1944-06-09

[Stage Direction]
On the orders of the day:
Mr. GORDON GRAYDON (Leader of the Opposition):: I should like to ask the Postmaster General whether arrangements are being made for the distribution of mail to


[Stage Direction]
Section agreed to. 100-231
[Stage Direction]
Business of the House
[Stage Direction]
our troops on the beachheads in France. If so, what progress has been made in this regard?
Hon. W. P. MULOCK (Postmaster General) :: All arrangements were made long ago in connection with the handling of mail in the event of invasion. There is no report at the present time.	The leader of the
opposition will realize that it is a matter of available space in crossing the channel. I am expecting information in due course, and as soon as it is available I shall be glad to advise the house.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Gordon Graydon: I have a question to ask with reference to the war-time elections bill. I point this out to the house only because yesterday I inquired of the Secretary of State as to .whether or not this bill had been printed. It was a formal question which I very often put because I have found that on occasions bills are given first reading before they have come from the printer. I suggest that the Secretary of State must have been in error when he said yesterday that the bill had been printed, becausq in making preparations for the debate on the bill to-day I found that none of our members had been able to get copies. I made inquiries and learned that the bill had not yet been printed. I thought the Secretary of State would like to know that his informant had been misinformed. It is difficult for us to proceed with our preparations unless bills are in our hands before second reading.


Hon. N. A. McLARTY (Secretary of State):: Before taking up the motion on the resolution I made inquiries and was advised that the bill had been printed. Much to my own surprise I found this morning that though it had been printed it had not been bound. Copies of the bill are now available for distribution. I regret very much any inconvenience that has been caused to my hon. friend or any other member of the house by reason of the information I gave last night as to the bill having been printed, but I made the statement in good faith on the basis of information which I thought was accurate.


Gordon Graydon: I have never questioned the minister's good faith or that of any other member.



JAM BERRIES


[Stage Direction]
On the orders of the day:
Mr. G. A. CRUICKSHANK (Fraser Valley):: I asked the Parliamentary Assistant to the Minister of Finance a question with regard to jam berries. I am sorry he is not in the house, but I would direct the question to the Minister of Finance and if he cannot give an answer to-day I would appreciate it at the next sitting of the house. This may be taken as notice of the question. When will the order be brought down regarding the price of jam berries?


Hon. J. L. ILSLEY (Minister of Finance):: I will make inquiries and give the answer on Monday.



FARM CREDIT


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of bill No. 134, to encourage the provision of intermediate term and short-term credit to farmers for the improvement and development of farms, and for the improvement of living conditions thereon.
Mr. J. A. ROSS (Souris):: There will not be a chance to discuss the provisions of this bill after it gets second reading because it will be referred to the committee on banicing and commerce, and only this morning we received the printed bill. I wish to make a few observations on it.
As pointed out in the discussion of the resolution, I think it is very important that we should have been able to discuss the legislation pertaining to floor prices of agricultural products in conjunction with this bill. The matter of a central agricultural bank in connection with floor prices will have a distinct bearing on the success or otherwise on the operation of the proposed act.
Paragraph (h) of section 2, the interpretation section, defines "farm improvement loan" as meaning a loan made by a bank to a farmer for the purpose of financing-
(i)	the purchase of agricultural implements;
(ii)	the purchase of live stock;
(iii)	the purchase or installation of agricultural equipment or a farm electric system;
(iv)	the alteration or improvement of a farm electric system;
(v)	the erection or construction of fencing or works for drainage on a farm;
(vi)	the construction, repair or alteration of, or making of additions to, any building or structure on a farm; or
(vii)	any work for the improvement or development of a farm designated in the regulations.

Farm Credit-Mr. Ross (Souris)
I do not see among these items any provision for seed grain. It will be readily realized that the farmer who needs assistance under this legislation may have had a crop failure through no fault of his own. That failure may be caused by hail in the district, and he may not have proper coverage of insurance to protect him. It may be caused by a grasshopper plague or drought in certain sections of the country. There is no provision made for that man to purchase his seed grain.
There is another matter that has been brought up by a colleague of mine in banking and commerce committees of other sessions, namely, a guarantee for binder twine in harvest time. It is recognized that in the prairie provinces binder twine must now be purchased on a cash basis. The farmer must make provision to pay cash for it, but there is no provision in this legislation for that. I am wondering whether those two items should not be included in this bill when it comes before the committee.
I go on with the clauses of the bill. Paragraph (i) of section 2 reads as follows:
"Farmer" means a person who is in possession of a farm and whose principal occupation consists of farming such farm.
When the resolution was under consideration I pointed out that there has been much trouble with the treasury board in the administration of the Prairie Farm Assistance Act in the past few years as to what properly constituted a farmer. I think it is important that that should be clearly understood in this measure.
Then, going on to section 3, "Guaranteed farm improvement loans," paragraph (d) subsection 1, reads as follows:
The principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other farm improvement loans previously made to the borrower and disclosed in his application, or of which the bank had knowledge, exceeded the sum of three thousand dollars.
That means, of course, that all other liabilities will be taken into account at the time. In many instances this will prevent a farmer from obtaining credit under this legislation, particularly farmers who have extensive liabilities on their farms.
Paragraph (e) is as follows: the loan was repayable in full by the terms thereof in not more than ten years.
That allows ten years for repayment.
Paragraph (f) states:
the rate of interest charged by the bank on the loan did not exceed five per centum per annum simple interest as long as the borrower wras not in default.
100-231i
In the resolution stage I pointed out that I was distinctly of the opinion that the rate of interest of five per cent was too high. I have pointed out that to-day many good farmers are receiving credit for five per cent. When the resolution was before the committee several other speakers stated that the rate of interest should not exceed the cost of the operation. I have already pointed to the Veterans' Land Settlement Act, where land is being purchased and resold to the veterans and ip costing them three and a half per cent. I suggest that the rate of interest in this bill should not exceed four per cent.
Section 4 deals with the limitations of the amount of the liability to the bank. It is as follows:
The minister shall not be liable under this act to pay to a bank a total amount in excess of ten per centum of the aggregate principal amount of the guaranteed farm improvement loans made by such bank.
In my opinion that guarantee of ten per cent will not produce the result that we have in mind. The guarantee should be higher. I am not sure, but I am of the opinion that in the case of national housing it was at least fifteen per cent.


James Lorimer Ilsley: It was fifteen per cent on the home improvement loans.


James Arthur Ross: Yes. To make this bill as effective as I hope it will be, I think the guarantee should be twenty per cent rather than ten per cent. If the government guarantee the banks twenty per cent and they charge the creditors four per cent, we may achieve the purpose the government has in mind in this bill. I think these are two important points. I am not satisfied that ten per cent is a sufficient guarantee to make this bill effective.
Section 5 states:
The minister shall not be liable under this act to make any payment to a bank in respect of loss sustained by it as a result of a farm improvement loan made after the aggregate principal amount of guaranteed farm improvement loans made by all banks exceeds two hundred and fifty million dollars or made more than three years after the commencement of this act.
I dealt with that and received answers from the minister yesterday. With regard to the maximum guarantee of S3,000, that is all to the good; but we must bear in mind the fact that when a man applies for this credit he will have to give to the banks the security to which they are entitled. The banks always ask for all the security they can obtain, but it will cut off the applicant's security with other creditors.
Farm Credit-Mr. Cruickshank

In the past two or three years we have had information brought down which proves that under existing conditions it is much more economical to operate a large farm than a small one. Speaking on the budget on March 11 of last year I put on Hansard figures which I had obtained from the officials of the Department of Agriculture, pointing out that at least in the prairie provinces the most economical farm to operate to-day is the two-section farm unit on a diversified basis with certain power equipment. Most of those farmers would be precluded from coming under this measure. Notwithstanding that, I am satisfied that when a man starts to operate on a larger scale it is his duty to make his own financial arrangements, but I do point out that the most efficient operator will not come under this legislation.
Section 6 has to do with regulations. Paragraph (b) of subsection 1 reads as follows: to designate works for the improvement or development of a farm, in addition to those specified in subparagraphs . . .
Then the paragraphs are named. I think this is an important clause, because it will give the government-I presume the minister, or by order in council at least-powers to designate other works. In that connection I want to make a suggestion, namely, that with respect to any works which shall be designated, proper agricultural authorities shall be consulted. I have in mind officers of the federation of agriculture. producers and the officials of producers' organizations. In order to make alterations such as these, to designate other works not provided' for, such officials as the representatives of agricultural producers in this country should be consulted and their advice taken.
Then subsection 2 states:
No regulation shall be effective until published in the Canada Gazette and upon such publication shall be effective and shall have the same force and effect as if it had been enacted in this act.
I think this is rather a new procedure in the last few years. A great deal of this has been done by the wartime prices and trade board officials, and the Minister of Agriculture has taken advantage of this in each of his orders in council in the past few years. I do not think that is good. We should have our statutes and we should put them into effect.
I now come to section 7, which is as follows:
Notwithstanding anything contained in the Bank Act or any other statute, if a bank makes a guaranteed farm improvement loan the principal amount of which exceeds two thousand dollars and the period for repayment of which is longer than five years, the bank may at the time of making the loan take as security for the repayment thereof and the payment of interest thereon-

(a)	a mortgage or hypothec upon the farm
in respect of which the proceds of the loan are to be expended;	.
(b)	an assignment of the rights and interest of a purchaser of the farm under an agreement of sale.
And there is further information in that connection. I think that will prove to any of us who have had experience in these matters that if full advantage is taken of this provision, and I think probably we would take advantage of it if we were in the place of the bankers, practically all the normal credit will be transferred to the banks, and any further credit will be cut off once an applicant comes under this bill. It is important that people should realize this fact. Then section 9, subsection 2, provides:
Any document purporting to be a receipt in the prescribed form and purporting to be signed on behalf of the bank shall :be evidence of the payment by the minister to the bank under this act in respect of the loan therein mentioned and of the execution of such document on behalf of the bank.
This is a phrase which has come into being under our war-time legislation of the past few years, and I think it is a little lax. I would have no fear of what might be done under the present minister, with the present set-up, but I do believe the wording might be tightened up a- little to safeguard the future.
There are four more sections in the bill, with which I do not propose to deal at this time. I would point out to hon. members that the mortgage debt of Canadian agriculture is approximately $700,000,000 to-day, and that this bill provides for a maximum of $250,000,000 or one-third of that total. When you remember that the present mortgage indebtedness will have to be taken into consideration when these people ask for loans under this measure; when you remember that once they come under it further credit will be cut off, I am not so sure that the bill will serve the purpose we have in mind. At the same time I heartily agree with the principle of the measure. I believe it is a step in the right direction, but if it is to be effective it seems to me the government guarantee should be increased to twenty per cent, while the rate of interest should be not more than four per cent. These two changes should be made in order to have this legislation as effective as we would like to see it, in the interests of the average farmer of Canada. I hope these matters will be taken into consideration when the bill is dealt with in the banking and commerce committee.


George Alexander Cruickshank: I think perhaps I am better fitted to speak on this bill than any other hon. member of the house, because of my long experience with

Farm Credit-Mr. Leader
overdrafts and promissory notes; I am certain my friends in the banks will not dispute my knowledge in that connection. I am going to be very brief; for once I am going to outdo the Progressive Conservatives. I want to support everything that has been said by the hon. member for Souris (Mr. Ross), except that I believe four per cent is too high.


James Arthur Ross: I said not more than four per cent; I believe it should be lower, too.


George Alexander Cruickshank: I am glad the hon. member agrees with me. It has been admitted by the banking and commerce committee-[DOT] and if they admit anything that is going some -that Canada's greatest hope for the future lies in increased agricultural production, but I do not think we will have that increased production unless money is made more readily available to the primary producers at very low rates of interest. It seems to me that in agriculture, a basic industry, three and a half pier cent is ample; and in addition I believe the minister is killing his own bill when he limits the government's guarantee to ten per cent. Perhaps this is not a popular thing to say politically, but I have never had any difficulty in borrowing money from the banks. Probably what I have borrowed would seem a small amount to the many millionaires in this house, but to me it seemed a great deal. I have not had any difficulty in borrowing it, but I have had a great deal of difficulty in paying it back. As long as I did pay it back, however, I coidd always borrow more. But in limiting the guarantee to ten per cent, I believe the minister is making a mistake.
I agree with the hon. member for Souris that it is very unfair to place this bill in our hands to-day and immediately ask us to put it through. Since I have been in this house I have always heard that agriculture is the most important industry in Canada, yet here we have a bill affecting agriculture which we are asked to endorse or criticize on very short notice indeed. As a matter of fact I have had this bill for exactly five minutes. It seems to me the minister is defeating his own purpose in restricting the guarantee to ten per cent. Any bona fide farmer, as far as I know, would have no difficulty in borrowing to that extent from the chartered banks. As I understand this procedure, the banks lend the money and the dominion guarantee their losses to the extent of ten per cent. Any chartered bank in the beautiful Fraser valley will take the chance of a loss up to ten per cent even now. I would go the hon. member for Souris one better, because our crop is not exactly the same as wheat; I do not think a guarantee of twenty-five per cent would be
too high, and I believe the maximum rate of interest should be three and a half per cent at most.
I am not in a position to go into this bill clause by clause. I agree with everything said by the hon. member for Souris, but I should like to see those two changes made if the bill is to be of any use to the farmers of Fraser valley, the main agricultural district of British Columbia. That is, I should like to see the interest rate reduced and the guarantee increased to at least twenty per cent.


Mr. HARRY LEADER (Portage la Prairie):: Perhaps a real dirt farmer might be allowed to say a word or two on this bill, though I had not intended to do more than commend the government on at least attempting to make credit available to farmers at low rates of interest, which I believe is the purpose of this legislation.
I agree with the hon. member for Fraser Valley (Mr. Cruickshank); I do not think anyone has difficulty in borrowing money from the banks provided he has repaid his previous borrowings; and after all I do not think any man, any corporation or any company should borrow from a bank without fully intending to pay back the amount borrowed. A great deal could be said about the high interest rates that farmers have paid in the past. Personally I have paid as high as twelve per cent, and I know of others who up to at least two years ago were paying eight per cent on machinery they had purchased. This bill, I believe, will do away with a great deal of difficulty in that connection.
I do not believe it is a good move to empower the banks to take additional security; I think it will have the effect suggested a moment ago by the hon. member for Souris (Mr. Ross). If a farmer gets into difficulties and the bank takes additional security, that farmer will be placed at a disadvantage if he wishes to get any further benefits from the bank or any other institution. However, that is not why I rose. I want to say that I believe the government is wise in restricting its liability to ten per cent, though most of those who have spoken previously have said that this percentage should be increased. The hon. member for Souris would increase it to twenty per cent, and I believe the hon. member for Fraser Valley mentioned twenty-five per cent. I believe that easy credit has ruined more farmers-and I am speaking only for farmers, though perhaps this applies to other trades and professions-than have been put on easy street by bank borrowings. Get the idea into a farmer's mind that he must pay this money
Farm Credit-Mr. Leader

back, and he is going to be very careful when he asks for credit. I think that if the government increases the liability they are going to encourage the banks to be more liberal in their loans. Do not for one moment think that I am condemning the banks for lending money to needy borrowers. That is not my intention at all. The point I make is that easy credit is going to ruin many men. And if the banks accept a liability higher than ten per cent it will mean easy credit for many of our farmers.
The other point I make is one where I take issue with the hon. member for Souris-and I have had to do so on several occasions. However I think I know whereof I speak. I have heard men declare-not farmers, so often, but. the men who farm the farmers, as we have heard it said-that it is more economical to grow wheat on a large farm than to grow it on smaller farms. I will not agree with that. And when the hon. member for Souris says that a two-section farmer is the economic unit, I disagree with him entirely, I think that that is the class of farmer that got us into trouble with our big wheat surplus-a condition we have now overcome because of the war. In my opinion the economic unit is the smaller farmer on the half section or three-quarter section of land. He may have three or four sons, and in that event could probably have a section. The men on those smaller farms are diversified in their farming operations, and do not depend entirely upon the growing of wheat and other grains. They do not build up big surpluses to depress the prices for the smaller farmers.


James Arthur Ross: I referred to a diversified farm.


Harry Leader: Well, some might call two sections of land a diversified farm. But the smaller farmer must practice diversification, because he cannot put all his eggs in one basket. He has to keep live stock, and that live stock will build up any farm, whether it be one of 2,000 acres or only a quarter section. I know that the farmers who stood the stress of the years of depression were the smaller farmers. You can find that in every province of Canada. And when we are encouraged to build up larger farms, or what are called more economic units, I believe we are making a mistake. What do we want? With less than one-third of Canadians living on the farms in Canada to-day, what we want is more farmers on the land. The 2,000-acre farmer is perhaps living in a city or town, and has his farm operated by a hired man who runs one or two tractors. Get the farmers out on the smaller farms. Build the country in that way, and we
{Mr. Leader.]
will build from a proper foundation, not only in Canada but, I believe, throughout the world.


Mr. ROBERT FAIR (Battle River):: Mr. Speaker, farmers are always thankful for small mercies, and I think they will appreciate a rate of interest of five per cent, particularly if they had to start out, as I did, by borrowing at eight per cent. And that eight per cent was compounded every three months. If they had crop failures for four years in succession, as I had when I started out, then I think they will appreciate this rate all the more. I know my interest bills, like those of many others, had piled up so high I was not able to stand them.
The fact that this money is being made available will help out, provided that other steps are taken as well. I am thinking particularly of the mention made yesterday of the prices of farm machinery-and what I have to say about farm machinery will apply with equal force to a number of other products. I believe it was in 1936 and 1937 that the committee on agriculture investigated farm machinery prices. In one instance the committee found that one implement company was following up the practice now followed by the banks, that of having a secret reserve. In that instance it was one of $40,000,000, -which had been piled up from excess profits they were receiving. I do not know whether the other implement companies did the same thing, but at least one company under investigation was found to have a secret reserve of the amount I have mentioned. Those prices will have to be investigated, and they will have to be placed upon a sounder basis. If purchases are made for cash it is only reasonable to expect that the prices charged to-day might well be considerably reduced.
This programme would also relieve unemployment. It took the present war to relieve the unemployment of 1939. What I have suggested would also provide an outlet for the factories located in central Canada. Before going further I would point out to the minister that he is starting entirely at the wrong end. If a person has a sore on his hand or on his face he may put salve on it, but he will find that that will not do much good. He must go to the root of the trouble. Remove the cause and the sore will usually take care of itself.
For the information of the minister-and I assume he knows this already-I should like to place on record the percentages of national income received by agriculture over a period of years. I do this because about one-third of our population is engaged in that industry. I do it, too, because the workers in agriculture work from one and a half to twice as many hours as do those engaged in other industries. For these reasons I feel satisfied we should

Farm Credit-Mr. Fair
receive at least one-third of the national income. Beginning with the year 1926 the following are the percentages of national income received by the agricultural population:
Percentage of
Year	national income
1926		 17-8
1927		 10-4
1928		 17-6
1929		 14-6
1930		 9-6
1931		 6-3
1932		 5-0
1933		 6-6
1934		 9-1
1935		 9-3
1936		 11-4
1937		 11-5
1938		 10-9
1939		 12-5
1940		 11-0
It will be noted that in that wonderful depression year, 1932, the farmers of Canada, comprising one-third of our population, received only five per cent of the national income. These percentages work out to an average of 11-3 per cent over the fifteen-year period. Instead of extending this credit to farmers, some action should be taken to give them the percentage of the national income to which they are entitled. If that were done the necessity for this bill would be eliminated. I am not saying the bill should not be put into effect, for the time being. But I do say that even at the expense of those who are farming the farmers and profiteering to an abnormal extent to-day, steps should be taken immediately to place agriculture on a sound footing, for the first time since Canada was Canada.
I am, of course, in favour of the bill. I may have something further to say later on, but I would repeat, for the benefit of the minister and his colleagues, that until agriculture is placed upon a sound .footing we are going to have an unending succession of farm debts.


Hon. GROTE STIRLING (Yale):: Mr. Speaker, as has been said, this bill has been in our hands only since this morning. Since receiving it I have been trying to ascertain whether an irrigation farm may benefit under it. It is not clear to me, and I should like the minister to explain whether it does or does not. Section 2, paragraph (h), subparagraph (v), refers to the erection or construction of works for drainage on a farm, but there is no reference to machinery or equipment such as would be used on an irrigated farm. Section 6, regulations, states:
The governor in council may, on the recommendation of the minister, make regulations:
(a) to define for the purposes of this act the following expressions:
(ii) "works for drainage".
A considerable amount of farming in Canada is carried on under irrigation, and there are signs that this will be increased in the near future. It is a common thing for the farmer growing crops under irrigation to require assistance to purchase pumping machinery and various items of equipment required for the carriage of water to his land. When the minister replies I should like him to be good enough to say whether or not such requirements will be included in the clauses of this bill.
Hon. VV. E. ROWE (Dufferin-Simcoe): Mr. Speaker, as the hon. member for Yale (Mr. Stirling) has said, this bill has not been very long in our hands and it is difficult to discuss it on such short notice. However, the need for the bill may be defined in many ways. The previous speaker referred to the disparity in the prices of farm products and other things. That is one of the basic reasons, [DOT] not only for the depression in agriculture but for unemployment generally in this country, and it no doubt creates one of the needs for farm credit. However, I believe that even over and above that one of the needs for this bill has been created by the fact that we have farm loan boards in the different provinces; we have the Farmers' Creditors Arrangement Act which was passed by the dominion, and we have other efforts being made to extend credit to the country but not serving the purpose for which they were initiated. I fear that with this bill we are going to create further embarrassment for the farmer who wants to borrow money. If parliament sanctions a bill which goes so far in granting credit to farmers and then fails to go far enough to make it practicable, it is obvious to all of us who have had experience with farm loans, who have had experience in agriculture enterprises generally, that there are grave dangers hidden behind the inadequacy of the bill.
I believe it was the hon. member for Souris (Mr. Ross) who said that ten per cent was not sufficient. I find myself in full agreement with that. I believe the farmer should have his loan at four per cent if possible, and I hope there will be an amendment to that effect. If that is done, I doubt whether the ten per cent risk guaranteed by the government will make these loans sufficiently attractive to the local bank managers to make them want to extend the credit required.
The hon. member for Portage la Prairie (Mr. Leader), who preceded me, stated that easy credit is not sound credit. There is no one in business and I doubt if there is any one in this house, who does not realize the
Farm Credit-Mr. Rowe

dangers of easy credit for the young or the old, for the business man or the farmer. We all know it is sometimes ruinous, and to that extent I agree with the hon. member for Portage la Prairie. But I think he will agree with me, and I believe you will also, sir, when I say that there is a need for essential credit. There is a difference between easy credit and hard credit and essential credit.
We are living to-day in an age of advancement. I realize the good motives behind the statement of the hon. member for Portage la Prairie when he said that what we need are small farms, such as fruit farms, poultry farms and mixed farms. As the hon. member knows, for many years in this house I have urged the diversification of agriculture. He will recall that I twitted the western farmers for developing a lopsided agriculture. However, I have been in this house long enough to see the western farmer become almost as diversified in his production as the farmer in the east. The only difference is that he is farming larger units.
Progress knows no retreat. You cannot stop advancement. There is no enterprise in this dominion which offers greater possibilities for research in the use of modem equipment and advancement in general than agriculture. I have farmed all my life, and my forefathers before me. I will admit that I do not know all about agriculture. I have heard some speakers in this house who knew more than I, but I have heard one or two speakers who I am convinced knew less. With all respect to those who have the same motives as the hon. member for Portage la Prairie, may I say that after this war is over I would like to see happy families on small farms, but I would hate to see a bill that retarded the general progress of agriculture itself.
I have farmed on reasonably sized farms. My main experience has been with farms of around four hundred acres, but I have had experience on farms ranging from one hundred acres up to four hundred. Some of the smaller farms have done better than mine, but just as many of the larger farms have done better. I am convinced that with the march of progress that is obvious to us all, with the modern machinery that will come out following this war, no matter how desirable it may be to have small farms with the old team and the single furrow plough, the small cultivator and the-


George Alexander Cruickshank: Race horses.


Mr. ROWE:: Some race horses add a little bit of mirth to a class which is just as much entitled to it as any other class in this dominion. When you have the experience of seeing a boy of twelve or fourteen years go

out and plough more in one day than three hired men can with high-class teams of horses in a full week, you begin to count the cost. You then realize that you cannot stop progressive development. It is not easy credit; it is essential credit.
While it is true that the man on the small farm may not need more than the limit of $3,000 provided in paragraph (d) of subsection (1) of section (3); while he may not need $2,000 or perhaps no more than $700, in progressive times like these a limit of $3,000 is pretty small for the large farm. My hon. friends may say that in general that is enough, but there is something I want to place before hon. members who I know are just as much interested as I in this great industry. Once you have a credit of x dollars as the limit, you automatically destroy the chances of the farmer getting a loan anywhere else. I well recall that the government which I was supporting brought in the Farmers' Creditors Arrangement Act. I discussed it at great length privately with the government of the day and also in the house. That act may have helped in some respects.


George Alexander Cruickshank: Of course it did.


William Earl Rowe: My hon. friend says it did, but it was the general opinion of farmers throughout Ontario that the Farmers' Creditors Arrangement Act seriously injured the credit of the farmers of Ontario. The old retired farmer or the lawyer ini the village who was handling a widow's estate and had money to lend would say to an applicant, a voung couple perhaps who came in for a loan of $2,000 to buy a $10,000 farm, "No, I am sorry, George, I cannot lend you the money because I got a trimming under the Farmers' Creditors Arrangement Act."


George Alexander Cruickshank: Don't call him
George.


William Earl Rowe: The hon. member for Fraser Valley looks so prosperous that I do not think he would ever need credit, and if he did, I am sure he could get it without any trouble. I have had scores of men come and ask me where I thought they could borrow money. I have sent them to the old line creditors, perhaps a retired farmer or a lawyer handling a widow's estate, and they would come back to me afterwards and say that they were refused the loan because the Farmers' Creditors Arrangement Act had frightened creditors off. We have had a farm loan act in Ontario and money was not being lent under that act for a good part of the time; I say that without reflecting on any government. At times the government was collecting more than it

Farm Credit-Mr. Rowe
was lending under the act, and I believe that that is the case to-day. I am not saying that from any political point of view. I merely wish to emphasize the fact that because that act was on the statute book it frightened the normal creditor away.
Mr. ILSLEY. I do not see that at all.


An hon. MEMBER:: I do not believe it.


William Earl Rowe: I have seen it; I believe it; I have felt it; I have evidence of it. There is not a member from Ontario who does not know that that is so. If the minister sets up a farm loan agency under this act, he is going into the field of lending money to the farmer, and if the farmer cannot get enough money from him and applies to somebody else, he will be met with the reply, "The government has a lending agency, and if you cannot get the money there, do not expect me to take your risk."
I submit therefore that the bank must be in a position to consider freely the risk it is asked to carry, and it must be in a position to be reasonably lenient to the farmer, because almost every other line of credit will have been eliminated. I say this in fairness to our local bankers. The local bank manager is usually a good citizen. I do not believe he is going to take an undue risk even with the government taking twenty per cent of the loss, but he will be more sympathetic and will feel freer to sit down in his office with the farmer who needs a loan, knowing that twenty per cent of any loss is guaranteed by the government. But if the local banker under these circumstances is not sympathetic and refuses the man a loan, where else can he get credit? The old retired farmer who might have lent him money will say, "Have you been to your bank and borrowed money under this new act?" and if the man says, "Yes, but the fellow down at the bank was never friendly to me and he will not let me have the money," the retired farmer will say, "Have you any implements?" I am simply bringing out the point that if the local banker does not give the borrower a sympathetic hearing, he has nobody else in the village to whom he can go to borrow money.


George Alexander Cruickshank: If my hon. friend will allow me, my understanding is that this is not to take the place of mortgages but is providing for loans to enable agriculture to carry on.


William Earl Rowe: I was just coming to that. It guarantees the bank ten per cent of its loss on loans on improvements and implements.


George Alexander Cruickshank: To enable the
farmer to carry on.


William Earl Rowe: Yes, to carry on. Section
3(1)(d) says:
the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other farm improvement loans previously made to the borrower and disclosed in his application, or of which the bank had knowledge, exceed the sum of three thousand dollars.
Another section of the bill provides that the bank may take a farm mortgage up to $3,000, and I was just coming to that feature.


James Lorimer Ilsley: Only if the loan exceeds $2,000 and the period for repayment is longer than five years.


William Earl Rowe: Yes. I come to the other angle, in reply to the hon. member for Fraser Valley. Under this bill you are in almost the same lending field on mortgages as you are on loans. A loan of $3,000 may be sufficient for the small farmer, but $3,000 is not a very big loan to a farmer who is farming with mechanical equipment. But when you have a mortgage on his land he cannot get credit anywhere else, no matter how big his farm may be.


Mr. WEIR:: Would not that man utilize the Canadian farm loan board for a longer term loan, which would not affect his credit to the same extent?


William Earl Rowe: I agree. The Canadian farm loan board takes mortgages not only on the ground but on the chattels. You have already used the mortgage on the chattels. On the other hand, if the farm loan board can take mortgages, why put mortgages in this bill at all?


William Gilbert Weir: Just for special cases.


William Earl Rowe: That is the very point I am endeavouring to make. I want the minister to think this over seriously. We should not touch the loan field in any one of these cases unless we can go as far as it is economically sound to go, because, whatever field you touch, for that particular field you will detract from the attraction of the ordinary normal creditor. Personally I would rather see this bill go through the house guaranteeing twenty per cent instead of ten per cent. I hope it is possible. I realize that there are many difficulties. I hope it is possible to make loans at four per cent; I think it is desirable; and the banks could be assured of twenty per cent. I say this in all seriousness. To my mind there is little more risk being taken. Your bank managers are sound business men, and can help the farmers and business people generally across the dominion by sound advice. I am not so sure that if you gave them sufficient backing you would not get the best pro-
Farm Credit-Mr. Rowe

tection for the treasury and the dominion that could possibly be secured in Canada. But give them sufficient backing, or support, or guarantee, whichever term you choose to use, to enable them at least to function. If you do, they will be more apt to deal sympathetically with the farmers' requirements.
So far as the farm mortgage part of it is concerned, I think that should be eliminated. Either eliminate it or leave it to the discretion of the banker to fix a higher limit. In other words, you should not enter that field at all to disturb the possibilities of the farmer getting the loan from the farm loan board.


George Alexander Cruickshank: What does the
hon. member mean by a higher limit-ten per cent, or twenty per cent, or what?


William Earl Rowe: A higher guarantee. It should not be restricted to $3,000. I realize that our farm land prices, especially in Ontario, through the years of depression from 1930 to 1940 have gone to a pretty low level at times, but I am convinced that there were literally scores of farms that would have been sold and sold at reasonably good prices and young men would have started on them had they been able to find credit. In ninety per cent of these cases, in the province of Ontario, the reason why they could not find credit was that the Farmers' Creditors Arrangement Act frightened the old line lenders.


George Alexander Cruickshank: I do not want to
interrupt the hon. member. He states that in ninety per cent of the cases he mentions the reason why loans could not be secured was that the Farmers' Creditors Arrangement Act frightened lenders. Will he not agree that the reason was in large part the fact that the economic situation was such that the prices of agricultural products were too low?


William Earl Rowe: That is quite true, and I
thought I said that at the outset. But I am speaking of Ontario. Let me put it this way. Ninety per cent of the old normal type of creditor, the retired farmer or the lawyer who had money in trust, were eliminated because the Farmers' Creditors Arrangement Act ruined credit. I do not think this will ruin credit, but it will restrict the extension of credit and take it out of that field.
I would urge the minister therefore to reconsider first the ten per cent guarantee and make it twenty per cent. I would ask him to reconsider the mortgage clause and either make it adequate so that it will work in practice, or eliminate it so that it will not be required, and allow the farm loan board or other mortgage agencies to deal with mortgages as required. I would much prefer a mortgage of 810,000 on some farms to a mort-

gage of $3,000 on some other farms. It depends on the ratio. It is better for the government to extend through their bank a mortgage of $10,000 on a $15,000 farm than a mortgage of $3,000 on a $4,000 farm, and I see no reason why it should be fixed at any particular figure. Certainly if it is fixed at a figure, that figure should not be the arbitrary amount of $3,000, because in my opinion that would be only a nuisance mortgage.


An hon. MEMBER:: Would you not put on any limit at all?


Mr. KINLEY:: There is no limit except ten per cent; you can get all you want.


William Earl Rowe: A limit of $2,000 or $3,000 on implements, or to assist in improvements, might well stay at that level. Even $3,000 is not a reckless risk to take in connection with general equipment required on the average successful farm, where that includes live stock and farm implements. But when you go into the other field you find that the amount proposed is too small. It is too small to assist and therefore becomes a nuisance mortgage. And it is the first mortgage. I would like to know if there is any member in this house who would find anyone to take a second mortgage under these circumstances when it is so difficult to get the first.
I suggest therefore that the minister consider either the elimination of the mortgage clause or the desirability of making it sufficiently flexible to enable it to work. I am convinced that there is not a single feature that will endanger the credit of farmers more than allowing the government to take the first mortgage and leaving it to doubtful lenders to take the second.


James Lorimer Ilsley: Under this act it is not
necessarily the first.


William Earl Rowe: It may not necessarily be the first, according to the letter-


Mr. HOMUTH:: Would they take a second?


William Earl Rowe: That is the question. I say
to the minister:	Is it going to be your
practice to take a second?


James Lorimer Ilsley: The government is not going to operate it. The government will be supervising it, but not operating it. The banks will operate it.
v Mr. CRUICKSHANK:	Will the banks
take a second?


Karl Kenneth Homuth: They will never take a
second.


William Earl Rowe: With the government supervising and the bank operating it, and knowing

Farm Credit-Mr. Hansell
the present Minister of Finance, as I know him, and it is only to his credit to say so,
I am sure he will be very leery about a second one. Even he, in all his kindness, will leave it to John Jones, the retired farmer in the district, and John Jones will shake his head, as an hon. member over there is doing, and will decline to touch it. The farmer will then go to the farm loan board and someone will come and examine his farm. He will then say to the farmer, "You went to the bank, did you not?" The farmer will say "Yes." Then the other will say to the farmer, "You could not get it from the dominion?" "No." Well, whether it might be politic or not, the other man will say to the farmer, "You could not get credit from the government, and there must be some reason for that, because they can throw billions around here and there; they are not so small in their loans. If your credit were good they would have given it to you."
I am not critical of the bill, but I am throwing this out as a warning. I know the purpose is to help the farmer with reasonable credit rather than to injure him, but I fear that the purpose in view will not be achieved, and in the end, crude as this may sound, despite our good intentions, we may simply be adding insult to injury and depriving the farmer of other credit which he might have been able to obtain.


Mr. E. G. HANSELL (Macleod):: In discussing this bill providing short term credits to farmers for the improvement of their farms I do not do so as an agricultural expert. I -will admit, of course, that I know very little about farming and agriculture in general. I might dip one of my hands in one sack of wheat and the other in another and compare the two, and I would not know that there was very much difference, except that one might look a little bigger than the other.


Mr. KNOWLES:: They may both be oats.


Ernest George Hansell: They may be something else. I may look at two cows and I think I would know the difference between a Holstein and a Jersey. Once upon a time I did see a picture of the leader of the Progressive Conservative party milking a cow; I knew then which was the cow, but I do not claim to be an agricultural expert. I do not think it requires an abundance of knowledge about agriculture to discuss this bill. I do not knowhow much the Minister of Finance (Mr. Ilsleyl knows about agriculture, but I do know that he knows something about finance, about banking, about credit institutions, about mortgages and related subjects, and he is the
man who brings down the bill. It is purely a bill which concerns those who are interested in monetary affairs.
I do not think we can very well oppose the measure, because after all Canada's orthodox Minister of Finance is bringing it in for the purpose of helping the farmer to get credit on easier terms. While we may support the bill, what is actually needed is more fundamental legislation, legislation that would have the effect of putting the farmer m such a position that he would not have to borrow money for the improvement of property, buying machinery and things in general on his farm. Of course I am not saying that industry ever operates without certain credit facilities; whether it is secondary industry or primary industry they all find it necessary to borrow money, pay overdrafts, and so on. But I do say that what is needed is some legislation that would fundamentally change the present system of financial operations. When that is done, agriculture will have its chance, and secondary industry, though a bit better off in past years than agriculture, will also be in a better position. The fact of the matter is that fundamentally industry is never self-liquidating under the present system of borrowing.
This bill is a measure to provide loans for improvement of farms. Anything that will improve the farm will make it more valuable.
I agree with the hon. member for Fraser Valley (Mr. Cruickshank) when he says that the difficulty is not borrowing money but being able to pay it back. The difference between agriculture and secondary industry is that when secondary industry borrows money for the purpose of production those borrowings are written into the costs of its production. The result is that when the goods are sold the loans are retrieved and paid back. But that is not what happens with agriculture. The main difference is that secondary industry puts a price tag on its production that meets the requirements of the debt, but the farmer never puts a price tag on his production. He is a gambler-not that he wants to be, but the very nature of his business makes him one. He has to accept the available price for his production and take a chance on whether or not that available price will enable him to retire his debt.
I should like to see a crop failure paragraph in this bill, because the farmer operates on a yearly basis. If he has a crop failure one year his loan is still held intact, and he finds it necessary to continue to pay the interest on that loan-


An hon. MEMBER:: Compounded.


Ernest George Hansell: As my hon. friend says, compounded. That happens whether he has
Farm Credit-Mr. Hansell

a crop failure or not. The fact of the matter is it does not cost the bank anything to carry that loan for another year. That may be subject to a lot of discussion. As a matter of fact the banks do not lend the farmer anything, in reality. The banks lend debt. When the farmer goes to the bank he gets a debt in the form of financial figures. The only obligation that is imposed upon the banks-and I am using a crop failure year as an illustration -is what it costs to carry that debt, which is very little. When I say, "costs to carry the debt" I suppose I shall have to include the interest of one and a half per cent that the banks have to pay when that debt becomes deposits in the savings accounts of the people. Therefore I say there should be a debt paragraph in the bill which in a crop failure year would stay the increase of the debt in so far as interest is concerned. There would be no interest in a crop failure year.
The hon. member for Portage la Prairie (Mr. Leader) has told us of the danger to farmers by reason of their being able 'to obtain easy credit. I may agree with him there, but I would also say that any credit is a danger, whether it be easy credit or hard credit. Any credit is a danger because credit given to farmers by banks is a debt, and any credit is a danger in that sense. There is only one credit that is not a danger, and that is social credit.
I wonder if the minister, in discussing this bill, took the various agricultural organizations into his confidence. I do not know that it would help him very much, I must confess, because in reading much that is published by agricultural organizations I notice that they tackle almost every farm problem except the problem of farm debt. They deal with almost everything affecting agriculture, including markets, but somehow or other they do not seem to deal with the problem of a proper fiscal policy for the farmer. They may think they do, but I must confess that I find a sad lack in their literature in this regard. For instance, may I quote from a pamphlet issued by the Canadian federation of agriculture, which is rather enlightening. This is an address which was broadcast by Mr. Pearson, who is our representative on the United Nations Relief and Rehabilitation Administration, with respect to the Hot Springs conference. I heard the broadcast, and thought it was very good. This statement is very significant:
The application of science to agriculture has for the first time in history now given man the physical means for conquering want. Whether he has the economic sense and the social wisdom so to apply his scientific and productive knowledge that the food which is grown gets to all the people-well, that is another question.
[Mr. HanseU.i
That is the question, and Mr. Pearson does not go into the problem of how the food is to be distributed to the world, which I claim is a fundamental difficulty that has to be solved. If it is a matter of distribution, then it is a question of money. Then I have an address by Mr. Paul Appleby, which is also issued by the Canadian federation of agriculture. In these remarks I am not criticizing the federation; I am simply suggesting that while they have attempted to solve many problems of agriculture they do not seem to have tackled the most fundamental problem of all. I have mentioned this address by Mr. Appleby; I do not find any of my markings in this pamphlet, so I fancy I need not comment on that. In any case these people will know that I read their literature. Another publication by the federation is entitled " Farmers Meet the Cabinet," and it is very interesting. I do not know whether they got very far, but the pamphlet contains a paragraph on government subsidies. I am not going to read it, because I do not want to take the time of the house in doing so, but it gives the psychological impression that they are more or less apologizing because the government have given subsidies to agriculture, and they argue that after all the subsidy is given to benefit the consumer. That argument is right; I have no quarrel with it, but let me say that agriculture has no reason whatever to apologize for government subsidies. I agree with them, and I have no particular criticism to offer of the financial policy of the government in respect to subsidies. I do say, however, that agriculture is not self-liquidating under the present debt-creating system. The hon. member for Battle River (Mr. Fair) said he wanted agriculture put on a proper footing. So do I; so do we all. We want agriculture in such a position that with parity prices it will be able to pay its way. But let me add that in my humble opinion if one branch of Canadian industry is self-liquidating, it is at the expense of another branch of Canadian industry almost going into bankruptcy.
I am not going to say anything more about this matter of government subsidies, Mr. Speaker, because I am afraid you are apt to say it is a bit out of order, though as a matter of fact when we come to discuss a bill of this kind we are almost bound to discuss the operation of agriculture in respect to prices. Now I have another pamphlet issued by the Canadian federation of agriculture which deals with the federation itself; what it is, how it works and what it advocates. On page 11 they talk about farm income, and the concluding paragraph reads:
The federation believes that until the principle is accepted that farmers are entitled to

Farm Credit-Mr. Neill
a fair exchange value for the products of the farm with the products and services of nonfarm groups, there can be no secure future for agriculture.
In reality all that is said in this paragraph is that there must be parity prices; but if I am correct in saying that industry is not self-liquidating under a debLcreating system, parity prices of themselves will not do the trick for agriculture. I should point out, however, that on page 14 of this pamphlet I find one short paragraph dealing with farm credit. I do not think I need read it, for it simply says that farm credit should be available. With all that, however, they do not seem to recognize what is inherently the fundamental problem of all industry.
I shall close, Mr. Speaker, simply by saying that it seems to me such an organization as tlie Canadian federation of agriculture should have within itself a body or a committee of economic advisers. And may I suggest that if they ever have such a committee, it is of no use to have economic advisers who have not been able to advise in days gone by. They must be economic advisers with a new idea, advisers who know what is wrong and who will advise as to the right way out.
As I have said, I am going to support the bill. It is purely and simply an orthodox bill. It will not do the trick; do not think it will. It will not save the farmer completely; it will help to lengthen his suffering days, but just the same I will vote for it.


Mr. A. W. NEILL (Comox-Alberni):: I think the general opinion of hon. members is that this is a good bill. Any criticism that has been offered has been in an endeavour to make the legislation more useful, and has consisted of two suggestions; first, that the rate of interest should be reduced, and second that the government's share of responsibility should be greater. The hon. member for Dufferin-Simcoe (Mr. Eowe) introduced a new angle along this line. He pointed out something which is no doubt correct-although I do not give it the emphasis that he did- that under this bill it might be possible for a bank to take a mortgage for a small loan. They have that power under the act. That would to a large extent cut off a man's credit. He would not be able to get credit otherwise, once it was discovered that the bank had a mortgage on his property, even for a small amount.
However I do not anticipate the trouble anticipated by the hon. member, and for two reasons. The first is that this is primarily intended to be a small loan bill to help farmers in a small way and, as I understand it, for a comparatively temporary period. The
purpose of the bill is not to finance a farmer, but rather to help him. And unless a farmer has some stake in his land, and some reasonable assets, it is not proposed that this bill will enable him to start farming and finance him for his land, implements, stock and everything else. This is regarded more as a temporary matter.
On the other hand there is this feature, that even if he had a small loan for two or three hundred dollars, if he afterwards deemed it advisable to get a larger loan he could always get it under the Canadian Farm Loan Act, and he could repay this temporary loan.
I agree with those who have advocated that the rate of interest should be reduced. That would only bring it in line with the interest charged under the War Veterans' Allowance Act. I have had long experience with farmers, and I know that the less mortgage a farmer has, the better. He cannot afford to pay the high rate of interest which perhaps it would be fair enough to charge those engaged in some other lines of activity. If he is going to have any mortgage, then he should be able to get it at a low rate of interest. In my view four per cent, or even three and a half per cent, would be reasonable.
That, of course, would require consideration of the other objection which has been raised, namely, that the government should take a larger share of the loss, if any. It has been suggested that it be raised from ten per cent to twenty per cent. This would be essential if the lower rate of interest is conceded. Because even at five per cent I doubt if the average bank would be bothered. They are getting only a ten per cent repayment from the government, and their loans would be small. They can lend money at as much as six or eight per cent, and they are not going to be bothered with it. You can lead a horse to water but you cannot make him drink. And our appeal will not make them lend money if the proposal is not a reasonable one. Therefore, if we are to compel them to lend at four per cent it would be reasonable to expect the government to assume a greater responsibility of the ultimate loss, if any.
One other point, and it is this. According to the bill the governor in council may make regulations dealing with so many different matters that they extend over a page and a half. Well, I suppose that is necessary, but it entails great danger. For heaven's sake let the government use its power to make these regulations as simple as possible, and make the process of getting loans under this measure as rapid as possible. The government passed a reasonably simple act in respect of old age
Farm Credit-Mr. Neill

pensions, and gave power to somebody to make regulations. Those regulations made a completely new bill; one would hardly recognize it as the same bill. I hope the government will exercise its control in the present instance and prevent anything of that kind- because it is quite possible to condemn the bill entirely by way of regulations. They can go all over the shop with these regulations, and if that is done inadvisedly it will mean that the bill would be of no use at all.
Following out that idea I would impress upon the government the fact that a great deal of the advantage in connection with loans of this kind is that a man can get a loan quickly. If he cannot get it quickly it is not worth much to him. There may be an auction sale, or a man may have a chance to buy sheep at a low price. If he can get money in a few hours or in a few days, well and good. If not, a provision of this kind is of very little use to him.
A few years ago a man came to my office wanting to borrow $200. I told him all about the Canadian Farm Loan Act, and about the procedure he would have to follow. "But", he said, "I want the money now. I do not want to wait three or four weeks, or perhaps six weeks, while they go all through the red tape three thousand miles away. I want the money now." It was of no use to him if he could not get it right away. Instead of borrowing from the government at four per cent or five per cent I lent him the money at six per cent, and he later repaid it. The point I make is that he was willing to pay six or eight per cent to get quick action. That is the main thing in connection with these small loans, when a man goes to buy a bull, a horse or something of the kind. The regulations may say, "You have to write to Jones." Then Jones sends you a form. You fill out the form, and you sign your name. Then in the fulness of time you are advised that you have misspelt a word and you have to begin again. Then it is sent to Ottawa, and the man at Ottawa is on holidays -and I have seen this happen-and the usefulness of the loan has passed.
This is a good bill, and a good principle, but it should be made as simple as possible and the interest rate should be cut down. Make it worth the bank's while. I am not advocating the interests of the bank-it is most unpopular to defend the banks these days; one would think they were the spawn of the devil. But we cannot compel the banks to lend money, and if we do not give them a reasonable deal they will not be bothered. Therefore my suggestion would be to reduce the interest rate and make the regulations simple.


Mr ANTHONY HLYNKA (Vegreville):: Mr. Speaker, I object to the second reading of the bill this afternoon. We received a copy of it as late as eleven o'clock this morning, and have had only two or three hours to look over it. I suggest to you that members did not have enough time to digest the contents of the bill or to analyse what it contains. Therefore they are not in a position to discuss intelligently an important measure of this kind.
I do not wish to reflect upon those who have already spoken, but I say that any measure affecting approximately a third of our population should be printed a few days before it is debated in the house, and should be distributed to members of parliament so that they may be in a position to give it study before being asked to comment upon its merits or demerits. This measure will affect approximately thirty per cent of the people in this country. Agriculture has been our fundamental industry, and upon its success depends the success of people in many walks of life. I agree with the hon. member for Macleod (Mr. Hansell) when he says that agricultural organizations should have been consulted. In my opinion the bill'should have been printed a few days ago and distributed both to agricultural organizations and to members of parliament, so that they might be properly prepared to make their comments.
Divorce bills are usually printed well in advance, bills which most of us hardly read, but a measure of this sort is rushed through as quickly as possible and we have little or no time to look it over.
I would draw your attention to section 7, special powers of bank, which reads:
-if a bank makes a guaranteed farm improvement loan the principal amount of which exceeds two thousand dollars and the period for repayment of which is longer than five years, the bank may at the time of making the loan take as security for the repayment thereof and the payment of interest thereon-
(b) an assignment of the rights and interest of a purchaser of the farm under an agreement of sale.
To me this section indicates that if a bank takes a mortgage upon a farm home and the farmer fails to meet his debt on time, he will be forced to give up his land. In 1938 the province of Alberta passed the home owners' security act which was later disallowed by this government. The purpose of that act was to prohibit the foreclosure or sale under mortgage of any farm home. I suggest that ten years from now many of our western Canadian farmers will find themselves in a position similar to the one they were in from 1929 to 1939 and the financial institutions will proceed to foreclose upon their homes.

Farm Credit-Mr. Iilynka
I intend to support the bill, but object strongly to any provision which would permit a lending institution to foreclose upon the home of a citizen of this country. The family is an important institution in our nation, and we must have high regard for its welfare. Every family should have a home. If a mortgage is given upon land by a farmer I say that the home of the family should not be allowed to be sold for a debt. The time will come when the farmers of this nation will demand from the government that such a bill be passed so that they may be sure that at least they will have a home from which no one can evict them.
I notice that the bill provides for a total of not more than $250,000,000 in loans over a period of years. At the end of 1941 the private debts of our Canadian farmers amounted to $629,000,000, which works out to $2,372 per farm. The $250,000,000 provided in this bill is only a fraction of the money which the farmers of this nation owe to-day. and that does not include the debt written off and other private debts not covered by mortgages.
On a previous occasion I gave the house the details of the indebtedness as it stood in 1941 and as it affected the farmers in each province. I do not intend to repeat the remarks I made previously, except to say that forty-eight per cent of all owned farms in Canada are mortgaged. To me that is an indication that there must be something very much wrong. I have just received a pamphlet from the national farm radio forum and it has this to say under the heading of "The Federal Intermediate Credit Banks":
The present rate in effect in the continental United States is one and a half per cent and in Puerto Rico two per cent.
Why is it not possible for Canadian banks to make credit available to our farmers at one and a half or two per cent interest? The hon. member for Comox-Alberni referred to the fact that we shall be providing credit to our returned men at three and a half per cent. Why should we not be able to provide our farmers with lower rates of interest?
The government promises to guarantee certain losses up to ten per cent. I do not know that I can say much about that at this time. May I say, however, that no matter how honest and efficient a farmer may be, if he is forced to sell his production at below the cost of production, if he is not given protection from the hazards of nature, he will fail to meet his debt obligations. This has been proved by the experience of the past, particularly in the period from 1929 to 1939. The farmer must get parity prices for his products, and not on the 1926-29 level which is used by the Minister of Agriculture.
It should be a parity price which will constitute a proper relationship between the prices which the farmer gets for his products and the prices which he has to pay for the goods he buys. Again, the farmer must be protected from the losses caused by hail and frost and other hazards of nature so that he may be in a position to meet his debt obligations as they fall due.
The minister knows very well that the government has no say as to the amount of credit in circulation, and as this power rests in the hands of the banks, I suggest to him that the banks will restrict credit in the future and then proceed to foreclose on the homes of the farmers. I wish to underline the necessity of amending section 7 (1) (b) and so give protection to the banks in lending to the farmer and at the same time protect the home of the farmer from foreclosure.


William Gilbert Weir: Mr. Speaker, after listening to the hon. member for Vegreville (Mr. Hlynka) condemn this measure I am surprised that he stated earlier in his remarks that he would support it.
I think we sometimes overlook just what the purpose of this bill is. It is not designed to take away or remove entirely the facilities that now exist for people securing credit from other sources. For instance, the farmer who has victory bonds, as no doubt many of them now have, would have one of the best sources of security with which to go to a bank and borrow money, and he would be able to borrow it at a lower rate than is proposed in this measure. This legislation to me is merely a step in advance of what we already have. It is to meet the particular requirements of a class who have perhaps experienced some difficulty in the past in securing the credit which they need. We have had in existence the Canadian farm loan board which provides for a particular type of long term credit. We have, in addition, banks and private individuals lending for other purposes. The type of loan provided for by this measure fits in between these two- other types of loans, and the bill is designed, as I see it, to meet a little more than 'the ordinary seasonal requirements of farmers, and to take care of requirements that continue beyond one season into another.
Let me illustrate by taking the case of a man who wants to buy a farm implement and has not sufficient money to pay for it in cash. Heretofore we all know that the farm implement companies have provided a good deal of the credit facilities for that type of business. They have naturally been obliged to protect themselves by perhaps adding to their prices and by securing a rate of interest sufficient to cover that type of business. I
Farm Credit-Mr. Weir

look upon this measure as designed to meet that type of requirement, so that a man who wants to buy some farm implement will be able to go to the bank and secure a loan, giving security on the implement he is about to buy, and receiving a loan at a rate of 5 per cent, enabling him to make a cash deal with the implement company.
The hon. member for Dufferin-Simcoe (Mr. Rowe) appeared to be afraid that the entry of the government into this field of lending might have the effect of drying up other sources of credit. I do not think his fears in that regard are well founded. I think that other sources of credit have been affected for reasons other than government lending. Governments have come into the picture and have provided credit, it is true, and in the matter of farm mortgage loans, particularly in western Canada at the present time, it can be assumed that the government agency is making most of the loans and that private loans have largely dried up. That is to be regretted, and I agree with the hon. member to that extent; but other conditions have been partly responsible -for that. The Farmers' Creditors Arrangement Act, as the hon. member suggested, has undoubtedly played a part as well in drying up other sources of credit. Other forms of security have taken a prior position to the farm mortgage as first-class security, but the same credit facilities will still be available for the man whose assets make him in the eyes of the bank a creditworthy risk. That is all I want to say with respect to that particular feature.
I wish to draw the minister's attention to the banking facilities that are available in most parts of western Canada. I look at the area around Winnipeg. The banks are naturally located there and they do a considerable country business. There is not a rural bank in the area with which I am familiar within forty or fifty miles of Winnipeg. This is the point which the hon. member for Comox-Alberni (Mr. Neill) made, that the banks are not conveniently located to meet the needs of those requiring this type of loan.
There is another thing I have in mind in regard to this measure as it will be operated by the banks. I am not suggesting that it should be handled by any other means, but city banks, for example, are managed largely by the city type of banker, not by a rural banker, and I am just wondering if that type of banker would give the same attention to farm loan requirements that the experienced country banker would. I- have all kinds of confidence in the country type of banker so far as the requirements of the farmer are concerned, but since our country banking facilities are very limited, full account should be taken

of this aspect of the matter. If the city banker does not like doing farm business, the position of the farmer in getting accommodation under this legislation is going to be weakened. I shall be obliged if the minister when he is making his reply to the observations that have been made this afternoon will make some comment on that.


Mr. CLARENCE GILLIS (Cape Breton South):: Mr. Speaker, I am not a farmer and I am not a banker.


James Arthur Ross: Why?


Clarence Gillis: Nevertheless I am going to express my opinion on this measure. As I understand the bill before the house, it is merely a repetition of the Industrial Development bank bill applied to agriculture and my hope is that the banking and commerce committee will have sufiicient sense to consider carefully the whole matter of banks as they now exist and will refrain from recommending any extension of bank charters, from making any decision on the extension of charters, on the industrial development bank, or with regard to farmer's intermediate and short term credit, or the Quebec savings banks until such time as the picture is more clear. The world to-day, in my opinion, is in a fluid state, and those who are thinking in terms of regulating the currency and credit of this nation or of any other nation as it was prior to the outbreak of this war are not cognizant of the world situation. To-day international organizations are now talking about developing currency and credit in the international field for the exchange of goods and commodities between the different countries, and when that body lays down its mandate in that field it will affect the internal economy of every country, I do not care who is in power.
As I see the present proposals which the minister has brought in, and as I listen to and read the controversy that is taking place in the banking and commerce committee, it is all an indication to me at any rate, as a layman who makes no pretence at being an expert, that the whole matter of currency and credit is confused and requires a good deal of clarification.
The bills themselves and the discussions that I have listened to in the house are a clear indication that we require a lot of serious thinking on this matter of currency and credit, because, in my opinion, it is the kernel of the whole economic system, and unless that is sound we are in for much confused post-war planning. I think, and I believe the minister does also, that the measures are not going to be of very much value now during the

Farm Credit-Mr. Gillis
process of fighting the war; they are designed to take care of some of our post-war problems both in the field of reconstruction and industry and in the field of the stabilization of agriculture. If that is the purpose for which they are designed then I suggest that until such time as the international picture and the national picture as well are clearer than they are at the present moment, the banking committee would be well advised, instead of definitely deciding that this is the cure for our post-war ills, to undertake a close study and to come to a clear understanding of postwar problems. I suggest that they might take that view instead of deciding that this is the remedy.
Of course I realize that these measures can always be changed; but it must not be forgotten that this government is on the eve of an election and while they may have these measures passed now-


Mr. McILRAITH:: Do you know the date?


Clarence Gillis: No, I do not, but I am
reasonably sure it is not too far away.


Ernest George Hansell: October 15.


Clarence Gillis: They may have these measures passed and become law, but they may not be here to administer them. I have in mind, for example, the passing of the National Housing Act in 1936-I believe it was in that year but I am not sure-and I am afraid of the latitude given the minister in this bill. My fear is based on that National Housing Act, because the minister had a good deal of latitude under that measure, and I remember distinctly that when we tried to have the act implemented in the eastern end of Nova Scotia, the city of Sydney was informed at that time by the then Minister of Finance, Mr. Dunning, that it was not considered that there was sufficient prosperity in that end of the country to warrant the expenditure of public moneys in a building programme. The then minister exercised his authority under the act. Under this bill the minister at his own discretion can terminate any form of loan covered thereby. Section 3 clearly states that the minister may, with the approval of the governor in council, by notice to a bank, terminate the operation of that section with respect to any class of farm improvement loan, and so forth. Suppose the next minister is not a very conscientious fellow-


James Lorimer Ilsley: He will be.


Clarence Gillis: [DOT] The minister says he will be.


James Lorimer Ilsley: All finance ministers have
been.


Clarence Gillis: Well, none of us is sure he
will be here to-morrow. As I read this bill,
I may be suspicious, and perhaps my suspicion is based on experience, since I am a graduate from the school of hard knocks. At any rate, it seems to me that it is not a bad bill on the eve of an election, though I cannot see any solution for the farmer who requires money under it. The minister is in a position, after the election is over, to curtail or restrict or change or terminate this thing completely.


Mr. MacNICOL:: There may be a change of ministers.


Clarence Gillis: I am not a prophet but I am taking this bill as it reads. Personally I cannot see any redress for the farmer under the bill, though I have read it carefully. What is the experience in Norway, Sweden, Finland and France in connection with agricultural credits? They have endeavoured to solve the problem, and I know the machinery now being set up, both in the field of industrial development and in the field of agricultural credits, is not new. It was tried in the countries I have mentioned. The idea is merely to endeavour to extend and to build for the future on a machine which in my opinion has crashed and is beyond repair. That is why I do not want to pin our post-war plans in either field on this kind of machinery. You are not making any changes. You are still vesting in the chartered banks the right to issue or to withhold loans if they so desire. On the other hand, the government is going to accept a certain percentage of risk on the aggregate loans. As I heard the matter discussed here, I was led to believe by some members that the government would accept ten per cent of the individual loan. According to the bill, it is the aggregate loan. I presume at the end of the year the banks would file a stat# ment with the minister that the aggregate loans under the measure, in their particular branch, amounted to so much. They may have defaulted to the extent of such and such an amount and the department then assumes ten per cent of the liability of the total loans outstanding in that branch. Well, that might run into a condderable amount of money. However, I am not concerned about that. What I am thinking about is this, that the government guarantees the loan and does so with the taxpayers' money; and if the taxpayers' money is to assume the risk either under the Industrial Development bank bill or under this legislation, then I think they should expect to receive some benefits from it.
My Tory friends to the right and some of the Conservative members on the other side are very much concerned when one speaks about government control or the socialization of finance. They get all hot and bothered about that. The solution of the problem of
Farm Credit-Mr. Gillis

reconstruction and rehabilitation has been handed to the minister and the government. Industry says, "You accept the risk and allow us to make profits." There is nothing that smacks so much of that so-called enterprise as that. That is not a system, because if the system under which we have lived in the past has lacked anything it has lacked system. It is the most haphazard, grab-as-you-go system that has ever been or could be evolved. Their reason for existing and for wanting to perpetuate their future is that they take risk in the field of investment. Neither in the field of industry nor in the field of agriculture are they going to assume any risk in the future.
As I see it, what we have here and what we are evolving is a managerial form of society with the government managing the country, taking the risk, providing the services and guaranteeing the profits to the fellow who is not obliged to do even the thinking in his own private enterprise.


Mr. FRASER (Peterborough West):: If we had that it would be a terrible country.


Clarence Gillis: That is exactly what we have. If the hon. member cannot see it that is not my fault. That is exactly what we are building up. We are not so far away from it.
I said I was not an expert on banking or finance. I read these things and I try to apply some common sense to them. What I am afraid of is that we may do this in a hurry and make a mess of it. When the Industrial Development bank bill was before the house I said that we of this party want to see the people of Canada benefited by the future activities of our government. I have Reiterated time and time again that the thing we quarrel with is not what somebody else owns; that is immaterial. We have quarreled with the fact that the control exercised by the banks and industries of this country is complete control over the initiative and the wealth-creating means of the people themselves. Because of that control they are restricted. It is that control we want to unharness. We are not concerned with what the banks and industries have, but it is a fact that they can hold back the creative energies of the people in developing the country's resources for themselves.
The hon. member for Macdonald (Mr. Weir) talked of being afraid of the approach of the city banker to the problem of the farmer who may require credit in a hurry. I absolutely agree with him, because you do not have to go back very far into history in so far as the banking field is concerned to see that. The province of Nova Scotia

is a very good illustration. Not so many years ago we had our own banks there. They were owned and managed by Nova Scotians to do Nova Scotia business. We had no difficulties. Then they were merged into a central institution, and to-day if you want to start a small factory or get a loan over $500 you have to go to some central headquarters and clearly define the purposes for which you require the loan. If you are starting something that comes in competition with something that is already tied in with that centre you do not get the money. You have lost control.
When I spoke on the Industrial Development bank bill I tried to focus attention on the possibilities of supporting and developing the credit union organizations across Canada. I think the hon. member for Macdonald struck the nail on the head when he expressed his fear. If there is any institution in Canada that could come to the rescue of the farmer it is the credit union institution, which has been established on a community basis. If the government of this country are prepared to use the taxpayers' money to subsidize or guarantee the loans of the chartered banks in this field, what is the matter with giving some assistance to a movement that is already established in the field?


James Lorimer Ilsley: We have no control over them.


Clarence Gillis: No; you have no control over them, but you have no control over the chartered banks.


James Lorimer Ilsley: Oh yes.


Clarence Gillis: Yes, in theory.


James Lorimer Ilsley: And in practice.


Clarence Gillis: Not in practice.


James Lorimer Ilsley: We certainly have.


Clarence Gillis: I am not going to argue with the minister. The institution to which I refer is already well developed. Thousands and thousands of members have studied the movement. The farmer will require his immediate credits on a community basis. Short-term or intermediate credits are not the solutions of the fanner's problems. That is what has hamstrung him in the past. What he requires is long-term mortgage credit. If short-term and intermediate credit were the solution hundreds of farmers across the country would not have lost their properties. They lost their properties during the depression because they had short-term credits. If the government can protect them I think it should have protected the soldier settlers. It is only two weeks ago that we had a delegation from Manitoba and

Farm Credit-Mr. Gillis
Saskatchewan in this city pointing out to the Minister of Mines and Resources (Mr. Crerar) that since the outbreak of this war approximately 606 soldier settlers a year for the four war years in those provinces have lost their properties because of their inability to meet their payments. That has happened during this war. If there was a solution of the credit needs of the farmers of Canada the loss of property by farmers across the country would not have taken place. What the farmer needs is long-term and mortgage credit, not shortterm and intermediate credit, which has been the evil of the system in the past.
Many people think credit unions are small. They are not. Those unions consist of a large number of members, and the movement is a national one. There are 129 credit unions in Alberta, 108 in British Columbia, 78 in Manitoba, 146 in New Brunswick, 204 in Nova Scotia, 163 in Ontario, 47 in Prince Edward Island, 749 in Quebec and 128 in Saskatchewan, making a total of 1,759 across the country. These are only branches. There are thousands of members in this association pooling their resources on a community basis. To-day they control considerable finance across the country, and they have developed the field of credit to a very great extent. They have linked up the industrial worker and the rural worker on that basis. They meet together. They iron out their problems together. They are beginning to understand each other's problems.
What militates against that movement today is the lack of some central tie-up with the different provinces. It is tied up to some extent in Nova Scotia. It is coordinated with a credit union league, but it is not functioning to lend money on long-term loans or on mortgages. I emphasize the necessity of a national organization that would not only utilize the finances they have now but make use of the brains and the stamina that have been given by those who have voluntarily developed that organization across Canada in a completely new field.
They are not looking for anything for their services. The whole movement is voluntary. It aims at uplifting the intelligence of the people and solving this community credit problem which developed as a result of the failure of the banks to do anything about the matter back in the thirties. This organization has made wonderful progress, and I would suggest that when the banking and commerce committee come to study this bill they get the statistics which are available in connection with this movement and1 call in the people at the head of it to see if this organization cannot be utilized on a national basis for the
purpose of providing long-term mortgage credits for the farmers of this country. If the movement is not large enough to take care of the whole problem on a national scale it could be assisted and developed.
No money will be lost under this movement.
I happen to belong to this organization, which I helped set up in Nova Scotia. I have here a note from the manager of the credit union to which I belong. In the ten years during which the movement has been in operation in Nova Scotia it has not had one bad loan, and loans of up to $3,000 have been made by the local branches. This is just one branch, located in one ward of the town of Glace Bay, and the manager states that at the present time their assets amount to $60,000; that they have a savings account of $52,000, a loan balance of $41,000 and victory bonds to the extent of $8,200. This was just a note to let me know how the thing was going, since I was a member of the board of directors until I came here. As I say, this is just one small branch in one section of that community, and there are many others. In my opinion this offers a solution of the problem of farm credit in Canada. Under this set-up the farmer is dealing with his own people. If he meets adverse conditions and cannot live up to the terms of his agreement 100 per cent, he is not called in by a banker who is responsible to a board of directors in some distant city. Whether or not the bank manager is sympathetic-as I believe most of them are-he has no alternative but to squeeze the borrower, for the terms of a loan with a bank cannot be altered. Under this set-up, however, a man deals with his own people, who are not subject to a board of directors in Montreal or Toronto. His board of directors lives right in the community; they know him personally, and can extend his loan and perhaps waive his interest, simply because they are not paying salaries to people whose only function is to scrutinize the balance sheet at the end of the year.
Loans made through this medium are also protected by insurance. These unions insure their loan balance and share capital. According to this letter, which I am not going to bother reading but which I can show to the minister at any time he cares to look at it, their share capital is insured for sixty-five cents a hundred dollars and their loan balance for seventy-five cents a hundred dollars. The way it works, and the way it would work for the farmer, is this. If a man had $500 of share capital and wanted to take out that money as a loan, he would do so. Then he would make his purchase for cash, which means a saving of up to perhaps fifteen per
Farm Credit-Mr. Gillis

cent. Supposing something happens in the meantime; the man dies. That $500 is outstanding, but while he used that money that amount remains to his credit as share capital. In Nova Scotia at any rate that loan balance and share capital are insured through the Cuna Mutual Cooperative Insurance Company, which now has offices in Canada and is well established in the United States. That company pays off the loan balance and doubles the share capital to the beneficiary of the person involved in that loan. Many of the insurance companies cannot understand how they do it, but they do; we have had such cases ourselves. Under a set-up like that, with some assistance and encouragement from the federal government, a national organization could be developed to take care of the credit needs of farmers across Canada on a community basis. With this protection by insurance you cannot lose anything, but you will bring about a brand new economic reform in Canada in the field of finance and credit, while each individual member of the organization will benefit.
I am not going to discuss this matter longer; I am sorry to have taken up so much of the time of the house. I only want to emphasize that in view of the unsettled international situation, which is reflected in the situation of each country, with such important questions coming up for discussion as the renewal of the charters of the banks, the development of some form of credit for the farmers, the Industrial Development bank in connection with industry, all looking to the post-war period, it is my opinion that with the picture as confused as it is at present the banking and commerce committee would be well advised to take a year or so to study the set-up and bring in necessary reforms to the whole banking and credit structure, rather than make decisions now while the situation is in such turmoil. In my view this measure does not touch the problem at all; it will not do anything for the farmer as far as his credit needs are concerned. In the first place, short-term and intermediate credit caused many farmers to be dispossessed of their land in days gone by. What they require-and this is not my opinion but the opinion of men who have studied this matter-is long-term and mortgage credit if they are to be given an opportunity to utilize any lending institution in order to rehabilitate and maintain their farms. Short-term and intermediate credit is not the answer; it must be long-term and mortgage credit. There is a possibility of developing that field through the credit union set-up which now is organized nationally, and which has given this question a great deal of study.


James Lorimer Ilsley: Just for information, would the hon. gentleman tell me what rate of interest the credit unions charge?


Clarence Gillis: The rate of interest works out at six per cent per annum. It is one per cent a month on the unpaid balance. If you carry your loan for twelve months it works out at six per cent, but if you pay off the loan sooner you may get your money for two per cent.


James Lorimer Ilsley: But it is at the rate of six per cent per annum?	.


Clarence Gillis: Yes, but of course the answer is that you are paying it to yourself. At the end of the year they declare a dividend, and you may get three or four per cent on your share capital. You pay six per cent on your loan but you may get back three or four per cent.


James Lorimer Ilsley: If you borrow from yourself you are lending to yourself.


Clarence Gillis: That is right, and it comes back to you.


Mr. SLAGHT:: Did I understand the hon. gentleman to say that the insurance at seventy-five cents a hundred dollars is insurance with a recognized company against the possible loss by the union of that hundred dollars?


Clarence Gillis: That is right. It is a cooperative insurance company. It is seventy-five cents a hundred dollars.


Mr. W. F. KUHL (Jasper-Edson):: Perhaps almost everything has been said on this bill that can be said, Mr. Speaker, but there are one or two thoughts which may not have been emphasized as much as I think they should be. I should like to give expression to a few of the facts which I think should be emphasized a good deal more, in the consideration of a matter of this kind. I do not think there is any division of opinion as to the farmer's need of additional equipment, improvements and alterations on his farm. However, what is the consequence of enabling him to make these provisions? I think that is something most hon. members have not followed through in their discussions on the bill.
This is a bill to give the farmer more ready access to credit, so as to enable him, for example, to acquire more farm machinery. Certainly if he is able to acquire more farm machinery and other equipment, he will be able to increase his production in proportion to the amount of equipment acquired. In other words, the result of this legislation, as well as the legislation setting up an industrial bank, and other similar legislation, is to stimu-

Farm Credit-Mr. Kuhl
late to still great heights the production of this country, whether it be primary, secondary or anything else.
The question I would ask at this point is this: Was the problem which faced the people of Canada before the war one of inability to produce? AVere -we lacking in production of anything? Was there any lack of production of farm commodities? Was there any lack of any commodities produced in Canada? The answer is obvious. We were being told on every hand before the war that our problem was one of overproduction. Everyone was saying that our problem was not one of production; rather it was the reverse.
Yet to-day we have before us a bill the purpose of which is to stimulate production to still higher levels in the post-war period. *If the problem is one of production, or if the distribution could be accomplished by the system of production we had before the war- and it was not accomplished-how do we expect it will be accomplished after the war, with the same principle involved? Before the war the people of Canada were not consuming all the production they desired. For example, lumber was sixth on our list of exports, prior to the war. Yet I am sure that every stick of that lumber could have been used in Canada, had the people been in a position to buy it. That applies not only to lumber, but to many other products, which were exported.
The point I make is that in the discussion on this bill, as in most discussions pertaining to the post-war period, the emphasis has been placed on the wrong aspect of our national life. Hon. members always emphasize the production end of our economy. That is absolutely wrong, because production has never been a problem with us. The problem has been one of distribution and consumption. As some of my colleagues have already indicated this afternoon, if a measure of this sort is to be of any real benefit to the farmers, or if any similar legislation is to be of benefit to any other section of our community, it will have to be accompanied by legislation of a different kind altogether, something far more fundamental.
I contend that this measure will be of practically no avail in helping farmers in the post-war world. There are some who have said that the legislation should be accompanied by other legislation providing floors under agricultural prices. I am heartily in accord with any action which would guarantee a higher income for the farmer. But the point we must not overlook is that if there are floor prices under the products of the farm, and if there are minimum wages, all those factors are again reflected in prices. All costs enter into
prices. As far as the aggregate is concerned, in those circumstances the people as a whole are no farther ahead. The mere setting of floor prices and minimum wages will not be sufficient. We shall have to go a good deal farther than that.
The Minister of Finance (Mr. Ilsley) and his colleagues, along with members of the Progressive Conservative party, and all other orthodox thinkers will have to acknowledge the fact that since the industrial revolution, and particularly in the last twenty-five years, no primary, secondary or any other industry ever distributed purchasing power sufficient to buy back its own production. One finds that demonstrated if he examines the balance sheet of any industrial concern. Prices of commodities which come out of an institution are always in excess of the buying power coming from that institution. Therefore the aggregate for the nation as a whole is identical with that of one institution. It follows that the emphasis in respect of post-war legislation should be placed on the consuming end of our economy.
If consumption is taken care of, production will take care of itself. The house constantly concerns itself with the production end; but I am satisfied that if the government would introduce legislation enabling consumers to buy up to the limit of their desire to consume, we would have no problem at all in connection with financing production. But so long as we constantly hope and anticipate that our present income, or the income which will obtain after the war, will distribute the goods produced from industry, so long as we base all our hopes on that kind of thinking, all legislation of this kind is bound to fall far short of what is anticipated.
The hon. member for Cape Breton South (Mr. Gillis) made some observations respecting the ability of credit unions to provide what he considered was the type of credit farmers require. I believe he went so far as to suggest that the credit unions principle was the solution of farmers' problems. Perhaps he would go so far as to say that it would also be the solution of the problem of many other members of our society.
I support the idea of credit unions, but not for the same reason as that offered by the hon. member. I believe he is labouring under a delusion in respect of what is accomplished by credit unions. After all, a credit union is just a savings bank, or a reinvestment of savings. If I take $100 out of my earnings and put it into a credit union, that $100 is represented by $100 worth of goods somewhere on the shelves. If I do not buy that $100 worth of goods and pay my money into the credit union, then that $100 worth of goods remains
Farm Credit-Mr. Bryce

on the shelf. If someone else uses my $100 and puts it into new production, that $100 produces another $100 worth of goods. So that there are now two lots of goods, but only one lot of purchasing power. That is the result of the use of the credit union. I agree that it is good as far as it goes, but I certainly cannot grant that it is the solution of the problem of the farmer, of the labouring man or of other world problems.
We should emphasize the consumer end of our economy. Take care of the consumer and the production side will take care of itself. What we need is new credit and not the redistribution of old credit. We are short as it is. In normal times we are. short at least forty cents or perhaps fifty cents on the dollar. When we consider the degree to which machinery will be substituted for man-power when the war is over we must realize there will be a further deficiency in our purchasing power.
If the government, or the Progressive Conservative party for that matter, rely on legislation of this kind as a means of coping with the problems of the post-war world, they will be sadly disillusioned before many days go by. They will eventually come to the place where they will agree that the only solution is that which has been advocated by the Social Crediters of Canada and of the world, namely, to supply the consumer with buying power to enable him to buy up to the limit of his desire to consume. Until that is done, we shall fall far short of arriving at a solution of our problems.
If the members of the government and those who are like-minded want to continue bumping their heads against a stone wall until they learn, that is their right, but personally I can see the handwriting on the wall and I am satisfied that there will be no solution of these post-war problems that will provide individual liberty as well as security unless it involves new credit to stimulate consumption rather than production.


Mr. WILLIAM BRYCE (Selkirk):: Mr. Speaker, I understand from my colleagues that this is the last opportunity I shall have to speak on this matter, and I should like to add a few words to what I said yesterday. I said yesterday that it was absolutely necessary that legislation of this kind should contain a crop failure clause. If we analyse conditions we find that on many occasions the farmer has been accused of not paying his bills. That is wrong because the farmer more than any other person in this country is gambling with the elements. If he does not get a return for his labour, how can he pay his bills?

The banker is protected because when a man cannot pay his bill in the fall he is carried over to another year and he has still more to pay. He is faced with compound interest. The farmers are willing to pay. I am a farmer, and a small one at that. I know that you cannot pay your debts if you do not have money coming in. It is the business of the farmer to gamble with the elements all the time.
A man may decide to put in a concrete floor or some other improvement and spread it over three years, as is suggested in the bill. But if he does not get a crop, he will not be able to pay. I have the assurance of the minister that he will consider including a crop failure clause in the bill.


James Lorimer Ilsley: What I said was that I
would see it was given consideration in the banking and commerce committee when this bill is referred to that committee.


William Scottie Bryce: I would suggest that the
provision with regard to live stock should include bees. A number of years ago I could buy bees for $1.95 a package, and to-day I must pay $5. If I bought a hundred packages before, I paid $200, but to-day I must pay $500. The farmers need assistance there and I ask that that be included.
If a man borrows money to buy a binder and because of crop failure he is unable to repay it, I do not think it is right that the bank can come along and take a couple of cows to pay for the binder. If I make a deal on a binder, the binder should stand by itself. I do not think I want to take up any more of the time of the house as long as I have the assurance of the minister that he will look after these two points.


Mr. M. J. EDWARDS (Calgary West):: Mr. Speaker, I have one or two thoughts I should like to leave with the minister for his consideration. This bill has reference to farming operations from the man's point of view. There is nothing in it that looks at the problem of farming from the woman's point of view. If you are to have successful, contented and happy farm people, the farmer's wife must feel that way about farming. I suggest that section 2, paragraph (a) should cover not only electrical equipment but plumbing and heating and modern sanitary facilities. These things play a large part in the contentment of the people who farm.
The next paragraph should make provision for washing machines, modern stoves and heating equipment. Why provide all the facilities for the male side of the partnership and not give some consideration to the female

Farm Credit

Mr. Edwards
side of the farming operations? I am also concerned about paragraph (i) of section 1, which defines "farmer" as follows:
"Farmer" means a person who is in possession of a farm . . .
Does that mean physical possession or legal possession? A similar term has been the subject of a great deal of controversy and it seems to me that this paragraph ought to be clarified. I think actual residence on the farm is what is contemplated. I believe it is intended that this legislation shall benefit the man actually on the farm, the man who is working at farming as such. Then I would refer to section 3, subsection 1, paragraph (f) which reads:
the rate of interest charged by the bank on the loan did not exceed five per centum per annum simple interest as long as the borrower was not in default.
I think there ought to be some limitation to cover the situation where the farmer is in default. Most of the trouble of our farmers in western Canada in buying machinery and equipment has been that the lien note stated "five per cent until default." Then what? It read all the way from eight to twelve or fourteen per cent. I think there ought to be some limitation, some ceiling, on the rate of interest which the bank can charge when the note becomes in default.
The other point is as to the limit of the liability. Section 3 states:
The minister shall, subject to the provisions of this section and of the two next following sections, pay to a bank the amount of loss sustained by it as a result of a farm improvement loan . . .
And it provides for the government paying ten per cent of the loss sustained. But what is to be included in the term "loss"? The principal sum advanced? The principal, plus accumulated interest? Are legal costs to be included? Are fire, sickness or accident insurance premiums that may have been paid in connection with the loan to be included? I think the term "loss" ought to be clarified to a much greater degree than it now is.
Then section 3, subsection 1, paragraph (b), states:
the application stated that the borrower held an interest in the farm of the nature prescribed for the class of farm improvement loans to which such loan belongs.
I cannot for the life of me make out what is the nature of the interest. Is a tenant to be entitled to borrow? Does he state his interest as a tenant? Is a purchaser under an agreement for sale entitled to borrow? Does he state his interest as a purchaser under an agreement for sale? Are you to have your loans classified according to the nature of the interest held; that is to say, that a tenant will
be able to borrow up to a certain amount or on certain things and that the holder of possession under an agreement for sale will be able to borrow certain limited sums and for certain specified purposes? The section is not clear to me, and I should be glad if the minister would elucidate just what is contemplated by that phrase "held an interest in the farm".


Mr. SPEAKER:: May I point out to the minister that some consideration has been given in the course of this debate to sections of the bill now before us. The debate should really have been restricted to the principle of the bill and not have dealt with the sections because, if this bill is going to the banking and commerce committee, it will be discussed in detail there, and then come back to the house for further consideration. I suggest to the minister that in replying he confine himself to reviewing the principle of the bill in the light of the discussion which has taken place this afternoon.


James Lorimer Ilsley: Mr. Speaker, we have had a very interesting discussion of this bill and, as I understand it, all the members who have spoken are either mildly or strongly in favour of the principle of the bill. I do not know if that applies to the hon. member for Cape Breton South (Mr. Gillis). He perhaps would be an exception, but I do not think he will carry his objection to the bill to the point of voting against it; I would.hope not. Other hon. members supported the bill in principle but objected to details here and there, and some did not object to any part of the bill at all.


Gordon Graydon: I imagine they wanted to help the farmers, but there is a difference of opinion as to how they can best be helped.


James Lorimer Ilsley: Probably that is the situation. I do not know whether I should deal with all the speeches in succession. Perhaps I could answer some questions in such a way as not to depart from the rule that I should deal with the principle of the bill.
The hon. member for Yale (Mr. Stirling) asked me if pumping machinery and other equipment for carrying water through the land of a farmer were covered by the bill. I think I can say that they are under agricultural equipment, but if there were any question about that, it could be dealt with in the banking and commerce committee. Certainly any work for the improvement of a farm is ncluded by the language of section 2, paragraph (h) (vii).


Gordon Graydon: Does that include also what the hon. member for Calgary West (Mr. Edwards) suggested?
Farm Credit-Mr. llsley


James Lorimer Ilsley: It includes part of it. The hon. member for Calgary West asked whether plumbing and heating-


Manley Justin Edwards: And washing machines.


James Lorimer Ilsley: There is a difference. Plumbing and heating would come under paragraph (h) (vi):
the construction, repair or alteration of, or making of additions to, any building or structure on a farm.
Household chattels are beyond the scope of the bill, and are intended to be; but if some good reason were adduced for including them, that would be a matter for the consideration of the banking and commerce committee. The principle of the bill is to enable loans to be made on farm implements, machinery and equipment, live stock and so on, as part of the business of the farm; also on improvements to buildings. But it does not go farther and include furniture or household chattels. Perhaps it should. That is a matter for later consideration.


Gordon Graydon: There is the argument that the implements of the women folk on the farm should be put in the same position as the implements of the men folk.


James Lorimer Ilsley: Yes; there is an argument there. That is a matter that can be considered in committee.
Several members have taken exception to the rate of five per cent and suggested that the rate should be four or three per cent, but five per cent is lower than the ordinary rate charged at the present time and, as I indicated in a previous debate, if the limit is too low I do not think we can expect the freedom to lend that we otherwise could on the part of the banks. As one hon. member said, you can ask the banks to lend but you cannot make them lend. A fair rate of interest will have to be fixed, having regard to the protection which the government gives to banking institutions.
That raises the other question as to whether ten per cent is too low and whether it should be twenty per cent. In practice there comes a point beyond which one might as well make it 100 per cent as anything above that point. In other words, if the principle of the bill is to be to eliminate risk entirely from the banks and say that they should lend to anybody who applies for a loan, and that we shall make good any loss that is sustained, then the banks take no risk whatever. I do not think the house will approve a bill of that kind; I do not think I would be in favour of it; in fact I know I would not. The banks must exercise some real judgment in the selection of risks under the scheme. It is a matter of judgment on the part of parliament as to where they should put

the percentage of guarantee. We put it at fifteen per cent in the home improvement plan and found that considerably higher than necessary, and we thought ten per cent was ample for this scheme. The losses under the home improvement plan were less than one per cent of the total amount lent, and we would be exposing ourselves to severe criticism, I believe, if we placed the percentages so high that the banks would not be taking any risks at all.


Gordon Graydon: There must be a happy medium somewhere.


Stanley Howard Knowles: After all, this is still private enterprise.


James Lorimer Ilsley: Yes. That is a very just observation. The banks are carrying on under the system of private enterprise and they must take some risk. The total removal of risk from private enterprise is justified only if there is a very strict limitation of profit indeed, perhaps the elimination of profit. I have not just thought that through.
There have been various suggestions that the banks should not be empowered to enforce security on the loan. If they are not to be empowered to enforce it they should not be empowered to take it. If they are empowered to take it they should be empowered to enforce it. The one follows the other. The hon. member for Vegreville (Mr. Hlynka) did not object to the taking of security so long as they could not enforce it. That is a very happy and irresponsible position to take. It is popular with everyone. The borrower could get a loan because he could offer security, but when it came to making good on his obligation nothing could be done against him because the banks could not enforce security. That, of course, is not a matter that needs to be argued about further. If the banks are not empowered to take security fewer loans will be made than otherwise would be the case.
It is a question how far we think we should go in facilitating and encouraging lending to farmers in the period ahead of us. We had a feeling that we should facilitate it to a considerable degree. The farmers would be needing a lot of intermediate loans, and shortterm loans are pretty well provided for now under the Bank Act as it stands; long-term loans are provided for in other ways by the Canadian Farm Loan Board Act, by the lending institutions of the country, the loan and trust companies. But there is a gap in the credit structure for farmers just as there is for industries, and we are trying to fill the gap in the case of industries by setting up the Industrial Development bank, and for the reasons I state we felt that rather than set up

Farm Credit-Mr. Ilsley
an agricultural bank, with thousands of branches and a large personnel, it would be better to meet the problem in the way we have attempted to meet it by this bill.
The hon. member for Dufferin-Simcoe (Mr. Rowe) advanced an interesting theory, that because we were supplying these facilities for loans other lenders would withdraw and perhaps we would hurt the farmer more than we helped him. I cannot follow that. I think he was mixed up between the operations of the farm loan board and the operations of the Farmers' Creditors Arrangement Act. It is probably true that the operations of the Farmers' Creditors Arrangement Act in eastern Canada discouraged lending by persons who otherwise would be lending money on mortgage on farm properties. I think it did. I believe that was the case in eastern Canada, but I do not think the existence of the Canadian farm loan board has done that. I do not think the existence of these facilities would do it.
I have noted the observations with regard to the credit failure clauses and have given the assurance that these suggestions will be considered in committee.
The hon. member for Macdonald (Mr. Weir) asked a question as to whether the bankers would give the farmers good service. Before the banking and commerce committee the general managers of the banks, or most of them, will undoubtedly appear, and will give evidence. That committee ought to get just as definite a forecast as they can from the general managers as to how they propose to act in the operation of the scheme, and I think they will be able to get convincing assurances.
While probably it would not be possible for the head office to dictate in detail the action which the managers would take, I think that, with efficient institutions such as the chartered banks of Canada, the spirit in which the measure is to be administered would be pretty well known before very long and all managers would conduct themselves accordingly.
The hon. member for Cape Breton South (Mr. Gillis) suggested that the credit unions should have the same privileges as the banks. He touched on that. I interjected the remark that they are not under our jurisdiction at all. I do not believe that they are under federal jurisdiction. They are organized under provincial jurisdiction and are not subject to inspection by the federal insurance department or ;by the finance department, and we have no way of supervising the system of loaning of this kind. The hon. member went on to say that, apart from assistance by the government, the credit unions were the people to solve the problem and that they could solve
it. I do not agree with him. I think that if we wait until the capital goes into the credit unions to supply the needs of the borrowing farmers of Canada we shall wait a good deal longer than the year he suggests-a great many years. Moreover, the credit unions charge more in the way of interest rates than is proposed under this measure. I do not think it is a practical suggestion.


Clarence Gillis: I do not want to get into an argument with the minister, but you are setting up new machinery for the chartered banks and you could set up enabling machinery to link up the credit unions on a national basis. You are going into a new field anyway.


James Lorimer Ilsley: It opens up a big field that we are not in now and over which I think we have no jurisdiction.
The hon. member for Selkirk (Mr. Bryce) made two or three suggestions which are proper for consideration by the banking and commerce committee rather than by me in the concluding speech on the bill. If he sees that they are not getting consideration in the banking and commerce committee I suggest that he communicate with the chairman or secretary of that committee. One of his suggestions is a fairly minor one.
The points made by the hon. member for Calgary West (Mr. Edwards) are entitled to respectful consideration. Those points had to do with the question about possession and the rate of interest chargeable after default, the definition of loss and what is meant by classes of borrowers and so on. That representation will be given most serious consideration when the bill is before the committee.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.
At 6.15 p.m. the house took recess.
After Recess
The house resumed at eight o'clock. CANADIAN NATIONAL RAILWAYS

[Stage Direction]
The house resumed from Thursday, June 8, consideration in committee of bill No. 136, to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National Railways system during the calendar year 1944, and to authorize the guarantee by His Majesty of certain securities to be issued by the Canadian National Railway Company- Mr. Ilsley-Mr. Bradette in the chair.
[Stage Direction]

Guarantee of Securities
On section 2-Power to issue securities for capital expenditures.
Stanley Howard Knowles: I should like to ask the minister a question, and I want him to understand that I am seeking information only. When he spoke on this matter yesterday, as reported at page 3645 of Hansard, he pointed out that no railway issues have been sold since the outbreak of war, and also that these securities might be sold either to the government or to the public. I have in mind the information given in answer to questions I asked when we were dealing with another Canadian National financing matter, when the minister's parliamentary assistant pointed out that during the course of the war the practice has been to increase the amount of debt held by the government in the consolidated revenue fund and decrease the amount held by the public. Is there any change of policy or any conflict as between what the parliamentary assistant told me was the case and what is now proposed? A supplementary question would be: after this has been carried through, what will be the comparative relationship as between the amount owed to the government and the amount owed to the public?


James Lorimer Ilsley: No change of policy is foreshadowed by this legislation. What my parliamentary assistant said was correct. Section 2 is in the same form as last year, and authorizes either method of financing.


Stanley Howard Knowles: It is a matter of government policy as to what is done under the provisions of this bill?


James Lorimer Ilsley: Yes.


Mr. JACKMAN:: As I understood it during the hearing by the railway committee, the money borrowed by the Canadian National from the government bears an interest rate of 3i per cent, whereas if they were to go to the open market, particularly on some of their equipment obligations, most likely they could borrow at a considerably lower rate of interest. On short-term equipment obligations they could borrow at less than the three per cent going rate on Dominion of Canada securities. I would suggest to the minister that in order to keep the Canadian National on a proper accounting basis, and in order to be able to compare it with the accounts of the other railway, consideration should be given to allowing the Canadian National to borrow in the public market rather than from the government at the higher rate, which puts the publicly-owned company at a disadvantage as compared with the privately-owned company. Would the minister express an opinion on that?
I Mr. Ilsley.]	;	[DOT]


James Lorimer Ilsley: I understand that the rate
charged by the government is 3i per cent, but recently that has been reduced to 2i per cent on some of the larger loans.


Harry Rutherford Jackman: When did that reduction take place?


James Lorimer Ilsley: On February 15 of this year, on new loans only.


Harry Rutherford Jackman: Then does the minister
agree with me on the question of policy?


James Lorimer Ilsley: As to whether we should let them go to the public for money?


Harry Rutherford Jackman: Yes, the same as the
private company does.


James Lorimer Ilsley: I do not know; I would
have to think that over. It is always a big question whether it is desirable from the government's point of view to have anybody going to the public for money in times like these, when they compete with the victory loan campaigns. I am not in a position to give a considered answer to that inquiry.


Harry Rutherford Jackman: Could the minister state
how much the retirements were? In the first item I see, "additions and betterments (less retirements)", and I understand that those were by way of depreciation of equipment or assets which have been written off, and that an amount of money is available for the purchase of new equipment or the acquisition of new assets.


James Lorimer Ilsley: The retirements referred to in that item amounted to $1,034,100.


Stanley Howard Knowles: I should like to ask another question, and again I assure the minister I am merely seeking information. Last night, at page 3645 of Hansard, he tabled a statement showing the amounts owing to the government by the Canadian National Railways as at April 15, 1944. The total of those amounts was $498,287,322.77. When I was questioning the minister's parliamentary assistant on this matter on April 17 he gave the funded debt in the hands of the public as of December 31, 1943, as $744,232,472.60 and loans from the government as of the same date, totalling $537,323,765.07. The two figures I am asking the minister to compare are the last figure I have just read for December 31, 1943, and the somewhat lesser figure he gave last night. Does that represent a reduction, or are those figures dealing with slightly different matters?


James Lorimer Ilsley: The equipment loans are not in the $498,000,000 figure, and were in the $537,000,000 figure. It includes loans from the dominion government for the purchase

C.N.R.-Guarantee of Securities
of railway equipment. This amounted to $52,247.214 at March 31, 1944. Those were not included in the 1498,000,000 figure given last night.


Stanley Howard Knowles: So that if that figure is added it will give a figure comparable with the other one?


James Lorimer Ilsley: That is correct.


Stanley Howard Knowles: And it would show a slight increase?


James Lorimer Ilsley: Correct.


[Stage Direction]
Section agreed to.
Sections 3 and 4 agreed to.
On section S-Power to aid other companies.
Mr. BLACKMORE:: What other companies would be included?


James Lorimer Ilsley: The Minister of Transport tells me that the Canadian National Railways have ninety-four or ninety-five subsidiary companies. Those are the companies here referred to.


Stanley Howard Knowles: There is reference to those other companies at line 15 of section 2.


James Lorimer Ilsley: That is right. As the hon. member has said, we find this expression at the point he has indicated:
Any company or railways comprised in the national railway system.
Therefore "companies" in section 5 means companies or railways comprised in the national railway system, as defined in the Canadian National Railways Capital Revision Act, 1937.


Mr. JOHNSTON (Bow River):: The companies, and other subsidiary railways of the Canadian National Railways system are different. What other companies are there under the Canadian National Railways? It would not be other railway companies or subsidiaries.


James Lorimer Ilsley: "Companies" means companies or railways comprised in the national railway system. That is clear, if one reads section 2. "Companies" as used in section 5 means companies comprised in the national railway system.


Charles Edward Johnston: What type of companies? I do not want the minister to name them, but would he give the type?


Mr. MICHAUD:: The list appears at pages 26 and 27 of the annual report of the Canadian National Railways. It includes subsidiary railways, hotels, elevators, docks, and so on.


Charles Edward Johnston: It is not necessary to give the list, so long as I understand what it means.


[Stage Direction]
Section agreed to.
On section 6-^-Guarantee.
Gordon Graydon: I am not sure that this is the proper place at which to ask the question which I have in mind. However, I think it would make very little difference where the question is asked, because it applies to the principle of the bill itself. I believe there is some uncertainty in the public mind, which might be readily answerable but which, on the surface, causes some conflict of opinion. Here we have enabling legislation for the giving of a loan of something more than $10,000,000. If a loan is to be made to the Canadian National Railways, or if provision is to be made to enable the railways to obtain such a loan, why is it that the Canadian National Railways is at the same time taking a large block of victory bonds from the government from which it now seeks the loan. May I make it clear that I do not wish it to be understood that I am opposing the company's procedure of subscribing to the victory loan. From a public point of view, however, there may be some confusion as to why on the one hand the government gives the railway company $10,000,000, and at the same time the company is giving back to the government a large amount in the purchase of victory bonds? It seems to me there must be a clear, complete and concise answer, and possibly this would be a good time for the minister to give it.


James Lorimer Ilsley: The investment in victory bonds is an investment to provide for pension funds, insurance and deferred maintenance which will be required shortly after the war. Therefore the railway company must have that investment in something that is liquid.


[Stage Direction]
Section agreed to.
Sections 7 and 8 agreed to.
Bill reported, read the third time and passed. DOMINION ELECTIONS

[Stage Direction]
Hon. N. A. McLARTY (Secretary of State) moved the second reading of bill No. 135, to provide regulations enabling Canadian war service electors to exercise their franchise, and Canadian prisoners of war to vote by proxy, at any general election held during the present war, also to provide amendments to the Dominion Elections Act, 1938, which are consequential to such regulations, or have become necessary by the advent of the said war.
36SS
Dominion Elections Act
[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Bradette in the chair.
On section 1-War services electors voting at a general election.
Gordon Graydon: I think the minister ought to make a statement at some stage of the bill and perhaps this would be an appropriate time to hear what he has to say.


Norman Alexander McLarty: Mr. Chairman, when one bears in mind the fact that concurrence in the committee's report was waived and that the bill passed its second reading without debate 1 think I should accept the invitation of the leader of the opposition and say a few words at this stage. As the committee is aware, this bill is the result of some labour on the part of a special committee. I believe it will be gratifying to the committee to know that the report of the special committee was unanimous. I believe it was unanimous for two reasons. First, we had as chairman the hon. member for Spadina (Mr. Factor), and I think all members of the committee were impressed with his industry and above all the fair-minded attitude with which he approached the problem.
In the second place, I think I can say that eveiy hon. member of the special committee approached his task with only one object in view, to ensure the fullest opportunity being provided to those in the service forces of Canada to exercise their franchise. I know that all those who sat with me on the committee will agree when I say that there was no effort on the part of anyone to secure any petty political advantage, that politics in the narrow sense of that word were not even considered in the result arrived at.
I believe that this report represents as fair and intelligent a solution of this problem as has been presented in any democratic nation. The committee had the benefit of the services of Mr. Harry Butcher, K.C., once an esteemed member of this house and one who I believe is generally regarded, along with the chief electoral officer, as probably knowing more about electoral matters than any other citizen in Canada. The committee went at its work with considerable care.
It had the advantage of the legislation passed in Great Britain. It also had for consideration the legislation passed in the various provinces of Canada where such legislation has been enacted. Consideration was also given to the legislation passed in Australia under which the last federal election in that commonwealth was held and to the legislation of New Zealand and South Africa.

In addition the committee considered the legislation now being discussed in the United States. While that was a matter of interest, its actual benefit on account of different electoral methods was not so great. I recall that some method was placed before the committee dealing with the federal election held in 1864 during the civil war when the votes were actually taken upon the battlefield.


Gordon Graydon: You did not neglect the
past.


Norman Alexander McLarty: We were very careful to consider both the past and the present, although perhaps the present was more in our minds. But because of their different electoral system, the practical advantages of the United States legislation was very small.
Perhaps I may now deal with the bill itself. As will be noted, the bill is not an amendment to the elections act of 1938; it is a new bill. It deals with matters of immediate importance in connection with active service voters, and to that extent it will be in force and effect for the duration of the war and six months thereafter. But it deals also with a number of matters which will be operative after that period of time, and for those reasons it was felt it would be better to have a new bill rather than amendments to the elections act, 1938.
The bill has two schedules, A and B. Schedule A deals with those in the armed 'orces and in the auxiliary services, while schedule B deals with prisoners of war. Schedule A was gone over word for word and approved by the special committee. At the time the committee reported and suggested that the voting of prisoners of war be done by proxy schedule B had not been considered section by section, but it is the result of the committee's recommendations and now appears in the form of fifteen sections in the schedule-.
I believe the definition of war service voter will be found to be very broad since it covers not only those in the navy, army and air force but also, subject to conditions which the committee will want to discuss, those in the auxiliary services. It covers those in the mercantile marine and any Canadian on any ship of Canadian or British registry or the registry of any country allied with His Majesty in the present war. The question of age is immaterial as far as an elector serving in the active forces is concerned. Only one qualification is required, namely, that the elector be a British subject. In the case of certain auxiliary services and organizations it is necessary that the electors be stationed outside the boundaries of Canada. In other

Dominion Elections Act
words, it w'as felt that there should be the widest possible definition in order that everyone who is contributing to the defence of Canada and the prosecution of this war shall be ensured the right to exercise either his or her franchise.
It was necessary to provide machinery for the taking of the direct vote, in the one case, and the proxy vote, in the other. There is one quite material change being made in the elections act. Instead of seven days elapsing to permit papers as well as the names of candidates to be forwarded to the special returning officers, there will be a period of twenty-eight days allowed. In other words, there will be twenty-eight days between the official nominations and polling day.
The bill provides for the appointment of special returning officers in each major district, there being five in Canada. It makes provisions also for special returning officers in Newfoundland and Great Britain. Power is given to the chief electoral officer to recommend to the government, and ta the government to appoint special returning officers in such other theatres of war as may be thought necessary. This machinery can be more fully dealt with when we come to the particular sections.
I am told by the chief electoral officer that notwithstanding the fact that the votes will have to be counted and taken in widely separated portions of the world, the time that will elapse from the issue of the writs of election until election day will not be more than sixty days. In addition to that, whereas in the last war it required at least two months to get results from the ballots overseas and three months before a definite declaration as to the successful candidate could be made, under the procedure adopted by the committee it will be possible for these results to be secured within eight days.
There may be other points that I might have dealt with, but I believe I have indicated the general features of the bill that is now before the committee. It is not claimed that this bill is fool-proof. It will require a certain measure of cooperation and a large measure of intelligent work in its operation. What is claimed, however, both in the breadth of its definition of those who can vote as war service electors and in the plan for giving votes to prisoners of war is that it is probably the broadest measure adopted by any country in the British commonwealth of nations.
It is also claimed that the special committee set about its task for the sole purpose of securing that no one would be deprived of his or her vote if it was humanly possible to enable him to register it and that each
would preserve the right of franchise in determining who would form the government of Canada for the duration of the war and, we trust, for the years that follow after it.


John Ritchie MacNicol: In order to conduct an election within sixty days after dissolution, is it not the government's intention to ask for the right, if they have not the right at present, to arrange for the naming of special returning officers at once so that everything will be in readiness to carry out the election within the short space of sixty days after dissolution?


Norman Alexander McLarty: Yes; the hon. member for Davenport is quite correct. As soon as the bill passes the house and becomes law there is no reason why the ballot papers and the various forms provided for by this measure should not be printed and delivered, and there is no reason either why the special returning officers should not be appointed immediately. But that, of course, will have to await the passing of the bill. It is not the intention to wait until the writ of election has been issued before these steps are taken by the chief electoral officer.


Gordon Graydon: May I ask the minister if the urgent speed which he indicates in the appointment of returning officers and the printing of the ballot papers presages an early appeal to the people?


Norman Alexander McLarty: I do not know myself any more than the hon. member when that appeal will come, but I can assure him that nothing that I have said and nothing contained in this bill in any wTay presages an early election or a late election. This is simply ensuring that adequate provision will be made as and when an election comes.


Gordon Graydon: Nothing in the bill would retard an appeal either.


Norman Alexander McLarty: We hope not.


Stanley Howard Knowles: Mr. Chairman, our group wras represented by the hon. member for Cape Breton South on the special committee to which the Secretary of State referred. My colleague whom I have mentioned may be here before I conclude my brief remarks, in which event I shall resume my seat and let him speak, because it was our desire that he would say a few w'ords on our behalf at this time.


Some hon. MEMBERS:: Here he comes now.


Stanley Howard Knowles: Mr. Chairman, I should like to retire in favour of my colleague.


Clarence Gillis: Mr. Chairman, what remarks I am going to make will be directed not to I he
Dominion Elections Act

bill but rather to what is not in this bill. I was a member of the special committee and I am in accord with the regulations as drafted and embodied in the bill. The committee itself was a very agreeable one, very efficient and cooperative. The one desire uppermost in the minds of the whole committee was to bring forward the best regulations possible, keeping in mind the needs, desires and hopes of the armed services in casting their ballots.
There was one matter, however, which I think the committee should have included in its deliberations, though perhaps not in the regulations as drafted. I think the committee should have presented a recommendation to the house with respect to acquainting those in the armed services with the issues upon which they would be called upon to ballot. With the war situation as it is now in Europe, with things pretty much uprooted and a very confused picture over there, this is not just the kind of setting that I would choose to discuss this matter. It may be some considerable time before conditions are such on the European continent that we can say definitely that we are going to place a ballot in the hands of those for whom these regulations were designed to give them an opportunity to vote. But the regulations are here. I think one of the most important things is that those in the services who are to cast their ballots should have some knowledge of the issues on which they are to vote. Most of those who are in the armed services overseas have been out of Canada for the past two or three years and there have been some considerable changes in political thinking in this country during that time. New parties have sprung up and the programmes of probably all parties in this house, with the exception of our own, have changed considerably.


James Arthur Ross: How many times a day does your's change?


John Ritchie MacNicol: Have you a programme?


Clarence Gillis: You see, Mr. Chairman, most of these men recognize that statement is correct and they are merely laughing at themselves.


Gordon Knapman Fraser: We are laughing because you have a different policy in every province.


Clarence Gillis: We have not changed our name in the last ten years. We drafted a manifesto in 1032-


Mr. SINCLAIR:: And you are stuck with it.


Clarence Gillis: -and it is still the policy of the C. C. F.


Gordon Graydon: Why don't you progress a little?


Clarence Gillis: And it is the basic policy of the people of Canada from coast to coast. They have accepted it.


John Ewen Sinclair: What is it worth?


Clarence Gillis: Well, thirty-four members in Ontario was not a bad demonstration that the people there understand it.


Gordon Graydon: That was before Harold Winch, though.


Clarence Gillis: And driving the two old
machines in British Columbia to come together, and establishing an opposition there, is not a bad job either. It is a demonstration of the intelligence of the people. It shows that they are progressing all across the country. We have not had to repaint the old buggy at all and give it a new name.


Gordon Graydon: You are whistling going through the cemetery.


Clarence Gillis: I am not delving into the realm of prophecy, but you will get another demonstration on the 15th of this month.


Gordon Graydon: We had one in Haldimand-Norfolk.


John Ritchie MacNicol: And one in Toronto last
New Year's.


Clarence Gillis: We started the debate on the regulations as applied to the armed forces when my hon. friends over here, political contortionists I would call them-


Stanley Howard Knowles: Is that what "P.C."
means?


Clarence Gillis: -began this sideline.
The thing I was concerned about in the regulations, as I started to say, was to give those in the service who were to ballot some idea as to what they were to ballot on. The regulations themselves are clear and specific in so far as the candidate is concerned, his occupation and so forth. I did think, however, the committee might have recommended to the house something similar to what was done in New Zealand. I proposed that to the committee, but they did not see eye-to-eye with me on it. The drafting of a manifesto giving each party who may have candidates in the election an opportunity of briefly setting out the basic principles for which they stand is something desirable; and failing that, if the committee were not prepared to recommend it I thought, and some of the members of the committee agreed, that there was a possibility of utilizing the Canadian Press service. There is now established by the Canadian Press a

Dominion Elections Act
news service in the form, I believe, of an eight-page paper which is widely circulated throughout the different services both in England and in the Mediterranean, 'and I presume that when lines are established it will be on the European continent; that is, if we do not go through there very fast, as I hope we shall. I thought there might be a possibility of taking the last four or five weeks prior to the election and, by some arrangement with the Canadian Press, each party who may have candidates in the field could be privileged to use a column or so for the purpose of setting out what they stand for in this election and developing the issues as they saw fit. In that way there would be no cost; "there would be no responsibility on the part of the government. The Canadian Press would disseminate each party programme, and the parties themselves could be responsible for any expenditure necessary or any charge that the Canadian Press might make for that service.
I thought in connection with the regulations I would raise that matter in the house in order to determine whether hon. members were desirous of going to that extent at least in informing those in the service as to what they were balloting on. I believe that those in the armed services to-day are fighting for something; every man there is fighting for social objectives in addition to defeating those who would lay down a totalitarian system throughout the world. We in Canada are framing legislation to which they are to come back. The kind of Canada we build here, through the medium of this House of Commons and our provincial legislatures, is the framework into which these boys will fit when they come back. It is not going far enough simply to day down regulations, and as far as possible put the ballot into the hands of the service personnel, unless at the same time we are prepared to give information, in so far as it is possible for us to do so, as to what each candidate they will ballot on stands for.
There are half a dozen parties in the country each with a programme and philosophy of its own, and it is a prerequisite to the ballot that the members of the forces should have some understanding of what each of these political organizations stands for.
To the regulations themselves as they are contained in the bill I have no objection. I think they are about as well drafted and as fair as they possibly could be.


Robert Fair: As another member of the committee dealing with these regulations. I can only say, as some others have said, that the idea of giving every possible opportunity
to the men and women in the services to cast their vote is a good one. I am quite satisfied that we have done just as good a job as it was possible to do and the Secretary of State told us yesterday that the bill is based entirely on the recommendations of the committee. I have not had time so far to read the bill through, but taking the minister's word for it I feel that, as far as I can see, it is all right.
With regard to the point raised by the hon. member for Cape Breton South, I am not quite satisfied as to the benefits to be derived from his suggestion. First of all, I am not sure that the programmes of the different parties will be set out as they are, because, with the rapidly changing programmes of some parties, it would be impossible to give accurate information, and with the limited finances of some parties some of us could not take advantage of the advertising programme that would be necessary.
As regards holding up the bill, I do not think it is the intention of any member to delay it for any length of time, because I understand that the Prime Minister has D-day fixed for some time in October, and I am sure we do not want to knock him out in any plans he has made along that line. An hon. friend back here says it may be earlier than that; I do not know; as far as we are concerned, we are ready when the Prime Minister throws his hat into the ring.


Mr. HLYNKA:: May I ask the minister if there is any member in the house who has read the bill from cover to cover.


Norman Alexander McLarty: I presume that is just a hypothetical question, because I have not made any examination of the members to determine that.


Robert Fair: There does not happen to be a cover on this bill.


Alan Webster Neill: Do I understand that if we pass this clause we automatically pass schedule A? When you pass clause 7, does that mean that we have no debate with reference to schedule A?


Norman Alexander McLarty: That is purely for the committee to determine.


The CHAIRMAN:: I called clause 1 and I shall call all the other clauses. There is a schedule A and also a schedule B.


Alan Webster Neill: Shall we have an opportunity of discussing schedule A?


Norman Alexander McLarty: Ordinarily, where there is a schedule to a bill, we do consider it clause by clause. That is the ordinaly practice-


Alan Webster Neill: With the schedule?
Dominion Elections Act


Norman Alexander McLarty: -in committee, and I presume the Chairman will follow the same procedure in connection with this.


Alan Webster Neill: I want to know exactly where we stand, because this bill consists of a page and a half while the schedule consists of some eighteen pages, and I do not want to be deprived of an opportunity of discussing the changes, if any, in the schedule when the bill itself consists only of half a dozen sections. We shall be allowed to discuss the schedule?


Norman Alexander McLarty: Yes.


Alan Webster Neill: All right.


Joseph-Arthur Bradette: The rule is explicit on that point.


[Stage Direction]
Section agreed to.
Sections 2 to 12 agreed to.
On schedule A.
Joseph-Arthur Bradette: We now come to
schedule A. Is it the wish of the committee that the chair call every one of the sections of the schedule?


Alan Webster Neill: Yes.


Gordon Graydon: Yes, because the bill is of little consequence. It is the regulations that are the meat of the whole legislation.
On section 2-Application.


John Ritchie MacNicol: The sections are very
short; I think the chairman should read them.


Norman Alexander McLarty: There are sixty-four of
them. I think the chairman should read only ones which are specifically required.


John Ritchie MacNicol: If the chairman will delay calling "carried" for a moment it will enable each member to read the section. That will be satisfactory to me. I know what they are; perhaps others do not.


Joseph-Arthur Bradette: Shall section 2 carry?


Alan Webster Neill: Let us get some information
about this. What about a by-election?


Norman Alexander McLarty: Because of the nature of a by-election these regulations could have no application to it. In the case of one particular by-election it would be impossible to put all this machinery, such as the appointment of special returning officers all over the world and the segregating of electors to a particular riding, into effect. It would be so impractical as to be impossible; consequently in a byelection this would not apply. I might say that it specifically states it is referable only to a general election. *


Gordon Graydon: I take it there will be
no by-election before a general election in any event.


Norman Alexander McLarty: I could not give my hon. friend any undertaking like that.


Mr. CRERAR:: Do not assume too much.


[Stage Direction]
Section agreed to.
On section 3-General direction-special powers.
Alan Webster Neill: Give us an opportunity to
read it.


Joseph-Arthur Bradette: It would be quite satisfactory to me to read it, but it would be quite an ordeal on the committee.


[Stage Direction]
Section agreed to.
On section 4-Definitions.
John Ritchie MacNicol: Just there may I say
something about the inner envelope. The minister has likely received quite a number of protests from members of the legion as to the inner and outer envelope method. I have had quite a number of protests. Personally I cannot understand what the objection is. I have written to quite a few. I have not been able to understand the real objection to the outer envelope, and the inner envelope being put in the outer envelope. Has the minister any reason to doubt that this will not be, as we all hope it will be, fair and above board?


Norman Alexander McLarty: It would be hardly fair
to say that I have had protests about the procedure with respect to the inner and outer envelope; I have not. I have had suggestions that the ballot be made a secret one, but no suggestions that the procedure contained in the bill is not the most secret and practical one that has so far been evolved. The same procedure was in operation in the regulations of 1940 and as far as I am aware there were no objections raised to them at that time. Nor have I heard any objection to these except the expression of the hope, which we all share, that the ballot will be made a secret one.


Gordon Graydon: The minister seems to
have some little doubt and hesitation in his own mind as to the secrecy of the ballot.


Norman Alexander McLarty: I have none.


Gordon Graydon: Is it definitely understood and are there sufficient guarantees and assurances that no one will be able to know how a serviceman casts his ballot?


Norman Alexander McLarty: There may be the possibility of one exception where a serviceman is unable to write. Then someone may be in a position to know, but otherwise I am assured by the chief electoral officer that the secrecy of the ballot is maintained to the utmost extent possible.

Dominion Elections Act


Gordon Graydon: In other words, it is foolproof as far as secrecy goes?


Norman Alexander McLarty: In so far as it can be made so.


Robert Fair: I am quite satisfied that the system of voting is now just as good as we can make it, and it is perfectly secret. I believe if the Secretary of State would give the committee an explanation of the procedure it would probably do away with a lot of trouble a little later on. Could he tell us what actually happens in the polling booth and deal with both the inner and the outer envelopes? If he did that I believe it would be a help in getting rid of a lot of trouble that may come up later.


Norman Alexander McLarty: I shall be able to do that, but unfortunately the memorandum I have-
I would not want to trust my memory to do it -is perhaps a little longer than should be required, but if it is the wish of the committee, I shall read it. It is as follows:
There appears to be some misapprehension with regard to the secrecy of the ballot paper prescribed by the proposed regulations for use by war service electors at the next general election.
The procedure prescribed by the said regulations is similar to that followed for the taking of the votes of members of the active service forces of Canada at the 1940 general election and at the 1942 dominion plebiscite. On each of these occasions, not a single complaint was received that the manner in which ballot papers were marked by any active service electors was ascertained by voting officials or other persons. It may even be stated that it was generally considered that the prevailing special voting procedure afforded a higher degree of secrecy than the procedure prescribed for taking the vote of civilian electors.
I might explain that this is a memorandum of the chief electoral officer, and was not dictated by myself. It continues:
The proposed regulations prescribe that each \va r service elector before being allowed to vote will be required to make, before the commissioned officer designated to take such vote, a declaration on the back of the outer envelope in which his ballot paper will be transmitted by mail to the appropriate special returning officer. In such declaration the war service elector will state his name, rank and regimental number, together with the name of the place where he ordinarily resided prior to his enlistment, and other necessary particulars.
When the above declaration has been completed and signed by both the war service elector and the commissioned officer concerned, a ballot paper will be handed to the elector who will be allowed to mark it in private. The ballot paper will then be folded and placed in an inner envelope and after this envelope has been sealed bv the elector, it will be handed to the commissioned officer who, in full view of the elector, will place the inner envelope in the completed outer envelope above referred to. When the outer envelope has been sealed by the commissioned officer, it will be handed to the
elector who will himself dispatch it by mail to the special returning officer whose full name and address are printed on the face of such outer envelope.
When the outer envelopes reach their destination, they will be received by the special returning officer and his staff, mainly composed of six scrutineers nominated by the leaders of the various political parties.
Each outer envelope will then be sorted to its proper electoral district, according to the place of ordinary residence given by the elector in his declaration, by a pair of scrutineers consisting of persons representing different and opposed political interests, and no such envelope will be opened until the time has come to count all the ballot papers sorted to such electoral district. When the correct electoral district of a war service elector has been ascertained, the scrutineers will write the name of such electoral district on the back of the outer envelope and affix their initials thereto before sorting the outer envelope to its electoral district.
Voting by war service electors will take place on the twelve week days immediately preceding polling day and it is expected that outer envelopes containing the ballot papers cast by war service electors will be received by every special returning officer during a period of between twelve and fourteen days. At the end of each of such days all the outer envelopes sorted to a given electoral district will be placed, unopened, in a large envelope which will be specially sealed. At least two scrutineers will be required to affix their signatures to such seals.	_
These specially sealed large envelopes will remain in safe custody, unopened, until the ballot papers enclosed in them are counted, and the scrutineers are authorized by the regulations to inspect any or all such envelopes when they so desire.
The counting of the votes of war service electors will not begin until six o'clock p.m. on polling day. Then each pair of scrutineers will count the ballot papers, but for only one electoral district at a time. All the specially sealed large envelopes belonging to such electoral district will be opened and the outer envelopes contained therein will be placed on a table. After having ascertained that each of such outer envelopes belongs to the electoral district for which the ballot papers are being counted, the scrutineers will open each of such outer envelopes and place the unopened inner envelopes contained therein in a locked ballot box.
When all the inner envelopes sorted to a given electoral district have thus been placed in the ballot box, the ballot papers contained in the inner envelopes lose their identity, as these inner envelopes are absolutely plain.
When all the inner envelopes sorted to a given electoral district have been placed in the ballot box, the box will be unlocked by the special returning officer, and its contents will be placed upon a table. The scrutineers will then proceed to open such inner envelopes and count the ballot papers cast for each candidate officially nominated in such electoral district.
It will be observed that outer and inner envelopes containing ballot papers cast by war service electors are kept very carefully sealed up until the counting of the votes commences in the electoral district for which such envelopes have been sorted.
It will be observed also that every operation in the office of the special returning officer relating to the sorting and counting of the votes

Dominion Elections Act

cast by war service electors will be performed exclusively by scrutineers representing different political interests under the supervision of the special returning officer. A procedure of this kind should provide a maximum of secrecy to the ballot papers cast by war service electors.


Alan Webster Neill: May I ask what the minister is reading from?


Norman Alexander McLarty: I am reading from a memorandum prepared by the chief electoral officer; I thought I made that clear.


Alan Webster Neill: Is it part of the schedule?


Norman Alexander McLarty: No. I may say to the hon. member for Comox-Alberni that I was requested to explain the procedure in connection with the actual marking and transmission of the ballots, in order to preserve their secrecy, and what I have read is a memorandum prepared by the chief electoral officer in connection with that procedure.


Alan Webster Neill: Then it is not binding upon this house?


Norman Alexander McLarty: I did not suggest that it would be.


Alan Webster Neill: Do you not think all that should have been in the schedule itself, with which we are dealing, because it is to the schedule we look to see what shall be done.


Norman Alexander McLarty: These instructions will be given to the officers but will not appear in the regulations, which do not deal in such detail with the matter of actually ' handling the ballots.


Alan Webster Neill: I do not want to delay the minister at all; I want to get on, but I cannot understand the situation. When the soldiers come to cast their ballots will they be governed by what is in the bill before us or by what the minister has just read, which apparently is the opinion of the chief electoral officer? I want it to be in here, so that we may know for what we are voting. I am not concerned with or interested in what the chief electoral officer says; I want to know what is to be in this bill. Here we have something like thirty-five pages of this schedule, which is detailed and technical. Has this bill or this schedule ever been referred to a committee of the house, or are we dealing with it for the first time? If so, I say it is utterly impossible for us to do justice to it, because we cannot intelligently discuss the technical and involved phraseology of the schedule without some study. It should have been sent to a committee, before which the chief electoral officer should have appeared to give his opinions.


Grote Stirling: It was considered by a committee, every bit of it.


Alan Webster Neill: What committee was it
sent to?


Norman Alexander McLarty: Does the hon. gentleman wish to ask any other questions?


Alan Webster Neill: I should like those two points settled.


Norman Alexander McLarty: As to the first question, about placing the instructions from the chief electoral officer to the returning officers in the regulations, as my hon. friend knows, in the election act of 1938 no part of the instructions from the chief electoral officer to the returning officers is contained in the regulations. In other words, there is an instructional power given to the chief electoral officer, which he may exercise, and there is nothing in these instructions which conflicts in any way with the provisions of the regulations. This is merely the appropriate machinery by which those regulations can be best carried out.
As to the second point, I imagine that the hon. member was not in the chamber when I made my introductory remarks. Schedule A was discussed clause by clause by a special committee, and with the exception of perhaps three or four typographical errors it is in the form approved by that committee, which was appointed on February 1 of this year. That committee held a large number of meetings-


John Ritchie MacNicol: And called witnesses.


Norman Alexander McLarty: It called witnesses and went over this schedule word by word and clause by clause, discussing it fully. I believe five of the meetings were reported, but I do not think there is a report of the meetings at which these regulations were considered. That does not apply to schedule B. The recommendation of the committee, dealing with that portion we have included in schedule B, was as follows:
Your committee further recommends that every person who, while on active service with the naval, military or air forces of Canada, became a prisoner of war and is officially recorded as such at headquarters, shall be entitled to vote by proxy, on a special certificate issued by the chief electoral officer. Such certificate shall be issued not earlier than two weeks before polling day to the person officially recorded at headquarters as the next of kin of such prisoner of war, provided such next of kin is qualified to vote as a civilian elector.
The fifteen clauses contained in schedule B were not considered word for word by the committee, but I believe they will be found to be a fair interpretation of the recommendation of the committee to enable the next of kin of prisoners of war provided they are

Dominion Elections Act
qualified electors, to vote by proxy in the particular riding in which the next of kin is a qualified elector at the time of the election.


Alan Webster Neill: Was the report of the committee adopted by this house?


Norman Alexander McLarty: No.


Alan Webster Neill: Was it referred to this house?


Norman Alexander McLarty: It was tabled but no motion was made for concurrence in that report.


Alan Webster Neill: Was the committee unanimous?


Norman Alexander McLarty: The committee was
unanimous.


Charles Edward Johnston: The minister has outlined how the balloting will take place. The elector will mark his ballot and place it in the inner envelope, which he will seal and then give to the officer commanding, who will put it in a large envelope in the presence of the elector. That large outer envelope will be sealed and given back to the elector, who will mail it. Now comes the point about which I w'ant to ask. How is that envelope mailed? Is it sent by the elector in an open mail bag, or is it put into a ballot box like those we use in the general elections here, on which there are locks?


Norman Alexander McLarty: I must say that I cannot answer that question; I do not know. I presume the procedure may be different in various areas. You see, there will be the special returning officers. Then a commanding officer is appointed who will look after the local polls. I presume the procedure may not be absolutely uniform as between those serving with the air force in Burma, let us say, and those fighting in Italy. I presume in each case they will do the best they can, and 1 know the chief electoral officer will send the same supplies in each case. Whether or not there will be a lock on the mail bag, or whether it will be a special pouch, I regret that I cannot advise the hon. gentleman.


Charles Edward Johnston: That is an important point, because it may be possible- I am not suggesting that it will be-that there will be interference-


Mr. BLACK (Yukon):: Look at form 10 on page 37; the information is contained there.


Charles Edward Johnston: I am not suggesting that it will be, but I say it may be possible that there could be interference from the time the ballot is dropped into the mail bag, if it happens to be an open mail bag. A good deal of misrepresentation may occur because of that. Some uniform regulation or practice should be adopted. It may be a mail bag which is locked, with some sort of opening which would just permit the envelope to go in. I feel, however, that some way should be devised whereby there could be no interference whatsoever with the ballot, once the elector drops it into the mail bag. I am sure there will be some objection or some complaints made after the election, especially if it is just an open box into which the ballot can be dropped by the elector. After he has gone there might be some interference, or it might be possible for someone to interfere.


Norman Alexander McLarty: I do not think I can usefully add anything to what was suggested by the hon. member for Yukon (Mr. Black), I would ask the hon. member who has just spoken to refer to form 10 on page 37, where it states that after placing the inner envelope in the outer envelope-
The war service elector shall then mail the completed outer envelope in the nearest post office or mail box.
I doubt if it would be of advantage to insist upon the Post Office Department providing certain equipment for the transmission of mail from the various points. I think we would have to rely upon the honesty of the postal officials to see that the mail is duly transmitted. I doubt if we can expect to go any farther, bearing in mind that it is not the easiest task in the world to take votes in an actual theatre of war.


Mr. HAZEN:: Section 35 of schedule A deals with the matter and sets it out clearly.


John Ritchie MacNicol: I think it is only fair to give a report of what certain members of the legion feel about the outer envelope. I, myself, am in favour of it. I think it is a safeguard and a protection. Certain members of the legion seem to think the outer envelope would permit the ascertaining of how a soldier might cast his vote. The outer envelope has his name and rank, and all particulars on it. Men who have written to me seem to think that would enable one to find out how a soldier voted. If the authorities take time to examine the envelopes, the outer envelope containing the inner envelope, I should imagine it would take a year to do so. I do not think anyone would do that. The argument used is that all that should be required of the soldier is that he come forward with his pay book. Hon. members on this side of the house who are in the armed forces will be familiar with the pay book. Each soldier carries a pay book, and it is said that presentation of same should be sufficient to obtain his ballot.
Dominion Elections Act


John Ewen Sinclair: Airmen in Canada do not have a pay book.


John Ritchie MacNicol: I refer the committee to form 8 on page 35 that pertains to the outer envelope. The hon. member for Vancouver North, lately back from the front, served on the committee, and it paid a good deal of attention to what he said. He was in accord with these regulations. I listened to him carefully, and after his presentation I thought that what the ' committee adopted, namely, the programme of having an outer and inner envelope, was the best one.
May I say further that I have implicit confidence in the chief electoral officer. He has held that post for some years, and on any occasion I have made inquiries from him I have found him 100 per cent above-board. I am prepared to accept what he has presented. I believe it is the best elections act of any countiy in the world to-day, and I am convinced the chief electoral officer deserves more credit for it than does anybody else. He was always open to reason or to argument, and did not try at any time to influence the committee. The committee asked him on various occasions to explain details, and at all times, in my judgment, his explanations were satisfactory. I cannot see the objection to the inner and the outer envelope. Once the inner envelope is taken out of the outer envelope and placed in the ballot box, there is no possible way of telling whose ballot it might be. The outer envelope is certainly a check to control the voting, and a check against spurious voting, and against any stuffing of ballot boxes, or anything like that. No one has convinced me thus far that the procedure of using outer and inner envelopes is not a satisfactory one.


Clarence Gillis: As I pointed out a moment ago, I think everything that could be thought of for the protection of the service personnel is contained in these regulations. An hon. member expressed doubt as to whether any member had read the bill. I say to him that every member of the committee read the bill at least four times, because the regulations were drafted and re-drafted on at least four occasions.
I do not think there is an argument or an objection which could be raised which is not covered in the regulations, if we read them through carefully.
Then, with respect to suspicion in some quarters, or the apprehension that the ballot may not be a secret one, may I say that I had two letters asking me-


John Ritchie MacNicol: And the hon. member
is a returned soldier, himself.


Clarence Gillis: Yes, that is right-and a
very suspicious one. I received two letters inquiring as to whether I thought the ballot as prescribed by the regulations would be a secret ballot. Someone was leading the people in my section of the country to believe that the ballot would not be secret. I wrote back giving an explanation, and I recieved no further objections. They said, "If you are satisfied with it, it must be all right."


John Ritchie MacNicol: I will admit that the
hon. member was a real watch-dog.


Clarence Gillis: The memorandum read by the minister and prepared by the chief electoral officer sets out the procedure in detail. It is rather lengthy, however, and could be misunderstood. That is, anyone who might read it, and who might not understand the background of the committee's deliberations, might not understand it.
May I say, as a member of the special committee that the members belonging to this group after checking this over-and I discussed it with them as we went along-are perfectly satisfied with the regulations. In so far as the secrecy of the ballot is concerned, I am convinced there is no way of interfering with that ballot. The regimental number, the name of the voter and the constituency to which the ballot is directed will be written on the outside of the envelope and this leads some people to believe that when the envelope is opened the ballot can be checked. That is not true. When the outer envelope is opened there will be a small envelope inside without any marking on it containing the ballot. That smaller envelope will be placed in a locked ballot box and it may be a week before the ballots are reshuffled and checked. When the ballot comes out of the ballot box there will be scrutineers representing each political party present and there will be nothing on the small envelope to indicate who has marked the ballot. There is no way in which it can be checked. I wanted to say this because I think it is the duty of the members of the committee to give the public and those in the services an assurance that this will be an absolutely secret ballot.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
On section 6-Special returning officers and their staffs.
George Black: I object to the wording of paragraph (d) of this section which groups together the provinces of Manitoba, Saskatchewan, Alberta and the Yukon Territory. As the section is worded these constitute

Dominion Elections Act
a voting territory with the headquarters of the special returning officer at Edmonton. It is not proper to group the Yukon with the three prairie provinces. They are across the mountains away from us. If the Yukon is to be grouped with any province, British Columbia is the natural one. Therefore, I move:
That the words "and the Yukon Territory" in subsection (d) of section 6 be struck out and the words "and the Yukon Territory" be inserted between the word "Columbia" and the word "shall" in subsection (e) of section 6.
If that amendment carries, paragraph (d) will read:
The provinces of Manitoba, Saskatchewan and Alberta shall constitute a voting territory, with the headquarters of the special returning officer located at Edmonton.
Paragraph (e) will then read:
The province of British Columbia and the Yukon Territory shall constitute a voting territory with the headquarters of the special returning officer located at Vancouver.
That is the natural place at which to have the headquarters of the returning officer for British Columbia and the Yukon Territory.


John Ewen Sinclair: May I answer that? Of course, as a British Columbia member it was quite a blow to me to see the Yukon divorced for the first time from British Columbia and attached to the prairie provinces. However, as far as the men in the armed services are concerned-these are mainly air force men- they do not go to the Yukon through Vancouver, they go through Edmonton over what is called the northwest staging route. This route provides the quickest mode of transportation into the Yukon. Both airmen and men in the army go through Edmonton for the new northwest air command. This is the reason why for the first time in Canadian history British Columbia and the Yukon have been divorced. Despite the fact that I am as British Columbian as any British Columbia member here, I agree to this grouping of the prairie provinces and the Yukon with headquarters at Edmonton.


George Black: So far as speed in transportation and communication goes as between the outlying districts in the Yukon and Edmonton and Vancouver, there is a daily plane service between Whitehorse and Vancouver, both ways, except on Sundays. The same applies as between Edmonton and Whitehorse. Therefore Vancouver is no more remote from the Yukon than is Edmonton. If the hon. member for Vancouver North has aeroplane service in mind in his reference to the northwest staging route, Vancouver is as close to us as Edmonton. If he is referring to motor service on the Alaska highway, I hope we shall never have to depend on that for communication.


Norman Alexander McLarty: I think the hon. member for Vancouver North has answered this question much better than I could, but I should like to say a couple of words. I think it will be fair to say that the hon. member for Yukon is more definitely affected by the particular territory to which the Yukon is attached in these regulations than any other member. I am not going to repeat what the hon. member for Vancouver North has said, but I understand that this was the provision contained in the regulations of 1940 and also of 1942. If we change them as the hon. member suggests we shall be going back a considerable number of years because Edmonton was the headquarters for the election, in the one case, and for the plebiscite in the other.
I am advised that the facilities for getting material into the Yukon are more convenient when the headquarters are at Edmonton rather than at Vancouver. I have no prejudice one wav or the other; it is just a matter of facilitating the collection of votes.


George Black: The most natural communication for the Yukon is with Vancouver rather than with Edmonton. Until the Alaska highway went through, Edmonton was as far away from the Yukon as Montreal or Toronto. We had no communication with the country on the other, side of the Rocky mountains because the natural course of trade and communication was down the Pacific coast to Vancouver. I hope the committee will see its way clear to group the Yukon Territory with British Columbia.
Amendment negatived.


[Stage Direction]
Section agreed to.
Sections 7 to 14 inclusive agreed to.
On section 15-Promulgation in orders.
John Ritchie MacNicol: Did I understand the
minister to say a few moments ago that there were a few errors that had to be corrected?


Norman Alexander McLarty: No; the question was
asked whether this was identical with that passed by the committee, and I said that apart from any typographical errors I thought it was an exact reproduction.


Alan Webster Neill: Under which section of this schedule is provision made for advising the soldiers of the names of the candidates?


Norman Alexander McLarty: Under section 22.


[Stage Direction]
Section agreed to.
Sections 16 to 21, inclusive, agreed to.
On section 22-List of names and surnames, et cetera, of candidates.
369S
Dominion Elections Act
John Ritchie MacNicol: This is the section that
the hon. member for Comox-Albemi inquired about. Perhaps it would be well to read it, Mr. Chairman.


Alan Webster Neill: I was only asking for information because I could not find the section. I see that what I had in mind is provided for.


Gordon Knapman Fraser: This
section says in line 42:
Upon such list shall he inserted after the names and surname of each candidate the designating letters currently used to indicate his political affiliations.
Some of the men overseas might not just know what those letters stand for.


Stanley Howard Knowles: They know what C.C.F. means.


Gordon Knapman Fraser: Yes,
Constant Cackling Flip-Floppers.


William Gilbert Weir: They might not know what
Prog. Con. meant.


Gordon Graydon: I could understand the
hon. member for Macdonald being confused over that. Of all men he is the one who would ask that question because at one time he was a Progressive himself.


Norman Alexander McLarty: There will be a key giving the names of the parties or groups in full. While only the initials	will appear	on	theballot paper, if anyone	is in	doubt	he	can
consult the key.


Gordon Knapman Fraser: I do not want P.C. after my	name	because I	amnot a privy councillor.	The	name	of	the
party should be written out in full.


[Stage Direction]
Section agreed to.
Sections 23 and 24 agreed to.
On section 25-Before whom votes to be cast.
Gordon Graydon: 1 am not sure that this
is the section on which I desire information, but I fancy it is. There is one little loophole which I think we should close. As I understand the regulations, a service man who is on leave and away from his unit, in order to cast his ballot must go to his unit or to some special station where service men are allowed to vote. I am thinking of the man who is on leave in some far distant part of Canada. He may be home on furlough from overseas. Under these regulations, in order to reach the polling booth he might have to travel a great distance. There is a difficulty there which might easily be cured by a slight change in the regulations. I recognize at once the difficulties which might ensue from the opening
 .
up of the civilian polling booths to all men in the armed services who happen to live in that district and who are there on a short leave, but surely there must be some way by which a service man on leave in some far distant part of Canada will not have to travel a great distance to cast his vote, while civilians in the district might have to go only a mile or so to reach a polling booth. Has that situation been considered? Perhaps the difficulty is not as great as I now see it, but as I read the regulations that does seem to me to be a difficulty.


Norman Alexander McLarty: Would the hon. leader of the opposition refer to section 35 of the regulations? He will see that there the committee has gone about as far as it is humanly possible to go. In the first place, if the man is on leave and at home he can vote as an ordinary civilian voter.


William Gilbert Weir: Whether on the list or not?


Gordon Graydon: No; I do not think he can. That is the difficulty.


Norman Alexander McLarty: I beg pardon. That can only be done in the rural polls. He would have to be over twenty-one to vote as a civilian.


Gordon Graydon: Then that would cut out the men between the ages of eighteen and twenty-one.


Norman Alexander McLarty: Subsection 2 of section 35 provides:	.
A war service elector who is absent from his unit, on leave or on furlough, during the voting period prescribed by paragraph 15 (2) of these regulations, and who has not already voted at the pending general election, may, on production of documentary proof that he is on leave or furlough, cast his vote elsewhere before any commissioned officer of the same force, designated to take the votes of war service electors, when such commissioned officer is actually engaged in the taking of such votes.


Gordon Graydon: That is exactly the situation I want cleared up. Suppose a man who is nineteen years of age is on leave in a far distant part of Canada. He cannot be sworn in as an ordinary civilian voter because he is not twenty-one. He has no way of voting at the civilian poll because he is under twenty-one and cannot take the oath, so that he must cast his vote elsewhere before a commissioned officer of the same force designated to take the votes of war service electors. That place might be a hundred miles away. That is the difficulty, and this does not cure it.


James Arthur Ross: A great many chaps in the air force are under twenty-one, and unless some special provision is made whereby they

Dominion Elections Act
can make a declaration, a great number of them will be disfranchised. I think we should provide for them.


Norman Alexander McLarty: I wonder if I might answer one question at a time. With regard to the question raised by the hon. member for Souris, would those persons who are in the air force and are on leave be in municipalities where there is a closed list or an open list?


James Arthur Ross: They would be in both, but I am thinking particularly of the open list.


Norman Alexander McLarty: Under twenty-one?


James Arthur Ross: Both.


Norman Alexander McLarty: All I can suggest is this. The committee thought that in framing this bill they would draw it as broad as it could possibly be made. If the leader of the opposition has some practical suggestion that would overcome the difficulty, I know this committee would have no hesitation in adopting it. But I would ask him to bear this in mind. There have to be some definite limitations somewhere. We wish to make it as convenient as possible for every war service elector to vote, but on the other hand, as I say, there must be come practical limitation. You cannot make a regulation to suit every possible condition that might arise. The committee felt it was going as far as it possibly could be expected to go in making that arrangement. You could not phrase any clause which would cover every possible contingency that might arise. For instance, a man might be on leave in Muskoka and be a resident of Windsor. He might have many miles to go. Unfortunately, you could not provide that a man could go and cast his vote before a postmaster, because there has to be some check. While a situation might arise such as the leader of the opposition envisages, I do not believe that it would often arise. The cases would be widely exceptional, and I would be apprehensive if you made a special rule to cover those exceptional cases, because the difficulty that would ensue might be much greater than the difficulty that you are trying to overcome.


James Arthur Ross: Now that you have made provision for an open list in certain sections, could you not provide for a declaration in eases of persons under twenty-one years of age in the service? It is the wording of the declaration that must be taken care of; that is the only thing you have to alter. Any persons who are not on the voters' list and who are entitled to vote could make a declaration that they were British subjects, resident so long in the constituency. All you have to do is to provide a declaration that a member
of the services should so affirm rather than a declaration that he is of the full age of twenty-one. That is all you have to provide for.


John Ewen Sinclair: The committee should remember that there is not a single day for men in the services to vote but a period of twelve days, and at some time or another during those twelve days, if a man is keen to vote, he is sure to be near some camp or another. The objection here is that, with the voting taking place in advance, if a man is on leave and he is extremely conscientious and overwilling to do the best for his party, he might go to a civilian booth and vote as a civilian, so that there is a possibility, from that point of view, of having plural voting, and in the absence of pay books it would be difficult to make a check-up. There would be very few men on leave, however, who at some time in the two weeks afforded could not get to a camp somewhere and cast their vote, as they can under this measure.


James Arthur Ross: I agree with the hon. member, but suppose there is an election in harvest time. There might be thousands of members of the armed services home on harvest leave, and they would be entitled to vote in those districts if they were at home with their relatives harvesting.


George Alexander Cruickshank: Or home sick.


James Arthur Ross: Yes; but there would be many thousands at home at harvest time.


John Ewen Sinclair: As regards the air force, there are air force stations all over the prairies. Every town in the prairies has an air force station.


Gordon Graydon: There might readily be considerable hardship with respect to this. It would take a good deal of travelling for some in my constituency to go to the nearest service voting place. Perhaps the city of Toronto or Hamilton would be the nearest but there would be none in the constituency. This is one section of the bill which I suggest might stand until some consideration can be given it. It may be that I am picturing a condition which would exist in such a very small number of cases that it would not be proper to open the bill for them. As I see it, however, with the consideration that I have given it, I think it is sufficiently important that this bill should be amended to make provision in the way I suggest.


Norman Alexander McLarty: Would not the proper section to stand be 35, if you are to let a section stand?


Gordon Graydon: I should like to have the proper section stand, whichever it may be,
Dominion Elections Act

so that we may give the matter due consideration. I do not feel like withdrawing my objection until some consideration is given the matter and I suggest that we should allow that section to stand.


Norman Alexander McLarty: When we come to section 35 we shall let it stand.


[Stage Direction]
Section agreed to.
Section 26 agreed to.
On section 27-War service electors in nonCanadian units.
Gordon Knapman Fraser: What about naval men who have been transferred to British ships? How would they be looked after? There are some Canadians who have been so transferred.


Norman Alexander McLarty: I refer my hon. friend to section 37 of the regulations.


Gordon Knapman Fraser: I see it. It is all right.


Gordon Graydon: Take those who are training in special lines of military work in the republic to the south. What happens to their franchise? Do they lose it entirely?


Norman Alexander McLarty: The chief electoral officer advises me it is not necessary for them to lose their franchise. It would not be humanly possible to cover every individual elector, but on the last occasion personnel in the city of Washington were covered from Ottawa. It would be a matter of the chief electoral officer working out a satisfactory plan, but there is no reason why they should be disfranchised or why it should be assumed that they would be.


Gordon Graydon: I am thinking of Fort Benning in Georgia, where under normal circumstances there would be a number of our people. Would they lose their franchise?


Norman Alexander McLarty: No.


John Ritchie MacNicol: Or take a young Canadian lad training at Pensacola for flying off airships. There are quite a number of them there. Would they be taken care of?


Norman Alexander McLarty: Is the hon. member referring to Pensacola?


John Ritchie MacNicol: I know a number of young lads in Canada who are training there. I understand they are training to fly off airships.


Norman Alexander McLarty: I presume the same principle will apply to Pensacola as to any other place. If there is any group and the chief electoral officer is aware that there is such a group, or made aware of it, then there will be no difficulty in arranging that, but the arrangement would be made from Ottawa.


Alan Webster Neill: There are a large number of our young Canadians in the Royal Air Force. Is any provision made for taking care of their votes?


Norman Alexander McLarty: Would the hon. member refer to section 37?


Alan Webster Neill: We are on section 27 now?


Norman Alexander McLarty: Yes.


Alan Webster Neill: Once we pass it we cannot go back. The minister referred me to section 37?


Norman Alexander McLarty: Yes.


Alan Webster Neill: I want to try to connect the two. Section 27 states in a casual sort of way that the special returning officer shall endeavour to get in touch with them. It does not seem definite. This is how it reads:
The special returning officer shall endeavour to secure the cooperation of the commanding officer of such unit.
That is where it is reported to the special returning officer that there are war service electors attached to a unit not distinctly Canadian. It does not suggest any more than mere activity on his part. It says: "If it is reported to him." Who is to do the reporting? The minister refers me to section 37, which states:
Every person on active service in any of His Majesty's United Kingdom forces, who enlisted m such forces . . . who is a British subject . . . shall be qualified to vote . . . and may cast his vote . . .
If this suffices, of what use is section 27? If section 27 is the governing one it is not definite enough.


Norman Alexander McLarty: There is a difference. Section 27 refers to war service electors as defined by the regulations. Section 37 refers only to active service voters.


Alan Webster Neill: Does "war service electors" mean active service?


Norman Alexander McLarty: Not necessarily. If you read section 5 you will see what constitutes a war service elector. It is much broader than those on active service.


Mr. BLACK (Cumberland):: How will it work in actual practice? Take the case of R.C.A.F. personnel serving in R.A.F. units in Wick, Caithness, Scotland. My information is that there are not more than three or four Canadians in the unit. In actual practice how would these three or four R.C.A.F. personnel be able to cast their vote?


Norman Alexander McLarty: It must be assumed that that would be the duty of the special returning officer at London. They are presumably

Dominion Elections Act
supplied with the names of everyone enlisted in the forces in the R.A.F. and the locations in which they are established. It is the duty of the special returning officer to make some provision whereby the vote may be cast. Just what procedure he will follow will have to be left to his own ingenuity, I am afraid. But we have gone as far as we can in the regulations in seeing that the right to vote is there. It is up to the returning officer to see that the voter is given an opportunity of exercising that right.


Percy Chapman Black: How Would the returning officer get information that there are Canadians located for the time being in this special place serving in association with the R.A.F.?


Norman Alexander McLarty: He would get it from the R.A.F. itself.


[Stage Direction]
Section agreed to.
Sections 28 to 34 agreed to.
On section 35-War service elector voting as civilian.
Section stands.
On section 36-Voting by merchant seamen.
Gordon Graydon: It has been drawn to my attention by the hon. member for Kootenay West that a large number of Canadian nurses are in the forces in South Africa. I am personally interested because one of the personnel there comes from my own town and a neighbouring family. I think she is stationed at Pietermaritzburg in South Africa. I take it that some provision will be made for recording the vote of the nurses there. I certainly would be very much interested in having this particular young lady's vote recorded in the next election.


Norman Alexander McLarty: There will be a great deal of work to be done after this bill is passed and becomes an act. Since the leader of the opposition has called attention to the fact that nurses are in South Africa, and he is particularly interested, I know the chief electoral officer will endeavour to see that provision is made so that they will be able to vote.


[Stage Direction]
Section agreed to.
Section 37 agreed to.
On section 38-Elector must vote only once.
Grote Stirling: It occurs to me that at this time there are civilians, perhaps professional men, carrying on what might be called semi-war duties in various parts of the world. There are members of the press, and if one
exercised one's ingenuity one could think of a great many such people who are not war service electors. Will they be able to vote?


Norman Alexander McLarty: War correspondents are entitled to vote. I do not think it is quite as broad as perhaps the hon. member for Yale suggests. If the hon. member refers to paragraph (f) of subsection 1 of section 5, he will see that the following appears:
Persons attached to overseas forces.
Though not mentioned in the foregoing clauses, is subject to naval, military, or air force law, as the case may ibe, by reason of his or her being attached to or accompanying, outside of Canada, any of the naval, military, or air forces of Canada on active service.
That would hardly be as broad as what the hon. member for Yale suggested. He suggested a person in some country doing important official work for the government, although he is not connected with the services.
I am afraid if you broadened it to include such individuals then you might as well say whoever wants to vote may vote as long as they are Canadian citizens. I think it must be borne in mind that the committee wished to be very broad in its interpretation. I think it has been and to extend it would be extremely dangerous.


[Stage Direction]
Section agreed to.
Sections 39 to 57 inclusive agreed to.
On section 58-Procedure; penalty for offence.
Gordon Graydon: Are these penalties perfectly in order, having in mind the military discipline to which a service man is normally subject?


Norman Alexander McLarty: Yes; I understand that no exception has been taken by the military authorities. These provisions were in the 1940 regulations as well as the regulations governing the plebiscite. Perhaps that is not the most satisfactory answer in the world, but no exception having been taken, I imagine we can assume that they are not very objectionable.


Gordon Graydon: That is a better answer than none but perhaps not as good as some.


[Stage Direction]
Section agreed to.
Section 59 agreed to.
On section 60-Procedure on death of candidate.
John Ritchie MacNicol: This may be the clause the minister had in mind in reference to a by-election. If a candidate died between nomination day and election day, the election would not take place as far as that con-
Dominion Elections Act

stituency was concerned; there would be a by-election, in which the soldiers would not vote.
Mr. MeLARTY: I do not quite follow the point the hon. gentleman is making.


John Ritchie MacNicol: This bill applies only to a general election. If a candidate died during the campaign there would be no election as far as that seat was concerned. Then when the by-election would be held afterwards the bill would not apply.
Mr. MeLARTY: That is right.


[Stage Direction]
Section agreed to.
Sections 61 to 64 inclusive agreed to.
Joseph-Arthur Bradette: Now follow ten forms, which may form part of the schedule, but I do not think they should be called.
Schedule A stands.
On schedule B.
Sections 1 to 14 agreed to.
On section 15-Offences and penalties.


Gordon Graydon: Before we leave this entirely I just want to make sure that I understand the situation with regard to votes of prisoners of war. From reading the regulations I take it that no instructions came from a prisoner of war to enable the next of kin to vote. In this respect, therefore, it is different from the procedure followed in the Ontario election, in which the next of kin or the person designated who cast the vote had to have something official by way of proxy from the man concerned. I take it that under our procedure, whether or not a prisoner of war wants to vote, his next of kin may exercise the franchise for him if they so desire, without any direction or instruction on his part as to whether or not he desires his ballot to be cast.
I raise no objection to that; I merely point out what appears to be the dissimilarity between these regulations and those which were promulgated in connection with the Ontario election. As the minister knows, that experiment in the province was rather an unhappy one, and I am glad no suggestion has been made during the discussion of this bill that proxy voting, as it was carried on in Ontario, should be repeated during the federal election as far as our active service voters are concerned.
I hardly see how the regulations could be drawn differently, because of security matters and so on which might be involved if prisoners of war were asked to take some part in an election in a democratic state. I presume that point had some bearing and was a factor in the 
decision reached by the committee in regard to this point. I do not rise to complain, but only to point out the difference.


William Gilbert Weir: I should like to ask one question about the next of kin voting. Supposing a soldier goes overseas and marries, and is then made a prisoner of war. Who is then his next of kin, as far as this vote is concerned?
Mr. MeLARTY: The wife is the next of kin:


William Gilbert Weir: But she is in England.
Mr. MeLARTY: It is the one appearing as next of kin on the records at headquarters.


John Ewen Sinclair: And a resident of Canada.
Mr. MeLARTY: And who is a qualified elector in the-constituency in which the proxy wishes to vote.


[Stage Direction]
Section agreed to.
Schedule B agreed to.
On schedule A.
On section 35-War service elector voting as civilian.
Mr. MeLARTY: We have covered everything except this section. I have been giving the matter some little consideration, at least as much as could be given while dealing with the other sections. I realize that, as the leader of the opposition points out, there may be some cases-I should say they would be isolated cases-which will not be covered by the provisions concerning voting as a civil elector and the wide provisions covering voting as a service elector which, as the hon. member for Vancouver North pointed out, allow twelve days. It may be impossible to have polling booths as conveniently located for service electors as for civilian voters. On the other hand I must urge, as has been pointed out by the hon. member for Yale, that hard cases make bad law. If one tries to cover too many exceptional cases he might stretch the bill to an unreasonable length.
I suggest to the hon. member that the number of exceptions there will be, in the instance to which he has directed attention, are not numerous. On the other hand, in considering just how to give effect to those few odd cases, I must say frankly that unless we are prepared to enlarge greatly the number of polling subdivisions for war service electors, I do not see that there is any possibility of doing it. Consequently I feel that unless my hon. friend insists, not seeing any way out of the difficulty, and believing that the difficulty will be met with only in most

exceptional cases, we might proceed. I am wondering if it is of sufficient importance to hold up the committee.
Gordon Graydon: Perhaps we can dispose
of it readily. I take it that the minister has indicated the government's position. If the government desires to take the responsibility -as it must, in the end, in any event-and feels that the section must go through as it is, then I can only say that I can accept no responsibility whatsoever for agreeing to a section of this kind. I must confess that I think we should have taken much more time. The bill was presented only this afternoon, and I think we ought to have had some time to consider the matter raised. So far the bill has passed with very little discussion, the reason being that the Votes and Proceedings have carried the general provisions.
I say that the minister and the government are asking far too much when they ask the opposition to give consent, without further consideration. If the government decides to take that stand, and accept that responsibility, then it may do so. But it certainly is carried over the most vehement and vigorous protest, so far as I am concerned.


Norman Alexander McLarty: I am quite agreeable to allowing the section to stand.
Section stands.
Schedule A stands.
Progress reported.



NAVAL SERVICE ACT


[Stage Direction]
The house resumed from Thursday, June 8, consideration in committee of bill No. 112, respecting the naval service of Canada-Mr. Macdonald (Kingston City)-Mr. Bradette in the chair.
Sections 9 to 15 inclusive agreed to.
On section 16-Organization.
Grote Stirling: Would the minister explain the reference on the explanatory page to the "Royal Canadian Fleet Reserve". I never heard of it.
Hon. ANGUS L. MACDONALD (Minister of National Defence for Naval Services): In point of actual fact, Mr. Chairman, the fleet reserve has no personnel. There is an organization on paper, and regulations are drawn for a fleet reserve; no such reserve, however, has been organized. When organized it would
Naval Service Act
consist of men who have served in the Royal Canadian Navy for at least seven years, but who have then left it.


Grote Stirling: As apart from the Royal Canadian Naval Reserve.


Mr. MACDONALD (Kingston City):: That is right.


[Stage Direction]
Section agreed to.
Section 17 agreed to.
On section 18-Naval service may be at disposal of His Majesty in emergency.
John Ritchie MacNicol: It is my understanding that in the event of an emergency, where the Canadian naval force would be called into action, there would be nothing in that force which would compare with what is known as the zombie army. Everyone in the navy is subject to active service.


Angus Lewis Macdonald: That is the way it is to-day, yes. The navy is composed entirely of volunteers, who are all on active service.


[Stage Direction]
Section agreed to.
Sections 19 and 20 agreed to.
On section 21-Naval volunteer reserve.
Grote Stirling: It would seem that sections 21 and 23 repeat section 16. Is that necessary?


Angus Lewis Macdonald: Section 16 is for the naval reserve, and these sections, to which the hon. member has referred, refer to the naval volunteer reserve.


Grote Stirling: And it is necessary that it
be repeated.


Angus Lewis Macdonald: They are different, yes.


[Stage Direction]
Section agreed to.
Sections 22 and 23 agreed to.
On section 24-Naval college to be established.
Grote Stirling: The Royal Canadian
Naval college is, of course, the one at Royal Roads?


Angus Lewis Macdonald: Yes.


Grote Stirling: Is that the only one that can be designated as a naval college? I am thinking of King's, near Halifax, and certain other establishments which train officers and ratings for specialized services. Do they not come under the head of colleges?
Naval Service Act


Angus Lewis Macdonald: No; I think not. King's, as a college, was not a naval college.


Grote Stirling: Does the minister say it is a college?


Angus Lewis Macdonald: As a college, King's was not a naval college. It was an institution under the control of the Church of England. But when it passed over to the navy we simply called it His Majesty's Canadian Ship King's, without using the word "college." The name Royal Canadian Naval college is properly applicable only to the institution at Royal Roads.


[Stage Direction]
Section agreed to.
Sections 25 and 26 agreed to.
On section 27-Requirements for admission.
Grote Stirling: Why is it necessary to speak of the engineering branch as separate from the military? Do I take it that the term "military" includes all the specialized branches in the navy and for some reason or another the engineering branch is kept separate?


Angus Lewis Macdonald: That was the old wording of the section. If we were rewriting it we would probably use the words "executive and engineering branches," but we wanted to change the old section as little as possible.


Grote Stirling: I do not quite follow why signals, navigation, gunnery, torpedoes and so on are left out and the engineering branch is mentioned particularly.


Angus Lewis Macdonald: In the navy to-day we have the executive branch and also the engineering branch. The executive branch includes all those branches to which the hon. member has referred. I think if we were drawing the section anew we would use the word "executive", but thirty-four years ago the word "military" was used. I think it is well understood in the service that it means the executive branch as distinct from the engineering.


Grote Stirling: Wre are amending the Naval Service Act, so why retain the word "military" when another would be better?


Angus Lewis Macdonald: I see no objection to simply saying:
The age of candidates on admission to the Royal Canadian Naval College shall be as prescribed by the governor in council.
We would not designate any particular branch.


Grote Stirling: I do not see why it is desirable to retain the word "military" simply because it was in the act thirty-four years ago.


Angus Lewis Macdonald: Let us change it then. The words to be taken out would be "for the military and engineering branches of the naval service" and the words to be substituted therefore would be "to the Royal Canadian Naval College". The section would then read:
The age of candidates on admission to the Royal Canadian Naval College shall be as prescribed by the governor in council.


Mr. MACKENZIE (Vancouver Centre):: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 28 agreed to.
On section 29-Target practice.
Mr. ISNOR:: Can the minister give us any assurance with regard to compensation for damage to equipment? I have in mind the damage which has been caused to fishing equipment along the Atlantic coast. Thousands of dollars of damage have been done, particularly during the past few months. This has been on account of the patrol work carried on by the navy, but as far as I know no provision has been made to pay for this damage.


Angus Lewis Macdonald: I doubt if there is any provision in this bill dealing with the matter to which my hon. friend refers. I know the department has paid many claims for damage to nets along the coasts of Canada and I assume the practice will be continued. When we have had proof that a man's net has been damaged by one of our ships, some compensation has been made, but that matter is not specifically covered in the bill.


[Stage Direction]
Section agreed to.
Sections 30 to 41 inclusive agreed to.
On section 42-Officer or man serving in another navy.
John Ritchie MacNicol: I do not quite understand this subsection which reads:
Where any officer or man belonging to the naval forces is borne on the books of a ship or establishment of another navy, he shall for all purposes of command and discipline be subject to the laws, regulations and customs applicable to that ship or establishment.
How can a man be serving in two navies?


Angus Lewis Macdonald: A member of the Canadian navy might be in a

Naval Service Act
British ship or establishment on loan to the British navy, in which case he would be subject to the laws of that ship or establishment.


[Stage Direction]
Section agreed to.
Sections 43, 44 and 45 agreed to.
On section 46-Court-martial witnesses.
Grote Stirling: I do not quite see the necessity for subsection 2.


Angus Lewis Macdonald: I think that is not an unusual provision. It is to ensure that witnesses will attend and that the court martial may proceed.


[Stage Direction]
Section agreed to.
On section 47-Persons subject to this part.
Grote Stirling: In paragraph (c) certain portions of the commonwealth are mentioned, but India is omitted and so is Southern Rhodesia. India had a Royal Indian Marine.
I am not sure whether it is still retained as a separate force.


Angus Lewis Macdonald: It is.


Grote Stirling: Then should it not be included? Southern Rhodesia is a dominion, although so far as I am aware it carries no naval service. Kenya does, but it would come in under His Majesty's forces of the United Kingdom, I presume, but not India. Why should India not be included?


Angus Lewis Macdonald: The origin of this part of the section is to be found in the Visiting Forces Act passed here in 1933 and in other parts of the commonwealth at the same time. The places mentioned in that act are the very same places that are mentioned here: the United Kingdom, Australia, New Zealand, South Africa, the Irish Free State and Newfoundland. That is why they are the Only ones mentioned in this bill.


Gordon Graydon: Has the neutrality of the Irish Free State no effect upon this section?


Angus Lewis Macdonald: They are members of the commonwealth. If they have a navy-


Gordon Graydon: Have they?


Angus Lewis Macdonald: If a member of their navy should be attached to our Canadian naval forces, certain consequences would follow. So with the Royal Australian Navy. That is all that that means.


Grote Stirling: Cadets of the Royal Indian Marine join our cadets and the cadets of Australia and of the other dominions in a training cruiser. I do not understand why India should be omitted.


Angus Lewis Macdonald: The discipline of commonwealth troops attached to a force of another part of the commonwealth is settled by the Visiting Forces Act, and I would assume-I am not sure that this is exactly so-that India is not a partner to the Visiting Forces Act for some reason or another. Therefore we make no provision for her in this subclause.


[Stage Direction]
Section agreed to.
Sections 48 to 73 inclusive agreed to.
On section 74-Suffering ships or aircraft to be improperly lost.
Gordon Graydon: As one goes over these consequential penalties it seems- to me that the boys of our Canadian navy would not be guilty of many infractions of this kind, although I can well understand that the minister has to have them in.


John Ritchie MacNicol: On the right hand page I see this note, "Corresponds to section 28"- "Corresponds to section 29"-"Corresponds to section 30"-and so on. What does that mean? To what act does it refer?


Angus Lewis Macdonald: That refers to sections of the British Naval Discipline Act which are in effect in this country. They are made applicable in Canada because a certain section of our act says that they are to be applicable. We propose, as I stated last night, to put them in our own act, which makes for a more compact arrangement.


John Ritchie MacNicol: Our new bill is largely the British Act made applicable tq the Royal Canadian Navy?


Gordon Graydon: It is a change from
indirect application to direct application?


Angus Lewis Macdonald: Yes.


[Stage Direction]
Section agreed to.
Sections 75 to 80 inclusive agreed to.
On section 81-Endeavouring to stir up any disturbance on account of unwholesomeness of the victuals or other just grounds.
Gordon Graydon: I hope the penalty would not be too great for that kind of infraction!


[Stage Direction]
Section agreed to.
Sections 82 to 85 inclusive agreed to.
Naval Service Act
[Stage Direction]
On section 86-Breaking bulk on board prize ship with a view to embezzlement.
Grote Stirling: Does prize money still exist in the navy? Have some of our officers and ratings been benefiting by some of the captures that have been made?


Angus Lewis Macdonald: I
have heard some doubt as to whether there is to be a distribution at the end of the war. I do not know just why the question has arisen. The fund would not be distributed in any event until the end of the war. It is all pooled. I do not know why the doubt has arisen but I have heard it expressed. In the last war there was a prize fund in which Canadian sailors participated.
Sections 87 to 89 inclusive agreed to.
On section 90-Jurisdiction as to place
where alleged offence committed..


Ian Alistair Mackenzie: I move that subsection 1 be amended in the second line by inserting between the word "inclusive" and the word "of" the words "and section 96".


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 91 to 103 inclusive agreed to.
On section 104-LConstitution of courts martial.
Grote Stirling: I have read this section with a good deal of interest and I see that certain regulations, certain methods, and certain points in connection with courts martial are laid down here, but a great deal is omitted with regard to the conduct of courts martial, and I must presume, therefore, that they come under the regulations. But could the minister assure me that there is at some stage provision for the charge to be handed to the accused or stated in court or given him in such a way that he can prepare his defence? A good many years ago there was a rather famous court martial in which a sailor of admiral rank was court-martialled and the charge never made-


Angus Lewis Macdonald: Never read?


Grote Stirling: It was never furnished him. In the course of the court martial it was quite obvious what the charge was, but it created a good deal of attention and indeed is quoted all these years after.


Angus Lewis Macdonald: As set out in section. 109, the officer is allowed

to object to any member of the court and he may raise any other objection regarding the constitution of the court. That is a vital provision for the accused. There is a provision in the lung's Regulations and Admiralty Instructions that he must be given a copy of the charge twenty-fours in advance.


Grote Stirling: That is it.


Angus Lewis Macdonald: That will be incorporated in our regulations.


Grote Stirling: And also provision for the prisoner consulting his friends?


Angus Lewis Macdonald: Yes. There is provision now that the accused person shall have full opportunity of preparing his defence, free communication with his witnesses and with any adviser whom he may wish to consult, and he may also have with him any person whom he wishes to conduct his case, a legal officer or adviser.


John Horne Blackmore: What would happen if a court martial were proved to have been conducted without regard to one or more of these provisions? Suppose a man had been declared guilty though any of these provisions had been disregarded. What recourse would he have?


Angus Lewis Macdonald: The finding of the court martial, of course, would have to be approved by the minister. It must be reviewed by the judge advocate of the fleet, and any irregularities of that kind, I should assume, would be detected by one or other of these persons. As a matter of fact, I have had to quash some proceedings in the last three or four years.


John Horne Blackmore: Suppose a court
martial's finding got past all these officials and still was allowed, notwithstanding that it was deficient in respect of two or three of these provisions. What recourse would the victim have?


Angus Lewis Macdonald: Of course, if the error were of the kind my hon. friend states the accused would have the right to appeal to the civil courts, if he failed to get justice anywhere along the line in the naval service.


John Horne Blackmore: Would the same apply to other branches of the service?


Angus Lewis Macdonald: Oh, yes.


John Horne Blackmore: What would be the nature of the case which the accused would bring to the court? Would he sue someone for damages?

Naval Service Act


Angus Lewis Macdonald: There are several remedies open. One would be the ancient and well known remedy of habeas corpus. He would demand that cause be shown why he should be punished. There are certain other remedies. There is the writ of mandamus which might issue in certain cases, and the proceeding known as certiorari, where the whole matter is brought up, might also be available. There are several opportunities.


[Stage Direction]
Section agreed to.
Sections 105 to 123 inclusive agreed to.
On section 124-Coming into force.
Gordon Graydon: Before the last clause carries and in order that I shall not be deprived of an opportunity of asking a question that did not seem to present itself while the sections were being read, may I say to the minister that there does not seem to be anything in the bill with respect to the naval board. Is there a section or paragraph that actually covers the naval board?


Angus Lewis Macdonald: No; that has not been put in the bill. There is at the present time an order in council establishing the naval board, and it is proposed to put that in the regulations. It is more or less a matter of internal administration in the department which, perhaps, at some future time may be changed. Some other minister might prefer some other title for his advisers; consequently it was not thought right to incorporate that in a statute. It will be in the regulations.


Gordon Graydon: I understand that there has been acquiesence on the part of the government with the criticisms which were made last year by Commander MacLean with respect to the suggestion of the inclusion of two extra members from the Royal Canadian Naval Volunteer Reserve on the naval board. Could the minister advise us whether or not there was an addition to the board, and, if so, were naval volunteer reserve men appointed?


Angus Lewis Macdonald: In the first place I would not say that it was 'because of Commander MacLean's protestations or statements that the change was made. I think the hon. member for Lake Centre, my hon. friend's colleague, made a well reasoned plea on that point at one time in the house when my estimates were up, which impressed me considerably. But apart from that, the naval reserve and the naval volunteer reserve have now grown to such proportions that it was felt we should give them fuller representation on the board, and that
was done by means of an amendment to the original order in council establishing the board.


Gordon Graydon: I was not trying to assess the position in which the minister found himself as regards the representations which were made. I was merely inquiring, because I have just read in the magazine edited by Commander MacLean of a suggestion of that kind.
In conclusion, may I say that a very interests ing situation may have escaped the notice of the members of the committee to-night. While we were discussing the Naval Services Act the navy was represented by the minister who was sponsoring the bill. One of the chief critics on our side of the house was the former Minister of National Defence, and the acting chairman of the committee was no less than a flight lieutenant of the Royal Canadian Air Force (Mr. Sinclair); therefore, the three services were represented on this particular occasion. I thought the committee might like to have that drawn to its attention at this time.


John Ritchie MacNicol: Before the last section
passes, may I ask a question with reference to section 115? I realize that the section has already passed. According to this section the minister may order a penalty remitted or suspended. I presume that would be a sentence passed by the judge advocate, or whatever is the proper name. Would the minister have the power to override a judge's decision?


Angus Lewis Macdonald: The minister always has power to reduce a sentence, yes.


Stanley Howard Knowles: May I ask a question
about another section that has been passed?
Should there not be a qualifying phrase in section 2 (b) similar to that found in paragraphs (c) and (g)? My point in asking that question will be obvious. Provision is made in paragraphs (c) and (g) for the occasion when under the Department of National Defence Act there is a minister and deputy minister of national defence for naval services. I wonder whether paragraph (b) should not have a similar qualifying phrase, so that the department under that same circumstance would mean, not the Department of National Defence but the Department of National Defence for Naval Services?


Angus Lewis Macdonald: The hon. member raises an interesting point; but I am advised, and I think my advice is correct that the draftsmanship is right. By looking at the National Defence Act itself and the amending act of July 12, 1940, I conclude that the paragraph is in proper form.
370S
Naval Service Act

Strictly speaking, there is only one Department of National Defence. My colleague, the Minister for Air and I are merely named as ministers of national defence for air and national defence for naval services. No special department is named. Consequently I think it is better that we should be correct and have the word "department" defined as it is now, to mean only the Department of National Defence. It is a good point; I am glad my hon. friend raised it, but on reflection I think the paragraph is correctly worded.


Stanley Howard Knowles: I just wanted to be sure it was not an error.


Percy Chapman Black: Mr. Chairman, the leader of the opposition has made reference to you, with your very distinguished service in the air, taking part in the passing of this naval bill, and also to my colleague the hon. member for Yale, a former Minister of National Defence. I should like to complete this record of distinguished personages who have played a part in drawing up and dealing with this bill by mentioning my fellow townsman, Commander Horace Read, R.C.N.V.R., of Amherst, Nova Scotia, who has had a distinguished career in the legal profession; who was a professor at Dalhousie college and who, because of his high qualifications, was secured to head the department of legislation in the law school at the university of Minnesota. He returned to Canada in order to contribute his services to- the naval department, and I believe was largely responsible for the drafting of this bill as well as other very important work. He also had a distinguished career in the last war, first enlisting in (he 219th battalion and later transferring to the air force. Those were early, pioneering days in the air, as compared with the period through which we are now passing.
I might also mention, as among the distinguished personages to take part in our
proceedings to-night, my fellow townsman the Minister of National Defence. As we all know, he distinguished himself in the last war. Now he is carrying a very great burden in administering the Department of National Defence during this struggle and has assumed the additional responsibility of leading this house during the absence of the Prime Minister in Great Britain and, at times, since his return. It gives me very great gratification, Mr. Chairman, to make these additions to the record of which you were reminded by the leader of the opposition.


Stanley Howard Knowles: I do not know whether or not I am in order, but I should like to draw 
attention to the presence in the gallery of a naval rating. I do not know who he is, but he has been here throughout the discussion.


[Stage Direction]
Section agreed to.
Title agreed to.
Bill reported, read the third time and passed.
It being ten minutes after eleven o'clock the house adjourned without question put, pursuant to standing order.
Monday, June 12, 1944