1943-05-14

[Stage Direction]
First and second reports of standing committee on standing orders.-Mr. Golding.


Hon. J. L. ILSLEY (Minister of Finance):: I desire to table two documents concerning the wartime prices and trade board. The first is a report covering the activities of the board from its creation on September 3, 1939, to March 31, 1943, a period of three years and seven months. This is the first detailed report of this kind prepared by the board and will, I feel sure, be of considerable interest to hon. members and to the public at large. An attempt has been

made to deal briefly yet adequately with all phases of the work of the board and its related crown companies, and I am hopeful that it will give information that would otherwise be requested on the order paper or when the relevant item in the war appropriation is under consideration, and thus will help to facilitate proceedings. Copies of the report are being distributed to hon. members to-day.
The second document I am tabling is a statement showing the recipients of subsidies paid by the commodity prices stabilization corporation up to March 31, 1942. The corporation was formed in December, 1941, and is the agency responsible, under the wartime prices and trade board, for the payment of subsidies necessary for the maintenance of the price ceiling. This statement covers subsidies paid during a period of approximately three months, January, February and March, 1942.
Hon. members may recall that a year ago- on April 23 to be precise-I gave a statement to the house in which I dealt at some length with the reasons for subsidies and the basis on which they are paid. At that time I said that I had come to the conclusion, after very careful study, that it is definitely not in the public interest to give current information as to the names of persons to whom subsidies are being paid, or the amount paid to each. I did agree, however, at some appropriate time, that is when the information is not likely to reveal to competitors and others intimate details of the nature and volume of the recipients' business, to give the names of individual recipients and the amount of subsidy paid to each. It is reasonable to assume, I think, that information as to subsidies paid more than a year ago is not likely to reveal anything of vital importance in regard to current business dealings.
The statement I am now tabling shows subsidy payments amounting to SI,180,215. As I have already explained, this covers only the initial four months of the price ceiling and represents but a small fraction of total subsidies paid to date. As hon. members will see, when they have had an opportunity of reading the full report of the wartime prices and trade board, total subsidies paid from the date of the application of the price ceiling until March 31, 1943, amounted to approximately S65 million, in addition to which there were trading losses on bulk purchases by the commodity prices stabilization corporation of about $2j4 million.
Although subsidies to the end of March, 1942, amounted to just over one million one hundred thousand dollars, no less than 35,601 individuals participated in the payments. This large number is attributable to the fact that

Wartime Prices and Trade Board
the most important subsidies during this period were domestic subsidies paid in connection with the production of fluid and concentrated milk. At that time a subsidy of 40 cents per 100 pounds was paid on milk used in the manufacture of concentrated milk products and 30 cents per 100 pounds on fluid milk sold in areas where there had been no price increase since August 1, 1941. These milk subsidies accounted for nearly 80 per cent of total subsidies paid to March 31, 1942, and for all but 129 of the individual recipients.
I am sure hon. members will appreciate the very heavy task involved in listing the names of 35,000 individual recipients of milk subsidies and will agree with me that the expenditure of time and money entailed in preparing such a list could not have been justified. Instead of giving the names of individual ultimate recipients of these milk subsidies, it was therefore decided to list the names of the milk distributors which had been used as agencies for making payments to individual milk producers, together with the numbers of producers participating. Thus one of the first names on the list is that of a Toronto dairy which was paid $15,053.00 to reimburse it for subsidies in that amount which it, as a milk distributor, had previously paid out in full to 404 producers delivering their milk to it.
Apart from milk the only other classifications of subsidies up to the end of March 1942 were footwear and imports. I would refer hon. members to the report of the board for details as to the principles on which these subsidies were paid. During the period covered by this statement $191,504 were paid out by way of domestic subsidy on leather footwear to 78 individual recipients and $64,758 on imports to 51 individual recipients. The statement does not specify the import or imports in respect of which subsidy was paid, listing only the name of the recipients and the total amount paid. To have classified payments by individual imported goods would have meant much additional work in the preparation of the statement and in particular cases might have meant, even after the lapse of more than twelve months, the revelation of information valuable to Competitors.
At the risk of reiterating in part what I said a year ago I want to make it perfectly clear that these subsidies are not really subsidies to any manufacturer, importer or dealer, but are in reality subsidies for the benefit of the consumer. They are paid when there is no other way of ensuring adequate supplies of a particular product for the consumer at prices
permitted by the price ceiling. In principle, these subsidies are paid to the consumer to keep down the cost of living. In practice, because consumers are so numerous, they are paid to producers or dealers on condition that they maintain supplies and carry out the policy of the price ceiling by supplying goods to others at such prices as will permit them in turn to operate within the limits of the price ceiling.
I can perhaps illustrate this point by referring to subsidies on imports. These are paid to ensure a continued supply of essential goods produced outside of Canada at costs higher than would permit their sale in Canada at domestic ceiling prices. If the subsidy were not paid, these essential goods simply would not be imported for sale in Canada at ceiling prices.
With regard to presenting a report later, covering subsidies paid in the fiscal year ending March 31, 1943, the difficulties in giving names of recipients, the chief of which is the tremendous number of individual payments-hundreds of thousands-will be sh great that it now appears that they will be insurmountable. I can discuss these difficulties when the wartime prices and trade board estimates under the War Appropriation Act are reached. My only purpose in referring to them now is that I do not wish it to be assumed that the procedure followed with regard to the subsidies paid in 1941-42 will or can necessarilj' be followed for those paid in 1942-43.



PRIVATE BILLS


[Stage Direction]
Bill No. 79, for the relief of Helen Alissamon Wheeler Baker Macoun.-Mr. Claxton.
Bill No. 80, for the relief of Adele Le Roy Fuller Hardy.-Mr. Hill.
Bill No. 81, for the relief of Constance Maxine Keating Noseworthy.-Mr. Abbott.
Bill No. 82, for the relief of Alvina Antoinette Bouchard Winterson.-Mr. Mcllraith.
Bill No. 83, for the relief of Bernice Evelyn Berman Sholomenko.-Mr. Mcllraith.
Bill No. 84, for the relief of Marjorie Florence Gray Lever.-Mr. Whitman.
Bill No. 85, for the relief of Robert Gordon Shaw.-Mr. Macmillan.
Bill No. 86, for the relief of William Taffert.-Mr. Mcllraith.
Bill No. 87, for the relief of Uuno Ojalammi. -Mr. Mcllraith.
Wheat
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Bill No. 88, for the relief of Leo Guay.- Mr. Tomlinson.
Bill No. 89, for the relief of Marie Beatrice Arsenault Theriault.-Mr. Abbott.
Bill No. 90, for the relief of Margaret Varga Csabi.

Mr. Maelnnis.
Bill No. 91, for the relief of Frances Helen Shand Howell.-Mr. Maelnnis.
Bill No. 92, for the relief of Charles Cardin. -Mr. Ross (St. Paul's).
Bill No. 93, for the relief of Gladys Irene Harrison Mathers.-Mr. Casselman (Grenville-Dundas.)
Bill No. 94, for the relief of Eileen Grace Shearer Taylor-Mr. Macdonald (Brantford City).

[Stage Direction]
On the orders of the day:
Hon. J. A. MacKINNON (Minister of Trade and Commerce):: Before the orders of the
day are proceeded with I should like to make a brief statement respecting wheat quotas for this crop year.
The Canadian Wheat Board are establishing 1942-43 wheat quotas of fifteen bushels per authorized acre as quickly as elevator space permits. About eight hundred points can be increased to fifteen bushels almost immediately. Up to the present the maximum quotas have been fourteen bushels per authorized acre. The extra bushel is considered necessary to bring the permitted deliveries up to 280 million bushels, as provided in order in council No. 10,000 of November 6, 1942.
The authorized acreage for wheat delivery purposes in the west in 1942-43 is slightly over 19 million acres, but many farmers are unable to deliver fifteen bushels per authorized acre because of hail, drought, frost, et cetera, unusually heavy farm feeding of wheat, or because of seeding in 1942 much less than the authorized acreage for delivery purposes. The deliveries of durum wheat, military services over-deliveries, and certain family gristing deliveries are over and above the total delivery figure of 280 million bushels.
The authorized wheat acreage for delivery purposes in 1943-44 will be closer to 20 million acres than to 19 million acres, mainly because there are about 700.000 authorized acres on farms which seeded no wheat in 1942-43. This acreage was ineffective for delivery purposes in 1942-43, but some of it will be effective in 1943-44. The western farmers will begin the 1943-44 season with

200,000,000 to 225,000,000 bushels of wheat on farms, whereas they had practically none to start the 1942-43 season. With an ordinary 1943 crop, the authorized wheat acreage will therefore be more effective in 1943-44 than in 1942-43 and a fourteen bushel quota should bring out as much wheat in 1943-44 as a fifteen bushel quota will in 1942-43.


Mr. CASTLEDEN:: Are we to understand from this statement that there will be space available at delivery points for the quotas that have been established at those points?


James Angus MacKinnon: The quotas will be established on a basis of fifteen bushels just as soon as there is space available at the various points, and it is hoped that the total amount of wheat which we have stated we would take from the producers will be accepted before the end of the crop season.


Mr. DOUGLAS (Weyburn):: How many points are there at which this quota cannot be accepted now?


James Angus MacKinnon: I forget the exact number of quota points, but there are eight hundred where this quota can be accepted, and I think that is about fifty per cent of the quota delivery points.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS1 (Cape Breton South): I should like to direct a question to the Minister of Labour, and I am sorry I did not have an opportunity to send him notice of it. Is the bargaining agency of the employees being used to assist selective service in transferring the men from the plant of the John Inglis company in Toronto to other essential industries? In transferring the employees from that plant to other work, will the wage rates applying at that plant be maintained in such other work? Could the minister make a statement supplementary to the one made yesterday by the Minister of Munitions and Supply (Mr. Howe) with respect to this situation?
Hon. HUMPHREY MITCHELL (Minister of Labour):: As my hon. friend knows, and as was indicated yesterday by the Minister of Munitions and Supply, the lay-off has not started yet. Any transfer will be undertaken, of course, through the instrumentality of selective service.


Mr. GILLIS:: Notice has been given.

Labour Conditions


Humphrey Mitchell: In regard to the second point, that cuts both ways. Obviously the hon. member would not like to have these people transferred to industries in which the wage rates were lower; no doubt he would like to see them transferred to industries where the rates are higher. I cannot give any guarantee as to that. The hon. member will understand the difficulties that arise where you have variations in wage rates as between the different industries in this country.


Clarence Gillis: The highest rate should
prevail.


Mr. KNOWLES:: Further to the question asked by the hon. member for Cape Breton South, would the Minister of Labour answer the inquiry as to whether or not the offer of the bargaining agency at the Inglis plant to assist the selective service is to be accepted? I understand a similar offer by the bargaining agency in connection with the lay-off at the Transcona Cordite plant was refused some time ago.


Humphrey Mitchell: There has been no offer yet, officially. Probably the hon. member has some inside track in these matters that I have not. But he can rest assured that any representations made by any organization, whether employer or employee, will be dealt with sympathetically by the Department of Labour.



USE OF PRISONERS OF WAR FOR FARM LABOUR

[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Leader of the Opposition):: An Associated Press dispatch from Algiers states in part:
. . . many of the axis soldiers captured in the Tunisian campaign who are willing to work undoubtedly will be shipped to North America and Britain, it was said authoritatively to-day. No definite plan for putting them to work in Canada or the United States has been reported yet, but there would be jobs available especially on farms in both countries for those who want them.
I should be glad if the Prime Minister would indicate to the house what plans the government has in mind with respect to the matters referred to in this dispatch.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: The government has not received any official intimation of the possible or probable transfer to Canada of prisoners of war from the battlefront of Tunisia.


Thomas Clement (Tommy) Douglas: Yesterday I asked the Minister of Labour if he
would make a statement with reference to the availability of internees and prisoners of war. Is he ready to make the statement?
Hon, HUMPHREY MITCHELL (Minister of Labour): I have not forgotten the question addressed to me. Council, however, did not finish its deliberations to-day until almost three o'clock. I shall try to get the information for the hon. member on Monday.



CONSCIENTIOUS OBJECTORS

Mr. J. G. DIEFENBAKER (Lake Centre):: I should like to ask a question of the Minister of Labour in reference to the matter of the allocation of man-power for farm labour, of which there is a definite shortage at the present time. What is being done, and what success has been attained in securing the services of conscientious objectors and others subject to alternative service to go to the farms at this time to assist in the spring work? I would ask, too. whether any measure of compulsion to that end is being applied.


Humphrey Mitchell: The reply to the first question is this: There are 700,000 farms in Canada. Out of that 700,000 farms the number of applications for farm help stands at about 4,600. That is the figure this morning. I am not suggesting that that is a complete indication of the farm labour situation at present, but it will indicate to hon. members that at least, while the situation might be grave, it is not quite as grave as some people would have us believe.


Mr. CASSELMAN:: They are not applying, that is all.


Humphrey Mitchell: The machinery is there. With respect to conscientious objectors, the hon. member is no doubt aware that an order in council was passed about two weeks ago. We are now in process of setting up the machinery. A director has been appointed, and alternative selective service officers have been appointed to deal with the problem of conscientious objectors. It is not a big problem, compared with some problems with which we have to deal in a time of war. Speaking from memory I would say there are in Canada about 3,000 conscientious objectors of military age. Of that number I believe about 1,500-and again I speak from memory-are already in alternative services.


John George Diefenbaker: Doing what?


Humphrey Mitchell: Some are in the forestry camps of British Columbia, some are doing
Sugar

fire prevention work, others are building roads in Alberta. They are engaged in undertakings of that kind. I believe it is fair to say that the great majority of conscientious objectors in Canada are at present engaged in agriculture, which in itself is a partial answer to the hon. member's question. He can rest assured that those who are available will be placed in a manner which will be in the best interests of the country, and where we can best use them.


Mr. CRUICKSHANK:: Does that include those in the House of Commons?


Humphrey Mitchell: Yes; if there are any, it includes them.



RATION ALLOTMENT FOR CANNING PURPOSES

[Stage Direction]
On the orders of the day:
Gordon Graydon: I should like to ask the Minister of Finance to make a statement, if he will, by way of explanation and clarification with regard to the policy followed by the wartime prices and trade board in the rationing of sugar to the housewives of Canada for canning purposes. My object in rising to seek such a statement from the minister is based upon this situation. Earlier this year the ration administration issued to the housewives of Canada an appeal which read in part as follows:
Home canning takes on new importance in wartime. We want as much as possible of Canada's perishable fruits, including wild fruits, canned for use throughout the winter.
It rests with Canadian homemakers to make the fullest use of Canada's fruit crop for wartime food. Any sugar allowed is in trust so that you may provide canned fruit, jam and jelly for your families during the winter months.
Later the housewives were asked to make formal application for the amount of sugar required for this purpose, and now some five hundred local volunteer ration boards throughout Canada have been asked to take the responsibility of restricting the amount of such sugar to a figure which is said to be well below one-half the amount actually applied for by the housewives of the dominion. The fact that the widespread appeal was made without indicating the limitations which were later instituted may very well have the effect of placing ah unnecessary burden upon the local ration boards throughout Canada and may well lead to the feeling in the minds of Canadian housewives that they have been encouraged to lay plans for fruit canning without having had the true picture given to them at the beginning. Protests appearing in the press would 
indicate that there is urgent need for the minister to make a full explanation and to clarify the matter at once.


James Lorimer Ilsley: Mr. Speaker, after I received notice of this question from my hon. friend I made inquiries about this matter. I find that the reason for what my hon. friend has called an appeal was that the ration administration was afraid applications would not be made in time for the sugar required for canning, and they brought the matter somewhat forcibly to the attention of the public in the language that has been quoted by the hon. gentleman. Their expectation was that they would receive applications for sugar sufficient to can the usual amount of fruit, and they were desirous of making available enough sugar for that purpose. As a matter of fact, however, they have received applications for 209,000,000 pounds, which is far more than enough to can the largest quantity of fruit that has ever been canned in Canada. The amount of fruit represented by that amount of sugar never was canned in this country and probably cannot be canned. One hundred million pounds of sugar, which is as much as has been used in the past, if not more, has been set aside for canning purposes. That being so, it is necessary to have the quantities requested in these applications reduced in the best why possible. It may be possible to increase somewhat the amount of sugar that will be available, but I cannot give any guarantee as to that.


Gordon Graydon: In the advertisement
there was no suggestion of any limitation, and as I understand it from those who give me information on this point from time to time many housewives throughout the dominion regarded the appeal as something in the national interest; they regarded the preserving and canning of fruit as necessary in order that the man-power employed in the canning industry, in the manufacture of containers and so on, might be made available for other purposes. On top of that, the final burden rests upon the local ration board. I think the minister had better make it a little clearer to housewives so that they will not feel that a hoax of some description has been worked upon them. I know the minister has that in mind. But on the other hand one cannot ask the housewives of Canada to preserve and can all possible fruit, in the national interest, and then finally leave it to the local ration board.


James Lorimer Ilsley: There is no justification for the suggestion of a hoax. Certainly the public would not understand that an unlimited

Mutual Aid Bill
amount of sugar was available, nor would the statement in the appeal make any difference in the amount of individual applications.


Gordon Graydon: Why does the minister say that?


James Lorimer Ilsley: Ju^t because it stands to reason that if 100,000,000 pounds is available, how can one individual plan her application in regard to that 100,000,000 pounds. However, I shall not argue that. All I am saying is that the purpose of the appeal was to draw the attention of the public to the fact that applications for sugar for canning purposes should be made, and canning so encouraged.


Gordon Graydon: It went much farther than that, of course.



FOREIGN EXCHANGE CONTROL


[Stage Direction]
On the orders of the day:
George Alexander Cruickshank: I should like to ask a question of the Minister of Finance. Will foreign exchange be provided for any member who has the privilege of being invited by congressmen to visit Washington to hear Mr. Churchill deliver his victory address?


Mr. DEPUTY SPEAKER:: Orders of the day.


George Alexander Cruickshank: I should like to have an answer. I happen to be probably the only privileged one in the house.


James Lorimer Ilsley: When will the hon. member be going, if he can get the exchange?


George Alexander Cruickshank: I am going on
Monday, if I can get the money.


James Lorimer Ilsley: I will let the hon. member know in plenty of time before that.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I notice an item in one of the local papers this morning in which it is stated it is not probable a redistribution measure will be introduced at the present session. I hope the house will not draw any-such inference from the statement I made respecting legislation at this session, when I answered the leader of the opposition (Mr. Graydon) some days ago. I made it clear
that the measures mentioned specifically in the speech from the throne would be proceeded with. The redistribution bill is one of them, and it is the intention of the government to introduce a redistribution measure at this session.


Mr. HANSON (York-Sunbury):: We ought to get at it, then.



THE WAR


[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: Mr. Speaker, hon. members will have observed that yesterday the government of the United Kingdom set aside next Sunday, May 16, as a day of prayer and thanksgiving for the victory in North Africa. My colleagues and I feel that the people of Canada would, on the same day, wish to join in a like public expression of thanksgiving upon the victorious culmination of the African campaign. On behalf of the government I should therefore express the hope that throughout Canada religious services on Sunday next may be given a character appropriate to the occasion.



UNITED NATIONS MUTUAL AID

[Stage Direction]
PROVISION FOR APPROPRIATION OP §1,000,000,000 FOR PRODUCTION AND TRANSFER OP WAR SUPPLIES
Hon. J. L. ILSLEY moved the third reading of Bill No. 76, for granting to His Majesty aid for the purpose of making available Canadian war supplies to the united nations.
Mr. M. J. COLD WELL (Rosetown-Biggar):: Mr. Speaker, this is a bill to transfer to the united nations goods to the value of one billion dollars as a contribution to the common cause. As 'such we support the third reading of the bill. During the discussion in committee we refrained largely from making any criticism of its principles because we believed that all the allied nations should contribute to the common pool for the common cause. But when we are discussing additional loans- I say this to the Minister of Finance particularly-to nations it seems to me that the situation is entirely different. In such cases I have no hesitation in urging the freeing of Canada from any of her external debts by the repatriation of securities held abroad.
To-day I want to make some comments in connection with the costs of certain goods which go to make up the gift that we are
Mutual Aid Bill

making to the allied nations. As I have said already, we support the free transfer of war goods to our allies, but we criticize severely profits and gifts to private corporations which these transfers involve. Under the necessities of war, giant monopolies in Canada are strengthening their economic control and endangering the future of democracy in the country in which wm live. Of these monopolies I think the outstanding example at the moment is the Aluminum Company of Canada. Since I mentioned this company and its operations in March, certain other information has come to my knowledge which I intend to place before the house and the government, because I believe that this information bears directly on the matter of supplying necessary commodities to the united nations.
First let me say that I understand that some eighty per cent of the stock of the Aluminum Company of Canada is owned by the people who control the stock of the Aluminum Company of the United States. The Canadian company obviously was organized originally as a separate corporation to escape the United States anti-trust laws in order that this company might be able to play its part in the international cartel whose agreements restricted production in t'he democratic countries and allowed Germany greatly to expand her aluminum production before the war. The history of these companies is a story of the manner in which monopoly obtains privileges and makes profits.
In the fifty years from its original incorporation in 1888 the parent company has made profits of over $335,000,000. In the first twenty-four years, from 1888 to 1912, it made profits of $33,000,000. This on an original investment of $2,000,000. The net profit in 1940 was $44,000,000. In 1941 the Canadian company had net profits of $13,992,000 after paying income taxes and excess profits taxes.


Mr. HOWE:: What invested capital earned that profit?


Thomas Miller Bell: The invested capital was built up largely out of profits and reserves of the company.


Clarence Decatur Howe: But the sums were large.


Thomas Miller Bell: The sums were large; nevertheless you cannot consider them apart from their origin. It is to this giant corporation that the governments concerned have given or advanced hundreds of millions of dollars to enable them to build a huge plant at Shipshaw and to expand their aluminum monopoly. How was this huge expansion financed? This is where we enter more directly into a discussion of the provisions of

the bill. Part of Canada's contribution, although not all, is covered by P.C. 11745, which provides for a special write-off or accelerated depreciation of $154,500,000. The Minister of Munitions and Supply (Mr. Howe) gave a break-down of this to the house in March. I have the prospectus of the company, and it has the following to say about Canada's contribution:
Normally, such capital expenditures for plant additions are written off for tax purposes over a period of years. In order to give effect to the fundamental basis of the contracts, permission has been granted the company to amortize these capital expenditures by a special deduction from income at a stipulated rate per pound of all aluminum delivered-
I understand that is five and a half cents per pound.
-the effect being to amortize the estimated cost of the additional aluminum producing facilities and sixty per cent of the estimated cost of the additional power facilities by the time all deliveries have been made under the war contracts.


Richard Burpee Hanson: Would the hon. member identify that prospectus?


Thomas Miller Bell: This is the prospectus dealing with the new 1942 issue of $15,000,000 five per cent preferred stock by the Aluminum Company of Canada. Thus all the aluminum facilities will be retired by a special write-off from income, and sixty per cent of the cost of the power plant will be retired under the war contracts of the company. In addition to this $154,500,000 there are various pieces of equipment and some projects at Kingston and Arvida which are depreciated in one or two years. The amount of these depreciations is some $9,000,000. There is also provision for another amount of $9,000,000 for the protection of the company against abnormal costs. According to sessional paper 274 tabled in the house there appear to be eighteen other projects of the company totalling $4,431,000, nine of which, totalling $3,869,000, are to be written off in a year, and the other nine, totalling $562,000, in two years. It seems to me therefore that the total is not $154,500,000, as we were told in the house this year, but nearer to $175,000,000.
The necessities of war and the monopolistic position in which this company found itself has enabled it to take from the nations in their war extremity hundreds of millions of dollars' worth of property in addition to the profits they are able to make in the meantime. The British contribution is referred to on page 5 of the prospectus as follows:
The total loan was increased to $55,600,000, which figure appears in the consolidated balance

Mutual Aid Bill
sheet printed herewith as "3 per cent redeemable notes, due 1961, payable to the British government-principal and interest abatable in certain circumstances as provided in the contracts under which they were issued." These loans are payable in full if all of the additional capacity is used in each of the twenty years during the life of the notes. If in any year or years such additional capacity is used only in part, the notes are payable only in proportionate part, both as to principal and interest.
It should be noted that the British loan is repayable in full only if all the additional capacity is used in each of the twenty years during the life of the notes.


Clarence Decatur Howe: Just to clarify that, the additional capacity referred to is capacity additional to the first capacity built. If there is any future to the aluminum business these notes are likely to be paid in full.


Thomas Miller Bell: The minister said on
March 23 that the outlook after the war was more or less problematical.


Clarence Decatur Howe: The outlook to which my
hon. friend referred is not the outlook of that part of the plant that is covered by the loan.


Thomas Miller Bell: I am glad to get the
minister's statement, but if none of the additional capacity is used in any year, then that year's repayment is cancelled. I think that is true. Let us remember that the British government was paying two cents a pound more for its aluminum than the United States government pays for lease-lend aluminum.


Clarence Decatur Howe: No, both prices were adjusted
on the same date. The price in the United States at the time the British were paying seventeen cents per pound was exactly the same price converted into United States dollars. When the price was cut to fifteen cents the Canadian price was revised accordingly to all customers. There was some discussion between the officers of the Aluminum company and the officers of the Reconstruction Finance corporation or the Metals corporation with regard to maintaining the differential, but naturally the Canadian government had something to-say about that. The change that was made in price was made simultaneously for all customers.


Thomas Miller Bell: I am very glad to
know that. But my information-I will tell the minister what my information was-was that all the aluminum used by the United States for other than lease-lend purposes was still chargeable at fifteen cents and the aluminum used for lease-lend purposes was chargeable at seventeen cents and that the British were also paying seventeen cents.


Clarence Decatur Howe: No, that was the first proposal. It was referred to in congress but it is not true. When the final agreement was made that was adjusted.


Thomas Miller Bell: I am very glad to get
that correction, and as I proceed if there are any other misstatements of fact I hope the minister will correct me.
Looking over the prospectus I am forced to the conclusion that the British parliament ought to investigate the circumstances under which the agreement was made and who made it on their behalf. I am not going to discuss that because, as I say, it is a matter for the British parliament to deal with. There has been a good deal of talk about the American contribution. Let us see what the prospectus says. The prospectus says:
From an original total of approximately $93,000,000, they have now been reduced as a result of metal deliveries to approximately $79,000,000. As new smelters come into operation, the liquidation of these advance payments is being accelerated. Cancellation of future deliveries under such contracts by the purchasers prior to the completion thereof (the greater part of which are to be made before the end of 1944) would relieve the company of the obligation to repay practically all of the balance of the advance payments not then liquidated.
No doubt the part played by these advance payments by the United States will be thoroughly investigated at Washington. It is not my purpose to criticize the activities of any government of a friendly or allied nation. I take it that that is a matter for their own people and for their own congress.
The Minister of Munitions and Supply argued that the American participation in the plant had reduced the price from seventeen to fifteen cents per pound.


Clarence Decatur Howe: No, I did not argue that.


Thomas Miller Bell: The minister mentioned that in the course of his remarks on March 23.


Clarence Decatur Howe: No. The North American price dropped.


Thomas Miller Bell: I am glad the minister has cleared up that point because there is in the prospectus something which lends colour to the idea that there are two different prices. I will refer the minister to the words used in the prospectus, as follows:
Despite making provision for the payment of the major part of the cost of w-ar facilities from the proceeds of the metal sold, the company has reduced the base selling price of aluminum approximately twenty per cent since the outbreak of the war.
That gave some colour to the idea that there were two different prices-a base price and another. I am glad to know, therefore, that that new price applies to all the united nations.
Mutual Aid Bill

The Prime Minister has announced that he is going to Washington. I think it would be well for him while there to inquire into all the matters concerning the signing of Canada's agreement; for I want to ask him what part in this agreement and in the general agreement we are discussing the Department of External Affaire played. What part did it play in relation to this country? I note that the report of the Canadian Legation at AVashing-ton for the year 1942 refers to the many and complicated questions, including taxation, dealt with by the legation. This depreciation, of course, is very largely a matter of discussion with our taxing authorities.


Clarence Decatur Howe: I think I can answer that now. The legation played absolutely no part in the discussion. The Department of Munitions and Supply was familiar with certain phases, but the transaction was carried out directly between the Aluminum Company of Canada and the Metals Reserve bank.


Mr. OOLDWELL:: Did the Department of Munitions and Supply make arrangements regarding accelerated depreciation?


Clarence Decatur Howe: No.


Thomas Miller Bell: Well, who did?


Clarence Decatur Howe: They were recommended to the cabinet by the war contracts depreciation board.


Thomas Miller Bell: I am not disputing the minister's word. I am just questioning his knowledge. I find it very difficult to believe that the minister at Washington had nothing to do with negotiations in regard to these matters involving Canada and the United States. I am saying this because I think it is something of which this house, and particularly the Prime Minister, should take heed now. Our minister at Washington is Mr. Leighton McCarthy. I understand that while it is obligatory for ministers of the crown to resign their directorates in companies, it is also customary but not obligatory for ministers to foreign countries to resign their directorates also. Mr. McCarthy, right up to January of this year, was a director of the Aluminum Company of Canada. He is still a director and vice-president of the parent company, the Aluminum Company of the United States. Had he remained a director of the Aluminum Company of Canada he would probably have signed this prospectus to which I have made frequent reference this afternoon, but he resigned shortly before it was issued and after the deal was made. As a matter of fact, Mr. McCarthy has been for thirty years legal consultant to the Aluminum Company of
[Mr. Coldwell.J
Canada, and the prospectus is signed by J. F. Van Lane, as a director. Mr. Van Lane is the secretary of McCarthy and McCarthy of Toronto, the minister's old legal firm.


Clarence Decatur Howe: Mr. Speaker, may I say that for my hon. friend to attack a man in Mr. McCarthy's position is most unwarranted. Mr. McCarthy is a man who had retired from active business, a man who had reached an age when he might well have been permitted to retire, but as a patriotic duty he accepted, under considerable pressure, the post he now occupies at Washington. I have assured my hon. friend that I know from my own personal knowledge that Mr. McCarthy had absolutely no contact with this transaction. Why attempt to injure a man in Mr. McCarthy's position, a man who cannot defend himself on this floor, particularly when I have stated the true facts?


Thomas Miller Bell: Mr. Speaker, I am not injuring Mr. McCarthy, but I am going to place before this house a condition which I think is against the best interests of this country. Mr. McCarthy may have done nothing improper, but I say that a government in appointing gentlemen to represent this country abroad should insist upon their relinquishing their association with business, particularly business of this description which may be involved in negotiations between our two countries. Mr. McCarthy is a director of a number of power companies which, like the aluminum company group, have used every means possible to prevent the development of public power in this country, particularly St. Lawrence power. In my opinion this whole deal demands a thorough investigation, and the Prime Minister when he is in Washington should see Mr. McCarthy and discuss his own position with him. Personally I think that Mr. McCarthy should be asked to come back to Canada and explain to the government why it is that he has retained these directorates in spite of custom. The Aluminum Company of Canada is associated with the Saguenay power and other power enterprises in Canada. Often our two countries are discussing electric power relationships, and this house should know that the New York state power authorities, the government organization, in its annual report for 1937 named Mr. McCarthy as one of the men blocking the development of the St. Lawrence waterways as a public enterprise. The New York power authority also named Canada Life Assurance, of which Mr. McCarthy and Arthur W. Davis, brother of the president of Aluminum of America, after whom

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Arvida is called, who are directors, as associated with numerous power companies in blocking public power enterprises. The New York report says:
The people of New York and Ontario face the necessity of overcoming the influence of this consortium of monopoly interests if they are to realize the wealth producing capabilities of their chief waterpower resources in the St. Lawrence and Niagara rivers.
This whole aluminum deal is linked very closely with power and power interests. It is not only aluminum they want. It is the great power resource, Shipshaw, the greatest in Canada, yes, the greatest developed in the world, which these people are anxious to control and are controlling. There is one thing about this prospectus which struck me at once. This is an invitation to subscribe $15,000,000 par value of five per cent cumulative redeemable sinking fund preferred shares. Why the preference shares now for the first time in the company's history. It has authority to issue three million shares of common stock. They have only issued $1,500,000 of common shares, and I am advised by people who have made inquiries that if one wants to get preferred shares the limit is twenty-five shares. Why? Because they want to give the small investor a chance to get in first, they say. In my opinion, what they really wish to do is to spread some of the preferred shares over the country in order that there will be public opinion favourable to the aluminum company. That is the trick of utility corporations everywhere; and as for this common stock held in the treasury, if this venture is what we think it may be, anything may be done with it, and the people who control the company may obtain a great deal of unearned increment out of it.
On March 23 the Minister of Munitions and Supply said that in the dim and distant future the aluminum company may obtain some benefit from the Shipshaw development and there may be some post-war value in it for them. I say that these power aluminum interests have obtained in effect the greatest power resources at present available in the world, virtually as a gift; and thus they can, if they will, effectively block, in Ontario and New York state and eastern North America as well, any government-owned public power development, because their plant will be paid for during the war and any plant which the province of Ontario or the government of New York state, or the government of Canada or that of the United States or both, may wish to build, will have to be paid for over a period of years. Not only that, but they
will be able, through the cheapness of power, to control the price of aluminum almost everywhere on earth, and when we realize that we are entering upon an age of light metals and that they have entered into the field of magnesium production as well, we can understand how dangerous a monopoly we are building up by our public funds and war activities in this country.
Indeed, I believe that the real objective is the control of these great power resources by this corporation. Those of us who have lived long enough in Canada to know about the struggle that has gone on over a period of years between, on the one hand, Insul-until he was eliminated by the depression-and the great North American power trust, and on the other hand the publicly-owned enterprises, will realize the force of what I am saying. I believe that is behind all this, and in making this great gift, into every pound of munitions that we give, containing aluminum, five and a half cents a pound is a charge, aiding this company further to establish its monopoly control of these great power and metal resources.
I say, Mr. Speaker, that under these circumstances the government would be warranted, this house would be warranted, in appointing a royal commission to go into all the phases of this deal and to see what the implications are to the public of Canada and of the United States.
I am not going to continue at greater length. I have tried to condense in as few words as possible what I had to say this afternoon but I feel that this house cannot overlook what is going on in Canada. In common with many other people, I am gravely disturbed and alarmed over the trend of events in Canada. Some people say that we are opposed to free enterprise. I am not opposed to free enterprise. I should like to see every man free to follow his abilities and his initiative. I am opposed, however, to what one of the representatives before the committee yesterday called corporate enterprise, and if we are to continue as we are going we shall be delivered completely into the hands of these corporations and we shall have, as someone behind me suggests, not a cooperative commonwealth but a corporate state. When we examine the various phases of the war appropriation measure we shall go into a number of related matters. The policy is wrong. It is anti-social, it is unsound from the point of view of the people; and in passing this bill I urge that we do so with our eyes open. We wish to make the gift, but in making the gift I fear the government unfortunately is fastening on our people giant corporations like the one I have discussed this afternoon. .
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Clarence Decatur Howe: The hon. member for Rosetown-Biggar (Mr. Coldwell) has made a simple transaction both complicated and menacing. What is the situation as regards the transaction with the United States? The United States was in urgent need of aluminum for war purposes-very urgent need. The United States came to the Aluminum Company of Canada and said, "We want to buy aluminum." The Aluminum Company said, "We will sell it to you at your current price, which is 15 cents per pound American dollars." That was the entire transaction. They bought so much aluminum, delivered over a certain period, at the going price in the United States. Naturally there were not the facilities to produce that aluminum; those facilities had to be created. The existing facilities were fully booked by Canada and Britain, and to permit of the necessary facilities being built an advance payment was made for the metal. The metals reserve bank said, "We will advance you five and a half cents on the entire block of aluminum, as a lump sum, to be used for your capital expenditure, and the rest, will be paid as the aluminum is delivered." If the war goes on until 1944 the entire transaction resolves itself into the fact that the metals reserve bank of the United States has bought a block of aluminum at fifteen cents a pound. That is the entire transaction. If the bank wishes to cancel a part of the aluminum, should the war end and the need for aluminum pass, it is permitted to do so. Naturally if such a cancellation takes place, that part of the advance spent for capital expenditure will not be refunded. It has been used, being that part of the price of the aluminum which it was understood would be utilized for creating capital facilities and naturally there can be no substantial refund of that part of the fifteen cents a pound of aluminum contracted for. If anyone investigating that transaction from the point of view of the United States can suggest any cheaper or better or surer way of getting badly needed aluminum, I shall be very much surprised.
What is the British transaction? The British transaction was made either prior to the war or in the first months of the war. It was made between a representative of the British treasury who came to this country and the Aluminum company. Canada had no part in that transaction, nor was Canada consulted so far as I recall. There again the British government created certain facilities and took securities for its capital commitments. It is true that the borrowing was of a nature that repayment depended on the use of the facility.

As I have explained, it was a very large addition to the existing capacity, and it is not surprising that both parties agreed that that sort of transaction was desired.
What is the position of Canada? Canada has put up no money, directly or indirectly, in the creating of these tremendous facilities. The pre-war facilities were sufficient to take care of Canada's needs, or we felt that they were. As a matter of fact we are taking somewhat more aluminum than is represented by the pre-war capacity. We collect each year taxes from the enterprise, in amount at least as great as we could have collected had there been no expansion, and if the war goes on beyond the period of special write-off we will collect taxes from the enterprise vastly greater than could have been dreamed of on the basis of pre-war capacity.
As to the alienation, of power, the Aluminum company had owned the power at the site of the Shipshaw development for many years. The power at that point was partly developed; about S35 million had been spent by the Aluminum company prior to the war in one section of what is now the Shipshaw development. There was a development of power, but no alienation of power sources as a result of the construction project. The Shipshaw power rights had" been granted and during the war the power rights were developed. It is a mistake to suggest, and I do not think my hon. friend intended to suggest, that there has been a complete writeoff of the cost of the power development. As my hon. friend knows, there was a writeoff, authorized by accelerated depreciation, of sixty per cent of the cost.


Thomas Miller Bell: I said that.


Clarence Decatur Howe: Yes, I knew my hon. friend did not intend to misrepresent the situation. I pointed out in my earlier discussion that the actual construction costs were nearly double the pre-war estimated cost, owing to building under war conditions and conditions of tremendous urgency. So that I think a residual value of forty per cent is not unreasonable, considering all the factors and considering the urgent need for power to correct the very distressed power situation in that area.
What has been the benefit to the allied nations of that development? That seems to be overlooked. Aeroplanes cannot be built without aluminum, and we all know the importance of aeroplanes in the conduct of this war. The battle of Britain was won by the use of the aeroplane. The battle of Egypt was won in part at least, by the use of the aeroplane. In the battle of Russia the tide

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is turning in -our favour through the use of the aeroplane. And the aeroplane is now being used in the battle of the Atlantic. The supply of aluminum has been absolutely vital to the flow of aeroplanes to all these fronts. Surely it is a desirable thing, a tremendous thing for the allied nations, that we had in Canada the ability to harness the resources of this country in a way that permitted! us to turn out forty per cent of all the aluminum that has been used1 by the allied nations. In weighing our liabilities and assets let us not overlook the fact that we were able to do that, and that the courage and shall I say the gambling instinct of the Aluminum company allowed them to -undertake operations of that magnitude to meet a national emergency. I believe that, in discussing the position of the Aluminum Company of Canada, we should lay great stress on the tremendous contribution that company has made to the winning of the war. In presenting the case to the public let us present a fair balance sheet.


Stanley Howard Knowles: The Minister of Munitions and Supply (Mr. Howe) has said a good deal about the results of these arrangements in the actual production of aluminum. We most heartily agree that Canada should by all means make her contribution of the things that she can contribute to the war. We rejoice in the possibility of this country contributing so much of the needed aluminum. But I would remind the minister that the end to be achieved does not necessarily justify the means by which that end has been achieved. In one sense we congratulate him on having succeeded in getting aluminum produced, but we deplore his failure to consider the social implications of the means adopted.
The minister has gone over some of the various countries that have been connected with this deal, the United States, Britain and Canada. In connection with the assistance given by the United States, he suggests that the only assistance was in the form of advance payments for aluminum to be delivered in the future, and he minimizes the fact that if the . full amount ordered is not delivered, that is if the order is cancelled by the purchasers, in this case the United States government, those advance payments do not have to be paid back in full. The basis of his minimizing that position is his contention that the plant may be a white elephant when the war is over. It is interesting to note that in the agreement
with the aluminum company in P.C. 11745 of December 31, 1942, we find a clause which says: Whereas-
-the company has represented that the said increase of capacity is far beyond its peace-time requirements and far beyond any anticipated post-war requirements-
That is the representation that the company made to the government, but when it puts out its prospectus to the public as it seeks to sell shares to the value of $15 million it points out that one of the purposes of the issue is to get money for the post-war operation of an industry which is a vital factor in the Canadian economy.


James Lorimer Ilsley: Those two statements are not inconsistent.


Stanley Howard Knowles: In my view the statement in the prospectus indicates that the aluminum company expects its property to be of tremendous value in the post-war period and is seeking the subscription of further capital on that basis.


James Lorimer Ilsley: Not necessarily all of its property.


Thomas Miller Bell: We are approaching an era of lighter metals, and I think it might be concluded that aluminum will be very important after the war.


James Lorimer Ilsley: I should think it would be highly improbable that they would use all that tremendous development. No doubt they will use some of it.


Stanley Howard Knowles: With the amount of aluminum to be used in post-war aircraft and possibly in automobile engines, locomotives, railway coaches, and so on, I should think there would be a good chance after the war of using as much aluminum as we are using now, and my suggestion is that the company is correct in its statement in this prospectus that aluminum will be a tremendously vital factor in the post-war Canadian economy.
Then the Minister of Munitions and Supply went on to refer to the assistance from Britain, which is similar to that from the United States, and then to Canada's part in connection with the development of this plant, both the aluminum extension and the power plant. He made the statement that no funds from the Canadian treasury were being put into the extension of the aluminum plant cr the power development. It seems to me we are only playing with words when we talk in that way. It may be perfectly correct that the Canadian government is not handing out funds to make possible the construction of these plants; but

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the value of the plants actually is to be depreciated out of profits which the company will make by selling its product to the governments now engaged in the war against the axis. All of these profits have come about by virtue of the war. The position of the company is enhanced because we are at war, in the prosecution of which some of our men are giving their lives. It seems to me that in effect the people of this country and of all the other countries which are buying the product of this company are actually paying for the construction of the aluminum plant and the power development, to the extent already mentioned.
When the minister makes the statement that the Canadian government is not contributing directly to the cost of those plants; when similar statements are made by newspapers such as the Winnipeg Free Press, which has been taking me to task for talking about this matter back in Winnipeg during the Easter recess, it seems to me that one has to set against such statements the figures which have been given to the house already by the hon. member for Rosetown-Biggar (Mr. Coldwell). First we have in order in council P.C. 11745 a depreciation of 100 per cent against $117,000,000, being the cost of the aluminum plant extension, which is to take place between the date of the agreement and the end of 1945. Then there is 60 per cent of the cost of the Shipshaw power plant, over the same period. The cost of the plant was $62,500,000, and 60 per cent of that amount is $37,500,000. Then in the agreement embodied in P.C. 11745 there are certain clauses which allow the company a 5 per cent increase in the cost of the aluminum extension for special contingencies and 10 per cent for special contingencies in connection with the Shipshaw power plant. These two amounts, taking into consideration the 100 per cent and the 60 per cent provisions already mentioned, provide for depreciation over the same period amounting to $9,600,000.
When the Minister of Munitions and Supply spoke on this matter on March 23, at page 1476 of Hansard, he also cited certain other depreciation being granted this company, apart from this general development, totalling $8,-
828,000.	Then, as the hon. member for Rosetown-Biggar has already pointed out, sessional paper 274, tabled recently in this house, shows that during the years 1941 and 1942 the company made some eighteen applications to the government for special wartime depreciation, which were granted, totalling $4,431,956.06. Taken together these sums give us the grand total of $177,359,956.06. These are the depreciations being allowed, in some cases in one

year, in other cases in two years, and in other cases running up to the end of 1945. In other words to this extent, the capital expenditures of this company are being depreciated out of the profits the company makes by selling its product to this government and to the other governments who are partners with us in this conflict. In my view the profits from these sales, if there are to be profits, ought to come into the public treasury, instead of going into the hands of a private company.
There are one or two points I should like to mention, to which I think attention might be called in this connection. In the matter of getting this accelerated depreciation, it should be pointed out that this means the company is avoiding the payment of taxation on a certain percentage of its profits, at what are now high war-time taxation rates. To argue, as it sometimes is argued, that once these amounts are written off they cannot be written off again and the result will be that after the war taxes will have to be paid on much higher amounts, is to overlook the hope of the company that when that time comes the rate of taxation will be much lower than is the case at the present time.
It is rather interesting to some of us to note that for a considerable period of time strict secrecy hid from the Canadian people, as well as the people of other countries, and in fact from some high governmental officials in the United States, what was going on in regard to the extension of this plant and the construction of the Shipshaw power development. Suddenly that secrecy was lifted, apparently just about at the time the company desired to float this new $15,000,000 issue. Since then a great deal of publicity has been given to the matter, including large advertisements in the newspapers of Canada and still larger advertisements in the newspapers of the United States. The company was in such a hurry to get out this prospectus, in fact, that it found itself up against a little snag in regard to including in the prospectus its consolidated balance sheet for the year 1942. At the time this prospectus was issued the company did not have that balance sheet ready, I take it, so we find in the prospectus this clause:
The consolidated balance sheet of the company as at 31st December, 1942, is not yet available. The company has been relieved of its statutory obligation to include the same in this prospectus by an order in council, Canada P.C. 430.
I want to be perfectly fair and not make too much out of this point. I do not want to convey the impression that this consolidated balance sheet may never be given. As a matter of fact the prospectus does carry the balance

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sheet up to September 30,1942. The interesting thing to me is the hurry to get out this document and to give publicity to this matter, after about two years of wartime secrecy.
The information I have been able to get respecting the shares of this company is to the effect that last year its common stock ranged between 65& and 891, but more recently it has gone up to 129. In other words the rise from 65^ to 129, which is practically a doubling of value, has added in about a year $30,000,000 to the value of the common shares of the company. Further, one might point out this has been made possible through the increase in the assets of the company from $126,000,000 to $350,000,000, largely due to the kind of assistance the company has been receiving.
Before taking my seat I should like to correct one or two misstatements made on this matter in the Winnipeg Free Press, and also answer briefly one or two of its arguments. On May 5, on its editorial page, this newspaper carried an editorial on this matter, in which it stated:
While 70 per cent depreciation was allowed on the extension of the aluminum manufacturing plant, only 55 per cent was allowed on the power plant.
As has already been stated in the house on several occasions, those figures should have been 100 per cent and 60 per cent. The authority for my statement is P.C. 11745, and this afternoon the minister confirmed the figures in the order in council.
Then, again, on May 8 the Winnipeg Free Press found it necessary to deal with this matter, and quoted the total amount of money which had been put into the development of this plant from 1937 to the present time. It gives us the figure of $236,800,000. Then the Free Press says:
The Canadian government authorized it to write off about 60 per cent of this amount out of its war earnings.
If this figure of $236,800,000 is correct, sixty per cent of it would be $142,080,000. I have already shown that write-offs are allowed up to $177,359,956.06. The Free Press makes the statement that the government made a fair and businesslike arrangement with the company. Some of us feel it is not businesslike, but that it is monkey business. The people of this country will wonder why there was so much secrecy over a two-year period, and just what is happening in respect of this whole deal.
Sometimes the statement is made that not too much should be said about this matter in this house, because of provincial control over power resources. It is urged that if it 72537-170J
was given away, it was given not by this government but by a provincial government. The fact is that it is this government which is making it possible, under the provisions we have discussed from time to time, to bring about the development of the power site, and to build the aluminum extension plant, under such an arrangement as to fasten a real hold upon both power and aluminum in the post-war world.
Despite the protestations of the Minister of Munitions and Supply that this company might have some white elephants on its hands after the war is over, I submit they could hardly get into two more hopeful lines than power and aluminum, in the post-war years.
I feel that the hon. member for Rosetown-Biggar has made a suggestion which definitely should be carried out when he says there should be a thorough investigation of this whole matter. After all, these are lines of business in which the people of this country have a real stake, and there should be definite public ownership and control. I am reminded that after the Minister of Munitions and Supply spoke on this matter in the house on March 23, none other than the hon. member for York-Sunbury (Mr. Hanson), who is not ordinarily an advocate of public ownership, was so much shocked at the immensity of the assistance being given that he immediately suggested it ought to be a matter of public ownership.
Therefore, Mr. Speaker, I support wholeheartedly the suggestion made by the hon. member for Rosetown-Biggar, that there be a thorough investigation into the whole Ship-shaw Power and Aluminum company deal, because I feel there are deep misgivings and much anxiety about this matter throughout the country.
Mr. JEAN-FRANCOIS POULIOT (Temis-couata): I have listened with keen interest to the observations of the hon. member for Rose-toWn-Biggar (Mr. Coldwc-11), the Minister of Munitions and Supply (Mr. Howe) and the hon. member for Winnipeg North Centre (Mr. Knowles). They have discussed an important matter, and I am sorry I cannot follow what they have said. Hon. members will realize that the study of international finance is as fascinating as any novel. There is no end to it. When someone begins to study it he finds he is studying a history of the whole world. That is written, in the books of the international money lenders and speculators.
The hon. member for Rosetown-Biggar has been speaking about the Aluminum company. It is a trust; but there are several other trusts. There is the oil trust-and I hope hon. members of his group, or of the New Democracy group, will some day study the
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ramifications of the oil trust, and all those other organizations, cartels and trusts which try to exploit the natural resources of the world.
I would draw the attention of hon. members who are interested in the matter to Hansard of June 11, 1941, and July 2, 1942, in which mention was made of possible speculation in stock of the Canadian Pacific Railway held at that time in England. Where it is now, no one knows. This is a very delicate matter, and with the best intentions in the world hon. members who advocate the transfer of stock may serve the interests of the few. I leave it to them, and they will see occasionally how it works out.
I am greatly surprised that some hon. members who make a specialty of studying finance have passed over a most important publication which has been tabled. I refer to the three reports on the popularity contest between the pound sterling and the United States dollar. This contains the text of proposals by British experts for an international clearing house and also the text of the statement on, the international stabilization of currencies which Secretary Morgenthau presented to the United States senate committee on April 5, 1943. Finally, it contains the text of the preliminary draft outline of the proposal by United States experts for a united and associated nations stabilization fund.
At the present time we are hearing a lot about the stabilization of money. The Keynes report was published in the papers on April 8, and on April 12 mention was made in the press about currency plans and the stabilization of post-war trade. I have here a clipping from the Toronto Star of Saturday, April 17, stating that the United States senate had voted against giving President Roosevelt the power to devalue the dollar.
During the course of his remarks the Minister of Finance referred to the sterling area, I suppose meaning Great Britain, her possessions and those other countries which follow the sterling policy. I should like to have some explanation about this from the Minister of Finance or from the leader of the New Democracy group, or from the parliamentary assistant to the Minister of Finance.. I should like to know if the sterling area comprises all the united nations except the United States or countries belonging to the United States. I should like to know if Canada is in the sterling area. What was the origin of this designation? What exactly is meant by Sterling Area? I have never graduated in political economy and science, therefore I am not in position to understand

this too easily. I should like to have more definite information about it. I should like to know the position of Canada. Are we within or are we outside the sterling area? What are our financial relations with the government of the United States with regard to the dollar? I notic in the press that the deputy minister of finance has gone to Washington to discuss this plan with Mr. Morgenthau. No report has been made about this except what appeared in the paper to which I have just referred and which was tabled here. This financial transaction is very important for the -whole world and we should get some information from the specialists in the matter.
I have before me a Canadian Press dispatch of February 1, 1940, to the effect that Britain is acting to build up her exports. I wonder why we do not follow the best of the policies of Great Britain. Once at a meeting of mayors a speaker was outlining what had been done in the United States in the way of social work. A mayor from the maritimes then asked the asseml'bly if they were ready to accept all that had been done in the United States. The answer was, "No, we have to make a selection and choose the best." This government seem to be ready to follow everything that is done in. other countries. They consider that it is good if it is done in another country, that the precedent to follow is the fact that it is done somewhere else. This policy cannot work for very long. The selection should be more judicious.
A small group of members have opposed this bill, not because we have any bad feeling for Great Britain-far from it-but because we were ready to combine our efforts to help the British people as well as the people of Canada. We want to see the British people liberated from the toils of the profiteers, whether in the domain of finance or anywhere else. We are ready to do everything we can to help those who suffer, not only those in Great Britain but in all allied countries and occupied Europe. While I spent considerable time listening to hon. members, I was not in the house all the time. During the time I was here I heard no one refer to the relief that should be given to needy and starving children on the continent of Europe. Every hon. member knows, from reports in the press, of the sufferings of young children in the occupied countries. The pictures given cannot do anything else than arouse sympathy in the hearts of all. If hon. members heard that young children had been machine-gunned, they would cry out in horror, but

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the fact is that the conqueror of these countries is doing everything possible to prevent young children from being properly clothed or properly fed. The effect is the same.
There is only one organization in the world that can do this work properly, and that is the International Red Cross. This organization has done a lot to help starving children in different countries who are suffering most from the war. They have carried on this work in order that future generations may not suffer.
I hope that the ministers who are to compose this board will do their best to use the services of the International Red Cross in order to relieve the largest possible number of young children who may be suffering from hunger and other privations in German-occupied countries.
There is another thought in the minds of many Canadians in all provinces. If we can do so much for other countries, why do we not look after our own people who are in need and who are receiving no help from this government? It seems strange that we should be ready to do all we can to help people who do not belong to this country, and yet when cases of poverty and misery are brought before the government the answer is, "Nothing can be done." That was a long time ago, it was one year after this government came back to power, after the defeat of the former administration, that direct relief was cut. I remember distinctly the voluminous report that was prepared showing eases that required direct relief. But nothing was done by this government at that time. The only thing that was done was the making of an excellent report which showed that direct relief should have been continued. If the ministers are under the impression that now everybody has the opportunity to work in the war effort, their information is wrong. There are many people who are willing to work but find it impossible to get any work to do for war industries. They offer their services but can find no work. I have in mind a young man who was in the navy for two years in this war. He was discharged on account of his health. He can speak several languages, is well educated and has travelled a lot. He has offered his services several times but all he could get to do in Montreal was to shovel coal. He has travelled from pillar to post trying to get a position. I suggested to him never to get discouraged but to keep on trying to get work by calling the attention of government agencies to his case. He came to Ottawa and. I introduced him to some officials of the civil service commission, upon whom he made a very good impression. But as yet it has been impossible for him to get any work.
There are many sad cases of people who are willing and are able to do certain work but
who find all doors closed to them. Although we are in favour of giving aid to people who are in need throughout the world, provided the aid we give reaches those who are really in need, we cannot overlook those in our own country who are in the same position. There are hundreds of cases I could mention of people who are willing and able to work but can get no work to do. Then there are those who are ill and have not enough to live on. They cannot work and they have no income. It is impossible for them to earn a living for themselves and their families. They are completely abandoned by this government. This government does nothing for them. They are left to the provincial authorities. That seems illogical. We are Canadians and we must first look after our own people. That does not mean that we are isolationists, as has been said about us. We are not isolationists at all. We are ready to help other people, but we want our own people to have their chance from this government. I fear that international business has gone to the heads of some people. When they talk of international matters they are like children who walk on stilts. They are very much higher up than others, but after they climb down from the stilts they are just like ordinary human folk. We cannot overlook the fact that the people of this country need help from this government, and we must serve our own people first. What would be thought of the father who would go to a neighbour's house to help him and leave his own children to starve? We would say that he was crazy. That is the policy of this government. We cannot get anything for our own people. This government takes it for granted that everybody is well cared for in this country, that everybody in Canada is able to work and can get work, meaning by that there are no sick people, no incapacitated, and that there are so many opportunities for those who are able to work that there is not one man who is out of a job. That is not the case at all.
It is a good thing for a member to live in his constituency amongst his own people for six months of the year. It is good for him to have an opportunity to meet his own people and listen to them. That is a great education for the private members which ministers do not have. I regret that it is impossible for them to come into such close contact as a private member does with his constituents. It is impossible for the ministers to receive their constituents here. They may receive letters from them and keep in touch with them through the mails. That is all right. I am not trying to depreciate the ministers-not at all. Their position does not permit them to get
Mutual Aid Bill

into contact with the people. It is we, the private members, who are in contact with the people and we have to inform the government of what is going on. That is why I am so much offended at times when the government gives us the cold shoulder for telling them the facts as they are. We have no reason to sugar-coat the pill. We bring the facts to their attention in order that they may provide the remedy right away.
You know, Mr. Speaker, the Canadian people are good. We hear at times that people are worse to-day than they were in days gone by, that people nowadays are not so high-minded as the people of past years. That is not true. The Canadian people are just as good as any other people. They are charitable to the utmost, but with the taxation that has been imposed by this budget it is impossible for the most charitable man to help as much now as he did before. It then becomes the duty of the government to step in and fill the gap.
I will offer another reflection in a conversational tone like this. We talked for a month in the house and in committee on the income tax. I want to pay tribute to the patience of the Minister of Finance (Mr. Ilsley). He did his best, as well as he could possibly do under the circumstances, and I give him credit for that and for his industry and so on. But we spent a month on the income tax. What was the income tax? It was the effect of this billion dollar Mutual Aid bill. That is the cause of the increase in the income tax. If there had been no Mutual Aid bill there would have been no increase in the income tax. What astounds me is that the discussion on the effect was four times longer than the discussion on the cause itself.
I shall not persist. I shall listen with pleasure to the explanation that will surely be given to the house 'by the Minister of Finance and by the other finance specialists, like the leader of the New Democracy group and the parliamentary assistant to the Minister of Finance, about the Washington talks and Mr. Keynes' London white paper, and I hope that what they say will be illuminating.
My last request to the ministers who compose the board will be not to forget this country in their dealings with other countries. I would ask the Minister of Agriculture (Mr. Gardiner) to see to it that the east is placed on the same footing as the west, with regard to the sale of farm produce and the encouragement of our farmers who raise hogs and other live stock and foodstuffs.
I thank hon. members for their kind attention and I assure them that the subject has been approached in the best possible spirit and

that there has been nothing narrow in what I have said. But we look first to the future of the country and its welfare before anything is done for any other country.


Mr. SPEAKER:: Is it tjie pleasure of the house to adopt the motion?


Mr. POULIOT:: On division.
Motion agreed to on division and bill read the third time and passed.



WAR APPROPRIATION BILL


[Stage Direction]
The house resumed from Thursday, May 13, consideration in committee of a resolution to grant to his majesty certain sums of money for the carrying out of measures consequent upon the existence of a state of war- Mr. Ilsley-Mr. Bradette in the chair.

Hon. J. L. RALSTON (Minister of National Defence):: When the committee rose last night I was making some references to the Dieppe operations, and I should like to continue with a few further observations in that connection. I may say that in obtaining the information on which my public statement was based, the officers who made the investigations and the reports were actuated, I know, by only one motive, namely, to ascertain the truth. Competent officers assembled the material, and competent officers studied the information which was obtained. A number of these officers took part in the operation. This study has continued up to the present and will' still go on. If there were lessons to be learned, they have been noted1, and if there were things which might be considered as faults or defects, those have been given particular attention. If there were achievements resulting from methods adopted, the benefits have been appraised. The practical experiences of Dieppe have already been translated into training principles, and, as I said last night, have literally become a handbook for the guidance of those who will take part in future landing operations. Already in the North African landing, the experience of Dieppe has proved extremely valuable.
Some questions were raised in this house regarding the planning and conduct of the operation, and I have considered whether I should deal with these matters at all. I certainly do not propose to go into any detail regarding them, nor do I propose to send to England extensive inquiries for the purpose of obtaining detailed information on specific

War Appropriation-Army
points. I do not believe, and I do not think the committee believes-I am of opinion that the country will agree with me in this-that to give our military leaders the impression that every time they plan an operation they must'bear in mind that they will have to justify every detail of that action before a tribunal of civilian strategists in Ottawa or elsewhere, is a good thing. If that is to be the situation, I submit that we shall be in a fair way of losing the war.
In that connection I wish to quote what General Marshall, the United States Chief of Staff, had to say to the American Legion convention in September, 1941. He said:
Kow, as veteran soldiers, I submit to you men of the legion the impossibility of developing an efficient army if decisions which are purely military in nature are continuously subjected to investigation, cross-examination, debate, ridicule and public discussion by pressure groups or by individuals with only a superficial knowledge of military matters or of the_ actual facts in the particular case. I submit that there is a clear line of demarcation between the democratic freedom of discussion, which we are determined to preserve, andt a destructive procedure which promotes discontent and destroys confidence in the army.
Having said that, I suppose it will be considered strange that I should discuss any of the points raised in this house, but I am doing so in the hope that hon. members will realize that there are answers to these questions that spring to the minds of individuals who cannot be familiar with the details of operations, and also to indicate that no possible good can come from raising questions which, if answered in detail, would disclose to the enemy the reasons for a certain course of action. It is my opinion, and I think the committee will agree with me, that we ought to leave the hun to do his own guessing as to why certain things were done and as to the lessons or the benefits derived from a particular course of action, and in dealing with two or three questions that have been raised I should -like to have it understood that, for the reasons I have just stated, I am not undertaking to answer further questions raised with regard to this operation in all its intricacies.
One question was, why there was no preparatory aerial bombardment; it was suggested that aerial bombardment was provided for in the original plan and then deleted, and the reason was asked. I have before me the secret reports of the planning which was done, and I can say that consideration was given the question of preliminary aerial bombardment. Does this committee for a moment suppose that in the careful planning and preparation for this
operation that question was not discussed by the military planners? I do not think so; nor is there any doubt that the plan was altered from time to time during the development stages. That would be expected, and it would only go to show that care and deliberation were used in connection with the planning of the operation.
I cannot give the committee the reasons for the changes that occurred. To do so would mean that I must recall senior officers from England to give a full account of deliberations and discussions that covered weeks of time, and the result would be that we would disclose our whole hand to the enemy. But senior Canadian and British officers agreed on the final plan after the most thorough and exhaustive deliberation of the matter, and aerial bombardment was one of the features which were the subject of discussion. I think I know the reasons for the final plan as it was approved. My advisers agree, and if it is of any use to the committee I may say that I thoroughly agreed, to those reasons. I know by reputation at least some of the officers who participated in the decision, and I can say to the committee that their names would carry weight anywhere.
Let me ask:	is there anyone in this
committee who would say that those officers were wrong? Is there anyone in this committee who would say that the results of the operation would have been different had a different plan been followed? I certainly cannot, and with all due respect to hon. members I venture to say that neither can they.
Another statement was:
We should know why men were landed at high tide and taken off at low tide at an hour when anyone who is familiar with channel tides would know that these men would have to cross four hundred yards of open beach to reach their barges.
I can assure the committee again that the officers who planned and conducted this operation were thoroughly familiar not only with the course and times of the channel tides but with landing and withdrawal conditions on the beaches at Dieppe in all the different stages of the tide's ebb and flow. I do not think the committee can conceive of officers charged with planning a landing operation in the face of the enemy not taking the most careful precautions to study tide conditions and select a date when the most favourable conditions would best match up with the hour set for landing. I cannot.
The decision to withdraw the troops was a military decision, taken at a time when our
War Appropriation-Army

men were actually engaged in combat with a determined enemy. The condition of the tide was a factor in the decision, but it was not the only factor. Again may I say that I do not think this committee can, certainly not without having before it all the voluminous material and record of consideration given to this aspect of the operation, come to any different conclusion. To make that material public would be giving the enemy a complete blueprint for future operations.
A further comment was:
We should know why tanks were landed on a beach facing a twelve-foot sea wall which had not been breached. In 1936 I spent a day in the town of Dieppe, and I would imagine that even aerial photographs would show the impossibility of scaling a sea wall unless it had been first partly demolished by aerial bombardment. What astounds me is not that none of the tanks got off the beach, but that those who planned the operation ever expected them to do so.
May I say first that the statement that none of the tanks got off the beach is absolutely incorrect. I refer hon. members to my statement of September 18 when I said quite clearly that some of the tanks "immediately got on to the boulevard in front of the town and penetrated further." And the boulevard is to the landward side of the seawall. I went on to say that others did not get off the beach-


Thomas Clement (Tommy) Douglas: How many?


James Layton Ralston: I said "some of the
tanks." My hon. friend said none of the tanks got off.


Thomas Clement (Tommy) Douglas: My information is that there was one.


James Layton Ralston: I ami stating that some
of the tanks got off, and I do not mean one. The boulevard is to the landward side of the sea wall. I went on to say that others did not get off the beach, some being unable to cross it, and I referred also to the perilous task that had been assigned to the engineers, and their inability under the circumstances fully to breach the sea wall. I do not know what the condition of the sea wall was in 1936, and I do not suppose that the planners of the Dieppe operation knew. What I can say, however, with full assurance is that they did know in advance the exact condition of the sea wall in the summer of 1942, and that their information was obtained not only from aerial photographs but from other sources as well. This information showed, what later was confirmed, as a fact, that in several places the sea wall did not rise sufficiently above the beach shingle to constitute an effective tank obstacle.

Again it was said:
. . . this house should have some information from the Minister of National Defence regarding any reports which he may have respecting the weapons which were used in this operation; and if there was found any defects in quality or quantity we should have the assurance of the minister that this matter is being taken care of.
I do not know to what the hon. member is referring, but I have received no reports indicating that the weapons used at Dieppe were defective in quantity or quality. The men at Dieppe were equipped with the best weapons possessed by the British or ourselves, and the scale of supply was as generous as the means of transport and the , conveying capacity of the men would allow in operations of this kind. And I want to say to my hon. friend and to the committee that I think it goes without saying that anything in the way of improvement in design of armament or equipment we shall continue to explore and implement as fast as possible. I think that has been Canada's reputation. I shall have something to say about the matter later in connection with mechanical and technical development.
I think I have said enough to show at least the futility of a discussion in this committee based on statements such as I have mentioned. I repeat that, while I have discussed them, J do not propose to make it a habit.
Dieppe demonstrated the difficulties and revealed the possibilities of landing on the continent. It established confidence between officers and men which stands to the everlasting credit of both. It destroyed enemy installations and took a heavy toll of Hitler's air force. It proved that there could be superb coordination and cooperation between the four different national contingents comprising the ground force and between the navy, the army and the air force. It gained information and experience and lessons of incalculable value to the allied forces which could have been acquired in no other way. The losses were heavy; but although the price was great, when history comes to be written I believe it will be recorded that Dieppe did a service of untold benefit not only on the Russian front and later in North Africa, but to the cause of the united nations generally. Dieppe was an important operation. It will continue to receive the most detailed study. It was practically the beginning of the offensive. In the offensive operations of the united nations it holds a significant place, and has already served a highly important purpose. It taught our enemy that Hitler's European stronghold was not inviolable: it taught us confidence in the power of our arms and the sagacity of our leaders. Some day it may well be considered

War Appropriation-Army
as having sown the seeds of our final victory. We are proud of the men who planned it; we glory in the heroism of the men who fought it, and we revere the memory of the men who died in it.
So far I have spoken of the overseas programme for the fiscal year just ended, Now I want to speak of the programme in Canada for last year, namely, the fiscal year 1942-43.
The committee will remember that at the beginning of 1942 we had in Canada the fourth division and three brigade troops of the sixth division, in addition to troops on static coast defence.
In his speech on January 26, 1942, as reported at page 39 of Hansard, the Prime Minister stated that consideration might have to be given to the formation of another division in Canada in anticipation of the fourth division going overseas. The committee will also recall that in February and March, 1942, there was a good deal of concern both in this house and in the country regarding Canadian defence. The situation on the west coast following Pearl Harbor and by reason of Japanese infiltration into the Aleutians was giving great concern, and on the east coast conditions had, to say the least, not improved. There was a very general demand for more troops and more equipment both east and west. Plans were made by chiefs of staffs for strengthening defences. The air force and the navy took measures accordingly, and the army was authorized1 to complete the sixth division and to mobilize the seventh division and three brigade troops of the eighth division. This was on March 24 last year.
I will not tire the committee with details of organization. We incorporated in these formations seventeen battalions which had already been mobilized and were on coast defence duties, and another eighteen were raised. Anti-aircraft defences alone in Canada have required a very large allotment of modem equipment and the training and mobilizing of a good many units. We have a schedule of priorities for anti-aircraft defences at various points, particularly on the coasts. I know a good many hon. members from the coasts were concerned indeed that those priorities were not being filled faster than they were. That schedule has now been practically completed, and it may be of interest and perhaps a matter of surprise to hon. members to learn that to man the anti-aircraft equipment it took troops almost equal in number to another division.
I want to recall what the situation was in the spring of 1942, and to carry our minds back to the situation in which these troops were mobilized and remind ourselves of a situation
which is not long past but which seems to-day to have been almost forgotten, perhaps justifiably so.
The objectives in mobilizing these new formations were, first, Canadian defence and the necessity for having formations which could be used either in whole or in part in operations as circumstances might require. In the second place the formation of these divisions gives us additional training organizations and training cadres. By having them in addition to our training centres it has been possible to train a large number of home defence personnel in order to release general service personnel to be available for reinforcements. The strength of the army in Canada and adjacent territories at the beginning of the fiscal year 1942-43 was over 170,000, all ranks; and the strength of the army in Canada and adjacent territories at the end of the fiscal year 1942-43 was over
250,000,	all ranks. I know there have been comments and questions as to the size of our army in Canada, That is one reason why I have reminded the committee of the circumstances under which the seventh and eighth divisions were mobilized. I should also remind the committee that our anti-aircraft defences have been in almost feverish demand from various sections of the country.
I want deliberately to break down the strength of the army in Canada into three parts, for the information of the committee. The figures are very rough, but they do give a general idea for a quick appreciation of the components which make up the forces in the north American area. Let us say, as I have said, that there are over 250,000 all ranks. Let us divide these into three equal or nearly equal parts; say over 80,000 operational troops, over 80,000 for home war establishments, and over 80,000 in the training stream; that gives some approximate idea of how that 250,000 is made up. The committee will ask, or at least some people in Canada will ask, "What are these troops for," and I want the committee to examine with me the functions of these components, so that we can at least understand the reason and perhaps the justification for their existence.


Mr. STIRLING:: The reserve army is not included in this?


James Layton Ralston: ' No, not the reserve army. I have a feeling that if the reasons were better understood, the conclusion may be that we were warranted in raising and training them.
First, let me say a word with regard to the operational troops. Do we need them, and what do they do? Well, the operational role of the active army in the defence of Canada could be stated in this way. The dispositions
72.r>37-171



DYJSED EDITION

[Stage Direction]
War Appropriation-Army
[Stage Direction]
of troops for the external defence of Canada are mainly in the two coastal areas. Within these areas there are garrisons at the principal ports and naval bases and at the main operational aerodromes, to provide defence against local attacks or raids on these areas. There are also general reserves concentrated at points further inland, ready for rapid dispatch to any threatened point to combat attacks or raids, where no troops are located or to reinforce existing garrisons, if necessary. Then the coastal garrisons at the fortresses and defended ports consist of coast artillery units manning fixed anti-ship defences, and along with these, infantry units and anti-aircraft artillery, which provide protection against land and air attacks respectively. At these fortresses there are also the fortress engineers and signal units organized for coast defence duties, and detachments or personnel from administrative services allotted to coastal districts, which cater to the needs of the coast defence units in the various localities.
Take the coast artillery, for instance; I am just going to indicate the number of points which are manned by coast artillery in this country, of course, not giving the location. I think the committee may not have an appreciation of the number of points where coast artillery equipment and personnel are located. We have coast artillery in six main areas on the east coast; three main areas on the west coast; four main areas in Newfoundland, and one main area-which is subdivided-in Labrador, and we have mobile guns at a number of posts. Then there is the coast defence infantry, which consists of a large number of infantry units. There are radio detachments, engineer detachments, search-lights, machine guns, ordnance, army service corps, medicals, dentals, chaplains and auxiliary services. These are on the coasts. Then there are the general reserves, consisting of the sixth and seventh divisions and the three brigade groups of the eighth division, which are located at strategic points in Canada for the purpose of being used as general reserves as needed.
I have just dealt with the operational troops in connection with the army. I come now to the disposition generally of the operational troops; that is to say, the combined coast defence and infantry, and all these other services. In the Atlantic command they are located in seventeen different areas; in the Pacific command, in nineteen different areas; inland, in ten areas; and elsewhere outside Canada, in four different areas. Then we have aerodrome defences, at aerodromes from the Yukon territory to Goose bay in Labrador, and from Alaska to Sydney. These consist of aerodrome defence companies equipped with special
'Mr. Ralston.]
weapons and carriers, and infantry components. Then there are the anti-aircraft defences, in twenty-seven different areas in Canada. These have received particular attention this year. We had the opportunity of obtaining the services of Major-General Archibald, a leading anti-aircraft expert of the United Kingdom, who has already concluded a visit to the Pacific command. He went first to the Atlantic command for a short visit, and then to the Pacific command, where he visited all the defences and conducted battery commanders' courses, to make them familiar with all the technique of anti-aircraft defence as it is known in Great Britain. At the present time he is on the Atlantic coast, doing the same thing there. We have ensured, I think, by General Archibald's visit and the work he has done, that wre have all the latest developments in anti-aircraft technique and organization.
That is just a quick survey of the operational troops, which as I said number about
80,000.	Are there too many? Does the committee feel that we ought to take the responsibility of reducing them? May I remind the committee that there is a tendency for memories to be short. We rather quickly forget the emergencies which stared us in the face and which led not only to the acceptance of an increase in the armed forces of Canada but to demands for even greater efforts. Just a year ago there was no doubt about the feeling in the country that we should have troops, and plenty of them, on the west coast and on the east coast. On the west coast it was the fear of the Japs moving eastward from the Aleutian islands and thence down the panhandle and our own Pacific coast. Then there were demands for the concentration of troops on the Atlantic and particularly along the gulf of St. Lawrence. At that time we could not have too many and could not organize them too quickly.
The responsibility for maintaining these forces has been placed on the army by this house. There has never been any hesitation, at least I have found none, about demanding more troops at the least sign of possible activity. Not long ago the Russians were driving the Germans back; the news was good and everybody sat back in their chairs. Then Kharkov was retaken; the hundred miles that had been gained were lost, and things were not so bright. The Tunisian campaign was over, some thought, a couple of months ago. Then Rommel put on vicious counter attacks and our spirits went down. Now they are up again after the overwhelming climax due to two years of fighting in Tunisia, but we must confess that we have had some bad half-hours.

War Appropriation-Army
But holding Tunisia does not allay our fears of enemy submarines on the east coast. Holding Tunisia does not take away any apprehension in regard to Japanese activity in the Aleutians. It is a fact that each change in the barometer from fair to stormy or from stormy to fair seems to bring corresponding suggestions about increasing or decreasing the army.
I wish to submit to the committee that this method of defence is very difficult to follow. You cannot mobilize and train men and organize an army, then send them home again because the news in the morning newspaper happens to be good. You just cannot fold an army up, put it- away in a drawer, and then take it out again when you want it. I am the first to admit that a major change in the strategic situation justifies us in taking certain risks, but if to-morrow morning there were news that the Japanese were renewing their infiltration in the Aleutians and occupying an island or two a little farther east, or if there were a sinking or two in the gulf of St. Lawrence, the army would be expected to be at its posts and at the alert, and not unlikely there would be demands for more troops to hold1 outposts and to defend aerodromes.
We have to remember this, also, that general service men, of both operational and home war establishment units as well, have an alternative role. They are on defence duties, . and at the same time they are potential reserves for overseas if they are needed and can be spared. Home defence personnel on defence duties are also potential reserves if the need arises, and action should be taken under the National Resources Mobilization Act.
That is the situation with regard to operational troops. Some may count up on their fingers and say that 80,000, the figure I have given, are too many. I have gone over the locations where they are, and how many men are needed for these different services. I think it will be found that our troops are pretty well dispersed and pretty well spread out, having regard to our coast-line, to the reserve locations, to the anti-aircraft defence, and to the coastal fortresses we have to mind.
Now, may I speak with regard to the home war establishment? We say again that there are about 80,000 men. That seems like a lot of men. Here I must say that we, down at national defence headquarters, have been pounding away to see if this cannot be reduced, if possible.
What is this home war establishment? It consists of training and administrative staff at eighty-seven different training centres and schools across Canada. There are constant
72.137-1711
demands to increase these establishments, to provide more personnel, and more staffs for training. That is the demand made by responsible officers who are in charge of training schools, or -district officers commanding, who know what work has to be done., and know how intensive the work is. They feel they should have more men with which to do it. I will say that it requires over 32,000 to train and administer those eighty-seven training centres. It requires two men for training and administration for every five who are being trained. That compares favourably with, other training systems. It may sound like a big proportion. If you ask the officers commanding the training centres all across Canada if they can get along with less, they will emphatically say no. They have a very much condensed and intensive syllabus of training which requires all the time of the men who are being trained. These men can do very little in, the way of fatigues or administrative duties. That has to be provided for them.
The home war establishment also includes headquarters staffs for twelve districts and two commands stretching across Canada. It includes national defence headquarters. It includes detachments and units of engineers, signals, army service corps, ordnance, medical, provost and pay corps. These units provide food, clothing, equipment, accommodation and transportation for the army in Canada, and in some degrees for the army overseas- because these same services are rendered to the men who are in training centres. The staff at national defence headquarters is busy all the time. I might say that perhaps it is a little busier during the session than at other times, probably because-and I do not complain about this-we are busy providing statistics and figures which are constantly asked for in the house. But national defence headquarters is very busy, as busy as the headquarters of any business enterprise, in connection with its work of administering these 250,000 men, and in addition to the
250,000	men in Canada, it deals with a thousand and one matters of policy respecting the army overseas. They are responsible for the expenditure of over a billion dollars of the money of the people of Canada. This year the amount is over SI ,700,000,000.
In spite of all these duties, there is a constant drive to release men on these training and administrative and headquarters staffs who are fit for overseas duty, and to replace them with men less eligible physically.
Then, economy of man-power is a doctrine which is not simply preached to the civilians
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[Stage Direction]
in this country, but is being continually impressed on all concerned throughout the army itself. Every commander is trying to do a bigger and better job with fewer men. We have a full-time board of officers trained in methods of man-power economy, which is continually travelling across the country examining our home war establishments. They are in the same position as the efficiency engineers of the business world, and the yardsticks of man-power which they recommend for any specific task are being enforced.
Let me sum up what the 80,000 in the home war establishment are for: Administration and training includes all the training centres and detachments and services of every kind and description, to service a quarter of a million men in Canada, to service men as they go overseas. Headquarters of all the districts and national defence headquarters are included, as well as about- seven or eight thousand of the veterans' guard, who have to do with the guarding of internment camps.
The last 80,000 are the men in the training stream; that is, those who are actually receiving training for service in Canada and overseas. To-day there are over 80,000 of these men. I do not think I need spend the time of the committee in speaking in support of keeping the number in training centres just as large as possible. It takes at least four months to train a soldier, and we have a lot ahead of us.
Richard Burpee Hanson: Does that
80,000	include the officers in charge of training centres?


James Layton Ralston: No.


Richard Burpee Hanson: Just the personnel of men?


James Layton Ralston: No, the officers in charge are on the home war establishments.
Then, there is a matter which has received considerable attention. I believe the hon. member for York-Sunbury has mentioned it as often as anyone. I had intended going over my comments and abbreviating them to some extent, but the matter came up this afternoon, so that I shall go on with it. I refer to the matter of reinforcements.
There have been questions with regard to the provision of reinforcements. The casualties at Dieppe have been referred to more than once as the measuring rod to be applied in deciding on what reserves we ought to maintain. I submit that anyone who stops to consider would not accept the percentage of casualties at Dieppe as the measure of reinforcement reserve to be maintained for a

field force. The percentage of reinforcements to be carried depends, of course, upon the percentage of casualties which can reasonably be anticipated, and the scale of casualties would depend upon the degree of hazard. That, in turn, involves many factors, including the closeness of the various components of the force to the enemy, their particular tasks, and the job of the arm of the service to which they belong.
At Dieppe we have to remember that our forces were in the front line. Even the battalion in reserve was in almost immediate .contact with the enemy. The army had no rear supply lines. The supply line and lines of communication [DOT] were provided by the navy. Therefore casualties at Dieppe were suffered in the ratio which -might be suffered by front-line troops in an attack on a strongly fortified position.
I suggest that perhaps we have the wrong idea with regard to this matter of reinforcements. For a commander of a field force to use the ratio at Dieppe regarding reinforcements would, in my judgment, be utterly wasteful in man-power. It would be to fail to discharge the responsibility which is placed upon a commander, because it would mean unjustifiably weakening the striking force by immobilizing thousands of men. The commander should, of course, make allowance for casualties, and it ought to be a prudent and wise allowance. The duty of a commander is to field the largest force possible for the operation.
My hon. friend asked the ratio of reinforcements or replacements overseas and in Canada to the number of fighting men in the divisions concerned. First, I say to him now that for reasons of security, which I think the committee will appreciate, I do not propose to give the number or the percentage of reserves. That is information which is most carefully guarded, and information of that kind in the hands of the enemy would be most useful. He could make deductions which would give him information, not only as to the length of time which a force would be able to keep up intense activities, but he could- gain an idea, by knowledge of the state of reserves, when zero hour might be expected.
In the United Kingdom there has never been a public disclosure, even of the approximate number of men in the three forces, still less of the approximate number in each service and there has never been any suggestion-I have never seen any and I do not believe anybody else has-in any public statement or report as to the number and extent of reinforcements. In the United States there have

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been statements with regard to the total overall number of men which the United States army is planning to put in the field on this continent and overseas, but there has never been, so far as I know, any statement or intimation as to what proportion of these will be reserves for reinforcements. On the advice I have, I consider it would be prejudicial, not only to Canadian troops but to all troops who might be engaged with us, to give any particulars with regard to the number or extent of reinforcements.
My hon. friend used the term "fighting men," but I think what he must have had in mind were men who are in contact with the enemy. However, we do not simply provide reinforcements for men who are in the forward area. We want to plan for reserves to take the place of casualties anywhere in the theatre of war concerned, whether they occur at the front or on the lines of communication or at the base.
I think a better phrase to cover all these would be "combatant troops," and I think that is what my hon. friend had in mind.
Then, again, there are variables to be considered such as the distance of the operations from, the home base; the severity, nature and duration of the expected operations; the proportion of the troops who will be employed on various duties extending from the front line to the base, and the difference in the hazard to which the various arms and' services are subject. Calculations have taken into consideration all these factors. I cannot give the details of these calculations or the percentages which each represents, having regard to the different arms of the service.
I can say this, however, that in the opinion of our military advisers we have in the United Kingdom adequate trained reinforcements to meet contemplated operations. I can say further that these reinforcements will be augmented by the early dispatch of further troops now available in Canada from time to time. Behind these reinforcements in the United Kingdom we have a steady flow of output from our training centre system in Canada. This training stream, together with the operational units and the administering and servicing units, generally known as the home war establishments, provide a backlog in Canada of over
185,000	general service personnel.
I do not want anyone to be misled by that term "backlog". I do not suggest that, if we are to keep up our activities in Canada, all these men would be readily available as reinforcements. Some would not be available at all as reinforcements. Many are needed to form the backbone of our organization here, and many are not of sufficiently high category or low age bracket. As a matter of fact we
try, particularly with our home war establishments, to have these less fit men replace men who are more suited for overseas service. But I would say that at the present time we have over 100,000 general service personnel in Canada of suitable age and category-that is, including those in the training centres-for overseas service, either trained or in training, who are available or by orderly withdrawal and replacement could be made available to be sent overseas as reinforcements should the need arise.


Richard Burpee Hanson: What about these R recruits?


James Layton Ralston: I am just coming to that. Besides that, we have in the training stream, in the operational units and in the administrative and servicing units, over 50,000 categoiy A personnel called up for training and service that could be made available if the need arose and action were taken under the National Resources Mobilization Act. I might add that there is nothing to which closer attention has been given than this matter of reinforcements and potential reinforcements.
The question of shipping is very closely linked up with the matter of reinforcements and with the competitive claims of reinforcements and units on shipping space. Priorities in connection with shipping are fixed by the United Kingdom authorities. They are fully cognizant of the numbers we have to send and of the purpose for which they are to be used. They have to determine what personnel shall go first in the. light of prospective plans. We have to remember that shipping space is not only for the Canadian army but for other services and other nations as well. The allotment has to be made as between the three Canadian fighting services, the United1 States army and navy, the other united nations training in Canada, the merchant service and individuals whose duties in the war effort require them to go overseas. Not only that, but unexpected situations require the diversion of shipping from the North American service. Demands are heavy and shipping is tight. We have had to suffer some disappointment and have had to make some very difficult last minute changes, but I can say that at the present time, after considerable readjustment, our prospects are good, and I have reason to hope that they will so continue.
What do we plan with regard to the programme in Canada for 1943-44? I have given some reasons for the establishment which we have in Canada at the present time. First, we plan to make some decrease in the strength of our troops in Canada. As I said a little while ago, ouw strength in Canada as of March 31, the end of the last fiscal year, was
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over 250,000. The minimum reduction which will be made in this number will be about
15,000,	so that the estimated strength in Canada as of March 31, 1944, will, I should think, not be above 235,000.
I wish to mention some additional possibilities of reduction. I have explained already that men are needed in Canada as operational troops, as home war establishment personnel for training and administration, and as personnel in the training system to provide reinforcements. It is anticipated that the army in Canada will be reduced by over 14,000. A greater part of this cut represents units and formations that have been raised in Canada, equipped in Canada and trained in Canada. We shall be taking a number of these units from our army in Canada without replacement to complete the army overseas in accordance with the plan agreed upon last year. They will take their place in the order of battle just as soon as they have been fitted into the overseas army structure. In addition, the cut will include further economies in the establishments of the army in Canada, including home war establishments.
The fact that our strength in Canada is to be decreased does not mean that we shall not need more men during the fiscal year 1943-44. We shall need more men. We shall need them here because Canada is, as I have tried to emphasize, the base of operations for overseas, and these men are required to assist our overseas operations, directly or indirectly. We want the men who enlist for general service primarily to train and be ready to be sent directly overseas as reinforcements as required.
In connection with men called up under the National Resources Mobilization Act, first, we want them for duties on our coasts in Newfoundland, Labrador, the West Indies and Alaska, so that we may not have to use for this purpose the men who enlist for general service, leaving them free to go overseas as the need arises. Second, we want these National Resources Mobilization Act personnel in order to release general service men now on service in Canada, so that these general service men can go overseas when needed. Third, as I have said before, the general service men will be trained and fit to be made available for service anywhere in case the need should arise and action is taken under the National Resources Mobilization Act. I want to emphasize to the committee that the programme in Canada is directly geared into our overseas programme.
This is the way I sum it up as to North American defence. We expect that, as developments progress, we shall be able to lessen re-
quirements on defence duties. That will be done if it is considered that conditions warrant it. That is to say, further reductions than the ones I have indicated. As I have said, there will definitely be a reduction in the number of troops in Canada, but this will be largely effected by dispatch overseas of units already earmarked for that service and by some reduction in administrative services.
In our activities to assist in overseas operations we plan, first, to keep our training centre system operating to the capacity necessary to meet our reinforcement commitments. This means that we cannot cut down unduly on our general service personnel who are instructing in these training centres. What we have done and can do further to a limited extent is to use in the training centres and home war establishments general service personnel of medical categories below overseas requirements. Already over sixty per cent of the general service personnel that we are using in home war establishments and staffs of training centres are below category "A" and/or over thirty-five years of age.
Second, we plan to release to the extent that they can be spared, general service men from units and home war establishments in Canada so that they will be available for overseas service.
Third, we plan to replace these general service personnel with home defence personnel to the extent required so that they will be available for service overseas.
Next, I shall deal with man-power and, since this is a new subject, Mr. Chairman,
I would ask you to call it six o'clock.
Progress reported.
On motion of Mr. Ralston, the house adjojurned at 5.55 p.m.
Monday, May 17, 1943