1943-03-09

Mr. FREDERIC DORION (Charlevoix-Saguenay):: Mr. Speaker, I rise to a question of privilege. I read in this morning's Ottawa Citizen the following statement under the title, "Will probe charge of waste only if M.P. makes claim," which appears in the first column on the first page of the issue:
Against the government on division were Progressive Conservatives, C.C.F., Social Credit, several independents in the "rebel" corner-
According to the Oxford dictionary the word "rebel" means:
A person who rises in arms against, resists, or refuses allegiance to the established government; person or thing that resists authority or control.
I have no doubt that the 67,000 people living in the constituency which I have the honour to represent in this house will resent this insinuation, and in their names, as well as in my own, I protest strongly against it. I must tell you, Mr. Speaker, that I am not at all afraid of what this paper may write about me. I do not want its support and I do not fear its insinuations, but I have always been of the opinion that a newspaper worthy of the name at least should be honest and fair even toward those who have the right to support a different point of view.



MR. MACKENZIE KING-HEADING OF ARTICLE IN TORONTO &quot;GLOBE AND MAIL&quot; OF TUESDAY, MARCH 9

Right Hon. W. L. MACKENZIE KING (Prime Minister):: I wish to refer to a matter which concerns the house. My attention has been drawn to the heading of an article which appears in the Toronto Globe and Mail of Tuesday, March 9, 1943, reading as follows: Speaker foils move to probe Thompson case. Opposition groups ask in vain for inquiry by commons committee.
I realize that Your Honour the Speaker is not in position to draw the attention of the 
house to this article, but it has been drawn to my attention and I think it is only right that I should make clear to those who are outside the house as well as to hon. members in the house that Your Honour the Speaker had nothing to do, as far as I can realize, with what is described as the foiling of a move to probe a case that was brought before the house yesterday. I have been reading the article and I cannot see anything in it which really justifies the heading that has been placed upon it. I do not want to attach undue importance to it, but I think it is due to Your Honour that the country should know that the Speaker of the House had not prevented any inquiry being made into the Thompson case.


Mr. GRAYDON:: No doubt the article
refers to the fact that the Speaker had ruled out of order the motion which is dealt with in the article. I have not seen the article myself.


William Lyon Mackenzie King: It conveys the impression that His Honour the Speaker was responsible for some inquiry not being permitted. His Honour the Speaker discharged his duties as Speaker in seeing that the rules of the house were obeyed and in giving a decision on the motion that was before the house in accordance with those rules. It is most important that no impression should go abroad that His Honour the Speaker, who is the presiding officer of this house and who in the discharge of the duties of his office must preside impartially, has been partial where in fact such is not the ease.



JAPANESE VESSELS


Hon. ERNEST BERTRAND (Minister of Fisheries):: I wish to table the report of the committee headed by the Honourable Mr. Justice Sidney A. Smith, of Vancouver, appointed by order in council of January 13, 1942, P.C. 288, for the disposal of immobilized vessels and equipment owned and operated by persons of the Japanese race in British Columbia.



POST-WAR RECONSTRUCTION CONCURRENCE IN FIRST REPORT

[Stage Direction]
Mr. J. G. TURGEON (Cariboo) presented the first report of select committee on reconstruction and reestablishment, and moved that the report be concurred in.
Motion agreed to.

Power Alcohol

[Stage Direction]
On the orders of the day:
Mr. ANGUS MacINNIS (Vancouver East):: I should like to direct a question to the Minister of Finance. I have information from Vancouver that wood that was selling at $9 per cord has been raised to S13 per cord. The increase in price, it was said, was on instructions from the wartime prices and trade board. Can the minister inform the house whether such instructions for raising the price were given, and if so, why?


Hon. J. L. ILSLEY (Minister of Finance):: I made some inquiry about this matter. The price was not raised on instructions from the wartime prices and trade board, but it would probably be true to say that the price was raised with the authorization of the board. One has to understand the situation there to appreciate it. This particular kind of wood, bushwood fuel, it is called, was sold in very small quantities until recently because most of the wood fuel required came from sawdust or mill wood, by-products of the lumber industry. When this latter fuel became very scarce the other form of fuel became more important, and as there were few suppliers, and they supplied only very small quantities, individual price ceilings meant very little. A maximum price for the kind of wood referred to by the hon. member was accordingly set for the whole zone or area. That maximum price was fixed at $13 a cord, the price that was deemed to be necessary to assure a supply.


Angus MacInnis: Is it illegal to sell this fuel in Vancouver below $13 a cord?


James Lorimer Ilsley: No.



PRICE SITUATION AT NEW BRUNSWICK BORDER POINTS

[Stage Direction]
On the orders of the day:
Hon. R. B. HANSON (York-Sunbury):: May I call the minister's attention to the situation obtaining on the border in New Brunswick? The price ceiling on hardwood fuel in New Brunswick is $12 a cord. In the United States, immediately across the line, the price is $15 a cord. Canadian producers are and have been for some time carrying fuel wood from New Brunswick across the border into towns such as Houlton and Calais, Maine, where they receive $15 a cord plus the exchange. It is feared that if this situation continues into another year, no fuel wood will be available at border
points in New Brunswick. What does the wartime prices and trade board intend to do about it?


James Lorimer Ilsley: I will bring the facts to the attention of the board.



POWER ALCOHOL . ROSTON MEMORANDUM ON UTILIZATION OF AGRICULTURAL PRODUCTS

[Stage Direction]
On the orders of the day:
Mr. E. E. PERLEY (Qu'Appelle):: I should like to address a question to the Minister of Agriculture. I am informed that a man named Roston, who was owner of one of the largest power alcohol plants in eastern Europe, named Kutno Limited, situated in Poland, has made a report to the minister on the utilization of agricultural products in Canada. In view of the prevailing interest in the production of power alcohol from farm products in Canada, will the minister make this report available to members of the house, either by tabling it or by providing each member with a copy?^


Hon. J. G. GARDINER (Minister of Agriculture):: Mr. Speaker, Mr. Roston has made representations to me personally with regard to the possibilities in connection with the production of alcohol, but he has made no report to me as Minister of Agriculture. I have had forwarded to me by a gentleman named Monahan on two different occasions a memorandum prepared by Mr. Roston on the production of alcohol, but it is in no sense a government document or even an exposition of government policy or departmental views with regard to the production of alcohol. I do not think it would be proper for me as a member of the government to distribute memoranda prepared by Mr. Roston or any one else who might be promoting some particular production.



BONUS ON IMPORTATION OF CRUDE OIL FROM MONTANA INTO ALBERTA

[Stage Direction]
On the orders of the day:
Richard Burpee Hanson: In the absence of the Minister of Munitions and Supply I should like to put a question which may be looked upon as a notice, because probably no one else can answer it now. I received to-day a communication from western Canada to the effect that some governmental authority, presumably the oil controller or what-not, is paying a bonus on the importation of crude oil from Montana into
War Refugees

the province of Alberta. I should like to know if there is any truth in that report, what is the basis of it, and what is the justification for it. It was represented to me that this was discrimination against the producers in western Canada.


Hon. J. E. MICHAUD (Acting Minister of Munitions and Supply):: Mr. Speaker, as this is something new I shall take the question as a notice and will try to bring down the information as soon as possible.



WAR REFUGEES


[Stage Direction]
On the orders of the day:
Mr. H. R. JACKMAN (Rosedale):: I should like to direct a question to the Prime Minister. A Canadian Press dispatch dated at London, March 7, reads as follows:
The Press Association said yesterday it learned that the British government has accepted the United States government's proposal for a preliminary two-power discussion on the refugee problem.
The United States suggested the meeting be held at Ottawa, but the meeting place is still under discussion along with the composition of the British delegation.
I wish the Prime Minister to amplify, if he will, the reply which he gave on March 4 to a similar question. Perhaps he will also be good enough to reply to the following: Has the Canadian government issued an invitation for the conference to be held in Canada? Secondly, will the dominion seek representation independently, or as a component part of the British empire, or not at all?


William Lyon Mackenzie King: There are a good many "or's" in my hon. friend's question, but I shall try to remember them.


Richard Burpee Hanson: They are better than "but's".


William Lyon Mackenzie King: Yes. First of all may I say that I have not received any information additional to that which I imparted to the house on the day I replied to the question to which my hon. friend has just referred. The communications were communications between the United States government and the British government, referring to a conference between the United States government and the British government. They were in the nature of what might be called exploratory communications. There was nothing final about them. As I stated at the time, the Canadian government had had some communication with the British government on the question of refugees. But the particular
fMr. J. H. Harris.]
correspondence referred to by my hon. friend originated with the United States government, and we had not had any communication at all from the United States government. I am unable to say whether the two governments have agreed on having a conference. It was suggested tentatively that Canada m'ight be a convenient place to have the conference, but this suggestion was without any prior reference to Canada in the matter, undoubtedly because, as I have said, the communications were tentative and the United States was endeavouring to find out from the British government whether or where the British government would agree to have a conference.
If we are invited to attend the conference I have not the least doubt that our government would be prepared to accept. But I do not think it would be either right or proper lor Canada to extend an invitation to the United States and Britain to meet in Canada in regard to a matter about which they themselves are conferring at this time.


Harry Rutherford Jackman: Would the Prime Minister seek representation notwithstanding the remarks he has made?-because he himself on March 4 said:
The Canadian government . . . will . . . be glad to examine any suggestions which the United States government may wish to put forward as a contribution to the alleviation of a grave and distressing problem.
Surely we in this country are as much interested in the refugee problem as they are in the United States.


William Lyon Mackenzie King: If we receive communications on this matter, and the nature of the communications permits, I shall be pleased to inform my hon. friend as to the reply.



RATIONING


[Stage Direction]
On the orders of the day:
Mr. ROBERT FAIR (Battle River):: In view of the recent increase allowed by the wartime prices and trade board in the price of tea, coffee and milk used as a beverage or as a luncheon, which will increase the cost of living by approximately fifty-five dollars a year to all who are compelled to eat in restaurants, and for which increase in prices there would not seem to be any justification, will the government consider having this order of the wartime prices and trade board cancelled?


James Lorimer Ilsley: I should like to be a little surer of some of the facts which the hon. gentleman incorporated into his question before I make an answer.

The Budget

Mr. Harris (Danjorth)
For instance, is the fifty-five dollars a year based upon a meal in a restaurant three times a day and every day in the year?


Robert Fair: Yes.


Richard Burpee Hanson: On a dollar and a half meal in a dining car you pay five cents extra for a cup of coffee. It is ridiculous.


James Lorimer Ilsley: I should not like to say that the matter will be reconsidered. It has been considered, and the reasons were given in the house the other day.


Robert Fair: I will point out that part of the-


Some hon. MEMBERS:: Order.


Robert Fair: Then I would say this, Mr. Speaker, that some low salaried people will be compelled to drink water with their meals. Surely this will not be the new order we are promised.


Some hon. MEMBERS:: Order.



THE ANGUS SHOPS


[Stage Direction]
On the orders of the day:
Mr. GASPARD FAUTEUX (St. Mary) (Translation):: Mr. Speaker, I wish to thank the honourable the Minister of Labour (Mr. Mitchell) for the action which, as a result of representations from Montreal members, he has taken with the management of the Angus shops with a view to preventing the dismissal from those shops of 2,000 employees who would thus have been out of work.



THE BUDGET


[Stage Direction]
The house resumed from Monday, March 8, consideration of the motion of Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. H. HARRIS (Danforth):: Mr. Speaker, before discussing the matter of ways and means of raising the revenue under the present budget, and bhfore we come to a review of the forecast for the coming year, I should like to say a word or two with regard to the national debt.
The minister has given us some stupendous figures with regard to our proposed expenditures, which will necessitate not only extraordinarily high taxation, but also heavy borrowing in the current year. Although the
bookkeeping figures might show that over one-half of our expenditures will be paid out of revenue, the actual fact is that we shall be unable to pay as we go. Last year we acquired assets and certain government obligations held in London and certain sterling balances, which our Canadian bookkeepers have considered as a $700 million loan. We might call them investments, but if they are; they are frozen investments; they are not liquid. We have bereft ourselves of these sterling balances and they will not be there next year or at the close of the war to be used to pay for our exports to Britain. In the present budget there is no concrete answer to the problem of how we are going to assist Great Britain to pay for our future exports. One problem, then, is how can we increase the earnings and the savings of our people so that we may lend more to our country and replace the sterling balances of which we are bereft, on the one hand, and in the second place, the $983 millions which it was necessary for Canada to borrow from the banks. If Providence is kind to agriculture, and if our Canadian people apply themselves assiduously to the task, we shall be able to increase our earning power. There will be shortages of material, scarcity of power, and difficulties of transport. But it must be remembered that the need for war production is still very urgent, though many contracts for munitions and supplies are well ahead of schedule. We must replace inventories of goods that we require for the war effort even if we go short of civilian goods. More production will require more money. The more that is produced, the more money there should be for the wage earner.
The Minister of Finance (Mr. Ilsley) says it is not the size of the debt that matters. To my mind that is a dangerous statement, even though it is a fact, and perhaps it should not be referred to too often. After all, he says, the debt is an obligation of the people to pay the people the bonds which they hold, and therefore it is a matter of the distribution of the debt. I agree that it is a matter of distribution. I hope to make a constructive criticism in considering ways and means which, to my mind, will help spread the debt. It is a matter of importance to see to it that the average Canadian citizen holds these government obligations. Therefore we must have more savings to the credit of the wage earner so that he will build up for himself a cushion for the after-the-war period.
Unfortunately both in Canada and the United States there seems to be a falling-off of the wage-earner's desire to save to the maximum of his ability. This falling-off of the desire to earn and save is slowing
W78	COMMONS
The Budget-Mr. Harris (Danforth)
down production, and it can best be illustrated by a few words about absenteeism. Thinking of ways and means, I would bring this subject as forcibly as I possibly can to the attention of Canada and of the minister. Absenteeism does not produce wages; if wages are not produced the income tax on the wages does not flow into the treasury of Canada. Absenteeism, which has become rampant in Canada and the United States, has created one of the most serious problems which we face. I quote from an editorial in the Ottawa Citizen of Saturday, February 27, headed "Lost Time in War Work." It states:
Habitual absence from work in war industry, according to a report of the United States House Naval Committee, constitutes "a very ugly situation." Judging from reports that continue to be made, the absentee habit in war plants in Canada amounts to very much the same thing.
The U.S. committee admitted itself unable to say why this offence against production has become so prevalent. The New York Herald Tribune has attempted to enlighten the committee. It offers "a very simple explanation of the phenomenon," to wit:
It is that we are spoiling our war workers with wages which most of them never before dreamed of earning. They can get now in a third or half the time what they were accustomed to finding in their pay envelopes at the end of a full week. . . . Since the worker to-day has less of an outlet for his greater pay than he had for what he used to make, one powerful incentive to keep his nose to the grindstone is missing. The principal luxury remaining to him is leisure. So he buys that. It is a simple explanation. In fact, it is a little too simple. To suggest that war plant workers absent themselves merely because they are paid higher wages than were available before the war is to place their patriotism at a rather low level and to pass over a mass of other reasons that are varied and complex.
But beyond question there is a considerable amount of absenteeism that comes from high *wages and temporary economic security. In normal times the cultivation of leisure is not necessarily an evil. But in times like the present it is different. The remedy is not lower wages, however, but the application of rules that will bring home to slackers the importance of their full-time cooperation in the war effort. In Britain, a worker who stays away-from his job one shift is required to give an acceptable reason. Otherwise he is liable to a fine. If he persists, he can be jailed. If this sounds drastic, let it be remembered that the fight for survival is far from having been won . . . and the fighting men cannot go absent whenever they feel inclined to take it easy.
It is time that the rules applying to men in the armed forces should be made to apply to all the rest of us while the war is on. We have a similar situation in Canada, but the cause is largely improvident taxation. I would ask the minister to bear with me a few minutes while I substantiate what I say.


Mrs. NIELSEN:: May I interrupt the hon. member? I am sorry to say that down at this end of the chamber we cannot hear a word he is saying.


James Garfield Gardiner: We cannot hear it over here, either.


Joseph Henry Harris: May I pay my respect to the hon. member for her kind thought. The same thought was running through my mind. Perhaps in view of the fact that what I am going to say is very important we might have just a little more order in the house. To those who cannot hear what I say I suggest that they gather around my knee, so that I shall not have to strain my voice.
I should like to put on record a few observations which to my mind are sufficiently constructive to assist in increased production by labour, and the removal of one of the worst menaces to our production schedules. It is commonly called absenteeism. Labour is not to blame for absenteeism; the major portion of the responsibility lies directly on the shoulders of the administration. This condition arises because the taxation brought down in the last budget has made it easy for labour to stay away from their places of employment during these extra hours that we are exhorting them all to put at the disposal of the country to increase our war effort. I will recite the problem and make a suggestion as to how it might be adequately met, without any undue hardship on the honest and patriotic employee. In fact I am of the opinion that the income tax rate on that portion of labour which is paying income tax could be considerably reduced and at the same time more man-hours of work be given by employees to their country. Under last year's legislation this is what actually happened.
An employee who is single without any dependents and works a full week of 48 hours at 60 cents per hour has a pay of $28.80 a week. To simplify the computation I am omitting the sixty cents paid as cost of living bonus. He pays an income tax thereon of $4.90, deducted at the source. Part of that, it is true, is savings. If that same employee works a 40-hour week at one place of employment, namely fi%jg days only, he pays an income tax of $3.56 a week. If he works four days a week he pays an income tax of only $2.27 a week. It will be seen at once that he would be better off to work the full six days rather than the four or five days; but at the same time his income tax is doubled if he works six days a week rather than four. Rather than give to the government the extra

The Budget-Mr. Harris (Danjorth)
$2.63 in taxation he will stay at home and probably spend his time in improving his home, working in his garden, or taking leisure, with the net result that the government receives only half the income tax that it expected to receive from that individual.
The next case I recite is that of the married man with no dependents. In this instance the amount of income tax paid, if he works the full six days of 48 hours at 60 cents an hour, is $2.68; whereas if he works five days his tax is 21 cents. If he works four and a half days he pays no tax at all, and the treasury is bereft of $2.68 a week on that employee, the national production is correspondingly lowered, and the morale of the employee who works alongside of him, honest and full time in an all-out war effort, is lowered, with the result that he becomes dissatisfied.
Let us now take the case of the third man, who is married and has two dependents. His taxation at 60 cents an hour for 48 hours is 39 cents, whereas if he works five days it is nil. He too becomes dissatisfied when he finds his mate at the next bench losing time. This entire situation is accelerated and exaggerated when men anxious to finish jobs and anxious to put in overtime find they work an extra number of hours.
The loss in Canada's production on account of absenteeism is a problem which must be grappled with immediately. The loss in revenue on a payroll which it was my duty to examine a week ago was equivalent to 400 man hours of work per week against a payroll which had 8,000 man hours of work per week; in other words it was equivalent to five per cent of the production, plus the loss through inefficiency on account of shortage of labour on certain days. The present income tax legislation on wage-earners tends to encourage this condition. I suggest that we reduce the rates. In this way we would get more revenue.


James Lorimer Ilsley: Mr. Speaker-
Mr. HARRIS (Danforth); If the minister will bear with me for a minute until I finish this statement, I shall try to answer his question. I have suggested that we spread the tax so that it will affect more absentees. Have more of our people paying income tax, and thereby avoid a condition under which many of our wage earners are entirely free from taxation. I have in my hand the table of tax deductions under the Income War Tax Act. It is well worked out, but it illustrates the difficulty. Take the first column, a single man, and say he is fortunate enough to have a job at a dollar
an hour, $48 a week. He must pay into the treasury of Canada, part by way of income tax, part by way of forced savings, a total of $12.02 if he works a full week of forty-eight hours. In other words, twenty-five per cent of his earnings is taken in the form of tax and what is to be returned to him two years after peace is declared. But if that same individual works'only three days during the week, and stays home the rest of the time and potters around his house or garden, he pays only eight per cent of his earnings. Working half a week he pays eight per cent; working a full week he pays twenty-five per cent, which means that in the last three days of work some forty per cent of his earnings is going into the treasury of Canada.
I leave the schedule for hon. members to study. I come now to a married man with no dependents; if he works the same number of hours for the same pay he is taxed a total of S9.63 and he has a saving of $4.32. In other words for the first three days he works he pays no tax or forced savings, whereas for the. last three days he pays eleven per cent of his total earnings, which for the last three days is equivalent to twenty-two per cent of his earnings.
In like manner a married man with one dependent pays no tax if he works half the week, but if he works the full week he pays $8.02 on his $48, of which $4.68 is savings. For the married man with no dependents the total deduction is twenty per cent. If he works three days a week he gets a dollar an hour during those three days, but for the next three days he gets about eighty cents an hour, and he does not feel happy about working while his mate is absent, or about not getting a similar return for the effort and energy he is putting into his work.
The hon. member for Waterloo North (Mr. Breithaupt) is one who is accustomed to large payrolls, and there are many others in this chamber who know what it is on Fridays to have to find many dollars for payrolls. They are worried about this matter. I hope that before the debate is over the minister will put on record the number of wage earners who are not paying any income tax or contributing to forced savings. When he does so I am of opinion that we shall find that half of the wage earners in the old standard lines of business-I am not saying so much about wartime or new industries-are not paying any income tax at all. My suggestion that the idea be considered of spreading that tax over the whole field of absentees either on a small percentage basis in the smaller brackets or on a more or less uniform percentage basis of some kind; or
1080	COMMONS
The Budget

Mr. Harris (Danjorth)
at the very least apply this legislation as it at present stands and collect it on a daily basis. There is provision for doing that. There would then be no encouragement for the individual to absent himself from his place of employment. I had hoped that this legislation would be amended, because the minister must have had scores of representations made to him, apart from those made by his own followers, particularly the one mentioned.
A weak effort was made by the Minister of National Revenue (Mr. Gibson) to remedy part of this situation. When he speaks on the budget I should like him to make some sort of recommendation, but unfortunately in the conduct of our affairs the Minister of National Revenue is meticuluously careful at no time to enunciate any policy in regard to taxation. He leaves that field entirely to the overburdened Minister of Finance and says: I am merely a collector of the taxation the Minister of Finance puts upon the statutes. However, he did give instructions to employers with regard to deductions to be made from employees on account of income tax, including force4 savings, under date of August 1942, on page 4 of which we find the following provision-I will read the provision and then explain it:
"Established payroll periods" refers to that period in any business which, as a regular practice, pays at the close of the pay period, even though an employee worked only part thereof, and the deductions will be made under the table of tax deductions for such pay period.
Here is the weak clause in these instructions; it must be weak because there is no legislation to cover the point:
If however in the course of an employee's continuous association with his employer the employer observes that such an employee is more or less habitually working three days or less in the established pay period of one week he should deduct on the factual experience of the employee and in lieu of deducting on the established pay period basis will deduct on a daily pay period basis.
Legislation should have been brought down to change "should" to "shall," and I hope it will be amended when the resolution is under consideration. Then we shall be able to bring those who absent themselves half the week in the pay period to a sense of their responsibility and collect the tax on the daily basis. At the present time that does not obtain, and you cannot ask an employer to try to implement the intention of this clause when he is not reinforced by legislation which says that he shall deduct on the factual experience of three days.
But three days is not enough, because there are very few individuals earning more than $48 a week, with the result that they may work

three and a half days and still be excluded from paying taxation. If that schedule of taxation filled in all the blanks, even if the rate were very small, not only should we relieve the pressure of absenteeism on our economic system, and increase our production, but we should broaden the base of forced savings among many more thousands of our people so that they would have a cushion after the war. Briefly, it is only half the possible individual items of taxation which might be collected, but I do admit that it is not just half of the possible taxation. It is far more than that. Those in the brackets I have mentioned are paying far too much into the treasury as compared to those who pay nothing at all. An equalization of the situation would obtain and even increase the present revenues; it would maintain the savings which, are to be returned after the war, and could be so designed as to increase those savings. Certainly it could be designed in such a way that it would encourage the workers of Canada to work a full week and even work overtime if necessary. In the final analysis, it would bring about increased production in secondary industries throughout Canada by anywhere from five to twenty per cent, which would still further offset the words of the Minister of Finance when he intimated that we were fast approaching the complete fruition of all our production programme.
I should like to refer for a moment to another item appearing in this budget, the matter of the tax on liquor, though I feel disposed to leave this question to be dealt with by the experts, and anything I say on it will be my own personal view. It does seem to me, however, that of all the items contained in the present budget the one having to do with liquor is the result of political disagreement between the provinces and the dominion as to who should operate, restrict or control this traffic. The Minister of Finance tried valiantly to keep out of this field, but either force of circumstances or the Prime Minister got him back into it. In the earlier days the government expressed the fear that if this tax were increased, bootlegging would become rampant. Now they have reversed their stand; this problem is back on their doorstep, and it will have to be faced. Having in mind the necessity of getting every possible dollar into the treasury of Canada, I suggest that the government give immediate attention to the problem of bootlegging before it gets completely out of hand. By all means control the consumption of liquor. My personal view is that we should let our citizens have beer if they want it. Let us do away with the spec-

The Budget-Mr. Harris (Danjorth)
tacle that we see in our large cities to-day, with individuals rushing to the brewers' warehouses to buy up all the day's quota of beer, then in the evening parading from hotel to hotel and exhausting the supply of each tavern. That is a spectacle which should not be seen during these serious times. Let us have temperance in all things and prohibition in none, except where it may be necessary to bring about an all-out war effort. On Saturday last I was sorry to learn that in one institution the workmen, who under the terms of their union agreement had free access to a bulletin board, had placed on that board a sign saying, "No beer, no bonds." That is not a satisfactory condition; it is a very serious matter, and it must be remedied. I hope during the course of this debate the Minister of National Revenue (Mr. Gibson) will tell us what he intends to do in order to give some respectability and restriction to this traffic which is always with us.
I come now to a matter with which 1 should like the Postmaster General (Mr. Mulock) to deal. We have invaded the sacred precincts of the Post Office Department and demanded an additional $8,000,000 in revenue through an extra one cent of postage on letters, postcards and first class matter. This is another tax which business will have to pay, and I do not think business will complain very much about it. This additional money will be very difficult to find, except of course in those businesses which are in the excess profits bracket, and there are not so many in that group despite what may be said by' some of our demagogues. But in my opinion, this extra tax will not produce a clear $8,000,000, for various reasons. First, there will be economizing on the part of business organizations; second, there will be less social correspondence; third, companies now paying excess profits tax will reduce the amount of such excess profits tax payable to the government and will even reduce the tax paid on their ordinary profits by including this extra amount for postage as a proper charge against the conduct of their affairs. I can understand why there should be no extra taxation on second class matter such as newspapers, and daily, weekly and monthly periodicals. An additional tax on this second-class matter would be out of proportion as compared to what business might stand, because the distribution of newspapers and periodicals is so great and postage forms such a large part of the actual expense of carrying on their business. In an ordinary business house the cost of postage probably amounts to less than one-half of one per cent of the cost of the year's operations, while in the
case of newspapers and periodicals undoubtedly it is many times that percentage. At the same time I have no doubt there is a political reason, which I bring to the attention of the administration in as kindly a manner as possible. I suppose any government would put its political life in jeopardy if it added fifty per cent to the cost of circulating these newspapers and periodicals. But now that we are going to collect more money from the Post Office Department, some means should have been found to .spread that increase over the whole gamut of the post office business, making exceptions here and there as might be necessary. I believe the government should have had enough courage to impose further taxes upon third-class matter, being careful to exempt literature for the blind, school examination papers, and other items which directly affect the welfare of the state. All the welter of unnecessary circulars should bear its full share of the cost of our mail service. Over fifty per cent of the third-class matter, which is the portion of the mail that breaks down the constitution of our letter carriers, finds its way to the desk of the individual to whom it is addressed, where it accumulates until in his spare time he finally drops it into the waste paper basket. That part of our third-class mail could very well afford to bear a greater share of the cost of our postal service, in the interests of the economy of Canada. It is an economic waste, and should be curtailed if it cannot bear its fair share. I would ask the Postmaster General to give the house some explanation as to why the government did not cover the entire field when once it entered upon the sacred precincts of the Post Office Department m connection with taxation.
I now come to a matter which has been engaging the attention of the press and public of Canada. I refer to what some call the Ruml plan, but what I call the Ilsley plan, in regard to the payment of income tax. First may I be permitted to make this observation to this house, to the press and to the people of Canada. The adoption of the Ruml plan or the adoption of the Ilsley plan is not going to save the nation. Far too much emphasis is placed upon and far too much attention is being paid to this one item in our taxation. It is a question whether we are being fair to Canada's war effort by occupying the time of our. people and the time of this house in worrying about this particular item.
I have looked over the proposals of the minister and I cannot bring myself to agree that he is carrying out the Ruml plan. A better name for this partial application would be the Ilsley clan. It is difficult to understand why, the tax for the four months
1082	COMMONS
The Budget-Mr. Harris (Danjorth)
at the end of 1942 having been deducted at the source, the minister used the figure of fifty per cent for the delayed collection and the forgiven portion. Why did he not use 66J per cent? A clean sweep has not been made to deal with this matter for all time. There is imposed an unjustifiable hardship because the minister in his budget has pursued the policy which to my mind takes so much cash in settlement of a debt, to be [DOT] paid in two instalments in 1943 for taxes accrued during the year 1942, and the taxpayer finds that he must liquidate this indebtedness and at the same time assume the full obligation for the prompt payment of the 1943 tax.
The intention of the Ruml plan, as I understand it, is that the 1942 balance of debt should be erased from the books of the government, should not be there, while in the case of the Ilsley plan we find that we have compromised the debt. I dissociate myself from the Ilsley plan for that particular reason. As an illustration I would cite the case of a married man, with one dependent, receiving a salary of 83,000. In March, 1942, he paid an income tax amounting to $170 and in the same year a defence tax of $86. In the months of
September to December, 1942, he paid deductions amounting to $105. In 1943 he will pay $427, including the adjustment with respect to the 1942 tax of $65, and in March, 1944, he will have a final payment of $49 to make. In other words he will have paid an income tax in two years of $788 and will still owe $49 to be paid in the following March.
What I am trying to impress on the house is the fact that we have not made a clean sweep of this particular innovation in the matter of taxation. This income tax legislation is an added burden in the form of income tax upon those who draw from $1,500 to $5,000. It is a heavy burden to that class which is very often called the forgotten class. I have a short schedule showing the payments of those receiving salaries of from $1,500 to $5,000, and with the permission of the house I should like to place it on Hansard.


Mr. SPEAKER:: With the consent of the house.


Some hon. MEMBERS:: Carried.


Joseph Henry Harris: The statement follows:



INCOME TAX-1943 BUDGET

[Stage Direction]
$1,000			$2,000		
Single	Married	Married 2 dependents	Single	Married	Married 2 dependents$ cts.	$ cts.	$ cts.	% cts.	$ cts.	$ cts.1942-Tax before Budget	152 00	600 80	430 80	214 80 107 4076 00	300 40	215 40	Payment that would have been due in	September, 1943, in final liquidation of	0 35	60 11	43 41	21 44Payment that will have to be made in June,	4 19	57 95	41 69	15 88
$3,000			$4,000		
	1,064 40 532 20	884 40	668 40	1,594 40 797 20	1,364 40 682 20	1,148 40 574 20
		442 20	334 20			
Payment that would have been due in						
September, 1943, in final liquidation of 1942 tax		106 48	88 40	66 83	159 40	136 40	115 22
Payment that will have to be made in June,						
1943, in final liquidation of 1942 tax		119 56	110 20	84 79	195 00	184 00	159 00
	$5,000			$6,000		
1942-Tax before Budget	2,128 00 1,064 00	1,878 00 939 00	1,662 00 831 00	2,685 00	2,415 00	2,199 00 1,099 501942-Tax after Budget	1,342 50	1,207 50	Payment that would have been due in	September, 1943, in final liquidation of 1942 tax	212 75	187 82	166 24	269 00	242 00	220 00Payment that will have to be made in June,	1943, in final liquidation of 1942 tax	270 03	264 49	239 08	350 00	350 00	324 00$7,000	$8,000	1942-Tax before Budget	3,275 00 1,637 50	2,985 00 1,492 50	2,769 00	3,865 00	3.555 00	3,339 00 1,669 501942-Tax after Budget	1,384 50	1,932 50	1,777 50	Payment that w'ould have been due in	September, 1943, in final liquidation of 1942 tax	327 54	298 51	276 93	387 00	356 00	334 00Payment that will have to be made in June.	1943, in final liquidation of 1942 tax	437 24	441 45	416 03	524 00	534 00	508 00
[Stage Direction]
The Budget-Mr. Harris (Danjorth)
INCOME TAX-1943 BUDGET-Concluded
		$9,000			$10,000	
Single	Married	Married 2 dependents	Single	Married	Married 2 dependents$ cts.	$ cts.	$ cts.	$ cts.	$ cts.	$ cts.1942-Tax before Budget	4,472 00	4,142 00	3,926 00	5,112 00	4,762 00	4,546 001942-Tax after Budget	2,236 00	2,071 00	1,963 00	2,556 00	2,381 00	2,273 00Payment that would have been due in September, 1943, in final liquidation of	455 00448 00	415 00	392 00	512 00	477 00	Payment that will have to be made in June, 1943, in final liquidation of 1942 tax	614 00	628 40	603 00	711 32	730 18	731 44
It is pointed out to the Canadian, people that our income tax is the highest in the world, but it is sometimes forgotten that the period given the taxpayer within which to pay has been reduced more severely than it has been in any other country. The spirit of Canada does not permit of any challenge to its desire to go all out in every conceivable way in its war effort. This imposes a great responsibility upon the government, and perhaps the time has now been reached when the people should be taken more fully into the government's confidence with respect to the broad principles of public finance which the government has laid down for itself.
It is true, as the minister says, that we have more physical goods in Canada than they have in Great Britain, for example, but by the same token we eventually shall have less cash and government securities, less insurance protection, fewer owned homes, et cetera. This of course is accentuated when a comparison is made with the United States. The tougher the government makes it for the taxpayer, the more right the taxpayer has to ask that the government go to some pains to explain its long-term planning.
The British government has had a much wider and longer experience with income tax imposts, and it would scarcely seem that our government should exceed the limits which the British government have decided upon without at least explaining more fully than they have just why they are doing it. We are disposed to have confidence in the judgment of the British government. In fact, it would not seem unreasonable to take the stand that they know a little more about taxation principles and points of saturation than does Canada. The people of Canada are not averse to spending every last cent they can in the war effort; they are ready to save, to buy bonds, to pay their taxes and to act as good citizens. However, they want to feel that "the government needs the money" is just a slogan and is not the government's long-range fiscal policy in this regard.
When the hon. member for Rosedale (Mr. Jackman) first raised this question in the house andi suggested the adoption of a plan, his suggestion received the approval of a large body of Canadian citizens. Let me make this observation. If this legislation had to come, it is unfortunate that it came at a time when incomes are so high. It would have worked out to much better advantage to the treasury of Canada if it had been put into effect some years ago. Many incomes will never again be as high as they were in 1942. Those with high incomes braced themselves without a murmur to pay the 1942 income tax. If they had high incomes, they must have had capital assets from which they received income apart from their earnings as wage-earners. I am of the opinion that they were ready to liquidate those capital assets and pour them into the revenues of Canada as a contribution, not only by way of high income tax but as a contribution to the war effort. But there are others in the same groups who are not so prone to take a serious view of Canada's position. They are not so ready to help out. Perhaps they are anxious to help, but they do not stop to think of the entire situation. I am going to say a word to them.
I have not much sympathy, particularly in war time, with that class of people known as globe-trotters, non-producers and holiday makers, those who are able to spend the winter months in Florida or California. If they are able to do this, they are able to pay heavy income taxes. With the war on, some means ought to be found to force the wealthy and healthy non-producer idler into production. For those in poor health who must have a change of climate I recommend the Laurentian hills of Quebec, the maritime climate of southern British Columbia and the northern highlands of Ontario.
I come now to another matter of ways and means which has not been enlarged on in this budget and which should receive some attention, namely, succession duties. Last year, as reported on page 5296 of Hansard, I said
1084	COMMONS
The Budget-Mr. Harris (Danforth)
that I was in accord with heavy taxation on estates during war time. If there is wealth in estates and Canada needs the money, let us go and get it from those estates. At the same time I drew the attention of the Minister of Finance to the hardship imposed on those who receive annuities from estates and are faced, on the one hand, with the payment of succession duties on the capital amount represented by the annuity, and on the other with an income tax on the actual annuity. I think the minister agreed with me, as reported on page 5300 of Hansard of last year, that wills drawn up ten years ago should be revised so that annuities would not become liabilities during the first few years of the life of the annuitant. Briefly, the outstanding example-the others will be found in Hansard-was that of an individual, no relation to the deceased, who received an annuity of $2,000 a year. He found that it was capitalized by the federal authorities at $31,365 with a succession duty payable of S3,465, while the same annuity was subject to a provincial succession duty capitalized on $28,976, amounting to $12,664. In other words, the total succession duty on that portion of the estate which is lifted out of the capital sum to provide an annuity of $2,000 amounts over a four-year period to $16,129, one-quarter of which is $4,033 yearly, in order that the recipient might receive an annuity of $2,000 per year. At the same time, in the case I recited, the income tax from the receipt of the $2,000 amounted to $1,065, with the result that the individual had to find four annual tax payments of $5,097, after which there would be no further succession duties. In my opinion our statutes ought to be amended so that the first charge against any estate would be the collection of succession duties, and that should be made a statutory provision in each and every will. In that way many estates which now escape [DOT]succession duty would be taxed, and at least the treasury would have the first call on the estate and would be paid first, with the beneficiaries having the second call.
I come now to the matter of annuities. The high income tax rates which are necessary have destroyed the incentive to buy annuities. I should like the Minister of National Revenue to deal with the unfairness of income tax on annuities. Many Canadian citizens abhor taking an old age pension from the state. They are honest citizens with some pride in themselves and their families, and they cannot bring themselves to believe that when they reach the age of seventy they have the right to accept an old age pension. They 
would prefer to sell their house and lot and some of their other assets and put the money mto an annuity. But the present system of taxation is destroying the whole philosophy which underlies the purchase of annuities. The Canadian citizen who abhors taking an old age pension from the state converts his capital assets into an annuity and finds that he pays the full income lax on capital so invested as well as on that portion which represents interest. On the other hand, if he buys a war savings certificate or a victory bond, his capital is returned to him without income tax on the principal sum. Of course he pays taxation on the interest which the. victory bond earns. There is no practical reason why the capital portion of an annuity should not be returned to the taxpayer in like manner as he woidd liquidate a victory bond or a war savings certificate. This was brought to the attention of the government last year by the lion, member for York-Sunbury (Mr. Hanson), and I am disappointed that nothing has been done about it.
The simplest way for me to explain the matter to the house is to read into the ui laqoutu	u iuojj	u p.ioaai
Alberta. He says:
I was a cattle rancher in Alberta until last year. The department of defence expropriated my property for military purposes. Being 74 years of age I did not wish to start again. In order to assist in the war effort I considered placing funds in victory bonds or government annuity. As far as the war went I could see no difference. In both cases I lent a certain sum to the government. In each case it went into the treasury and was used the same way. In each case payment is provided for at a specified time. I put part of my savings in each but in one case the interest only is income but in the other the whole of my savings is to be subject to income tax when returned. This does not make sense to me. The use of a mortuary table to determine the amount necessary to deposit to receive a certain yearly repayment does not alter the principal. It is either income or returned savings. I have noobjection to paying war taxes but I do not like paying income tax on the return of my savings.
As you will know, when the dominion government was put into effect it was income tax free and called for very reasonable rates. Later the rates were raised about 15 per cent and income tax clause struck out.
In my letter to the deputy finance minister I suggested that the low rates be restored and the tax free clause also, that investment in dominion government annuities be advocated to finance the war along with victory loans and war savings certificates, and after the war to continue the compulsory savings to an extent sufficient to eventually replace the old age pension by government annuities.
He goes on to say:
On page 11 of the dominion government annuities pamphlet we are told from statistics,

The Budget*-Mr. Harris (Danjorth)
"Poor when old will he the fate of every other Canadian we meet." Surely we can do better than that.	,
We need something better and more dignified than old age pension for half of our people even though part of the necessary funds came from the national treasury.
I should like to place on the record the case of a married man with one dependent and an income of $3,000 per year. It shows that if he buys government annuities he pays a total tax of $776.40, whereas if he and his
employer pay into an approved superannuation fund his tax amounts to only $369.40. To save time, Mr. Speaker, I would ask the permission of the house to place this short calculation on Hansard; it sets forth the figures which I have recited.
Thomas Vien: With the permission of the house.


Joseph Henry Harris: Thank you, Mr. Speaker. The table is as follows:
Income $3,000-married-1 dependent
Total Income	 $3,000 00
Less-Payment to approved superannuation fund	 275 00
Taxable income	 $2,725 00
Normal Tax
7% of taxable income	 $ 190 75
Less 1 dependent	 28 00

Graduated Tax Income .... Exempt _____
30% on	
33% on
37% on 41% on
$2,725	00		
660	00		
2,065	00		
500	00	150	00
1,565	00		
500	00	165	00
1,065	00		
1,000	00	370	0065	00	26	65
Less allowance for wife. Less allowance for child
150 00 80 00

Total Tax
481 65 $ 644 40
Savings Portion
10% of income $2,725 1% of income $2,725
272 50 27 25

	299 75

Tax Portion
Add savings portion Less annuity	
299 75 275 00

	24 75

Total Tax Payable

The Budget-Mr. Harris (Danjorth)
The second example shows how the provisions of the act affect the income of a married man, who has one dependent, who is earning $3,000 per annum and who is providing for his own maintenance after retirement by paying premiums on a Canadian government annuity, without assistance from his employer under a pension fund or plan.
Income $3,000-married

1 dependent
Total Income	 $3,000 00
Canadian government annuity ($275) not deductible if not held in connection with pension plan.
Normal Tax
7% of taxable income	 $ 210 00
Les 1 dependent	 28 00
Graduated Tax
Income	
Exempt ....
30% on....
33% on....
37% on 41% on
$3,000	00		
660	00		
2,340	00		
500	00	150	00
1,840	00		
500	00	165	00
1,340	00		
1,000	00	370	00340	00	139	40
Less allowance for wife. Less allowance for child
150 00 80 00

Total Tax	
Savings Portion
10% of income $3,000 1% of income $3,000

330 00
Tax Portion
Add savings portion Canadian government annuity premiums not deductible.
Total Tax Payable

330 00
	 $ 776 40
I come now to another income tax situation which is disturbing the minds of a great number of our farmers, and that is the income tax with respect to cooperatives. A farmer joins a cooperative organization. My view always was that he felt that that organization was part and parcel of his farm. He felt that when he had an income from his farm he should not be taxed on the surplus which came from his cooperative organization. Have I made myself clear? In the business field an incorporated business, of course, pays the corporation tax, but it is difficult to make the farmer believe that when he is a member of a cooperative enterprise he is in a business which is operated for profit to the shareholders. With the change in the organizing, financing, and the operating methods of cooperatives because of conditions and new market requirements, we also have a change in the policy of

the income tax department which desires to discontinue the exemption from income tax on patronage dividends. If this income tax exemption is abolished and confirmed by the court and made retroactive, it will have a disastrous effect on the reserves of the cooperatives. This legislation should be clarified, and consideration should be given to the condition which obtains in the United States where the members of the cooperatives can distribute exempt from taxation the surplus funds they have left over from their transactions. The taxation will come off the dividend-or so-called dividend; for to my mind the word is a misnomer-the return of the money of the farmer who belongs to the cooperative will be added to his income tax as an individual, raising him perhaps to the higher bracket, and you will get a large per-

The Budget-Mr. Harris (Danjorth)
eentage of the tax as the outcome of this suggestion, due to the fact that one hundred dollars, we will say, added to the income of S3,000 which he is making ordinarily on his farm, would bring the return to S3,100.
The forecast which the minister gave the house is to my mind very disappointing. He anticipates by way of increase of revenue from the budget proposals which he recites,
So,000,000 from the excise duty and S33,000,000 from other excise taxes, and he says he gets $105,000,000 from personal income tax. But we are not getting that out of this year's budget; that $105,000,000 has come from the legislation which was incorporated in last year's budget, the surplus from the enactment which was adopted last year. It is therefore unfair to suggest that our total of 8136,200,000 represents an increase from this year's budget proposals. A careful analysis will probably show that all of it derives from last year's legislation. There is not much courage or conviction in reciting that we have to have more revenue if there cannot be found within this year's budget any increase in revenue from these proposals. That is what makes some people say that probably this is an election budget. That is what discourages a large number of our people who are anxious to cooperate with the government in every possible way. We need cooperation of the kind which gripped the imaginations and hearts and minds of the Canadian people when war was first declared. The minister knows the class of people to whom I refer. Patriotic citizens who had means and were anxious about the war were writing letters-I will read a portion of one-in the days of 1939 and 1940, and very seriously and in all sincerity were placing everything they had in the world, not only their sons but all their material interests, at the disposal of the state. Here is a portion of a letter dated October 22, 1940, addressed to the Minister of Finance:
This will serve to confirm a telephonic conversation of Thursday, October 10 at some length at the expense of the taxpayer, not charged to the government as some people are so prone to do when they call a government department, franked back against the government to pay for, and an exchange of wires of the same date paid for by this taxpayer, and an interview given the writer in Ottawa, Tuesday, October 15, at his own expense and paid for by that taxpayer. At that conference it was intimated to you in a like manner as I previously intimated to the Hon. Mr. Howe and the Hon. Mr. Ralston, that I am anxious to do everything possible to assist Canada with her war effort.
I therefore place at the disposal of the government of Canada my services as an individual to serve anywhere in any capacity, and my interests as they may appear in the ownership of three or four different industries.
Doubtless in the early days there was a lot of correspondence of this kind. But with a weak budget such as the present one there will be a tendency, I believe, for that interest to slough off. I ask that something be done to stimulate in our people again the idea that they must give more and more, and not slow down just because we are having a few victories in Africa and because Russia is doing a big job somewhere else. We must harness this power and use it in every possible way we can.
The minister has had months to prepare this budget, and he knows about it. Those of us who are charged with the responsibility of constructive criticism have had months to think about it, but very few days to know about it. We are not fortified with a corps of economists, doctors of philosophy, professors and what-not to assist us. I sometimes wonder if more facilities of that kind should not be given to those who are in opposition, and who are supposed to add something to the welfare of the state, to assist them in making constructive suggestions.
I thank the minister and the house for their understanding courtesy towards me in this particular job of work. I am going to make a suggestion to the press. It is embodied in an old adage which, I believe, was repeated in this house some years ago: "Criticize this criticism if you must; praise it constructively if you can; but for goodness' sake do not forget it, and do not let the Canadian people forget it."
I reiterate that this is a very weak budget and it looks like an election budget. "Work and save" is not enough. It is not sufficient for the minister to say that there are two things, and two things only, to do. The minister mentions first our ability to strike hard, and he says, in the second place, that the time to relax is when our enemies have surrendered. He says we know these things only. He must know that our people can apply themselves more assiduously to their daily task. He must also know that our people are willing to make great sacrifices. He knows that our air force on the Atlantic coast line could do very well with faster and better planes to search out the submarines. He has been told often enough that there is waste and extravagance-I call to witness the hon. member for Simcoe East (Mr. McLean) and the hon. member for Wellington South (Mr. Gladstone)-which members of this house, if we organized ourselves into a body of men without any political interest to serve, could search out. He knows that the membership of this house is capable and willing and anxious to help the operations of this country in every possible way. He ought to know that

1088	COMMONS
The Budget-Mr. Harris (Danforth)
that membership comprises many men well able to assist in designing the policies which now emanate from the economists, scientists, doctors of philosophy and what-not in the building here to my left. We are in fairly safe hands with the minister, because he can hold this group of economists in check. But if he does not realize it, I tell him now that they seem to be lacking in business ability to consider a business budget for Canada; and when he is preparing his budget he would be far safer in the hands of members such as the hon. members for Victoria, B.C. (Mr. May-hew), Waterloo North (Mr. Breithaupt), Waterloo South (Mr. Homuth), Davenport (Mr. MacNicol), Lincoln (Mr. Lockhart), Cumberland (Mr. Black), Peterborough West (Mr. Fraser), Qu'Appelle (Mr. Perley), Skeena (Mr. Hanson), and Haidimand (Mr. Senn).
These hon. members, who have business experience but who are not consulted, would give you their confidence; they would not betray your confidence, and the net result would be that we would not only have something more acceptable to the Canadian people but something which would more nearly balance our budget. How humiliated and exasperated are the members at the little they are able to do in the war effort, particularly when they know so much about Canadian conditions.
The minister knows that victory will come only with tears, sweat and blood. Are we so medieval that we will not bestir ourselves until we have a blood bath in Europe? Our duty is to sweat now. We must realize that Germany works from the centre of Europe out to the perimeter. She is bounded by oceans and water on three sides and, thank God, by Russia on the other. We are many thousands of miles away, and must fight from the outside of the perimeter. Our air force has overcome part of this difficulty. We have partly overcome distance; we have partly overcome difficulties; we have partly overcome disaster. And even though the road be long and hard, the growing strength of our united nations is fast overwhelming the enemy by the magnificence of the performance of the fighting men of the united nations.
Let us then pray, petition and plead that Providence will vouchsafe us an abundance of agricultural increase in the coming year. Let that faith be accompanied by works, and we shall have answer to our prayers. Let us be loyal to our king, and affirm our faith in the British partnership. Let us strengthen, reinforce, support and buttress our British commonwealth. Let us associate ourselves more closely with our allies of the united nations, and pledge ourselves to our fighting services wherever they are. Let us encourage,

stimulate and urge more application by those charged with secondary production. Let us assist and cooperate with labour-management production committees, and foster sound labour relations. Let us invigorate individual initiative by rewarding integrity and intelligent industry.. Let us give freedom of enterprise to our people, between the floor and the ceiling. Let us honour our partnership between the two races with equality, justice and toleration. Let us harness and put to work the power of this Canadian House of Commons.
Let us add magnitude to our effort, and then nothing can stop us from final victory. Let us save our democracy by applying ourselves. We dedicated ourselves to the task in September of 1939; we should then this day, this very hour, rededicate ourselves to its accomplishment.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, since I have been able to hear what the hon. member for Danforth (Mr. Harris) said, it has been a real pleasure to listen to him. I took occasion to read from Hansard his remarks of last night, and I was impressed not only by the breadth of vision he displayed, but by the amount of care and study he had devoted to the preparation of his speech. I believe the house, is indebted to the hon. member for the effort he put forth, and the manner in which he presented his speech to the house.
I believe, too, that the house is indebted to the Minister of Finance (Mr. Ilsley). I do not agree with the manner in which the minister is endeavouring to conduct the financial affairs of this country, but no man who watches him can doubt his sincerity. Certainly any man must admire his energy, his earnestness, and his incessanit endeavour to conduct the affairs of the country in the best way he believes they possibly can be conducted. I thought his speech well prepared and well delivered. I did not gather from it, however, the impression gained by the hon. member for Danforth, namely that it was a weak budget. On the contrary I had the. impression it was a rather strong one and, as one of my colleagues points out, one with plenty of kick in it.
Before turning to the minister's speech I should like to give some attention to what has been said by the hon. member for Danforth. Anything I say I shall say in all earnestness, humility and sincerity. There is a distinct difference between the points of view of hon. members in my group and those of other hon. members in the house. We believe that there is a new way of doing things financially in this country, and that

The Budget-Mr. Blackmore
that new way ought to be tried. We look with respect upon the opinions of others, and we beg permission to differ, earnestly and sincerely, and we do not so differ without having given the whole matter of finance a considerable amount of attention.
The hon. member for Danforth said, if I remember correctly, he hoped we should be able to keep the financial system of Canada sound. Perhaps I should read his words. Far be it from me to misrepresent any hon. member; it is hard enough to understand each other, even when we represent correctly and with the greatest of sincerity our respective views. As reported at page 1064 of Hansard the hon. member said:
I come now to the matter of government accounts and finances. I am of opinion that with all our war expenditures Canada can maintain a sound financial position, but it will be necessary for our people to observe a few cardinal principles which I enunciated in the early part of my remarks and which I shall enunciate again in a few minutes.
May I hasten to inform the hon. member that hon. members in this group are by no means endeavouring to introduce into Canada any financial system which is unsound. It is our earnest contention, and one which we will maintain, that the principles which are at present being followed are the unsound ones. In order that we may make this quite clear I would ask the hon. member for Danforth, after he has had time to consider the question, to enunciate to the house what he considers to be the principles of sound finance. What does he mean by sound money? Must it be money which is backed by gold? No. Must it be money created by banks? Must it be money which is lent, and therefore paying interest? Must it be money which is scarce? Must there be plenty of it in order that it be sound? Must it be properly circulated in order that it be sound? Does the price structure in a country have anything to do with the soundness of that country's money? Many questions of this kind the hon. member for Danforth will have to study with care, and give the answers with accuracy, before he will be in a position to tell us whether or not the system we are now pursuing is a sound one.
The hon. member for Danforth referred to borrowing from our chartered banks as a dangerous practice. As I recall, the minister himself indicated some misgivings with respect to that part of his transactions. I say to the hon. member for Danforth that I do not agree that borrowing from the chartered banks is necessarily unsound or will necessarily lead to inflation. I am not advocating that we borrow 72537-69}
from the chartered banks, but my chief objection to borrowing from them is that in so doing we incur additional debt and burden this country with the obligation of paying additional interest. But when one looks at the whole financial operations of this country from a long-range point of view, those two characteristics do not make the whole transaction unsound. Before the hon. member for Danforth can be sure whether or not the borrowing of this money from the banks will cause inflation he must know what inflation is. Does he? He must know what causes inflation. Does he? He must know how the causes can be overcome. Does he? With all deference to the hon. member I submit that he is unable to answer accurately any one of those questions; otherwise he would have been more guarded in the things he said concerning: borrowing from the chartered banks.
The hon. member would prevent extravagant spending in the country. How would he do it? Would he increase taxation? Would he increase the base, the number of people who are paying taxes? Is he in favour of rationing as a means of preventing people from spending extravagantly? I should have been pleased to hear the hon. member discuss and answer these questions. Now I leave the hon. member's remarks and turn to the Minister of Finance.
First of all I tell the minister that in my judgment he has shown a great deal of wisdom. For example, his statement to the effect that he had decided to pay subsidies to keep downs prices; that is one very wise decision and an. indication of vision and understanding on the-part of the minister. There are other things' in his speech which I would commend. But it is not my purpose particularly to single out the commendable features of his speech, not because I begrudge the minister the credit due to him, but simply because I believe it is my business first of all to express my criticisms concerning the budget and then to suggest what I consider to be ways in which the weaknesses of the budget can be remedied.
First I would say something to the minister which will sound quite harsh but which I believe can easily be established. The Canadian government is leading Canada in an accelerating headlong rush towards repudiation of debt, towards fascism and scarcity, if not actual famine. The definition of each of these terms will be necessary in order that aif may understand what is meant by them, in order that they may not seem extreme.
This budget is heaping up debt on the Canadian people. It certainly is not a pay-as-you-go budget. Whether it is possible to
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pay as you go is a question which I am not going to discuss at this time. The net increase of debt from 1942 to 1943 was $2,261 million, according to the minister's own statement as recorded on page 842 of Hansard. The increase from 1941 to 1942 was only $413,681,000, as recorded in Hansard of 1942 at page 3575. The increase of debt in this year we are now closing is more than five times as great as the increase in the previous year. Can anyone by any exercise of the imagination characterize a budget which increases the debt of the country at that appalling rate as a pay-as-you-go budget?
Canadians have never yet paid the financial cost of the last war; witness the three-cent postage stamp. In the midst of the last conflict our postage rate was increased from two cents to three cents and we were told it was a war measure, but when the war was over the three-cent stamp remained, and everyone who sent a letter from that time to this has been helping to pay the burden of the last war.


James Lorimer Ilsley: That is incorrect.


John Horne Blackmore: I should be glad to have the minister tell us why.


James Lorimer Ilsley: There was a period between 1926 and 1931 when the postage was reduced.


John Horne Blackmore: Then we will make
that exception, but up to 1926 and from 1931 on, that generation was certainly paying for the last war. I was glad to hear the hon. member for Danforth say that we ought to be frank and tell the truth, that we ought not to deceive the people. One of the deceptions which a good many of the public men of Canada indulge in is that we are going to pay the cost of this war during the war. Now, we are not paying it.


Mr. MARTIN:: Who said that?


An hon. MEMBER:: Nobody ever said it.


John Horne Blackmore: I did not come prepared to prove it, but I can and will do it from the words of various public men in Canada. Let it be understood that we are now preparing to pass on to future generations a crushing debt, and they are going to assume that debt at a time when perhaps it will be necessary for them to be preparing for another war by expenditures the like of which we have never deramed of.


James Lorimer Ilsley: Will it not be a debt due
from one part of the future generation to another part of the same generation?


John Horne Blackmore: I believe that is true. But may I point out another fallacy or semifallacy which men are endeavouring to persuade the people of Canada to believe. Before

I finish I intend to point out that the bonds of the last war debt are held by about fifteen per cent of the people of Canada, but they are owed by all of us. I am not saying the figures are exactly right; grant that they are held by twenty per cent of the people; in effect that renders eighty per cent of the people of Canada hewers of wood and drawers of water to the twenty per cent.


James Lorimer Ilsley: These people are changing
all the time.


John Horne Blackmore: But they are all
among the same group. I shall discuss that at greater length. To say that because we owe the debt to ourselves we need not worry about it is to delude the people of Canada.
Canadians have not yet paid for the last war. Now we have a four-cent postage stamp imposed upon us to afflict future generations. Let no one imagine that once this four cent rate is established it will ever be changed, unless some tremendous revolution takes place. Under the present system the Canadian people will and can never pay off the debt of the last war. Under it they will and can never pay off the debt of this war. According to the minister's figures, as of March 31, 1943, our national debt will amount to $7,861,000,000, and if I interpret the minister's words correctly the annual charge at 2-6 per cent is $205,000,000. If we add $2,250,000,000 a year for the three more years which it is likely this war will last, we shall add $6,750,000,000 to that colossal debt, and Canada will find herself saddled with a debt of some $14,000,000,000.
For the last number of years the Minister of Finance was able to encourage the house with the statement that the interest rate was going down even though the debt might be going up, but I ask what guarantee the people of Canada can have that the interest rate will continue to go down. If we are committed to a debt of $14,000,000,000, who is to say that the group of men holding that debt will not, at some time, agree among themselves to increase the interest rate; and what power would the Minister of Finance or the government of Canada, as at present constituted, have to prevent such an increase in the interest rate? Suppose the rate of interest was increased to 3, 3i, 4 or 4^ per cent; imagine what would be the condition of the people with a contractual obligation of that kind, which is supposed to be as sacred as though it came from the sanctum sanctorum, the holy of holies of all time.
Turning to the expenditures in connection with this war, I wish to declare definitely that we cannot avoid those expenditures, and we

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would not if we could. But I submit that this house would be remiss in its duty if it did not give earnest attention and careful examination to any set of proposals which offered a way whereby we might be able to manage our affairs without the dangers which evidently we are incurring, and thereby to introduce a saner system of managing the financial affairs of Canada.
There is another feature with respect to the budget which I indicated a moment ago. Not only does the size of this debt disturb me, but the ultimate number of the holders of the debt, the personnel of the creditors, greatly alarms me. Let it be borne in mind that a Canadian government bond constitutes a mortgage on every piece of property in Canada, that with the taxation structure which is now imposed, and which can be aggravated, it constitutes a mortgage on the very life of every individual in Canada, be he worker or anybody else. All the property of the people of Canada, particularly of the producers, is being mortgaged to a few Canadians. The bonds are gravitating into the hands of a very, very few, as all the records tend to show. There is no evidence that this trend will be in any other direction in future; in fact the evidence all goes to show that as days go by the bonds will come into the hands of a progressively smaller number of Canadians. Those individuals are accumulating so many bonds that they will be able to live upon the interest of those bonds. They will not invest in industry because their money will be safer in bonds. They will become a special class of gentlemen of privilege. The bondholders will be people who will have no interest at all in the welfare of the people generally, producers or consumers, and no interest in Canada. Their only concern will be to keep Canada alive and sufficiently strong to give them their pound of flesh from time to time. They will control the laws of this country because they will control parliament, which makes the laws. They will control government policy, because governments will bow down to the simple wave of their hands. They will also control the banking policy of this country. Therefore, as I said a short time ago, from eighty to eighty-five per cent of all Canadians will become hewers of wood and drawers of water for the remaining fifteen per cent; in effect, eighty-five per cent of Canadians will become hopeless serfs. One of the characteristics of a serf in olden times is, I am told, that he was unable to leave the estate on which he was employed. Well, the people of Canada who will be bound by these debts certainly will be unable to escape their bondage by any means. They will be serfs.
The men who are now overseas, your sons and mine, after having risked their lives, after
having done their bit heroically, nobly and effectively during this generation, will come back here and become members of the serf class almost to a man. I ask, is that democracy; is that what the members of this house will permit these boys to fight for? The condition toward which we are drifting is fascism, the rule of a few wealthy men over all the rest, a rule that cannot be shaken off by any means.
Some hon. members may wonder why I speak so feelingly on this matter. Well,! come from a province which has been struggling to extricate itself from the condition I am picturing, the condition into which Canada is rushing wildly. Does anyone think we can extricate ourselves from the toils of the monster that has gripped us? Not by any means; not by any possible effort we can exert. Every move we take is blocked by the courts. And, after all, the dominion is only a big province; it is only nine provinces joined together.
There is another aspect of this question. The financial policies of the minister are palpably failing to stimulate Canadian producers and workers to satisfactory production. That is not altogether the fault of the minister or of the government. It is the result of the faulty financial system which they are endeavouring to make work in these times. The minister is always worrying about where money is to come from. Not very long ago I had the privilege of going with a delegation to ask the minister for a certain amount of money for a most important health work in Canada. The-minister gladly granted that our case was just; there was no doubt about that. But did the* minister ask, "Are there enough doctors to do-all the work which would be involved in examining the people? Are there enough hospitals to treat the people whom you wish to treat? Is there enough medicine to give them the medical care they should receive?" Those were not his questions. Those questions would have been calling forth the human and material resources which are at the disposal of Canada. His comment was, "No, I cannot afford the money," which is the clearest possible evidence that the minister is bound by financial considerations rather than by considerations of the material and human resources which Canada possesses.


James Lorimer Ilsley: What was that occasion? I do not remember that at all.


John Horne Blackmore: I do not wonder the minister does not remember it. The hon. member for Renfrew South (Mr. McCann) was one of those who went in to see if we could get a certain amount of money, and I
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think one of the members from Manitoba was with us. I can soon refresh the minister's mind on that.


James Lorimer Ilsley: That was about a year ago.


John Horne Blackmore: Only the other day the Minister of Agriculture (Mr. Gardiner) referred to his inability to get money for the things which he needed. He realized that he needed things and it was simply a question of money. Time and again it has been declared in the hearing of every member of this house that financial considerations would not be allowed to be a hindrance to achievement in this country, that the only consideration would be our material and human resources. But such is not the situation. Did the minister borrow that money from the chartered banks because he wanted to do it? Did he do it because he did not have the material and human resources in Canada which were necessary to achieve the ends which he wished to achieve with the amount of money he borrowed from the banks? Not by any manner of means. Despite his protestations that he will make financially possible whatever is physically possible; despite the brave front which he puts on from coast to coast of Canada and for which everyone admires him; despite his strenuous efforts the minister is hampered by the limitations which result from the financial system which he is endeavouring to make work in this country.
I say that the time has come for a change. In the interests of the minister; in the interests of Canada's war effort; in the interests of the future the time has come for this chamber to consider the advisability of making a change. I, therefore, move as an amendment to the motion of the Minister of Finance:
That all the words after the word "that" be struck out and that the following be substituted therefor:
"this house regrets that the government still disregards the possible uses of government-created national money to the end that in so far as taxation and the borrowing of the people's savings fail to meet government expenditures the government might employ national money:
(a)	To relieve the debt situation which threatens the ownership and control of a great many private businesses, factories, farms and other means of production.
(b)	To pay farmers and other primary producers fair prices thereby stimulating the production of food.
(c)	To provide workers with adequate purchasing power.
(d)	To alleviate the distress of the aged and others in needy circumstances.
(e)	To prevent inflation by the subsidizing of industry where costs are uncontrollable, adopting where necessary a more aggressive and consistent rationing policy."
{Mr. Blackmon* ]
The matter with which I am going to concern myself more particularly is the impairment in production which has developed as a result of the government's financial policy. The Minister of Finance is paying far too little attention to the production of the needs of life in this country. From the beginning of the war too little attention has been given to the influence of wages and prices upon production. The armed forces have taken away our man-power, as has been urged with great eloquence and persistence in this house, and the wages paid to workers in munitions plants have drawn workers away from agriculture and other primary industries. The result is that there has developed the alarming shortage of labour which has been elaborated upon in this house.
I am not saying that what was done was not quite satisfactory. I am not saying that those two measures for obtaining men should have been avoided. I am not in agreement with those who would have impaired the chances of increasing this country's munitions production and this country's armed forces in order to take care of agriculture. But I contend that there were ways of overcoming this labour shortage in agricultural and other primary industries. Efforts should have been made to subsidize or bonus wages in our primary industries in order to draw into those industries women, elderly men, and many of the more or less unemployable who would have been willing to do all they could to help.
I am not sure that the house completely senses the seriousness of food in our war economy. I think that factor has been, rather neglected. I should like to read to the house some quotations from the statement of Mr. Herbert Hoover. These have been gathered together by Mr. M. M. Robinson, manager of the Ontario food distribution council. I draw particular attention to the following:
Food supply has now become secondary only to military operations in determining the outcome of the war. And it will take first place in saving the world from anarchy after the war.
And again:
The burden of furnishing food supplies to the united nations now and to a starving world after the war rests largely upon the American and Canadian farmer.
Again:
Agriculture simply must be envisaged as a munitions industry. The farmer must receive men and tools if he is to perform bis part.
And again:
The news comes daily from all parts of the country that the farmer is sending his dairy cows to slaughter for lack of labour. And this is amply verified by the arrivals at the slaughter houses.

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And further:
The shortage of labour, of machinery and methods of price control are limiting the vitally essential expansion of this production and the flocks and herds upon which production depends. And unless we can quickly realize and quickly reverse these limiting forces there are dangers to the conduct of the war.
And again:
But there is an even deeper cause of these shortages. We had all these burdens and difficulties in the last war. We are to-day exporting less than half the meats and fats to our allies that we did in the last war, for we then had to support France, Belgium and Italy also. Yet with this lesser burden of exports we are threatened with greater shortages of meats and fats on our home front than m world war I.
And again:
After all, the best remedy for price is increased production.
May I pause there to point out that apparently the hon. member for Danforth quite overlooked this factor in the matter of inflation, Inflation is, after all, a rise in price, and that arises from a shortage of goods. If we can stimulate our production sufficiently we need not fear a rise in price. Again I quote:
But the first and imperative necessity is to get more production. The American farmer will do it if he gets a chance. And the fate of the world may depend upon it.
I believe that with very slight modification every one of those quotations could be applied to the situation which exists in Canada.
I maintain that the minister and the other members of the government should have been much more careful to leave in the essential industries a good many more effectives than they did. I believe that there was carelessness on the part of the ministers of defence in taking away too many key men, but I am not going to press that because it is water under the bridge.
Every precaution should have been taken to give prices, bonuses and other forms of encouragement such as credit to the farmers, access to live stock, access to materials, so as to enable them to produce at maximum capacity. In my own constituency this year I was called into a conference by machinery agents and was really astounded to learn to what an alarming degree the farmers in my constituency were to be deprived of essential machinery for the conduct of this year's operations. We simply have not given the attention we should have to providing the farmers with the necessary means of production, and in many respects that is the result of our financial policy. We should have brought into production every potential producer of
daily products, honey, eggs, wool, poultry, beef, pork, fruits, wood, fish, lumber, et cetera, from coast to coast in Canada. There should have been not only a ceiling which was high enough but a floor which was also high enough to guarantee to the producer not only the cost of production but such a reward as would enable him to live and encourage him to continue producing, and guaranteed prices should have been established to continue for two or three years after the war.
I was talking with a farmer in my constituency just before I left for Ottawa. He was contemplating the purchase of a valuable Ayrshire cow costing a considerable amount of money, but he said, "I am afraid I had better not buy that cow because just about the time I get through paying this fancy price for her and getting an expensive shed built for her and other equipment purchased, the war will be over and I shall have the cow on my hands and be out my money." That is a characteristic and very common reaction among the farmers. It leads to uncertainty and hesitancy and militates against the war effort because, beyond question, it militates against production. There are thousands of farmers, villagers andi townspeople who would produce honey if they could' get bees, who would raise chickens to produce eggs, who would raise cows or sheep and provide the facilities for taking care of them if they were certain that a remunerative price would be guaranteed for long enough after the war to enable them, as they say, to get out from under. That guarantee is freely given to those who go into the production of munitions. If the farmers were sure that they would be able to market at remunerative prices all the eggs they produced, there is no question that production would increase, and the same with other farm products. One would think that anyone with sufficient intelligence to be selected for any post of responsibility in the conduct of this country's affairs would be able to see that. Are we to imagine that the minister was unable to see it? Are we to imagine that the Minister of Agriculture (Mr. Gardiner) and the Minister of Trade and Commerce (Mr. MacKinnon) were unable to see it? Then why did they not take care of the matter? Purely on account of financial considerations. In other words, they were bound by financial restrictions, not by the question whether bees, or cows, or sheep, or lumber, or all the other necessities for production, could be bought. They were not bound by the question whether or not there were plenty of men to help them produce, but by financial considerations, and
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they neglected to give those forms of encouragement which they knew were necessary in order to stimulate production in Canada. The attitude which they took in their heart of hearts would be the normal attitude of men in their oircumstanees. Their attitude would be: We will trust to Providence that it will work out all right because we cannot do any better anyway on account of financial restrictions.
Just to show that what I am saying is not out of line with what is thought by sober-minded men, let me give a quotation from the submission made by the Canadian Federation of Agriculture to the government only this year. I read from page 7, under the heading "Dairying":
A satisfactory price for dairy products sufficient to induce production is necessary.
The clear implication is that there is no such satisfactory price at the present time. Again:
The price control policy, mitigated by subsidizing on a very piecemeal basis-
You see what the farmers think of the means which the minister has so far used: -has created uncertainty and anxiety with regard to the future. Assurance should be given that subsidies when given will continue for a reasonable time to give stability to the industry.
I believe that that statement regarding the dairy industry applies in greater or less degree to every branch of agriculture in Canada. Even those who are producing hogs at most attractive prices and those who are producing beef at most attractive prices are filled with anxiety if the question arises whether they should purchase a choice sire, which might entail an outlay of one thousand or fifteen hundred dollars, to increase the quality of the calves they are raising, with the hope that in two or three years those calves will be old enough to sell. That anxiety tends to make them let their stock run down, and that is all to the detriment of production in this country.
A great many more men would labour in agriculture if they were assured of a living.
I have two letters here which I shall read, but before doing so may I make this general comment? I believe we have a tremendous capacity in Canada for singling out and emphasizing the wrong thing. So much stress is laid to-day upon the shortage of labour. That is something which cannot be overcome now by recalling men from the armed forces or from war industries. Instead, stress should be placed upon prices and wages which would tend to alleviate agricultural conditions by drawing into the industry people who dare not come in now on account of the low 
remuneration. One of these letters is from the far east and the other from the far west, and evidently both are written by good men. The first one comes from Moncton, New Brunswick. If some one asks me to name the writer of this letter, if I am called upon to do so I shall do so, but I hope that no one will invoke the rules of the house because I would prefer not to give this man's name. The letter is right here, and anyone can see it. It is dated March 2, 1943, and reads:
Dear Sir,
About all you see in the papers and hear over the radio these days is what our wonderful government intends to do "when the war is over."
What about now, when thousands are idle and in want and cannot get work anywhere? The labour department says "shortage of man-power." Where? Winnipeg paper says 8,000 idle there, and that applies to all over Canada. Personally I have tried several times this year to get work but employment and selective offices say "no work." I am past military age and strictly temperate and offered to accept any suitable job but answer is always "no work". It is about time they changed the head of the labour department and put a real man in who will help win the war.
Would appreciate your opinion on the above letter.
Thanking you and wishing you every success, I am, sir-
This man tells me in his letter that he is a consulting specialist on all classes of brick, stone, tile and concrete masonry. Whom does he blame? He is blaming the Minister of Labour (Mr. Mitchell). Who is to blame? The Minister of Finance? Not the Minister of Finance, but the financial system under which he is working.
Let me read another one now. This comes from Taber, Alberta. This man had written to me to see if I could find him a job. He is a returned man from this war. I had told him I was having difficulty in finding a job for him. He replies:
Your letter of February 17 received for which I thank you. In regard to where I stand with the selective service office in Lethbridge I will state I have been registered with them ever since shortly after I left the army on October 10, 1942. I have asked to be placed on different jobs if they came up such as grain buyer or a plant guard at the Trail Smelter, etc., but to date they have not been able to line up anything. Once when I was in there I showed them an application I had filled out applying to the civil service in Ottawa for a position in a government elevator or terminal, and they said "that's fine," for me to send it in by all means, so as far as they are concerned I can accept the first position offered me. I was becoming desperate for a job and that is the reason I have taken the matter of a position up with you as I figured I would get quicker action and better results through you than waiting for the Lethbridge office to get me something. The veterans' welfare officer in Calgary has worked

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hard to try and get me placed through the Lethbridge office but so far has had no success. I am hoping that through your efforts I soon will be able to get placed at work and I wish to thank you for your interest in my behalf.
Now, Mr. Speaker, there are two witnesses, and I will wager you could bring others from a thousand places in Canada, or more. Yet we are supposed to be short of labour. Is it to be imagined that a man of the quality of these would not go into agriculture if he had an opportunity to get enough money to keep his family? Is it to be imagined that he would not work on a farm? Yet what prospects would he have? About twenty-five dollars a month during all the months except the harvest season; during the harvest season, perhaps five or six dollars a day. I ask anyone, what chance has such a man of keeping a family on an income like that?
The reason why men of that calibre are not absorbed into agriculture or other primary industry is simply the matter of wages. It is a matter of price, pure and simple. The farmers are unable to pay them any better prices. Something must be done; the only power in this country able to do anything is the Department of Finance, and they apparently are unable to do anything as long as they are under the present system.
Most of the flaws in our organization for production can be blamed only upon the Minister of Finance. He alone can provide a remedy, but budgets such as this are not providing the remedy; budgets such as this are actually destroying incentive. They are drawing off savings which could go into production. They are aggravating the debt.
Last year I urged most earnestly, just as long as I felt it was becoming that I should, that the minister make allowance in the income tax for people who owed debts which they had contracted honourably prior to the introduction of the tax. But the only consideration he would give was in regard to mortgages and agreements of sale of homes. But there are people, tens of thousands of them, in this country who are deeply in debt and are being threatened with foreclosure, eviction and other misfortunes, and who are rendered utterly helpless to discharge their obligations because the minister has put them in that position through the financial system under which he is working. He says "I have to have the money."
May I give an idea how serious the debt situation is? I shall choose just one province, namely, Saskatchewan, which I do not happen to come from, and I hope hon. members from Saskatchewan will pardon me if I seem to be taking up a task which, I know, they would gladly take up if they had the opportunity. I chose Saskatchewan as an example of the 72537-70
provinces of Canada. According to the figures I have, there is a debt of $630,000,000 on the farms in Saskatchewan, which amounts to $21 an acre of the thirty million acres of farming land in that province. The average debt on the better land is perhaps $30 an acre. At present, 45 per cent of the crop is required to pay the interest on the debt alone. Just to show how farm organizations are concerned about this matter, and that they have expressed their opinion very definitely, may I read from a pamphlet which I have in my hand, "U.F.C. Information," published in Saskatoon. The particular issue is February, 1943, and I read as follows from page 2:
As mortgage companies call for one full third share of the crop, to apply as mortgage payment, it should be clear that even this full one-third is insufficient to meet the existing obligation. This deficiency, plus an amount less than one-third which also cannot be paid except in exceptional years, is pyramiding upon unpaid principal. 1940 produced the second highest provincial farm income since 1930, i.e. $142,000,000, and in that year $42,000,000 was required to service the farm debt of the province, leaving about $100,000,000 as the fundamental maintenance for our provincial economy, or slightly over $100 per person.
Probably that was never brought to the minister's attention. But I ask him now, does he imagine that people can carry on and produce when all they have to live on is $100 a year-and many of them not that-when they are badgered, beset, driven by creditors writing them offensive threatening letters, until they dread to go to town to get the mail? When they are threatened with foreclosure on such and such a date they struggle away in order to raise enough money, somehow or another, to stave off their creditors. And they are not sure whether they will be able to hold their farms until the next crop period is over. Under such circumstances how can they produce with any degree of assurance? This whole matter should be taken care of in a way which will relieve our producers from the handicaps which are now preventing them from producing. The whole matter boils down to this question: Where is the money coming from? And that again boils down to the financial system under which the minister works.
May I read a quotation from this "U.F.C. Information Bulletin". I find this at page 1:
Give the farmers a chance to produce, the same chance as the manufacturers, and we shall have food in abundance for the armed forces, for export and for the civilians.
There is no doubt about that. I read again:
We admit that the situation is difficult; but on the other hand much of the man-power which could be utilized for chores, feeding and the

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care of live stock and hogs on a farm is now frozen. In this time of emergency, many people above middle age who manage to exist by state or other assistance, would willingly work on farms and could do quite a lot of work if they were not expected to do a full man's job and if they were allowed to retain their state allowance or pension and, in addition, be paid a reasonable wage for services rendered. In this kind of work, the aged and crippled men and women and thousands of boys and girls can he utilized.
I think hon. members will be just about as distressed as I was when I tell them of two instances which came to my attention in the last year. One of them had to do with a man who served in the last war, and who is receiving a war veteran's allowance. This man was skilful in the production of poultry. I believe the finest poultry establishment I ever saw, and the best results from poultry I have known, were through the efforts of this man. At the same time he was able to work, and gladly. He told me he dared not produce more than just so many eggs, because the inspector came around every year and nosed into all his affairs to find out whether he sold an extra egg, or whether he possibly had obtained two cents more than the amount of the money he was allowed to earn before being rendered liable to cancellation of his war veteran's allowance. This man lives in Lethbridge. He was taken by a certain farmer to his farm to pick carrots. He said to me, "I can do a good day's work in the field," and he told me the number of days he worked bringing in carrots. At the end of a certain number of days and a certain number of hours he quit working on the carrots, because by that time he had earned all the money he could be allowed to earn, without losing his war veterans' allowance.
I ask any hon. member this question: When in the department of which the minister has charge such conditions as that exist, how can he possibly assume and assert that this country is exerting its maximum war effort in production. There are tens of thousands of men in that class.
Here is another example-and I will not tell where this man lives, although he happens to live in my constituency. He is seventy-three years of age, but hale and hearty, because he has lived well. He has been a hard worker all his life, and is still able to do a lot of hard work. In response to the urgent call for help this man went into the fields to stook grain. He was urged by the man employing him to go on stooking, and to do other work, with the result that he earned a few dollars more than he was permitted under the regulations governing old age pensions. As I stand here

now I am mortified, humiliated and ashamed to think I had to have that man tell me that they had cut off his old age pension.
It is time the minister set a whole body of people to work cleaning house and scrapping a *whole collection of silly, useless regulations which are trammeling and impeding this country's war effort right and left from the top to the bottom. I believe if he will do that he will find a great deal of the man-power difficulty will be cleared up.
I read again:
We have men, material and national resources, but we lack the medium to facilitate production and distribution. That medium is money and credit. The banks and other lending institutions do not function. Therefore parliament must exercise its power, release and govern a systematic flow of money and credit, which is the life-blood of civilization, and thus make it possible for farmers to do their bit in providing food.
The banks are lending money now much more freely than they have been for a long time. But still there are scores; yes, I suppose there are hundreds of thousands of men who are unable to get the credit they need to establish themselves in a way which would enable them to produce. This quotation justifies the statement I make. I read further:
Well, if the government will provide parity prices for farm products, farmers will be "good risks", for borrowing purposes.
The writer has been discussing the fact that a banker has said that because a certain farmer has lost everything he is no longer a good risk, and is therefore unable to borrow.
I find a good many most attractive passages in this publication. This one, for instance, appears at page 2:
In Saskatchewan the farmers are being persuaded to sign quit claims and to become tenants, which is perhaps more peaceful and not so costly a method of bringing about the transfer from ownership to tenancy.
Why is that condition permitted to exist? Because the Minister of Finance does not see how he can remedy the matter, and he fails to see how he can remedy it because he is bound by restrictions of an absolutely outmoded financial system. It is not that there are not enough resources and men in this country to remedy that situation. The only difficulty is that the money is not available.
Referring to page 4, so as to give another aspect of the farmers' troubles, I find that prairie wheat production in 1917 was 233,742,850 bushels, while in 1941 it was 279,000,000 bushels. Hon. members will note that this is almost 46,000,000 bushels more in 1941. Let us see what the income was. The average net price per bushel in 1917 was $1.94, while the average net price in 1941 was 50 cents. The

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net value in 1917 was $453,038,600, and the net value in 1941 was $139,500,000. Then we find this paragraph:
Thus, while wheat production in 1917 was 45,257,150 bushels less than in 1941, the western farmers in 1917 received $313,538,600 more for their crop than the wheat farmers in 1941 received for their greater production.
I wonder if the minister realizes the significance of these appalling figures. I wonder if hon. members realize what they mean in sabotage of the production effort of the agriculturists in Saskatchewan. Yes, it is sabotage. It is sabotage by the financial system, pure and simple. They have not talked about the quota and all the damage it does to the farmer. I read another one:
During the present war, farm prices in Canada have been substantially below prices in practically every one of the warring nations.
I interject to ask the Minister of Finance if he can conceive of a reason why agricultural prices in Canada should be lower than in any other country of the warring nations. What has gone wrong with Canada that she should become all of a sudden so meticulous about giving farmers low prices? Is she producing a different type of farmer from what the other countries are producing?
This situation followed a ten-year period of extraordinarily low agricultural prices. Wheat for instance reached the lowest point in three centuries. Prairie farm income dropped $2-5 billion in the seven-year period following 1930 as compared with the seven-year period prior to that date. In the year 1926 agriculture received 24 per cent of the national income. In 1931 it received only 14-83 per cent of the national income. The figure for recent years has reached about 15 per cent. As one-third of the people in Canada are actually engaged in farming, it is obviously unfair for them to receive only one-sixth of the national income.
Yet. in a country where conditions like that have been allowed to come to pass the minister tells us that Canada has reached her peak of production. And would the hon. member for Danforth, if he were in his place at the moment, tell us that the financial system is sound which permits a thing like that? It is not sound.


An hon. MEMBER:: Except for the banks.


John Horne Blackmore: It is not sound even for the banks, for the banks are losing their money. How will the banks and mortgage companies get their money if they utterly impoverish the people who owe the money? Apparently their only object is to get the land. Why do some men in Canada want to get all the land? If their desire to get that is not clear evidence that fascism is already rather firmly established in this
country, that they simply want to get the titles and deeds to make it that much more effective, will someone explain it?
I read further:
It is true that the government is spending a substantial sum of money annually for bonuses to farmers, but these bonuses do not begin to make up the difference between current prices and parity prices such as are now being paid to the farmers of the United States.
I think those are all the excerpts from that publication that I need to read in order to establish my point, namely, that the minister administering the present financial system is simply not encouraging the people of Canada to produce to the maximum the food which may be the determining factor in the prosecution of this war.
May I now read one quotation which comes not from farmers but from a source which certain hon. members will perhaps accept as being more dependable. This is from the Canadian Bank of Commerce monthly letter for February, 1943:
Our index of farm revenue rose to 88-8 (1926-100) the highest level since 1930, compared with 83-6 for the preceding twelve months. The rise was due mainly to greatly increased returns from live stock and milk, which more than offset smaller sales of wheat. Farm costs however rose from 89-5 to 98-5 owing chiefly to higher wages, with the result that farm purchasing power (revenue divided by costs) fell from 93-4 to 90-1.
It seems a reasonable conclusion, however, that some improvement occurred in the last quarter of 1942.
The writer did not take pains to elaborate. Could one have more convincing testimony to the impoverished condition which generally prevails in agriculture in this country?
As an illustration of the kind of thing which these men have evidently been using in making their computations may I read from the latest Searle Grain Company letter of March 3, 1943:
The Searle index of the cost of things farmers buy (147 itenis)^ now stands at 153-7 (1913-14 equals 100). This means that these same things cost farmers of the west at the present time 53-7 per cent more than did similar items of the same quality in 1913-14. (These costs have risen 17-3 per cent since August, 1939.) The price of wheat is now 5-5 per cent higher than it was in 1913-14. The purchasing power of a bushel of wheat is now, therefore, only 68-G per cent of what it was in 1913-14.
Why do conditions like that exist? Because there is a faulty financial system in this country. If the financial system is unable to remedy that defect the financial system is due for a change, long overdue. The dominion government must discover and introduce a financial and economic system which will
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render what is physically possible financially possible, so that Canada may have a genuine pay-as-you-go policy.
The minister has reported to this house year after year greatly enhanced revenues. Why have the revenues increased? Because the income of the people of Canada has increased. Is it to be supposed that if the income of the farmers be increased a few hundred million dollars the minister would not have derived more revenue from them? And will not the same rule that applies to manufacturers of other commodities also apply to producers of food? That gives point to the statement that we could have a pay-as-you-go policy if we managed things rightly.
Such a system has been discovered in social credit, and can be put into operation by an application of the monetary reform proposals of social credit, which will enable Canada to make a greater war effort without destructive taxation, without overburdening Canada's future with debt or impoverishing the Canadian people or endangering their democratic freedom.
There will be people who will challenge what I say. I invite them to make good their challenge. The simple fact of the matter is that this government has stubbornly refused to pay any attention whatsoever to the social credit system during these years, notwithstanding the fact that our need for a change is the gravest that has obtained in all our long history. Any financial and economic system capable of achieving the results necessary must be based upon the broad principle of the creation by the state of purchasing media that can be spent into circulation by the state without capital debt or interest charge. Such a system has been proposed by the social credit movement in Canada.
The dominion government must guarantee or cause to be guaranteed such prices and wages in such primary industries as agriculture, fishing, lumbering and mining as will positively assure Canadians of adequate supplies of food, clothing and shelter.
Generally speaking, all increases of prices and wages involved in the implementing of such guarantees must be in the form of bonuses or subsidies which will not cause added costs to consumers. The dominion government should pledge the Dominion of Canada to maintain such guarantees of price and wage levels for at least three years after the war. The state must create a substantial amount of the money needed so that it can be spent into circulation without capital debt or interest charge.
|Mr. Blackmore.]
What has the government done with the Bank of Canada? Let us look at page 873 of Hansard of this session. There we learn that the government borrowed from the Bank of Canada $443,000,000, including $250,000,000 in renewal of a loan, which, if I understand it correctly, means that the government borrowed this year from the Bank of Canada only $193,000,000. I wonder if the minister would feel himself free to tell us why he did not borrow $200,000,000; why stop at $193,000,000?
I should like to know why he did not borrow $1,000,000,000 from the Bank of Canada. There it was; and I ask, what was the reason for creating the Bank of Canada? Was it simply to be a dignified ornament? The dominion government borrowed from the chartered banks some $790,000,000, up to March 31. Apparently the hon. member for Danforth does not know that every single dollar of that money was created. He imagined that the money borrowed came from the deposits of the people. He needs to learn more about banking. What we want to know in this house and what we have a right to have the minister declare to us, is why the government did not borrow that $790,000,000 from the Bank of Canada. I should like to ' read some quotations, particularly for the good of the hon. member for Danforth and the hon. gentlemen around him who applauded some of his unwise remarks about finance last evening. I am reading from the evidence before the banking and commerce committee in 1939:
Q. But there is no question about it that banks create that medium of exchange?
Mr. Towers: That is right. That is what they are for.
The minister will find that quotation at page 287 of the proceedings. Perhaps in the midst of his anxieties he forgot to refresh his memory as to what took place before that committee. Mr. Towers says definitely that the banks are there to create credit. Well, what is the Bank of Canada there for, if it is not to create money? Let me read further:
Q. And they issue that form of medium of exchange when they purchase securities or make loans?
Evidently that is created money.
Mr. Towers: That is the banking business, just in the same way that a steel plant makes steel.
That is also at page 287. How can one conceivably place any other interpretation upon those words than that the banks create the money which they lend?
In the light of those solemn and definite pronouncements, will the minister tell this house why he did not have the Bank of

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Canada create that money and lend it to the Dominion of Canada rather than have the chartered banks create the money and lend it to the Dominion of Canada, thereby creating a debt and necessitating the payment of interest for years and years by the dominion, interest which was lost to the people of Canada, while that interest might have gone to the Bank of Canada and come into the possession of the Canadian people, inasmuch as that is a national bank. This is the sort of thing we want to understand, we want to know about, we. want explained. I reassert that money can be created by a bank; both types of money can be created, both currency, which is bills, and credit, which is figures in a book or cheque-book money. If the Bank of Canada is a genuine bank, is there any reason why it cannot also create both bills and credit; and if the government chooses to have credit rather than bills, for some reason or other, surely the Bank of Canada can accommodate it. Why does the government persist in disregarding the Bank of Canada in connection with this function of creating money? I say it should have borrowed that $790,000,000 from the Bank of Canada.
The minister probably will reply, as he has replied already in this house, that if the dominion government borrowed Canadian one dollar bills from the Bank of Canada, then those one dollar bills would come into the hands of the chartered banks who would expand those bills ten to one, as is their privilege under the banking laws of Canada, thereby creating an excess of circulating medium which would put us in danger of inflation. That would be the minister's answer. Let me reason with him for a moment or two. Why not overcome that difficulty by having the Bank of Canada print the one dollar bill and then lend the Dominion of Canada the ten dollars credit? Then why should not the Dominion of Canada spend the ten dollars credit; and when that ten dollars gets into the hands of a chartered bank why not have the chartered bank present the cheque to the Bank of Canada and receive in exchange the one dollar bill, so that the chartered bank can expand ten to one, thereby giving it the cheque-book money with which to meet the obligation it incurs when it receives that cheque on deposit?
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


John Horne Blackmore: Mr. Speaker, when the house took recess I was arguing that the
present financial system under which the Minister of Finance is endeavouring to conduct the affairs of this country in time of war has failed us signally and is threatening us with serious difficulties unless something is done about the matter. I moved an amendment to the motion of the minister in which I conveyed the idea that a change should be made at once, a change based on the general principle that state-created money which could be spent into circulation without capital debt and without interest' charges should underlie the new system which should be introduced to make better Canada's war effort and to render it possible to make what is physically possible in Canada financially possible.
I asked the Minister of Finance why it was that the government persisted in disregarding the use of the Bank of Canada for financing the war. Specifically I asked why the $790,000,000 which the government found it necessary to borrow from the chartered banks this year had not been borrowed from the Bank of Canada. I foresaw that the minister would answer such a question in the usual way. He would say that if the Bank of Canada printed one dollar bills and lent them to the government and the government spent them, then the chartered banks would get the one dollar bills into their possession and would use them as a basis of expansion ten to one, as is their right and privilege under the Bank Act, and thereby they would greatly increase the amount of the purchasing power in circulation and produce a tendency to inflation which, might be uncontrollable.
I pointed out that the government could adopt a technique which might overcome that difficulty. Suppose that the government desired to borrow $10-I am using the smallest sum to illustrate-from the Bank of Canada, it would not ask the Bank of Canada to grant it ten one dollar bills, it would ask the Bank of Canada to print one one dollar bill. That one dollar bill could be expanded at the rate of ten to one, which ought to be the privilege of that bank as well as the privilege of any chartered bank, and the Bank of Canada could then lend the government nine figures in a book or nine credit dollars which would constitute a checking account against which the government could issue a ten dollar cheque. The government could issue that ten dollar cheque for government expenditures, for example as payment of dependents' allowances. The ten dollar cheque would then come into* the hands of a chartered bank, say the Bank of Montreal.
The chartered bank would discover immediately that it had ten dollars more bank credit
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than it had cash on hand to support, according to the ten to one ratio. It would, therefore, apply to the Bank of Canada for some remedy. The Bank of Canada woidd ask that they send the ten dollar cheque to them, whereupon the Bank of Canada would send a one dollar bill to the Bank of Montreal which would immediately give the Bank of Montreal a basis for an expansion of ten to one which would enable it to expand its credit or its deposits sufficient to equal the ten dollar deposit which had been placed with it by the cashing of the cheque.


Richard Burpee Hanson: How will it reach my pocket? That is what I am interested in.


John Horne Blackmore: I did- not know the hon. member was so much interested in banking. I did not know that he was an important shareholder.


Richard Burpee Hanson: I want the dollar bill.


John Horne Blackmore: I am astonished that the hon. member cannot follow this line of reasoning. I do not think I will repeat it just now, but I will give him another illustration after a while. Obviously the government under these circumstances would have got into its possession ten dollars from the Bank of Canada. This would be government (money capable of being spent into circulation without an increase of capital debt or without Incurring interest charges except with respect to the Bank of Canada, a government-owned institution. The government would then have ten dollars which it did not need to borrow from any organization except its own bank, or itself, and upon which it would not have to collect any taxation.
If that technique were followed the government would be able to prevent undue expansion on the part of the chartered banks. The Bank of Montreal would not be able to expand any further than the ten dollars which would be the exact equivalent of the cheque which was placed in the hands of the bank by the person who received the cheque from the dominion government. From that time forward the Bank of Montreal would have ten dollars more money in circulation as a result of the government's expenditure. The ten dollars would be made up of a one dollar bill which it would keep in its vaults as backing for the nine dollars cheque-book-money expansion. It would have a one dollar bill and nine dollars credit, which would constitute ten dollars more in circulation. But the bank could not expand

that any further than the government's expenditures had expanded it. The same principle could be applied to 8100,000,000.


Mr. MacNICOL:: Why not a billion?


John Horne Blackmore: We shall come to that in a minute; one step at a time. If the government desired the Bank of Canada to lend it 8100,000,000, it could call on the Bank of Canada to print ten million dollars of bills, keep the bills in their vaults and give the government a credit of 8100,000,000. The government could write a cheque on that money. When the money went out into circulation it would get into the hands of the chartered banks. The chartered banks would submit a cheque to the Bank of Canada and would receive ten million dollars in bills as a basis for the creation of credit to equal 8100,000,000 which had been spent and which had come into their hands.
If this technique is followed, all tendency to inflation through credit expansion by chartered banks will have been overcome. There would be no more of an inflationary tendency than there would be if the dominion government spent 8100,000,000 which it had got from any other source-even borrowed from chartered banks. There may be some technical difficulties in the way of the application of the principle, but I submit that if there are any technical difficulties they can be overcome under the War Measures Act. Far more serious things have been done under the War Measures Act. The result of the whole procedure would be that the dominion government would be able to have money to spend which would not cause taxation of the people or incur permanent debt.
This raises the whole question of inflation which we have discussed time and again, and which I shall discuss briefly once more. I heard that a great reformer was once asked why in the world he repeated a thing one hundred times. He answered that he did so because ninety-nine times were not enough. If I repeat this a few times more I do it because I have not found that what we have said already is enough. First of all, what is inflation? Inflation is a rise in prices and cost, nothing more. The people have been taught to think that the German inflation consisted of something that had happened to German money. What actually happened was that German prices went up in terms of that money; the money stayed as it was, but the prices went up in terms of the money. That is all that that inflation was. The same thing happened with respect to the assignats in France during the revolutionary days. Prices

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went up for various reasons. Once we lay down the principle that inflation is a rise in price we are able to deal with it as something concrete and we are able to take measures to overcome that rise in price.
There are three causes of inflation. First, there is deliberate manipulation. When the war broke out, certain concerns in Canada raised the price of lard immediately by two or three or four cents. Immediate government action forced them to put the price down again. That was a case of inflation by pure manipulation, for which there was no justification whatsoever. That rise in price was made purely for purposes of exploitation. That is one cause of inflation which has nothing in the world to do with money.
The second cause of a rise in prices is what is called the price spiraling. If wages go up, the cost of production goes up and the price of the product goes up. The product goes into circulation and raises the cost of living; then labour asks for a rise in wages, and the result is that we have the spiral.
The third cause is scarcity. Spiraling has very little to do with money, and scarcity has very little to do with money in circulation, either the kind or the amount of it, but those are the three causes of inflation and they are the only causes as far as I have been able to discover.
What can be done with respect to each of these causes? Price fixing will overcome the first form, deliberate manipulation. The government proved that in the early days of the war, and it has been proved a hundred times since.
Take the second cause, spiraling. The government has to step in and absorb the spread by means of subsidy, which the wartime prices and trade board, greatly to its credit, has proved to be a perfectly feasible device. The discovery has been made that spiraling can be prevented provided the subsidies are sufficient.
The third cause, scarcity of goods, can be overcome by price fixing, by stem repressive measures. One of the devices for overcoming a rise in price owing to scarcity is either to increase the amount of goods in circulation or else to ration the goods, one or the other, and usually the two devices together will overcome this third cause of inflation.
Looked at in this way, inflation loses its horror. It becomes no longer something dreadful, unknown, unfathomable. It becomes a reality with which the people can deal effectively in a concrete tangible way. The war is teaching us several important things. It is teaching us many things about inflation.
First, it has taught us what inflation is. Second, it has taught us that it can be controlled. And, third, it has taught us how it can be controlled. The war is therefore conferring upon this generation a great benefit. It remains to be seen whether this generation is clear-headed enough to take advantage of what it is being taught and to apply to its own betterment the results of what it has learned.
This war is dispelling many delusions regarding inflation, such as that new money is inflation. Before the war broke out, the minute one spoke of the government creating a dollar bill people cried out at once, "Oh, that is inflation." That has been proved to be a lie, perhaps deliberately concocted and deliberately propagated among the people by certain selfish interests. That delusion has been dispelled.
Second, there was the delusion that new money necessarily causes inflation. That was an assumption quite commonly made. When the social credit movement commenced in Alberta we commonly heard all these untruths, these delusions, urged against the social credit policy. Most of them have now been dispelled.
The third delusion which has been dispelled is that creating money is or necessarily causes inflation; the fourth, that money without gold behind it is or necessarily causes inflation; the fifth, that state-created money is or necessarily causes inflation; the sixth, that money not lent by a bank is or necessarily causes inflation. Every one of these was a delusion. Many of them were taught in the schools to keep the people ignorant concerning the all-important matter of money. But the war is, as I have said, dispelling these delusions. We are learning to realize the truth of Mr. Hoover's remarks which I quoted earlier this afternoon, that the best remedy for a price increase is to increase production.
The experiences of Britain are most enlightening with respect to inflation. May I refer to the experiences of Britain during this war. There was great danger of inflation in Britain on account of the fact that there you have forty-seven million people living in a small island, with rather meagre resources in some respects. Under those conditions, as soon as the war broke out and restricted imports, there was every danger of inflation because great sums of money were being spent in the country in the conduct of the war. J. R. Scott Watson who was recently in Canada made known to us that the United Kingdom in 1939 had only thirty million acres in agriculture; much of that land was poor, much of it not in use. But Britain undertook
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An hon. MEMBER:: Socks.


An hon. MEMBER:: What kind of party was that?


John Horne Blackmore: 
Mr. HOMUTH:: Would there never be any fluctuation, then?


John Horne Blackmore: I would not say there would never be any fluctuation, but the amount of fluctuation could be controlled in such a way that the price could be maintained stable. This is the ideal of monetary management. When prices are stable, and the money is suitably circulated, and there are markets available, the tendency is toward sound money.
The word "inflation" has virtually been eliminated from the English vocabulary. I read in an article published in the Christian Science Monitor of January 30, and written by one Rene Cross, the last few lines as follows: The pound sterling is the world's healthiest currency. The word inflation can safely be eliminated from the English vocabulary.
Thus have the English people controlled their pound; thus have they managed inflation in these most trying times during war days.
Britain could have done just as well; she could have eliminated inflation just as effectively, if she had used to a considerable degree one pound notes spent into circulation without capital debt and without interest. May I illustrate? I have brought to the attention of this house two or three times, in the course of the years I have been here, the fact that during the last war Great Britain used money which was really a treasury note, and which was called a Bradbury. A good many hon. members have seen the Bradbury. It is nothing but a treasury bill valued at one pound. The Bradbury became to all intents and purposes a second currency. With the Bradbury the British fought the war, and with the Bradbury the British won the war.


John Ritchie MacNicol: How did it get the name Bradbury?


John Horne Blackmore: Because it was signed by Lord Bradbury who, if I remember cor-

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rectly, was head of the board which issued them. People called them Bradburys jocularly, and so originated the name of that famous British money during the last war.


Karl Kenneth Homuth: But there was still gold behind it.


John Horne Blackmore: Only a very small amount. They had behind it the treasury notes redemption fund, in which there was never at any time sufficient gold to give anything like backing. My hon. friends will find this dealt with most interestingly and scientifically in a book called "Currency, Credit and the Exchanges", by William A. Shaw, who was secretary to his majesty's treasury. That book is in the library; hon. members will find it very good reading, and most instructive. It shows how Bradburys were used in the conduct and in the winning of the last war. It is written by a man who undoubtedly is an unchallengeable authority, namely, Dr. William A. Shaw.
If in this war the British people had been using the Bradbury, which was issued without debt by the treasury, and without interest payable by the treasury, they could have applied the same anti-inflation devices exactly, namely, first of all subsidizing production to increase the amount of goods on hand; second, rationing and subsidizing prices, and, third, siphoning off. They could have used these three devices and could have controlled their prices just as accurately and effectively as they could, using the money they now use.


Karl Kenneth Homuth: Would the hon. member permit a question?


John Horne Blackmore: Yes, any number of them.


Karl Kenneth Homuth: Under the social credit scheme, from what I have been able to learn in the speeches to which I have listened in the past few years I would understand there would be no such thing as rationing, because there would be no necessity for it.


John Horne Blackmore: That is a very fine question. The important point to be borne in mind is that we are now at war.


Richard Burpee Hanson: Oh, oh.


John Horne Blackmore: The hon. member has a chance to learn something, if he will listen. As soon as he sees a chance of getting something which will enlighten him, he shies off.
The point is that in war time there are always scarcities of goods. Social credit is designed to be a scientific method of distribution applicable in an age of plenty. It presupposes, therefore, an age of plenty. We are now in an age of plenty, or will be in the midst of it as soon as we are at peace. 
The mere fact that we had overproduction all during the terrible thirties is clear evidence that there was an abundance of goods, and therefore rationing was unnecessary. Is that clear to my hon. friend? But when you come to a war and begin to use social credit devices in war time, of course you must use rationing in order to prevent evils which will naturally result from there being more purchasing power in the people's hands than there are goods to purchase.


Karl Kenneth Homuth: That is because there is a Liberal government in power.


John Horne Blackmore: I would not draw that conclusion. I suppose the hon. member is referring to the shortage of goods.


Karl Kenneth Homuth: And the shortage of gov* ernment, too.


John Horne Blackmore: My hon. friend may
make that allegation about the Liberals, but I do not propose to do so at the present time. They are guilty of some misdeeds, but they cannot overcome the scarcities which naturally result from war.


Mr. MITCHELL:: What happened to the Bradbury in 1919?


John Horne Blackmore: It was the soundest
money in the world.


Humphrey Mitchell: Except that the cost of living index was 98 per cent higher than in 1914.


John Horne Blackmore: Yes, but it was higher in the United States than it was in Great Britain. Laugh that off.


Humphrey Mitchell: The hon. member was
talking about the Bradbury.


John Horne Blackmore: The cost of living was higher in France than in Great Britain. Laugh that off.


Humphrey Mitchell: You laugh off the
Bradbury.


John Horne Blackmore: It is very apparent that the hon. member has a little information, but a little learning is a dangerous thing.


Humphrey Mitchell: My information arises
from the fact that I spent Bradburys in 1919 and I know what they were worth.


Karl Kenneth Homuth: You did not spend enough.


John Horne Blackmore: And if my hon. friend had been spending dollars in the United States he would have known what was wrong there [DOT]-or dollars in Canada. Conditions in the United States were not as good as they might be.

The Budget-Mr. Blackmore
The trouble was that in the last war Great Britain had not perfected the techniques which she used to prevent inflation in this war. There was inflation at the time of the last war, and there would have been with any kind of money. Bank of England pounds were just as weak as Bradburys in Great Britain. I think I have dealt with that, but if there is any further question with respect to Bradburys, now is the time to ask it.
The point I wish to make is that the British government would have been able to manage its price structure and prevent inflation just as well if it had been using Bradburys, which were governmenGissued debt-free pounds, free of capital debt and free of interest-just as well as it has been able to manage with the regular money of the realm in this war, if it had only used the technique used in the last war. It could have subsidized production with Bradburys just as well. It could have subsidized consumption just as well with Bradburys. It could have rationed: it could have siphoned oil just as well. The result is that it would have controlled inflation.
With respect to what Canada can do, let me say that Canada, with state money, could do just as well as Great Britain. Dominion dollar bills were just as good as were Bank of Canada bills. Money which hon. members used in Canada, all the way through, until the time of the establishment of the Bank of Canada, were either dominion bills or bills of one of the chartered banks. And the dominion bills were just as good as bills of the Bank of Montreal, or those of any other bank. They were state issued, and the state did not owe anybody for one of them, and could have used them-


Mr. TUSTIN:: Could those Bradburys be
used outside England?


John Horne Blackmore: Of course not. Can
the English pound be used outside England?


George James Tustin: Certainly.


John Horne Blackmore: I am sorry; I apologize to the hon. member, because I did not understand his question correctly. Bradburys could have been used exactly the same as Bank of England one-pound notes-exactly the same, no better and no worse. Does that deal with the hon. member's question? The question which I think is in the hon, member's mind is as to whether or not they were as good on the exchanges, and whether the exchange rate on them was as good. May I say to him it was just as good.
As I was proceeding to say, in Canada before the formation of the Bank of Canada we were using dominion dollar bills. They
were just as good as Bank of Canada bills have been since that time. They were just as good as any bill of any bank in Canada, up to that time. During the last war the dominion government printed 26,000,000 dollars in bills and spent them just as they would spend ordinary revenue. Hon, members will find an account of that in the report of the royal commission on banking and currency in Canada. This was published in 1933 and I have a copy of it. This is what I find at paragraph 47 on page 22:
In the war session of 1941 parliament raised the partially covered issue of $50,000,000.
That was partly covered with gold.
Subsequently an issue of $16,000,000 was made against a deposit of railway securities-
No gold behind1 those.

guaranteed by the dominion government, as well as an uncovered issue of $10,000,000 for governmental purposes.
I contend that if the dominion government were printing bills to-day in the manner that they printed those twenty-six million and were applying the anti-inflationary devices which the British have applied with such success we would completely overcome inflation in Canada, just as successfully as we are overcoming it with the money we now use. And that money could be used to subsidize production and consumption just as well. And by rationing and siphoning off we would keep our economy free from inflation just as well as we can do with the debt money which we now use. The dominion government issued the money to which I have referred, the $26,000,000, under the Finance Act of 1914. Another finance act of 1923 permitted the dominion government to issue money in a similar way. It was understood that there was gold behind the dominion bills. In fact, there was gold behind dominion bills. Probably the gold gave a certain amount of value to the bills until April 10, 1933, when the gold redemption clause was suspended. After that there was behind the dollar bills no gold that could be called for; there was no redemption; still the dollar bills continued just as valuable as before. That indicates clearly that it was not the gold behind those bills that gave them value, and it was not the fact that the bills were printed or lent by a bank that gave them value. They were of value because the state printed them and behind them was the goods-and-serviees-producing-power of the nation.
I say that Canada to-day could use the Bank of Canada, the bills and money issued by the Bank of Canada, for the financing of a large measure of the cost of this war. I will
The Budget-Mr. Blackmore

not say how large a percentage, but certainly the $790 million which we borrowed from the chartered banks could have been provided from the Bank of Canada. Canada could either cause the money to be issued by the Bank of Canada or she could establish a currency commission of the treasury board which could function as efficiently as the treasury board did in 1914 to 1917 in issuing money.


Mr. REID:: If the hon. member would
permit two questions:	Under that system
would there be taxation? And if there would be taxation, in what proportion would the issue of dollar bills be to the taxation?


John Horne Blackmore: There would have to be taxation while the war is on. One device for overcoming inflation is siphoning off the money the very device used by Britain. The minister uses them all, taxation, borrowing from the people by savings certificates or bonds.
With respect to the second point, I am not able to say at the moment what the percentage should be because I have not given thought to that matter. I would have to give it some thought.
I contend that in the light of the evidence which is available to-day members of this house are neglecting their duty to the people of to-day and to the people of the future if they do not canvass with the greatest thoroughness all the possibilities which might result from a proposal to finance in whole or in part the activities of this country with money which may be created by the state and spent into circulation rather than lent into circulation, and spent into circulation without debt and without additional interest.


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I do not propose to speak at the same length as those who have preceded me. I think two speeches have taken five and a quarter hours, and I am sure the house is weary of long speeches.
First let me say that in common with all hon. members of this house we of this group are anxious to make the greatest possible contribution to the successful effort of this country in cooperation with the united nations in the winning of the war. However to-night I am going to discuss the budget. I would delight to enter into a theoretical discussion of the fundamentals of certain social theories which I hold, but I do not believe this is the time or place to do that. I do, however, want to say a word with regard to the hon. member for Lethbridge (Mr. Blackmore) and some state-

ments he has made, because he has moved an amendment, and consequently one must, in passing, at least say something about it.
The hon. member for Lethbridge said he did not know what those of us in the other groups regarded as sound money; did we think that money with gold behind it was sound money, or money with anything else behind it? My understanding of sound money is money that is directly related to the goods and services which that money is designed to account for and to circulate in society. In order to get that sound money, society cannot rely upon any law of supply and demand in a social field in which great monopolistic enterprises, either financial or industrial, are predominant, and therefore the time has come when, if we are to have sound money, we must of necessity be able to plan our production and distribution in such manner that we are able to relate-directly the purchasing power that is produced when goods are produced to the goods produced. We cannot regard money as anything but a rough and ready measure and medium of circulation for goods. It seems to me that my hon. friends to my left mistake money for wealth. In other words, they mistake the shadow for the substance. In my view sound money is money that is related to goods and services. If we stimulate the production of goods out of proportion to the amount of money in circulation, we have that bitter thing that we call deflation. If on the other hand, without regard to the goods that can be consumed in a nation, we circulate vast quantities of money, then we have the equally evil thing, inflation.
War demands at present have made it impossible for consumers' goods to be placed on the market to the extent that we are placing money in the pockets of the people who are producing goods, and consequently what the minister is up against to-day is not a shortage of purchasing power -but the question how to extract the potential purchasing power from the pockets of those in the community who-possess it. If the hon. member for Lethbridge would just examine one step further into the British scheme of things he would find that in addition to the very heavy taxation, at this very moment they are asking the public to-raise a voluntary gift amounting to the enormous sum of $3,000 million for the purchase of aeroplanes. I refer to the "Wings for Victory" fund. That is to arouse the enthusiasm of the British people in order that they will surrender to the government a portion of the purchasing power that otherwise might create a demand for goods that cannot be satisfied.

The Budget-Mr. Caldwell


John Horne Blackmore: That of course is a form of siphoning it off.


Major James William Coldwell: It is, but if you are continually siphoning off, what is the object of continually pouring in something you have to siphon off?


John Horne Blackmore: If my hon. friend will permit a question; if the minister was so much interested in taking the money out of the pockets of the people, will he explain why he took $790 million from the chartered banks and put it back into the pockets of the people?


Major James William Coldwell: The Minister of Finance (Mr. Ilsley) will have to answer that himself. Sometimes the loud laugh just speaks the vacant mind.


John Horne Blackmore: Not in this case.


Thomas Vien: I must ask hon. members to refrain from interrupting the hon. member who has the floor.


Major James William Coldwell: Yes, Mr. Speaker, and then I will not make any more remarks of that description. Under our present banking system, when the Minister of Finance goes to borrow funds from the chartered banks he borrows something from the private institutions that they are able to lend him because they are basing their credit upon certain notes and securities which they have obtained in various ways from the Bank of Canada.


Some hon. MEMBERS:: No.


Major James William Coldwell: At the present time, yes; and for every dollar the Bank of Canada issues, when it goes to the private chartered banks- and I use the term "private chartered banks" advisedly-they can lend, as the hon. member for Lethbridge properl}'- said, at least $10 which they consider safe or, under our law, $20 if they so desire.


Some hon. MEMBERS:: No.


Major James William Coldwell: Certainly; that is the law. For every dollar of Bank of Canada money they hold they can lend up to that amount. Consequently, as the minister explained very fully last year, the issue of currency to meet our war obligations directly by the Bank of Canada is to that extent more inflationary than the direct borrowing of money from the chartered banks of Canada. The minister explained that very fully during last session. Now I am just a little tired of being lectured, and I sometimes think that, after all, we have in existence in Canada one government which represents in part the views of my hon. friend. This afternoon the hon. member for Lethbridge gave some instances
of poverty in the province from which I come.
I was going to give some of those instances myself to-night, but I shall not do so because that has been done. But let me point out that poverty on the prairies is not confined to Saskatchewan. It is also rife in Alberta, where in 1935 a government took office which said it would wipe poverty off the map in that province or the premier himself would take to the tall timbers.


Mr. JOHNSTON (Bow River):: That is not right.


Major James William Coldwell: I have in my hand one of a good many letters I have received from Alberta this session. I want to put it on the record, because letters were placed on the record to-day from my own province, and quite properly; I am glad that was done. This letter was written to a friend of mine in Saskatchewan, one of my supporters in my constituency. It is dated from a little place in Alberta, January 25, 1943, and says:
Dear Mrs.


Richard Burpee Hanson: What is that?


Major James William Coldwell: It is a radio broadcast from Alberta. Therefore when we are talking about poverty, let us look at ourselves just a little. I noted that in the budget of the province of Alberta recently brought down in Edmonton there is a surplus of two or three million dollars; yet look at the poverty in that province. And still we hear so much about what will be done in the future.

The Budget-Mr. Coldwell


Mr. HLYNKA:: What has that to do with this budget?


Major James William Coldwell: This afternoon the hon. member for Lethbridge indicated the poverty of the province of Saskatchewan.


John Horne Blackmore: Only as an illustration.


Major James William Coldwell: And I am indicating, as
another illustration, the, poverty in Alberta, where my hon. friend's party is in power.


John Horne Blackmore: I am very glad you
are doing it.


Major James William Coldwell: Now let me say that my hon. friend s ideas and our ideas about money are quite different I have given what I believe is a correct definition of what sound money ought to be. We do not believe in the present system. We believe that all money should be national money. We believe that the whole financial system should be a national system. That was illustrated last year in an interchange which took place in this house and which appears at page 3108 of Hansard for June 5, 1942. The Minister of Finance referred to the hon. member for Lethbridge, and said:
gen*Ien??n seems to argue part of the time that we should run the banks. That is the Cooperative Commonwealth Federation policy He seems to object to the private banking system. Instead of allowing the banks a profit on the carrying on of banking activities, he suggests that the government should carry them on; and, as presumably he would say, that the sho"!d have the profit themselves, is that the position of social credit?
The hon. member for Lethbridge replied in these words:
No; that is not quite correct. The social credit movement believes that the banks can work for the government. The banks do not necessarily belong to the government. It may Iif	a,^ right for the government to buy
the whole banking system. We would certainly never favour having the government seize it or cause any harm to the bankers.
If I have learned anything since I have been m this house, I thought from the point of view of our social credit friends the bankers were the big shots who were entirely responsible for every evil that has cursed this country since confederation. Then he went on-
We do believe in private enterprise. That, the minister will find, is the distinctive difference between our movement and the socialistic movement, which seems to favour government ownership and direction. We believe it is better tor the country to have private ownership.
I find it very difficult to understand exactly what is involved in that answer, but let me

say this to my hon. friend. When he was speaking the other day, after I had spoken, he said that we of the Cooperative Commonwealth Federation were "shifty." I want to say that I know of no more shifty statement on the records of this house-


John Horne Blackmore: It was completely
consistent.


Major James William Coldwell: -than that, which was applied to the Cooperative Commonwealth Federation group.
In order that we may place our position clearly before the house, I wish to move an amendment to the amendment which has been moved. I move, seconded by the hon. member for Cape Breton South (Mr. Gillis):
That all the words after "that" in the amendment be struck out and the following substituted therefor:
"this house regrets the failure of the government to provide for the nationalization of the banking system so as to make possible the full utilization of the Bank of Canada for the financing of the war;
and further this house regrets the failure of the government to provide for increases in the amounts paid to old age and blind pensioners, or to make adequate provisions for veterans of the last or the present war, or their widows and dependents;
and further this house regrets the extent to which the government has vested the control of the Canadian economy in monopolistic industry and finance."
There we place our position in the clearest possible language. We believe that if we are to have a financial system that will be an instrument of the country in which we live, the financial institutions must be the property of the nation. Some may disagree with that, but that is the position we have taken in this house throughout the years, and that is the position taken by all democratic groups like ours wherever these are to be found throughout the world.
I want to get down to some of the things in the budget. I am sure that none of us in this house is envious of the task that had to be performed by the Minister of Finance. That task is easily illustrated if we look up the record for a few years back. For example, we find that in the fiscal year 193S-39 the total revenues of Canada were the paltry sum, as we think of it nowadays, of $502 million. I recollect how we were told that we could not find an additional $100 million to provide work for those who were unemployed and travelling from place to place across this country. Last year the total

The Budget-Mr. Coldwell
revenues in round figures were over $2,200 million. A comparison of the expenditures shows the same state of affairs. The total expenditures in 1938-39 were $553 million, leaving a deficit of $50 million. The total expenditures in 1942-43 were nearly $4,500 million, and with revenues of less than $2,225 million, there was an estimated deficit of just over $2,225 million.
I wonder how many members realize that if you add up all the appropriations we have made, since September, 1939, including the one now covered by the resolutions before the house, you will find they total $12,500 million. I looked up the Canada Year Book to see what the total estimated wealth of this country was. The last year for which it was given was 1933, when it was shown as $25 billion. In the four years of war we have spent a sum of money equal to one half of the estimated total wealth of Canada in 1933.


Mr. SLAGHT:: That was a bad year.


Major James William Coldwell: If the hon. member for Parry Sound will do what I did and look up the figures for 1927 he will find that the estimated national wealth for that year was not much higher. I have just forgotten the figure, but I know it is not much higher. It seems to me that there are valuable lessons to be learned from this. We have been told to-night that we live in an age of potential plenty. I believe that in normal times planned scarcity ought to be regarded as a high crime on the part of any government. What we have done during the war has not been done by means which are at all mysterious.
I remember in 1933 during the course of some public addresses which I made, one of them over the radio, I said that if all our people in Canada were put to work, if all our idle machines and resources were used we could provide goods and services to furnish on the average every Canadian family of five with approximately $4,000 worth of goods and services. I was laughed at, but the governor of the Bank of Canada estimated just recently that the gross value of the national output for this year will be approximately $9 billion. With 700,000 of our young men and women out of production and in uniform we have been able to produce in Canada goods and services to a value rapidly approaching the figure I mentioned for a family of five. It has not quite reached that figure, but it is rapidly approaching it.
We are producing more goods, but we have not had the benefit of them in our own communities because the goods we are producing
to-day are not civilian consumption goods- they are goods for war. If we organize our industrial and economic life as we ought to, we should be able to produce goods for peace to the same amount, or even more because we would have 700,000 more men and women in industry. However, the unfortunate factor is that in normal times the main stimulus to economic activity is not defence of the nation or the good of the community, but the making of profit. To my mind that motive is wrong, but it is the motive which sets the wheels of industry in motion and keeps them running. May I say to my hon. friends to my left that it is this constant dipping by the great financial organizations, the taking out of purchasing power that they cannot use for consumption goods, that causes stagnation and ultimately ends in depression.
The interest of the people is sacrificed in such times by government non-intervention, but that is the price we pay for free enterprise. We take the position that in any proper form of society human needs ought to come first and that the making of profit ought to be a purely secondary consideration, instead of reversing the position. Let me say that the fateful years through which we passed condemned not only the people but the nations to insecurity and inequality. We then got the ultimate result-war.
My adverse criticism of the budget is that it contains no attempt whatsoever to relieve poverty and to remove trade barriers which will be a potent factor in the post-war world, nor does it prevent control of our economy by monopolistic industry and finance. Today, in this war, sacrifice to be just must be equitable. We have no right whatsoever to ask the aged, on their old age pensions, and the widows and dependents of the men who perished in the last war or in this war to accept, during this war, a sacrifice which is inequitable. Of course, we are told that undoubtedly when the war is over, better times will be ahead. Well, I view promises with a good deal of suspicion,. There have been too many promises, and the vain repetition of promises is useless in these days to satisfy the people of our country. In 1919, if I may quote again from a document from which I quoted the other evening, the present Prime Minister (Mr. Mackenzie King) attended and was elected leader at the great liberal convention in this city. He moved a resolution there on social security and said this:
The committee feels that this war-
That was the war of 1914-18.
-was a War for freedom. It was a war to bring about throughout the world a larger measure of human freedom; and that the men who
The Budget-Mr. Coldwell

sacrifice their lives do so that there might come into the world a newer and higher civilization. Those who did live through these stormswept, war-swift years in France and Flanders were not preserved that they might return to conditions of warring factions in industry. They have come back with the hope of helping to bring about a condition in which the life of the people shall be made a life of greater freedom, a life of greater human happiness for the masses; a life of social, political and industrial freedom in so far as it is possible to make it such.
He went on to say-this was on August 16, 1919:
It is not enough to have work one day and unemployment the next, to have work at one time and then when sick be helpless. . . . The Liberal party of Canada in accepting this programme in its entirety to-night is taking a position which in the course of time will be regarded as historic; it is declaring itself the first political party in any country in the world to accept this programme and to ask its followers to join with other nations in carrying it out.
Those were noble words, but need I say to this house that those promises have been unfulfilled? If you look at Britain, Australia or New Zealand, you find that those countries have gone far beyond what we have done. Since that day the Prime Minister spent seventeen years in power in this country. During his regime we drifted into a depression, we saw the League of Nations destroyed; we helped to arm the aggressor powers, we shipped nickel, copper, aluminum to them. I think that is sufficient condemnation.
The Minister of Finance also spoke of the tariff. He said that to-day the tariff had little effect. The revenue last year amounted to $118,000,000; that was the estimated receipts in this year's budget. My suggestion is this, that if tariffs amount to very little these days, why not remove the tariff altogether on the essentials for war and on the necessities for life? That would indicate Canada's stand. It would be a fine gesture.
When I was on the war expenditures committee, as other members who were with me will recollect, when we were looking at the expenditures we would find from time to time tariff duties on machines brought into Canada for war purposes. Here we are in the middle of a -war importing necessary machinery, and may I add, vital repairs to the machines used in our agricultural industry, and those war machines and those agricultural machinery repairs have to run the gauntlet of the tariff.


Mr. DOUGLAS (Weyburn):: And the exchange tax.


Major James William Coldwell: Yes, and the exchange tax.
To-day the nations' trade is run through national boards. The Minister of Finance also said this:
There again, however, will be a time when the tariff will be an important instrument of trade policy.
It is left for a future decision. I thought the Liberal party had made a decision on that subject long ago.
I listened carefully last night to see where the Progressive Conservative party stood in relation to trade. I must say that I could not hear very well from where I sat, but I listened carefully and I read their spokesman's address in Hansard this morning. It seems to me that the critic for the Progressive Conservative party looks forward to the time when the industries of Canada will be protected again by a fairly substantial tariff. That was the correct interpretation, I think, that should be placed upon the hon. gentleman's remarks. All through the years, Mr. Speaker, we have stood by this statement-I am quoting from our manifesto of 1933:
The strangling of our export trade by insane protectionist policies must be brought to an end. But the old controversies between free traders and protectionists are now largely obsolete. In a world of nationally organized economies Canada must organize the buying and selling of her main imports and exports under public boards.
That is precisely what the nations are doing now and what I believe they will do in the future. Instead of a large number of individuals going on to the speculative market and buying various commodities, we shall find the government doing the buying through boards. That is something we heard about last year when we were on the other side of the ocean. If that policy was correct in any particular in 1933, it is much more correct to-day.
I pass on to something else. More disturbing still is the situation in regard to our war industries. When I look around I find that representatives of big business control a number of the major economic functions of the state to-day. Orders in council have been passed by the thousands giving them power, with no adequate supervision, and, indeed, no opportunity for this house to make the intensive studies of these 35,000 orders in council that ought to be made-there are too many of them. If I may refer again to 1919, there was no more caustic critic of government by order in council than the present Prime Minister who on August 6, 1919, moved a resolution in this city reading thus:
... restoration of the control of the executive of parliament...

The Budget-Mr. Coldwell
I skip a few words:
...and the discontinuance of government by orders in council.
Those were the words of the present Prime Minister after the experiences of the last war.
When I speak of these things, let me say that there are other disturbing factors. The war expenditures committee pointed out the necessity for looking into agreements that contained clauses for accelerated depreciation or for rebates from the Excess Profits Tax Act. I brought down with me, so I thought, two or three orders in council that were tabled recently. After the last session of parliament I did discuss one of these agreements, not the one tabled1 recently, but one tabled last session, and when I first mentioned it I made an error in my interpretation of it which I corrected.
But let us look at two or three of these contracts. Here is P.C. 2846, an agreement made with the Consolidated Mining and Smelting Company of Canada under the War Exchange Conservation Act, the one made last April to which I have referred. What is that agreement in brief? This company agrees to construct an additional power plant at an estimated! cost of $9,256,000. This plant is to be leased to a subsidiary of Consolidated Smelters, the West Kootenay Light Company Limited. In return the agreement states that in the computation of the amount of the profits of the company for the purposes of the Income War Tax Act and the Excess Profits Tax Act, to determine the liability of the company to pay tax under these acta for each of the years 1941, 1942, 1943 and 1944, a special deduction from profits is to be permitted each year. The amount of the special deduction is not to exceed fifty per cent of the total expenditures made on the power project; that is to say, not more than one-half of $9,256,000. This, I submit, is equivalent to the government making a gift of over four and a half million dollars to this company.


James Lorimer Ilsley: No, it is not.


Mr. McLARTY:: It is a maximum.


Major James William Coldwell: It is the maximum, and they will get the maximum.


James Lorimer Ilsley: Well, that remains to be seen.


Major James William Coldwell: As will be done by the next one to which I shall refer.


James Lorimer Ilsley: It is merely a write-off which would have taken place in the normal course, but over a little longer period; that is all.


Major James William Coldwell: "Over a little longer period." We pay for it during the war, and the company has the plant.


Harry Rutherford Jackman: The country has the plant.


Major James William Coldwell: Consolidated Smelters has the plant.


Harry Rutherford Jackman: The country has the use of the plant during the war.


Major James William Coldwell: And we pay for it. I refer now to P.C. 7819, made with the Falconbridge Nickel Mines Limited. Under the same act, this company was assured of a contract through the war production board of the United States to purchase ten million pounds of nickel in matte during 1942 to 1945 at a price which included six cents a pound extra to repay the company, over the life of the contract, for the capital costs incurred in fulfilling the order. The company claimed that unless special depreciation allowances were granted to enable the company to amortize the costs of the additional facilities in mine, mill and smelter over the life of the three-year contract, the expenditure necessary to provide the facilities would be wholly unjustified on account of the small net return and doubtful value of the additional plant and facilities after the war. Now what does the government allow? The government has allowed the company, in computing the amount of profits for purposes of the Income War Tax Act and the Excess Profits Tax Act, a deduction by way of special depreciation allowance as follows: for the year 1942, twenty per cent of the cost of depreciable assets, not to exceed $131,346; and for each of the years 1943 and 1944-each of the years-forty per cent of the cost of the depreciable assets, not to exceed $262,690 in each of the three years. And who is going to own the plant and the depreciated assets at the end of the three years? This nickel company.


Norman Alexander McLarty: What is wrong with that?


Major James William Coldwell: The other day I asked some questions in the house about the Ship-shaw development. I wish to say that I object to the government of Canada giving anything to either the nickel company or the aluminum company. The Aluminum Company of Canada Limited was the predominant partner in the Alliance Aluminum Company of Basle, Switzerland, in 1931, when the world was divided up among German and other companies. I do not want to name them all.


An hon. MEMBER:: Why not?


Major James William Coldwell: Because, to be perfectly frank about it, I do not happen to have them on the tip of my tongue. The Aluminum
The Budfjet-Mr. Coldwell

Company of Canada was the predominant partner when the markets were allotted in July, 1931; it had the largest amounts allotted to it of any company. What do we find? We find that that agreement stated in effect-and they varied that agreement a little later on so that they would not interfere with one another in the export market-that each member of the Alliance could manufacture up to the limit in its own domestic market. We find to-day, as a result of that policy, that we have to gather up the old aluminum pots and pans throughout this country and in the United States because during these years, under that agreement, the Germans had built up the largest aluminum development in the whole world.


Richard Burpee Hanson: Oh, no, the United States has the largest.


Major James William Coldwell: I can give my hon. friend the figures. I am not speaking without having studied this matter fairly intensively during the past few weeks and examined the records of the committee which sat in the United States the other day.
If you look at International Nickel and the other nickel companies you find the same thing. Yet under policies like this we are handing oyer the control of plants and resources to these powerful monopolistic industries which will, if they have the opportunity, regain some sort of liaison with the great companies in the countries with which we are at war Therefore I say that I object strenuously to the alienation of our resources and the depreciation of our national investments in this manner to companies of this description.
One other example-


Thomas Vien: I am sorry to interrupt the hon. gentleman, but he has exceeded his time.


Major James William Coldwell: I moved a subamendment, Mr. Speaker.


Thomas Vien: As the hon. member says, he moved a subamendment. But I have examined the question whether the hon. member is entitled to longer than forty minutes, and I have come to the conclusion that he cannot be permitted to continue beyond that time except with the unanimous consent of the house.


Some hon. MEMBERS:: Go on.


Major James William Coldwell: Thank you. May I point this out, that last year, when the hon. member for Lethbridge was in exactly the same position as I am in to-night, he was allowed to continue, and it was stated that he had the right to continue. I did not think of bringing down this evening the copy of

Hansard which bears on that point because I did not think the matter would be raised. Had I done so, I would have been quite prepared to discuss the question.


Some hon. MEMBERS:: Go ahead.


Richard Burpee Hanson: Let us have a ruling.


Thomas Vien: I have no recollection that such a privilege was given to the hon. member for Lethbridge; but I was considering, while the hon. member for Rosetown-Biggar (Mr, Coldwell) was speaking, whether the point might arise, and I think the house is entitled to know the reason why I should object to the hon, member continuing.


Major James William Coldwell: Well, Mr. Speaker, if there is any question about it-


Richard Burpee Hanson: Let us hear Mr. Speaker's ruling.


Thomas Vien: If the hon. member with the consent of the house wishes to continue longer, of course the Chair will agree; but in the circumstances here perhaps it might be well if a ruling came from the Chair, because the same situation arose on the debate on the address; the question was then raised, but not presented to the Chair for any decision. I think it might be well that the hon. member should continue, because that appears to be the feeling of the house. Nevertheless, for the guidance of hon. members in future, I think the house should know the position I would take with regard to this question.


Karl Kenneth Homuth: Let us have the ruling.


Thomas Vien: Standing order 37 states:
No member, except the Prime Minister and the Leader of the Opposition, or a minister moving a government order and the member speaking in reply immediately after such minister, or a member making a motion of "no confidence" in the government and a minister replying thereto, shall speak for more than forty minutes at a time in any debate.
A close examination of that standing order shows that it had been drafted without having in view the complex situation which has arisen, as we have it to-night, and as we had it during the previous debate on the address. The principle that each amendment or subamendment is a separate question only applies to relevancy and to the right of a member to speak again. It has no relation to the special rule limiting the length of speeches, and it does not alter the fact that when the house is seized of a motion of want of confidence all the allegations which make up that motion must be decided together. Members may vote against the amendment and for the motion, or

The Budget-Mr. Coldwell
vice versa. In any event the final decision of the house can be ascertained only after the amendment has passed through all its proposed alterations, and resolved on its final phraseology which will be the real motion of *want of confidence put by the Chair. Such a motion cannot be divided.
The hon. member's subamendment is as follows:
That all the words after the word "that" in the amendment be struck out and the following substituted therefor:
"This house regrets the failure of the government to provide for the nationalization of the banking system so as to make possible the full utilization of the Bank of Canada for the financing of the war;
And further this house regrets the failure of the government to provide for increases in the amounts paid to old age and blind pensioners, or to make adequate provisions for veterans of the last or the present war, or their widows and dependents;
And further this house regrets the extent to which the government has vested the control of the Canadian economy in monopolistic industry and finance."
That is an amplification of the motion of want of confidence, as embodied in the amendment of the hon. member for Lethbridge. There cannot be two motions of want of confidence at the same time before the house. There is only one now, and it consists of the amendment together with the subamendment. The vote on the subamendment will not be final, but it will have to be followed by the question: " Shall the amendment as amended carry?" If it carries, "no confidence" will have been voted against the government. For these reasons I rule that the hon. member is not entitled to speak longer than forty minutes.
However, if there is unanimous consent of the house, 1 presume the hon. member may continue.


James Lorimer Ilsley: Yes.


Arthur Graeme Slaght: Mr. Speaker, in view of your last statement, although perhaps not strictly in order I should like to mention the reason why I think all hon. members ought to permit the hon. member for Rosetown-Biggar (Mr. Coldwell) to continue his speech at least to a reasonable degree. My reason is this: Under a friendly arrangement, on a major debate it has been arranged that one of them shall precede the other, and that in a following debate the other should come first. As hon. members know, this arrangement gives the leader who speaks first the right to move an amendment to the main motion, thereby gaining the right to address the house without restriction.


Thomas Vien: Order.


Arthur Graeme Slaght: Under those circumstances I appeal to hon. members to permit the hon. member to proceed.


Richard Burpee Hanson: Where are you going to draw the line?


Thomas Vien: I have given my ruling.
The hon. member for Parry Sound must realize that when a question is put to the Chair all the Chair can do is to give an interpretation of the rule. I have endeavoured to do so, and in my judgment the hon. member cannot continue, under the rules. However, with unanimous consent the house may permit the hon. member to proceed, and I take it that it is the wish of hon. members that the hon. member for Rosetown-Biggar should have that privilege.


James Lorimer Ilsley: Go ahead.


Major James William Coldwell: I shall draw my remarks as rapidly as possible to a close-


Some hon. MEMBERS:: Go ahead.


Major James William Coldwell: -leaving out some of the things I had intended to say.


Karl Kenneth Homuth: Go on; the Liberals want to hear you.


Major James William Coldwell: Well, I am glad to
know the Liberals are courteous enough to want to hear me; but I believe the hon. member who has just interrupted will agree with me when I say I have not spared the Liberal government to-night.


Karl Kenneth Homuth: I am always interested.


Major James William Coldwell: Before taking my seat I wish to say something about some other matters which are related to the ones I have just mentioned, and which I believe are disturbing. I am not going into this fully tonight, because there will be other opportunities. I am, however, thinking of the tremendous expansion which has occurred in the last four years in the air transport system of Canada. I am thinking, too, of the fact that when we set up the Trans-Canada Air Lines it was generally understood that years ago we had made a mistake in not keeping the railways as a national organization. It was pointed out that at least we ought to keep the air free for the people, and unalienated in any degree. And yet during the past year we have witnessed the tremendous growth of the new Canadian Pacific air lines. We notice a statement from L. B. Unwin, president of the Canadian Pacific lines, in -which he states:
During its first year of operations Canadian Pacific Airlines flew approximately 6,000,000 schedule airplane miles in 1942.
The Budget-Mr. Coldwell

Passengers and mail carried were more than double the previous year. Air cargo reached a record total of close to 10,000,000 pounds. The company now employes over 6,000 employees in its commercial operations, air training schools and overhaul plants.
Then we are told that it played a major role in the construction of the Alaska highway. It did.


Mr. HANSON (York-Sunbuiy):: It shows
what a private enterprise will do.


Major James William Coldwell: A private enterprise
based on heavy expenditures made by the people of Canada. What have we done? We have provided them with all the facilities required. We have provided the long and more expensive hauls across the country, leaving the short and more profitable hauls in the hands of the private organization. Let us remember that it entered the field only since the war. And what it has built up to date has been built through war traffic, mainly through carrying government men, government equipment and government freight.
What about it in the post-war period? Well, we have to watch. The president the other day was quite frank in this statement:
In this regard the Canadian Pacific, as a long established world-wide transport system, will undoubtedly through the extension of its air operations, take its natural place in the development of world trade and travel routes.
In past months I have had some little opportunity to sit in on discussions dealing with post-war air traffic, and I want to say that as a country we are making a mistake if we do not do what other countries are doing, namely, safeguard our airways, and our own publicly owned air corporation.
In the United States they have the great Pan-American Airways Limited, a private organization. I say that that organization, in seeking to gain control of certain airways in this world, will create considerable difficulties for the great nation to the south of us, and make it more difficult, in some respects, perhaps, even to reach the kind of international agreements we want to reach.


Paul Joseph James Martin: It is backed by the United States government.


Major James William Coldwell: Great Britain has kept her airways under her control, Imperial airways, British airways, government controlled organizations, and we should see to it that since we control the vital air route between great populated areas of the world in Europe and Asia we do not allow the alienation of our great air routes.
There are one or two other observations I wish to make, but I will be very brief. We
[Mr. Coldwell.)
are pleased that the government has adopted the pay-as-you-go plan of income tax payment. We are under no illusions, however; we know we are going to pay more this year in most of the brackets. But I believe the change will -relieve a good many people of worry about the hang-over from the previous year, and with the high taxes we have I think it is important that we should have no hang-over of any description, if I may put it in that way. I am pleased also that the minister has exempted government annuities; that is something that I thought it was a pity was not done last year.


Karl Kenneth Homuth: He has not told us that.


Major James William Coldwell: Oh, yes, that is the intimation in the budget speech.


James Lorimer Ilsley: I do not know whether hon.. gentlemen are thinking about the same thing.
I stated in the budget speech that payments on government annuities purchased before the date of last year's budget and being paid before that date would be allowed as offsets against the refundable tax.


Major James William Coldwell: That is right, placing such annuities on the same basis as life insurance was on the same date. I am very sorry that we are continuing the system of encouraging prospecting by mining companies by means of rebates of their war taxes. I think again we are allowing the alienation of our natural resources to private corporations when the time has come when we ought to be doing some of this prospecting and developing; ourselves.
In relation to income taxes generally, I suggest to the minister that while the computation of farmers' income taxes on a two-year basis is better than on a one-year basis, speaking particularly for the farmers in the prairie provinces where we sometimes have quite long: periods of drought and disaster, that period is not long enough. It should be an average of five years, or three years at the very least.
We from the prairies are disturbed about the threat that we hear that the cooperative societies may be assessed for income tax. We hear rumours to that effect. I suggest to the minister that he follow the example of other countries where cooperatives have been in existence for a long time and treat them here as they are treated there. These societies are not corporations; they are simply mutual aid societies, not out for profit making but purely to perform a service, and anything that accrues to the members in the way of patronage dividends is incidental to the real purpose of the society.

The Budget-Mr. Turgeon
I did intend to say something about the national debt, but I shall leave that until the resolutions are under discussion. I want to thank the house for the courtesy it has extended to me to-night. I did not wish to trespass upon the time of the house beyond my forty minutes when I discovered that was all I was entitled to, and I am very grateful for having been given this courtesy.


Mr. J. G. TURGEON (Cariboo):: I know that the leader of the Cooperative Commonwealth party (Mr. Coldwell) who has just taken his seat will excuse me if for a moment only I deal with some of the incidents of the last twenty or twenty-five minutes. First may I say, partly in joke but only partly so, that I [DOT]could see a little chuckle of delight on the part of the Minister of Agriculture (Mr. Gardiner) at the commencement of the hon. member's address when he took issue with the hon. member for Lethbridge (Mr. Black-more) over the allegation that the province of Saskatchewan is in worse shape than the province of Alberta. I am sure the Minister of Agriculture was delighted to hear a defence of the government of Saskatchewan.


Major James William Coldwell: Anything but that.


James Gray Turgeon: I know, but that was the effect. The other thought I want to express in connection with his general statements is as to what he said about this government permitting private air companies to operate. What will be the proper solution of our air problem when this war is over is a question on which at the moment I cannot state an opinion. It may be the duty of Canadians to see that Trans-Canada Air Lines is enlarged so as to include all air transport. Personally I am doubtful of it. But what I wish to point out is that if what the hon. member said to-night had been the considered policy of this government during the last ten years, all that part of British Columbia known as the Cariboo country, which extends almost from within touch of Vancouver city clear to the Yukon and across the mountains to the Northwest Territories would have been without its one saving feature in transportation; it would have been without airways. The first air company operating in that whole part of British Columbia was the originator of the Yukon Southern. It was greatly extended until that part of British Columbia north of the main line of the Canadian National Railways from Edmonton to Prince Rupert had an air service where before it had no transportation whatever except seasonally down the waterways. That air service was then extended until Vancouver and the Peace
River block, White Horse in the Yukon Territory and Edmonton were all connected by air service. And it was only after those air services were in operation and that part of British Columbia enabled to come in small measure into its own that the Canadian Pacific Railway Company came in and bought out the existing companies. If it is the considered policy of the hon. gentleman who has just spoken to see that no private companies be permitted to run in such areas as that, I must take exception to it.
Before speaking on the budget and in connection with money matters, with which parliament naturally has so much to do, I wish to say a word concerning my young and very good friend the hon. member for Peel (Mr. Graydon) and to congratulate him and the Progressive Conservative party upon its choice of him as its leader in this house. The hon. member has been in my constituency; he has been in that part of the Cariboo which started the population trend in British Columbia, that part where the Cariboo gold rush took place. He has not been in the other part of my constituency which is becoming famous on account of the very air services of which I was speaking a few moments ago. Speaking here to-night, I want to tell all the supporters of the Progressive Conservative party in my constituency that they can be satisfied that they have conducting their party affairs in this house an honest, good Canadian.
But may I express just a word or two of wonderment. Since he has taken over the leadership of his party in this house I have noticed that, quite naturally, he has been very proud of the word "Progressive" which has been attached to the word "Conservative" in the re-naming of the party. I am inclined to think that the Winnipeg conference was an excellent thing for the Conservative party, and I believe it will turn out to be a good thing for Canada, because it has helped to focus. attention upon the need for reform. It has directed attention to those groups of men and women who in days gone by, when reform was not as popular as it is to-day, were trying to bring about a condition under which reform could take root and grow.
* Since the Winnipeg convention, every time the government has made any suggestion of a movement looking to reform, either the leader of the Progressive Conservative party or someone behind him has stated that the inspiration came from the Winnipeg convention. He has not yet claimed that the Atlantic charter was inspired by that convention; and while at that convention many
The Budget-Mr. Turgeon

glowing references were made to our relations with the United States, neither has he claimed that the Ogdensburg agreement or the Hyde Park agreement, which followed from it, were inspired by the Winnipeg convention. However, as I have said, it is a good thing that the Winnipeg convention took place. The Progressive Conservative party have confessed and have repented, though I am afraid they will have to remain in sackcloth and ashes for quite a while yet. I feel certain that if the hon. member for Lethbridge (Mr. Blackmore) were sitting in the place of the right hon. Prime Minister (Mr. Mackenzie King), he would say to my friends opposite, as St. Matthew said, "Are you simply fleeing from the wrath to come?"
I should now like to put on record a letter that I received some years ago. There is no doubt at all that throughout Canada there is suspicion of men in public life. That has not come about only during the last few years. I can remember when I was first elected to a seat in the legislative assembly of Alberta, away back in 1913. I had not been a member of that legislature very long until I could feel that I was not held in quite such high regard as I had been before I permitted myself to become a candidate on behalf of a political party, and had the good or bad luck to be elected. We in this house have been talking a good deal about reconstruction, and a great deal has been said about what members of parliament and what parliament itself should do. Hon. members must not permit themselves to forget the suspicion with which I am dealing, which is felt by many people in Canada with regard to men who are in public life. To-day the leader of the Cooperative Commonwealth Federation party read a resolution which was proposed by the present Prime Minister at the Liberal convention which took place in 1919. I should like to read a letter in order to show how the Prime Minister has been viewing these matters of reform ever since 1919. This letter comes from the office of the leader of the opposition in Ottawa and is dated April 2, 1931:
J. G-. Turgeon, Esquire,
744 Hastings Street West,
Vancouver, B.C.
My dear Turgeon:
I thank you for sending me a copy of your recent interesting address before the Progressive Liberal Association.
With your general point of view I am, as you would know, in complete accord. I question, however, the wisdom of including in the Liberal programme the policy of state life

insurance until, at least, we have succeeded in getting a national system of social insurance, which will include unemployment, accident, invalidity, old age, etcetera. The worst feature of the social insurance problem to-day is that each province is attempting to cope with it more or less in its own fashion. What is needed is a national scheme which will provide like standards in all the provinces. I am inclined to think that there should be a readjustment of the financial relations between the dominion and the provinces, which would involve, on the one hand, either a lessening or eliminating of federal subsidies, and on the other, the assumption by the federal government of social insurance obligations in the directions indicated. It is a large reform and I recognize it is full of difficulties, arising out of the desire of the provinces to continue their control in many of these matters. Sooner or later, however, the change will be made and I, for one, would be happy if it should come in our lifetime. Personally, I feel that the time to take on a programme of state life insurance, if it is to be taken on, would be after headway had been made in the other direction.
With kind regards,
Yours sincerely,
.	W. L. Mackenzie King.
That letter was written to me after I had sent the Prime Minister a newspaper report of a speech I had made before a Liberal association-a Progressive Liberal association- in Vancouver, in which I urged that the Liberal party should give consideration to the insurance problems affecting the people of Canada, with a view to seeing, first, whether the Liberal party should recommend a programme of state life insurance or, second, whether the Liberal party should recommend that there be a cooperative effort between the great insurance companies and the governments of Canada, so that the experience and knowledge of the insurance companies should not be lost but that at the same time we should not lose sight of the human values and the human welfare which could be put into insurance in greater measure by governmental motivation and under governmental direction.
I listened to some of the speeches made during the last debate, and I have read newspaper accounts of speeches made in this house and outside about the inspiration that came to the Prime Minister from Winnipeg. I thought immediately of that particular letter, and I know that every member in this house perhaps can think of conversations he has had relating to matters of reform which would on their own prove that one of the great motivating desires of the Prime Minister throughout the years has been gradually to bring about a condition where human welfare and human needs will be the foundation of a higher and better standard of life.
The hon. member for Danforth (Mr. Harris) covered a great deal of ground1 when speak-

The Budget-Mr. Turgeon
ing last night and to-day. Among other things he referred to the way in which the House of Commons sitting either as a house or in committees, deals with public affairs in connection with governmental expenditures. He threw out a warning to the Minister of Finance (Mr. Ilsley), and through him to the government. He warned that the things that are being done are not being properly publicized, and he referred particularly to labour. He said that labour was told about the lack of fuel and about the hardships which a condition of war imposed upon the people of Canada, but he said that labour was not told properly of the great things that were being done, such as keeping down inflation.
As I listened to the hon. member, I thought of the attempt which is being made to show the people of Canada a certain side of affairs which might possibly have some foundation. Reference was made yesterday to graft in connection with the carrying out of some contract. If the hon. member for Danforth is right and we are making a mistake and not properly building up the morale of the people of Canada by telling them of the good things being done by this government, are not those-I speak now without the slightest thought of criticism, I am thinking only of war morale- who are referring to the hiding of certain things which they claim are taking place, making an effort, without knowing it, to destroy public morale?
I remember, and I think every other hon. member will remember-again I am speaking without any critical attitude-the days before the war when the time of this House of Commons and the people of Canada was taken up for a year or a year and a half by an investigation into the Bren gun contract. Again remember that I am not talking critically because that event is past. But if Hitler himself, in the preparations for war against the world which he then was making, had asked any body of Canadians to help him, what more could have been done for him than to stop the government of Canada for a year and a half immediately prior to the war from making the efforts then made under the direction of the minister from British Columbia to prepare for war days.


Thomas Clement (Tommy) Douglas: Examining
a contract does not stop you from making machine guns.


James Gray Turgeon: To examine the contract in the manner in which my hon. friend and some others were speaking yesterday, would give the same result as the examining of the Bren gun contract.


Thomas Clement (Tommy) Douglas: It did.


James Gray Turgeon: It did break up the
morale of the people and stopped us from taking our proper place in the first year of the war.


Thomas Clement (Tommy) Douglas: It got you a much better contract.


Thomas Reid: You wanted it rescinded; you did everything possible to stop it.


Norman Alexander McLarty: They wanted it cancelled.


James Gray Turgeon: I am speaking without any thought of criticism and in all seriousness. We are facing what will be the most tragic days we have ever had. It will not be long before our boys overseas will be engaged in a slaughter, perhaps unequalled since the war began. I am asking members of this house to be careful of the way in which public opinion is aroused in these days of preparation for what is coming to us from overseas.
Speaking of the way in which the House of Commons conducts its business, I intend to take the liberty of putting on the record something which is rather old. This is taken from the official records of the legislative assembly of Alberta. It is a motion presented by me on March 2, 1920, just 23 years ago, and it reads:
Moved by Mr. Turgeon, seconded by Mr. Davidson:
Whereas under the generally accepted interpretation of the working of the British parliamentary system it is assumed that the defeat of a bill or measure presented to the legislative assembly by a minister of the crown officially on behalf of the government is in itself a defeat of the government; and
Whereas the members of this legislative assembly feel that the time has come when members ought to be free to vote either for or against any bill or measure before the house without thereby expressing lack of confidence in the government;
Therefore be it resolved that this house express its desire that the premier ought not to consider the defeat of any government measure a sufficient reason for tendering the resignation of his government, unless such defeat be followed by a vote of non-confidenee in the government.
In 1923, about three years after, an hon. member from Alberta who then sat in this house introduced a similar motion, but it was not carried either. I proposed that motion not because I was young and did not know what it was all about, but because conditions were such that it seemed to me as a member of the assembly that a resolution of that kind was essential if we were to have parliamentary government. I have been in Ottawa for seven years since 1935, and I take the liberty of saying that I now firmly believe that the
The Budget-Mr. Turgeon

motion which I have just read and which I presented many years ago is not needed in this House of Commons in Ottawa.
Why is it not needed? I should like to answer those who are critical of the manner in which the business of parliament is carried on. I have heard it said here, and I have read it in the newspapers that members on the government side of the house were merely rubber stamps. I think that was said yesterday. We have been told also that when committees are set up, the government members on those committees are instructed as to what attitude they must take and they follow those instructions. I am not a rubber stamp. I have been a faithful member of this government and of the Liberal party, but I am not a rubber stamp.
I have been on some important committees of this house. I was on the defence of Canada regulations committee under the chairmanship of the Minister of Finance, and I was on the pensions committee of last session. This session I am on the reconstruction committee. On no occasion has any minister of the crown ever made the slightest suggestion to me as to what should be my attitude toward any question coming up before any of these committees. During last session I happened to be chairman of one of the committees. At no time has any suggestion ever been made to me about the attitude I should adopt on that committee in connection with any question whatsoever.
I attend faithfully the caucuses of the Liberal party. A great deal has been said about government caucuses and1 about the whip hand held over members on the government side of the house. I can speak of the whips because I have been the deputy chief government whip, and the whips, in Canada at least, are simply the organizers of the business of parliament. They work hard and well without any remuneration, and I should like to take this opportunity of paying tribute to all those men who during this parliament and the last have been whips for the different parties. I cannot speak of caucuses of the Progressive Conservative party, or of the Cooperative Commonwealth Federation party, or of the Social Credit party, or of any of the newly-formed independent parties in the house, but I can speak for the Liberal party and say that every member of the Liberal party emerges from a Liberal caucus just as free as when he entered.


Ernest Bertrand: And just as pure.


James Gray Turgeon: Somebody says, "and just as pure." I say that he leaves the caucus just as free as when he entered it. There is nothing binding on any member on this side of the house through his attending the caucuses of the party. For these reasons I say that this motion which I have made, in spite of the fact that I was a supporter of the government in powrer as I still am, was not in the least degree needed in this House of Commons.
Just one further word with respect to the speech of the leader of the Cooperative Commonwealth Federation party, and I mention it in closing because I want to throw out in that connection a suggestion or two about my own constituency. The hon. member spoke of prospectors and denounced the arrangement made by the Minister of Finance for prospectors to go out into the country where minerals abound and prospect for them. I must say that if the hon. member's advice were taken, semi-ruination would come to certain parts of the constituency of Cariboo and to other constituencies in British Columbia.


Thomas Clement (Tommy) Douglas: He did not
speak of prospecting by individuals, but by mining companies, giving them concessions.


James Gray Turgeon: He used the term
"prospectors" and said that all that work should be done by the government. If my hon. friend will look at Hansard to-morrow he will see that the hon. member for Rose-town-Biggar (Mr. Coldwell) used the term "prospectors".	.


Thomas Clement (Tommy) Douglas: He was speaking of prospecting by mining companies, not by individual prospectors.


James Gray Turgeon: That is prospecting. What I was about to say when my hon, friend interrupted, which interruption I do not resent in the least, is that some years ago as a result of the discovery of fraudulent practices by some of the brokerage companies the provinces became panic-stricken and passed certain legislation which almost killed prospecting, and to-day British Columbia is full of old prospectors who, because they could obtain nothing for their discoveries, found it useless to go on their prospecting trips. Therefore, while my hon. friends opposite may be sad, I was happy when the Minister of Finance arranged for a reduction of taxation to permit prospecting again to take place.
In conclusion, Mr. Speaker, may I express the hope that the Minister of Finance will always keep one thing positively in his mind when dealing with the financial administration of this country. I feel for the farmers; I

The Budget-Mr. Lacombe
feel for labour; I feel for industry; I feel for the aged people; I feel for the workers in industry. But the one thing which this government must never forget is that no matter where the money is to come from, when our men come back from overseas, from the air force, the army, the navy and the merchant marine, when this war is over, there must be no question of giving them relief, but instead they must be assured of a proper standard of living based upon emploj'ment, and for those who are disabled a proper standard of living based upon a disability pension. In this connection I recommend to the government, to the Minister of Finance, the Minister of Pensions and National Health (Mr. Mackenzie) and the ministers of the defence departments, that they give further consideration to the proposal to restore the insurance principle in pensions. With that thought, Mr. Speaker, and . with one word more of praise and appreciation of the efforts of the Minister of Pensions and National Health, I conclude.


Mr. LIGUORI LACOMBE (Laval-Two Mountains):: Mr. Speaker, the budget presented by the Minister of Finance (Mr. Ilsley) caused quite a commotion among many people of this country and it will cause many more to be startled. Is it fair to bear down in such a manner as this budget does upon the taxpayer who is in receipt of a small income? What are the intentions of the government? On the one hand it passes measures of social security, and then on the other hand it counteracts the effects of those measures by levying taxes so heavy that they threaten both the family and society. It is certainly not in the best interests of the country to spend sums so enormous that the whole economy of the nation is threatened and in danger of crumbling under the weight of taxation. If the Canadian people are compelled to accept the sacrifices called for in this budget, certainly they will not be capable of bearing them all. We are already bending down under the weight of the present excessive taxation, and now the government imposes still more and'more taxation. Our man-power, our economic and financial position will not be able to absorb these billions of new taxation. The government is leading the country to bankruptcy without a thought for agriculture and the working classes who are the main source of the substance and man-power required for the production of food and munitions.
What is the government doing to remedy the lack of man-power in the agricultural domain which is threatening our production of food? On March 1, the hon. member for 72537-71
Quebec-Montmorency (Mr. LaCroix) denounced in this house the capitalists who are taking advantage of the present state of war in order to exploit small owners. Their greed is becoming even greater. During many years the farmers and the consumers have been the victims of the trusts of this country. The proof is found in the high prices paid for fertilizers and feedstuffs which are necessary to agricultural production. The rationing of butter and sugar deprives the consumer of the first necessities of life, while there are millions of pounds of butter stored away in warehouses. The farmer will not be able fully to develop his sugar bush and thus provide against the rationing of tea and sugar. There is in Canada an ever-increasing scarcity of beef, veal and pork. Why this ridiculous situation in a country overflowing with wheat and the grain by-products which form the basis of dairy feedstuffs? The government should at least prevent the large milling combinations and all greedy intermediaries from exploiting farmers and consumers. Who will dare contradict me on this point, *when everyone knows that wheat sells for the ridiculous price of eighty cents or ninety cents a bushel, while the consumer must pay almost four dollars for 100 pounds of wheat flour? Who will claim that I am distorting facts, when feedstuffs, by-products of wheat flour, sell as high as 12.75 and $2.90 per 100 pounds? If you add to all this the military call-up of farmers and war workers, you will have the real causes of the agricultural, industrial and economic turmoil which is afflicting this country. What measure is this budget proposing to remedy this deplorable state of affairs? It is imposing new taxes which affect the small owners and the working classes. This is where our participation in this war is leading us- unrestricted participation, and consequently a participation above our strength.
On September 9, 1939, seconded by the hon. member for Quebec-Montmorency, I condemned this participation. This is where it is leading us, this mobilization act which was adopted on June 19, 1940, after the amendment which I moved, seconded by the hon. member for Quebec-Montmorency, was defeated by 202 against 2. That was a success. Is the government satisfied with its works? Will those who shared and are still sharing the most formidable responsibilities continue to vote with serene coolness the billions which are fatally leading us to the abyss?
Mr. Speaker, this deplorable picture of the actual situation will remain unchanged as long as our best energies remain paralyzed by a destructive policy. The lack of balance in our farm labour and our industrial labour is about

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to destroy the economic life of the country. From 1929 to 1939 we witnessed a great exodus of our rural population toward the cities. We saw hundreds of thousands of families on relief; thousands of labourers were out of work, and thousands of farmers were compelled to sell their farms because they could no longer make a living out of them. Confusion had set in everywhere. That was the post-war period, when the collapse was preceded by an artificial prosperity. What will the next postwar period bring us? Confusion, unemployment and anarchy, most likely.
How can we prevent these calamities? By taxing to the extreme limit those who take advantage of the war; by controlling and readjusting the salaries received by war workers; by exempting completely farmers from military training; and by granting the farmer and the labourer adequate representation in the cabinet. Briefly, by adopting social measures in accordance with the needs of the present and the requirements of to-morrow.
We shall not cure the great evils of this period with a multiplication of commissions of all kinds and with a bureaucracy which is not responsible to the people. We shall not improve this state of affairs by ignoring parliament. If we destroy responsible government we shall also destroy democracy. The united nations are fighting for democracy. Canada is fighting for its survival, and everything in this country seems to be conspiring to destroy it. Who could number the contradictions in the various attitudes taken by our statesmen? How many solemn pledges did they not violate? How many sacred commitments were not trampled upon? The country, which was already distrustful, is now wondering where the government is leading us.
The Minister of Finance attached great importance to the so-called extension granted to farmers in the paying of their income tax. We all know that the average farmer can barely make both ends meet, and how many still feel deeply the effects of the crisis, which lasted too long. When they were about to recover, the government deprived them of their best farmhands by calling their sons for military training. It also put a ceiling price on food. This ceiling price resulted in a discrepancy between ceiling prices of farm products and the purchasing price of foodstuffs, which I mentioned a while ago, the prices which must be paid for his clothing, that of his family, and those necessary objects he could not produce himself.
Furthermore, it is now impossible for them, and for quite a while they will not be able

to renew their farm implements, because the production of farm implements has been discontinued. In many districts they have been deprived of the privilege of developing their bushlands, because last fall the wartime prices and trade board set the price of cordwood so low that it was not worth while cutting any more. But the government got panicky and all of a sudden changed its mind. On March 4 it announced a subsidy of a dollar a cord on all cordwood. This was a useless measure, because it was taken too late. Last fall it practically killed all production of fuel wood, and now the government cannot redress the harm done to the trade and to industry, to the army and to the civilian population. This error cannot be rectified. How can the government now recover this cordwood which is definitely lost? Bushmen and farmers are now handicapped by snow, and in a few days there will be tremendous floods.
There is a time for everything, and I say to the Minister of Finance it is impossible to replace man-power and production by subsidies and orders in council. The government does not take into consideration the high cost of farm help. These powerful commissions which sometimes seem to ignore everything about agriculture have set ceiling prices on farm products and on cordwood, without giving due consideration to farm hands. As a consequence, in a few months we shall be facing a serious shortage of food and fuel. The government may boast of its love of the farmers and labourers, but those farmers and labourers will never swallow this heaviest and most insinuating budget the country has ever known.
You cannot tell the farmer, "I am granting you an extension to enable you to pay your income tax", because he will answer back "Give me back my best helpers, my sons whom you called up for military training; give me back my best farmhands, my most industrious and most experienced labour; give me the tools to produce, the tools for victory for which Mr. Churchill asked. My war work is to supply food to the army, to the industrial war workers and to the civilian population. You want me to pay income tax? Then take my farm; take this farm, which is only half cultivated because you did not allow me to do my share."
These are the complaints voiced by the agricultural classes in Canada. I do not invent them, and I do not betray them. The government has already heard those complaints, as voiced by the representatives of the people. Many requests have been sent in by agricultural associations; protests have come in from every district. Therefore the government can-

The Budget-Mr. Bence
not claim that it is not aware of these representations, all of which deal with matters of national importance.
(Translation): Before concluding my remarks, I cannot ignore the serious wrongs which constantly result from the thoughtless application of the mobilization act. I have so many times requested the government to transfer back to their respective fields of activity the farmers' sons and the war plants' workers now in training whose services are essential to the victory of our armed forces, that it would perhaps be idle to do it again Besides, mobilization means conscription. Is that not what the Prime Minister (Mr. Mackenzie King) stated himself during the debate on the repeal of section 3 of the mobilization act? That happened in July, 1942. There was a hectic atmosphere in this house, so much so that the Prime Minister reminded parliament that conscription had been in our statutes since June 21, 1940.
In conclusion, I shall quote an excerpt from "Relations" which strikingly resumes all the speeches delivered in parliament by those of my hon. fellow-members who are imbued with a truly Canadian spirit:
We know that Ulster, South Africa, India, and Australia, have not enacted conscription and as the Australians regret that they did not stay at home in order to defend their country, we hope that Canada will organize her own protection of the Maritime provinces and British Columbia, whose men are taken away. While appreciating devotion to the empire, we would rather protect our own interests. Gratitude for our hard-won survival, for theoretic or genuine rights does not imply for us the obligation to die for people who have neither killed nor deported us. In the words of Rene Johannet "an individual can or must, as the case may be, remain aloof. A group (a people) never has such a permission, which is the permission to commit suicide."
We do now disavow Sir John Macdonald's national policy; we have no desire to police the continents, or to redress world wrongs; we do not like to be handled like bundles by selfsatisfied colonials-from both parties-who know nothing of the Westminster Statute and who deal with us not in the tactful British manner, but with the harshness of "quality niggers" watching their brothers; we have no confidence in exclusive brain trusts whose stock is watered; we have read the militaristic epic of Sir Basil Zaharof, the Levantine who made millions out of the life blood of nations, and we fear that he may have emulators; we are the uncomplaining witnesses of the waste of military supplies- "Waste, the enemy at home", you say-and of the profits which are thereby made by Canadians too recently arrived in this country; we wish that the loan may be a success and that it may be better used; we bear insolence better than hypocrisy.


Mr. A. H. BENCE (Saskatoon City):: There are several matters with which I should like to deal in this debate, and it being impossible for me to complete the whole of my speech by eleven o'clock I wish to deal now with one particular phase which I believe is of the utmost importance to the farmers of the prairie provinces and to the citizens generally of that part of the country. It has to do with the production of flax for linseed oil. Flax is produced in this country for two purposes, one for the production of fibre and the other for the production of linseed oil. Flax for fibre is produced mainly in Ontario and Quebec; that for linseed oil is practically all grown in Manitoba, Alberta and Saskatchewan. According to the information I have, which information I understand was produced to the agricultural conference held in Ottawa on December 9 last, in 1942 the seedings to flax in 1942 were:
Acres
Manitoba	 227,000
Alberta	 183,000
Saskatchewan	 1,056,000
The total Canadian flax acreage for last year was 1,492,000 acres.
As a result of the conquest by the Japanese of the sources of eastern vegetable oil supplies there was a great shortage of vegetable oils, and this continent found itself in a position where it had to accelerate its production of vegetable oils. It did so by various means. It endeavoured to increase the production of linseed oil as well as to produce a considerable quantity of oil from soya beans, sunflowers, and in the United States I understand that, in addition, they used peanuts. As a result of the requirement for greatly increased production, considerable stress was placed in the press and over the radio on this necessity. Therefore the farmers of the prairie provinces began to plan early last year for a tremendous increase in flax acreage. The return obtained from flax last year was very good; it was purposely good in order to increase the production as largely as possible. It seems to me and it seemed to the farmers on the prairies that the sensible and practical thing to do was to turn to production of flaxseed for oil purposes, something largely required for our war effort, and away from the production of wheat of which we have an overabundance and which constitutes perhaps the greatest agricultural problem in this country to-day.
I emphasize this point, that the farmers of western Canada during last summer and fall were planning for a large increase in flax acreage this year. They bought their seed,
The Budget-Mr. Bence

in many instances at fairly high prices, ranging I think from S3 to So, and by reason of the necessity for increased oil production from flax it was decided at an agricultural conference held in Ottawa on December 9, and I believe the following day or two, that the flax acreage for oil production should be increased in Canada by one million acres. Announcements were made to the press, and the farmers went on making plans for such production.
Then in the middle of January the Minister of Agriculture (Mr. Gardiner) rather suddenly made the statement that as a result of a conference held in Washington at which he was present it had been decided that no additional flax acreage should be put in during 1943. He stated that whereas the acreage in Canada in 1942 amounted to 1,492,000 acres and despite the fact that they had decided at this agricultural conference in December to increase the acreage to 2,500,000, at this conference held in Washington they found it was not feasible to cany out the increase that had been proposed, and he asked the farmers to go back to the original plan and produce from the same acreage as in 1942.
What I should like to know is why the Minister of Agriculture did not find out before January that it was not feasible to produce the additional acreage of flax which had been decided upon in Ottawa on December 9. After all, the United States had the whole key to the situation, and it seems to me they should have been consulted and that the Minister of Agriculture should have been fully aware of the situation which existed on December 9 when that conference was held in Ottawa. It is inconceivable to me that the authorities who had knowledge of the situation in Washington were not just as well aware at that time as they were a month later. The first announcement by the Minister of Agriculture that the plan arrived at on December 9 for the increased acreage would not be carried through was made at a meeting in the city of Saskatoon on January 14. I believe a similar announcement was made a day or two previously in Winnipeg, though I have not the press reference in that connection. Then to further confuse the situation, on January 17 there was a press release from the publicity and extension service of the Department of Agriculture at Ottawa, which was referred to in an editorial which appeared in the Winnipeg Tribune under date of February 6, as follows:
The United States department of agriculture, according to the latest survey, estimates that that country faces a shortage of close to a billion pounds of fats and oils for food and

industrial purposes in 1943. To help overcome this shortage the government of Canada is asking for increased production of oil-producing plants such as flax, soybeans, sunflowers, etc. The objective for flaxseed is an acreage increase of 68 per cent.
This was just three days after the minister had made the statement that there was to be no increase in acreage for 1943. Then on January 29 the Minister of Trade and Commerce (Mr. MacKinnon), speaking in this house on behalf of the Minister of Agriculture, in effect stated that there was no assurance that flaxseed from any additional acreage could be disposed of in 1943. Then to confuse the situation even more, on March 1 there appeared in the Saskatoon Star-Phoenix a dispatch from Ottawa under the heading "Flaxseed campaign expected" as follows:
Definite announcement is expected in a few days that Canada will launch a flaxseed campaign this year to increase sown acreage by
1.000.	000 acres. In 1942 flax acreage was
1.500.000	acres, and the 1943 objective is ex-jiected to be not less than 2,500,000 acres.
The flaxseed situation is rapidly clarifying, it is learned, and the original production objective of the Department of Agriculture is expected to be retained. In December the department called for an increase of 68 per cent in flax acreage, but in January plans were revised though the final 1943 objective was left open.
Last Tuesday Doctor Phyllis Turner, Canadian administrator of oils and fats, stated in a Toronto speech that Canada's minimum requirements of flaxseed would be 20,000,000 bushels. Confirming this to-day, she said this meant
2.500.000	acres would be required. Disposal of
20.000.	000 bushels of Canadian flax grown in 1943 could be made, said Mrs. Turner, to fill Canadian, American and British requirements.
Then on March 3 in the same newspaper there appeared a press dispatch dealing with a meeting of the national barley and linseed flax committee at Winnipeg, in which reference is made to a statement by Mr. L. H. Lehberg, as follows:
L. H. Lehberg, technical adviser to the federal oils and fats administration, told the committee's annual meeting that supplies of vegetable oils received from the United States had been below expectations and that U.S. crushers were in the market for Canadian flax in addition to overseas demand.
In addition to domestic supplies, there were indications that upwards of 10,000,000 bushels of flax will be wanted by the United States and a like amount wanted for export overseas it was stated.
Yesterday I managed to ask the Minister of Agriculture if he would make a statement in this connection, since I believed it imperative that the whole matter should be cleared up as soon as possible in order that the farmers of the prairie provinces might know their position, but the only response I could

Questions
obtain was in effect that a statement would be made before seeding time. I do not believe the farmers should be treated in what I might describe as this rather cavalier fashion. If administrators and officials of various departments, who are supposed to have knowledge of this matter, are making statements to the press that this increase in acreage is to be brought about, surely the farmers should be given the definite information by the minister himself as soon as possible. I think Mr. George W. Robertson, secretary of the Saskatchewan wheat pool, put the matter very clearly in a radio address on January 15, during which he referred to the necessity for early knowledge on the part of the farmer in order that he might make his plans for the coming year. Mr. Robertson said:
There is amongst western farmers a feeling of confusion as to just where they fit into the general picture. This is illustrated by the flax situation. With limited manpower, limited ability to secure the implements of production, if we are to obtain maximum farm output there must be a very great deal of careful preparation carried on by the producers themselves. Plans cannot be adjusted at a moment's notice and farmers have a right to know what this country expects of them.
Furthermore, Mr. Speaker, I should like to know, and I am sure the farmers would like to know, just what took place at that Washington conference early in January and why it was decided at that time not to increase production. Was it on account of lack of crushers? It may have been. How has the picture changed between January 1 and the present time?
On motion of Mr. Bence the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, March 10, 1943