1946-07-09

PRIVILEGE


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I rise to a question of personal privilege. I understand that copies of a letter addressed to me by Mr. Thorvaldson, president of the income taxpayers' association, have been circulated among members of parliament. The letter contains this statement:
The first sentence of the third paragraph of your letter is sufficiently evasive to make me doubt the substance of your charges. Indeed, I do doubt them, and now challenge you to prove them.
Therefore, though I have not permission from the writers to do so, I now table a number of letters dealing exclusively or almost exclusively with the forgery of signatures to certain cards that have been received by certain hon. members; envelopes marked "Unknown" or "Unclaimed" though some of the envelopes so marked have been already destroyed, and cards obviously addressed by one person, or several persons in the same handwriting, together with affidavits obtained by the hon. member for Swift Current (Mr. Bentley) when he was in the west, from some of his constituents denying that they had signed such cards. I may say we know of other persons who deny having signed such cards, but from whom we have not written or documentary evidence.
I believe these communications, of which there are quite a few, will be sufficient evidence to show that the statement I made in the house with regard to the forgery of these signatures is well founded.


Mr. SPEAKER:: I must draw the attention of the hon. member to the fact that while his question of privilege is well taken, according to the rules of the house it is not the privilege of an hon. member to table private correspondence. I have no objection to allowing him to do so, since every hon. member has received letters complaining about what he has mentioned, but I would ask the house if it could be done by unanimous consent.


Some hon. MEMBERS:: Agreed.



VETERANS AFFAIRS

[Stage Direction]
Fifteenth and sixteenth reports of special committee on veterans affairs.-Mr. Tucker.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved:
That the name of Mr. Gauthier (Xipissing) be substituted for that of Mr. Mcllraith on the standing committee on banking and commerce.
Motion agreed to.

[Stage Direction]
Hon. BROOKE CLAXTON (Minister of National Health and Welfare) moved the first reading of bill No. 252 (from the senate) to amend the Food and Drugs Act.
Motion agreed to and bill read the first time.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved that the house go into committee at the next sitting to consider the'following resolution:
That it is expedient to present a measure to amend the Veterans Rehabilitation Act by authorizing the minister to make, with the approval of the governor in council, grants to universities supplementary to those by the act authorized, to assist in meeting the expenses incurred in training veterans.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved that the house go into committee at the next sitting to consider the following resolution:

Coinage
That it is expedient to present a measure to provide rights, privileges and benefits to and in respect to veterans of world war II domiciled in Canada at the time of joining the forces of allied nations, and to the widows and mothers of such veterans as died in service or subsequently but before they had received such rights, privileges and benefits in full.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a measure to amend the Pension Act to provide for extended payments of pensions to veterans and their dependents as therein set out; to provide further for the reorganization of the commission and for the salaries and duties of the chairman, deputy chairman and other members of the commission and generally to enlarge the scope and application of the act.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
Hon. LIONEL CHEVRIER (Minister of Transport) moved that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to present a bill conferring authority upon the governor in council to authorize the Canadian National Railway Company to construct a line of railway from Bar-raute to Kiask Falls on the Bell river, in the province of Quebec, a distance of approximately 55 miles at an estimated expenditure of $4,125,000 and an average expenditure of $75,000 per mile. The bill will make provision for the issue by the company of securities, which may be guaranteed by the government in respect of the cost of construction. To enable the company to proceed with construction forthwith temporary loans may be made to the company out of the consolidated revenue fund, upon terms and conditions prescribed by the governor in council and secured by company securities.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. R. W. GLADSTONE (Wellington South):: Mr. Speaker, I should like to ask the Minister of Finance a question with respect to the copper-coloured five-cent pieces. These coins and one-cent pieces are too much alike. Every person dislikes that five-cent piece-
Some lion. MEMBERS: Order.


Robert William Gladstone: -and tries to pass it on to another. Through oversight eleven cents is frequently tendered to pay for a three-cent newspaper.


James Horace King: Order. I would ask the hon. member to come directly to his question.


Robert William Gladstone: Will the minister consider withdrawing the copper-coloured five-cent piece from circulation?


Right Hon. J. L. ILSLEY (Minister of Finance):: The department is taking steps to have these coins withdrawn from circulation. It will take some time to do this, as the actual withdrawal will have to be done by the chartered banks. I am hopeful, however, that these coins will be out of active circulation in the comparatively near future.



TRANSPORT COMMISSIONERS


[Stage Direction]
On the orders of the day:
Hon. LIONEL CHEVRIER (Minister of Transport):: Mr. Speaker, yesterday the hon. member for Queens (Mr. McLure) asked the following question:
Under what or by whose authority is the board of transport commissioners to hold a meeting in Charlottetown, Prince Edward Edward Island, on July 17 next regarding truck freight rates on the Borden-Tormentine ferry?
The authority is that contained in sections 33 and 325 of the Railway Act. The complaint has been lodged by the board of trade for the town of Summerside.



THE BUDGET


[Stage Direction]
The house resumed from Monday, July 8, consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Macdonnell, and
The Budget-Mr. Blackmore
[Stage Direction]
the amendment to the amendment of Mr. Maclnnis.
Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, sugar, like rubber or gasoline, is an important munition of war and an almost indispensable requirement of peace. Whoever wittingly jeopardizes his country's sugar supply line is guilty of dereliction of duty. Whoever unwittingly jeopardizes his country's sugar supply line might be guilty of culpable ignorance. Whoever, having essential facts pertaining to his country's sugar supply line, fails to communicate them to those in responsible positions, could be guilty of gross dereliction of duty.
There have come into my possession certain vital facts pertaining to Canada's sugar supply line. It therefore becomes my duty to-day to discuss in the house the beet sugar industry in Canada. It may be questioned whether this matter directly pertains to the budget. I think upon mature consideration every hon. member will acknowledge that sugar supply in Canada does have a vital bearing upon the budget, upon price control, upon the value of money, upon the amount of money we can have in circulation, and upon many other things pertaining to the budget of any country, particularly of Canada.
Canada could be one of the sugar bowls of the united nations. Taken ten years ago, Canada could have been made an asset in the world sugar situation, not only during the war but also during the dangerous post-war days. Canada was made a liability in respect of the world sugar situation, a poor relation whose needs had to be considered a first charge on the sugar resources of the hard pressed united nations. With reference to sugar, Canada had to be carried through several of the most exacting war years, and now, with untold millions starving, Canada still must be cared for from the perilously depleted sugar stockpiles of the world, cared for with sugar that could help to save millions of lives. It is a sorry picture, and one far from gratifying to Canada's national pride.
In order to justify what I have said it will be necessary for me to deal briefly with four questions which it is my purpose to ask. The first of these is: Can the beet sugar industry in Canada be economically sound-first, for the beet producers; second, for the consumers of Canada; third, for Canadian agriculture and, fourth, for the Canadian economy as a whole? With respect to the producers of beets in Canada I believe there is an irrefutable answer to the question which is found in two sets of facts. The first one of these is a statement drawn from the submission of the

Alberta cooperative beet growers' association to the Rowell-Sirois commission in 1937; I quote from page 2 of that submission. This statement of fact will show quite clearly to what extent the beet sugar industry in southern Alberta was able to cope with the situation surrounding it and come out victorious. The statement follows:
To indicate the value of this industry to the agriculture of our district, the community in general and the Dominion of Canada, we submit the following figures relating to the 1937 beet crop:
235,481 tons of beets were produced from 19,829 acres of irrigated land-an average of 11:88 tons per acre.
75,603,700 pounds of sugar were manufactured.
3,813 pounds was the per acre yield of refined sugar.
$3,040,000 worth of sugar was manufactured.
$155 was the total gross return per acre.
$77.50 was the gross return to the manufacturer.
$77.50 was the gross return per acre to the farmer.
The farmers' costs approximated $60 per acre which includes $25 per acre paid for hand labour by the farmer. These figures were given in a speech made by T. George Wood, manager. Canadian Sugar Factories Limited, at Lethbridge, Wednesday, March 23, 1938. We believe that this land is producing more food value per acre than any other land in the dominion.
I think to hon. members that must indicate clearly that the beet sugar industry is not. a poor relation. It is not an industry that needs any particular help other than plain ordinary commonsense good management from any government in Canada, which kind of management I submit it has not thus far received at the hands of the present Liberal government.
Another set of figures which has an important bearing on the matter gives the price to the refiner of sugar on the Montreal market. These prices were as follows:
Cents
1931
1933
1935
1936 1,937
1939
4-754
4-378
3-875
3-832,
3-	626
4-	006
3-	895
4-	109 4-754
I received these figures from a high official who, I have reason to believe, knew they were correct. If anyone thinks that they are not correct let him quote the accurate figures and prove that they are incorrect. I received those figures confidentially. The reason I mention them is to show hon. members that the beet sugar industry was competing in a market in which the price of sugar was astonishingly low. Hardly one of those

The Budget-Mr. Blackmore
figures exceeds four cents a pound. No people in the world could ask that their sugar be produced more cheaply than that, yet the beet sugar industry was competing in that market and succeeding admirably well.
Is the beet sugar industry a going concern or a success from the point of view of the consumer? The mere statement of those prices to the refiner is a clear indication that the Canadian consumer was pretty well off. It must be remembered that the dominion government has seen fit to impose an excise duty of two cents a pound on sugar, raising the price of sugar virtually fifty per cent in many cases and thirty-three per cent in all cases. It must be obvious that the price of sugar to the consumer could be most attractive to the consumer in Canada if the beet sugar industry could get the administration in Canada off its back.
There is another matter which is important to all consumers-stability of supply. People want to know whether they are going to be able to get their sugar or whether they are going to be held up by some country or countries that happen to be in a position to refrain from giving them sugar. I think most people in this country were alarmed when they were told over the air that Canada was having all the sugar that was apportioned by an international board which had taken upon itself the responsibility of apportioning to Canada her share. I fancy that what is being prepared for Canada is a situation in which she will always be subject to the will of a board that will apportion sugar to her or refuse to do so in accordance with the whims of its own mind. I think the consumerswould appreciate having a stable supply on which they could depend.
Another matter is stability of prices. Many hon. members of this house will remember that after the last war the price of sugar went up to as high as 24 cents a pound. Why? Because certain cane interests found themselves in a position to dictate prices. Because of the almost unbelievable mismanagement which has taken place during the last fifteen years in Canada and the United States that same erow'd of people are virtually in position to dictate prices once moi'e and are beginning to do so. There will be people who will doubt the truth of what I am saying; to all such people I would refer an article which came into my hands to-day and which was published in the June 15, 1946 issue of a paper called "American Carbonator and Bottler", Atlanta, Georgia. In this article it is clearly shown that Cuba is beginning to feel that she is in a position to dictate. So the certainty of
stable prices is of great importance to consumers. I ask any hon. member of the house where you could possibly gain for the consumers of Canada a cheaper product and a more stable supply at a more stable price than you could obtain through the operation of a beet sugar industry in Canada, large enough and well enough managed to supply the needs of Canadians.
Is the beet sugar industry a success from the point of view of Canadian agriculture?
I am not' going to linger on any of these points. I am merely indicating for hon. members some of the things that derive from the beet sugar industry for Canadian agriculture. First, a profitable crop in sugar beets. Second, a stable predictable market and a stable predictable price. Third, almost a sure crop, especially in my province, wThere water is available through irrigation; a crop which enriches the soil for two or three reasons-a crop which improves the friability of the soil and the chemical nature of the soil; a crop which distributes labour and risk over the whole year instead of concentrating the risk all on one crop, such as wheat; a crop which enables mixed farming to be carried on; a crop which reduces grain surpluses, about which nearly everybody is led to worry in Canada; a crop which permits of the employment of hired help all the year round, which is a major problem of most farmers; a crop which provides cheap valuable feed in pulp, tops, leaves, molasses, alfalfa, which is raised in rotation in preparing the land for the crops, and straw which comes in abundance when grain is grown after beets. These are only some of the values of the beet sugar industry to Canadian agriculture.
Is the industry a success from the point of view of the Canadian economy as a whole? First, with respect to the domestic market, the beet sugar industry provides a domestic market for a considerable number of commodities in Canada-coal, lime, coke, agricultural implements, boxes, bags and a number of other things. It provides labour for all the people who produce these commodities. It provides traffic for the transportation systems wrhich convey them to the sugar factory. This means an appreciable domestic market. If any considerable portion of the sugar of Canada were produced from the beet sugar industry there would result a really valuable market. One hundred million pounds of beet sugar will put into the hands of the Canadian people 85,000,000. One hundred million pounds of cane sugar will put into the hands of the Canadian people $555,555. The beet sugar industry therefore will put into the hands of the Canadian people nine times as
The Budget-Mr. Blackmore


Mr. LOW:: Yes, they are.


John Horne Blackmore: A good many of the Blood Indians have worked in the beet fields-those are the ones with whom my hon. friend is familiar-and they do the job well. With training I believe they would be quite successful.
The third of the questions which I indicated is this: Is an increased quality and variety of production in Canada desirable?
This opens up the whole vexatious question whether Canada is to become more or less self-sufficient. There is a wide variety of opinion on this matter, and a good deal of heat is generated in the discussion of it. I am not going to enter into that matter; I shall approach the question from the point of view of plain common sense. When the war was on, it was of the first importance that we should be able to produce the things we needed. All hon. members will readily recognize that in a time of war, self-sufficiency is an attribute which most nations would be very glad to possess. Furthermore, in war, in our day, it is vital that a nation be industrially strong, that it have great factories which can be utilized for the production of war materials. Then it is important that a nation should have not only plenty of goods, food and the rest, but that it should have a supply to spare for its allies. Certainly from the point of view of war it is eminently desirable that Canada attain the point at which she will be able to produce her own sugar.
Now with respect to peace time. Let us consider rich and varied production from the point of view of its being a means of ensuring Canada's economic and financial independence. I was comforted by a remark which came in the minister's statement the other night on the four measures he was going to adapt to cushion Canada's economy against the irregularities developing in the United States. As I recall it, he said that Canada was going to maintain her economic and financial independence. I wish to commend the minister for that remark. I believe in it entirely. What development could possibly contribute more to the desirable objective of attaining and maintaining Canada's economic and financial independence than a wide variety of production so that the country can be independent of outside sources for the essentials of life? And certainly, sugar, being one of the essentials of life, should qualify.
The Budget-Mr. Blackmore

May we look at the matter first of all from the point of view of the balance of trade? When the minister gave his excellent speech- and it was a most excellent speech-on the foreign exchange control situation he revealed to the country the dangers which have always confronted Canada of incurring an unfavourable balance of trade with the United States. He referred to the revealing report of the foreign exchange control board, which again emphasizes that matter. Now, every commodity of which Canada can produce her own needs is an additional bulwark against the possibility of developing an adverse balance of trade. That ought to be obvious. So surely from that standpoint it is wise to develop the beet sugar industry in Canada. The more we produce the less we have to import.
It will be argued that perhaps this is inconsistent with the statement I made a few minutes ago to the effect that if we have an abundance of purchasing power within the country we shall be able to buy more from the outside. We can use foreign exchange control to keep out the non-essentials. What bothers us is having essentials which we must import. That is a thing which we must avoid. If we can increase our productive capacity in the country we shall increase our population and in due time we shall begin to have manufacturing, which will produce many of the things we now import from outside, especially the United States.
Let us look at the matter from the point of view of price control, the very thing that the minister dealt with the other night in his statement. Price control, I think he will agree, is relatively not so difficult if there is plenty of goods. He himself has emphasized that time and time again. All hon. members recognize it. Consequently if we have plenty of sugar in Canada we shall certainly be able to control sugar prices much more effectively than if we are in danger of being constantly held up, shall I say, by Cuba or by some other foreign source of sugar.
May I deal with the question from the point of view of the stability of our money?
I have already referred to this. The thing that gives money its value is plenty of goods and services. It used to be thought, only a short time ago, that what gave money its value was gold. No one believes that to-day, at any rate no one who is well informed. We hear the Minister of Labour every once in a while repeating his classic to the effect that what imparts value to money is the scarcity of it. He will learn in due time that that is not what gives money its value, because in 1932 our money was scarce enough, and it was not

sound money for the reason that prices wrere far too low and the result was that things were, not going well with us.
The thing that does give money its value is having plenty of goods and services in the state. Hence the importance of sugar in the matter of keeping Canada economically and financially independent. I could go into greater detail but I had better not take the time now.
The fourth point under that general caption is our freedom from foreign control. A good deal of discussion has already taken place on the matter of cartels. Well, if the sugar supplies of the world should be found to be in the hands of an international cartel, it is obvious that any government that might take power in Ottawa would be under the necessity of bowing and scraping to the foreign cartel that controlled sugar. If we wish to be free from any such danger we must have our own sugar supply. And if we are to be free from the dictates of other nations I would commend to hon. members a careful study of the article to which I have already referred, w'herein it is shown that even the lordly United States is in danger of having to bow to Cuba by reason of the fact that Cuba has the sugar and the United States has not. Surely if Canada is to be free from other nations, from their dictation, domination and influence, she must have her own supply. She must be free equally from international groups, from groups of nations which might take the notion to cooperate in dictating the affairs of the nations of the world. We see plenty of evidence of that already.
This is the fourth question that I asked: Does the present government in Ottawa, encourage the beet sugar industry in Canada?
I will answer that with a flat no.


Mr. MacNICOL:: You are correct.


John Horne Blackmore: I wish to refer to several circumstances from which I draw that conclusion. I could cite a great many, but a few will do. In the spring of 1941 an order went out that 1,300 acres were to be taken out of production of sugar beets in my constituency. What was the reason? There were
200,000	hundredweight of sugar in the storehouses of Canadian Sugar Factories Limited, and there was in Canada, in charge of sugar, a controller whose business it was to take that sugar. But he chose not to take it, and thereby forced the sugar company to take 1,300 acres out of production. I will ask any hon. member of this house whether a government that was in sympathy with the beet sugar industry would have tolerated behaviour such as that on the part of the sugar controller, whoever he may

The Budget-Mr. Blackmore
be. Hon. members can find an account of that at page 2125 of Hansard of 1941, where I discussed the matter.
Could there be any conceivable explanation of that most ill-advised move, except that the sugar controller, appointed definitely to hurt the beet sugar industry, seized the first opportunity afforded and exposed and overplayed his hand? A wave of popular opposition developed across the country; or it may be that on second thought the controller was led to change his decision so as to allow the 1,300 acres to come back into production. At any rate, in the light of what happened since, the minister must realize that that was a most fantastic order for the sugar administrator to allow to go out when he had the power with respect to sugar at the beginning of the war- a most dangerous power from the point of view of the industry.
Another evidence of Liberal lack of sympathy with the beet sugar industry is this: The government and government spokesmen have used various specious arguments against the beet sugar industry. They argued that it was not economic in Canada. The speciousness of this argument I have revealed in what I have said. It is nonsense.
The government spokesmen constantly proclaimed that beet growing and the manufacture of beet sugar are too expensive to be carried on successfully without high tariff protection. I will ask the minister this question, and he can reply to it later if he sees fit: Is it not a fact that the Canadian sugar tariff is constructed in such a way as to protect the Canadian refiners of cane sugar, and that it only accidentally proves a partial protection to the beet sugar producer? Do not tariff items 134, 135, 135b, clearly answer this question in the affirmative? Does not this affirmative answer become extremely emphatic when these Canadian tariff items are compared with the corresponding items of the tariff structures of the United States and the United Kingdom?
Again, government spokesmen spread the story that Canada signed the London sugar agreement in 1937, contracting not to aid the further development of the beet sugar industry. Is this story not false? The minister will have to confess that it is. Is it not true that Canada never did sign the London agreement? Yet people in the government have urged upon me the alleged fact that Canada had signed this solemn agreement and therefore had to keep her pledge.
Liberal spokesmen constantly spread the story that the development of the beet sugar industry lost for us the fish and potato market which the maritimes need. Even the Minister of Agriculture had accepted this
fallacy, as is clearly shown by replies he gave to certain hon. gentlemen on May 29, as reported at page 1994 of Hansard. One suspects that somebody must be deliberately falsifying. Listen to this from "Reports on Markets for Dried and Pickled Fish", prepared by O. F. MacKenzie and F. Homer Zwicker, printed by the king's printer, issued by the Department of Fisheries, Ottawa, in 1938. On page 17 of the report there appears the following:
A great deal of idle and ill-informed comment has been in circulation regarding the so-called dump duty on refined sugar from Cuba, imposed in 1932 being responsible for the loss of Canada's market in fish and potatoes in Cuba. Careful study of the Cuban graph is invited and this study will definitely prove that the West India treatj- is responsible for the loss of the Cuban market, and the dump duty had nothing to do with the downward turn in the trend of trade with Cuba.
In 1926, the year before the West India treaty was proclaimed, we did a business with Cuba of just under twenty million dollars. At that time Canadian fish entered Guba at the low duty of $1.30 per 100 kilos and potatoes at 65 cents per 100 kilos. In 1930, with the West India treaty becoming effective, this trade has shrunk to less than eight million dollars. At this stage Cuba raised their duty on codfish from $1.30 to $3 per 100 kilos. In 1931, with trade down to five million, the duties were increased to $4 and consular charges were also drastically increased. In 1932, Cuba again increased duties on codfish to $5,50 per 100 kilos where it has remained. By this time, as the graph so clearly shows, the market for codfish in Cuba was practically gone. After a further slight decline the following year, the demand had been increasing, and in both 1936 and 1937, Canada's exports of codfish to Cuba were considerably more than what they were the year dump duties were enforced.
Surely, Mr. Speaker, that publication was available to the members of the government; and in the face of those facts how can they possibly excuse themselves for this story that has gone out about the destruction of the maritimes market for potatoes and codfish?


James Horace King: Order. The hon. gentleman's time has expired.


John Horne Blackmore: I shall have more to say about this matter later, when the opportunity arises.


Mr. RODNEY ADAMSON (York West):: Mr. Speaker, I want to deal to-day with one particular aspect of the budget, more particularly the minister's statement last Friday night bringing the Canadian dollar to parity with the United States dollar. We in this party have emphasized, as have responsible citizens throughout Canada, that the only salvation for our economic future is increased production, particularly primary production. This is the third and to me the most important part of our amendment. To be prosperous the Canadian economy must be at all times
The Budget-Mr. Adamson

an economy of production. Many people, including most economists, consider that the war years, despite the tremendous increase in the funded or per capita debt of the people, nevertheless were a prosperous era. We are now burdened with the service charges for this debt, as well as very greatly expanded social services and commitments, and our debt to our veterans. If we are to meet these obligations we must have an expanding production proportionately greater than that of 1939. We cannot increase our taxation, because it has reached the saturation point now; and it is highly probable that if an attempt were made to increase it, the law of diminishing returns would immediately become effective. We cannot, and it is our sacred duty to see that we do not, meet these obligations with a dollar depreciated in productive power.
I mention the productive dollar rather than the purchasing dollar, Mr. Speaker, because I believe the productive dollar controls the purchasing dollar, and unless you have a high productive dollar the value of your purchasing dollar will fall. By a productive dollar I mean a dollar that can be put to work to build, to create, to bring into being the capital and consumer goods that our purchasing dollars can buy. If we do not have the former, no matter how the rest of our economic structure is secured we face inflation, because of the simple fact that we have created a demand for goods and have not allowed those goods to be produced. There is a spurious belief that an ever-increasing amount of money automatically has inflationary consequences. The idea that increases in our money supply inevitably mean inflation is a legacy of the old-fashioned quantity theory of money. However, because our money supply has increased to somewhere around eighty per cent of our national income, we cannot avoid the very real danger of inflation unless we give that money something to do. There used to be an old saying that the devil finds work for idle hands to do. Certainly, Mr. Speaker, the devil finds work for idle money to do as well. How much higher our production must be to meet our greatly expanded economy can be only conjectured, but I believe it safe to say that unless we can bring about an increase in production of at least from one-third to one-half more than that of 1939, the inflation-deflation cycle is inevitable, which is what booms and depressions really are.
I have said, Mr. Speaker, that the minister's statement of Friday night, while immediately deflationary since it destroys production, in my opinion is bound to have inflationary consequences. As I am dealing with mining and the employment of money as a means of pro-

duction, I want the house to look at the immediate result of this policy. The first result, apart from the stock market recession -and this also was instantaneous-is that prospecting for and developing of new properties, particularly gold properties but base metal properties as well, has been sharply curtailed. The flow of money into prospective and projected mines has dwindled and eventually will dry up altogether unless some spectacular find is made, and this in turn becomes more unlikely because of the decrease in prospecting and developing being carried on. Therefore this money will do one of several things. It may be hoarded, and become unproductive. Because of its existence it will increase t.he demand for goods that are in short supply, and in turn will force up their prices by the very pressure it exerts. In the third place, if this money is American money it will be lost to the development of Canada; and as a pioneer country we can ill afford this.
The next pressure which will be brought to bear on the Canadian economy will be from the employees of mines w'hich are forced to close. A little later I shall show how serious this condition is, particularly in the province of Quebec. To-day's miners will not be able to find other jobs in the mining fields of Canada because the reduction in exchange, even in connection with rich and high grade mines, will destroy from thirty to fifty per cent of the rock which previous to Friday evening was considered ore. Therefore even high grade mines will have to curtail production and leave behind them material which was once a valuable asset to the country. Despite the fact that some of them are high grade mines, they will not be expanding and hiring more men. Even though many mines will continue to operate, there will be no expansion. Naturally, therefore, these miners who will be thrown out of work because of the closing down of their mines will have to seek employment elsewhere. Most of them will return to the cities, increasing the congestion there and pushing the demand for housing and consumer goods even higher. Though this movement will be inflationary at the start it is certain to have a depressive effect in the near future. With the world demand for metals at an unprecedented high we in Canada have chosen this moment to take a step which will cut our production of both base and precious metals. A condition which formerly we considered fortuitous, in that in many instances our base and precious metals were mixed with each other in the same deposit, may now react unfavourably.
The value of our mine exports over an eighteen-year period has been greater than

The Budget-Mr. Adamson
the value of total exports of farm or wood products, and about 71 per cent of our total exports of farm and animal products combined. I mention that fact, Mr. Speaker, to show how vitally important the mining industry as a whole is to Canada. Furthermore it is axiomatic that if we are to become a nation we must have a population that can consume a greater proportion of our secondary production than heretofore. Therefore it is imperative that we have population. Many figures have been given in this connection. The United States bureau of mines and the chamber of commerce of the state of Utah have issued figures which are well known, and they have variously estimated that from ten to twelve people are supported by one man operating in the mines. A committee of this parliament which sat some time ago very conservatively estimated that a married man working in a mine gives employment to 4-6 persons, and that a single man gives employment to one other person. The Canada Year Book gives the figure of 112,000 people employed in the mineral industry, 64,000 of whom were hard rock miners.
So I want to say that any curtailment in this industry has a proportionately greater effect upon the economy of the country, because of what is knowm as the leverage principle, in that one man's job at the mine creates several men's jobs elsewhere. In Quebec and in the clay belt of northern Ontario mining and agriculture went hand in hand. Colonization followed the mines, and a ready market for all produce of the farms was provided by the mining communities. This pattern is a common one throughout the world, and it may be said that in Australia, the states of Victoria and New South Wales were opened up to a large degree by mines whose pioneer discoveries in the interior of these states brought about the development of an agricultural economy. Many of the mines in these states in Australia have subsequently ceased to exist, but they were in production long enough to allow agriculture to become firmly established. If the mines in northern Quebec, particularly the low-grade properties from Bourlamaque to the Ontario border, are forced to close, the agricultural and colonization efforts will also fail, because they have not yet been established long enough to be self sufficient if the immediate and local market is taken away from them.
Furthermore, because of the rigour of the climate, they cannot live off the land with the ease of residents in the southern states of Australia. Therefore we face an added calamity. Not only do we destroy great mineral resources, but we run the danger of
making it impossible to develop our northern agriculture. This in turn will limit our population possibilities with its attendant out-ofbalance economic structure.
I now wish to discuss very briefly the use of gold as a monetary metal and an economic stabilizer. What I am- going to suggest will I believe answer all those who say that the government is generously buying a metal which is not desired anywhere else, and that the somewhat fantastic procedure of taking gold out of one hole in northern Canada and putting it into another hole at Fort Knox is a useless procedure. Actually it is the desire of the government, and it is particularly the desire of the United States government, to own much of the gold of the world that aborts the proper functioning of gold as an exchange medium. Gold may be worth $36 an ounce, it may be worth more or it may be worth less. But as the government of the United States was not prepared to free gold from its control it was difficult for the true world price of gold to be arrived at. Up to the present time it was reasonable to think that action in establishing of a free market for gold could be taken only by one of the major powers, more particularly the United States. However the drastic action that the Minister of Finance was forced to take last Friday night puts an entirely different face on the matter.
I believe, Mr. Speaker, we are now in a position to act independently. I believe, further, that we must do so. Canada faces an economic crisis of great severity unless the restoration and encouragement of the mining industry can be brought about. Mining, next to agriculture, is Canada's greatest industry. And after this hurt the reaction upon us will obviously be severe. Some people have suggested that an appeal ought to be made for a subsidy, and that the Canadian government should bonus gold to the extent of $3.50 an ounce. This is defeatist talk. I reject it, and I am sure that most gold producers would reject it immediately. What I do ask for, and I plead with the minister to give it serious consideration, is that a free market for gold be established right here in Canada. I make the following suggestions: I want to urge upon the government that in order to save the industry and Canadian economy in general, some immediate steps must be taken. I urge (I) that a free market for gold be established, and that buying and selling of this metal shall be carried on as the buying and selling of any commodity without any restrictions from any government agency whatsoever; (2) that corporations and banks in Canada have the opportunity of
The Budget-Mr. Adamson

purchasing gold and using it as part of their reserves and (3) that any individual or corporation, whether Canadian or foreign, shall have the opportunity to purchase and sell gold on the open market, and furthermore that all restrictions on the import or export of gold shall be immediately withdrawn; (4) that Canadian producers may sell on the free market any precious metal they desire.
The government has gone far to hurt the gold mining industry. No clearer statement of intent could possibly be made than that by the minister the other night. The government cannot have it both ways.
I wish to quote briefly from a statement made' by the deputy minister of finance before a parliamentary committee, showing that the government realizes the seriousness of the situation. The question was:
Exchange rates are very important to the metal industry, particularly to gold mining, because without the ten per cent discount many of our mines, perhaps the majority of them, would be out of business before long.
To this Doctor Clark replied, "That is right". I think it is only fair, if the house will allow me, to give the rest of his statement, because I do not wish to be accused of lifting the text from the substance, as it were. Therefore, with ipermission, I shall read the rest of the paragraph.


James Lorimer Ilsley: What committee was that?


Agar Rodney Adamson: The standing committee on natural resources, which sat in another place on May 28 of this year.


Mr. DEPUTY SPEAKER:: It is my impression that the hon. member cannot quote from the proceedings of a committee in another place until the committee has made its report.


Agar Rodney Adamson: I bow to Your Honour's ruling. I was simply trying to be fair, by giving the whole rather than part of the statement. If that is your ruling, I accept it.


James Lorimer Ilsley: Well, Mr. Speaker, something will have to be done about that. Either the answer will have to be withdrawn from the record, or the explanation added to it. The hon. member has now quoted only part of the report of the senate committee.


Mr. KNOWLES:: And he is now willing to bow to Mr. Speaker's ruling.


James Lorimer Ilsley: He was stopped from proceeding. However, so long as it is understood that something further was said by the deputy minister, I think we can let it rest at that.


Mr. STIRLING:: Would Mr. Speaker be good enough to quote the rule?


Stanley Howard Knowles: Standing order 41.


William Ross Macdonald: It is a well-known rule.


James Lorimer Ilsley: I think with leave of the house the hon. member had' better finish; otherwise it would be most unfair.


William Ross Macdonald: The rule is clear that hon. members may not refer to debates in another place, nor may they quote from the proceedings of committees appointed in another place, until the committee has made its report. Likewise hon. members may not quote from the proceedings of a committee appointed by this house, until such time as the committee has reported.


James Lorimer Ilsley: I suggest that the hon. member proceed with his speech.


William Ross Macdonald: If the hon. member is continuing to quote from the report of the proceedings of such committee it must be with the unanimous consent of the house.


James Lorimer Ilsley: I did not think that he was.


Agar Rodney Adamson: No, I am not quoting from the unmentionable place. Credit me, however, with trying to be fair. I merely wanted to record my contention. The government cannot have it both ways. It cannot deliberately restrict by price control the price of any commodity and set that price so low that it is impossible for the basic producers to produce the commodity. Gold is the supreme hedge against inflation. If the government is genuine and sincere in this fear of inflation it will realize that the possession of gold by the citizens of the country is a great safeguard against runaway inflation and its attendant evils.
It is obvious that the government has little interest in gold. The effect of the order will be to close low grade operating mines in Canada and gradually to strangle the entire gold mining industry. As proof of this statement I want to quote figures which show the cost of producing an ounce of gold in 1944 in Quebec and Ontario respectively. In Quebec the cost was $34.72 an ounce and in Ontario it was $30.95, leaving a profit of $3.78 and $7.20 an ounce respectively after mint charges. Those were the figures for 1944. In 1945 and again in 1946 the costs of mining rose considerably so that both figures, $3.78 and $7.20, would be materially reduced.


James Lorimer Ilsley: What is the source or
authority for those figures?


Agar Rodney Adamson: The Quebec department of mines and the Ontario Mining Association. Even if this were not so, the loss of ten per cent exchange reduces the profits per ounce to $0.28 and $3.70 respectively. It is obvious

The Budget-Mr. Adamson
that the entire Quebec gold mining industry must come to a quick end, and only a few of the richest mines in Ontario will be able to operate for any length of time. This lethal shock to the entire Canadian economy is one from which it is doubtful we can recover. Mining is now the second largest industry in Canada, and gold mining represents approximately one-third of the total output.
That is not all. Our base metal position is also in a precarious condition. Our internal prices of copper, lead and zinc are 11-55 cents a pound, 5 cents a pound and 5-75 cents a pound as compared with the United States prices of 15-8 cents per pound, 9-07 cents per pound and 10-17 cents per pound respectively, and those of the United Kingdom government of 14-24, 8-90 and 8-05 cents per pound respectively. I quote these to show the unfavourable position of our base metal mines. If Canada is to continue as a major producer of base metals, her mines must be allowed to receive the world prices for the metals produced.
If the gold mining industry is to be saved, further immediate steps will have to be taken. There are three steps which I believe should be taken. First, there should be a return to a fifty per cent depletion allowance to both mines and shareholders. Second, we should exempt all new mines for three years. Third, we should wipe out the excess profits tax on all mining.
The first two suggestions were part of the recommendations made by the Ontario and Quebec mining associations to that unmentionable place. I repeat that unless these steps are taken immediately the effect on the industry will be progressively severe. Other countries have let their mining industry go in a way almost identical to that which the minister has been forced to follow at the present time, and it took them decades, even generations, to bring it back on its feet, and in several instances it has never recovered. Truly this is a case of killing the goose that lays the golden eggs. However, the more permanent damage will be to kill development of metal deposits. Initiative will be destroyed, and once destroyed will not easily return. Therefore will vanish all the hopes and all the dreams we once had of developing the north country, of having a great population and providing a cure for any coming depression and its consequent unemployment. It may be said that at one stroke the government has hit initiative and blasted the hopes so fondly held of Canada becoming a great industrial nation. Surely this is an awful price to pay for fear of inflationary reaction within the United States.
Some years ago Australia in a moment of socialist extremity imposed taxation on mining which destroyed her industry. The result was that the economy of Australia was paralysed and her credit during the depression years was virtually non-existent. She had to take drastic steps to get the mining industry back on its feet, and for many years-I believe this is still the case-imposed no taxation whatever on metal mining and was actually forced to pay bonuses to people to get them interested in the discovery and development of mines. I am no prophet of doom, but I do say this to the government: Unless these regulations are amended in the way I have suggested it will not be many years before we in Canada may be bonusing people to return to the ghost towns of northern Ontario and Quebec.
I come now to another question that the house may like to ask: Why is this reduction so serious? At the present time mines in Quebec are making a profit per ton of ore of 62 cents. The gross value of the ore put through the mills of the average Quebec gold producer is somewhere in the neighbourhood of $6.20. Ten per cent of 86.20 is 62 cents per ton, which is the profit the mines are making at the present time. That goes to show how serious this reduction is to the mines.
It may be said that the mines produced gold when gold was worth only 820.67 per ounce. It is true they did, but only the richer mines were able to produce at that time. Costs were extremely low; wages were less than half of what they are to-day; the cost of supplies was less than half, and taxes were negligible compared with what they are now. Furthermore, the increased price of gold has brought into being many northern communities, which are now dependent on development of low grade deposits.
The next question the house may like to ask is: Why is the situation so immediately serious? I have referred to the destruction of profit. As a matter of fact, mines will immediately begin to be operating in the red. Because these mines have been unable to build up surpluses they will shortly come to the end of their resources and it will not be long before what capital they have to tide them over a bad period will be exhausted. When it goes, it goes quickly in a mine, because it costs a lot of money to operate a mining property.
The house may ask: How would an open market operate? I do not suggest that it would be necessary for Canada to follow the South African policy and have a refinery as they have in Johannesburg. I believe that the mint could produce, as it does now, ingots of any desired size and marketability. I believe that the operation of a free market in gold could be

The Budget-Mr. Adamson
conducted similarly to the operation of almost every other commodity exchange. I believe many of our firms will find that the possession of gold as a part of their reserves is a great asset in carrying on trade throughout the world. Insurance companies, banks, and large oil companies will probably find the use' of gold very helpful not only as a reserve but as a means of acquiring foreign exchange and concessions. There is also the factor that there are many people not living in Canada who will wish to purchase gold as a hedge against inflation within their own country.
I come to the final question which the house may ask, and it is this: Can gold stand on its own feet? Here is the final question that must be decided, and it can only be decided by the march of trade. If gold is not worth anything, it should not be produced. But if gold is worth anything, it should receive the world price, and not be restricted. That is the question, and I say to you, Mr. Speaker, that that question can be resolved only through a large open market. There have been stories of the market in Bombay and the market in Alexandria and of very high prices, $70, $90 and probably even more being paid for gold. We are not sure how large those markets were, or whether they were constant, and what the daily volume was of those markets dealing in precious metals.
The whole basis of the Bretton Woods agreement is the value of the various currencies. Under that agreement several countries undertook not to devaluate their currencies. But the actual value in terms of gold of any of these currencies has yet to be decided. In my opinion there is only one way in which the value of these currencies can be adequately determined, and that is by trading those currencies in a free market against gold. The currency is what it is worth in terms of the supreme trading blue chip, and that is gold. That has been the history since the gold standard came into effect. Gold was traded freely on the London market, and it had become fairly stable over a period of years. When the authorities of that day undertook to put the pound sterling on a gold basis they merely took the day's market quotation for the metal. I do not believe we can arrive at any parity of exchange for gold for a long, long time. I do think that unless we allow the market to be free we are never likely by artificial means to have a true yardstick of the actual values of world currencies.


Mr. EUGENE MARQUIS (Kamouraska):: Mr. Speaker, although Canada has covered herself with glory, she is suffering from deep wounds as a result of the war. Our country, proud of her heroes, hails them and strews

their path with the flowers of her everlasting gratitude. War prisoners, infantry troops, sailors or airmen-they exemplify the stamina and the fighting strength of a young and vigorous nation.
However, our joy is tempered with sadness when we think of those who have gloriously fallen on the fighting lines and when we remember the great wounds which the conflict has inflicted on the nation.
We are going through a period of joy and sadness, hope and regret, post-war worries and planning for the future. We are entering the struggle for a new life.
During the war the needs of our three armed services, as well as those of the devastated allied countries, of some occupied territories and of the essential industries of this country have considerably extended our markets both at home and abroad. The steamship lines and the railroads have reached a pitch of activity that has hitherto been unknown. Our production has increased to a remarkable extent. It is now up to us to maintain our economic power at a high level.
In order to attain that goal we must join our efforts without any partisanship but inspired by the purest Canadian spirit. If there are people who would prefer to play politics, they will be sternly called to account by the people of this country.
Our attention must first go to agriculture which, to my mind, is Canada's basic industry. Besides, history shows that from the point of view of their everyday needs successive generations have always turned to agriculture in fulfilment of their normal destiny. To that, let us add the development of our other natural resources. With the advance of science and the growing needs of the nations, the other industries have taken on a necessary and considerable expansion, but this cannot change mankind's destiny, which is to obtain its daily bread from the soil where the Almighty has caused it to grow.
May I be permitted to pay a grateful tribute to our settlers and farmers, whose heroism is on a par with that shown by the warriors of all times? Their bravery is daily renewed in the discharge of toilsome and oppressive tasks. Soldier heroes may achieve glory by a single feat of arms, but our pioneers of the soil achieve their country's glory by assuring its greatness and prosperity by a lifetime of toil and sacrifice. As farmer's son, I take pride in my origin and take this opportunity of paying homage in this house to the memory of my father, for the valuable lessons taught me by his humble and arduous life as a tiller of the soil.

The Budget-Mr. Marquis
One of my fondest wishes, therefore, is that agriculture in my country should prosper. As I have already mentioned in this house, my constituency has two choice institutions for the development of agricultural science: the agricultural high school and the experimental station of Ste. Anne de la Pocatiere.
During the war, certain public men claimed that these experimental stations were not essential industries, and urged that they be closed down. To my mind, this course would have been quite ill-advised. When a people's life is at stake is hardly the best time in which to cut down its facilities for production and supply. All the more, therefore, can we now appreciate the government's wisdom in keeping these farms in operation.
True, their budgets were curtailed during the war. But now that hostilities are over, could the government not increase its subsidies to those important institutions, particularly the one at- Ste. Anne de la Pocatiere? This investment would bring dividends to the whole country by placing our agriculture on a more modern and scientific basis.
In this connection, may I foe allowed to suggest an improvement? There seems to be some anomaly in the management of the Ste. Anne farm and, I understand, in that of all experimental farms in Canada. The superintendent, a government official, is in the same position as the manager of a private concern. Out of the funds at his disposal he has to meet all expenses, including employees' wages, with the exception of salaries paid to the office staff and department heads. Well-meaning as he unquestionably is, he cannot escape a certain amount of misunderstanding with his employees. Whenever the latter have grievances over wages it is only natural that they should hold the superintendent responsible. In fact, the latter is torn between the obligation to pay fair wages and the no less reasonable obligation to economize and indeed to show a surplus. And there lies the source of many difficulties.
In all fairness to the superintendent and the employees, it would seem necessary that a substantial budget be voted for all farm expenditures, with the exception of wages. These should all be paid by the government directly on a higher classification and wage scale, consistent with regulations provided, for various trades in each province. Present wages are inadequate and the classification of trades is an imperative necessity.
I might add that these farms are operated hy qualified men, whose experience is deeply appreciated. It would seem just to raise the officials' salaries as well as the employees' pay.
In my view, scientists and technicians are bound to play in agriculture the same part as in war industry. Through their research, experiments and wise counselling, the farmers of Canada will attain first rank in the agricultural world of to-morrow.
In anticipation of this rebirth of agriculture, may I suggest that the government place at the farmers' disposal all obsolete war equipment suitable for farm work. Tractors, trucks, bull-dozers, steam shovels and other machinery used in war time might thus serve to improve our production. This material could also be employed in draining flatlands where new parishes would develop and absorb large numbers of our young people.
The government might in the near future go one step farther and, in conjunction with provincial legislatures, subsidize the drainage and rehabilitation of our farms.
By contributing financially to the setting up of public markets, not only in great cities but in rural centres, as Riviere du Loup and other towns of the same size, we could help to stabilize prices in country areas and particularly in my own riding of Ivamouraska. Any measure aiming to stabilize prices permanently is preferable no doubt to special and temporary grants.
The last session opened w-ith a long debate on wheat, a commodity which is highly prized in our country because of its value as an export and as food for our own people. But we must not forget the rest of our produce. In my riding some farmers grow wheat for domestic consumption, but dairy production is the main industry.
"The nation can make no better investment than in milk for its children", said Mr. Winston Churchill during the recent war. Thousands of children from devastated countries and particularly from France and England beg us to relieve their hardship and to save their lives. It is our duty, as descendants of these two great races, to meet that appeal.
During the war, we stoutly assisted Great Britain wffiile she was heroically resisting the aggressor. At that time, however, we were unable to lend a helping hand to France, the mother country of a large section of this dominion. This nation which was credited with so many resounding victories through the ages suffered the most brutal and most humiliating defeat. Trodden down by the oppressor, France deplored her ills in silence, awmiting the hour of liberation. This long hoped for liberation, expected with so much anxiety, must have cost a great deal of devastation and suffering as wrell as many lives. To-day France rises anew and asks Canada to supply her with milk that she may save the lives of her children, rendered anaemic by hardship.
The Budget-Mr. Marquis

In the dairy industry, our country is a great producer, but it can increase its output. In 1943-44, Canada produced more than 8,000,000 tons of milk, distributed as follows: 1,678,000 tons of fluid milk, 776,000 tons consumed on the farm, 354,000 tons fed to animals, 4,533,740 tons used in the production of butter and cheese, 275,740 tons processed into condensed, evaporated or powdered milk.
There is no doubt that the output of powdered milk can be largely increased. Aside from whole milk, skim milk, with its high nutritional value, can also be powdered; in that form it will be greatly appreciated by starving countries. May I suggest that the government and particularly the Minister of Agriculture (Mr. Gardiner) promote the dairy industry by every means in their power. The numerous farms in operation can boost to a greater extent our production of milk.
But there is another angle to consider. Numerous farms already under cultivation, which had showm good yields, are now abandoned. In the province of Quebec, alone, there are at least 5,000 such farms. It is also estimated that approximately thirty million acres of arable land in northern Abitibi, in the province of Ontario, could be brought into production. Must I mention the possibilities offered in New Brunswick, in the way of land clearing and settlement? In that part of Quebec known as the lower St. Lawrence and around Chicoutimi and in many other regions near the elder settlements, there are at least one million acres of uncleared land, which could be subdivided into no less than ten thousand farming establishments. Do I have to mention that, according to experts, the districts of Abitibi and Temiskaming hold
15,760,000	acres of tillable land, which represent at least 100,000 farming establishments/ or 500 parishes of 200 families each?
We are now faced with the problem of reconstruction. Our war industries are being reconverted to civilian production rapidly enough, but industry alone cannot survive unless we encourage in every way the production of agricultural commodities. Development of agriculture is the answer to unemployment. By increasing production on land already under cultivation and by encouraging the bringing into cultivation of those millions of acres which have never been cleared, we could easily create w'ork for everyone. Those who are employed on farms can earn their own living, as well as that of their families, without becoming public charges. Besides, they can thus bring about a greater industrial development and are in a position to supply the needs of our urban population. We would

thus help our trade, by marketing at home part of that production which must otherwise be exported. There would still be jurisdictional difficulties, as between the federal and provincial governments; but I am inclined to believe that, in a matter of such importance, a suitable plan could be worked out to facilitate our country's normal development along the path intended by Divine Providence.
We are an agricultural country and I believe we must encourage agriculture in every possible way. The greater the number of veterans, farmers' sons and men of good will set up on farming establishments, the better stabilized will be our national economy. In war time it is a guarantee of survival and in peace time a guarantee of progress.
May I point out that it is not necessary to bring in immigrants in large numbers from other countries in order to develop our arable lands? If agriculture is given more encouragement and if prices of farm products are maintained at a high level, that is, in keeping with wages and prices of manufactured products, I am firmly convinced that most of our young men will be happy to live peacefully on farms which they will clear themselves or which they will improve with their own hands.
It is absolutely necessary to employ Canadians rather than foreigners. Further, in most European countries there is a tremendous amount of reconstruction work to be done. In England and in France, it seems obvious that every able-bodied individual is needed to restore the economic stability of those countries. It does not behoove us to request much outside help. It. is preferable to see that every able-bodied man is given employment, first on farms, and then in some of the industries which have been set up in Canada and which have developed tremendously since the beginning of the war.
In the Canadian scheme of things there is room for the scientific and progressive development of agriculture and for the normal advancement of related and other industries which may help the consumption of our products and the development of our export trade.
If I have supported the agreement between the United Kingdom and Canada, it is because I was convinced that it would help to maintain prices of agricultural products and the economic stability of our country. Indeed, it was difficult at the end of the recent war to maintain our exports and retain our foreign markets without making some kind of contribution, but we must not depend only on such a scheme If prices of agricultural products should fall off, a depression would certainly follow. We would then witness the exodus of farmers to

The Budget-Mr. Lacombe
the cities, a decrease in agricultural production, a curtailment of industrial activities and, finally, unemployment. That is the problem which must be faced.
It must be admitted that the government has endeavoured to restore quickly our peacetime economy, but I humbly suggest that we should continue to guarantee stable prices for agricultural products and to encourage our young people to settle on farms.
Indeed, family allowances are a great help to farmers in looking after the needs, the education and the training of their families. The amounts paid to them bring about a greater increase of wealth on the farms than in the cities. It is true, no doubt, that the children of workers benefit from this important grant, but the sums handed to farmers' children contribute to a higher agricultural production, to a more careful education and to a special vocational guidance for these children. It is to be hoped that these family allowances may enhance the scientific development of agriculture and that our future farmers may thereby become known as the best in the world. Given the proper development of farming methods and the stabilization of industry, our country will be assured of a foremost part in future world activities.
In concluding, Mr. Speaker, may I be allowed to make to the hon. members of this house a special plea for Canadian unity. It is now more timely than ever to avoid deluding ourselves and being carried away by mere words. If we love our country, if we wish greatness and unity for it, we must put aside all racial and religious prejudices, all differences originating in local difficulties, avoid all sectional rivalries, so that we may think, act and speak as Canadians should. Do you not believe that were a part of this country to refuse to recognize the rights and opinions of other parts, an impassable barrier for our descendants would thereby be erected which would create chaotic conditions for our children? The sole material object of our lives is to prepare the future of our descendants. To a certain extent the French-speaking members of the house have expressed a strong wish to promote a truly Canadian feeling in this country. They all endeavour to speak both official languages. We acknowledge the right of each and every one to entertain personal views, but we deny them the privilege of refusing the same freedom to those who speak our tongue.
I do not claim that certain hon. members are devoid of Canadian spirit and feeling. On the contrary. I believe each one of us is anxious to develop our country and to create a national idea. Then, once and for all. let us place our
cards on the table; let us be straightforward and put away from our minds the thought that when someone presents a measure for changing the name of a holiday or for designing a distinct national flag, he does it with the purpose of changing the constitution. We wish to live as Canadians, under Canadian statutes and a Canadian flag, in a united and peaceful Canada.
Mr. LIGUORI LACOMBE (Laval-Two Mountains); Mr. Speaker, the taxation levied upon cooperatives by this budget is an unfortunate move. Nothing was neglected by religious and civil authorities when the problem came up of promoting cooperation in all domains, and especially in the agricultural domain. But, when preparing this budget, did we pay any attention to the substantial subsidies granted to cooperatives by the provinces? Is the government forgetting the devotion of our religious authorities toward the fruitful work of cooperatives? We should not give in to evil influences whose object is only the interests of a few instead of those of the whole nation. Profiteering capitalism will not retreat in front of anything. It will even walk over the corpse of our cooperatives in order to attain its selfish interests. The taxation upon cooperatives built up by the sacrifices of the poor and humble is the worst item of this budget.	.
The government received innumerable protests against this tax. Every member of this house was warned beforehand. I addressed personally to the Minister of Finance (Mr. Ilsley) several resolutions from cooperatives in my riding and my province, protesting against this tax. Consequently it is with regret that I realize that the government seems to ignore the expression of public opinion based this time upon simple common sense. I beg that it amend the budget resolutions before it is too late. Let the government exempt cooperatives [DOT] from income tax. Let it not destroy by a stroke of the pen an economy built up after thirty years of sacrifices, devotion and unselfishness. Instead of imposing a tax upon cooperatives, the government should revive [DOT] subsidies to agricultural county fairs, which were suspended during the war. It would thus foster the breeding of pure bred cattle and the improvement of our much needed dairy industry. On the contrary, on the one hand, agricultural cooperatives are taxed, and, on the other, agricultural fairs are deprived of class B subsidies which are necessary to their survival. The government is all the more stingy when it has no reason to be so, in the same proportion that it is prodigal toward foreign countries.

The Budget-Mr. Lacombe
In 1939, it cost the government S97,000 to subsidize our agricultural county fairs in the province of Quebec. Others are given or lent billions of dollars without interest, but the sum of $97,000 is refused agriculture whose contribution was so great to the victory of our armies. Do you realize, Mr. Speaker, how odious such a policy is? It is never too late to render justice. Let the government revive former grants to our agricultural societies, and relieve our cooperatives from paying income tax. It will then fulfil its duty toward agriculture which was our first line of defence during the war, and which remains our wealth and our strength.
My colleague, the hon. member for Terrebonne (Mr. Bertrand) has on the order paper a resolution asking that irrigation works be executed in the Mille-Iles river. It is with great pleasure that I second this project of my hon. friend. We both represent, in this house, a district where tourists are numerous. Providence has bestowed upon our ridings all the beauties of a majestic nature. Therefore, in view of the public interest, I recommend that the project of my hon. colleague for Terrebonne be put into execution.
On several instances, I have asked for an amnesty in favour of our young men who did not comply with the mobilization act. I am still asking for this amnesty. Why always contemplate punishment? The time has come to forgive these young people. Real justice, like real peace, cannot arise out of hatred and punishment. Above human justice, there is a great commandment which was preached almost two thousand years ago by the Dispenser of justice and peace. This commandment is the commandment of love and charity. Canada did not fight for anything else. The war aims of the united nations were founded on a doctrine of peace, love and charity. Let us not deceive ourselves. Let us grant a general amnesty to our young men.
There is a more frightful danger than the attitude of those who avoided the mobilization act. This danger is within our walls. It is ready to explode simultaneously in a hundred different places. It is communism. How many times in this house did I not denounce this atheistic doctrine? Instead of putting a stop to this communist wave, the government acts as if this doctrine suited its aims. The Canadian Broadcasting Corporation has just offered its facilties to the Labour Progressive party whose recognized chief is Tim Buck.
Is there now a sole Labour Progressive member in this house? The only representative of that party is no more sitting in parliament, and the Canadian Broadcasting Corporation, instead of granting broadcasts to representa-

tives of the people, whoever they be, gives its facilities to Moscow and its gang of spies. How edifying this is! The first duty of the government which is controlling the Canadian Broadcasting Corporation is to notify this servile instrument of propaganda that it should deal in all fairness with every member of this house.
In a Christian country, is it befitting to allow the atheistic and revolutionary Labour Progressive party to diffuse its nefarious doctrine among a nation which needs all its moral strength to overcome the difficult times we are experiencing? The government is breeding a monster which sooner or later will devour it. Let it beware of the hammer and sickle. The-Jewish-Masonic gang can effect the worst interventions in Canada, and can carry them very far. The government should not listen with sympathy to promoters of immigration recruited among the emissaries of powerful transportation companies, which are only seeking their selfish interests. There is no room in this country for even one immigrant. A great number of war veterans are still unemployed. There is a housing scarcity. Our whole economic structure was shaken by the war. We have an urgent duty toward Canada, and toward Canada only. To reestablish our national economy, reorganize our finances, pay our debts and give to the nation an example of honesty and thrift, this is the very common sense based upon the most elementary equity and justice.
Before closing, I wish to remind the government of its duties toward the provinces. It cannot avoid them without incurring the most serious difficulties. Let the government hand back to the provinces, in their entirety, all the rights which are guaranteed to them by the constitution. This is no time for arrangements. It is time for action. If such an injustice must persist, the nation will see to it, sooner than we think, that right triumphs over strength and unfairness. This is going, too far. Let us hand back to the provinces the complete range of their jurisdiction, which short-sighted politicians have abandoned to the central government. If the government aims at the termination of confederation, let it continue along the line of its mostly unfair attitude toward the provinces.
Finally, I am looking forward to the day when Canada, like the Philippines, will be able to proclaim its independence and cease to follow in London's wake. Like all true Canadians, I sincerely wish that we may live in a free and independent country, and that a distinctive flag, with no signs of colonialism, may unfurl over this magnificent and immense country, the only country we have covered with glory, ennobled and uplifted by the

The Budget-Mr. Knight
supreme sacrifice of those who fell overseas under the guns of the enemy for the triumph of freedom, justice and right. Then, and then only, shall we see the real sovereignty and the real valour of Canada. And we shall cherish but one ideal, the most noble and most worthy-independence. A shield of glory will assert the freedom, independence and sovereignty of our nation. Canada needs this freedom for the huge task of restoration which requires all its efforts. This sovereignty must emerge with complete clarity, distinction and brightness beneath a flag which will be a distinctive symbol of rallying around an essentially Canadian policy. It is in this broad, immense and enlightened horizon that I foresee and call for the freedom and independence of my country.


Mr. R. R. KNIGHT (Saskatoon City):: Mr. Speaker, in looking about for a particular subject upon which I might speak in the budget debate, I came across a paragraph from something written by the pen of Ellen Wilkinson, minister of education in the British government. She says that her aim is to make the schools provided by the state so good and so varied that it will just seem an absurd thing not to send children to them. Then I received a letter from an address in Canada which reads:
I am the teacher of a rural school in a small fishing village. This school is built by the side of the public road, and as the land surrounding it is privately owned, the children have no playground. The desks on which the children must sit day after day are old, shabby and uncomfortable.
I could go on with that letter, but it ends with an appeal to the various citizens of this country to come to the rescue of the little children in that school district.


Stanley Howard Knowles: Where was it from?


Robert Ross (Roy) Knight: Nova Scotia. Then I come to this sentence:
There is no point in education if it does not give youth a desire for a better life.
So I have my text. I -have no apologies to make for speaking on education. I know this is a subject which is somewhat shunned in this house. We feel that it is so much and so particularly the prerogative of the provinces that we are almost afraid to introduce it here. I think that is a mistaken idea. Speaking on the subject of federal aid to education during the debate, I think last May, the hon. member for Dauphin (Mr. Zaplitny) made such a lucid and constructive exposition of the subject and covered the ground so thoroughly, that I was not much disappointed
when the procedure of the house precluded my taking part in the debate although I had intended to do so.
The fact that the dominion-provincial conference has failed, or, if that language is too pessimistic, the fact that it is in a state of suspended decision makes it even more imperative that the dominion government should come to the assistance of the provinces in this matter of education. May I assure my hon. friends, with whom this is a debatable point, that I am not suggesting that there should be any form of interference with provincial autonomy with respect to education but rather a standing by of the provinces on the part of the dominion with moral support which would lend weight to the importance of education as an essential part of the national life, and financial support which would ensure to the people of each and every province some equality in the matter of educational opportunities.
There are those who have said that the acceptance of federal grants would be a surrender of provincial freedom, but that is not necessarily so. The federal government is already in the field of education in the matter of grants in aid of technical education, without the loss, so far as I know, of the freedom of anyone. The acceptance of family allowances has enslaved no one. The provision of federal support for education could become an agency for the promotion of national unity. A new national interest in education could be an instrument for national unity, just as education in a broader sense could be used to promote mutual understanding among the people of the world and, with its ultimate aim of international peace, could shine into and dispel dark ignorance, the gloomy breeding ground of suspicion, of hate and of war.
One way in which the dominion government could aid education without objection from anyone would be to provide direct financial assistance to certain brilliant scholars unable to finance their own university courses, thus ensuring that Canada as a whole would have the benefit of their trained minds. Britain's labour government is giving the lead in that connection. Basil Dean in the Ottawa Citizen of May 20 says that scholarship winning students in Britain whose parents earn $2,600 a year or less will get full maintenance grants, so that it will not cost the parents one cent for their children's university education. In future, no promising student in Britain will be deprived, by lack of means, of the opportunity for a full university course of study. This is a type of investment which we might well emulate.
327S
The Budget-Mr. Knight

Leaving my listeners to study further in the speech of my colleague the matter of federal aid, I shall advance some ideas: first, on the meaning of education; second, on the place of the educator in a world of social change and, third, on a special organization for education which we might well encourage for the national and international good.
Many and diverse are the definitions of education that have been advanced and great are the differences of opinion in regard thereto. I shall only define it indirectly as I develop my idea. Perhaps I shall define it negatively, as to what it is not, rather than positively, as to what it is. Hon. members would be astonished at some of the misconceptions held and the theories advanced. For example, we find that one lion, member of this house has said:
I suggest that we do not always educate our men and women for the callings for which they are best fitted.
And again:
This nation cannot afford to waste many of those people by educating men and women for the wrong jobs.
Here is a conception or misconception held by some, but surely one would expect more in a speech on education from a public man in this house. It is a question, of course, of the difference between education and training. The terms are not synonymous. Might I suggest to hon. members generally, and to the hon member whom I have quoted in particular, that education is not necessarily the fitting of a man for a job. Education is a thing of the mind and spirit; its purpose is the creation of a personality, the acquirement on the part of the individual of a broad culture, the creation of a being with a proper sense of values and with the mental equipment for a full and happy life.


Mr. MACKENZIE:: Does the hon. member suggest for one second that as much is being done in the old country by way of university training for veterans and ex-service men as is being done in Canada?


Robert Ross (Roy) Knight: I did not make any such statement. I said not a word about veterans. The minister seems to be a little touchy on the matter.


Ian Alistair Mackenzie: We are miles ahead of them.


Robert Ross (Roy) Knight: I do not think the minister needs any defence for his scheme, and if I were in his place I would not say so. Nothing used to make me so angry during my teaching years as to have a parent say to me, "But my Willie doesn't need French or literature," or what-
ever subject he had failed in, "you know he's just going back to the farm"; or "Mary is going to be a dressmaker; why should she read all these books?" Well, now, we have come to the argument of the hon. gentleman. One should say to such people: "Let Willie be a farmer; we hope he will be a good farmer- it is a fine profession; it will provide food for his body, but why should we on that account starve his soul? If he is to work with his hands, if Mary is to work at what may be a monotonous job, all the more reason why their minds should be stored with some of the great thoughts of literature. All the more reason that they should have at hand the greatest thoughts of the greatest men of all the ages, and what is important, some power to interpret them." I am going to pass over the statement of the hon. member for St. Paul's (Mr. Ross), who, speaking of his Ontario constituency, said: "We do not need education." It is refreshing to read elsewhere the words of the Minister of Agriculture (Mr. Gardiner). He said more in a breath than the author of the speech I quoted said in forty minutes. He said:
A man appreciates being on a farm just a little bit more if he has had the opportunity to get a university education. That should not prevent a man from working with his hands if he has the right kind of stuff in him.
Good! Hear, hear! Education, in the sense I understand it, is not wasted on anyone, no matter what his occupation is to be.
I am not opposed to vocational training or to the teaching of skills; far from it. But let me say this. Let us beware of going too far with this evident trend in utilitarian education. It has been intensified during the war. It is the craze of the machine age.
Knowledge does not necessarily give wisdom, and our science is on the way to destroy us, and will destroy us, if we have not with it the sense of proportion and of values which only true education can bring. Let us beware lest our educational system, in its worship of material things, may gain the whole world and lose its own soul. We must be realistic, you say. Exactly. "Education has now to take on new and terrible responsibilities," President Truman of the United States said the other day. Realism, yes, but the only true realism is idealism; without it civilization cannot survive.
So much for what education is. Now as to the need of it and the teacher's place in it. Harried as we are by the day-to-day call for solution of imminent and immediate national problems, we have been inclined to neglect, federally, the importance of education in a changing social order; and as I speak I am

The Budget-Mr. Knight
thinking of the world situation, as well as of our national situation here in Canada. In the face of present-day speed and progress, surely there is need for haste in instituting long-range plans for sharing with all peoples collectively the scientific and cultural heritage of all peoples individually. Cannot education be made to play a vital part in the building of the peace? May it not, free and universal, form a basis of mutual understanding and respect?
That change in the social order is continual and inevitable is acknowledged even by those who wish to apply the brakes to the vehicle of progress, even as it is by those of us who would fain grease the wheels of that same vehicle. Let us first accept that fact, then try to discover how education, and what education, can make this progress smooth and beneficial. Let us learn how best to contribute in the things of the mind and spirit to the welfare and culture of others, how best to absorb what they have to offer in the same sphere; a process which should be as effective between province and province in our own country, between nation and nation in the community of the world, as it is amongst individuals. Indeed, I think it will be proven by experience that the sharing of knowledge, of scientific invention, and a common interest in the arts, and the use of the universal language of music can be aids in the preservation of world peace.
If one accepts the inevitability of social change, then one must also accept as inevitable the necessity of an emphasis on the teaching of the social sciences. The teaching of the social sciences involves more than merely a recitation of social facts; it involves some attempt at interpretation thereof, and that puts the educator into the role of a leader in social progress, rather than that of a mere instrument for the defence of things as they are.
It is unfortunate that the educator has perhaps too easily accepted the latter role, has accommodated himself to the environment and society with which he finds himself encompassed, and so has been pushed into the position of passivity, and is not at all the dynamic force in the shaping of events that he ought to be. He has found out that in his position life is more easy and placid if one does not too vehemently assert his rights of citizenship, and so he yields sometimes to the temptation to follow the paths of least resistance. In proportion as he does so, to that degree he loses the respect of those who look to him for leadership.
I have always protested the circumstances which produce such a retreat from reality.
I am not saying to teachers that they should indoctrinate or indulge in propaganda, but I could remind them, too, that by passivity and acquiescence they are already propagandists for the status quo. They are apparently generally so accepted, for when they do even mildly step out of that role, they are immediately rebuked and told that they should stick to the intricacies of algebra or of the transitive verb, or they are accused of indoctrination or of being agitators or communists- and in that connection I deplore the recent comments made upon the educational institutions of this country by the leader of the Social Credit party (Mr. Low).
He would no doubt agree with the following statement by the deputy leader of the Conservative party in the house, who said:
One of the things that this country must do is to see that the seats of learning, whether they be higher or lower, are purged-
A good word!
-of any teachers who may be found to have undemocratic ideals, whether they are purveying them to the pupils or not.
He does not define "undemocratic", nor does he say who is to do the purging. And so we are now to dictate to the teachers not only what they shall teach, but what they shall think! That word "purge" does not somehow go well with a passion for democracy. It reminds me too vividly of certain historic events which took place prior to the war in two countries which have for some time not been considered as good examples of the democratic state. I am glad, however, that the hon. member realizes his own limitations. He referred to his own speech, and quite rightly, I think, as a group of rambling remarks and expected criticism in regard to it. Well, let me tell the hon. gentleman that the German teachers, suitably muzzled as to democracy and indoctrinated as to nazism, were the key group in the plans of Hitler in the building up of his tyranny.
But to return to my remark that education can play a vital part in the building of a peaceful world, I want to ask for both government and public support for the united nations educational scientific and cultural organization, which was set up in London in the closing months of last year.
The term "federal aid to education" can have a practical application in connection with this institution. It will need an ample budget, may I say, and the government can help there. Education as an instrument of peace must be universal. It is vain for one country to educate its youth for peace, whilst, all around, its borders are bristling with the guns of those who cry for war. Our aim

The Budget-Mr. Knight

should be to acquire the means to teach a minimum programme of peace in every schoolroom in the world.
The organization of which I spoke, commonly known as UNESCO, was planned at San Francisco in the spring of 1945, when the nations pledged themselves to promote international cultural and educational cooperation. A conference was held in London in November, 1945, attended by representatives of forty-four of the united nations, including Canada. A constitution was agreed upon, and the first conference to be held under it was planned to take place in this summer of 1946.
The declaration setting up the organization set forth the following as its purpose:
To contribute to peace and security by promoting collaboration among the nations through education, science and culture in order to further universal respect for justice, for the rule of law, and for the human rights and fundamental freedoms which are affirmed for the peoples of the world, without distinction of race, sex, language or religion, by the charter of the united nations.
Article VII recommends that within each signatory nation there shall be set up a national commission to act in an advisory capacity to their respective delegations, and to act as agencies of liaison between their respective governments and the main body of the organization. .
To-day I am appealing to the government and to the country for support for this international organization, and for thoughtful consideration in the setting up of the proposed national organization or commission in Canada. While asking for ac,tion and leadership in this regard, I realize that this is a matter in which it is perhaps necessary to hasten slowly, for since it deals partly with education, it is dealing with a matter which comes under the jurisdiction of the provinces. The commission should be established, then, with the support of the provincial governments and all national bodies interested in education, science and culture generally.
This' may take some time, and so I urge upon the government some immediate action by way of a beginning. In this field there is no minister, no government department to give a lead; some leadership should be arranged forthwith. The national commission should be set up at once as a consultative and advisory body. Such a body might have the following purposes:
(1)	To assemble representatives of the intellectual and cultural life of the nation, those who pursue it professionally and those who enjoy its fruits, and are organized to serve its interests.

(2)	To provide a national group in which the intellectual and cultural resources of Canada may be expanded and fortified by the mutual exchange of views and experience.
(3)	To provide a national body through which the government may keep in constant touch with the ideas, wishes and activities of those directly interested in the education, science and culture of Canada.
(4)	To provide, through the government, a link between this aspect of Canadian national life and UNESCO, the international body of which the country is a member.
As for the personnel of such a commission, its membership should be drawn from all the provinces and from organizations in the educational, scientific, and cultural fields. It should meet in widely separated parts of the country. It could thus in its own right become a powerful instrument for national unity.
One thing on the educational side of the organization I would particularly urge upon the federal government. The educational organizations of this country are vitally interested in the success of this organization. The organized teachers of the country are vitally concerned in it. I was informed, in reply to a question I put on the order paper some time ago, that the Canadian teachers' federation have already advised the government in this matter, have asked for representation on the proposed national commission and on the Canadian delegation to the main conference itself, and have even suggested names of those who, they consider, would represent them suitably. Organized teachers are entitled to such representation; I urge it upon the government with all the earnestness at my command. I would urge the government to keep in touch in this whole matter with such fine organizations as the Canadian teachers' federation and the Canada and Newfoundland education association.
UNESCO is vitally important. Let us support it wholeheartedly. In appealing for federal aid to education in this particular and special sense, I think that I can do no better than quote the words of that fine scholar Doctor R. C. Wallace, president of Queen's university, who was one of the Canadian delegates at the preparatory conference of UNESCO last year. I find them in the International Journal (winter number 1945-46) published by the Canadian Institute of International Affairs. Doctor Wallace there maintains that the great nations can secure peace for a generation by the use of power, and that during that time this organization of UNESCO can be laying the foundations on which permanent peace and security will be built. He says:

Private Bills
What then is the purpose which has inspired this movement? It can be put in a few words. It is in the minds of men that wars begin. It is in the minds of men that understanding must be created, sympathy inculcated, cooperation established. That can only be done if education is universally shared, knowledge made common property, scientific progress available to all, the fine arts an open book to the whole world. By interchange of scholars and teachers, by translation and publication, by all the means of mass education, by books, by word of mouth, by national and international organizations, the fruits of the mind and the spirit must become the common property not of the intellectuals only, but of men and women everywhere.
Surely, Mr. Speaker, this is a thing worthy of the most generous support of the Canadian government.
I have endeavoured to enlist the support of the members of this house and of this government for federal aid to education. I have defined briefly education as I see it, both as to its effect on the individual, and as a potential instrument of human understanding and international peace. I have outlined the plans of the united nations educational, scientific and cultural organization for making that instrument effective. I have quoted the words of a great head of a great university, a university I think of as peculiarly my own. Let me conclude with the statement of another, the president of the university in my own home city, speaking upon the necessity of the world being as one in the matter of education. He has said well the things that I fain would say. President J. S. Thomson of the university of Saskatchewan, speaking the other day upon the actuality of world community, said that it was a bright spot of our time that never in history was such a great interest taken in education. He believed that the idea of the world community should enter all departments of education; that the theme of our history should be the story of mankind. He said that music should be taught as the international language which interprets the feelings and thoughts of all men. Science belongs to no single country; it is the great cooperative enterprise of the human spirit coming to grips with its natural surroundings. The story of mathematics should be presented as the saga of the human imagination. If we approached our education with that attitude, as training for world citizenship, the teacher and the child would lead the world into a new and better day.
May the words and the ideas of these two men of vision, whose lifework education is, bring us in this house and in this nation to a sense of our responsibility in regard to it.
At six o'clock the house took recess.
63260-207i
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Mr. RALPH MAYBANK (for Mr. Cleaver) moved the second reading of bill No. 244, respecting the Army and Navy Veterans in Canada.
Mr. GRAYDON:: I do not happen to have in my list a copy of this particular bill and I should like to have it. That, however, is not the reason for my rising now. I am quite sure that the hon. member for Winnipeg South Centre (Mr. Maybank) is only too anxious to give some explanation before we go farther with the second reading of this bill, and it would be a great shame if he were now deprived of that opportunity.


Mr. MAYBANK:: The only explanation I can give, seeing that the request that I should move the second reading has just come to me, is that I understand the object to be the incorporation of this body. That is all I can say.
Motion agreed to and bill read the second time.



CANADIAN INDEMNITY COMPANY

[Stage Direction]
Mr. RALPH MAYBANK (Winnipeg South Centre) moved the second reading of bill No. 246, respecting the Canadian Indemnity Company.
Mr. MacINNIS:: I presume the sponsor of the bill will be able to give the same illuminating explanation of this one as he gave of the last bill.


Ralph Maybank: I feel I can give just about as illuminating an explanation of this one. The bill has gone through the senate, and the explanation will be found in the explanatory notes. In the main, it appears to be asking power to cut stock, as they say, five ways, from $50 to $10. That is what was done some little time ago in the banking and commerce committee with respect to all the banks at the time of the revision of the Bank Act. They are also asking power to write certain additional kinds of business. Certain powers which they have not had along that line they are asking for now.


Gordon Graydon: Has this bill been before the appropriate committee of the senate?


Ralph Maybank: I can only presume so, in view of the fact that the senate reported it. I do not know anything about procedure in
Private Bills

the senate. I only know that this was a senate bill, and I understand it was before the appropriate committee there.


Gordon Graydon: I asked the question because I am wondering whether the superintendent of insurance appeared before the committee and gave his approval of the provisions of the bill.


Ralph Maybank: I do not know, but I should suppose that he could come before the banking and commerce committee of this house and give evidence. He usually does.


Gordon Graydon: Is it my hon. friend's object that this bill shall go before the banking and commerce committee after second reading?


Ralph Maybank: It is not a question of what my object is; it is whatever the procedure of the house is. I believe that this sort of bill always goes to the banking and commerce committee.


James Lorimer Ilsley: Perhaps I should say a word about this bill and another one that will come up. I understand that this bill went before the appropriate committee of the senate, received the approval of that committee, and passed through the senate. I should say that the superintendent of insurance does not approve the subdivision of these shares and I would suggest that when this bill is referred to the committee of this house that deals with such bills the superintendent of insurance be called and asked to give his reasons. It is not a matter upon which I feel I should take a stand myself, or upon which the government should take a stand. It is one feature of a bill, one clause of a bill. Unless I change my mind, I would be content to take the judgment of the committee of the house that considers the bill. I think the committee should have before it the superintendent of insurance and hear what he has to say about it.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the committee on banking and commerce.

[Stage Direction]
Mr. RALPH MAYBANK (Winnipeg South Centre) moved the second reading of bill No. 247, respecting the Canadian Fire Insurance Company.
James Lorimer Ilsley: The same remarks apply to this bill as to the previous one. This also contains a section providing for subdivision of existing shares. Here again I may say that the superintendent of insurance is not favourable to
[Mr Maybank.]
this being done, and once more I am content to leave the matter to the judgment of the committee that considers it.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the committee on banking and commerce.

[Stage Direction]
Mr. D. A. CROLL (Spadina) moved the second reading of bill No. 248, to incorporate Prescott and Ogdensburg Bridge Company.
Gordon Graydon: The sponsor of this bill, I notice, is in his seat and he too, I am sure, is anxious to give a full explanation of the bill.


Mr. CROLL:: This bill is very similar to one passed in this house in 1939 fixing the date of expiry in 1942. The sponsors were unable to proceed with the building of the bridge at that time owing to the war, and now they feel they ought to have a new bill rather than have the other one extended, in that they ask the right to build either a bridge or a tunnel. I do not believe there are many differences in this bill and the sponsors are the same.


Gordon Graydon: May I ask the sponsor of the bill whether it is his intention to ask that the bill go to a committee of the house?


David Arnold Croll: To the appropriate committee.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the committee on railways, canals and telegraph lines.


[Stage Direction]
The house resumed consideration of the motion of Right Hon. J. L. Ilsley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and on the proposed amendment thereto of Mr. Macdonnell (Muskoka-Ontario), and on the amendment to the amendment of Mr. Maclnnis.
John Ritchie MacNicol: Notwithstanding the fact that the mining industry is greatly exercised and chagrined over the actions of the government during the last ten days, and notwithstanding the fact that many assert that production in the mining industry will be greatly reduced, I rise to-night to advocate a vigorous expansion in the whole mining industry along the line of greater production. If we can bring this about I believe two things will follow. First, there will be a widening of the business base, with the result that there will be a further broadening of tax-

The Budget-Mr. MacNicol
ation and, to that extent, a general lowering of taxes upon the public generally. Second, such an expansion in production will bring about a great demand for labour, as has been the case in the past and as happened toward the end of the great depression. So I have no hesitation whatever in advocating that in the whole mining industry production be vigorously accelerated.
To-night I am going to try to present one view of expansion, and shall deal with one mineral. Time, of course, would not permit me to deal with many, and I believe my time will be exhausted when I have dealt with one.
I am not going to choose the precious metals to talk about; the hon. member for York West (Mr. Adamson) dealt with that subject this afternoon. I am going to deal with a humble metal, plain, ordinary red iron ore. I am convinced that if we can bring about a great expansion in the production of iron ore, in the last half of this century Canada will have perhaps the same opportunity to expand its whole business fabric that our cousins to the south had in the last half of the last century.
Many hon. members have visited Toronto lately, and that is only one city where what I am going to speak about may be noticed. Those who have been there have seen another skyscraper, the new Bank of Montreal building, going up on the northwest corner of King and Bay streets. That provides a great object lesson as to the results coming from the production of iron ore. I am sorry to say that we import a great deal of steel; and while our iron and steel industry has given a great deal of employment we do not begin to produce in this country anything like the iron ore we should produce, nor do we take care of even a small part of our own demand for steel. If one drives outside and around the city of Toronto, one may see-I do not know if it is the case to-day, because I have not been driving very much lately-signboards with beautiful pictorial illustrations of what results from the production of iron ore and steel. One may see beautifully portrayed on these signboards steel ships, steel frames of ships, steel bridges and steel construction work of every order. Beneath these pictures one may read a long line of printing stating that the contractors of Canada have had on hand for this post-war period orders for 8300,000,000 worth of structural steel consisting of perpendiculars, horizontals, angles, bars, shapes and other steel products. That 8300,000,000 worth of structural steel represents $250,000,000 worth of labour; that is the proportion. In addition, anyone who knows anything at all about steel and construction knows that in orders for $300,000,000 worth of structural steel there are
coincident or correlated orders for other steel equipment, such as that required for the expansion of factories; the dump cars; the rails; the expanded steel metal and steel doors; the pipes for conveying steam; the vacuum plants, and all the other works that enter into the buildings of steel construction. Here we have another $300,000,000 worth. In other words, the statement on those signboards means that there are in sight orders for not less than 8600.000,000 worth of steel, which means $500,000,000 worth of labour.
That is big business. That is the kind of business Canada should go after. That is the kind of business we must make at least some effort to develop in this country from our own iron ore, in our own steel mills. There is ample opportunity. Anyone who looks at the statistics will see that during the four years prior to the outbreak of the last war Canada imported $600,000,000 worth of iron and iron products of which something between $15,000,000 and $25,000,000 represented raw iron ore imported into this country. If we ever had an opportunity, in my opinion we have it now, in the first place to expand our own iron ore production and in the second place to expand our own steel mills and mills for the smelting of iron ore. I believe it was the late Thomas Carlyle who wisely said that the nation which controls iron controls gold. That puts gold in a secondary position to iron; and if there is one nation in the world that demonstrates the truth of that statement it is the United States.
I may say that I have visited many of the great steel mills in the United States and many of the iron ore deposits in both the United States and Canada. About the middle of the last century two men, Henry Bessemer in England and William Kelly in the United States, though several thousand miles apart, at almost the same time discovered what is now known as the Bessemer steel process which revolutionized the steel business of the world. Very shortly after that discovery the Marquette iron ore range in northern Michigan was discovered. Later on, the great VermilioD iron ore range in Minnesota was located; still later, the incomparable Mesabi iron ore range, also in northern Minnesota, was discovered; and the United States went ahead to become, as it is to-day, the greatest producer of iron and its products in the world. To-day the steel industry in that country, with its thousand or perhaps two thousand puddling plants, steel plants, rolling mills and so on, is the greatest employer of labour in that great nation and the greatest contributor to ihe national wealth of that country.
The Budget-Mr. MacNicol

That is something for us to shoot at in this second half of the twentieth century we are now approaching. That is a target for Canada to aim at, if we have the iron ore. I believe we have large deposits of iron ore. If time permitted I should like to give a history of the development of the iron and steel industry in Canada from those far-off days when in your own beautiful province, Mr. Speaker, along both sides of that great river which flows into the St. Lawrence at the fine city of Three Rivers, Canada's iron ore business commenced. That is one thing your fair province can take credit for, that therein the iron and steel industry of Canada was begun. The iron and steel industry of Canada commenced there, and it continued for quite a number of years until finally the resources ran out. In my own province of Ontario-I could also speak of the other provinces such as Nova Scotia where they started to smelt iron ore in the eighteenth century-on a beautiful little creek called Potter's creek in the county of Norfolk iron ore was melted. Evidence of it still remains. It was the commencement of a real iron ore industry in Canada. It was not the first, as iron ore had been found about 1800 in the county in which my people settled in 1820, the county of Lanark and in Leeds, but neither deposit was of much importance. For some fifty years they smelted bog iron on Potter's creek, the same type of iron as the ore discovered in Quebec along the St. Maurice river. It is a far cry from the time of Louis XV and the deposit of iron ore which was discovered on the west side of the St. Maurice river to the present day. In all these years Canada has been trying to do something with its own iron ore, but nothing of any magnitude was done until we came to the first great war.
During the first great war a rich deposit of iron ore was found in northern Ontario in the Michipicoten area, 175 miles northwest and also directly north of the fine city of Sault Ste. Mane. At that time Mr. F. H. Clemie was a power in that part of Canada. He was the founder of the steel mills which are to be found at the'present time at Sault Ste. Marie. He was the power that brought about the development of the Michipicoten iron ore magnetite ore. It was then called Helen mountain and it contained approximately four million tons of iron ore. That ore was put to great use during the first great war until the ore became exhausted. I am told that at present they are anticipating finding more high-grade ore north of Helen mountain. Close to that is a great deposit of low-grade ore, at New Helen mountain. I spent con-

siderable time in surveying that area. I believe the mountain is about two thousand and some odd feet high. I thought it was about ten thousand feet high when I reached the top. It was much easier coming down than going up. At the present time they are taking out, as the hon. member for Algoma West (Mr. Nixon) will agree, about 750,000 tons of ore per annum. When that low-grade ore is sintered or roasted and smelted it emerges as pigiron. From those 750,000 tons of iron ore last year they received about
270,000	tons of first-class pigiron. Of course the amount is small but it can be developed. Later, I shall speak about the development of low-grade iron ore deposits.
Within the last few years, in fact during the war just closed, what is developing into a large deposit of exceptionally high-grade haematite ore, a sample of which I have in my hand, was discovered in the Atikokan area, to which I shall refer at greater length in a few moments. I wish to revert to what is going on in the United States, to build a platform, if I can, as a proposal for the development of a vast iron ore and steel industry in Canada. During the war just closed the demand for iron ore reached colossal proportions in the United States. The tonnages reached astronomical figures and, according to great engineers who have knowledge of the subject, the United States is experiencing a great contraction in its iron ore deposits. A recent issue of the Toronto Globe and Mail, I believe the October 1, 1945 issue, said that during the five years of war, in the United States 470 million tons of high-grade Mesabi and Vermilion ores were shipped to blast furnaces in Chicago, Toledo and Cleveland and other points. Cleveland has great smelting plants. To these plants they brought down 470 million tons of high-grade ore, to such an extent that the ablest of the United States engineers and geologists have become alarmed. They are alarmed, first, because, if all their high-grade ore became exhausted, what would they do in the event of another great war breaking out? I am told by those who should know that the Mesabi ore has been reduced to much less than a billion tons in sight. That is not very much from a mine which heretofore was considered inexhaustible. If their iron ore is reduced to that extent it is Canada's chance. This is Canada's chance. One of the United States great engineers and geologists, Mr. W. R. Van Slyke of Minnesota, who is thoroughly conversant with everything pertaining to the Mesabi and Vermilion iron ore ranges, the greatest in the United States, wrote the war production board of Washington last

The Budget-Mr. MacNicol
summer warning them to do two things: first, to withdraw from possible extraction of ore in that area four hundred to five hundred million tons; that is, take it out of circulation, prevent it from being used. In his letter he recommended that because of the necessity of having high-grade ore in vast quantity if and when the United States should ever again require it for defence. Second, he recommended that their own vast low-grade ores be put to work. He suggested that the United States government-and I am going to suggest the same thing to this government later- bring the best engineers, geologists and scientists together to develop the finest technique for processing low-grade ores, so that they would be able to retain their present great Mesabi and Vermilion iron ore ranges, or at least a portion of them.
What I have given has been facts. Canada has a chance because here we, too, have splendid low-grade iron ore deposits. We have the vast low-grade iron ore deposits in Algoma to which I referred a moment ago. We have vast low-grade iron ore deposits on Taxada island and on the island of Vancouver. Out there they also have water power, hydro power. If they had high-grade iron ore to mix with the low-grade ore, along with the hydro power, it would mean the erection of a steel industry in British Columbia, to which I shall refer later on.
That brings me to the next point. Where is the high-grade ore in Ontario? At this point I wish to say that I personally am not interested in the remotest possible way in any mine or in any ore. I speak from a world of experience in the study of iron and steel. I speak as a Canadian with a heart filled full of hope that the time will come when Canada, particularly in this century, will take her place in the sun by being a great producer of both iron ore and steel.
My hon. friend whom I see across the aisle, the hon. member for Fort William (Mr. Mclvor), knows that what I am saying is true. I spent a lot of time at Steep Rock in the Atikokan area. I was there during the wet season. When one goes into an iron mine he must be prepared to get not only his clothes but his boots fairly well marked up. However, that made no difference. When I go out on a survey I want to see the last part of it; I want to see all there is about it. I made a thorough survey while at Steep Rock.
I had the good fortune while there to meet representatives of the R.F.C. in Washington and other engineers. They were capable, brilliant men and I had the good fortune to be able to discuss with them the value of this ore and its probable tonnage. I am convinced that
there is a large tonnage there, not because of anything that I could see but for three principal reasons. First, I do not believe the United States government would have allowed the R.F.C. to invest $5,000,000 in that iron ore mine without sending engineers there, which they did, to make a thorough investigation as to the possible and probable tonnage. They are too clever for that. Their men must have reported back that the evidence obtained from the diamond drill cores, which are still there to be seen by anyone who cares to go there, was such that it would warrant the R.F.C. lending $5,000,000 in Canada to proceed with the production of ore in the Atikokan area. That is pretty strong evidence.
But there are two more pieces of strong evidence. The second is the fact that the Ont>-ario government, through the hydro electric power commission, which commission has a number of eminent and brilliant engineers, put up $2,500,000 in order to provide more electric power at Alexandra falls on the Nipigon river and wire it for a distance of 150 miles west to the Atikokan area. That is another reason why I am convinced that there must be a lot of ore there.
Mr. Speaker, I can hardly hear myself speak and I am talking rather loudly. I am really trying to present something to this house. If hon. members are interested at all in the advance of their own country; if they are at all interested in what will put this country ahead and increase our production of iron ore and steel, as has been demonstrated; in the United States, I hope they will listen and take an interest in what I am saying. Perhaps they will become more interested in this and help to bring about further development.
I should like to digress for a moment and refer to what two other great countries are doing along the lines of what I am urging should be done in this country. I am going to take a trip to India to see the great works of the Tata iron and steel company at Jamshe-pur. That is undoubtedly one of the greatest iron and steel producing plants in Asia. It has turned out a lot of iron and steel and has captured for that part of the world much of the iron and steel business. During the late war it did a wonderful job in producing iron and steel.
Then our friends the Russians are doing likewise. They are developing a tremendous iron and steel industry. Unless we Canadians wake up and develop our own iron and steel industry in a big way we may be buying our requirements from India or Russia or elsewhere when we should be producing them at home.

The Budget-Mr. MacNicol
I come back now to where I left off. In the Atikokan area there is what is known as Steep Rock lake. This lake consists of three parallel arms. If I hold up my first three fingers, finger No. 1 would represent the east arm; the middle finger would represent the centre arm and the third finger would represent the west arm. This lake is connected to a river which flows into and out of a lake lying immediately north of the east arm called Marmion lake. This latter lake is two miles north.
Steep Rock lake is 1,262 feet above sea level, while Marmion lake is 1,363 feet above sea level, or 101 feet higher. There was a power plant situated on the river between the two lakes, but the hydro had to wipe that out in order to prevent the water from flowing into Steep Rock lake. They dammed off the lower end of Marmion lake, and they cut a canal west from Marmion lake to a small lake called Raft lake and then into Finlayson lake, which is directly north of the west arm of Steep Rock lake. Then, by a brilliant piece of engineering they lowered the level of Finlayson lake from 1,398 feet to less than 1,363 feet, so that the water would flow out of Marmion lake through Raft lake into Finlayson lake. Then they cut a canal from Finlayson lake into the west arm of Steep Rock lake. Then they dammed off the centre arm of Steep Rock lake, from the east and west arms.
It is in the centre arm of the lake that two ore beds are found. As I say, they dammed off this arm and pumped it dry. It would be worth any hon. member's time to read of the engineering problems that our Canadian engineers overcame in draining out a lake that had a river flowing into it at the average rate of over 1,000 cubic feet per second. I take my hat off to the Canadian engineers who did that. They dried out the bottom of the centre lake.
In the centre arm of Steep Rock lake are two fine beds of iron ore. The one at the south end, which is within three .miles of Atikokan station on one of our great main lines of railway, is called B ore bed. I have here a piece of ore from B ore bed, at the north end of what is called A ore bed. When the overburden is taken off over both these ore beds the ore can be taken out by steam sho\ el. 1 he week I was there they were taking out ore from B ore bed by steam shovel at the rate of five to six thousand tons a day and taking it out to Atikokan by rail from where it was shipped to the United States.
1 his is fine business. There were a lot of men working there, and anything we can do to increase the amount of tonnage to be taken out of that lake is all to the good for Canada. When I was there the engineers told me that they can take by steam shovel, open pit [Mr. MieNirol.l
method 15,000,000 tons or more of ore out of B ore bed at the south end of the centre arm by steam shovel, and another 15,000,000 or more tons from A ore bed at the north end of the centre arm. Better still, they tell me that as far as the drills went they found the same grade of ore which can be taken out later by regular mining methods.
I believe that Canada has something wonderful in that high-grade Steep Rock ore. Canada has something that -will help to push this country along. One pound of gold at the rate of about $35 an ounce is worth about $560, but a pound of steel watchsprings is worth $1,600. In other words, a pound of steel made into watchsprings is worth more than three times as much as a pound of gold. In this ore this country has a treasury that will permit us to advance to heights never dreamed of before.
We have in this country many iron and steel mills. I see my good friend, the hon. member for Hamilton East (Mr. Ross), looking at me. He has two great steel mills in his riding, Dominion Foundries and Steel, and Steel Company of Canada. I shall speak of that a little later, of the expansion that is possible there. We have in Algoma a vast quantity of low-grade iron ore. We have, I am told, upwards of a billion tons high grade iron ore in the three ore bodies, A, B and C, at Atikokan. I suggest that we make every effort to develop these iron ore bodies. We should have steel plants in Winnipeg and in Vancouver. We have them in Hamilton. We should have them in Ojibway, where two or three unused blast furnaces have stood for I do not know how many years, but ever since my hon. friend (Mr. Croll) was mayor of that city. I want to see those blast furnaces put to work. We should have a blast furnace in Toronto. I do not see why we should not have these developments because this iron ore body lies along the great railway highway, the Canadian National Railways, and it is only 140 miles from the St. Lawrence waterway at Port Arthur. There is no reason why, if we developed these mines to the extent they should be developed, we should not be shipping high-grade ore both east and west, from Fort William and Port Arthur. I am sure the hon. member for that district would like to see a mill there, and that will come some day. Some day you will have a big smelting plant in Port Arthur and Fort William and you will be shipping your product east.


Mr. REID:: Is it haematite ore?


John Ritchie MacNicol: This is haematite. The red proves that, to start with. I said at the beginning, red iron ore. Magnatite is not red

The Budget-Mr. MacNicol
in the same manner. They are both No. 1, and I wish we had inexhaustible quantities of both. Nothing can hold this country back if they are developed.


Mr. GILLIS:: How? By private enterprise?


John Ritchie MacNicol: I was a private enterprise man myself and I like to hear my hon. friend talk about private enterprise. If there is one thing that I am proud of it is that I have assisted in giving thousands of men jobs, and I like to talk to a man who has given men jobs.


Clarence Gillis: Is the hon. member suggesting that private enterprise develop these deposits?


John Ritchie MacNicol: The iron ore deposits are now being developed by a very fine company. I am glad that my hon. friend mentioned that. The men who discovered this iron ore are wonderful men, Jules Cross of Port Arthur and the late Joseph Errington. For years they travelled up and down that part of the country with no possible hope at that time of getting any reward. But finally, as a result of the persistence of these men, this ore body was discovered and developed. It never would have been discovered but for their persistence and their stick-to-itiveness. The ore was developed by a company which these men promoted, along with Major General Hogarth. I give them credit for promoting that company. The United States government and the Ontario Hydro also put money into its development, as well as this government. I did not mention that before and I am glad to mention it now. I would not suggest for a moment that this government does not also deserve credit, because it put in about $2,500,000 through the Canadian National Railways to build a line from Atikokan to Steep Rock, three miles in length, and strengthening the whole line from Atikokan to Port Arthur, and building a trestle bridge half a mile long and dock at Port Arthur capable of loading 2,000,000 tons of ore in ships that come alongside the dock in the shipping season of 200 days. I give credit to all those who helped to bring about this development. Anyone who helps to develop this country deserves credit.
I see that my time is passing, Mr. Speaker, and I want to make some recommendations as to what might be done. I am not going to ask the government to put up money because this is a time of economy. But they can help by showing their willingness to assist in other ways. I would first recommend that the Minister of Finance consider every possible way of relieving taxation on mining, and particularly on any new mine like this. This is a 63260-208
new mine. It took years to develop it. Last year they shipped about 750,000 tons and this year they expect to ship about 1,000,000 or
1,500,000	tons. It is exceptionally high-grade ore. It contains only about -020 of phosphorous, only -021 of sulphur and 2-86 of silica. The iron ore itself is of very high grade, containing from 60 to 61i per cent of pure iron. So much is that so that the purchasers in the United States can put the iron ore straight into the smelters. It has also other features. It is full of vuges or interstices, so that when it goes into the smelters it rapidly disintegrates, and that is important, as anyone knows who knows anything about melting iron. It is of such high grade that it receives a premium on the market in the United States. That is a wonderful thing for Canada.
My first suggestion was that every possible tax-be taken off primary mines.
Next, I suggest that freight rates should be equalized from AtikoTran to Port Arthur to compare with the rates from the Mesabi range in Minnesota to Duluth. That is the competing mine.
Third, I would suggest that this government help in the matter of power costs. How can they do that? At the present moment electricity loses a considerable amount of power in its transmission over the wires. I think the time has come when this country should ask its scientists to get busy as the scientists did in Germany and discover a method of transmitting electricity without too much loss of power. That would help to cut down power costs. That is one way in which the government could help.
I have already said that the A ore body was covered with a large overburden of dirt. The government could, if it would, assist in removing the large burden over A ore body by supplying the equipment. That would be something that would enable the company to turn out more ore, and that is the problem. They are expecting, I am told, to turn out this year 1,000,000 to 1,500,000 tons of iron ore. If they could turn out 10,000,000 tons, just think what that would mean! We would then be able to ship this high-grade ore to Vancouver, to mix with the low-grade British Columbia ore and start blast furnaces out there. We would be able to ship to Winnipeg and have blast furnaces and a steel rolling mill and a puddling mill there. We would be able to ship it to Windsor for Ojibway, and open up the three blast furnaces there. Why they did not go on with that development, I do not know. But there should be great steel works in -the vicinity of Windsor. They have them across the river at Detroit,

The Budget-Mr. MacNicol

down the river at Toledo, down the lake at Cleveland. We should like to have a steel plant at Toronto. It would be practicable because we have a great water highway, the greatest in the world.
There is a vision; there is a target to shoot at, for this countiy to produce as much iron ore as it can and smelt it into iron and steel.
I thank you, Mr. Speaker, for your great kindness to me before the dinner recess.


Mr. McIVOR:: I should like to ask the hon. member a question. Does he think that dollar parity will result in a boost for the Steep Rock iron ore? I know it will be a great help to our people in the purchase of United States heavy trucks. Does he not think the dollar parity measure will be a great help in selling this iron ore in Canada?


John Ritchie MacNicol: In answer to the hon. member's first question, I might say I am for whatever will produce iron ore in Canada.


Clarence Gillis: Mr. Speaker, it is not my desire to prolong this debate-


Some hon. MEMBERS:: Hear, hear.


Clarence Gillis: -but after the last forty-five minutes I am not making any apologies.


John Ritchie MacNicol: I have been on my feet for just thirty-five minutes.


Daniel (Dan) McIvor: I should like to say that the last forty-five minute speech was extremely good.


Clarence Gillis: That is a matter of opinion. I always enjoy listening to the hon. member for Davenport (Mr. MacNicol) making an *historical survey of water or power or metals. The thing I can never figure out is how the group to my right can plead with the Minister of Finance (Mr. Ilsley) to grant exemption from taxation to billion dollar corporations and at the same time suggest the taxing of cooperatives, people who are lifting themselves up by their bootstraps. That is an angle which always provokes me; it is completely inconsistent. They say, do not tax these billion dollar corporations; provide everything in the way of social security, but do not tax anyone except the people down in the $750 class; spare these poor corporations!
I am going to try to stick with the budget for a few minutes. The hon. member for Vancouver East (Mr. Maclnnis), speaking for this group, made a general survey of the budget and did, I think, an excellent job. What I am going to try to do is to be as 
brief and as explicit as possible on points which, I think, support the arguments he advanced.
To begin with, I am not quarrelling with the Minister of Finance. The minister just happens to occupy a very uncomfortable position; and so long as the rules of the game are as they are, and hon. members on both sides of this house rise in their places and insist that those who hold the means of life in this country in their possession to-day should utilize those means of life for private profit, the minister is going to have to do the kind of job which he has done in this budget. There is no alternative.


Mr. ROSS (Souris):: Page the hon. member for Yorkton.


Clarence Gillis: Perhaps the worst feature of the budget is the failure to raise the exemptions on the lower income groups. I believe the effect will be to create further problems for the Minister of Labour (Mr. Mitchell). Many of the workers across this country, heavily taxed during the war, were looking to this budget for some relief and some improvement in their standard of living through a lifting of the exemptions. Now that they are disillusioned on that score, I believe the result will be to create a brand new set of demands for wage increases, and I think those demands will be completely justified.
The second and perhaps most serious defect in the budget was the failure of the Minister of Finance to follow through with the proposals made to the dominion-provincial conference. One of the most serious things which happened in this country since confederation was the refusal of the premiers of some provinces to assent to the steps taken by the dominion government in order to determine the fields of taxation and pave the way for social security, for putting into effect the building programmes which have been set up across the country, and the health programme which a comdmttee of this house spent some months in considering. I believe the major responsibility rests with the provinces of Quebec and Ontario, in failing to recognize the fact that, coming out of this war, we are entering a new era, and that it is not possible to redeem the promises and pledges made to the service personnel who fought this war unless the narrow prejudices which existed in the past are swept away and the dominion government is given greater responsibility and larger finances to meet the many social needs which exist in all the provinces. Perhaps the premier of Nova Scotia was as great an offender as the premiers of the two central provinces. I read very

The Budget-Mr. Gillis
carefully his statements in the proceedings of the conference; and while he took the stand, when the conference had practically broken up, that he would like to see it reconvened at some future date, he certainly did not make any contribution to keep the conference on an even keel or try to adjust the differences which existed between those who sponsored the meeting and those who, in my opinion, were trying to wreck it. His stand left much to be desired. As a member from Nova Scotia I am quite free to criticize him here or elsewhere, and to a greater extent than are some others.
The plea made by some of the provinces to the effect that provincial governments will be merely a fifth wheel on the coach, that they will lose their constitution and forfeit their power and authority, arouses the reflection that if their performances in the past seventy-five years are the criterion for justifying their existence, it is pretty nearly time that some of them were uprooted. At any rate, in the province from which I come, and in New Brunswick as well, for the past fifty years we have been nothing but overseers of the poor. Everything we had when we went into confederation was siphoned up without any protest from those who had jurisdiction to manage the affairs of the country. Social legislation has been completely lacking. Yet they want to hold on to their positions. It means more prestige for them. To my mind, any premier who takes that stand is thinking of himself and not of the country, and I am convinced that if we cling to these old ideas, and the attitude which wrecked the dominion-provincial conference persists, we are betraying the people who fought this war for a new deal, a new world, and a new order of society. I am reasonably sure that had these agreements gone through and an understanding been arrived at in the conference, the programme mapped out by the reconstruction committee in regard to public works across Canada could have been proceeded with and we in the maritimes would not have the unemployment problem which we have at the present time. That applies also to the health programme and to many other social measures. The wrecking of that conference is the most serious thing that has happened in this country since confederation.
I realize that perhaps the Minister of Finance has not all his own way in the cabinet. His organization is a large and complicated one that cannot be presided over and understood in all its ramifications by any one man, and he has taken a creditable stand and one for which we give him all the praise in the world, in that he is prepared to make agreements with any province that wishes to make them. But 63260-208J
he did not follow that through and decide to go forward in that province, if it so desired, with the social measures that were outlined in the dominion-provincial conference. I think that around him and behind him are too many Tories, and I suggest that he should try to weed them out because, unless that question of dominion-provincial jurisdiction in the field of taxation is decided, a serious road lies ahead of the Dominion of Canada.
Another point in the budget upon which I wish to comment briefly is the proposal to tax cooperatives. An agitation was carried on across the country for several months by an organization known as the income tax payers' association.


An hon. MEMBER:: Who are they?


Clarence Gillis: That is just what I should like to know, who they are.


An hon. MEMBER:: That should not be too hard to find out.


Clarence Gillis: If the hon. member has information he would be doing a public service by giving it to the house.


Mr. SMITH (Calgary West):: It was given before a senate committee, every word of it.


Clarence Gillis: I have here an editorial from which I wish to quote a few sentences for the benefit of my hon. friends to my right, and if some of them follow me in this debate I want them to comment on this editorial and give the information asked for in it:
Just about a year ago the secretary of the income tax payers' association was questioned by the McDougall commission sitting in Winnipeg. The association claimed a membership of 6,300. The secretary said that it depended on membership fees of $1 per member to finance its activities. At that rate and with that membership its revenue could be computed at a little over $6,000 a year-if the members all paid their dues.
Which does not happen all the time.
Just at present the income tax payers' association is spending money for radio broadcasts at the rate of $10,000 a week, estimated. The spot campaign is already in its third week and. we gather, will continue into the fourth week. Briefly, this means that the income tax payers' association is spending $10,000 (more or less) to misinform the public regarding the cooperatives.
These are the questions I should like hon. members to my right to answer, if they are prepared to defend the income tax payers' association:
Where is the association getting the big money to carry on its campaign? That is a question which we believe the average Canadian citizen wants to see answered. Is it subscribed by cartels and like-minded big interests and deducted from profits and charged to advertising or some other account in order to escape the income tax?
The Budget-Mr. Gillis

That angle to the question should be investigated by the government.
This is a question which we suggest should be asked in the house at the.present time.
I bring this question up because I know the value of the cooperative movement; and I wish to say that in the province from which I come, and from which the Minister of Finance also comes, the cooperative movement really got its start in the thirties, in the depth of the depression, when miners and steelworkers were working one and two days a week trying to maintain a family. They banded themselves together and -went out to find ways and means of raising themselves by their bootstraps under the leadership and guidance of the university of St. Francis Xavier. No one.was getting paid for it. It was a recognition on the part of these industrial workers, and on the part of clergymen and small business people, that as far as the system under which they lived was concerned, it had failed to provide the means of livelihood. They could not sit idly by and starve, so they went out to do something for themselves. They organized credit unions, cooperative stores and wholesales and succeeded in building these organizations into fairly large and substantial businesses, out of which no one makes any money. I have been actively associated with them since their inception, and still am, and I have never received anything in the way of dividends. We do not look for them. The earnings of the average cooperative consumer store or credit union go back into the movement in the form of education and the provision of cheap insurance for the average worker, because most of them could not carry on under the circumstances that existed at that time and protect their families.
The Minister of Finance has had pressures and difficulties during the preparation of this budget. We recognize that. But I do not think he gave this question proper consideration, not because he did not wish to, but simply because he did not have the evidence. I want to warn my hon. friends to the right, and other members in this house as well, if they are interested in the democratic form of government, and in a democratic order of society, to be very careful in tripping up movements that are built by the people themselves. because you have reached the stage in this country and on this North American continent where you can fail to give the people ownership, to raise their average of education, to show them a real democracy working among themselves and of which they are part and parcel-you can fail to do that, I say, and do what they did in Europe. You

can pull our own house of cards down about our ears. Make no mistake about it, that while we succeeded in defeating the nazi philosophy in this war, the nazis were not all in Europe and totalitarianism did not exist only in Germany, Italy and the European countries. You still have that ideological war on your hands, and the surest way to alienate the people from the democratic form of government that we know and understand is to start taking from them the things that they have built themselves. That is confiscation, and that is what you are doing by taking money from the cooperatives in the form of taxation. And you will not get . much money. By taxing them you are taking away their means of education. Every year their financial report is brought out, a certain amount is allocated for education, literature and so on. Their education is the democratic philosophy, which enables them to keep people on the road organizing and training store managers, credit union clerks and managers, and things like that. That is what you are taking from them.


James Lorimer Ilsley: How?
Mr. GILLIS; By taxing them. You are taxing their reserves; you are preventing them from expanding. In effect, as I understand it with the chance I have had to read the budget, you are relegating them to the position of a profit-making organization.


James Lorimer Ilsley: Only to the extent that they make profits.


Clarence Gillis: But they do not make profits.


James Lorimer Ilsley: Then they are not taxed.


Clarence Gillis: They are not taxed?


James Lorimer Ilsley: No, not if they do not make profits. I have expressly stated that if they do not make income we do not propose the imposition of any tax whatever.


Clarence Gillis: Then it is a matter of interpretation; that is the point. Half a dozen lawyers, sitting behind the scenes in Ottawa, draft the budget. Around that budget will be evolved a lot of regulations, which are to be interpreted, not by people who understand that movement, but by people who have the concept that you have over there; and we suffer. People who know and understand the cooperative movement have no illusions. This fight goes deeper than the budget. The fight to-day is a test between the people's organizations and the cartels of the North American continent. That is what it is; do not make any mistake about it.


James Lorimer Ilsley: Does my hon. friend think we did what the cartels wanted us to do?

The Budget-Mr. Gillis
Does he think we did what the income taxpayers' association asked us to do? Not by any means. We received over thirty thousand cards asking us to tax patronage dividends, and we refused to do so.


Clarence Gillis: Well, whether or not patronage dividends are taxed is something we shall determine when the proper item comes up. I am not going to argue it now. If the regulations are to be handled and applied by people of the calibre I think will administer them, then I believe the budget resolutions could be construed as meaning that patronage dividends are being taxed. However, as I say, I am not going to argue that point now; when the proper item comes up we shall consider it further.
It amuses me to hear our hon. friends to my right talk about free enterprise. The only free enterprise we have in this country is the cooperatives, the small business in this country from coast to coast. They say a man is free to go out and work and build and do something for himself, but to-day private enterprise in this country is a small monopolistic stranglehold. There is not a small business man in this country to-day who has any more elbow room to do business than I have, and before 1 am through I will show the house how free they are. I am awfully glad to be able to pull these fellows out into a frank admission. To-night they frankly admit they stand for the taxation of the cooperatives. They did not say that during the campaign, though they were asked that question quite frankly.


An hon. MEMBER:: What did you say?


Clarence Gillis: I said exactly what I am saying now, and I shall continue saying it no matter who likes it or who does not. I think I am right; and election or no election, that is the programme I shall support.
How free is this free enterprise? It has freedom to exploit the people; it is free to walk on the other fellow's back and trample him to death, if it is big enough. It means the tooth-and-claw law of the jungle. As I heard Tommy Douglas, now premier of Saskatchewan, say in this house once, it is pretty much the same as an elephant dancing among the chickens. It is all right if you are the elephant, but it is pretty hard if you are in the chicken class. That is about the philosophy of the enterprise you have to-day. The freedom is gone.
Here is another example of that- freedom. The Minister of Finance is from Nova Scotia, a province that has had practically all its industries stolen from it. The banks were siphoned off, and it lost control of its credit and control
of practically its whole economy. To-day, if you want to borrow $500 there to establish a small industry-and a great many people are trying to do that to-day-you have to go to Montreal, if you are doing it straight through the private banks. Then, when you got to Montreal they look over their list. What are you going to establish; a machine factory? They say it cannot be done; they already have one in Montreal, and they are selling their products there. Only a few weeks ago in Halifax the minister of industry in the government of that province made a pretty serious accusation against an agency of the dominion government and the milling companies, the free milling companies of Canada. You can go out and establish a flour mill anywhere you like, provided that the big mills want you to. In this case the minister of industry of Nova Scotia made an accusation which I never intended to let go. It appeared in the press. Nobody seemed to bother with it. I am going to read it for the benefit of my hon. friends as another example of free enterprise in this country.


An hon. MEMBER:: Can you take the flour and make dough?


Clarence Gillis: It is not necessary to have flour to make dough; there is a lot of it over to my right just now. This is an editorial which appeared in the Halifax Herald of May 8, 1946.


John Ritchie MacNicol: That is a good paper.


Clarence Gillis: Yes, I think I would be quite free to admit that the Halifax Herald is perhaps one of the fairest newspapers in Canada. It is interested in the province in which it is published; it fights the battle there, and I give it credit for that. The editorial states:
During the session of the Nova Scotia legislature recently prorogued, the minister of industry levelled a direct and serious charge against the national harbours board. He charged that "the milling interests of central Canada blocked the Nova Scotia government's plans to erect a million-dollar flour mill at the ocean terminals in Halifax."
I am not going to read the rest of it, but that is the charge.


An hon. MEMBER:: Why not?


Clarence Gillis: If you want me to I shall do so; it gets better farther along.
Before a house committee the minister declared that-
". . . he was entirely satisfied that the decision of the national habours board to refuse the government permission to use pier 23 for the mill 'was dictated by the milling interests of this country'."
The fellow who said that is not a socialist. He is a Liberal in a Liberal government pre-
The Budget-Mr. Gillis

sided over by the former minister for naval affairs in this government. The editorial goes on:
Other committee members "expressed agreement with this view" ...
There are no Conservatives	in the
government.


Mr. MANROSS:: That is why you have not got the mill.


Clarence Gillis: I am particularly glad to hear that admission from my Conservative friends. It is a practical admission of the official opposition that the milling interests of Canada are Tories, and because there are no Tories in the government of Nova Scotia, no mill went down to Nova Scotia. We shall see that proper use is made of that statement at the proper time. I merely put that on the record as an indication, first, that free enterprise is not free in this country and that, second, sometime before parliament prorogues I want the Minister of Finance or the responsible minister to give us a statement as to whether the minister of industries in the Nova Scotia government made that charge and can substantiate it or otherwise. The reason I want that done is that if the milling interests of Central Canada blocked the Nova Scotia government from establishing a million dollar industry in that province they did a serious disservice to that province.
At the present time in Nova Scotia we have perhaps one of the greatest unemployment problems in Canada, and it is not getting any better. The solution now is the same as it was in the Bennett slave camps. If you want a job we shall get together four or five hundred at a time. We all remember the mobile labour reserves that Bennett used to talk about, the boys on the rods drifting from one part of the country to another, to keep wages down. t
A few weeks ago I noticed an item in the press where 500 men, practically all exservice men, from the island of Cape Breton are back home, back to the rods. Their gratuities are gone and they have no jobs. They were told that they could1 take a train and that they would be shipped over to the lumber camps in Maine. The offer was attractive. They went over. That is a nice reception for them to receive. AVe all remember the cries we heard in the house when the boys were overseas. We all heard the talk of a new heaven and a new earth, no more riding the rods, jobs for everyone, thousands of them; the boys w-ouki never be let down. These fellows came back from Holland and took the rods. They were sent over to the woods in Maine, away from their families. They did
[Mr. Gillis. 1
not stay long. They landed there and found that conditions were not as described. According to the item I saw in the press, most of them had to beat their way back home. They are back in Nova Scotia. I want the Minister of Finance or the appropriate minister to tell us if some interests in central Canada stopped the erection of a million dollar plant in Nova Scotia.
There is another matter to which I should like to drarv the attention of the Minister of Veterans Affairs (Mr. Mackenzie). I do not do it by way of criticism, but merely as a thought-provoker. I have heard in the house and out of it, and I have seen in the press, that the crying need in this world to-day is food; that millions of people are starving everywhere. That is true. The government has set up the Land Settlement Act, applicable to service personnel of the war just closed. The act is not too bad, but in my opinion it is not going beyond 1946. I say that for the reason that the latest report showed that some 35,000 applications had been received from soldiers to settle on the land. The director informed us that he could place some 17,000 of them by the end of 1946. The reason that the others could not be placed was that the land was not available. Crowm lands were not available because of lack of agreements with the provinces. That brings up the question of the dominion-provincial conference again. If by the end of 1946 there are 18,000 soldiers who cannot be placed on the land they will never be placed there, because their gratuities and their ambition will be gone and they will have drifted into something else. That is something that should be rectified. The food situation of the world is such to-day that the federal government will be completely justified in requisitioning all the land in this country to settle soldiers w'ho made application and who have the necessary qualifications.
There is another factor tied up with the Land Settlement Act. I am emphasizing this because I believe that our Land Settlement Act applicable to soldiers of this war is one of the most important pieces of legislation we have. There is the opportunity of rehabilitating and putting 35,000 people to work producing food, the most necessary requisite to-day. The problem that the 17,000 who can be placed are up against is lack of machinery. They are unable to get farm machinery. Those who are lucky enough to get land cannot get the farm machinery. They have not got it and they cannot get it because it is not produced. That statement was made to us officially. I criticize that because I think there is a solution. AVe should have solved this problem a year ago. AVith the legislation on the statute books

The Budget-Mr. Gillis
the government could have taken over two, three or a dozen of the plants, if necessary, which had gone out of production during the war, retooled them and put them in production for producing farm machinery. The necessary legislation was on the statute books in the form of the Crown Companies Act. They could have done it under that act. Then there was the industrial development bank which I understood was established for the purpose of providing risk capital, capital for ventures which free enterprise will not enter. Under that legislation I believe one of the first obligations of the government should have been to get a few of these plants into production producing farm machinery. They should have requisitioned the necessary land to settle these boys and permit them to produce food, because food requirements are going to be with us for at least the next five or six years. There is no doubt in my mind about that, especially when 80,000,000 people have gone out of production in Germany. They were practically feeding Europe before the war began.


James Lorimer Ilsley: There is only one thing
limiting the production of farm machinery, namely, the inability to get steel.


Clarence Gillis: Yes; we probed that question also.


James Lorimer Ilsley: That is true.


Clarence Gillis: That is right. But, provided that you had the raw steel to-morrow you have not- the plant and equipment to start producing machinery.


James Lorimer Ilsley: Oh, yes.


Clarence Gillis: No. As I understand it,
there is a possibility now of building up the production of raw steel in the near future. I understand from official sources that there is quite a programme, but at present it would take a little time to get into production. We should not wait for the steel to be turned out to start talking about putting these other plants into production. Get them ready, retool them and do the two jobs at the one time. The whole difficulty is that we are not planning at all; we are taking the thing piecemeal. We did not do it in that way during the war. When war broke out we examined the requirements of war and planned their production. The production went ahead one after the other. To-day we are still feeling around, simply because the government does not want to go into the husiness of taking over where free enterprise is not developing something, and the other fellow who has a small plant and some equipment does not want to expand. He has the opportunity to
expand. There must be a demand next year, the year after or for two years. A year ago, when the Minister of Finance and the Minister of Reconstruction (Mr. Howe) were speaking in the house, I understood that they were quite prepared, to fill in the gap if free enterprise was not doing the job. In this field of land settlement and the production of steel which is necessary for the manufacture of farm machinery we are trying to carry on by means of legislation, while free enterprise has fallen down. There is no reason in the world why the government should not step in and go ahead. We are just passing a lot of legislation in the house and not following through. You have set up farm improvement machinery and hung it on to the chartered banks. You have set up certain credit organizations for the service personnel and have hung it on to the chartered banks. These things will not work, because the chartered banks have not the necessary staff.


The ACTING SPEAKER (Mr. Golding):: The hon. member's time has expired.


Some hon. MEMBERS:: Go on.


Clarence Gillis: Thank you very much.
I am not going to go into that any farther. There is one thing I want to leave with the minister and some of the hon. members to my right in connection with this business of increasing wages, inflation and the cost of production. I should like to give them a practical illustration to show that you can increase wages, get increased production, lower your cost and have the reverse effect of inflation. I am going to take the steel industry as an example, the very one we have been talking about.
In 1939 this organization was producing 202,904 tons of steel and this production was stepped up to 665,889 tons in 1945. With an estimated working force of 3,000 in 1929, the per man production was 67 tons annually. With an actual working force of 3,638 in 1945, the per man production was 183 tons annually. This is an increase of 173 per cent in the per man productivity. The annual payroll increased by 133 per cent from 1939 to 1945, while the annual production increased by 221 per cent in the same period. The labour cost of production per ton of ingot steel was approximately $18 in 1939, and this had dropped to approximately $13 in 1945. While they increased their wage rates by 133 per cent, they . reduced the cost of producing steel from $18 to $13 a ton.
I merely mention this because this steel workers' organization has been patient and long-suffering. Finally, the government has placed their case before a commission.
The Budget-Mr. Farquhar


Arthur Leroy Smith: What company is that?


Clarence Gillis: The Algoma Steel.


Mr. THOMAS FARQUHAR (Algoma East):: Mr. Speaker, I wish to speak briefly on this debate in the hope that we may get a vote to-night. I think we in this house and the people of Canada generally agree that the Minister of Finance (Mr. Ilsley) did an excellent job during the war years. Even his most severe critics, if they are fair and reasonable, will admit this fact. To my mind, one of the most difficult jobs has been the control and regulation of prices. No government in the world has made the success of regulating and controlling prices which the Minister of Finance has achieved under the direction of the government of Canada. This fact is recognized not only by the people of Canada but by all other countries. It is well known that the officials of other countries came to Canada from time to time during the war years to make an investigation of the successful working of our regulations governing price controls and have copied and put into effect similar wartime regulations.
No one in this country wishes to have controls maintained unless it is absolutely necessary. I believe, however, that even in peace time it is necessary at times for the government to maintain control to some extent in order to prevent some classes from taking advantage of other classes who are not in a position to defend or protect themselves. It will be noticed that it is the big interests and their representatives in this house who are crying for the removal of all restrictions on both ceiling and floor prices of all manufactured goods and produce; thus allowing them to find their natural levels.
We passed through that experience after world war I with a result that many of us will not soon forget. We paid dearly for the experience and we certainly do not wish to have it repeated at this time. The farmer was a great sufferer at that time because he was at the mercy of a more privileged class who were in a better position to control the situation.
I should like to mention what happened in one particular line, the sale of beef cattle. Good butcher steers were selling on the Toronto market at uncontrolled prices in June, 1920, at $15.02 per hundredweight, and this price dropped to $5.61 per hundredweight in November, 1921. Many farmers who had bought and raised cattle at the higher cost suffered: such serious losses that they were many long years in recovering, if they ever recovered. There is
[Mr. Gillis.l
no question that if the restrictions were- removed now we would have a repetition of what happened after world war I.
For that reason, I trust that the government will pay no heed to the cries of those who represent the big interests in this house for the removal of all restrictions, on both ceiling and floor prices. This would be most disastrous until the danger period of price fluctuation has gone by. Farmers are not unreasonable in their request for fair, stable prices for their products, but they do want some assurance of a permanent price for farm products. In order to give the farmers that assurance, floor prices must be maintained permanently. To my mind, there is no other way of giving the farmer that assurance of permanent farm prices which will assure him a reasonable and fair share of the national income, without which we can never hope to maintain a high standard of living for the people of Canada.
Farming, which is our basic industry, must be profitable if Canada is to be kept prosperous. We must not lose sight of this fact. We must continue to work for unrestricted world trade. It is true that if this is to be brought about, other countries will have to make concessions.
It is also interesting to note that the people of Canada are getting away from the Conservative idea of high tariffs and are working for freer trade with all nations. No longer can the Progressive Conservative party persuade the people of Canada that high tariffs are necessary to the economic life of Canada. That day has passed away, and the Conservative party has almost passed away with it in most provinces. I believe that nothing would have a greater or more far-reaching effect upon international relationships than a freer exchange of goods with all nations.
Another question to which I wish to refer briefly is the reduction in excess profits taxes. It matters not by what name this tax is called. You may call it corporate income tax, excess profit tax, or any other name you wish to call it; the fact remains it is excess profits.
I have heard no argument which has convinced me that excess profits should not be heavily taxed. It is true that this tax was imposed in order to prevent manufacturing industries and business generally from making large excess profits from war-created gains. But why in peace time should business be allowed to have unreasonable excess profits exempt from taxation? Is it not just as important and just as reasonable to have high excess profits taxed in peace time as in war time? Is there a more just tax or a more just source of revenue than a tax on unreasonably high profits?

The Budget-Mr. Jackman
Surely it is true that the concerns which are making excess profits are those which can best stand taxation, and they should be taxed much more heavily on excess profits than on ordinary profits which are not excessive. It is true that the large excess profits which were made during the war may not be made to the same extent during peace time, but I believe that when industry becomes fully adjusted to peacetime production, and materials become more plentiful, with the tremendous demand for all kinds of goods both at home and abroad excess profits will be high for at least a few years.
One of the arguments used by corporations is that, if not exempt from excess profits tax, they will not have the capital to expand and create employment. I am of the opinion that we have listened altogether too long to this argument, and we have, encouraged the expansion of the large corporations to the disadvantage of the smaller business concerns which are in much greater need of encouragement for necessary expansion. It is a well known fact that any city or town is in a much better position if it has a number of small industries operating in it than if it has just one large industry operating, upon which the city, town or community is entirely dependent. I am of the opinion that small business concerns should be given greater encouragement to expand, and that large business corporations which are making excess profits should be heavily taxed.
I am firmly convinced that if we are to retain oUr present system of private ownership of industry, big business, cartels and large financial corporations must be controlled to a much greater extent than they have been in the past. If they are not controlled our system of private industry will pass out and be replaced by government ownership of industry. The people of Canada will no longer tolerate the control of the financial affairs of this country by cartels, big business and large financial corporations, and I know of no better way of controlling them than by taxation.
Since the war ended, there have been elections held in eight European countries. Prior to the war these countries were under very strong capitalistic control. In each and all of these countries there has been a definite swing to the left. When we see what happened in Great Britain when she swung from a strong Conservative capitalistic government to the other extreme-a strong socialist government-let us not go away with the idea that "it can't happen here". We are making a great mistake if we close our eyes to what is going on in practically all countries in the world to-day with regard to the world-wide feeling
that exists in demanding greater freedom from capitalistic control. The great danger is, as history has proven, that nations struggling for freedom usually swing to the other extreme, centralizing their power in the government at the expense of the individual, so that the people bring upon themselves slavery instead of freedom. This has always been true when too great a power has been centralized in governments, and that is the great danger that we are facing to-day.
I am not entirely opposed to government ownership. I believe in government ownership of public utilities, but I am opposed to government ownership of private industry to the extent advocated by the C.C.F. party, and especially so by its extreme element who are rapidly getting control of the party.
I am sure that the people of Canada do not rvish to have an extreme socialist government take office in this country. To my mind, the only way of preventing this is for the government to take a definite and decided stand on this question of the control of the moneyed interests in Canada. If this is done, we shall be able to retain our present system of private industry, which I feel all liberty-loving people of Canada would wish to retain.


Mr. H. R. JACKMAN (Rosedale):: Mr. Speaker, the budget is always looked forward to as a document of extraordinary interest, for now it is not what our services bring in the open market but what the government lets us keep as "take-home pay" that really matters. In fact the government is gradually getting itself around to the point of view that it is not the people who create the wherewithal by which we live, but the allpowerful state that suffers us in our various capacities and makes all things possible. While *we are duly appreciative of the opportunities which living in a community gives, most of us know where we would be if it were not for our own endeavour, sacrifice and hard work.
How did1 we manage our affairs in this country last year? We spent $4,691 million and we took in $2,955 million. The over-all deficiency was $1,736 million. This amount we just added to our debt. The war was on for part of last year, and during a war the only thing that financial figures do is to measure how much we can possibly turn out, for money is no object when it comes to winning a war and it would be foolish to let it be so. The creation of so much debt year after year does leave a painful aftermath, and that is the real reason why we are having so much trouble in holding down the price ceiling and warding off inflation.

The Budget-Mr. Jackman
How does the government propose to run our country's business during the present fiscal year? We are going to spend $2,769 million and our revenues will fall short of this amount by about $300 million. As well as raising the money to pay for this deficit, we shall have to raise some money, about another $1,000 million, for the United Kingdom loan, the foreign exchange control board, et cetera; and I hope that the millions for the foreign exchange control board have not already been lost owing to the recent change in the value of the Canadian dollar.
One of the most interesting things about government finances, because it is one of the most unusual ways of doing business, is the method of spending before we have any idea where the money is to come from. This debate is only concerned with the ways and means of providing the money we have already spent or planned to spend. We may preach a stricture or two on economy; but the time to pull in our belts, so that we may be able to reduce taxation and let our economic machine run in high gear, is when we are making appropriations from a not- yet provided tax pot. Parliament goes on its merry way as if there were no end to that pot. If ive are to have an honest dollar we must cease this business of forgetting to look at our cloth before we cut our coat. Our estimated expenditures for this year of $2,769 million, to say nothing of the extra $1,000 million we must raise for capital account, is a substantial part of our gross national product or national income of about $11,000 million. It is very nice to budget for a deficit of $300 million, for it recalls Mark Twain's saying that he was resolved to live within his income even if he had to borrow to do it. We have almost come to the point where the government is looking after so many of our requirements that we have to ask ourselves, do we want to spend our own hard-earned money, or do we want the government to do it for us? Remember, the government does not create a red cent of it, not even one of thpse nickels which the minister is withdrawing from circulation. Taxes come from only one source -from the people.
Here I should like to quote a few words from. Sir John Anderson, Chancellor of the Exchequer in Mr. Churchill's government:
It was very forcibly argued in the recent budget debate that all experience in modern states goes to show tnat when more than about 25 per cent of the national income is taken by the government in taxation, inflation results, for the reason that the public prefers to reduce the cost of the debt and other fixed charges by letting prices go up. As things now stand, when the immediate effects of the war have been worked off. the government will be taking no less than 35 per cent of the national income in taxation.

Perhaps I might add that inflation comes about unwittingly when 25 per cent of the national income goes in taxation, for then taxation becomes so discouraging that less goods are produced.
Canada's, federal government's current expenditures alone, again leaving out capital account, are running about 25 per cent of our national income and with capital expenditures, about 34 per cent. We should all be this much better off if we did not have the federal government and its expenditures to support. I am not suggesting that we can do without it, but we must be careful that it does not crowd us out of our tent entirely.
The minister reviewed the reconversion period to date, and noted that 650,000 from the armed services had been released and that work or training had been found for them. Another 650,000 men and women out of war industry have likewise been released. The total number of unemployed is only
200.000,	or about four per cent of our working force. There are at least 100,000 jobs available which could1 be filled if the government had any kind of civilian training programme to fit square pegs into round holes, as promised under the Unemployment Insurance Act.
How different these figures are from the gloomy prognostications of the government's economists and statisticians both here and in the United States who expected mass unemployment during the reconversion period. I have not the figures for Canada, but in the United States these experts figured out that the unemployment figures would reach about eight million this spring. But all the unemployed, including non-veterans, numbered
2.310.000.	By May, 11,400,000 male veterans alone had been discharged in the United States. If we ever have a managed economy based on such miscalculations of the future, heaven help our national prosperity!
Nothing can take the place of free competitive enterprise. Our national income is more than double what it was in 1938. In face of our unexpected good fortune, the employment which has been made possible by free enterprise, one might have had good reason to expect some fair measure of relief from wartime taxation.
It is interesting to follow the workings of the minister's mind. He states that immediate economic considerations are of less importance in determining our present proposals than longer term economic policies and the necessities of dominion-provincial relations. Then he devotes a paragraph to the need for export markets if we are to maintain our prosperity. But there is not a word about our

The Budget-Mr. Jackman
greatly enlarged home market. What does he think our people are going to do with their increased purchasing power? Where a man had two shirts and one pair of shoes he is now going to have an extra shirt and a pair of shoes for Sundays; he is also going to eat more meat and generally enjoy a higher standard of living, thus greatly expanding the home market. The domestic market is a much better market than the export market; and while Canada must always be an exporter of its basic agricultural products and those of the mine and the forest, we should take second thought about depriving ourselves of, much less lending the money for others to buy, what we so badly need for our own people. Why build locomotives for others when we need houses for our veterans? Exports financed by credits for which we do not immediately receive imports only add to the inflationary pressure.
The minister then mentioned the second most powerful influence in maintaining employment and production-private expenditure of a capital nature. Housing is mentioned as paramount among these. But nothing is done to stimulate the building of houses as was done for industry and labour in order to bring about war production. At the present rate of construction we shall never overtake even the most urgent cases which cry out for relief. On March 25 in this chamber I mentioned several cases in the city of Toronto; one, where there were no less than fifty-four people in one house-appalling conditions in this day and age. There is something wrong with the operation of a system which cannot provide houses for veterans and other citizens.
The minister then mentioned a third support of our reconversion period, and here drew our attention to consumer expenditures. Veterans' expenditures were singled out as having constituted a powerful influence in increasing the total of what consumers have been "trying" to spend. The minister must have blushed when he thought of his government's timing of the introduction of family allowances. Prices were referred to as being pulled up by excess purchasing power and pushed up by wage increases. We are told we must resist pressure, because the battle is nearly over and, I presume, victory is in sight. I do not propose to go into this vexed question at this time, but it will be interesting if the minister would tell the people of Canada what he means by "nearly over". A year has already gone by. Under his fiscal policies there is little early probability of supply catching up with demand unless he steers us into a depression. Nothing he has done has cured the disease caused by deficit financing. Price control poulticing only
covers up the symptoms from the public gaze. The real answer, the constructive answer, the minister says, to the inflationary pressures existing at this time is to work and produce the goods that are wanted in greater volume, so that our greater buying power will result in more goods at reasonable prices, rather than fewer goods at higher prices. The real difficulty of maintaining price control lies in the government's deficits, which for the last five years have been as follows: 1942, $396,000,000; 1943, $2,137,000,000;	1944,	$2,557,000,000;	1945,
$2,558,000,000; 1946, $1,735,000,000, or a grand total for the five-year period of $9,383,000,000 of deficits

over nine billion dollars.
Total bank deposits have increased from $2,500,000,000 in 1938 to about $6,000,000,000. Active note circulation, that is to say, money in your pocket and in mine, has increased from $205,000,000 in 1938 to $1,100,000,000 in 1946, or an increase of over five times in note circulation. Compare these figures with the physical volume of business which in April of this year, the last month available, was 193 as compared with 100 as the average for 1935-39. That is the reason why many people will tell you that we already have inflation, and why the minister should tell the people of Canada how and when is the way out, if he really knows.
We remember that we had high war taxation and compulsory savings, not only to raise revenue but even more importantly to siphon off purchasing power and make it unprofitable to produce more goods for civilian consumption. These reasons are now largely gone, particularly the discouragement to the production of civilian goods; but the tax policies have not been put in reverse, as would seem logical if the minister is to attain his ends.
This, then, should have been a production-incentive budget. But is it? We have joined Bretton Woods in order that, in the international field, we may follow expansionist, not restrictionist policies, in helping to keep the economic ship of state on an even keel. Why not adopt expansionist policies in the domestic field also? People produce and work harder, or otherwise, because of the personal advantage or disadvantage in so doing. Surely, after the experience of the last few years, with workers refusing to work Saturday mornings and professional men taking extended holidays, this does not have to be elaborated upon.
Let us turn our attention to the personal income tax exemption. Single workers are now taxed after they receive $750 instead of $660; married workers after they receive $1,500
The Budget-Mr. Jackman

instead of $1,200. In the cities, where most of the tax is collected, let anyone try to maintain the Canadian standard on such minimum amounts. The tax scale starts at 22 per cent and goes up to 85 per cent on anything above these amounts. Is incentive to be found in any of those rates, in view of the minimum exemptions allowed? Should the Canadian government become an agency for lowering the standard of living of the Canadian people below the necessary level of decency? We are not so much concerned with what other countries may do as we are with allowing a fair standard for those who by their own efforts strive to maintain a decent standard.


James Lorimer Ilsley: Would the hon. gentleman be in favour of raising the exemptions to a level which would lose us $300,000,000 in revenue, thus making the deficit $600,000,000, instead of $300,000,000?


Harry Rutherford Jackman: If the minister will bear with me for a few moments he will hear some constructive suggestions which I shall presently make. The concessions granted are niggardly and even grudging, even when those applicable to 1946 are combined with those promised for 1947. Taxation is still strongly reminiscent of wartime rates when we no longer have a war. Among the strange arguments the minister cites in defence of his policy is the following:
We cannot secure proper equity and fair treatment if the exemptions from income tax are so high as to exclude most of those receiving incomes.
What right has he to accuse the Canadian people of such a dog-in-the-manger attitude, and how does he reconcile the fact that already many small wage-earners are not and should not be taxed? The majority of the citizens are not made economy-conscious by being included in the tax roll. They merely grouse. Like everyone else, I subscribed to the idea that if a man paid a tax he would be more interested in government expenditures. It was thought to be an excellent investment in citizenship. The result disproves the theory and only leads to the asking of greater "take-home pay". Indeed, it is obviously the minister's desire that taxation be not lifted at the present time. For listen to this:
Moreover, as I have already indicated, the current economic situation in respect of the available volume of purchasing power and current spending trends is not such as to provide an economic justification for reducing taxes at the present time. Lighter taxes are not needed now for the purpose of permitting or encouraging additional private spending in order to maintain employment this year. In fact, if only immediate economic conditions were involved, one [Mr. Jackman. 1
could make a case for temporary higher taxes in order to curb the excess of spending in some directions that is tending to pull prices up.
What an example of a restrictionist policy! This is managed economy with a vengeance, a shining example of how we are to be treated if the brain-trusters are to be allowed to run the affairs of the Canadian people. Let our people be warned by it!
Yet the minister talks about increased production as the primary aim and need of the present budget. So let us see how he would encourage married women to remain at their jobs. I am not speaking of mothers with children to look after, but there are many married women who have not such responsibilities but who are free and who desire to work part time. With the shortage of help in the domestic field and in the needle trades, where work is done at home, to mention only two classes-and one might include some of the able secretaries in the House of Commons-there are many women who will not work beyond the earning of $250 which is allowed them before their husband's taxation is substantially increased. Earned incomes of married women did not reduce a husband's tax exemptions to those of the single man during the urgent need for war production. But now production apparently is not so necessary, and yet the minister preaches production as the chief means of offsetting the calamitous dangers of inflation.
Of course, in theory a married man should not be allowed the marital exemption of $750 if his wife works. I agree. But are we more interested in theory or in production? It is a case of man being made for the theory and not the theory for man.


James Lorimer Ilsley: Are we not interested in equity and fairness to some extent?


Harry Rutherford Jackman: I am not going to elaborate an answer to the minister's question. I am interested in production, and I do not believe that the Canadian people wish to adopt this dog-in-the-manger attitude which the minister suggests. If a man's wife is able to work and produce, particularly at the present time when there are more jobs offering than workers to fill them, I say, let her work and give her some incentive; don't reduce the married man's exemption.


James Lorimer Ilsley: My hon. friend can not have heard the scores of speeches made in this house in the last two or three years on the other side of that question.


Harry Rutherford Jackman: I am speaking as I see it, as I believe it and as I think I know it will work out. It will help the minister a great

The Budget-Mr. Jackman
deal if he gets more production. He is endeavouring to put the lid on the prosperity and well-being of this country in order to ward off inflation. What the minister wants above all is production, and I am pointing a way for him to get production. Does he want theory? All right. If he wants fairness and equity to a certain degree, all right; but what we are after is production. If the minister thinks there is any doubt in my mind as to which of the two should prevail, I will tell him it is production.


James Lorimer Ilsley: I will take fairness.


Harry Rutherford Jackman: I wish the minister would make up his mind whether he wants the production of goods and services to give our people a better life, or whether he wants to keep down production by taking away incentive.


Ian Alistair Mackenzie: It is the very opposite.


Harry Rutherford Jackman: I should be delighted if the Minister of Veterans Affairs (Mr. Mackenzie) would make a contribution to the budget debate in due course. In the six years I have been in this house I have not heard him make any contribution to any budget debate.


Mr. GARDINER:: You make a better speech when you are not reading it.


Harry Rutherford Jackman: We all do that. Sometimes we must refer to our notes; otherwise we should not get as much in. Apparently the minister is following the advice of two sets of brain-trusters who never before have run the economy of a state and just do not know what makes the clock tick. Let us sympathize with the minister in his desire to keep inflation from manifesting itself; which is at the root of many of the government's contradictory policies. Inflation is with us, owing to the inevitable economic sins in financing the most costly war in history. The production of more goods over which to spread the available purchasing power is all to the good, though there are good authorities who believe that by the very process of enlarged production the purchasing power thereby created will aggravate an already strong and inevitable inflation. If there is a way out of inflation I hope the minister will show it to this house. Whatever may be the financial effects of increased production, we know its social effects are wholly good; the more goods and services that are produced, the more there is to divide among our people and the higher the standard of living
The minister asked if I could give him any suggestion in lieu of increasing the exemptions. Here is one which I offer to him,
which I think will help production and help meet the inflation problem. It is my recommendation that some different way must be found to raise a good part of the national revenue, other than that of discouraging enterprise and work. I have already quoted Sir John Anderson's view in that regard. I am not suggesting here that any great part of the load may be dropped; but there is a right way and a wrong way to harness a horse; a man can pull more than he can push, and he can pull more on wheels than he can drag on the ground. To tell a man, whether he wears a blue collar or a white collar, that he will earn less per hour for overtime, because of taxation, just does not work.
While there are some arguments against the extension of the sales tax, there are few when food, which bulks so largely in the average housewife's expenditure, is exempted as L recommend. Very few of our people to-day know there is already a sales tax imposed at the wholesale level. Such a tax does not discourage the worker from working, and there is fairness in a tax policy based on the principle that the more one spends, the more one pays. There is nothing obligatory about paying a tax if one does not purchase; but unfortunately the great growth in instalment sales in normal times is a clear indication that most people will spend if they have the money, and even when they have not. Let the worker have more take-home pay if we are to encourage production. Other indirect or nonincentive destroying taxes must be found if we are to keep our economy in high gear. I may be asked, how does it help in what way we pay our taxes, when they have to come out of the same pocket anyway. The answer is that under the present system the pocket is only half full because the high individual tax rates discourage work, enterprise and production. Under a system such as I propose the same amount of taxes would have to be paid, but we would have fuller pocketbooks out of which to pay them.
May I now say a word on the effects of the government's monetary policy and deficit financing. The pumping of money into the circulation system has had the effect of lowering interest rates. Just as everything goes up in price when there is more money than things to spend it on at the old price level, so bonds went up in price because people had to invest their money somewhere and there was little else to spend it on. The government encouraged us not to spend, anyway. Of course this form of inflation was all right because the
rhe Budget-Mr. Jackman

government was the producer of the bonds, and the only place one approves of a ceiling is on what someone else has to sell, not on what one produces. So investors have bought government bonds at inflated levels, and the return on their investment has been cut about in two, while increased taxation has almost reduced this income by half again. In the meantime, nearly all other groups have had some increase in take-home pay in recognition of the increased cost of living, the white collar group least of all. As a measure of great solicitude, the minister now offers the poor retired widow, who may or may not have children to educate, relief by way of increasing the exemption from the special surtax of four per cent on investment income from $1,500 to $1,800. In other words, this munificent concession, after all he has done to the retired man with a small income on which to keep 'himself, is to give him relief from the four per cent surtax on $300 more of income or, Mr. Speaker, $12 per annum, about the price of a new pair of shoes. Obviously the minister did not have the wealthy investor in mind. I hope he did not spend too much time in working himself up to this pitch of generosity.
Turning now to the corporation tax, we find there is no implementing of the now well recognized unfairness of the double taxation of business earnings, first in the hands of the corporation and then, what is left of the same earnings, in the hands of the individual. The latter is the only one who can consume these earnings; and it was confidently expected that the government would at least make a start in eliminating this feature of double taxation which is generally conceded to be unfair. As with so many other aspects of the budget, one must continue to live in hope. The reduction of the minimum corporation tax from 40 per cent to 30 per cent, though this may only make way for a provincial levy, was a needed step. The ordinary corporation tax was 18 per cent at the outbreak of war, and the additional 22 per cent, making 40 per cent in all, was taken from the Excess Profits Tax Act. This is once again proof that this tax-because even if a business earned less than before the war the higher tax prevailed-was always a misnomer. It was really-and I am sorry the previous speaker is not in the chamber at the moment-an excess tax on profits. A tax of 30 per cent or more on business is still a high tax, but we cannot spend on social services if we do not tax, and business will do its best to create jobs under the present imposition, thankful even for small mercies.
The excess profits tax was a fair one in many respects, because no one should be allowed to profit from the emergency and sac-
TMr. Jackman.]
rifice of war and from the forced spending in unlimited volume caused by the war. Today's business is no longer the result of war expenditures, and the average 1936-39 earnings on which the excess profits tax is based has become an anachronism. Just as the island of Manhattan was once sold by the Indians for $24; just as valuable farms in western Canada were once free homesteads, you cannot turn back the hands of time. It is particularly hard on young businesses, and ten years is a long period in the life of any company. Great Britain has recognized these facts and is doing away with the excess profits tax at the end of 1946 and, of course, Great Britain has no corporation tax as we know it. The United States did away with the excess profits tax at the end of 1945. Only Canada is left with this deterrent, to be 15 per cent additional to the ordinary corporation tax of 30 per cent in 1947, a deterrent particularly to small and growing businesses. How can they expand and create employment if they cannot plough back any earnings, just as a farmer ploughs back a crop of clover.
Let me give an example of why Canada cannot afford a substantially higher corporation tax than obtains in the United States, much less an excess profits tax which that country wisely abolished. There are over $4 billion of American investment in Canada, much of it consisting of investment in branch plants. If the American company finds that it can get more profit after tax, retained profit, from its American plant than from its Canadian, it is quite obvious where any goods for export are going to be made. Employment is thus created in the United States which otherwise would have gone to Canadian workmen. Another manufacturer informed me of a developing export business with Newfoundland in competition with firms in the United States. Since the American was allowed, under their tax system, to retain a larger share of his profits he could quote a closer price than the Canadian and hence the business went to the United States.
In his budget remarks the minister said, "this tax has distinct weaknesses and limitations in normal times and it is not to be accepted as a permanent part of our tax structure. Experience, however, has shown, he says "that we are still living in highly abnormal times, the shadow of war is still upon us." What of the United States, and what of the not to be compared strains and uncertainties upon Great Britain?
Is it likely that we shall ever live in a complacent world? Let Canada get back to a fiscal basis on which she may proceed and progress. The difficulty which the minister faces

The Budget-Mr. Herridge
at every turn is that he has not yet made up his mind whether our economy needs to be encouraged or whether it needs to be held in check. On the one hand, he wants to see production increased; and, on the other, he does not, particularly if it means making the people prosperous and putting more pressure on the price ceiling. He wants to have his cake and eat it too. He asks for more production so that he can hold his price ceiling line, and then he turns around and destroys the incentive for both individuals and businesses without which there is not likely to be more production but less. Already the index figure for the volume of manufacturing stands at 190 as compared with 271 in April, 1945, and 291 in April, 1944. Not since John Bunyan's "Mr. Facing-Both-Ways" have we had such an example of disastrous indecision.
The people of Canada might not be so much alarmed at this budget if the minister had not said that it was "essentially a peacetime budget, providing for the financial needs of the first post-war year which is wholly a year of peace", to which he added that certain demobilization costs would not be of a recurring nature. This, then, is to be the model of his government's production-incentive budgets for the future-may we hope it will be short.
I have asked for a reexamination of his government's policy on excessive expenditures, on exports, on private expenditures of a capital nature, particularly housing, and on consumer's expenditures and price control. I have pointed out the fallacy of the incentive-destroying personal income and corporation taxes, the restrictionist effects of their attempts at managed economy, and the unfair and antisocial distribution of the tax burden in the case of married women who wish to work.
The importance of "take-home pay" has been emphasized and certain alternative fiscal measures have been suggested. We are rapidly drifting, if we permit the trend to continue, into a managed economy where brain-trusters regulate the conditions under which we all strive for a living. It is a step toward socialism and state control and the eventual loss of economic liberty which inevitably leads to the loss of personal freedom for which we have just fought and won a great and costly war. Our duty is to give our people a budget which will ensure them their economic freedom as well as economic security and encourage them to put forth their best efforts in ordor that all may fully share in the great heritage which is Canada!


Mr. H. W. HERRIDGE (Kootenay West):: I just wish to make a few comments on the budget and to present to the house some of the opinions of my constituents toward it.
It was interesting to me to listen to the criticism of the Progressive Conservative party members, especially the first two or three speakers who asked for a policy of economy in this country. I am interested in it because, after hearing the criticism and other experiences I have had, I have found the reason why the Progressive Conservative party is called the Progressive Conservative party. When the members of that party sit in the veterans affairs committee they vote unanimously for every scheme that means the expenditure of money, and sometimes vote against the majority of the committee. When the Conservatives come into the house they criticize the government for the expenditure of money in general. Therefore, in the veterans affairs committee we find them very progressive and in the house typically Conservative.
This afternoon the hon. member for York West (Mr. Adamson) dealt with the question of bringing the Canadian dollar to parity with the United States dollar. He pleaded with the Minister of Finance (Mr. Usley) to work on behalf of having a free market for gold so that gold could be sold at a world price. When he was saying that I thought of the days of the depression in the United States when there was a free market for gold, when gold was selling at $22.62 an ounce. As a result of government action it had to be raised to $35 an ounce before conditions started to improve in the United States. Yet this afternoon that hon. gentleman was suggesting that the Minister of Finance work for a policy of that kind.


Agar Rodney Adamson: There was no free market for gold in the United States. This is partly what caused the depression to take such a firm hold on the economy of the United States.


Herbert Wilfred Herridge: We differ in that connection.


Arthur Leroy Smith: That is not in the hon. member's book, is it?


James Horace King: Order.


Herbert Wilfred Herridge: Before proceeding further with my few remarks on the budget, I wish to express the appreciation of the people I represent of the government's policy of price control. I believe they all support strongly the present policy of price controls. Many of them write me from day to day and week to week, as also do organizations, urging that I emphasize that price controls be maintained and strictly maintained. When it comes to the question of bringing the Canadian dollar to parity with the United States dollar there has been some criticism of that, and possibly,
The Budget-Mr. Herridge

as far as gold mining is concerned, it may cause a temporary setback. I am quite sure that, on the whole, it will be of benefit to the Canadian economy. I am quite ready to accept the decision of the Minister of Finance in that respect because of the way in which he and his associates handled the finances of this country during the war period.
I should like to mention the issuance of Canada bonds. In the riding I represent there has been a most sympathetic response to the issuance of these bonds. They are excellent and something that should become a permanent part of the government financial policy.
I have a few criticisms to make which are set out largely in the subamendment moved yesterday by the C.C.F. This subamendment reads:
That all the words in the amendment after "the calendar year 1946," be struck out, and the following substituted therefor:
(1) by raising sufficiently the exemptions of those in the lower income brackets.
In my constituency, particularly among the working people, there is considerable disappointment that the exemptions were not raised to a greater extent. I think it would have been a better policy to 'have raised the exemption for single persons to $1,000 and for married persons to $1,800, and at the same time place more emphasis upon the sale of Canada bonds. I am quite sure that if the exemptions had been raised and the situation placed before the people there would have been a most generous response-I assume there will be anyway-to the appeal to purchase bonds. The sub-amendment continues:
(3)	that the budget fails in the new offer to the provinces to provide for social security measures which will achieve a reasonable standard of economic security for all Canadians.
I know there was great disappointment throughout Canada, particularly among old age pensioners, over the failure of the dominion-provincial conference. I think this government should have announced, as a definite policy to be brought into effect in the near future, some scheme for the alleviation of the condition of these people. There are many people in these older groups, particularly those between the ages of sixty-five and seventy years, who are not able to qualify for old age pension and who also are not able to find a place in the labour market. I submit that provision should have been made for them in the budget. The subamendment continues:
(4)	that the budget fails in its tax proposals to recognize the principle that cooperatives are non-profit-making organizations.

I am glad the Minister of Finance and the government did not succumb to the wooings of the income tax payers' association, but I do not think they have recognized the cooperative movement to the extent that they should have. Labour and the cooperative movement are the twin bulwarks of any democratic country. I have had long experience in the cooperative movement and I feel keenly about this. I think the percentage of my constituents who are members of the cooperative movement is greater than the percentage in any other constituency. We have service cooperatives, consumer cooperatives and agricultural cooperatives. I realize that this is a rather strong statement to make, particularly when I am looking at the Minister of Agriculture (Mr. Gardiner).
I am speaking on behalf of the people in my district who support the cooperative movement and I urge this government to give that movement every encouragement possible. When the government went to the country at the last election they put out posters reading, "build for a new social order". If the government want to build that new social order they will have to get the cooperation of the people, and there is no group of people in this country doing more toward building a new social order than those who support the cooperative movement.
This evening the hon. member for Cape Breton South (Mr. Gillis) mentioned what had been done in his district in Nova Scotia, but I should like to give an illustration of what has been done in my constituency. In 1932 a few men who lived in Rossland, who were working for the Consolidated Mining and Smelting company, decided to form a cooperative to transport themselves from Rossland to Trail, a distance of about seven miles. At that time the charge made by a private company was ninety cents for the return trip. A half dozen men got together in 1932, formed a cooperative and purchased five or six seven-passenger cars. From then until the present time they worked steadily at the development of that cooperative until to-day it has 1,000 members whom it transports between those two cities for thirty-five cents the return trip. It has a fleet of fifty-seven passenger cars, a $50,000 garage, several clerks, and has subscribed for over $20,000 of victory bonds. Last year it was able to pay $10,000 in patronage dividends. I mention this as an illustration of what a group of people working together can do for themselves.
It is not only the financial advantage that counts; it is the effect that the cooperative endeavour has had upon the city of Rossland

The Budget-Mr. Herridge
itself. It has permeated its way into the community. These men working in that movement have seen what can be done and they have formed a consumers' cooperative movement. They are to be found on the city council and in every public activity in the city. As a result of their activities there have been formed other organizations on the same basis which have proved to be extraordnarily successful. On behalf of the service cooperatives, the consumer cooperatives and the fruit organizations of Kootenay West I urge the government to give further recognition to the functions of the cooperatives in this changing society. The subamendment continues:
(2) that the budget fails to provide for the investment of public funds to bridge the gap between anticipated private investment and the total national investment required to assure a high national income and full employment.
The government has failed in not providing for a full programme of investment. This investment should not be limited to any extent to the immediate future. This is the time to plan for the future; this is the time the pattern should be drawn. If this government in this budget had announced to the Canadian people that where private enterprise failed to give good employment at decent wages the government had a programme to put those people to work at decent wages, I think it would have been accepted by the people of Canada as a genuine effort at the beginning of a new social order.
When it comes to the question of public investment, that means public expenditure. In that respect I suppose we shall be criticized by our hon. friends of the Progressive Conservative party. I think I am correct, and if I am not I trust the hon. member for York West will correct me, when I say that we have had a balanced budget only on fifteen occasions since confederation. When it comes to a question of public investment, it is not a question of going into debt. This public investment will be an investment which justifies expenditure. It is entirely different from public expenditures for purely relief projects which do not get us anywhere.
I suggest that this budget would have had a tonic effect upon the Canadian people if some such proposal had been provided, if the government had shown the Canadian people that they were preparing for the future. I admit that with the labour situation, and possibly with the material situation at the present time, it would not be possible to expect any great expansion of public enterprise, but I think the pattern for the future should have been laid down in this budget.
I suggest that there are three or four forms of public investment to which this government should give serious consideration and to which I suggest this government will be giving serious consideration before long.
First, we should have a public investment programme for national housing. That is the first need of the Canadian people; to see our people properly housed and sheltered is our first duty. At the present time several housing projects are coordinated under the administration of one minister, but at the same time we are not tackling this problem in the way we should. We have discovered that in the veterans affairs committee. No one is personally responsible. We should have a large programme of subsidized housing to meet the needs of the Canadian people. That should be planned for in a programme of public investment which would be put into effect as the need develops.
In addition, I feel that there is a tremendous necessity for public investment in the development of irrigation schemes which are so sadly required by many of our good friends on the prairies and by many people in British Columbia, especially in the Okanagan valley, in northern British Columbia and in the Koote-nays. That is a programme of public investment which would bring dividends in the way of increased production." It would be a sound investment from every point of view. I believe that at the present time it would not be possible to go very far, but there, again, I suggest that in a programme of public investment this government should be planning great schemes of irrigation projects in western Canada; for the future, water means food.
There is another opportunity for public investment which would absorb the labour slack in the future. There is a great need for a programme of doing away with grade crossings. I understand that there are 30,000 level crossings in this country and that only slightly more than 3,000 are protected. There is a type of public investment which would pay dividends in the saving of life and time and which would build up and improve our facilities. I suggest that this is another form of public investment which should be considered by this government.
I now come to a programme which is of serious concern to the people of southern British Columbia and to the residents of my constituency. As part of a public investment programme trans-Canada highways should be developed. The Canadian people require for the immediate future a good highway system for the transportation of commodities and for the attraction of tourists from the south. During the past few days I have had a number

The Budget-Mr. Herridge
of letters from residents of my constituency pointing out that hundreds of United States tourists are actually visiting the Kootenays at the present time, and they all complain of the same thing, the poor condition of British Columbia roads, which prevents large numbers of tourists from coming. Here, again, I do not suggest that the time is ripe for the government to step in with a large programme of trans-Canada highway development, but the government should be laying plans for the future, for a system of trans-Canada highways that will be a credit to the country and reflect the wealth which this country can produce. I have here a brief which has been circulated generally throughout western Canada and in British Columbia. It was originally submitted to the dominion regional reconstruction council for Alberta by the Calgary board of trade. This brief deals in general with the possibilities of highway development in western Canada. I shall not read it in full because it is lengthy, but I shall read one or two of the reasons given why this organization believes in the necessity for the development of a dominion government trans-Canada highway programme:
1.	To foster and encourage communication between the separate provinces of our dominion with a view to developing a national spirit.
2.	To insure Canada to some extent against unemployment.
3.	To attract American tourists and to capitalize on the favourable advertising we have received during the past six years.
4.	To keep Canadian tourists at home by making motor travel in our own country as attractive as it is elsewhere.
5.	To assist in the development of our natural resources, especially mining and forestry.
Then 6, and I am sure this will appeal to the hon. member for York West:
6.	To provide a better and more adequate postal service in rural areas, and in communities not served by railways.
7.	To improve the health of our nation by bringing hospital centres and medical services closer to our rural citizens through the use of motor transport.
8.	To develop our educational system by providing roads over which buses may travel and bring the students to the centres where they will receive adequate and proper training.
9.	To encourage farming by bringing the farmer closer to his market with the use of motor equipment.
10.	To encourage immigration from the United States.
11.	To assist the individual owner of a motor vehicle to operate same more economically.
12.	To assist in creating a favourable balance of trade with the United States and thereby raise the standard of living in Canada.
In addition, the Nelson board of trade of my own constituency, supported by all the other boards of trade in the riding and
fMr. Herridge.]
branches of the legion, sent the following letter to the Prime Minister (Mr. Mackenzie King) early this spring:
To the Right Honourable W. L. Mackenzie King, Prime Minister,
Parliament Buildings,
Ottawa, Canada.
Sir:
It is requested on the following grounds that the federal government contribute to the improvement of the highway between Medicine Hat in Alberta and Hope in British Columbia and that it be recognized as the southern route of the Trans-Canada highway.
(a)	It is open for travel 365 days in the year whereas owing to climatic conditions, the northern route known as the Big Bend highway is open for travel for not more than five months in the year.
(b)	It serves the most thickly populated area in the interior of British Columbia, the number of residents of the area being at least ten times that of the district contiguous to the Big Bend highway.
(e)	It traverses a territory considerably more developed industrially than that adjacent to the Big Bend highway in mining, smelting, power, lumbering and agricultural activities, including among others the principal operations of the Consolidated Mining and Smelting Company, of the power plants of the West Kootenay Power & Light Company Limited and the East Kootenay Power and Light Company Limited.
(d)	The public works department of the government of British Columbia has under construction a 40-car capacity steel ferry with necessary landings and approaches to provide for the Kootenay lake crossing.
(e)	It provides access to some of the outstanding scenic beauties of southern Alberta and British Columbia, including the Waterton, Kootenay, Slocan, Arrow and Okanagan lakes, which have great possibilities as tourist attractions which cannot be realized until the highway is made adequate for tourist travel.
(f)	Throughout its length it is approximately
parallel to and within a relatively short distance of the United States boundary and has many connections with the United States highway system.	.
(g)	Its immediate improvement would relieve the unemployment which exists and will continue during the readjustment period.
That resolution is supported by all organizations and residents of my constituency. They are very much concerned about having the southern provincial route, a portion of the trans-Canada highway between Hope and the Alberta boundary, improved and extended. There is one rather unusual feature in connection with the suggestion for the development and extension of this southern provincial highway, and that is the suggestion to make arrangements to go through United States territory to avoid going over the Cascade mountains between Rossland and Grand Forks. Between Rossland and Grand Forks the road climbs to an elevation of 5,400 feet over the Rossland summit and the Cascade summit. The road involved an expenditure of large sums of money, but a satisfactory highway will

The Budget

Mr. Herridge
never be built, owing to the steep nature of the banks and the trouble every spring with thaws. It is a very difficult route to keep open in winter. At the present time it is not kept open because of the great expense and most people travel from the interior of British Columbia to the coast by United States roads.


An hon. MEMBER:: It misses Kamloops.


Herbert Wilfred Herridge: Kamloops is on the central trans-provincial highway. It just so happens, Mr. Speaker, that those mountains taper out five or six miles in United States territory; and if we could get permission either to- purchase 300 feet of right of way in the United States between the American towns of Laurier and Patterson, or possibly get a section-the distance would be some 25 miles long by five miles deep-and have that made into an international memorial park, with special arrangements for immigration and customs, the matter could be dealt with in that way. In any event, the people of my district are very much concerned that the Canadian government shall make some arrangements with the government at Washington to enable us to get around the tapered end of the Cascade mountains through United States territory instead of, for all time, climbing over two mountain slopes unnecessarily.
In this connection I may say that I have travelled over the whole of the road with officials of the United States government and engineers of the department of public works of British Columbia. It is practically level country, its highest floor being some 200 feet below the city of Rossland, and the cost of construction would be very moderate.
In that connection a brief has been prepared by the Rossland junior board of trade. They have done a great deal of excellent work on this subject. I do not want to take the time of the house to read the brief, but the information contained in its couple of pages would, I believe, interest all hon. members; it has to do with a quite unusual proposal, and with the unanimous consent of the house I should like to place it on Hansard.


Some hon. MEMBERS:: Agreed.


Herbert Wilfred Herridge: The brief follows:
The Rossland Junior Board of Trade Rossland, B.C.
The Victory Highway
Object
It is the purpose of this brief to submit preliminary information on a proposed alternative route for the new southern British Columbia trans-provincial highway between the city of Rossland and the city of Grand Porks. It is emphasized that the proposed project is intended as a post-war undertaking.
Present Route
The present highway-locally known as the Cascade highway-is a poor class gravel road at best. In the course of some 40 miles between Rossland and Christina lake-along north slopes practically all the way-it first rises to an elevation of 4,600 feet (Rossland summit), thence drops by a series of treacherous switchbacks to a valley floor, elevation 2,200 feet (Sheep creek), thence climbs .a second summit to 5,000 feet elevation (Cascade summit), dropping again to the level of Christina lake, elevation 1,400 feet. Sixty per cent of the above highway is over 3,400 feet elevation, and snow conditions are such that keeping it open all winter is both costly and difficult, if not impossible. It is our contention that it would be an extremely costly undertaking to make this a first class route, and the snow clearance problems would still remain. Alternative Routes
There exists between Rossland and Christina lake two north-south mountain ranges both extending from the international boundary to the Lower Arrow lake. The easterly range is over 5,000 feet in elevation except for two passes, the one at elevation 4,200 feet near Sheep lake, the other near the international boundary with an elevation of 4.600. feet and occupied by the present Cascade highway. Likewise, except for one 4,000-foot pass at Faron, the westerly range is over 5.000 feet elevation.
In addition to the present route, and the one which forms the subject of this brief, the following other routes have been proposed:
(a)	Faron Route
This would involve costly rock work on the north shore of Lower Arrow lake, a ferry across that lake, and a narrow and precipitous 4,000-foot summit between Lower Arrow lake and Christina lake. This road would pass through relatively uninhabited country, by-passing both Trail and Rossland.
(b)	Blueberry Creek Route
This route -would traverse over 50 miles of entirely uninhabited country, cross over a 5,000-foot summit, and likewise by-pass both Trail and Rossland.
The Victory Highway
The salient feature of this route is that the two mountain ranges previously mentioned both taper off 5 to 6 miles south of the international boundary to elevations of 2,200 and 3,200 feet respectively.
The proposed route-mostly on southern slopes -would follow the present highway from Rossland to Patterson, from whence it would bear west following approximately the course of an existing United States road, for a distance of roughly 25 miles, thence reentering Canada at Laurier.
Construction would be mostly bull-dozer work, the only rock work being a half-mile stretch at the headwaters of Deep creek in Box canyon, a dry canyon.
The average maximum depth of snow along the whole route occurs at Rossland, B.C., where it averages 3 feet yearly. Elsewhere the average is between 1 and 2 feet. Under these conditions, winter maintenance should be relatively easy.
The over-all distance between Rossland and Grand Forks would be about 35 miles, a reduction of from 6' to 10 miles over the present cascade highway. Faster travelling time would be
ossible along the proposed highway, the grades
eing less extreme.
The Budget-Mr. Herridge

Benefits
The proposed Victory highway route would:
(a)	Facilitate the movement of agricultural produce to and from the prairies, Grand Forks district, Okanagan, and coast points.
(b)	Stimulate tourist traffic in this district. At the present time travel through this district is severely curtailed due to the fear of traversing the treacherous Cascade highway.
(c)	Provide year-round bus and freight traffic service between the Kootenay and Grand Forks district, and a highly important link in the southern B.C. trans-provincial highway. International Aspects
During the winter months the only road link between Rossland and Grand Forks is by a roundabout route through the United States, the Cascade highway being closed due to heavy snow conditions; freight carriers are compelled to travel under bond and seal.
The following means of overcoming international complications that would arise in connection with building the proposed highway are suggested:
(a)	That an area extending approximately from Patterson to Danville and from 5 to 6 miles each side of the boundary, be set aside as an international memorial park, and that travel within this area be as free as possible of customs and immigration formalities.
(b)	That the Canadian government either lease, or purchase from the United States, a strip of land 300 feet wide. Most of the land is in a forest reserve in which there are few settlers.
Conclusions
The present road link (Cascade highway) between the Trail-Rossland district and the Grand Forks area is inadequate, and it would be extremely expensive to make it a first-class highway. Alternate routes through Canada are not attractive.
We leel that a first-class road link between the above-mentioned areas is vital to the continued prosperity of southeastern B.C., and suggest the Victory highway project be given very serious consideration.
Submitted by:
The Rossland Junior Board of Trade Endorsed by:
The Rossland Board of Trade (Senior)
The Trail Board of Trade
The Trail Junior Chamber of Commerce
I brought up this matter in the provincial legislature, and the Premier of British Columbia stated that it would be brought to the attention of the proper authorities in Ottawa. Some time ago the Rossland junior board of trade and other organizations wrote to the premier of British Columbia, and he replied to the effect that the matter was being taken jp with Ottawa and that they were waiting to aear from the east. Then I wrote the Department of External Affairs, but nobody there knew anything about it. Then I asked for the production of all papers and correspondence between the government of British Columbia or any official of the government of British Columbia and the government of the Dominion of Canada or any official of the dominion government, but again I was told that no one

knows anything about it. So that I do not know what has happened to date, and I should certainly like to know what is being done in connection with these proposals for this new diversion into United States territory.
I see, Mr. Speaker, that my time is slipping away very quickly. I am not going on at greater length, except to again emphasize my belief-and it is not my belief only but that of many other people in this country-that the budget should have contained evidences of the government's approach to the reconstruction period, that it should have provided for a programme of public investment for the future, for a housing erection project, for doing away with level crossings, and for a great development of the trans-Canada highway system. I trust that, while this government has not seen fit at this time to give effect to these proposals, when the next budget comes before this house we shall see that the government has reacted favourably to these proposals and is doing the things which I know all of us realize the Canadian people wish to see it do.


Some hon. MEMBERS:: Question.


Mr. BENTLEY:: Mr. Speaker-


Some hon. MEMBERS:: Eleven o'clock.


James Arthur Ross: Mr. Speaker, may I call it eleven o'clock?


Thomas John Bentley: May I move the adjournment of this debate?
On motion of Mr. Ross (Souris) the debate was adjourned.


James Horace King: Before adjourning the
house, it is my duty to call the attention of hon. members to Beauchesne's Parliamentary Rules and Forms, third edition, page 102, article 239, in which they may read:
Besides the prohibitions contained in this standing order, it has been sanctioned by usage both in England and in Canada, that a member, while speaking, must not:
(o) read from a written, previously prepared speech.
Many times since the beginning of this session I thought I should call the attention of hon. members to this rule; but I hesitated to do so. However, I feel that it is my duty now, particularly to-night, to draw the attention of hon. members on both sides of the house to this rule, and to tell them that I feel I should call to order in future members whenever they read their speeches.


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

Private Bills
Wednesday, July 10, 1946.