1944-05-02

Mr. A. W. ROEBUCK (Trinity):: I wish to present a petition signed by approximately two thousand citizens of Trinity riding, in the city of Toronto, asking for an increased clothing allowance for discharged members of the armed forces.



REPORTS OF COMMITTEES


[Stage Direction]
Hon. ERNEST BERTRAND (Minister of Fisheries) presented the first report of the special committee on the defence of Canada regulations, and moved that the report be concurred in.
Motion agreed to.

[Stage Direction]
First report of the standing committee on standing orders.-Mr. Golding.

[Stage Direction]
Hon. L. S. ST. LAURENT (Minister of Justice): I table three copies in English and
three copies in French of report on food consumption levels in Canada, the United Kingdom and the United States, prepared by a special joint committee set up by the combined food boards.


[Stage Direction]
Mr. A. D. LEGER (Kent, N.B.) moved for leave to introduce bill No. 89, to incorporate Fundy Air Lines.
Mr. HANSON (York-Sunbury):: Explain.


Mr. LEGER:: This bill will permit a group of men to form a company called the Fundy Air Lines, giving them permission to apply to operate air lines in the maritimes.
Motion agreed to and bill read the first time.



WORKERS BENEVOLENT ASSOCIATION OF CANADA

[Stage Direction]
Mr. RALPH MAYBANK (Winnipeg South Centre) moved for leave to introduce bill No. 90, to incorporate Workers Benevolent Association of Canada.
Richard Burpee Hanson: Explain.


Mr. MAYBANK:: This is a bill to incorporate a company that has been carrying on benevolent insurance or something of that sort in the province of Manitoba and in some other provinces. It finds it necessary to be incorporated under dominion rather than provincial laws. There is little more than that in the bill.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE


[Stage Direction]
On the order:
Second reading of bill No. 91, an act respecting banks and banking.-The Minister of Finance.
Richard Burpee Hanson: Before the Minister of Finance moves this order, I desire to point out to him that he has no right to do so. The bill is not printed in French. Furthermore, may I point out to the minister that although I made diligent inquiry from every available source I could not obtain a copy of the bill until ten minutes past two to-day. I do not understand the extreme urgency of moving this bill to-day, when members have just seen the outside of it. However, I am going to surprise the minister by saying that I do not intend to take advantage of the position which is open to me, and if he still, under the circumstances, thinks he must or
Bank Act

should go on, notwithstanding the very-courteous request I made to him yesterday, I shall not object.


Mr. ILSLEY:: I moved the first reading of the bill yesterday, and the procedure is that, after first reading is moved, the officers of the house take steps to have the necessary number of copies printed and distributed. Last evening I was able to get a few copies unbound which I sent to the leaders of the three parties in this house. I understand that the bill was not printed for distribution until this afternoon, and now it is distributed.


Richard Burpee Hanson: It is not printed in French, and the rule is explicit.


James Lorimer Ilsley: The usual procedure has been followed.


Richard Burpee Hanson: It should not be proceeded with if it is not printed in both languages.


James Lorimer Ilsley: I was not aware that the
bill was not printed in French.


Richard Burpee Hanson: I took
pains to ascertain that.


James Lorimer Ilsley: The bill is a very bulky one. With regard to the point of courtesy, I thought that perhaps the privilege might have been accorded me of moving the second reading at the time the first reading was moved, but the hon. gentleman himself-


Richard Burpee Hanson: Why so?


James Lorimer Ilsley: -would not consent to that.


Richard Burpee Hanson: On a bill
as important as this?


James Lorimer Ilsley: For the reasons stated yesterday, I think I should go on with the second reading of the bill.


Mr. COLDWELL:: May I ask the minister a question? If second reading is moved today will discussion follow the second reading, or shall we have time to study the bill until Monday or Tuesday?


James Lorimer Ilsley: I propose to move the adjournment of the debate at the end of my speech.


Richard Burpee Hanson: Yourself?


James Lorimer Ilsley: Yes.


Major James William Coldwell: Until Monday?


James Lorimer Ilsley: That is a matter for arrangement. I thought that Thursday had been decided upon.


Major James William Coldwell: The point is, as the
hon. member for York-Sunbury (Mr. Hanson) says, that this is an important bill. Some

of us are on the war expenditures committee and some on the broadcasting committee sitting to-morrow, while others are leaving the city to-morrow, so that it will be impossible for us to study the bill before the discussion comes on on Thursday, if it is to be discussed on Thursday. Personally, and I believe a large number of other hon. members feel the same way, I should like to see the discussion held over until Monday or Tuesday.


Richard Burpee Hanson: I have a suggestion to make which will perhaps clear up the position. The minister might move second reading to-day and make his statement and then give an undertaking that there will be ample time for us to study the bill and his statement as well. I think that is a fair proposal and ought to meet with the approval of all concerned.


Mr. RALSTON:: I have been discussing this matter with the leader of the opposition and with the leaders of the other two groups in the house ever since Friday. I have intimated how important we thought it was to get the bill to the committee. May I say to you. Mr. Speaker, and to the house, that if I had my way, having regard to the importance which I attach to the war appropriation resolution, I would not allow anything to interfere with it. But it seems to me that we must take account of the fact that the banking and commerce committee is sitting and will have a great deal of work to do in connection with this bill. I suggest therefore that in order to expedite public business and keep everything moving along, we ought to get the bill to the committee as soon as possible.


Richard Burpee Hanson: That ought to have been done weeks ago.


James Layton Ralston: The suggestion was made that the minister should move the first and second reading on Friday. After discussion that did not seem possible, and then the suggestion was made for Monday, but it was felt that unanimous consent would not be given, and so it has come on on Tuesday. I intimated last night that all we hoped to do to-day was to go on with the second reading of the bill and then proceed on Thursday. I indicated also that I had spoken to the leader of the opposition and to the leaders of the other two groups and that they had been good enough to inform me of the number of speakers who they thought would probably be interested in taking part in the debate. With that in mind I hoped that it would be possible to end the discussion of the bill on Thursday so as to get it to the committee. I had in mind the fact that in 1934 we were

Bank Act-Mr. Ilsley
not more than one afternoon, or at any rate one sitting, in dealing with the bill in order to get it to the committee.


Richard Burpee Hanson: We had time to see that bill.


James Layton Ralston: I am not so sure about that.


Richard Burpee Hanson: I am.


James Layton Ralston: I happen to be one of those who took part in the debate. Hon. gentlemen will have an opportunity to see this bill between now and Thursday. I suggest to the house that if at all possible we ought to get on with the bill and get it to the committee. Hon. members will realize that when the bill comes back from the committee it will go to the committee of the whole and will then be dealt with clause by clause, so that there will be ample opportunity then for the house to discuss it. In 1934 the method adopted was that while we were agreeing to the second reading of the bill we reserved the right to make any objections or to move amendments as we thought proper, regardless of whether it was a matter of priiiciple or of detail that was involved. That preserves the rights of all hon. members of the house.
May I close by expressing the hope that the house will cooperate in this respect with the idea which we had in mind of getting on on Thursday. I say to the hon. member for York-Sunbury (Mr. Hanson) that I shall consult with the Minister of Finance and with my other colleagues to see if any other procedure is desirable, proper or advisable in the circumstances. But I do wish the house would be prepared to take up the bill on Thursday in the hope we may finish with it very shortly and get it to the standing committee.


Richard Burpee Hanson: I made a very reasonable suggestion. The bill is not ready to go forward to-day because it has not been printed.


Mr. BLACKMORE:: In considering the
matter I think what the acting leader of the government has said is correct. I was of the opinion that it might be possible to carry on on Thursday, but since I have had an opportunity to look over the bill, and to give some thought to the intricacies that may be involved, and since the Minister of Finance is about to make a statement on the bill, I believe it would be in the best interests of the country and most satisfactory to all concerned if we were to defer further discussion until Tuesday next. We have enough work to do with the war appropriation bill and other matters, so that we shall be just as far ahead
as if we proceeded with the debate on second reading on Thursday of this week. After taking into consideration all the matters involved in this question I think we are justified in asking the Minister of Finance to defer further consideration until Tuesday.


James Layton Ralston: Mr. Speaker, this is not a compromise, but I am afraid that the next member who speaks may ask for Wednesday and the next one may ask for another week; therefore, I am going to hurry and head that off now by saying that after the Minister of Finance moves the adjournment of the debate, second reading of the bill will be proceeded with on Monday next.


Richard Burpee Hanson: That is fair enough.


Mr. SPEAKER:: The position is that all objections to the motion for second reading of the bill to-day have been withdrawn?


Richard Burpee Hanson: Yes, with that undertaking.



BANK ACT AMENDMENT


[Stage Direction]
Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of Bill No. 91, respecting banks and banking.
He said: Mr. Speaker, it is not necessary for me to stress the importance of this bill to which the house is npw asked to give second reading. It is a bill which extends the charters of the ten commercial or so-called "chartered" banks for another ten years, specifies the types of business which these banks can carry on, and prescribes the regulations and the controls governing the conduct of their operations. These regulations and controls which are probably more comprehensive and in most respects more restrictive than are to be found in the banking laws of any other democratic country, are the product of six decennial revisions by the parliament of Canada of the first banking legislation of a general character passed in the Dominion of Canada, the Bank Act of 1871. That act in turn was the product of a rich background of a half-century's practical experience with, and legislative regulation of, a banking system which had been transplanted from Scotland and adapted to the special needs of the British colonies in North America.
The wisdom of this device of decennial revision of our banking legislation is, I think, obvious. It provides regular opportunities,
Bank Act-Mr. Ilsley
[Stage Direction]
at reasonable intervals, for a full-dress review of the efficiency with which the banks are serving the needs of the public and for making such amendments to the law as changing conditions seem to require. The sense of responsibility with which parliament has acted in these periodic inquests has been commented upon by foreign observers. Breckenridge, for instance, in his history of the Canadian banking system, was impressed with the natural growth or evolution of our banking system. In his concluding paragraph he had this to say:
One of the strongest contrasts which this whole record presents to such a history of banking as that of the United States, is in the continuity of the progress. There has been no recurring struggle to establish a great government bank, no epidemic of wild-cat banking, no rejection of one system for experiment with another. A certain continuity, without doubt, can be discovered in the history of any banking system. Men do not wholly break with the past or build on foundations entirely new. But down to the present day Canadians have always held to the plan on which were framed the statutes governing their first banks. Additions have been made, new safeguards against public loss introduced, limits restraining corporate activity have been narrowed in some parts and widened in others, a few arrangements for the advantage of the government have been attached, but never has there been a successful attempt to tear down the fair work of the first builders and out of the ruins construct anew. When defects have appeared in its structure, Canadians have not forthwith condemned the heritage of the past, and petulantly, illogically swept it away to make room for some new, untried affair, arranged on different lines; after study of the trouble they have endeavoured by some slight strengthening, some little alteration, to keep and enhance the certain benefits of what they already possessed.
In an earlier passage, he made this interesting comment:
In Canada, as in Scotland, the history of banking records singularly few frauds upon the currency, and, so far as their creditors were concerned, the losses inflicted by insolvent bankers have been remarkably slight. In order to reform the system, it never became necessary to maim it; in neither country has banking developed the abuses that,
diseases desperate grown By desperate appliance are reliev'd,
OB not at all.
The present revision comes at a significant and appropriate time. We look forward to a decade which will include at least a number of years of transition from a war to a peace economy, years of readjustment and reconstruction, and years in which we are determined that this young country shall make great strides to bigger and better things. That prospect, it is obvious, will require not only an efficient but a strong and flexible banking system. In 1944, also, we can look back,

with some perspective, to the period of the early thirties, a period of widespread distress and general frustration as a result of which the banking system, like other economic institutions and most political institutions, became the target of constant and sometimes bitter attack.
It was perhaps only natural that this should be the case. Human nature tends to over-simplify and one of the easiest oversimplifications is to blame a major depression on the lack of credit. Certainly it might seem to the manufacturer who had to close down his business, say, in 1932, that the cause of his failure was the refusal of his bank to give him unlimited credit, but there were thousands of bankers in the United States in that year who could have explained what would, and did, happen to the banks which left their credits outstanding. The banks, of course, were not blameless, either in respect of the policies they followed in the boom years of the late twenties, policies which involved the granting of too much rather than too little credit, nor in the policies they followed with the onset of depression when faced with the necessity of saving their own institutions they may have aggravated the deflationary process which the antecedent inflationary boom had made inevitable.
But there are two points which I wish to make in this connection.
In the first place it is a travesty of economic interpretation to place responsibility for the great depression upon the Canadian banking system. The world-wide character of the depression and of the fall in prices which accompanied it should be sufficient proof of the absurdity of such a contention. It would probably take a volume to give a clear and satisfying explanation of the causes of this depression, which was unprecedented in its severity, its coverage and its persistence. Its causes were not solely, perhaps not even primarily, financial or monetary, but economic and political as well. It had its roots in the maladjustments in the world economy produced by the first world war and particularly in the wholesale use of inflationary methods for financing that war by all or nearly all the belligerent countries. The consequences of that inflationary finance, in the form of distorted price levels, unbalanced economies, unstable currencies, political instability and resurgence of economic nationalism, posed for the world a series of economic and political problems of difficulty almost beyond the wit of man to solve. Certainly the statesmanship of the leading nations in the twenties showed neither the courage nor the imagination to solve them. On the contrary, many of the policies followed by a good many countries

Bank Act-Mr. Ilsley
ie.g., import and export restrictions, quotas, clearing agreements, etc). were such as to aggravate rather than to lessen the evils left by the war.
My second point is that in the twenties and the early thirties the Canadian banking system was subject to a clearly marked limitation which has since been remedied. I refer to the absence of a central bank.
During the period of rapid development of Canada as a nation, our banking system served this country extremely well. That is the universal verdict of foreign observers; it is, I think, the verdict of most Canadians. In this connection, I wish to quote a paragraph from the report of the royal commission on banking and currency in Canada, 1933. The paragraph reads as follows:
201. It has been manifest, from what we have previously written, and indeed from much of the information afforded us in the course of our hearings, that in so far as t'he ordinary functions of banking are concerned, the Canadian banks give admirable evidence of security, efficiency and convenience. In a time of universal economic difficulty, the Canadian banks have stood firm and have continued to render to the people of the dominion the same high quality and the same wide variety of services as in the past.
I wish to associate myself with that tribute to the Canadian banks. Ours has been a banking system of unusual strength; thanks to the protections surrounding the incorporation of banks, the provisions designed to safeguard the note issue, the prohibition of loans upon real estate, and the diversification of risk which is inherent in the branch banking system, the losses suffered by the creditors of Canadian banks, their note holders and depositors, have been extremely small. The importance of this factor of strength or safety should have been brought home to us in the early thirties by the contrast with conditions in the United States where thousands of banks failed, bringing untold loss and hardship to millions of bank depositors and aggravating greatly the severity of the depression. Another merit of our system has been its flexibility and the elasticity of the currency supply which it provided. These virtues were the result of the absence of rigid legal reserve provisions, the issue of notes on the basis for the most part of the general assets of. the bank, and the branch banking system' which facilitated1 the automatic flow of credit in accordance with the seasonal credit requirements of various industries and various sections of the country. Their importance was particularly great in a country such as Canada with its wide climatic variations, its emphasis on primary industries, and the very special problem of moving the western grain crop to market each fall and winter.
The only other merit of the Canadian banking system to which I wish to refer is the comprehensive network of banking facilities which it has provided for the convenience of the public. There may be certain areas to-day where we find public criticism of the closing of branches since the early thirties. This criticism in itself is confirmation of the extent to which our banking system at its peak bad brought banking services to nearly every hamlet throughout the country. Even to-day Canada is probably still better served with banking facilities than almost any other country. The branch system made it possible to give services to hundreds of communities which could not otherwise have supported a bank, and for many years it was the pride of our Canadian banks that they pioneered the new communities, going in ahead of the railway or indeed of any sizeable population.
These and other merits of our banking system deserve great praise. It will be noted, however, that they relate primarily to the working of individual banking institutions and to the strict or narrow function of commercial banking. In certain respects the system as a whole left something to be desired. Thus up to 1935 the volume of money and credit in circulation in Canada was regulated essentially merely by competition amongst the chartered banks in the granting of loans and the purchase of securities. The banks, however, were private, profit-making institutions and it was only natural that the automatic working of competitive, commercial forces should not always coincide perfectly with the broadest national interest. Fortunately our banks were usually staffed with able, prudent and far-sighted men, and normally their business judgment led them, to make decisions and adopt policies which were not only sound for their institutions but also in the national interest. There may be some confirmation for this statement in the reported fact that Canada leads seventeen countries in the number of years of prosperity per year of depression. In an elaborate analysis of business cycles in various countries, published by the National Bureau of Economic Research, New York, under the title "Business Annals", Professors Thorp and Mitchell found that for the period 1888-1924 Canada had had 1-86 years of prosperity for each year of depression, while the United States had enjoyed but 1-79 years and the average for the seventeen countries studied was but 1-14 years.
However, as our economy became more and more industrialized and more sensitive to the rhythm of business fluctuations in other countries, it became more and more obvious that we needed a more delicate adjustment of the volume of credit to' real public requirements.
Bank Act-Mr. Ilstey
[Stage Direction]
a more effective mechanism for endeavouring to counteract by credit control the normal tendency of business forces to alternate between boom and depression. In the late stages of a boom, as for instance in the late twenties, it was difficult for any individual banker or indeed for the group of commercial bankers as a whole to break away from the prevailing business and public psychology and ruthlessly apply the brakes against further expansion. Similarly when a boom collapsed, it was not always possible for the private banker, interested necessarily in the safety of his institution and the protection of his depositors, to follow an expansionist credit-granting policy which might have tended to retard the process of deflation. One can scarcely Dlame a group of competing banks for failing to discharge with 100 per cent perfection a function for which they were not assigned specific responsibility by public authority. The fault lay rather in the failure of public policy to provide an institution charged with responsibility for regulating the volume of money and credit solely in the public interest. Such a function could only be performed by a public body interested not in the making of profits but solely in the performance of a public duty.
It was the lack of such an entity which the Macmillan commission found as the one important defect of the Canadian banking system, as a result of their investigations during the summer of 1933. As they expressed it, they were impressed "by the absence in Canada of any single banking authority which while linked by its activities with national finance and commerce, is nevertheless detached by its constitution and the temper of its administration from the ordinary pursuits of commercial banking." In other words, they found no organization charged with responsibility for regulating the volume of credit and currency in the best interests of the economic life of the nation. On the basis of this finding, they recommended the establishment of a central bank in Canada. The following year parliament passed the necessary legislation and on March 11, 1935, the Bank of Canada commenced operations.
This development marked the beginning of a series of reforms, designed to improve our banking system and secure a rounding out and better integration of our financial structure as a whole, a series of reforms which we expect to carry much farther during the present session of parliament. One of these reforms related to the organization of the Bank of Canada itself. The House will remember that as the bank was originally organized, its stock

was held by private shareholders, although the bank was subject to strict control by the government. An important amendment to the act in 1938 eliminated the private shareholders and made the bank a government-owned as well as a government-controlled institution. Since that amendment, there can be no question that the control of currency and credit in this country is carried out by a public institution solely in the public interest. Concurrently with these developments and assisted greatly by the Bank of Canada, there has come a very much improved organization of the short-term money market in Canada; the issue of treasury bills at public tender at very low rates of interest and the active markets for short-term securities generally are reflections of this development. In 1939 an attempt was made to improve the organization of, and the practices in, the longterm mortgage market, and an act authorizing the setting up of a central mortgage bank was passed by parliament. Unfortunately the war intervened just as this bank was on the point of being set up and action to implement this legislation had to be deferred. In all probability parliament will find it necessary in the not distant future to reenact this legislation in a modified form in order to standardize and make more marketable mortgage credit instruments and thereby make possible more economical long-term credit. The banking and commerce committee has now before it a bill to authorize the establishment of an industrial development bank, which is designed to fill another gap in our financial structure- the provision on reasonable terms of fixed and working capital for small or new industrial enterprises whose needs are not met,^ or not fully met, by existing financial institutions. Finally, the speech from the throne has indicated that we intend to introduce a bill to authorize the insurance or guarantee ^ of export credits in order to assist in developing export markets for primary and secondary industries in the post-war period.
When we add to the measures which I have listed the significant proposals which we are making in the Bank Act amending bill and in the supplementary legislation to which I shall refer in a moment, the house will agree, I trust, that a very serious effort has been and is being made to build up in this country^ a well-rounded and highly integrated financial structure which, with the changes still to come, should be able to take care of all the sound credit needs of the Canadian public. The bill which is now before the house represents the results of a thorough and painstaking study of our existing Bank Act and of the

Bank Act-Mr. Ilsley
changes which should be made in it to enable our chartered banks to meet present day needs. I do not flatter myself that it will meet the views or satisfy the wishes of all groups and individual members in this house. It will not, of course, satisfy those whose doctrines lead them to advocate the nationalization of the banks as a step towards the overthrow of private enterprise, nor those who cannot withstand the temptation of making free credit available in a way which in my view would result in the debasement of our monetary system. The changes I am proposing are intended to improve our banking system and to ensure adequate credit at [DOT] reasonable rates for all sound and useful purposes. We are suggesting those improvements which can be achieved by legislative means, but in my opinion we should be foolhardy indeed to reorganize it completely along radical lines as a matter of political doctrine or tactics, or to tamper with its integrity and exploit it in accordance with the theories of the inflationist school.
Let me deal first with the demand of one of the parties in this house that the banks should be nationalized. In preparing to meet this argument, I tried to find out just what was the case for nationalization, or rather, what its advocates felt the case to be. As usual, I found a great many vague charges against existing institutions, a great deal of loose and irresponsible indictment, far too much appeal to popular prejudice and a great many rosy promises in regard to what might be expected to happen under a new dispensation, but very little analysis of what was regarded as wrong under the present system and very little in the way of concrete proposals-
Richard Burpee Hanson: Hear, hear.


Major James William Coldwell: That suits the reactionaries.


James Lorimer Ilsley: -indeed little more than a mere beckoning to the promised land with a minimum of specifications as to how to reach it and none as to how our lives would be ordered when we get there.
Trying to put the pieces together, I find that there are apparently four arguments or contentions used by its advocates to support the case for bank nationalization. They may be summarized as follows:
First, the argument that nationalization of banks is necessary in order to make possible the effective control of currency, credit and prices;
Secondly, the contention that nationalization of banks will result in greater economy and efficiency;
Thirdly, the claim that the banks are a monopoly or through the system of interlocking directorates constitute part of a "big business" monopoly; and
Finally, the argument that nationalization of the banks is necessary as the first step in bringing about the end of private enterprise and ushering in the socialist state.
Well, let us see, if we can, what there is in each of these contentions.
Take the first argument. It is, of course, essential that the state-that is the government, responsible to parliament and the people- should have control over the total volume of bank credit, in order that such credit may be regulated as a measure of economic policy in the general interest. But as I have taken pains to point out, we already have that control in the hands of the government, exercised through the Bank of Canada as its agent. This control over bank credit is effected by the Bank of Canada through its control over the cash reserves of the chartered banks. Because of the nature of their business and well-defined practices of long standing, it is necessary for the banks to limit their deposits to about ten times their cash reserves. That is to say, the banks find it necessary to keep about $1 in reserves in the form of Bank of Canada notes or deposits with the Bank of Canada for each $10 which they owe to their depositors. The law reenforced this established practice by prescribing that in no event shall a bank have cash reserves of less than 5 per cent of its deposit liabilities. In fact however, the practical necessity of the ten to one ratio has been so well established in practice that the legal obligation is of comparatively minor significance.
On the other hand, the need to earn interest in order to pay interest on its deposits, meet its other operating expenses and earn some profit on its capital, drives each bank to increase its loans or its investments to the point where its cash reserves come down to the ratio which prudence and well-established practice require. This spur of cost and self-interest therefore ensures that cash reserves do not significantly exceed ten per cent of a bank's deposits, and therefore that total deposits of all the banks closely approximate ten times the total amount of cash reserves which is held by all the banks. (It would of course be more accurate for me to speak of total demand liabilities or total note and deposit liabilities, but as bank notes are now such a small and decreasing portion of



Bank Act-Mr. Ilsley
their total liabilities, I am, for simplicity's sake, speaking as if bank deposits were the only form of bank credit.)
For the reasons mentioned, the Bank of Canada has effective control of the total volume of bank credit outstanding.' It exercises that control through its control over the cash reserves of the chartered banks. These reserves are made up of Bank of Canada notes and deposits with the Bank of Canada. They are watched closely and are expanded or contracted as the public interest may seem to require. The Bank of Canada can reduce them by selling some its large holdings of government securities. It gets paid for such securities by a cheque drawn on a chartered bank, which when presented for payment, results in a reduction in that bank's deposit with the Bank of Canada. Conversely, if the Bank of Canada wishes to expand bank reserves-in order to promote an expansion in bank deposits or bank credit-it can do so very easily by purchasing government securities on the open market. It pays for such securities by a cheque drawn upon itself which is deposited in a chartered bank by the person or business firm selling the security, and when the chartered bank presents the cheque to the Bank of Canada it gets an increase in its deposits with the Bank of Canada-or takes out Bank of Canada notes to hold in its reserves.
This process of control of bank reserves, find thereby of bank deposits and bank credit, is well known to many members of this house, but I felt it should be reviewed here to make clear beyond any doubt that already the government has effective control over the total volume of money and credit. We have the control we need for all the essential purposes of monetary policy. Moreover, we have it in an exceedingly simple form which enables us to exercise over-all control without interference in the granting of individual credits or the transfer of deposits or any of the other business transactions of an individual bank. Any one bank is free to compete for all the business it can get-because it can attract deposits and thereby cash reserves away from the other banks. It is free to exercise sound business judgment in the selection of its risks and the choice of its customers. Hence the credit control we exercise is a sensible form of national economic planning and direction in matters of broad policy, free from the dead hand of bureaucratic interference in private affairs. I only wish such simple and effective mechanisms of national control and stimulus were available in other equally important fields of economic activity.

It should now be clear that the need for public direction of monetary policy does not necessitate nor justify the socialization of all our banks. It requires only socialization of central banking-and that of course we have already achieved.
Now if there is no justification for nationalization in the first argument used by its advocates, is there any in the second, the possibility of greater efficiency and economy as a result of state operated banks? There are few, I think, who would seriously charge that our chartered banks are inefficient. The various departments and agencies under my direction have had a great deal of experience in dealing with the chartered banks-the Department of Finance with its enormous disbursements and receipts; the national war finance committee in the sale and handling of victory bonds; the foreign exchange control board in the carrying out of our external transactions, public and private; the wartime prices and trade board in the complicated business of ration coupon banking; as well as the Bank of Canada in its operations as a central bank, and the inspector general of banks in his intimate audit of all the banks. All this experience with chartered banks and knowledge of their detailed working confirms the general belief in the efficiency of the chartered banks in carrying out the normal functions of commercial banking. Certainly I think there would be few who would honestly contend that the banks would be operated more efficiently or more economically as one great department or agency of government. Like other large organizations they must have their own problems of bureaucracy, must face the same difficulties as we do in reconciling central control with local initiative. It is absurd to assert that these problems and these difficulties would be solved and greater efficiency and economy promoted by a far greater centralization under direct public or political control and with neither the lash of competition nor the spur of profit possibilities.
The third argument of the nationalization advocates rests on the charge of monopoly, the allegation that the banks themselves are a monopoly or form part of a larger group which' in some way or other constitutes a monopoly and exercises control over the industrial and financial institutions of Canada. I am sure that we shall hear the changes rung on this contention and that long lists of the company connections of various bank directors will be presented. The argument has a certain specious appeal. It is easy to make. It can be made in vague terms and embellished

Bank Act

Mr. Ilsley
with innuendo. It can be used to stir prejudice against mere bigness and successful achievement. But the only point which should interest a responsible member of this house is whether or not it is true.
No one, of course, will wish to deny that most bank directors are also on the boards of other financial or industrial corporations, in a number of cases on a good many other boards. I suppose the quality which above all others the banks desire in their directors is sound business judgment and it seems only natural therefore that they should seek their directors amongst men who have proven they possess that quality by the success they have achieved in other businesses. If the community's banking needs are to be efficiently served, we need men of large vision, constructive imagination, sound judgment and wide experience to assist in formulating the general policies which are to be applied by the senior executive officers of the banks. It would, I think, be very unfortunate if the day ever comes in this country when demonstrated success in one line of business, proven capacity for the direction of large affairs, should debar a man from bringing the benefit of his judgment, foresight and experience to the assistance of bank managements or the management of any other business or, I may add, to the direction of public affairs. Canada has great natural resources and will have adequate capital, but the speed of her future growth and development will depend as much as anything on the adequacy of her supply of managerial talent, of business leaders who possess the qualities which I have mentioned. As a nation we should encourage that kind of talent, not discourage it or decry its success.
Let no one mistake my position. I am not arguing for a widespread use of interlocking directorates but merely for a rational approach to this problem. I have no brief for the man who spreads himself thin over a long list of directorates, and I often wish that the banks and other business corporations would search more intently for suitable directorship material in other walks of life-such as in small business, agriculture and labour-and also that the banks would use to a greater extent the device of regional advisory committees in order to obtain the benefit of as many points of view as possible in working out their policies. These suggestions are merely personal, but I think their adoption would do a great deal to bring about a better public understanding of bank operations and policies and should remove even the appearance of any grounds for the charge that banks are run by a monopoly of big business men in the interest of big business. I suspect that bankers themselves will feel their own consciences clear in this respect
100-160i
and may not see the need of any such devices as I have suggested. They will resent, and rightly so, the insinuation that because they have directors from this and that corporation on their board they allow themselves to be dominated by them, particularly to the extent of restricting credit to the competitors of those corporations. That is a very serious imputation and I do not for a moment believe it has any foundation. No director is allowed to be present or vote at a particular meeting when loans or advances to himself or any firm or corporation in which he is a partner or a director are under consideration, and I am convinced that any director who attempted to prevent the bank from meeting the credit needs of a competitor would receive short shrift at the hands of his fellow directors. If there is any honourable member who honestly believes otherwise, he will have his chance in court. Let him cross-question the bankers when they come before the banking and commerce committee and he will find out how the banks really operate.
After all; there are two tests of whether the banks constitute a monopoly. The first is whether in fact the banks fail to compete with each other in the obtaining of deposit accounts and the granting of credits and thus tend to promote a restriction of credit. The second is whether the banks make abnormal or monopoly profits. Taking the second question first, I am going to give in a few moments detailed figures of the earnings of Canadian banks over a long period. If, after I have disclosed this previously unpublished information, there is any one who still believes that the banks are obtaining abnormal or monopoly profits it will be, I am afraid, because "one convinced against his will is of the same opinion still". On the first point we have the testimony of the volume, "Social Planning for Canada," which according to the foreword written by the late Mr. Woodsworth is "the first comprehensive treatise on Canadian economy from a socialist point of view." I quote the following extract from its discussion of Canadian banks:
Before answering this question, it is as well to make clear how the chartered, banks operate to-day. Their operations are regulated, of course, 'by a bank act enacted by the federal government, from whom they derive their charters. Perhaps because of this regulation the Canadian banks have been free from the sort of defect which plunged the whole American banking system into panic in 1933. Canadian banks have kept clear of the worst type of speculative loan (e.g., real estate). No bank failure has taken place in Canada since the Home bank closed in 1924. Nothing comparable to the disclosures made with respect to the investment activities of the big banks in the United States has emerged in Canada. At the
Bank Act-Mr. Ilsley

same time the competition between the banks would seem to guarantee reasonably fair and competitive treatment of all comers.
In general then-and certainly from any superficial point of view-the chartered banks .present a picture of a stable, well-ordered set of institutions; a tower of strength in time of trouble, as they not infrequently remind us. There is no doubt that a defective banking system enormously aggravates the inherent instability of the capitalist system; and Canada has been spared that complication.
Most of the current criticism of the chartered banks is picayune stuff. . . .
There can be no doubt about the competition for deposit accounts; even though the banks pay the same rate of interest on deposits there are other ways in which the keen competition manifests itself, including the character and variety of the services offered. Equally there can be no doubt of the competition for lending accounts and an even greater possibility of variation between the different banks in the treatment given and in the services rendered. Business men, both large and small, accustomed to dealing with banks will bear witness to competition that takes place between the banks in attracting accounts. If one talks to such business men one will not take long in finding many instances of switches of lending accounts from one bank to another. Obviously, banks turn down certain applications for loans but the reason is almost certain to be, at least in times other than those of acute depression, either that it was not the type of a loan that a bank should make or that the particular borrower or business was unlikely to be able to repay the loan. In the latter type of case there is always -recourse for the borrower to one or all of the other nine banks who may take a different view of the credit-worthiness of the borrower or his enterprise. It is -most unreasonable to think that the banks, at least in normal times, should deliberately wish to refuse sound loans or -restrict credits when they have the resources with which to make loans. If they cannot get commercial loans, their only recourse is to invest their funds in securities. On such securities they earn less, usually much less, than they could make on sound commercial loans. To-day, and for some years past, their percentage of loans to total assets has been unduly low. The desire to increase their earnings, if nothing else, drives them to seek outlets in loans. The charge of a monopolistic combination conspiring to restrict credit is a figment of the imagination and has no foundation whatever.
The fourth and final point with which we have to deal is the argument that nationalization of the banks is the first step necessary in the liquidation of private enterprise and

the ushering in of the socialist state. I suspect that here we have the crux of the whole case. To those who are convinced socialists, it must seem reasonably obvious that control of the banks and other financial institutions is probably an indispensable instrument for the liquidation or slow strangulation of free enterprise and for ushering in the new dispensation. Certainly it will immensely facilitate the task and it is equally clear that a privately controlled banking system would not be consistent with a socialized state.
If we were all socialists, this argument would be wholly convincing. The simple and conclusive answer to it is that the Canadian people are not socialists and do not want to adopt devices, the only valid argument for which is that they will facilitate the coming of socialism. No one can tell me that the Canadian people who have reacted as they have in the last three or four years to the limited controls and partial regimentations essential to the emergency requirements of wartime would ever vote to imprison themselves in a socialist state which would make such controls and regimentations practically universal and perpetual.
If we do not want a socialist state, we do not want a socialized commercial banking system to deaden the initiative of our system of free enterprise. We do not want this government or any other government to have a monopoly of the business of lending for commercial purposes nor even of the business of keeping the people's banking accounts. The relation between banker and borrower, and between banker and depositor is a private, confidential relationship. A large proportion of our citizens would not want any government, even one which they support, to intervene in this confidential relationship or to be privy to it. But a far more important point is the undesirability of having the credit of each of us and of every business throughout the country assessed by civil servants working under political control for a government banking monopoly, rather than by bank managers interested not in the political or other views of the borrower but solely in his ability and trustworthiness as a debtor. The best guarantee of fair lending as well as sound lending is to preserve a number of independent lending agencies, so that a potential borrower can choose his own banker, can deal with the one who is prepared to meet his credit requirements on the most favourable terms and who is interested solely in the soundness of the loan itself. We must, and we do, have control of the cash reserves of the banks, so that the total volume of all bank credit can be con-

Bank Act-Mr. Ilsley
trolled-and conditions of depression and crisis avoided. Given that, I think we can trust the enterprise of the banks to lend where opportunities for sound loans are available, because of the incentive to get their loanable funds earning a more attractive return than is possible under the only alternative of investing in securities.
There will be some cases where it would be illegal or inappropriate for the banks to make loans although the loan might be essentially sound and useful in developing Canadian industry and resources. We are proposing to meet this type of problem in two ways. First, we are proposing to establish the industrial development bank in order to assist the financing of small or new enterprises which might otherwise find it impossible or very difficult to get the types of credit required from banks or other financial institutions on reasonable terms and conditions. Here we are using the device of public ownership to carry out a specific task for which it is best fitted. But this government bank will have no monopoly; any potential borrower will be free to go first, or instead, to other banks or to any other source of capital if he so desires. Secondly, I shall be making proposals in a later section of my remarks which will involve assistance from the government to encourage loans to farmers and fishermen of a longer term and different character from those they have been able formerly to make. These two measures, I believe, will be sufficient when coupled with the other legislation announced in the speech from the throne to ensure that adequate credit will be made available for the efficient and vigorous development of our country. They are not intended either to drive the banks out of business or to be a means of gaining financial control over all kinds of business as a step towards socialism.
They do not throw into the scrap basket all *the heritage of the past. They build upon it and supplement it in order to remedy any defects it may have had and to enable it to meet fully and efficiently the requirements of our people. Like the nationalization of the Bank of Canada in 1938, they demonstrate the government's willingness to use the agency of the state, even the device of public ownership as well as control, where it is required to serve a useful and specific purpose. The question of nationalization of an industry or a specific firm should not be one of ideology. We should neither shrink from nationalization because of an economic philosophy based on fear, nor embrace it rashly with nothing more in our minds and hearts than mere devotion to doctrine or desire to punish. We should use it only where it alone can serve the public
interest or can serve it better than any alternative form of organization. Commercial banking, I am convinced, is not one of those cases. I hold that conviction with greater assurance, because I find that in no other democratic country have the people become convinced that it would be wise to nationalize their commercial banks. In thia connection it seems pertinent to observe that even the labour, and avowedly socialist, governments of Australia and New Zealand have not yet seen fit to nationalize the commercial banks in those two dominions.
Summing up this discussion, we find that the several alleged arguments for nationalization of the banks do not stand careful scrutiny. It is not necessary to nationalize the commercial banks to make possible the effective control of currency, credit and prices; we have already nationalized that part of the monetary and banking system which gives us control over currency, credit and prices, namely the central bank. There is no reason, on grounds of operating efficiency, for nationalization. There is no basis for the charge that the chartered banks, whether in combination with other business or not, constitute a monopoly which interferes with the free flow of credit and leads to monopoly profits. We do not want nationalization to promote the liquidation or strangulation of free enterprise or as the entering wedge for socialism. We are providing a publicly-owned institution to provide credit for useful and desirable industrial projects which the private institutions are unable or unwilling to finance, but we do not want to create a huge government monopoly of the banking business which would lead to an enormous increase in centralization, a loss in operating efficiency, a decline in the initiative and enterprise which decentralized and competing private business is best able to supply, and the inevitable intrusion of political consideration and control in the multitude of private transactions which the banks must make. We are confirmed in our point of view by the experience of all other democratic countries.
I would now like to spend a few minutes on what I understand to be the position of the Social Credit party. Their attack on the banking system will be of an entirely different character from that of the Cooperative Commonwealth Federation party. They, or at least most of them, recognize, I believe, that the chartered banks are efficient in carrying out the ordinary day-to-day functions of commercial banking and would, I imagine, dislike as much as I do the socialist proposal to convert the banks into a huge government monopoly run by bureaucrats. I do not think I need to devote any attention to the main, or
Bank Act-Mr. Ilsley

shall I say, the original, body of their doctrine, which has been discussed in this house on several occasions and which we seem to hear much less of to-day.
To judge from their more recent utterances, what we may expect from the Social Credit party in this debate is likely to be a proposal that the government should borrow its requirements from the Bank of Canada and that the resulting increase in Bank of Canada notes and deposits will be turned over almost entirely by their recipients to the chartered banks-since the public do not hold deposits in the Bank of Canada and hold only wyhat notes are needed for convenience-should be "frozen" in the hands of the chartered banks. In other words, the chartered banks should not be allowed to use these additional cash reserves as a basis for the usual tenfold expansion of their deposits. Presumably, they will suggest that this policy be carried out by amending the Bank Act in such a way as to require the banks to hold 100 per cent reserves against increases in their deposits beyond a specified figure. The purpose of such a restriction upon the activities of the banks would be to enable the government to borrow its requirements without paying interest except to itself by way of its agency, the Bank of Canada, and without allowing this increase in Bank of Canada money to lead to an unnecessary and very great addition to the loans, investments and deposits of the chartered banks, an addition that they recognize would probably lead to inflation.
Let us trace for a moment in simple terms just how this type of 100 per cent reserve arrangement would work, as undoubtedly many people are attracted by the easy virtues of this apparently costless source of credit. Suppose, then, that we did rule that the banks could not use any additional cash reserve which they obtain, in consequence of government borrowing from the Bank of Canada, as the basis for the usual tenfold expansion in deposits-or what would amount to the same thing, that they must hold additional cash reserves equal to any additions to their present level of deposits. Let us concentrate on the main, simple point and neglect the purely technical difficulties. Armed with this shield against the expansion of bank credit, the government will proceed, we may assume, to borrow, say $1 billion, from the Bank of Canada. With this new fund the government would then draw cheques on the Bank of Canada payable to contractors, civil servants, holders of government bonds and others to whom it must make payments for services rendered. The recipients of these cheques deposit them in

their bank account in the normal way, as they do any other cheque-taking in cash from their banks only what they need to have to carry around in the form of cash. The chartered banks will then find that their deposits have increased by almost the whole amount of this billion dollars and in exchange they will have these cheques on the Bank of Canada less the small amount paid out in cash to depositors-which we may safely neglect merely to simplify the argument. The chartered banks then present the cheques to the Bank of Canada and their deposits with that bank increase by $1 billion.
At this stage then the chartered banks' deposit liabilities have increased by about a billion dollars and their cash reserves-their assets-have increased by a billion dollars While their books may balance they are very much worse off than before because they must pay interest on the additional deposits, so far as these are in the form of savings deposits, and provide services on them which cost real money, and no small amount of money at that as I shall seek to show later. On the other hand, the increase in their assets which is in the form of cash reserves brings in no income at all, as the Bank of Canada, of course, pays no interest on its deposits.
It is in this unfavourable position that the banks would be frozen by the amendment which I suggested the Social Crediters might propose. The banks would be prevented absolutely from following the normal course of using part of their additional reserves to make additional loans or buy additional securities, which is the means by which bank credit and thus bank deposits are expanded on the basis of the additional reserves. It is the expansion made possible in loans and investments under the usual practice that enables the banks to cover the costs of the additions to their deposit liabilities. To block this normal expansion in order to make it safe for the government to exploit Bank of Canada credit more fully, means depriving the banks of the means of meeting the additional cost. As a result, either the shareholders of the bank must absorb these increased costs by receiving less earnings or * suffering losses, or the depositors must pay the costs through higher service charges or reduced interest on savings deposits, or other borrowers from the banks must pay more, or bank employees must get less in the form of wages and salaries, or all or some of the four groups must share the burden between them.
It should now be possible to see the proposal in its true light. It is a proposal that the

Bank Act-Mr. Ilsley
government through the Bank of Canada should force the chartered banks to borrow from the public in the form of deposits which are of course liabilities or debts of the banks, at a cost either in interest or in services rendered, and to relend the funds so obtained to the government interest free. Obviously, such a system favours the government as a borrower. It enables the government to obtain not debt-free money as is contended by its advocates because notes and deposits are liabilities of the body which issues them, but rather interest-free loans. Obviously, also, the system is merely a complicated device for obtaining forced ' loans from the banks and either the shareholders, the depositors, or the borrowing clients or the employees of the banks must suffer the losses which are the government's gain. This is nothing less than taxation of a most discriminatory and unfair character. There is no reason why the government should seek to escape the cost of interest on its borrowings at the expense of any one or all of these particular groups associated with the banks. The only equitable policy is for the government to pay reasonable rates of interest appropriate to the form and nature of the borrowing and meet the cost from taxation levied by parliament in the way considered fairest and most equitable. If we must for any reason raise forced loans, they should be raised as a general measure applicable fairly to all in accordance with their ability to pay.
Now, I do not think such proposals would be seriously put forward by members of this house, if it were not for the belief which seems to be prevalent in certain quarters that banking is a costless function. We have heard so much talk in recent years about the ten to one ratio and so much propaganda about "fountain-pen money" that some people have come to believe that it costs banks little or nothing to carry on their operations, that it is a very simple business concerned almost entirely with holding a fountain pen upside down and letting the ink run, and that of course the banks must be making enormous profits. The facts are quite to the contrary and something at least of their general signi-finance should, I would have thought, be familiar to certain hon. members who belong to the Social Credit party. They at least should be familiar with the Public Accounts of the province of Alberta which show, if I read them correctly, that the Alberta treasury branches which operate certain deposit accounts had an excess of expenditures over
revenue of roughly $390,000 on their operations during the fiscal year 1942-43, and even if we exclude the consumers bonus which was paid, a loss of S246,000.
I am quoting these figures to show that banking is not a costless function.


Mr. JAQUES:: They do not create money.


James Lorimer Ilsley: Total operating expenditures, after deducting this bonus and, by the way, without including any rentals of office space, were $368,000. As total deposits at the end of that year amounted to less than $6,900,000, this would appear to indicate that the cost to the Alberta government of operating these accounts was something over 5-3 per cent. This seems to throw some light on the cost of operating a deposit business.
While the facts as to bank operating costs and earnings refute some of the views currently held, I am convinced that they must be seen in order to be believed. I have therefore come to the considered conclusion that I should break a long-established tradition of Canadian banking and disclose to this house the essential facts in regard to the operations of the Canadian banking system as a whole.
If therefore the house will permit me, I will place on Hansard, at this point a statement showing the current operating earnings and the current operating expenses of the Canadian banks as a group for the average of the fifteen years 1929-43 as well as for the year 1943, together with certain supplementary information relating to the amount of dividends paid to shareholders, the net amount of current operating earnings available for losses on loans, investments and other assets and for general contingencies, the net amount of capital profits including certain nonrecurring profits, and the average annual amount required during the 15-year period for losses or specific provision for losses on loans, investments and other assets, less recoveries.


Richard Burpee Hanson: May I
ask the minister if those figures are disclosed in the monthly or annual returns, or are they confidential figures?


James Lorimer Ilsley: They have never been disclosed before.


Richard Burpee Hanson: They are not in the returns.


James Lorimer Ilsley: They could not be ascertained from anything that has been made public.
Bank Act-Mr. llsley


Richard Burpee Hanson: The banks are not obliged to disclose them?


James Lorimer Ilsley: They cannot be ascertained from the returns.


Mr. QUELCH:: Is the minister including the inner and hidden reserves?


James Lorimer Ilsley: Yes. Certain percentage
ratios are also given in order to facilitate
interpretations of the table. I shall put the table on at this stage and discuss it later.


Major James William Coldwell: These give the average for each year?


James Lorimer Ilsley: I give the fifteen-year
average.


Major James William Coldwell: It is an average?


James Lorimer Ilsley: Bank Act-Mr. llsley
I will call attention to a few of the more significant points disclosed by this table. The average annual current operating earnings for the 15-year period were $138-7 millions or 4-02 per cent on total assets. These total figures are broken down into interest and discount on loans, earnings on securities and exchange, commission, service charges and other operating earnings, but I will not weary the house by quoting the detailed figures. Current operating expenses (not including losses) averaged $112-3 for the 15-year period which was 3-26 per cent on total assets. These expenses are classified under six headings. When we compare this figure of current operating earnings of only 4-02 per cent of total assets with operating expenses of 3-26 per cent, we have to conclude that there must be something wrong with this fountain pen theory and that the operating margin on which banks have to work is a fairly thin one.
The supplementary information shows that dividends paid to shareholders averaged only 4-6 per cent of total shareholders' equity over the last fifteen years. Even if we take total shareholders' net income which is the sum of dividends, net capital profits, including nonrecurring profits, and net current earnings available for losses less the average annual net amount required for losses, we find that it amounted to only 5-09 per cent of total shareholders' equity on the average for the 15-year period. By no stretch of the imagination can a business which produces such results be regarded as a gold mine.
There is just one further point I would wish to make. The table which I have presented shows that after paying dividends which cannot be regarded as high, there was available, out of current operating earnings, for losses on loans, investments and other assets and for general contingencies only an average annual amount of $12-8 million. To this figure are to be added certain net capital profits, averaging $2-5 million a year. This figure includes certain non-recurring profits, among them the profit on gold in the year 1935 and certain profits on securities. In this latter connection. it must be remembered that the 15-year period was one in which there was a substantial reduction in interest rates, leading to a corresponding increase in bond prices. Against the sums available out of current operating earnings and from capital profits must be set the requirements for losses or specific provision for losses on loans, investments and other assets, losses which must be expected in the business of banking over a period of years. For the 15-year period, those requirements after deducting any recoveries in 100-161
respect of losses over-provided for in earlier years average $13-8 million per year. This is the average or "normal" loss experience during this period of good and bad years; everyone knows that the losses in the early thirties were much higher, requiring in certain cases the transfer of substantial sums from published reserves to inner reserves. It is clear from the table that our banking system has fortunately been able to absorb those losses and in addition that it must have strengthened its inner reserve over the last fifteen years by an average annual amount of modest size. Is there any hon. member who will take the responsibility of expressing the conviction that that amount is unduly large for a banking system which is the trustee of the people's savings and which has increased its assets and, therefore, its liabilities by no less than 62 per cent during the period in question.
It js true that interest being paid on savings deposits is now lower than it was on the average during the 15-year period and the total assets and the volume of business of the banks have increased under wartime conditions. On the other hand, the average rate of return on securities and other earning assets of the banks has decreased. The table shows that for the year 1943, total current operating earnings of the banks amounted to $144-5 million or only 2-86 per cent on the total assets of the banks. Current operating expenses, on the other hand, were $114-9 million or 2-28 per cent on total assets. The margin between operating earnings and operating expenses of the banks therefore was somewhat lower than the average for the 15-year period. I am speaking now about the year 1943. Dividends paid to shareholders in 1943 were only 3-3 per cent of total shareholders' equity, and even total shareholders' net income last year was only 6-03 per cent of shareholders' equity. Even in a good year like 1943 the total amount left over out of current operating earnings and capital profits available foT losses or specific provision for losses and for general contingencies was only $22-0 million, although there had been a reduction in dividends paid by nearly all the banks, thus retaining for this purpose funds which would normally have been paid out. I have already pointed out that the average annual requirement for losses or specific provision for losses during the last fifteen years was $13-8 million. Under the circumstances and bearing in mind that the losses of bad years have to be met out of the earnings of good years such as 1943, it will be obvious that last year's net earnings were not unduly large.

Bank Act-Mr. Ilsley

As Minister of Finance it is my responsibility to exercise general, supervision over the operations of the Canadian banks and that is a responsibility which I take very seriously. My considered judgment is that the Canadian banks. have not made unduly large profits, that they have come through a most difficult period without impairing the proud tradition of safety which they have built up over a long period of years, that they have reserved an amount of earnings appropriate to take care of the normal hazards of banking but not an amount which responsible and prudent men could say is unduly large, and that their shareholders have been content with a net amount of earnings, both in the form of dividends and left in the business, which is really modest by comparison with the record of other businesses subject to similar risks and managed with comparable efficiency.


Major James William Coldwell: Has the minister the figures showing the dividends related to the paid-up capital of the banks? I noticed the minister used the words "assets of the banks".


James Lorimer Ilsley: No, the equity, the total equity.


Richard Burpee Hanson: The shareholders' money?


James Lorimer Ilsley: The total equity. That is not the assets.


Major James William Coldwell: No, I know it is not the assets. The total equity would include some others, the capital obtained from the public.


James Lorimer Ilsley: That is right, the rest funds.


Major James William Coldwell: I want to know the rate on the capital originally obtained from the public.


James Lorimer Ilsley: It is easily ascertained. I do not have it here. The figures are well known. It is well known what the capital of the bank is.


Major James William Coldwell: I know; but to give a fair picture it should be placed on the record with the minister's statement.


James Lorimer Ilsley: No, not at all. It would be a very unfair picture. You must take into account the rest funds as well as the subscribed capital.


Richard Burpee Hanson: Dividends are declared on the paid-up capital.


James Lorimer Ilsley: Major changes in the Bank Act. Apart from the extension of the charters of the ten existing banks for a further ten-year period ending July 1, 1954, the bill which is now before the house contains a great many amendments to our existing legislation as a result of the very thorough examination we
[Mr. Ilsley.1
have made of that legislation. Many of these are consequential in character or of minor importance and I shall call the attention of the house only to those of major importance.
First let me deal with the new provisions relating to the issue of notes by the chartered banks. Hon. members will recall that under the existing act the banks have been required to reduce their note issue gradually during the last ten years. As a result of this requirement the legal limit of their note issue in Canada on January 1, 1945, was to be 25 per cent of the amount of their unimpaired, paid-up capital, and what was to happen thereafter was to depend on a further enactment by parliament. During the present year the legal limit is 35 per cent, but the house will realize that in practice the banks must operate somewhat below this legal limit.
We have given very careful consideration to whether-we should prohibit further note issue altogether or provide for a further gradual reduction in the legal limit of issue or provide for a continuance of the 25 per cent legal limit which without further enactment would be the law as from January 1 next. We were impressed by the fact that since the establishment of the Bank of Canada, note issue of the chartered banks has ceased to play the important role it formerly played in our economy, and impressed also with the desirability of having all our " money," in the narrow sense of the term (that is to say, coins and paper money) issued by an agency of the state rather than by private institutions. Moreover, from the {mint 0f view of the banks I think it can no longer be said that the small amount of notes which they are now permitted to issue can be of any great value in promoting efficiency and economy in the operations of the banks. We have therefore recast the relevant sections of the act to accomplish the following purposes:
1.	to preclude any new bank that may be
incorporated from having any right to issue notes;
2.	to limit the right of existing banks to
issue and reissue notes in Canada to the period ending January 1, 1945, and in that period only up to the present limit of 35 per cent of their unimpaired, paid-up capital;
3.	to require the existing banks to reduce
their note issue in Canada by January 1, 1945, to 25 per cent of their unimpaired, paid-up capital; thereafter until January 1, 1950, to take away from them the right to issue o reissue their notes; and to require them to retire all their notes outstanding in Canada by January 1, 1950; and

Bank Act-Mr. llsley
4.	to allow existing banks to continue to issue notes for circulation outside of Canada but only up to a maximum of 10 per cent of their unimpaired, paid-up capital.


Richard Burpee Hanson: Has consideration been given by the government in arriving at this conclusion to the effect of these provisions on the maintenance and operation of country branches? I hold the view that the power of the chartered banks to issue their own notes has a tendency to keep open branches which otherwise might not be maintained.


James Lorimer Ilsley: I think the factor now is so small-


Richard Burpee Hanson: It is
thirty-five per cent.


James Lorimer Ilsley: -that it would not result in the keeping open of any branches which otherwise would be closed. Whether or not branches are kept open will depend mainly on the possibility of making advantageous loans in volume in the districts concerned. There are other provisions in the bill which I think will help that situation.


Richard Burpee Hanson: The charge against the banks was that they took deposits away from the small communities and lent them elsewhere. But the maintenance of the note issue was a factor in keeping open those branches, and if it is to be taken away the branches may be closed.


James Lorimer Ilsley: The committee can consider that, but the percentage now is down to such dimensions that I do not think it would have any effect in keeping open any branches.
On January 1, 1950, the amount of unretired notes issued for circulation to Canada and still outstanding must be paid over to the Bank of Canada and the Bank of Canada will then become liable to redeem the said notes. On the passing of the act the Bank of Canada will become the agency for redemption of the notes of any bank that winds up. Notes of those banks which have been wound up in the past will henceforth be redeemed by the Bank of Canada rather than by the Minister of Finance. It will be obvious that as a result of these proposals the Bank of Canada is to become after January 1, 1950, the exclusive note-issuing agency in Canada, and it will also be the exclusive note-redemption agency, first, of the outstanding notes of defunct banks, and by 1950, of any outstanding notes of the existing banks.
I should add that the changes which we are proposing in regard to note issue will require certain other consequential changes. Apart from the necessary changes in the statements regarding note issue required to be 100-161i
made to the minister, there will also be a new subsection providing that the provisions of the Act relating to the circulation redemption fund shall cease to operate in respect of any bank after it has paid over to the Bank of Canada the funds needed to redeem any of its notes outstanding on January 1, 1950.
I might at this point refer to a somewhat related amendment to section 92 of the act. The general principle as to the responsibility of a bank in respect of deposits made with it which has long been in effect in Canada, has been that the claim of a depositor is not barred or lost by reason of any statute of limitations or prescription, the responsibility of the bank being a continuing responsibility. I believe that this principle is just, and fundamental to maintaining confidence in the banking structure. A modification of the application of this principle is proposed by the amendment. If. in respect of any debt owing by a bank and outstanding on its books in Canada by reason of a deposit, no transaction has taken place and no claim has been made for ten years, or if in respect of any such debt owing by the bank by reason of a cheque, draft or bill of exchange issued, drawn or certified by it, no payment has been made for ten years, the bank shall pay to the Bank of Canada the amount of the debt together with interest, if any. to the date of payment. Thereupon the liability of the bank in respect of the debt ceases and determines but it is provided that the Bank of Canada shall, if payment is demanded by the person who was creditor of the bank or by his legal representatives, pay the amount paid to it together with interest, if interest was payable on the debt, for a period not exceeding twenty years at such rate and computed in such manner as may be determined from time to time by the governor in council. After the expiration of the twenty-year period the Bank of Canada will continue to be liable to pay the amount and the interest accumulated during that period, but no further interest will accumulate. The governor in council may make regulations prescribing the time for payment by a bank to the Bank of Canada, the records to be maintained or kept by the bank with reference to a debt with respect to which payment is so made, the manner of payment of any claim against the Bank of Canada and the rate of interest to be paid by the Bank of Canada and the manner of computation thereof. The result of this amendment is that the principle I have referred to, that the claim of a depositor or his legal representative, to repayment of moneys deposited in a bank is not limited in time, is preserved, but unclaimed deposits, which
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formerly were retained indefinitely by the chartered banks will no longer be retained by them.
Provision is also made that a bank shall not be liable in respect of any act or omission relating to an account kept by the bank, which occurred or which is alleged to have occurred thirty years prior to the making of a claim in respect thereof. At the present time a bank maintains complete records of all its accounts whether they are still open or have closed for many years, because there is no time limit on the liability of the bank to give an accounting in respect of any of these accounts. The amendment is designed to relieve the banks of liability where items in its accounts have not been questioned for thirty years and will permit the banks to destroy records more than thirty years old, the maintenance and accommodation of which are presenting an ever expanding problem, particularly under today's conditions. This provision does not apply to accounts kept by the bank in respect of unclaimed deposits, the provision for which I have already mentioned.
Various changes are being made in the provisions of the act regarding the many statements and returns required to be made to the minister. Former sections 112-114 have been recast and renumbered as sections 112119 for purposes of clarification and to eliminate repetition. This has permitted the penalty sections relating to returns (former sections 154-162) to be consolidated into one section (section 158). Minor changes have also been made in the form of some of the returns in consequence of other changes made in the act or for other reasons and there have been certain deletions to avoid unnecessary duplication or because the relevant information no longer serves any useful purpose.
Very important changes are being made in respect of section 91. Subsection 1 of this section fixes the maximum rate of interest or discount which may be charged by any chartered bank. In keeping with the decline in interest rates which has occurred in recent years, this maximum rate is now being reduced from 7 per cent to 6 percent per annum. However, we are adding a new subsection which makes a far more radical change in Canadian banking practice and which will, I hope, make a really important contribution to public need. It has always seemed to me highly anomalous that while this parliament has passed an act authorizing small loan companies and personal money lendlers to make small .personal instalment loans on the basis of a charge for interest, and other costs of 2 per cent per month for loans extending
fMr. Ilsley.]
up to fifteeen months, nevertheless we have at the same time prevented our normal lending institutions, the chartered banks, from participating effectively or on any considerable scale in this type of business. The loans are for small amounts, the average, I believe, being around $150, they require to be repaid in small monthly or other periodic instalments, and collateral security is inadequate or lacking altogether. The result is that the costs of doing the business are high and the effective rate of interest must be proportionate or the loans will not be made. The only reason, I believe, why this house was convinced that the small loan companies should be allowed to charge a rate as high at 2 per cent per month was the belief that otherwise the necessitous borrowers who need these loans would be driven to pay higher, and indeed much higher, rates to so-called loan sharks. No one liked to approve a charge of 2 per cent a month and yet the alternative was far worse.
After very careful consideration, I became convinced that we should make it possible for the chartered banks to participate on a substantial scale in this type of business. They already have offices in easy access to the public throughout the country and should therefore be able to conduct the business on a more economical basis. I am therefore proposing that where a loan, evidenced by a promissory note, repayable in substantially equal instalments does not exceed $500 and is not secured otherwise than by endorsement of the note or by insurance on the life of the borrower in favour of the bank as the insured, the bank may charge discount or interest at a rate which, having regard to the term of the loan and the frequency of the instalments, does not exceed a rate of interest equivalent to the rate resulting from a discount of 5 per cent on a one-year loan repayable in equal monthly instalments. A 5 per cent discount on such a loan is equivalent to an effective interest rate of 9f per cent per annum, which, it will be noted, is considerably less than half the rate allowed to the small loan companies and personal money lenders. No other charge can be made by the bank in respect of such loans except, of course, interest at no higher rate on overdue' payments and the actual cost to the bank of insurance on the life of the borrower. This insurance will be term insurance taken out in the form of a blanket policy on the lives of all such borrowers and the cost is very low indeed-I believe about twenty-five cents per $100. I wish to emphasize that the loans covered by the special provisions of this

Bank Act-Mr. Ilsley
subsection will be unsecured loans and that loans to a borrower who is able to give ordinary collateral security will come under the maximum interest ceiling provided for in subsection 1.
For these new proposals I would like the benefit of very special consideration by the banking and commerce committee and this house. In my desire to keep maximum charges low I may easily have gone too far and I would like the committee to hear evidence from the banks as to whether it is really possible to do this type of business under the terms which I am here suggesting. Furthermore, while in the interest of simplicity and for the purpose of avoiding an odd or fractional rate of interest, I have expressed the ceiling in terms of a 5 per cent discount, it may be that the committee may prefer to express the ceiling in terms of a maximum rate of interest per month or per year. I shall be prepared to welcome the guidance of the committee in this respect also.
An amendment to section 85 is being suggested to facilitate the financing of alterations of, repairs to or installations on ships or vessels. Under the present law a bank may loan money to aid in the building of a ship, taking as security therefor a mortgage, hypothec or lien on the ship. Under the amendment proposed they may take the same security for a loan to assist in the installation of engines or equipment or the repair or alteration of the ship or its engines or equipment.
There is also an amendment to section 75 which gives specific power to the banks to lend money or make advances upon the security of, and take as collateral security for any loan or advance made by it, lien or other notes, conditional sales contracts or any other instruments or agreements made or entered into respecting the sale of goods, wares and merchandise. The object of this amendment is to remove any doubt as to the validity of advances made on this type of security. Practically all notes taken for goods sold on a time basis are either in lien form or supported by lien contracts, and frequently the dealer who sells the goods or the finance company with whom he discounts the notes, desires to obtain bank credit against the security of such notes.
I now come to a series of amendments relating to a category of loans which, in banking parlance, is known as section 88 loans. There are a number of changes in the definitions in section 2 which have the effect of extending the coverage of section 88 and
making it possible for certain additional borrowers to get credit thereby. Thus the definition of "grain" is now widened to include "beans, and all kinds of seeds" and the definition of "live stock" is being extended to include fur-bearing animals in order to assist farmers and others who raise such animals for their pelts or for sale as breeders. Similarly, the definition of "manufacturer" has been extended to include bottlers and canners of all kinds. There are certain other important changes in regard to farmers and fishermen which I shall come to a little later.
In addition to these changes, I am also submitting for consideration certain proposed amendments to sections 88-90 and the schedules relevant thereto. Some of these amendments are intended to eliminate repetitions and certain inconsistencies but others are designed to simplify the procedure in giving security which is now complicated and believed to be unnecessarily burdensome on both borrowers and banks. AVe have received representations not only from banks but also from business firms and organizations requesting this simplification. After careful consideration, the arguments appeared to me to be convincing and I have therefore included the proposed amendments in the bill. However, I would like the banking and commerce committee to give these proposed amendments very carefully consideration and to hear evidence from both business and bankers in regard to them.
Perhaps I can make clearer the nature of the proposed amendments if I say a few words about the working of the present section and the arguments which have been advanced for the suggested changes. Manufacturers constantly process raw materials into finished goods which are sold and new materials are continually being purchased for manufacture. Other types of borrowers likewise find it necessary frequently to turn over the goods upon which security is given. Under the terms of section 88, as it is at present, fresh security must be given every time new materials are acquired. This involves a good deal of needless paper work. By virtue of the new procedure under the proposed amendments the security given at the outset will be security for the payment of all loans and advances made or to be made under the seasonal line of credit granted under the original and any supplementary applications for credit and promises to give security. Property of the kind assigned whether' owned or to be owned by the borrower is covered, thus facilitating the operation of a revolving line of credit and covering raw materials as they are acquired and manufactured. The
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security will therefore conform to manufacturing and other business methods and will operate, in effect, as a continuing security, simplifying the process of giving security.
The result, it is obvious, will be to reduce the great amount of work required of customers who continue acquiring new property upon which they wish to borrow money. At the present time a grain dealer, for instance, who has already applied for and been granted a line of credit for the season and has signed a promise to give security may have to complete and sign daily not only a promissory note but a fresh assignment under section 88, describing all the promissory notes to be covered as well as the property covered and the place or places in which it is located. Under the new procedure an application for credit for the season coupled with a promise to give security will be signed. When funds are required, security in the new form will be given which will suffice for the season and as additional funds are needed all that will be necessary for the borrower to do will be to give covering promissory notes pursuant to the application for the seasons's credit. Consequently it is claimed that what has of a number of branches and it is sometimes previously been accomplished through a most laborious and cumbersome procedure both for borrowers and bank staffs will be accomplished with a minimum of effort and at the same time the banks will not be getting any thing in the way of security that they are not now getting for the same revolving credit as a result of the present laborious procedure.
It will be obvious to the house that these changes while primarily procedural, are nevertheless of real importance. The opportunity which the committee will have of crossquestioning w'itnesses from both business and banks will, I believe, enable hon. members to determine whether the greater convenience to the business community and the more readily availability of credit under section 88 warrant the adoption of these proposals. I am prepared to be guided by the views which the committee will reach upon the basis of the evidence.
I shall omit any reference to other minor changes and proceed immediately to explain the most important and I believe the most constructive changes which we are suggesting in this banking bill. I refer to the proposals designed to make credit, particularly intermediate credit, readily available on reasonable terms to farmers and fishermen.
In the field of agricultural credit the primary function of the chartered banks in the past has been to provide short-term or seasonal loans to farmers for the financing of current production. The widespread system of branches

which our Canadian banks have established has on the whole proved well adapted to a country of great distances and rapidly changing frontiers of settlement. To facilitate farm lending, section 88 has been amended from time to time during the past fifty years, with the result that it is uniquely adapted to Canadian agricultural conditions, there being no counterpart so far as I am aware in any other country. Under this section loans can be made to farmers for any purpose on the security of threshed grain and livestock, and for the purchase of seed, fertilizer and binder twine on the security of the growing crop.
These provisions of the Bank Act have enabled the banks to extend credit on an extensive scale to farmers for the growing, harvesting and marketing of their crops. Nevertheless, there has been criticism both of the banks and of the legislation. The most common complaint is that the banks have been unduly restrictive in their lending policy, particularly during periods of difficulty such as were experienced during the drought and depression years of the thirties. This is a matter of judgment and I hold no brief for the bankers, who will have an opportunity to answer for themselves before the banking and commerce committee. There has also been criticism of the banks as a result of the closing said that with the smaller number of branches the banks are now unable to give adequate service to farmers in certain areas. It seems to me, however, that the credit stringency during the thirties and the closing of branches in rural areas were in the main a reflection of the unsatisfactory situation then prevailing in agriculture, due in part to drought and other climatic hazards and in part to the effect of the world-wide depression on agricultural prices. The government has already done much, and proposes to do more, for the purpose of achieving reasonable stability in agricultural incomes. As a nation, we must, and we are determined to, achieve a better balance between our rural and our urban economies and even without the legislation which the government has announced for establishing a floor under the prices of the major agricultural products, it seems to me that the outlook .for the agricultural industry in the years immediately following the war will be more promising than it has been in a very long time. Given any reasonable assurance of stable prices and agricultural prosperity, I do not think that farmers will have any difficulty in securing from the banks the credit they need to finance their shortterm or seasonal requirements. It also seems to me the reasonable expectation that the banks will only be too ready to re-open

Bank Act-Mr. Ilsley
branches in any community where there is any prospect of the branches being selfsustaining.
At the other end of the scale are the longterm credit requirements of agriculture. I need hardly remind the house that the chartered banks are not empowered under the Bank Act to lend on the security of real estate mortgages. This has been a fundamental principle of Canadian banking since confederation and experience has, I think, proved its soundness for depositors, borrowers and shareholders alike. The long-term credit needs of agriculture therefore, must be and are being met by a different set of institutions, namely, the insurance companies, the mortgage and loan companies and government lending agencies which specialize in mortgage lending. In this field the dominion' has acted directly not only by making long-term mortgage loans available to war veterans, both after the last war and now under the new and generous Veterans Land Act, but also to other farmers through the Canadian farm loan board. I have already referred to the Central Mortgage Bank Act which was intended to facilitate lending by private agencies in this field, but the operation of which had to be postponed for the time being. Although in the meantime there has been a very substantial reduction in farm debts throughout Canada, it would be a mistake to assume that the need for a central mortgage institution has disappeared and, as I have already intimated, parliament may soon wish to give reconsideration to this legislation, perhaps with an approach somewhat different from that required by the special problems confronting us in 1939.
There remains for consideration another field of farm credit which grows steadily in importance as standards of living rise on the farms and as mechanization of the farm proceeds. This is the kind of credit needed by farmers to increase the efficiency of their farming operations and to add to the amenities of life on the farm. Loans for such purposes would usually be required for from two or three years to eight or ten years and are therefore usually referred to as intermediate credit. Such loans have not ordinarily been available from the banks partly because of the limitations imposed by the Bank Act, and partly because, as the liabilities of the banks are mostly in the form of deposits withdrawable on demand or short notice, it has always been thought desirable that they should keep their assets in rather liquid form. On the other hand, the farmer seldom feels justified in raising money for these purposes from a mortgage institution.
The Canadian Farm Loan Act provided for a system of intermediate credit by making second mortgage loans available for the purpose of consolidating debts, purchasing stock, machinery and equipment and making permanent improvements, but as such loans could be made only to farmers who were also borrowers on first mortgage from the board, these particular facilities were of course available to relatively few farmers. In the main, intermediate credit of this type has been provided to farmers by the implement companies, lumber dealers and other manufacturers and merchants with something durable or semidurable to sell to the farmer. Financing of this kind is always relatively costly, partly because it is not sufficiently selective and partly because the farmer obtains his credit not directly but at second hand. One of the greatest difficulties was that the good farmer, able and willing to pay his debts on the dot, had to bear the burden of the losses and heavy collection costs caused by the inefficient or irresponsible farmer who could not or would not pay his debts as they came due. I have heard it said that a not inconsiderable portion of the cost of farm implements is due to the loading included in the price to take care of the losses and the high collection costs incurred by the implement companies. The term and method of repayment of these trade credits are also usually standardized and frequently are not adapted to the special circumstances of individual farmers. I think the house will agree that, if we can establish a workable system under which the farmer can pay cash to the manufacturer or dealer for his machinery and equipment and secure from some other source a credit on reasonable terms and with repayment adapted to his probable income receipts, we shall be making a real contribution to the reduction in the price of farm machinery and equipment and to the efficient and economical conduct of the farming industry.
I think also there can be little doubt of the extent of the need. With the shortage of man-power and materials, farm equipment and farm buildings must have been allowed to rim down during the war years. When the war ends and controls are relaxed, there will presumably be need for an extensive reequipment programme for Canadian agriculture. Moreover, as part of a programme of post-war reconstruction and in order to improve farm efficiency and the amenities of farm life, we will wish to see a wide extension of rural electrification and widespread activity in the repair, renovation and construction of farm buildings. We will wish to see better houses, as well as better bams, and more bathrooms, more elec-
Bank Act-Mr. Ilsley

trie stoves, and more electric refrigerators in our farm homes. Finally, there will always be need for intermediate credit for drainage and fencing, for building up herds of live stock and for other permanent improvements.
Granted the need, how is credit for these purposes to be made readily available to farmers? Serious consideration over a long period of time has been given to various aspects of this problem. For a time we felt that we might have to set up a new government institution, perhaps somewhat similar to the proposed industrial development bank, with a hierarchy of offices and agencies throughout the country. The house will appreciate, however, that unlike the industrial development bank which will operate with a relatively few offices and a comparatively small but highly skilled staff, a similar agency to provide intermediate credit for agriculture could only do its job effectively with literally thousands of branches or offices throughout rural areas readily accessible to farmers. Some of the United States farm credit organizations were considered as possible models, but the government did not feel justified in imposing on farm borrowers, or on the country as a whole, the additional burden which the overhead costs of such an extensive organization would involve when the same objective could be attained more speedily and effectively and at a fraction of the cost by a comparatively simple extension of existing lending facilities. Moreover, a new set of institutions would have taken years to build up and to equip with competent and experienced staff. In contrast the solution which we are proposing offers facilities already at hand, ready to start to work to-morrow if we should decide that the public need so requires.
That solution is based on certain enactments which will make it possible for the chartered banks to supply the intermediate credit needs of agriculture, and which will encourage them to supply those needs to the fullest possible extent and upon reasonable terms and conditions. In the bill now before you, you will find a number of provisions enabling the banks to make the loans required and to take appropriate security therefor. The government proposes to introduce a companion measure to be called "The Farm Improvement Loans Act" which, if enacted, will authorize the Minister of Finance to give limited guarantees to banks in respect of loans made to farmers for specified purposes and complying with specified conditions, much along the lines of the old Home Improvement Loans Act which had such a successful experience in the years just prior to the outbreak of war.

If the house will bear with me, I shall endeavour to explain my proposals in somewhat greater detail. The enabling provisions in the Bank Act are to be found in paragraphs (f), (g) and (h) of subsection 1 of section 88 and in subsections 2 and 3 of section 89. These provisions enable loans to be made to farmers for the purchase of agricultural implements upon the security of such agricultural implements for the purchase or installation of agricultural equipment or a farm electric system (defined to include all machinery, apparatus and appliances for the generation or distribution of electricity on a farm) upon the security of such agricultural equipment or farm electric system, whether movable or affixed; and for permanent improvements generally upon the security of agricultural implements. Permanent improvements in this sense will include the alteration or improvement of a farm electric system, the erection or construction of fencing or drainage works, the construction, repair, alteration or extension of any building or structure on a farm, and any other works for the improvement or development of a farm for which a farm improvement loan may be made under the companion legislation.
The provisions to ensure that these facilities will be made available to farmers to the fullest possible extent, at reasonable rates of interest and for sufficiently long terms will be found in the collateral measure to which I have referred. It would not be appropriate for me on this occasion to explain in detail the terms of that measure which is not yet before the house. However, to enable hon. members to grasp the significance of the changes being made in the Bank Act, I may be permitted to refer to some of its general principles. It will authorize the Minister of Finance to guarantee a bank against loss up to a specified proportion of the aggregate amount of loans of the eligible category made by a bank; incidentally it is intended that this specified proportion shall be 10 per cent. The bill will specify the types of loans that will be eligible for this guarantee. They will be classified by purpose and type of security to be taken, and the length of term as well as the maximum amount of loan permitted will vary with the class of loan. The maximum interest rate allowed to be charged by the banks will be 5 per cent simple interest per annum. There will of course be a limit on the total amount of loans which may be guaranteed without further enactment by parliament as well as a limit on the amount of loan which may be made in respect of any one farm. Finally, the legislation will permit the guarantee of loans not only to farmers who own their own farms

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but, also for certain types of purposes, to purchasers under agreements for sale and tenant farmers as well.
It is obvious that this direct and simple approach to the problem of intermediate credit for agriculture has several very important advantages. It avoids delay; the loans can be made available throughout farm areas the day after the legislation comes into effect. It avoids the hazards and the additional costs of building up an elaborate, new and untried bureaucratic organization. It affords a desirable combination of government assistance with business judgment. The banks will be encouraged by the government guarantee to make loans wherever there is a reasonable prospect of repayment, yet they will retain sufficient interest in the soundness of each loan to exercise ordinary business prudence. Any cost which may ultimately have to be borne by the government should not be large in relation to the great benefits which will accrue The principle has already been applied with conspicuous success in the home improvement plan, the banks lending $50 million to home owners, mostly in urban districts, and within a period of two or three years. Under that plan of government guarantee, the losses to date are only about three-quarters of one per cent.
These new facilities for short and intermediate term agricultural credit form another and important part of the government's programme to prepare the way for a high level of employment and income after the war. The benefits will be available in some measure as soon as the legislation comes into effect, but the full value will appear only when wartime restrictions are lifted.


Mr. GRAYDON:: May I ask the minister a question?


James Lorimer Ilsley: Yes.


Gordon Graydon: The minister speaks of short and intermediate term credits being extended with respect to agriculture and some other branches; but has the government closed the door entirely upon this means of financing the type of security that is covered by an industrial development bank?


James Lorimer Ilsley: Oh, yes. The needs of small industry will be met by the Industrial Development bank instead of by guarantees.


Gordon Graydon: No; the question I asked was this-and I raised it on a debate previously in connection with the Industrial Development bank-whether the existing lending institutions might conceivably be used for the purpose envisaged by the Industrial Development bank in the same way the minister now proposes to do in the case of agriculture.


James Lorimer Ilsley: No; that would involve a guarantee on the basis of the home improvement plan, and I think it is better to do it the other way, in the case of the Industrial Development bank. In the case of the Industrial Development bank you only require to have ten or twelve branches all over the country and you can handle it without trouble. But you cannot handle this in that way.


Gordon Graydon: The principle seemed to be the same. That is why I raised the question.


James Lorimer Ilsley: During the war some farmers will have accumulated funds to pay for their own post-war programmes, but it is essential that such additional financing as may be necessary and desirable should be available on terms that do not place an undue burden on the farmer. This is particularly important in view of the necessary replacements that must take place when supplies of implements and equipment are again available in full volume. I may add that the government is hopeful that these new facilities will be used extensively in the improvement, modernization and electrification of farm homes which, I am convinced, should be one of this country's major post-war objectives.
Our study of the special credit needs of agriculture led to an examination of the credit needs of other primary industries. Facilities of section 88 of the Bank Act have been available for a long time to the logger and the lumber man, and I know of no difficulty in this field which would suggest the need of any special legislation at this time. There are, however, real and difficult problems in the fishing industry.


Richard Burpee Hanson: What about the decision of the privy council in the Royal bank and Port Royal case?


James Lorimer Ilsley: I shall have to discuss that, I am afraid, in the banking and commerce committee. I do not know just what the decision is to which the hon. gentleman refers.


Richard Burpee Hanson: I know, to my sorrow.


James Lorimer Ilsley: This industry presents problems not only in the credit field but in the economic and social fields as well. Provision of better credit facilities will be helpful but will of course not solve all the problems. Conditions as between the Pacific coast, Atlantic coast and inland fisheries vary considerably, but the need for new capital is probably greatest along the Atlantic coast where fishing is carried on in scattered communities originally adapted to salt fish production which have only recently begun to
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adjust themselves to modern conditions of freezing and canning. It is significant that ninety per cent of the fishermen on the Atlantic coast work on their own account. Most of these fish in the coastal waters from small boats which cannot put to sea except in good weather. Deep sea fishing is organized on a large-scale basis and is carried on chiefly by corporations owning a number of boats or by co-operative groups, fishermen and others, who join together in the ownership and operation of a vessel. Low prices and relative depression in the industry from 1928 to 1939 prevented individual fishermen from accumulating any surplus themselves. For the same reasons outside funds were not attracted to the industry in any volume. The mortgage lending institutions found it difficult to do business with fishermen because of the lack of substantial collateral. Consequently, fishermen working on their own account have had to rely often on instruments made by hand or on the cheapest type of capital goods such as might be provided by merchants or outfitters on credit. In recent years credit unions in certain districts and the fishermen's loan board in Nova Scotia have supplanted merchants as a source of capital, but the resources of these institutions allow them to make relatively small loans. In only a comparatively few localities have fishermen been doing business with commercial banks. In short, although fishermen are more prosperous now than for many years, the credit facilities at the disposal of the fishing industry are incapable of providing the capital for that improvement and increase in efficiency of boats and gear and processing equipment which will be necessary if the industry is to be reasonably prosperous after the war. Only through such increase in efficiency can our fish resources be exploited effectively and the highly perishable product handled in such a way as to compete with modern food industries.
The Industrial Development bank should be useful in meeting some of the capital requirements of the fishing industry as its powers include the granting of credit for the construction of fishing craft or for refrigeration or other processing needs. In order to permit and encourage the chartered banks to finance at least certain of the short-term and intermediate credit needs of fishermen, we are proposing an amendment to section 88 of the Bank Act which would make it possible for a bank to make loans to any fisherman upon the security of fishing vessels, fishing equipment and supplies or upon the catch itself.
To make these provisions fully effective, it will be necessary, I believe, to enact a companion measure somewhat similar to the Farm

Improvement Loans Act which I have already described, which will enable the government to give a limited guarantee in respect of loans made by chartered banks to fishermen. It will probably not be possible to introduce this legislation at the current session of parliament. Other measures will have to be taken by government to enable this industry to become a healthfully functioning industry providing reasonable economic returns and sound social conditions and all these measures must fit together into a well rounded and integrated programme for the industry as a whole. A careful investigation is being undertaken with this objective in view. In the meantime it is proposed that loans made by banks for the renovation or modernization of the homes of fishermen, many of whom in fact combine fishing with farming or logging, may be included under the guarantee facilities to be provided for under housing legislation to be introduced later.
I have now completed this long survey of the major changes which we are proposing in our banking legislation as well as of the considerations and guiding principles with which we approached this decennial revision. I trust that the house will agree that we have made a very serious effort to bring this legislation up to date and to make sure, in so far as it can be done by legislation, that our banking system will meet efficiently and effectively the varying requirements of the different sections of our population and thereby make the maximum contribution to the building and development of the greater and better Canada to which we all look forward.
On motion of Mr. Ilsley the debate was adjourned.



WAR APPROPRIATION BILL


[Stage Direction]
The house resumed from Monday, May 1, consideration in committee of a resolution to grant to His Majesty certain sums of money for the carrying out of measures consequent upon the existence of a state of war-[DOT] Mr. Ilsley-Mr. Bradette in the chair.

[Stage Direction]
National selective service programme, $11,002,429.
Mr. FRASER (Peterborough West):: At
page 560 of Hansard the hon. member for York South (Mr. Noseworthy) is reported as follows:
The point is that these people object to paying for the war under compulsion. One of these

War Appropriation-Labour
men tells me that if he had consented to pay $2 a week to the Red Cross he could have avoided going to gaol or going into the army.


Mr. MITCHELL:: Who made that statement? I never did.


Gordon Knapman Fraser: The hon. member for York South.


Humphrey Mitchell: I am not responsible for any statement made by him. You had better ask him the question.


Gordon Knapman Fraser: The hon. member asked the minister of defence a question in that regard, and I wondered whether there was any truth in it because a number of people have asked me the same question. Does the minister say that there is no truth in it?


Humphrey Mitchell: I am dealing with a
man-power pool of 1,600,000 people. I cannot answer offhand a question of that kind, but I doubt whether there is any substantiation for the statement that a man in exchange for $2 a week to some organization can escape going to gaol. To me it does not ring true.


Gordon Knapman Fraser: The statement is, going to gaol or into the army. It is something that should be cleared up.


Mr. DIEFENBAKER:: In this regard, I asked the minister a question about conscientious objectors and particularly the number of conscientious objectors who are allowed to remain on the farms of parents or relatives and do their alternative service on these farms. I have in mind a man who was declared a conscientious objector and who was given certain forms to be executed. In those forms there was a clause whereby, as long as $15 a month was paid to the Red Cross, this man was guaranteed the right to remain on the farm, but if the employer failed to turn over $15 a month, in that event the man was to be sent to an alternative camp. That is as recently as March 21 of this year. The minister said that he did not like to see men sent to these camps because the work they would do would not be necessary to the war effort. I have before me a copy of the agreement which conscientious objectors working on farms are required to sign. One provision is that the employer shall pay for the employee's services in respect of such employment at the rate of farm labour, $40 per month, and the employer shall further provide suitable board and lodging for the employee. The employer shall pay to the employee the sum of $25 per month. The employer shall pay to the Canadian Red Cross Society, or such person as the Minister of Labour may designate to
receive the same for the Canadian Red Cross Society, the balance of said monthly payment payable by the employer for the employee's services, namely, the sum of $15 per month.
How many of the 8,000 conscientious objectors now on farms are actually on farms of their parents or brothers? As regards the Doukhobors, the minister says that the problem has been completely solved in Saskatchewan. What it amounts to in their case is the approval of the flouting of these regulations by these people. I should like the minister to give the numbers with regard to these people, and then I have something more to say in that connection.


Humphrey Mitchell: I have not the figures in front of me of the people on their own farms. I shall be glad to look up that information and find out the disposition of these people if it is physically possible. Let me be frank about this; I still hold the opinion that it is far better to have these people working in a productive capacity than to have them tucked away in some camp, provided they comply with the law. If they do not comply with the law they go into a camp. Make no mistake about that.


John George Diefenbaker: What it amounts to is this: while alternative service was prescribed and the method of that alternative service was described, the result to-day is that for the payment of $15 a month to the Red Cross these people are allowed to perform service on behalf of others on their own relatives' farms.
There is another matter I should like to ask the minister about because it is of considerable importance. It has not been answered because it has not been drawn to the minister's attention. This information is of great importance in discussing the minister's speech because it has to do with the availability of reinforcements for the armed services. In his speech the minister used these words, which are to be found at page 2445 of Hansard:
Recently my colleague, the Minister of National Defence (army), made the statement in the house that he would require 60,000 men in the year commencing the first of April. In further correspondence with me, he has stressed the absolute necessity of obtaining these men, particularly bearing in mind the requirements of operations which are in prospect. In the last six months, September, 1943, to February, 1944, there actually have been more than 5,000 men per month who were enlisted and enrolled in the army alone. However, the monthly average has been decreasing, and at times enlistments and enrolments have fallen below the numbers required by the army.
This is a matter upon which the minister must have full statistics. At page 2445 of Hansard I asked him the question as to the
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months when the numbers enlisted and enrolled fell below the numbers required. As I understand it the difference between the enlistments and enrolments is that enlistment represents volunteering for service anywhere and enrolment represents the recording of a man's callup in the home defence army. I ask the minister to give the figures as to the numbers that have been asked for by the Minister of National Defence for the army in each of the months beginning October 1, last, and also the numbers required under the call-up scheme from month to month, and the degree to which these requirements have been met month by month to date. The minister said that he had the information available but did not have it before him at the moment. The minister said, as reported at page 2445 of Hansard:
I can get those figures for my hon. friend, but I think he will appreciate that when you are operating machinery of the magnitude I am, you cannot remember all these little details. I shall be glad to make a note and get those figures at the earliest opportunity.
I ask the minister to furnish that information now.


Humphrey Mitchell: That still stands, Mr. Chairman. I will get the figures. I have them here in a partial way. Since my hon. friend has been talking figures I intend to talk figures. I intend to talk about this phantom army of
390,000	people in respect of which my hon. friend made the headlines as usual this morning.


Gordon Knapman Fraser: The
minister will make them to-morrow morning.


Humphrey Mitchell: I do not think so. The newspapers in which my hon. friend made the headlines are not newspapers that are friends of this government. My hon. friend made the same mistake as was made last year and there is a simple explanation for it. I should like to draw to his attention the situation with respect to the province of Quebec, to which he referred. He said that there were only 8,872 called up when there should have been 39,000.
Mr. DIEFENBAIvER: Called up for medical examination in military district F.


Humphrey Mitchell: Wait until I am through. I think he told only half the story and he put the worst possible complexion on that half. He is assuming the total number called to report for medical examination at Quebec is the total number called in the province of Quebec. He has simply omitted the total number called to report in the city of Montreal. The total for the two , places is 81,855, just about ten times as many as my hon. friend mentioned in his speech yesterday.

In dealing with man-power figures I do not wonder that one becomes confused. They are, of course, big figures. May I refer to table No. 7, which was placed on Hansard on April 28 and may be found at page 2451. An explanation of the accounting has been made there and shows a total of 1,665,504. It is not exact. I am frank to admit it is not exact accounting because there is an additional shortage of 49,000 men, and not
390,000	men, as my hon. friend pointed out yesterday. I am confident that when I next make a survey of the man-power resources of this country before this committee we shall have been able to account for the 49,000 men. May I say that there are deficiencies in every country where there is a man-power problem. It is inevitable. People die and you do not know anything about them. In the Dominion of Canada people slip across the border and join the United States army; they go into the mercantile marine, and so on, but I do not think it is in the best interests of Canada to broadcast figures of that kind, because after all is said and done, the 390,000 men of whom my hon. friend speaks constitute almost as big a number as the total of the active forces, army, of the Dominion of Canada. I think the people of this country, and even the hon. member himself, take that figure with a grain of salt. He is simply taking the number of orders to report for medical examination and deducting the number of men who reported. The remainder he calls the "lost men". If you look at the table appearing at page 4039 of Hansard of 1943 you will see that there is an explanation of the difference, and it is a simple explanation.
Then my hon. friend takes order No. 142-A, which shows the result of the military training call-up as of January 31, 1944. This shows 433,453 men called, and it explains just what happened. It admits that 9,274 who were called did not comply, and, in addition, that 4,803 orders did not reach the men, making a total of 14,077 as of January 31, 1944. These have not been located, but we have been tracing them and some of them have, of course, been located since that date. Instead of using the figure 14,077, my hon. friend adds another 5,000, making a total of 19,077. I am afraid my hon. friend did not study arithmetic in the same school that I did.


John George Diefenbaker: That is true.


Humphrey Mitchell: At page 2498 of Hansa/d my hon. friend speaks of 22,000 men having been found by commission agents. Actually the figure is 25,710.


John George Diefenbaker: The figure given
by the minister the other day was 22,000.

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Humphrey Mitchell: I said that was an
approximate figure. I have a vivid recollection of that; I was very careful about it, because I was making an extended statement at that time. I pointed out very clearly to my hon. friend that the figure was approximate. Again on the same page the hon. gentleman speaks of the total number of prosecutions up to the end of March, 1944, as being 4,214, when actually there were 5,227.


John George Diefenbaker: Was that not the
correct number up to the end of January?


Humphrey Mitchell: No; the total was 5,227. If I may put it in this way, I do not think it is quite the right thing to endeavour to place other than a proper interpretation upon the man-power situation of this country. It is like the case of a man biting a dog; that is news, while it is not news if a dog bites a man. I do not consider it quite right to let the story go to the four corners of the earth that we have 390,000 men missing as far as the call-up is concerned. Last year it was the man-power muddle; this year I suppose it is going to be the lost battalion. Before hon. gentlemen make statements of that kind, if they are not clear on the facts my office is always open, as are the offices of my officials. If hon. gentlemen want to place the correct interpretation upon any figures dealing with such a vital question as the man-power situation of this country, I am sure my office door always swings both ways, as well as the doors of the offices of my officials provided the information solicited is of a kind that can be made public without being of any assistance to the enemy.


Gordon Graydon: May I ask the minister
if the figures coming from his office would be at all different from the figures given in the house?


Humphrey Mitchell: Of course not; why
should they be?


Gordon Graydon: I do not know, but I
understood that the hon. member had built his case upon the figures contained in a return brought down in the house.


Humphrey Mitchell: The same mistake was
made last year, and I assume that my hon. friends went back to the computation they made at that time. I have sat in opposition in this house; I think I know the duties of an opposition. As I said the other day, when you are asking a question you may spend hours in drafting it so as at least to make it difficult for the government, if not actually embarrassing. So it is when you deal with a set of figures: sometimes when your case is not very good you will not make the sort of
computation you would make if you were sitting where I am, and had to give the Canadian people the figures as they exist in my department. I am not going to say more than that, Mr. Chairman, except that I hope the press to-morrow will make the necessary corrections, not necessarily in the interests of any political party but in the interests of this dominion and the war effort it has been making since the outbreak of hostilities.


John George Diefenbaker: Now the minister
has stated his side of the story it becomes necessary for me to present the figures which I did not place upon Hansard yesterday, and all of which came from the minister's office. I do so because, while the minister has not attempted any explanation of the lost individuals to whom I referred, yesterday afternoon, as reported at page 2501 of Hansard, said:
My hon. friend spoke about figures . . . I do not want to take him too harshly to task on that, but I think that observation might be made in reverse, and I say that in a kindly way. I mean the figures my hon. friend quoted were all staggered.
I take it that the meaning of those words was that the figures I gave dealt with different periods. The figures I gave yesterday- they are in the returns office and can be checked there-all had to do with the period up to January 31, 1944. There would be no necessity for me to place these figures upon Hansard, if instead of returns being brought down which find their way to the returns office and there remain embalmed, the answers to the questions asked by hon. members in connection wiht such matters were placed upon Hansard itself. Let me begin with the statement by the minister that I was in error when I stated that 22,000 represented the number who had been prosecuted.


Humphrey Mitchell: Not 22,000 prosecuted.


John George Diefenbaker: That 22.000 had been picked up.


Humphrey Mitchell: No, not even picked up; traced.


John George Diefenbaker: When I made my speech yesterday afternoon I was relying upon the figures which had been given me by the minister the day before, but they were revised and enlarged after I spoke.


Humphrey Mitchell: My hon. friend will admit-


John George Diefenbaker: I did not interrupt the minister.


Humphrey Mitchell: That is all very well, but I do not want to be accused of bad faith. I was making a lengthy statement; my hon.
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friend asked me a question and I said that I had not the figures before me but that these were the approximate figures.


John George Diefenbaker: Now I am criticized for having relied upon the approximate figures given by the minister. Yesterday the figure was revised up to 25,000. The approximate figure given the day before, upon which I relied, was 22,000, and I am now to be criticized for having used the figures given to parliament by the minister. I think that is sufficient on that point.
Then the minister said I was in error as to the number of prosecutions. In that regard I was relying upon return No. 142F, in which figures were asked as to prosecutions against defaulters under the National Resources Mobilization Act up to January 31, 1944, the last figures available, by provinces or military districts. The answer was as follows:
Prince Edward Island	 2
Nova Scotia	 25
New Brunswick	 89
Quebec	 2,443
Ontario	 722
Manitoba	 324
Saskatchewan	 229
Alberta	 138
British Columbia	 242
Total	 4,214
That was the figure I gave yesterday, the latest information available. Then the minister said that the number of dodgers was only about 49,000, or approximately three per cent.


Humphrey Mitchell: They are not dodgers; I would not go that far.


John George Diefenbaker: Well, they have disappeared. Here is what was said by James Butler, chief investigating officer of the Toronto branch of the mobilization board, as reported in the Toronto Telegram of March 4, 1944:
It is amazing the number of young men who are believed to be dodgers of service with the armed forces.
If three per cent only are missing who are not even dodgers, that would not be amazing. The statement made by Mr. Butler indicates how widespread and how great is the number of those who have disappeared. The record tells its own story. Those records I shall now place before the committee. I shall have to ask the pardon of the committee if I proceed to read these various items. I know figures are tiresome, but I believe it is necessary to refer to them.
First I turn to what the minister said on June 23, 1943, as reported at page 4039 of Hansard, and I have here the statement to

which he has just given his approval. It shows the numbers called for medical examination up to April 16, 1943, as follows:
, .	No. called
Military	for medical
district	Location	examinationA	London	
74,578B	Toronto	
189,205C	Kingston	
60,008D	Port Arthur	12,189E	Montreal	
210,245F	Quebec	
107,883G	Halifax	
43,113H	Saint John	
33,303I	Charlottetown	8,167J	Winnipeg	
67,394K	Vancouver	
72,147M	Regina	
69,000N	Edmonton	
41,243
As I said yesterday, the total is 988,475 called for medical examination.


Humphrey Mitchell: I wonder if my hon. friend would read the prelude to that. That is the explanation.


John George Diefenbaker: I am reading this.


Humphrey Mitchell: You do not want all the evidence in, that is the trouble.


John George Diefenbaker: The records are before the house.


Humphrey Mitchell: But they are not.


John George Diefenbaker: We find that 988,475 were called for medical examination, and the number who reported for medical examination was 608,642. The minister explained the discrepancy to the committee yesterday by saying that in some provinces there is greater industrialization, or greater agricultural activity.


Humphrey Mitchell: Some military districts- not provinces.


John George Diefenbaker: And that explains the reason for the difference? Mr. Chairman, this has nothing to do with the call-up for service; this is the call-up for medical examination. So that as of April 16, 1943, some
380,000	who were called for medical examination did not report for examination. If the records are as perfect as we are told they are-and we know to-day that more than 4,000,000 people in Canada are employed in connection with the war effort-if the record is so complete that the minister can give a perfect break-down as to what all these people are doing, and if all the registrations which have taken place since 1940 are before the department, surely there would be some explanation other than the ephemeral one which has been given as to where the 380,000 went.
Then, coming down to January 31, 1944 we find the information in return No. 142E,

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wherein I ask the number of men called for medical examination as of January 31, 1944.
They are as follows:
No. called
Military	for medical
district	Location	examinationA	London	
97,972B	Toronto	
258,878C	Kingston	
91,481D	Port Arthur	
21,018E	Montreal	
283,376F	Quebec	
116,607G	Halifax	
80.243H	Saint John	
58,641I	Charlottetown	
13.114J	Winnipeg	
93,970K	Vancouver	
111.672L	Regina	
118.477M	Edmonton	
103,968
1,449,417
The number who reported for medical examination were 979,569, or a difference of 469,848 men.
I now pause for a moment to answer a statement made a moment ago by the minister.


Humphrey Mitchell: Where did you get that last figure? It must be from some other return.


John George Diefenbaker: It is the same return, No. 142E, showing the number of men who reported for medical examination on January 31, 1944. The reason why we have to ask for this information in two different questions is so that we would get the exact figures, of the same date, namely, January 31, 1944. When information on call-ups is given as it used to appear in "Canada at War", we were enabled to analyse the statements as changes from month to month took place. Then a new system of bookkeeping was set up. So that in order to get the information, we have to follow the course of asking questions at different times, but as of a given date-not as of different dates.
I paused a moment ago to answer what the minister had said. He said I had made a statement which was not in acccordance with the facts, so far as district F at Quebec is concerned. The statement I made was that fewer than 9,000 of the number called up for medical examination between June 23, 1943, and January 31, 1944, came from district F, Quebec. I did not mention Montreal. It had a very large call-up for medical examinations. I mentioned Quebec district only, and here are the figures: Military district F, Quebec, number of men called up for medical examination as of January 31, 1944, 116,607. The number called up for medical examination, according to the minister's statement of June 23, 1943, as of April 16, 1943, was 107,883, a difference of less than 9,000.
So that the statement I made was entirely correct. And it is borne out by the figures given by the minister last June, and the return, No. 142A.
I now proceed to the next figure. Some of the disappeared group enlisted, on receipt of the order. We may turn to return No. 142A *where the minister answered as to the number who enlisted on receipt of the order. The number who enlisted as of January 31, 1944, was 71,545. In addition to that, there must be taken from the roaming legion a total of 9,317 men, being statutory exemptions, et cetera, men who were rejected or in connection with which there was duplication. This is shown in return No. 142A. If the minister will take these figures he will find that the statement I made was entirely correct. In fact, on the figures I gave, after making due allowances for enlistments of which the department has no record, I made an understatement. But that is not the complete picture. Not only did 469,848 men not answer for medical examination, but after those who were medically examined had completed their examinations and the call-ups took place, another large number disappeared. I now give the rest of the picture.
According to return No. 142A, of the 979,569 men who reported, up to January 31, 1944, the number placed in category A was 434,453 men, less than fifty per cent. The calls went out and here is the record of the disappearances. This is found in return No. 142A as of January 31, 1944. In answer to the question, "How many training orders were sent out?" the following answer was given:
Military- district A 			Number 	 25,859
B 			 81,111
c 	,		 26,144
D 			 6.070
E 			 109,787
F 				 29,001
G 			 21,935
H 			 16,134
I 			 3.811
J 			 23,732
K 			 37,954
L 			 29,170
M 			 22,745
We start off with the fact that 1,449,417 notices for medical examination were sent out and of that number only 979,569 men reported for medical examination. A total of 434,453 military training orders were sent out but only 220,762 men reported. In other words, between the time they were medically examined and the time call-ups were sent out 212,691 disappeared.


Humphrey Mitchell: That is not true; that is not the fact.
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John George Diefenbaker: I am reading from the return.


Humphrey Mitchell: My hon. friend is sticking his fist into a pile of papers and pulling out sheets and he gives a different story with each sheet. That is not the fact. Let us get the record straight.


John George Diefenbaker: There is not a different story. Those are the records from the department as of January 31. It is surprising the minister does not know of these figures because they came from his department. There were 212,691 men who disappeared. Even putting the best side on the question, all that enlisted was 71,545, as shown by return 142-A. That leaves a further number of 141,000 who are still lost and who still must be accounted for.


Mr. ROWE:: How many does that make altogether?


John George Diefenbaker: They can be totalled up. These are not staggered figures; these are figures that come from different returns and they are reinforced by what is shown in "Canada at War". "Canada at War" issued full figures in January and February, 1943, which revealed the situation and showed the trend that was taking place. Men were disappearing and enforcement was falling down. We in the opposition drew that matter to the attention of the country. What happened? Those figures did not appear again in "Canada at War" throughout 1943.
In January, 1944, we had a new set of figures and a new basis of bookkeeping in "Canada at War". It is only by an examination of returns such as I have referred to-I have taken all of the particulars in those returns that have anything at all to do with the matter-that we find out the position of affairs. In spite of the fact that the minister would wave the situation aside there has been no explanation of where these men are, what happened to them or what is taking place in connection with enforcement.
Yesterday the minister stated that he had nothing to do with the courts of this country. That is quite true. I referred to the extremely low penalties being imposed upon men who have been convicted as defaulters under these regulations. It is true that the minister has no control over the courts, but he can alter the penalties that are provided for in the regulations and make the punishment such that those who are minded to default will realize that there is no profit in taking that action.
At six o'clock the committee took recess.

After Recess
The committee resumed at eight o'clock.


John George Diefenbaker: I think I have now placed before the committee sufficient information from the returns and information furnished by the department itself to establish conclusively that not only were the statements made by me yesterday in accordance with the facts, but that the actual figures disclose an even greater number of delinquents than were referred to by me. I have set out in detail, based on the various sessional papers which have been brought down, the number of men to whom medical notices were sent, the number who reported in pursuance thereof, and finally the number who were called up for military service and the very considerably lower number who reported; and deducting therefrom the numbers shown to have enlisted, and the statutory exemptions, the figures I gave yesterday, I repeat, have been conclusively proven. They cannot be answered by merely saying, "Well, we cannot explain the shortage; or the loss, or the missing hundreds of thousands; they must be around, they must be in the armed services"; for I would point out that the department has very full records to-day. Last Friday the minister showed that the number of people in the armed services of Canada and at work was 5,057,000, being fifty-seven per cent of those fourteen years and over. Last year the figures he gave were that the number in the category fourteen years and over was 8,720,000. The government Las the records. The answers regarding man-power given to the house have been summarized by me and brought together in a composite picture; and they reveal exactly the situation to which I referred yesterday.
Another matter to which I wish to refer is that of medical fitness. There is a pronounced difference in the degrees of medical fitness in the various provinces; and I should like to know from the minister whether the Pulhems system for the medical examination of recruits or of those called up under the National Resources Mobilization Act is being used in every province, or whether its application is confined to one or more provinces.


Humphrey Mitchell: It is used in all the provinces.


Mr DIEFENBAKER:: So that it is being used everywhere across the dominion? Its application no doubt accounts for the very large percentage of men who are found to be physically unfit. Now that I have the assurance of the minister in that regard I need not pursue the matter any further.

War Appropria tion-La hour
There is just one other point I wish to make. I referred this afternoon to the January, 1943, issue of " Canada at War." I should like to refer to the February, 1943, issue of the same publication, which showed the position of affairs in so far as the call-up is concerned to December 26, 1942. Even at that time it was admitted in the particulars which were given that 87,485 medical examination notices had been undelivered, that 9,345 military training notices had been undelivered, and that in addition there were cases pending and delinquent and otherwise unaccounted for, numbering 98,128. According to the official records, therefore, the number unaccounted for, including cases pending, was then 194,958. Today the situation is much more serious. The number has rapidly increased until it now amounts to the figures I gave yesterday. What I ask of the minister is the latest figures on the situation. The question was asked yesterday by the hon. member for Hastings-Peterborough, who requested a recapitulation of the figures up to date in order to show the proper, unvarnished position so that the Canadian people might know the facts.
I have given the facts revealed by the answers of the minister and the returns brought down in this house. Those figures, startling as they are. cannot be answered by a mere sweep of the arm and a declaration that they are meaningless; they stand as a direct challenge to the government. Yesterday I placed before this house and the country the generalizations based on the information furnished to this house in the returns; to-day I have supported my statements by figures directly and definitely taken from the government's own answers. The responsibility now is upon the government to meet the situation.
I again suggest that enforcement is important and that it can never be achieved while the penalties provided for under the regulations are of so low an amount that they actually operate as an invitation to those who would be delinquent to continue to be so; for if a man escapes for two, three, four or five months and the only penalty imposed upon him is a twenty-five dollar fine, there is an invitation to wrongdoing, for the penalty is not comparable with the offence.
A j'ear or so ago, there were many who did not understand the regulations, and the provisions for the penalties at that time could be justified. Everybody knows the regulations to-day. Every newspaper in Canada has carried advertisements. Not only that, but a check-up has been taking place all the time. In addition, immunity was offered; all who would return would be forgiven. Yet in the face of all these activities Mr. Butler in Toronto was justified in indicating recently that the situation was appalling in its result. And the minister takes my remarks as a personal criticism. Far from it; it is not given in that way. It is a situation which is difficult. The responsibility was placed on him; he started with an inheritance of delinquents, but that inheritance has been increased.
All we ask is that this condition be frankly faced. To-day we are short of man-power: the minister says that his department is scraping the bottom of the barrel. If so, surely now is the time, having regard to the fact that we face the darkest period of the war in so far as prospective casualties are concerned, to secure the mobilization of every available man. Now is the time to have revealed to the country the situation as shown by the returns referred to, to the end that an intensified campaign may be undertaken with a view to securing the necessary man-power. Placing this matter, not on the basis of any hypothesis, not on anything but the figures of the government, I do not think the minister has any right to suggest that the figures I have given are not in accordance with the facts. Every statement I made yesterday has been to-day established on the basis of the government's returns. I have given a composite picture of the situation, and I ask the minister now to explain what appears to be up to the present time, so far as the department is concerned, the inexplicable disappearance of hundreds of thousands of men.


Mr. POULIOT:: If the minister will permit me before he replies to the hon. member, I have some observations to make, as one who is in daily contact with the soldiers and with the draftees. My hon. friend the member for Lake Centre (Mr. Diefenbaker) is one of the best debaters in this house and I regret profoundly that the figures he has quoted do not speak as well as he does himself.


Mr. MACKENZIE (Vancouver Centre):: Not half so eloquent.


Jean-François Pouliot: There are many things to consider in connection with this problem, and I will not insist on his quotation of what Mr. James Butler, the chief investigating officer of the Toronto Branch of the mobilization board, said according to the Toronto Telegram of March 4, 1944:
It is amazing the number of young men who are said to be dodgers of service *with the armed forces.
While quoting Mr. Butler, my hon. friend rendered a service to his colleagues in this
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house by informing them that the situation is amazing in Toronto and therefore is bad not only in military district No. 5, Quebec.
I have nothing to say in the matter of complaint against what is happening in Toronto, Quebec or anywhere else, but I want to explain to my hon. friend, if he wishes to know, the reaction of the people, and if he is in contact with his own people as I am with mine he will surely agree with me.
In the first place, I am not at all amazed that the number of young men who were found unfit by military boards was so considerable, because all those who have been classified in category E by their family doctor were called again to pass medical examinations before the army board, and they had been declared unfit before by doctors who had followed them probably since their birth. Those men who were physically unfit, were called again, and they were again in a large number of cases found unfit by the military boards.
In the second place, another class of young men were called to pass their medical test before the army boards. They were those who had secured postponement until further notice, et cetera, from the mobilization board. These were not supposed to enlist.
I am not surprised at all that there is some discrepancy in the figures given by the minister, for this very good reason, that most of those officers, especially those who compose the military boards, are not under the Minister of Labour, but under the Department of National Defence, and therefore he gets his information from the Department of National Defence. I know very well that in Quebec city there is very little cooperation between the registrar and the army medical boards, and it takes a very long time to have a file transferred from one office to another.
Moreover, I do not think my hon. friend is quite as fair as he usually is when he blames the minister for figures that appear in "Canada at War," which is published by the wartime information board under the Prime Minister. We have three branches under three different heads. There is in the first place the Department of National Defence, which is supposed to supply figures to the Department of Labour; then there is the Department of Labour, and then there is the wartime information board. Since it is human to err, I am not surprised that there may be some discrepancy in these figures. I could quote to the hon. gentleman the fact I have mentioned in these last days to the Department of Labour about some young men, seventeen or nineteen in number. They were farmers' sons. They had postponements until further notice, and they went to see the employment officer, selective 
service. They got a permit to work in the forest and they did so. Then, while they were there, they went to the post office, filled in the regular forms, and got receipts. What happened? They were arrested by the mounted police and put on the train. This happened in Ontario. They were put on the train, had handcuffs on them from North Bay to Toronto, and they were sent to various military camps. They were acting in accordance with the law when they were discharging essential duties as farmers and as lumbermen, and it would be impossible for me to argue with my hon. friend if he takes for granted that the army has a priority over essential industry and that those in essential industries are supposed not to do any useful work in this time of war.
That is why I have asked for some detailed information about the essential occupation of men who are not in the army, in order to know what they are really doing for war purposes while working in the forest or on the farm, et cetera, et cetera; and the answers I have received are far from satisfactory.
I will tell my hon. friend more, and my files are at his disposal just as they were at the disposal of the Minister of National Defence. It is that in military district No. 5 the leading officers are not all French Canadian, but I say that in a large number of cases men from my constituency had a Taw deal from the army in that district, a raw deal that they would not have had in another district. Is it fair to penalize military district No. 5 for the incompetency of some officers who are always defended by the Minister of National Defence when he is in the house?
I do not want the Minister of Labour to be made the goat of other departments over which he has no jurisdiction. If he were in charge of all draftees, as he should be, the situation would be entirely different, and the hon. member for Lake Centre would be perfectly justified in arraigning the Minister of Labour and asking him to render an account. But at the present time he knocks at the wrong door. All that he has said to-day should have been said on the estimates of the Department of National Defence. Why should the Minister of Labour be made the goat of the medical boards of the army when these men are not under his jurisdiction? Besides that, this afternoon I listened carefully to my hon. friend, and he said something about conscientious objectors and the Doukhobors. There are quite a lot of conscientious objectors; there are quite a lot of Doukhobors. But I make a great distinction between the man who does not take advantage of that law which is stupid and antiquated and should be repealed, and the others.

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There is no reason why special treatment should be given to the conscientious objectors, the Mennonites and the Doukhobors. When the plebiscite was before the Canadian people the government asked for a release from all promises made. If the answer "yes" meant that the government was freed of all promises made to the Canadian people it applied as well to Doukhobors, Mennonites and conscientious objectors as to anyone else, and I am one of the very few members who has protested because of such discrimination. It is true that I have in my constituency no Douhkobors, no Mednonites and no conscientious objectors. But if I had I would take the same stand as I do now.
There is something else that my hon. friend should argue on. It is the number of all guests of military age or who have become of military age since they landed in this country from the beginning of the war on We are told that some of them are called now for their military training. Whether that is true or not, I do not know.


Humphrey Mitchell: It is true.


Jean-François Pouliot: No statistics have been
given on that point; but this I know, for a time it was supposed to be bad manners to call up any young man who came from some other country and who had reached military age and was in good health. He was not supposed to be called to the army. Here again I ask for the support of the hon. member for Lake Centre. I ask him to support me not only to apply to Mennonites, Doukhobors and conscientious objectors the same treatment as to any other people, but to see to it that every young man of military age when he arrived here or, if he was not of military age, but has become of military age since the beginning of the war and who is in this country, follows the law, respects the law just the same as any other British citizen in this country. I appeal to him for that support.
I appeal to him for another thing. I appeal to him to send overseas as first reinforcements all those pasty youths who are in uniform here in Ottawa, who have never been to any theatre of war and do not intend to go to any theatre of war, who wear the uniform who have allowances at the expense of the Canadian taxpayers, and who are supposed to be heroes just because they wear a uniform. They should be the first to go. I appeal to the hon. member for Lake Centre to support me in urging not only upon the Minister of Labour but upon the government the necessity of putting all these men in the place where they should be. Why should they
wear the uniform like that? Why' should they take up so much space on the sidewalks? Why should they get allowances when they do clerical work? The same with women; they wear the uniform, all right. I have been told very often by the Prime Minister that they were brave, that they were shedding their blood for their country. Let them do so. Let them be brave. Here again I ask for the support of my hon. friend.
I will tell more to my hon. friend. I see my old friend the hon. member for York-Sunbury. He must remember that when his past leader was Prime Minister I very often indulged in statistical work to condemn his government. I spent days and nights in working on figures and numbers of every district about exports and imports, et cetera, et cetera, in order to prove my thesis to condemn the Bennett government. That was in peace time. It is a kind of sport in which I would never indulge in war time, and I regret most profoundly that the hon. member for Lake Centre has been doing in war time precisely the same kind of thing that I had a right to do in peace time, because I was doing that for political purposes and the result was good. It is one of the reasons why my hon. friend was defeated in York-Sunbury, as my speeches were read throughout the land with good effect. But now that we are at war the hon. member for Lake Centre is playing a dangerous game; and when his leader, the late John Bracken-


Some hon. MEMBERS:: Oh, oh!


Jean-François Pouliot: comes to the province of Quebec to make love to the Quebeckers, whether they are French Canadian, Scotch, Irish, English or Jew, he goes. And then after he is gone we hear our friend the hon. member for Lake Centre making speeches such as the one he delivered yesterday and the one he delivered to-day. It will have a very bad effect, and it is not because he mentioned what was said by Mr. James Butler of Toronto about people from Toronto that the people of the province of Quebec will forgive the insult that they have received that they are not doing their duty.
May I tell my hon. friend that I represent a constituency which has supplied the army with perhaps the largest number of men that any rural county has given? I shall not quote many names, but not long ago an officer was honoured here on the occasion of the opening of the sixth victory loan campaign; he was honoured not only here but in many other parts of this country. He was a native son of Temiscouata. Then there
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were many others who were made prisoners at Hong Kong or who were killed at Dieppe, Sicily and many other places.


Richard Burpee Hanson: He left there a long time ago, before you came around.


Jean-François Pouliot: What does my hon. friend Bay?


Richard Burpee Hanson: I said that he left there before you appeared on the scene.


Jean-François Pouliot: Would my hon. friend be kind enough to repeat the sublime word?


Richard Burpee Hanson: I will not bother.


Jean-François Pouliot: I will tell my hon. friend that when he does for the soldiers what I have been doing in my constituency he will have the right to speak to me, and when Filip Konowal, V.C., kisses his hand, as he has kissed mine, he will have the right to speak to me. Until then he should put live charcoal on his mouth. I will not stand for any joke because the people of my constituency have done their duty. I do not care what is said about me. I attach no importance to what the hon. gentleman might say in a derisive way. I tell him that I will be a tiger to defend my own people as they deserve to be defended. I will tell not only my own people; soon I may have an opportunity to tell the people of this province of Ontario how some Tories jeer when we talk of men of whom the country is so proud, men who have done their duty, who have not been afraid to go to war, and who have better war records than that of the hon. member for York-Sunbury. What is his military record? It is the same as that of Arthur Meighen, the same as that of all the Tories who have never been to war but who preach conscription in order to encourage the big contractors who want to sell more boots, more uniforms and more food to the soldiers. Canada Packers! The hon. gentleman is this sort of imperialist. He laughs, just as the Tories laughed during the depression when I mentioned the case of the poor settlers who had to make soup from maple leaves, our national emblem. They laugh; but when John Bracken copies to the province of Quebec he does not speak as the hon. member for Lake Centre spoke yesterday and to-day. If John Bracken comes again, however, the people of the province of Quebec will remind him of what has been said yesterday and to-day. They will remember that the former leader of the opposition, a man who was honoured with the confidence of his

former leader, Mr. Bennett, laughed and jeered when I mentioned the heroes of this war-


Richard Burpee Hanson: I did not laugh at the heroes of the war; I was laughing at you. You ought to be in Verdun.


Jean-François Pouliot: -because they are French Canadians coming from Quebec. That is why hon. gentlemen opposite laugh. I do not know if my hon. friend had the honour of shaking the hand of Major Paul Triquet, V.C.; but when the time came tp honour a man who had one of the finest records of the last war, a man who is doing the dirty work downstairs, the only holder of the Victoria Cross under this roof now that Major Gregg is in Brock-ville, was it the hon. member for York-Sunbury or the hon. member for Lake Centre or the member for Temiscouata who brought that man before the committee on honours and decorations, who wired the victory loan campaign committee that Filip Konowal, V.C., deserved a place on the stand here, and who introduced him to the Prime Minister, the Minister of National Defence and Major Triquet himself? I did it because an older man, a privy councillor, a man with the authority and prestige of the hon. member for York-Sunbury, did not do it. Now let him laugh.


Richard Burpee Hanson: You are a great man.


Jean-François Pouliot: Who is a great man?


Richard Burpee Hanson: You are.


Jean-François Pouliot: Oh, no; I do not pretend to be a great man. I give others an opportunity to do the right thing, but when they do not take advantage of the opportunity I have to do it myself. We are hearing now about national unity. Hon. gentlemen opposite say, "Let us be one in this country." One with Tories like that? Never; it is impossible. It is all right; they may cluck, but when they are behind our backs they are treacherous. They say things that offend the pride of proud men, things that are most contemptible because they may affect the future of this country. As a party man I feel that I am rather independent; but there are things I cannot let pass; there are things to which any man whose heart is in the right place cannot listen without being offended. There are disgraceful scenes which one cannot witness without protesting very strongly and deeply.
Let me remind the hon. member for Lake Centre, the hon. member for York-Sunbury and other hon. gentlemen opposite who may be more serious, that at times they have voted with the

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Cooperative Commonwealth Federation in order that the farmers might receive more money for their products; but when the time came to defend the farmer himself, because the farmer is an asset to the country, they always voted as one against us. Then they will tell of their love for the farmer. If they want me to recite facts I can do so. I can tell the hon. member for-well, the constituency which he will no longer represent after the next election-that every time I and other members of this house have defended the farmers and asked for a postponement of their training, hon. gentlemen opposite have always voted against us. How can they be believed, then, when they say that they are the friends of the farmers and that John Bracken is milking a cow every day? That may be true, and perhaps they themselves are all anxious to milk the cow, but their statements cannot be taken seriously.
This concludes the first part of my observations in reply to the hon. member for Lake Centre. I wanted to say these few words before the minister answered the hon. member. Let me tell the minister that when a living being has two or three heads it is a success at fairs; it is considered a monster. I do not believe any single thing can be carried into effect successfully when it is decided by three heads. There should be only one head. It will be impossible to deal with selective service successfully until the Minister of Labour is in full charge of it. That should be easy, provided no one has an inferiority complex in regard to the imperialists, those men without a country, who think that Canada is just an adjunct of the empire and that all our policies should be decided in and by London. It will not be enough to have all these matters under the direct control, supervision and direction of the Minister of Labour; it will be essential also to decide all matters of war, in the broadest possible sense, according to the Canadian spirit. I will not shock any Tory by saying that. Was it not Mr. Bennett himself who spoke of "Canada first", a policy that was never applied by him? It is a very sound policy; theoretically it is beautiful, and brings cheers from all comers when it is advocated by someone other than my humble self. That is nothing; my point is that the policy of Canada first should be carried out in fact rather than by words.


Humphrey Mitchell: I am not going to reply at length to the hon. member for Lake Centre. The points he has raised were covered fairly well in my statement to the house and also in what I might call the basic tables I placed on Hansard at that time. "He has arrived at a figure, and I do not know how he arrived at
it, of 380,000. One hon. member raised the ante up to, I believe, 700,000, and if we debate this question long enough everybody in the dominion will be missing, before we are through.
I believe in simple things. I know my hon. friend is an able criminal lawyer. I count among my friends, past and present, on both sides of the house many men who were able criminal lawyers, and I may say, in a most kindly way, that there are a good many men in this dominion to-day who are breathing God's pure air only because of the dexterity of able criminal lawyers.


Richard Burpee Hanson: Now, why say that? That has not anything to do with this.


Humphrey Mitchell: I approach this matter in a simple way. The hon. member has raised the figure of 380,000. I speak of a man-power pool of 1,665,504. That is stated in simple language in table No. 7, tabled by myself last week, in which I have enumerated all the different divisions of these so-called missing men. This is found at page 2451 of Hansard for April 28, where man-power is listed according to categories. These are some of the categories:
Men applying and on postponement-Fit men, i.e., "A" category only Unfit men, i.e., "B, C, D, E" category Unfit for front line combatant duty, i.e., active service, and includes "B", "C", "D", t"E" categories and rejections on enlistment Not yet sent order-military training Not yet sent order-Medical examination Sent orders-time limit not expired Not yet 18J years of age but born in 1925 Not available, i.e., outside Canada, not acceptable, deceased, in gaol, reserve army, et cetera
Statutory exceptions, i.e., clergy, police, enemy aliens, et cetera Over age
Not accounted for
I am not going to read all these totals, but I shall give the gross total for each military division, and the number not accounted for. They are as follows:
	Not accounted	
Division	Total men	for
London 			1,794
Toronto 	
306,386	7,887Kingston 	
103.024	733Port Arthur ..	
24,997	324Montreal 	
325,647	18,923Quebec	
136,631	6.252Halifax 	
86.178	1,166Saint John ...	
66,393	889 .Charlottetown	
13.575	33Winnipeg . ...	
108,607	1.017Y ancouvor . ..	
125.479	5,063Regina 	
135,483	3,235Edmonton ....	
122,097	1,685That makes a	total of 1,665,504	of whichtotal of 49,001	are unaccounted for. That is	
the figure arrived at after all the statistical
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resources and staff of the Department of Labour have looked into it. It is the official figure for this dominion, notwithstanding a compilation made in a series of returns asked of the ministry of Labour. Those figures were arrived at with the assistance of the bureau of statistics and my own organization. I have a staff of about 450 in Ottawa, and of course I have staffs in every military district across Canada. In addition to that, we have people in the headquarters of the armed forces.
That is the position I am going to take; that is the answer. After all the resources and all the staff we have at our command have been used, that is the picture arrived at.
As I said, I believe in stating things simply. This afternoon my hon. friend read from return No. 142A. He read the first two columns, namely, military training, orders sent out, 433,453. He read the next column: reported, 220,762. He then made a subtraction and got the figure of around 212,000 odd. But he did not go on and read the whole thing. He did not read those enlisted on receipt of orders, amounting to 71,545.


John George Diefenbaker: I put it on the record.


Richard Burpee Hanson: Certainly.


Humphrey Mitchell: And " orders returned, 4,803."


John George Diefenbaker: And I put that on the record. [DOT]


Humphrey Mitchell: And, " orders not complied with, 9,274."


John George Diefenbaker: It is on the record.


Humphrey Mitchell: And industrial workers, and all those who have been postponed, amounting to 117,752. Then there are statutory exemptions which, as I pointed out, include clergy, people in gaol, and so on, amounting to 9,317.
I must insist upon this, that to the people of this country those are the figures. I am frank to admit that at this very moment there are 49,000 people we cannot account for. As I pointed out before, it may be that a great many of them have joined the United States army.


Richard Burpee Hanson: Oh, that is a new thought.


Humphrey Mitchell: It works both ways.


Richard Burpee Hanson: That is a new thought.


Humphrey Mitchell: No; it is not a new thought, at all. It may be new to my hon. friend, but it is not new to me.


Richard Burpee Hanson: It is new to you, too; you never suggested it before.


An hon. MEMBER:: Yes, he did.


Humphrey Mitchell: My hon. friend went to the United States the other day, and lost his identity, too.


Richard Burpee Hanson: No; I lost
my passport, my identification card.


Humphrey Mitchell: And might I say this, that he did not find it again until I gave it to him.


Mr. JOHNSTON (Bow River):: And he is not sure of it now.


Humphrey Mitchell: And my organization is just as efficient in the bigger field of selective service, in connection with call-up for military service, as it was in connection with my hon. friend's passport.
I am not going to say anything further. I have tried to keep to the point, without trying to build up a straw man, only to knock it down again.


Mr. CHAMBERS:: Mr. Chairman, in view of the fact that the speeches this evening have wandered from the actual subject under discussion, may I crave the indulgence of the committee to start at a point even more remote. In the army time is either hanging very heavily on one's hands, or it is a matter of great immediacy. With that excuse I will, if I may, wander slightly.
It is a long time since I have had an opportunity of saying a few words in this house, and I can do so now only from the point of view of the troops overseas to whom it is to be supposed that these drafts, when they are finally obtained, will be sent. The attitude of a great many of the men overseas toward the question of the drafting and training of men in Canada for the defence of Canada and for fighting overseas is that they are not really greatly concerned with it. The opinion of the men is that fundamentally one either wants to fight or one does not. That may not be a popular thing to say, but that is the fundamental fact which I think all of us on both sides of the house might as well bear in mind.
But there can be no question either in their minds or in ours as to the ultimate result of the policy, however it may be applied. If there are not sufficient men who want to fight, at least those who do must not be let down if it is merely a question of sheer man-power. I must confess that it is a bit disturbing, knowing how well and how magnificently volunteers from the province of Quebec have fought in this war, having been with them, to find that a wrong impression should be created by

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the passage of a resolution such as was passed recently in the legislature of that province. It does a great deal of harm because it is not explained or understood. It does not lead to that complete understanding and sympathy between our fighting men over there which is what we all seek to achieve. However, it is not a thing I can do anything about; it is not what I rose to talk about.
What I wish to speak about, if I may, is the attitude of the troops, their thoughts, their ideas, their hopes as to what eventually lies before them. I cannot in any sense claim to represent them, but I can at least say with complete truth that I am one of them. I have had some small opportunity of knowing what is going on in their minds. It is a long, far cry from Dunkirk to May 1, 1944. Throughout that time we have managed by means of a volunteer system to build up overseas a large combined air, naval and land force from Canada, a portion of which has been tested in battle and not found wanting, and the remainder of which is waiting to go over into that country to which our fathers went in 1914-18.
Some remarks have recently been made in this house about the part played during this time by the people at home. It is not unusual to find men returning from overeas who become a little bitter on the subject of the attitude of civilians at home. That is understandable, but I just want to say this for myself alone. I have been home only a few weeks, but I have had some opportunity of meeting people in various parts of Canada. I want to pay a tribute to the working men and women of Canada, not only for what they have produced but for the way they have unceasingly and uncomplainingly carried on; and to management for the results that they have produced with the labour at hand. But especially I want to pay a tribute to the citizens of Canada for the way in which they have responded to war loans, Red Cross drives and the many other demands made upon their loyalties and emotions. They have responded month after month and have given vast sums of money to back up in a mute way, the only way that so many of them can, the war effort of this country. This is not a government war; this is not a party war; it is a citizens' war. I am glad that as a soldieT I can come home and find my fellow-citizens doing a first-class job on their front. It will be something to tell my comrades overseas.
'Now something about them. During the long wait we perhaps came to be termed the Duke of York's Own more than anything else. Hon. members will remember that the Duke of York had 10,000 men; he marched them
up the hill and he marched them down again. During that period of the defence of Britain, then in the Mediterranean the fighting in .Sicily and Italy and now when they are on the edge of prospects, the hardest burden our men have had to bear, has not been the food conditions; it has not been the living conditions; it has not been even the liquor conditions; it has been something that their relatives here at home are sharing-homesickness. The hardest thing our troops overseas have to bear is the long sustained absence from their home country. But the fact that in spite of that they have been able to retain their sense of responsibility and discipline is, I think, no mean tribute to them.
Somebody asked me the other day what the boys think about the war itself and about the time that is to come after the war. We are encouraged in knowing that all members of this house are united in the ceaseless endeavour which I have witnessed since I have been here, an endeavour which is supported by a tremendous amount of good will through the country, an endeavour which is led by the government, to provide rehabilitation measures which will allow our boys to take their normal places in Canadian life when they come home. They are bucked up by knowing that that is being done, but I would suggest to the government that some direct measure be taken to provide our troops overseas with knowledge of what has been prepared for them and of what as yet is not completed but is under way. Most of us over there are very ignorant on the subject, and it would add to our understanding of what goes on, and also help our morale, if we had a clearer knowledge of what is being prepared.
We know that no matter what measures may be adopted, what laws may be passed in this chamber, what training may be entered into, what money may be provided, unless the general level of employment in this country is high at the time, those measures will inevitably fail of their own weight to provide employment. We know that the basically sound administration by controls and by government direction has ensured the probability of a satisfactory employment situation at the end of the war, and we want to make sure that they continue in so far as it is necessary.
We also feel very strongly that, because our country has made a measurable sacrifice in this war-and it is not by any means over- it would nevertheless be well now to-consider the fact that we should also, perhaps in a minor way but at least in a minor way, make our small contribution in after-war international meetings to prevent a war in the future. I think that is fundamental.
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Then, too, at the back of the heads of most of us, I think, is the question of a home. Thousands of our men have married overseas; thousands of others are going to, before the war is over. Many of us have been in the army for four and five years; some of us will soon have been in the service for six years; and while I do not know how long the Japanese affair may continue, it is conceivable that many may have been in the services for seven years before they settle down again in this country. In the army there is no home, and home remains still the anchor of the Canadian overseas. Our idea of home is the mental anchor that sustains us. We look forward to having homes when we come back. We want to make sure that the government, the parliament and the people of this country know that.
Therefore it simply sums up then, does it not, to this, that basically we want to take our share in the provision of a general security. We do not ask, I think, anything beyond the opportunity to provide that for ourselves. After all, we are volunteers in a great adventure.	We want to take our part in the
provision of it for all of us. We want to make sure that we have homes to come back to.
I have personally no great optimism as to the outcome of this war. I do not see abroad in the world any great spirit of tolerance and good will among nations. I have seen in this war, and I know I shall see again, the tremendous value of good will between man and man, and this is a great deal. I have seen the British infantry from Northumbria moving up the line, small, hardy men, as their forefathers were, but great men; I have seen the 51st Highlanders-Scots. I have been alongside the United States troops in this war, and I want to say to you, Mr. Chairman, and the committee and this country, that there are no finer fighting men in the field than the Americans. Alongside the French and the others, from this there comes a great comradeship. I hope that this will be felt, too, between the governments, between the peoples who are represented by these governments, so that there may come out of this, if nothing else, a greater patience, tolerance and understanding among ourselves as peoples and among each other, even here.


Charles Edward Johnston: I want to bring the committee back for a few minutes to the subject of national selective service and the relationship of employee and employer.
I am going to cite a case to the minister, not as a particular instance but to serve as an example for him to give an opinion regarding

its solution as applicable to conditions which exist throughout the country. I think it is well understood that in the case of an employee-I am going to refer to the miners because I am familiar with mining conditions in the Drumheller fields-a man who has quit his job without giving the required seven days' notice is liable under the regulations to a penalty. He must comply with that requirement, and if he does not do so he can be prosecuted.
Now here is a situation where the mine management itself did not comply with the government regulation in this particular respect. One of the mines in the Drumheller field closed down without giving the men the required seven days' notice. They were somewhat deceitful in the action they took. They knew they were going to close down-they notified the men that they would give them at least two weeks' work before the shut-down came about; and further they informed the men that they could not qualify for unemployment insurance until they had been unemployed for nine days. As a result, the men in this mine did not apply for unemployment insurance, and when they went to make application they found that they had not lived up to the required regulations. These men complain that they have been wrongly treated, and that they should receive at least the seven days' pay which the mining company owes them. It is suggested that the only recognition these men can get would be by starting a civil action. That, it seems to me, is not quite the proper thing. I hope that my information is wrong and that the minister will correct me when he answers this question. I seems to me that there should be some regulation vrhereunder the government will prosecute mine owners or mine management and force them to comply with the law, just as they compel employees to comply with the regulations, because some mining companies are deliberately closing down and debarring their men from their rights. I think the minister knows the case to which I refer, because I have communicated it to him by letter, but other cases have been drawn ,to my attention, and in settling this one we might be able to settle the others. Would the minister tell us what can be done in a case of this kind with the mining companies?


Humphrey Mitchell: On the question of unemployment insurance, of course, the employees have the right to appear before the referees ir>
the district. On the other question, I should like to point out to my hon. friend that it is not a one-way street; if the workman has to give seven days' notice the employer has to do likewise. You cannot have one law for one group of individuals and a

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different law, dealing with the same subject, for another group; that kind of thing leads to revolution. While I am not intimately acquainted with the case mentioned by my hon. friend, if he will turn the whole matter over to me I shall have our people investigate it and see if we can do anything for these men.


Charles Edward Johnston: I did write the minister, and I have his acknowledgment signed by himself. Since I wrote about this case, two others have been drawn to my attention. One was up in the Edmonton district, where a mine deliberately closed down without the men receiving any notice at all, and I am informed by some of the employees who have written to me that they are advised that their only recourse is to take civil action. That should not be so, because presumably the mining companies are subject to some regulation in these matters.


Humphrey Mitchell: We have an enforcement branch which deals all the time with cases like that. All that men in that position have to do is to write to us, and that sets the thing in motion. I shall be glad to get the details, and if the cases are well founded, the necessary action will be taken.


Mr. NOSEWORTHY:: Just as a matter of information, I should like the minister to explain what appears to be a duplication in table No. 7 to which he referred earlier. In item 2 there is listed a total of 138,497 men as unfit in categories "B", "C", "D" and "E". In the next item, unfit for front line, there are included "B", "C", "D" and "E" categories. Does that imply that the 138,000 men in the second item are also included in the third?


Humphrey Mitchell: Some men are classified as 'B", but in the final examination they turn cut to be "A". There are two sets of cases; one is positive and the other doubtful.


Joseph William Noseworthy: Are those "B", "C", "D" and "E", included in the third item, men who have been reexamined and are not included in the first, found to be of a lower category later? Just what is the point of giving two sets of figures for the same category?


Humphrey Mitchell: One is on postponement, and the other is not.


Mr. ROSS (St. Paul's):: I was very much interested in listening to the excellent speech of the hon. member for Nanaimo (Mr. Chambers), and later on I shall have something to say with reference to some of his remarks. We have had a lot of talk about call-ups, but when we hear the Minister of National Defence speak about our volunteer army one wonders why we have the call-ups. We are 100-162
all proud of our volunteer army and what they have done, but we no longer have a volunteer army. What we have now is a call-up for the purposes of forced volunteering. That is really what it amounts to. The minister the other day said that he had never heard anyone either in the house or elsewhere [DOT]suggest that the volunteer army was not a desirable thing. I agree with him; I think it is a very desirable thing. But this is a modern war, as the hon. member for Nanaimo says, and there are no heroics of the old kind that appeal to the people to-day. It is a business, and it is not practical to have volunteers altogether.
The minister said, "I have repeatedly indicated my preference for a volunteer army, and I think most Canadians will agree with me." He says he has "never heard anyone suggest that the volunteer army is not a desirable thing", and that is perfectly true. On the other hand there are a great many people in this country who think the voluntary system as it is to-day is not fair. There are many people, the legion, members of the opposition, members of the Liberal party, and many others, who have asked for the full operation of the N.R.M.A. for service anywhere in the world. The minister says he thinks most people in Canada agree with him about the volunteer army. That is beside the point. What about the voices of the people in the plebiscite? That certainly called for something different from a volunteer army Those voices called for conscription anywhere in the world, there is no doubt about that, and we have not got it yet.
Just what is wrong with conscription? What is wrong with that method of getting men? The way it is looked on to-day and talked about by ministers suggests a slur on many of those fellows who are drafted, and it is not fair to them. Too much slur is cast on them. Whether you like it or not, to-day you have coercion for volunteering, and why should that slur be cast on those fellows? What is wrong with conscription in the United States or in Great Britain? There is nothing much wrong with it.


Mr. GIBSON:: What is wrong with the volunteers in Canada?


Douglas Gooderham Ross: Members of the
army in Canada in the last year or so had to go around the place wasting their time in making speeches urging on draftees the necessity for volunteering because they could not be taken overseas otherwise. That principle is wrong. Why do they talk so much about the volunteer army and not about having conscription? As I see it, from now on there will not be a volunteer army, because we know
REVISED EDITION*
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very well that we cannot get men without calling them up first and forcing them to enlist, and to my mind it is simply a whim of this government, who are so spineless that they will not put into force the N.R.M.A. to the full extent.
The hon. member for Temiscouata a few minutes ago talked about the unity of Canada, but he said, unity with the Tory party, never. As far as I see it, this whole question of the N.R.M.A. is not a question of the unity of Canada, if the provisions of that act are to be enforced; it is a question of the unity of the Liberal party in this country. This brings me to another point which was suggested to my mind by the hon. member for Nanaimo. We have in Canada to-day some 60,000 men under the N.R.M.A., and of these in the active army, not liable without further government action to service overseas, 34,950. Some of our men in the active army overseas have been there for a long time, men like the hon., member who spoke a little while ago, and yet we have here 34,950 in Canada in the active army who cannot be sent overseas at the present time. The men overseas have been there for four or five years. Could these men here not be sent over to replace those fellows who have been there for four or five years, so as to give them a few weeks' furlough in Canada? Could we not have some proper system of leave whereby those fellows could have a chance to get back?
As the hon. member for Nanaimo said, one of the worst things facing the* troops overseas is homesickness. The United States have made an arrangement for leave for their men coming from the front from different quarters. They have been only three and a half years in the war and we have been in from the beginning. It does not seem fair to have these men over here and the others overseas for so long.


Humphrey Mitchell: If I might rise to a point of order, I have been on deck for nearly three days now and we have not got the first item through. I have no objection to sitting here until the resurrection, but I think most of the hon. members have. I have no objection to answering questions that affect my department particularly, but I object to wandering all over the lot. The hon. member for St. Paul's is wandering off into the Department of National Defence. I do wish that the hon. member would stay within my department, so that we may at least. get some of the other departments that have to do with the war appropriation bill before the committee in the not very distant future.

The CHAIRMAN; The point of order is well taken in connection with the questions that have been brought up by the hon. member for St. Paul's. I gave readily-I was going to say joyfully-a certain amount of latitude to the hon. member for Greenwood and the hon. member for Nanaimo because it was the first time they had spoken in the committee for years. I believe the time has now arrived when we should get down to the item that is before the committee and stay with it, if possible. I think we should undertake to avoid the multiple repetitions that we have had since the beginning of the discussion. I sincerely appeal to the hon. members of the committee.


Douglas Gooderham Ross: I bow to your ruling. I would not have spoken in this way were it not for the fact that this matter is uppermost in my mind, and' in the second place I listened to the hon. member for Temiscouata talking about everything in the world outside of this particular item. I know you, Mr. Chairman, are fair in these things, but I think if you had held the hon. member for Temiscouata a little closer to the subject it might have been a great deal better for everybody.
My speech has been interrupted by a point of order. I have only a few more words to say. As far as this is concerned, I like to see fairness in these things, and if the hon. member for Temiscouata is going to occupy the time of this committee by wandering all over the place, as he did to-night, then I think he should be called to order immediately.
The only other thing I have to say is that in all fairness to the men overseas-


Some hon. MEMBERS:: Order.


Douglas Gooderham Ross: I have said I have a few remarks to make-


The CHAIRMAN:: The hon. member should be allowed to finish his short statement.


Douglas Gooderham Ross: I say in all justice to these men overseas-and I mean it-we should do something about it, if possible. Instead of having these fellows who are sitting back here in the forces in Canada doing nothing, it seems to me that the government might put into full force the N.R.M.A. and send them overseas and let the men overseas have a chance to come back.


Mr. MARSHALL:: I have one or two questions I should like to ask before the item carries. First of all I do not think we have had a break-down of the sum of something over $11,000,000 submitted to us. I find from previous reports that these figures can be

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broken into (a) the various sections of the department such as the office of the director, headquarters in Ottawa, administration; (b) mobilization division; (c) the man-power records, and (d) the amount set aside to be spent by the unemployment insurance commission for work performed on behalf of national selective service. I should like the minister to explain the difference between the figure as set out on page 396 of Hansard of February 11, which shows that the appropriation for the year 1943-44 was $8,680,225, whereas this amount is $9,845,948. Would the minister be good enough to explain that? Then I have one or two other simple ones that I should like to ask.


Humphrey Mitchell: I will give my hon. friend the breakdown of the $11,000,000 odd. It is as follows:	Labour supply, $811,879.
There is a decrease of $4,496 there. Mobilization, $3,250,000. There is an increase of $157,000 there. Unemployment insurance commission $6,275,150. There is an increase of $900,000 there. Man-power statistics, $223,200. There is an increase of $55,200 there. National registration administration, $442,200. There is an increase of $48,776.63 there.


James Alexander Marshall: The minister has not explained the reason for the difference between the figure set out on page 413 of Hansard and the figure of $9,845,948.37 on the sheet which has been supplied to us.


Humphrey Mitchell: There is a general increase in staff all the way through. That is the answer.


James Alexander Marshall: In the morning edition of the Ottawa Citizen of a few days ago there appeared certain advertisements, presumably from the national selective department. J should like to draw this one particularly to the attention of the minister. It reads as follows:
Special representative wanted. A leading life insurance company requires special representative in Cornwall and district. He must be a man of character and ambition, a real worker, age thirty ' to fifty. The position offers an attractive life career, with opportunities for advancement. Other benefits include sickness and pension provisions. Previous experience not necessary. The right applicant will ibe given a special training course to fit him for his responsibilities. Apply in writing, selective service, F.M. 374.
What are the circumstances surrounding such advertising, and why does national selective service go to the expense of advertising for a leading life insurance company that could well afford to pay for its own advertising?


Humphrey Mitchell: Of course, one cannot advertise in this country except for very few 100-162J
categories, namely, household help and things like that. What is done is, we route all these people through selective service so that we know where everybody is and have the measure of control that we have. That particular company would pay for the advertising. The individual would be routed through our office, and then of course we would have some say whether the individual could go into life insurance or whether he should not be in some other priority.


James Alexander Marshall: Would it be possible for the minister to give me the figures with which I can compare table No. 1 with the figures for Great Britain, South Africa, Australia and New Zealand? Table No. 1 is a rather complicated one, and I should like to break it down if I may into the figures as I see them. This is the way the figures appear in the table:
Aug. 31, Dec. 1, Population class	1939	1943
Per cent Per cent
Armed forces	
0-1	8-7Industry	
29-7	38-0Agriculture	
24-5	19-2Students	
7-6	5-4Unemployed	and all others 38-1	28-7
I should like particularly to direct the attention of hon. members to the tremendous contribution being made by agriculture. In spite of the fact that the percentage of men and women engaged in agriculture has dropped from 24-5 to 19-2 we are producing more foodstuffs and agricultural supplies that ever before. The minister stated, I think on two occasions during the present debate, that Canada's figures are exceeded only by those of Great Britain. Would the minister place on Hansard, on some future occasion if he so desires, the figures for the other divisions of the British Empire, Great Britain, South Africa, Australia and New Zealand? Would it be possible to get those figures?


Humphrey Mitchell: I know the British
figures; but they are secret and confidential; they are not published, I suppose for very good reasons best known to themselves. I cannot speak for the United States; I do not know whether or not they publish their figures.


James Alexander Marshall: I am not interested in the United States; I am talking about the other parts of the British empire. Could we have those figures?


Humphrey Mitchell: I could not give the British figures, but I can try to get the figures for Australia, New Zealand and South Africa.


Mr. CASTLEDEN:: Under national selective service in the west, if a man is called up to take his medical and makes application for
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exemption on the ground that he is a conscientious objector, his case is left entirely to an alternative service officer appointed under order in council. In most cases single men who make application on these grounds are asked, I think quite justly, to take service in some other effective work in Canada. If they are put into agriculture they are asked to take employment under contract, under which they are paid the going wage, which I believe is $40 a month. One of these men is allowed $25 for his own expenses and is asked to pay the balance of $15 to the Red Cross, which I think is quite justifiable. Recently, however, my attention was drawn to the case of a man married in 1937, with a wife and two children, living on a quarter-section of land. He did not make application for exemption on the ground that he was essential to agriculture; he claimed exemption because he was of the Doukhobor faith, and acting in good faith he made application on these grounds. His contract calls for him to employ himself at the rate of $40 a month. Of this total he is allowed $25 for himself, and apparently for his wife and two children, and he is required to pay the balance of $15 to the Red Cross. This man claims he is unable to carry out these instructions, and he wrote asking if this was considered fair treatment. I should like to know whether there is any method by which this man could obtain redress from the alternative service officer with respect to his dependents.


Humphrey Mitchell: I think the channel is there. My hon. friend has stated the facts, but this man can appeal to the associate director, who is in charge of that phase of my organization.
Mr. CASTLEDEN; The alternative service officer?


Humphrey Mitchell: Yes, the director in
Ottawa.


George Hugh Castleden: He can apply to the director in Ottawa?


Humphrey Mitchell: Yes.
Mr. CASTLEDEN; Who is that director in Ottawa?


Humphrey Mitchell: Mr. Westman. If my hon. friend will send the application to me I will see that it gets to the right man.


George Hugh Castleden: I wrote the minister about this case. It seemed to me that in spite of the minister's letter to the effect that the alternative service officer has a staff to investigate these cases, in this instance some-
I Mr. CastJeden.]	.
thing was done which had not been properly investigated, and I was wondering whether there were many other similar cases.


Humphrey Mitchell: No.


Mr. WHITE:: I should like the minister to deal with the point I raised yesterday in regard to the young men who have been given postponements because they are working on farms, and who are being called to the district depots for reexamination. Yesterday I asked the minister if there was to be any change in the procedure, and I wonder if he could give an answer to-night.


Humphrey Mitchell: We have to know where people are. We may give a man a postponement because he is essential to agriculture, but if we are not careful he may pop up in some industry in Toronto or Montreal or Quebec or some other city. We have to keep our fingers on everyone, at least to know where they are; so that I cannot give my hon. friend the assurance that there will be any change in that policy in the immediate future.


George Stanley White: Am I to take it from the remarks of the minister that any young man now working on a farm who has a postponement will be granted a further extension after May 1 or June 1, when his postponement expires?


Humphrey Mitchell: Absolutely.


Mr. FAIR:: Does it make any difference whether that man continues to work for someone else or if he starts out on his own?


Humphrey Mitchell: As long as he is engaged in agriculture; that is the essential point.


Jean-François Pouliot: I was in the gallery when the hon. member for St. Paul's spoke. I wondered if my memory was good, so I looked in the "Parliamentary Guide" and confirmed my recollection that he had graduated from the military college at Kingston. He is strong for conscription, although he never volunteered during the last war and was then of age. When I see him looking as imposing as usual I think he must be a major-general, but I am surprised that a man educate'd at the military college at Kingston should be so strong for conscription though he did not himself volunteer during the last war; and I make that statement as a civilian.


Joseph-Arthur Bradette: Order. When the hon. member for St. Paul's was speaking the Minister of Labour raised a point of order, which I upheld, because at the time the hon. gentleman was not speaking to the item under consideration.

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Jean-François Pouliot: I agree with your ruling, Mr. Chairman, and I shall speak of a more interesting matter. The question now before the committee is undoubtedly one of the most important we shall have to discuss during this war, namely, the question of selective service. I regret very much that some facts have not been recorded by the registrar's office, or by national defence headquarters in each military district. For instance, I asked the following two questions, which may be condensed into one:
1.	Since 1940, how many requests for leave or postponement of training have been submitted, by the army to the mobilization board of each of the military districts other than the military district of Quebec for soldiers or conscripts who were farmers, farmers' sons or farm helpers?
2.	In how many of such cases did the said boards (a) recommend leave; (to) refuse to recommend leave?
Here are the answers that were given to-day:
1 and 2. The army does not maintain records on the number of applications for leave referred to mobilization boards nor on the number of those recommended or not recommended by such boards. To ascertain this information it would be necessary to examine the personal file in the district records office of every soldier.
Application for postponement of training is made direct to mobilization boards toy the individual concerned before his enrolment into the army.
The matter is of great importance, and I know that since the thing has not been done before it would take some time now to gather the information. But there was no excuse for the registrar, and there was no excuse for the headquarters in each district not gathering that information, because each case was submitted by the army to the mobilization board. It is within my knowledge that in very deserving applications for leave the rulings of the mobilization board supported the contention of the army. Very seldom did the men get justice before mobilization boards, when their cases were submitted to those boards by the army.
I see some hon. members opposite who have spoken loudly of their love for the farmer. There is a small number of members of parliament who have done something for the farmer by succeeding in having national war service regulations and mobilization regulations amended. I, for one, have done my share in that work, because I know very well the usefulness of the farmer on the farm. It is a great mistake to tell farmers that their first duty is not that of cultivating the farm, but that it is to enlist in the armed forces. Where would the army be if it had no food? Some country-wide re-forms were gained for the
farmer by the small group of members who were fighting for him last year, and whose claims are on record in the Votes and Proceedings of this chamber. They have got something for the farmer. They have tried to secure recognition of the importance of his work on the farm.
For instance, the former chairman of the Quebec mobilization board had the feeling that all those ?f military age who did not join the army were slackers, and unworthy of British citizenship. He once wrote me:
You must understand that we cannot postpone the farmers' service indefinitely.
In his view, a postponement was a favour, not a right in virtue of the law. He and his brother colleagues of the board did not understand either the letter or the spirit of the regulations, and we have had to put up a struggle for the farmers; for everyone will realize the loss that must result when the farmers are taken away from their farms. It is disastrous.
I had the unpleasant duty of reporting him to his minister, who entirely agreed with me, to the effect that the farmers had the same rights as others occupied in seasonal and essential industries, and were entitled to postponement. The staff of the board had to be changed because of their refractory turn of mind.
Now, when we hear some people saying that the farmers are exempted from service, it is untrue because there are a good many farmers who went to their training in good faith but they were kept in the army by men who are not expert in agriculture. There are many farms that cannot produce as much now as they did before, and that is exactly the reason.
The first reform was to secure postponements of six months instead of four for all those engaged in an essential industry. The second reform was that instructions were given to all the national war services boards in accordance with the statement made in the house on November 11, 1941, by the then minister now Mr. Justice Thorson. These were his words:
Mr. Thorson: My answer will be in reply to the question asked by the hon. member for Temiscouata (Mr. Pouliot) and the hon. member for Hastings-Peterborough (Mr. White). No postponement can be for longer than six months, but when that six months period is over, another^ postponement may be granted. The jurisdiction of the board is not confined to the second postponement; the board may grant one or more extensions of the original postponement, but each postponement must be for a period of not longer than six months. In each case the board looks at the application
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from the point of view of the national interest and deals with each ease upon its merits. It has complete jurisdiction in granting or refusing an application for a postponement order.
The ex-chairman was a judge, and he had had the distinction of having four of his judgments reversed at one term of the court of appeal. Under his chairmanship the jurisprudence of the board was that all farmers who worked as lumberjacks during the winter were not bona fide farmers. He always refused a postponement in such cases.
I succeeded at last in having him remove that from the picture, but he was responsible to a large extent for the otherwise inexcusable farm and labour shortage in the Quebec district. The representative of the farmers was a former wood-scaler of the Power Lumber company of St-. Pacome. Both the cx-chair-man and he were the choice of the Minister of National Defence for Air. Originally the third member of the board was a former mayor of Quebec city, and the father-in-law of the D.M.O. of military district No. 5. He died and was replaced by a labour leader who was so silly that I had only to mention in the house a long distance telephone conversation I had with him to have him replaced by another man whom I do not know, and whom I have not yet called over the telephone.
It was quite a feat to get rid of those people whom Ottawa seemed to consider more indispensable on the board than the farmers on the land, the lumberjacks in the forests, the firemen and the brakemen on the trains, and so on. And there have been advertisements appearing in the press with pictures of the Minister of Labour. I had so much trouble with the board in Quebec city that I had to write them to the effect that if they did not consider seriously the cases of some farmers' sons who were working in the forests during the lumbering season, I would have to write to the papers and ask them if they were really authorized to publish the minister's picture, or if it was just an April fool joke. The picture of the minister was put alongside the statement that those who were working in the forests would be considered as working in an essential industry. It is not surprising that these things happen when we consider the point of view of the imperialists, those who are blind and who do not realize the importance of having men in all the various fields of endeavour.
I complained about the office of the Quebec registrar. There have been son*e changes, but the clean-up has not gone far enough. I commend the minister for having put out one of the assistant registrars. I complained about him three years ago and it has taken that long to get rid of him. What did he do
FMr. Pouliot.]
while he was there? What did the incompetent judge do while he was chairman? Many applicants suffered injustices and many farmers have been placed in the position of producing much less because of the stupidity of these men. I want the minister to understand that I have no grievance against anyone. When I complain about some one on these boards I do so because I know there is inefficiency. I try to help him by giving him information which he could not secure otherwise. Many people are afraid to tell the truth because they fear they will be penalized. They fear that rulings will be given by these men if they denounce them to the minister. It is not a question of carrying tales, to use the popular expression; it is a question of informing the minister of what is going on.
The proper way to secure the right information as to how the law is being administered is not to write to the guilty parties for a report. I know this man is incompetent because I know this is not the only occasion mistakes have been made. What happened? Most of the time he was asked to report on my complaint and it is not surprising that his answer was his own justification. Things got so bad that two years ago I had to assign as a witness the very man who had been fired by the minister after three years of complaints. An investigation was carried on in court before a district magistrate. I asked the selective service to secure a copy of the reporter's notes, but I do not think this has been done. I gave my services free and I did not feel like paying to have the stenographer's notes transcribed for the government. I expected the department to do that. I do not know if it has been done yet, but many months after the case was over, the notes had not been transcribed by the court stenographer. This inquiry showed the incompetency and inefficiency of that man who had the power of life or death on draftees.
I read what was said yesterday and I have listened to what has been said to-day about military district No. 5. A clean-up is needed in the army headquarters and national selective service in Quebec city. I should like to say a word of praise for the representative of selective service on the mobilization board in that city. The hon. member for Quebec West and South (Mr. Parent) says that I am right in complaining about the army in military district No. 5. French Canadians are getting a raw deal from French Canadian officers who have never been at war. I do not say that it is only French Canadians who are treating my compatriots in the province of Quebec in that way because at headquarters in Quebec city there are people from

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all over the country. But French Canadians are not getting a fair deal from the medical corps of the army. I think I have given enough instances of the trouble they have.


Mr. McNEVIN:: Mr. Chairman, you ruled that this debate should be confined to the Department of Labour. We are now getting into a discussion of army matters.


Jean-François Pouliot: My answer is quite
obvious. The minister gave figures which had been provided by the army. All day yesterday this was the subject matter of the debate, which resumed at five-fifteen this afternoon until six o'clock, and then from eight o'clock until the present time. I complained that the minister was not the boss of his own department, that he had to rely upon figures over which he had no control. I am ready to help him to the limit, although I do not know what the limit is. Even though we are at war we should have reforms at and from general headquarters.
As my hon. friend knows, these farmers are called up for medical examinations. They receive these notices from the registrar who is under the minister. Then the mobilization boards which are under the Minister of Labour decide upon matters submitted to them by the Department of National Defence. How is it possible to discuss the operation of this law under the Department of Labour without mentioning what happens in the Department of National Defence? It is all the one and the same thing. It is not a question of being prejudiced; it is a question of seeing that Canadian people do their best in producing war materials on the farm, in industry and everywhere else. There has been a complete ignoring of the importance of the work being carried on by men in essential industry.
At this point I should like to ask the minister a most important question. What is the arrangement between his department and Canadian National Railways and the Canadian Pacific Railway company regarding the calling up of men to the camps? There is one man in the C.N.R. and another in the C.P.R. who have the power of life and death over railway men. These men are located in Montreal and they decide whether a man is essential in his own district. To my own knowledge men have been recommended by their own divisional superintendents and this recommendation has been reversed by these men who are in Montreal. It is Mr. Edge in the C.N.R., and there is another man in the C.P.R. If a man does not have a recommendation from either of these gentlemen he goes automatically to the camp, no matter how essential he may be as a railway man.
There are essential positions in the railway business. Is an old man who is past the superannuation age, who can be seen at the same hour every day at the news-stand in the Chateau Laurier, to decide whether a man is essential? That old man has outlived his usefulness and yet he has the power of life and death over other railway men. As I say, he is located in Ottawa and the other two are located in Montreal. These men have the power of sending to the training camps men who have had long experience in railway work.


Mr. HANSON (Skeena):: My hon. friend is stating that these men must have a recommendation from either the Canadian Pacific Railway company or the Canadian National Railways that they are essential. I thought, Mr. Chairman, we were discussing the labour question and not men for the army. No doubt the minister has had difficulties in choosing these men, but I am pretty sure that he would not have chosen them unless he had had recommendations from the essential war industries, like the CP.R. and the C.N.R.; and if he receives the recommendation that somebody should be taken on, even though he is over-age, it is reasonable to assume that under present conditions the Minister of Labour and the selective service board will accept the recommendations of those who say that certain men are essential to -their operations. I think we are going beyond our scope when we try to discuss military matters under this item.


Jean-François Pouliot: In reply to the hon. member for Skeena, who will not be a member after the next election-


Olof Hanson: Thank you. Mr. Chairman, I have just as good a chance, I think, if I decide to stand, as the hon. member for Temiscouata.


Jean-François Pouliot: We can decide that between ourselves.


Mr.   CHAIRMAN@: Order.


Jean-François Pouliot: Here we are discussing, precisely, national selective service, and I have been speaking in the first place of a man who was an appointee of the Department of Labour. I wonder why I should not have the right to discuss the case of a man who was not appointed by the C.P.R. or the C.N.R., but by the Minister of Labour himself. That is the first point. In the second place I mentioned the name of one of the other men merely at the request of one of my colleague#, and I have said nothing uncivil in that respect. I complain of the fact. I do not complain of these two men; I complain of the fact that they are given the power of life and death over railway men who are essentia! to the war effort but who cannot resume their activities
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as railway men because Mr. So-and-so does not want to recommend them on account of an arrangement which has been made between the Department of Labour and the railway. If this condition does not affect the hon. member in his constituency of Skeena, because he has not a large number of railway men in his riding, it may affect the transportation of his constituents or of their goods. We need good men, men of experience, to carry on their work as railway men, and it is because I realize the great importance of the railway business that I am asking some questions of the minister. I would tell the hon. member for Skeena that I was in the house a long time before he arrived, and I have been-


Olof Hanson: I have been here for fifteen years; and as far as the constituency of Skeena is concerned, just about one-third of the population is either dependent in the matter of transportation on the railway or on coastal shipping.


Joseph-Arthur Bradette: If I may be allowed to refer to the point of order raised by the hon. member for Victoria, Ontario, surely after three full days of discussion we should come down at some time to work on the definite item before the committee. I appeal to all hon. members to realize that, with all the speeches which we have had for the past two days and more, this item is not yet passed. The Chair must take some responsibility and insist that speeches must be relevant to the matter before the committee. Surely, after nearly three days' discussion, so much repetition is unnecessary. Much of the discussion is out of order.


Jean-François Pouliot: I regret that I have to repeat things, but it is at the request of the hon. member for Skeena. This matter has not been brought before the house during this session, and it is the time to ask for some information from the Minister of Labour about the arrangement that has been made between his department and the railway companies. I have been told that there is an arrangement whereby those who have had one month's training go automatically to the army as soon as their leave has expired and that further postponement is granted to those who have never done any training. I would ask the minister to be kind enough to give us full information about the arrangement which has been made between his department and the railway companies regarding the status of men of military age who have railway experience.


Humphrey Mitchell: Mr. Chairman, it is
simple. It is an arrangement which exists in every big corporation in this country, and it

is that the personnel managers of these particular railroads-I think Mr. Edge is one of them and Mr. Brydon-Jack is the other-are responsible for any recommendations made to the mobilization board with respect to the postponement of men engaged in these companies. That is the general procedure. A man applies for postponement; it is either supported or not supported by the employer. These two gentlemen happen to be the chiefs of personnel of these two great railroads. In some other organization it would be someone else. It is just as simple as that. There is no secret about it. They speak for the company.


Jean-François Pouliot: Mr. Chairman-


Joseph-Arthur Bradette: Order.


Jean-François Pouliot: If my hon. friend permits me a minute, I will ask the minister if he will be kind enough to table the correspondence between the railways and the Department of Labour regarding this matter.


Humphrey Mitchell: I shall be glad to do that. Anything for peace and quietness.


Robert Fair: May I ask the minister whether the national resources mobilization board is supreme in each military district, or whether there is any authority or board above it to which an appeal may be directed?


Humphrey Mitchell: The board is supreme. There is no appeal.


Mr. DUPUIS (Translation):: Mr. Chairman. I feel it is my duty to say a few words on these estimates, although I am anxious that the debate be concluded with all possible speed. But first, I may be allowed to heartily congratulate the hon. member for Nanaimo (Mr. Chambers) for the splendid speech he delivered to-night. His stand proves that his patriotism is not of the parlour variety but of the staunchest kind; it is the brand of patriotism professed by those who love their country as we do, and who are willing to risk their lives for the defence of the endangered fatherland. In my own name and on behalf of all those who feel as I do, I wish to congratulate him from the bottom of my heart, on his stand and his sentiments.
We have entered this war because we really thought that the country was in danger. The great majority of the hon. members of this house, in 1939, supported the government when they declared war on Germany. If the elementary principles of philosophy I learned in my student days have any value and one of which is that common sense is a test of truth, I believe that the great majority of the members of this house, having sup-

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ported the action taken by the government when they declared war, we must have been right. We realized that our country was in danger. We have felt that it was worth risking all that we hold as most valuable to defend what our fatherland, Canada, means to us. As for me, Mr. Chairman, such were my feelings and such they have remained. After France, like other European nations, was overrun in June, 1940, I felt that if Great Britain had been crushed at a time when, following the Dunkirk evacuation, neither Canada, England nor the United States were prepared to meet the onslaught, this would have been the end of our liberties, of everything worthwhile in Canada. Therefore, since every patriotic citizen who really loves his country must be anxious to defend it at the risk of his life, and since every worthy citizen is naturally patriotic, we must realize that the youth who have voluntarily enlisted for overseas service or are still willing to do so when circumstances permit, deserve our admiration and are worthy of the pride we feel for them. Those who do not enlist, even though they would be most anxious to do so, have been prevented from taking that course by the selective service. In a great majority of cases, young men brought up on farms have been prevented from enlisting because it is as if each of them had been told: "Young man, in spite of your desire to fight for your country overseas, it is our duty to prevent you from going there because we want you to produce foodstuffs for those who are going to fight over there." Therefore, a great majority of farmers' sons have been, as it were, frozen on the land. The same thing may be said about those who are called upon to work in war industries. If what I say is true, I submit that farmers' sons have not enlisted in larger numbers because they could not do so or because it was thought that their immediate duty lay in the production of foodstuffs for our soldiers and the armies of our allies. My hon. friend the member for Beauharnois-Laprairie (Mr. Raymond) told us last night how terrible it is for a farmer to inform against his son. However, I do not know any bona fide farmers in my constituency, or elsewhere whose sons have been refused a postponement. Therefore, as I know very well the hon. member for Beauharnois-Laprairie, I was rather puzzled by the statement he made last night about farmers' sons. He knows as well as I do that not one bona fide farmer's son has been called up and that, if he has been called he was granted a postponement. Therefore, the father has not been forced to inform against his son since it is the duty of both the father and the son to produce more and more.
There is another matter broached by the hon. member for Beauharnois-Laprairie about which I would like to offer some explanation, not with the intention of lecturing him, but at least so that the citizens of our province may know that if a member protested against that order in council while all others kept silent, it was not because anyone wanted to admit the accuracy of the statement made by the hon. member for Beauharnois-Laprairie, and which had reference to the order in council he mentioned last night as reported on page 2534 of Hansard. He said that the government had been unfair to Canadians of French extraction when they passed order in council No. 1355, dated March 4, 1944, which contains the following provision:
The minister, upon being informed by the Department of National Defence that a specified number of men are required for military training, may instruct any registrar to apply these regulations to a specified number of men from iris division, and may inform a registrar how many French-speaking men are required.
And the hon. member for Beauharnois-Laprairie said:
I ask the minister why he has inserted in this order in council a special provision relating to French-speaking Canadians. I thought that in this country of ours we were all Canadians and that when men are called into the army there should be no distinction between French Canadians or English Canadians or Canadians of any other race, because we are all Canadians. I fail to see the abject of this special distinction applying to French Canadians.
Mr. Chairman, I do not intend to answer on behalf of the minister. The hon. minister can well take care of himself. If I bring the matter up, it is only to state humbly that the hon. member for Chambly-Rouville differs from the hon. member for Beauharnois-Laprairie in his interpretation of the order.


Mr. FAUTEUX:: Hear, hear.


Vincent Dupuis: My hon. friend knows perfectly well, or at least should know, that in the very first year of the war, in 1940, when the National War Services Department was set up, the hon. Minister of National War Services and the other ministers of the crown decided in their wisdom-and we congratulate them for it-that English-speaking Canadians would receive their military training in the English language, and that the French-speaking Canadians would get theirs in their own language. And then, as officers were not in sufficient number-the hon. member for Portneuf (Mr. Gauthier), a former officer himself, knows it very well-officers' training schools were set up throughout Canada and particularly in the province of Quebec. Thus a great many officers were trained and formed, so that, since the

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beginning of the war, any young Frenchspeaking Canadian, whether he enlists voluntarily or is called up for home defence in Canada or in Canada's territorial waters, is directed to a training centre where he is instructed in French by French-Canadian officers. The hon. member for Beauharaois-Laprairie must be aware of that. Since 1940 every member in the house and every army training centre have received a pamphlet, "The National War Services Regulations, 1940" (Consolidation 1941). And if the hon. member for Portneuf who is presently, I suppose, the representative of the party headed by the hon. member for Beauharnois-Laprairie, cares to look up page 7, paragraph 9, of that pamphlet, he will note that this same paragraph of the order in council exists since the beginning of the war. I shall not quote the whole paragraph, but merely the part which deals with French-Canadian recruits. Subsection 2 of section 9 reads as follows:
The minister shall inform each divisional registrar concerned of the number of Frenchspeaking men who are required to report for military training to an indicated place or places and at an indicated time.
Since then, and precisely on account of this section, these instructions are followed by National Defence and mobilization officials. When the number of French-Canadian recruits who report for military training is known, they are immediately sent to training schools staffed by French-Canadian officers who teach them in their own tongue. More than that, they are supplied with French textbooks. So that when my hon. friend from Beauharnois-Laprairie attempted to take the hon. Minister of Labour to task for this section of the order in council which he quoted last evening, he afforded the other hon. members of this house who are of French descent the opportunity to look up the National War Services regulations and to tell our hon. friends, the members of the Bloc Populaire, that the purpose, the motive, the reason why this clause was inserted,-and is still in the regulations-was exactly to give fair play to Canadians of French descent who wish to do their duty and defend their country.
(Text) Mr. GILLIS: I am just as anxious as the minister to see the item pass, but this is about the only chance we have to get information on certain matters about which we receive inquiries. I wish to try to get some information from the minister on the unemployment situation, and I rise for that purpose. So many complicated statements are made that I am beginning to wonder whether anyone knows exactly what the employment requirements of the country are. Since the minister has presented his estimates he has stated

that he could use 160,000 people if he could find them. Notwithstanding that statement one finds statements in the press and statements emanating from national selective service that would lead one to believe that either those in selective service who are directly responsible for the problem have very little knowledge of it or the minister is out in his estimates. It is to clarify that, in my own mind at least, that I want to get some information. For example, on March 23 the Ottawa Citizen carried the following statement :
Mr. Redvers Pratt, local manager of the office of employment and selective service, said to-day he called on contractors unaware of the surplus of workmen to begin operations immediately.
That is, in the building trade, and he goes on to point out that he has listed in his office some 121 carpenters out of work, also a great number of bricklayers, lathers, painters and a considerable number of heavy labourers and so forth. That is right here in Ottawa from one of the main offices. You find the union of carpenters, bricklayers, painters and labourers in Toronto writing in and protesting against the fact that employees in the building trades, old men who were unfit for, or not eligible for military service are being replaced by ablebodied Royal Canadian Air Force personnel. They are taking over the regular employment of those men who must earn their own living in that way. I am not going to elaborate on that. It has many ramifications. There is waste in several directions there. I am absolutely convinced of the trustworthiness of the sources of the information. It has been a matter of controversy for some time between the Department of Labour and the unions concerned.
I hold in my hand correspondence of as recent a date as April 18. The fact of the matter is the R.C.A.F. personnel are replacing civilian personnel in that trade. More serious than that is a circular letter issued by the office of the manager of selective service at Dawson Creek, British Columbia. According to this letter it would appear that there has been some change in the rates of pay of employees employed on the Alaska highway. A new schedule was posted which in effect changed from an hourly basis to a monthly basis most of the employees employed on that project in a maintenance capacity. This change is looked upon by the employees as a reduction in wages of approximately S125 a month.
That is a substantial reduction in the change-over. Coinciding with the posting of the new schedule we find the manager of employment and selective service in that area

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issuing a notice which is certainly not in line with the statement made by the minister on the matter of employment. I shall quote a couple of paragraphs of it, because if the minister is not aware of it he should be. The notice reads as follows:
To: All Canadian employees employed by United States engineers department.
I regret very much that due to pressure of business I am unable to call upon each and every camp individually and give a talk regarding the proposed set-up for Canadian employees on the maintenance of highway flight strips and airports and the conditions pertaining thereto.
However, Mr. McDonald of the labour relations, U.S. government, who is a Canadian, has kindly consented to give a talk on such conditions which have been posted in each and every camp.
I want the minister to take notice of this statement:
There is one thing I would like to impress upon you. As no doubt some of you are aware, conditions outside at the present time are not of the very best meaning by this there has been heavy lay-offs of workers throughout Canada as a whole and in many centres where there has been war projects of various descriptions the wages have lapsed back to those that were paid prior to the war.
It is the intention of both United States and Canadian governments at the present time to retain in the neighbourhood of five to six hundred individuals for the fore-mentioned maintenance work.
There is no indication at the present time of any new projects being opened up in Canada with the result there will be a difficult matter to absorb in Canadian industry the hundreds that are now idle throughout the prairie provinces alone and I would suggest and advise that those of you who are desirous of having employment for the duration of the war plus six months thereafter at a still fair wage schedule as quoted by Mr. McDonald, would consider very seriously of making their intentions known immediately to their superior official.
I cannot understand a letter like that going out from a national selective service office. I do not imagine the central office in Ottawa would have any knowledge of it, nor that it would have their sanction, because that officer is giving a wrong picture of the employment situation, if the minister is correct, and is using his office to coerce the men concerned into accepting a very substantial reduction in wages. In the light of press statements emanating to a large extent from selective service officials, and the minister's statement that he could find employment for some 160,000 people if he had them, I should like him to tell the committee briefly just where this employment is available, because in the province from which I come a large number of men are unemployed. I receive letters from them from time to time, and I should like to be able to advise them where they might find employment. I am not going to 100-1631
take up any more time on this subject; one might speak on it for hours, but I should like the minister to make a brief statement indicating the sections of Canada where there is a shortage of labour, and of course I should like him to make some comments on this letter. What I am principally concerned about, of course, is to discover where in Canada there is a shortage of labour in any given industry, so that when we receive inquiries we may be able to advise people accordingly. Certainly, men are not needed in the building industry.


Mr. GARDINER:: They are needed in
every packing plant in Canada.


Mr. GILLIS:: That is good. Then, as a
matter of labour relations, I should like the minister to tell me whether it is the policy of his department under selective service to permit regular members of the building trades, mechanics and so on, to be replaced by service personnel and thrown on to unemployment insurance. This is an old difficulty which, to my knowledge, has been encountered for the last eighteen months; it has been a matter of controversy between selective service and the service departments, and I think the time has come when the Department of Labour should decide exactly what is to be done, since it is the prerogative of this department to look after such matters.


Humphrey Mitchell: I was speaking in round figures the other day when I mentioned the 160,000 people who were needed. In the A, B. and C priority industries there is at the present time a shortage of 103.659 males. There are vacancies for 15,709 loggers and for 51,475 females in all occupations. This is the latest return.


Clarence Gillis: Could the minister give us
any idea of the sections of Canada where these people are needed?


Humphrey Mitchell: I am trying to get that break-down now. In regard to the letter read by my hon. friend I can only say that in a large organization such as we are administering, letters like this do go out sometimes. As soon as we had knowledge of this letter it was suppressed; that is as far as I can go in that direction. In regard to people being unemployed, the hon. gentleman knows as well as I do that there will be pockets of unemployment. That is inevitable in a country with seasonal employment like Canada; for short periods, at any rate, there will be unemployment, particularly in the building trades, let us say. The men engaged in those trades understand it; in fact the wage structure is predicated upon that fact. I am not going into the history of the development of the wage structure in the building industry or any
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other industry, but that fact is understood. In regard to the information requested by the hon. gentleman as to where labour shortages exist, as I said in connection with another matter naturally we who are engaged in the central control deal in the large numbers while the local offices deal with matters in the field. I shall endeavour to give my hon. friend the figures he desires; they are available any time he wants them. I can send them over to him, unless he would like them on the record.


Clarence Gillis: I believe they should be on the record.


Humphrey Mitchell: Very well, but my hon. friend can see what I am up against.


Clarence Gillis: It is not necessary to read them.


Humphrey Mitchell: This is a pretty big proposition.


Clarence Gillis: Table them.


Humphrey Mitchell: I shall be glad to do that, but I do not think they should go into Hansard; they would cover several pages. My hon. friend wants an indication of where there are vacancies, I suppose particularly in his own province.


Clarence Gillis: Yes.


Humphrey Mitchell: I shall be glad to give my hon. friend these figures. With reference to competition in the services, particularly in the building trades, that is an old story, and it is pretty hard to draw the line between where the functions of the armed services end and where the work of the building trades begins. I was not aware that we were having any serious difficulty at the present time, I mean in a large way. That condition might exist somewhere temporarily, but I know we maintain liaison with the service departments, and any protests or complaints or representations are taken up with the other departments expeditiously. I think that is as far as I can go. I know of no specific instances at the moment of complaints of competition between men in the services and those engaged in ordinary, everyday labour.


Clarence Gillis: I have in my hand a list sent me by the national union of carpenters and bricklayers of Toronto. The complaint is that at No. 1 equipment depot twelve civilian carpenters have been laid off and replaced by R.C.A.F. personnel. The matter is now being adjudicated, I understand, by two or three different departments.


Humphrey Mitchell: That is in the day to Jay administration of the department; there is nothing new about that.
[Mr. Mitchell. 1


Clarence Gillis: You take a boy into the air force, and the country goes to great expense in order to train him. Then when you have him trained, when he might be able to make a real contribution from a military point of -view, you make use of that boy to replace a civilian carpenter, who is forced back upon unemployment insurance. I cannot see the sense of it.


Mr. DOUGLAS (Weyburn):: I would ask the minister to answer a question I had placed on the order paper, giving the figures as to the number of persons, both male and female, registered as unemployed, and the number of persons placed by the unemployment service. The figure came up to January 27. Would the minister bring it up to the end of April?


Humphrey Mitchell: The hon. member wants the figure for unemployment insurance?


Thomas Clement (Tommy) Douglas: No; the number registered at employment offices as seeking employment. If I remember correctly, on January 27, the figure was 67,000.


Humphrey Mitchell: I shall be glad to have that information to-morrow.


Mr. GAUTHIER (Translation):: Mr. Chairman, I was listening a little while ago to the hon. member for Chambly-Rouville (Mr. Dupuis) who, outside as well as within this chamber has become a most powerful champion of an all-out war effort in the province of Quebec. I rise at this moment not for the purpose of answering his speech but rather in an attempt to put things in their proper light. Since he spoke of the declaration of war, and though he was out of order, I shall take the liberty of following in his steps so as to straighten the facts.
His speech would lead us to believe that most of the members of the house have voted in favour of participation in this war, though ne did not expressly say so. His remarks might give the impression that the members actually voted on this question, while no vote was taken on the declaration of war. If the hon. member wishes to refer to Hansard of that year, he will note that the declaration of war was agreed to on division, following an observation made by the then leader of the C.C.F. party, Mr. Woodsworth, who said that several members opposed the motion. The speaker having said: "Carried", an hon. member added: "On division." That is how the declaration of war was agreed to. Two days later, we were called upon to vote on the question of participation, that is on a motion of the Minister of Finance asking for an appropriation of 8100,000,000. Sixteen members voted against participation, and the hon. member for Chambly-Rouville was not one of them.

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Vincent Dupuis: I am proud
of the fact that I was not one of them.


Pierre Gauthier: The hon. member for Chambly-Rouville has talked about farmers' sons. He has made an effort once more. Last year the hon. member for Temiscouata (Mr. Pouliot)-I would not compare him with the hon. member for Chambly-Rouville when it comes to helping farmers' sons, as that would not be a mark of favour or of praise-made a motion to get exemptions for farmers' sons. I wonder if the hon. member for Chambly-Rouville voted for that motion.


Vincent Dupuis: (Translation): The government had already decided that farmers' sons were exempted.


Pierre Gauthier: Certainly, and Le Canada and Le Soleil published headlines six inches high that read: "Farmers' Sons Are Exempted". Since when are they exempted?


Vincent Dupuis: They still are.


Pierre Gauthier: They are not. They get a postponement, and they have to lose hours and days of.work every time it must be renewed. If the hon, member thinks that is right, I do not.
And when the hon. member for Gaspe (Mr. Roy) last year moved an amendment to the address dealing with farmers' sons, and when we of the Bloc Populaire presented an amendment to the amendment in which we asked that farmers' sons be exempted, the hon. member voted against it. He had once made an effort that had been too much for him, he did not try to repeat it.
The hon. member finds that the member for Beauharnois-Laprairie (Mr. Raymond) goes too far, that he is too critical. But the farmers' sons who have volunteered were certainly not compelled to enlist for overseas service. One of my fellow parishioners who had volunteered has just returned from overseas. But in regard to those who were called for home defence, it frequently happens that farmers' sons had to remain four months and even six months in the army before their release could be secured.


Vincent Dupuis: There are not five per cent of these in your constituency.


Pierre Gauthier: I repeit that in several cases farmers' sons were compelled to remain a long time in the army ' before obtaining their release.
(Text) Mr. MITCHELL: If I might just interject a word: I think my hon. friend is discussing the position of employees in agriculture, under the national selective service regulations. I think I had better read the
regulations, so that they may be on record. This is the law. It is not an opinion; it is the law, and it says:
the board shall, upon the application of a person employed in agriculture, grant him a postponing order until further notice, until it is established to the satisfaction of the board that such person is not an essential worker in agriculture or that such person has at any time since March 23, 1942, ceased to be a person employed in agriculture; but any postponing order made on such grounds may be cancelled by the board, if it is satisfied that the person has, at any time since March 23, 1942, ceased to be a person employed in agriculture.
So that it is automatic.


Pierre Gauthier: I was just telling the hon. member for Chambly-Rouville that we have cases where farmers' sons were called to report to the army, or to pass their medical examinations; and sometimes because they have delayed in filling out their report they have been kept in the army for from four to six months. These were farmers' sons, bona fide farmers' sons, and I can give the cases to the minister, if he wants to have them. That is what I was saying; I was not speaking generally. I was telling the minister that there were cases where farmers' sons were obliged to ask for delay, and when they wanted to obtain that delay they had to use hours and sometimes days to attend before the commission in Quebec, before a decision was given. I think I am right in saying that.


Humphrey Mitchell: I should like to see the facts in the case before expressing an opinion. That farmer may have had more sons; I do not know.


Pierre Gauthier: This is a special case, and I will give the information to the minister. This boy was kept in the army for four months.


Vincent Dupuis: One man in the constituency!


Pierre Gauthier: Wait a minute; my hon. friend is braver than he was in Stanstead. This is not the only case I have, and I am positive I am not the only member who could give cases to the minister where farmers' sons have been kept in the army for months. That is not an opinion; it is a fact.


Humphrey Mitchell: They may not be essential; it is a matter of opinion.


Pierre Gauthier: When a farmer has only one son, do you say he is not essential?


Humphrey Mitchell: It may not be a producing farm.


Pierre Gauthier: This time it was a producing farm.


Humphrey Mitchell: That is what you say; the board might not think so.


Pierre Gauthier: If the minister does not wish to take my word, all right; I am honest enough and polite enough to take his.
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Mr. WEIR:: Was he late in applying for postponement?


Humphrey Mitchell: I would be glad to look into the case for my hon. friend.
Mr.,GAUTHIER: There are cases like that where farmers' sons are still in the army and the minister knows about them. There are cases where men did not report right away. I know of one or two cases where the men did not report for a month or two. One man came in himself and the other was brought in by the mounted police. Are these men being kept in the army as a penalty because they did not report right away?


Humphrey Mitchell: I do not know the case. My hon. friend knows all about it.


Pierre Gauthier: A farmer's son was called by selective service to report and-


Vincent Dupuis: He fails to do so.


Pierre Gauthier: -he fails to do so, as my hon. friend says. But he reports to the army, and I want to know if he is being kept there as a penalty because he delayed reporting.


Humphrey Mitchell: I have told my hon. friend that I cannot say. I cannot sit in judgment in this House of Comomns on 1,600,000 people; it is a physical impossibility. If my hon. friend will give me the facts and the numbers of the cases I shall be glad to look into them. The other day I parked my car where I should not have parked it. I got a ticket because I had broken the law. It is just as simple as that. These men were ordered to report and they did not; they broke the law.


Pierre Gauthier: But I am asking if this man is being kept in the army as a penalty.
Here is another case. Suppose a man is a specialist in agriculture and was working on a poultry farm as an employee before being called up. He had studied for a number of years and when in the army he endeavoured to get a deferment, which was refused.


Humphrey Mitchell: That is another instance where I would have to get the particulars. My hon. friend cannot turn this House of Commons into a tribunal. I assume that the board is located in Quebec city and that there would be representatives of agriculture to advise that board, as well as the different agencies interested in the man-power problem generally. A judge of one of the courts acts as chairman, the same as in every other part of Canada. I do not know the particulars of these cases. It may be that this man is the only one in Canada who claims he is a specialist. A man may say he is a farmer and be the only man in Canada who thinks so. Because a man says he is a

farmer does not mean a thing until he is proved to be a farmer by these different agencies.


Pierre Gauthier: This man was in British Columbia and he had attended agricultural college for two years before taking this position. He asked for a delay which was refused on the ground that he was not related to his employer. A man who has studied for two years must be a specialist.


Humphrey Mitchell: It often happens that a man will not tell his commanding officer the same story as he tells his family.


Pierre Gauthier: He does not need to tell me his story because I know him personally. I know where he has been working and all about him.


Humphrey Mitchell: There are lots of men who tell their commanding officers an entirely different story from what they tell at home. Many of these men want to stay in the army when the people back home think they should be home.


Pierre Gauthier: He does not want to stay in the army. He asked for a delay and they refused it on the ground that he was not related to his employer.


Mr. DORION (Translation):: Mr. Chairman, I was in Quebec last night when I read in the newspapers that entirely unfair attacks from a member of this house against Quebec district had again unfortunately been launched. I was glad to find to-night in L'Action Catholique of Quebec, a rejoinder concerning the gratuitous assertion made yesterday in this house by the hon. member for Lake Centre (Mr. Diefenbaker). At page 2498 of Hansard of May 1, I read the following:
In Quebec military district, division F, they called up 8-6 per cent of the total population, or, in that period of time, only 8,724 out of some 460,000 men.
I wonder why some members take pleasure in making such exaggerated statements which invariably refer to the province of Quebec. They afterwards circulate such falsehoods in the English language newspapers of this country. To-night, I read in L'Action Catholique of May 2 a statement from the Quebec district registrar, Mr. Pare. Here is what he says:
It is absolutely untrue that, in Quebec district, only 9,000 out of 460,000 "callable" men have been called up, as was alleged by Mr. John B. Diefenbaker, Progressive-Conservative member for Lake Centre. In the first place, in our district, there are but 180,000 "callable" men, not 460,000 as Mr. Diefenbaker has asserted. Moreover, to date, all these men have been called up and have complied with the law. A certain number have been sent to military camps, others have been found physi-

cally unfit, while a third group, after having complied with the law, have been granted postponements under the regulations exempting from military service farmers' sons, lumbermen, fishermen and persons employed in an essential war industry. One must not forget .that our district is not like an entirely urban district. On the contrary, the Quebec division might be said to be an essentially rural one, which explains that many potential recruits are momentarily exempted from compulsory military training. One must, however, emphasize the fact that these men have complied with the law and have been granted regular exemptions.
I was anxious, Mr. Chairman, to make this correction to-night so that the falsehoods published yesterday in the English language newspapers might be rectified to-morrow.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned until Thursday at 3 o'clock p.m., pursuant to special order made Monday, February 21, 1944.
Thursday, May 4, 1944