1950-09-08

BUDGETARY PROPOSALS


Hon. Douglas Abbott (Minister of Finance):: Mr. Speaker, in my financial statement last evening I announced that the excise tax of ten per cent would be increased to fifteen per cent on a list of items, which included furs. I find that through a clerical error no mention was made of furs in the resolution I subsequently tabled. Therefore I wish to give formal notice that the proposed amendments to the Excise Tax Act will include an increase from ten per cent to fifteen per cent in the excise tax on furs, effective as from this morning.


Mr. Macdonnell (Greenwood):: Retroactive legislation.



CONSUMER CREDIT


Douglas Charles Abbott: for leave to introduce Bill No. 4, to make temporary provision for the regulation of consumer credit.


Mr. Knowles:: Explain.


Douglas Charles Abbott: Mr. Speaker, as the title of the proposed bill implies, its purpose is to give the government authority to restrain spending by limiting the amount of credit available to consumers for the purchase of goods. The implementation of this measure would substantially follow the practice adopted during the war under the wartime prices and trade board regulations.
Motion agreed to and bill read the first time.



WAR GRAVES


[Stage Direction]
On the orders of the day:
Mr. E. D. Fulton (Kamloops):: I should like to direct a question to the Minister of National Defence. At the session last spring the minister was kind enough to say that he would investigate the request that the names of the units be placed on the headstones of graves of members of our forces buried overseas, and that he would let us know as soon as he had had the matter investigated. Is the minister in a position to indicate the results of his investigation, and whether a decision has been arrived at?


Hon. Brooke Claxton (Minister of National Defence):: Yes, indeed. We found that the present practice had been followed in consequence of directions issued in 1946 before I became Minister of National Defence. I must say that it was possibly due to a misunderstanding, curious though that may seem. When I looked into it I found that some four thousand headstones had been erected already without the names of the regiments which those who served in them consider to count above all others-that is, the armoured and infantry regiments. The artillery do not seem to have that kind of appellation, being ubiquitous. I have given instructions that all headstones to be erected will bear the appellations of the historic armoured and infantry regiments whose members lie buried in those cemeteries, and as soon as that is done we will change or replace the headstones already erected that do not bear the names of the historic regiments in which they served as they and their families and comrades would want. That is being done.
Further, this caused me to look into the situation regarding the Book of Remembrance for the second world war, which is in course of preparation; and the same action is being taken there. It also led to an investigation of the possibility of putting the particulars of each French-speaking serviceman and the name of his unit in the French language. That is difficult; it is not always possible to tell from the name of the man when that should be done, but where there is a clear indication that the fallen comrade was French-speaking, all the particulars that can be put on in French will be put on in that language.



REQUEST FOR INCREASE IN INITIAL PAYMENT

[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: I should like to direct a question to the Minister of Trade and Commerce arising out of press reports concerning the spread between the prices for different grades of wheat. I notice that these spreads are substantial, and since much of the wheat being harvested this fall in western

Inquiries of the Ministry Canada no doubt will be of low grade, I wonder if the minister, should we continue to sell at or near the ceiling price under the international wheat agreement, would consider at an early day increasing the initial payment so as to cushion the loss sustained from frost damage?


Right Hon. C. D. Howe (Minister of Trade and Commerce):: I stated that under the pooling arrangement interim payments would be made from time to time as the progress of sales from the pool made possible, and I can assure my hon. friend that will be attended to.


Mr. Coldwell:: Did I understand the minister to say an initial payment would be made? Does he mean interim payments?


Clarence Decatur Howe: That is correct; interim payments will be made.



PUBLIC BUILDINGS


[Stage Direction]
On the orders; of:'the day:
Mr.  W. Chester S. McLure@Queens: Will
the. Minister of Public Works make a statement concerning the construction progress on the federal public building at Charlottetown, Prince Edward'Island? , , . :	,, ,


Hon. Alphonse Fournier (Minister of Public Works):: As soon as I have read the statement made last evenihg by the Minister of Finance I-shall prepare :a statement with respect to that building.' V '



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:	.
Mr. George A. Drew (Leader of the Opposition):: May I ask the Prime Minister if he can indicate whether any further legislation is to be introduced, beyond that which has now been indicated?


Right Hon. L. S. St. Laurent (Prime Minister):: I would not like to be very definite at this moment, because, I have not checked the indications already given, but my impression is that everything we have to bring forward, except perhaps some resolution or disposition dealing with sessional allowances, has been indicated already. However, I shall verify that, and if I find I am not correct, during the course of the day I shall ask leave to make a more specific reply to the hon. gentleman.



ESSENTIAL MATERIALS (DEFENCE) ACT PROVISION FOR CONTROL AND REGULATION OF PRODUCTION, DISTRIBUTION AND USE OF ESSENTIAL MATERIALS AND SERVICES

[Stage Direction]
The house resumed, from Thursday, September 7, consideration of the motion of Mr. Howe, that the house go into committee to consider the following resolution:
That it is expedient to present a measure to authorize the governor in council to take action to avert possible disruption of defence preparations requisite for the safeguarding of national security and to assist the United Nations in accordance with Canada's obligations; also to prevent economic disorder and hardship on a national scale; with authority to appoint and fix the remuneration and expenses of assistants and advisers to the minister.
Clarence Decatur Howe: Mr. Speaker, the essential materials bill to be based on this resolution will make provision for the regulation, when, as and if required, of the production, supply, distribution, use and prices of essential materials and services.	,
The primary purpose of the bill is to enable the government to make sure that Canada's military program and Canadian international commitments with regard, to preparedness and defence- can be implemented without undue delay or disruption. In particular, this measure will enable the government, if necessary, to direct the distribution of essential materials, such as steel, and essential services, such as electric power, the supply of which may be insufficient to meet both increasing military requirements and civilian needs.
We face a period ahead of us in which a larger portion of Canadian resources will have to be devoted to preparedness. This results not only from our own efforts but frqrri the vastly increased defence programs of the United States and other members of the United Nations and North Atlantic pact'. Substantial as Canadian resources are they may not in all fields and at all times meet both defence and civilian requirements. When and where this occurs it is expected that in the first instance industry itself will deal with the problem. In some cases there is already a voluntary rationing of essential materials by the producers. However, depending upon the degree of shortage, or the contractual position of the suppliers, it may be necessary for the government to direct distribution to the most essential needs. This is the kind of situation for which we are getting ready. The essential materials bill, if enacted by parliament, will give the government authority to cope with problems of allocation of essential materials and services if and when such problems are encountered.

It may assist the house in its consideration of the bill if I review briefly our economic position as of today and our forecast of the next few months.
Hon. members will recall that I gave this house a review of the economic situation and outlook on March 31 last. I said then that the year 1950 would be a banner year of economic activity. The situation is actually more favourable than I then anticipated. Having been accused of being an optimist, I was perhaps too ready to discount favourable factors of that period.
It appears now that the level of our exports in 1950 will be substantially above the 1949 level. This will reflect price increases, which have taken place this year, but there are as well substantial increases in the volume of exports. In the current year increased sales to the United States will more than compensate for decreases which have occurred overseas. In each year since the end of the war we have maintained our over-all balance of payments in a sound and healthy condition. The serious problem confronted three years ago was the large deficit which was then being incurred in our trade with the United States. Our current earnings in trade with the United Kingdom and other overseas countries would have been more than sufficient in 1947 to finance our deficit with the United States. Sterling could not be converted into dollars, however, and the result was that our gold and dollar reserves were seriously impaired.
Since 1947 we have been successful in reducing our trade deficit with the United States to a level which is quite manageable even under present conditions. In 1947 our deficit on account of current trade with the United States amounted to nearly a billion dollars. By 1949 this deficit had been reduced to about $400 million, which was less than half of its level in 1947. It appears now that in 1950 our trade deficit with the United States may be reduced to considerably less than half of the 1949 level.
Our policies have been directed towards maintaining an over-all high level of trade while at the same time rectifying the unfavourable balance of our dollar trade. At the same time, we have assisted the United Kingdom and other sterling area countries to improve the balance of their current trade with us. The rigorous policies of dollar saving and dollar earning throughout the sterling area have greatly reduced the deficits incurred in their trade with Canada, to the point where it may be hoped that the sterling area can begin to relax controls which were imposed
Essential Materials (Defence) Act for balance of payments reasons. There is evidence that these controls are being relaxed, though not as rapidly as we would wish.
In summary, therefore, while the over-all levels of our external trade have been maintained and even increased during this difficult period, we have in addition succeeded in achieving sounder balances with our two principal customers, who are also our principal suppliers. There can be no doubt that our external trade is in a strong and healthy position.
As for private and public investment and resources development, a mid-year survey indicates the impressive result of capital expenditures amounting to $3-7 billion for 1950, exceeding exports by half a billion dollars. If this program is realized it will be eight per cent greater than last year.
All signs are that the construction industry will have a year of peak activity. We expect that this industry will do a $2-4 billion business of new construction, which is the major part of the investment program, and, in addition, will do some $700 million worth of repair and maintenance work. That is a total of $3-1 billion.
The major portion of investment, about seventy per cent, has been forthcoming from private initiative paid for by the personal savings of millions of individual Canadians. For those hon. members who may be interested in more details of the Canadian record in the investment field, my department is preparing a study entitled "Private and Public Investment in Canada, 1926-1950", which will be available in the near future.
As a result of strong over-all demand for Canadian production from abroad, and continuing investment and resource development at home, Canadian prosperity this year is greater than ever before. And more than that, it is spread widely across the country. Earlier this year I said that we expected a gross national product of $16-3 billion for 1950, or two per cent above 1949. But it looks now as if Canada's gross national product may exceed $17 billion in 1950. This is an economic event of the first order. In no small measure this achievement will be due to a near record crop. In its last estimate the dominion bureau of statistics forecast a wheat crop of some 540 million bushels, or about fifty per cent above last year. Although frost and other factors may reduce this tremendous total somewhat, there is -little doubt that we shall have a much better crop this year than we had last year. Thus the Canadian farmer will amply participate in Canadian prosperity. And so will businessmen and workers; for, until the railway strike occurred, production and employment were at record levels.
446	HOUSE OF
Essential Materials (Defence) Act
I have given this outline of Canada's present economic position to explain the difficulty of adding a defence program, with its requirements for manpower and munitions, to an economy that is working almost to the limit of its capacity. The need for legislation to permit the allocation of strategic materials and strategic services as between defence needs and civilian needs must be obvious. In 1939 Canada's war requirements were imposed on an economy that was operating far below capacity. The war needs of 1950 must be imposed on an economy that is operating close to capacity.
There is still every hope that there will be no general war in our generation. But if we are to prevent such a war we must get used to the idea of settling down and steadying our nerves for a long period of military and economic preparedness. We must build up our forces in the hope that our actual and potential strength will deter aggression and thereby prevent a general war from breaking out. We must at the same time maintain a decent standard of living consistent with the requirements of defence. We must show the world that the free democracies can be both prosperous and strong.
I think the will of the Canadian people has become abundantly clear in the last three months: we must be prepared to resist aggression and do this as a member of the United Nations team.
There are two aspects of preparedness. One is military preparedness. My colleagues, the Secretary of State for External Affairs (Mr. Pearson) and the Minister of National Defence (Mr. Claxton) have dealt with this aspect. The other is economic preparedness.
Economic preparedness means doing the things at home that give tis the physical and moral strength to cope with the challenges of production and distribution and the everpresent threat of inflation.
To achieve this we must increase output of essential goods and services, using the best initiative that Canadian business can muster, employing the scientific and technical genius which distinguish our professional people, and putting to work the great skill which the Canadian labour force possesses.
Once the essential goods and services that are needed are produced, we must make sure that they are distributed in such a manner as to do the most good. This means making sure that all essential materials and services required for the manufacture of defence supplies are available, and that enough is left to meet important civilian needs. To achieve


this there is need for industry and government to co-operate, and for the government to have the appropriate authority to make the necessary arrangements.
There is, finally, the need to avoid runaway inflation, with its distortions of the wage and price structure and the unrest it brings in its wake. Common sense and self-discipline on the part of all Canadians can go far to avoid excesses which are completely unnecessary. As I explained earlier, we have never been more prosperous. We have never had a larger supply of goods and services and a greater capacity to produce more of these goods and services. Those who are hoarding, those who are raising prices in anticipation of a controlled economy, are doing a disservice to themselves and to the communities in which they live. In fact, by doing so they are directly contributing to a situation which may make it necessary to introduce controls that could otherwise be avoided.
Nobody can foresee the exact course of events over the next eighteen months. I am satisfied that with the full co-operation of Canadians in all walks of life we can meet the situation as it now appears without the over-all controls we had during world war II. However, as for essential materials and services required to produce necessary defence supplies, we must be prepared for all exigencies. That is the reason we are asking for the stand-by powers mentioned in the resolution now before the house.
Let me now turn to consider what the increased defence program may mean for the Canadian economy.
First of all, government proposals to be put before this house will have the effect of about doubling Canadian expenditures for defence and preparedness. This amount will cover increased expenditures for a strengthened Canadian defence force and greater supplies of military equipment and munitions for use in Canada and by the other signatory nations of the North Atlantic treaty. In addition, we expect that some member nations, and this applies particularly to the United States, will be purchasing in Canada both defence supplies and strategic materials required for the production of military equipment in their own countries.
The Canadian preparedness effort will be the largest in the history of this country in any time except in the last great war. The same will be true of the United States and most other democratic nations. Canada intends to play her full part in the preparedness efforts of the democratic world. We have already been discussing with the United States, and with other countries signatory to

the North Atlantic pact, how we can best step up production to provide the equipment and weapons and defence supplies of all kinds to our allies as well as our own forces.
As hon. members know, the United States and Canada co-operated very closely during world war II in making the best use of the war-making potential of the North American continent. Since the end of the war, and as the international situation deteriorated, we have been exploring ways and means in which our two countries could continue in a spirit of co-operation and work towards gearing both economies to a maximum state of preparedness. As we envisage it, each country would be doing the things for which its resources and the skills of its people are most suited. We are hopeful that out of these discussions will develop a common approach to the problems of defence and control over essential materials and services, with each country pursuing similar objectives and achieving the end in a way best suited to each country's economic conditions, institutions, environment and the temperament of its people.
In assessing what preparedness efforts will mean for the Canadian economy, it is important to bear three things in mind.
First, our industrial capacity is so substantial that we can turn out a considerably larger volume of military equipment and munitions than could possibly be used by our own armed forces. To make full use of industrial capacity for defence we therefore have to know the military requirements of our friends and allies before we can embark on large-scale production. And not until the intentions of these other nations are known to us shall we be able to translate ideas into ships, guns, aeroplanes and munitions.
Secondly, our own preparedness program, large as it is in relation to past peacetime performances, will still involve over the next year or eighteen months-barring a major emergency-only a small proportion of Canadian capacity and output, perhaps of the order of six to seven per cent of our gross national product. Requirements coming from abroad, even if they are substantially larger than now indicated, are still likely to be in this period only a small proportion of Canadian industrial production. Our preparedness efforts, including foreign demand, in this period are, therefore, likely to be of the order of less than ten per cent of our gross national product. That is a considerably smaller proportion than what we did during the last war. In 1943 and 1944, the years of our maximum efforts, about forty-two per cent of
Essential Materials (Defence) Act gross national product was either directly or indirectly related to the pursuit of war.
Thirdly, Canadian capacity, capital equipment and skill are considerably greater today than they were ten years ago when industrial production was rapidly expanding to become ultimately one of the deciding factors in winning world war II. There is substantially increased Canadian ability to produce better and more intricate goods both for peace and war.
However, there is this main difference between present-day conditions and the situation in 1939 and in the first year of the last war. The Canadian industry was not operating at capacity, and there was slack to take up an expanded program. Today Canadian industry is operating at close to capacity, so that the impact of the increased defence program, although small by comparison, will not be without some effect, especially on some of the critical defence materials.
Canada's gross national product for 1950 expressed in constant dollars-that is, after allowing for price changes-is estimated to be twelve per cent above 1943 and seventy-five per cent above 1939. Industrial production at mid-1950 was one per cent greater than in 1943 and eighty-four per cent greater than in 1939. I am speaking in constant dollars. Motorcar production during the first seven months of 1950 numbered 233,000 units, or more than double the total number of vehicles turned out in the corresponding months of 1943 and 1939.
Output of strategic materials is also considerably higher than it was at the war peak or before the war. For example, production of primary steel ingots is estimated at 3,150,000 tons for 1950, or eleven per cent higher than in 1943 and 110 per cent higher than in 1939. Aluminum production is running at 415,000 short tons this year, sixty-seven per cent above 1943 and 400 per cent above 1939. Electric power recorded a daily average of 144 million kilowatt hours in June, 1950, up twenty-nine and ninety-two per cent respectively over the same period. Domestic output of crude petroleum was very small before andi during the war. But the most recent figures which I have been able to obtain indicate a daily output of 85,000 barrels, or about one-quarter of our domestic requirements. Further important developments in crude oil are still ahead.
All this is evidence of increased production already achieved, and further expansion in sight is indicative of the fact that Canada has the capacity to take increased preparedness efforts in her stride, and still leave substantial resources free for civilian use. There is,

Essential Materials (Defence) Act therefore, no reason either to be alarmed about increased defence spending, or to exaggerate its impact on the Canadian economy. There will be stresses and strains in individual sectors, it is true. But with individuals and governments co-operating there is no reason whatsoever why Canadians should not maintain a high standard of living, and at the same time be adequately prepared to defend their way of life against aggression.
I have gone to quite some length in discussing the economic situation and the physical conditions which this government expects in the near future. Because we realize that there may be stresses and strains in individual sectors of the economy which require government intervention in the interests of national security, and in order to fulfil international obligations, the government is seeking the stand-by powers as are outlined in the resolution now before the house.
This is not. the occasion to. .discuss the individual provisions of the bill, but as I come to the end of my remarks hon. members may wish me to sketch briefly the broad terms of reference of the bill.
The primary authority sought is for. the allocation of such essential materials and services as may be designated by the governor in council from time to time. A great deal of allocation may, and no doubt will, be achieved by voluntary co-operation on the part of the business community, and without the need for any action on the part of government. But where contractual relations or other exigencies make government directives necessary, such orders will be made under this bill, as and when it becomes law and the need for such action arises.
In this connection I might say that in the last few months I have received scores of messages from prominent individual Canadians and trade organizations, which have contained assurances that they are prepared to do anything in their power to assist the government in its efforts to establish a satisfactory state of economic preparedness. Needless to say, the government is sincerely grateful for these offers of assistance and co-operation.
The bill also provides for authority to control prices of essential materials and services. This provision may be described as a stand-by authority once removed from the control of physical allocation. If those who produce, sell and deal with essential materials and services will succeed in maintaining reasonable price levels, there may be no need to control prices, even if allocation controls come into force. But if that is not



OF COMMONS

[Stage Direction]
the case, we cannot allow allocation of essential materials and services for defence purposes to be defeated by the charging of exorbitant prices.
In this connection I should like to make one point clear. While we are primarily concerned with getting the materials and services required to see through our military preparedness program, we must have the authority to control all aspects of production, supply and distribution, use and prices of essential materials and services. For if output or supply cannot be increased, it is only by taking away from less essential civilian needs that the rising military demand can be met.
We believe that, barring a major emergency, the powers of the act will be sufficient to cope with the problem we anticipate. It is possible that Canada will face greater difficulties over the next eighteen months than are indicated at the present time. If that turns out to be the case, we will bring the facts before parliament and ask for the additional authority to cope with the situation. But for the present we have no intention either of being drawn into or getting involved prematurely in a set of over-all controls which would be particularly appropriate to an emergency much more intense than the difficulties we are facing at the moment.
I trust that the bill to be based on this resolution will commend itself to hon. members.
George Alexander Drew: Mr. Speaker, at this point of course it is difficult to tell exactly the way in which it is intended to carry out the general purposes which the minister has outlined. There is however one point which raises a question right away, namely, the statement of the minister that we must have authority to control all aspects of production. It seems that although this is still in the initial stage, it would be well if it could be amplified so that we may know exactly how it is intended that it shall be carried out.


Clarence Decatur Howe: We are not in committee, Mr. Speaker. Could that question be left over to the committee stage? I suppose that if I speak now I will close the debate.


George Alexander Drew: I am quite satisfied that that be done.


Major James William Coldwell: The
statement made by the minister this morning is a very important one. My mind goes back to 1939, when a munitions and supply resolution and bill were before the house. As I

listened this morning I could not help thinking that the minister has asked for many of the powers that were included in the bill at that time, but there are some very notable exceptions.
The bill based upon the resolution will ask for authority to direct essential supplies and services. The minister explained what was meant by "supplies and services". He spoke of the industrial supplies necessary for the production of munitions of war for ourselves and our friends across the sea, and defined "services" largely as electrical services and so on. Therefore I take it the main concern of the proposal now made is for defence purposes for ourselves and for our allies. In order to achieve this objective we are told that industry will be left pretty much to itself, but will be expected to co-operate as far as possible together and with the government to achieve the end, although the government regards it as likely that direction will have to be given to industry in some important respects.
So far as the allocation of essential supplies and services go for this purpose, I think the house will agree that that kind of power must be given to the government and to the minister; but if we are in for, as he said, a long period of military and economic activity for defence, something more needs to be done than is foreshadowed in this resolution.
I was glad to note that the minister does not expect-and I have noticed that that also confirms the statements of the Prime Minister (Mr. St. Laurent), the Secretary of State for External Affairs (Mr. Pearson) and others who are in touch with the situation-that there is any immediate prospect of a general war. I sincerely hope, should there be no immediate prospect of a general war, that we may get over the next few years and finally come to an understanding so that a general war will be avoided. But I agree immediately, as I have before, that we have to combine with other members of the United Nations in order to show that we are determined to resist aggression, and that means of course that we have to assist those who are associated with us as well as do something for ourselves in the realm of building strength in order that potential aggressors may know that we are prepared to resist such aggression.
The economic preparedness discussed by the minister this morning he hoped would be achieved by organizing not only our own economy but our moral resources. I agree with that point of view; but let me say immediately that in 1939, in order to make certain that we had the moral support of the people of the 69262-29
Essential Materials (Defence) Act country, assurances were given and legislation was introduced to see to it that the people of Canada would understand that they were to be protected against the results of any inflation that might result from the tremendous economic activity in which the country would be engaged for defence and for war purposes.
It is all very well to ensure the distribution of essential goods for industry where they will do the most good; but at the same time great care has to be exercised to see to it that the general population will have allocated to them the things that they need to maintain their homes and their families.
The minister said that we have to avoid runaway inflation. But what are we facing now? What have we at the present time? There is serious inflation in the price level of goods that the ordinary people need. When the Minister of Finance rather more than two years ago told us that we had probably reached the peak, and that prices would level off at something like 145, we felt that was higher than it should be. However, the most recent report of the bureau of statistics indicates that the present level is 168-5, and I rather suspect that the August level, when made public, may be higher than the figure I have just noted-which of course was for the month of July.
If it is true that we have never before had more goods and services available to the people of this country, then some other factor must be present to account for the tremendous increase in the cost of living over the last two years. The minister has said that there were hoarders, and I am going to suggest that there may also be some profiteers. Hoarding and profiteering we decry in this House of Commons; but we found during the second world war that we had to do more than decry hoarders and profiteers. We had to introduce legislation to control the price level of ordinary goods, and also do what we could to prevent the country itself from being subject to undue expenditures because of the profiteering in essential supplies. The house, through its legislation, tried to stop that in the early years of the war.
This morning, when I knew this matter was about to be considered, I looked at the debates of 1939 and read the resolution foreshadowing the establishment of the department of munitions and supply. There are some similarities between the resolution then passed and the one we are discussing today. But the then prime minister, Mr. Mackenzie King, pointed out that we had already on the statute book effective legislation that we have

Essential Materials (Defence) Act not now, namely a measure setting up a defence purchasing board, which was designed to limit profits to five per cent.


Stanley Howard Knowles: Why is it not there?


Major James William Coldwell: While that limitation was set aside, because of considerations the minister of munitions and supply gave the house, including the difficulty of obtaining certain basic supplies under that limitation, it is interesting to see what was done at that time under similar circumstances. Mr. Mackenzie King said this, as reported at page 171 of Hansard for September 12, 1939:
Hon. members will recall that at the time the defence purchasing board was set up the Minister of National Defence (Mr. Mackenzie), in reply to a specific question, said-
Then he quoted what Mr. Mackenzie had said when the defence purchases act was passed:
The answer is this, that this is a measure for peacetime-
The measure we are discussing today is, of course, a measure introduced in peacetime. The then prime minister continued the quotation as follows:
-and I trust that it will long be used for that purpose. If an emergency arises, doubtless other measures will be enacted immediately to deal with the emergency.
Mr. Mackenzie King went on to say:
The main concern at that time was to ensure that there should be no profiteering incidental to preparations for defence.
I am suggesting this morning that at the present time we have no legislation which would prevent profiteering incidental to preparations for our defence. Hon. members will recall that at the last session we endeavoured to amend the bill then before us so that we might limit profits to five per cent, and suggested to the government, when it refused to accept our proposal, that it might propose some alternative to prevent profiteering. Up to the present time, however, we have no such legislation on the statute book. Mr. Mackenzie King went on to say:
The then minister of finance (Mr. Dunning) envisaged different methods for controlling profits in the event of war. In the same debate he said:
"And of course if-God forbid-war should come and we have to consider the results of war inflation of one kind and another, outside of this measure altogether we shall have to evolve schemes for profit control which will apply not only on purchases by the Department of National Defence. I think there is no doubt we would come to that."
Of course we did come to that during the second world war. At the present time the condition in this country is vastly different from the situation we faced in 1939. Hon. members will recall that even in 1940 at one time we had something like 400,000 people in
	j
Canada on relief, many of whom were unemployed persons. As the minister indicated this morning, industry was not working at anything like capacity.
At the present time we have probably one of the highest levels of employment in the peacetime history of our country, and one may say that our industrial machinery is fully employed. The very figure the minister gave this morning of the value of the total national production this year, an all-time high, indicates that there is neither a labour surplus nor a surplus of industrial machinery.
Consequently it seems to me that if we are to protect the country, apart altogether from individuals, from undue expenses in the field of national defence equipment, much more than is suggested in this measure should have been brought before the house. The minister told us this morning that we have never had more goods and services. As I have already stated, he recognizes that in spite of that fact there were hoarders-and as I have said, I suspect there were some profiteers as well.
No control is foreshadowed or guaranteed in the measure before us other than the control of essential materials needed for defence. But, I ask the government, what of essential supplies needed for the sustenance and welfare of the great masses of the people? We cannot rely wholly upon equipment for our defence. As the minister said at one point, we have to marshal the moral resources of the country, and, if we do that successfully we must see to it that we have sufficient supplies and that they are so allocated that all our people will receive an amount sufficient to ensure a reasonable and decent standard of living.
I have been watching the newspapers lately and have noted that some of the European countries that removed controls are in difficult circumstances. For instance, for a long time Belgium was held up as an example of the beneficial results of the removal of controls; but today Belgium is suffering from severe inflation, and in many respects supplies are so difficult to obtain that the government of Belgium is preparing to introduce some rationing as well as some controls.
The hon. member for Vancouver East reminds me that at the present time there is a considerable amount of unemployment in Belgium. That is what he was informed when he was an adviser to the delegation to the ILO conference at Geneva two or three months ago. Consequently I say that while the measure gives the minister very wide powers in some respects, it does not give the government those essential powers

which are necessary in order to protect the people against the kind of condition to which I have been referring.
Effective defence, the minister said, demands the co-operation of industry and all the people. I want to say to the government that if we are going to get that co-operation there must be freedom from discontent. Industrial unrest resulting in strikes would be disastrous to the defence preparation plans that the minister has in mind. Let us also bear in mind that so far as the farming population is concerned, their prices have been falling in some instances. In the areas which some of us represent in the house the initial price of wheat this year is considerably lower than it was a year ago, and with the prospect of a low-grade crop the returns may not be nearly sufficient to meet the needs of the population at a time when we have serious price inflation and the prospect, if shortages occur because of our defence activities, of further increases in our inflationary difficulties.
The minister said that the requirements foreshadowed in the rearmament of ourselves and the assistance to our friends across the seas would not demand more than ten per cent of our gross product. He went on to point out that in the peak years of the war at times forty per cent was required for war purposes. Again if we compare 1939 with the present situation we can see that ten per cent now will mean a great deal more to our general economy than the allocations we made in 1939, because of the difference in the availability of labour forces and the use of machines. We have few factories with machines idle at the present time.


Mr. Smith (Calgary West):: Will the hon. member permit a question? I think the reference he made to forty per cent applies to 1943 and not 1939.


Major James William Coldwell: I think what I said indicated that I was also referring to 1943; then I said that if we compare 1939 with 1950 we find that we had both idle machines and idle labour in 1939. Therefore ten per cent now with machines and labour fully employed means a great deal more in regard to inflation that what we started to do in 1939 meant in 1939 when we had available both idle labour and machines. That was my point.


Arthur Leroy Smith: I am sorry.


Major James William Coldwell: I may not have made it clear, and I appreciate the hon. member asking for clarification.
I think what I have said demonstrates that we need more effective controls than we had in 1939. Yet the government in 1939 paralleled their preparations for defence and
69262-29i
Essential Materials (Defence) Act participation in the war with comprehensive proposals for the prevention of profiteering and the maintenance of a price level. Let us remember that at that time the government indicated clearly that they were not going to allow profiteering and would introduce excess profits taxes in order to prevent anyone from profiting unduly out of the war. In spite of that there were some very great beneficiaries of our war effort. Because of my interest in the subject during the war, I noted the reference the minister made this morning to the aluminum industry. During the war we gave terrific concessions to the Aluminum Company of Canada. They built a most remarkable power project at Ship-shaw, and I thing the engineers who constructed that great project can be very proud of it. I have no criticism of the men who did that wonderful job, but after all, we paid for sixty per cent of the project.


Clarence Decatur Howe: May I correct my hon. friend? We paid nothing for the aluminum project. Never at any time have we paid anything to the Aluminum Company of Canada for power development or for any capital construction. Anything that we did for that company by way of accelerated depreciation we are getting back now through additional taxes.


Major James William Coldwell: All right; suppose I take the correction of the minister and say that we did not pay for it. What we actually did by accelerated and special depreciation was to allow the Aluminum Company of Canada to charge an additional amount over cost of production and normal profit to pay for sixty per cent of the Shipshaw project and one hundred per cent of the additional aluminum equipment installed. Speaking from memory, because I did not expect the minister to mention it this morning, I think the special and accelerated depreciation amounted to approximately $170 million. I can well remember the statements made in the house when this agreement was under criticism. We were told that the justification for these tremendous concessions to that great company was that after the war the larger part of the new equipment, and indeed the new electrical development, would be surplus and would not be used. Some of us argued that with the coming of the use of light metals in all probability there would be no surplus plant. As a matter of fact, so far as I have been able to ascertain, expansions have actually been made by the company during the last year or two.
Let me say to the minister that I am not criticizing the excellent job the company did for the country during the war, or the excellent job which I hope it is going to do now.

Essential Materials (Defence) Act What I am pointing out is that while we asked the people of Canada generally, and our young men particularly, to make sacrifices, the manner in which we operated during the war enabled some of the great companies

and I have just mentioned one; there were others-to reap tremendous benefits out of the tragedy of war. That was so in the case of steel, nickel, and others that one might mention.


Clarence Decatur Howe: I should like to straighten this out in my hon. friend's mind if I can. I think if the Aluminum Company of Canada had foreseen the future of the industry as we see it today they would never have elected to write off the sums they wrote off through accelerated depreciation in those days. It is true the company took accelerated depreciation over three years, but the result is the company has no depreciation to take now, and anything it earns is subject to corporation tax by the government.


Major James William Coldwell: I am not going to argue that particular point. Hon. members may laugh, but I am going to say that, unlike the people of Canada, unlike the young men who went to war, the Aluminum Company of Canada took no risks at all. They had a guarantee of price and quantity in advance. The money was. put up in advance by the allied countries. Because the condition is changed-and this is what I am trying to say-is no reason why, when we start to do anything during this preparatory period of defence, we should repeat the same kind of policy and the mistakes that I think we made during the last war. I am also saying that, while it is all very well to control allocations and exercise control over industrial material, it is the duty of the house and the government to see to it that allocations of food and other supplies are made available to our people at prices they can afford to pay.
This is a very important measure. I have pointed out that we are not doing anything nearly as comprehensive as we did in 1939, when, as I said the other day, we appropriated far less money than we are appropriating under the bill this session. The authority sought for the allocation of material I am quite sure will be supported by the house, together with the control of prices of essential supplies and services for defence purposes. However, we go beyond that; we say, why control the price level of supplies and services for defence purposes and refuse to give some protection to the men and women working in those industries, the men and women producing food on the farm, and


workers generally upon whose efforts industry in this country will be built during this period of defence preparation.
Let me add that when we divert supplies and the machinery of production to producing military and other defence supplies we are indeed taking away from civilian production, particularly at a time when that production is at peak levels. So I say to the minister that while the powers he asks are necessary under present conditions, the government should be doing much more. It should see to it that there are adequate and proper controls, as the Prime Minister indicated in 1939 and as Mr. Dunning in an earlier speech, earlier in 1939, said would be essential if we had to prepare for war or if war came.
I wanted to make these criticisms immediately, because I was impressed by the deficiencies in the minister's statement as he presented his proposals to the house.


Mr. Sinnott:: I listened attentively to the hon. member for Rosetown-Biggar, and I should like to ask one question. Does he propose that the government should impose over-all control on wages and prices?


Major James William Coldwell: I suggest that the government should call together the producers of this country, whether farm producers or wage earners, and discuss with them the levels which they -feel would be reasonable and proper for both farm production and wages. During the war there was very little difficulty about the wage earners coming to an understanding and controlling their own wage levels. We were free from strikes and major dislocations. I notice that hon. gentlemen opposite share with us the view that if you can get something without compulsion it is better to do so, and I have no doubt that the unity of labour, in view of the necessity for preventing aggression at the present time, would enable us to come to suitable arrangements with them for the voluntary control of the wage situation.
So far as industry and other factors in the economy are concerned, the situation is somewhat different. You cannot get together the thousands of people who are producing and distributing all sorts of things, in the same way that you can get the organized groups together, the organized farmers and the organized wage earners. However, in that way I think we could arrive at a decision which would be beneficial to the whole country.


John Sylvester Aloysius Sinnott: Even after the question I asked and the lengthy answer of the hon.

member, I still do not understand whether or not he proposes over-all wage and price control.
Mr. Cold well: I am afraid I cannot help it if the hon. member does not understand me; it is not my fault.


Mr. F. D. Shaw (Red Deer):: It occurs to me, Mr. Speaker, that more effective consideration can be given the proposals of the government in the fields outlined by the minister when the bill which will follow this resolution is before the house. However, I wish to make a few observations at this time, and I intend to make them extremely brief.
When one reflects upon the dangerous international situation; when one considers Canada's accelerated preparedness program to meet whatever situation may arise, it is not difficult to conclude that powers such as the minister is reguesting in this resolution are more or less reasonable. Certainly it is most desirable for the government to be in such a position that the governor in council can take action to avert the possible disruption of defence preparations which are necessary to safeguard the national security. It is most desirable also that the government should be in a position to assist the United Nations in accordance with Canada's obligations. My colleagues and I have always stressed the fact that Canada must live up to her commitments under the United Nations. It is also necessary, I believe, that the government be in a position to prevent economic disorder and hardship on a national scale; and finally we believe it necessary that they should be in a position to engage those persons who are required for the purpose of carrying out such a program.
Having said that, I want to emphasize that this does not necessarily mean that we agree with everything the government contemplates doing or may do under the measure now before us. If it were the purpose of the minister and the government immediately to plunge headlong into a program of rigid controls, stringent allocation measures and rigid price fixing under this legislation, I would be extremely hesitant about speaking as I am at the moment. However, I did not miss the minister's assertion that this was but a standby measure, and that no immediate severe action is contemplated. He used several expressions, all of which mean the same thing. He said on one occasion "as and if required." On another occasion he said, "if and when necessary," and again, "such action may be necessary." Specifically the minister referred to steel and power as being two commodities that might have to be dealt with
Essential Materials (Defence) Act early in the program. It is our firm conviction, Mr. Speaker, that if and when it becomes necessary to take rather severe action under this measure, parliament should be kept fully informed, and should be called upon to participate in whatever action may be contemplated, more particularly if that action is to be severe.
The minister emphasized our improved trade position, and the fact that it is expected that in 1950 the value of the gross national product in Canada will reach approximately $17 billion. We feel that we are in a much more favourable position today to meet any contingencies that may confront us without the same degree of rigid control which was necessary during the last war. After all, it is undoubtedly true that from the standpoint of trade, and from the standpoint of our own national production, we are in a much more favourable position today than we were in the early forties when confronted with all-out war. Moreover we cannot overlook the fact that today, except in theory, Canada is not yet at war.
During the minister's observations he associated almost every instance of military preparedness with economic preparedness. He spoke of military needs and civilian needs. I, for one, am particularly pleased that the government is laying such emphasis upon civilian needs. We have always taken the position that a strong Canada can result only from economic stability in the nation, when the people enjoy an optimum standard of living, and when there is that high degree of unity within the country that comes from the application of sound economic policies.
The minister said that if self-discipline is practised by industry within Canada, it may be possible for us to avoid many of the stringent regulations which would otherwise be necessary. Certainly we concur in the minister's hope, and we join with him in appealing to industry to co-operate fully to avoid the rigid price control and rigid material allocation. Personally I think that industry in Canada could play a major role in rendering it unnecessary for the government to go too far in those fields.
With respect to new plants for the production of war materials, I was quite impressed by what an hon. member said yesterday about the necessity for the decentralization of plants within Canada. It is my sincere hope, quite apart from any desire that anyone in any particular part of Canada may have to see industry established in that quarter, that that can be done. From the standpoint of safety alone, in a war such as we could easily be

Essential Materials (Defence) Act confronted with in the future, the decentralization of war industry in Canada to the greatest possible degree should be carried out.
For example, how much easier it is to decentralize war industry in the years to come, particularly in the light of the oil development in western Canada. Surely that as a source of power should contribute materially towards a government decision to see to it that the major part of our war industry is not established in the two central provinces. Moreover, from the standpoint of cost, great savings could be effected if the government would give favourable consideration to this matter.
In the third place-and I put it there because it is important, though not the most important reason-I think it is much fairer to the people of Canada themselves if industry is decentralized even in peacetime, but particularly when there is likely to be such a rapid expansion during wartime.
I listened with some interest to the observations of the hon. member for Rosetown-Biggar (Mr. Coldwell) with respect to profiteering. The hon. member for Peace River (Mr. Low) also made a reference to it. Although technically Canada is not at war today, there is every evidence that profiteering is taking place within our country, and quite apart from the supplying of any war materials. I am thinking particularly of those who are supplying civilian commodities. In almost every quarter in Canada there is evidence that profiteering does exist. If there is profiteering at a time like this, when Canada is not involved in all-out war, how much more likely is it to occur if we do become involved in all-out war. I feel that a duty rests upon the government to investigate price spreads as they apply to many commodities, that spread between the cost and the price which the consumer is called upon to pay.
Unfortunately it is the little retailer in the corner store who is bearing the brunt of a good deal of the criticism which has arisen as a consequence of higher prices. I urge the government, if it hopes to secure the full support of the Canadian people, to proceed immediately to investigate this question of price spread. There may be a better opportunity of doing it now than a few months from now if we should become Involved in all-out war.
I do not intend, Mr. Speaker, to take more time at the moment. I have mentioned two important things, the decentralization of industry, and the obvious price spreads which prevail at the present time.


Mr. J. G. Disfenbaker (Lake Cenire):: Mr. Speaker, I was impressed by what the minister said about the necessity of mobilization, of our resources, and in particular the integration of economic development in Canada with that of the United States. On more than one occasion I have advocated the necessity of having this problem of the development of Canada's hidden resources, which are so necessary in war, brought before the forthcoming dominion-provincial conference with a view to arriving at an agreement between the provinces and the dominion whereby the development of our resources may receive the consideration that it deserves. This would assure that many of the commodities which are so necessary and are in such short supply in other countries will not only be available but will be developed.
It is difficult, however, to debate a resolution such as the one now before the house until the bill based thereon is presented. I am not in agreement with the hon. member for Rosetown-Biggar (Mr. Coldwell) when he says that vast powers are not being granted under the resolution in its present form. All of us want to see the mobilization of our resources to the end that freedom will be maintained. We cannot afford to resort to the belief that history proves that tyranny is ultimately overturned and that good eventually wins, without translating our resources into powerful potentialities for the assurance of our freedom. At the same time history has proven that parliament is, in its essence, the greatest power for the preservation of freedom. If this resolution goes as far as it says, there is indeed being set up at this time an economic dictatorship. The powers granted to ministers will, unless subject to rigid controls and vigilant supervision by parliament, constitute once more an abdication by parliament of many of its important functions.
I know what the answer will be to that. History shows that the symbolism of democracy must often be sacrificed to meet the exigencies of national danger. None the less, and without opposing the legislation at this point-for without all the facts it is impossible to debate it-I point out that it gives to the governor in council clear title deeds to almost unlimited economic power and unlimited executive lawmaking power. Let us just read it:
... a measure to authorize the governor in council to take action to avert possible disruption of defence preparations requisite for the safeguarding of national security . . .
In his interpretation of that resolution the minister pointed out how important this is;

for in effect he said that we must get ready for a long period of austerity, if you will, in order to meet the world situation, and that we must have the necessary stand-by powers. The Minister of Trade and Commerce gave an answer to the Prime Minister (Mr. St. Laurent) who the other day spoke as though the danger were only a matter of ten months, when he said in effect that it is possible that Canadians will face greater difficulties in the next eighteen months. The minister has given us a message today which is challenging to this parliament. At the same time he has asked that powers be given to the governor in council which are tremendous in their import, powers which to a large extent should be exercised by parliament.
With those words, Mr. Speaker, I conclude my remarks; for one cannot debate without knowledge. But the generality of those words if they are actually expanded and implemented, will give to the governor in council powers tremendous in their amplitude, powers to be exercised by the governor in council independent of parliament.
As I have already mentioned, I rose at this time, not to oppose the resolution, but rather to point out that, worded as it is, it is wide enough to make the governor in council supreme and to constitute a transference by parliament to the governor in council of parliamentary control because of the fact that efficiency demands that these powers be granted. But after all, in my opinion efficiency can be maintained without denying parliament.


Stanley Howard Knowles: It was my hope, Mr. Speaker, that at this session of parliament the government would profit from past experience and would bring in a proper bill with regard to the control of our economy in the interest of our people.
When I say that I looked for a proper bill, I have two points in mind. On the one hand, there is the experience which the government has had, and to which the previous speaker, the hon. member for Lake Centre (Mr. Diefenbaker) has alluded, namely, that of being criticized on the floor of parliament for the lavish use of unlimited powers by the device of order in council. The government at times has pointed out that from part of this house it gets pushed to use certain powers for the good of the people, and it also gets criticized for the arbitrary use of wide powers.
It seems to me that the solution of that dilemma is for the government, when it asks for necessary powers, to spell them out in considerable detail in the legislation placed before parliament. I gather that the hon.
Essential Materials (Defence) Act member for Lake Centre would agree with that suggestion. He does not oppose the idea of parliament giving powers to the government when they are needed, but says that we should not give them in the form of a blank cheque; that we should know the nature of the powers that we are giving to the government. My friend and I would probably not agree as to the precise nature and detail of the powers that we should give, but at least we are agreed that we should know what powers we are giving to the government.


John George Diefenbaker: And we should not give unlimited powers.


Stanley Howard Knowles: My hon. friend suggests that we should not give to the government unlimited powers, namely, the kind that they can later interpret as enabling them to do things that nobody had in mind at the time the legislation was passed. I agree with my hon. friend on that point. On the other hand, as I have said, it seems to me that the kind of criticism that he has made and that I am making could be met by setting out clearly in a stand-by bill the precise nature of the powers, to be used when they are needed, that are given by parliament to the. government.
The other idea I had in mind when I said that this legislation should be on a proper basis is this. The government has had considerable experience with the need of controlling our economy in wartime, in the transitional period after a war is over, and in what the government has chosen to call the period of twilight between war and peace. On the basis of that experience it seems to me that the decision taken by the government at the present time is indefensible.
In this debate one cannot deal with the speech of the Minister of Finance (Mr. Abbott) in another debate he initiated last night; but the same announcements were made to parliament by the Minister of Trade and Commerce (Mr. Howe) in his speech this morning, and the same attitude was taken by both ministers. The government's position is that for the time being they do not intend to go into the field of general control of the economy, and in particular that they are not going into the field of price controls. The government has made it clear now, through several of its ministers, that they feel that the situation is not sufficiently serious for that; that somehow things can be kept on an even keel with the limited amount of intervention in the workings of our economy that is proposed by the Minister of Trade and Commerce. It seems that he and the government feel that
45S

Essential Materials (Defence) Act that intervention should not at this time go further than control over the allocations of basic materials.
At the appropriate time, Mr. Speaker, some of us will be calling as witnesses on the other side of the question present and former members of the government, notably Mr. Ilsley, who had so much to say about the usefulness to our economy during world war II of the system of price controls which we had under his jurisdiction. I remind hon. members opposite that it was the boast of the government in those days that that system of control was one of the best in world war II in any of the allied countries; that it not only saved the Canadian people huge sums of money, so far as their own pockets were concerned, but it had saved the country money in terms of government expenditures on the war itself. That point was made not only from this side of the house; it was made as a boast on the government side.
After the war was over we were able to get the figures from Mr. Ilsley as to how much had been saved for each dollar that had been spent in the administration of price controls and in the provision of subsidies. I have not the exact figures at the tip of my tongue, at the moment, but, as I recall it the ratio was something in the nature of one to twelve and a half; that is, that for every dollar we spent on the administration of price controls and in the provision of subsidies there was saved to the Canadian people as a whole, either in their own pockets in their personal expenses, or in the expenses of government, the sum of $12.50. With that experience behind the government, I am amazed that they approach this time of crisis, when, Mr. Speaker, the world is just about on fire, and try to tell us that there is really nothing to be concerned about; that we can get along with this minimum amount of intervention in the workings of our economy.
I feel that the speech made by the Minister of Trade and Commerce, and other statements made from the government side, indicate that the government realizes there is rolling up in this country a demand for direct action so far as rising prices are concerned. The other day I referred to the request in that connection that had come to the government from the Canadian association of consumers. I believe the Canadian Legion has called for the reimposition of price controls. Certainly labour organizations across the country that are close to those who know what it is to try to get along on low wages, where housewives cannot make both ends met, are insisting that such should be done. Even financial papers that one picks up admit that there is 

this increasing demand for some direct action with regard to rising prices, and that it will be a problem the government will have to face.
In commenting on the government's position with respect to price controls, one of the morning papers indicates in a press comment that we can expect prices to continue to rise throughout 1951. What a prospect! Indeed, this situation is too serious for the government to leave it unsettled, which is the upshot of such legislation as has been given to us thus far in this session.
The leader of this group pointed out that we well remember the statement of the present Minister of Finance (Mr. Abbott) some years ago when he gave us his assurance that the cost of living would level off somewhere around 145. A strange piece of levelling off indeed! It has now risen to the alltime high of 168-5, and, as I indicated the other day, that is the average cost of living index, whereas the item which is of most concern to people, namely, food, stands at 216-7 of the base which was established over the period 1935 to 1939.
I feel that when we raise this whole question of the need of price controls and of the growing demand that there is for it in the country, Mr. Speaker, there is something more to it than just the bread-and-butter necessity of making both ends meet. I suggest that it has a very direct bearing on the struggle in which we are engaged in the world today. That struggle is a very real one, not only in a military sense on the battlefields in Korea; it is a struggle between ideas. Behind the military struggle is that conflict between the democratic idea and the totalitarian idea. I urge again that hon. members consider seriously whether we are paying enough attention to the ideological conflict, whether we are doing enough to make sure that we are not losing the war in the realm of ideas.
Those of us who met any of the people who came to this building yesterday could not help but feel, despite the fact that we regarded them as misguided, their determination to sell the idea to which they are wedded. Around the world people are being misled, are being led to believe that somehow or other the communist way, even though it is totalitarian, even though it is the denial of the essence of freedom and democracy, offers them something more substantial and real than the democratic way does. I submit, sir, we have to sell to the world the reality of our idea, our conviction that the free and democratic way is the better way. We have to sell that idea to the people of Asia; we have to

sell it to peoples around the world. We have also to sell it to our own people. I said the other day, and I repeat it because I am satisfied that it is true, that even if prices run wild, even if this government lets the people of Canada down in economic and social matters, the people will still stand by the government that they have elected; they will stand by the United Nations to which this country is committed; they will see this conflict through. But they will not see it through with the same spirit, the same high morale, that they would if they were convinced, not in a passive way, but in a positive way by new measures, that this democratic way of ours is not just something we have because we inherited it from our fathers and grandfathers, but something that we really prize, something that is worth defending, and if necessary something worth fighting for.
It seems to me that right there is the crux of the situation in the world today, and the crux of the situation so far as our people are concerned. We recognize the evil of the thing that we are fighting against, but there is a limit to which people can go on just fighting against something. They need a boost in morale; they need the fervour, if you like, that comes from the feeling that you have something to fight for. The people in our country will not get that fervour, Mr. Speaker, will not get that boost in their morale if prices run wild, if the value of wages is depressed, if the standard of living in this country goes down.
I submit in addition to all the things that the Minister of Trade and Commerce is concerned about-such as getting the co-operation of industry, of leaders of industry who are prepared to offer their services for a dollar a year, of labour organizations and so on-the whole government should give real thought to this problem of winning wholehearted allegiance and wholehearted support of the Canadian people to our way of life, to our democratic concept, our concept of freedom, and let us make it freedom from every kind of tyranny, particularly the economic tyranny under which so many of our people labour.
I submit that one of the main fronts of that battle is in this field of prices. Let prices run wild; let inflation interfere with our economy, not only so far as the government is concerned but so far as our people are concerned, and the enemy we are opposing-the idea we are up against-will have a tremendous advantage right in our own midst.
I could not be more serious or more concerned than I am about this whole question of mobilizing the moral support, the confidence and the convictions of our own people. We cannot do it by preaching to them; we cannot 692G2-30
Essential Materials (Defence) Act do it by speeches-even of the kind I am making. The thing that convinces people, when we come right down to it, is action taken to help them and to protect them. Runaway prices will deprive them of their morale, while action taken by the government to control prices and to protect the standard of living of our people will supply some of that fervour of support for our democratic way and some of that conviction that we really need at this time.
I urge the house to realize that this is not just a ten-month conflict. It is not just a conflict of even the years-God forbid-that the member for Lake Centre said the other day we might be at war. This is an age-long conflict between two fundamental ideas; the issue is whether the mind, spirit and life of man shall be free of all forms of tyranny or controlled by a dictatorship of one form or another. There is no question where we stand; but we can lose the political freedom and the spiritual freedom we have gained down through the years if we allow economic tyranny to master and to ruin our livelihood and to deprive our people of their conviction respecting the way of life we are defending.
I urge the government to reconsider this whole matter. I urge them not to think of it as a political question, or refuse to act on it because we in this corner happen to be pressing for it. I would remind them of all the organizations I have mentioned that are asking for price controls, and I urge the government to think of this whole question in the context of the serious times in which our lot is cast. If we do our best in this and in other respects not to undermine the home front, then I believe the time will come when our people will not only say but really believe that our democratic way, our free way, is the way we want not only for ourselves but for the peoples of the whole world.
Motion agreed to and the house went into committee, Mr. Dion in the chair.


Mr. Green:: Apparently the minister's
department has made an extensive survey not only of conditions in Canada today but also of the expected conditions in the months ahead. It is of importance that he tell us whether he believes it is going to be possible to hold the cost of living at its present figure; or is it expected that it will go even higher than it is at the present time?


Clarence Decatur Howe: Mr. Chairman, it is very
hard to forecast the cost of living. The recent increase in the cost of living is due largely to the increase in food prices. The price of meat has entered in very considerably. I recall that in the last month, the last one for which we have the figure, the cost of living
458	HOUSE OF
Essential Materials (Defence) Act index went up one point, whereas the agricultural cost of living index went up two and a half points.
It seems to me the high cost of meat may be a temporary situation. The law of supply and demand will likely operate. I am sure that the high prices being obtained for cattle and hogs will tend to increase production and operate as a corrective. Then, there may be opposite forces working.
The purpose of the measure is to try to see that war buying is not permitted to be a factor in increasing prices. In other words, if for war purposes we shorten the supply of materials and the remainder is insufficient for domestic supply, we then take the right to fix prices on the materials for domestic use, and arrange distribution. That is the purpose of the bill; that the effect of war on price levels will be minimized. But just what the effect of the over-all pressure that has been working up to this time will be I would not wish to predict.


Howard Charles Green: I suggest that if power is to be taken only to deal with war buying, it does not go far enough to meet the present situation. There can be no doubt that the persons across Canada who are on fixed incomes are being strangled economically. For instance, let us consider the condition with respect to beef, to which the minister has just referred, and also lumber. The prices of those two commodities are not at their present terrific height because of the law of supply and demand; they are forced up so high because such a large proportion is being shipped to the United States.


Clarence Decatur Howe: But that is the working of supply and demand on an international scale.


Howard Charles Green: I believe these shipments have a great deal to do with it. Certainly the price of lumber has been increased in some cases in an irresponsible way. Something has to be done to stop it. That increase in prices has resulted in the cost of housing going completely out of reach. I do not believe that in an emergency such as we are facing at the present time the government could dare to decline to do anything about the cost of such commodities as beef and lumber. Is it the intention of the government to take any action to deal with the high prices of commodities of that kind?


Clarence Decatur Howe: Mr. Chairman, my hon. friend is an able and experienced lawyer. He must realize the legal restrictions upon our position. Canada is a federal state, and the only process by which the federal government has the right to control prices is by invoking the War Measures Act by declaring a state of emergency. I can remember debates over


the last several years in which the opposition members have told us that we were then far exceeding our powers by maintaining the existence of a state of emergency. Except in respect of rent controls we have acceded to opposition pressure, and we now have no right to interfere with domestic price levels, except in the field of rentals.


Howard Charles Green: What about the power of allocation?


Clarence Decatur Howe: The power of allocation granted by the bill is wholly associated with defence. Except for defence we would have no right to allocate goods for civilian purposes. This government has the legal right to defend our country. The Department of Justice has ruled that we have the legal right to do that for which this measure provides. The Department of Justice has also indicated that that is about as far as we can go, unless we wish to invoke the War Measures Act.
The hon. member for Rosetown-Biggar was comparing the situation in 1939 with that of 1950. I would point out that in 1939 Canada had declared war against Germany. The War Measures Act had been invoked and that legislation gave the government power to pass and to enforce almost any sort of law it liked. We have not invoked the War Measures Act at the present time and we have not declared war against any country. We believe the situation now scarcely warrants the invoking of the act on the ground of impending war. That is the legal difference between the 1939 situation and that of today.


Major James William Coldwell: I realize that. I quoted Mr. Dunning's words in 1939. I suggest the government could introduce a comprehensive powers act, outside of the War Measures Act, to give us the necessary power.


Clarence Decatur Howe: We have had many opinions to the contrary.
At one o'clock the committee took recess.
The committee resumed at three o'clock.


Howard Charles Green: Mr. Chairman, just before the committee adjourned for lunch I was pointing out to the Minister of Trade and Commerce the increased cost of beef and lumber which I thought was largely due to shipments to the United States. He mentioned certain reasons why the government could do nothing about it. I should like to ask him whether there is not power under the Export and Import Permits Act to deal with that situation. Again, I wish he would tell us whether it is the plan of the government to take no direct

action with respect to prices at least until the next session of the house, which will probably be in January of 1951.
I sometimes wonder whether the ministry have a clear realization of how people in the constituencies are being squeezed by the cost of foodstuffs. I received a letter yesterday from a very responsible housewife in my own constituency. She says:
We do most earnestly hope that you will do everything within your power this session to urge the government to curb the rise in prices in essential foods Eggs are up again, a rise in milk threatened, now bread. Wholesome meats are already beyond the average family budget. As usual the full hardship of inflation falls upon the poorer members of society, already handicapped in "the battle of the housewife" by poor housing, often containing little or no storage space, refrigeration, nor ovens capable of baking good bread.
I submit that is a situation which should not be left until next year. I ask the minister to explain whether the government intends to do anything about it in the meantime.


Clarence Decatur Howe: Just before lunch I was pointing out the lack of legal authority for the government to do so. It is illustrative of the difficulties of government in Canada when the opposition will fight against the maintenance of controls for four or five years, and then, as soon as the controls and emergency powers are abandoned, demand that we exercise emergency powers that have been repealed at their insistence.


Howard Charles Green: Of course there is a new emergency now.


Clarence Decatur Howe: We think it is the same old emergency. The rise in the cost of living is not something that has occurred within the last few weeks. The current inflation is not wholly the result of the Korean war.
My hon. friend has referred to the Export and Import Permits Act. That act was never designed as an act to control prices. If there is an acute supply situation in Canada we can invoke the Export and Import Permits Act to prevent those supplies from moving out of Canada that are urgently required in this country; but my hon. friend is proposing something quite different. He is proposing that we invoke the act to cause a glut of lumber in Canada sufficient to bring the price down, which is quite a different matter.
If you will let me be a philosopher for a moment I will give you the result of my experience with price control. I claim no better judgment than anybody else, but I think I have had more experience with the administration of price control than any other member of the house. I believe that price control can be effective only if it applies across the board. In November, 1941, we instituted 69'2 (i2-301
Essential Materials (Defence) Act over-all price controls. We froze the price of every commodity except wheat. We froze wages and salaries. In other words, we made it impossible for any change to take place in payments for any of these services. That was effective for about two and a half years. I think it was far more effective than the price control system applied in any other country. It broke down finally when labour situations developed with which we could not cope, and we had to abandon controls on labour. The success of that system was possibly because we were in a state of war, because the people of Canada were worked up to a high pitch of war fervour, and because sacrifice was the keynote of the day. During that period I think almost every home in Canada had a member of the family on a fighting front.
Under those conditions we applied effective price control, but short of war conditions I doubt whether effective price control can be made efficient by law. To attempt to control one, two, or three commodities is likely to be futile and to defeat its own purpose by being the cause of price increases in other commodities. The bill to be based on the resolution undertakes to control the drain of war purchasing as it may tend to react on the price system, and to that extent I think it will be reasonably effective. In fact I am very hopeful that, having the authority to control prices, it will not be necessary to do so.
The bill mentions commodities such as steel. I feel quite certain that steel is one commodity that will not require control. There are only four or five primary producers of steel in Canada. Over the years these producers have been working closely with the department. I think steel prices have remained more stable than prices for almost any other commodity, and I have every reason to believe that if we convey to the primary steel producers the requirements of the government in relation to war and civilian purposes we shall receive the fullest possible co-operation.
It is really amazing what can be accomplished by conference and through the desire of Canadian industry to co-operaite with the government. Yesterday I had in my office twelve or fourteen representatives of the scrap dealers of Canada, people who deal with scrap iron, non-ferrous metals scrap, rags and papers. It is an important industry, and any deviation in the industry has its repercussions on the price of finished goods. We were having some problems associated with that industry. . I had these people come to see me. We had a very frank discussion It was agreed that the situations that caused
460	HOUSE OF
Essential Materials (Defence) Act us concern would be corrected by the industry itself, and I am confident that they will be.
I suggest to the committee that a word from the government is more effective if there is a law in the background that can be applied in case the response is not all that may be desired.


Howard Charles Green: What are some of the other main items that the minister expects will be under the act? He has referred to steel and scrap. What are some of the other items he has in mind?


Clarence Decatur Howe: Any item where war buying interferes with the normal civilian supply. It could easily be copper or zinc. Nickel is already being rationed by the producer in consultation with the government. It is being rationed both in Canada and the United States.


Howard Charles Green: Lumber?


Clarence Decatur Howe: Lumber might very well be one of these commodities.


Mr. Fleming:: I should like to ask the minister whether any labour shortage is expected because of the contemplated industrial expansion to meet the needs of defence preparation.


Clarence Decatur Howe: The hon. member speaks of expansion of industry. When industry is working to full capacity and when there is no unemployment, war industry can only be imposed on civilian industry by displacing a certain amount of civilian production. As I said earlier, unless the position becomes much more serious I do not contemplate that we shall be building new plants or extensions, of plants. The policy under present circumstances will be to find the capacity we require by replacing non-essential civilian production rather than by expanding the productive capacity of Canada. That is as I see it at the moment.


Mr. White (Middlesex East):: So that there will be no misunderstanding about the statement the minister made to the leader of the C.C.F. group with respect to the cost of living index, if I recall aright the minister said just before lunch that in the last month for which we have figures the general cost of living index went up one point, whereas the agricultural cost of living index went up two and a half points.


Clarence Decatur Howe: The agricultural index.


Harry Oliver White: Yes. I have in my hand the last cost of living index, published on September 2. Without going into it too fully it says:
But the Canadian farm prices index dropped from 154-3 on July 28 to 142-7 on August 4.


That is the last month for which there is a report.


Clarence Decatur Howe: I was referring to the cost of living for August. I have seen the figures, but perhaps they have not been published.


Harry Oliver White: The trouble is that consumers see the price of food go up while farmers see the price of their primary products go down. That is what the C.C.F. and many others throughout the [DOT]country are complaining about. I do not want the impression to go abroad that the farmers are getting those increased prices; for they are not.


Mr. Darroch:: Mr. Chairman, since coming into this house I have noticed that when one makes his initial contribution, if it can be considered a contribution, to the proceedings, the usual procedure is first to eulogize the riding from which he comes.' This is a special session of the house, however, and I am going to forgo that pleasure, except to say that the people of Wellington North sincerely believe that they live in the banner constituency of the finest province in the greatest country of the world; and I heartily agree with them.
I desire to give some reasons why I am in favour of this resolution. I do so as an Ontario farmer. I want to make it clear at the outset that I do not pretend to speak for agriculture as it concerns the whole of Canada; I do not know enough about it for that. Having lived all my life within five miles of the farm on. which I am now living, however; and having spent about nine years on the local county council, meeting farmers from all parts of Ontario as they gathered to discuss county matters, if I ever hope to appreciate some of the problems affecting Ontario agriculture I believe I should be able to do so now.
It has been suggested by several hon. members that this legislation should be broadened in such a way that it would more directly affect the people of this country. I have been unable to find out whether or not those who are suggesting the need of further controls mean that they should take effect at once or at some future time. I have been unable to find out whether they wish an over-all freeze, or just a partial freeze. I noticed that this morning the hon. member for Rosetown-Biggar neatly sidestepped a question by an hon. member on this side of the house, as to whether or not he was in favour of the immediate freezing of wages. As I say, I am not too clear on that point; but my understanding of the controls advocated, beyond those provided in this legislation, would be

an over-all freeze of wages and prices right now, and from that point of view I should like to offer a few suggestions.
We were called here primarily to deal with the national crisis resulting from the railway strike, and the government brought in for our consideration Bill No. 1. Before coming here I had the privilege of meeting a group of railway men who live in my riding, and had the benefit of their views as to why they believed they were entitled to higher wages and shorter hours. The legislation brought in by the government has been fairly acceptable to these men. They are not transient labourers; they are solid citizens, home owners and all the rest of it. They considered they had a legitimate cause; the Prime Minister stated that they were acting quite within the law, and I was glad to hear the Minister of Labour endorse that statement in Toronto on Labour day. Having in mind the fact that this dispute has not been settled, if we were to impose a wage freeze at the present time, as has been suggested, it would be extremely unfair to these men; so I suggest that is one angle we should consider.
Then from time to time we hear complaints about the cost of living and the cost of food. As a farmer I should like to mention a few things that I believe have been lost sight of for a long time by the consuming public. In the first place I believe that for many years the consuming public have been accustomed to cheap food. Probably the people who are buying it will not agree with that statement; still I maintain that for many years the people of this country have enjoyed food which has been sold at less than the cost of production. If we farmers had figured our costs as any other industry does he would have been away in the hole. From time to time we have been accused of being income tax dodgers, and we always reply that we do not know where we are at; that we are not very good bookkeepers, and I think that is true of most farmers. Now, however, we are starting to figure our costs a little more closely, and as a result of that figuring I do not believe there has been any increase in the production of food in this province. In other words we are beginning to realize that for a long time we have been selling for less than the cost of production.
One of the features of that cost of production which has been given practically no consideration by any person is the part played on the average Ontario mixed farm by the housewife. Before I left home we were fortunate enough to finish our threshing, so I had my grain in before I came away; but when we were working at that job we started at seven o'clock in the morning and quit at
Essential Materials (Defence) Act half past eight at night. That necessarily meant that the chores in the morning, afternoon and evening had to be done by someone else, and in most cases it was the housewife who did them. If you asked any of those farmers whether he was making any money on his hogs, first he would figure how much he had to pay for feed; then he would add another $4 or $5 for bis own work and another $10 or $12 for the price of the weanling pig; but I venture to say he would never give a thought to the hours of work put in by his wife. We farmers are very unfair to our wives in that regard, and I believe that is something which should be taken into consideration, especially in this day and age when we hear so much about wages and hours of work.
Many people are asking for shorter hours and more take-home pay; and let me say right here I am not opposed to that. I am a firm believer in the philosophy of wages we heard enunciated so often by the late Hon. Humphrey Mitchell, who time and again said that he was in favour of the highest wages the traffic would bear. I want to go on record as subscribing wholeheartedly to that theory. 1 have no quarrel with any who ask for a forty-hour week with forty-eight hours' take-home pay; if they think that is feasible and that the industry can carry that burden, it is all right by me, and I for one would not oppose them. But, sir, to my mind this is the $64 question. So far as the cost of what we consume is concerned, I wonder if these people ever stop to think what the cost of production of foodstuffs would be if the farmers of Ontario suddenly decided to work forty hours a week. I have in mind the hours of work that are put in by the average farm housewife outside of her ordinary household duties. I think I am safe in saying that they work at least four hours a day outside their ordinary household duties. The average Ontario farmer still works at least ten or perhaps twelve hours,-I quite readily agree that conditions have changed in the last few years owing to the advent of hydro in rural communities throughout Ontario, and I am quite willing to admit that farmers do not work as long hours as they used to work.


An hon. Member:: And they get no overtime pay.


Arnold Darroch: We do not consider overtime. Let us say that the farmer works ten hours a day, and add to it the four hours a day the housewife contributes; that makes fourteen hours a day. You do not need to be an Einstein to calculate it. The majority of the farmers in my riding, if they adopted the forty-hour week, would have their week's

Essential Materials (Defence) Act work done, considered from the point of view of hours, by Wednesday night. I have no quarrel whatever with the fellows who can secure the forty-hour week if their industry can stand the pressure. But I think people should be fair. I think the people who have achieved those wage standards and hours of work should realize that they cannot expect the price of foodstuffs to go down.
We have heard a lot of beefing about beef, Mr. Chairman, since this session began. Apparently some people are worrying about the price of beef today. I know that when my wife goes to the butcher shop to buy beef a couple of dollars do not seem to go very far. There is a lot behind the present cost of beef. Over a period of some years I think I am safe in saying that I have had livestock on the Toronto market for at least forty of the fifty-two weeks in the year. Sometimes I have not had very much, but occasionally when my banker calls me in at the end of the week I realize that I have been there too late with too much. I am quite sure that the present cost of beef can be attributed to a condition of scarcity. What is the cause of that scarcity?
I believe there are several causes for it, and not the least is the fact that for a number of years the beef producers of this country were faced with an embargo under which they were not allowed entry into world markets in which beef would bring more money than it did in Canada. I believe the farmers agreed to that because they felt it was their patriotic duty to do so. While there was the occasional protest, in the main the farmers of this country readily agreed to produce at what they knew was less than cost. I know my friends the wheat farmers will say that the same was true of wheat, but I do not know anything about that. I am dealing with conditions in Ontario, about which I know something. As a result of that there was not any increase in the number of cattle the farmers kept.
We have to bear in mind also that in Canada today we have over two million more mouths to feed than we had at that time. We have to bear in mind that the country to the south of us has a population of millions more than it had before the war. Since this government granted us access to the United States markets, we have been getting good prices for our cattle. Probably the cattle have been liquidated faster than is good for the country. The whole thing boils down to a dollars and cents basis. Today a farmer can realize $300 on a heifer that under ordinary conditions would be kept at home and used for breeding purposes. 'The farmers are not breeding them; they are

shipping them. Day after day I have seen loads of Holstein heifers and beef type heifers, that would ordinarily have been kept at home, going across the scales to be killed. This means that our cattle production is not increasing.
I point this out to those who say that the price of beef is too high today. So far as I can see there are two or three things that can happen. Either we shall have to pay more for beef, or we shall have to eat less of it, or both. I do not think it would be fair to pick out one particular section of agriculture and say that product is too high in price, while leaving the remainder of the products alone. I am in favour of price control if it goes right across the board. Unless it goes right across the board, I am not in favour of a greater degree of control than is provided for in this resolution.
I would say, sir, that I can see no immediate prospect of a drop in the price of foodstuffs that are produced on the Ontario farms. Do not forget that we have to meet urban wage conditions. If I am going to hire a man I have to provide him with facilities, and I have to provide him with hours of labour somewhat approximating those he can get in the large urban centres. Otherwise I do not get him. I am not kicking about wages. Any experience I have had in hiring men for the farm or perhaps for driving a truck has taught me that if you pay a man well he will give you a good day's work, but if you try to cut down his wages he will not. I am in favour of fair wages; but I do ask people to be fair about things and give the Ontario farmer a break. I believe there are other members here who could tell of similar conditions in their province.
I mentioned that one had to consider the cost of production. In this connection one could make a comparison between the cost of pop and the cost of liquid milk. Today milk is selling for about twenty cents per quart. In the newspapers I have seen some protests that that is too much, but if we consider the cost of production we will find it should be thirty cents a quart or the same price as pop. I am not saying for one minute that we should not drink pop, or that it does not contain some food value, or that some members of the house are not directly interested in it. I just cite this instance to prove my point, that if the farmer based his price on the cost of production, the same as the manufacturer does, the price of milk would be more than the price of pop.
I would say that at the present time I am in favour of this resolution, and the bill that is proposed. I do not think it would be fair to Ontario agriculture to have the price

of agricultural products frozen at their present level. I heard some person mention the fact that an embargo should be placed on the shipment of beef to other countries. I would say that no government should prevent us from taking advantage of that United States market which is so accessible to us; no government could justify an embargo of that kind unless it was prepared to substitute some form of subsidy to compensate the farmer for the loss of an export market.
May I add that I believe a subsidy to the producers is to all intents and purposes a subsidy to the consumer. It means that that particular commodity is retailed at a lower price. If the government should, however, be faced at some time in the immediate future with a crisis that necessitates the freezing of prices, I think I can assure them that, so far as the Ontario farmers are concerned, this is one branch of industry in this country from which they will secure every co-operation.


Mrs. Fairclough:: Mr. Chairman, in considering this resolution I think it will be granted by hon. members of this house that probably one of the most important elements in the successful carrying out of plans such as the minister has under consideration would be industrial harmony. Representing as I do a constituency which is largely composed of industrial workers, I was greatly concerned yesterday when I heard the remarks of the hon. member for Rosetown-Biggar (Mr. Coldwell) with regard to a letter which had gone out to enlisted men from the Steel Company of Canada; and I think that the hon. member would be the first to want to know the truth about this particular situation. Inasmuch as what we have already heard is not quite right, I think that the correction should be made in this chamber.
The form letter to which the hon. member referred yesterday is one which is used by the Steel Company of Canada to terminate the employment of drifters-that is, employees who just fail to show up for work, who do not clear their unemployment insurance books in the usual manner, whose whereabouts no one knows, and so on. In the course of time the Steel Company of Canada sends out this form letter to notify them that their services with the company are ended, their seniority rights cancelled, and so on. At no time was it ever intended that this letter should fall into the hands of any employee who had enlisted for the Korean force. Any employee who advised the company that it was his intention to enlist, or that his reason for failure to report for work was his enlistment, would never have received this letter. Employees of the Steel Company of Canada
Essential Materials (Defence) Act who so advised the company were told at the time they terminated their employment that the company policy with regard to reinstatement was not yet fixed, and that as soon as this matter had been considered and a fixed policy arrived at, they would be advised. In no case was the employment of that employee terminated, nor were his seniority rights cancelled.
I feel that the matter should be known, and that this information should receive the same publicity as did the hon member's remarks of yesterday.
With regard to this particular letter, as a matter of fact if an employee reports to the company stating the reasons for his failure to report for work-reasons beyond his control, illness, or any other such thing-he will be reinstated; and that is the policy which the company has followed in the past. If a worker simply left his job, with no intimation to anyone as to his intention, and, as sometimes happens, his fellow workers reported to those in charge that he had left, I do not doubt that this letter could have gone to him. But if the recipient of the letter had reported to the company, as he should have done, the circumstances of his having left that employment, the matter would have been rectified at once.
I think it should appear on the records of the House of Commons that the information received yesterday was erroneous in that regard; and I am sure that the hon. member for Rosetown-Biggar will be the first to welcome the information.


Major James William Coldwell: Yes, Mr. Chairman, I am one of the first to welcome that correction; but I must say this. Accompanying the letter that was sent to me was another letter from the officers of the union which informed me that the matter had been taken up with the company and that the company had replied that this was the procedure being followed, and that they could not adopt any other procedure until the federal government had legislated protection for the employee who had enlisted. That was the gist of the accompanying letter that I received from the secretary of the union.


Ellen Louks Fairclough: That, Mr. Chairman, is utterly at variance with the information I have. I wish to quote from a Canadian Press dispatch which reads in part as follows:
When it was learned that the man had enlisted, he received another letter saying, "As yet we do not know what policy might be formulated regarding any of the men enlisting in the armed forces. We have kept a list of all the names of the boys who have enlisted and when a policy is formulated we will know what the outcome will be."

Essential Materials (Defence) Act


Mr. Benidickson:: That is exactly what the hon. member for Rosetown-Biggar said.


Major James William Coldwell: There is your confirmation, Mr. Chairman.


Ellen Louks Fairclough: I rise to protest, Mr. Chairman. If their policy is not yet formulated, how can they state it? I have assurance from the management of the company that there is no intention now or at any time to take seniority rights from these men who are in the service of their country. I am sure there are many other members of the House of Commons who know the reputation of this company, and I resent the implication which is being made in this particular matter.


Mr. Gillis:: I had not intended, Mr. Chairman, to take part in this discussion, but I happen to know something about the subject matter under discussion. The lady member is much in earnest in defending the reputation of the national steel company-


Ellen Louks Fairclough: No, the Steel Company of Canada.


Clarence Gillis: The Steel Company of Canada, I should say; and in believing that their word is good. In a matter of this kind, however, and knowing this company as well as I know it, I am not taking their word for anything.
Action is required by the federal government in the matter of the Reinstatement in Civil Employment Act before the man going into the services has any protection whatsoever. Last night I had two of the top officials of the automobile workers' union-they happened to be in Ottawa on this particular subject-meet with government officials with regard to changing the Reinstatement in Civil Employment Act in order that members of their union who enlisted might have some protection; not only do they want an amendment but they want it made retroactive to June 1 of this year. Apparently the workers in the automobile industry are affected in exactly the same way as are those in the steel industry and others. The act as it is affords no protection to the young man going into the services. It must be amended. Those enlisting from the automobile industry have gone in with that sword hanging over their heads. There was no assurance whatsoever with regard to them. All the employee received was a slip terminating his employment, which means that his seniority rights, his pension rights and everything else terminate as of that date, unless the government amend the present act to include in it this Korean force and make it retroactive to at least the date of the outbreak of the trouble.
I suggest that some statement should be made, either by the Minister of Labour or by the Minister of Veterans Affairs, because they are both involved. I think the Reinstatement


in Civil Employment Act was administered by the Department of Labour, but the Minister of Veterans Affairs definitely has a responsibility also. In order to clear up that point-because it is bothering many of the boys who have gone into the forces, or would go in-there should be some assurance from the government that that act will be amended so that they may be protected.
As I am on my feet, I might as well say something about the proposal before the house. I should like to have waited until the bill was brought down and to have had a look at it; but the subject matter is not hard to discuss. The minister should have no difficulty in giving the answers to any questions that may arise under this legislation, because he has gone through it all before. That is why I am going to take advantage of this opportunity rather than to wait for the bill. There are two or three things that I have in mind which arise out of the minister's speech. I want to provoke his thoughts so that if the bill is not adequate now he will amend it before he brings it in, to avoid further discussion.
The first thought that I should like to leave with the minister is this. While the resolution itself recommends nothing specific, it states that the minister has the right to protect the economy of this country; to take whatever steps he considers necessary to build up the defences of the country for any purpose that the situation may warrant. It gives him the power to hire assistants, to fix their remuneration, and all of that kind of thing.
Our experience in the last war was that the minister did all that. He hired assistants, and he brought in dollar-a-year men who were made controllers. But the point I have in mind is that the industrialists of the country were completely protected in that mechanism by reason of the fact that they had men on the inside in control and controlling the commodity that their own organization was producing; in fact they had a direct representative in there making the laws that suited the corporation. He was paid a dollar a year by the government, but he was paid a lot of other things besides. He got a fairly good expense account, and so forth, but he was also paid his salary by his own company. In the first analysis he was working for his own company; he was controlling for his own company, and he was seeing that his own company's interests were protected. The point at issue is this: he was working for the country, but he was in control of the commodity that his company produced. In the allocation of materials he was in a position to allocate them to his own organization. It may be necessary to do that again, and the

minister will do it, but at this time I do not want to see it done exactly in that way. I consider the man who produces, the worker in the plant, in the factory or on the farm, just as important as the person who has an investment in the industry.
If the minister finds it necessary to organize in the same way as he did in the last war,
I suggest that this time he should also bring in representatives of the people who actually produce. I would not suggest that the minister call them in and give them permanent appointments. I think it should be done in the way I suggested the other day. The Department of Labour is one of the most important departments of government. Particularly in a time of war they have a terrific problem to handle. They have upsets in all directions. If you are to get production, that department has to run fairly smoothly.
In this legislation the Minister of Trade and Commerce is given the responsibility of reorganizing the economy of this country, putting it to work and fitting it to the needs to the extent that he thinks the situation requires. If he follows the pattern set in the last war, under this legislation he will call in representatives of industry and find out their requirements. He will ask for their co-operation. He has already indicated to the house that he gets that co-operation a hundred per cent. He is amazed, he says, how co-operative industry is. That is fine. You indicated to them in the last war that you can work with them. This time it would be much easier to get the job done; but the minister has not tried to get the co-operation of those on the other side of the tracks. He has never taken in the worker and through his representatives said: We are going to turn the economy of this country around; you are part of the mechanism; you have well-developed, fairly sensibly led unions, and we are going to ask for your co-operation; we want you to come in and help us in swinging the economy around.
Without actually making them controllers as such, my suggestion the other day was that the minister should set up industrial councils in the basic industries, such as steel, coal, packing houses, and so forth. All it means is that you call in one or two representatives of the union who, with the employer, sit down with the Department of Labour, and through their contact inside will be able to go back to their respective unions and report exactly what has been done, why it is being done, and why it is necessary. As I have seen it in the past, and as it is today-because fairly recently I talked on this subject to responsible people who are heads of unions-that has not been done.
Essential Materials (Defence) Act
I want to say this also. Having in mind the fact that the enemy we are fighting this time has already infiltrated this country-he has his agents and his cells built in that stratum of society, because that is where he can do you the most damage-something along that line should be done. The minister and the industrialists may be great organizers. He may get the best machine production in the country that it is possible to get, but if someone is in charge of those who produce with that machine and is able to pull the pin on you when he likes and thereby leave you without full production, you are in a pretty sad spot.
Having in mind the fact that these cells are there and these agents are very vocal, the responsible people in the unions who have, to fight that kind of thing are merely out on the sideline as spectators. They cannot get up and talk to their people with any authority, or with the respect they would command if they were placed in such a position that they know what is being done on the inside, and are partners in what is being done. If you give them that status they can go back and speak with authority, and will thereby be in a position to influence to a much greater extent the people for whom they work. I just leave that thought with the minister. If he is obliged to use the powers given him in this legislation at this time I would ask him to make those who produce a partner in the machinery that he is developing for production services. I think that is absolutely necessary.
There is another observation I should like to make. It has to do with the development of new plant, if it is necessary, or the conversion of industry for wartime purposes. The facts and the records speak for themselves. Industry was completely concentrated in the two central provinces. I said it was not good in peacetime, and it is definitely not the thing to do in the kind of war that we might expect. It is not the thing to have your war production concentrated in some central spot where it might be knocked out overnight.
The minister pointed out that the national income was around $16 billion, with a potential of $17 billion this year. If you take a look at that potential production you will see that it is largely concentrated in the two central provinces. There is nothing in the east. There is lots of room for it there. If you are to produce bombs, shells, small arms, and guns, the logical and most economical place to produce them is the closest point to the raw material. If you are to fight a war in Europe, the shortest route to Europe for shipping supplies of that kind, or to the

Essential Materials (Defence) Act other member nations of the North Atlantic pact, is on the north Atlantic seaboard, and the shortest cut to there is from either Halifax or Sydney. On the island of Cape Breton particularly you have the coal, the steel and the transportation facilities right at your back door. The whole thing can be done there in the one spot. There is a huge surplus of labour in the maritime provinces that does not want to be shipped out. They would like to stay home. The government could kill two birds with one stone; it could properly decentralize production machinery, and at the same time give work to people who have not had it since the end of the war, as well as to hundreds who are coming from the schools and who have no place to go, except to go somewhere else. There is plenty of raw material and labour, and it is situated right at the back door to Europe, so it can be shipped to the other free nations of the North Atlantic pact.
The minister has the responsibility this time, and will have the benefit of the lessons he learned during the last war. We could be excused then for some of the mistakes we made, but we cannot be excused this time. I should think that war equipment and plants built this time will either stand ready for operation or be in actual operation for a long time. I should like to look at it as a permanent arrangement, because the international picture does not look good and is not going to -clear up quickly. I say this because there are some pretty sensible people in the maritime provinces who will -co-operate with the minister if they -are given the chance.
Another disturbing factor is inflationary prices. It is amazing what the propaganda machine can do when it is turned on, given the proper voltage and turned in the right direction. We left Ottawa in the latter part of June, when the situation in Korea was just developing. The first broadcast I heard after leaving Ottawa was that the people of Canada were hoarding sugar, hoarding this and hoarding that, with the result that prices were beginning to go up. That is a lot of nonsense, and I do not think any sensible member in the committee would believe it. How much stuff can the people of this country hoard?


Clarence Decatur Howe: A terrific amount.


Clarence Gillis: The incomes of eighty per cent of the people of Canada are such that they are just living from week to week. They can get three meals a day, and they might be able to pay their rent, but they cannot afford to buy better clothing. What are they going to hoard? If there is any hoarding it is done in the upper brackets among those who wish

to fill their cellars-and I am not even suggesting they do it. That hoarding suggestion is merely a slogan that was coined to hide what was being done by people like Canada Packers, who stored several million pounds of butter not long ago until they got a price increase for it. Hoarding was merely a slogan to cover them while they created an artificial shortage and got a price.
At the same time as this hoarding cry was going up, and at the same time as prices were increasing, President Truman was broadcasting to the people of the United States, telling them not to be disturbed, and pleading with them not to raise prices. There is no shortage; there is more sugar in storage in the United States and Canada than there ever was in the history of either country, and the potential supply never was so great
Nevertheless that price cry went up. We know why. One or two people in this country control sugar; they pull the strings. They can cause shortages when they like. They can create artificial shortages and raise prices whenever they feel like it. I hope the minister is not falling for that nonsense about hoarding, because all the hoarding that could be done by the average person in this country affects the picture very little.
The minister does not want to put on price controls, and perhaps if I had to administer his department I would not want to, either. There is a good deal of work in connection with it, heavy responsibility, and one would have to stick to his office and do a job. Yet there is no need for me to tell anyone in this chamber about the benefits of controls during the last war. The Minister of Finance did that.
At the beginning of the second world war the then minister of finance, Mr. Ilsley, stood in his place and told the House of Commons that price control was the worst device the world had ever known; but he had to get into it later on. Self-discipline did not work in the early days of the last war, with the result that the government had to impose controls. Then, in the latter part of the period of the war we heard the Minister of Finance telling hon. members who sit immediately to my right, and who were demanding, "Off with controls; back to free enterprise; up with prices; down with wages," and all that kind of thing, that controls were the greatest device ever invented by man, and that millions upon millions of dollars had been saved for the Canadian people. He had the facts and the figures to prove it.
If the government does not want to put on price controls, then the next best device is to hold down prices. They have got to be held down. As to the excess profits tax, I know

the minister would not fix any unreasonable figure as the measure of profit which could be received. Perhaps he could take a base around 1944 or 1945, and state that that would be a reasonable profit. My view would be that even the base at that period would be unreasonably high; however, he could pick that if he wished, and anything beyond that could be classified as excess profits. There would be no use in raising prices because the excess would be taken from them. There weuld be no incentive to increase prices if the extra amount had to be paid back in taxes.
I suggest to the minister seriously that most of the basic industries in this country feel that within the last year they reached a levelling off. We see an organization such as the automobile workers making a five-year contract. It is not an easy thing to tie the average workingman to a contract for a period of five years. In that contract there is an escalator clause making provision for changes in the cost of living, but they are not in a position to negotiate on the price increases. Then there are other unions that in good faith a few years ago bargained on a longterm basis for the purpose of stabilizing the whole economy. Mine workers did the same thing when they tied themselves up under a two-year contract, with no escalator clause. They cannot open that contract. They felt that they were safe in tying it up for two years; yet their wages had been eaten into by the increased cost of living.
There will be unrest in those industries; that is what I am trying to say. Right now basic steel is about to make a contract. I know they were figuring on signing a two-year contract, but with prices running away they are going to hesitate, because they will have no assurance that prices will remain stable.
This part-war part-peace economy cannot be stable unless some device is used whereby these people will be given some assurance that there will be stability in prices. I do not believe it is true to say that had we not taken off controls and relieved the pressure, the stresses and the strains, we would have had a bad time in the immediate post-war period. I do not think that is right. There was considerable pressure all right. We remember all the industries who wanted to make more money and to take advantage of the shortages in consumer goods. There was plenty of political pressure brought to bear then, and people were pulling the minister in all directions. I do not think anything would have happened to the economy of this country except that which was beneficial. My conception of our price control machinery and our subsidies was that we never needed
Essential Materials (Defence) Act them more than we have needed them from 1945 to the present time. The fact that the United States did put decontrol into effect rapidly affected us to some extent because of our close connection with them.
I want anyone to answer this question: How many points has the cost of living advanced in Great Britain since the end of the war? Yet they have maintained their controls. I know because I saw the figures a year ago. From 1945 until about the middle of last year their cost of living had risen by only one point; that is all. Ours has run away. In addition, mind you, wage increase after wage increase was given in that country. They held their prices down with subsidies. Certainly they did, and despite all the ballyhoo, propaganda and nonsense that you see about Great Britain in the North American press, the progress she has made since the end of the war, with the machinery she has evolved, is greater than that of any other country in the world. That is a fact. Do not forget that Great Britain came through a war and was devastated. Compare Great Britain today with France, Belgium and the other countries that faced a similar situation.
Great Britain is a country that must export about fifty per cent of what she produces in order to live. I am not saying these things for propaganda purposes at all, because I am a Canadian and I am going to live in this country. I want to see the best possible devices developed for the people of Canada, and I say there are many things we can learn from the type of experiment they are making in Great Britain. We are told that we cannot institute price control because it is going to do this, that and the other thing. Nevertheless the trend is in that direction, and the more study and attention we give to it the better.
You have to hold prices down somehow if . you expect to sign agreements with the organized workers of Canada. Prices must be held down. The hon. member on the other side of the house who made his maiden speech a few moments ago-and I compliment him on his initial effort-said a lot of things that we have been talking about in the house for the last ten years. He said that the hon. member for Rosetown-Biggar skirted the question of wage control. He did not. Older members of the house will know that for the last ten years we have put our formula on paper many times. We are not ducking the question of wage control. The fact of the matter is that wages are controlled now, and there should be a proper price control system imposed, to be coupled with a certain measure of wage control. They go together, and you cannot help it.

Essential Materials (Defence) Act Prices are controlled now for the farmers. Government agencies fix prices, make initial payments and subsidize the industry, whether it is fruit, wheat, or what have you. I do not think there is a farmer in Canada who would want to get away from that system. They at least know what they are doing. They know what price they are going to get for their crop. They have some idea about marketing, and there are responsible people on these boards doing that kind of job for them.
Consumers are also entitled to have the government provide some protection, because I do not believe in fighting with the boss to get ten cents on my wages and then telling John Smith, who heads Canada Packers, to add twenty cents to the cost of living, making me ten cents worse off than when I started. Some responsible person in the government must draw the line at the point where that kind of economic anarchy shall begin or end. I definitely believe that if you are not prepared to face price controls, if you do not want to hold down prices by way of subsidies, if you do not want to control the incentive for runaway profits by the introduction of some measure of excess profits taxation, you will have to enact legislation against profiteering.
The price of sugar has risen about 3-1 cents since the beginning of the Korean war. I think that is a straight steal. I do not think the earning position of any corporation in this country warrants it. I also think it is not patriotic. It certainly is not giving the government the support they should receive at a time like this. If you do not get such support voluntarily, then I think you will have to enact some kind of law against profiteering. I think we should read the report of the prices committee again to see the kind of thing they discovered. A company like Canada Packers admitted that they held butter in storage. They said: Yes; we forced the price up and made ourselves a couple of million dollars extra profit, but that is business, and there is no law against it. The only difference between them and A1 Capone is that there was a law against Capone, and he had a gun. He had to do it the hard way. I consider it theft just as what A1 Capone did. The only difference is that it was legal.


Stanley Howard Knowles: They caught him on his income tax.


Clarence Gillis: I know that the minister knows all these things as well as I do. I want to assure him that, so far as we are concerned we consider controls necessary. If he is prepared to institute that kind of legislation, if it is made necessary, then he will have our 
support, even if he does not have that of anyone else, in enforcing such controls and seeing that the right thing is done. I can assure him that we will help him in every way we can. The last time it was industry and the government. This time let it be industry, the government and the worker. Let such a mechanism be developed that we can remove suspicion, place the worker in the position where he too will have representation, where he too will plan the economy and will know exactly what is going on on the inside. Then he can go back and say to his people: I was there, I agree with that, I think it should be done, and this is the way it should be done. His people will have some respect for him because he has been elevated, has a status, is on the inside and knows what is going on. Then he can talk to that little pipsqueak with the line of chatter who represents Uncle Joe in this country.


Clarence Decatur Howe: Mr. Chairman, my hon. friend has covered a good deal of territory. I always like to listen to his speeches, because he is a realist. I also try to be a realist. However, I should like to correct one or two impressions he has of the last war. We had controllers for industry, and some of them were dollar-a-year men, but they were not made responsible for their own industries. We did not follow that policy. We appointed a cement man to control steel, a glass manufacturer to control coal, and a banker to control oil. We did not select a man from the industry concerned to control that particular industry. During the war we did our best to bring labour into the orbit of government administration. My hon. friend will remember that we tried to develop labour-management councils in war plants, and with some success. I think a good many are continuing at the present time. We were not successful in getting councils in one hundred per cent of the plants. There had to be good labour relations in a plant before we would institute a labour-management council, and that was not found in all factories.
Then we had the labour councils meet with us in Ottawa to discuss the over-all policies. If we had to face the same situation again we would build on the experience of the last war, and I would hope do a better job in that regard. I think we realized then, just as we realize now, that we must have the co-operation of labour as well as management to do an efficient production job.
I do not know that I can cover the ground that was covered by my hon. friend with respect to price controls in the last war. Again I say he is a realist because he admits that we

cannot have price control unless we can also control the price paid to labour and workers generally. He and I saw price and wage control initiated in 1941, and we saw the whole thing blown sky-high by the steel strike of 1944. Price control was never fully effective after that time. The point I am making is the one that 1 mentioned before, namely, that to have effective control we must have the co-operation of every section of the Canadian people, and we can only hope to gain that cooperation under the stress of war conditions. We had no trouble at all in obtaining the co-operation of everyone in Canada during the period from November, 1941, until early in 1944. Pressures were building up; distortions were occurring; injustices were being perpetrated and perhaps accentuated. The situation was bound to blow up some time, and it was the steel strike that really ended effective price control in this country. My hon. friend says the United Kingdom has price control. It has; but it also has wage control. That country has had a freeze on wages; but reports indicate that it is facing a situation today in which the pressures are building up to a point where that system may break down. Price control is not a course to be undertaken lightly; and I sincerely believe that the legislation we have before us today represents the workable extent to which we can impose distribution and price control under present conditions.


John George Diefenbaker: A good deal has been said about price control; and the discussion today, I think, has shown parliament at its best. The discussion has been full and complete, an exchange of views in a manner that should be more typical of parliament than it is. The minister has discussed the mobilization of the nation; and if this resolution is in fact translated into legislation he will have all the powers necessary for that purpose. I now intend to ask him a question that is being asked today by a large segment of the population; it has to do with the wheat farmers of the prairies.
In connection with the British agreement there was in fact a fixation of prices and a maintenance of the wheat price at less than could have been secured on the world market. Within the last year and a half, as the minister knows, there has been a great deal of interest in what, if anything, will be. done with a view to making up for the lower prices farmers had to accept as a result of the control of wheat prices under the British agreement. That question is not asked only by farmers; it has been discussed at political party conventions, where resolutions have been passed, and I think some answer should
Essential Materials (Defence) Act be given at this time. People want to know what, if anything, will be done by way of compensating the western farmer for having been required over the years-and I am not entering into any controversial discussion now-to accept prices-for his wheat that are so much below world prices. Now, having regard to the fact that if we are to mobilize this nation, each group making up the nation must have the assurance of fair dealing, I ask him again what is the plan of the government for compensating the farmers by adding to that which is now to their credit in the pool. No one knows exactly what the amount now to the credit of the farmer is, but using ordinary powers of computation and deducting what one would expect to be the reasonable cost of operation of the board, there is nothing to indicate that the amount to be distributed would, be more than ten cents a bushel. Will any additional amount be paid, or is there any suggestion of it?


Clarence Decatur Howe: I have explained several times that the government would be in a position to consider the final payment from the pool as soon as the wheat has been sold and we can know what can be paid out. I find it difficult to understand the reference to compensation. My hon. friend is talking about the five most profitable years the farmers ever had in the peacetime history of Canada, so far as payment for wheat is concerned. I could tell him the British analysis of the situation, if he cared to hear it. Perhaps this is not the time or place for that, however; it might better be done when speaking to the farm organizations later on. Up to the present the government has never been accused of being unfair to the wheat growers of western Canada, and when the pool can be wound up I think my hon. friend will find that the government will deal with the situation in a way that will be fair to the farmers.


John George Diefenbaker: Is there any hope that
there may be some compensation?


Clarence Decatur Howe: Well, my hon. friend can hope for anything he likes.


George Alexander Drew: As I indicated earlier, Mr. Chairman, I believe the detailed discussion of this subject can best take place when we actually have the bill before us. Nevertheless I should like to put forward certain features of this resolution which it seems to me should arouse the interest of hon. members and cause them to examine with a great deal of care the exact extent of the powers which will be conferred by the bill when it comes forward.
470	HOUSE OF
Essential Materials (Defence) Act
The situation with which we are confronted is this. At a time when we found ourselves getting rid of the carry-over of controls from the last war, we are called upon to consider not only rearmament and the provision of money for that rearmament, as well as the necessary manpower; we are also asked to confer certain over-all powers which are said to be necessary for the purpose of carrying out most effectively the industrial and other activities by which we may prepare ourselves for defence on a much larger scale.
It has been generally conceded that part of the very system to which we are opposed is the control of the economy of the country by the state. Quite apart from whether a particular form of control may be approved by some part of the community, the fact remains that there has been general agreement that it is not desirable to place the whole economy of the country in the hands of any government. There has been fairly general agreement that the best way to protect our system is to have it operate as a free system in which the word "freedom" applies to all human activities no matter what they may be, as long as they are within the law and are consistent with the best interests of our people. For that reason it does seem that we should examine with considerable care these legislative provisions which will once again bring under the wide powers of the government the daily lives of our people.
The thing that has impressed me in the explanation given today is the similarity of certain statements that have been made to other statements that have been made, in connection with both the over-all preparations for national defence and the provision of the money required for that defence program. Members of the government have raised some objection to the suggestion that there has been complacency on the part of the government in presenting its case to this house. That was heard on a number of occasions when we were dealing with the resolution which had to do with national defence. There has not yet been the same opportunity to discuss the financing of this program which was placed before us last night, but once again the suggestion of complacency has been made. Today we have placed before us a general statement regarding the necessity for assuring the effective channelling of resources and supplies, so that our industrial and other production may be most effective for the purpose of building our national strength to meet the threat in front of us. Once again, however, there is this same tendency to leave the impression in this house, and to convey the impression beyond this house, that while there is a 

serious situation there is no impending threat on a scale that calls for tough words and an appeal to the people of Canadian to recognize the tremendous dangers which confront them.
It is true the Minister of National Defence spoke of the threat of communism. Having done so he then conveys the impression that we are going to take our place in the collective defence of freedom by one active army brigade for the defence of Canada, and one special brigade for the United Nations. We are dealing in terms of less than 10,000 combatants while those who present the threat to us are dealing in terms of many millions of men fully trained and armed to the teeth. Again in the case of the budget that was presented to provide for this limited recognition of the threat, although provided for at great expense, we had this effort that we must accept described as a hill on the road to peace. What a gentle and easy term to describe the threat that is before us, the threat implicit in the words of the Prime Minister, who accepted a statement that the really critical period may well be within the next ten months.
Where at any point in the statement of the Minister of National Defence is there a recognition of the fact that our fate may be determined within ten months? Where in the statement of the Minister of Finance is there a recognition of this challenging thought? Where in the statement of the Minister of Trade and Commerce is there any suggestion of a threat of the nature that has been exposed to us by the tragic events in Korea in these past few weeks? The Minister of Trade and Commerce has left no doubt that the powers which would be conveyed by the bill, which we have not yet seen, would be wide and sweeping powers. He has indicated his belief that those powers are necessary so that this country may perform the task to which it is committed. I think that with very few exceptions, if any, the hon. members of this house are prepared to support every appropriate piece of legislation which will strengthen the defence of this country, both from the military and from the economic point of view. But here again we have the suggestion that, great though the powers may be, there really is not the urgency which should lead us to regard those as something that will be exercised in carrying out this task. The Minister of Trade and Commerce, having admitted without reservation that the powers are wide, did point out that the government will be in a better position to make arrangements with manufacturers and others if it has this power in reserve.
I believe that the words the minister used were these, or if not that they accurately

interpret the words that he did use. A word from the government is more effective if behind it there is a power that can be applied. We will all agree that is so. What the minister is really saying when he uses those words is, give me a club and I will do the job. At a time, Mr. Chairman, when we are seeking to preserve a parliamentary democratic system I strongly urge the members of this house to bear that in mind when the bill comes before us. In conferring powers upon the government as a whole, or any member of the government, we do have some concern about the possibility of passing a law which is only intended to be used as a club, even if it is not intended to apply the club except as a threat. I hope that when this bill comes forward it will state how the authority is to be exercised and will to the greatest degree possible retain under the authority of parliament that responsibility which is part of the very essence of the democratic system we are seeking to preserve.
We have no intention of voting against this resolution. At the moment the resolution stands in general terms. But before passing from this resolution stage and while waiting for the bill itself I urge the government, no matter what may be the content of the bill now, to recognize that part of the process of preserving democratic freedom is to retain the authority and the responsibility of parliament itself.
Resolution reported, read the second time and concurred in.
Mr. Howe thereupon moved for leave to introduce Bill No. 5, respecting materials and services essential for the purposes of defence and national security.
Motion agreed to and bill read the first time.



BUSINESS OF THE HOUSE


[Stage Direction]
On the order:
Second reading of Bill No. 3, an act respecting the Canadian forces.-The Minister of National Defence.
George Alexander Drew: I thought, Mr. Speaker, that Bill No. 2 was to come next.


Brooke Claxton: As to that, Mr. Speaker, no order was indicated last night.


George Alexander Drew: Yes, there was.


Brooke Claxton: The Minister of Public Works (Mr. Fournier) as reported at page 442 of Hansard said:
Tomorrow we shall continue debate on this resolution. Then we shall proceed to the second reading
Business of the House of Bill No. 2, an act for granting to His Majesty aid for national defence and security, and second reading of Bill No. 3, an act respecting the Canadian forces.
He gives them in order, of course, but it was not indicated which would be first. The fact is that the other place is waiting for legislation to deal with, and it is rather important, for reasons which will appear to hon. members, that the actions taken consequent on the adoption of Bill No. 3 be taken just as soon as possible. If the bill could get to the Senate today, it would certainly be of convenience to them in order to enable them to deal with it; it would also enable those consequent actions to be taken.


George Alexander Drew: I have no desire to raise an objection simply upon the ground that we were informed that Bill No. 2 would be dealt with first, although there are good reasons for adhering to that procedure. I suggest, however, that there is another reason why we should adhere to the understanding that Bill No. 2 would be dealt with first, namely that Bill No. 3 is in effect consequent upon the adoption of Bill No. 2; and the order in which the discussion has been proceeding is in the order that would be followed if Bill No. 2 were now dealt with. I for one am not aware of the reasons, suggested by the minister but not stated, for there being such urgency in dealing with Bill No. 3 at this time.


Major James William Coldwell: May I, Mr. Speaker, support the leader of the opposition (Mr. Drew) in what he has just said? Owing to the manner in which we are being pressed this session, it is difficult for some of us who want to participate in the discussion of some of these resolutions and bills to prepare ourselves for those discussions as they arise; and when we learn at night that a certain order is likely to be followed, we naturally try to get prepared in the order in which the bills or resolutions will arise.
I do not know what other business the government can proceed with at the moment, but I should like to see this discussion deferred until say eight o'clock, so that we may have an opportunity to get together the necessary material. . Some of us have not research groups behind us for the purpose of assisting us in making preparations.


Brooke Claxton: That suggestion would be quite agreeable. It would be more convenient to the other place to have one bill before them earlier, and it was thought that the third one would be easier than the second. But if there is any objection at all, we will adhere to the order announced last night.

Defence Appropriation Act DEFENCE APPROPRIATION ACT



PROVISION FOR GRANTING TO HIS MAJESTY AID FOR NATIONAL DEFENCE AND SECURITY

Brooke Claxton: the second reading of Bill No. 2, for granting to His Majesty aid for national defence and security.


George Alexander Drew: Before I speak on this bill, Mr. Speaker, I would ask if it is the intention of the minister to make any supplementary statement now that the bill is before us.


Stanley Howard Knowles: The minister whose name
is on the bill is not here.


Brooke Claxton: No statement now.


George Alexander Drew: The bill before us, Mr. Speaker, gives legislative expression to the intention of the resolution which has been before us for some days and which has led to an extensive discussion of our national defence problems. While the bill stands in the name of the Minister of Finance (Mr. Abbott), it in fact presents to the house proposals which have been dealt with by the Minister of National Defence (Mr. Claxton).
On second reading we are dealing with the principle raised by the bill. The principle inherent in this bill is the raising of money for the rearmament program and for the extension of military services called for by the international crisis which has become more apparent within these past two months. My impression is that almost all hon. members are in full accord with the principle that we should support those measures which are called for by Canada's participation in the plans for collective security which have been supported by this parliament.
Hon. members, however, have an obligation to make sure by every means within their power that whatever finances are provided will be used most effectively for the preparation of those defence forces which are called for by the international situation today. I have no intention of enlarging upon the details which have been discussed so extensively already. I do want to point out, however, that we still are not in a position to say what our real state of preparation is at this moment, nor are we in a position to say that when we have approved of those great expenditures there will be any assurance that they will be devoted to the most effective purposes in preparing our defence forces.
Last June this house approved of the resolution adopted by the security council, that the members of the United Nations should take joint action to restrain aggression in


Korea, and carry out the principles of the United Nations charter. That therefore is not in issue. At the moment the type of force to be sent to Korea is not greatly in issue. We now recognize the simple fact that so far as land forces and air forces, or combat air forces, were concerned, we simply did not have them for service, either in Canada or elsewhere, at the time this situation arose. We therefore accept the fact that for the defence of Canada, and for any other commitments, we should be doing whatever is necessary to assure that with the greatest possible speed defence arrangements will be made so that we can defend Canada and assume the obligations which are set forth in the preamble to this bill.
The Minister of National Defence (Mr. Claxton) has pointed out that on three occasions in the last session we urged the appointment of a committee on national defence. He put that forward as a reason we should not hear any more about it now. My own impression is that the condition in which we found ourselves this last summer is one which supports with the utmost emphasis the need for a committee of that kind. If such a committee had been appointed at the time when this proposal was made last June, to say nothing of whether or not it had been made on the several earlier occasions that it was put forward, hon. members would have known more about the real state of our defence. That is past. Nevertheless we cannot ignore that past until we have some assurance that we have taken appropriate steps to prevent the same thing happening again. There is only one way we cam, namely, to have a committee on national defence set up now so that it may examine the plans, either in open session or in secret session as decided by the committee, and obtain that information which will make it possible for that committee to report to the government, and to hon. members, as to the real state of defence forces. After all, the state of those defence forces is the obligation of parliament and not of the government alone.
If these statements that we are reading in the press and hearing over the radio do correctly interpret the world situation as it is today, then, we are simply not operating in terms of reality when we accept the proposition that during these critical months immediately ahead we are going to prepare only two brigades, one for special service and one for the defence of Canada, and that there is going to be the slow increase in the strength of the Royal Canadian Air Force which is given priority as the major branch of our defence preparation.

There is none of that sense of urgency which is conveyed to us by all that is happening today. Korea is occupying the mind of every one of us. We must remember, however, that Germany could become another Korea on a far vaster scale, with implications that go far beyond anything that is brought to us by the events in Korea.
There are other places where trouble could start, and it could start at any time. Our one hope is to show now, and with the utmost speed, that here and in the other free countries we are preparing with a speed and a determination which will convince the men in the Kremlin. Does any hon. member think that the men in the Kremlin are going to be greatly impressed by the news that some months from now we are going to have a special brigade available? In the face of their 175 fully mobilized divisions and their 350 divisions which could be in the field in a very short time, is one special brigade, with three or four thousand combatants, going to leave very much impression in their minds of the urgency, vigour and determination with which we are playing our collective part in the responsibility of saving freedom for ourselves and for others? That is the issue before us. We can go only as far as the government is prepared to go. We can however seek to impress upon the government that this is not their responsibility alone, that the responsibility for preserving freedom is that of every Canadian, and that every Canadian has a direct, very deep and very real concern about the adequacy of the steps being taken.
Other governments following the same constitutional practices we respect have adopted the same method for keeping members informed. The system of committees is not new. We employ it in regard to many departments of government, and I submit that, far from the Department of National Defence being one which should be excepted from that general practice, if there were not other departments the Department of National Defence is certainly one which should be assisted by the constant supervision and suggestions which would come from a committee of that kind.
The Minister of National Defence (Mr. Claxton) has said on other occasions that when members of different parties join in a committee of that kind there is an obvious tendency to forget party differences and to work together for the purpose of making the committee as effective as it can be. I am certain that if such a committee, made up of members from both sides of the house, were appointed, members with military experience in the various branches of the armed services
Defence Appropriation Act of this country, we would find many if not all the reports and recommendations presented as unanimous reports and recommendations. Hon. members would know from those committee members who have a background of real experience in this field that the stated policies of the government were being carried out in the most effective way, and that the money to be spent would be spent to the best purpose.
Hon. members are anxious to see all these things done as rapidly as possible. They certainly will support the provision of the money required; but at the same time I submit that all members of the House of Commons should be seeking a practical way to obtain the greatest possible information about the most important subject we have before us.
Therefore, Mr. Speaker, for the purpose of bringing this matter under direct consideration by all members of the house, I move, seconded by the hon. member for Lake Centre (Mr. Diefenbaker):
That Bill No. 2 be not now read the second time but that it be resolved that while this house is ready at all times to provide for our national defence and to meet our obligations under the United Nations charter, the North Atlantic treaty or any other similar instrument for collective defence that may be entered into by Canada, it regrets the circumstances connected with the introduction and prosecution of this measure, namely, that the government has refused and still refuses to allow a special committee on national defence to be appointed by this house during this session of parliament so that the house will thereby be able to ascertain the needs and requirements for such national defence and for meeting our aforesaid obligations.


Mr. Speaker:: The question is on the amendment. I have a serious doubt as to whether the amendment is in order. However, I will put it, as I understand the house would like to vote upon it.


Mr. Brooks:: I was paired with the hon. member for Gloucester (Mr. Bichard). Had I voted I would have voted for the amendment.


Mr. Henderson:: I was paired with the hon. member for Hastings-Peterborough (Mr. White). Had I voted I would have voted against the amendment.


Major James William Coldwell: Mr. Speaker, I do not intend to delay the house for very long, but I want to reiterate the position we have taken regarding the rearmament program. We are behind the effort of the government to provide for the defence of this country and to provide support for the nations allied with us through the United Nations in the endeavour to prevent aggression throughout the world. On numerous occasions in this house my colleagues and I have placed before parliament the view that under no circumstances should there be any profit to any individual out of the provision of the weapons and the munitions of war. That view, of course, has been very largely shared by many who do not support this party in the house.
I regret very much that after the last war steps were not taken by the government to retain the machinery of production for which the country had paid, and which would have enabled us to carry out the rearmament program largely on a nationalized basis. I realize that to come before the house at the present time and urge that the factories, industries and so on engaged in the production of those things usually regarded as munitions of war should be nationalized would delay the effort we all want to see carried out as quickly as possible. Consequently I am urging that in these large expenditures we are going to make in connection with rearmament we as a house should direct the government at least to nationalize the production and sale of what I might call the principal armaments and weapons of war.
We have gone some distance in that direction, I am glad to say. As the minister indicated, the bulk of our shells, bombs and so on are being manufactured in our own efficient Canadian Arsenals Limited, owned by the nation, from which, therefore, there is no private gain. Over the years I believe a strong determination has been growing up in the country that some time or other we should endeavour to take the profit out of war; and, as I say, I regret that when the last war ended and we had an opportunity to retain in our hands and under our own control sections of industry that were manufacturing arms and

munitions, we did not take advantage of that opportunity, in order that we might be able to do something that I believe many of us, and certainly all of us in this party, think is desirable. I well remember the lengthy and strong speeches made by many members of this house when the defence purchasing bill was under consideration here. Particularly I remember the speeches by the minister in charge of the bill, the late Right Hon. Ian Mackenzie, who on March 10, 1939, as reported at page 1767 of Hansard, said:
The government, If I may speak for them, believe in the principle of equality of sacrifice; that in wartime men should not be required to offer their lives and limbs while those who provide the weapons of destruction have even the possibility of reaping undue profits.	-
That sentiment was shared by many hon. members. Last session we endeavoured to put into the defence purchasing bill a provision limiting armament profits but which the Minister of Trade and Commerce (Mr. Howe) stated could not be wholly carried into effect. That may be so, but at least the principle might have been accepted, and we might have endeavoured to exercise a control which would have eliminated the criticism that must arise if we allow profits to be made out of the provision of materials and instruments of war. Today I am urging the house that we accept the principle that at least the production and sale of principal armaments and munitions should be brought under national control, and I use the word "nationalized" in that respect. I remember that at the same page of Hansard Mr. Mackenzie said this:
The government is determined that in peacetime, where private industry must be utilized, there shall be the strictest possible regulation of profits both in the interests of the taxpayers and in deference to public abhorrence of profits made from products which involve destruction of human lives and misery among nations.
I am not going to put on the record again all the quotations that were put on Hansard, particularly by the hon. member for Kootenay West (Mr. Herridge) during the last session when we discussed a similar proposal. The record is there, and those who wish to read what he quoted at that time can do so. I recall of course that he quoted extensively from articles that were written by the present leader of the opposition (Mr. Drew), and especially from a series of articles entitled, "Merchants of Death". I remember that the previous leader of the opposition, Dr. Manion, upon the outbreak of war in 1939, after referring to a statement he had made before the house was called, made some interesting remarks along the same lines. Dr. Manion quoted from a statement he had issued to the press a day or two before we met, pledging
Defence Appropriation Act support of war against Hitler, and he said this, as recorded on page 16 of Hansard of September 8, 1939:
At the same time, in giving this co-operation, it must be the steadfast determination of all of us that there be no profiteering of any kind-no unfair advantage taken by anyone-no enrichment for some while others are offering their lives.
Then in commenting on that in the house he said this:
I repeat that I consider that principle perhaps the most important that the government can adopt in carrying out this co-operation. I believe that all Canadians desire that that be carried out, and they desire it ardently. They feel that anything made in the way of excess profits by anyone at a time like this is, in a sense, blood money. The idea of some growing rich on the suffering of their fellow-Cana-dians is repugnant to everyone. It must not be permitted; there should be an absolute and rigid control to prevent it.
We concur in that view. In the house we have argued for the limitation of profit, and for the reintroduction of excess profits taxes at this session. In the budget that came down last night that was not done. I do not propose to criticize the budget just now. One of my colleagues will do that when the occasion arises. I want to place before the house as strongly as I can the belief of a great many people in this country, that if we are going to prepare for our defence and if we are going to ask, as we must ask, many of our young men and-if the worst came to the worst, which God forbid-many of our young women once again to don the country's uniform and stand steadfastly against aggression, the profit must be taken out of war.
In order that I may put this squarely before the house I am going to move, seconded by the hon. member for Melfort (Mr. Wright):
That Bill No. 2 be not now read a second time but that it be resolved that in the opinion of this house the production and sale of munitions and armaments should be nationalized.
I do not want to delay the house but I feel that, having expressed this view so frequently and as strongly as we have, I should place the idea before the house in the form of an amendment. Though the resolution suggests, as it must under the rules of the house, that the bill be not now read a second time, the word "now" is the governing word. If it is defeated then we can proceed immediately to the second reading of the bill, but I hope the amendment will be supported and carried by this house.


George Alexander Drew: Mr. Speaker, I am entirely in sympathy with the expressions which have been used by the leader of the C.C.F. group in regard to profiteering in the defence requirements of this country. There is, however, one difficulty raised by the wording of
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Defence Appropriation Act the amendment which I should like to point out. The amendment calls for the nationalization of the production of munitions and armaments. As the hon. member for Kose-town-Biggar (Mr. Coldwell) has correctly said, I have advocated for some considerable time the elimination of profit from the manufacture of weapons of war which have no other use than for military purposes.


Major James William Coldwell: That is the intent of this amendment.


George Alexander Drew: I recognize that is the intent, and for that reason I have said I agree with the purpose of the amendment. I have not changed any view that I have ever expressed in regard to the making of private profits, and particularly what may be described as profiteering, in the weapons which could have no competitive sale. After all, rifles, machine guns, artillery weapons, submarines and things of that kind have no purchasers but governments. Believing as I do in a free competitive system, I also believe that the thing which protects that system is the competition. When there is no purchaser but governments for things of this kind, I certainly do not think they should be the basis of profit.
I have had occasion to express my opinion at different times about that type of production, particularly in the international field. I recall that one of those companies, which was one of the worst offenders in that field, was a company that sold only to governments throughout the world. This particular company had no competition because it had the overriding patent. It sold with complete and impartial disinterest to its own government, to Germany, to Italy, to Japan and to every other country. I mention this simply as an example, and it was the Electric Boat Company, which now wholly owns what was a national plant in Montreal only a few years ago. I object strongly to that type of activity in this field. Holding these views just as strongly as I do, however, and holding the very strong view that before we leave here we should have some assurance by legislation or otherwise that effective steps will be taken to prevent profiteering, particularly international racketeering in the things of war, nevertheless I regret that I cannot support an amendment which uses the words "munitions and armaments", because any clear definition of those words would embrace those other products which are today turned out by factories that are making other things as well and which, in my opinion, could not effectively be brought under a program of national production.


Mr. Solon E. Low (Peace River):: Mr. Speaker, to make our position clear, I feel 

that I should say just a word on the amendment which has been placed before the house. We look with considerable sympathy upon the sentiments expressed by the leader of the C.C.F. party on the statement he made prior to moving the amendment. We have always felt that every effort should be made to take the profit out of war. Only by doing so will it be possible for us eventually to abolish war. There is no question about that at all. We should like to see every possible move made within our country to prevent armament factories or producers from making undue profits out of the manufacture of those things which are classed as munitions and armaments. We feel, however, that to nationalize the production and sale of them would not necessarily achieve the desirable aim that is envisioned in the amendment. I believe that we had in the last war enough experience in the manufacture and sale of armaments and munitions of war in this country to assure us that even when governments enter into the production of such things they are often obliged to call in private companies to operate the factories and that they cannot get the production unless there is some incentive to produce. At the same time, however, I believe that it is possible, without nationalization, to set limits on the profits that are to be made out of the manufacture and sale of armaments and munitions of war.
The thing that I believe we should give more attention to perhaps is to get at these fellows who manipulate the international exchanges and, through the manipulation of those exchanges, are able to manoeuvre countries into war. I am satisfied in my own mind that there is there a more prolific cause of international strife and rivalry than is to be found within the country in the manufacture of armaments. For those reasons, Mr. Speaker, although we are sympathetic to the intention, we cannot support the amendment.
Mr. Stanley Knowles (Winnipeg North
Centre): I wish to say just a few words, Mr. Speaker, on this matter. I note that the last two speakers have indicated their sympathy with the aim of our amendment. Yet they have indicated, for the reasons they have stated, that they feel they must vote against it. I may say that it took a good many years of contending that the production of ammunition and bombs should be nationalized in order to achieve that objective. I was glad that the Minister of National Defence (Mr. Claxton) was able to tell us yesterday that by far the larger part of the ammunition and bombs that we are manufacturing in this country is now being manufactured in our own arsenals. There was a day, no doubt, when sympathy was expressed with the aims

of those of us who sought that way of doing things with regard to ammunition and bombs. Accordingly, I feel that we must keep moving in that same direction with reference to other materials that go into the waging of war, particularly in the field of direct armaments such as guns, tanks, armoured vehicles and items of that kind.
The objection that the leader of the opposition (Mr. Drew) has made to our amendment is that some of these things to which I have just referred-for example, armoured vehicles and tanks-are made in factories which in peacetime make other kinds of vehicles or in wartime make both vehicles for use in war and vehicles for peaceful purposes. We recognize that difficulty, particularly now that we are right into the midst of a defence program. That is the reason for the emphasis placed in our motion on the production and sale of munitions and armaments. In this motion we dio not ask for the outright taking over of every factory that happens to produce within that factory, along with peacetime needs, some armaments and munitions as well. That is another question. Our contention, however, is that to the extent that a factory is engaged in the production of direct munitions and armaments, it should be nationalized and should be under the control of the government. Similarly, we contend that the sale of these articles to the government should be strictly under government control, so that profiteering in this line in which there is no competition, as the leader of the opposition has suggested, can be completely eliminated.
We welcome the expressions of sympathy that have been indicated for our point of view. But we feel that more than sympathy with that point of view is required at this stage in human history. As the hon. member for Peace River (Mr. Low) has said, perhaps one of the ways in which to get rid of war altogether would be to take all the profits out of it. When are we going to do it? At the end of world war VI or world war VII? Some day when it is too late? I suggest that now is the time to take action in this matter, and I suggest that more than sympathy is required. I urge that this is the time for people who feel disposed in this way to indicate that they want further progress in the direction of taking the profits out of war by bringing the production and sale of direct munitions and armaments completely under public control.
Before I sit down, I should like to put on record one other paragraph from the September session of 1939. I was not a member of this house at the time but I well remember
Defence Appropriation Act sitting up here in the south gallery, as a visitor, and listening to the lengthy speech given on that occasion by the then prime minister, Right Hon. W. L. Mackenzie King. As recorded at pages 22 and 23 of Hansard of that session, he said:
I come to profiteering. I believe I have already stated in this house that I know of nothing in the world more contemptible than that any man should seek to profit from the sacrifices which others are making. And if the laws and other measures which this government may introduce and seek to enforce are not sufficiently strong to destroy anything in the nature of profiteering, I hope hon. members of this house will bring to our attention, in a way that will also bring it to the attention of this country, what we ought to do to achieve that all-important end. There are some things that are very difficult of accomplishment. Unfortunately human nature has its weak and its bad sides as well as its strong and good sides. Sometimes it is very difficult to cope effectively with the underworld and its methods. But let me say this: I care not who the individual may be, how respectable in his own eyes or in the eyes of others he may appear, or what position he may hold; if in this crisis he seeks to profiteer, he belongs to the underworld and should be treated as one of those who menace all that is sacred in human relations.
That too is a strong statement of our point of view; and our point of view has received the sympathy of the last two speakers. I submit that if members feel as strongly as that about it, as strongly as we do, we should all do something about it as indicated in the terms of the amendment which has just been moved by the leader of this group.


Arthur Leroy Smith: Will the hon. member permit a question?


Stanley Howard Knowles: Yes.


Arthur Leroy Smith: Would he regard the truck or jeep used by the army as an armament or a munition of war as referred to in their resolution? Does he regard those as munitions or armaments? Because if he does, what they are suggesting is obviously impossible, it would seem to me.


Stanley Howard Knowles: I would agree that in this matter we will have to make progress realistically; hence what we are asking for at this time is that the procedure we propose be applied in the case of items that are used exclusively for war purposes.


Clarence Decatur Howe: May I ask my hon. friend a question. Does he know of any profiteers who made munitions in the last war, and would he care to name them?


Mr. Gibson:: Hear, hear.


Some hon. Members:: No.


Stanley Howard Knowles: That will be answered later.


John Lambert Gibson: As usual, Mr. Speaker, when the C.C.F. party start to talk about profiteering, they are being completely unrealistic; and to be fair with them,

Defence Appropriation Act I think they realize it too. Recently they had occasion to amend the Regina manifesto, after about seventeen years, and they have suddenly discovered that profits are something that are not too unrespectable. It took them seventeen years to arrive at that conclusion, and I would think that probably in another seventeen years they would amend their constitution to say that sex is here to stay, or something of that kind. They know very well that we need armaments in Canada; that the best way to get them at the cheapest possible price is to let some manufacturer have some incentive to produce them. I would suggest that the only standard of value the government can have is to have a real manufacturer with some ability, who will add up his books at the end of the year and say: I made a profit producing these things; I must have been reasonably efficient.
It is not a question of profiteering. The difference between profiteering and profits is one that is obvious to all of us. I would suggest that to tie in profits with profiteering, and make them sound as if they were illegitimate, is unfair. I would sincerely hope that whatever manufacturer takes over the production of war materials in Canada he will make a profit, because if he does I have great confidence that both the Minister of Finance (Mr. Abbott) and the Minister of National Revenue (Mr. McCann) will take most of it away from him and just leave him barely enough to keep him working hard.


Mr. P. T. Hellyer (Davenport):: The hon. member for Winnipeg North Centre (Mr. Knowles) spoke of realism. There are two practical questions I would like him to answer. First, what would he do with the factories in peacetime? Second, would he succumb to political pressure by the workers in these factories and pay them between wars to sharpen up on their bomb-making along the lines of his suggestion that parliamentary stenographers should be paid between sessions to practise their shorthand?


Stanley Howard Knowles: Don't be ridiculous.


Mr. Angus Maclnnis (Vancouver East):: do not know if the hon. member for Davenport's questions should be answered, for they are not germane to the question at issue. Does my hon. friend suggest that we must always keep factories that make munitions supplied with contracts, or that they must be kept operating when there is no war? I would suggest to him the situation is altogether different. We are asking young men- and we take only the best young men when they offer-to give their lives in war, whether it be police action such as we have at the present time, or whether it be a declared war against an enemy nation. If the men who do the fighting do not need the incentive of profit,


why must the people who in the safety of their places of business make the munitions and machines that the soldiers use have to be well lubricated with profitable returns?
The hon. member for Comox-Alberni (Mr. Gibson) says that we are not realistic when we talk about profits. Perhaps we are just as unrealistic when we talk about profits as the hon. member for Comox-Alberni is when he talks about wages. I generally find that people are usually unrealistic about the things that do not definitely concern them, or when they feel they are being gypped out of something because someone else is being realistic.
At the beginning of this trouble in Korea I was really horrified with the-I do not know just exactly what word to use-


Mr. Stick:: Any one will do.


Angus MacInnis: -the apparent satisfaction in certain sections of the country over the contracts that the United States by reason of the war was going to place in this country. Surely we are hard up for profitable business when we feel pleasure over business that comes to us in that way. Even if we are so hard up that we were glad to have war contracts we should have decency enough to cover up our pleasure.
Let us remember that it is abhorrent to the great mass of fathers and mothers of this country, whose sons do the fighting in this and every other war, that people should be making profits out of supplying them with the means of defending themselves and destroying others.
Apparently there is great difficulty in deciding what is a munition and an armament of war, because so many things go into war supplies that it is difficult to draw the line. But I am satisfied that there is a long list of materials that could be put in the category that this amendment would apply to. Until we have the will to do a thing there will always be difficulties in the way, but the moment that we have the will the difficulties will disintegrate into thin air.


Mr. G. R. Pearlces (Nanaimo):: All through the pages of history I doubt whether there is any more despicable figure than that of the profiteer, whether it be the robber baron of ages gone by, whether it be the dishonest contractor during the period of the Crimean war, or whether it be the war lord in more recent struggles in Asia. Therefore I sympathize with the general idea behind this amendment that profiteering should be eliminated from the manufacture of all arms and equipment and that the manufacture of all munitions of war should be nationalized. Yet, I find it extremely difficult to know where to draw the line. Modern war embraces so

many different activities that I would find it extremely hard to say that this or that particular form of production is solely devoted to war.
I am thinking at the moment of the chemical industry. In my constituency there is an explosive plant which is manufacturing explosives for peacetime uses that during war converts its knowledge and know-how into producing explosives, partly for peaceful purposes and partly for munitions of war. One could go on from there to the forest industries, which are closely connected with our war effort, and all the industries connected with the supply of different types of vehicles, their spare parts and so forth, many of which are closely interwoven with the production of armaments, many of which must be maintained in peacetime in order to produce the requirements of peace, and yet will be able to turn over at very short notice to the production of armaments.
I deplore the idea of profits being made from the provision of armaments. The profit incentive no doubt is there. But even soldiers have other incentives during wartime. It was Shakespeare who said something about seeking the bubble reputation even in the cannon's mouth. And so I feel that for practical reasons I cannot support the present amendment.


Mr. G. K. Fraser (Peterborough West):: Mr. Speaker, after hearing what was said by the hon. member for Vancouver East (Mr. Mac-Innis) I thought it my duty to rise and tell of an experience I had during the last war.
A manufacturer asked me if I could get him an appointment with one of the officials in Ottawa connected with the supply of munitions, so that he might see if he could help the war effort. Through the office of the then minister of munitions and supply I secured the interview. We went to the supreme court building and saw a gentleman who, in turn, directed us to those in charge.
This manufacturer was interested in the production of dies. A die was shown to him, and he said, "Well, I believe this die could be made cheaper. How much are you paying for it?" If I recall correctly the amount stated was $14.37 each. He said that it could be made in a certain fashion and produced more cheaply, and stated that he could turn it out for a little more than $7. In a few weeks he got a contract at that price.
He began making the dies at the figure slightly more than $7, but after he got into production he was producing them for just a little over $4, and with practically no profit to his company whatever.
Defence Appropriation Act
I believe that is what most manufacturers in Canada tried to do. I am referring of course to the established manufacturers, who tried to produce the best quality of goods at the cheapest possible price, so as to save taxes increasing, and to keep down the cost of munitions. In my view those manufacturers did a good job.
I do not feel however that the government should give contracts to those who are not established in business, or who have not manufactured munitions or other articles previously. I cannot vote for the amendment because I know what the manufacturers did in the last war and the preceding one.
I feel that if production were government controlled we would pay through the nose for the munitions we would get, and I am sure any established manufacturer could do the job better.


Clarence Gillis: Mr. Speaker-


An hon. Member:: Again?


Clarence Gillis: Yes, again. If some of these fellows did' not make their provocative speeches, and make crazy accusations, some of us would say nothing. We sat here all through the last war, but fortunately the memories of some of us are good.
I believe the hon. member for Peterborough West (Mr. Fraser) believes what he says.


Gordon Knapman Fraser: I know it is true.


Clarence Gillis: But the facts do not bear it out.


Gordon Knapman Fraser: I know it is true.


Clarence Gillis: Your reading is very limited; I think that is true. Perhaps it is unfortunate that the word "nationalization" is used in the amendment, because it sets off a chain reaction in the minds of hon. members like the hon. member for Comox-Alberni (Mr. Gibson). The amendment presupposes government control and ownership, and I know the hon. member certainly does not want the government to take over his lumber industry or his whaling operations. He would rather run them himself, and I do not blame him.
I repeat that the use of the word "nationalization" is perhaps unfortunate, because it must be applied to the production of steel, the production of little gadgets, and all those items which enter into the manufacture of armaments. Perhaps the word in the present circumstances is not properly used.
I believe all hon. members want to limit profits so far as possible in the manufacture of armaments. The Minister of Trade and Commerce (Mr. Howe) said, "Name somebody; let us have some companies that made money during the last war". He was then
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Defence Appropriation Act minister of munitions and supply, and let the contracts. Therefore he should know better than anybody else in the house.
If one looks at the balance sheets of different companies for 1939 and again for 1945 they certainly show that a lot of money was made. For instance, the Massey-Harris Company made large sums of money. However, when anyone asks who profiteered during the last war he immediately must define the term "profiteering". There is no law in Canada today which gives that definition. The manufacturer can get as much as the public will pay, and still he cannot be accused of profiteering.
I am sure that International Nickel made large sums of money during the last war. I know the steel companies in Canada made what I consider exorbitant profits in an emergency. I well remember the president of Falconbridge just before the invasion of Europe making a public statement to his board of directors to the effect that he was very glad to report-and it appeared in the public press-that their plants in Norway under German control were operating at 100 per cent capacity, and he was further pleased to report that when the war was over they would have their share of profits, which were being set to one side, and they would share in the increased production in Norway. In other words, he was quite pleased that large quantities of nickel were being turned out by his plants in Norway so that in the form of bullets they could be shot into the bodies of Canadian boys when they crossed the channel. That was the head of a large industry, making that statement in the middle of a war. The statement was based upon profits.
One could then go on to the Aluminum Company of Canada. Indeed, the balance sheets of every one of the basic organizations interested in converting their plants to equipment for war purposes show that they made a lot of money. However, one cannot say they were profiteering, because there is no definition of that word.
What is the best way to get at it? Perhaps nationalization is not the best way, because I think myself that runs right into the stream of raw materials. Where would this be cut off, in the matter of armament? I would say that we might start this way:	Let us include
planes, tanks and perhaps submarines. Let us boil it down to three or four of the basic essentials used in war, and say, "In this particular category of materials we do not want any undue profits made at this time."
Then, hon. members want to know what is going to be done with all this plant and equipment when the war is over?
[Mr. Gillis.l


Some hon. Members:: Six o'clock.


Clarence Gillis: I can finish in ten or fifteen minutes. I can wind it up in a few minutes.


Some hon. Members:: Six o'clock.


Mr. Speaker:: Order. The hon. member for Cape Breton South (Mr. Gillis) has said that he can finish in a few minutes.


Some hon. Members:: Six o'clock.


Some hon. Members:: Go ahead.


Stanley Howard Knowles: That means a vote at
suppertime.


Clarence Gillis: I do not want to be un-cooperative. I want to get finished and be out of here by the end of next week. I want to ask my hon. friend over here what we are going to do with this plant and equipment? When the last war started out national income was something like two and a half billion dollars. By the time the war finished our national income had risen to around $10 billion. The increased productivity in the country that boosted our national income arose largely from the creation of new industries established by the government for war purposes. At the end of the war the new war industries were converted to peacetime uses.
Our national income has now risen, as the minister indicated, to around $17 billion. The plant and equipment established during the war, and converted to peacetime uses after the war was over, have created an expanding economy, have boosted our national income, and are directly responsible for the condition that we have in Canada today. But it took a war and public investment to bring about that expansion. Canada is a young country. It is growing and there is plenty of room for expansion. I visualize that the time is not far distant when we will have fifty million people, and anything created by way of plant and equipment today can be used in the years ahead. It is not necessary to maintain it as a wartime set-up.
The training that our boys received in trades and so forth during the war was put to use. The only thing I want to see done at this time is that we start somewhere to take the profit out of war. We must define bombs, planes and that type of equipment and say that we do not want undue profiteering in their manufacture. When we are creating the new plant set-up let me say for the benefit of my hon. friend that we should scatter it across the country, decentralize it, and establish it in places where it can be used when the war is over as we used it after the last war.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
Mr. Victor Quelch (Acadia):: Mr. Speaker, when resolutions of this kind are before the house we invariably hear a lot of talk that is very unrealistic in its nature. For instance, it is argued that no one should be allowed to profit as the result of war. I wonder if anyone really means that. When we recall the conditions in this country during the thirties, with the poverty that existed, and compare it with the prosperity that developed in the latter years of the war, and especially in the post-war years, when we realize that the prosperity we have enjoyed in the postwar years has been very largely the result of the war and of the unlimited markets created for our production, then is anyone going to argue that those who have prospered as a result of the war should not have been permitted to do so? Would a member of the armed forces be any better off if the civilian population were forced to remain in a state of poverty instead of being allowed to profit as a result of the war?
The hon. member for Vancouver East (Mr. Maclnnis) took exception to the manufacturers of armaments being allowed to profit on the arms and munitions the soldiers had to use, when those soldiers were sacrificing their lives for the country. Well, where are you going to draw the line? If the manufacturers of the guns the soldiers carry are not to be allowed to make a profit, why should the manufacturers of the uniforms the soldiers wear be allowed to make a profit? Why should the manufacturer of the boots the soldier wears be allowed to make a profit? Why should the manufacturer of hats, or the manufacturer of trucks be allowed to make a profit? And why should the producer of the food the soldier eats be allowed to make a profit? It seems to me impossible to draw a line when you start to argue in that way.
Some people believe that the manufacturers of armaments try to bring about wars in order to make profits; I have heard that argued in this house many times. I do not think that can be said as far as Canada is concerned. We know that here those who manufacture implements in peacetime convert their factories, largely at the request of the government, to manufacture arms. When they manufacture implements they make a profit. Why should certain manufacturers be asked to stop making farm implements and start to make arms without any profit, while the remainder of the industry continues to make peacetime goods at a profit? That seems to me a totally unrealistic attitude.
Defence Appropriation Act
Then we hear many people talk about the necessity of adopting the principle of equality of service and sacrifice. We all really subscribe to that principle, but we know it can never be applied. You cannot compare the service of a soldier in a theatre of war with the life led by a person in Canada. They just are not comparable. You cannot compare the filth, the mud and the torture suffered by the soldier with the kind of life led by a worker in Canada. Then how can you talk about equality of service and sacrifice? On the other hand, if we really desire to implement that principle to the greatest possible extent I think we would be justified in asking the workers in industry during a war to accept the same wages a soldier is paid and to work the same number of hours per week the soldier works when he is in a theatre of war. There is no eight-hour day or forty-hour week on active service. They are often fighting seven days a week, because no one takes notice of a Sunday in the middle of a battle. But then, would the soldiers be any better off if that principle were adopted? I have never heard of the soldiers asking that such a thing be done. I simply point out that the general principle of equality of service and sacrifice cannot be put into operation. It seems to me that if we want to back up our armed forces to the greatest possible extent we should ensure the greatest possible efficiency in the production of armaments. Can anyone argue that during the war, under government control and direction, private enterprise did not make a very good job of the production of armaments? I am not at all sure in my own mind that the nationalization of industry would bring about either greater efficiency or greater economy; I do not think history can show that it would.
If, as I take it, the intent of this amendment is to back up our armed forces, I would suggest the following things are necessary. First, we should adopt a truly pay-as-you-go policy, for unless we do so, what happens? A soldier fights overseas for perhaps four or five years; then he comes back and has to start paying for the war. I think the service of a soldier overseas should be recognized as his full contribution toward carrying on the war; yet when he comes back he has to pay taxes for the rest of his life to help pay the cost of the war he fought. Perhaps it is not possible to fight a war without debt, but I say it should be possible to at least exempt a soldier upon his return from that portion of taxation required to pay for the war. And then I would say that taxation during the war should be strictly on the basis of ability to pay in order to control profits at a fair level.
482	HOUSE OF
Defence Appropriation Act Finally, of course, it is essential that when the soldier returns everything (possible should be done to re-establish him. I believe that generally speaking we made a pretty good job of re-establishing our soldiers after the last war, though, mind you, there are still some things we should do.
So, in conclusion, Mr. Speaker, I would say that in my opinion the nationalization of industry will not help the soldier, and will not guarantee either efficiency of operation or economy in production.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I did not intend to take part in this debate, but I feel compelled to answer the statement we have heard from the very genial member for Comox-Alberni (Mr. Gibson), and to my surprise from the hon. member for Acadia (Mr. Quelch), that this group is unrealistic in presenting this amendment.
I want to be as brief as possible, but let me ask first, is it unrealistic to suggest that when one man offers his life in defence of his country, some other person or group of persons shall not take advantage of that situation to make excess profits, or to profiteer, as we call it? Is it unrealistic for those of us in this group to express what is without a doubt the opinion of many Canadians on this important question? The hon. member for Acadia belongs to the same veterans' organization that I belong to, and I have great respect for him, but I am sure he will remember that the Canadian Legion passed a very strong resolution urging that profit be taken out of war-in fact by passing a resolution urging the conscription of wealth and manpower for the effective and fair prosecution of the war. The whole intent of the resolution passed at that time was to eliminate profiteering as a result of war. Quite a number of churches in this country have passed resolutions supporting in principle the very amendment that this group is presenting to this house. Is it unrealistic to take notice of the opinions of large numbers of the church people in this country? I am quite sure, Mr. Speaker, that if it were possible and practicable to have a poll of the mothers of this country who have sons of military age, as to whether or not they would support this amendment, we would receive a large majority, fs that unrealistic, Mr. Speaker?
Of course, I know there are some groups opposed. I am quite sure the Canadian Manufacturers Association would be opposed. I am quite sure the Canadian Lumbermen's Association would be opposed. I remember in September, 1945, when this government was proposing to extend wartime housing because ~''H of veterans, the one organization
i.]

opposed to the entrance of the government into the housing field was the Canadian Lumbermen's Association. I presume they still have the same point of view with respect to the amendment presented by this group. We in this group realize the difficulties this type of resolution presents to a capitalist government, the difficulty of giving it full effect under a capitalist system. We present this to the house as a principle to be supported. It is a principle which is endorsed by large numbers of Canadians. I am not suggesting for a moment that we can nationalize all those industries that play a part in war production, because they are extensive and very widespread. I am suggesting, as did the member for Vancouver East (Mr. Maclnnis), the member for Winnipeg North Centre (Mr. Knowles), and the member for Cape Breton South (Mr. Gillis), that in order to show that this parliament believes in what is generally termed equality of sacrifice, it should be willing to endorse this as a principle and recommend to this government that wherever practicable under present conditions this resolution be given effect.
The member for Acadia (Mr. Quelch) mentioned the prosperity that was brought to a large majority of Canadians as a result of the war. I think that is a sound argument in support of the deficiencies of this system. Unfortunately war, to most of the Canadian people except those who have lost relatives overseas and those who served overseas, has meant a period of relative prosperity. It is for that reason, when we are discussing this and other bills, that we hear members suggest or at least imply that there should be a war industry in their district. They are thinking of the fact that war and war preparations bring prosperity rather than the fact that war is a tragedy to this nation, and to the whole world. The member for Acadia mentioned the prosperity brought to the Canadian people as a whole. What it brought to the Canadian people as a whole, to the wage earners and salary earners, was a relatively decent standard of living. This resolution is not aimed at the great mass of people that experienced improved living standards; it is aimed at the monopolists who take advantage of their control of resources, processes and equipment to make exorbitant profits under war conditions. These are the people the resolution is aimed at.
I am quite sure, Mr. Speaker, if we examined the balance sheets of the great majority of Canadian people and the balance sheets of the few corporations at whom this resolution is directed, we would see which of them had the reserves and which of them unfairly benefited from certain aspects of war production. In fairness, Mr. Speaker, I may

say that we recognize this government did an excellent job, on the whole, with respect to war production. We admit that, and I think it is generally admitted. It is most difficult under capitalism to have great war production without having profiteering creep in. I think it is only fair to say that in presenting this amendment to this bill we present it as a principle to this House of Commons, trusting that the members will support it as a principle, and in so doing indicate to the country that, when men are willing to volunteer to defend this country and our frequently termed Christian civilization, we are opposed to any profiteering at their expense, and that of the national interest.


Mr. R. R. Knight (Saskatoon):: Mr. Speaker, might I for a moment join the ranks of the idealists? In the discussion before the recess it seemed to be the tendency for those who were speaking on behalf of this amendment to be blaming the profiteers as such. I believe the member for Vancouver East (Mr. Maclnnis) made a good point when he said that patriotism was a sufficient motive to the young men who had to give up their lives in the field of battle, and it should be sufficient motivation for those who had to make the implements of war in defence of the country. As he knows and everybody knows, however, they demand their profits in addition. As a matter of fact they refused what I thought was a fair profit at the beginning of the last war in the matter of making munitions. I do not know that the individual profiteer is so much to blame. After all the system under which we live is motivated by profit. If it is legitimate to make a five per cent profit, if it is good business to make a five per cent profit, certainly I do not see why it is not better business to make a ten per cent profit. As a matter of fact there is no law of which I know against making profits.
There is a point which I did not think was sufficiently brought out in this debate, and that is that the very thought of war may became more acceptable, more palatable to people, because of the fact that during its operation these profits can be made. In other words it is a condition in which profits become possible. So far as I am concerned, I think war is an ill wind from which no good should blow to anyone. I have frequently heard the statement, as I am sure most hon. members have since the fighting in Korea started, "It is too bad, but one good thing about it is that business has certainly improved." May I repeat my colleague's words by saying that I too have the greatest respect for the member for Acadia (Mr. Quelch), but he did surprise me a little bit. I do not know 69262-31J
Defence Appropriation ACt whether he strayed from his usual common-sense approach; that is a matter of opinion. He has uttered one truth, and that is that the economic prosperity enjoyed by the people as a whole was as a result of the war. The deadly thing about that is that young people may begin to accept war as the lesser of two evils when they compare it with a state of depression. Acceptance of that idea might result in an unfortunate lessening of the resistance to war.
As to the charges of our being idealistic rather than realistic, I am not prepared as yet, in spite of the realism of the Minister of Trade and Commerce (Mr. Howe) and others in this house, to give up my ideals. I wish some of the hon. members would tell me where idealism ends and realism starts. I might suggest, though I know I would be ridiculed for this particular type of statement in this very practical and realistic house, that idealism might even be considered as the true form of realism.


Mr. Speaker:: The question is on the amendment. Those in favour will please say "yea".


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will please say "nay".


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the nays have it.
And more than five members having risen:


Mr. Speaker:: Call in the members.


Mr. Speaker:: I declare the amendment
lost. The question is on the original motion for second reading.
Pearson
Poulin
Proudfoot
Prudham
Quelch
Ratelle
Riley
Robertson
Robinson
Rooney
St. Laurent
Shaw
Simmons
Sinnott
Smith (Calgary West) Smith (Queens-Shelburne)
Stewart (Yorkton)
Stick
Stuart (Charlotte)
Studer
Thomas
Thomson
Tremblay
Tustin
Valois
Ward
Warren
Welbourn
White (Middlesex East)
Whiteside
Whitman
Winkler
Winters
Wood-156.

the patient way in which he had answered the many questions that had been placed before him. I am quite certain that no hon. member will take exception to the opinion then expressed by the hon. member for Regina City.
I am sure that the minister has been under considerable strain during the last two or three days, because he has had to answer with care and discretion many of the questions that have been placed before him. I also think that all fair-minded members will appreciate that the opposition has had a duty to perform, and that they have done their best to carry out that duty in the only way that was available to them. And had it not been for the skill, the persistence and the patience of hon. members such as the hon. member for Kamloops (Mr. Fulton), the hon. member for Calgary East (Mr. Harkness), the hon. member for Cape Breton South (Mr. Gillis) and many others, in framing their questions, I doubt whether hon. members as a whole would have been able to have the information placed before them which would enable them to make a decision regarding the expenditures which we are now asked to vote upon.
The stature of this house and the dignity of this parliament have lost nothing during the debate of the last two or three days. It is the democratic way, and the grandeur of the democratic system has been enhanced during the last few days because men have spoken fearlessly the views they have held.
Now it will be up to the members of the house to analyse the information with which they have been supplied, and to examine and sift the various figures before they arrive at the decision and the conclusion they themselves make regarding the strength and efficiency of our armed forces.
One thing stands out crystal clear, and that is that the armed forces of this country have been permitted to fall both in strength of personnel and in quantity and quality of equipment far below any reasonable standard which might be expected to provide for the security of this country, and to enable us to take our rightful place among the nations of the world in the repression, prevention and spread of aggression.


George Randolph Pearkes: Mr. Speaker, during the last three days we have had a long and protracted discussion on the resolution stage of this bill. We have obtained some information, rather of a statistical nature, by the slow and painful process of question and answer. Last night the hon. member for Regina City (Mr. McCusker) expressed the thanks of this house to the minister for IMr. Speaker.]
In that respect history is only repeating itself, because all down through the centuries that has been the process of democratic countries, namely that as soon as a war has been brought to a victorious conclusion the establishments for defence forces have been reduced until another crisis arises, at which time once again hasty steps are taken to build up adequate strength.

Had more vigour been put into the reorganization and maintenance of our armed forces following the last war, had more funds been made available during the past five years, then we would have had more troops ready to meet the situation which has arisen this summer. It cannot be denied that members on this side of the house have been advocating continuously the need for stronger defence forces. The next few months may well be a period of grave anxiety. The Prime Minister (Mr. St. Laurent) himself has pointed out that it may be that during the next ten months a decision will be reached. During that period of time our defence forces will still be weak in strength. The result of the accelerated program cannot have been felt.
The Minister of National Defence (Mr. Claxton) pointed out that during the current year we can expect only two or three more aircraft. The new recruits which will come into the armed formations will not be trained men; they will have to undergo a period of training. The units, as personnel fill up their ranks, will have to undertake more advanced training before they are ready to fight as a team. As the leader of the opposition (Mr. Drew) said, we are living on borrowed time.
I regret that fuller information has not been given, but the picture is sufficiently clear to indicate the needs that we have. I can only hope that the moneys which will be voted will be expended effectively and economically, bearing in mind that there are three phases in this problem. There is Korea, which is merely an incident in the present international situation. I express the hope that Korea will not be allowed to develop into what I would term a Spanish ulcer. During the Napoleonic campaign the operations in the Iberian peninsula drained the resources of the French army to the point where it was termed an ulcer. Actually, operations in the Far East might very easily develop along the same lines, and the resources of the democracies might be poured into that far-off country to an extent which would weaken our general position to meet what might happen in the future.
As has been said, the second phase perhaps will be that of other acts of aggression. And then there may be a third and final phase of general war. Those three phases must be borne in mind, and a balance maintained among those three in so far as the distribution of our funds and available resources is concerned. With those in mind, we all appreciate the necessity, so far as we are able, and without weakening too much our own strength, of providing assistance by way of resources and equipment to the other nations who see as we see.
Defence Appropriation Act
Therefore, now that the discussion on the resolution stage is over, and now that the amendments which have been suggested have been turned down, we shall be prepared to vote the funds necessary for the maintenance of the program the government is proposing. I feel it is the duty of hon. members in all sections of the house to go further than merely voting the sums of money, but in addition to give encouragement to the recruiting program and the other measures in this connection, in the hope that in the shortest possible time this country may recover much of the ground that has been lost during the past few years.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Dion in the chair.
On section 1-Short title.
Howard Charles Green: Mr. Chairman, in essence this bill is to enable us to help the forces of other countries which would be fighting on our side in the event of a general war. As I read it, it gives power only to help nations which are members of the North Atlantic pact.


Brooke Claxton: I understood we were on the bill to provide money.


Howard Charles Green: And that is this bill, Bill No. 2. The power to help the armed forces of another nation is restricted to those nations which are parties to the North Atlantic treaty. I suggest to the minister that consideration be given to amending the bill to enable Canada to help another nation of the commonwealth. For example, there is now no power to give this kind of help to Australia, New Zealand, India or Pakistan although there is power to help Italy, which after all is a former enemy, and to help other nations in Europe. There is no doubt that if we should be in a third world war other nations of the commonwealth such as Australia and New Zealand would, be fighting by our side.
I suggest most earnestly that the minister agree to an amendment to the bill to enable Canada to help the sister nations of the commonwealth. At the present time the only member of the commonwealth to which we can give help is the United Kingdom because the United Kingdom and Canada are the only two commonwealth nations that are parties to the North Atlahtic pact. I suggest the amendment could be made to section 3 simply by adding the words, "and the armed forces of any nation of the British commonwealth."


Brooke Claxton: I have not discussed the proposed amendment with my colleagues in the cabinet, but it would go outside the scope of this arrangement. We think the main centre

Defence Appropriation Act of difficulty, the main threat[DOT]>
of trouble, is the north Atlantic area. I think that is agreed by all members of the house, despite the importance of Korea. We think that help should be given where it is most needed. We have had no request for help from Australia, New Zealand or South Africa, and I do not think that enters at all into the practical considerations at the present time.


Howard Charles Green: Australia and New Zealand will be having troops fighting in Korea, and it is in Asia'that the actual fighting is taking place at the moment.


Brooke Claxton: Well-


Howard Charles Green: I have the floor.


Brooke Claxton: I beg your pardon. I thought you had finished.


Howard Charles Green: 
Brooke Claxton: The proposition of the hon. member for Vancouver-Quadra is that in this bill we should provide for the possibility of giving assistance to Australia, which has never indicated to us any desire for assistance. 1 do not know what the hon. member thinks about the pride of Australia or New Zealand, but I think they have a good deal.
I also wonder how it would fit in with the whole pattern of collective security at the present time. I might tell the hon. member that we have provided forces for service in Korea, and so has Australia. They are most vitally interested in the Far East, just as we are. I would not wish for a second that any comparison should be made between us because we have the happiest kind of relationships with Australia, New Zealand, and all the countries of the commonwealth. I have never heard it suggested that Australia should have assistance from us in peacetime, nor have I heard it suggested by New Zealand that they should have assistance from us in peacetime. I wonder how they would take such a suggestion. They are pretty proud peoples.


Howard Charles Green: What countries have asked for this assistance? The minister says that Australia and New Zealand have not asked. I quite understand that, but what countries have asked for assistance of this type?


Mr. Pearson:: Maybe I can deal with that point. The countries of the north Atlantic


area, by signing the North Atlantic pact, have agreed to help each other. The pact is based on the principle of self-help and mutual aid. That is the principle on which the North Atlantic pact was signed. This clause is one of the ways by which that principle can be implemented. I understand the hon. member has suggested that the bill might be amended along the lines indicated to provide for that kind of mutual aid to Australia or New Zealand. That would require an amendment to section 3, I believe, of the bill as it now stands. Possibly that difficulty, apart from the difficulty mentioned by the Minister of National Defence, namely, that Australia, New Zealand and South Africa have never indicated they desire that kind of help, might be considered to be covered by subsection 4 of section 3 which reads:
For the purposes of this section the expression "North Atlantic treaty" includes any other similar instrument for collective defence that may be entered into by Canada.
Therefore if a situation arises where we desire to talk with the other dominions of the commonwealth and they desire to talk to us about mutual aid of this kind, it can be covered under subsection 4 of this section.


Howard Charles Green: Would that not require a military pact which would have to be approved by parliament before subsection 4 of section 3 would be applicable?


Lester Bowles Pearson: It would require an intergovernmental arrangement of that kind which no doubt would be brought to parliament's attention, but the section could be used for that purpose if the other governments of the commonwealth and we desired to so use it.


Brooke Claxton: I think the point should be made that until this moment nobody in the whole world has suggested that Canada should aid Australia with arms or equipment.


Howard Charles Green: Of course the government is taking power by the bill to give aid to certain countries. As we all know, the North Atlantic pact has been negotiated as a means of preventing a third world war or, if such a war should come, of winning it. There is no doubt the other commonwealth nations would be in it with us, and I do not see why we should not take the power at the same time to let them have equipment as well.


Brooke Claxton: We gave them a great deal of aid during the last war, and if there is another war in which they are similarly involved on the same side of the fight with us, there is no doubt but that we will give them all the aid we have to give.


[Stage Direction]
Section agreed to.
Sections 2 and 3 agreed to.

On section 4-Governor in council may authorize agency of government to purchase, etc., supplies, etc., for the government of the U.S.A.
Mr. Harkness:: I think this is the first time there has been any mention of this particular matter of some agency of the government being authorized to make purchases for the United States government. I am not raising any objection to it whatever, but I do not remember having heard anything said about it before. Would the minister explain why it is necessary to have that provision in this particular bill?


Brooke Claxton: We have been carrying on discussions with representatives of the United States government over defence procurement arrangements almost since 1938. It goes back that far. I need not recall to hon. members the progression by which we came to the declarations of Woodbridge and Kingston in 1938, of Ogdensburg in 1940 and of Hyde Park in 1941. That worked magnificently during the war. It was an arrangement under which we pooled our resources; under which, in fact, we were able to get United States purchases in Canada to more than counterbalance Canadian purchases in the United States. By an exchange of notes in 1945, at a time when I happened to be Acting Secretary of State for External Affairs, we agreed to carry that on. On February 12, 1947, the Prime Minister announced in this house and the President announced at Washington that the agreement was to be carried on, and since then we have been working on its implementation.
There has been no difficulty over it. It is a complicated question in peacetime, but during the period since the war I think by and large we have been buying at least as much in the way of military supplies from the United States as they have bought from us, if not more. Our motion, is that it would be a good thing if that situation were brought into balance and even if we could go further and, as has been so often suggested in this house, regard the industrial power of the whole of North America as something that could be mobilized in the event of an act of aggression against either country. That has been worked on, and now my colleague the Minister of Trade and Commerce has arrived at an arrangement under which we hope it may be possible for the United States to buy very considerable quantities of equipment in Canada. We hope and expect that they will match our purchases of military equipment. We believe that in their interests, in the interests of peace and of the North Atlantic treaty nations, they should go further than that. If they do, it may mean
Defence Appropriation Act that for a certain period it will be desirable that purchases made for the government of Canada by the Canadian Commercial Corporation, through the Minister of Trade and Commerce, will be financed for a period, until deliveries can be made, in order to conform with United States laws. This is a clause to facilitate the very kind of thing everyone has been working for and has had in mind for a long time.


Douglas Scott Harkness: As I think I indicated in the beginning, I am all in favour of the United States buying military equipment from us. My question was merely why this should appear in this bill, since there was no mention of it in the resolution. I presume it is here because it is necessary to take certain amounts out of the consolidated revenue fund in order to purchase these supplies; then when they are turned over to the United States that money is paid back.


Brooke Claxton: That is correct.


Edmund Davie Fulton: I should like to ask a question on section 3, which was carried rather rapidly. I do not want to enter in any way upon a discussion of the budget, but I should like to know whether I am correct in my understanding of what was said during the budget address last evening. I understand it is anticipated that of the $309 million future commitment being authorized under section 3, only some $100 million will be entered into this year.


Clarence Decatur Howe: That is the case; not more than $100 million.


Mr. Higgins:: The expression here is, "as principal or agent." That seems to me a little contradictory, and I wonder if the minister would explain the reason for it.


Clarence Decatur Howe: The Canadian Commercial Corporation would serve in either capacity. In connection with guns, for instance, an order was placed with the Canadian Commercial Corporation, and that corporation placed it with Sorel Industries. In that case I suppose the commercial corporation would be an agent. All United States government orders for munitions are channelled through the Canadian Commercial Corporation and placed by that corporation with Canadian firms.


Gordon Francis Higgins: Then it would not be a principal; it would be purely an agent.


Clarence Decatur Howe: In that case it would be an agent. On the other hand the Canadian government might have goods in store which the Americans wished to purchase, as sometimes happens. In that case we would act as principal.

Canadian Forces Act


Gordon Francis Higgins: It seems very involved to me. I do not see how the Canadian government could act as principal for the United States government.


Clarence Decatur Howe: If we were selling goods we
owned we would be selling them as principal.


Gordon Knapman Fraser: The Canadian Commercial
Corporation would sell them as your agent.


Stanley Howard Knowles: Does "principal or agent"
refer to the government or to the corporation?


Clarence Decatur Howe: It refers to the Canadian
government, which may act as either principal or agent under this bill.


Gordon Francis Higgins: I submit you should take
out the word "principal".


Clarence Decatur Howe: Suppose we are selling goods
owned by the Canadian government. In that case we would be hardly an agent. We could not be an agent and sell our own goods.


[Stage Direction]
Section agreed to.
Section 5 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the bill be read a third time?


Some hon. Members:: Now.


Some hon. Members:: Next sitting of the
house.


Brooke Claxton: Oh, sir, could I not ask that it be read now? The Senate is waiting for business. The bill has been passed. We have had a very full discussion. If I may ask the indulgence of hon. members, why should not the bill go to the Senate tonight?


Some hon. Members:: Agreed.


Douglas Charles Abbott: that the bill be now read a third time.


[Stage Direction]
Motion agreed to, bill read the third time and passed.


Brooke Claxton: the second reading of Bill No. 3, respecting the Canadian forces.


Howard Charles Green: Could we have a statement
by the minister?


Brooke Claxton: I gave a statement last
evening. It was brief, but I hope it was fair and adequate to explain the general purposes of this bill.

In the first place, it should be made clear that under the existing law of Canada, which dates back to 1868 and was re-incorporated in the National Defence Act adopted by parliament last session, it is provided that in an emergency the governor in council may place the forces of Canada on active service at home or abroad. That has only been done probably twice in the whole history of confederation. When we came to redraft the new National Defence Act we thought that hon. members would wish to have this provision preserved, and that was done in a substantial measure. The importance of it from the national point of view is that at any time when the active forces are put on active service at home and abroad, parliament has to be called within fifteen days, thereby preserving one of the fundamentals of our constitution, and that is the control of the people's representatives over the military forces. I could, if hon. members have not heard me enough in the last three or four days, give a good deal of historical background for that provision, background which runs all the way through British and Canadian history and is of the utmost importance. I shall not do that.
I shall start at 1868, and say that in the new bill we tried to preserve that principle, and I believe succeeded. We tried also to take account of the fact that fifteen days might be longer than was necessary to call a session of parliament, so the term was reduced to ten days. In the case of this session the members met, and met magnificently from every part of Canada and some parts of Europe, in less than ten days. It is believed, however, that ten days is a fair number, so that the act as it stands today requires parliament to be called within ten days of the governor in council placing any of the forces of Canada on active service. But the act also provides that that can only be done in an emergency. An emergency is defined by the act in section 2, paragraph 1, as meaning:
... war, invasion, riot or insurrection, real or apprehended.
When faced with the necessity of placing some of our active forces on active service outside the country under the United Nations charter, we were face to face with the necessity either of not regarding that as active service, as that term is defined, or regarding this as an "emergency" and that means war, invasion, riot or insurrection. Korea may be a really tough war, and certainly is for the people fighting it, but in the legal sense it is not a war but an act of aggression. We felt, therefore, some amendment was required to the act to take care of this situation. It was proposed that in addition to our being able to place the active forces or other forces of Canada on active service in an emergency.

as that was defined, we should also endeavour to obtain from this house the power to place them on active service, if considered desirable, in consequence of any action undertaken by Canada under the United Nations charter, the North Atlantic treaty, or any other similar instrument for collective defence that may be entered into by Canada.
As was stated last night, the function of our constitution is, and I think it is recognized now by all parties and certainly by this, that that sort of course would not be adopted without reference to parliament. The adoption of any instrument for collective defence that may be entered into by Canada applies to an instrument of international agreement signed by our representatives but only ratified by or after that instrument has been submitted to and approved by parliament. This course has been adopted by this government throughout, certainly in the case of the United Nations charter and the North Atlantic treaty which are most in point. The purpose of this provision is not, therefore, to extend the principle of the existing act but to extend the field in which the existing act may become operative so as to cover the present situation. That relates to sections 2 to 6 inclusive, which are consequential.
Section 7 of the bill provides:
The governor in council may by regulation provide that all or any of the enactments set out in the schedule shall, in such manner as the governor in council may prescribe, apply to
(a) any or all persons who, subsequent to the fifth day of July, nineteen hundred and fifty, were appointed, transferred or posted to, or enlisted, enrolled or serving in, any force designated by the governor in council as a special force for the purposes of this section;
The governor in council has already designated the force that we have raised, and which now totals by recruits, quite apart from any postings from the active force, as at five o'clock yesterday afternoon, 8,763, as a special force. Subsequently it is the intention of the government, if this bill passes, to designate other elements in the forces that may be actually engaged in Korea or may become engaged there, special forces so as to have the advantage of section 7. But that will have to be done, as hon. members know, with some caution because our idea is that we should extend to all the officers and men specially enlisted in the special force all the benefits that are applicable under the veterans charter. All of them are not, or may not be, dependent on the length of service, entitled to the benefits of the veterans charter as set out in the acts enumerated in this schedule.
The active force personnel-that is, the permanent force or the regulars as we know them -while on active service abroad with the
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special force, will have the same treatment as they get but also would have, if they could qualify on return, the benefits that would be appropriate under the veterans *charter; Our anticipation is, however, that they, being permanent-force, full-time soldiers, would not qualify for many such benefits. To sort out the different classes and find out who is entitled to what, so as to do substantial justice and carry out the promise of the government that the men enlisting in the special force shall have treatment similar to that of veterans of the second world war, will not only require a good deal of working over, by officials of the Department of Veterans Affairs and of the Department of National Defence, but will also require the surveying of actual cases as they arise. It is the desire that, under this bill, we should have power by regulation to deal with immediate cases as they may arise-and we do not think there will be a great many-and to bring into effect such parts of the law as seem obviously to be applicable; and then at the next session of parliament to put before a newly-constituted committee on veterans affairs the question of determining what advice should be given to the house on how this arrangement should be worked out in detail.
There are a great number of different conditions, and it has been quite impossible for us, in the last three weeks, to draft legislation to put before this house as to how certain classes of veterans of active force personnel and of civilians enlisting in either the active or the special force should be treated. Therefore the only sound and proper course that would appear to us to be desirable is to ask hon. members to give us power to deal with the interim cases-and there will certainly be few of them-until this house meets again, and then to put the matter before a committee of parliament on which the various parties no doubt will be represented largely by veterans who have become expert in veterans affairs and which can hear, from the Department of Veterans Affairs, the Department of National Defence, veterans' organizations and anyone else who may desire to be heard, representations as to how any necessary changes in the law might be made.
Our general aim, however, is first to create one force. There is going to be no difference between the active force and the special force, except in term of enlistment and other matters consequent thereon. Our second aim is to ensure that as far as possible, and as far as seems proper to the members of parliament, the officers and men of the special force shall receive benefits similar in character, extent and application to those enjoyed by veterans under the veterans charter at the end of the
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second world war. That will of course include -and the acts are mentioned in this schedule -the benefits of re-establishment in civilian occupation, a matter which was raised today by the hon. member for Cape Breton South (Mr. Gillis); and if the existing act on civil re-establishment does not cover the case he has mentioned, or even if it should, the place to discuss that matter first is, I suggest, either with the Department of Veterans Affairs or with the Department of National Defence, but ultimately with the committee on veterans affairs that we propose to set up to deal with just such matters.
I do not think there is anything else to be said about this matter. In consequence of this bill being passed, if it is passed, in both houses, we shall put components of the active forces of Canada on active service, and that action will lead to certain consequences which I mentioned last night. It will entitle them to the benefit of the insurance provision, provided they are a special force. It will entitle them to make a will in certain provinces in a special form. If they commit certain offences, it will make them liable to a special punishment. I do not know that it has any other consequences than those. There are some other consequences, but as hon. members can see, while they may be important they do not involve any great question of principle having regard to the legal consequences of the bill being made into law.
I venture to say, Mr. Speaker, that this is a necessary move in the way of our doing our utmost to help the forces that are fighting on our side under the United Nations charter. I am sure that it is the first bit of legislation of this character, couched in such terms as actually to provide for action under the United Nations charter or under the North Atlantic treaty being considered as equivalent to an emergency. In that sense I believe we are making history and are cutting out a path that I hope some other nations may follow.


George Randolph Pearkes: In the speech from the throne, Mr. Speaker, it was forecast that legislation would be introduced to increase our national security and the international co-operation required by the fighting in Korea. It would seem that this is the legislation which will implement that forecast.
I think most hon. members came to this session believing that they were required to pass legislation authorizing the dispatch of the special brigade to Korea or elsewhere to fight under the United Nations' flag. This legislation extends the provisions whereby the governor in council may place on active service any service, component, unit or part of any of the armed forces of Canada not only for the defence of Canada in case of 
emergency but also to co-operate with the United Nations or to carry out commitments under the North Atlantic treaty or any other commitments which may be made. I think the essential point to note is that this proposed legislation gives the governor general in council authority to place troops on active service, to fight under the flag of the United Nations. But there is nothing in this bill, so far as I can see, that grants authority for the dispatch of this special brigade to Korea or any other place. If the decision is reached at some time or other to place this Korean force on active service in order to go to Korea or elsewhere it would seem to me that it will again be necessary for parliament to be assembled within ten days in order to grant that approval, unless there is some special legislation introduced during this session.
Today I was rather surprised to hear the Prime Minister (Mr. St. Laurent) say that no other legislation was forecast, other than some administrative bill to deal with sessional indemnities. My impression of this-I may be wrong; if so, I hope I shall be corrected- is that while section 32 of the National Defence Act is now extended to make it possible for the governor general in council to place troops on active service, section 33 is in no way repealed or modified. Section 33 still requires parliament to be assembled within ten days after the placing of troops on active service.
Now, of course, troops of the Royal Canadian Navy, three destroyers, have been in Korean waters for considerably longer than ten days. These troops are not yet on active service. They are carrying out their police duties with the United Nations, still on what is termed) as being on service, a difference having been made in the National Defence Act between "service" and "active service", those units of the active or regular forces of Canada always being on service, but not on active service until they are placed on active service by the governor general in council and confirmed by parliament.
Therefore the first question that I would like to ask is whether it is the intention of the government to introduce definite legislation during this session, by which this special brigade will be placed on active service, to be sent either to Korea or elsewhere in order to co-operate with the other forces of the United Nations? It does not seem to me that Bill No. 3, as it stands now, gives adequate authority to the governor general in council to place on active service the forces which are now in Korea, and the special brigade which may be sent there in the future. That is the point which I hope will be cleared up. It is not clear to me at the present time. But

as I say, until section 33 of the National Defence Act is repealed-I do not think it would be wise to repeal it, and I do not think that parliament would agree to the repeal of that section-it seems to me that special legislation is required to grant the authority for placing this force on active service.
There is no very clear definition anywhere of what active service is. There are regulations which govern the troops when on active service, but neither in this particular bill nor in the National Defence Act is there any definition of what is meant by active service. As I said, there are regulations saying what must be done when troops are on active service but there is no definition of that.
Then I think the situation has been complicated by the introduction of this term "on service", which applies to the general condition of the troops of the active forces; but it also could be made applicable to troops of the reserve forces who may be placed on service, but only with the consent of the individuals themselves. However, I do not want to complicate the discussion by pursuing that any further.
The next point upon which I should like to make an observation is that dealing with the benefits which will be granted to the personnel of this special brigade. If the benefits of the various pieces of veterans legislation are extended to them, I think it is very regrettable that it has already been published in the press as press releases, and the statements which were made by the Minister of National Defence (Mr. Claxton) last night, namely that the personnel of this brigade would be granted the benefits of these various acts which are included in what is known as the veterans charter.
The bill says, and I am inclined to think rightly, because obviously further consideration must be given to it, that the provisions of these acts may be applied to the personnel of this special brigade by order in council. As the minister has already pointed out, I think that further consideration should be given to just which of those acts of veterans legislation should be made to apply. It is quite debatable whether a short-term force, a force which has been enlisted for only eighteen months, should receive the same benefits as men who were enlisted for what must appear now to have been a much more serious conflict than perhaps this particular Korean show is. Therefore, I think it is wise to give further consideration to how far the benefits of the veterans legislation should be extended to this special brigade. I repeat that I think it was unwise that premature publicity should have beeij given to the fact that 69262-32*
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these men were to receive these benefits. We may be running into conditions which were perhaps not dissimilar to those which arose after world war II in so far as the fire fighters were concerned. They thought certain promises had been made to them, and later on they were disappointed when the promises which they thought had been extended to them were not being kept.
So I feel it is wise to give further consideration, and we should not decide prematurely that all these benefits are going to be extended to the personnel of the special force. Finally, I could not help smiling at the enthusiasm with which the Minister of National Defence (Mr. Claxton) was prepared to appoint a committee to deal with a department other than his.


Stanley Howard Knowles: Mr. Speaker, the Minister of National Defence made very clear a number of points respecting the bill and its relation to the present situation. However, as the hon. member for Nanaimo (Mr. Pearkes) has pointed out, there are some aspects of the situation which are still not as clear as they should be made to us before this session ends.
The Minister of National Defence pointed out that the main purpose of the bill is to authorize the governor in council to raise a special establishment in view of any commitments we have made to the United Nations, or under the North Atlantic treaty, or by virtue of any similar commitments we might make. He also made it clear that its purpose is to authorize the governor in council to place those or any forces on active service in lieu of commitments we may have under the United Nations, the North Atlantic treaty or any similar collective security agreement.
With all of that we cannot but agree. That' follows from the support parliament has given to the government's support of the United Nations on behalf of Canada. In pass-' ing may I say that we agree, too, with the aim of the bill in so far as it seeks to extend; certain benefits now on the statute books to those who enlist with these forces. But the point that I think has not been made as crystal clear as it should have been is one touched upon by the hon. member for Nanaimo, and to which the minister referred, namely the bearing of section 33 of the National Defence Act on the present situation and, indeed, vice versa.
The hon. member for Nanaimo suggested that such-and-such could not be done unless, section 33 of the National Defence Act were repealed. I was glad to note his haste to add that section 33 must not be repealed. Likewise the Minister of National Defence has made

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it clear that not only does section 33 stand on our statute books as something historic in our legislation, but that it has been slightly improved over the way it used to read, in that the term fifteen days has been reduced to ten days, referring to the period within which parliament must be called. That change was made, I believe, by the committee on the bill at the last session of parliament.
I do not think it would have been amiss for the Minister of National Defence to give us the historical survey he said' he had intended to give.


Brooke Claxton: No, I did not intend; but I could have given it.


Stanley Howard Knowles: I do not have any notes the minister might have had, nor do I know what he had in his mind, but it had been my intention to do just that. In view of what has been said I shall shorten what I have to say in this connection; but I do think that, despite our preoccupation with other matters, it is important for us to give attention to the processes of our parliamentary democracy. In view of this business of sitting all day, I have not had time to go all the way back to the year 1066, but I browsed around in the library at meal times today, and- I found that there has been on the statute books, certainly since 1904-I should say in parentheses that it may have been there longer-the provision now contained in section 33 of the National Defence Act.
When in 1904 parliament was writing that section into the then Militia Act, the question was asked as to where the wording came from, and the obvious answer was made that it was to be found in the Militia Act of the United Kingdom. In fact, Mr. R. L. Borden gave the answer-the question having been put to Sir Frederick Borden, minister of militia, who was putting the Militia Act through at that time-in which he stated that the clause then being put into the Militia Act of Canada was similar to section 19 of the Militia Act of 1882 of the parliament of 'treat Britain and Ireland.
That section 19 read as follows:
Whenever Her Majesty orders the militia to be embodied. if parliament be then separated by such adjournment or prorogation as will not expire within ten days, a proclamation shall be issued for the meeting of parliament within ten days-
This of course was in Great Britain.
-and parliament shall accordingly meet and sit upon the day appointed by such proclamation, and shall continue to sit and act in like manner as if it
had stood adjourned or prorogued to the same day.
Thus that language-substituting "on active service" for the word "embodied"-found its way into the Militia Act of Canada, which was 
passed in 1904, being chapter 23 of the statutes of that year. This was section 71 of that act:
Whenever the governor in council places the militia or any part thereof on active service, if parliament is then separated by such adjournment or prorogation as will not expire within ten days, a proclamation shall be issued for the meeting of parliament within fifteen days, and parliament shall accordingly meet and sit upon the day appointed by such proclamation, and shall continue to sit and act in like manner as if it had stood adjourned or prorogued to the same day.
When the statutes of Canada were revised in 1906, that same wording was carried forward in the Militia Act, which was chapter 41 of the Revised Statutes of Canada, 1906. It remained as section 71, and the wording was exactly the same as that in the statutes of 1904, from which I have just read.
When the statutes were again revised in 1927 the same wording was again retained, so I need not repeat it. This year, however, the expression "militia" was deleted and other words were put in so as to correspond with modern practice. Thus we now have section 33 of the National Defence Act, which reads as follows:
Whenever the governor in council places the Canadian forces or any service component or unit thereof on active service, if parliament is then separated by such adjournment or prorogation as will not expire within ten days, a proclamation shall be issued for the meeting of parliament within ten days, and parliament shall accordingly meet and sit upon the day appointed by such proclamation, and shall continue to sit and act in like manner as if it had stood adjourned or prorogued to the same day.
That provision had indeed a long history and tradition behind it. This year, when the National Defence Act was rewritten and reenacted by parliament, the only change that was made is the one already referred to, namely, that the time within which parliament must meet has been reduced from fifteen to ten days.
One of the things that interested me in studying this matter, although probably I should have known it, was to find that this was required by law. I remember so well the speeches made by Mr. King, especially during the years just before world war II, to the effect that parliament would be called in the event of war, that parliament would decide whether or not the Canadian forces would be put on active service and sent overseas. I had the notion at the time that that was merely in the nature of a promise made by the prime minister of that day. I find now that his promise was clear-cut and categorical all right, but it was also based on the requirement of the law.
As hon. members will recall, in 1914 war broke out on August 4, and on consulting Hansard, as well as the Journals and other records of that day, I find that on August 4,

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1914, the cabinet took the action oi placing certain of the forces then in Canada on active service, and on the same day issued a proclamation for parliament to meet on August 18. That was fourteen days later; in other words, within the fifteen-day requirement. Similarly in 1939 war broke out by the action of Germany against Poland, as we all remember, on September 1. On that day the forces of Canada were placed on active service, and the same meeting of the cabinet which passed the order in council placing the then forces of Canada on active service passed another order in council arranging for a proclamation for parliament to meet on the 7th of September.
I have in my hand the orders in council that Mr. King laid on the table the day that parliament met in September, 1939. There is quite a batch of them, but in particular it included those two orders in council of September 1. During the debate in the session of 1939 Mr. King referred to all these things that had happened, the fact that under an earlier section of the Militia Act the militia had been called up prior to September 1, 1939, but that it had not been put on active service until September 1, which was the day that cabinet at the same time took the decision required by law to summon parliament within what was then a fifteen-day period.
Similarly during the course of the debate Mr. Ian Mackenzie, who was then minister of defence, made the same point clear. The point was that prior to September 1 he, as minister of defence, had the power to call up the militia, but it was not until the cabinet had taken the decision as required by law to call parliament within a fifteen-day period that they could put the forces of Canada on active service. It seems to me this is not just a matter of tradition and history. It is not just a case of being interested in a technicality. It seems to me that this is very basic and fundamental to our whole concept of parliamentary democracy. As I have said on other occasions, parliament is a little bit closer to the people of Canada than the cabinet, by the nature of things, can be. The people of the country think of the 262 members of parliament, the backbenchers in the main, as their representatives. Somehow or other it is deep in the hearts of our people that major and important decisions should not be made by the cabinet alone but by parliament as a whole.
It is true that the requirement of the law that I have just indicated does not say that parliament has to approve of the action of the government in placing the forces on active service. All that the law seems to require is that parliament must be here and be sitting within fifteen days, now ten days, after the
proclamation placing the forces on active service has been made. Mr. King said in 1939 that parliament would make the decision as to whether or not Canada would go to war. He said that the government had made up its mind what its policy was and parliament would express its view by giving or withholding support from the government on that issue. I remember one very interesting exchange that took place when Dr. Manion pointed out to Mr. King that he had said something in one of his speeches that was not in the speech from the throne. Dr. Manion wanted to know if that was included in any vote of confidence in the government, and Mr. King said yes, that the house would make its decision by voting confidence or non-fidence in all that the government, through the Prime Minister, had declared to be its policy.
We are moving into a different kind of world. Things have improved in some ways but in other ways they have become much more critical and serious. I am wondering just how this is all going to work out in a world in which there may not be declarations of war such as there were in 1914 and 1939 but something different such as police action under the United Nations or under the North Atlantic treaty. As a matter of fact, we have had a pretty clear undertaking that no action will be taken under the North Atlantic treaty without the decision of parliament. The Secretary of State for External Affairs (Mr. Pearson) made that clear to us again the other day when he said that if there were any move, for example, against one of our partners in the North Atlantic treaty, the government would call parliament to make the decision as to what to do about that situation.
But where are we now with respect to the special force that we are raising? Where are we now with respect to any other outbreak of aggression that might perchance occur when we are not here? I hope it will not, but we have to face that possibility. As the hon. member for Nanaimo (Mr. Pearkes) points out, this session can end and members be sent home without our being told what the plan is with respect to the special force. I am hoping that what we are saying will draw forth a clear statement from the government because it would seem that if the special force has not yet been placed on active service then if the government decides to place it on active service after we are home the law says that parliament must be summoned within ten days.
The government may get around that by placing the force on active service before we go home. Let us suppose that is done. Then

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what happens if there should be aggression somewhere other than Korea? I think the government should be particularly frank and straightforward with us in connection with these matters. You see, the requirement of the law does not state that the governor in council must place forces on active service for a particular place. We might assume that action taken by order in council was taken in respect of Korea, but a couple of months from now there may be a need somewhere else. Will the fact that the Canadian forces have been placed on active service for one area, while parliament is here, result in the possibility of these forces being sent somewhere else? In my view, that should not be done. As has been made very clear, our commitment in regard to Korea is under the United Nations. Commitments under the North Atlantic treaty are different in character. A couple of days ago the Secretary of State for External Affairs stated clearly that if we were required to make any commitment under the North Atlantic treaty parliament would be called. As I say, if the forces are on active service already the legal advisers of the Department of Justice might find it possible to say parliament need not be called, but I would deprecate such a course being pursued.
I believe the point should be made perfectly clear. I think the government should take us completely into their confidence and tell us what their plans are in connection with the force now being raised. I believe we should have the sort of clear-cut statements we have had in the past, and deservedly so, as to the intentions of the government in relation to parliament, as far as any future situation may be concerned.
I am not indulging in any criticism in this as far as the past history of Canada is concerned. The law was lived up to in 1914; parliament was called within fourteen days of the date the forces were put on active service. In 1939 parliament was called within six or seven days of the date the forces were put on active service. The present situation is different, but at least the government has called parliament. We may say they should have called us sooner, as I think they should, but at any rate we are here. The record is good thus far in the relation between government and parliament with respect to this matter of our forces going to war, whether it is declared war or police action, and I think it all important that this relationship be maintained between government and parliament and between parliament and the people.
As I have said, my own view is that section 33 is fundamental to our parliamentary democracy and the rights of our people. I am glad
the hon. member for Nanaimo hastened to say that it should not be rescinded or repealed or changed in any way. I also think it should be lived up to, not only in letter but in spirit. There should be no suggestion at any time of taking advantage of anything in order to get around the spirit of that section, which says clearly, as it has said from time immemorial, that putting our forces on active service makes absolutely necessary the calling together of parliament. In other words when it comes to going to war, whether it is war as declared between nations or whether it is a collective security police action, that is the kind of important decision that should be made by the people themselves through their representatives in parliament.
From what the Minister of National Defence (Mr. Claxton) has said tonight, and from what has been said previously by the Secretary of State for External Affairs and on other occasions by the Prime Minister (Mr. St. Laurent), I feel they are with me in this, so I do not think I have to argue it. I did think it was possible, however, that the house might be so preoccupied with other matters this session as not to get this issue right into the open and have it made perfectly clear. I hope before we leave-it could be now, or later in this debate, or later in the session, but certainly soon-it will be made perfectly clear just how the matter stands as to the responsibility of the government to parliament, which is there all the time, but which is particularly clear and important in this matter of putting our forces on active service.


Louis Stephen St-Laurent: I think the matter should be made perfectly clear at once, so there can be no misapprehension or uncomfortable feeling about it anywhere. When this bill is passed and becomes law it is the intention of the government to comply with the letter and spirit of section 33, in so far as its policy has been announced with respect to Korea. The intention of the government is that if any other service should be required of this special force, which of course is not being created solely because of the Korean incident, if any police action, for instance, that has a warlike character should be required of it, elsewhere than Korea, the government of course would have to make its decision, but it would immediately call parliament, make that decision known and leave it to parliament to approve or disapprove of it. I think that is the only way the Canadian people would feel they were getting the protection they expect from their representatives.
[M*. Knowles.l

I am glad the hon. member for Nanaimo <Mr. Pearkes) and the hon. member for Winnipeg North Centre (Mr. Knowles) provided this occasion for making that perfectly clear. The purpose of this bill is to make it possible to put Canadian forces on active service for the implementation of international obligations resulting from the charter of the United Nations, when such obligations have been recognized by us here in parliament as morally requiring fulfilment. It is also to enable us to put Canadian forces on active service for the implementation of obligations arising under the North Atlantic treaty, because they are obligations that have been incurred with the consent of the Canadian people through their representatives here.
That is the situation, and I do not think anyone would venture to suggest that it should be departed from in any manner whatsoever, in letter or in spirit. If it should become necessary, as it may, to enter into more specific undertakings with members of the North Atlantic treaty or members of the United Nations, those more specific obligations might require some variation in the present procedure; but that variation would have to be brought here and approved by this house before any government would be justified in acting in any different manner. It is our intention to ask that this measure be given royal assent, not at the very end of the present sittings of this parliament but at a time which will permit the required formalities to be carried out. It is intended to have the orders in council applicable to this special case tabled before this session adjourns. If anything else should be required at any future time in order to carry out similar commitments, the government of course would have to take the responsibility of making its decision, but would certainly have to place itself in the hands of parliament within the ten-day period for ratification or disapproval of that decision.
I am sure that is the way everyone would wish matters of that kind to be handled by their representatives, and that all parties would wish that to be the relationship between the government and parliament in that regard. Technically the decision has to be made by the executive branch, but it can be made only in such manner as places it within the power of parliament in the short time provided by section 33 to deal with the government that has made the decision, and to continue its confidence in the government which made the decision or prevent its implementation.
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Howard Charles Green: May I ask the Prime Minister whether there will be a resolution authorizing the sending of troops to Korea?


Mr. SI. Laurent:: No, sir; that would be something which has never beeh done. The government announces to parliament what its policy is, and asks parliament for the ways and means to carry it out. It is for that reason that we have our appropriation bill. If parliament does not authorize the ways and means to carry out the policy, it cannot be carried out. If parliament, on the other hand, on any motion of non-confidence, expresses its disapproval of the conduct of the government, of course the government resigns and some other group forms a government to carry out the will of the Canadian people as expressed by their representatives in parliament.


Edmund Davie Fulton: An order in council will be tabled?


Louis Stephen St-Laurent: An order in council will be tabled. It may be that that order in council, for the convenience of the operation, will be in broader terms than if it were possible at this time, for instance, to say that the three destroyers that are now in Korean waters will be the only units of the navy to serve there. It may be that it will be found of advantage to bring one or more of those destroyers back and replace them by others. In order to make that possible, and to make such changes as circumstances would dictate, it may be that the terms of the order in council will have to be broader than the enumeration of those immediately intended to serve. The statement I am making to the house is that this government will not go beyond what has been announced without bringing parliament back to deal with its decision.
There was one other matter raised by the member for Nanaimo (Mr. Pearkes), and I think that all members of the government are in agreement with him. These provisions of existing statutes which are to apply to the men enlistedi in the special force cannot be applied without special consideration being given to each of them. It is for that reason the legislation provides that it will be done by orders in council, but those orders in council will not be permanent. Those orders in council will not extend beyond the life of the next session of parliament. We have expressed it in that way so as to make it quite clear that at the next session of parliament we shall have to ask parliament to say whether or not what we have put in the orders in council is sufficient, or whether it goes too far. Whatever we shall have put in

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the orders in council will only apply provisionally until parliament has had an opportunity of dealing specifically with each detail expressed in the regulations.
We felt it would not be prudent, in the short time we had available, to attempt to bring in a complete code of the parts which would apply, and of the manner in which they would apply. We believed we would have to make that code by orders in council, so that if any individual who had enlisted happened to require its application in the meantime it would be available, but that it would not operate as law beyond the life of the next session of parliament. At the next session there will have to be legislation and every line of the regulations will be subject to the approval or disapproval of parliament. I feel confident that we shall maintain, without any impairment whatever, the traditional doctrine of the responsibility of parliament to the people of Canada in respect of all these matters.


George Alexander Drew: Mr. Speaker, one of the points which the hon. member for Nanaimo (Mr. Pearkes) put forward was in regard to the effect of this act in relation to the overriding provisions of section 33 which call for the summoning of parliament within ten days if it is not in session at that time. As I understood the point he made, it was that a question arose as to whether the adoption of this act disposed of any question in regard to sending the special force to Korea. As I understand what the Prime Minister has said, it is that orders in council will be tabled before the end of this session in the ordinary course of events.
I was under the impression that, when parliament was called for the particular purpose of approving the action of the government, there was some operative motion or some other provision which dealt with that particular subject. It seems to me that the point raised by the member for Nanaimo is whether there is in fact any operative resolution before us, or anything in this act which disposes of that question. What the Prime Minister has now said is that the orders in council will be tabled. The question in my mind is whether or not that does meet the requirements of section 33.


Louis Stephen St-Laurent: I shall have an opportunity of speaking again in committee.


George Alexander Drew: Might I suggest, in view of the nature of this subject, that it might be convenient, with the consent of the house, if the Prime Minister answered that now so that it is dealt with in sequence.


Mr. Deputy Speaker:: Has the Prime Minister the unanimous consent of the house?


Some hon. Members:: Agreed.


Jean-Paul Stephen St-Laurent: My understanding of the constitutional position is that there is no specific action required by parliament in the form of an affirmative decision. The decision has to be made by the executive branch of the government. It has to be announced and parliament, within the period provided by section 33, has to be put in a position where it can prevent the implementation of that decision by dealing as it may see fit with the government that made it. This act does not in any way derogate from section 33. It does not interfere at all with the application of section 33. It merely provides that the governor in council may place units of the armed forces or components of the armed forces on active service. Whether that be done for service within or outside Canada, when it is done section 33 applies.
Before the end of the last session the government announced to parliament its intention, if naval units were found to be of value, to have them proceed to Korean waters. We announced to parliament that they were already proceeding towards that region from their base on the Pacific coast, and that if any other action of a different character were required parliament would be summoned to deal with the situation. Subsequently a transport squadron was made available to perform duties similar to those that the transport squadrons are constantly performing in our own country or over the Atlantic for the purposes of our service. But when the decision was made that those forms of participation in the action requested by the United Nations should be added to, announcement was made of a decision to raise a special brigade. That could be done without that special brigade being then put on active service. But we felt that it could not be put on active service because of the terms of section 16 of the National Defence Act, and parliament was called. It was announced in parliament that the policy of the government was to raise this force and the required reinforcements and to train them for the purpose of carrying out obligations Canada might have either under the United Nations charter or under the North Atlantic security pact; and also that the intention was, when this land force was ready for front-line action, to have it participate in the Korean action if at that time that was the place where it could be of the greatest utility to the purposes of the United Nations.

We are proceeding in that way and we are still assuming that that is where it could be of the greatest service to the United Nations when it is ready for front-line action; and we have asked parliament to provide us with the ways and means to implement that policy. Should circumstances change, should it be found that that is not the proper thing to do at the time this land force is ready for front-line action, and that something else should be done instead, the government will have to consider that situation; and having made a decision it will have to call parliament, communicate that decision to parliament and put itself in the hands of parliament for approval or disapproval.
I think that is not only the manner in which the terms of section 33 should be complied with but that it is the manner in which traditionally these matters are dealt with by governments and by parliament under our constitutional system. I think it is proper to repeat the assurance that no other line of conduct will be followed by this government.


George Randolph Pearkes: Will the Prime Minister (Mr. St. Laurent) permit one question?


Louis Stephen St-Laurent: Yes.


George Randolph Pearkes: It is quite obvious that there must be a considerable degree of flexibility in the arrangements that are being made. Will parliament have an opportunity, before it is adjourned, of seeing and discussing the order in council which will be tabled placing this brigade on active service?


Louis Stephen St-Laurent: I do not know just what form of opportunity should be provided; but I think the spirit of section 33 requires that it be done in such a manner that if parliament does not feel it is the proper thing to do, parliament has it within its power to make that view known and to make it prevail.


George Randolph Pearkes: In other words, there will be the opportunity to discuss this order in council?


Jean-Paul Stephen St-Laurent: Parliament will be here, and I feel that it must be done when parliament can, if it sees fit, express disapproval.


Stanley Howard Knowles: May I ask a question of the Prime Minister, Mr. Speaker?


Jean-Paul Stephen St-Laurent: Why not ask it in committee?


Stanley Howard Knowles: You would prefer that I do it in committee on clause 1?


Mr. Deputy Speaker:: We are not in committee yet.
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Alphonse Fournier: No. Let us get into committee.


Stanley Howard Knowles: I wonder if I might ask the question now just so that it will be close to what the Prime Minister has said. I would be prepared to wait if we were going to go straight into committee, but apparently there are other speakers. First, may I thank the Prime Minister for the statement he has made. It is the kind of statement he should have made anyway; but I believe that it is one of the most important assurances he has given this parliament. This is my question: Even though the order in council placing these forces on active service may be general in terms, may merely place them on active service without mentioning Korea, is it clear that it is understood that it is for Korea only, and that the undertaking the Prime Minister has given tonight applies no matter what the wording of the order in council may be?


Louis Stephen St-Laurent: Yes.


Stanley Howard Knowles: I trust that "yes" is on the record.


Ellen Louks Fairclough: There are two or three questions I should like to direct to the minister, if I may. They have to do with enlistees in the special force for Korea. In his remarks the minister used the phrase "war or act of aggression". As to the women who are left at home, it does not matter a great deal what the description of the activity is; the net result is the same. They are left in their homes to look after themselves and to rear their families with whatever provision is made for their support.
In this regard I should like to ask the minister whether or not the basic family allowance is the same as it was in the last war; that is, I believe, $30. Is there added thereto an amount for each child; and if so, how much? What definite steps have been taken to ensure compulsory assignment of pay to dependents? I might explain that I tried to secure this information from the central command of the military district in which my riding is situated; and the answer I received was that arrangements are in hand) for compulsory assignment direct to the dependent.
I have in my office documents showing two or three instances in which there has been no assignment to the wife of an enlistee, and in one case at least she was in dire circumstances as a result thereof. In another case I was given to understand-I must admit without proof; nevertheless I was told-that this particular woman was assured that an assignment had been made to her but that

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because the arrangements were not yet finalized, the cheque bad been sent to her husband. I should like to ask the minister whether or not the arrangements are in effect for the support of dependents of enlistees in the special force, and whether or not the compulsory assignments, if in effect, are being forwarded directly to the dependents.


Mr. Deputy Speaker:: Order. I think it would be better to vote second reading and then to go into committee where these questions may be answered.


Ellen Louks Fairclough: I should be quite happy to raise the matter in committee, but I could not find a clause under which I thought it could properly be raised. That is the reason I have mentioned it at this time.


Mr. Fournier (Maisonneuve-Rosemont):: You
may ask any questions you wish on section 1.


Mr. Deputy Speaker:: It is against the rules to ask questions on second reading.


Gordon Francis Higgins: I have one question. I do not know whether it is a fair question to ask now or not. In view of the Prime Minister's statement of the seriousness of the moment, is it the intention, when the business of the house is finished, to adjourn or not?


Louis Stephen St-Laurent: I have already spoken.


Mr. Deputy Speaker:: Is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Dion in the chair.
On section 1-Short title.
Brooke Claxton: In answer to the question of the hon. member for Hamilton West, I can say that a similar question was asked last night and dealt with in part at page 405 of Hansard, which no doubt the hon. member has seen. The army is instituting a compulsory assignment of pay. The amounts have to be worked out. We have no intention whatever of reinstituting the former dependents' allowances. The present system of married separation allowance is much more adequate, we think, and it will keep the members of the special force in line with the active force.


Ellen Louks Fairclough: I agree with the minister that the former provisions are far from adequate under present conditions. Do I understand now that no provisions have been made, and at this time there are none in effect?


Brooke Claxton: They are in effect now.


Ellen Louks Fairclough: What amount is payable to a wife over and above the basic rate for each child?


Brooke Claxton: So far there is only the addition for married people with children, but not in respect of each child. The arrangement so far is identical with that in effect for the active force.


Ellen Louks Fairclough: I have not been answered yet to my own satisfaction, at any rate. I do not know the amount, and I do not know whether the assignment is compulsory on the enlistee and, if so, whether it goes direct to the wife.


Brooke Claxton: The pay rates and the rates of separated family's allowances were put on Hansard on September 6, 1950, at page 317.


Ellen Louks Fairclough: The point that I am particular about is that the information I have shows that these cheques are not coming through to these women. Can the minister assure me that they definitely are going to them?


Brooke Claxton: Nine-tenths of the men have been enlisted for only two weeks; but the greatest possible pressure has been put on the paymasters, as I indicated last night, to make payments of separated allowances even in anticipation of the time at which they should be paid under the existing pay regulations. In fact I think I have broken the pay regulations along the lines that the hon. member wants.


Ellen Louks Fairclough: I would hope so. If nine-tenths of the men have been in the forces for only two weeks then Hamilton must be well in the forefront of enlistees, because from what I have heard a number have been in the service for much longer than two weeks. Some of the women have had to apply to the welfare department of the city of Hamilton for assistance to tide them over until such time as they receive the allowance from the government in respect of their husbands.


Edmund Davie Fulton: Could we have a further explanation from the minister as to just why it is felt that the definition of emergency in the National Defence Act does not cover the situation with which we are confronted?


Brooke Claxton: All I can tell the hon. member is that in the view of the government and of its legal advisers this is not a war, invasion, riot or insurrection.


Edmund Davie Fulton: It seems to me that that means we are not going to be engaged in a war in Korea.


Brooke Claxton: No; we are going to be engaged in and are going to try to stop an act of aggression.


Edmund Davie Fulton: How are we going to stop it?


Brooke Claxton: We hope in the same way as the other forces fighting there, and that is why our troops are to go there.


Edmund Davie Fulton: I just want to know whether it is not the view of the government that the troops that are in Korea are engaged in warfare.


Brooke Claxton: Certainly they are engaged in warfare, but no nation so far as I know has declared war on any other nation, and we are not going to be the first.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
On section 3-Provision for release.
George Randolph Pearkes: Owing to the new and very difficult conditions of this warfare, which is not a war, I cannot help feeling that some definition of active service is now required. It is all very well to talk about resisting an act of aggression. We resisted an act of aggression in 1914 when the British Expeditionary Force was sent into the low countries. Certainly a declaration of war had taken place; but there is no declaration of war in Korea. At the same time it is hard to believe that these United States troops who are fighting in Korea are not on active service; and yet our troops apparently are going to be placed on active service and are not going to be at war. It is all so complicated. I suggest that some definition be given of what is meant by being on active service.


Brooke Claxton: I think the troops there will know that they are on active service.


George Randolph Pearkes: Really, that is no answer. It is not what the troops know. The troops may believe that they are on active service. Apparently the Canadian destroyers have been firing shells into the enemy territory. According to press reports, the personnel of the destroyers have been landed and have carried out commando operations. That would be on active service, but they have not been so placed. They would think that they were on active service, but they have not been placed on active service yet. If they are on active service then parliament should have been assembled within ten days. I am not trying to make things difficult. I am asking for what I think is now necessary, namely, a clear definition of what being on active service is.


Brooke Claxton: The hon. member would not wish me to suggest that perhaps it is not a good thing to have a committee of parliament dealing with the bill, because a committee of parliament dealt with this bill, and he was an honoured and useful member of it, without
Canadian Forces Act
leading to such a definition. But he knows just as I do that the expression has existed from time immemorial in the war act which has so long been one of our texts, incorporated in our laws, in the king's rules and regulations for the forces in Great Britain and Canada, and in every other military text.
It has not been considered desirable so far to define it because it is one of those terms which I think everyone finds difficult to define -so difficult, indeed, that we are here assembled tonight adding a case where we think there is active service and where our troops should go, if it is the intention of the government.
Mind you, I appreciate the hon. member's difficulty, and I must say when I was discussing the bill with my officers we went into this at great length, just as the hon. member has no doubt during his thirty-five or forty years of service. However, in the end we felt we had better leave it as it was.


Howard Charles Green: Were the three destroyers not placed on active service?


Brooke Claxton: No.


Howard Charles Green: I cannot understand why under the National Defence Act they should not be treated in the same way as the troops.


Brooke Claxton: No; they will be now. But I was advised by the Department of Justice that it was quite possible to send them to Korea without putting them on active service.


George Randolph Pearkes: That was because they are members of the active component of the navy.


Brooke Claxton: Yes, they have to go where they are told.


George Randolph Pearkes: They are now on service.


Brooke Claxton: Yes, they are now on service.


George Randolph Pearkes: But I presume the special brigade, being part of the active component of the army, could also be sent to Korea on service, and they might be fighting pretty hard in Korea and still be termed not to be on active service. It is very complicated.


Brooke Claxton: That is right.


Edmund Davie Fulton: What is the position if there is no war or state of war declared to exist, which I understand is this position, when any of our troops, naval personnel or air force personnel are taken prisoner while engaged in warfare or hostilities? What happens if they should be taken prisoner by the enemy, or the person with whom we are waging warfare, although we are not at war? Under those circumstances, what is the position of a prisoner?
500	HOUSE OF
Canadian Forces Act


Brooke Claxton: I understand the United Nations forces, working under a unified command, and consisting largely of United States forces, are observing the rules of war, and a request has been made to the enemy forces that they do likewise. The position I should say is uncertain.


Edmund Davie Fulton: I understand we have asked that the rules of war be enforced, or in force, although we are not at war. I do not see how we can expect the North Koreans, who probably do not understand the legal refinements, to accede to that request, unless we are prepared for the purposes of the United Nations forces to take the logical step in restraining aggression by saying that we must be under a state of war, until the aggression is restrained or ended.


Brooke Claxton: I do not know what point the hon. member is trying to make.


Edmund Davie Fulton: It is I suggest a serious point. What is the status of such of our personnel as might be taken prisoner and thereby fall into the hands of the enemy, when our own position with relation to the enemy is not defined? What international or other rules of war or peace can we invoke with respect to the treatment of prisoners? We are not at peace with them.


Brooke Claxton: On that account do you want them not to go?


Edmund Davie Fulton: I beg your pardon?


Brooke Claxton: On that account do you want them not to go?


George Alexander Drew: Now, now-


Joseph-Alfred Dion: Order.


Edmund Davie Fulton: I can only say that I think that remark-


Joseph-Alfred Dion: Order. It seems to me the discussion is absolutely out of order on this section.


Edmund Davie Fulton: There has been considerable discussion as to the status of our personnel in the navy, who are already over there. I was following up that question.


Joseph-Alfred Dion: That does not apply to section 3.


Edmund Davie Fulton: There was a discussion of that matter which, it seemed to me, was related to the question as to whether or not they are on active service. It was that aspect of the matter I was following up. With respect to the minister's last remarks, I shall content myself by saying that I do not think they were worthy of him, and I do not think he would have made them had he not been, shall I say, under considerable pressure for the last three days. However, I do say it is 

a serious question calling for a serious answer because, frankly, I am of the view that we are avoiding the crux of the matter until we have decided whether or not a war exists.


Brooke Claxton: Mr. Chairman, I never heard that by reason of my being under pressure at any time I had done anything I should not do. I can assure the hon. member that my interpolation was solely related to the fact that it struck me he was trying to spin out a discussion which was, first of all, irrelevant and, secondly, something which had already been dealt with. I thought I had indicated that the question as to how these troops fighting in Korea would be regarded by the enemy was a matter under discussion, and that the United Nations forces were observing the rules of warfare, and that the rest of it was under discussion.


Edmund Davie Fulton: I do not think the minister said that before.


[Stage Direction]
Section agreed to.
Sections 4, 5 and 6 agreed to.
On section 7-Extension of veterans legislation.
Alfred Johnson Brooks: We have heard this evening an explanation which, I think, is satisfactory to members in the committee, that men of the navy, the air force and the army will be pretty well looked after. There is another group of men who, as the minister will remember, we felt during the last war should be accepted as a branch of the service. I understand that already four ships of the merchant navy have been chartered to the United Nations for the conveyance of troops, munitions and the like to Korea. What is the position of the government as regards the merchant navy and, in this instance, will they be considered as the fourth branch of the service? I have here a resolution sent to the Minister of Transport. Perhaps I should read it so that there will be a basis on record for my question.
This communication is dated August 23, 1950, and was sent by the national secretary of the Merchant Navy Veterans of Canada to the Hon. Lionel Chevrier, Minister of Transport, and states:
Whereas the government in its advertisements seeking recruits for the army, navy and air force to serve in the Korean conflict promises these men all of the benefits under the veterans charter, and Whereas, four Canadian merchant ships, manned by Canadians, have already been chartered to the United Nations and are already serving in the same war without any of the rehabilitation benefits of the veterans charter, and Whereas, modern warfare with its long-range planes, faster submarines and atomic bombs presents a danger greater than ever before to merchant seamen, be it therefore

Resolved that the government amend the veterans charter to include merchant seamen who will be required to serve in the Korean war and any other war in the future.
We already have a squadron of the Royal Canadian Air Force doing practically the same work as are these men of the merchant navy. I think it is time these men had some understanding as to their status in the present situation.


Brooke Claxton: So far as we know, no members of the Canadian merchant marine are yet directly involved.


Howard Charles Green: Four ships.


Alfred Johnson Brooks: Four ships have been
chartered.


Brooke Claxton: Chartered, yes. That will become a question for decision by my colleague the Minister of Transport, and for recommendation by him and the Minister of Veterans Affairs, and the committee we propose to set up. There is nothing in this legislation to deal with it.


Alfred Johnson Brooks: I may say that this matter
was considered by the Minister of Transport, the Minister of Veterans Affairs and the government during the last session, and I think these men received very shabby treatment. I hope more consideration will be given to their claims this time than was given before.


Howard Charles Green: I think that consideration
should be given to the suggestion of the hon. member for Royal. Under the acts listed in the schedule to Bill No. 3 there is some provision for a few of the merchant navy men of the last war. Some of them who have pensions have certain rights under these particular acts. I believe there are already four ships with Canadian crews serving in Korean waters. Therefore I think the government would be well advised to consider whether or not there is to be coverage for such men. I hope that the decision will be in favour of giving them the protective benefits of these different acts.
There is one other question that has arisen. I had a letter today from a young man who is thinking of rejoining one of the forces, but he is worried about whether or not the Reinstatement in Civil Employment Act will be utilized in full for the protection of men who join the present force. Under section 7 the government need only put a part of the act in effect so far as the men in the new force are concerned. I believe it would be helpful if assurance could be obtained from the government to the effect that the provisions of the Reinstatement in Civil Employment Act will apply in full to the men who
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join one of the forces for service in Korea. Of course they want to know that such is the case before they enlist. There is no point in giving up their jobs if they are not going to have protection under this act.


Brooke Claxton: Of course the bill provides
for the governor in council extending the benefits of the act to the classes covered retroactively to the 5th of July this year, at which date ships were sent to Korea. The intention is to look through the many provisions of the act and apply them to just the kind of cases that the hon. member has in mind. That assurance has been given publicly and it will be lived up to. There may be some provisions of the Reinstatement in Civil Employment Act which may not be applicable. I am advised that that is so, but the principle and intention of the act will be carried out fully so that men who leave jobs for the purpose of joining the special force will be reinstated in their civil employment.


Howard Charles Green: With regard to the Pension Act, is it the intention that the insurance principle shall apply as from July 5 to all forces which are to be placed on active service?


Brooke Claxton: Certainly all forces placed on active service for service outside Canada. As to the rest, that remains to be seen.


Douglas Scott Harkness: I understand from what the minister and the Prime Minister have said that these various veterans acts will be made applicable entirely or in part by regulations and orders in council. I wonder if the minister can give us any indication when the regulations and orders in council will be made public so that men who have enlisted, their families and the general public, may know just what the situation is. I think the general impression that has gone out throughout the country as a result of press releases and so forth is that all the veterans legislation passed following the last war would be applicable to the men of the special service brigade and those in the other services who were on active service. As has *been pointed out by the Prime Minister, some of these things may not be applicable to them. Therefore the sooner the position is made definite the better so far as the government is concerned, the men themselves and the general public. Can we get some idea as to how soon it will be possible to make that information public?


Brooke Claxton: I quite agree it is very important that it should be done just as soon as possible. The publicity to which the hon. member refers started with the advertisement

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for recruits which appeared, in newspapers on the 7th and 8th of August. It said:
Veterans benefits, reinstatement in civil employment and other appropriate benefits under the veterans charter, as extended by parliament.
It is the intention to put into effect at once measures such as the Reinstatement in Civil Employment Act because this may benefit even those who have only been in the force for two or three weeks. Therefore it becomes an absolute necessity that it be brought into effect at once. With respect to some of the other benefits, they are more complicated and more time will be taken to work them out, but so far as the Reinstatement in Civil Employment Act is concerned, that must be brought into effect at once, and it will be done.


Alfred Johnson Brooks: Should the Pension Act not be brought into force at once also?


Brooke Claxton: It will all be retroactive to the 5th of July, but I quite agree that any pension provisions should be brought into effect at once.	.


George Randolph Pearkes: Could consideration be given to the application of the veterans legislation to any civilian personnel who are employed in the air transport that may be taking place? We had difficulty in connection with the ferry command personnel in the last war.


Brooke Claxton: That is a question for my colleague, the Minister of Transport. He is here and has heard your suggestion, and it certainly will be considered.


Clarence Gillis: I am not satisfied with the minister's attitude so far as the merchant service is concerned. We argued that question during the last war and it has been raised many times since the end of the war. I feel that in the last war and during the period since the war the merchant service got a pretty raw deal, and I think the situation should be corrected at this time.


Brooke Claxton: It cannot be dealt with in this bill.


Clarence Gillis: It can be dealt with in this bill. Section 7 gives the right to the governor in council to amend any of the acts that have to do with rehabilitation, pensions, and so on, as they affect personnel. Changes can be made now lby regulation. If the governor in council so desires he may by regulation -extend the privileges of these acts to anyone who is taking part in this war. I think that should be done for the merchant service. We are not entering into something that is going to be over tomorrow. We are making long-range plans to fight wars in any part of the

world. I do not anticipate fighting a war in Canada. You may have to go to Europe. You certainly have a long supply line now to Korea, and you are not going to get supplies there by plane. The merchant service is definitely going to be a part of wars of the future.
Having in mind the different treatment they received after the last war compared with what was done for service personnel, I think we should do something to correct the situation. The argument was always used that the armed forces were the servants of the state, and that is correct, and that the men in the merchant service were employees of private shipping companies. The private shipping companies exploited them for war purposes but did nothing for them when the war was over. I know boys who lost their legs while in the merchant marine, and who were never fitted with artificial limbs. Today many of them require hospital treatment because of hardships suffered while fighting that war, but they have no redress.
If we anticipate having to use the merchant marine in the next war, instead of being employees of private shipping companies I believe they should be an auxiliary of the naval service, and should go on these boats at naval rates of pay and with some training. Then when the next war is finished they should be treated as the fourth arm of the services. I leave that thought with the minister; I do not think it is good enough to say they cannot come under the act and cannot be considered service personnel, because without a good, efficient merchant service you cannot fight a war in Korea or anywhere else. How are you going to get your supplies there? But the merchant service must get better treatment than they were given during the last war, and I think the answer is to make them a naval auxiliary, and recognize this as the fourth arm of the services. You may not be able to do anything about this now, but the temporary arrangement is that the governor in council may make regulations. I understand that next session the veterans affairs committee will work on a new bill, but in the meantime I want the minister and his advisers to consider the advisability of bringing these men in as I have suggested.


Brooke Claxton: I can tell the hon. gentleman that while, as he knows and has said, this bill only deals with the Canadian forces, the suggestion he has made has been under consideration by the maritime commission, the

Department of Transport and the Department of National Defence. It is receiving active consideration should another emergency arise.


Angus MacInnis: I think too much criticism of the treatment given the men of the merchant navy during the last war has been expressed to permit this matter to pass without further consideration. If no provision can be made in this bill then another bill should be brought in containing such provision. There is no reason why the sailors in the merchant ships should have to go without protection, any more than the men in the other services should be left without protection. Since it is after eleven o'clock, Mr. Chairman, I think we had better let this section stand.


Brooke Claxton: I ask the assistance of the committee to get this bill through tonight. Hon. members have been helpful indeed, and we are now at the last section. I believe hon. members must recognize that the merchant service is not relative to this bill at all, and I have given the assurance that the matter is under consideration. The Senate will be sitting tomorrow, so I ask my hon. friend if we could not possibly get this through tonight.


Angus MacInnis: And I asked the minister something just now, whether another bill will be brought in to look after the men of the merchant navy. In my opinion the convenience of the Senate or of this house is not as important as looking after the welfare of these men. One reason I particularly wanted to have this matter further discussed was that within the last few weeks I took up with the Minister of Transport a case on which I have been working for four or five years. It is the case of a sailor, a young man of wonderful physique, who fell down the hatch of a ship and broke his back. He has no pension, nothing whatever. Thinking I might be able to arrange for him to get some vocational training, I took up the case with the Minister of Transport just a few weeks ago. This young man is six or seven or eleven days short of the required period of service; there are one or two other matters, and just because those little things have not been observed-and it was impossible for him to observe some of them-he cannot even get vocational training. That is the condition that faces every sailor on our ships.
Earlier in the discussion, when the question was raised by the hon. member for Royal, the Minister of National Defence said these men were not yet involved. I understood that though the ships had been chartered they were not yet in service, and that perhaps there was no great urgency in the matter. But now I believe there is urgency, because if
Canadian Forces Act
provision is not made now these men will have no security whatever in case accident or any other mishap shall befall them.


[Stage Direction]
Section agreed to.
On section 8-Coming into force.
Edmund Davie Fulton: I would ask the Prime Minister whether it is intended to make the orders in council placing the forces on active service retroactive to the date on which the act is to be deemed to have come into force.


Louis Stephen St-Laurent: I do not think we would have the right to do that. I do not believe we could give them retroactive effect without a special, explicit provision in the statute, though that is a matter the Department of Justice will have to consider. It is intended to go as far as we can to make these provisions operative. Some of them it will be possible to make operative under section 7 as from July 5, which I think was the date mentioned by the minister. I would not like to say we could attempt to declare that these men will be deemed to have in fact been on active service since that date. However, that is a matter that will have to be considered by the Department of Justice. [DOT]


Brooke Claxton: But with regard to the benefits a man may enjoy under this legislation, it expressly provides for retroactivity to July 5.


Edmund Davie Fulton: I realize that it is after eleven o'clock, but I think this is a matter of considerable importance. My recollection is that the benefits provided in some cases were in proportion to the length of time the men had been on active service, and we have some naval personnel over there already.


Brooke Claxton: That is why July 5 has been fixed as the date as of which the governor in council can put the schedule into effect.


Edmund Davie Fulton: Is it quite clear, then, that though it is not possible under the orders in council placing the forces on active service to make it retroactive to July 5, nevertheless all the benefits under this legislation will be made retroactive, even though the parent act which is now being applied may make them dependent upon the length of active service?


Brooke Claxton: That is absolutely right, in so far as such benefits are to be extended to active force personnel, because only active force personnel are abroad today.


[Stage Direction]
Section agreed to.
Schedule agreed to.
Title agreed to.
Bill reported, read the third time and passed.
[Stage Direction]
Business of the House BUSINESS OF THE HOUSE
Alphonse Fournier: Tomorrow we shall take up the following bills: Bill No. 5, respecting materials and services essential for the purposes of defence and national security; Bill No. 4, to make temporary provision for the regulation of consumer credit. When these two bills have passed, I think we will adjourn.


George Alexander Drew: When will Bill No. 5 be ready?


Alphonse Fournier: It will be in the boxes tomorrow morning, I am told, if it is not ready now.


Brooke Claxton: May I express appreciation of hon. members' co-operation.


[Stage Direction]
It being ten minutes after eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Saturday, September 9, 1950