1946-06-04

Mr. SPEAKER:: I have the honour to inform the house that I have received notices of the vacancies which have occurred in the electoral districts of Pontiac, province of Quebec, and Portage la Prairie, province of Manitoba, and I have issued my warrants for writs for new elections in these electoral divisions.



WOMEN IN ATTENDANCE IN THE GALLERIES- WEARING OF HATS

James Horace King: With reference to the question asked by the hon. member for Qu'Appelle in connection with ladies having to wear hats in the galleries, which reads as follows in Hansard of May 29, page 1984:
There is a matter I wish to draw to the attention of the acting house leader, the Minister of Veterans Affairs. It has been the custom not to allow women in the gallery without some kind of head covering. So many women go everywhere now without hats that the observance of this regulation is enforcing indignity on this house . . .
Pursuant to this question I made the following statement:
As the question asked by the hon. member concerns the house. I suggest that she put her question to the Speaker, but not from the floor of the house, as it is against the rule. I shall be very glad to give it consideration.
After a few days of meditation and mature consideration I have prepared the following statement.:
The practice of requiring women to wear hats in the galleries of the House of Commons was probably borrowed from what was until recently the practice in all churches. Indeed in the churches it may very well have been looked upon as a rule promulgated by Saint Paul, both in the first epistle to Timothy, in which he recommends that-

women appear in churches in decent apparel, adorning themselves with modesty and sobriety, not with plaited hair, or gold, or pearls, or costly attire, and that they learn in silence . . . But I suffer not a woman to teach nor to use authority over the man: but to be in silence.
[DOT]-and also in his first epistle to the Corinthians in which he ordered:
Let women keep silence in the churches: for it is not permitted them to speak, but to be subject as also law saith.
The fact that women have now become eligible to the House of Commons and been given the right to speak their minds there, 
even if it does involve "teaching and using authority over the man," shows that the church rules need not necessarily apply to parliament.
As a matter of fact I am informed that the Church of England dispensed during the war with the rule that women appear in church with their heads covered, and that it is not apt to be reestablished there. As far as this house is concerned, I have made enquiries and I have found that there never was any written rule about the matter. I am not disposed to adopt any severe decree; for I think it is advisable to leave the decision to the ladies themselves. I am sure that whether they are covered or hatless their presence in the galleries will always be welcome.



INDIAN ACT


[Stage Direction]
Mr. D. F. BROWN (Essex West) presented the second report of the special joint committee of the Senate and the House of Commons, appointed to examine and consider the Indian Act, chapter 98, R.S.C., 1927, and all such other matters as have been referred to the said committee, and moved that the report be concurred in.
Motion agreed to.


Mr. THOMAS REID (New Westminster):: Mr. Speaker, I desire to lay on the table a petition signed by thousands of residents in British Columbia urging the repatriation of Japanese. This petition comes from the Japanese repatriation league, and reads:
To the Honourable the House of Commons in Parliament assembled:
The petition of the undersigned of the province of British Columbia humbly sheweth:
That your petitoners view with ' alarm the fact that approximately two-thirds of the persons of the Japanese race in Canada are still in the province of British Columbia and that a very small number have been resettled east of the Rocky mountains on a permanent basis.
That your petitioners are unalterably opposed to persons of the Japanese race being permitted in the said province which is a natural defence area for Canada in the event of war on the Pacific.
Wherefore your petitioners humbly pray that your honourable house may be pleased to enact such measures as may be necessary to make certain:-
1.	That persons of the Japanese race shall not be permitted to reside in the province of British Columbia.
2.	That all persons of the Japanese race not permanently resettled east of the Rocky mountains are repatriated to Japan or resettled in

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territory in the Pacific ocean under the jurisdiction of the united nations or whatever international organization may be founded.
And your petitioners as in duty bound will ever pray.
Dated the 1st day of March, A.D. 1945.
This is only one of a number of petitions that will come to the house.



STRAIT OF CANSO CAUSEWAY


[Stage Direction]
On the orders of the day:
Mr. CLARENCE GILLIS (Cape Breton South):: May I be permitted to direct a question to the Minister of Transport. On March 22 of this year the minister intimated that he might be in a position at the end of May to make a statement with regard to the progress being made in the development of the causeway project across the strait of Canso. Can he make a statement now?


Hon. LIONEL CHEVRIER (Minister of Transport):: The hon. gentleman was good enough to send me notice of the question. I have a statement which I am happy to give him now. The present position of the Canso investigations is as follows:
1.	A good subsurface survey of the site of the causeway is completed.
2.	Five borings to rock have been made at the lock site at the west end of the causeway.
3.	One boring to rock has been made at the east end of the causeway.
4.	A proposal to put down five borings in the central section of the causeway from J. P. Porter has been accepted and material therefor has been ordered by the contractor. Work should start in the near future.
5.	The above proposal includes two borings on the site of a possible bridge.
6.	A subsurface survey on the sites of new terminals on either side of the strait is completed.
7.	Much field work has been completed in study * of possible railway diversions.
8.	Four borings have been completed on the possible site of terminals at Steep Creek and on the shore opposite.
9.	A barometric, reconnaissance survey of the country between the Sunnybrae line and Antigonish-Mulgrave line has been completed and an excellent low grade route has been found for connecting these lines.
10.	The geological survey have given us a new report on the territory in the vicinity of the causeway and the availability of material for its construction.
The services of Mr. S. W. Crowell of Amherst have been secured and a survey party headed by him will be in the field in one
week's time if all goes well. During this summer we expect to spend about $45,000 on borings and $15,000 on surveys. We shall probably complete our work in September.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. ALISTAIR STEWART (Winnipeg North):: I wish to direct to the Minister of Labour a question of which I have given him notice. What steps are being taken by the federal government to settle the dispute between the typographical union and the newspapers concerned?


Hon. HUMPHREY MITCHELL (Minister of Labour):: For the information of the hon. member for Winnipeg North and other hon. members regarding the stoppage of work in three newspapers published by the Southam Company-I speak now of three only; there may be others to-day that I do not know of,- the Ottawa Citizen, the Hamilton Spectator and the Edmonton Journal, the employees affected are members of the international typographical union. The work stoppage at these points has its basis in a similar stoppage w-hich has been in progress at Winnipeg since November 8 of last year, affecting the Winnipeg Tribune, also published by the Southam Company, and the Winnipeg Free Press, published by the Sifton interests.
In Winnipeg, basically the issues were the union's policy that its international law is not subject to arbitration, et cetera-and when I say "et cetera" I refer to the regulations set in motion by the respective governments of this country-the forty-hour week and payment for overtime if the union could not provide labour under its closed shop agreement. Unfortunately the situation had deteriorated to such an extent in Winnipeg by the time it reached the attention of my department that the appointment of two industrial disputes inquiry commissions and the holding of several conferences in Ottawa did not bring about a settlement.
The chief reason why my department intervened in the dispute was to prevent its extension to other newspapers of the Southam and Sifton chains. The Southam Company is taking the position that each of its local newspaper managements has control over local newspaper policy and labour relations. The union's position is that certain basic labour conditions must apply in all newspapers operated by the company. Apparently its individual managers in the Ottawa, Hamilton and Edmonton newspapers would agree to the pro-
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posals of the union, but no agreement can be reached in regard to the Winnipeg newspaper of the company.
My department has been in touch with the minister of labour of Ontario concerning the stoppages affecting the Ottawa and Hamilton newspapers. With regard to 'the Edmonton newspaper, my department has no jurisdiction in the province of Alberta.



LUMBER INDUSTRY-STRIKE IN BRITISH COLUMBIA

[Stage Direction]
On the orders of the day:
Mr. G. R. PEARKES (Nanaimo):: May I direct a question to the Minister of Labour? Is the minister in a position to give us any information with regard to the strike of the international woodworkers of British Columbia? My reason for asking the question to-day is that there were indications last night that work may have been resumed to-day.


Humphrey Mitchell: As my hon. friend and those interested know, Mr. Justice Sloan rendered his report on Saturday. I received it on Monday. I do not think it is necessary for me to give the details of his decision. The operators have already accepted the report. The men's organization have asked until Wednesday of this week to consider it. I can understand that, because they have to get in touch with their membership, which takes a little longer than with the employers. I hope that both sides will have the good sense to accept what I call a very fair report. It is not often that I use an expression of that kind in the House of Commons. I always endeavour to walk down the middle of the road.


Mr. COLDWELL:: To sit on the fence.


Humphrey Mitchell: Well, that is all right. I believe it is sensible, it is fair, and it is sound. I hope that the I.W.A. will have the good sense to see to it that they recommend it to their membership so that the necessary assistance can be given to farmers of British Columbia in connection with the forthcoming crop in that province.
Mr. CRUI'CKSHANK: I did not hear the last part of the remark of the Minister of Labour. Did he refer to the farmers of British Columbia, and if so would he repeat that portion of his statement? It may save my asking another question.


Humphrey Mitchell: I know what my hon. friend is interested in, and I said, "and to

render the necessary assistance to the farmers of British Columbia." Goodness knows they have been long suffering.



USE OF EMPLOYMENT SERVICE TO RECRUIT MEN TO REPLACE STRIKING SEAMEN

[Stage Direction]
On the orders of the day:
Mr. D. A. CROLL (Spadina):: I should like to direct a question to the Minister of Labour. In dealing with the seamen's strike, is the national employment service employing personnel to man the ships at the present time?


Humphrey Mitchell: I wish to say to the hon. member for Spadina that officially I know of no instance in which our employment offices are being used for the recruiting of men to take the place of members of the Canadian' seamen's union who are on strike through a dispute with the lake boat operators. If an operator filed a request with one of our employment offices for men to work on lake boats, the office would canvass those looking for jobs, and if they were interested in taking the job they would be cautioned that there is a strike and that they were taking these jobs to replace men on strike. Printed instructions have been given to managers of all our offices to explain this point to the men referred to jobs under these circumstances.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. H. W. HERRIDGE (Kootenay West):: I wish to address two brief questions to the Minister of Mines and Resources. Will the displaced Europeans and others mentioned in the minister's statement to the house on changes in the immigration regulations, Wednesday, May 29, have preference in time of admission to Canada over thousands of British ex-servicemen and women who have indicated their desire to come to Canada at the first opportunity? Has the minister any information concerning protests of British trade unions against admission to Great Britain for employment there of displaced persons mentioned in his statement?


Hon. J. A. GLEN (Minister of Mines and Resources):: The hon. gentleman sent me a copy of his questions. The answer to the first question is no. The controlling factor in the movement to Canada of admissible immigrants from the British isles and the continent of Europe is passenger accommodation. This was referred to in my statement

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to the house on May 29. Immigration facilities for the admission, of British subjects are now available; there is practically no movement of immigrants other than the dependents of our service personnel, simply because there is no steamship accommodation for them. Immigration facilities have not yet been provided for the examination of immigrants at continental ports, for the reason that there is no passenger service to Canadian ports. It will be recalled that on Wednesday last, when referring to immigration from the continent, I said that it is proposed to reestablish inspectional facilities on the continent as quickly as circumstances permit so that as transportation becomes available imigrants of the admissible classes may come forward.
The answer to the second question is no.



CONFERENCE WITH PROVINCES


[Stage Direction]
On the orders of the day:
Mr. W. R. THATCHER (Moose Jaw):: I should like to direct a question to the Acting Prime Minister. I am sorry I did not give him notice, but if he is not in a position to answer to-day, perhaps he would do it tomorrow . Has the government considered the advisability of reconvening the dominion-provincial conference? Have representations been received from any province asking that it be reconvened?


Right Hon. J. L. ILSLEY (Acting Prime Minister):: I intend to deal in my budget speech with the matter referred to in the hon. member's questions.


Mr. GRAYDON:: When will that be?


Major James William Coldwell: When may we expect the budget?


James Lorimer Ilsley: I shall announce that date just as soon as I am in a position to do so.


[Stage Direction]
On the orders of the day:
Mr. D. G. ROSS (St. Paul's):: I should like to direct a question of the Minister of Reconstruction. It arises out of a statement made by the deputy coal controller, Mr. Ian MacLaren. He said that widespread unemployment would result next winter because of the coal shortage. He said that it is not possible to assess fully the tremendous damage that the recent bituminous coal strike has caused Canadian industry, because of the possible shortage of 5,500,000 tons of coal. Would the minister comment on what his associate, the deputy coal controller, has said, and give us some idea of what our people are to have in the way of coal next winter?


Hon. C. D. HOWE (Minister of Reconstruction and Supply):: The statement of the coal controller is quite correct. We are behind in normal shipments of coal from the United States to the point of about five and a half million tons. The fact that there is a seamen's strike on the great lakes is putting us still farther behind. It seems impossible that we can make up the shortage between now and the time that coal will be required. We are doing the best we can. It is quite useless to ask me to-day where we shall stand next December. I have not the faintest idea, but I can assure hon. members that anything that, can be done will be done to provide heat for domestic users and for industry during the next cold season.


Douglas Gooderham Ross: If I may ask the minister a further question, is anything being done to get coal from Alberta, for instance? What effort is being put forward as far as that is concerned?



RADIO BROADCASTING


[Stage Direction]
Hon. IAN A. MACKENZIE (Minister of Veterans Affairs) moved:
That the name of Mr. Maloney be substituted for that of Mr. Leger on the special committee on radio broadcasting.
Motion agreed to.


[Stage Direction]
The house resumed from Monday, June 3, consideration of the motion of Mr. Howe for the second reading of bill No. 155, respecting the operation of government companies.
George Randolph Pearkes: Mr. Speaker, the hon. member for Vancouver South (Mr. Green), speaking yesterday in the debate on the motion for second reading of this bill, called attention to one of the objections to it, in that no provision is made for the payment by crown companies of any taxes, federal, provincial or municipal. I intend to devote my brief remarks this afternoon to that aspect of the bill before us, and that aspect only. I believe it is of interest to hon. members on both sides, since I notice on the order paper in the name of the hon, member for Vancouver North (Mr. Sinclair)
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a notice of motion referring to the heavy and unequal burden that is placed upon certain municipalities by these tax exemptions. This comes pretty close to home, because just across the border from my constituency is a small municipality of some 1,500 ratepayers. This I will use as exhibit A to show the burden which may be placed upon a small municipality which has within its borders a large number of government-owned buildings.
I desire to refer to the municipality of Esquimalt as the example, I might almost say the horrible example, of a small municipality which is throttled by the octopus of government-owned tax-free property. Out of a total assessment on land in 1946 of $2,000,000, nearly $700,000 is crown property. Referring to the improvements on this land, out of a total assessment of $11,000,000 for improvements, $9,000,000 is represented by improvements on crown properties which were erected prior to the outbreak of hostilities. That figure does not include improvements which have been erected during the years of war. It is impossible to give an accurate estimate of what those improvements might amount to, but a rough estimate would easily place them at an additional million dollars. Disregarding those improvements and dealing with the land alone, this small municipality suffers an annual loss of $22,912 at the present mill rate. During the war many of the choicest building sites and waterfront locations were expropriated by the government for the construction of crown properties, and in this connection there is an annual loss of revenue amounting to $7,500 from land which has been appropriated.
It is of little value to say that the' wages paid those employed in these government owned properties increase the wealth of the merchants of the community, because that is not so. Those working there are principally men connected with the services. The navy have their barracks and the army have their fortifications in the municipality of Esquimalt. If these men are married they have their families living in the nearby city of Victoria. When they wish to spend their money for recreational purposes they do so either within their own barracks or in the city of Victoria. Yet this small municipality has to maintain a road system which carries much heavier traffic than it was designed to carry, because of the government-owned properties now located within its boundaries; it has to maintain additional police services; it has to look after the additional garbage, lighting, and perhaps hospital and school services.
I do not intend to elaborate on this; I merely want to say that this municipality is

an example of what may happen if a small community finds itself with a large number of government buildings or crown companies established within its boundaries. The municipality of Esquimalt will wonder how far these crown companies are going to be extended. They will look tc their ship yards and to their dry docks. They will ask whether these ship yards, now run by Yarrows, are going to be turned into a crown company, and if so, will they be free of taxation. I believe that if hon. members of this house will consider the position in which Esquimalt has been placed for many years; if they will realize the burden borne by the municipal council, which has not been able to find any solution to the problem though in past years appeals have been made to this government for grants, they will think twice about giving the government carte blanche in regard to the establishment of crown companies in other small communities.
As I said, I intended to deal with only this one phase, because I feel that other phases have been dealt with adequately and effectively by other hon. members. Therefore I rest my case at this point and ask hon. members to bear in mind the example I have given. This is not the place to suggest remedies for the particular situation at Esquimalt. That I intend to do on a later occasion.
Mr. DONALD M. FLEMING (Eglinton) : Mr. Speaker, some remarkable attributes of the present bill have been brought to light in the course of the debate. If one is to judge by the effect it has had upon certain quarters of the house, thfen indeed it is a most versatile bill. It is an inspiring bill: it inspired the hon. member for Vancouver East (Mr. Maclnnis) last night to deliver a eulogy on socialism and on the minister who introduced the bill. It inspired the Minister of Veterans Affairs (Mr. Mackenzie) to embark upon a eulogy of the minister, and upon what Re, I am sure, on calmer reflection will wish he had not indulged in, namely, comments of a personal nature on the observations made by an hon. member on this side of the house when that hon. member urged that the house do not give second reading of the bill.
Reading Hansard, I find in the remarks last night of the Minister of Veterans Affairs that he invited me not to participate in the debate at that particular juncture. Were he in the house at this time I should have liked to assure him that my failure to participate in the debate at that point was in no way attributable to his invitation. In fact if his remarks had not been lost in the din in the house at the time, I should have been most happy to participate then. -

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I should like, if I may, to contribute by way of clarification of the essential issues presented on the motion for second reading of the bill. I regret to say that those essential issues have been greatly beclouded during the debate.


Clarence Decatur Howe: Hear, hear.


Mr. FLEMING:: I am glad the Minister of Reconstruction (Mr. Howel agrees with me. I should like to dispel those douds, so far as I can, and direct our thoughts to what exactly is involved in the bill before us and what is the principle thereof.
The justification offered by the Minister of Reconstruction for the bill, as stated by him in the course of his observations on the resolution, is that the method of joint stock company administration is a more useful vehicle in the administration of enterprises of certain kinds carried on by the government than is direct administration under his department. That, I take it, is the gist of the minister's remarks, and the reason he has given for introducing the bill.
I would ask hon. members to look farther and to see that that is not the issue on which the house is now deliberating. The issue presented by the bill is not whether the method of joint stock company administration shall be preferred in respect of certain forms of government enterprise to direct administration by a government department; rather, it is the issue as to whether parliament shall hand over to a minister the power to continue to set up crown corporations and to finance them without specific reference to the house having been made in advance. That is the issue.
It is all very well for the minister to make a speech outlining the advantages of the corporate form of administration. But again, that is not the problem presented by the bill. We can have those advantages and at the same time stay within the four corners of the sound principles laid down last night by the hon. member for Vancouver South (Mr. Green) in his most useful and thoughtful contribution to the debate. .He made it clear- and I ask hon. members to underline what he said-that in any specific situation in which the Minister of Reconstruction or any other member of the house thjnks administration can better be performed by a joint stock company controlled by the crown than by direct administration under a department, then the house is prepared to review that situation and that proposal on its merits; and, if satisfied that the company form of administration is to be preferred it will give effect to the minister's request. But I take it, Mr. Speaker, that we are not prepared, without 63260-136
regard to such situations as may arise, to hand over holus-bolus to the government the power to go on setting up and financing crown companies-


Mr. McILRAITH:: There is no such power in this bill.


Donald Methuen Fleming: -without reference to parliament. In other words the principle put forward by those of us who oppose second reading is this, that parliament must retain control. It must be for parliament to decide whether in any particular situation a crown corporation is to be set up. That, we think, is the parliamentary method; that, we think, is the sound democratic way of meeting the problem.
The government may be assured parliament will give careful study to any such bill presented. Indeed, parliament has already given proof of its willingness to give careful consideration to proposals for the incorporation of crown companies on a statutory basis. For instance, at the last session of parliament we passed a bill to incorporate the Central Mortgage and Housing corporation. Parliament gave consideration to that bill, approved the principle on the 'whole, and in that particular instance established a statutory corporation. Other corporations have been established in the same way. Surely the names of at least half a dozen corporations spring to one's mind when one thinks of crown corporations established under special acts. One thinks immediately of the Canadian National Railways; one thinks of Trans-Canada Air Lines; one thinks of the Canadian Broadcasting corporation. I draw attention to the fact that order No. 21 on the order paper is a resolution standing in the name of the Minister of Trade and Commerce (Mr. MacKinnon) setting out a proposal to establish a corporation to be known as the Canadian Commercial corporation. It would not be proper for me to make any comment on the merits of that resolution, but I do say that the method is sound, and that the Minister of Trade and Commerce is in that respect following a sound course. In the bill now before us the Minister of Reconstruction and Supply is following an unsound and unparliamentary course. I have placed before the minister these various examples of statutory corporations, the establishment of which parliament has approved, and I point out to him that it is a method which ought to be followed in all cases.
Does the minister say there is no danger in this bill? That, I take it, will be one of his arguments. As a matter of fact he will be hard put to it to convince the house that there is no socialistic danger in the measure,

Government Companies

in view of the eulogy, concerning the bill and the minister who introduced it, delivered in the house last night by the hon. member for Vancouver East. I do not believe that at this session of parliament, or in the first one, we ever listened to such transports of delighted oratory as we listened to last night from the hon. member for Vancouver East. It seemed as though the millennium had arrived. I thought he was about to burst into a nunc dimittis. Actually it seemed that the bill gave him everything he had been waiting for so long, everything he had been praying for, as an advocate of and a believer in complete socialism. .
I fancy that having delivered that speech the hon. member for Vancouver East must have realized that it presented some embarrassment to the minister whom he had so fulsomely eulogized. It will not have escaped the notice of the house that the next member of the C.C.F. who spoke, the hon. member for Qu'Appelle (Mrs. Strum), was quite restrained in her favourable comments on the bill. As a matter of fact the tone of the remarks of the hon. member for Qu'Appelle was to this effect: Oh, well, after all, this bill has a quite limited application; if you look at the minister's remarks you will see he intends to exercise these powers only for the purposes of continuing the three corporations, Polymer, Eldorado and Canadian Arsenals Limited, which now owe their existence to orders in council. The reason is obvious. The minister must have been embarrassed by the eulogistic oratory of the hon. member for Vancouver East, and the apparent purpose of the hon. member for Qu'Appelle in speaking was to play down somewhat the effect of the bill.
I listened with interest to some of the remarks from the opposite side of the house. It was suggested that the view put forward by the hon. member for Vancouver South was based on a complete antipathy toward government ownership. Obviously that was not a fair interpretation of the remarks of the hon. member for Vancouver South. Where a situation calls for incorporation by statute of a crown company, then I take it that all parts of this house are prepared, to entertain such a measure, review it and bring their best judgment to bear upon it. But it is the view of those of us who sit in this part of the house, and perhaps it is also the view of the Social Credit group, that in such a situation this House of Commons is going to see fair play for those who may be adversely affected by the bill. In - this instance I am thinking particularly of the municipalities.
There have been some who have expressed the view that if this bill should be adopted

we might expect corporations to be set up by a number of ministers. It may be a perfectly sound view, but I am more disposed to think that the Minister of Reconstruction will retain control in his own department of all corporations which are likely to be set up. I say that because he has retained to himself the two corporations which have fallen most closely under his administration by taking them out of the control of the minister who presides over the department to which they are assigned by statute. I refer to his having retained control, when he gave up the ministry of transport, of Trans-Canada Air Lines and radio broadcasting. I think it is not unlikely that if the Minister of Reconstruction should go on incorporating companies and proceed to take over the responsibility of some other portfolio, he will take with him into the new department all companies incorporated under this measure.
It is not enough to have assurances as to any limitation of intent on the part of the minister. I am confident that when the Minis- . ter of Reconstruction rises to speak he will say again to the house: We have in mind at the present time only three comapnies, the three I have referred to; it is not our thought at the moment to extend in the next two or three years others of the thirty-one corporations set up under orders in council during the war. That may be his view at the moment, but I suggest it is the duty of this house to go much farther in testing the propriety of giving endorsement to the principle of this bill.
The minister asks for broad powers, but does not think he will use them all; that is the pith and substance of the view which has been put before the house by the government.
I suggest that that should be enough to defeat this bill in principle. Parliament has no business whatever giving powers to the government for which the government cannot make out an appropriate case right now or within the period that may expire before the next meeting of this house.
The minister says in effect: this gives us general powers for the future to bring new corporations into existence; it is general in its application. I say that that is not good enough. When the minister makes out a case, as he considers he has, for the continuation of three crown corporations, then I say his case is confined to the continuation of those three companies. The proper method for him to follow would be to bring in three separate measures providing for the continuation of the corporate existence of those three companies. This method would be in keeping with the sovereignty of parliament.

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It is not good enough to have the statement of the minister to the effect that there has been a good deal of exaggeration of the effect of the bill. That is no answer to the clear argument, based on the terms of this bill, that the bill gives to the minister sweeping powers which this parliament ought not to be handing over to any minister. There is not a dictatorship on the face of the earth that did not begin as a benevolent dictatorship. Dictatorships never get an opportunity even to begin except on the basis of being benevolent. I do not suggest that we are going to open the way to a dictatorship of the kind that was defeated at the hands of the united nations in the recent conflict, but we have to have regard for the dangers inherent in a bill of this kind. There' are always those, such as our friends of the C.C.F., who are ready to repeat the old, old story, "It can't happen here." If enough bills of this kind are introduced, if powers as sweeping as these are given to enough ministers, it can happen here. It is our duty as the House of Commons to see that it does not become possible for dictatorship in any form to happen here in Canada.
Let us have regard to the particular scope of this bill. As was pointed out by the hon. member for Vancouver East, this bill and the two accompanying bills-one having to do with the incorporation of an atomic energy control board, and the other having to do with an amendment to the National Research Council Act-form a pattern. The other two bills give those bodies, with the approval of the minister, the widest possible powers to set up crown corporations. This bill will permit the governor in council to finance crown corporations to the extent of a million dollars each, half a million dollars for capitalization and half a million dollars for works. There is the pattern.
Are they limited in the field they are to cover? The bill before us does not tie the government down to any particular field. Whenever the government holds the power to establish a corporation under part I of the Companies Act, it will at once be able to apply all the provisions of this bill. There is no limitation as to the field; the field is broad, as broad as Canada. If other ministers obtain power by statute, or by order in council having the force of statute, to set up corporations within the ambit of their respective departments, all the provisions of this bill can be put into effect by them in the way I have mentioned. Every power provided by this bill will under those circumstances be enjoyed by every minister with respect to every cor-63260-1361
poration whose stock is owned completely by the crown. That is the situation in naked fact.
I am not commenting on the methods of administration of certain fields of public enterprise. I have made it quite clear, Mr. Speaker, that I am dealing with the principles presented; with the question whether this House of Commons should hand over to the minister these broad powers without reference to parliament. In one interjection he made last evening the minister sought to indicate that this bill of itself does not create the power to establish the companies. He indicated that the scope of the bill is confined to financing such companies and clothing them with certain additional powers not related to the original incorporation. Now, let us examine , that-not, I trust, in any spirit of hair-splitting, but having regard to the realities of the situation.
We have at the present time, or have had established by order in council under the authority of the War Measures Act, thirty-one companies which came into existence by what I understand to be the following method. Under authority of the War Measures Act the governor in council passed an order in council authorizing application to be made to the Secretary of State under part I of the Companies Act for incorporation of a company for certain purposes and under a certain name. Those corporations came into existence by letters patent. At the present time, we are told, twenty-six of them are in the course of being wound up and their charters surrendered; two are to continue for a limited period, and three for an indefinite and perhaps permanent period.
Now, if this bill does not give, as the minister seems to suggest, power to incorporate companies, it certainly does not give power to continue companies in existence. The three corporations to which we have referred particularly-and we might include the two others, Wartime Housing Limited and Park Steamships, which are to continue for a period of several years at least-these five corporations must find, on the minister's argument, some basis for continuing their corporate existence. Where do they get it? Are they to go on simply on the basis of having been brought into being under part I of the Companies Act pursuant to an order in council passed . under the War Measures Act? If they do, I cannot square that with the proposition that the minister suggested last night in his interjection. If this bill does not give power to establish or incorporate companies, it does not give power to continue those corporations; and I am arguing that either the Minister of Re-
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construction is going to carry into peace-time corporations which owe their existence entirely to an order in council passed under the authority of the War Measures Act, or he must come back to parliament in the case of each of these companies for a special act continuing or giving statutory authority for the continued corporate existence of these three companies. If the second alternative is correct, and the minister must come to parliament for authority to continue those three corporations, would not the sensible course be that suggested by the hon. member for Vancouver South, namely, to introduce in the case of each of these companies a separate bill and to get away entirely from the vice of the bill which is now before us?
If the first alternative is the one on which the minister relies, namely that crown corporations brought into existence in war-time pursuant to authority contained in an order in council passed under the War Measures Act, can continue as such, then I think it is quite clear, certainly to every lawyer in the house, that he has similar powers under the National Emergency Transitional Powers Act passed at the first session of this parliament. And if he has powers under that-which I think is clear to all, if his reasoning is correct-the governor in council has the power right now to go along setting up more crown companies under the authority of that act, bringing them into existence with the machinery contained in part I of the Companies Act. There is the situation. If the minister is correct in saying that this bill does not permit the incorporation and the bringing into existence of new corporations, he still has that power under the emergency legislation passed at the first session of this house; and it is clear, on the record of this government, that the minister will not hesitate to use that power if so minded in any particular situation.
That is not the whole story, either. I am pointing out the breadth and the scope of this bill if we approve it in its present form. If we approve it, what is the other aspect? It is this, that there are two other bills which are being considered along with this bill. Both bills make provision for the incorporation of an unlimited number of limited companies. I ask you to have regard in that respect to the words used by the Minister of Reconstruction himself at page 1897 of Hansard. He was then dealing with the bill to empower the national research council to establish crown companies with the approval of the minister himself. When the minister was asked as to the extent and the scope of this provision, how far it was 
intended to extend it or within what area it was intended to confine it, what did he say? These are his words:
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.
And, Mr. Speaker, by parity of reasoning, under the measures now before this house you can have scores and scores of companies set up under these acts, power being given under the bill now before us to finance them up to the extent of a million dollars apiece without reference to parliament, and thus to transact a substantial part of the business of government in this country without reference to parliament in advance, without seeking parliamentary approval, and for that matter, to embark on an excursion into socialism without consulting parliament. That is the naked reality of the principle of this bill. There is no escape from it, and it is not good enough for the minister to say: Well, I do not intend at the moment to give it that wide application. That is not good enough. The minister has no right to ask parliament for these broad powers when no present justification for them exists. We say, Mr. Speaker, that the proper method in any particular situation requiring it is the creation of a statutory corporation.
I want to say a word on one particular vice of this bill which has been already referred to by certain hon. members. We are being asked to give the governor in council power to establish an unlimited number of crown companies for purposes which are not disclosed, and to do so on the basis that not one of these crown companies shall be subject to taxation by a province or a municipality-yes, more than that, shall not pay anything by way of taxes to such bodies. I asked the Minister of Reconstruction and Supply in the committee stage of this bill if it was not the intention of the government to insert a provision in this bill that such corporations should submit to taxation, should agree to pay amounts in lieu of taxes to municipalities in which they might acquire property; and the minister said, no. I want to deal with that for a moment.
The hon. member for Vancouver South has dealt with the situation in the city of Vancouver. The hon. member for Nanaimo (Mr. Pearkes) has dealt with the situation in Esqui-malt. That situation is duplicated many times over in the municipalities throughout the length and breadth of this country. Take for instance the city of Toronto. At the present time property owned by the crown in the right of the dominion in that city, including crown companies, totals $15,187,981-over $15 million.

Go vent men I Companies


Clarence Decatur Howe: I suggest that no crown company owns any property in Toronto not subject to taxation at the present time.


Donald Methuen Fleming: I wish to deal with certain situations in Toronto-


Clarence Decatur Howe: You included crown companies.


Donald Methuen Fleming: In the short space of time at my disposal it was not possible for me to get a break-down as between crown companies and government-owned property, but if the minister says that it is all government-owned property, I thank him for the information. I submit, however, that 'the same principle ought to be applied to government-owned property as to property owned by crown companies. It imposes an unfair burden upon the municipalities for the government to acquire or expropriate property and have it exempt from taxation by the municipality while other property owners in the municipality have to pay their share of taxation. It is putting an unfair burden upon the municipalities -when they have to provide essential municipal services.


Major James William Coldwell: May I ask the hon. gentleman a question?


Donald Methuen Fleming: I have only five minutes left, and I should like to proceed.


Major James William Coldwell: I wish to ask the hon. gentleman-


Mr. DEPUTY SPEAKER:: Order. No questions may be asked without the consent of the hon. gentleman who has the floor.


Major James William Coldwell: What about the C.P.R.? What about church property and other property of the kind?


Donald Methuen Fleming: If the hon. member for Rosetown-Biggar is inquiring about churches, I am not dealing with that question.


Major James William Coldwell: I also said the C.P.R.


Donald Methuen Fleming: I am not dealing with churches, because they are not owned by the crown. I am suggesting, however, that the principle that property owned by the crown in the right of the dominion, and property owned by crown corporations, shall not be subject to municipal taxation, is unfair and unjust. When we have section 125 of the British North America Act quoted to us, I would remind hon. members that wrhen that act was passed in 1867 not one of the fathers of confederation could possibly have foreseen such a situation as exists to-day, where government-owned property, growing in leaps and bounds throughout this country, is exempt from taxation by the municipalities.
Here is another situation, and I take it that this is one the Minister .of Reconstruction had in mind in his question a moment ago. There is already precedent recognized by the government, indeed created by the government-aye, and recognized by this parliament -for submitting the crown or crown corporations to municipal taxation. In the resolution stage of the bill I referred to the statute enacted by this parliament to incorporate the Central Mortgage and Housing corporation, being chapter 15 of the acts of the first session of this parliament. It provides that that, crown corporation may pay sums in lieu of municipal taxes on property acquired by it under mortgages. There you have the principle of a crown corporation, under those circumstances, making a grant equivalent presumably to the taxes upon its' property. I come to the point which the Minister of Reconstruction had in mind, and I call it a precedent created by the government itself, because in the John Inglis plant in Toronto, where the government carried on operations during part of the war, the government paid the city of Toronto the sum of $8,500 a year in lieu of taxes.
If the principle is not sound, the principle of taxation or of payments in lieu of taxation equivalent to the municipal tax, by crown companies, why was it done in that case? Not only that, but the Toronto Shipbuilding Company was taken over by the government during the war. That was a corporation established under part 1 of the Companies Act. The government took over operations during the war and paid taxes. You have another precedent in the case of the Canadian National Railways for the payment of municipal taxes. Why not give general recognition to a principle which has already received recognition by this government, and has certainly been recognized by this parliament in the measure to which I have already referred, namely," the Central Mortgage and Housing Corporation Act passed at the first session of the present parliament?
If there is not a grave danger of socialism, a danger of sweeping governmental powers inherent in this bill then why the eulogy from our socialist friends last night? The government sitting opposite, all members opposite, were elected, if the advertising material provided by the Liberal party in the1 1945 election meant what it said, on a platform of preserving the free enterprise system. Why not do it?


David Arnold Croll: I think what is troubling my hon. friend is not so much the bill as the people who support the bill. He
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is much concerned about the eulogy that was paid last night to the Minister of Reconstruction (Mr. Howe).


Gordon Graydon: A bill is known by the company it keeps.


David Arnold Croll: After all, if hon. gentlemen sitting across the way like the minister and are prepared to applaud him, as the rest of the country has done on many occasions, and as members directly opposite have also done, we cannot find very much fault with that. I think it is recognized that the minister made a great contribution during the war, and as a result of his experience, as a result of his knowledge, and, what is more important, as a result of his success with the department during the war, he now brings to us this particular bill.
It is important to read the resolution, because many hon. gentlemen in the house have lost sight, of it. As set out at page 1908 of Hansard, the resolution states:
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.
Now, what the bill does in effect is to bring these companies under the control of parliament. At the present time parliament has no control over these companies, and if I may refer to section 6, section 7 (3) and section 10 of the bill without reading them, I think hon. members will appreciate that these provisions indicate exactly what the bill intends to do.
Let us see whether the analogy to dictatorship, as suggested by some speakers, is applicable. The minister, who was minister of munitions and supply, had thirty-one companies under his control. Eighteen have already been wound up; eight are in process of being wound up, and five continue. If there are any gentlemen in the house who wish that these companies be done away with, this, I think, is the time and place so to declare. Is there anyone who would like to do away with Canadian Arsenals Limited, or with Polymer corporation, which cost us fifty millions and now stands at forty millions, and which even now is a paying proposition? Wartime Housing Limited, is as essential today as it was when it was first created, and the same applies to Eldorado Mining and Refining company and the Park Steamships company.
This bill does not give the minister any power. As a matter of fact, a clear reading and understanding of the bill indicates that fMr. Croll]
his powers are now limited; he actually gives up powers which he formerly had and which now belong to the house generally.


Mr. MERRITT:: Under what section?


David Arnold Croll: As a matter of fact, under section 10, if my hon. friend will read it.


Mr. JACKMAN:: Whereabouts under section 10?


David Arnold Croll: Well, read it. There are some aspects of this bill that are encouraging; for instance, section 9, dealing with superannuation, pensions, and payment. It is well that the house should recognize that one of the great strengths of the department of munitions and supply during the war was the ability of the minister to go out into the open market and hire the best possible people he could get, pay them a decent wage and then have them do the job. This is a splendid principle if it will only show the way to the civil service commission so that they in turn may in some way find it possible to raise wages to a decent standard. The house should know that present statistics indicate that some thirty thousand of our young people, the cream of the crop- statisticians, young professional people, graduates of our universities-are flocking to the United States, going away because there is a lack of opportunity, because they cannot possibly receive compensation in accordance with their need and their requirements in this country.


Harry Rutherford Jackman: Liberal taxation.


David Arnold Croll: My hon. friend talks about low taxation.


Harry Rutherford Jackman: "Liberal".


David Arnold Croll: Liberal taxation; it has been pretty fair. It has not done too badly by my hon. friend. I have heard a lot of talk about taxation, but it is a privilege, and my hon. friend should know it, to pay taxes in a country such as Canada. A great number of people would like the opportunity to pay taxes in this country, and I have not seen anyone become poor as a result of paying taxes.


Mr. KUHL:: Most of it is legalized robbery.


David Arnold Croll: My hon. friend comes from Alberta, and he knows legalized robbery when he sees it.


Harry Rutherford Jackman: The people of ward 2 will find out.


David Arnold Croll: 
Charles Cecil Ingersoll Merritt: That is not the point at all.	-


Mr. J. S. SINNOTT (Springfield):: I rise to take part in this debate although what I am about to say may not be taken very kindly by some hon. members on this side of the house. Having been the head of a municipality for a number of years I can see the difficulty which will be placed on the small municipalities and cities. I should have no objection to this bill had it contained a taxation clause which the ordinary business man has to contend with. Having seen airfields being built, having seen lands acquired by the dominion which took up the large part of certain municipalities^ having seen public buildings subject to no tax, having seen roads, schools, hospitals and other services going behind in small communities, I think it is time we saw to it that the dominion government should not be so high and mighty that it is not subject to taxation.
We have to keep in mind the little fellow. After all, in Canada to-day the little fellow is paying the major portion of the taxes, and
as private members of this house it is up to us to support the man who is paying the taxes. If this bill contained a clause which would make the companies subject to taxation, I should.have no objection to it, because I believe there is nobody who is more capable of expanding the industry of Canada than the Minister of Reconstruction and Supply (Mr. Howe). He has had experience in war time. If we have his guidance in peace time, I think we can do a lot toward helping the poorer classes of this country. I do not see how private enterprise can compete with a business alongside of it which is paying no taxes. It is not fair to private enterprise; it is not fair to the little community in which the government business is situated. Had this bill contained such a section I would have supported it. In the present circumstances I cannot.


Walter Frederick Kuhl: There has been a certain amount of controversy on the issue of government companies versus private enterprise. There are a few thoughts which I should like to express concerning that issue. A certain amount of support of this bill has been expressed by hon. members on the government side, but I have not yet heard a clear statement from the minister or from any of his political supporters as to the real reason why the government must set up these corporations.
Why is it necesary for the government to go into business in the manner in which they intend to do under this bill? From listening to what has gone on I have not been able to discover just how far they intend to go in the matter of setting up these corporations. As a matter of principle I should like to hear a clear-cut statement on the part of the minister as to just why it is necessary for the government to enter into business in peace time in competition with private enterprise. I think that raises a very fundamental question which has been referred to already by several members of the Progressive Conservative party; that is, whether the carrying on of business is a legitimate government function. I agree with the statement made last evening by the hon. member for Grey North (Mr. Case) who said he considered the chief function of' a government was that of legislating, not entirely carrying on regulatory or administrative action. Personally I agree with that thought. I cannot agree that the carrying on of business by the government is legitimate in any way whatsoever. As a general principle I say a government should do for the people what they cannot do for themselves; and I think the people of this nation have demonstrated that they
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are quite capable of conducting their own businesses. Consequently I cannot see any real reason why a government should go into any business at all during peace time.
Furthermore, Mr. Speaker, * I cannot see what purpose such actions serve, what is gained by a government going into business. I have observed right along our C.C.F. friends claiming that the government must go into business because private industry has failed. I do not consider that it has failed. I believe the C.C.F. charge private enterprise with having failed because they are charging private enterprise falsely. They are holding it responsible for things for which it is not responsible. Therefore it is quite easy to charge it. Last evening the hon. member for Cape Breton South (Mr. Gillis) and others stated that we have a quarter of a million unemployed and that private industry is doing nothing about it. To hold private enterprise responsible for employment, as my colleague the hon. member for Red Deer (Mr. Shaw) stated last evening, is to hold it responsible for something for which it is not responsible. In all these discussions we should get down to a basis of fundamentals, and in considering this or any other similar bill I do not think we shall make any progress until we agree on those fundamentals. Of course if private enterprise is responsible for employment, then the socialist charge is legitimate; but I do not consider that it is responsible. On numerous occasions I have said that I consider the only legitimate function of private enterprise to be the production of goods and services, regardless of whether that requires much labour or little labour.
Some of the C.C.F. members made a few points with which I should like to deal for a moment or two. I feel that in their condemnation of private enterprise the C.C.F. members constantly confuse the use of capitalism with its abuse, when what they should do is condemn the abuse. To assert that we must abolish the use of private capital because it is abused would be equivalent to saying we must abolish the use of motor cars because very often people lose their lives through the use of motor cars. Likewise it would be just as logical to abolish the use of firearms because sometimes people are murdered through their use. So I say the C.C.F. members should deal with the abuse and should not confuse the use of capitalism with its abuse. I would not be so critical of their attitude if they were consistent in their policy, but this is what we find them doing. They condemn private enterprise; they condemn capitalism; they condemn profits and the profit motive, yet they advocate a procedure

under which they except certain sections of the community from that policy. They proceed to the farmer and say: We are against capitalism; we are against private ownership of the means of life; we are against profits; but we do not mean you. Then they proceed to the small merchants and tell them the same story. 'Thus they go up and down the street telling people they do not mean to include them. On the other hand, however, they condemn the principle of private enterprise. My comment is that if profits and private enterprise and private ownership are wrong as a principle, they must be wrong for everybody. They cannot be wrong for some and right for others. Surely consistency should be the acid test of any philosophy; and I suggest that hon. members of the C.C.F. party consider that very seriously. If they are prepared to place all people under their general policy, then I can do nothing but submit to the will of the majority if a majority of the people in this country want complete socialism. But I think the fact that they have left out the farmer, the small merchant and many other sections of the population indicates that they are quite well aware that the majority of the people of this country believe in private enterprise for themselves.
As was pointed out this afternoon by the hon. member for Eglinton (Mr. Fleming), I believe, as far as state enterprise and government companies are concerned the government has no mandate to carry on in that fashion. If the last election demonstrated anything, it demonstrated that the majority of the people of this country still want to be their own bosses,-to manage their own affairs and to support private industry. I notice that quite frequently when that point is raised the C.C.F. members bring in the matter of Trestrail. My only comment is that surely they can rely upon the people of Canada to judge for themselves. The point with which I have not heard them deal as yet is the charges which Trestrail made in the literature which was circulated; and I think that would be much more relevant.
I believe those who supported the Liberal party, the Progressive Conservative party and the Social Credit party indicated by their support that they wanted to continue under a system of private ownership and private enterprise. But where the Liberal party and the Progressive Conservative party fall short is in not supplementing and in not advocating policies to supplement the private enterprise system in such a way that it can be made to work. They must reconcile themselves to certain fundamental changes which will permit private enterprise to function. And it can

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function if certain changes are made. It is a tragedy to me to see that the country, the world in general, is being driven more and more into nationalization as a consequence of the refusal and failure of those who believe in private enterprise to make the necesasry changes. That is the greatest tragedy, that those who are the strongest supporters of private enterprise constitute its greatest danger by reason of their neglect to bring about the necessary changes which would make it function.
I believe wholeheartedly that once the basis of private enterprise and private initiative is destroyed, the basis for democracy is destroyed. I do not believe we can have any kind of democracy whatsoever once private ownership and private initiative are removed from society. All that will take its place is mass regimentation, as has been suggested many times. There can be no other substitute. So I suggest earnestly to hon. members in the Liberal and Progressive Conservative parties that if they want to see private enterprise flourish in this country they had better examine the proposals which have emanated from the Social Credit group in the house, because they are the only proposals which will permit private enterprise to function properly.
May I emphasize that it is wrong to conclude that just because there is unemlpoyment and a lack of distribution of goods, it necessarily follows that the government must go into business. As I said earlier in my remarks, I believe private individuals in Canada are capable of running their own business. Private enterprise does not necessarily mean monopoly enterprise-and I am afraid C.C.F. members constantly make that error. When they condemn private enterprise, meaning to condemn monopoly enterprise, they do the former a great injustice. I suggest they should differentiate; but they do not. In condemning private enterprise they condemn the thousand-dollar business as well as the million-dollar or billion-dollar corporation. Fundamentally I believe all people are private enterprisers, even including hon. members in the C.C.F. Many of them own their own businesses and their own farms; they .sell their goods at a profit, and, if they had their choice, would remain in those circumstances for the rest of their lives.


Mr. ROSS (Souris):: And they ask the government for more profit.


Walter Frederick Kuhl: If private enterprise is good enough for them, then surely it should be good enough for everyone. I suggest their charges do not come with very good grace when privately they themselves believe in private enterprise.
I suggest that they should deal with the abuses of private enterprise and advocate the elimination of those abuses. Monopoly control, cartels, price manipulation and all those practices are merely abuses of the private enterprise system. If their position is a logical one, then the thing to do is to retain competition but remove the abuses. That is where I think the C.C.F. criticism and analysis goes off the beam. I agree with them in their condemnation of monopoly control and abuses which arise as a consequence. But if they are logical they should argue that competition should be restored. Instead of that, however, they suggest by way of substitution a still greater monopoly, namely state monopoly. All that happens when there is monopoly control is absence of competition; Surely logic dictates that the solution is to restore competition. It is only in competition that there can be freedom. Competition does not necessarily mean cutthroat operations.


An hon. MEMBER:: How about cooperatives?


Walter Frederick Kuhl: That is a matter for the individual. If people wish to join in cooperative societies, that is their business. But that is possible only under a system of prviate enterprise.
So I say to them this: Let them advocate the elimination of the abuses and maintain the principle intact, and we shall preserve a free society. To the minister, and to those who support him, I suggest that if they will bring in legislation which will enable private enterprise to work, they will receive the wholehearted support of the Social Credit group. If that is done, I do not think it will be necessary to bring in legislation of this kind. By making it possible for the people of Canada to buy everything produced, and by stimulating the buying power of the people, it will be possible for every industry to sell what it has to sell. If the abuses of capitalism are removed and the deficiencies taken care of, with adequate purchasing power, I am completely satisfied the private enterprise system will work as near perfectly as any human agency can be made to work. It is only under such an arrangement that we can preserve freedom as well as enjoy security.


Mr. WILLIAM IRVINE (Cariboo):: Mr. Speaker, I suppose like many others, I am at a loss to know whether the house is discussing the policies of the C.C.F. or this crown companies measure.


Gordon Graydon: The same thing.

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William Irvine: I am glad to hear it, if that is so. If we were discussing the policies of the C.C.F. I should make a speech somewhat different from the one I am going to make.
The hon. member who has just taken his seat has given us an example of that type of irrational circumlocution which might be expected from an hon. member with far less capacity than I hope he possesses. I do not propose to follow his line of reasoning, or his lack of it; but I should like, in passing, to ooint out to the hon. gentleman just the sort if reasoning that he has presented to the louse. In criticizing the C.C.F. he says that lapitalism is all right, that we should not con-lemn private enterprise. He says that what ve should condemn is the abuse and not the use of these great institutions. Then he goes on to give an illustration or analogy. He says, "You may as well condemn the motor car because here and there one runs over somebody as condemn free private enterprise."
Then he goes on from that to argue the very opposite. He says, "You cannot be wrong and right at the same time; when the C.C.F. distinguishes between capitalism that is robbing the agricultural people of this country and the farmers who have been robbed, that is wrong. You must either be right or wrong all the time and make no distinction between the motor car which runs over somebody and the motor car which does not."


Walter Frederick Kuhl: It is a matter of how you deal with it.


William Irvine: 
Mr. BENI  DICKSON@: Such as this.


William Irvine: The next point is that there is no provision that crown companies shall pay taxes. The hon. member for Grey North (Mr. Case) comments on this point, and says, Hansard, page 2150.
We in Ontario realize that our hydro system, owned by the crown, has brought us cheap power and has assisted in our industrial development.
I think the hon. gentleman should have pointed out that his community has already received taxes in the forms of cheap power and developed industry. The matter of whether a government concern of this kind should be taxed could very well be considered by this house at some other time. But if we proceed that far there will be objections from many quarters; because, to follow the logic of the hon. member for Jasper-Edson (Mr. Kuhl), what is good and right for. one must be good and right for everybody, so you must not stop in the middle, and if you are going to tax public institutions of this kind you must tax hospitals and public schools; you must tax churches, and, most sacred of all, you must tax the property of the C.P.R. So I am afraid that when we start to be logical about this thing my hon. friends of the Progressive Conservative party will not be so anxious about it. Let us not forget that the surpluses which come into any publicly operated in-
216S
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stitution go into the public treasury, whether of the municipality or the provincial government or the federal government. It is nothing but absurd folly to tax what you already have in the public treasury: the result is to increase expenditures and the cost of public business by doing a foolish thing. When it comes to the municipalities, there may be a case there, and that, as I have said, might very well be argued at some other time. But I repeat if we extend the taxation powers of municipalities to government institutions they will have to be applied to such other organizations as I have mentioned.
I come now to the fourth argument of those who oppose the bill, and it is that these companies will be in competition with private business. That should be welome to those for whom the life and soul of business is competition. One hon. gentleman who spoke last night suggested that the principle of life is the survival of the fittest, and so, of course, he opposed the bill. I am afraid that if the principle of the survival of the fittest were applied individually it all cases the hon. member might have ceased to exist long ago. But as regards opposing government-operated institutions because they furnish competition to other companies, for people who believe in competition as an economic principle to take that stand is an utter absurdity. I do not believe there should be competition and this us where I shall proceed on the way a little farther than my socialist friend the minister.


Some hon. MEMBERS:: Oh, oh.


William Irvine: The Progressive Conservative party can see a joke. It is most extraordinary.


Gordon Graydon: They can hear one too.


William Irvine: I listened to one just now.


Mr. FRASER:: Which one is the joke?


William Irvine: You. But here is the difference. I do not believe that the government should enter into competition with private industry. I believe that private industry should be taken over in every case where the government enters business.


Walter Frederick Kuhl: Totalitarianism.


William Irvine: If that were totalitarianism, then my hon. friend would be leading it; that is where he belongs. That is where he has always been and where those associated with him have always been-on the side of totalitarianism.


Mr. BLACKMORE:: That is utter nonsense.


William Irvine: You ought to know, sir; you are the best authority on nonsense I have ever met anywhere.


John Horne Blackmore: You had better explain your remarks.


William Irvine: If I am to explain my remarks the hon. gentleman will have to do the same. Those who live in glass-houses had better be careful of the rocks they throw and the number of times they engage in throwing them.


John Horne Blackmore: I am -glad I do not live in one.


William Irvine: The survival-of-the-fittest
idea, which is held up as the soul and spirit of free enterprise, should not be condoned by a crown company which has been set up to perform a specific function in the national economy. It should not enter into or countenance the wasteful and stupid duplication which competition involves, and to that extent the bill is far from being socialistic. It has the marks of free enterprise upon it in that regard. If I were the minister I would expropriate all companies in any field in which it was found necessary for the government to enter and do business.
As to the fifth argument, that the government. is setting up a super civil service, that is to say, that by providing in this bill the means whereby the servants of the crown corporation shall be employed, the government is instituting a super civil service, well I think that is hardly worth stopping to answer; for with respect to crown companies the government will have to have the same responsibility that it has in regard to any other department of the civil service.
So I hasten, owing to the shortness of my time, to deal with the sixth argument, which is that this measure should be opposed because it is a socialist measure. I wonder what hon. gentlemen mean by a socialist measure. Perhaps that is the first question that we ought to settle so that we may know exactly what terms we are employing; otherwise no debate can have any meaning. I say, therefore, that in my view a socialist measure is this-or perhaps it would be better to discuss a socialist enterprise. In my view a socialist enterprise would be one which had as its chief objective the interests of the community. On the other hand, a private enterprise is one which has as its sole objective, its chief objective, the profits of the shareholders.
YVith that definition before us let us examine this bill. The hon. member for Muskoka-Ontario, in dealing with this point, warns us that we must stop, look and listen. I tell my hon. friend that the most that his party has ever done has been to stop. I do not know whether it has looked or listened. YVe have

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come to the time, however, when we must start, look and listen. This measure may be termed socialistic, if you like, to the extent that it has as its object the meeting of specific community needs, that being the chief objective of such companies. In that respect it is distinguished from private enterprise, which is not free at all and is extremely costly to the public, for it never enterprises except in its hunt for profit, and it has left a trail of failures, in so far as humanity is concerned, right across the pages of industrial history.
It is remarkable that all hon. gentlemen who have opposed this bill have said that if this were only war time they would not oppose it but would hold up both hands for it, because they say in effect that in war time there was a great emergency, and that emergency was so great that they were willing to do wrong things in order to meet it. That is a most extraordinary concept of things. Again I say to the hon. member for Jasper-Edson who was so concerned with the logic of the C.C.F. policy: if this is wrong in peace time it would be wrong in war time.


Walter Frederick Kuhl: Different situations entirely.


William Irvine: Two different situations with exactly the same principle to be applied. As I say, it is a most extraordinary type of argument indeed. The hon. member for Red Deer (Mr. Shaw) stated at page 214S, of Hansard:
We agree that the urgent .demands of war made that course of action necessary-
Referring of course to war-time crown companies.
-but what does the minister advance as the reason for a crown corporation to function after the war?
That is to say, we are perfectly willing to contribute to the wrong type of action during a war but we are not prepared to do so now in peace, and the reason why they were, willing to do wrong during the war was that there was a great emergency. I say to my hon. friends that there is just as great an emergency in peace now as there was in war. Any intelligent man who tries to make a survey of the world situation to-day must realize that there is an emergency of the first magnitude. If he does not, he has no business to be in this house.
The world js practically faced with starvation. Our own country has tremendous problems to face. To mention only one, there is the 'housing situation; and in that connection there are such industries as coal and lumber which to-day atre failing to function, as they very well might be functioning, under crown companies, to the fullest extent, in meeting the needs of the Canadian people.
The hon, member for Red Deer argued that private enterprise could produce abundance. How does he know? It has never been known to do that.


Walter Frederick Kuhl: Overproduction before the war.


William Irvine: That was undendistribution.


Walter Frederick Kuhl: That is a different thing.


William Irvine: He refers to the great stockpile which could be viewed in 1939 and throughout the thirties. Such stockpiles were not in themselves an evidence of private enterprise's capacity to produce. They were grim eyidenees of free private enterprise's incapacity to distribute. But the great point that I wish to make in this connection is that the objective of free private enterprise is not primarily to distribute goods to the public; its objective is to make profits out of goods, and it does not care whether there are many or few goods, it makes the profits anyway. The objective of a public corporation dealing with a community need is to meet the needs of the people. That is the first thing, the chief object of its coming into being. That marks the difference between the public ownership and the private ownership argument stated so well by the hon. member for Muskoka-Ontario.
The hon. member for Grey North (Mr. Case) seemed to have a sort of vision that the Progressive Conservatives may just happen by accident to come to power some day, and therefore he says, as reported at page 2149 of Hansard:
This legislation could become, in the hands of those who would seek to use it for a purpose it was never intended, in the mind of the Minister of Reconstruction and Supply (Mr. Howe), a dangerous thing.
I am glad that he has given us that warning in time. I hope the people of Canada will take notice of it and see that they never endanger their interests by entrusting him with power.
Let me conclude by saying that it is absurd to discuss this bill as being socialism. I wish it were. But I say this about the bill; its trend is so far toward common sense that it makes it look like socialism, and it is because of this trend toward that measure of common sense that I shall be glad, to give it my support.


Mr. RODNEY ADAMSON (York West):: There are in this bill a number of things that I was prepared to think were quite satisfactory until I heard the hon. member who just took his seat, who showed the trend of socialism

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and the way of thinking of the C.C.F., and also the way in which they would interpret a bill such as this.
There are one or two inaccuracies concerning what has just been said that 1 should like to clear up first of all.. The first inaccuracy is in regard to private companies. Private companies certainly do make a report. They make a report to the Minister of National Revenue (Mr. McCann), but not to this parliament. They are subjected to careful inspection by that department. They are inspected far more closely than any crown company ever is by any committee of this house.


Mr. KNOWLES:: The information is kept secret.


Agar Rodney Adamson: They report and publish a detailed financial statement. They report to their owners in public meetings. The officers of the company have to give a most explicit and detailed statement, not only to the department but to the owners, the shareholders. The officers are subject to questioning. They have to make a forecast of what they expect in the year to come, and they have to justify their actions of the year past to their shareholders. No crown company is ever subjected to the scrutiny which the average private commercial company must undergo. That is the first thing I wish to make clear.
The second thing is that the Canadian Pacific Railway Company is the greatest individual taxpayer in Canada to-day. It pays taxes several times the amount of any other company. Where we would be without the tax revenue from the Canadian Pacific Railway company, I shall leave to the Minister of National Revenue to say. Suffice it to say it would cause a great hole in the tax revenues of the country.
We come now to the second suggestion made by the C.C.P. philosophy, namely, that if the government find it necessary to go into business, they should not only go into business but completely expropriate all other competitors in that line of business. This means that if the government went into the business of the production of synthetic rubber-synthetic rubber is a combined prodtict of the rubber and oil industry-they would, under that reasoning, expropriate the Canadian rubber industry and the Canadian oil industry. That is an untenable situation, but it shows the way of thought in Canada to-day; it shows the type of thinking that is going on to-day, which is being fostered by the present government, and this bill is one of the measures which is doing it.

Debate on the bill has resolved itself into a discussion of the government's function as an operator of business. Is the trend in that direction? If so, is it a good trend? During the war there were certain emergencies which had to be met. There is a fundamental difference between war and peace. War is an economy of destruction. Everything you produce for war you produce for destruction. What you hope to produce in peace time you hope to produce for construction and for use. That is one of the essential differences between war and peace; and because it is the function of a government to produce uneeonomically things, shall we say, like the Polymer Corporation and several of the strategic metal materials in war time there is no reason why they should be doing it in peace time. In war your aim is to destroy. Everything you produce you produce to destroy the enemy. There is a fundamental difference between production for war and production for peace, and the economy is entirely different.
The first objection which is being mentioned in regard to crown companies,-and I shall not deal with it at length because it has been dealt with successfully by the hon. member for Eglinton (Mr. Fleming)-is the matter of municipal taxation. In the Toronto area at the present time there are, with the exception of the Dominion Arsenals and the War Assets in my riding, a number of warehouses. There are no active crown companies which do not pay taxes to the city. But there is in the city and in my riding a great deal of property which does not pay taxes, and it has been a severe handicap to several of the municipalities.
The second point is that under stress the government enters business which is not normally commercially profitable. Here I mention housing. Wartime housing cannot be and I doubt if it ever could be commercially profitable, in this or any other country. It is an emergency measure and should be treated as such. I do not think it will have any place in the Canadian economy after this immediate and desperate housing shortage is alleviated. I do not say that wartime housing is the answer even now; in fact in many cases it has proved very much a disadvantage, but in our present desperate situation concerning housing we have to grasp at any straw that comes along.
Then the government may go into business, as they have in the past, for reasons of geography. While they have not definitely taken over companies they have paid and probably will continue to pay subventions for the production of coal and other materials,

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because of the freight haul involved. I am speaking of Nova Scotia and Alberta coal. Here action on the part of the government will probably be necessary. This is a technical question, and no doubt subventions and such things are necessary to ensure the mining and satisfactory marketing of Nova Scotia and Alberta coal. That is a function, which it may be necessary for the government to perform.
Another form of government enterprise is in setting up marketing and distributing agencies. Here I have in mind the wheat board and government selling agencies and marketing schemes abroad. Under the present world set-up, with conditions so chaotic, no doubt there is a necessity for the government to take a hand in these activities.
I should like to speak briefly about the government entering business as a war measure. First we have Polymer, which I think has proved itself in spite of the fact that it has lost $40,000,000.


Clarence Decatur Howe: What are you talking about?


Agar Rodney Adamson: Well, it has not paid for itself.


Clarence Decatur Howe: That is too bad. It has been in operation for two years.


Agar Rodney Adamson: I realize that, but on the minister's own admission synthetic rubber is not likely to be a commercial factor in future, so that the plant is not likely to pay for itself.


Clarence Decatur Howe: Do not take your losses until it is necessary.


Agar Rodney Adamson: Well, we are still into it to the extent of $40,000,000. I do not care to forecast the future with respect to synthetic rubber, but on the minister's own admission it is unlikely to be a serious factor when natural rubber comes back into normal production. However, it was necessary during wartime, and that is the only point I am trying to bring out. It was ' necessary during the war, in spite of the cost.
Then we have the production of such things as mica, tungsten, mercury, magnesium and many other strategic metals. Production has now ceased in connection with nearly all these. Magnesium is not being produced at the moment, though I understand the company has some hopes for the future. The production of all these strategic metals was on a basis which is now uneconomic, and they were produced as an emergency measure. I am sure that is a justifiable function of government in war time, but it is not a function for the government now that the war is over.
Then we have the Dominion Arsensals. I think it is reasonable to assume that in the enlightened future the government must and shall be the sole maker of weapons of war, because I believe in the past the manufacture of weapons was uncontrolled. Certainly before the first great war large companies such as Krupp and the big cartels did a great deal to foster the spirit of war, and I feel that the manufacture of the weapons of war must remain a function of government. From that point of view I have no objection to the Dominion Arsenals, though I believe humanity to-day is pretty much the same as it was two thousand years ago, and we are not going to banish war from the world for all time. So I believe that encouragement should be given to private firms or private individuals who may from time to time invent new weapons. This is one of the things we have to think about. New weapons will be constantly invented. We must-and I say this regretfully-be prepared to keep at full efficiency our inventive genius in regard to new weapons.
I now want to go on with a discussion of of the government entering into the development of natural resources. Recently we had the government going into the Yellowknife area and constructing a hydro electric power development there. I think that is a progressive step. The Yellowknife is isolated, and the devolpment of a great mineral area requires hydro electric power. Under the present system of taxation it was probably a justifiable function, and in this case a good thing, for the government to develop hydro electric power in that area. It will be expensive; the rate per kilowatt hour, per horsepower year, will probably be high, but if the development is to go ahead quick action must be taken. So I think the Minister of Mines and Resources (Mr. Glen) is to be commended-


James Horace King: I am sorry to interrupt the hon. gentleman, but his remarks should be relevant to the bill which is before the house.


Agar Rodney Adamson: I bow to your ruling, Mr. Speaker, but the development of hydro electric power in the Yellowknife area will probably necessitate a crown company.


Clarence Decatur Howe: Not at all.


Agar Rodney Adamson: In any event it is a government-sponsored project. If it is not to be sponsored by a crown company certainly the financing will be very peculiar, -and must be a direct charge and liability of the government, who will expect some return in the shape of revenue from the power users. The development of that water power has been undertaken by the government; and if it does not
Government Companies

require a crown company it will require some kind of financing. It is the sort of thing that could be financed in a crown company.
But it brings me to the question which I wish to discuss in somewhat more detail, and that is the Eldorado Mining and Refining Company. That company is the largest, if not the sole producer of pitchblende in Canada. If there are other producers, they are small. It is apparent from the policy of the government that any mineral suitable for producing material which can be used in connection with atomic fission is going to be the prerogative of the government. Certainly that is so in respect of pitchblende.
But there are other materials in which the government is interested. For instance, there is thorium, which is now being used, and there are many others.
Since the government's action in taking oyer the Eldorado company, so far as I have been able to find out there has been practically a cessation in prospecting and attempting to develop pitchblende. This may or may not be a good thing. Pitchblende, the ore of uranium and radium, may be found only in one limited location. But, apart from what is being carried on by the Eldorado company, the average prospector is not interested in searching for these minerals because he feels that if he makes a find the government will take it over. I have discussed the matter with many of them, and that is what I am told. That is one of the results-perhaps an inescapable result-of the government's action in taking over the Eldorado property.
I am not complaining of the fact that the government did take over that property. At a very critical time in the war it had1 to see that a supply of uranium was available, because at that time it was the only known material which could be used for the development of the atomic bomb. I have no quarrel with that; but with our present knowledge of atomic warfare and science, I believe that the government should inform the country as to its policy in respect of the development of minerals which have atomic uses, of which pitchblende is one and thorium another. There may be a great many others. In my view it is greatly to the advantage of Canada that all mineral deposits containing these minerals, and any others which could be used for the development of atomic energy, should be vigorously prospected. But if the government preempts the field in respect of these important minerals we shall find that prospecting development will die. Instead of having an active fraternity of prospectors looking for gold, lead and zinc, as we have 
to-day, we shall find that these important minerals will be left to development by the government. Surely that would be a retrograde step.
It is necessary that the most active search for these metals should be carried out. If the government is prepared to take the position that, in the event of another source of pitchblende being discovered, it can be developed by the people who made the discovery and brought it in, I believe we shall have a far greater activity and a more extensive development of these strategic minerals.
I realize that during a critical period of the war Eldorado was taken over, and that possibly the government had no other choice. I feel now, however, that with the possibility of these potential atomic minerals being useful not only for purposes of war but, it is hoped, for the pursuits of peace, every encouragement should be giyen to their prospecting and development. I criticize the government for not stating clearly its position as to what its policy shall be in respect of newly discovered and newly developed strategic mineral production. In that way the government is holding back development, and it is a restriction which should be lifted at the earliest possible time. The research work at Eldorado should not be discontinued. Possibly the work being done there is properly a function of the government, but in my view, it should make its policy clear in respect of what it intends to do in the matter of new deposits. These new minerals and new scientific developments may constitute the most valuable natural resources we possess and, despite the work it is doing, the present policy of the government is not a proper one and is not conducive to developing deposits of these new metals.


Clarence Decatur Howe: Mr. Speaker, this debate has wandered into strange fields and has covered a large territory. One speaker has referred to myself as the darling of big business and in the same speech called me the builder of a slipping slide to socialism. I regret that I was not able to save considerable time of the house by intervening earlier in order to explain the bill. I realize that no one who spoke last evening had read the bill. I felt greatly comforted when the hon. member for Eglinton (Mr. Fleming) rose to-day to clarify some of the points because I then thought he had read the bill. Unfortunately he had not. I think the hon. member for Vancouver South (Mr. Green) must assume some responsibility because he undertook to interpret the bill to the house, and it

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was because the discussion was based on his interpretation that it has wandered up and down so many peculiar lanes.


Mr. GREEN:: Do not blame me for all that.


Clarence Decatur Howe: You started the discussion and I found an echo of your dissertation in all the subsequent speeches. The hon. meniber for Vancouver South mentioned six objections to the bill. The first objection was that there was no limit to the number of crown companies which could be set up and, further, that any department could set them up. I can assure my hon. friend that no crown company can be set up under this bill.


Howard Charles Green: I did not suggest that it could.


Clarence Decatur Howe: I understood that you were discussing this bill. '


Howard Charles Green: I did not suggest that companies could be set up under it.


Clarence Decatur Howe: This is a bill respecting the operations of government companies. As is stated in the explanatory notes, there were at one time thirty-one crown companies operating under the direction of' the Minister of Munitions and Supply. There was no lack of statutory authority for setting up those companies. They were set up under the provisions of the Munitions and Supply Act which is an act passed by parliament, and unanimously, in 1939. The authority is contained in paragraph 6, which reads:
(3) (a) The minister may, if he considers that the carrying out of any of the purposes or provisions of this act is likely to be facilitated thereby, procure the incorporation of any one or more companies or corporations under the provisions of the Companies Act, 1934, or under the provisions of any act of any province of Canada relating to the incorporation of companies, for the purpose of exercising and performing in Canada or elsewhere any of the powers conferred or the duties imposed on the minister by this act or by the governor in council and may delegate to any such company or corporation any of the powers and duties conferred or imposed upon the minister under this act or any order in council.
Then it goes on to state that for the purposes of the section the Secretary of State may, if the minister so requests, issue letters patent. That is the authority for forming crown companies as far as the Munitions and Supply Act is concerned. As I have said, at the height of the war there were thirty-one companies formed under the authority of that act. We are now in process of liquidating the war, and it is hoped that in time we shall be able to liquidate the Munitions and Supply Act. It was never intended to be a permanent statute of Canada and when it
serves its purpose, which we hope will be in a matter of months, the government will ask for the repeal of the act.
The situation is that out of the thirty-one companies there are still thirteen that are active. Five will continue for a considerable period; perhaps three will continue as permanent companies; two may continue for a certain period, while eight others are in process of being wound up. The winding up of large operations takes time, and it seemed desirable to ask parliament for some continuing provision for the operation of these companies independent of emergency wartime legislation. That is the simple purpose of the bill before the house.
It has been suggested that there should be a separate bill for each company. That would mean thirteen bills on the order paper of parliament. All the companies are identical in form; they were all formed under a uniform statute, which is part I of the Companies Act. The suggestion that we have a separate bill for each company would mean that we would have to have on the order paper thirteen bills, each one identical in form with the others, except for the name of the company to which it applied.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Bill No. 157, for the relief of Mary Epstein Harris.-Mr. Maybank.
Bill No. 158, for the relief of Helen Irene Flewelling Wilson.-Mr. Maybank.
Bill No. 159, for the relief of Maitable Horwitz Hollander.-Mr.-Maybank.
Bill No. 160, for the relief of Pauline Gisele Guenette Villeneuve.-Mr. Maybank.
Bill No. 161, for the relief of Mary Jaclyn Robinson Jeffrey.-Mr. MacLean.
Bill No. 162, for the relief of Jessie Hope Forbes Hardie.-Mr. Emmerson.
Bill No. 163, for the relief of Robert Venor. -Mr. Maybank.


[Stage Direction]
The house resumed consideration of the motion of Hon. C. D. Howe for the second reading of bill No. 155, respecting the operation of government companies.
Government Companies
Clarence Decatur Howe: Before the recess I pointed out that the purpose of this bill is to give statutory authority for the operation of the crown companies as set up under the Munitions and Supply Act during the war. The explanation of the bill makes its purpose clear. It states:
During the war, several companies-
Some thirty-one crown companies.
-were incorporated under part I of the Companies Act, 1934, to carry out special projects. Some of these companies, such as Polymer Corporation Limited and Canadian Arsenals Limited, will continue their operations for a considerable period. It may also be desirable, where statutory authority exists, to incorporate similar companies to carry out other special projects.
Having stated that the bill does not convey statutory authority to create any company, I might point out the articles of the bill, which to my mind are very' clear and simple. The first section is the "short title", then the definitions of the "minister" and the "company". Then it provides for the bank accounts. Then it provides for additional capital. The purpose of that provision is that in winding up crown companies capital is sometimes required for unexpected purposes, either for operating or for capital investments. The provision referred to enables the Minister of Finance to advance money not in excess of $500,000 for such purposes as an accountable advance. If the money is not refunded before the next parliament meets it will be necessary to include the amount in the estimates of the department in order that the money may be refunded to the department, as is required for all refundable advances. This provision is simply a provision for additional capital, that is, to permit the treasury to make lump advances to the company either for capital or for operating purposes, which in each case is a refundable advance.
The bill provides that all funds in excess of those required for current operations shall be paid to the Receiver General of Canada.
I might say that it has been the custom, in the operation of crown companies to examine accounts at the end of each month and that all funds not required for the operation of the company are then recalled by the receiver general.
The bill appoints the company the agent , of His Majesty and provides that it can make contracts in its corporate name and that it can sue and be sued.
It provides for the appointment of employees. It provides for the setting up of a pension fund and a superannuation fund. It provides for the protection of civil ser-

vants who may be transferred to the employ of a corporation. It preserves to them the benefits of the Civil Service Act.
It provides that each company shall make an annual report and that the report shall be laid before parliament, and it provides also that any other reports required by the minister shall be made.
In closing, it provides for the coming into force of the act.
I cannot see how any- hon. member could read into the text of so simple a document any provision for the setting up of new crown companies. It wras never intended that that provision should be in the bill and it is not, in fact, any part of the bill.
I mentioned the first objection, which is, that there was no limit to the number of crown companies which could be set up under the. act, and I think I have shown that that objection is wholly without foundation.


Howard Charles Green: I did not say, "set up under the act". The minister is wrong in that.


Clarence Decatur Howe: How would they be set up?


Howard Charles Green: Just read the speech and you will see what I said about it.


Clarence Decatur Howe: That any department can set them up? The only method I know of setting up a company is to come to parliament for
the necessary authority.


Mr. BOUCHER:: What about the Research Council Act?


Clarence Decatur Howe: I have come to parliament for the right to amend the Research Council Act which wTas originally passed by parliament.


George Russell Boucher: Is it not a fact that the minister has also asked parliament under the Research Council Act for power to the council to set up some of the companies on its own initiative without special reference to parliament?


Clarence Decatur Howe: Quite. Parliament may grant that right as it sees fit. That is a matter which I hope the house will decide in the next two or three days. Nevertheless, if Parliament passes this bill in its present form it will have authorized the setting up of certain crown companies under the national research council-to which, I think, no hon. member can take exception, provided that parliament agrees that this should be done.
The second objection is that government activities of this kind are, according to the hon. member, far removed from parliamentary control. I must say that I cannot agree with that, because it seems to me that parliament has all the control over the activities of a crown company that it has over

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the activities of a government department. The main control of the activities of a department is through the voting of the estimates. If funds are required for a crown company they must be voted by parliament, and parliament can then exercise the same control as it would exercise over any department of government.


Howard Charles Green: May I ask the minister if the vote is a vote for each crown company, or is it one lump sum voted for all crown companies?


Clarence Decatur Howe: The vote would necessarily be for each crown company. I can hardly imagine the opposition agreeing to vote money in a lump sum for all crown companies.


Howard Charles Green: It is not that way in the estimates this year.


Clarence Decatur Howe: Well, these are the demobilization estimates. I think they are exceptional.


Gordon Graydon: The minister seems to be comtemplating a deficit each year.


Clarence Decatur Howe: Well, that may be. I think parliament has always voted money for the maintenance of arsenals. I am hoping there will not be a deficit in the arsenals company: but, if there is, it will be exactly the same situation as has obtained ever since I have been in parliament and, I think, ever since the oldest member has been here.


Gordon Graydon: It looks as though this adventure into socialism will be a loss.


William Ross Macdonald: Order. May I remind the hon. member that the house is not in committee of the whole at the moment.


Gordon Graydon: Thank you, Mr. Speaker.


Clarence Decatur Howe: The third objection is that there is no provision for crown companies to pay taxes, municipal, provincial or federal. I suggest that it is not within the competence of this parliament to order crown companies to pay taxes. In order to provide that crown companies shall pay taxes, we must amend the British North America Act. At least, that is my understanding 'of the matter, and I would be glad to be corrected if I am wrong.


Gordon Knapman Fraser: We can do that easily
enough.


Clarence Decatur Howe: Perhaps; nevertheless the
fathers of confederation decided that crown property could not be taxable either to the dominion or to the province or to the munci-pality. As far as the excess profits tax is concerned, that tax on crown companies is a tax of 100 per cent, in that all the earnings of the
company are returnable to His Majesty. That applies to companies wholly owned by the government.
A good many crocodile tears have been shed in this house over the fact that crown companies operate in cities and municipalities without paying taxes to those cities and municipalities. I must say that I have had singularly few complaints from the municipalities concerned. In fact, I have never had a complaint from any city or municipality. I have had a few requests for taxes after the company had been built and put into operation, and when such complaints have been received I have made it my business to examine the accounts of the corporation to determine whether, in fact, it is worse off as a result of the establishment of the crown company, or otherwise. Invariably I have found that the revenues of the corporation were vastly improved, not necessarily perhaps as a direct result of the establishment of the crown company but certainly as a by-product. Many war plants have been built during the war in various parts of Canada, and during the war those plants did not pay taxes; but I can say that at least 80 per cent of them are to-day paying taxes. They have been placed in private hands and are to-day on the active tax rolls of the cities of this country. I should be very glad indeed to have some hon. member rise in his place and give me a specific instance of any loss in a community as a result of the government's building a war plant in that community.
I might mention an interesting coincidence. My hon. friend the member for Lambton West (Mr. Murphy) entered a complaint on behalf of his constituency about the fact that Polymer Corporation is not taxable. Under date of May 31 I have received an entirely unsolicited letter from the mayor of Sarnia, as follows:
Hon. C. D. Howe,
Minister of Munitions and Supply,
Parliament Buildings,
Ottawa, Canada.
Dear Sir:	With reference to the recent debate
in parliament in which the member for West Lambton made certain charges against Polymer plant here, may I say personally as mayor of our city I could not commend his attitude. It is my belief that Polymer has been a great asset to our city, capably managed and efficiently directed, and that we have been very well treated by the government in this regard. It is my hope that the incident above referred to will not be held by yourself or your department against our city, as it is my opinion that Mr. Murphy's remarks, while perhaps reflecting his own views, do not in any way represent the majority opinion of this city.
I am,
Very truly yours,
W. C. Nelson,
Mayor.
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I suggest that the reaction in this instance is typical of the reaction of every other city where crown plants have been established. The crown does not pay taxes, but it does not put cities or municipalities to expense in connection with its operations. If it requires service from a community it pays for that service, and I think the numerous speeches that have been made in this house in this debate, deploring the fact that crown companies do not pay taxes, are entirely without foundation as far as the real situation is concerned.


Agar Rodney Adamson: May I ask the minister whether he has resolved all his difficulties so far as the town of New Toronto is concerned?


Clarence Decatur Howe: We have never had any difficulty with respect to New Toronto.


Agar Rodney Adamson: They camplained to me with reference to storm sewers.	<


Clarence Decatur Howe: The next complaint is this:
In some cases crown companies will be in direct competition with private business. I do not think any member of the house can question that fact.
That is the next point. Let me say that while the Department of Munitions and Supply- created thirty-one crown companies, it has never created a company that is in competition with private business in any way, shape or manner. If private business was able to carry out the war objective, private business was given that opportunity. The government has created crown companies only to undertake work'that private industry was not willing to undertake.
It has been suggested that the Polymer Corporation is in competition with private business. May I say that if the government had not built the Polymer Corporation when it did there would have been no private industry in this country as far as rubber is concerned. There was absolutely no way of bringing supplies into Canada to keep the rubber industry in operation or to fill the war needs in connection with rubber. Polymer is the backbone of the rubber industry, but it is not in competition with private industry in any way, shape or manner. Similarly, our arsenals have always been operated by the government. It is quite proper that the making of arms and ammunition for war purposes should be in the hands of the government, and that has been the policy of the government for a great many years. The arsenals corporation will carry out that policy, which will meet the requirements of the armed forces in certain ways that have been met by the arsenals for years, and it will not be in competition with private industry.

The third company is Eldorado; and I have explained to the house, as every hon. member is well aware, why the products of Eldorado must be kept in the custody of the government from the time that mining operation commences, until the finished product is delivered.


Howard Charles Green: What about the companies to be set up under the research council.


Clarence Decatur Howe: There is one company in connection with patents which are the property of the research council. Surely that company will not be in competition with any other concern that I can think of.


Howard Charles Green: What about the other
company ?


Clarence Decatur Howe: The second company proposed is the company which is already in existence, and to which I have referred, and the third suggestion was that there may be a company to operate Chalk River, which is a government operation that is hardly in competition with private industry. I know of no government company that has ever been in direct competition with private industry; and certainly those that will be continuing companies cannot possibly be considered to be in competition with private industry.
I continue with the hon. member's objections:
The fifth objection is that the bill makes possible the setting up of a super civil service. Employment is entirely in the hands of officers of the crown companies. They can hire whomsoever they choose and pay whatever salaries they wish. The minister explained that one of the reasons he wanted crown companies was to pay salaries commensurate with those paid by private industry.
Surely no hon. member will suggest that the government should go into the manufacturing business with one hand tied behind its back. No one would suggest that the Polymer Corporation, a $50 million project with a turnover of $40 million or $50 million a year would be operated by a man with a civil service salary. The government is going into business on equal terms with private business. It must do so if it expects to have a record which will compare with that of private business. I suggest that no hon. member should ask that the terms under which the government enters business should be any less favourable than those that obtain in private business.


Donald Methuen Fleming: But not more so.


Clarence Decatur Howe: Does the hon. member think they are more favourable?


Donald Methuen Fleming: Yes, where taxes are concerned.

Government Companies


Mr. FULTON:: It lias the resources of the whole country behind it.


William Irvine: I cannot hear this private conversation.


Clarence Decatur Howe: It is not very important. I go on with the objections of the hon. member for Vancouver South (Mr. Green):
The sixth objection is that by using these crown companies the government is putting into effect a very fine method of bringing about a socialist state.
Surely that subject has been debated sufficiently. We need hardly pursue it any farther. Had the government been desirous of setting up a socialist state I suggest that it would hardly have disbanded the majority of its thirty-one companies. It is keeping only the companies which I believe are companies which properly should be under public operation. If the government wished to enter the field of socialism it would certainly advance in a wholly different way from that which is being followed in the present instance.
I believe that covers the main argument in opposition to this bill. As I say, the hon. member for Vancouver South set the tone of the debate, and it was religiously followed by other hon. members of his party. In dealing with his arguments, I feel that I have dealt with the subject matter of the debate.
I would again point out that this is a harmless bill. Its purpose is to permit orderly liquidation of the government's war business, and to ask for the repeal of the Munitions and Supply Act under which all the crown companies in the department were founded. As soon as we can carry it out, the objective is to liquidate the eight crown companies which are still functioning, but which are not required for any purpose other than to liquidate their accounts, and to set up the five companies remaining, on a legal basis aproved by parliament. That, I believe, is a worthy objective. The purpose of the bill is to do it simply. The alternative would have been to introduce into parliament thirteen separate bills of the same content. Therefore, in asking hon. members to approve this bill, I am not asking parliament to depart from any practice which is usually followed.


Lionel Chevrier: I was paired with the hon. member for Grenville-Dundas (Mr. Casselman). Had I voted I would have voted for the motion.


Mr. JEAN:: I was paired with the hon. member for Waterloo South (Mr. Homuth). Had I voted I would have voted fon the motion.


Mr. BREITHAUPT:: I was paired with the hon. member for Danforth (Mr. Harris). Had I voted I would have voted for the motion.


Mr. ISNOR:: I was paired with the hon. member for Colchester-Hants (Mr. Stanfield). Had I voted I would have voted for the motion.


Mr. BLACK (Cumberland):: I was paired with the junior member for Halifax (Mr. Macdonald). Had I voted I would have voted against the motion.


Mr. HODGSON:: I was paired with the hon. member for York North (Mr. Smith). Had I voted I would have voted against the motion.


Mr. BRACKEN:: I was paired with the Prime Minister (Mr. Mackenzie King). Had I voted I would have voted against the motion.


Howard Charles Green: I was paired with the hon. member for Westmorland (Mr. Emmerson). Had I voted I would have voted against the motion.


Mr. LENNARD:: I was paired with the hon. member for Compton (Mr. Blanchette). Had I voted I would have voted against the motion.


Mr. MURPHY:: I was paired with the hon. member for Charlotte (Mr. Stuart). Had I voted I would have voted against the motion.


Mr. McMASTER:: I was paired with the hon. member for Champlain (Mr. Brunelle). Had I voted I would have voted against the motion.


Mr. CLEAVER:: I was paired with the hon. member for Bow River (Mr. Johnston). Had I voted I would have voted for the motion.


Mr. LALONDE:: I was paired rvith the hon. member for Royal (Mr. Brooks). Had I voted I would have voted for the motion.


Mr. MICHAUD:: I was paired with the hon. member for Simcoe North (Mr. Ferguson). Had I voted I would have voted for the motion.


Mr. MacNAUGHT:: I was paired with the hon. member for Elgin (Mr. Coyle). Had I voted I would have voted for the motion.


Mr. COCKER  AM@: I was paired with the hon. member for Hamilton East (Mr. Ross). Had I voted I would have voted against the motion.


Mr. DANIEL:: I was paired with the hon. member for Parry Sound (Mr. McDonald). Had I voted I would have voted against the motion.


Mr. HAZEN:: I was paired with the hon. member for Essex East (Mr. Martin). Had I voted I would have voted against the motion.


Mr. TUSTIN:: I was paired with the Minister of National Health and Welfare (Mr. Claxton). Had I voted I would have voted against the motion.


Mr. LACOMBE:: I was paired with the hon. member for Terrebonne (Mr. Bertrand). Had I voted I would have voted against the motion.


Mr. CASE:: I was paired with the hon. member for St. Johns-Iberville-Napierville (Mr. Cote). Had I voted I would have voted against the motion.


Agar Rodney Adamson: I was paired with the hon. member for St. James (Mr. Beaudry). Had I voted I would have voted against the motion.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair.
On section 1-Short title.
Mr. MacNICOL:: Is the crown company at Fort McMurray one of the companies the minister has in mind?


Clarence Decatur Howe: The operation at Fort
McMurray is not carried on by a crown company. It is an operation under the Department of Mines and Resources.


John Ritchie MacNicol: I may be wrong, but my recollection is that it was set up as a crown company. The crown certainly put up the money for it, and turned it over to a group to operate. I have not heard anything in the debate-one, by the way, in which I took

Government Companies
no part-which would indicate that any of the companies the minister is about to set up will be operated in any other way. All those crown companies are operated by a group of men, just as is done at Fort McMurray.


Clarence Decatur Howe: Abasand, as I remember the situation, was a privately owned company which had been operating for some years. Arrangements were made with Abasand by the government under which certain experimental operations would be carried out under contract by the private company at government expense, but Abasand was never a crown company.


John Ritchie MacNicol: I am still in the dark; I cannot get the picture of what the minister means. The original Abasand company was a privately operated concern, but when it was taken over by the government the old Abasand Company went out of the picture completely. The government has had this operation under its control for about three years or more and during that time $2,000,000 more or less of this country's money has been voted by this house to carry on that business. I do not see any difference between that and any other company that is being operated under the crown. I am not trying to find any fault with the minister, but I want to know if Abasand is to be continued or js to be closed down? Personally I should like to see it closed down as a government operation.


Clarence Decatur Howe: My officers advise me that I gave the correct position. Abasand is the same company to-day, with the same shareholders, that it was before the war. It has been carrying on certain experimental work under contract with the Department of Mines and Resources, and this work was carried on at the expense of the government. I am unable to give my hon. friend the information he desires. I am sure the Minister of Mines and Resources will be better qualified to do so, but I can assure him that Abasand is not a crown company.


John Ritchie MacNicol: I know the minister is thoroughly qualified to tell me what I wish to know, and I do not know that the Minister of Mines and Resources can know very much about it. He has not had it under his control very long and he had nothing to do with the setting up of the company. The minister did have something to do with that. The minister set it up and I am sure he can tell us, if he will, exactly what is to be done with it. When the Minister of Mines and Resources comes before the committee I shall not expect him to answer. He will have to ask somebody sitting in front of him, but the minister
does not need to ask anybody in front of him; he knows himself. It was set up under his orders and he is familiar with it.
I am not finding any fault because it is all past and gone, but I am anxious to know what is going to go on. It makes no difference to me at all, but the minister knows that the plant built under his supervision-it was not built under the supervision of the Minister of Mines and Resources-was burned down some time ago and insurance amounting to several hundred thousand dollars was collected. I was informed a short time ago that application is to be made to the government for a sum equal to the amount of the insurance, which I believe was $350,000, to make a total of $700,000, in order that the rebuilding of the plant may be proceeded with.
If the government is to expend the money received from the insurance I think it could be more sensibly spent in continuing the operations that were started under the minister's direction a year or two ago-this was before the present Minister of Mines and Resources had anything to do with the matter (

of drilling down the Athabaska river in the known oil sand beds in order to investigate the tonnage of oil sands in that area. If that work is not completed now, there is a danger of what has already been spent being lost. It is government business to find out what are the resources of the country and I think this money could be better spent in doing this drilling than to rebuild the mill. I am trying to be nice to the minister because I recognize his ability, but I should like to know what is to be done.


Clarence Decatur Howe: My hon. friend is much too complimentary about my knowledge of that, particular transaction. I did have something to do perhaps with starting the experiments, but the contract was always carried by the Department of Mines and Resources, and the officials of that department supervised the operations with some collaboration by our oil controller when we had an oil controller. My officials tell me that I have a memorandum on my desk about this, but I have not read it. I do not know whether they will continue operations, but I do know that if any money is to be forthcoming for that purpose it will be voted in connection with the estimates of the Department of Mines and Resources. I am sure the minister of that department will be well briefed when he appears in the house and will be able to discuss the matter with my hon. friend.


John Ritchie MacNicol: That particular company is not one of the companies the minister has in mind to carry on under this bill?
Government Companies


Clarence Decatur Howe: That is right.


John Ritchie MacNicol: Yes or no?


Clarence Decatur Howe: That company is privately owned. It is the same old Abasand company; I can assure my hon. friend of that. It has never been a crown company; it is not a crown company at the present time and, I think I am safe in saying that it never will be a crown company.


John Ritchie MacNicol: I recommend the Minister of Mines and Resources to read what the minister has just said, that it is not a crown company. I will not pursue the matter with the minister any longer, but when the Minister of Mines and Resources comes before the committee I will read to him the original contracts entered into by the government with the so-called private concern. There is no private concern about it to-day. I hope the Minister of Mines and Resources will get the memorandum the minister has on his desk because he will need it and every other memorandum he can put his hands on.


George Russell Boucher: When the Minister of Reconstruction was speaking this afternoon he referred to the fact that this bill really was enabling legislation to help in the operation of such crown companies as are now in existence or such others as the government may wish to create. Such companies as polymer, Canadian Arsenals and Eldorado are already owned by the government; they have been financed by t'he government; they have been in operation and they have some revenue. What further financing does the minister want to do for them? I am thinking particularly of the powers set out in section 4 of the bill, which authorizes the governor in council at any one time to finance a company to the extent of $500,000 for additional working capital by way of loan or guarantee.
Then section 5 of the same bill provides "that the governor in council may advance a further $500,000 at any one time in any one fiscal year -I suggest that this would permit as many half million dollars in as many fiscal years as they may wish-for the purpose of constructing, acquiring, extending or improving capital works and for the purpose of purchasing additional shares of capital stock. Taking the three sections together, and bear-mg in mind that there are three companies, Polymer Corporation, Canadian Arsenals and ;he Eldorado company, one can see the possibility of a great deal of government money ?oing into these crown projects without suffi-lient notice to parliament. The companies vill have the capital which they now possess, plus their increased earnings, which may be retained and may not be recalled by the re-

ceiver general, plus not more than $500,000 granted at any one time for the purposes of operation, plus a further number of $500,000 for extensions and improvements and the buying of stock, so long as not more than one sum of $500,000 is given within any fiscal year. If you add those amounts together you will see the possibility of huge sums of money being obtained by these crown companies without any actual vote by parliament until after the deed is done. It is true that a statement will be available to parliament by being laid on the table of the house at a future time. But combining these three things, it seems to me the minister cannot but agree that he is asking parliament at this time to make an unusually large concession at one time. If my interpretation of the bill is correct it will be dangerous for us to assent to it in its present form. Probably he can enlighten me on this point. He may say that my construction of the terms of the measure is not correct, that the government cannot add to the capital of these companies beyond what they already have, or it may be that the minister will see fit so to revise the terms of the bill that there will be something which will limit, more than it does at present, the amount of money which the governor in council can give these crown companies without first submitting the matter to parliament.


Clarence Decatur Howe: Am I to understand, Mr. Chairman, that sections 1, 2 and 3 have passed by the committee? We are discussing at the moment section 4.


William Ross Macdonald: The section under consideration is section 1, short title, and it is usual to have a general discussion when section I is up for consideration.


Clarence Decatur Howe: This is a very special discussion of section 4.


William Ross Macdonald: Does section 1 carry?


George Russell Boucher: With all deference to the minister, I say that it is not a question of section 4. It is a question wdiich has in view the purposes of the bill under sections 1, 4 and 5. These are pretty nearly all the pith and substance of the bill, and I think that under the policy and procedure of the house this is the proper time to ask the question, because otherwise we are restricted to the one section. This question relates to three or four sections of the bill and how they are related to each other.


Clarence Decatur Howe: I am quite willing to discuss section 4, but I had always understood that the principle of a bill was discussed on second reading and not in committee. However, '

Government Companies
section 4 gives each crown comp'any the authority to borrow from the Minister of Finance not more than-


William Ross Macdonald: Order. I think the minister is probably correct, and if he intends to discuss section 4 he might reserve his remarks until that section is reached.


Mr. HACKETT:: I think the minister is adopting the proper policy in telling us something about this corporation. I do not believe that many members of the committee understand what is its purpose and how it functions, and if the minister can in a few sentences enlighten the committee, now is the time to do so. It may save a lot of time later on.


William Ross Macdonald: If it is the wish of the committee to discuss section 4 now, the chair will certainly not object, although I believe it would facilitate the proceedings of the committee if these sections were discussed as we reach them. If the minister is just going to make a few remarks with regard to section 4, without a general discussion, it might be satisfactory to do so now.


John Thomas Hackett: Before the minister commences, may I be permitted to say that many hon. members who have some acquaintance with business and- finance are completely at sea concerning the method of operation and the purpose of creation of these and other corporations of a similar nature, and we would be profoundly grateful to the minister, who has a far broader knowledge of the operations of these corporations than anyone else, if he would give the committee the benefit of his experience and his information concerning them.


Clarence Decatur Howe: Mr. Chairman, if I may
resume, the purpose of section 4 is to permit each crown corporation to borrow from the Minister of Finance, for .a period, up to a limit of $500,000 for operating, and up to a limit of $500,000 for capital purposes. It is simply a loan. A crown corporation differs from a private corporation in that it cannot borrow money from the usual sources. It cannot float a bond issue, nor can it borrow money from a bank except by authority of the Minister of Finance. This bill authorizes the Minister of Finance to guarantee a loan from a bank up to half a million dollars or alternatively make a temporary advance up to half a million dollars direct from consolidated revenue. That is simply banking accommodation. The important feature of the bill is that it allows each crown company to operate with money which it earns, which is not the case at the present time.
For example, Polymer corporation sets up a maintenance fund. It would be free to a private corporation to invest that maintenance fund for capital purposes or for any corporate purpose. Under the present practice that particular fund is paid to the Receiver General of Canada and is not available for corporate purposes unless voted. When this bill is passed the maintenance vote will still be paid over to the Receiver General of Canada, but it will be kept in a suspense account for corporate purposes of the company until the auditor general decides that the amount has become excessive, when it will be transferred from that account into the consolidated revenue fund. That is the difference between the present-day practice and the practice under this bill. But provisiop is made in this bill for borowing power up to half a million dollars for operating, and half a milion dollars for capital purposes. That money must be refunded before any further loan can be obtained. The amount outstanding can never be more than $500,000 for each account at any one time.


Howard Charles Green: That is, a total of one million dollars?


Clarence Decatur Howe: Yes.


George Russell Boucher: I appreciate the minister's explanation, but I do not understand the section, because if he refers to section 4, he will find that there is a limit of $500,000 for operating expenses at any one time; but if he reads section 5, that, is the latter part of it, he will see that the only restriction is that the advance or loan is not to exceed $500,000 in any fiscal year. That means, as I understand it, that in each fiscal year the government can advance this company $500,000 and the total could be much in excess of half a million dollars by reason of several advances. I see nothing in the bill to confirm the minister's statement that at no time can the advances exceed two loans of $500,000 or a total of $1,000,000, nor do I see anything which provides that a company must refund one loan before it can secure anbther. That is not in the bill.


Clarence Decatur Howe: The fact of the matter is that the loan, under section 5, which is for capital purposes, is limited to $500,000 until it is cleared. It can be cleared in either of two ways. It can. be cleared by vote of parliament for capital purposes, to replace it, or it can be cleared by the finance department taking-additional stock in the company, as it has a right to do. The loan is limited to $500,000 for any fiscal year, and naturally there can be no further loans until the next fiscal year, until the first loan has been cleared.
Government Companies


George Russell Boucher: I cannot read in the bill anything to that effect. I hope that is the case, but I cannot see anything of that kind in the bill.


Clarence Decatur Howe: It is stated clearly in paragraph (c) of section 5 that the Minister of Finance is authorized "to purchase additional shares of capital stock of a company and to pay for the same out of unappropriated moneys in the consolidated revenue iund." Unappropriated moneys have to be appropriated. There is no such thing as a vote of unappropriated moneys in the consolidated revenue fund.


George Russell Boucher: But there is nothing to say that they could not be appropriated to this crown company for each fiscal year for five, ten or fifteen years before any of the loans are paid back.


Clarence Decatur Howe: They can be appropriated only by vote of parliament. My hon. friend is right. They must be appropriated by vote of parliament or otherwise refunded.


George Russell Boucher: The minister has stated that only on one occasion can they have a loan of $500,000. This section does not say anything of the kind, nor does any other section say anything of the kind. It does not say that they cannot have a number of appropriations by way of loan or advance to the company, of $500,000 each, and it does not say that they must pay back one loan before securing another. The section says that the governor in council may do it, not parliament.


Clarence Decatur Howe: The governor in council can authorize an advance from unappropriated moneys in the consolidated revenue fund, but at the end of the fiscal year unappropriated moneys must be appropriated. No one in the government has the right finally to spend unappropriated money of the consolidated revenue fund. My hon. friend, having lived all his life within sight of the capital, must know government practice to that extent.


George Russell Boucher: Unfortunately I know it only too well, because it looks to me like locking the barn after the horse is stolen. The minister says that the governor in council can appropriate money, and there is no requirement saying that they cannot appropriate it again even though the first loan is not paid. The minister himself stated it a few minutes ago, but now his stand is not the same, which leads me to believe that, although he has lived in the capital for some years, and has been much more active in the capital treasury than the member for Carleton ha? been, he is not in a position to give an explanation.


Clarence Decatur Howe: My hon. friend is saying again and again that black is white while I am saying that black is black and we cannot get together in that kind of discussion. However, I leave it to any hon. member whether he can read anything else into that section.


Douglas King Hazen: Would not section 4 be clearer if the last four words of paragraph (b) were deleted, so that it would read "shall not, in the case of any company, exceed $500,000"? What is the purpose of putting in the last four words, "at any one time"? It seems to me that the company is limited to an advance of $500,000. Why put in those words, "at any one time"? That creates the impression that at another time they can get another $500,000.


Clarence Decatur Howe: The company might very well need an advance of $500,000 in August to buy coal for the winter, and by December it might be able to pay off that $500,000. By March it might need another $500,000 for inventory for something else, and that might be liquidated later on and a third loan made in the fiscal year. But let me point out that the advance can never be more than $500,000 at any one time. You can borrow $500,000 several times in the year if you pay back earlier borrowings.


George Russell Boucher: I do not follow the minister. Section 4 says, not more than $500,000 at any one time, but section 5 does not say that: it says, not to exceed $500,000 in any fiscal year. There is a vast difference in wording as between the two and in the meaning of the enactment by virtue of the difference in wording.
Mr. MACDONNELI, (Muskoka-Ontario): Perhaps the minister on the one hand and the hon. member for Carleton and myself on the other are really in agreement if he can explain the position. I understand that under section 4 advances up to $500,000 can be made, but it must not exceed $500,000 at any one time. But my understanding is that under section 5 advances or payments or subscriptions, whatever you choose to call it, may be made at the rate of $500,000 each year, because it is not the aggregate of the amount outstanding but the aggregate of the amount paid under paragraph (b) which shall not exceed $500,000. My understanding is the same as that of the hon. member for Carleton. Under section 4 you have an aggregate of $500,000, but under section 5 you can go on year after year, $500,000 each year. Is that the minister's understanding?


John Thomas Hackett: And at the end of five years you have $2,500,000

Government Companies


Clarence Decatur Howe: Let us go about this thing quietly and see if we cannot understand it. My hon. friend has operated in business for a long time


Mr. MACDONNELL (Muskoka-Ontario):: We are going about it quietly. We want to be sure that we understand the same thing.


Clarence Decatur Howe: Section 4 gives the company an operating credit of 1600,000, a limit-


James MacKerras Macdonnell: Yes, I understand.


Clarence Decatur Howe: A banker would take you aside and explain what a line of credit is, with a limit of $500,000. You can borrow up to $500,000 and do it repeatedly, provided that you pay it off in the meantime. It is a floating credit.


James MacKerras Macdonnell: I understand that.


Clarence Decatur Howe: The second is a loan for capital purposes, a loan that goes into the property.


James MacKerras Macdonnell: But is it a loan? Is it not a purchase? Paragraph (c) talks about a purchase of shares.


Clarence Decatur Howe: It can be cleared in several ways. The provision is for an advance for capital purposes and the advance must be covered. It can be a loan repayable from a vote of parliament, or it can be a purchase of shares by the government, a purchase of interest by the government.


James MacKerras Macdonnell: Supposing an amount of $500,000 is used this year for a purchase. Then the hon. member for Carleton argues, and I argue, in this way: All right; that is $500,000 which is paid this year, and next year the same thing can be repeated, and the next year. Does the minister agree? If he does, then we are all at one. That is.the way it reads, surely.


Clarence Decatur Howe: I would point out that the advance is made from unappropriated moneys and the money must be appropriated. In other words, in between, before another $500,000 is made available, they must come to parliament and get an appropriation. They must change unappropriated moneys into an appropriation.
Mr. MACDONNELL (Muskoka-Ontario). But we are talking about whether it can happen year after year and, as I understand, you are agreeing to that.


Clarence Decatur Howe: It can, if parliament votes it. Parliament must vote the money.


John Thomas Hackett: The minister said that the corporation might not keep the moneys that it made as profit through its operations.


Clarence Decatur Howe: At the present time.


John Thomas Hackett: Is there anything in this bill that expresses the effect of the statement the minister has made?


Clarence Decatur Howe: When this bill passes, the company will be able to use its earnings for corporate purposes.


John Thomas Hackett: Is that section 3?


Clarence Decatur Howe: Yes. The section reads:
Every company shall establish and maintain in its own name one or more accounts in the Bank of Canada or a chartered bank approved by the Minister of Finance and shall deposit therein all moneys received by the company and shall pay out of the said accounts all administrative and operating costs and expenses of the company.


John Thomas Hackett: When one reads that section with section 6 which gives the minister or the Minister of Finance the power to take back anything that is conceded to be in excess of the requirements of the company, what are the particular uses of section 5?


Clarence Decatur Howe: Once it is out of section 6, then it is gone. It goes into the consolidated revenue fund. The requirements for capital come up very suddenly. For example, the Polymer Corporation is in many different kinds of business. Its main business is the making of rubber. It also sells the by-products of petroleum in several forms. For example, there is a demand now for additional styrene, and apparatus is being installed with some urgency to increase the cut of styrene. That happens in any chemical company; and if funds were not in hand to-day, section 5 of the bill would be invoked and the Minister of Finance would be asked to advance the required sum in excess of $500,000, to be repaid 'either from earnings or be appropriated by parliament, as the case may be.


George Russell Boucher: Now that the minister has agreed with me that the governor in council may appropriate $500,000 for extensions or for the buying of capital stock, construction and acquisitions c>f the company each fiscal year, the limit is not $500,000 as he stated; it is $500,000 in any one fiscal year, which may be accumulated over a number of years by $500,000 each fiscal year. Does he also agree with me-


Clarence Decatur Howe: Mr. Chairman-[DOT]


George Russell Boucher: If the minister wishes to answer he may do so.
Government Companies


Clarence Decatur Howe: I agree with nothing of the kind. My hon. friend may keep on saying that for the rest of this evening, but I do not agree with him.


George Russell Boucher: The minister's statement was clear, and that is what I at least took from what he said. He said they could appropriate $500,000 in one fiscal year for the buying of stock and the acquisition of property under section 5. The next fiscal year they could get another appropriation of the same amount. That is what section 5 says.


Clarence Decatur Howe: Put this proviso down in writing and keep it in front of you: Provided . that in the meantime the appropriation is voted by parliament; provided that parliament votes the money that has been appropriated in the previous year.


George Russell Boucher: That is not in the bill. The bill says:
The governor in council may . . .
Even though parliament does appropriate the money, it gives the same result. The result is that a company like Polymer, which the minister says has made so many million dollars, can over and above any appropriation it seeks from parliament, use all its profits for its own purposes or for any purpose it may see fit without consulting parliament at all. Is that not correct?


Clarence Decatur Howe: Yes, it can use its own earnings.


William Alexander McMaster: As I read sections 4 and 5, they deal with entirely different matters; As I read section 5, it deals with the carrying on of the operating end of the business. As the minister said, at one time they need money to buy materials, and at another time to buy coal. Section 5 seems to me to deal with capital expenses.


Clarence Decatur Howe: That is correct.


William Alexander McMaster: If that is so, then following what the hon. member for Carleton has said, is it a fact that each year they could be advanced $500,000 for capital expenses?


Clarence Decatur Howe: Yes, that is correct, provided -and this proviso is reiterated-that in the meantime parliament votes $500,000 to the company for capital purposes to clear the last advance that has been made. If the proviso does not wrok it cannot be done.


John Bracken: Where can we find in the estimates the appropriation from which funds for this purpose will be drawn?


Clarence Decatur Howe: The present arrangement obtains. In other words, if this is a company
IMr. Boucher.]
under the Department of Reconstruction and Supply it would be an item in the estimates of the Department of Reconstruction and Supply.


John Bracken: Could not the minister, through his advisers, tell us where that item is in the estimates?


Clarence Decatur Howe: There is no such item.


John Bracken: I wanted to ask that question, and I wigh to ask one other. Is there a blanket vote from which the moneys required for these corporations may be drawn? The minister has referred to' parliament voting money for particular companies. I rather doubt whether the minister will bring down estimates showing a separate vote for each company. I expect to find it in some blanket vote, and we shall not understand what it may be used for.


Clarence Decatur Howe: There has been no occasion for individual votes. The money has been appropriated in the war appropriation under a blanket vote. In fact, the war appropriation for the whole cost of the war was contained in one bill; but under the arrangements of this bill there must necessarily be a separate item for each repayment. In other words, it would be a vote to repay a recoverable advance. It must be a separate vote. If this is a vote for general purposes it would be so labelled. But the item under section 5 would call for a specific vote for a particular company. ,


John Bracken: That is the question I am asking. We are over two months into this fiscal year, and there are ten months ahead of us. If this measure goes into operation, surely there must be an appropriation already in the estimates.


Clarence Decatur Howe: There may be.


Howard Charles Green: May I call the minister's attention to the fact that on page 74 of the main estimates, item 609 reads:
Administration, reconversion and operation of crown companies and/or crown plants, $20,000,000.
There is an increase of $16,000,000 over the vote for the last fiscal year. Is that the vote to which the minister refers?


Clarence Decatur Howe: Yes, that is correct. The reason for the increase is that last year the companies had considerable revenues. This year it is a question of the clean-up of contracts, and the amount was increased accordingly. I shall be glad to give a full explanation of the items when the estimates of the companies are reached; but that is not an item that is used to finance these particular companies. It is more a clean-up item of the companies that are now out of business.

Government Cotnpanies


John Bracken: I do not mean to embarrass the minister, but if this measure is to come into operation in this fiscal year and it requires funds the question I was asking is, where in the estimates shall we be able to find the vote? Is it a blanket vote from which the governor in council may draw funds as it requires them for these separate companies? The minister said that he would be asking for a specific vote for each of these companies. From the answers given so far I rather question whether he is correct in that statement.


Clarence Decatur Howe: Any money borrowed under
sections 4 and 5, unless it can be repaid from the operations of the company, will be repaid by a specific vote for -a specific company. My hon. friend has referred to requirements. Polymer, for instance, will require no funds from the government during the coming 3rear; its earnings will be quite ample to take care of its requirements. Park Steamships will require no funds; its earnings are ample to take care of its requirements, Eldorado may or may not require an appropriation, depending upon the amount of exploration work undertaken during the current season. Wartime Housing, of course, does require appropriations, and these are in the estimates; I refer hon. members to item 607, covering housing developments and including commitments of previous years. Canadian Arsenals will require an appropriation. Whether or not that appropriation is spent will depend upon the experience of the first year. We shall have certain extraordinary expenses involved in organizing Canadian Arsenals and moving and placing the equipment, but we hope that in future years Canadian Arsenals can operate without an appropriation from parliament.


John Bracken: I think the minister can clear up my difficulty with one answer. I gather that in the estimates for this year any appropriation asked for is a bulk appropriation and that there will not be specific votes for specific companies. I also gather from the minister that in future there will be specific votes for specific companies?


Clarence Decatur Howe: That is right.


John Bracken: If that is the minister's
intention I have my answer.


Clarence Decatur Howe: That is correct.


John Bracken: It is not in the estimates in that way this year, but in future the requirements of specific companies will be asked for in the estimates?


Clarence Decatur Howe: Yes; that is with companies
borrowing under the bill. It must be the case.
Mr. HACIvETT:	Can the minister come
to my assistance in this matter? He has explained section 3, under which in future a crown company may have to its credit moneys which it earns. Then section 6 provides that the minister or the Minister of Finance may take those moneys from the company. Will the minister state the difference in method and purpose between sections 4 and 5, in getting new moneys for a company?


Clarence Decatur Howe: Section 3 permits the company to use its revenues for operating purposes. Section 6 provides that if the company does not believe it is time for a dividend to the consolidated revenue fund, the Minister of Finance may step in and say that the dividend shall be paid. Sections 4 and 5 are to cover temporary borrowings, one for current purposes and the other for capital purposes, borrowings which can be made in advance of authorization by parliament, but which must be cleared by parliament before a further advance can be obtained.


John Thomas Hackett: Section 4, then, covers
borrowings for temporary purposes; and section 5-?


Clarence Decatur Howe: For capital purposes.


John Thomas Hackett: I have some difficulty
in understanding that section 5 has to do with borrowings for capital purposes, since it entails the sale of securities. Is that considered a borrowing for capital purposes? I refer particularly to section 5 (c), which authorizes the Minister of Finance to purchase additional shares of capital stock of a company and to pay for the same out of unappropriated moneys in the consolidated revenue fund.


Clarence Decatur Howe: Perhaps I can explain it in
another way. The Minister of Finance has no money of his own. This is authorizing him to borrow money from the consolidated revenue fund, which he does out of unappropriated moneys in that fund; but that money has to be paid back to the consolidated revenue fund by way of an appropriation. An appropriation will be required to square the Minister of Finance and his consolidated revenue fund before he can make another loan from the same source.


James MacKerras Macdonnell: Perhaps I am stupid, but I still think the minister is either confused or is confusing us
Government Companies

or we are confused; it is one of the three, and I am not sure it is not the first. The minister still speaks of this as a loan to the company, but I still find it difficult to understand that purchasing a company's stock is making a loan. Paragraph (c) of section 4 speaks of purchasing additional shares of the company's stock. Is that what the minister speaks of as a loan to the company?


Clarence Decatur Howe: I think we would get on much faster if we took up this bill clause by clause. The point is that this stock is purchased with unappropriated moneys, and nobody can spend unappropriated moneys permanently without going to gaol. Unappropriated moneys must be appropriated at some stage.


Charles Cecil Ingersoll Merritt: That is the point that is troubling me. I know very little about finance, but it seems to me that section 5 is a statutory authorization to pay money out of unappropriated moneys in the consolidated revenue fund. Then, if at the end of the year the auditor general asks for the authority for the payment of, say $500,000, the production of the order in council under section 5 of this measure would be adequate authority for that payment and adequate appropriation of the money. Therefore it would not be necessary for the minister to come back to parliament and recoup that $500,000 by an item in the estimates. It would seem to me that the only limit to this would be the existence or non-existence of unappropriated money in the consolidated revenue fund at any particular time. If I were to pay my annual income tax of $500,000 and it happened to be lying there the day the minister wanted some money, under this section he could take it without putting an item in the estimates; or if it appeared in the estimates it would be like the family allowances, for instance. That is, it would be a statutory item, just as the minister's salary is a statutory vote which does not require to be discussed and passed in committee of supply.


Clarence Decatur Howe: My hon. friend it quite mistaken. This is not a statutory vote; it is not a vote at all. This gives permission to make temporary borrowings, which must be repaid by means of appropriations. If it were a statutory vote it would say so. The vote covering the salary of the minister, for instance, is a statutory vote, but this only gives permission to borrow up to this amount each year.


George Russell Boucher: I may be hard to convince, but is it not a fact that after this bill is passed an order in council itself will be

sufficient appropriation to authorize the government to advance the money? What further steps will be necessary?


Clarence Decatur Howe: The further step is a vote of parliament appropriating the money.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Howard Charles Green: During the discussion on
second reading of this bill there was quite a bit of talk about the ways of forming crown companies, and I think this is a good time to have that straightened out. If I am wrong in any of the statements I make about the method of incorporating these companies I hope the minister will correct me. As I understand it, these crown companies, formed under part I of the Dominion Companies Act had never been used until the war. During the course of the war the Department of Munitions and Supply decided that it would be a good idea to set up crown companies in that way. The minister, who was then Minister of Munitions and Supply, was given power to do so in the session of 1940. That is found in chapter 31 of the statutes of that year, which is an act to amend the Department of Munitions and Supply Act. The power to bring about the incorporation of these crown companies is set out in subsections 3 and 4 of section 6, as enacted in 1910. Those subsections give the minister this wide power, namely that of bringing about the incorporation of crown companies under the Dominion Companies Act.
It was done, I believe, by having employees of the government sign the necessary application for letters patent just in the same way a private businessman would sign an application leading to the formation of a company under t'he Dominion Companies Act. The act to which I have just referred put no restriction whatsoever upon the number of companies which could be formed through the minister in that way. That provision is still law.
That section of the Department of Munitions and Supply Act is still law; so that right up to the present time under that act the minister has power to procure the incorporation of any number of crown companies he thinks should be formed. As I have said, the act is still in force.


Clarence Decatur Howe: 'Only for the purposes mentioned in the act. The minister can only delegate powers given to him in the act. My hon. friend voted for it; I presume he thought it was all right then.


Howard Charles Green: The minister will admit that the powers given are quite wide.

Government Companies


Clarence Decatur Howe: Not too wide. They were related wholly to war.


Howard Charles Green: At the last session we passed the Department of Reconstruction and Supply Act, which is chapter 16 of last year's statutes! Under section 6 of that statute the minister was confirmed in all the powers he had under the Department of Munitions and Supply Act. So that, as long as the Department of Reconstruction and Supply Act remains on the statute books, the minister will have that power to set up crown companies which he was given by section 6 of the Department of Munitions and Supply Act. Again, there is no limit on the number of companies he can set up.


Clarence Decatur Howe: Provided that they are for the purposes specified in the act, which relate wholly to war. There being no war, I think it would be difficult to find a basis for setting up any new company under that act. In any event, when the Department of Munitions and Supply was called upon to set up War Assets Corporation it did not proceed under the Department of Munitions and Supply Act, because that was not within the competence of that act. It came to parliament for a separate bill.


Howard Charles Green: Of course my submission on second reading was that any new companies to be formed should be formed in the same way as War Assets Corporation was formed, namely, by special statute of parliament.


Clarence Decatur Howe: That would necessarily be so, in my opinion.


Howard Charles Green: Will the minister say, then, that there will be no more crown companies set up under the provisions of the Department of Munitions and Supply Act or the Department of Reconstruction and Supply Act?


Clarence Decatur Howe: Yes.


Howard Charles Green: Well, then, under Bill No. 154, which is a bill to amend the Research Council Act, power is given to procure the incorporation of these crown companies.


Clarence Decatur Howe: Yes.


Howard Charles Green: No limit is set upon the number of companies they can incorporate.


Clarence Decatur Howe: It is limited to the purpose of the act. That is, as long as they keep within the field of the national research council, they are all right.


Howard Charles Green: Then, again, under the
atomic energy control board act, the same power is given.


Clarence Decatur Howe: It has not yet been given.


Howard Charles Green: We have not yet seen the bill. However, in the discussion on the resolution preceding the bill we were told that power would be given to set up crown companies under part I of the Dominion Companies Act.
Mr. HOI\E: For the purpose of carrying out the bill.


Howard Charles Green: With no limit set as to the number that could be set up. I suggest to' the minister that there is also power to set up these crown companies under the provisions of the National Emergency Transitional Powers Act which was passed at the last session, and which remains in effect at the very least until after the house meets next spring. Then it may be extended for a further time.


Clarence Decatur Howe: Under what section of the National Emergency Transitional Powers Act, 1945, would we set up companies?


Howard Charles Green: Under the general powers contained in that act.


Clarence Decatur Howe: No; those are limited powers.
I would refer the hon. member to section 2 where it states that the governor in council may do such acts and things as are deemed necessary or advisable for the purpose of certain things set out in paragraphs (a), (b), -(c), (d) and (e). I believe the hon. member would have difficulty setting up companies under that.


Howard Charles Green: The minister thinks there would be trouble in doing that?


Clarence Decatur Howe: Yes.


Howard Charles Green: At any rate, there are these other ways of setting up crown companies at the present time.


Clarence Decatur Howe: By authority of parliament.


Howard Charles Green: My point was this: Parliament passes, let us say, the Research Council Act. There is then no necessity for the research council to come to parliament to obtain approval _ respecting any of the companies they wish to set up. I was suggesting that parliament should pass on each company rather than give a blanket power to the research council to set up any company they might see fit to set up. That is where the minister and I do not see eye to eye as to what would be the best policy.


Clarence Decatur Howe: My difficulty is to discuss three bills at the same time. I have said that the bill we are now discussing-and the only bill we are discussing-does not give authority to set up any crown company.
Government Companies


Howard Charles Green: But what the bill does do, in the section we are now discussing, is that it describes a company. The section states:
"Company" means a company incorporated under part I of the Companies Act, 1934, all the issued shares of capital stock of which are owned by or held in trust for His Majesty in right of Canada, except shares necessary to qualify other persons as directors.
So that the provisions of this bill are so broad that they cover every crown company, do they not?


Clarence Decatur Howe: Every existing crown
company. '	.


Howard Charles Green: No; any crown company to be set up in the future is covered by section 2.


Clarence Decatur Howe: No; they do not cover a company until it is in fact set up. I know of no way of setting up a crown company to-day, except by coming to parliament. Perhaps my hon. friend can tell me a way.


Howard Charles Green: I suggest to the minister that I have already told him the way that it is done and I think he agreed with my statement. For example, under the Research Council Act, once the amendment is passed the council will have the power to set up any corporation it wishes.


Clarence Decatur Howe: For the purposes of the act and provided that power is given by parliament to the research council. It could not do it to-day.


Howard Charles Green: I admit that, but having got that power they can set up any company. Let us say that they set up five companies; each one of those five companies would come under this blanket bill. The minsiter will not deny that.


Clarence Decatur Howe: Of course, but my hon. friend will remember that anything the companies could do, the national research council could do without the companies.


Howard Charles Green: I suggest to the minister that that is a very good reason why the national research council does not need to set up companies at all.


Clarence Decatur Howe: Which bill are we discussing? Do I get any protection? Do I have to discuss four bills at once?


Howard Charles Green: Surely the minister is not asking for protection. We will call in the mounted police to help him out.


William Ross Macdonald: The committee is considering section 2 of a bill respecting the operation of government companies. All discussion should be relevant to that section and to this bill.


Howard Charles Green: I was speaking of crown companies. Paragraph (a) of this section also has great significance and it supports the argument I made last night. It reads:
(a) "Minister" means, in relation to each company the minister who has direction or control of the affairs of the company.
I suggest that that is worded broadly enough for any minister in any dominion cabinet to operate under this bill if there happens to be a crown company set up dealing with the business of his department.
. Mr. HOWE: Under part I of the Companies Act.


Howard Charles Green: Yes. I think there can be no question about that. That is one of the conclusions I was trying to reach in my speech last night, and I think the minister's answers this evening have made it perfectly clear that that is the situation. There is power taken under this bill to provide for the operation of any crown company that is set up under part I of the Companies Act, and there is no limit to the number of companies that can be dealt with under the bill. Any minister has the power to operate under this bill if he has a crown company mixed up with his department.


Clarence Decatur Howe: Organized under part I of the Companies Act.


[Stage Direction]
Section agreed to.
On section 3-Bank accounts.
Stanley Howard Knowles: This section provides that every company shall establish and maintain a bank account in the Bank of Canada or one of the chartered banks. I should like the minister to clear up a point that arises in my mind in connection with this section. As I read the section, it implies that a company could carry on its banking business either with the Bank of Canada or with a chartered bank, the company is given a choice. If that is the case, and if it is possible for a company to do all its banking business with the Bank of Canada as well as with a chartered bank I should like to know if consideration was given to wording the section so that these crown companies would do all their business with the Bank of Canada.


Clarence Decatur Howe: My hon. friend will note that the company is instructed by the Minister of Finance as to the bank with which it will do its business. It so happens that the Bank of Canada does not do commercial banking, and therefore I think an active crown company would hope that the minister would place its account with a chartered bank.

Government Companies


Stanley Howard Knowles: I thought that was the reason for the section. I do not deny that I would prefer that all the business be done with the Bank of Canada, but in the light of what the minister says I am still bothered by the wording of the section. It says, "Bank of Canada or a chartered bank approved by the Minister of Finance." That seems to imply that it could be done with either one. If what the minister says about the inability of the Bank of Canada to carry on this type of business is correct, then it seems to me that there should be a change in the wording of the section.


Frank Exton Lennard: How could a crown company located in northern British Columbia utilize the facilities of the Bank of Canada? In that case, it would be only common sense to use one of the chartered banks.


Clarence Decatur Howe: Yes.


[Stage Direction]
Section agreed to.
On section 4-Additional capital.
James MacKerras Macdonnell: The third line of this section refers to additional working capital. I draw the attention of the minister to the explanatory note, which reads:
It may also be desirable, where statutory authority exists, to incorporate similar companies to carry out other special projects. The present bill is intended to provide for the financing of such companies . . .
I think in our consideration of the bill so far we have been talking mainly of existing companies. Will the minister explain the financial arrangements which would be made on the inception of a new company? Section 4 implies that the company is already a going concern financially, because it speaks about additional working capital. Where would the first financial resources comes from?


Clarence Decatur Howe: If the company is set up by an act of parliament the initial money could be obtained by an appropriation of $500,000 as a working advance, or it could be provided with capital from a vote of parliament. It must be one or the other, surely.


James MacKerras Macdonnell: You made it clear to us that in many of these cases there would not be any occasion to come to parliament. There is already power given to the various departments for the purposes mentioned. If I understood you correctly, what you are saying is that the company would then proceed to avail itself of the financial powers under this bill, but surely the phrase "additional working capital" cannot be appropriate. The word "additional" implies that it is already a going concern.	.


Clarence Decatur Howe: I am mistaken. The provision is not intended for the purpose of starting a new company. The appropriation would have to be provided from some source.


James MacKerras Macdonnell: If it were one of the companies contemplated under the Research Council Act that would not be done by parliament; that would be done by an executive act.


Clarence Decatur Howe: It would have to come from the national research council appropriation ol from moneys at the disposal of the national research council. The national research council has money of its own from two sources, from gifts and earnings, which represent quite a substantial sum, and from annual appropriations of parliament. With the consent of the treasury board the money could be diverted from one source to another.


Douglas King Hazen: I should like to ask the
minister a question which he may have answered already. The' question is this: will the money which is advanced by the Minister of Finance to these crown companies by way of a loan under section 4 be voted by parliament before it is advanced, or will it be advanced by the Minister of Finance and parliament be asked later to provide the money?


Clarence Decatur Howe: This gives power to the Minister of Finance to advance up to $500,000 to a company without the consent of parliament. The expectation will be that the money will be repaid from the earnings of the company. But, if not, the minister responsible for the operation of the company must come to parliament, explain why an appropriation is necessary, and obtain the appropriation. If he is unable to obtain the appropriation the borrowing power of the company is ended.


James MacKerras Macdonnell: I still query this word "additional". If I understand the situation the minister is tying himself there unnecessarily. I do not see why that word "additional" is there. It seems to me that he may want to use it for companies which are not going concerns at all.


Clarence Decatur Howe: This bill is drawn to deal with existing companies which have capital. If it could be enlarged to deal with new companies the department would have no objection, but it was designed to deal with companies already in operation which have a capital, and I think it would be better to leave it that way.


James MacKerras Macdonnell: That is not according to the explanatory note The explanatory note states:

Government Companies

It may also be desirable ... to incorporate similar companies to carry out other special projects.
If I read that correctly it means that it is not intended to apply only to going concerns. There is the research council and, as the hon. member for Vancouver South points out, there may be many others. I suggest earnestly that the minister look at that word "additional".


Clarence Decatur Howe: The $500,000 was not supposed to be working capital. It was a temporary advance.


James MacKerras Macdonnell: It is called "working capital".


Clarence Decatur Howe: It is called "additional working capital." No chartered bank would advance working capital to a firm that had none, I should think. It would expect the firm to have a certain amount and would advance them additional working capital from time to time as required for temporary purposes. That is the purpose of this particular section. It is not to provide capital to a company being established. We are assuming that the authority that established the company also provided it with capital.


Howard Charles Green: There is one question which I should like to ask under this section. Is it the intention that Canadian Arsenals Limited will make ammunition for sale to the public, for example for hunting or other uses of that kind?


Clarence Decatur Howe: That has never been the purpose of the arsenals. Arsenals make ammunition and make weapons only for the armed services.


Howard Charles Green: Well, the minister said the other day that he expected that Canadian Arsenals Limited would operate at a profit. How is that profit to be made if there are to be no sales to the public?


Clarence Decatur Howe: I do not know that I said that it would operate at a profit. I said that I hoped it would pay its way. The purpose is to charge the defence departments for work placed at the arsenals, at current rates. In other words, instead of getting a blanket appropriation for the arsenals and doing work for the services free, the services are charged at commercial rates for the work which they place with the arsenals.


Howard Charles Green: And it is not intended to sell any of the products made by Canadian Arsenals Limited to any buyer except some other department of the dominion government?


Clarence Decatur Howe: Well, that is hardly true. We were speaking of weapons. The hon. mem-

ber spoke of guns and ammunition. It so happens that at the present time Canadian Arsenals Limited is making fertilizer, which is sold to the public; it is also making dia-cyanamid, which is also sold on the markets of the world; and it is making sulphuric acid, which is sold to private concerns. These are by-products of the operation, and they are being maintained because part of the plant must be kept as a stand-by resource for making picrite, , which is an explosive material peculiar to war and not sold to the public.


Howard Charles Green: These articles then, are being sold in competition with private business?


Clarence Decatur Howe: I presume so, yes.


Howard Charles Green: The minister said earlier this evening in answering my speech of last night that none of these crown companies was to be in competition with any private business in any way.


Clarence Decatur Howe: Well, there are exceptions to anything. These are by-products of an operation; they are sold at a world price, and they may be competitive, but I do not think there is any. crime in that. There is at the moment an acute shortage of all these articles. I doubt if my hon. friends could say that they are in competition.


Howard Charles Green: I just wanted to get ihe facts straight, and now we have them, that there is to be competition with private industry.


Clarence Decatur Howe: Well, if you call it that.


Gordon Knapman Fraser: Are they sold direct to the consumer, or are they sold through an agency?


Clarence Decatur Howe: I assume that in Canada they would be sold direct to the consumer, but 95 per cent of the sales are foreign sales and are made through agents.


Gordon Knapman Fraser: The minister says he
"assumes" they are. He is not sure?


Clarence Decatur Howe: Well, I am quite sure that if anyone applies to the arsenals for a carload of anything they will sell it to him.


Gordon Knapman Fraser: They will sell it direct?


John Bracken: I have just one observation to make, and I am looking at the estimates. I think it is quite clear now what procedure is intended under this legislation. One item here is:
609. Administration, reconversion and operation of crown companies and/or crown plants.
Under that item the department asks for $20 million this year as contrasted with $4 million last year, an increase of $16 million. Then another item is:

Government Companies
611. To provide recoverable advances for working capital purposes and to authorize, subject to regulations to be approved by the governor in council on the recommendation of the treasury board, the re-advancing for working capital purposes of any amount received by way of repayment of advances for working capital purposes provided hereunder or from war and demobilization appropriations in previous years.
The amount there is an extra $10 million.


Clarence Decatur Howe: At one stage of the war it was $600 million.


John Bracken: That may be. One of
the criticisms which we have been making is that this is a blanket measure for the operation of government companies, some of which are already formed, others of which may be formed. There has been no detail given in the discussions on this legislation as to the assistance to be provided for each of these companies. There is no detail given in the estimates before the committee. There are these two large blanket votes. It is quite clear to me that under each of these two votes the governor in council has power to make these advances to the different companies, and that the house may never see or have that information. What I was trying to get from the minister a while ago was whether in subsequent estimates we shall have an item for each of these companies. He intimated that there will be. I think he answered that question too quickly, and what we shall be asked to do is to vote a bulk sum under these two items of $26 million which then will be at the disposal of the governor in council through these crown companies or otherwise to disburse as they like under legislation which has previously been passed. Whether that is good or bad, I believe it is a fair statement of the legislation with the estimates .which are before us.


Clarence Decatur Howe: If my hon. friend will look
at page 74 of the main estimates, from which he was reading, at the top of the page, he will notice that this is a special item on demobilization and reconversion. In other words, it is a transitional vote, and that is only part of the total vote, most of the estimates being voted specifically. But in that vote there are blanket items; and the purpose of this legislation, the purpose of the government, and the' purpose particularly of reconstruction and supply is to liquidate war accounts so that we can get back on a specific basis. The object of this bill is to enable us to do precisely that, instead of depending on blanket votes, so that each vote of parliament may be for a specific purpose. That is why I gave the undertaking.
63260-138J


John Bracken: I do not want to protract the discussion. Do I gather that the minister does intend in future to have a specific vote for each of the companies-


Clarence Decatur Howe: That is right.


John Bracken: -but that for this year there is only a bulk vote from which the governor in council may draw as in his judgment he deems necessary?


Clarence Decatur Howe: This is a transitional period, and we are trying to get back to the condition which both the hon. gentleman and I desire.


John Bracken: I hope the transitional
period will not continue for too many years.


Wilfrid Garfield Case: In connection with section 4,
do I understand that the Minister of Finance can advance up to $500,000 to any one company in any one year? There is no number of companies stated, but there is provision for up to $500,000 in any one year. That is the limit.


Harry Rutherford Jackman: Why in this bill does the government seek to depart from the system carried on under the Canadian National Railways Act, whereby any profit from year to year is turned over to the consolidated revenue fund and, if the railway needs it, it is voted to the company by act of parliament. Why are any profits allowed to stay in the company, no matter how large they may become, instead of being turned over to the consolidated revenue fund as in the case of the railway? The growth of companies in this country, and in other countries as well, is the result of ploughed-in profits; and I see no reason why, if some of these government companies are successful by reason of charging high prices for patent rights and so forth, they should not become extraordinarily large and take an undue share of the business of the country. If the minister will give me his attention, would he also couple with his answer a statement as to why the government, in the case of the T.C.A., has a five per cent interest rate on capital advanced to that government-owned company, whereas in connection with these contemplated government - owned concerns, some already in operation, apparently no interest charge is being made?


Clarence Decatur Howe: Is my hon. friend referreing to the Canadian National Railways Act? What is his interpretation of the act?


Harry Rutherford Jackman: If there is any profit in the Canadian National railways, as fortunately there has been in the last few years- a surplus of $24,000,000 last year and an estimate this year of $7,000,000-it is not kept
Government Companies

in the funds of the company to revolve around there and be used again this year and in subsequent years, but is repaid to the government.


Clarence Decatur Howe: The only reference to the question I find in the act is that, whenever the accounts of the railway system, certified by the auditors appointed by parliament, show surplus earnings, after payment of all charges including interest on securities held by the public, the directors of the Canadian National Railway company may cause to be paid over to the minister for the consolidated revenue fund all or any part of any such surplus earnings.


Harry Rutherford Jackman: Perhaps the "may" is permissive and not mandatory; I do not know whether in the case of crown companies "may" is taken to mean "shall."


Clarence Decatur Howe: What does "any part" mean?


Harry Rutherford Jackman: I do not know; but certainly it has been the custom, and I suggest it is a very good custom, for them to do it. In the case of the Canadian National Railways it goes to pay off debt held by the government; nevertheless it is a surplus for the year and is returned to the government. My position is perhaps strengthened by the fact that when the Canadian National Railways require money for capital expansion they have to come to parliament for a vote for the various items, which are approved first of all in the railway committee and then presented to the house for approval before the railway can buy any more rolling stock or build bridges or make other expansions. That is a good principle; and the principle with regard to earnings being turned over to the government is also very important because, as I mentioned, the only way by which a company grows-the history of companies indicates this-is by the shareholders refraining from taking the last cent out of current earnings after taxation but, instead, leaving it in the concern and allowing it to accumulate. That is the way in which companies become large over a period1 of years; and while some of these crown cotnpanies may start on a small basis, if they are allowed to retain these earnings they may become a veritable octopus and do a very great proportion of the business in any particular field in the dominion.


Clarence Decatur Howe: I pointed out the provision in the act which permits the Minister of Finance to take any money which he regards as surplus to the requirements of the company, and that is carried out in this case. Every two weeks the bank account of Park steamship company is moved into the con-

solidated revenue fund, and that is the case with several crown companies that have earnings. Any money not required for the operation of the company is drawn into the consolidated revenue fund on the demand of the Minister of Finance.


William Ross Macdonald: It seems to me that the question of paying profits into the consolidated revenue fund would more properly be discussed under section 6.


Harry Rutherford Jackman: The point I am making has to do with a revolving bank account and it may be discussed under section 3, 4 or 6. It does not make very much difference where the minister discusses it, but I should like to get an answer. The minister has not indicated why in this bill there is not inserted a principle similar to the one in the Canadian National Railways Act where it is permissive, if not mandatory-and I question whether that permissive provision does not mean it is mandatory as applied to a crown company. He has not answered why it would not be a good idea for these companies, if they do make a profit from year to year, to pay it into the consolidated revenue fund, which provides the capital whereby the profit is made, and then, if the company requires money to grow, it can be revoted by this house. There is the same principle, almost, in relation to private business and cooperatives. Where you have untaxed profits they quickly mount up, and that enables you to expand in a way in which private business cannot expand and therefore is unable to compete. I see the same principle here, if one carries it far enough. One does not know how far these government-owned companies may go, how large they may become, and we must be careful that parliament keeps close control over the direction in which the business tends. The minister should explain to the committee why he does not want that principle adopted in this bill.
There was a second question I asked with reference to the five per cent charged on capital in connection with the T.C.A. Why should that principle not be incorporated in connection with other government companies?


Clarence Decatur Howe: This bill was drawn primarily to apply to existing companies; that is, companies which have capital sufficient for their purposes. The provisions suggested by my hon. friend might be appropriate for one company and not for another, for example, a trading company. It would be difficult for it to put up an actual budget requirement. This is an act of general application, and I think no grave abuse can accrue under the terms thereof.	.

Government Companies


John Ritchie MacNicol: Will these companies
that the minister has in mind setting up under this bill be set up in somewhat the same manner as the Dominion Magnesium company, which operates at Haley's Corners, was set up?


Clarence Decatur Howe: The Dominion Magnesium company was never a crown company.


John Ritchie MacNicol: I may say to the minister that this country voted, right here in this house, millions and millions of dollars for that company and. others, and now we are told that they are not crown companies. Later on, where shall I be able to get full proof as to the Dominion Magnesium company's setup and operations? I remember the glowing accounts that the minister gave in this house of what a great thing the Dominion Magnesium company would be for this country, and how it would make lots of money not only during but after the war, and we now see what a mess it has got into.


Clarence Decatur Howe: The Department of Munitions and Supply by direct expenditure built a plant at Haley's Corners for the manufacture of magnesium. It made a contract with a group of men with specialized experience to operate the plant for the government without fee. It was a very simple operation, but there was no crown company. It was simply a directly owned government plant operated by arrangement with a group of men with specialized knowledge, of whom Doctor Pidgeon was one.


[Stage Direction]
Section agreed to.
Sections 5 and 6 agreed to.
On section 7-Company an agent of His Majesty.
Gordon Knapman Fraser: Does this section mean that any company can make a contract without reference to parliament? I should like an explanation of subsection 2.


Clarence Decatur Howe: ^It can operate in its own name. For instance, it can buy raw materials and sell its own product, dealing in its own name. There is only one type of transaction that it cannot do under the general regulations. No property can be bought for the crown or sold for the crown except by authority of the governor in council.


[Stage Direction]
Section agreed to.
On section 8-Employment and remuneration of officers and servants.
Howard Charles Green: This section has to do with employment and remuneration of officers and servants. It goes very far. It provides that:
(1)	Every company may, notwithstanding the Civil Service Act or any other statute or law, employ such officers or servants as it deems necessary to conduct its operations and may determine their conditions of employment and their remuneration which shall be paid by the company.
(2)	Every company has the control and supervision of the officers and servants employed by the company.
As I read this section, it means that in the case of each of these crown companies the employment is entirely in the hands of the officers of the particular company. Is that 'right?


Clarence Decatur Howe: Yes, the directors and the officers of the company, subject to such conditions as the minister may impose. At the present time any employee of any crown company who is paid more than $4,000 a year is approved by myself in writing. That is done simply to keep the pattern of salaries in crown companies in order. Aside from that, the directors of the company have a free hand in employing.


Howard Charles Green: Is there a separate pattern of salaries for crown companies as distinguished from the regular civil service?


Clarence Decatur Howe: It is the same pattern, depending on the industry. For example, the salaries of Polymer, which is akin to the oil industry, are akin to the salaries of the oil industry, and the salaries in Eldorado, which is a mining company, are akin to the salaries in the mining industry.


Howard Charles Green: The minister has said that in the case of the payment of a salary of $4,000 or over he has to write a letter authorizing that payment. Why is there not some provision to that effect put into this section instead of giving the officers of each company carte blanche to pay whatever they wish?


Clarence Decatur Howe: Another minister may wish
to examine salaries of $3,000 and over, and another minister may wish to examine all salaries. A minister may impose any regulation he likes.


Howard Charles Green: How does the minister square this policy with the policy that has been in effect by the dominion for many years of engaging people under the Civil Service Act, and on' the merit basis? This seems to be a complete departure from that principle, a departure not only in respect of executive officers, but right down the line to the lowest * paid employee. He or she may be hired by the officers of the company and be paid what* ever salary they see fit, quite regardless of what the ordinary civil servant doing the same work may be paid. What is the justification for going that far?

Government Companies


Clarence Decatur Howe: Tlie civil service was not
designed for handling business transactions. The civil service was designed for the ordinary work of government.


Howard Charles Green: It handles some pretty big business.


Clarence Decatur Howe: In the work of departments. For example, does my hon. friend expect the civil service commission to choose the officers of a commercial concern? What would be their standard? What rules would they apply; the same rules that they apply in the government departments?


Howard Charles Green: It seems to me that. some system could be devised whereby the Civil Service Act could be amended in some way to meet that situation. There is no doubt that it is a new situation; but surely there should be something devised to meet it instead of ignoring the whole question and giving each of these companies the power to set its own rules and to hire its own employees. This section may affect hundreds of employees. It is not as though there were only a handful to be covered by it. There are bound to be several, thousand employees of crown companies. The minister has said that during the course of the debate. Surely we cannot jest ignore the unfairness of having two types of civil servants, one type subject to the provisions of the Civil Service Acts and then the officers and employees of these crown companies working on an entirely different basis.


Clarence Decatur Howe: My hon. friend must be aware that we have had that situation for many years. I have before me the National Harbours Board Act.
The board may employ such professional, technical and other officers, clerks and employees as it may deem necessary for the proper conduct of its business and fix their remuneration.


Howard Charles Green: Oh, there have been exceptions.


Clarence Decatur Howe: This is not an exception. When the government is in business it does not do that business under the Civil Service Act.


Howard Charles Green: There have been exceptions, but this is a different matter.


Clarence Decatur Howe: Tell me one instance of the government being in business under the Civil Service Act.


Howard Charles Green: Other departments than
reconstruction are in business, and in big business too. This is not the only department of the government that is in business.


Clarence Decatur Howe: Name one.


An hon. MEMBER:: How about the wartime prices and trade board?


Howard Charles Green: I suggest that when earlier this evening the minister said he brought in this provision so that he would be able to hire the best people. That was a serious reflection on the civil service, and I think it shows a wrong attitude. I believe that some different method should be worked out for employing at least a portion of those who will work for these companies.


Clarence Decatur Howe: My hon. friend is trying very hard to involve me with the civil service, but as a matter of fact I take civil servants wherever I can get them. There is provision for civil servants to be employed in these companies and their rights under the Civil Service Act are protected. But my hon. friend would not suggest that we could draw from the civil service people with expert knowledge of mining who could go to Great Bear lake and operate a mine. We borrow geologists from the Department of Mines and Resources whenever we can, and they are turned over to Polymer for certain operations. But the ordinary rock miner who works underground is not a man you can hire through the civil service commission. It is the same with specialists at Polymer. Men require years of experience in similar operations.


Howard Charles Green: But there are specialists in all the branches of government.


Clarence Decatur Howe: I doubt if there are any specialists in the manufacture of synthetic rubber. If there are I should like to borrow them.


Howard Charles Green: But there are many scientists in other branches of the government who are just as capable as the scientists who may be employed in these crown companies. They have been engaged under the Civil Service Act and are bound by the terms of that act.


Clarence Decatur Howe: Quite so; and we borrow them whenever we can.


Howard Charles Green: There may be some professional men who should be hired in the way contemplated by this section, but there are thousands of others who could be employed under the Civil Service Act as easily as those already under that act.


John Thomas Hackett: In the employment of personnel by these companies is any preference given to returned men? I refer to that aspect of employment which is so deeply imbedded in the civil service commission. In engaging men for these companies, is a preference given to people who have seen service?

Government Companies


Clarence Decatur Howe: Yes.


John Thomas Hackett: How is it exercised, and what type of preference is it?


Clarence Decatur Howe: It is a complete preference, the same preference that is in force with regard to the civil service. If a returned man is qualified he is given the position, even though someone is available who is not a returned man but who is much more highly skilled. It is exactly the same.


John Thomas Hackett: What methods are employed to make known the requirements of a crown company? If an engineer is needed is the position advertised, or does the company have to rely upon the casual acquaintances of the minister or the directors of the company to find candidates for the opening?


Clarence Decatur Howe: The government operates its own bureau of technical personnel and these positions are filled through that bureau, just as manual position are filled through the national employment service.


James MacKerras Macdonnell: I should like to add a word to echo the uneasiness expressed by the hon. member for Vancouver South. I think we can quite understand the minister's statement that highly technical operations such as Polymer and Eldorado have required people with special techniques and they have had to deal with them in a special way. I am not suggesting that the problem is easy, but it seems to me this is a light-hearted and easy-going way of trying to solve a problem which I think is much more difficult than the minister has admitted. Let me read this section again. It is too nice, too easy and too simple, and may, in years to come, land us in difficulties which none of us will want to face. After all, we are talking about what may turn out to be a far-reaching plan. The section provides:
Every company may, notwithstanding the Civil Service Act or any other statute or law, employ such officers or servants as it deems necessary to conduct its operations and may determine their conditions of employment and their remuneration which shall be paid by the company.
No one is trying to make cheap capital out of anything the. minister said earlier about civil servants. I have no doubt he has a higher regard for civil servants than any of us, because he has had a great deal to do with them. Nevertheless it seems to me that here we are stepping carelessly, as I see it, into a situation which may prove to be fraught with many difficulties. First of all there will be great difficulties as between the companies themselves; and just to step in like this, without a pattern of any kind, without any regulation and without even an attempt to set up
any plan but to leave it entirely to the discretion of each company, seems to me to be going very far. After all, each company will wish to go ahead and do the best possible for itself. It will be quite irresponsible, as far as the directors are concerned. It will have a desire only to improve its own operation. It will not care two straws about the civil service. In the meantime it must be remembered that there will be thousands of people in the civil service who will know what is going on and will be critical of it. If they are wise people they will admit that in cases such as Polymer and Eldorado there are special conditions which require special treatment, but I would earnestly suggest to the minister that this light-hearted and omnibus way of dealing with this matter is hardly the way to deal with such a serious problem.


Clarence Decatur Howe: Surely my hon. friend will not say there are not already precedents. The largest crown company the government owns is the Canadian National Railways. The remuneration of its employees is fixed by the board of directors and the management. The national harbours board is another; the national research council is another; the Canadian Broadcasting corporation is" another; the Central Mortgage and Housing corporation, which parliament authorized last year, is another. I wish my hon. friend would tell me of one business corporation set up by the government that follows any other plan. He suggests that we are starting something new. I am simply following the practice that has been authorized by this parliament for many years in dealing with business enterprises.


James MacKerras Macdonnell: I am not terribly impressed with that answer. As far as the Canadian National Railways are concerned, we all know that salaries and wages are settled by long precedent, international agreements and so on, so that does not seem to me an answer at all.


Clarence Decatur Howe: So they are in crown companies. Each of these companies is unionized.


James MacKerras Macdonnell: I have already pointed out that as far as Eldorado and Polymer and one or two others are concerned these are special cases involving special circumstances, but I am talking about something which may develop into scores of companies, as the minister earlier admitted. To take a few special cases and say that because they have been recognized as special cases the same procedure is to be applied in scores of others does not seem to me quite reasonable. Furthermore, I am not impressed with this argument that we have been doing
Government Companies

this for three or four years. Those were war years, when people were prepared to put up with all kinds of special conditions and keep their mouths shut. We are now stepping into years which I suggest are quite different. Again I repeat the suggestion that to leave this wide open in a careless manner is dealing in a trivial or in at least a careless way with what I think is a serious question.


Mr. MacINNIS:: The point to which I shall address myself has perhaps been already covered, because of relations established in crown companies. No doubt, in these crown companies there will be employees who will come under certain trades and occupations the members of which are formed into trade unions. Will the government's policy which was established in 1943 in connection with crown companies entering into trade union agreements be continued?


Clarence Decatur Howe: Yes. All the employees of these crown companies are union men who have contracts with the companies.


John Thomas Hackett: What provision, if any, has been made for pensions of employees and servants of the companies?


William Ross Macdonald: Section 9 covers that point.


Mr. NICHOLSON:: I note that in one of the returns brought down yesterday it was pointed out that the president of the Central Mortgage and Housing corporation is receiving a salary of 318,000. Has that been fixed by order in council, or will this measure now legalize the setting of salaries on that scale? Is this section designed to give crown companies the privilege of paying salaries in the higher categories, or salaries that are out of line with those paid in the regular civil service?


Clarence Decatur Howe: This bill does not apply in any way to the Central Mortgage and Housing
corporation.


Alexander Malcolm Nicholson: The minister mentioned it a minute ago.


Clarence Decatur Howe: Yes, but I mentioned it as a business concern which was not under the supervision of the Civil Service Act. It is not under this bill, either.


George Russell Boucher: The minister said a minute ago that written authority is required from himself for the payment of salaries of $4,000 or over. It seems to me there will be many employees in these crown companies who will not be highly trained. They would stand almost in a parallel situation with clerks and various other employees operating in the civil service under the Civil Service Act. In my 
view, if in crown companies there are groups that correspond with groups of employees operating under the Civil Service Act, they should be governed by the same act and the same regulations.
Then, the minister requires that the management of a company shall receive from him written authority before they shall pay salaries in excess of $4,000. I fully appreciate the advisability of keeping some limit on salaries these crown companies can pay. Otherwise, they could be paying what is virtually government money in an exorbitant fashion, without detriment to themselves, but with detriment only to the people who pay the money.
I believe that in this measure there should be much more specific limitations respecting the power to employ and to pay employees in various grades, whether they be specialists, tradesmen, clerks or stenographers. While the minister says he has made a regulation under which his signature is required, I would point out that there is actually nothing in the law requiring that his regulations be obeyed, or to assure the people of Canada that there is equity in the arrangement.
Under what authority does the minister make those regulations, and how is such authority exercised? Will he also explain why people holding corresponding positions in the civil service, those who are not specialists or experts in any particular line, are not put in entirely the same category, and why they do not operate under the Civil Service Act which applies to civil servants?


Clarence Decatur Howe: The minister exercises the potent authority of the shareholders of the company. He can get rid of the management, if that management bungles the operation-and, I might say, he sometimes does. Also, the company is an agent of the crown, and the minister representing the crown in a particular case has the right to act.
It is all very well for my hon. friend to speculate how things could be done; but may I point out that these are business concerns. They have bargains with their employees. Usually they are unionized. I would say that 90 per cent of the employees of these companies are members of unions which have contracts with the companies. I do not know how my hon. friend can suggest any particular rule that would apply, other than the usual bargaining arrangement between employers and employees found in all business firms.


Harry Rutherford Jackman: It seems to me almost incredible that the minister should say to the committee that, even leaving aside his own

Government Companies
department, the government ia not in big business. Any organization which employs tens of thousands, if not hundreds of thousands of employees, must of necessity be in what is called big business.
The only difference I can see between some forms of government business-and we will exclude the Canadian National Railways, for special reasons-and private business is that private business is in active competition with its fellows; and most of that competition has to do with selling.
I have not heard from the minister that these government companies are to be in active competition with private industry, although he did mention one exception when my colleague the hon. member for Vancouver South brought up the point to-night. But, as I say, the only difference I can see is that they actively compete with someone in regard to selling. I do not see why the men and officers who staff these government-owned companies cannot come under the civil service. I believe the minister has a completely wrong conception about why the civil service was ever started. It certainly was not, as one must infer from his remarks, an organization started up for the sole purpose of creating a system which was not efficient.


Clarence Decatur Howe: Do not put words into my mouth.


Harry Rutherford Jackman: That is the only inference which can be drawn.


Clarence Decatur Howe: My hon. friend is fond of doing that. I did not say the civil service was not efficient.


Harry Rutherford Jackman: That is the only inference which can be drawn.


Clarence Decatur Howe: Never mind inference.


Harry Rutherford Jackman: That is the inference I draw from your remarks. If you wish to correct it you may do so at another time. But do not interrupt when I am speaking.


William Ross Macdonald: I must remind hon. members that when they are speaking they should address the chair.


Harry Rutherford Jackman: Yes, Mr. Chairman. What I am saying is that the only inference I can draw, with my limited background, is that the minister does not believe that the Civil Service Act is an efficient form of organization, or that efficiency in a government department can be developed under it. Otherwise, why in connection with these companies which he intends to set up, or which are set up and are to be extended, does he not use the civil service form of administration.
Surely the Civil Service Act when it was brought down, wa,s a forward step in governmental administration, because it got rid of the curse of patronage which every government knows is sometimes a greater nuisance than it is worth. With a setup of this kind, in taking this retrogressive step, in connection with a series of companies the minister and those around him may appoint any number of people to jobs commanding high salaries. Under such circumstances you can only have a system of patronage which is undoubtedly bad and which flies in the face of the whole reasoning behind the Civil Service Act. This building up of a super civil service, for that is what it. means, will lead to a lack of harmony-I will not say a lack of best effort- and will cause discouragement to many who have served for a long time in the civil service.
For example, take the announcement in the press to-day that the president of the Central Mortgage and Housing corporation is to receive a salary of $18,000. The deputy minister of finance and other deputy ministers are doing not only an equal job but, in many cases, a much superior job; they require a background at least equal to the other gentleman, and in other cases they have had many more years of experience, but they are getting only approximately half that amount. How do you expect to get loyalty and the best endeavour from your senior men when you introduce new men and start them off at much higher salaries?
Another example is the unknown salary of the governor of the Bank of Canada. I presume that that salary is three times what the deputy minister of finance is getting from this government which states it is willing to pay equal wages for equal work. There is no excuse for paying these limited salaries in comparison with those being paid to the super civil servants you are setting up under these corporations.
I believe the minister misconceives the purpose of the Civil Service Act and by implication is condemning it as an efficient instrument to carry on the business of government. This committee would be well advised to consider putting the administration of these new companies under the Civil Service Act.


Angus MacInnis: I think I should say something on the point just raised by the hon. member for Rosedale. Since coming to this house I have taken a special interest in civil service matters and have been on many of the special committees set up to consider the civil service. If I felt that the staffs of crown companies of this kind could be as efficiently

Combines Investigation

recruited under the civil service as they can be by the means to be used I would certainly press to have the civil service do the job, I believe the civil service is the best method of staffing our governmental institutions, but I feel the hon. member for Rosedale would not ask that the staff of the Canadian National Railways, from the men who tamp the ties to the engineers who drive the locomotives and the clerical staff that administers the office, be recruited under the civil service.


Harry Rutherford Jackman: I excepted them.


Angus MacInnis: My hon. friend says that he excepted them, but are not these corporations to some extent on all fours with the Canadian National Railways? It seems to me that the Minister of Reconstruction and Supply, who is piloting this bill, must accept the advice of my hon. friends to my right with a certain amount of suspicion. They are opposed to what he is doing, and anything they offer in regard to the measure would be something to make it less effective than it otherwise would be.


Some hon. MEMBERS:: No.


Angus MacInnis: Of course that is right. Any man with any logic would immediately come to that conclusion, and I try to approach matters in a logical way. If my hon. friends want to improve this measure and to make the crown companies set up under it a success they will have to stop opposing it and bring forward ideas and suggestions to make it better and not ideas and suggestions to hamper the operations.


Mr. SKEY:: I am sure the Minister of
Reconstruction and Supply appreciates the help he has had from the hon. member for Vancouver East, but I find it difficult to rationalize the ideas or tenets or theories of the hon. member as previously put forward in this house with the suggestion now made that there is an unequal basis for civil servants in the country.
However, I am concerned with another aspect of this bill. Yesterday afternoon I asked the minister about the security provisions that were being set up, and I am particularly concerned about the company set up with respect to atomic energy. Section 8 provides that, notwithstanding the Civil Service Act or any other statute or law, the officers or servants-a few moments ago the minister said that would mean the directors- are empowered to employ such officers or servants are deemed necessary to conduct the operations of the company.

May I remind the committee and the minister that at this time we are dealing with Canadian Arsenals Limited and Eldorado. If the power to employ such officers or servants as are deemed necessary is given to the directors, it is thereby taken away from this house, from the civil service commission, from the R.C.M.P. or from any other agency which might check on the security of those particular people. I should like to ask the minister whether the security provisions provided by this particular clause are sufficient to guarantee to the country, to the people who may deal with atomic energy and to the government that the employees who are employed can be completely trusted and will be those in whom they can have full confidence. When I asked this question yesterday the minister said that for years the R.C.MP. had been checking such employees as were employed in the national research council and other services of the government.
Section stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, June 5, 1946.