1946-05-27

VETERANS AFFAIRS

[Stage Direction]
Sixth report of special committee on veterans affairs-Mr. Tucker.


[Stage Direction]
Right Hon. J. L. ILSLEY (Minister of Finance) moved that the house go into committee of ways and means.
Motion agreed to and The house went into committee, Mr. Golding in the chair.
Mr. ILSLEY moved:: Resolved, that towards making good the supply granted to His Majesty on account of certain expenses of the public service for the fiscal year ending March 31, 1947, the sum of $203,837,388.85
, granted out of the consolidated revenue fund ot Canada.


[Stage Direction]
Motion agreed to.
Resolution reported, read the second time and concurred in. Mr. Ilsley thereupon moved for leave to introduce Bill No. 141, for granting to His Majesty certain sums of money for the public service of the financial year ending the 31st March, 1947.
Motion agreed to and bill read the first time.
Mr. ILSLEY moved the second reading.
Mr. GRAYDON:: May I ask for the customary protection from the minister that in agreeing to second reading of' this bill we shall



LABOUR CONDITIONS


[Stage Direction]
Right Hon. J. L. ILSLEY (Acting Prime Minister). The hon. member for Fraser Valley (Mr. Cruickshank) indicated on Friday that he intended to-day to bring up the question of the supply of wooden containers for food in British Columbia the production of which is rendered impossible by the strike of those engaged in making lumber for boxes and material, for baskets and other wooden food containers.
I understand that if these containers are not produced the result will be a large wastage and spoilage of food of many kinds produced in British Columbia both for the Canadian market and the overseas market during the coming months. I understand also that there is a disposition on the part of both operators and members of the unions to recognize the gravity of this situation and that meetings are being held, at least between the farmers and the workers, with a view to putting an end to this lamentable situation.
As the house knows, the importance of food at the present time is of great concern to the government, and I would like to say on behalf of the government that it is the sincere hope

Grain Crop
and wish of the government that arrangements be immediately made whereby the industry making material for wooden food containers will resume work at once, without prejudice to any negotiations regarding conditions in the industry which are now proceeding.
The Minister of Labour is unavoidably absent from the house to-day but I know that this is his wish as well as that of the other members of the government, and I am therefore, on behalf of the government, making this earnest appeal to all those concerned in this dispute to arrange for the resumption of work at once in the lumber mills which make lumber for containers for the shipping of fish and fruit and other food products.
I am not now dealing with the other phases of the strike in British Columbia, which are very grave. I will have to leave these for the Minister of Labour, who is putting forward every possible effort to bring about the settlement of the dispute as a whole.
Mr. CRUICKSHANK:: I wish to express my thanks to the minister for his statement. Now I will not move the adjournment of the house.

1944 CROP-BARLEY EQUALIZATION FEE-ONTARIO WHEAT EQUALIZATION FUND


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: On behalf of the Canadian wheat board I wish to make a brief statement regarding the 1944 barley equalization payments and the 1944 Ontario wheat equalization fund.
We are at present in process of making payment to all producers who delivered barley either through country elevators or by farm-to-farm transactions in the crop year 1944-45. An amount totalling $6,106,932.94 is involved in this payment, being the difference between the advance equalization payment and the equalization fees collected in respect of barley exported, after allowing for administrative costs and the estimated cost of making the payment. The payment covers deliveries made between August 1, 1944 and July 31, 1945, inclusive. In the case of deliveries through country elevators, the cheques are compiled from information submitted to the board by the handling companies. Where producers made deliveries to more than one elevator, separate cheques will be issued, one for each of the companies to whom deliveries were made. The cheques will be forwarded to the elevator companies for distribution when completed, but cheques covering the farm-to-farm transactions will be distributed by mail from the offices of the board.
Approximately one hundred and fifty-five thousand cheques are involved covering total 63260-119
deliveries of 80,435,781 bushels, and the amount per bushel of the payment is 7-59 cents.
Immediately following completion of the barley payment, payment will be made to the producers who delivered Ontario winter wheat in the 1944-45 crop year. This payment will be made on the basis of monthly reports received from the elevator agents in the province of Ontario. The surplus arising as a result of the equalization fees collected in Ontario winter flour and other wheat products exported from that crop, after allowing for administrative costs and the estimated cost of making the payment, totals $192,824.77. The per bushel payment amounts to 3 cents. Approximately twenty-nine thousand cheques are involved.


Mr. BRACKEN:: Mr. Speaker, may I ask a question with respect to the announcement the minister has just made? He mentioned that the barley equalization payment has already been made.


James Angus MacKinnon: No

is in process.


John Bracken: Is in process of being made. When it is made, then a similar payment with respect to Ontario winter wheat will be made?


James Angus MacKinnon: Yes. The wheat board is proceeding with the barley payments now, and a-s soon as they are completed the Ontario payments will be made. The wheat participation payments will follow that.


John Bracken: That is the question I was going to ask. There has been a good deal of criticism with respect to the delay in the payment of the participation certificates. My understanding is that they have not been paid since prior to 1943. Can the minister say now when these payments are likely to be made?


James Angus MacKinnon: I have been in very close touch with the wheat board on this matter, partly because hon. members on the other side of the house have raised the question here. The assurance I get from the wheat board is that the issuing of these cheques will commence in June immediately following the cheques to which I made reference in my statement.


John Bracken: That is for the crop year
1943-44?


James Angus MacKinnon: Yes.


Mr. ROSS (Souris):: May I ask a supplementary question? Would it be possible for the minister to make a statement before the cheques are issued as to how much per bushel these payments will be?

Questions


James Angus MacKinnon: That is exactly what we are waiting for-advice on what the payments will be, and to have the auditors pass on them. Just as soon as that figure is arrived at, and I believe it has just been arrived at, the cheques can be made out. I understood that the hon. member for Souris was asking for the prices of the different grades. The actual price, if it is now known., has just been arrived at.



STANDING COMMITTEES


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved:
That the name of Mr. Breithaupt be substituted for that of Mr. Mcllraith on the standing committee on external affairs.
That the name of Mr. Coldwell be substituted for that of Mr. Zaplitny on the special committee on radio broadcasting.
Motion agreed to.

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)

Mr. WYLIE:: 1.	What buildings have been sold at No. 34 S.F.T.S. Medicine Hat, Alberta?
2.	Who were the purchasers and what amount was paid for these buildings?
3.	Who purchased the linoleum from the officers' mesh?


Mr. McIDRAITH:: 1.	and 2. The following buildings have been sold to the city of Medicine Hat for $15,092:
No. 5 N.C.O.'s quarters; No. 6 N.C.O.'s quarters; No. 7 N.C.O.'s mess; No. 9 other ranks quarters; No. 10 other ranks quarters; No. 15 hospital; No. 17 large canteen; No. 30 dental clinic; No. 32 other ranks quarters; No. 3 officers quarters.
One of the conditions of sale in respect to all buildings mentioned above was that all normal fixtures contained within the buildings were included and further that the buildings
were not sold for removal but were to remain on the site provided that fencing-in of the property along the lines as indicated in the site plan was undertaken by the purchaser. The buildings are to be used for emergency housing.
3. The linoleum, not being crown property, has not been declared surplus to War Assets Corporation.


POLYMER CORPORATION-PRODUCTION OF RUBBER
Mr. MURPHY:: 1.	What is the present cost per pound for the production of the different types of rubber produced by the Polymer Corporation Limited?
2.	What was the cost for the production of the different types of rubber by the Polymer Corporation Limited during each quarter for the years ending March 31, 1945-March 31, 1946?
3.	How many pounds of the different types of rubber were produced in each quarter during the years ending March 31, 1945-March 31, 1946?


Mr. HOWE:: Mr. Speaker, this question refers to the manufacturing data on the current operations of Polymer Corporation. The public accounts, recently published, contain the balance sheet of the operations of Polymer up to the end of March, 1945. The difficulty of giving the present-day costs is that the rubber is competitive in foreign markets with that of other manufacturers, and it is prejudicial to the work of the directors on policy matters to have the day-to-day operations made public in a forum such as the House of Commons. If the government intends to be in competitive business I think the same latitude which is permitted to competitive business should be permitted to crown companies; therefore in the public interest I must ask that this question be dropped.
Question dropped.


LOANS TO PROVINCES
[Stage Direction]
Mr. DORI.ON:
1.	What was the amount of the loans each year from 1939-1940 to date, by the federal government to each of the provincial governments ?
2.	What was the interest on these loans?
3.	What amount has been reimbursed on these loans ?
4.	What is the total amount due to date by each of the provinces to the federal government?
Mr. MAYHEW:: 1.	Manitoba Saskatchewan	Alberta British Columbia1939- 40	
$ 2,012,000 00	$10,247,749 82

1940- 41		1,757,600 00	...	271,890 96
. (no loans since 1940-41)

Questions
2.	Manitoba
1939-	40	
713/129	571940-	41	
760,834	921941-	42	
756,516	401942-	43	
752,452	821943-	44	
744,936	101944-	45	
743,261	631945-	46	
742,839	26
3.
1939-	40	
129,507	281940-	41	
355,924	361941- 42	1942-	43	
288,674	091943-	44	
153,589	821944- 45	1945-	46	
15,025	804.	,(As of March 31, 1946)....	24,759,924 47Saskatchewan	Alberta	British Columbia1,831,960 12	782,375 94	996,914 58216,633 46	781,318 85	1,039,694 73216,840 55	780,146 12	1,042,331 60214,706 23	779,010 42	1.042,002 72213,963 27	777,892 40	1,038,524 89212,102 85	777,074 86	1,036,058 01209,519 25	776,574 17	1,034,109 381,057,068 20	53.6S8 00	62,993 77	7,500 00	31,265 90175,112 74	46,000 00	54,826 87	3S,500 00	121,255 8346,488 83	26,500 00	89,810 0589,838 47	19,500 00	66,181 4384,840 00	18.000 00	97,380 0692,841,910 61*	26,219,500 00	34,369,759 99
* Includes $21,722,724.83 outstanding in connection with seed grain loan guarantees.
Note to answers No. 3 and 4.-Interest received by and repayments to the dominion government relate to loans referred to in answer to question No. 1 and to loans in the period 1931-32 to 1938-39 (see House of Commons debates, May 6, 1946, page 1258).


PRISONERS OF WAR FOR SEASONAL LABOUR
Mr. DESMOND:: 1.	How many prisoners of war are going to be available in camps for seasonal labour?
2.	How many prisoners of war will be available in the sugar producing area of Ontario?
3.	Can reasonable assurance be given that camp labour will be available?
Mr. MacKINNO'N:
1.	This year it is the intention to place as many prisoners of war on individual farms as possible rather than house them in camps. There will be between 3,600 and 4,000 prisoners available for agriculture for at least the early months of the summer, some will! be in, camps but the number will depend on how well the plan to place them on individual farms works out.
2.	Between 872 and 900 prisoners including those on individual farms are allotted to the Ontario sugar beet area.
3.	The period of time for which this labour will be available is dependent on the arrangements which can be made with the British authorities, and upon the latest dates when available shipping space for the return of the prisoners to Europe can be secured. At present no assurance can be given that the prisoners will be available beyond the early part of August.


AIR FORCE-ELEMENTARY OR RESERVE TRAINING- FLYING CLUBS
Mr. DIEFENBAKER:: 1.	What policy has been established by the Department of National Defence for Air in connection with R.C.A.F. elementary or reserve training?
2.	Is such training going to he allocated to the flying clubs in whole or in part?
3.	What grants or other 'assistance will be given to flying clubs?
4.	Which flying clubs sponsor and organize elementary flying training school companies?
5.	Which of said flying clubs benefited, and to what extent during the period of the war, from contracts from the Department of National Defence for Air in connection with the operation of elementary flying training schools?


Mr. GIBSON (Hamilton West):: 1.	Elementary training as was known in the British commonwealth air training plan in which civilian flying training school companies trained pilots on light aircraft has been discontinued. It is the intention of the R.C.A.F. to carry out reserve training at some future date.
2.	It is intended that certain elementary training will be allocated to flying clubs.
3.	The loan of certain equipment and aerodrome facilities together with fees for such training as may be agreed upon.

Questions
4.	A list of flying clubs which sponsored elementary flying training schools under the B.C.A.T.P. appears below.
5.	See list below answering No. 4.
Thunder Bay Flying Club	$19,000	00Montreal Flying Club	
21,554	32Calgary Flying Club	
22,831	11Saskatoon Flying Club	
11,700	00Prince Albert Flying Club	
11,700	00Windsor Flying Club	
21,700	00Aero Club of B.C	
30,000	00Hamilton Flying Club	
18,750	00
Ivitchener-Waterloo Flying Club
(Canada)	 10,131	15
County of Huron Flying Club	 9,733 85
Ottawa Flying Club	
22,900	00Regina Flying Club	
20,000	00Halifax Aero Club	
11,596	68Brandon Virden Flying Club	
8,750 00Moose Jaw Flying Club	
8,750	00Ontario County Flying Club	
10,851 00Kingston Flying Club	
3,617	00Brant-Norfolk Aero Club	
3,615	17Winnipeg Flying Club	
19.200	00Moncton Flying Club	
16,250	00York Flying Club	
20,833	34Edmonton Flying Club	
19,165	00


POLYMER CORPORATION-DOW CHEMICAL COMPANY
Mr. MURPHY:: 1.	Did the Polymer Corporation Limited pay the Dow Chemical Limited for material supplied and services rendered?
2.	If so, in what amount?


Mr. McILRAITH:: 1.	Pursuant to an engineering contract made with that company dated May 1, 1942 Polymer Corporation Limited paid Dow Chemical of Canada Limited for engineering services performed by it in connection with the process design and engineering of the styrene plant at Sarnia and for acting as-supervising engineers during the construction of that plant the fees and disbursements payable to the said company under the said contract. Pursuant to its operating agreement with that company-, entered into as of May 1, 1942, Polymer Corporation Limited has paid to Dow Chemical of Canada Limited management fees for services rendered by it. Poly-mer Corporation Limited has also paid to Dow Chemical of Canada Limited certain royalties payable to Dow and/or the following firms: Universal Oil Products Company; Standard Oil Development Company; Jasco, Incorporated; Koppers Company; Koppers United Company; Monsanto Chemical

Company; Carbide and Carbon Chemicals Corporation; Phillips Petroleum Company; The Lummus Company; The Dow Chemical Company; pursuant to an agreement on the exchange and use in Canada of technical information relating to styrene, dated October 15, 1942. No payments were made to the said company for materials supplied by it, other than the engineering drawings and specifications referred to above and the fee paid for enginering services includes the said drawings and specifications.
2.
For engineering services	$	8,250 00
Management fees covering services performed pursuant to operating agreement up to and inclusive of April 30, 1946	 353,122 13
Royalties pursuant to the agreement on the exchange and use in Canada of technical information relating to Styrene		64,025 91


$ 425,398 04 LUMBER PRODUCTION
[Stage Direction]
Mr.	FLEMING:	
What was the total annual		production of
1 umbel	in Canada, commencing	with the year
1938, in (a) footage; (b) value'		
Mr.	MacIvINNON:	
Year	(a) Footage	(b) Value
	M ft.b.m.	(at the-mill)
1938	
3,768,351	$ 72,633,4181939	
3,976,882	78,331,8391940	
4.629.052	105,991,2171941	
4.941.0S4	129,287,7031942	
4,935,145	149,854,5271943	
4.363.575	151,899,6841944	
4,512,232	170,451,4061945	
Not yet available.

Mr. DIEFENBAKER:: 1.	Have any of the companies which operated elementary flying training schools during the period of the war been requested to turn over to the Department of National Defence for Air, any or all of the surpluses earned under contract?
2.	If so, which companies, and how much has each of said companies turned over?
3.	What were the reasons and/or justification for such requests?
4.	Have all of said companies been treated on the same basis in regard to the disposal of surpluses ?
5.	If not, what companies have been differently treated, in what respect, and why?

Questions


Mr. GIBSON (Hamilton West):: 1.	Yes.
2.	Malton Flying Training School,
Limited (Later De Winton Flying Training School,
Limited	$318,500	83
Thunder Bay Air Training
School, Limited	 208,594 31
London Elementary Flying Training School, Limited. ..	38,098	57
Windsor. Mills Flying Training
School, Limited	 99,309	46
High River Flying Training
School,. Limited	 429,025	56
Northern Saskatchewan Flying Training School, Limited'. ... 317,094 97 Windsor Flying Training School,
Limited	 198,767	44
St. Catharines Flying Training
School, Limited	 146 028 84
Hamilton Flying Training,
School, Limited	 156,387	12
Quebec Airways (Training)
Limited	 212,030	36
Huron County Flying Training
School, Limited	 406,165	32
Eastern Ontario Flying School,
Limited	217,616	99
Regina Elementary Flying
School, Limited	 505,041	71
Nova Scotia Flying Training
School, Limited	 45,656	70
Virden Flying Training School,
Limited	
554,223	17Ontario County Flying Training School, Limited	
318,897	88
City of Quebec Flying Training
School, Limited1	 132	02
Vancouver Air Training Co.
Limited	
282,067	93Central Manitoba Flying Training School, Limited	
340,683	55
Moncton Flying Training
School, Limited	 362,766	67
Edmonton Flying Training
School, Limited	
419,048	37Boundary Bay Flying Training School, Limited	
514,897	51

3.	The contract provides that SO per cent of the surplus be returned to the crown and the remaining 20 per cent paid to a flying club approved by the minister. By voluntary resolution the operating companies surrendered all profit and/or surplus in excess of $5,000 per annum, such restricted profit and/or surplus to be paid to flying clubs approved by the minister, in the hope that at the termination of the agreement the dominion government
would make available aerodrome facilities and equipment for the continuance of the operation of these flying clubs.
4.	No.
5.	(a) London Elementary Flying Training School, Limited; Quebec City Flying Training School, Limited. The schools operated by these companies were closed down at the time or prior to the renewal contract becoming operative.
(b)	Sit. Catharines Flying Training School, Limited. This school has as yet made no voluntary surrender of its profit and/or surplus in excess of $5,000 per annum.
(c)	Quebec Airways (Training) Limited, Cap de la Madeleine, P.Q., owned by Canadian Pacific Air Lines, Limited. This school surrendered all profit and/or surplus.


POLYMER CORPORATION-ST. CLAIR PROCESSING CORPORATION
Mr. MURPHY:: 1.	Did the Polymer Corporation Limited pay the St. Clair Processing Company Limited for material supplied and services rendered?
2.	If so, in what amount?


Mr. McILRAITH:: 1.	Yes. Pursuant to its operating agreement with that company Polymer Corporation Limited paid St. Clair Processing Corporation Limited management fees for services rendered. No payments were made to the said company for materials supplied by it, since no materials were supplied to Polymer Corporation by that company.
2.	For services rendered between October 1, 1942 and March 31, 1946, Polymer Corporation Limited paid to St. Clair Corporation Limited $758,992.30.


PUBLIC DEBT
Mr. POULIOT:: 1.	What was the total debt of Canada (a) on September 1, 1939, and (b) on April 30, 1946?
2.	What was the total revenue of the dominion government (and also of all its agencies) from September 1, 1939, to April 30, 1946?
3.	During that period what was the total expenditure in virtue of (a) main and supplementary estimates; (b) war appropriations; (e) what was also the total expenditure by all government agencies and not provided for by the abovementioned estimates and appropriations?


Mr. MAYHEW:: 1.	Gross liabilities of the Dominion of Canada on August 31, 1939, totalled $3,767114,590. The figure for total debt or gross liabilities at Aipril 30, 1946, is not yet available but for March 31, 1945, it was $15,712,181,527.
2.	Total revenue of the dominion from September 1, 1939, to February 28, 1946, was $12,681,719,279. (Later figures are not yet available).
Questions

3.	Non-war expenditures (under main and supplementary estimates including statutory items) from September 1, 1939, to February 28, 1946, totalled 84,702,870,331. War expenditures in the same period totalled $17,366,355,982.
Note.-Net revenues of government agencies which accrue and are paid to the government are included in the government's revenue. Net expenditures of government agencies are included in the government's expenditures either under government-owned enterprises or war expenditure. In the case of the Canadian Broadcasting Corporation, however, the corporation has the right to retain for the purposes of its act all moneys received by it rising out of its business and consequently its net revenues or net expenditures are not included in the government accounts.
To include gross revenues and expenditures of government agencies would involve duplication in many cases, e.g., expenditures of Commodity Prices Stabilization Corporation, are included in the government's war expenditures.


AIDS TO NAVIGATION-REMOVAL OF RIPPLE ROCK
Mr. BLACK (Yukon):: 1.	What have attempts to remove the menace to navigation on the Pacific coast of Canada known as Ripple rock cost Canada to date?
2.	Is the government considering the use of atomic energy in its attempt to remove said Ripple rock?


Mr. FOURNIER (Hull):: 1.	$831,793.78.
2.	The development of the application of atomic energy is still in the hands of research scientists, and its practical uses, particularly under water, are still unknown.


REPARATIONS
Mr. THATCHER:: 1.	Has the Dominion of Canada, to date, received reparation payments of any kind from Germany, Italy or Japan?
2.	If so, of what nature and value?
Mr. ST. LAURENT:
1.	No.
2.	Answered by No. 1.


ADVERTISEMENTS SPONSORED BY DEPARTMENT OF -TRADE AND COMMERCE
Mr. LOW:: 1.	What has been the total cost to date of the series of advertisements in Canadian newspapers, sponsored by the Department of Trade and Commerce on the subject: "Thirty-five cents out of every dollar you get comes from Canada's trade abroad"?
2.	What has been the purpose of the advertisement?
[Mr. Mayhew.l


Mr. MacKINNON:: 1.	Fiscal year 1945-46, $9,288.05; fiscal year
1946-47, $12,796.86.
2.	The current advertisements sponsored by the Department of Trade and Commerce are of two kinds: (a) addressed through newspapers and magazines to the public on the general theme "One Third of Your Dollar"- the proportion of our national income conservatively estimated as earned, directly or indirectly, by export trade. These advertisements are designed to bring home to Canadians generally, in addition to producers and exporters, the importance of foreign trade to their daily lives. The advertisements further point out that in order to build up our export trade now it would be wise to do without some things in the domestic market in order that at least token shipments may be sent to markets abroad, thus enabling connections to be established that will be needed in the future; (b) addressed through business publications to actual and potential exporters on the general theme "C.Q.P."-meaning continuity of supply, quality that is consistent, prices that are fair. Good export practices are the long-term means of promoting our trade, and the advertisements are designed with that purpose in mind.
In general, therefore, the Department of Trade and Commerce is trying through its advertisements to prepare the ground at home for the maintenance of the level of export and import trade which is believed to be essential to Canada's prosperity.


BARBED WIRE-SHORTAGE FOR FENCING PURPOSES
Clarence Decatur Howe: On May 21 the hon. member for Cariboo (Mr. Irvine) asked this question:
Have the government any information as to the great shortage of barbed wire for fencing and, if so, what are they doing about it?
The average monthly production in Canada of barbed wire is approximately 1,000 tons. None of this is exported at.the present time. This barbed wire is distributed by the producers to the consumers through the regular trade channels namely the jobbers, distributors and hardware firms. The producers are doing their utmost to maintain equitable distribution of the available supply. To divert increased tonnages of wire for this product would merely result in taking the steel away from some other product which is equally urgent and in equally short supply. For example, it could veiy possibly affect the production of nails, another wire mill product. The short supply of barbed wire is merely one part of our overall acute steel supply position. The condition here is no more acute than the supply position of plate, structural, sheet bars, rods and all wire mill products.

Questions as Orders for Returns
We can expect no relief until such time as conditions in the United States return to something approaching normal.
radio broadcasting-"johnny home show"


Mr. McCANN:: Mr. Speaker, a question was asked on May 15 by the hon. member for Peterborough West (Mr. Fraser) having to do with the cost of certain shows put on by the Canadian Broadcasting Corporation.
I should like to answer that question more fully, verbally.
In reference to the "Johnny Home Show", as indicated in the answer to this question there is'no extra cost to the C.B.C. for lines, facilities, station time and producer cost, but if sold to a sponsor, production, lines and C.B.C. station time for this programme would cost $871.32 per week. With reference to the show "The People Ask", the C.B.C. station time for this programme, if sold to a sponsor, would cost $280.80 a week. Is that answer satisfactory?


Mr. FRASER:: I want to thank the minister for the answer.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. STEPHENSON:: 1.	What is the name of the company constructing veterans homes on No. 2, highway about two miles east of Bowmanville?
2.	If incorporated, what are the names of the directors and officers of the company?
3.	If a partnership, who are the partners?
4.	On what basis was this contract let? _
5.	How many houses are being built at this location?
6.	When will they be completed?
7.	What will the sale price be and have any been sold yet?


HOUSING-VETERANS-PORT HOPE AREA
Mr. STEPHENSON:: 1.	What is the name of the company constructing veterans homes on land near Port Hope on highway No 2 under the Veterans Land Act?
2.	If incorporated, what are the names of the directors and officers of the company?
3.	If a partnership, who are the partners.
4.	On what basis was this contract let? _
5.	How many houses are being built at this location?
6.	When will they be completed?
7.	What will the sale price be and have any been sold yet?


VETERANS LAND ACT-ELGIN COUNTY
Mr. COYLE:: 1. How many farms under the Veterans Land Act are now awaiting inspection in Elgin county ?
2.	How many farms have been purchased in Elgin county since the Veterans' Land Act came into force?
3.	What was the acreage in each farm?
4.	What was the price paid for each farm?


HOUSING-SMALL HOLDINGS
Mr. STEPHENSON:: 1.	How many houses have been built in Canada under the D.V.A. on land known as small holdings?
2.	What is the sale price of these houses to veterans and on what terms?
3.	How many houses have now been sold to and are now occupied by veterans?
4.	What is the government's plan for continuation of such building for veterans homes?


INSURANCE COMPANIES-FILING OF BUSINESS STATEMENTS
Mr. MARSHALL:: 1.	Were any insurance companies penalized during the last fiscal year for failure to file their business statements under the terms of the Department of Insurance Act in the required time?
2.	If so, what companies?
3.	Were any of these companies granted rebates?
4.	If so, which companies; in what amounts, and for what reasons?
5.	Were any companies, late in filing such returns, not penalized? If so, which companies?


REPATRIATION OF JAPANESE NATIONALS
Mr. REID:: 1.	What is the number of Japanese nationals for which arrangements have been made for repatriation to Japan?
2.	Of these, how many were born in Canada and how many were born in Japan?
3.	Have arrangements been made to transfer to their account in Japan, cash or other assets?
'	4. If so, what is the total amount of cash
assets from Canada which will be available to them on arrival in Japan?
5.	Are any gifts or sums of money being given by the Canadian government to the Japanese being repatriated?
6.	If so, are these sums of money in addition to any cash assets belonging to those being repatriated?
7.	What will be the cost or charges for each Japanese national repatriated, giving the cost of, (a) transportation, both rail and steamship; (b) any gifts or sums of money?
8.	What will the total costs be for the numbers for which repatriation arrangements have been made ?	'
9.	Is General MacArthur in charge of affairs in Japan? If so, has he been consulted in the matter?
10.	Has he given his approval to the entry and establishment in Japan of the Japanese nationals in Canada who requested repatriation?
Wheat



BLACK MARKETS


[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: May I direct a question to the Minister of Justice? It was intended that notice of the question should be sent this morning, but I regret that it did net go until after lunch. In view of the serious allegations regarding the implication of bank employees and distilling channels in the extensive black marketing of sugar and butter reported to-day from Montreal, will the minister make a report to this house regarding the matter?
Right Hon. L. S. ST. LAURENT (Minister of Justice): I received notice of this question just before coming into the house. I shall be glad to take it as a notice and obtain a report from the R.C.M.P., and then consider whether their' report can be made public without hampering the proceedings being instituted for the repression of this black market. If that is possible I shall be glad to communicate it to the house.


Major James William Coldwell: That is satisfactory. WHEAT



INQUIRY AS TO DISCUSSIONS IN LONDON

[Stage Direction]
On the orders of the day:
Mr. J. G. DIEFENBAKER (Lake Centre):: I should like to direct a question to the Minister of Trade and Commerce in connection with a press dispatch from London regarding a meeting between the president of Canadian Cooperative Wheat Producers and the British food and agriculture ministers respecting a long term agreement covering wheat. The question is: Has the government given instructions to its representatives there that the jndnimum price in respect of wheat under a long-term agreement Shall be $1.55?


James Angus MacKinnon: I am not sure whether the hon. member for Lake Centre is referring to a statement by Mr. Wesson which has appeared in the press-


John George Diefenbaker: That is it.


James Angus MacKinnon: If so, I am quite sure Mr. Wesson would be the first to deny that he was in any way speaking on behalf of the government or the Canadian wheat board. I might add that negotiations between' the United Kingdom and the government or the wheat board are proceeding with regard to the sale of Canadian wheat. We hope to
Mr. Reid.]
have a conference here in Canada very shortly between officials of the United Kingdom and our own officials.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: I had intended to direct a question to the Minister of Labour, but I notice he is not in the house. In view of the statement made a moment ago by the Acting Prime Minister, I would suggest that when the Minister of Labour returns to the house he might make a statement on the strike in the lumber industry and the strike of the Canadian seamen's union.


James Lorimer Ilsley: I shall bring the request of the hon. gentleman to the attention of the minister.



RESEARCH COUNCIL


[Stage Direction]
Hon. C. D. HOWE (Minister of Reconstruction and Supply) moved that the house go into committee to consider the following resolution:
That it is expedient to bring in a measure to amend the Research Council Act to provide for the continuance of the committee of the privy council on industrial and scientific research; for the appointment of two vice-presidents to the research council, their tenure of office and salaries; for the appointment of an executvie committee of the council; for the creation of corporations to carry out certain powers of the council which may be more conveniently performed by a separate corporation, and also to provide for the organization, administration and financing of such corporations; and to provide further for the superannuation pension and, other rights of the employees of the said corporations.
Mr. GREEN:: May I ask the minister whether it is his intention to make a statement with regard to this resolution?


Clarence Decatur Howe: Yes, Mr. Speaker. The present Research Council Act was passed in 1924, and has not been amended since. On the other hand, as everyone knows, the research council has expanded greatly since that date in order to meet the needs of Canada in this technological age, and the present amendments are being proposed in order to bring the formal organizational structure of the council into harmony with its present day activities.

Research Council
Before discussing details of the proposed amendments, I would like to indicate in very broad terms the great changes that have taken place in the scope of the council's work since 1928. In that year a full-time president, Dr. Troy, was appointed, and a decision was taken to provide a research laboratory building. Previously the activities of the council had been confined to awarding scholarships, making financial grants in aid of research to university and other workers, and organizing cooperative research projects. The council's budget in 1928-29 was $323,366.56. In 1932 the main research building on Sussex street was formally opened. For the fiscal year 1932-33 the council's budget was approximately $450,000, and the professional staff numbered 57. For the fiscal year before the war, that is 1938-39, the council's budget increased to approximately $1,000,000, and there was a total staff of a little less than 300.
During the war, as we all know, the council's activities expanded greatly in magnitude and diversity, and during the last year of the war the council was supporting directly a total staff of 1,600, and indirectly another 400. The total direct expenditures amounted to nearly $7 million., or seven times the 1938-39 figure. And, in addition, the president and other administrative officers of the council carried scientific responsibilities for operations such as the atomic energy project, and many other secret operations supported financially by the Department of Munitions and Supply and the Department of National Defence, which ran into many millions of dollars. All this expansion took place without any permanent change or additions in the permanent administrative staff.
The government has decided that the peacetime needs for scientific research in Canada require that the activities of the research council be maintained on the same order of magnitude as in war, and in the estimates for the current fiscal year the needs of the council are placed at about $6,378,000, which is apart from the very sizable expenditures on atomic energy activties which are directed by the president and administrative officers of the council.
Compared with the staff of 300 in 1939, the full-time civilian staff will number about 1,500. In addition to the one large laboratory bhild-ing of 1939, the council is now operating sixteen other laboratories in Ottawa, in Montreal, in Chalk River, in Winnipeg, in Saskatoon, and plans have already been drawn for several others, including a building research laboratory, a road research laboratory, and a new radio and radar laboratory.
In addition to the laboratories, the president is responsible for the administration of about 50 associate research committees and 100 subcommittees, on which sit literally hundreds of the country's most distinguished scientists, engineers, and industrialists, and who in turn consider and lay down policy in connection with broad research projects such as aeronautics, Canadian government purchasing standards, medical research, explosives, geophysics, dental research, radio research and a number of others.
The council also operates scientific liaison offices in London, Washington and Ottawa, maintains a large scientific library, publishes the Canadian Journal of Research and many other reports. It has an active programme of awarding scholarships and making grants in aid of research-all of which have increased during the past few years in the same proportion as the other activities.
The president of the council acts as adviser to the government on an increasing number of scientific subjects, sits on a large number of boards and committees of a general character, has assumed the responsibilities of director-general of the research and development branch of the Department of Reconstruction and Supply, is proposed as a member of the atomic energy board to be set up, and also acts as a special adviser and consultant in connection with military research-all of which, it will be seen, represents a greatly increased administrative burden as compared to the organizations of 1932 and 1939. While the war was on, the administration of the council received help and advice from senior officials seconded from universities and from senior officers in the Department of Reconstruction and Supply, but now that such help will no longer be available, it is obvious that there is need formally to strengthen the top administrative set-up of the council by providing for two senior officials:	a vice-president (administration),
and a vice-president (scientific); and there is also need for other provisions which will be found in the proposed amendments.
The remainder of what I have to say deals with individual sections'of the bill. Perhaps that might best be said after the bill has been introduced.


Howard Charles Green: Could the minister not give us that further information at this time?


Clarence Decatur Howe: I shall be glad to; but whether it would be intelligibe or not, without having ' the bill before us, I cannot say. I might explain, however, that the amendments to section 4 provide for the appointment of the two vice-presidents and for an increase in the size of the honorary council in order that the vice-presidents may sit on the council and
Research Council

also that the various scientific interests at present covered by the scope of council activities may be represented. Provision is also made for an executive committee with the normal functions.


Mr. SPEAKER:: Order. I am sorry to interrupt the minister, but he is out of order. The house cannot discuss the details of the bill following the resolution, when that bill is not actually before the house.


Howard Charles Green: Perhaps I am at fault.


Clarence Decatur Howe: That was my impression.


Major James William Coldwell: Mr. Speaker, the house has before it this afternoon two of the most important resolutions we have ever considered, namely resolutions numbers 13 and 14 on the order paper. Of the two, probably the former is the more important.
Speaking briefly to this resolution, number 14, may I point out that we welcome the proposals contained in it, and look forward to the introduction of the bill. We have long been of the opinion that an expansion of our scientific activities is essential at this time. As a matter of fact, what I fear is that people in public life-political leaders, and in some degree men in charge of our defence forces- are failing to exercise, in the matter of scientific progress, that degree of imagination the scientists themselves are exercising.
I hope this resolution means that Canada will expand her scientific research in a big way, and that the scientific branch in the national research council will be comprised of our outstanding young men in science. I was amazed when I learned the ages of many of the young scientists who had been engaged in the important work to which the Minister of Reconstruction has referred. We know something of the contribution they made in the discovery and development of RDX; we know of the work they did in radar, and of the work they are doing in connection with nuclear physics.
We wholeheartedly support the idea behind the resolution, and behind the other resolution about which I shall speak at a later time. I would hope, however, that the scale of salaries we shall institute will be sufficiently attractive to secure able scientists for the public service of Canada. We have lost too many young scientists in the past to our great neighbour to the south, and in various fields they have found employment across the seas. Some of the physicists, doctors and scientists who have made names for themselves in Great Britain were graduates of Canadian universities:	I sincerely hope the scale of

salaries, the superannuation benefits and the conditions of service will be such as to attract the best of our young Canadians.
I hope that ways and means will be found also to encourage our young Canadian scientists to exchange their scientific knowledge with scientists in other countries. We cannot allow matters of defence to be betrayed when the government desires to retain them or to let them out only on a reciprocal basis, but I think there is a danger at the present time of scientific researchers being so constricted or restricted that the exchange of scientific knowledge among the nations may be interfered with to our disadvantage and to the disadvantage of the world generally.
All I intended to say at this stage is that we welcome this resolution. We believe it is a step in the right direction. It shows some forward-looking thinking on the part of the minister and his advisers, and I sincerely hope that the scientific research branch of Canada will contribute to the scientific knowledge of the world and to the development of our own great resources, primarily for the good of Canada and, of course, of the world generally.


Mr. J. M. MACDONNELL (Muskoka-Ontario):: Mr. Speaker, I do not think any of us will disagree with the remarks of the hon. member for Rosetown-Biggar (Mr. Coldwell) as to the desirability of the government being forward looking in the matter of scientific research, and indeed as to virtually everything else he has said. I want to make it very clear that that is my view. There is one question I should like to raise with regard to this resolution, because it seems to me it may be carrying us in a direction in which we ought to go somewhat cautiously. Among other things the resolution provides.
-the creation of corporations to cany out certain powers of the board which may be more conveniently performed by separate corporations-
I am not suggesting that that may not prove to be a perfectly proper step to take, but when the bill comes down we on this side may have considerable to say on a point we have spoken about so often, namely, whether this is again taking matters away from parliament and leaving them to be dealt with entirely by a corporation which, although theoretically subject to this house, gets pretty far away from it and can only be reached in some indirect and far-off manner.
Perhaps when we see the bill the point which I have in mind may seem to be not very practical, but at the moment it seems to me to be very practical indeed. It seems to me that it might be wise for "this house to take the position that it will retain a good deal of control

Research Council
over what is to be done. However enthusiastic one may properly be about scientific research and about what scientists do, the fact remains that when the theories of scientists, however practical, come to be put into effect their enthusiasm sometimes has to be controlled and directed by those who are not scientists but who are men of a certain amount of experience and common sense.


Mr. HAZEN:: The minister told us that the estimates for this year called for an expenditure of $6,378,000 for the research council, apart from atomic energy activities. Is the minister in position tell us what the estimates are this year for atomic energy activities?


Clarence Decatur Howe: Mr. Speaker is in the chair and I do not think it is appropriate to ask questions at the moment.


James Horace King: I draw the attention of hon. members to the fact that the house is not in committee and they are not supposed to question the minister. When the house goes into committee they will have an opportunity to ask any. question relevant to the resolution.


John Bracken: Mr. Speaker, with respect to the general question of the encouragement of research I do not think there will be any one in this house who will oppose that objective. It is the view of many of us that Canada, relatively speaking, has been behind in research matters, and to the extent that this measure provides for the encouragement of research, this party will be enthusiastically behind it.
In the resolution several specific matters are mentioned. Your Honour made' a ruling a moment ago which was technically quite proper, that the details of the bill cannot be discussed before we have the bill. However, with all respect, sir, there are a great many matters in this resolution which [DOT] can be discussed and which this party will expect will be discussed in committee. They might very well have been discussed here, but they can be discussed in committee. Let me point out some of them.	.
This resolution is to amend the Research Council Act and provide for the continuance of the committee of the privy council on industrial and scientific research. It provides also for the appointment of two vice presidents to the research council. The "very item the minister was discussing is mentioned in the resolution. I rose merely to say that I hope nothing in the bill will prevent the minister when we are in committee of the whole from outlining fully the position of
the government and the purpose of the proposed bill with respect to the various items mentioned in the resolution now before us.
Mr. PHILEAS A. COTE (Matapedia-Matane) (Translation): Mr. Speaker, I wish to join those who have already complimented the hon. the Minister of Reconstruction (Mr. Howe) on the two resolutions which he is submitting for our consideration to-day, and which, to my mind, will contribute perhaps more than anything else not only to the development of science but also to the creation of a truly Canadian spirit, with equal opportunities for all Canadians.
Indeed, if there is a sphere where all can be in agreement, it is certainly the field of science. Unfortunately, in the past, a great many of our scientists, irrespective of their creed or nationality, have been compelled to take up residence in the United States because we did nothing to keep them here: Incidentally, may I recall, Mr. Speaker, among others, the case of your brother, one of our foremost scientists, who has certainly been a pioneer in research work on diseases of the heart at McGill University, and who himself has had to leave for the United States in order to continue his studies. I could mention many other such cases.
I hope that concurrence in these resolutions will permit us to retain in Canada all those who wish to devote their lives to science in order to ensure better protection for future generations.
I also hope that when the time comes to appoint the vice-presidents in the Research . Council and the members of the executive committee of that Council, the honourable the minister will have some thought for my two French-language universities of Quebec and Montreal, have already done so much for science and who could have accomplished still more if better opportunities of doing so had French-speaking fellow-citizens who, in the been given to them.
(Text):


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, it gives me great satisfaction to see this resolution introduced. In Canada we are faced with two great problems. First, we must learn how to adjust ourselves to the atomic age. When the atomic bomb was first used I was afraid that the calamity howlers were going to terrify us into a state of paralysis so that w-e would not do anything about this atomic bomb but lie down and yield our national sovereignty to some international body or do all the other foolish things that were being suggested. This resolution
18S8
Research Council

indicates a determination to go right out and meet the situation; after all that is the only sensible thing to do.
I heard a story the other day about three or four soldiers who some thousands of years ago were supervising the first attack with a catapult on a walled city. When they were-all ready to shoot the first great stone with the eatapault, one of the soldiers said to his companions, "Well, this will end war all right!" But we are still finding new methods of warfare, and we still must learn new methods of meeting new weapons. I take it that this organization will direct its efforts first of all towards defending ourselves against an atomic bomb attack, and next towards the means of launching an atomic bomb attack in case we need to do so.
The other extremely important problem is one which I have not yet heard mentioned as one of the problems that would be given to a research council; considering its seriousness I am amazed that we have not long ago turned it over to a national research body. I refer to the problem of distributing goods. We fought the last war because men did not know how to distribute goods, and the indications are that we shall have to fight the next war because men still do not know how to distribute goods. Men do not seem to realize that distribution is a scientific problem which has to be solved by scientific means. I hope that at an early day the minister will turn over to a considerable body of scientific men the task of ascertaining how to distribute in Canada the maximum amount of goods which Canada is able to produce, so that the people of Canada will be able to enjoy the maximum standard of living which would be justified by our productive capacity. The minister should say to them:	We are not
telling you. where to go to look for the solution, but we want you to solve the problem and to find a solution soon; then we want you to find out how to distribute any surplus which we cannot trade away to other nations of the world.


James Horace King: Order. We are discussing the principle of the resolution which is before the house, which is:
That it is expedient to bring in a measure to amend the Research Council Act . . .
I doubt whether the subject now being discussed by the hon. gentleman is covered by the resolution, I suggest to him that he wait until the bill is before the house, when he will be able to see whether the matter he is anxious to discuss is covered by the bill. On the resolution I think the hon. gentleman is out of order.


John Horne Blackmore: Mr. Speaker, I think I have completely covered what was in my mind. If this resolution does not envisage solving the problem of distribution, it is high time the minister took it back to his office Sind so drafted it that it would attain that end.
Motion agreed to and the house went into committee, Mr. Macdonald (Brantford City) in the chair.


Howard Charles Green: Mr. Chairman, this is not the stage of the measure at which any statements of policy should be made. As the leader of the opposition has suggested, we are very much interested in the promotion of scientific research in Canada, and at this particular stage, when the resolution is in committee we want to get a good deal more information from the minister with regard to the resolution and the proposals of the government. I should like to bring to his attention four or five points on which we wish to have information.
What is the policy of the government with regard to having research carried on in different parts of Canada, and how far does the government propose to go in dividing the work up to make certain that problems which affect perhaps only one or two parts of Canada are not overlooked because of too much centralization? The minister did say a few minutes ago that there were several branch research laboratories, but we should like to have further information on the plans of the government for spreading out research work across the whole dominion.
The second point has to do with the power which is to be given to the research council to set up corporations. They have not that power at the present time, but the resolution reads:
... to provide for the creation of corporations to carry out certain powers of the council which may be more conveniently performed by a separate corporation, and also to provide for the organization, administration and financing of such corporations.
Is the power to set up these corporations to rest with the research council, or with the government? A good deal of concern is felt about the present trend of the government in setting up crown companies. It is a new policy, one which was adopted during the war, as the minister said a few days ago, but it looks as though he had now acquired the habit of doing business through crown corporations. We should like to know just how the crown corporations are to be fitted into the framework of the research council. That brings up the question of the extent of the control the minister is to have over these

Research Council
crown, corporations; and, more important still, what control parliament is to have over them. The danger in setting up these corporations has been that they are so far away from parliament that they might as well be in another world so far as effective control by the elected representatives of the people is concerned. They are right outside the control of the Canadian people.
Another point has to do with the type of employee. Under the present Research Council Act employees can be appointed by the governor in council-the minister will correct me if I am wrong-and I presume that that power is to be continued; in other words, this greatly enlarged staff of the research council will not be subject to the Civil Service Act or the civil service commission. Will that principle apply also to employees of the corporations set up under the research council? Are they to constitute what might be called a super-civil service? We are getting a long way from the intention of parliaments in the past, which was that the civil service should be under the Civil Service Act. What is the plan with regard to the employees of the research council and of the new corporations?
Finally will the minister explain why it is necessary to provide for the continuance of the committee of the privy council on industrial and scientific research. That seems to be amply covered in the act as it stands at the present time. Who are the members of the privy council on this committee, and what are the plans with regard to the setting up of an executive committee of the research council? The minister said nothing about that in his opening statement, and I think he should give us an explanation of the type of executive committee which it is proposed to set up under the amendments that are. to be made.
These are some of the questions which we should like to have answered. Others will come up as the discussion proceeds, but I should be grateful if at the moment the minister would give us a reply to these questions.


Clarence Decatur Howe: I shall be glad to give what information I have on the subjects mentioned. In the matter of conducting research outside headquarters at Ottawa, the war has already furnished developments of that kind and has proven the desirability of not concentrating all operations of the council in one locality. As my hon. friend knows, a branch of the research council is being established in the prairies and will be charged particularly with finding a solution for problems which affect the prairie provinces and which are not common to other parts of Canada. Consideration is also being given to research facilities in British Columbia. Plans are being considered for facilities on quite a substantial scale which will operate in conjunction with the university of British Columbia. Similarly, consideration is being given to the development of research facilities in the maritime provinces.
Research facilities are at present integrated with the facilities of the provinces. Close integration has been established for the purpose of preventing overlapping in the work of the two organizations, and this is now being extended into the field of private research, the object being to coordinate public research and private research to eliminate any overlap.
In the matter of crown corporations, the purpose is to separate certain operations of the council, which are themselves attaining very sizable proportions. For example, the council controls a considerable number of patents. The number was greatly increased during the war. These have a commercial value which should be exploited. It is simply a corporation to hold patents and exploit them for the crown. In the United States a corporation functions for a similar purpose in conjunction with national research facilities there. I see none of the dangers mentioned by my hon. friends in a corporation of the kind, which simply paves the way for keeping the books on the operations and bringing a balance sheet before parliament.


Howard Charles Green: Are they to be operating companies?


Clarence Decatur Howe: That would be an operating company; it would own patents and either sell or lease them for public exploitation.


Howard Charles Green: Will it do any manufacturing?


Clarence Decatur Howe: No. It is simply a merchandising company, merchandising patents owned by the national research council. It, would also follow up experiments being conducted and would have experts determine whether discoveries of the council are patentable, make sure that they are patented and brought into commercial use in order that the crown may recover some of the expenses involved in the creation of the asset.
I cannot agree with the argument that the creation of a corporation removes the operation from the eye of parliament. It seems to me it brings it under the eye of parliament in a manner which permits it to be constructively criticized. I wonder how many hon. members could give me any idea of what the balance sheet on the operations of the canals of Canada represents? The canals represent an investment of over 8100,000,000, and there are certainly operating revenues.

Research Council


Mr. MacNICOL:: Six .hundred million.


Clarence Decatur Howe: Yes, six hundred million; my hon. friend is right. Operating revenues and operating expenses are involved. I was curious to know how the balance sheet stood in that regard, and it took' me several hours to dig out the results from various parts of the public accounts. It can be done; nevertheless, if operations can be put before the country in balance-sheet form, the tendency will be to reduce expenses and to make some effort to increase revenues.
I like to place the people responsible for operations of that kind in the position where they must face a balance sheet, where they must be conscious of a balance sheet at all stages of operations, and must face the prospect of the balance sheet being discussed in parliament and questions being asked as to why expenditures exceed revenues, if that is the case.


James MacKerras Macdonnell: You had better do that for us in the public accounts.


Clarence Decatur Howe: I should be glad to have someone else answer for public accounts. I like to be able to know from month to month how any balance sheet stands, and with corporation accounting that is easily possible.
I think the fact that during the war commercial operations were conducted by corporations has added greatly to the efficiency of those operations. It has allowed us to check the pricing of the commodities. It has allowed us to watch the operations more closely than would have been the case under another form of accounting. My endeavour throughout has been to bring government transactions into corporate form, for reasons which I believe are good for operation and good for the conduct of those responsible for carrying out those operations.
Under this bill two corporations are proposed. One is definitely required at the moment, and that is a corporation to own and commercialize patents owned by the national research council. As regards the second, it has not been definitely decided, but I am of the opinion that Chalk River should be operated as a corporation.


Howard Charles Green: Will these corporations be organized under the Research Council Act?


Clarence Decatur Howe: 
Mr. SMITH (Calgary West):: They will own the whole interest?


Clarence Decatur Howe: That is correct.


Arthur Leroy Smith: The minister said the controlling interest.


Clarence Decatur Howe: I meant the whole interest.


Howard Charles Green: They were supposed to under the other bill, the resolution preceding which was discussed the other day.


Clarence Decatur Howe: At the moment the other bill simply provides for these companies to be in existence. There would be nothing in that act, when passed, that would prevent moving any of these companies under the direction of the research council. But provision is now being made that the research council can exercise jurisdiction in case the government wished to transfer jurisdiction of the crown companies to the national research council.


Mr. COLD  WELL@: I understand that $6 million is being appropriated to carry out the purposes of this particular measure. Is that right?


Clarence Decatur Howe: The current appropriations of the national research council are those which are given in items 345, 346 and 347, which total $2,087,852, also item 612, which totals $4,291,000. These are the items I mentioned which total something over $6 million.


Major James William Coldwell: If this resolution is as comprehensive as it appears to be, that would seem an inadequate sum to carry out what is intended. The minister said that there were fifteen hundred employees in the council at the present time. If the average salary paid is $2,000 it would account for $3- million. An additional $3 millions for the expansion seems to be a very small amount. An average salary of $2,000 is ridiculously low. It struck me that if this is what it appears to be, an expansion of our scientific research, the appropriations in the estimates to which the minister has referred do not carry out the intention of the resolution.	.
I had hoped this meant that we would embark upon the kind of scientific research that many of us contemplate. Many hon. members of the house hoped that there would be a wide expansion of scientific research.
While I am on my feet may I say I believe the minister is right in his defence of the principle of setting up crown corporations. I thoroughly agree that to bring these activities

Research Council
into the estimates in the form in which we usually get them in the various departments would give us no picture of what was being done; yet we have to safeguard the employees of this organization from political interference. We can easily devise ways and means of doing that in these corporations if the men at the top are interested in getting and hiring the best men they can. It seems to me that we cannot have day to day interference on the part of parliament with operations of this description. The alternative appears to be crown corporations. Probably public activities in the future will be along that line; I believe they should be. The point I had in mind is that I am rather disturbed at the small amount of money estimated to carry out this important scientific project. Perhaps the minister has in view introducing some further amounts in the supplementary estimates-I do not know.


Clarence Decatur Howe: I would remind my hon. friend that the national research council has substantial revenue in addition to the appropriation by parliament. For example it undertakes projects initiated on behalf of others, the cost of which is paid by others.


Major James William Coldwell: Could the minister give us an idea of the revenue?


Clarence Decatur Howe: I am sorry; when I suggested that, I was afraid my hon. friend would ask me that question. But I shall have the information when we discuss the bill.


Major James William Coldwell: I do not think it would compensate for the amount-


Clarence Decatur Howe: It is a substantial amount.


Mr. LOW:: Is that revenue not taken into the consolidated revenue fund, and does it not have to be revotedl?


Clarence Decatur Howe: No. The present Research
Council Act permits special allocations of that type to be used for the purpose for which it was intended. However, I shall obtain the information. I would also point out that that appropriation does not include anything for atomic energy research for the Chalk River project. The amount for that is included in items 605 and 609. But compared1 with the total appropriation of around one million in 1939 we are not doing badly.


Howard Charles Green: There are two or three questions the minister did1 not answer.


Clarence Decatur Howe: Yes. I intend to deal with them. With reference to the appointments not being subject to the Civil Service Act, I believe that that is vital to the service. The type of service in research is not the type of service in the public departments generally.
There should be a considerable turnover of research men. In other words, people should move from universities into the government service, and after they have made their contribution there they should move back to the universities. In government there should be a good deal of moving from one department of research to another department, from one type of research to another. There should be moving frofti public research into private research, and from private research into public research.


Mr. JACKMAN:: How about your leader?


Clarence Decatur Howe: He is not in the scientific service. I believe any scientists would hold the view that I am taking now, that there should be a fluid system of employment in scientific research. Therefore the retirement fund for the national research council should be different from the civil service retirement fund in general. It should be possible for men to be able to leave the service and take their .retirement fund with them. Special study is being given to that phase of the retirement fund for the national research council. There are many reasons why it is not desirable that employees of national research council be placed under the Civil Service Act.


Howard Charles Green: Do the same reasons apply in respect of the employees of these crown corporations?


Clarence Decatur Howe: That may or may not be so. The Civil Service Act does apply to certain employees of corporations. They can be drawn from the permanent civil service and retain their status in the service, or they can be employed outside the service. It would depend on the kind of work as to whether or not it would be desirable to place employees of crown companies under the civil service.


Howard Charles Green: What is the intention with regard to the crown companies mentioned?


Clarence Decatur Howe: The Research Council Act will apply. It provides that the employees shall be employed by order in council.
A question was asked about the committee of the privy council on industrial and scientific research. The present act makes provision for the committee, but it does not prescribe any duties for the committee, and the committee has not-


An hon. MEMBER:: They do not do very much, anyway.


Clarence Decatur Howe: No, very little, as a matter of fact. The committee has no authority or legal standing other than by being mentioned in the.
Research Council

Research Council Act. The purpose of the amendment in this case is to give the committee certain duties and responsibilities.


Howard Charles Green: Who are the members of the committee?


Clarence Decatur Howe: I have the honour to be chairman of the committee, and among the other members are the Minister of Agriculture, the Minister of Mines and Resources, the Minister of Trade and Commerce, and several others whose faces are familiar to me in other capacities.


Howard Charles Green: How often does the committee meet?


Clarence Decatur Howe: It meets to consider the annual report. The Minister of National Defence is also a member. When the duties and responsibilities are more clearly defined we hope the committee will meet much more frequently.


Howard Charles Green: What' about the executive committee?


Clarence Decatur Howe: The membership of the
national research council is large. In effect that council owns the corporation and directs its activities. Its membership is made up of busy men, and it is very difficult to bring together. The purpose of the executive committee is to carry on certain duties at present being dealt with by the full council.


John Ritchie MacNicol: "rtSe minister said something about patents, and if I understood him correctly I gather it may be intended to have the national research council set up corporations to carry on manufacturing. I am glad to see the minister shake his head, indicating that it is not the intention under this bill for the national research council or the government to go into the manufacturing of anything that may be developed and patented. I always thought the research council did good work, that the country owed a great deal to what has been developed there, and in the past I was under the impression that when anything worth while was developed the patent was put up for sale and purchased by some company which would carry on the manufacture. Is that the way it is to be done?


Clarence Decatur Howe: Yes.


John Ritchie MacNicol: I am glad to hear that. In the course of his remarks the minister said something about roads and also medical research. In what way is the council to cooperate with the provinces? At present all roads, with the exception of those in the far northwest, are under the control of the provinces, though perhaps in connection with the

trans-Canada highway, which is now almost completed, the government may have something to say. What would any research council in Ottawa have to do with roads? Ontario carries on its own research work in connection with road materials for the construction of provincial highways; would we not be interfering with provincial jurisdiction in that regard? I also understand that everything pertaining to medicine comes directly under the provinces. I have never heard of any federal medical college giving doctors licences to practise, so it seems to me that this .matter too comes under provincial control. Something was also said about scholarships. What can the federal government do in reference to scholarships? Is that not entirely an educational question? In the past the provinces have been very jealous of their control of all matters pertaining to education.
I do not like to take from what I have heard that it is the intention of the government to continue to operate crown companies. I had hoped the government was going to get out of -operating crown companies at the earliest possible moment, because no one can convince me that every crown company can operate with anything like the same degree of efficiency or economy as a private company. If I .were convinced that the plant set up at Haley's had been operated economically it might be an argument in favour of crown companies, but as the minister knows, this country has already put-he will know if I am wrong, and I do not know if I am right-two or perhaps three million dollars into the proposition at Haley's; that will never come back to the country. The same thing applies to the crown company at Fort McMurray, where we have already expended approximately $2,000,000. Later I am going to try to find out what is going to be done up there. The plant has been burned down, and some insurance is due to somebody. I should say the government should take that insurance, put it into the public treasury and get out of that undertaking altogether. As far as I have observed, crown companies cannot operate with the same efficiency as private companies. Why? It is as plain as a-b-c. In a private company there is incentive to develop and produce, to sit up all night and experiment, as I have done times without number, with no extra remuneration but because it was my duty to see that the company existed and went ahead. There is not that inducement in a government institution. I had hoped that instead of creating crown companies which would remain in existence at government expense, the reverse would be the policy. There is no trick whatever in operating a company if you can

Research Council
put your hand into the public treasury to meet the deficits of operation. Private companies cannot do that. The factories in your riding, Mr. Chairman, cannot do that; they have to operate on a businesslike basis.
On the other hand I am firmly in favour of the research council developing what they can and proving what they can, if they at once dispose of it to the public by tender and get out of it themselves. Then I would see some hope for development along that line; but if the government is going to operate plants I just cannot see that at all. For a while some of these plants the government has set up may have to be kept in operation by the crown, until they can be advantageously disposed of. No doubt in the end there will be losses to the country. I am not going to blame anyone for that, because many of these crown companies would not have been set up if it had not been necessary to do it for war purposes. So far as that is concerned, for whatever has been achieved I congratulate those responsible for setting up companies that private industry could not and perhaps would not set up because they did not have the money with which to do it. Now that the war is over I think it is time for the government to get out of all manufacturing, with the possible exception of military production, since there seems to be quite a strong feeling that war equipment should be produced by the government.
That is about all I have to say at this stage. I am reassured by what the minister indicated when he nodded his head a couple of times, but I should be a great deal more reassured if I knew that in due course the government would be entirely out of the manufacturing of anything.


Clarence Decatur Howe: The national research council has been taking the lead in medical research since its inception. There has been a very strong medical committee for many years, under the direction of the council, and it is the desire of the profession that these activities should be enlarged rather than restricted. There is no difference between the provinces and the dominion as to medical research. It is a little different from anything having to do with the practice of medicine. Medical research is a valuable part of the service of the national research council. The same applies to dental research. Research into road making and road building materials is also a subject, as far as science is concerned, which is and has been of interest to the council. I know the provincial governments are also interested in research. I assume anything planned in that direction will be at least with the knowledge and approval of provincial agencies.


John Ritchie MacNicol: Are we not going to overlap with provinces having their own research institutions? I know there is one in Toronto. The minister's proposal is that there will be research institutions under the control of this government, which will be operating in the various provinces. If there is to be one in Ontario, for instance, how will it cooperate with^the institution at Queen's Park?


Clarence Decatur Howe: The greatest precaution is being taken to prevent overlapping of federal government research with provincial government research. I am sure there will be no overlapping.


Harry Rutherford Jackman: Mr. Chairman, while it is always comforting to see Mr. Speaker apply the rules not only against the humble private members but also against ministers of the crown, yet I must say I was sorry the minister did not have a chance to continue his explanation when he spoke upon the introduction of the resolution. I should hope that before long he would discuss any point which appeared in his original memorandum, even though he does not refer specifically to the sections involved.
Meantime I should like to know what is being done in respect of this great problem by other countries. This is not a problem singular only to Canada; rather it is one which the United States, Great Britain and other great powers must be working. Perhaps we could borrow some suggestions from them. On the other hand we may be blazing a trail along lines much better than the ones they are adopting.
Secondly I should like him to explain the relationship between the council, as it will be reconstructed, and the three national defence services. As the minister mentioned a while ago, the privy council committee on industrial and scientific research did not meet as frequently as it might have. We might assume from that the Department of National Defence was not as active in putting forth its point of view, or of having research carried on by the central council, as it might otherwise have been.
I should like him to speak briefly on the responsibilities for these various corporations envisaged by the minister, two of which I believe' are to be formed at the present time and perhaps more in the future. What is to be the form of reporting to parliament? Will the same practice be followed as is followed by the Canadian National Railways, which reports to a parliamentary committee set up from one parliament to another? OMs it to report to a select committee of some other description? In connection with the reporting by the Canadian National Rail-
Research Council

ways, I believe it is a well managed company, and one relatively free from outside influences. Yet when they appear before a parliamentary committee only for one week in a year, the background members of parliament may have acquired in the preceding year has been more or less lost in the interval.
I would welcome a proposal from the minister for a committee of parliament ifhich would have continuing interest in and supervision over the policies and general affairs of the corporations he intends to set up.
Perhaps it might be well to have an officer with functions modelled somewhat after those of the auditor general. He would be responsible to parliament, would report directly to it and not to the minister or to any agency of government. Because once the principle of private ownership and incentive is abandoned, sometimes the minute supervision so necessary to the effective carrying on of a company's operations is removed.
The matter of the relationship between federal research organizations and research laboratories, such as those mentioned by the minister as being located in the prairie provinces, British Columbia and the maritimes, has been discussed by the hon. member for Davenport. While the minister has said that every precaution has been taken to prevent overlapping, the very fear in the mind of the minister that there might be overlapping would lead one to the conclusion that certain existing research facilities could very well do the work without creating new agencies. If there is a danger of overlapping, there is the necessary implication that that which already exists is capable of doing the work. I hope the minister will be as specific as possible on this point.
Some hon. members in this section of the house are afraid that the Minister of Reconstruction and Supply, who is undoubtedly able in many respects, has a tendency to gather unto himself many threads of power which soon become strong ropes. If some of the measures giving him those powers were used to their fullest capacity we would certainly find that the Minister of Reconstruction and Supply had become the economic dictator of our country. In this instance he is setting up a research organization not only in Ottawa but in the various provinces. He must be careful not to overlap with certain existing -and, in this instance-provincial research institutions.
May I say a few words with respect to patents? I understand the minister wishes to set up these corporations in order to exploit them. I do not like the use of the word "ex-

ploitation" in connection with a publicly-owned company . I think the word has been reserved to our friends of the C.C.F. who like to use it in connection with certain other forms of enterprise. As one of their witnesses before a parliamentary committee once said, the words "exploit" and "monopoly" are emotional words, and we should be very careful how we use them. I do wish to learn from the ' minister whether any patents evolved by the research institution will be available to private industry upon payment of reasonable fees, or is it the intention to exploit them-if you like-or develop them to their utmost, and collect as much by way of fees as possible? It is not unreasonable to expect that patents thus developed should be used to recover some of the expense which has gone into research. However we find in respect of Polymer, for instance, that thal process is being used exclusively by one - company. This afternoon, when the orders of the day were called, a question was asked as to the cost of producing a pound of this synthetic rubber. We were told that this information was not available, although we appear here on behalf of our constituents, and are all shareholders and owners of the company. In explanation the minister said it would be unfair to Polymer to give the information because the effect would be to give competitors in the synthetic and natural crude rubber fields an advantage to which ordinarily they would not be entitled. I cannot see that in respect of a publicly-owned corporation such as Polymer the reason given by the minister was adequate. I hope he will give the committee further information as to the fees to be charged for these patents.
The minister said that he favoured setting up separate companies because of the process of corporation accounting, and that assets and liabilities would be apparent on company statements. I hope if these separate companies are set up, and corporation accounts are kept for them, some consideration will be given, not necessarily to the appointment of private auditors, but to having the auditor general look after the auditing of the accounts of the separate companies. The auditor general's report is looked forward to every year, and he could do this work most effectively. I hope there will be no reason to feel that accounts are not properly audited as far as income and outgo are concerned. Many of us have the suspicion-sometimes it is well founded and perhaps at other times it is just a suspicion-that when a corporation is owned by the government it receives assistance from other instrumentalities of government. The Trans-Canada Air Lines, for example, has

Research Council
virtually a monopoly of the airways of this country. The amount of revenue that T.C.A. takes in or the expenditures which it makes are not considered in relation to the appropriations made for the Department of Trans. port for the upkeep of air fields in this country. Sometimes the relationship between a government-owned corporation which publishes a balance sheet showing a profit in a particular year is so close to a government department which does not operate under balance sheet accounting that the profit and loss of the corporation is lost sight of because many things are done for the corporation by the government agency which would otherwise not have been done.


Mr. NICHOLSON:: How about the Canadian Pacific Air Lines? Does that company not use the same facilities?


Harry Rutherford Jackman: I said that the T.C.A. has virtually a monopoly in this country. That answers the question.
Will the government once and for all declare its policy with regard to municipal taxation? Many of our municipalities have had to carry a great burden during the war because large factories were erected and in some cases Wartime Housing carried on operations. The municipalities obtained no revenue from these operations, and yet they had to provide all municipal services, including education.
The profits and revenue of the national research council from year to year should be allowed to circulate instead of being revoted by the house, as was suggested by the previous speaker. In the case of Canadian National Railways any revenue above operations must, under the provisions of the 1937 Railways Act, go into the consolidated revenue fund. Then if parliament in its wisdom sees fit to vote money for capital expenditures, that is done by this house. Unless some adequate explanation is offered, I believe that the same method should be adopted in connection with the research council.


Clarence Decatur Howe: My hon. friend has touched upon many subjects, and I shall be glad to answer those that I can remember. He suggested that the accounts of the company should be audited by the auditor general or someone appointed by him. That has been taken care of already. The accounts of all crown companies are audited by the auditor general, and the public accounts give the detailed balance sheet of each crown company operation. The comments of the auditor general also apply to the conduct of crown companies. A similar provision is contained in the Research Council Act, and this would
apply to any crown company organized by the council. It would be subject to audit by the auditor general and the details of its operations would be published in the public accounts. Any provision that parliament may wish to make for the examination of the annual report of the national research counci' is a matter for parliament.
I would suggest that the accounts of all crown companies might very well be submitted to a parliamentary committee, perhaps the committee on railways and shipping, government owned. The scope of that committee might be enlarged so that it could undertake the examination of all crown companies. That is my suggestion, but it is a matter for parliament to decide. My hon. friend is as free to move that the report of the national research council be handled in that way as is any member of the government.


Harry Rutherford Jackman: That committee sits but one week in the year, which means that fifty-one weeks intervene between each sitting. That makes it difficult to have any continuity. It is the responsibility of the minister to decide matters of policy. Can he suggest any way in which there would be continuity in examination of the operations of these companies?


Clarence Decatur Howe: The auditor general exercises supervision, and the comptroller of the treasury keeps a careful check on accounts.


Harry Rutherford Jackman: What'about policy?


Clarence Decatur Howe: I suppose policy is the responsibility of the minister under whose jurisdiction the various companies operate.


Mr. ROSS (St. Paul's):: The minister told us where the different branches of the research council were to be located, and I was surprised to hear that no provision had been made to operate a branch of the council in conjunction with the university of Toronto, which is located in perhaps the largest industrial centre in Canada. Why was that decision arrived at, and why are some of their buildings not to be' used? What coordination is there between the Ontario research foundation and the national research council? On the surface it would appear that much of the expense of research work is to fall upon the shoulders of the university of Toronto.


Clarence Decatur Howe: The university of Toronto has been closely associated with the national research council, especially during the war years. Some very substantial items of research have been carried out, and carried out successfully. I believe the amount of work that the university will carry out, for the council will be limited by its capacity to handle it.
Research Council

The council will be very glad to send the university any items of research which the latter feels it can carry out along with its own major activities.
The council has worked closely with all universities, and has encouraged them to take on research work organized by the national council. I think that will continue to be the policy of the national research council. So far as the research foundation of Ontario is concerned, it is my recollection that the director of the foundation is a member of the national research council. In any event he works closely with the chairman of the national research council. I do not think my hon. friend need have any fear that the work of the two organizations is not closely coordinated.


Douglas Gooderham Ross: The minister said that the university of Toronto would carry on research work and that the research council would give it as much research as it could handle. I am not a graduate of the university of Toronto; I went to McGill, but the university of Toronto is a great university and has a very large student body, which at the present time are very much cramped for quarters. The minister has said that plans have been made for buildings in connection with the university of British Columbia and, I suppose, in connection with the university of Manitoba and the university of British Columbia. If new buildings are to be built in connection with these other universities the university of Toronto should receive consideration because it is a great research centre located in a large industrial centre and urgently requires additional accommodation. Some time ago hon. members brought before the house the situation in connection with Research Enterprises. I presume that those buildings are sold. At all events it does seem to me that since new buildings are to be built in connection with other universities something should be done to provide more premises for the university of Toronto.


Clarence Decatur Howe: The national research council erects buildings for itself and not for universities, but it happens that some buildings it erects for itself are, for purposes of administration, located adjacent to universities. If my hon. friend will visit the important annex to the university of Toronto known as Ajax he will find magnificent buildings there housing a large student body. These were made available to the university by the Department of Reconstruction and Supply.


Mr. BOUCHER:: This resolution provides for the creation of corporations to carry out certain powers of the research council. Order

No. 10 on to-day's order paper is to provide for the operation and financing of government companies. Would the minister explain to us the relationship between the corporations to be set up under the research council and the companies contemplated in order No. 10?


The CHAIRMAN:: I do not think it is competent for the committee to discuss order No. 10 while on this resolution.


Clarence Decatur Howe: Perhaps, Mr. Chairman, I might be allowed to say that order No. 10 makes provision for all crown companies, and that the resolution now before us provides for the research council supervising the activities of certain crown companies.


George Russell Boucher: Therefore the crown companies contemplated under the resolution now under discussion will be governed by the measure contemplated under order No. 10. The minister has mentioned th^,t he proposes to establish two companies, one for the owning and commercializing of patents, another for the Polymer Corporation, and I think he mentioned a third, for the Eldorado company. The resolution before us is to give the research council power to create and operate as many crown companies as it deems desirable. I am therefore confused by the answer given by the minister to the hon. member for Davenport that it was not proposed that the crown companies set up under this resolution would be operating companies, because most certainly Eldorado and Polymer are operating companies.
Before this resolution passes we should have a statement by the minister defining the limits of the power of the research council to create crown companies and to operate crown companies in a commercial way because, as the resolution reads, it gives almost unlimited power to the research council to establish crown corporations for any and every purpose that they could possibly conceive of as having anything to do with research.
We realize, of course, that research is one of the most important things that the House of Commons could discuss in these reconstruction days, and I think every member is zealous to see to it that Canada maintains and enlarges her research activities carried on during the war so that they can apply to peace-time industry. But we should be very careful to ensure that the research council confines its activities to research for the public benefit. I should not like to see a crown corporation set up and' removed entirely from the control of parliament as some of the crown companies now are. I should not like to see any crown company established and put in a position

Research Council
where we would have to question any one of three or more ministers about its activities as we have to do in connection with the Canadian Broadcasting Corporation. I would not want it to be thought that because the crown companies will produce an annual balance sheet the House of Commons will get much more information about them than if the information were contained in the auditor general's report, because that has not been the experience of the house. The fact that a financial statement of a crown company appears in the auditor general's report or in public accounts and that the statement is audited and supervised by the comptroller of the treasury or by the auditor general does not of necessity give parliament the particulars it desires of the operations of the company. I think we all will agree in this day of reconstruction that the government in carrying out the mandate of the people of Canada and administering affairs of the scope of the national research council's work should do so not behind closed doors, not in secret, not in a manner that will withhold information from competitors in private enterprise or even from other nations, but should act for the benefit of mankind and for the information of private enterprise.
The Minister of Reconstruction gave some reasons this afternoon why he thought that the cost per pound of manufacturing rubber in Polymer should not be given to the public, but the reasons did not impress many of us. Polymer operated during the war in a time of emergency for the benefit of the people of Canada, and if it is to continue in time of peace it must be prepared to show that it can operate economically and must convince its shareholders, the people of Canada, that it is a wise and prudent investment for them to continue. But we cannot get that information if the particulars are withheld from us, nor can private industry benefit by the research work done at Polymer if its research information is not to be made public. It is but the part of prudence for any man before deciding whether an enterprise is sound or not to be able to compare its efficiency in production with that of its competitors. I therefore trust that the minister will make a statement defining the scope of the power that is to be given to the national research council to create and operate crown companies. Such a statement would allay the fears of many of us and probably expedite the passage of this resolution, because then we would be in a better position to judge what course we should take.


Clarence Decatur Howe: The purpose of the national research council is to promote research, and incidentally to the promotion of research it finds itself involved in certain business activities *which it is not primarily organized to handle. For example, sixty per cent of the time of the chairman of the national research council is given to problems both of organization and of business. The purpose of the reorganization of the national research council staff is to provide assistance to the chairman, who is also director of research, and relieve him of certain business activities by placing them in the hands of corporations. As I have said, the handling of patents involves a great deal of time, and in my opinion the organization for handling patents at the moment is not adequate. I believe that a corporation which will relieve the national research council of that duty is desirable. Whether a corporation proves to be the best means of handling Chalk River I am not at the moment prepared to say, but at present it is the view of those associated with the project that it can be handled to best advantage through a corporation. Chalk River involves the administration of an industrial plant, a townsite, the purchase of raw materials and the sale of the product. It has business activities as well as research activities, and it may very well be that the scientists there would prefer to have the business administration of Chalk River handled by a corporation so that they would be free to devote all their time to science.


Howard Charles Green: Is it run by the research council now?


Clarence Decatur Howe: No. At the moment it is
being operated by the contractors who built the project. It will be turned over to the national research council when it has been thoroughly tested and can be regarded as a fully operating project.
As regards Eldorado, that is concerned wholly with producing materials which will be used by Chalk River and by similar establishments in- other countries, and it may be that the direction of Eldorado should be associated with the work of the national research council through a crown company reporting to the council. It will be simply asking the management to report direct to the director of the national research council and to the board of the council rather than to the minister. I have no desire to limit the number of companies which the research council can have. If it needs twenty, then it should have twenty. I am giving it power to have crown companies, and there are very sensible people on the council, so that we can leave it to the good sense of the national research council to: decide how many crown companies they should have.


George Russell Boucher: Will the minister make a statement regarding his intentions in the
Research Council

matter of limiting the scope under which any companies which may be created under this measure will operate. He has stated that the research council is interested primarily in research, but he has demonstrated the fact that he intends the research council to go into commercial production. I do not under any circumstances rest my case on limiting the number of companies that can be organized or created by the national research council, but I would ask the minister to give serious consideration to the question of limiting the scope under which the companies so created may act.


Clarence Decatur Howe: The authority is limited in the resolution for the creation of corporations to the carrying out of certain powers of the national research council which may more conveniently be performed by a separate corporation. My hon. friend has reiterated, and so have hon. gentlemen opposite, that a corporation removes the operations from the control of parliament, and he bases that belief on the fact that I am not prepared to give the cost of producing rubber at Polymer last month. Does he know what it cost to produce rubber at any other plant last month? I can tell the selling price. Does he know, for example, what the cost of producing motors at General Electric is? The purpose of crown corporations is to publish a financial statement once every year. That is done through the annual report which is published in the public accounts of Canada. I hope we shall not hear too much about my not being prepared to give the cost of producing rubber at Sarnia last month.


George Russell Boucher: It is not merely a question of rubber. I think the minister will agree with me that it has been proved that scientists are not great administrators; or perhaps that it has not been proved that scientists are great administrators. When it come to putting in the hands of crown companies, engaged in research, matters of business management, I believe the minister will agree with me that some limit should be put to the scope of the pperations of the concerns which are so created. He has not answered that.


Clarence Decatur Howe: One object of the legislation is to appoint a vice-president of the council who will be a business man in charge of business administration. At the moment we are trying to correct that weakness in seeking the power to form companies. I am not putting a limitation on that.


Mr. JOHNSTON:: The hon. member for Carleton asked a question and I am not sure whether the minister answered it clearly. I understood the hon. member to ask whether

the information obtained as a result of researches carried out by the national research council would be made public or be given to private enterprise. My understanding is that such information will be made public in connection with the development of any process after it has been proved successful. I believe the minister indicated that at the end of the year, in their annual report, information on these various researches will be made public. Is that so?	.


Clarence Decatur Howe: Steps are being taken for a wide dissemination of the results of research. I have told the house on a previous occasion that the Department of Reconstruction and Supply has a particular branch devoted to making the results of research immediately available to industry, and the national research council is made acquainted with the requirements of industry in the direction of research. In every province a representative of the department will consider any problems of research that may be helpful to the economy of that province. Further, the research council will make its library available to industry or to any user of scientific information, and if necessary, it will initiate research to supply any deficiency in available information. The latter would probably be at the expense of a business firm which might require the information. However, discoveries of the national research council are patented and it is now the practice to patent all discoveries of reasonable value. Many are in use and many patent holders already pay fees to the council for the use of the patents. Hon. members will agree that anyone wishing to use a patent of the national research council should pay its full market value, and it is to obtain the revenue that should properly come from the patents of the council that the proposed corporation to handle patents is to be established.


Charles Edward Johnston: Will it be possible for any private enterprise to acquire a patent from the research council and then, as has often been suggested is the practice of some establishment-whether it is true I am not in a position to say-to hang the patent on the wall and simply keep it there? Would the research council have some control over private enterprise and make it develop and market these patents which it gets?


Clarence Decatur Howe: In that case it is the practice of the national research council to lease the non-exclusive use of the patent. I cannot say that it is done in every case, but I think the council will retain the right to grant the use of the patents to more than one user.

Research Council


Charles Edward Johnston: The minister spoke of different branches of research being set up in the different provinces in order to spread the activities uniformly throughout the country. That is commendable. They should be scattered throughout the dominion. Does the minister contemplate the setting up of a branch of this research work in Alberta and also in Saskatchewan?


Clarence Decatur Howe: They are there to-day.


Charles Edward Johnston: Will there be an expansion, or will they be left as they are?


Clarence Decatur Howe: I am speaking of the
representatives <of the Department of Reconstruction and Supply Who are agents of the national research council. There are representatives of the department located in Edmonton, Regina and Winnipeg. They are being kept busy supplying information that seems to be required in those provinces.


Charles Edward Johnston: So far, our discussion
seems to have been directed along industrial lines. The national research council seems to be endeavouring to broaden the field. In listening to the minister I heard him speak of research in the medical field. That is admirable, but we should extend our research effort into the economic field. At this point may I congratulate the hon. member for Lethbridge on the recommendations he made for research into the proper distribution of goods. What efforts will be made toward research in the medical field? I mention that because, like many other hon. members, I *have received many letters about the terrible disease of arthritis. There does not seem to be any material progress made in that field. Then there is cancer, which has been brought before the house on other occasions, especially by the late member for Portage la Prairie, who was especially interested in that subject, and took an active part in the discussion. This is one field in which the research council could do important work. It could assist in other ways. It could assist in research into the control and elimination of not only cancer but also arthritis. It is all very well to speak of the economic standard of our people, but if the national health is deteriorating, then the national economy will also deteriorate. Efforts should be made by the research council to extend their studies into the medical field to, see what can be done with these two diseases, cancer and arthritis. Is any progress being made along that line?


Clarence Decatur Howe: The direction of medical
research is in the hands of a committee of the national research council. on which the medical societies of Canada have representation. I cannot say what work is being conducted in the two particular fields mentioned. Of course, many millions of dollars are being spent at the present time in many countries on cancer research. Certain research is being carried on here, but I cannot say to what extent. All the scientific information in that field is pooled and we sincerely hope that a cure can be found for cancer, which is the greatest killer of all diseases. However, the medical councils of the country decide the lines of activity which will be followed in medical research. The purpose is to make the funds available to the council go as far as possible, and to undertake lines of research which will be most helpful to the Canadian public.


Charles Edward Johnston: The same answer would apply to arthritis?


Clarence Decatur Howe: Yes.


Major James William Coldwell: Does the national
research council get in touch with the various foundations that are dealing with these diseases? There is a disease called disseminated sclerosis, which is a mysterious one, and which is attacking people to-day. I know there is a foundation in New York which is studying this disease. I wondered whether our research council kept in touch with the foundations that are dealing with these particular types of diseases.


Clarence Decatur Howe: Yes. Our national research council maintains in Washington an office with a considerable personnel for that specific purpose. It also has an office and staff in London, England. It has facilities for obtaining the results of discoveries in any part of the world.


Alexander Malcolm Nicholson: This afternoon a good deal has been said about the Polymer Corporation. I should like to remind the committee that after Pearl Harbor, when our supply of natural rubber disappeared, the firms which normally might be expected to manufacture rubber were not particularly interested in risking any of their capital. Had not the minister in his wisdom been prepared to invest $50 million of Canadian money in this project, the war might not have ended as soon as it did. Now that it has been demonstrated that a high quality of synthetic rubber can be made by Polymer, there are those who think the government should retire from this field. The minister would be wise not to pay too much attention to those who argue that the free enterprisers should have clear sailing in this field in which the people have invested $50 million. I believe it has been demonstrated that the quality of the rubber compares favourably with rubber made anywhere
Research Council

on the continent. The facilities there are adequate to make all we need here and some for export. Should we now at this stage decide that there should be five, six, seven or a dozen similar plants in the country, or shall we continue to use the facilities that are there? Hon. members to my right can be assured that the operation of this corporation will be reviewed by the people's representatives in this parliament from time to time, just as the operations of the Canadian National Railways, and the Trans-Canada Air Lines are reviewed from time to time by the people's representatives, and that a satisfactory explanation can be given for the operation. Even the most ardent supporters of the Canadian Pacific Railway company cannot make a very good case against the publicly-owned railways. *
Earlier this afternoon the minister said that it would be a splendid thing to have men working in research work move freely from university to research council, from research council into private enterprise, or back into universities. I do not share this view. A research problem is something a man cannot pick up and handle in a short time. There are men who are working on one problem for a lifetime. Those who are in the national research council should be placed in a position so that they might continue in the government service for their lifetime if there were a chance of making a decent livelihood. It is a pity that they should be obliged to leave the national research council or any public organization to go to private enterprise at a time when they are bringing up a family and are not receiving enough to make ends meet. We have had a number of distinguished scientists attached to the national research 

council who have been working, certainly during the war years, on compensation entirely out of line with the service they perform. It is extremely difficult to estimate in dollars and cents what some of this research has meant. I understand that at the national research council glycol has been made from low grade wheat. It has been used in cars as anti-freeze and compares favourably with Prestone. I see no reason why, when the people have spent so much money in developing a process of this kind, we should not go on and develop it, sell it to our people and find a market for our low grade wheat, and at the same time provide our car drivers with a suitable anti-freeze at a lower price than we normally pay for Prestone.
I am very glad to hear that additional money is to be spent in western Canada. I am sure the people of Saskatchewan will be pleased to learn that Doctor Larmour has been selected to direct the activities of the

research council in that province. He is one of our own graduates, a man who enjoys the confidence and respect of scientists across the country, and I am sure he will do a very good job. I am heartily in favour of research on the ground, as it were, when we have so many products going to waste. I consider it quite conceivable that during our lifetime, for instance, we may find some use for the wheat straw that is destroyed in such large quantities every year. I think it is not too much to expect that if the federal government will spend a little money in the initial stages they may do research work that will pay attractive dividends from a long-term point of view.
I should like the minister to reconsider the matter which was raised earlier, of having the employees of the national research council move freely back and forth from the university to the council, where they will get their training, and then to privately owned organizations, which will obtain the benefit of the research that has been carried on. I do not think these men should be encouraged to leave for salary reasons. I see no reason why the taxpayers cannot pay salaries as attractive as those paid by private organizations. Therefore, in formulating his plans for the future I should like the minister to make upward revisions in the salaries paid to the scientists of the research council, so that none of these men will feel obliged to leave for financial reasons.


Mr. BROOKS:: I was pleased to hear the minister say that it was the intention to decentralize the work of the national research council. If that principle could be applied also to manufacturing in this country it would be a great benefit to all. The minister said that a research branch would be set up in the maritime provinces. I should like to ask at what point he contemplates setting up this branch and what particular work it is proposed to do. At the present time, for instance, we have a fish experimental station at St. Andrews. I should like to know whether the work of the council would be correlated-with the work of the fisheries departments, both dominion and provincial.
In connection with the method of disposing of these patents, I understand they are not sold outright to any particular company but are given to the companies for the development of certain articles. Would different companies be allowed to bid for the patent, or would the council itself decide what particular company should obtain a certain patent? Then, if that company did not deal with it satisfactorily, could the council exercise its authority at a later time and take away from

Research Council
any particular company a patent which the council felt had not been developed to the fullest possible extent? These are questions the minister might answer, if he will.


Mr. WRIGHT:: I have one other question somewhat along the same line which the minister might answer when he is replying to the last speaker. I was wondering what research work the council does on behalf of other governmental bodies in Canada, that is, municipal and provincial governments. The provincial governments have control of our natural resources, and a vast amount of research work could be done in connection with the best uses to be made of those resources. Does the national research council do this work for the provinces, and what are the financial arrangements as between the dominion and the various municipal or provincial governments?


Clarence Decatur Howe: As far as research facilities in the maritime provinces are concerned, I simply said that they were being contemplated. I doubt if the study of the matter has reached the point where we can determine the exact location or the exact nature of the work. However, the work will be supplementary and additional to the work at present being carried on. In any event there is nothing in this resolution dealing with that particular enterprise, and I am not at the moment prepared to be any more definite than that. Feld representatives of the branch are operating in the maritime provinces, in association with the. Department of Reconstruction and Supply.	.
The policy in connection with the use of patents is determined by the national research council, and in future will be determined by the council operating through the proposed corporations. I assume the policies would vary, having regard to the nature of the patents and the use to which they were to be put. For example, perhaps the most valuable patent owned by the council, at least the one I know most about, is concerned with turning ammonia nitrate into prills. When ammonia nitrate was first put on the market as fertilizer by Canada it was referred to in the southern states as tombstone fertilizer. It was found because of moisture, that if a bag were left out in the open for two or three weeks it would turn into a pillar of concrete. Employees of the government working at Calgary discovered a way to turn this material into small pellets known as prills, and by manufacturing fertilizer in that way we have found a method of marketing our surplus ammonia in a satisfactory form. That patent is owned by the national research 63260-120
council. We have applications from almost every country making ammonia for the use of the patent, and a policy is being studied in that connection.


Gordon Knapman Fraser: Do you collect royalties on any patents?


Clarence Decatur Howe: We certainly will if we dispose of it. At the moment it is owned by the government and is being used in government plants, but if we dispose of the patent outside Canada we will dispose of the use of it for a price, and we have decided in that case the policy will be only to dispose of the nonexclusive use. In other words, we may license ar company to use it, but will not give that company a monopoly in any territory.


Major James William Coldwell: What was the annual salary of the young fellow who discovered that process?


Clarence Decatur Howe: He was one of our more expensive men. I should like to make it clear that in referring to a turnover of scientists it was not my purpose to suggest that the national research council should starve them out. I believe most scientists like to move from field to field, and my feeling is that it is a good thing for them to do so. I have always encouraged young engineers who have been associated with me to try somebody else after a time, to broaden their experience. I think it is a good thing for scientists to move from laboratory to laboratory and in that way build up their background.


James MacKerras Macdonnell: That is what we recommend to the people of Canada.


Clarence Decatur Howe: But unfortunately you have not provided suitable alternatives. In science we have good men coming along to replace the people who leave us, and that seems to be the great difficulty in government circles.
The hon. member for Melfort asked a question in regard to financial arrangements as between provincial and federal governments. Matters of science are treated as matters of interest to all the people. I do not think there is any exchange of funds as between the federal government and the provincial governments, unless in connection with a problem in which both are interested, but which is assigned to one, along with a financial grant. I believe the national research council would be prepared to undertake any problem it thought was of importance to any part of Canada. For example, research into the use of wheat for glycol is being carried on by the national research council as one

Research Council

of its projects, and I presume that would be one of the projects transferred to the laboratory in Saskatchewan for further development.


Mr. MURPHY:: Mr. Chairman, I had not thought that Nos. 10 and 14 on the order paper would interlock to such a great extent. What I shall have to say will refer more particularly to No. 10, and I shall say it at a later time.
The point which now concerns me has to do with research chemists, as it applies to Polymer, and also as it may apply to many other corporations. We know that in the development of Polymer time was a big factor, and that both governments obtained the support of engineers and chemists not only from the United States and Canada but from Europe.
What concerns me now is that in the area of Sarnia, where Polymer is located, there is a tendency on the part of many of these chemists, some of whom were employed by the Imperial Oil company, to terminate their contracts with Polymer. I am advised that some of the top men in Polymer who were most instrumental in the production of rubber so quickly, when time was an important factor, have the option of returning to Imperial Oil within a year, and that by doing so they will be eligible to take' advantage of the retirement and pension schemes offered by that company.
I know, and I have no doubt the minister knows, that inducements are being offered to the head chemists at Polymer by private industry. I hope that in order to preserve this important industry the minister will see to it that we retain our top chemists, scientific research men and engineers. After all is said and done, we know what private industry will pay men of a high calibre. In this connection, one might compare what is paid to the head chemist of Imperial Oil with the amount paid to the head chemist at Polymer. If Polymer wishes to have men equal in ability to those employed by the private company, an inducement by way of price must be held out. We are alarmed at the fact that many of these men will be leaving, although they still have eleven months to serve. However, this fact leads us to doubt the permanency of the plant, and we want assurance that the head chemists will be retained.
I am not so much concerned about the question which seemed to bother some hon. members this afternoon. A week ago last Tuesday the minister gave the price of rubber, and also the price of it last September and October. I notice there has been very little change. I also notice that some of his employees in the Polymer Corporation have

given out prices of rubber from time to time. I do not see how it can be any great secret. I am not quarreling about the minister's not answering the question because, after all is said and done, some of this information can be obtained later. A week ago last Tuesday the minister told us that the price was 204 cents; and why he had to reject the question to-day, I do not know.


Clarence Decatur Howe: The question was as to the cost of producing rubber. I am willing at any time to publish from the roof tops the selling price of rubber. But the question asked was as to the cost of producing rubber last month. While I may be willing to tell the house that last month was the best month we ever had, so far as costs are concerned, yet I am not anxious to tell the world what it costs us from month to month to produce rubber at Sarnia.


Joseph Warner Murphy: I did not ask it from month to month.


Clarence Decatur Howe: I think the hon. member did, as a matter of fact. This is the question:
1.	What is the present cost per pound for the production of the different types of rubber produced by the Polymer Corporation Limited?
The present cost would be the cost per month. Then he asked:
2.	What was the cost of the production of the different types of rubber by the Polymer Corporation Limited during each quarter for the year ending March 31, 1945-March 31, 1946?
We are attempting to hold our research staff at Polymer. We need that staff, to keep up to date. Through the research work carried on at Polymer we have substantially improved the quality of our rubber.
The St. Clair Processing Company Limited had on loan from Imperial Oil certain chemists involved in plant operation. Now that the St. Clair Processing Company Limited is no longer in charge of operations at Polymer, some of those chemists are returning to Imperial Oil. Polymer has a permanent staff of chemists. The head chemist came to us from the oil industry. He left that industry to come to us, and I have heard nothing to indicate that he intends to leave us to return to that industry, at least in the near future.
We were admitted to the patent pool, which controls all the rubber patents, on the undertaking that Polymer would spend a certain amount of money each year on research work, and that the results from such research would be turned into the pool. We are carrying out that obligation. We believe that our contributions to the pool of information respecting synthetic rubber are well up to the expectations of those who admitted us to the pool.

Research Council


Mr. FLEMING:: I have several questions to ask, and I am prepared to submit them separately or in a group.


Clarence Decatur Howe: I can remember only one thing at a time.


Donald Methuen Fleming: Then perhaps I should put them individually. First:	Was the advisory
committee under the act consulted about the present bill, and particularly that feature of it which contains the proposal respecting the setting up of companies?


Clarence Decatur Howe: The bill was framed by the director of the national research council, and I have every reason to believe that he consulted his committee before recommending it to the government.


Donald Methuen Fleming: We have heard about many aspects of these companies, but I do not think the minister has told us anything about the method of financing. Is it proposed that the national research council should have power to finance the companies out of its budget, or is some other method of financing to be followed? I take it that they require some financing, even if they are only patent holding companies.


Clarence Decatur Howe: Funds must be provided either from those voted to the national research council, or through funds voted specifically for the purpose by parliament. The cost of operating a patent corporation would be no greater than that of employing those persons who at present deal with patents on behalf of the corporation. I believe that no new funds would be required in that respect.
Eldorado has funds and working capital. It is an operating company, and we would assume it has an income sufficient to carry out its obligations. Chalk River would undoubtedly require an appropriation by parliament. If it is operated through a corporation, parliament would need to provide working capital for the operations at Chalk River, and probably in addition,, some annual appropriations in the initial stages to provide for the experiments carried on at that point.


Donald Methuen Fleming: The resolution refers to the provision to be made for the superannuation, pension and other rights of the employees of the corporation. Has any basis been contemplated for general application to such companies? I am particularly concerned about a comparison with the pension and superannuation provisions for civil servants.


Clarence Decatur Howe: Any superannuation plan for government employees is examined by the superintendent of insurance and by the civil service commission. Obviously, the govern-63260-120i	-
ment would not permit any superannuation plan to be established which was out of line with government practice in other directions, but the form of superannuation benefits differs as between industries. For example, the rubber corporation is closely associated with the petroleum industry, and it would require a form of superannuation which would not be dissimilar to that in effect in the industry with which it is associated. The same would probably be true with the other corporations. The purpose is not to set up a standard plan for all crown companies and the national research council, but to work out plans specially adapted to the requirements of each industry.


Donald Methuen Fleming: They will not necessarily be the same as among the different companies?


Clarence Decatur Howe: No.


Donald Methuen Fleming: Could the minister say a word as to the extent to which an expansion of research work is contemplated, provided that the bill goes into effect? I take it that there will be an enlargement of the executive of the council, and I should like to know if there is to be a corresponding enlargement of the staff as well as a programme to retain scientists in Canada. We all know that many scientists have drifted to the United States, and one of the chief reasons given for this is that the salary inducement in Canada is not adequate to keep them here. This is a matter of great concern to us all.


Clarence Decatur Howe: As I said, prior to the war the personnel of the national research council numbered 300; it is now about 2,000. The purpose of this bill is to expand the structure of the council in order to permit it to administer the number of scientists who are at present under its' control. We are adding vice-presidents and enlarging the administrative staff at the top. With regard to salaries, as my hon. fridnd knows a royal commission is now investigating higher salaries in the public service, and the civil service commission is considering a new scale of salaries for the national research council. I hope that we can improve the salary position of our scientists so that it will be comparable at least with that in other countries which are competing with us for scientists.
However, there is an acute shortage of scientists throughout this continent and abroad. I suppose the atomic energy development has in a measure been responsible for this, but the fact remains that any man of science can step out into industry to-day and double or treble his salary. I say that without fear of contradiction. I know of tremendous
Research Council

salaries being offered to men who are working here in Canada. These offers are sometimes made by Canadian industry and sometimes, perhaps more often, by industry abroad. That is the situation, and until we can develop more good scientists it will be difficult for the national research council to hold its personnel.


Donald Methuen Fleming: In the auditor general's last report there is one reference which troubles me. There was some discussion this afternoon about the audit of receipts and expenditures of the research council by the auditor general, as provided for by section 12 of the act. I should like to quote paragraph 225 of the auditor general's report for the year ended March 31, 1945, to be found on page 52. It reads:
225. The council caused an addition to be constructed to the medical laboratory of Queen's university. The addition is currently regarded as a public work of Canada. The contract, dated October 25, 1944, with Doran Construction Company, Limited, was executed on behalf of the council by Professor G. B. Reed of the university. The plans and specifications were prepared by the Department of National Defence. The contract is on a cost-plus-a-fee basis.
The contractor has been paid a fee of $1,000 and a further $1,500 for engineering, superintendence and other services. Total expenditures of $23,625.38 have been charged to war appropriation. Attention is drawn to the transaction because the records do not disclose either that tenders were invited or consent of the governor in council sought, as is required by section 36 of the Public Works Act.
Would the minister make a statement about what happened in connection with that particular matter, having particular reference to the concluding sentence?


Clarence Decatur Howe: I shall be glad to inquire about it. I did not notice that reference in the auditor general's report. I think those who are best acquainted with the council realize that its business administration has not been all that could be desired. All matters are referred to the president of the council who should be occupied almost wholly on the scientific rather than the business side. One of the purposes of this bill is to provide a business administrator who will be more careful about transactions of the type indicated. I think it is quite possible that the council, having the funds, went ahead without obtaining the consent of the government which is necessary when public works are being constructed.


Mr. PROBE:: I should like to commend the Minister of Reconstruction for introducing the general policy which is implied in this resolution. I feel he is pursuing a wise course in setting up corporations within the national research council to look after necessary

business functions which are bound to be involved when these men, who are test-tube people, make important discoveries. I hope that the patents which will result from their efforts will be utilized properly for the benefit of the people of Canada. In deference to the hon. member for Rosedale, I will watch my use of the word "exploited" because there are so many connotations of the word. I hope that this will be a corporation which will have the efficiency which private industry prides itself on being able to show. I hope that we shall be able to come back in a year or two and point with pride to the fact that this corporation has been run on a commercial basis. To that end I should like to bring forward a matter in the auditor general's report which I believe the Minister of Reconstruction should take up with the coordinating committee. This would seem to indicate a loss of revenue to the national research council. I would refer the committee to page 14, paragraph 41, of the auditor general's report of 1945, which contains this statement:
The bureau of mines collected $1,481.93 for assays and analyses . . .
It then goes on to state:
Scales of fees exist, but most of the work is done without charge. The bureau's chemical laboratories performed 24,524 determinations, 1,566 gold assays and 294 silver assays in the year. These include tests made for other divisions. The scales of fees for such tests range from $2 to $7. Had all been assessed even the minimum - rate, the revenue would have been $52,768. The actual revenue received was $1,481.93.
In view of the fact that a comparable activity, the national research council, makes charges for work performed, attention is drawn to this department's policy.
The minister stated earlier this afternoon that the Minister of Mines and Resources was on the privy council committee on scientific research. Here we have two public departments doing valuable work for people who might be considered the friends of the hon. member for Rosedale, who speaks of the efficiency of private enterprise. These two departments are doing a service for private enterprise. There is a scale of fees in the Department of Mines and Resources, but apparently the fees are not levied by the bureau of mines, while the fees are levied by the national research council. If we are to have research run on a commercially sound basis I submit to the Minister of Reconstruction that he should get together with the Minister of Mines and Resources and say: Either your department can go ahead and do this work without charge if you think that is in the public interest, or we will do

Research Council
the work under national research council and charge and collect our nominal fees. Would the minister indicate why this conflict apparently exists between the two departments in the matter of assays and determinations.


Clarence Decatur Howe: I would hardly call it a conflict. The Department of Mines and Resources has a policy of collecting fees but apparently someone is not collecting them. I presume, now that the auditor general has called attention to the matter, the fees will be collected. The research council has also a scale of fees. I would not like to guarantee that full fees are collected in every case, but with better administration we could see that they are collected.


John Oliver Probe: They are collected by national research council but not in the other case, and therefore the bureau of mines is working as a free agent. That does not seem quite right.


Clarence Decatur Howe: Yes, I agree.


Douglas King Hazen: There is a question I should like to ask. It may not be an important one, but it has to do with a matter that is not clear to me after reading this resolution and the preceding one, which is No. 13 on the order paper. The question is this: What, if anything, will the research council have to do in the future with the investigation, research and development of atomic power? I ask that question in view of the resolution which is No. 13 on the order paper, which provides for the setting up of a corporation to be known as the atomic energy control board, to have control and supervision over the development, application and use of atomic energy. Will the board that is to be set up under resolution No. 13 control the activities of the research council so far as atomic energy is concerned? Was any attention given to making the atomic energy control board a part of and come under the research council, or why was it made, as it apparently is to be, altogether separate from the research council? The minister said that Eldorado would come under the research council and that Chalk river might. Why should Eldorado not come under the atomic energy control board rather than under the research council?


Clarence Decatur Howe: The atomic energy control board is primarily a policy board. There :s only one appointment to the board that is ex-officio, and that is the president of the national research council. There are other obvious appointments to a policy board. One would be the representative of the government of Canada on the international atomic energy commission. There would be other
interests that would have an important contribution to make to the policy governing atomic energy.
The operation of the Chalk River plant, however, would be associated with the national research council. The atomic energy commission would determine policy in the use of the product and in disseminating knowledge of atomic energy as it affects the people as a whole. But the operation of the Chalk River plant would naturally and, I think, necessarily be under the direction of the national research council, from which it would draw practically all its scientists.


Douglas King Hazen: Policy is a matter for the government.


Clarence Decatur Howe: The government will be advised by a commission in this case.


Mr. STEWART (Winnipeg North):: Speaking of Polymer a little while ago, the minister stated that that company was a member of a patents pool. What are the names of the other members of the pool?


Clarence Decatur Howe: All the manufacturers of synthetic rubber on this continent.


Alistair McLeod Stewart: Principally the big oil companies; is that not right?


Clarence Decatur Howe: I think the big oil companies own certain plants, but in any event all the patents available on this continent at the time this work was needed were acquired by the government of the United States and were made available under certain conditions to those wishing to use them for war purposes. We availed ourselves of them. We could not have built the rubber plant without them; we could not have obtained the information required to build it. But we met the conditions and obtained' the use of the information, as did others who were commissioned to build synthetic rubber plants at that time.


Alistair McLeod Stewart: Are
there any restrictions on those belonging to the pool? Could a private enterprise group in Canada, if it wanted to, build another factory for the manufacture of synthetic rubber, or is there monopoly control?


Clarence Decatur Howe: If they could get the use of the information, yes. I think it would be very difficult for any private group to-day to obtain all the necessary information on synthetic rubber and build a plant,
Mr. Chairman, I have on the order paper three resolutions that I should like to deal
Research Council

with, and perhaps hon. members would allow this resolution to pass now since we have had a long discussion about it.


Howard Charles Green: Some members of the opposition desire to ask further questions.


John Horne Blackmore: I am not ready to let it pass yet.


Major James William Coldwell: Will the minister take the resolution under order No. 13 next? The same questions will arise there.


Clarence Decatur Howe: I had in mind to finish the resolution under order No. 10 first, where the same questions will arise, and' then we could take No. 13.
At six o'clock the committee took recess.-
After Recess
The committee resumed at eight o'clock.


James MacKerras Macdonnell: As I said earlier in the day, we are all entirely in favour of the continuation and extension of the work of the national research council. The minister explained that one of the proposals under the bill would be that the council, it was hoped, would make certain discoveries through scientific work, which discoveries would be made the subject of patents and in proper cases be made available for use in ordinary business and private enterprise. He also indicated, as the resolution itself indicates-and it is in this regard that I wish to ask him a question-that several corporations might be set up which the council would in fact operate and manage. When he first spoke he mentioned two or three of these corporations, but later in the afternoon I understood him to intimate that there might be a considerable number. I can understand the operations of the national research council; I can understand their making discoveries; I can understand these discoveries being made available by means of sale or lease as the case may be. But what is of importance, regarding which I should like to have some further information, is this. One or two cases were mentioned by the minister-Polymer, Eldorado and, I believe Canadian Arsenals. Will he indicate what he considers to be the kind of cases in which there might be further corporations-and by that I understood him to mean corporations, some of which, at any rate, might be carrying on some kind of business? Will he indicate the general principles which will underlie the formation of these further corporations?


Clarence Decatur Howe: It has never been the practice of the national research council to go into
	.
the manufacturing business. For example, even during the war, all scientific discoveries in the field of radar made by the council were developed commercially elsewhere. At that time the work of the council stopped in making one prototype. A new radar device would be invented by the research council, and a prototype made, which would then be sent to Research Enterprises for manufacture, the actual manufacturing details being worked out by the crown company which was not associated with the national research council.
The present policy would be for the national research council to make the prototype. It would then be sent to a private industry, which would work out the manufacturing details and put the device on the market, or manufacture it for the armed services, as the case might be. This will continue to be the policy so far as this government is concerned. It has been decided as a matter of policy that the work formerly performed by Research Enterprises Limited will now be done by private interests. In other words, with the liquidation of Research Enterprises, it is not proposed, in future, to perform through crown companies the work which was formerly done by Research Enterprises.
The crown companies supervised by the research council will be those which will deal with the business side of the national research council. For example, in my opinion, the marketing of patents must necessarily be associated with the national research council. Further, experiments on atomic energy must, of necessity be a part of the work of the research council, and so large a part of the staff connected with that project should logically be associated with the council. If Chalk River is associated with the council, Eldorado, which furnishes the raw material for Chalk River, should also possibly be associated with the council. It has not, however, been decided finally whether Chalk River and Eldorado will be associated with the national research council. These, together with the parent corporation, are the crown companies which are envisaged at the moment. There may be one as the minimum; there may be three as the maximum. If I mentioned Polymer I did so inadvertently. It is not proposed that Polymer will be placed under the national research council.


John Ritchie MacNicol: It could be disposed of by and by.


Clarence Decatur Howe: It could be, or it could be operated under some department of government. The latter would be the logical development for Polymer.


John Ritchie MacNicol: The first two should be under the government.

Research Council


Clarence Decatur Howe: They are closely associated with the work of the research council; and inevitably, for several years, they will be scientific establishments rather than commercial establishments. We hope that in time Chalk River will develop a commercial establishment and, if it does, probably it should be withdrawn from the research council, and put under another department of government.


John Ritchie MacNicol: Or disposed of.


Clarence Decatur Howe: I hope I have made the position clear. It is not intended that the research council shall go into the manufacturing business. That has, not been the policy to date, and, as now contemplated, will not be the policy in the future.


James MacKerras Macdonnell: Perhaps I might make sure that I have understood fully what the minister has said, and to do so I might sum it up in this way. I understand the minister to have said that the companies he has in mind will be companies necessitated by scientific operations of the research council or by such business dealings as are incidental to those scientific operations.


Clarence Decatur Howe: That is correct, yes.


Douglas Gooderham Ross: I should like to correct an impression I may have left in the minister's mind. Before the recess he said that he did not intend to put up buildings for the University of Toronto. I never asked him to do so. What I had in mind was this. With the large university there, and all the work they have done, it seemed to me that one of the branches of the research council might very well be set up in Toronto. I may have left a wrong impression in his mind in that regard. The minister also said that we have done pretty well by the university of Toronto because we have allowed them to have the buildings of Ajax. I should like to make a correction there too. It is not a question of allowing them to have the buildings of Ajax, but the university of Toronto wanted to do work in connection with the rehabilitation of men returning from overseas. They have at present more applications than can possibly be taken care of. They could take a good many more if they had more room. I do not wish the government to get the idea that they are doing the university of Toronto a favour in that respect, because for every student who goes there it costs them money. I just wanted to get that straight.
During the war a great many crown companies were formed. How many of, these companies were formed by order in council and how many by acts of parliament? Is it
proposed under this bill that the companies which are to be formed will be formed by individual acts of parliament to be discussed here before the companies are formed?


Clarence Decatur Howe: The provision of the bill is that companies will be formed under the provisions of an act of parliament, part I of 'The Companies Act, and therefore a separate act is not required.


Mr. MacINNIS:: I do not wish to say
very much at this time because I believe we are wasting time on discussion that should take place on second reading of the bill or when the bill is in committee. At that time we shall have more information before us and we can discuss the matter much more intelligently. All we have to do now is to approve the principle outlined in the resolution which is fairly clear. If we do that, then the matter of the setting-up of the companies and all the other matters mentioned in the resolution will appear in the bill.
A moment ago the minister said that it was not finally settled whether the Chalk River undertaking would be associated with the national research council. It would be a bold man who would say to-day that anything is finally settled. We are in a world that is moving fast. An indication of that is the bill which is about to be brought before us. Ten years ago or even seven years ago it would be unthinkable to have a resolution such as this introduced into the Canadian parliament. We should not really concern ourselves as to whether or not the matter is finally settled. Conditions will determine what changes are to be made.
So far as we of this group are concerned, our leader made our position quite clear this afternoon. I support the principle of the resolution and I think we should get on with the bill as quickly as possible. At that time we shall be able to discuss it much more intelligently than we can now.
Resolution reported, read the second time and concurred in. Mr. Howe thereupon moved for leave to introduce bill No. 154, to amend the Research Council Act.
Motion agreed to and bill read the first time.


Howard Charles Green: This afternoon the minister had not quite finished making his statement with regard to this measure. It would be helpful if he could finish his statement at this stage rather than waiting until we are on second reading.
Research Council


Clarence Decatur Howe: It is understood that the
bill is read the first time. Perhaps it would be in order for me to finish the statement.


William Ross Macdonald: There is no
debate on first reading.


Howard Charles Green: Just to finish his statement.


William Ross Macdonald: Moved by Mr. Howe, seconded by Mr. Glen, that the bill be now read a second time.


Howard Charles Green: No; next sitting of the
house.


Mr. STIRLING:: Even though debate
on first reading is not permissible I wonder whether, with unanimous consent, permission could be given to the minister to complete the statement which he began to make and was prevented from doing this afternoon. The reason I ask that is that we shall have the bill in our hands soon and it would facilitate later consideration to a great extent if the statement could be completed.


Major James William Coldwell: Mr. Speaker, is it not
usual to give the bill second reading and then consider the details in committee? Would not the bill have to be read a second time or passed into committee before the minister can make a further statement? It seems to me that this afternoon Mr. Speaker called the minister to order because he was about to discuss the various sections of the bill. If he was out of order then, surely he would be out of order now.


Grote Stirling: I think it will be agreed that with unanimous consent we could listen to the remainder of the statement.


Major James William Coldwell: I am not going to object to that.


William Ross Macdonald: I understand there is not unanimous consent.


Major James William Coldwell: I am not objecting to it.


William Ross Macdonald: There is nothing before the house.


Howard Charles Green: There is no objection.


William Ross Macdonald: I would suggest that after second reading is moved the minister can make his statement and the matter can then stand over.


Charles Edward Johnston: We should have a look at the bill before it gets second reading. The minister can make any explanation he wishes now; I have no objection to that, but we should have the bill before us. I have not yet seen it.


Clarence Decatur Howe: In the circumstances perhaps we can adjourn the debate and I shall make the statement immediately on second reading. Will that be satisfactory?


Charles Edward Johnston: Take up the other
resolutions.


William Ross Macdonald: Second reading will be given at the next sitting of the house.



GOVERNMENT COMPANIES


[Stage Direction]
The house resumed from Tuesday, May 14, consideration in committee of the following resolution-Mr. Howe-Mr. Macdonald (Brantford City) in the chair:
That it is expedient to introduce a measure to provide for the operation and financing of government companies, to define their status as agents to His Majesty, and to provide further for the superannuation, pension or other rights of the employees of such companies.
Joseph Warner Murphy: In a brief statement this afternoon I mentioned that I was primarily concerned with the Polymer Corporation, which is one of the companies affected by this particular resolution. Since the Polymer Corporation happens to be in my riding I should like to make some comments on this resolution. First of all, I wish to say that I appreciate the fact that this particular industry is located at the particular place where it is, which, after all, is the logical place for its location. As everyone knows, this plant is on the great lakes, and is next door to the Imperial Oil refinery. While Imperial Oil happen to be the largest refiners in the British empire, they have several refineries in Canada, and the largest in this country is at Sarnia. So that obviously this was the natural and logical place for the Polymer Corporation.
I think I should say in the beginning that we all appreciate the fact that after Pearl Harbor it became absolutely necessary that we manufacture rubber immediately. Time was of the utmost importance; cost was not. We were in a state of emergency; we were all concerned with producing rubber in order to prosecute the war successfully, and producing rubber as quickly as we could. With that in mind, this country and the United States, with support received from other scientific sources, were able to gather together a very considerable group of scientists, research engineers and chemists who pooled their knowledge to bring about the manufacture of rubber in this country. At that time we in Canada had the support of some of the most capable men in our industrial life. On the board of directors when the Polymer Corpora-

tion was incorporated we had men such as Mr. Campbell, president of the Ford Motor company, the president of Goodyear Tire, and other men of high reputation who, working with that body of scientists, were able to get together and perform a miracle. I have no hesitation in telling this committee now that, as a result, Canada was in the lead in the development of synthetic rubber, something of which we may all be proud.
I am speaking as the member for that riding. As a matter of fact this plant is located in the township in which I live. As a crown corporation it is not liable to taxation, which of course is also the case in other ridings in which crown corporations are located.
Another aspect of the question, with which I should like to deal a little later, is the security of the men who carry their dinner buckets, who are vitally interested in whether or not the present operation is continued.
I wish to deal first with the matter of taxation. The minister stated that some $50 million had been invested in this corporation. I do not attempt to suggest that if this were a private corporation that entire amount would be subject to taxation. We all know that, while land and buildings would be liable to taxation, under our assessment act the municipal assessment or taxation would be on but a small part of that total. According to the company's statement as of March 31, 1944. I find that the capital for land and buildings was in the neighbourhood of $7,000,000, in round figures, while the capital as of March 31, 1945, was about $1,250,000 more. I submit that the municipality in which this corporation is located is subjected to expense by necessity, for instance in connection with the maintenance of roads, hospitalization, administration, education and so on. I should like to give some rough figures with respect to education, having in mind the fact that, according to the minister, this corporation turned in to the government profits of some $10,000,000, apparently since the 1944 statement was issued, because in that statement we were told that the loss of the corporation was around $440,000. In this particular township there are four school sections which have had, by reason of the Polymer Corporation, a capital outlay on new buildings and rentals, in addition to extra teachers, amounting to something like $250,000, on which there is of course an annual charge. We find that in the six months since November 1 of the last year the cost of hospitalization was about four times the cost three years ago, and we must anticipate increased costs in that connection, though we 63260-121
Research Council
do not know how great the increase will be. The same argument will apply in connection with relief.
At the time the plant was in the course of construction I happened to be on the township council, and we received from the corporation a grant of $6,000 toward the cost of road maintenance. As hon. members know, construction was carried on both winter and summer. We are not quarreling over the additional cost incurred, because time was of the utmost importance, and everyone wanted the work done in a hurry. We all know it could have been done more cheaply in peace time, and it could have been done more cheaply in the summer time, but no one objected to the work going on summer and winter because the plant had to be completed in record time, and it was. But in order to carry on that work they had to haul gravel over the roads at periods when full loads were not permitted, and as a result they gave the township $6,000 toward road maintenance. That summer they also contributed $5,000 to the general township fund, and similar annual grants have been made since that time. There was some argument as to what should be the proper amount. We did not know what the expenses would be to which I referred a moment ago, or what the increase would be.
I maintain that if this crown company is to remain a crown company and operate as such the municipality should receive some consideration by way of compensation for the additional expense incurred, which I have somewhat laboriously pointed out. I am certain that if it were a private company and were assessed as such, the assessment of that plant alone would just about equal the present assessment in the township. I am also equally confident that if it were a private company, and if it were to be assessed at a lower value, as other industries are, our revenue from Polymer would be at least $70,000 a year. If it is considered advisable to have this measure pass, some consideration should be given to these modest claims by way of compensation for the township.
I notice from the resolution that the minister has included provision "for the superannuation, pension or other rights of the employees of such companies." I should like to emphasize at this time why in my view each of these companies, in the interests of good reasoning, should be incorporated separately.	[DOT]
After all is said and done, we are concerned about the permanency of the Polymer Corporation, and its continuation. The employees have a great deal invested because of employment in that company. At this time I believe
revised edition
Research Council

that they have group insurance coverage to the extent of $2,500 a year. If I am not correct in that, I shall be pleased to be corrected. I believe, too, that they now receive some hospitalization, sickness and accident benefits
Referring to these social security benefits, I was glad to hear the minister say that he had in mind the Imperial Oil plan. My point is that if the Polymer Corporation incorporated separately, it would not be jeopardized by the failure of any of the other companies. Since this corporation employs much the same type of employee as does the Imperial Oil Company, my suggestion is that in all probability Polymer Corporation employees should be entitled to the same standards of superannuation, hospitalization and other benefits. While during the period of construction the plant may have employed what might be described as journeymen types, in its present operations the type of workman employed is superior to that found in most plants and, as the minister has said, of a type comparable favourably with those employed by the Imperial Oil Company. Many of them are skilled mechanics, and they are employed because much of the operation in the plant is technical.
My chief concern is as to the permanency of the company, whether it is to be operated as a crown company or as a private concern. The minister has said that no atttemj^t has been made to see what the purchase price would be. I would suggest, however, that any company showing a profit of $10 million would seem to be a tempting organization in which to invest money. I shall leave the matter there for the moment.
At this point I should like to read into the record a statement made by the minister, and for the next few minutes I shall attempt to place on the record the series of events in proper sequence. The first is a statement by the minister on May 14 where, at page 1513 of Hansard, he is reported to have said:
One difficulty is analysing government-owned business in general is the government's method of bookkeeping. It is a simple method of bookkeeping. Everything that is paid out by the treasury is charged up as expenditures from a government appropriation and everything that is received is entered on the books as revenue.
In the next paragraph he says:
The bill that will be based on this resolution provides for the normal corporation accounting for crown companies.
As I said a minute ago, the minister did state as reported at page 1561, that Polymer Corporation was built at a cost of about $50 million. He said on the same day that the cost per pound of rubber was about 20J cents.

Then, in reply to my question on October 29, 1945, as reported on page 1570 of Hansard, the parliamentary assistant to the minister answered:
To September 30, 1945, Polymer Corporation Limited released to War Assets Corporation, buildings, machinery and equipment to the value of $1,757,740.31, and machine tools to the machine tool and war service committee to the value of $208,761.28. These transfers were tnade at cost to Polymer Corporation Limited. Direct sales and returns to manufacturers were made by Polymer Corporation Limited to the value of $144,861.47.
I turn next to public accounts for the fiscal year ended March 31, 1944 and direct the attention of the committee particularly to page K-108, on which appears the balance sheet as of that date for the Polymer Corporation Limited, tinder the heading "assets" appear these items:
Inventories, at the lower cost of realizable values, as determined and certified by the management-
Materials and manufacturing supplies (including coal, $1,791,731.03), $2,836,064.67.
Pre-production expenses applicable to butyl rubber, $638,500; training of technical employees, $503,421.97, $1,141,921.97.
Net loss for the year ended March 31, 1944, $420,936.33.
Just by way of observation in connection with these latter figures, I should like the minister to explain whether the item of $1,141,921 covering pre-production expenses applicable to butyl rubber and the training of technical employees covered all the pre-production expenses, or was it only part? It is shown here as part of the assets.
In the 1945 public accounts the balance sheet as of March 31, 1945, is on page MA-123. In the assets ' column we find an item of $1,558,907.99 covering inventories at cost as determined and certified by the management. Then, under liabilities we find an item of $967,685.30 covering portion of administratiye expenses capitalized during the period of plant construction, now written off. I do not know what the total of that item is, although I expect we shall get that information later on. Since this item gives only a portion I think we are entitled to have the complete picture.
There is another item which I feel I must cite. There is set out capital assets held in trust for the crown as at March 31, 1945, and under this is one item of $1,513,094.43 covering construction camp, staff and bunk houses and roads, sewers, et cetera. Then, under liabilities are shown reserves which I think will require some explanation if we are to know how to assess this resolution. One item is unascertained losses and other contingencies, $3,000,000, and another is inventory appreciation, $1,802,484.74. Then under "surplus" I

Research Council
find an item of $1,134,551.56 covering special reduction in inventory appreciation reserve.
. What worries me as a businessman when I look at these figures is how I' can arrive at some intelligent answer without having a great deal more information. I have had some experience in business and I should like to have more details of these items which cover very large amounts of money. According to the minister, the cost of Polymer is around $50,000,000 and he tells us that the company has turned over $10,000,000 in profits to the government. I am wondering whether certain items should be charged to profit. If so, it will alter the statement on profits and affect- the cost of rubber per pound.
Certain features in connection with this Polymer Corporation seem a little cloudy to a businessman, and any remarks I make in this connection are not intended t-o cast any reflection on anyone. As I understand it, by agreeing to this bill we shall be endorsing what has been done. I should like to quote from sessional paper 250, which sets out the operating contract between Polymer Corporation Limited and Dow Chemical of Canada Limited, dated as of May 1, 1942, but not executed until June 28, 1943, covering the operation of the styrene unit; and operating contract between Polymer Corporation Limited and Canadian Synthetic Rubber Limited, dated as of March 26, 1942, but not executed until March 22, 1944, covering the operation of the buna A copolymer plant. The note which follows is, I think, very important. It reads:
No operating contract or letter in lieu of contract relating to operation of the units being operated by St. Clair Processing Corporation Limited exists. Imperial Oil Limited and St. Clair Processing Corporation Limited have proceeded on the strength of the assurances received from the senior officials of Polymer Corporation Limited that they would be paid on a reasonable basis for services rendered and products supplied. Negotiations are proceeding.
Here we have the government or some agency of the government doing business in millions for a year or two with nothing in writing. Apparently these transactions were carried out on the strength of assurances by senior officials of the Polymer Corporation Limited. I assume that they would be the directors and Mr. Nicholson, the general manager, in whom everyone has complete confidence. I have heard it whispered here and there that Mr. Nicholson's salary of $25,000 is too large, but I want to go on record right now as saying that I happen to know Mr. Nicholson and that if the general manager of Polymer corporation is not worth $25,000 a year, he would not be the manager. After he pays his income tax he has only about one-half 6326(^-1211
of that left. However, this sort of thing, contracts on assurances, does not look like good business to a businessman.
There is no question in my mind about the future operations and1 the continued success of the Polymer corporation, but the taxpayers and the employees there are wondering just what permanency there may be. As I said this afternoon, we have had the benefit of much expert advice but, now that the war is over, these people will be returning to their own places of business, having performed their duties more or less from a patriotic point of view and having received no money therefor. Now that they have left, the government must depend upon what remains in the way of expert technical advice. The people are wondering if a change in government policy is likely to affect the jobs of these 1,800 persons, with their families, as well as their investments, the municipal obligations they have undertaken, public services and schools and that sort of thing. Are they to continue as employees? They say that rubber may be used as a means of barter between Canada and some other country and that perhaps the production of rubber, by government policy, will decrease 50 per cent. Some maintain that under private ownership, with so much invested and so many stockholders interested, they would naturally carry on to the best of their ability. We know that this government in the operation of this plant did import products duty and excise free, but that is only a matter of bookkeeping anyway. We realize that, whether it is under public ownership or private ownership, we shall have Jo compete, there being no duty on rubber, with foreign markets. We know that we have an export market in the Scandinavian countries, a bit of a market in England and a bit in the South American countries.
The point I wish to emphasize is that some of the employees who have been with this corporation a long time, some of them during the course of its construction, are sceptical, many of them, about the efficiency of government operation. They wonder what this $10 million profit means or if it is a $10 million profit. They know, for instance, that in the course of construction of Polymer there were some thirty-five or thirty-eight bunkhouses, staff houses, hospitals and so on and that some of their friends bought some of these staff houses, which cost from $25,000 to $30,000, for one or two thousand dollars as the case may be. They know also that their friends wrecked these buildings, dismantled them. I know that in one case the purchaser obtained the property for the purpose of obtaining a
Research Council

heating unit. He took the heating unit out for his hotel, and he took out the plumbing and the electric light wiring, and then sold the shell for as much as he had1 paid for the complete building.
Another one-and mind you, these people know this and it is one reason why they are so sceptical-purchased one of these bunk-houses for an amount in the same neighbourhood, dismantled the building and claims that he made from four to five thousand dollars on the deal.
The point which I think is most important to these men who have seen the scrap collectors go in with their trucks and take out scrap which was not scrap is that they wonder if that is the way the government is going to carry on this proposition.


Clarence Decatur Howe: My hon. friend is making charges. I will be very glad to have a committee investigate the charges that he is making at this moment. This attack by insinuation is not helpful.


Joseph Warner Murphy: The records I have here, Mr. Chairman-I will give them to him right now-the minister will be able to verify if he looks up his own records.


Clarence Decatur Howe: So far as any wrongdoing is concerned, the public accounts committee or the war expenditures committee will be glad to investigate any charges, and I shall expect my hon. friend to appear before whichever body he chooses and substantiate his charges.


Joseph Warner Murphy: The resolution before us, as I read it, is to provide for the organization, administration and financing of such corporations. And the question is, do we want the government to operate these companies? If not, why? I am telling you why.


Clarence Decatur Howe: I am asking my hon. friend to substantiate the charge he made that junk dealers go in and take out material that is not scrap. That is a charge of dishonesty and my hon. friend as a member of the house will have to take his responsibility for that charge.


Joseph Warner Murphy: I will take my responsibility right now.


Clarence Decatur Howe: Then you will do it before a committee of this house.


Joseph Warner Murphy: I will give you an opportunity of verifying it from your own records.


Clarence Decatur Howe: I shall ask a committee of this house to verify it.


Gordon Knapman Fraser: We know that 3,300 stoves were sold as scrap.
[Mr. Murphy-l


Joseph Warner Murphy: The other day in the war expenditures committee I asked the head of War Assets-I think his name is Mr. Berry-


The ACTING CHAIRMAN (Mr. Golding):: Order.


An hon. MEMBER:: The hon. member
asked for it.


William Henry Golding: The hon. member is out of order in referring to something that is before a committee of the house.


Joseph Warner Murphy: I will leave out what took place in the war expenditures committee. We have only started in there; there is more to come. I wish to put this on the record, that an article known as:
6" Standard cast iron rubber lined obnoxious vapour condenser. Fig. 4010 Size 14" x 17" x 47" (new).
Not old.
Reported to War Assets by Polymer. Cost $325.40. Sold as scrap to Lampel-
A disciple of Shylockism, and there are many more throughout the country.
-on MTL-18838 at $1.34.
I do not know why they put in SI.34, except that it makes it hard to figure the percentage. I can imagine this man Lampel going to your man in War Assets to buy this and your man saying, "It cost us S325.40," and they finally got down to the point where the War Assets man-I could name him- finally took S1.34-a dirty- dollar, three dimes and a nickel and gave back one penny, and the War Assets man gave this fellow, the disciple of Shylockism, one penny.


Clarence Decatur Howe: You mean he was a Jew.
You may as well come out and say it straight.


Joseph Warner Murphy: If you will keep your
seat-


Clarence Decatur Howe: If you want to make this
unpleasant, we will have it good and unpleasant.


William Henry Golding: I think the hon. member is entirely out of order in bringing up this matter on this resolution.


Some hon. MEMBERS:: No.	-


William Henry Golding: All these matters are being dealt with by a committee of the house and the hon. member had an opportunity of presenting them there. He is out of order, on this resolution, in discussing these matters which are before a committee.

Research Council


Howard Charles Green: Mr. Chairman, may I point
out on the point of order that one of the companies referred to is covered by this proposed measure, the Polymer Corporation. The hon. member is now dealing with what happened at the Polymer Corporation and I submit that he is perfectly in order in doing so.


William Henry Golding: I must disagree. The hon. member is dealing with something in connection with War Assets, and that is before a committee of the house.


Joseph Warner Murphy: I submit, Mr. Chairman,
that this case has not come before the committee. This resolution, if it is adopted, means that we endorse having this company operated as a crown company. The resolution asks us to endorse the government in continuing this company as a crown company. I submit, Mr. Chairman, that the company must be judged on their record, and I am prepared to give the record. This has not yet been before the war expenditures committee.


William Henry Golding: The hon. member is referring to some business transaction with War Assets Corporation. War Assets Corporation, with all its dealings and its methods of doing business, is now the subject of an inquiry by a committee of this house.	I think the hon.
member will agree with me that it is not in order to bring matters of that kind before the house while the committee in question is sitting.


Joseph Warner Murphy: Am I to understand, then, Mr. Chairman, that, even in order to appreciate the question we are discussing, we must not go into details and seek information upon which we can base our judgment?


William Henry Golding: I hope the hon. member will not take that view. We are discussing crown companies, but the matter which the hon. member was dealing with had to do entirely with War Assets Corporation. The article he mentioned as having been disposed of was disposed of by War Assets.


Joseph Warner Murphy: I will deal first with what was sold by Polymer Corporation.


Mr. HANSELL:: On a point of order, Mr. Chairman, as I understand your ruling-and I am interested in this because I expect to speak on the matter

it is that on this resolution we cannot discuss the operations of War Assets. I take issue with that, because there
is no committee specifically set up to investigate expenditures of War Assets Corporation. The committee itself is a war expenditures committee which has the right to investigate any war expenditures at all, and just because at the present moment the committee is investigating War Assets, it does not follow that that is what it was specifically set up for. If your ruling is correct, we cannot on this resolution discuss the three companies, because they also have been operating in time of war. I suggest that if there is anything in your ruling it can apply only to such items as may be under discussion at the present time, but I do not think it can apply to all the business of War Assets any more than it could apply to all the business of any other crown company.	,


William Henry Golding: I would point out to the hon. gentleman that this is not my personal point of view. It is recognized as a rule governing the whole of our parliamentary procedure, that while some matter is being discussed by a parliamentary committee set up for the purpose, such questions should not be referred to or dealt with in detail in the house. If the hon. member was going to proceed to deal with crown companies, that is what we have before us at the present time; but only a short time ago the hon. gentleman was referring absolutely to what happened in the committee, dealing with one particular item. I am quite sure he will agree with me that I am right in calling the attention of the committee to the fact. The motion in connection with the war expenditures committee was this:
On motion of Mr. Mackenzie King it was resolved:
That a select committee be appointed to examine the expenditure defrayed out of moneys provided by parliament for national defence and demobilization, and for other services directly connected with the war, including the disposal of surplus war assets, and to report what, if any, economies consistent with the execution of the policy decided by the government may be effected therein-[DOT]
And so forth.


Mr. MACKENZIE:: On March 22, 1946.


William Henry Golding: I hope the hon. member will deal with crown companies. He is in order in doing so.


Joseph Warner Murphy: I presume I may continue this argument on a more limited basis by referring neither to the article nor to the person who purchased it.


William Henry Golding: If the hon. member is going to bring up those matters I suggest that he should bring them * up in detail in the war expenditures committee.
Research Council


Joseph Warner Murphy: I should like to have the position clear. I emphasized at the start, purposely, that there were certain questions I had in mind. I want to determine whether certain figures are to be considered as capital cost or to be charged against profits. We have had the statement that $10 million was made; we also had the financial statement up to March 31, 1945, giving us in some detail, very limited, capital costs; and my point is simply this, that in order to determine whether they are capital costs or must be charged against profits we must have more information. I submit, then, that I am entitled to ask the minister or the government what particular capital account or figure these amounts can be charged up to. So that we may agree on this, take the figure I have just quoted, which was $325, and the item was sold for $1.34. My argument Is that if the capital costs are as outlined by the statement, at $50 million, this represents a loss of $323.66 which must be charged up against capital, or it must be charged against profits, or it must be the amount representing the loss that would be actually sustained if you and I were operating that company. That is clear. I do not wish to be overbearing on this sort of thing. I am an Irishman; I am rather new here, and I am willing to learn.
Another item amounts to $218,058.55. That was sold for $3,500. There is another item of $286,460 which was sold for $19,000; another item of $22,350.84 which was sold for $3,650; another item of $21,076 which was sold for $1,900; and another item of $46,658.96 which was sold for $1,560. Another item of $107,597.47 was sold for $1,188.25, or T7 per cent of the cost. Another item of $269,489.13 was sold for approximately $6,000', or 2-2 per cent of the cost. The total of these eight items is $775,815.95. These items were sold for $35,602.59, or 4-5 per cent of their cost. Was that part of the capital cost of Polymer? Looking at the statement, and trying to interpret it as a businessman, one must come to the conclusion that there is a loss of $742,413.36 somewhere.
I appreciate the difference between something used and something new. I do not expect that the government through any of its agencies will realize as much on the cost if the article has been used as they would if if were new. Let us take bunk and staff houses as an example. No one expects that they are going to be sold for what they cost.
I quoted some of these figures purposely to show that they were sold for less than could have been realized for them by what one might consider businesslike methods.
^The Acting Chairman.]
We have also to take into consideration the important fact that some of this merchandise was never used and was sold at so much per ton. Some of it was sold since the statement I quoted was drawn up. This statement is dated March 31, 1945. Do those sales enter into the cost or profit of Polymer? We
want to know that.
/
This afternoon the minister chose to ignore the question which I happened to have on the order paper. He may have acted wisely. That is for him to say. But if we are to endorse the resolution to let any department of the government operate or continue to operate we are at least entitled to information, and I submit that we should have had a different answer. How are we to analyse a statement without having such information before us?
I understand that some of the new merchandise whicji was sold by the ton, and which forms the greater part of the amount quoted, was sent to another plant just below the Polymer Corporation. I do not know why, and my people wonder why, it was sent there to be loaded on cars instead of being loaded in the Polymer Corporation. I submit that these amounts which I quoted represent a realization of some 4-5 per cent of cost. I also appreciate that the government or some department of government could have a building in some faraway place which would have involved a considerable amount in dismantling, and the cost would probably be out of proportion to what it would have been worth when dismantled. But there is one point which my people question, and rightly so. We are not the only place in Canada which is hard up for housing, for toilets and wash-basins, for electrical wiring and so on. I do not mind telling this committee that considerably more than two or three million feet of good lumber could have been salvaged from these staff and bunkhouses, et cetera. It seems like poor business for the houses to remain there unused when the material could be used in erecting houses for veterans and others who need them.
It seems obvious that I am not permitted to put on record more details concerning these particular sales, but the few item? I have given come to a little better than three-quarters of a million dollars. In all probability, when these and other companies are investigated by the war expenditures committee there will be considerable doubt in the minds of reasonable people on both sides of the house as to whether or not it is good policy to endorse this resolution. As I see it, if I vote in favour of this particular resolution I am

Research Council
endorsing what the government has done. I tried to tell the committee, and I finally did what it had attempted to do. I submit in all sincerity that, on the record of what has taken place there and elsewhere, we ought to question whether it is a wise policy. Let me give an instance that they know about. Everybody is talking about this sort of thing, and this is what our people are restless about. An item involving some 822,000 was sold for about $2,000. It consisted of forms for building pavement. They would be just as good twenty-five years from now as they are to-day. Any contractor who knew they were to be sold or were for sale would have given, fifty, sixty or seventy per cent of the cost price. The only conclusion I can come to is that to which my constituents would come, namely, whether it is to be a wise policy to agree to -this, and whether they are to be secured not ' only there but wherever there is a crown corporation, if those crown corporations are to continue operating as they have done in the past.


Clarence Decatur Howe: The hon. member for Lambton West undertook to discuss a plant which cost $50 million, and which is regarded as one of the finest plants in the Dominion of Canada.


An hon. MEMBER:: By whom?


Clarence Decatur Howe: I shall leave that to any competent person in this country or in the United States. As a matter of fact it has a record in the industry of being the finest integrated operation that came out of the rubber expansion

	.


Joseph Warner Murphy: I said that half an hour ago.


Clarence Decatur Howe: You made your speech. I will thank you very much to keep quiet for the next few minutes.


Joseph Warner Murphy: I said the same thing you did.


Clarence Decatur Howe: As I say, the hon. gentleman started talking about that type of operation, and he got down to his own level very quickly, the level of the junk pile of construction material. Unfortunately, when a plant has to be built-


Some hon. MEMBERS:: Oh, oh.


Gordon Knapman Fraser: I think the minister should withdraw that statement.


Clarence Decatur Howe: I will withdraw nothing.


Mr. FERGUSON:: Take a look at what he says.


Clarence Decatur Howe: I can discuss my hon. friend who has just intervened and some of his war
work any time he wishes, and would be very glad to do so. I have a few notes on this subject I shall be glad to make available.


Arthur Leroy Smith: Now, don't be mad. Let's get on with it.


Clarence Decatur Howe: All right. I have been engaged in war work now for five years; I have spent some twelve billion dollars of this government's money. This is the first occasion on which I have been accused on the floor of this house of dishonesty; and that is the charge to-night.


Some hon. MEMBERS:: Oh no.


Clarence Decatur Howe: That is the charge; dishonesty.


James MacKerras Macdonnell: Don't be silly; nobody accuses you of that.


Clarence Decatur Howe: That is the charge absolutely; dishonesty, and my hon. friend will have a chance-


Joseph Warner Murphy: It is not personal dishonesty at all; I would not have any such intention. I wish the minister would believe that.


Clarence Decatur Howe: It is dishonesty of myself or my staff.	.
' Mr. SMITH (Calgary West):	Nobody
accused them.


Clarence Decatur Howe: I will just take what the hon. member said and analyse it. Sit down and let me make my speech.


Joseph Warner Murphy: AVhen the administration wastes money I do not say it is your fault. You cannot look after it all.


Clarence Decatur Howe: I suppose my hon. friend was discussing to-night the disposal of the construction plant. A construction plant to build a $50,000,000 building costs a great deal of money. Expensive equipment must be brought in; bunkhouses must be built; temporary buildings must be erected for use during the construction of the project. Probably they are used for a year or, at the most, a year and a half; then they are disposed of. I have been in the construction business all my life, and I know the difference between the cost of construction articles when they go on the job and their value when they go off the job. However, my hon. friend will have a chance to explain all this to a select committee of this house; and the proper officers of my department will be there to crossexamine him on the subject, sinfce he has made the charges. I think I shall venture to attend myself, because certainly we cannot allow the record of the Department of Munitions and Supply to be smeared as it is being smeared to-night.
Research Council


Arthur Leroy Smith: What do you want to do about it?


Clarence Decatur Howe: I am going to discuss it, as my hon. friend discussed it a few moments ago. I am going to talk about it for a while, if I can have the attention of the committee. Be that as it may, perhaps I might deal with the reasonable part of my hon. friend's speech, brief though it was.
The hon. gentleman spoke of the fact that the Polymer Corporation is not liable for municipal taxes. That arises from a provision in the British North America Act whereby property of the crown is not taxable by provincial or municipal governments. The township knew that was the case when the industry located there. I received no objections from it at the time; in fact I had a very warm invitation to locate the plant in Sarnia, and we were very glad to do so because it seemed the reasonable point at which to establish the industry. The plant does pay for services; it pays a very substantial amount to the town of Sarnia and the township. My hon. friend mentioned $70,000 a year as a reasonable tax. Well, I believe the plant pays to the township or the city of Sarnia something like half that amount for services. But I would point out that, as a result of the government plant being constructed in its present location, private industry has located on adjoining property; and private industry is spending some five or six million dollars, with every prospect that this amount will be largely increased as the years go by. From the very nature of its operation, the Polymer plant will be the focal point of an organic chemical industry which uses the by-products of the Polymer operation. I think the town of Sarnia and the adjacent township will have no financial reason to regret that the Polymer Corporation has been established there.


An hon. MEMBER:: They do not, either.


Clarence Decatur Howe: I understand they do not, except the hon. member who represents them in the house. As far as the earnings of the corporation go, my hon. friend is quite correct in saying that the plant went into operation in 1944. In that year it obtained a total revenue of $9,664,000, while the cost of producing that material was $10,084,000, resulting in a loss on operations that year of $420,000; and there were pre-operation expenses which for the time being were capitalized. In 1945 the plant sold material valued at $29,460,000, and after $3,662,000 was set up as a replacement reserve the cost of material was $27,828,000.


Arthur Leroy Smith: To whom were the bulk of those sales made?


Clarence Decatur Howe: To private industry; rubber companies in Canada.


Arthur Leroy Smith: Private industry, in that year?


Clarence Decatur Howe: Yes; in every year. So that after the reserve was set up the profit amounted to $1,632,000, and including the reserve the profit was $5,295,000. In 1946 the replacement reserve was set up in the amount of $2,706,000, and after that reserve the profit was $2,585,000, so that the total profit, including reserve, was $5,292,573.36. I spoke of the fact that $10,000,000 had been returned to the crown by the corporation out of the $50,000,000 advanced. The exact amount of balance in profit and loss, all on the side of profit, is $10,166,687.92, up to March 31, 1946.


John Ritchie MacNicol: Was that profit on operations?


Clarence Decatur Howe: Yes, on operations.


John Ritchie MacNicol: You mean from the beginning?


Clarence Decatur Howe: Yes, from the beginning. The balance sheet of the company as at March 31, 1946, showed assets as follows:
Current assets	 $ 987,368 31
Inventories	
4,689,580	66Fixed assets	
49,644,409	48Prepaid expenses, etc	190,318	37

Then, on the liabilities side:
Current liabilities	
$2,102,724	78Reserves applying to inventory	
1,449,785	47Contingent liability	
3,000,000	00Share capital	
32	00Dominion of Canada advances	
38,792,446	65Surplus accounts	
10,166,687	92

I might explain that the item of $3 million is a reserve set-up to cover a liability created in connection with the purchase of crude rubber prior to the fall of Singapore. The government had, at the time, outstanding contracts for crude rubber. It was purchased f.o.b. docks, Singapore, and at the fall of Singapore the question arose as to how much of that rubber would be deliveredi, and how much liability would be set up in Singapore for rubber which we would not receive. Originally the reserve was something more than $5 million, that being the peak value of the commitments in Singapore.
At this time the rubber has been largely delivered. Some of it came in during the war-

Research Council
years. Some came in ships riddled wtih gunfire, but still afloat. A surprising amount of it was received even after the fall of Singapore. But there still remained a considerable amount of rubber unaccounted for, and the $3 million was maintained on the books to cover the complete liquidation of those liabilities.
Recently, other shipments of rubber have arrived from warehouse stocks in Singapore, and we have now determined that the S3 million item is much in excess of the actual liability.


Arthur Leroy Smith: Is that a matter of contract?


Clarence Decatur Howe: Yes, contracts were outstanding for delivery of rubber in Singapore, and until the last of those contracts is liquidated we are maintaining the $3 million as a contingent reserve, rather than taking it into profit. However, by the next balance sheet I think the item will have disappeared and the amount of reserve will be taken into profit.


Arthur Leroy Smith: Surely there can be no profit in that. However, I am happy about it. Do not worry.


Grote Stirling: Is this rubber that was captured by the Japanese not used by them, and now being delivered.


Clarence Decatur Howe: I presume so, yes. It was rubber that was left on the docks at Singapore, or in warehouses at Singapore and Penang, in Japanese occupied territory. After the recapture of the territory the rubber was found intact, and sent on to its consignees.


Grote Stirling: Extraordinary.


Clarence Decatur Howe: Yes. It did not arrive in the best of condition, but still we got a good deal of it.
Something has been said about the cost of synthetic rubber. The plant operates on a basis of first setting up a replacement reserve. In an operation of this kind, funds must be available to change processes and to keep the processes up to date. Recently, we have sold certain- by-products. In order to make the maximum use of the by-products, we have had to instal additional equipment, and that is being paid for from the replacement reserve, quite properly, because that is the purpose of it.


Arthur Leroy Smith: What percentage is set up, on an over-all basis, to take care of that?


Clarence Decatur Howe: The reserve is different for different operations of the plant. There is a formula in existence, but I have not it here.


Arthur Leroy Smith: Do not bother.


Clarence Decatur Howe: The amount set up for that account in 1945 was to bring the reserve up to date from the commencement of operations. That amount was $3,662,000. I should think the amount set aside for 1946 would represent one full year, making an annual amount of $2,706,000.


Arthur Leroy Smith: A reserve, covering what?


Clarence Decatur Howe: A reserve set aside to cover replacements. I suppose in ordinary business you would call it a depreciation reserve.


James MacKerras Macdonnell: With regard to the item of $3,662,000, does that include interest charged on the amount?


Clarence Decatur Howe: No, that is replacement reserve, as it is called here. Perhaps in other business it may be called a depreciation reserve. Interest on the investment is represented by the dividends to shareholders, which is all the money that is not required for the operation.


James MacKerras Macdonnell: Should we not regard part of that profit as something to be considered in lieu of interest.


Clarence Decatur Howe: The profit belongs to the government, of course. The way this is set aside on the balance sheet is as follows: $6,369,000 depreciation reserve, or replacement reserve, whichever you wish to call it. This leaves $4 million for the two-year period as dividends to the owners of the common stock.


Arthur Leroy Smith: Is the minister not confusing depreciation and amortization, and is he not leaving out interest on the capital invested? I am sorry to be so awfully technical, but I have been licked so often on these things in my business, that I am very careful. Would the minister try to differentiate between amortization and depreciation, and that thing my hon. friend from Muskoka-Ontario referred to, namely capital invested? Let us get down to two and two makes four- not five.


Clarence Decatur Howe: From my slight understanding of corporation work, I believe amortization applies only to outstanding bonds. If you wish to get rid of them you amortize them.


Arthur Leroy Smith: Amortization is applied when a plant is useless.


Clarence Decatur Howe: I thought that was depreciation.


Arthur Leroy Smith: No; you borrow money on bonds, and amortize against the end of the road. Depreciation is just the little
191S
Research Council

house you live in-but of course the minister lives in a big house. However, he understands me. Let us not be wrong about this.


Clarence Decatur Howe: We did not borrow the money.


Arthur Leroy Smith: No, because you had unlimited capital to spend. You never borrowed a dime.


Clarence Decatur Howe: No, we did not borrow a dime. We got the appropriation from the consolidated revenue fund, or from whatever source such moneys come.


Arthur Leroy Smith: I can think of a better word.


Clarence Decatur Howe: And it is represented to-day by common stock. Common stock has this advantage, that there is no amortization. There are dividends, if you have the money; otherwise, everything goes on merrily.


Alistair McLeod Stewart: Is not depreciation deducted before you show operating profit?


Clarence Decatur Howe: Yes.


Arthur Leroy Smith: Well, there is one man who doesn't know what it is-but he asks the right question.


Clarence Decatur Howe: And it is a good question. I referred to the fact that some $10 million of the $50 million had been returned to the government. Some of it has returned in the form of depreciation reserve, or replacement reserve, and the other is returned in profits. But it is all returned to the government. The bank account of Polymer is cleaned out every Sat-\ urday night. So that the government, instead of having $50 million outstanding at Polymer, according to its own books has only $40 million,


James MacKerras Macdonnell: This free and easy way of dealing with interest does not seem to work out with what the minister said this afternoon about the advantages of the accounting methods of crown companies. However, I am not going to deal with that at the moment. I have here the public accounts for 1945, and I find it a little difficult to understand the relationship between Polymer Corporation Limited and Polymer Sales and Service Limited, which apparently was formerly Fairmont Company Limited. I gather that their operations are closely allied and I should like the minister to explain the difference between the two.


Clarence Decatur Howe: Back in 1939, at the commencement of the war, the Fairmont company was organized, I believe as the second crown company, to stock-pile rubber and silk,

two commodities for which the government was dependent on foreign sources. Since it was impossible for private buyers to operate in the market, it was necessary for the government to take over the purchasing of all rubber and silk that were required for war purposes, or, in fact, for any purpose. The Fairmont company carried on its operations until 1943. At that time the Polymer Corporation was selling synthetic rubber and it seemed reasonable that that corporation should also take over the selling of crude rubber. Therefore, the name of the Fairmont company was changed to Polymer Sales and Service Limited.


Arthur Leroy Smith: That was for crude rubber?


Clarence Decatur Howe: Crude was purchased from the Fairmont company and also in the United States. Polymer Sales and Service Limited continued to sell all rubber, both crude and synthetic, that Canada used during that period.


James MacKerras Macdonnell: Does that mean that they sold the whole Polymer output?


Clarence Decatur Howe: That is right. Later on, the activities in connection with crude rubber reached a low ebb because we had plenty of synthetic rubber available.


Arthur Leroy Smith: What time would that be?


Clarence Decatur Howe: June 30, 1945. As I say, activities in crude rubber practically came to an end, and it was thought reasonable to amalgamate Polymer Sales and Service Limited with Polymer Corporation Limited and make the corporation its own selling agency. The balance of $228,422.01, which represented the profits of the predecessor company, was paid into the treasury of Polymer Corporation Limited as a dividend, and Polymer Corporation Limited took over the physical assets and liabilities of the predecessor sales company.


James MacKerras Macdonnell: Was the sales corporation acting for Polymer and nobody else at the time it was taken over?


Clarence Decatur Howe: It was the selling agency for all rubber bought in Canada. They sold the output of Polymer and they also bought crude rubber from other agencies, chiefly in the United States. -


James MacKerras Macdonnell: That was right up to the time they were taken over?

Research Council


Clarence Decatur Howe: Yes. Even to-day Polymer buys crude rubber from outside sources and sells it to the trade.


Arthur Leroy Smith: You have not mentioned reclaimed rubber?


Clarence Decatur Howe: No.


Arthur Leroy Smith: I may have something for you on that.


Clarence Decatur Howe: At one stage, reclaimed rubber was important and came into quite general use as a substitute for other forms of rubber, but as goon as synthetic rubber came into free supply, the reclaimed became a drug on the market. Unfortunately we have some dumps of reclaimed rubber for which we can find no great market.


Arthur Leroy Smith: Is that the kind that slips on the ice?


Clarence Decatur Howe: I believe it is the synthetic.


James MacKerras Macdonnell: There are two or three points I cannot understand in the public accounts for 1945. Page MA-124 sets out the operating statement of Polymer Corporation Limited for the year ended March 31, 1945. It shows sales of some $29,460,000, and then certain deductions are made. Then, if you turn to page MA-128 you find the income and expenditure statement of Polymer Sales and Service Limited for the same period. In that statement the sales are shown as only $21,202,000. Are those figures subject to adjustment, because I think the minister said a moment ago that Polymer Sales acted for Polymer Corporation and other people as well?


Clarence Decatur Howe: The reason for that is that Polymer Corporation sold its by-products, such as ethylene, to the Dow Chemical company. Polymer Sales handled only rubber, but its other products and processes were sold by Polymer.


James MacKerras Macdonnell: As I say, page MA-128 shows the sales of Polymer Sales as $21,202,000. This simplicity of crown companies which the minister talks about is not simple enough for me to understand readily these next two items, which are:
Surcharge income	 $5,843,084 20
Stabilization income	 4,627,561 72


Clarence Decatur Howe: Stabilization income is the subsidy on crude rubber. Crude rubber cost between 45 and 50 cents a pound and it was sold at about 26 cents a pound.


James MacKerras Macdonnell: Does that mean that from another pocket we took $5,000,000 in order to help make this $10,000,000?


Clarence Decatur Howe: No; it had nothing to do with the operations.


James MacKerras Macdonnell: Does it mean that the people of Canada donated $4,600,000 to create this stabilization income which found itself, through Polymer Sales Corporation, into Polymer Corporation Limited and helped to make the $10,000,000? Where did that money go?


Clarence Decatur Howe: It did not channel in that way at all.


James MacKerras Macdonnell: Where did it find its way?


Clarence Decatur Howe: It had to do with crude rubber sales and Polymer does not make crude rubber.


James MacKerras Macdonnell: Who put up the money?


Clarence Decatur Howe: The government of Canada put it up to subsidize the price of crude rubber to the manufacturers of Canada and thus to the public.


James MacKerras Macdonnell: At what time was Polymer Sales and Service Limited taken over by Polymer, and at what time did these figures enter into the accounts of Polymer Corporation itself?


Clarence Decatur Howe: June, 1945, but, as I explained before, there was no cash handed over from Polymer Sales. Polymer Sales made no profits out of its transactions. It simply paid what it had to pay and sold its product for the ceiling price, twenty-five cents. The subsidy paid by the government was not to help Polymer or anyone else except the user of the rubber.


James MacKerras Macdonnell: What about the surcharge income of $5,800,000?
Mr. HOWE,: It is a charge of the same nature. It has nothing to do with Polymer. It is a balancing item in the accounts of Polymer Sales. The explanation given in the auditor general's report is as follows:
This company (formerly Fairmont Company Limited) ceased business as of June 30, 1945. It acquired the stored crude and synthetic rubber and made sales thereof to manufacturers having contracts with the Crown for the production of war supplies, and to manufacturers engaged in essential civilian production.
As stated in paragraph 252 of last year's report, stocks of rubber were revalued upwards in 1943 to the equivalent of current replacement prices, and an offsetting inventory appreciation reserve established. Order in council P.C. 5750 of July 20, 1943, authorized the company to collect surcharges (based on tire deliveries) from the Department of National Defence and other organizations, for the proportion of rubber going
Research Council

into the production of war supplies, and also to collect from Commodity Prices Stabilization Corporation Limited amounts from time to time estimated for the loss incurred on the proportion of rubber going into the production of civilian goods.	.
It is clear to me, and I think I can make it clear to my hon. friend.


James MacKerras Macdonnell: That is not necessarily the same thing.


Clarence Decatur Howe: My memory is perhaps helping me. I think I can explain it now. The Polymer Sales Corporation bought crude rubber where it could at the price it had to pay. It sold the rubber going into consumer goods at the ceiling price. The stabilization corporation objected to stabilizing rubber going into military goods. It said: We are responsible for the consumer but we are not responsible for the war, and therefore you must separate the crude rubber that goes into civilian goods from the crude rubber that goes into military uses. Therefore, after the total subsidy had been arrived at, it was divided into two items, one of which was paid by the stabilization corporation and the other by the Department of Munitions and Supply. One was called stabilization income, paid by the stabilization corporation, and the other was the war item, called surcharge income, which was paid by the Department of Munitions and Supply. But both covered the same item; that is, the difference between the purchase price of crude rubber and its sale at the ceiling price.


James MacKerras Macdonnell: The minister has made it clear about the $10,000,000 profit that we had by virtue of regarding ourselves as shareholders. Nevertheless, when you are looking at it from an accounting point of view, it would have been better to charge yourself some interest on your investment. But let that pass. Do I understand that what is shown here as sold in 1945, totalling $29,000,000, was the total output of Polymer? The minister said something about that 'being sold to the public or to the trade, or did I misunderstand him? Was that the total output?


Clarence Decatur Howe: The $29,000,000 is the sales of rubber and other commodities for the year ended March 31, 1946.


James MacKerras Macdonnell: Was that the total output for that year?


Clarence Decatur Howe: Yes.


James MacKerras Macdonnell: And that was the total income of Polymer for that year?


Clarence Decatur Howe: The sales were as follows:
Buna S rubber	
$25,512,044	09Butyl rubber	
2,606,883	60Ethylbenzene	
789,699	08Cumene	
551,106	96


James MacKerras Macdonnell: How was the price arrived at?


Clarence Decatur Howe: Buna S was sold at the ceiling price which was established for that commodity.


James MacKerras Macdonnell: How was it established1?


Clarence Decatur Howe: By the wartime prices and trade board. It was the same price at which it sold in the United States, 2oy2 cents. That was the ceiling fixed for synthetic rubber as against a 25-cent ceiling for natural rubber.


James MacKerras Macdonnell: Was that fixed for this large volume or for smaller amounts?


Clarence Decatur Howe: That was the price fixed1 to the manufacturer.


Alistair McLeod Stewart: I think the minister can have a rest for a few minutes while I say something to our Tory colleagues. The level of debate in this house is usually fairly decent, even although it is quite frequently dull. When it gets indecent, as when a discussion takes place on the Japanese, for instance-


Arthur Leroy Smith: On a point of order, Mr. Chairman-


Alistair McLeod Stewart: There is no point of order involved.


Arthur Leroy Smith: Will you allow the Chairman to decide?


Alistair McLeod Stewart: Will you please sit down.
Mr. SMITH (Calgary West)1: You are big but you are very much annoyed. I suggest, Mr. Chairman, that the Japanese have nothing to do with this subject.


William Henry Golding: That is quite right.


Arthur Leroy Smith: You see I was right.


Alistair McLeod Stewart: The hon. member for Lambton West to-night made an insinuation, which I think was wretched and cowardly, against a group of people in this country, and that, following upon the protestations for civil rights and appeals for liberty which come from the Tory party enables us to judge how much sincerity there is in them.

Research Council


Arthur Leroy Smith: Mr. Chairman, the hon. member referred t-o a statement made by the hon. member for Lambton West as cowardly. Let him take it back if he has the guts he has for his size.


William Henry Golding: I hope the hon. member for Calgary West will take back the remark he has just made.


Arthur Leroy Smith: I certainly will. Let him join me.


William Henry Golding: Thank you.


Donald Methuen Fleming: If I am correctly informed, Mr. Chairman, the word "cowardly" is entirely unparliamentary and must be withdrawn. No member of the house is entitled to use that word of another member under any circumstances.	-


William Henry Golding: I ask the hon. member to withdraw it.


Alistair McLeod Stewart: In
deference to your ruling, Mr. Chairman, I withdraw the word but you know what I mean.


Harry Rutherford Jackman: The hon. member must retract without any qualifications whatever.


Alistair McLeod Stewart: The Chairman will decide whether I am in order or not.


William Henry Golding: The hon. member must withdraw the word "cowardly".


Alistair McLeod Stewart: Very well, Mr. Chairman, I do. Something has been heard in this house about the iniquities of the government, and I have no doubt they are plentiful, in allegedly selling materials at very low prices. But there are two parties to every sale, the seller and the buyer, and be it noted that those who are doing the buying from the government are the same private enterprisers of whom the Tories are so proud. They are the ones who are getting the benefit of it. They are the ones who are getting all the gravy, and there is a lot of it going.
Another statement made was that the balance sheet of Polymer was uncommunicative. I think that is true. There is no question of its being rather uncommunicative, but it is not more so than the balance sheet of any other commercial organization that I have seen, and I do not think that is an unduly strong lash to use against the government. I would say to the minister, much as I admire his undoubted ability, that there are nevertheless
times when he makes statements that are not altogether borne out by the facts. On March 23, 1944, he made this statement:
I do not favour cartels. I believe that the cartel is a relie of the past that is rapidly disappearing. I wholly agree with its disappearance. I believe that the disappearance of the cartel will be a benefit to industry as a whole. Canada has been singularly free from cartels.
That is surely an imaginative statement in view of this report of the commissioner under the Combines Investigation Act in regard to international cartels. The contents of the pamphlet are, in part:
1.	Examples of cartel arrangements affecting Canadian import commodities.
Fertilizers: Potash, Nitrogen, Phosphorus
Tanning materials:	Quebracho
Flat glass
Sulphur
Dyestuffs
Tools-Cemented Tungsten Carbide Magnesia Refractories Titanium Pigments
2.	Examples of cartel arrangements restricting Canadian manufacturers to home market on exclusive basis
Chemicals Soda Ash Electric Lamps Radio Tubes and Sets Matches
3.	Examples of cartel arrangements involving participation by Canadian exporters
Base Metals:	Copper, Lead, Zinc, Nickel
Steel _
Aluminum
Acetic Acid	.
Radium
Newsprint
In the course of his speech when he introduced this resolution the minister said, as reported at page 1517 of Hansard:
I have yet to hear any businessman suggest it was not a good thing for Canadian business to have Canada's only source of rubber in the hands of the government, rather than in the hands of a private corporation.
I find myself in complete agreement with him on that statement, but why does he restrict himself to rubber alone? Are there not other materials equally necessary and valuable to Canada apart from rubber? One of them, one with which the government has had something to do, is magnesium. Although I support the principle of the resolution, I submit that the government ought to go farther in this matter of crown companies and take under its aegis or its wing those corporations which are dealing in a monopolistic way with materials that are vital to the welfare of Canada, one of which, as I have said, is magnesium. The history of this 'metal is interesting. At the end of the last war it cost $5 a pound in the United States and there were
Research Council

eight competing companies. Two years afterwards, there were only two competitors, one being the American Magnesium Corporation, a subsidiary of Aluminum Corporation, which I shall call Alcoa, and the other was the Dow Chemical company. For a number of years these two corporations were apparently in competition because the price fell to fifty-five cents a pound in 1927. Then the American Magnesium Corporation and the Dow Chemical company came to an agreement whereby they were going to split the market and sell the material on a certain basis at a certain price agreed to between themselves. One of the reasons for that was that the aluminum monopoly feared competition. It had invested millions of dollars in bauxite and did not want that investment imperiled by this new light metal, magnesium. The Department of Justice, as a matter of fact, ruled that the companies had agreed to keep the price of magnesium one-third higher than the price of aluminum, and in this connection I would quote from "Patents for Hitler" by Guenter Reimann, who, in turn, quotes Norman M. Little, assistant United States attorney-general, who made the following statement in a lecture delivered before the Indiana state bar association:
And so it is with a productive capacity in the aluminum industry inadequate to meet the numerous demands of the expanding airplane industry, we are also simultaneously confronted with a limited capacity for the manufacture of magnesium, the only competing metal! This is all the more appalling when it is realized that of the sources for magnesium, brine deposits and magnesite are plentiful in this country.
In Germany the nazis had realized to the full the value of magnesium. The price was exactly the same as that for aluminum, and realizing its value, the Germans in 1931 came to an agreement with Alcoa whereby the patents of Alcoa were pooled with the I. G. Farben company and there was formed the Magnesium Development company. That organization was formed, not for purposes of production, but with the object of holding patents. The only company which was granted a licence was the Dow Chemical company, and by special agreement production was limited. This, again, was private enterprise at work, ensuring for themselves the maximum profits, no matter what the danger was to the country.


Arthur Leroy Smith: Will the hon. gentleman please tell me what he is quoting from?


Alistair McLeod Stewart: I was quoting from the Truman report in the United States on the patent inquiry before the senate.


Arthur Leroy Smith: Just what are you saying and just what does the report say?


Alistair McLeod Stewart: The facts I am giving are taken from the Truman report. It will probably be found in the library.


Arthur Leroy Smith: Do not use the word "facts". You are quoting opinions.


William Henry Golding: Order.


Alistair McLeod Stewart: The result of that policy was that at the beginning of the war German production exceeded United States production by ten times. The value of this metal is obvious when one considers that aluminum is a third as heavy as steel and magnesium half as heavy as aluminum. The government apparently decided that this was a necessary and vital metal for the war effort and started a plant at Haley's Station, and last year as will be found in sessional paper 241, I asked certain questions. I quote:
Was a new process for producing magnesium developed at thfe national research council? If so, who was responsible for this development?
The answer I received was:
An old process for the production of metallic magnesium was investigated by a private group and funds were provided by the group to have the process tested at the national research council laboratories. A small pilot plant was set up and out of this came improvements that were applied in the construction of the commercial plant. The work was done under the direction of Doctor Lloyd Pidgeon of the national research council staff and became known as the Pidgeon process.
I next asked:
Was a crown company formed to exploit this development in Canada?
The answer was:
No. Dominion Magnesium Limited was formed by the original group of parties interested and acquired a deposit of dolomite near Haley's Station, Ontario, in an area where power was available.
After investigation of the cost of the erection of a plant to produce magnesium in Canada, the capital cost for the required production rate was found to be lowest by using the Pidgeon process so the minister of the Department of Munitions and Supply entered into an agreement with the Dominion Magnesium Limited to design, construct and operate a plant on the property near Haley's Station, Ontario. The supervision of the work was carried out under Wartime Metals Corporation starting in April, 1942.
The cost of the plant to the dominion government to produce this material was $3,464,102.15. Afterwards, we got rid of it to this company for $1,400,000. I am going to suggest to the minister that he consider very

Research Council
seriously the advisability of taking this plant over again on the basis that what it is producing is vital for Canada, not only in war time but also in peace time, and also in view of the fact that there is no guarantee at all that the new company will not enter into some cartel arrangements with foreign countries to the detriment of Canadian trade.
In the Financial Post of May 18 it is stated that a new marketing agreement has been completed by the company with Swedish interests and that a similar agreement is in process of being completed shortly with interests in Belgium. The wording may be unfortunate, but at least it smacks too much of the cartel arrangements which have been made in the past.
Now a word about the Aluminum Corporation, which is also another monopoly in this country and which, therefore, should be government-owned and controlled. A debate has already been held in this house on more than one occasion when the charge was made that aluminum was a monopoly. I believe there was an investigation into the matter by a committee, and the committee tried to whitewash the corporation. They did not succeed. The United States department of justice showed that it was a monopoly, and so it is. The danger of monopoly is that the men who run it are more interested in making profits for themselves than in looking after the interests of the country. That, I think, can be easily seen from the senate inquiry in the United States. Again I quote, and this time Mr. Thurman Arnold, who appeared before the patents committee where he was asked some questions about Alcoa's monopoly. The charge had been made that when this great monopolistic corporation knew processes had been discovered which threatened to impair the capital of the company, it had bought the processes and filed them away, thus not making them available for the benefit of the nation as a whole.
Thurman Arnold stated:
To Alcoa's monopoly, the use of the processes covered by those patents would have been disastrous, for its monopoly is basically a monopoly control of bauxite resources; its control of processing and fabricating facilities would have been much easier for a competitor to challenge. As a result, when a potential competitor appeared in this country with the Haglund patents for making aluminum from something besides bauxite they finally reached an agreement with him on a very remunerative basis. He received, I believe, about a million dollars and employment as a consultant at a fancy figure. The process never went into production; and Alcoa only recently was referring to the processes as "experimental," although we are informed that Italy has had them in production since 1928.
To add further to the patriotism of these great monopolies I would call to the attention of the committee the case of Mr. Arthur Bunker, who was the chief of the aluminum and magnesium section of the OPM, one of the dollar-a-year men. It was his task to preside over this section and, although the United States government provided funds for financing new plants, there was extraordinary difficulty in getting these funds used. Protests were made continually to the government that no additional aluminum plants were made because the same Mr. Arthur Bunker who was getting a dollar a year from the government was also getting 860,000 a year from the Lehman Corporation, which had a large investment in aluminum shares. These are only two examples of monopoly in this country which ought to come under government control, and I can think of no better method than that of the crown corporation. May I commend that to the attention of the minister, especially in view of his statement which I again repeat:
I have 3'et to hear any businessman suggest it was not a good thing for Canadian business to have Canada's only source of rubber in the hands of the government, rather than in the hands of a private corporation.
If that is good for one monopoly it is good for others.


Ernest George Hansell: I have listened with some interest to the previous speaker's talk on this resolution. I was particularly interested in the challenge thrown out by the hon. member for Calgary West to the hon. member for Winnipeg North. I thought immediately of going to the lobby and standing on the sidelines-


Alistair McLeod Stewart: I
would have put him to bed.
Mr. HANSELL; However, I was also interested in the speech of the hon. member for Winnipeg North, because in my imagination I saw another scene. I almost saw him going over to the Minister of Reconstruction and Supply, putting his arms around him in brotherly fashion and beginning to sing with him; "Hail, hail, the gang's all here".


Alistair McLeod Stewart: If the minister takes my advice I will do it.


Ernest George Hansell: It might be all right.
Personally I cannot work up any enthusiasm over this resolution, which calls for a measure which will form the basis for the organization of all crown companies. I suppose the minister has in mind the three large companies which have been mentioned previously. Nevertheless the legislation does
Research Council

provide the basis upon which all crown companies could be incorporated. I am not going' to go into the details such as the sale and purchase of equipment, the prices paid, and all that sort of thing. I should like to deal with the matter from a more general point of view. I should like to touch upon the principle. It seems to me that the big principle is, generally speaking, do we favour the government going into business? I am quite prepared to .say that times and circumstances may arise when it is wise for the government to do business and to set up a crown corporation, but I am never enthusiastic about it. I cannot see much difference between that and what is generally accepted as being the philosophy of socialism. There may be a difference but I am sorry I cannot see it.
An lion. MEMBER: What about the Alberta bank?


Ernest George Hansell: All these questions can be asked, but for myself I am saying that I cannot work up any particular enthusiasm about government going into business, and I do not care what government it is. Of course there is some little excuse for the government to be in business in time of war. That is a time of emergency when certain freedoms have to give way to a type of regimentation, a type of control, because there is a specific job to be done. I am going to compliment the minister; I think I can do that without going too far as a member of the opposition, in saying that during the war he did a fair job in bringing this country into the full-time productive effort that was required. But since the war has ended some of us have been looking for some of these controls to be loosened up a little and dropped off. Sometimes I wonder if the minister has not just a little bit of a mania for wanting a finger in a great many pies. Whether he has or not, I do not know, but I do not want him or any minister to become a sort of czar of government business.
Sometimes these government corporations start quite innocently. Their intentions are good. I might refer to the Canadian Broadcasting Corporation which was innocently brought into existence to see that the Canadian public got good radio free from abuses, and so on. But over the years that corporation has gradually taken to itself tremendous authority, and has practically become a radio monopoly in Canada. I deplore that.
There is something else with respect to government corporations, and it is this. They do not necessarily have to operate at a profit; they can operate at a loss. Let us recognize that. Let no one say that I am in favour of

exorbitant profiteering, but government corporations do not have to operate efficiently by reason of the fact that they must make both ends meet. If they do not; if they show a loss, the government can say, "Well, we always have the taxpayer to rely upon to make up any deficiencies," so the public pays just the same. I believe that in the minds of the Canadian people to-day there exists a desire gradually to do away with controls. The present administration may put on a bold front and say, "Gradually we are going to do away with these controls." But if, in place of these controls, they set up huge government corporations with power to regulate business, then the effect of controls is there just the same. I need only refer again, as an example, to the Canadian Broadcasting Corporation. It is supposed to be in the competitive field of radio; yet it makes the rules and regulations. By reason of special authority given to it under the act, it controls radio in Canada; and no fooling. There is nothing to say that ultimately any government corporation cannot do the same thing in its own line of business. I believe in private enterprise.


John Ritchie MacNicol: That is good common-sense.


Ernest George Hansell: I think it is, and I like to be a good commonsense man. I do not believe private enterprise has any right to license. I believe there is a place where, by legislation rather than controls, by law, private enterprise can be governed according to statute. I believe private business itself should be alarmed at the trend of things to-day in this country and in the world. It is all very well to say that we must have government corporations to combat monopolies; but, generally speaking, when government corporations come into existence they become monopolies, and monopolies under the state. Private business has need to be alarmed at that trend.
I am going to suggest, too, that labour should be alarmed. Perhaps on the face of it that may sound strange, but the more the government goes into business, the less freedom labour will have. Let them recognize that.


John Ritchie MacNicol: And the less labour.


Ernest George Hansell: Yes, perhaps there is something in that, too; less labour. Instead of dealing with local management as labour can to-day, it will have to deal with all-powerful governments. There is a place where the Canadian people can lose their freedom even

Research Council
in what might appear to be a type of legitimate business, if that business is government owned and operated.
I am going to advance one further thought, because I believe that government in business affects parliament in the sense that parliament has been regarded as a legislative body. Members of parliament have been regarded as legislators. But it seems to me that parliament has become and is more and more becoming an administrative body, and that, instead of members being legislators, they are fast becoming government agents. I mention this because some great man said that country is governed best that is governed least. Someone might remind me who made that statement.


Harry Rutherford Jackman: Burke.


Ernest George Hansell: It is a pretty good saying, whoever said it. The more government goes into business, the more legislators become agents and, if they are on the government side, apologists for what the government is doing, while if they are on the opposition side they become perhaps business critics, when we should be laying a legislative foundation upon which business, people and the country itself can be free and enjoy the liberties of mankind that our democracy, if it is effective at all, can offer the country. I think we are all cognizant of the fact that parliament is beginning to fall into disrepute in this country. The public are beginning to feel that we are dilly-dallying. The public are beginning to feel that we are dealing with a lot of non-essentials, trivial things, when there are such big issues in the world to deal with. I say that because I believe that the more the government go into business, the more critical we have to be of the dollars and cents they may spend, or the amount they may make here, or the individual who may be employed here, or the authority given to somebody over there. To my mind, it is all a matter of private and individual liberty.
Let us be legislators, creating a legislative foundation upon which the country can build a real, effective and free democracy, where the people themselves will enjoy to the fullest extent all that Canada can offer them.
I cannot work up any great enthusiasm for the measure, because I do not know where it will lead us. I do not agree with the principle of the government in business.


Clarence Decatur Howe: I would remind the hon. member that the Liberal government is at least working in his direction. A year ago we had thirty-one crown companies. At present we have liquidated eighteen and are in process of liquidating eight more. In a short time we will have reduced crown companies thirty-one to
five. So that we are at least working in his direction.


Ernest George Hansell: May I ask a question- and I have just now reached the question period. I was not in the chamber when the discussion on the resolution took place. However, I must ask this question:	Why is this
measure necessary? We now have three companies, and I believe they are operating. In respect of other corporations, we have specific acts as a result of which those corporations have been brought into existence, and upon which they operate.
They operate according to their particular law. For instance, there is the act affecting the Canadian Broadcasting Corporation, and another act for railways. Why do we have this one?


Clarence Decatur Howe: These are companies under part I of the Dominion Companies Act. They were established under the War Measures Act, and financed from war appropriations. They are being given power here to carry on under the provisions of the Dominion Companies Act, by a special appropriation from parliament, if necessary. We are simply giving them a status which they have not, except through war legislation.


Donald Methuen Fleming: I should like to ask the minister some questions. Perhaps I might follow the procedure I followed this afternoon, namely, that of putting my questions individually and thereby facilitating the answering of them.
Is it correct to infer from the minister's remarks that this measure is intended to be of general application? It will not simply specify the five companies or corporatioins which the minister has referred to as being likely to continue in existence for some time?


Clarence Decatur Howe: It is of general application. The terms of the bill to be founded on the resolution refer only to the organization and financing of the companies.


Donald Methuen Fleming: Are the terms such that the bill is capable of application to corporations hereafter created?


Clarence Decatur Howe: Yes. It does not contain power to create new companies, but its terms could apply to companies created subsequently.


Donald Methuen Fleming: Will it make these corporations liable to be sued and entitled to sue?


Clarence Decatur Howe: Yes.


Donald Methuen Fleming: Like any ordinary
corporation?


Clarence Decatur Howe: Yes.
Research Council


Donald Methuen Fleming: Will it make provision for submission to municipal taxation in the form which this house approved last year in connection with the Central Mortgage and Housing Corporation? I am referring to municipal taxation. I think we are all agreed that there is no power on the part of a municipality to levy taxes against property owned by the crown in the right of the dominion. But we have the precedent set out in section 30 (2) of the Central Mortgage and Housing Corporation Act, chapter 15 of the statutes for 1945, which provides:
Where title to real or immovable property becomes vested in the name of the corporation or of His Majesty, whether alone or jointly with any other person, in consequence of foreclosure or other proceedings taken in respect of a mortgage assigned to the corporation or to which His Majesty is a party under the housing acts, the corporation may pay to a municipal or other taxing authority an amount equivalent to the taxes which might be levied in respect of the said property or of the interest of the corporation or of His Majesty therein by the said authority if the said property or interest were not so vested, and may enter into such agreements as may be necessary to give effect to the provisions of the subsection.
Will this bill make such provision?


Clarence Decatur Howe: I scarcely think such provision would apply. That provision is one where a corporation holds a mortgage on a property', and later has to take possession. In such event- it can continue to pay taxes. But I think that would scarcely help any corporation the government might establish.


Donald Methuen Fleming: It goes farther than that. That is only the aspect of the Central Housing and Mortgage Corporation which has to do with mortgage business. The other portion has to do with the acquisition of land for housing purposes. It puts the corporation in precisely the same position in respect of taxation by a municipal corporation, or other taxing authority.


Clarence Decatur Howe: I have read the section carefully, and I can only find reference to property acquired by foreclosure.


Donald Methuen Fleming: I take it that the minister's answer is that the bill will not contain a comparable provision with respect to taxation by municipal or other taxing authorities?


Clarence Decatur Howe: No; an amendment to the British North America Act would be necessary before such a provision could be inserted.


Donald Methuen Fleming: It is because of the provisions of the British North America Act that the word "may" was used in the section I read. This matter was discussed in connection with the bill setting up the Central Housing

and Mortgage Corporation, and I cannot see any distinction in principle. If it is proper that the Central Housing and Mortgage Corporation in respect of land owned by it should submit to municipal taxation through legislation in this form, then I do not see why a similar provision should not be written into a bill of this kind which affects other crown corporations. However, the minister has indicated that that is not so.
When the resolution was before the committee on the last occasion the minister indicated, as will be found at page 1512 of Hansard, that he would be willing to table financial statements of any of these corporations which are to be continued. Will he be good enough to submit to the committee the financial statements of Wartime Housing Limited and Research Enterprises Limited? Those are two in which I am particularly interested.


Clarence Decatur Howe: All the balance sheets are published in the public accounts for the fiscal year ended March 31, 1945.


Donald Methuen Fleming: I have seen the public accounts, but I take it that when the minister made his offer he meant that he was prepared to bring before the committee a financial statement that was completely up to date in in each case. The information contained in the public accounts is now fourteen months old'.


Clarence Decatur Howe: I have statements which -have been furnished me, but unfortunately they have not been audited. I would be glad to give the information contained therein, but I would hesitate to table as a financial statement anything that the auditor general has not had an opportunity to audit.


Donald Methuen Fleming: Probably the minister would make them open to inspection by members?


Clarence Decatur Howe: Certainly.


Donald Methuen Fleming: This afternoon reference was made by the minister to the desirability of referring the annual statements of crown corporations to a standing committee of the house. Does he propose to provide in the bill that these statements shall be tabled in parliament? Will he indicate, also whether the government intends to take steps either to set up a committee to review these statements or to clothe some standing committee with power to do so?


Clarence Decatur Howe: It would hardly be appropriate for me to instruct parliament as to what it should do with a report or with a bill. Any

Research Council
member of parliament can ask that a bill be referred to a committee of the house. I have suggested that I thought it would be appropriate to refer these statements of crown companies to a committee. At the present time they are referred to the war expenditures committee, and1 I suggested that perhaps an appropriate committee would be the committee on railways and shipping, government owned. I would welcome any suggestion from hon. members as to an appropriate committee.


Donald Methuen Fleming: There is a point which arises out of the statement appearing in the press to-day concerning the new order issued by the government, under which control of Wartime Housing Limited and veterans housing will be lodged in the Central Mortgage and Housing Corporation. Will the minister indicate what bearing this will have upon the operations of Wartime Housing Limited, because that is a crown corporation to which the minister has referred several times during the course of the deliberations on this resolution. He indicated that this corporation would probably carry on for two or three years, but that it was not intended to be carried on indefinitely.


Clarence Decatur Howe: I think my hon. friend has answered himself. The company is brought under the aegis of Central Mortgage and Housing Corporation. Eventually, when it becomes purely an administrative company, its functions will be merged with those of Central Mortgage and Housing Corporation. While it remains a building company, it will continue to operate as a separate identity and will, perhaps, absorb some of the work at present being carried on by other building agencies of the government. For example, it will probably be the contractor for emergency housing, which now functions under the control of the Central Mortgage and1 Housing Corporation.


Donald Methuen Fleming: Does the government contemplate introducing further legislation along that line which would define the relationship of Wartime Housing Limited to Central Mortgage and Housing Corporation, or of the minister's department to Central Mortgage and Housing Corporation? Under the 1945 legislation which set up the Central Mortgage and Housing Corporation, the corporation was placed under the administration of the Minister1 of Finance, but by an order in council passed a month ago it was transferred to the Minister of Reconstruction and Supply. Is it the intention of the government to introduce legislation in that respect at this session?


Clarence Decatur Howe: Consideration is being given to certain amendments to the Central Mortgage and Housing Corporation Act.


Donald Methuen Fleming: At this session?


Clarence Decatur Howe: Yes.


Arthur Leroy Smith: I wish to ask two or three questions which perhaps might better be defined as suggestions. In the meantime I cannot overlook the amazing support given to the principle of this bill, in which I join, by my hon. friends over here. I had occasion to say last fall that they are anxious for the socialization of everything, and they are in great support of the minister on this particular occasion. I noticed they put in their oar and then immediately went away because no doubt they had more important things to do than listen to the minister's answers.
My first problem, my first question and my first suggestion is this: When the minister considers creating a crown corporation will he not consider bringing it within the orbit of a separate bill? He has suggested three corporations, Polymer, Eldorado and Arsenals. I know the minister will realize that I am not attributing anything wrong to him because, from the best information I get, he is going to leave the government on October 31. I cannot see any connection in discussion between Polymer, Arsenals and Eldorado. I know that any schoolteacher would immediately say to me, "Are you so dumb that you cannot separate those things in argument?" I confess that I am that dumb. What I have in mind is that once we get a bill which generalizes about crown corporations it is a very simple thing to bring in a little amendment for one or two more or, as the minister said to-day, maybe twenty.


Clarence Decatur Howe: We had thirty-one at one time. We are cutting them down to five, and I do not think it will ever be any more than five.


Arthur Leroy Smith: But you said it might be twenty. There are some wonderful expressions of speech such as hyperbole and literative harmony. I do not know what that last one means, and I am inclined to think my schoolteacher friend over here who accuses us of not being farmers will know exactly what that figure of speech means.


Alistair McLeod Stewart: You had all of nine to vote for your amendment.


Arthur Leroy Smith: I am just going to say a word or two to the hon. gentleman for Winnipeg North, and I use the word "gentleman" advisedly because he is a very good friend of mine, who last spoke. His position is this: He will go anywhere with anybody who will create socialism. He recog-
Research Council

nizes us in this group as his enemies. God bless them; let him keep on thinking that because, for the first time in his life, he is right, He is one of those theorists, one of those people who know all about architecture but who have never built anything. He is one of those persons who know all about bridges but never did anything but swim under them. So that I thoroughly understand his position. Nevertheless he is one of the most delightful men this House of Commons ever saw, because he has such wonderful idealism. It is an amazing thing that he has never run up against a few practical facts.
May I suggest to the minister that in bringing in bills or resolutions for the forma-ation of crown companies he bring in one at a time? I am all for the principle of the research council spreading its wings and doing a great deal, but why cannot we deal with one thing at a time? I and my hon. friends to my left differ fundamentally on the principle of doing business. I believe in a principle. I believe in the research council. I believe in its expansion, but I cannot understand why the minister should suggest that blanket authority be given to the research council to form corporations. The minister mentioned one thing. He said, with respect to patents owned by the corporation, that they should be sold at the price the market would bear, and I go with him. But why you should require a corporation to do that business is utterly beyond me. Will the minister not now say what things he wants corporate authority for? If you have a patent to sell you can put an ad in the newspapers and ask for tenders. You do not need a corporation to do that simple thing.
Let me make a comparison between these crown companies and the Canadian Broadcasting Corporation, which is also a crown company. I tried for several days in the house to find out whether the broadcasting corporation had bought one and a half million dollars of equipment. I tried to find out whether they intended to take over certain wave lengths belonging to three stations, one in Toronto, one in Winnipeg and one in Calgary. I was stupid, if you will, but I was persistent, as most stupid people are, and the Minister of National Revenue, who is not in his seat to-night-told me that he did not know whether these things had been done or not. I then asked the parliamentary assistant to the Minister of Reconstruction and Supply, and he told me that he would accept my question as a notice. Of course I knew they had sent out word a month before to these stations that they were going to take over their wave lengths. Why could we not have been told that in the House of

Commons? It is easy to say that these corporations can be reviewed before the House of Commons, but let us see just what can happen. The act setting up the Canadian Broadcasting Corporation provides that the corporation may not spend more than $10,000 without the approval of council and that they may not order anything costing over $10,000 without the approval of council-but we now learn that they have ordered material to a value of $1,500,000.
Do not let anyone think I am suggesting for a moment that the gentlemen who are put in charge of these corporations are not honest. Let us admit that they are, but power begets power. I am going to say something about the Minister of Reconstruction and Supply which I hope he will accept as a compliment. There is a chap named Petrillo in the United States who looks after musicians and they are going to pay him $400 a week for what? For one hour's work a week. The Minister of Reconstruction and Supply and Petrillo are both .drunk with power. So do not let these corporations get away from us. I think the Minister of Reconstruction and Supply is the most honourable man I know, but Petrillo is a rotter and a crook. I am not comparing them in that way at all because they are as the polea apart.


An hon. MEMBER:: Eleven o'clock.


Clarence Decatur Howe: Mr. Chairman, we have spent all day on this, and it is only a resolution. We shall have an opportunity to cover the whole ground on the bill. I wonder if the committee would agree to allowing the resolution to pass now to round out a day's work.
Resolution reported, read the second time and concurred in. Mr. Howe thereupon moved
for leave to introduce bill No. 155, respecting the operation of government companies.
Motion agreed to and bill read the first time.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Tuesday, May 28, 1946.