1952-06-09

Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, today as usual before the doors were opened you led us in prayer for our gracious sovereign lady, Queen Elizabeth, but as today is the day when we celebrate Her Majesty's birthday officially in Canada the leader of the opposition (Mr. Drew) and I should like to suggest that we rise and supplement our usual prayer by singing together "God Save the Queen".
Whereupon the members of the house rose and sang
God Save the Queen.



THE LATE OLOF HANSON


Mr. Daniel Mclvor (Fort William):: Mr. Speaker, with your permission I should like to pay tribute to a former member of the house for the constituency of Skeena, Mr. Olof Hanson. He was a man whom we knew to be a clear thinker, honest and faithful in his service and a credit to the country from which he came. He gave meritorious service to Canada. The finest tribute that we can pay to any man is to say that he was a Christian gentleman in practice, and that was true of Olof Hanson. We join today in expressing our sympathy to his wife and family and pray that they will have the comfort that always comes from Him who promised to give comfort.


Mr. E. T. Applewhaite (Skeena):: May I take this opportunity of expressing my personal thanks to the hon. member for Fort William (Mr. Mclvor) for what he has said. Instead of taking a great deal of the time of the house, I should merely like to say that if, when I cease to be the member for Skeena, I can be held in the same esteem as was Mr. Hanson I shall think I have done my job well.



NEW MEMBERS

Mr. Speaker:: I have the honour to inform the house that the Clerk of the House has 55704-1911
received from the chief electoral officer certificates of the election and return of the following members, viz.:
Of Gage Workman Montgomery, Esquire, for the electoral district of Victoria-Carleton.
Of Michael Starr, Esquire, for the electoral district of Ontario.
Of Albany M. Robichaud, Esquire, for the electoral district of Gloucester.
Of N. C. Schneider, Esquire, for the electoral district of Waterloo North.



GOVERNMENT PROPERTY


Hon. Stuart S. Garson (Minister of Justice) moved: the first reading of Bill No. 310 (from the Senate), for the control of traffic on government property.
Motion agreed to and bill read the first time.



PRIVATE BILLS


[Stage Direction]
Bill No. 311, for the relief of Joseph Timothy O'Connor.-Mr. Winkler.
Bill No. 312, for the relief of Victoria Elias Abdelhay.-Mr. Winkler.
Bill No. 313, for the relief of Margaret Edith Grace Batt Trent.-Mr. Winkler.
Bill No. 314, for the relief of Pearl Abramo-vitch Hoffman.-Mr. Winkler.
Bill No. 315, for the relief of Lily Sperling Kofsky.-Mr. Winkler.
Bill No. 316, for the relief of Jean Isobel Taylor Cuffling.-Mr. Winkler.
Bill No. 317, for the relief of Charles William Ledger.-Mr. Winkler.
Bill No. 318, for the relief of Benjamin Gordon Church.-Mr. Winkler.
Bill No. 319, for the relief of Laura Juliette Aubert Macdonald.-Mr. Winkler.
Bill No. 320, for the relief of Jean Lesly Macfarlane Cameron.-Mr. Winkler.
Bill No. 321, for the relief of Sarto Desnoyers.-Mr. Croll.
Bill No. 322, for the relief of Jean Marc Duckett Audet.-Mr. Winkler.
Bill No. 323, for the relief of Eugene Cote. -Mr. Winkler.
Bill No. 324, for the relief of Jean Baptiste Armand Michaud.-Mr. Winkler.
Bill No. 325, for the relief of Anna Lapinska Cholewicki.-Mr. Winkler.
[Stage Direction]
Questions
Bill No. 326, for the relief of Alexander William Hyndman.-Mr. Winkler.
Bill No. 327, for the relief of Vivian Mary Dickson Stewart.-Mr. Winkler.
Bill No. 328, for the relief of Stanley Baker Smith.-Mr. Winkler.
Bill No. 329, for the relief of Rebekah Ellinor Conley Burman.-Mr. Winkler.
Bill No. 330, for the relief of Allan Gowans. -Mr. Winkler.


Mr. Catherwood:: 1.	Is the wool purchasing agency set up under the Department of Trade and Commerce still in operation?
2.	If so, how much wool has been purchased, in dollar value, by the agency since it was created?


Mr. Dickey:: 1.	In February, 1951, a wool division was established within the Canadian Commercial Corporation, which at that time was responsible to the Minister of Trade and Commerce. On April 1, 1951, the Canadian Commercial Corporation, upon the inception of the Department of Defence Production, became one of the associated crown companies of that department. The wool division is still in operation as a division of the Canadian Commercial Corporation.
2.	The dollar value of wool purchased by the wool division up to May 31, 1952, is $26,565,351.13.



CONTRIBUTIONS TO DRAMA FESTIVALS


Mr. Knowles:: Are distilling companies allowed a deduction for corporation income tax purposes with respect to contributions made to drama festivals?


Mr. McCann:: Yes, as a donation to a charitable organization in Canada.



POSTAGE STAMPS


Mr. Brown (Essex Wesi):: 1.	What are the names of the responsible departmental officials who have approved of the designs of each of the following postage stamps issued in the past year, namely (a) three-cent Prime Minister Robert I,. Borden, commemorative issue; (b) four-cent Prime Minister W. L. Mackenzie King, commemorative issue: (c) four-cent postal centennial, commemorative issue; (d) five-cent postal centennial, commemorative issue; (e) seven-cent postal centennial, commemorative issue; (f) fifteen-cent postal centennial, commemorative issue; (g) four-cent royal visit, commemorative issue?
2.	What office of the postal department does each responsible departmental official hold?


Mr. Cote (St. Jean-Iberville-Napierville):: 1 and 2.
(a)	3-cent Prime Minister Robert L. Borden, approved by the Hon. G. E. Rinfret, K.C., M.P., Postmaster General.
(b)	4-cent Prime Minister W. L. Mackenzie King, approved by W. J. Turnbull, deputy postmaster general.
(c)	, (d), (e) and (f) 4-cent, 5-cent, 7-cent and 15-cent postal centennial issues, approved by W. J. Turnbull, deputy postmaster general.
(g) 4-cent royal visit issue approved by the Hon. G. E. Rinfret, K.C., M.P., Postmaster General.



QUESTION PASSED AS ORDER FOR RETURN


Mr. McGregor:: 1.	Have any of the special private cars, retained for the use of cabinet ministers, travelled between Windsor and Ottawa, during the past twelve months?
2.	If so, how many times, and on what dates?



MOTION FOR PAPERS


Mr. Poulioi:: For a copy of the by-laws of the board of directors of the Canadian National Railways under chapter 172 of the Revised Statutes of Canada, 1927, as amended.


Mr. Chevrier:: The return requested by the hon. member is virtually identical with that requested by him previously and to which I replied on May 26. The answer which I must make today is the same as made on that occasion. There are virtually no by-laws of the Canadian National Railway Company which were passed under chapter 172 of the Revised Statutes of Canada, 1927.
I am informed, however, by the company that such by-laws as do exist were passed pursuant to chapter 170 of the Revised Statutes of Canada, 1927; that all are of a private or domestic nature concerning the internal management of the railway, not affecting the public generally; and that the company objects to producing them.


Jean-François Pouliot: Mr. Speaker, I rise on a question of privilege.
In the first place, I want to have the by-laws passed in virtue of chapter 172 of the Revised Statutes of Canada, 1927. I now make another motion in virtue of chapter 172 of the Revised Statutes of Canada, 1927, as amended, and it covers the objection mentioned by the minister. Now those gentlemen, the directors of the railway, represent the government of Canada and the country in the

management of the Canadian National Railways, and those regulations cannot be any more pfivate than those which the minister has tabled and that I have received from the deputy minister after the motion is passed. Therefore I do not see why the Canadian National Railways or the board of directors should refuse to give us the by-laws that I am asking for. I hope the minister will reconsider his answer and that the by-laws asked for, which are those of the men representing the Canadian government and the Canadian people, will be given as requested.


Lionel Chevrier: Mr. Speaker, I am afraid there is nothing I can add to what I have said, but the house knows what the procedure is. My hon. friend is free to question any of the officers of the railway when they come before the committee on railways and shipping. He will have an opportunity perhaps later this week. The railway officers may then wish to submit to a ruling of the committee, and it will be up to the committee to decide whether these by-laws should be produced-but it has never been the practice of the house to compel the Canadian National Railways to produce matters which they think concern the internal management of the railway, and they have indicated to me that submission of these by-laws would offend against that practice. 1 have no other alternative but to bring it to the attention of the house.


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


Some hon. Members:: No.


Jean-François Pouliot: I will ask the minister, if he has no objection, to let the motion stand until I have an opportunity to ask questions of the representatives of the Canadian National Railways. It is a very reasonable suggestion.


Lionel Chevrier: I have no objection.


Mr. Speaker:: Motion stands.



ARMY BENEVOLENT FUND ACT


Hon. Alphonse Fournier (for the Minister of Veterans Affairs) moved: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend the Army Benevolent Fund Act, 1947, to increase the rate of interest from two and one-half per cent per annum to three and one-half per cent per annum on minimum monthly balances to the credit of the fund not in excess of five million dollars.
Proposed. Legislation
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


Alphonse Fournier: that the house go into committee at the next sitting to consider the following resolution:
That it is expedient to introduce a measure to amend the Cold Storage Act to provide that the governor in council may, out of any money appropriated by parliament for the purpose, grant towards the construction and equipment of certain warehouses a subsidy not exceeding thirty-three and one-third per cent of the amount expended or approved of in such construction and equipment; and to provide further that the governor in council may, on the recommendation of the Minister of Agriculture, authorize the payment in full of all or any unpaid instalments of a subsidy that is or may become payable under a contract entered into prior to the coming into force of the amending act.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the consideration of the house.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. Howard C. Green (Vancouver-Quadra):: I have a question for the Minister of Agriculture, and in view of the fact he is not present today perhaps one of the other ministers would draw this question to his attention or to the attention of his parliamentary assistant. Why is no support price being applied in British Columbia to cattle originating and sold in that province, but only to cattle imported from another province?


Righi Hon.  L. S.@: I shall see to it that this question is brought to the attention of the departmental officials, and have either the assistant to the minister or someone else supply the answer.



RESALE PRICE MAINTENANCE


[Stage Direction]
On the orders of the day:
Mr. Clarence Gillis (Cape Breton South):: I should like to direct a question to the

Inquiries of the Ministry Minister of Justice, and my notice to him supplies the background to the question. Can the minister inform the house if under the resale price maintenance legislation there is any machinery whereby the government can examine the cost of drugs to the public to determine if the price at which those drugs are retailing is in keeping with the cost of production and distribution?


Mr. Speaker:: Is that not a question which should appear on the order paper?


Stuart Sinclair Garson: I think it can be answered briefly, Mr. Speaker. -I want to thank the hon. member for having given me notice of his question. Section 37A of the Combines Investigation Act, Which is the resale price maintenance legislation referred to by my hon. friend from Cape Breton South, provides in effect that no supplier of goods may dictate the price at which the goods he sells shall be resold. Such legislation does not provide for any examination into the cost of production or distribution, for such is not its purpose.
If the hon. member will give me the facts of the situation he has in mind, we shall be glad to consider whether the high prices he alleges may be the result of any situation which would come under the Combines Investigation Act.


Clarence Gillis: Thank you, sir; I shall do that.



POTATOES


[Stage Direction]
On the orders of the day:
Clarence Gillis: Since the Minister of Agriculture is not in his seat, perhaps someone who is substituting for him could answer this question. Can the minister explain to the house why the price of potatoes has more than doubled over the past month? If the minister's substitute cannot answer now, perhaps the minister or his parliamentary assistant could answer later.


Louis Stephen St-Laurent: I do not know that anyone on
behalf of the government can explain why there are not enough potatoes to go around, and why people are bidding prices up to levels that are higher than we usually pay. I shall ascertain whether the Department of Agriculture has any explanation, and if so I shall see that it is brought down to the house.



SUGGESTED COMMONWEALTH CONFERENCE


Clarence Gillis: Mr. Speaker, on June 3 the leader of the opposition moved a motion, and at the time the debate was adjourned I was making some remarks on it. It is now June 9, and as the motion was moved on June 3, for the benefit of those who may read Hansard today I think it would be in order if that motion were restated so that it would appear on today's record. As reported on page 2852 of Hansard for June 3, the motion reads as follows:
This house is of the opinion that the government should consider the advisability of taking steps to convene at the earliest possible date a conference of the nations of the British commonwealth to seek means by which there may be convertibility of commonwealth currencies, and to explore all the possibilities for restoring and enlarging those traditional markets upon which our prosperity so largely depends.
At the time the debate was adjourned, I had made certain observations which I am not going to repeat. I have this to say to the leader of the opposition's motion, however, that it is one with which we do not disagree. In these days of force and dictatorship, we feel that any section of the public desirous of ironing out a difficulty around the conference table should have nothing put in its way to coming to an understanding on any problem; that is democracy at work. We have no objection to the motion on those grounds, but on the other hand I feel that the demand that the commonwealth countries alone should be consulted in a matter of international trade and the convertibility of currency is going into a field that is already established, and is narrowing down the possibility of reaching the solution to the international trade problem on a world-wide basis.
I believe we all recognize that after the last war international trade, as we understood it in the past, had been broken completely. There is no mechanism today whereby you can measure what international trade may be in the future. I believe that at the end of the war that was generally recognized, because all the allied nations involved in that war decided that international machinery would be necessary in order to iron out the world's problems. Everyone recognized that we were entering a new age, that we had reached the end of an era and that international trade, defence and related matters were matters that required the attention of an international body that would give each country the opportunity of getting around a conference table and deciding how these difficulties might be ironed out. It was then that the United Nations was formed.

All these social and economic problems were passed over to the United Nations. We have set up within the structure of the United Nations an organization known as the world food organization, for the purpose of ascertaining how the surpluses of the countries that have surpluses might be made available to the countries that were blasted out of production, and would therefore take a long time to return to a position whereby their resources might establish some reasonable standard of living for the people. In my opinion the proposal for a commonwealth conference on international trade and the convertibility of currency is, to a certain extent, entering the field that is already occupied by the United Nations. I should like the leader of the opposition, or any other member of his party who speaks later, to state what sort of machinery you are going to get at a conference between commonwealth nations that is not already available through the United Nations agency that is studying the problem.
It is suggested that we might have a commonwealth conference with Britain, Australia, New Zealand and Canada, nations that are already members of the world food organization, and who have the best brains available in their countries working in that organization to sell the idea of distribution of surpluses to the countries who have not the means with which to live.
In the second place, the problem is an economic one. Within the structure of the United Nations we have the economic organization, again with the experts from the various countries, advising as to ways and means of rehabilitating the economies of the backward countries. The problem of international trade and the distribution of goods is closely related to the economic problem. The convertibility of currencies, the stabilization of the currencies of the world, is another matter that the Bretton Woods conference ironed out. An international bank is established. The mechanics are there and in my opinion the United Nations is the organization to which we should be giving all the available information on the problems that are suggested for discussion by the motion of the leader of the opposition.
While I said that there is no harm in having a conference and an exchange of ideas, in the final analysis the solution, in my opinion, is not to be found within any bloc of nations. It is a world-wide problem. The world is so closely linked together that if we try to separate and to isolate any particular section of it, on the basis of economics or the distribution of food, then we are immediately getting into trouble.
), 1952	3029
Suggested Commonwealth Conference
I realize the fact that in the matter of defence it is necessary to set up regional pacts, as we have done. But again that regional pact is set up under the charter of the United Nations and is subject^ to examination from time to time by the United Nations. I do not like to see the suggestion, which is contained in the motion of the leader of the opposition, that we should isolate ourselves from the United Nations by the calling of a separate conference of the commonwealth nations to duplicate the responsibilities and authorities that we have centred in that world organization.
The second point that I should like to make is this. The leader of the opposition suggests a commonwealth conference. In his speech he presupposes that the centre of the problem is Great Britain herself. I agree with him that such is the case, but I do not think that any commonwealth conference, on the basis of international trade, is going to solve the problem of Britain. In my opinion, Britain's problem is one of population. Britain has 45 million to 50 million people centred in an area in which there are resources sufficient to maintain some kind of standard of living for perhaps 25 million or 30 million people. Again, I think that the question which Britain has to face up to and which the rest of the world must face up to is that of immigration.
I believe that the United Kingdom as such must consider the problem of relieving her economy by getting more of her people out to other parts of the commonwealth that are in a position to absorb them and where they can make some contribution. I think it is a backward way of doing things to keep Britain in the position in which she is, with the imports that she has to take in to feed her people and the exports that she has to send out in order to get the imports. She is in an impossible position with regard to arriving at any kind of solution to the problem of looking after her population, on the basis of the resources that she has at the present time.
My opinion is that Canada is in a position to absorb a large number of immigrants, properly selected and properly placed. To me it seems rather stupid for us on this continent to keep on producing and building up surpluses with the end in view of shipping those surpluses over to Britain, while at the same time the more we send over to Britain, the more she has to export in order to live. Instead of its being an economic problem that can be solved either by convertibility of her currency or by some international trade agreement, I think the crux of the problem is to be found in the population of Britain, based on the resources that she has at the present time.
3030	HOUSE OF
Suggested Commonwealth Conference
It would have been different if the leader of the opposition had suggested that a conference of that kind should be called, for the purpose of determining Britain's future on the basis of population and available resources, with the end in view of zoning this country to tap the available resources all over this part of the North American continent in order to place immigrants there to develop new territories and new resources, and to create new wealth, to cut down the burden that Britain now has with regard to imports and exports on the basis of the population she has at the present time. That is quite a long story. It requires a great deal of analysis. I only mention it at this time because I think it is nearly time that we got around to considering that particular angle.
There is another thought that I should like to leave with members of the house before I sit down and it is this. With regard to many commodities in this country, we are neglecting our internal consuming market.
I am not going to go into the long story of beef and high prices. I have read a great deal on that subject within the last few months; and in my opinion we have lost in this country a terrific market for beef because of high prices. It is said: Put a floor under it. That is fine. But where you have a floor under something, you must have a ceiling; and there has not been a ceiling.
I believe that we have priced the average Canadian out of the beef market over the past year. I think that the government-the Department of Agriculture particularly- should take a look at that particular market because it is one in which at the present time we are getting pretty badly stuck. We have United States embargoes, and we have made a tripartite agreement with Great Britain and New Zealand to accept some of our surplus beef; but at the same time we have lost in this country, over the past couple of years, a large market right in Canada because we have fairly well priced ourselves out of the market. That situation applies not only to beef. I asked a question this afternoon as to why the price of potatoes in this country has doubled during the past month. What is the reason for that? In my opinion there is shortsightedness on somebody's part. The Prime Minister (Mr. St. Laurent) said he did not know why there was a shortage of potatoes. That is the responsibility of the Department of Agriculture. Is there a shortage of potatoes, or is it a matter of some smart persons in the centre, who have large warehouses in this country, storing potatoes and creating an 

artificial shortage so that they can get whatever price they want to put them on the market for? Remember the lesson of J. S. McLean with regard to butter. Butter was stored in this country and prices were driven up until they were sure that they had the market in the position where they could get the highest prices; that situation was not because of a shortage but because a shortage was deliberately created.
Our own market is the one that we should be regulating and watching carefully. In my opinion, if we watch it as carefully as we should, we may not be so dependent on export markets as we appear to be at the present time. There are a great many things that we can do within Canada to protect ourselves, in developing and maintaining our own internal consuming market; and that depends to a large extent on how we allow our prices to fluctuate in this country. With regard to a commodity which is as necessary as are potatoes to the average person's table, it is the responsibility of the government to see that a reasonable supply is available. There is no reason that I know of why, within the past six months, there should' be the terrific shortage of potatoes that there is supposed to be in Canada at the present time. It is no excuse to say that because a commodity is in short supply it should be that much more expensive. That is an illogical argument. It did not cost any more to produce those potatoes. They should not be any higher in price to the consuming public. It is merely a matter of someone who has control of the fixing of the price of the commodity taking the general public by the throat because of the fact there is a shortage. In my opinion there is now in the hands of the government machinery to stop that kind of thing through the resale price maintenance legislation under the Combines Investigation Act. I hope that that legislation is not just another statute that is put away to gather dust. I hope there is machinery behind that particular statute so that situations like the price of potatoes in the country today can be taken hold of and an investigation made and the general public not be hijacked as they appear to be at the present time.


Mr. Brooks:: How about when they were 25 cents a barrel?


Clarence Gillis: Well, if the hon. member will tell me when they were 25 cents a barrel I will say something about it.


Alfred Johnson Brooks: I can tell you they were 25 cents a barrel, on a number of occasions.


Clarence Gillis: That is not information at all; it is just an assertion.


Alfred Johnson Brooks: Well, you should know that.


Clarence Gillis: I never paid 25 cents a barrel at any time I bought potatoes. I had to pay more than 25 cents a barrel.


Alfred Johnson Brooks: That is all the farmers got.


Clarence Gillis: I am not arguing the farmer's case at the present time; I am arguing the case of the consumer in Canada, and the question of markets and the relationship of the internal market to the export market.


Alfred Johnson Brooks: I am not in agreement with the high prices at the present time.


Clarence Gillis: We should start at home and put our own house in order. In any international relation I believe that the domestic economy should be the first yardstick. You cannot create chaos at home and expect to have an orderly market outside.
I made most of my remarks on this particular subject on June 3 when the amendment was moved by the leader of the opposition, and I am not going to extend them any further.


Mr. Victor Quelch (Acadia):: I regret that I was not in the house when the amendment was moved. I was unavoidably absent because I was taking part in the deliberations of a select committee; therefore I did not hear the speeches by the Minister of Finance (Mr. Abbott) and the Minister of Trade and Commerce (Mr. Howe) and the greater part of the speech of the leader of the opposition. However, since that time I have read their speeches, and a number of other speeches that were made at that time. I was very disappointed that within those speeches I did not find any suggestion as to how the problems outlined in the amendment could be met.
However, before going on I should like to comment briefly on a few of the statements made by the previous speaker, with a number of which I agree. He referred to the fact that the United Nations Organization has a number of ancillary organizations that were attempting to deal with this problem. He referred to the food and agriculture organization. I agree with him that on that body there are some excellent men who have given a lot of study to the problem of getting surplus products to needy people in other countries. For instance, they introduced a proposal for a world food board. Then they also introduced a proposal to set up an international commodity clearing house, in my opinion both excellent proposals. But the member nations voted these proposals down, and in regard to the second of those, one of the main reasons it was turned down was that it violated the principles of the Bretton Woods agreement.
So far as the Bretton Woods agreement is concerned, as I will show later, there is no
9. 1952
Suggested Commonwealth Conference solution to this problem under that agreement. The hon. member also mentioned that we should expand consumption within Canada to help reduce some of our surpluses. With that I agree wholeheartedly. We have not developed the home market to anything like the extent to which it could be developed.
I also agree with him that we should help to solve the problems of over-congested countries such as Belgium and Britain by allowing greater immigration to this country. Having got these people over here, then of course it would be our responsibility to see that they do their share to help produce the wealth of the country and to see that the purchasing power of those people, along with the rest of Canada, is maintained at a level sufficiently high to buy the production of the country and the imports that are brought in, in exchange for our exports.
I am not going to quote the amendment because the hon. member has put it on the record; but the main problem dealt with in that amendment is the one of trying to get a market for our surplus production and providing ways and means by which that production can be paid for by the nations receiving it. I noted in the speeches made the other day repeated reference to the fact that Britain lacked dollars with which to buy the produce of the dollar areas. Well, the next conclusion arrived at is that the solution to that problem is to make sterling convertible into dollars. In that regard we have to remember that dollars do not originate within the sterling area; they originate within the dollar area, and the only way the sterling area can make sterling balances convertible into dollars would be by the dollar area providing those dollars to the sterling area by a number of methods; either by buying sufficient quantities of goods from the sterling area so that the sterling area would then be able to pay for the exports from this country, or by foreign investment within the sterling area. That would be especially worth while where the productivity of any country is low. Foreign investment would then be justified to the extent needed to increase that country's productivity, so that they would have more goods available with which to pay for imports.
In that regard let us not forget that if we indulge in that kind of program we will have to be prepared to accept imports resulting from that increased production; and it is doubtful whether we would be willing to do that, because we have not even today accepted all the exports that these nations are willing to send to this country. I am very doubtful whether, if we indulged in a
3032	HOUSE OF
Suggested Commonwealth Conference program of investment in those countries, we would be willing to accept their exports to the extent necessary to permit them to pay for our exports to them.
The other alternative of course is to make loans or gifts. I am not advocating either of those, because neither of those two things is a solution; they are merely a palliative. As I have pointed out, the solution to that problem of converting sterling into dollars must, to a very large extent, rest with the dollar area because dollars originate in dollar areas. For that reason I take direct issue with the Minister of Finance when he suggests that this is primarily a problem to be solved by the sterling area. The sterling area can never solve that problem unless the dollar area is prepared to make its dollars available to them in one way or another.
The Minister of Finance, with a certain amount of pride, referred to the fact that we have made the Canadian dollar convertible for the past few months, practically a year. But why is the Canadian dollar convertible into United States dollars today? It is convertible largely as a result of the action by the United States of America in making large-scale investments in this country, thereby providing us with dollars not only to balance our unfavourable balance of trade with the United States, but also to build up our reserves of gold and United States dollars. If the United States of America had not indulged in that large-scale program of foreign investment in this country we would not have the Canadian dollar convertible today, and we would not have the Canadian dollar at par with the United States dollar. It is largely the result of that fact that the Canadian dollar is being bolstered at the present time by the United States dollar.
In so far as the calling of a conference is concerned, I would support that idea, but I am afraid it would be just like former conferences; it would meet, and there would be very little result therefrom unless we are prepared to send men to that conference with power to tread new paths. If these men are going to be tied down to follow out policies as enunciated in the Bretton Woods agreement, they might just as well stay at home, because there is no solution under the Bretton Woods agreement.
It will be recalled that in 1945, when we were discussing the Bretton Woods agreement, I bitterly attacked it on the ground that it had a pro creditor bias. It gave credit nations the right to demand payment for their exports in their own currency without putting any responsibility upon them to accept imports in return, because the only way these nations accepting goods from us can pay for them


is by selling us goods in return in order to obtain our currency. If we refuse to balance trade with these nations, then it is impossible for them to pay us with dollars. I indicated at that time that these exporting nations should be prepared to accept the currency of the importing nations, and I shall have something to say on that later on.
The leader of the opposition stressed the fact that if war developed tomorrow, in all probability we would, overnight, find ways and means of getting our production to the area of the war-to Europe, if the war happened to be there. I would agree with him one hundred per cent, because that has always been the history. We have had difficulty in peacetime, but just as soon as war has been declared, the canons of sound finance have been silenced by the cannons of war.
What happened in the last war? Within a very short time the dollar sign was abolished. That, in fact, was the expression used by President Roosevelt. A cabinet minister in England said that the humbug of finance was done away with. A system of lend-lease was introduced which merely meant that the countries of Europe were allowed to pay for their imports by their exports. That is, it was understood that at a later date they would be in a position to export goods to us in payment for goods they received from us. The dollar sign was abolished.
Unfortunately, however, just as soon as the last cannon had been fired, those canons of sound finance once again began to function in this country. They did not even wait until the end of the war. They started sniping a year before the war was over, because it was in 1944 the Bretton Woods agreement originated. If lend-lease had continued after the war, I am satisfied we would not be facing the difficulties we are facing today. I quite agree that lend-lease would have had to be modified in many ways, and I shall deal with some of the modifications I think should have been made to the lend-lease program in order to make it an effective instrument by which goods and services could be got to those countries needing them.
The present situation is a serious one. The sterling area is facing one of the worst crises in its history. In the last year its reserve of dollars and gold has gone down by over two-thirds. The leader of the opposition also referred to the fact that in the past multilateral trade and convertibility had worked fairly satisfactorily and apparently he felt that in view of the fact it had worked in the past there is no reason why it should not work in the future.

I think the reason is shown pretty clearly by a statement made by a former deputy minister, Mr. M. W. Mackenzie, on October 9, 1947. This statement, appearing in Foreign Trade, is important, because it deals with this very subject:
Our commodity exports to the United States have never been as great as our imports from that country, and even in prewar years the difference used to be of the order of one or two hundred millions. In the year 1929 it reached a prewar peak of $400 million. It was possible for this situation to develop because there was a lengthy period in which a well-working system of multilateral payments made it unnecessary for Canada, or for any other country, to be greatly concerned with its bilateral trade balances. The free convertibility of currencies provided us with a ready means of squaring our accounts with all countries, regardless of the size of the balance in any one direction. Now that the multilateral system of payments has suffered a serious breakdown for the second time, or perhaps one should say for the third time in the last generation, Canada and all other countries that are engaged heavily in international trade are facing a difficult stage in their affairs. The balance of trade between pairs of countries-that is, a bilateral balance-has become a matter of first importance and will remain so until the mechanism of the multilateral system has once more been placed in good order. That in itself is a tremendous and complex task, requiring measures of many different kinds. It is a job that will require time, even under the best of circumstances.
I think one should remember that since that time, when multilateral trade was working fairly well, and it was possible to have convertibility of currency, a great change has taken place in regard to the sterling area. Great Britain has lost a very large percentage of her foreign investments, investments which gave her access to American dollars. She also expanded her external debt very considerably, which means that a large amount of her exports today are unrequited.
I hold in my hand a document entitled "Survey '52; Where We Stand This Year". This purports to be an official account in popular form of the economic situation and prospects for 1952. It is published by the British government. In part, it says:
The present crisis is the worst yet. Between June, 1951, and March, 1952, nearly two-thirds of the gold and dollar reserves vanished.
Then it goes on to say:
In the meantime our own position had greatly worsened, too. On the one hand the import bill was leaping upwards: we were rebuilding our stocks, which had been heavily run down in 1950. On the other hand, exports were limited. They were limited in three ways: by the growing pressure of rearmament on the metal goods industries; by the shortage of steel which hampered the further growth in production; and by the falling overseas demand for consumer goods. So they rose scarcely at all. On top of that, there were the loss of Persian oil and the commencement of payments on the North American loans.
9. 1952
Suggested Commonwealth Conference
So it seems an odd time, really, to suggest that we should try to bring about the convertibility of sterling and American dollars.


Mr. Macdonnell (Greenwood):: Where did the statement come from?


Victor Quelch: It is an official account in popular form of the economic situation and prospects for 1952, and purports to have been prepared for Her Majesty's government by the information division of the treasury and the central office of information. I received it by mail, and thought perhaps all hon. members had received it.
I believe any time a person criticizes government policy or government proposals he should be prepared to make some constructive proposals in regard to ways and means by which that problem can be met. I have certain suggestions to make. Perhaps I should admit at once that these are not original; they were not my idea, but rather ideas I picked up. Perhaps I should mention where I got them, in the first place.
I was in England in 1938, and on that occasion met the late Lord Bennett and had with him a long and interesting discussion on the question of international trade, especially as it affected Canada. He suggested to me that I should meet the secretary of the London Chamber of Commerce, Mr. A. de V. Leigh, and introduced me to him. I had a most interesting talk with Mr. Leigh who, I consider, is a man at the top in his business. We know that the London Chamber of Commerce has perhaps had more experience on questions of international trade than any other body in the world. They are not just a bunch of pseudo-economists; they are men who have been engaged in business and in international trade for generations. Those men know what they are talking about.
When I came back to Canada I was particularly interested a couple of years later to receive from Mr. Leigh a copy of the report of the London Chamber of Commerce in which it deals with the general principles of a post-war economy. I should like to read one paragraph from that report:
The chamber, having considered whether there is any system which would achieve, wholly or partially, the solution of all the above problems, generally accepts the principles laid down in "A Twentieth Century Economic System," especially in respect of blocked credits for the payment of international obligations.
And then a footnote says that the publication "A Twentieth Century Economic System" is obtainable from the Economic Reform Club. It is interesting to note that "A Twentieth Century Economic System" is a little book

Suggested Commonwealth Conference whose author does not give his name. I quote from the front page where it says:
The author has decided to remain anonymous, in the hope that his fellow citizens will insist, on this occasion, on doing their own thinking, and will consider these proposals on their merits, uninfluenced by the names and reputations of the protagonists on either side.
I know the names of the men who were connected with that, but I do not feel free to mention those names in view of the fact that, apparently, they desire to remain anonymous. But they are men who have had a great deal of experience in regard to the question of international trade. I want to deal briefly with some of the proposals contained in the "twentieth century system". First of all it advocates that all exporting nations shall accept the currency of the importing nation. It points out that after all the main purpose of trade is the exchange of goods and services, and when you sell goods to another nation on that basis then all you require is a currency that will permit you to buy other goods and services from that country. If we export goods to Great Britain we do not need dollars in order to buy British goods. All we need is sterling with which we can buy goods or services from Great Britain.
Therefore it lays down a principle which is just the opposite of the principle enunciated under the Bretton Woods agreement. It lays down the principle that the exporting nation must accept the currency of the importing nation instead of having the right to demand payment in its own currency which forces the importing country into an unpayable debt unless the exporting nation is prepared to buy an equivalent amount of imports from that country. That is the first principle that it lays down. It also advocates that the rate of exchange should be mutually agreed upon, and it also states that a steady price level should be maintained with respect to export trade between those nations.
The method of doing business would be quite a simple one. It would provide for convertibility but convertibility by the exporting country. In other words, the dollar area would convert bills in sterling to dollars and the sterling area would convert bills in dollars into sterling. Let us take, for instance, a Canadian exporter who draws a bill in sterling on a British firm. The Canadian firm would merely take the bill drawn in sterling to the chartered banks, discount it and receive dollars. The chartered bank would turn it over to the foreign exchange control board. In view of the fact that we have no such body now he would turn it over to the Bank of Canada.
[Mr. Qyelch.l
In England the importer upon presentation of the bill would pay in sterling to their commercial banks and that sterling would be turned over to the Bank of England. Then the Bank of Canada would have a balance of sterling within the Bank of England and vice versa. When a British exporter exported goods to Canada exactly the same procedure would be adopted. Therefore in return for our exports we would have a sterling balance in England and the British in return for their exports to Canada would have a dollar balance in the Bank of Canada. As long as we balanced our trade no further action would be required. The only thing we could use our sterling balance in Great Britain for would be to buy goods and services within that country. That would be in order to carry out legitimate trade. If we refused to buy, the balance would remain there and we would get nothing for it. There would be no question of debt. There would be no interest drawn upon it and it would not cause any embarrassment to the sterling area.
So far as our exporters are concerned, they would be happy because they would be receiving dollars, and so far as the British exporters are concerned they would be quite happy because they would be paid in their own currency. If for any reason we did not wish to bring in more imports we would of course have the alternative of investing our sterling balance in England in some enterprise to help expand the production of that country. The situation might be that Great Britain actually did not have sufficient exports to meet our requirements. Then we would be quite justified in using some of that sterling balance for the purpose of developing resources in the sterling area.
Before anybody attacks that idea let me remind them that that is exactly what the United States has done with regard to Canada. For years Canada has had a great deal of difficulty in balancing her trade with the United States. This year we had an unfavourable balance of trade with the United States of over $900 million, and with the world at large of $500 million. The only reason we were able to meet that unfavourable balance of trade was because the United States made large investments in this country which made it possible for us not only to meet our unfavourable balance of trade but also to develop our resources. That was the result of the United States investing money in this country. It might also be a healthy situation for us to make investments abroad so that the returns from those investments would help to offset the money that we have to pay

to the citizens of the United States on their investments in this country. One would help to balance the other.
The question of the United States policy of investing money in Canada is a debatable one. By that I mean it is debatable whether or not it is really beneficial to Canada. There is no doubt that much of their investment has been a great help to Canada. It has helped us to build up our oil industry. It has helped us to develop iron ore and various other things, but a great deal of their investment has been of another nature. A large amount of United States investment has been for the purchase of dominion and provincial bonds and securities, and that is not quite such a healthy picture. Therefore when Canadians are apt to be a little bit boastful about the Canadian dollar being above par it seems to me they should remember that the only reason it is above par today is because it is actually being bolstered by the United States. No one can say it is a very healthy situation when a country, in order to meet its unfavourable balance of trade that is a deficit on current account, has to turn over a certain amount of its capital in order to achieve that balance, and that is exactly what has happened in so far as Canada and the United States are concerned. It is rather interesting to note the viewpoint of a United States citizen on this subject. I have here an extract from the Calgary Herald of March 26, 1952. It is an article by John Harriman of the North American newspaper alliance. The heading of the article is, "Americans control quarter of Canada's manufacturing. Capital still flowing in." The article reads as follows:
Is American business going to take over Canadian industry? If Canadians are not worried about this, they should be, for we have been pouring capital into their country at an unprecedented rate and buying both properties and securities right and left. There are now 2,500 United States firms in Canada. And these United States firms account for a total of 25 per cent of all Canadian manufactures. In the last two years about $2 billion in United States capital has flowed northward to finance the current Canadian boom, bringing our investment in that country today to an unprecedented $8 billion, which is about 70 per cent of all United States investment abroad. Last year Americans bought heavily of Canadian corporate securities-about $400 million. Back in the summer of 1950, United States investors bought $195 million of Canadian government bonds, which so bolstered the currency of that country that the Canadian dollar was unpegged from the rate of 90 cents to the United States dollar.
In the light of that I do not really think there is anything for Canadians to boast about. As I say, it has happened as a result of action originating in the United States. With respect to the sterling area, the countries in that area have a great deal of difficulty in
9,	1952	3035
Suggested Commonwealth Conference balancing their payments with this country. Apparently we are prepared to export to the sterling area more than we are prepared to accept payment for in imports. It is a situation very similar to that which exists between the United States and Canada. The Minister of Finance says that it is for Great Britain to deal with it. I say that in exactly the same way that the United States has helped us in this situation we should be prepared to do likewise with regard to the sterling area. I think at this time a certain amount of investment in the sterling area, for the purpose of building up some of their backward industries and increasing their efficiency so as to make it possible for them to export more of the type of goods that we want, would be well worth while.
Once that has been accomplished we will have to be prepared to accept those imports to a far greater degree than we have in the past. If we are going to be prepared to accept imports in future from the sterling area, then I think we will have to be very careful to see that at all times we maintain the purchasing power of the people of Canada at a sufficiently high level to buy those goods. Nobody can convince me that there are not hundreds of thousands of people in Canada who would be only too pleased to receive much of the goods that we could bring in from Great Britain today. The reason they are not buying is not because they do not want them but because their income does not permit. Therefore, in trying to solve this international problem, there is also a national problem to be solved at the same time. The first step is to maintain the purchasing power of your own people at a level which makes it possible for them to purchase the goods brought in in exchange for our exports. The second point is to provide a means by which other nations can purchase our exports.
In closing I would say I am prepared to support this amendment because I believe a conference could accomplish a great deal in bringing about a greater amount of trade between this country and the sterling area- provided we sent to that conference men who are prepared and allowed to tread new paths.


Mr. J. G. Diefenbaker (Lake Centre):: Mr. Speaker, I do not intend to trespass at any great length on the time of the house, but there are one or two things that might be said and that have not been dealt with in detail as yet.
I think it is particularly fitting that we should on this day be discussing this resolution; that we should on this occasion of the

Suggested Commonwealth Conference queen's birthday be dealing with the advisability of taking steps to convene at the earliest possible date a conference of the nations of the British commonwealth to seek means by which there may be convertibility of commonwealth currency, and to explore the possibilities of restoring and enlarging those traditional markets upon which our prosperity so largely depends.
As I listened this afternoon to the united singing on the part of all members of this house of the anthem that is national to every part of this British commonwealth, I thought of the words of John Masefield, poet laureate, which I feel express the attitude of consecration of all of us to the concept of the crown: An order and a beauty from of old,
Set by its virtue above greed and hate:
A loneliness of living crowned with gold,
In all life's storm, a standard of the state.
I think in those words are epitomized the attitude and concept of peoples everywhere within the British commonwealth.
I am sure the house listened with interest and attention to the address of the hon. member for Acadia (Mr. Quelch) who has just concluded, and in particular when he dealt with the situation whereby we in this country, as the years go by, are becoming more and more a magnetic attraction for investment by people from the United States, and less and less on the part of Britain. Britain had large investments in Canada prior to the first great war. I speak from recollection, but my memory is that they amounted to some $4 billion. Today, to all intents and purposes, they are largely dissipated because Britain found, as a result of the need for preservation of freedom, that all her resources should be liquidated and disposed of in the interests of our common survival.
Some two years ago-on February 28, 1950-I moved a resolution in this house, seconded by the hon. member for Dufferin-Simcoe (Mr. Rowe), in connection with this very matter. That resolution was:
This house is of the opinion that the government should take immediate steps to convene at the earliest possible date a conference of the nations of the British commonwealth and] countries of the empire to devise policies to restore our lost markets and thereby to provide jobs for our Canadian people.


Mr. Mcllrailh:: There was no reference to convertibility in your motion then?


John George Diefenbaker: No, not at that time; that is obvious. The motion that was referred to through the course of the debate and the question of convertibility was not comprised within the purview of the resolution which I moved.	*


George James McIlraith: That is right.


John George Diefenbaker: I am quite sure that my hon. friend, in making that interruption, does not want to leave the impression that, having voted against a British commonwealth conference in 1950, when the question of convertibility was not comprised within the resolution, he is today taking the attitude that if those words were omitted he might take a different attitude.


George James McIlraith: I was merely seeking information.


John George Diefenbaker: I am sure the hon. member had the information before he asked the question.
Now, Mr. Speaker, the hon. member for Cape Breton South (Mr. Gillis), with the clarity that always characterizes him and his thinking, left the impression that one of his reasons for being opposed to the convening of such a conference-


Clarence Gillis: No; I am voting for it. I said I saw no harm in it.


John George Diefenbaker: No, he was in general support but said that we should be giving our support to the United Nations and that the machinery already exists in the United Nations to do all that could be undertaken by a British commonwealth conference.
I would like to point out that, in connection with agriculture, the Canadian Federation of Agriculture, on March 6, dealt with that very point in its representations to the cabinet. They said as follows:
We regret that after six years, F.A.O. has not succeeded in establishing a practical international commodity program. To take the position that Canada and other advanced countries should produce to capacity because people somewhere need the product is a fine humanitarian point of view, but it is a theoretical and impractical one unless an international commodity program exists to organize and supervise distribution.
The world is waiting for leadership from governments in F.A.O. to establish a commodity program which would undertake the three-fold function of meeting emergency shortages and famine, of holding reserve stocks and of managing surpluses.
We were pleased to see that our government representatives at the last F.A.O. conference supported the view that some kind of international food board would be necessary if the world were to embark realistically on a policy of unlimited production of food for the world's needy people. We urge the government to continue its support . . .
... in this direction.
The FAO has not succeeded, and we Canadians find ourselves in the position that the Conservative party said as far back as February, 1950, would result unless action was taken. At that time we warned of the danger first of accumulating surpluses of agricultural products, and secondly of the fact that we had no available machinery to provide for distribution and therefore to assure prosperity not only for agriculture but

for our people as a whole. We contended that markets were being lost. However, the attitude of the government at that time was that markets for agricultural products were being provided in the United States of America. Certainly the United States market is close at hand, contiguous, and easily available, but experience has shown that when surpluses pile up in agricultural products those surpluses are as common to the United States as they are to Canada. At such times that market is a most tenuous one and difficult to maintain.
We are now faced with the loss of our market for beef on another ground, and we hope the loss of that market will be temporary. It is to be hoped that the expressed belief that by September the United States market will be made available to Canadian beef will prove to be a fact. We have learned in the last two years that the British market is, after all, the best market for Canadian agricultural products. Statements to that effect were made when we spoke in 1950. It is the most certain market, and it does not depend upon the changing conditions of the United States. We have lost our markets in Britain. In his address the Minister of Trade and Commerce (Mr. Howe) indicated that the markets have not been lost, but that we are out of the market by reason of our own actions.
We were promised farm markets. Some years ago the Minister of Agriculture (Mr. Gardiner) pointed out that one of the reasons that the western provinces were required to sell wheat at less than world prices was che fact that by so doing markets were provided for other farm products. Only today a quotation to that effect came to hand from a speech delivered by the Minister of Agriculture when speaking at Tweed, Ontario, and as reported in the last issue of the Letter-Review. The minister is reported to have said:
There has been criticism of our wheat agreement with Britain, but the fact remains that if there had been no wheat agreement, Canada would not have been selling any farm products to Britain. We just told them that unless they bought other farm products they would have to pay the market price of $3 a bushel for wheat.
That statement contains two admissions: First, that we were right when we said Canadian wheat under the British agreement was sold far below the world price; second, that the reason for that was the provision of markets in Britain for Canadian farm products.
What is the situation with regard to farm products? I have had a summary made of Canada's farm products, and their markets in Britain on the basis of volume, going back
3,	1952
Suggested Commonwealth Conference to 1938. I am not going into lengthy detail, but I believe that the statistics which I shall place before you, Mr. Speaker, reveal a condition of affairs that cannot be denied. They deal with quantities rather than dollar value. The figures show conclusively that Canada has lost her markets in Britain, as we in the Progressive Conservative party said in
1950	and prior thereto. I am going to run through various farm products, and show the lost markets, not for the purpose of getting any satisfaction out of placing these figures before parliament but to advance the argument that even now it is not too late to do something towards convening a British commonwealth conference to meet the situation which exists.
Barley: In 1938 we supplied 27-5 per cent -in every case I refer to quantity-and by
1951	we had lost this market to the U.S.S.R. which is now the largest supplier. Oats: In 1938, we supplied 93-9 per cent of the total British imports. In 1947 we still supplied 92-9 per cent, but today that market has been lost. Beans: In 1938, we supplied 254,500 cwt. or 24-3 per cent of British imports. Today, that market has been lost. Beef: In 1945, we supplied 43 per cent of the total British imports, and today after having lost that market a plan has been arrived at within the last two or three weeks covering an exchange between New Zealand, the United States and Great Britain.


Mr. Howe:: Have you got the figure on beef for 1938?


John George Diefenbaker: At that time we did not have any market for beef.


Clarence Decatur Howe: That is right, we just filled in during the war.


John George Diefenbaker: Bacon: In 1938, we supplied 18-4 per cent of the British imports, and by 1945 it was 83 per cent. In 1949, we started to lose this market to Denmark, Poland and The Netherlands. In 1951 we supplied only 16,048 cwt. of the total British imports of 4,426,138 cwt. Our percentage of this market is considerably below the prewar level of 1938. Hams: In 1938, we supplied 34 per cent of total British imports. This increased during the war until 1947, when we supplied 78-5 per cent of that market. The market has been lost. Cheese: We have long been a supplier of this market. In 1938 we supplied 23 -2 per cent of the total imports. Finally, by 1945, that had increased to 31 per cent. Today we find ourselves in a position whereby our exports have been reduced to approximately half what they were. Poultry: We had built up during the war an export market for poultry in the
3038	HOUSE OF
Suggested Commonwealth Conference United Kingdom. By 1947 we were supplying 107,479 cwt. or 18-2 per cent of the total British imports. We have lost that market.
Eggs: During the war we built up a market for eggs until in 1945 we supplied 56 per cent of the British imports of shell eggs and 26 per cent of their dried egg imports. In 1948 that had increased to 79-8 per cent of their dried egg imports and 20-2 per cent of their imports of frozen eggs in addition to 29-1 per cent of their whole egg imports. These markets have been lost to Poland, China and the sterling countries. Condensed milk: In 1938 we supplied 56-6 per cent of that market, which has been lost to sterling countries and The Netherlands. Apples: In 1938, we supplied 42-5 per cent of the market. Finally, in 1951, we found ourselves in a position where we had only 13 per cent of the total imports. Canned tomatoes: We had developed a large market in the United Kingdom prior to the war, when we supplied 19 per cent of the market. We now find ourselves in the position where-well, immediately after the war we had 47 [DOT] 3 per cent of the market. We have lost that market. Canned salmon: In 1938, we enjoyed a com siderable export outlet for this product, and by 1951 we had increased the amount but our market represented only 143,666 cwt. out of a total import of 378,650 cwt.
The maritimes have been concerned about pit props. In 1945 we supplied 55 per cent of the market, but by 1950 we had lost this market.


Clarence Decatur Howe: Would it not be better to fill in all the figures? You started to give 1938, 1945 and present.


John George Diefenbaker: When I do not give any figure, it means that there was none in 1938.


Clarence Decatur Howe: It is just as well to mention it.


John George Diefenbaker: I have already mentioned it. I am giving the figures accurately. They tell a story of a serious condition in loss of markets that cannot but challenge the attention of hon. members.


Clarence Decatur Howe: They would tell the story better if the hon. member would give all the figures.


John George Diefenbaker: The minister might some time do the same. I am giving all the figures.


Clarence Decatur Howe: When there is a zero, put that in too.


John George Diefenbaker: To deal with tobacco, the same situation prevails there.	.


Clarence Decatur Howe: Last year's export of tobacco was the biggest on record.


John George Diefenbaker: I am speaking about quantity.


Clarence Decatur Howe: So am I.


John George Diefenbaker: Again we come back to the division between us. One deals with dollar value. But dollar value is not a proper measure of the comparative value of exports or imports, with the change in value or the change in purchasing power of the dollar which has taken place since 1939.


Clarence Decatur Howe: Give us the quantities.


John George Diefenbaker: In 1938 our export market in Britain was 16,093,611 pounds of tobacco; in 1950 the amount was 15,835,955, slightly below the pre-war level. Then the minister mentioned 1951. That is as far as I have information for in connection with that matter. On January 30 of this year the British government announced drastic cuts in British food, tobacco and other imports. My information is that those announcements of drastic cuts were in fact carried into effect.
What do these statistics point to, Mr. Speaker?


Clarence Decatur Howe: The hon. member left out wheat and flour.


John George Diefenbaker: Oh, yes. Our market, as far as wheat and flour are concerned, is something about which there is no question.


Clarence Decatur Howe: Those are important, are they not?


John George Diefenbaker: I am dealing with the ones in which there have been reductions.


Clarence Decatur Howe: Why not give us the ones in which there have been increases?


John George Diefenbaker: As to wheat, that has nothing whatever to do with British purchasing power in so far as the international agreement is concerned. There the arrangements are made under the international agreement. If the minister wants me to deal with the international wheat agreement, all I can say is that the farmer today in western Canada is getting 50 cents a bushel less than the world price by reason of the fact that the international agreement contains no escalator clause in order to protect the farmer against increasing costs of production.
Having said that, I now come back to suggestions as to some of the things that we might do. It is appropriate that we should be dealing with this matter today, for in every part of this British commonwealth a common loyalty is being expressed. The need of trade with Britain was well set out in a book entitled "On Being Canadian". On page 5 the following statement appears:
We must not. however, think of our relations with Britain in terms of tradition and sentiment alone. They possess economic substance too. As recent events have taught us afresh.-

I think that book was written in 1947 or 1948.
-our trade with the United Kingdom is of vital importance to us. Indeed, such commerce is part of the geographical pattern of the North Atlantic area, as witness Newfoundland, which has been the extreme example of the close economic ties between British North America and Great Britain. It is therefore important to remember that we have historic and economic ties which also run on an east-west line. The St. Lawrence river and the Laurentian shield have profoundly affected our economy since the beginning and will continue to do so. The boundary between Canada and the United States is for the most part no arbitrary line but responds to certain economic realities which would have asserted themselves even if North America had been a political unit. Hence the development of our trade with Europe to which, indeed, we are geographically closer than is the United States.
Then also from the same book, "On Being Canadian", I think these are extremely pertinent thoughts at this date:
There are good reasons why the commonwealth is of importance to us in our national life; important both in our relations abroad and in our domestic affairs. For one thing, we have greater influence in the world as a member of the British family than would otherwise be ours. Membership gives us in a sense a double status. It provides one of the rare instances in which one can "eat one's cake and have it too". I feel sure from my own experience that the fact that Canada appears on the international scene, not only as an important country on her own account, but also as a member of a great world association, lends her enhanced prestige. In the international world, prestige means influence.
As far as domestic affairs are concerned, there is a persistent illusion in the minds of some people that the British connection has somehow a limiting effect on our national growth; that the term "dominion" is derogatory to our national dignity. "Dominion" is only a word, and it has all but disappeared. In any event, it is important to consider things rather than their labels. In Canada we have certain institutions and traditions and characteristics which give us, whatever language we speak, our meaning as a separate country. Without the British connection these things would steadily evaporate and we should) have less and less significance as an individual state. How long would a Canadian republic maintain its individuality here in North America? The forms of our sovereignty might be retained, but we should be caught inexorably by the southward undertow and completely assimilated to American life.
The words of that great work which I have quoted must give to us a realization that there is something worth while to preserve; that with Britain in the position in which she finds herself, we should be doing something to uphold and to maintain her spirit for she stands today, as in the past, as the bulwark of freedom.
The first suggestion is the one embodied in the amendment moved by the leader of the opposition, namely, the need to convene a British commonwealth trade conference. Some say that it will have no results. There can be no harm in trying. Certainly our markets are disappearing. Certainly the
9. 1952
Suggested Commonwealth Conference problems of convertibility are great. But whether they are great or not, surely they are not overwhelming. Bringing together at this time such a conference, in mobilizing the hopes of peoples everywhere within this commonwealth, would have an effect which could not be obtained in any other way. Certainly there could not but be effective results from these representative statesmen of the commonwealth meeting together to discuss the problems of what can be done to maintain these markets, to extend our trade channels, to consider the question of convertibility and also the possibility of Canada's purchasing within the sterling bloc raw materials now secured elsewhere; it would be a conference similar to that which has been suggested on several occasions by the hon. member for Peel (Mr. Graydon).
Britain finds herself in a position of trading with communist countries in order to secure metal, grain and lumber in return for machinery, rubber and precision tools, or has during the past year; that trade is now being reduced. Certainly we will get no results by doing nothing. However certain that some are that such a conference would not succeed, nevertheless I believe that it would be a message of hope to every part of this commonwealth and would be as well the expression at least of a hope that the farmers, who today in our country face a situation that is dangerous to the national economy, would at least have every avenue for trade explored.
Secondly, I suggest to the Minister of Defence Production, who has a vast knowledge of the subject, that every ordinary person like myself realizes that Britain is in a position where she has not available Canadian funds to make purchases of Canadian products. Is it beyond the capacity of Canadian and British statesmen to arrive at an agreement under which the minister could divert to Britain $90 million to $100 million of Canadian defence needs that are today being purchased in the United States, thereby assuring that the moneys made available in consequence of that diversion would be utilized for the purchase of farm surpluses that are piling up today? Mr. Speaker, they are piling up. If you put pork in cans, it still becomes a surplus that piles up. We have purchased some 30 million pounds of surplus pork at a price of between $18 million and $19 million. We can put that in cans but it is still surplus and it has to be disposed of.
I believe that in a British commonwealth resources and development trade conference there is a hope that fat least something will be done to untangle the snarls in traffic
3040	HOUSE OF
Suggested Commonwealth Conference which are causing fears for the future to be expressed, and with reason, by farmers and by other producers within our country.
Thirdly, and this is a personal suggestion, Britain finds herself in the position where her people are living on a food level far below anything that we in this country have ever undergone. Surpluses in our country are piling up. In the days prior to the last war surpluses in various parts of the world were disiposed of by destruction. Coffee, cotton, sugar and hogs were destroyed in order to reduce the glut of production. Surpluses are being piled up in our own country; and by next fall the situation may well be much more serious than it is now.
Can we afford, sir, in a world in which statesmen contend, and as the Secretary of State for External Affairs (Mr. Pearson) has said on many occasions, that the raising of standards of living is one of the means to withstand the onrush of communism, to neglect to do our duty by giving assistance? We are making our contribution to the Colombo plan. Would it be beyond what is fair to consider a grant from the people of Canada of a food gift to Britain in order, first, to assist that country, and secondly, to remove the effect of an overhanging deluge of a surplus that will inevitably occur unless something is done?
I know that there are some who say that this cannot be done. That argument does not apply to a British commonwealth conference. If it is not successful we in Canada would have at least discharged our responsibility. The situation is serious in Britain. One cannot say that that is their domestic issue alone, because after all we in co-operation with the United States either stand or fall together for freedom should freedom ever be challenged. When one reads the newspaper headlines today one cannot but realize the situation that exists in Berlin is a dangerous one. I believe that the U.S.S.R. cannot continue forever to talk tough without action; yet one can but hope that that situation will not turn out dangerously to world peace. Britain needs something of an uplift that such a gift would give her.
Somebody may argue that it would prove costly. All I can say is that the beef deal that has been made as a result of the exchange of opinions between New Zealand, the United States, Britain and Canada may also prove costly. The pork packing plan to dispose of pork in cans may also prove costly. The fear of an overhanging surplus on prices will always prove costly, because, unless something is done to remove that surplus, the loss will finally rest upon the Canadian


people. For that reason I ask for consideration by the Canadian government even yet of a free vote in this house on the question as to whether or not there should be a British commonwealth trade conference. Certainly in 1950, when the resolution was moved in this house, my party was not astray in the expression of our point of view. The hon. member for Dufferin-Simcoe (Mr. Rowe) seconded the resolution and spoke on it. He pointed out the dangers of a loss of the markets for agricultural products. What was said then has unfortunately proved too true. It is not for us to speculate on what would have happened had that resolution been accepted two years ago. But one thing we do know, namely that things would not be as bad as they are today in so far as the prospects of Canadian agriculture are concerned.
Somebody will say that the amendment amounts to a vote of non-confidence. I think of cases having the same effect that have come before this house, yet the government has released its membership from so considering it. I think of the milk subsidy discussion. There was an occasion when parliament was free to vote.
The situation is anything but hopeful, Mr. Speaker, in so far as agriculture is concerned. It is not hopeless. There is a step that we can take, and that is by calling together a commonwealth conference. When there are problems that are difficult of solution in the international sphere, our ministers go all over the world. They are the most ambulant and circumambulant ministry we have ever had. When international affairs are at stake they believe in conferences; they believe in putting their feet under the table with other nations. Cannot we afford to adopt a similar attitude among our own kith and kin within the British commonwealth and endeavour, in co-operation with the United States, to arrive at something which will remove the overhanging fear that today haunts the farmers of this country-the fear that in the failure to act we sacrifice the possibility of preserving our agriculture industry intact, in the light of our responsibilities and the opportunities we have to act now?


George James McIlraith: Mr. Speaker, it seems to me that before I deal in a detailed way with the motion before the house and the amendment of the leader of the opposition (Mr. Drew), perhaps I should spend a moment or two of my time in dealing with the speech of the hon. member for Lake Centre (Mr. Diefenbaker) who has immediately preceded me in the debate.

I would refer first to his statement that the amendment is not a want of confidence motion. I do not know just how he arrives at that conclusion because, as I understand it, a want of confidence vote is a vote upon any material and major matter of government policy. As I heard the speeches of members of the official opposition, last Tuesday and again today, I understood them to address most of their remarks to international trade. My understanding of international trade is that its significance, as expressed in terms of fractions, is that it involves about one quarter to one third of all our national income. It is a tremendous factor affecting this country. Perhaps it is more important to us than to any other country in the world.
For the hon. member for Lake Centre to assert in the House of Commons that a vote on a motion dealing with international trade is not a want of confidence motion, just is not tenable. I cannot see how the amendment can be considered as other than a vote of want of confidence in the government.
Then, there are one or two other observations he made which, it seems to me, require attention. He said he was going to set out in detail the markets we have lost. That, of course, is his privilege. Then he used some figures in support of his contention. First of all, he picked out only certain products, certain items. I am not criticizing him for that because, obviously, it would be impossible to go over all of them. But I do think it is desirable that we understand that that was done.
It will be seen at once that in picking out particular items of our export trade with the United Kingdom he was dealing with items they are not importing, presumably because of their dollar shortage. Then necessarily he becomes involved in going a step further and deciding that we would choose which products are to be exported to the United Kingdom, and that they would have no more say about it.
For instance, he suggests they would no longer have the right to choose the cheaper product, or the product which would go farther in feeding a larger number of people. I am sure the hon. member did not wish to assert that proposition. Yet that is the only conclusion to be drawn from his remarks, if one is to be logical in analysing them.
Then he used the general expression, "They tell a story." Of course they tell a story. I presume that is what the hon. member was trying to do; and I would have thought that in telling the story he would
Suggested Commonwealth Conference have explained that in 1945, one of the years he mentioned, there was a war on, and the traditional suppliers of many of the products with which he dealt had been overrun by the enemy, with the result that those products could not go to the United Kingdom from that area. I refer specifically to countries such as Denmark and Holland. I should have thought that some other figures could have been chosen to illustrate his point.
They tell another story. He could have placed before the house the trade statistics for the years 1938, 1951 and 1952 showing exports to the United Kingdom. Those figures would have shown that, in the field of agricultural and vegetable products, in 1938 we exported to that country those goods to a value of $3,737,000, while in 1951 the figure had risen to $13,279,000 and in 1952 to $22,857,000.
All the observations by members of the official opposition about changes in dollar value cannot explain away an increase, six or seven times over, in the amount of agricultural and vegetable products going from Canada to the United Kingdom in 1952 as compared with 1938. And of course in using those figures I must be quick to point out that the United Kingdom buys more grains now, and less of certain animal products. Their reason for doing this is perfectly simple and obvious. Those grains will feed more people for less money. It is a matter of common knowledge in the world of trade, and in the general field of health and nutrition, that it is cheaper to feed people with grain products than with animals and animal products.
Returning now to the matter before the house, I would point out that the amendment of the leader of the opposition is in language that indicates that he wants this government to convene at the earliest possible date a conference of British commonwealth nations to seek means by which there may be convertibility, and then to go on to explore the possibilities for increasing trade and enlarging traditional markets.
It will be seen at a glance that the essential part of the amendment is that the Canadian government is to convene the meeting, that it is further tied down by the fact that it must be done at the earliest possible time, and that the most important matter to be discussed is that of convertibility.
Notwithstanding the fact that these are the points set out in the amendment offered by the official opposition, practically all their discussion has been about trade matters. I should point out that hon. members in other opposition groups did not make that mistake,
3042	HOUSE OF
Suggested Commonwealth Conference because they did deal with convertibility, and with the question of the propriety of Canada's calling the conference.
But the three essentials in the amendment were not discussed by members of the official opposition. Those matters that did receive their attention were trade matters, particularly trade with the United Kingdom-but, in general, trade. I can conclude only that when these trade matters should have been discussed, namely, when the estimates of' the Department of Trade and Commerce were before the committee, they were absent, taking part in by-elections. In view of the results of those by-elections, perhaps one cannot be too critical of the official opposition for their absence on that occasion.


Mr. Rowe:: You had a few absent then, too. Quite a few in your front row were absent at that time.


George James McIlraith: No, they were here attending to business. The estimates went through quickly. At any rate, we are now having that discussion. That is what the situation is.
In the light of the fact that the official opposition has been discussing trade generally, perhaps it would be well to place on Hansard some general comparative trade figures. Let us take the years 1938, 1950 and 1951, and deal first with export figures. They are as follows:
Exports to All Countries
Year	Amount
1938	 $	849,000,000
1950	  3,157,000,000
1951		 3,963,000,000
Exports to the United States
1938	 $	279,000,000
1950		 2,051,000,000
1951		 2,335,000,000
Exports to the United Kingdom
1938	 $	341,000,000
1950		 473,000,000
1951		 636,000,000
Exports to Other Sterling Countries
1938	 $	104,000,000
1950		 201,000,000
1951		 264,000,000
Exports to Other Countries
1938	 $	125,000,000
1950		 433,000,000
1951		 730,000,000
Taking imports for the same three years the figures are as follows:
Imports From All Countries
Year	Amount
1938	 $ 678,000,000
1950		 3,174,000,000
1951		 4,085,000,000


Imports From the United States
Year	Amount
1938	 $ 425,000,000
1950		 2,131,000,000
1951		 2,813,000,000
Imports From the United Kingdom
1938	 $ 119,000,000
1950		 404,000,000
1951		 421,000,000
Imports From Other Sterling Countries
1938	 $ 67,000,000
1950		 243,000,000
1951		 309,000,000
Imports From Other Countries
1938	 $ 67,000,000
1950		 397,000,000
1951		 542,000,000
It will be seen at a glance that taking the over-all figures our over-all trade has increased tremendously and is in excellent condition. It will be seen that the total amount of trade last year for the first time exceeded $8 billion. It will be seen that imports from the United Kingdom have jumped sharply even after allowing for changes in the value of the dollar. In the light of these figures perhaps I might complete the picture by giving the figures for the first four months of 1951 and the first four months of 1952. Dealing first with exports, the figures for those two periods are as follows:
Exports to all Countries
First four months	 $1,120,000,000
First four months	 1,351,000,000
Exports to the United States
First four months	 $ 725,000,000
First four months	 736,000,000
Exports to the United Kingdom
First four months	 $ 155,000,000
First four months	 227,000,000
Hon. members will see how we are losing the markets. The table continues:
Exports to Other Sterling Countries
First four months	 $	77,000,000
First four months	 109,000,000
Exports to Other Countries
First four months	 $ 163,000,000
First four months	 279,000,000
Dealing with the question of imports into this country for the first four months of 1951

and the first four months of 1952 the comparative table indicates the following:
Imports From All Countries
First four months	 $1,337,000,000
First four months	 1,241,000,000.
Imports From the United States
First four months	 $ 956,000,000
First four months	 942,000,000
Imports From the United Kingdom
First four months	 $ 141,000,000
First four months	 97,000,000
Imports From Other Sterling Countries
First four months	 $	85,000,000
First four months	 55,000,000
Imports From Other Countries
First four months	 $ 154,000,000
First four months	 148,000,000
Perhaps it would be useful if I were to give the statistics for agricultural and vegetable products exports for the years 1938, 1950 and 1951. They are as follows:
Agricultural and Vegetable Products
Year	Amount
1938	 $191,000,000
1950		 637,000,000
1951		 894,000,000
The figures for exports of animals and animal products are as follows:
Animals and Animal Products
Year	Amount
1938	 $118,000,000
1950		 366,000,000
1951	  348,000,000
From these latter figures hon. members will see the answer to the argument that the farmers generally are losing their export markets. It is quite true there are difficulties in particular products. I am the first one to admit that, but I do not think the picture should be distorted or put out of focus. 1 think it should be examined on the facts, and they are all on record. You will see, for instance, from the figures I have just given that we have increased our imports from the United Kingdom in the year 1951 over 1950 but that they dropped off in the first four months of this year. Incidentally, the hon. member for Lake Centre (Mr. Diefenbaker) made reference to buying machine tools from' the United Kingdom. Apparently he did not hear what was said in this debate the other day. We are all anxious that any Canadian
9, 1952	3043
Suggested Commonwealth Conference business on that account should go to the United Kingdom, but I think the government is very much in the clear on that score.
The facts are that at the start of the accelerated defence preparedness program an attempt was made to buy machine tools from the United Kingdom. Since that time the Canadian government has been responsible for placing some $80 million of such orders, and the attempt was made to place them all in the United Kingdom. However, orders only to the extent of some $6 million were placed in that country. The facts are quite simple as to that situation. Their equipment is highly competitive and is good. Their prices are highly competitive. I think they are probably cheaper than elsewhere. The difficulty is simply that the United Kingdom was not able to supply that equipment, and it is no fault of theirs that they were not able to do so. They must assume responsibility for the management of their own affairs internally, and they had losses arising out of the war and restoration work in their own country because of war damage. They must now allocate some of their own productive effort, in a quantity to be determined by themselves, to defence preparedness in common with the other freedom loving countries of the world. For that reason they simply were not able to supply the goods. That is something entirely outside their own control. It is no fault of theirs; but why can we not debate this matter in the house in recognition of the facts?
It is asserted in the arguments that have been made by the official opposition that we are not paying enough attention to trade and to exports. The facts are that so far this year our exports to the sterling area are up some 40 per cent over what they were last year. Exports to Europe and Latin America are up some 70 per cent. Then it was said, obliquely in many cases, but repeated several times by the official opposition, that we were becoming more dependent on the United States. Indeed, the member for Vancouver-Quadra (Mr. Green) seemed to resent the fact that we were exporting so much to the United States. Well, let us take a look at that.
In 1951 the United States absorbed 59 per cent of all our exports. During the first four months of 1952 they only took 55 per cent of all our exports. That would rather tend to show just the converse of his argument. We are not becoming more dependent but less dependent in that regard.


Howard Charles Green: What about our imports from the United States?


George James McIlraith: I have not worked out the percentages, but the same story is true.

Suggested Commonwealth Conference


Howard Charles Green: No, it is just the opposite on imports.


George James McIlraith: I thought I could give it to you now, but I am afraid I have not got it broken down in that way. The figure is down in any event. We are less dependent either way.
There was another point, and I will make reference to it. It seems to me, in dealing with the question, if we are going to use percentages at all we should use percentages for the country about which we are talking. United Kingdom trade has been very much discussed today and on the last day of the debate, and very properly so. The facts are quite simple. You will find that United Kingdom imports from Canada in 1938 amounted to 9 per cent of their total imports. In 1950 and 1951 we supplied 7 per cent of all their imports. A great point has been made of our exports to the United Kingdom notwithstanding this very important or very serious United Kingdom dollar crisis.
In 1938 we in Canada bought 5 per cent of the total exports of the United Kingdom. In 1951 we bought 5 per cent of the United Kingdom's total exports. When you look at those figures you will see that, notwithstanding the dollar crisis in the United Kingdom, there has not been anything like the damage done to our markets that is suggested by the hon. members of the opposition. In making that statement I do not for a moment tend to minimize the importance of the fact that the sterling area has not convertibility. I do not wish my remarks misunderstood in that connection, and I am not in any way minimizing the importance of that fact to Canada. As a matter of fact I think it is apparent that all hon. members in this house are as one and in agreement on the fact that the dollar shortage in the sterling area is a very serious crisis, serious in its implications to us. I would go further and say I think all hon. members are agreed that it is desirable that if anything can be done to have that situation corrected, it should be done. I think that is common ground. Indeed, I think all hon. members are also agreed that in this country we should do all in our power to increase trade, but it seems to me that the whole debate got away from the main subject of the amendment.
Returning to the speech by the hon. member for Vancouver-Quadra, I must say that not only did I listen to the speeches of the hon. members of the opposition but I have read them over since with some care. I did them that courtesy; whether it was beneficial or not I do not know.


Mr. Graydon:: Your choice of reading has improved.


George James McIlraith: I must say it was not too good reading. Too many times they bore back to "blasting" our way back into the United Kingdom market. They got dangerously close to that idea; and I remember that, too, in the thirties. As I say, there are one or two sections of those speeches which are not good reading, but I suppose that is true of any speeches.


An hon. Member:: We will read yours
tomorrow.


George James McIlraith: When you read the speeches by the official opposition you will find that inference. Twice in those speeches you will find the reference that we should hold the conference-that it will be a Canadian conference is an essential element of the amendment-but we are to hold it out of this country. We are going to tell the other countries that we will hold it in their countries. That may not be realized.
Referring to the thought I expressed a few moments ago about the speech of the hon. member for Vancouver-Quadra, he got dangerously close to a doctrine on exports which would destroy our trade. In talking about the United States he apparently argued that we should not be so dependent on that country, but he failed to explain the dangers of following a policy of not exporting to that country. For the life of me I cannot understand why this country, in dealing with a friendly neighbour, should not sell products to it if it has the capacity to use them and the money with which to pay for them.


Some hon. Members:: Hear, hear.


George James McIlraith: I just cannot understand any quarrel with a proposition like that.


Howard Charles Green: I do not know how you got
that out of my speech.


George James McIlraith: I got it from re-reading the speech. I interrupted you when you spoke-


Howard Charles Green: You do not understand English very well.


George James McIlraith: I must say I read it carefully and I listened to the speech quite attentively. I interjected only once when there was a question of the interpretation of a percentage figure. If the hon. member wants to discuss his speech there are some more things we can discuss. He did talk a good deal about two British Columbia products, and very properly so. I am not quarrelling with him for that. After all, he comes from that fine province and, of course, there is a provincial election there.


Howard Charles Green: It did not have a thing to do with the election, and there is a serious situation there.


George James McIlraith: I have no quarrel whatever with the hon. member for discussing these subjects. It seems to me they were quite proper ones to discuss. I could not understand his remarks in connection with one tremendously important item so far as Canada is concerned, and that was the British Columbia lumber industry. Listening to the speech of the hon. member for Vancouver-Quadra (Mr. Green) and re-reading it, I must say that I interpreted his remarks as meaning that the lumber industry was in for a very bad time.


Howard Charles Green: On a question of privilege, Mr. Speaker, I pointed out that the lumber industry was extremely concerned about the loss of the British market. Since I spoke there have been further statements to that effect in the Vancouver press.


George James McIlraith: I have the copy of Hansard containing the hon. member's remarks. I do not know whether I can quickly enough, as I speak, pick out paragraphs from that speech, but all hon. members can read his remarks about the lumber industry and put their own interpretation on them. They are all in Hansard. Regardless of whether or not I misinterpreted the hon. member's remarks, the matter of how they should be assessed is something that can be determined by any hon. member reading the speech. In any event, after talking about lumber a great deal, he did say this as recorded on page 2864 of Hansard for June 3, 1952:
The fact I am trying to emphasize, Mr. Speaker, and which I think must always be kept in mind, is that Canada is becoming more dependent on the United. States for export trade.
I believe that phrase cannot be denied, and I certainly got the impression he thought the lumber trade was very much concerned about its future. The hon. member took a black view of that future.


Howard Charles Green: It is, too.


George James McIlraith: Then we are agreed sufficiently to go on. Here are the facts about the lumber trade of British Columbia as I have them at the moment. All the British Columbia mills will be busy on their present United Kingdom contracts to the end of June, most through July and August, and quite a few will have to go flat out to complete them by mid-September. Consumption in Canada is holding up very close to 1951, and export to the United States shows prospect of increasing.
The situation with regard to British Columbia sales to the United Kingdom is as follows, 'for a good many years the United Kingdom
Suggested Commonwealth Conference has been buying lumber through a state purchase scheme. This is the first year they have stopped that practice. They are now buying through individual purchasers or private dealers in a way they have not done for more than the last decade. This means that bulk contracts have not been arranged, and will not be arranged, which in turn means that negotiations are going on for these contracts. Our negotiations with the United Kingdom for this trade, with the exception of the war years, have been negotiations of free businessmen bargaining back and forth. There is a good deal of bargaining back and forth, because the United Kingdom is under the handicap of not having surplus dollars to spend freely. To assume, in view of that situation, that the mills, some of which will be working to capacity until October on United Kingdom orders, are facing a black future is not the strongest possible argument. In the light of increasing export to the United States and increasing consumption in Canada; in view of the fact that the United Kingdom-Canada transactions are still in the process of negotiations, to say that the future is dark is not the best possible type of argument.


Howard Charles Green: Events will prove who is right.


George James McIlraith: Yes, events will prove who is right, but to say now that anything has been proven is not in accordance with the facts. The hon. member spoke a great deal about lumber, and rightly so bearing in mind his interest in the province of British Columbia. There is another type of negotiation going on that is not always the best type for closing contracts for the sale of your products. Labour negotiations are being conducted between the men and the mills. I for one believe that the best way to conduct labour negotiations is through the free play of bargaining between the men's representatives and the negotiators for the mills. I do not know of any other way as good as that. What help is being given to that situation by the type of debate we had last Tuesday on British Columbia lumber? I hope these negotiations will work out satisfactorily and beneficially to the country, to the trade and to the men. There is the situation as it exists in the lumber industry at the moment.
I am quite sure the hon. member is opposed to state buying, but his remarks are capable of the construction that state buying would give certain contracts at an earlier date for the whole production for the year. I am quite certain he does not wish that interpretation to be taken from his remarks, but I would point out that his remarks can be so construed. I am quite sure that the hon. member's party is opposed to state buying.
3046	HOUSE OF
Suggested Commonwealth Conference Another interesting point was the failure of the speakers of the official opposition, when dealing with exports of meat and meat products, to take into account the fact that we had an outbreak of foot-and-mouth disease in this country some few months ago. I am sure all hon. members hope it will soon be cleared up, but the effect was to temporarily shut off our markets for animal products. Notwithstanding the fact that they are shut off, and notwithstanding all the statements made by members of the official opposition about the disastrous state of that trade, the fact is that only a few days ago there was an auction sale of cattle in Oakville. If hon. members read their newspapers carefully they would have seen that United States buyers paid what, under the circumstances, was a very good price for cattle. The point to be drawn from that is the confidence of these prospective importers of our Canadian cattle in the fact that the market will be opened again soon. How can we, from a news item like that, draw the conclusion that our markets have been ruined? Indeed, all these opposition speakers spoke about the barter deal for some of our surplus meat. I do not think that is the precise term; but in any event the deal will take surplus meat off our hands for use in the United Kingdom, while New Zealand meat will be put into the United States. They spoke favourably of that deal. Let me point out to the official opposition that that deal involves the taxpayers of Canada in paying cash money; in other words, it becomes in effect a subsidized export. We have heard a good deal recently from the opposition about higher taxes in this country. Of those hon. members of the official opposition who recommended that type of deal and its application to other products I would ask this question: Do they want the government to subsidize the export of those other products, or do they believe in the free play of the market and an effort to achieve a proper price for our exports without subsidization at the expense of the taxpayers?
As a matter of fact, when the hon. member for Lanark (Mr. Blair) was speaking about cheese-and he entered into a rather thoroughgoing discussion of that product-he spoke a great deal about barter, and wanted a barter deal on cheese worked out with the United Kingdom. We were to take some of their products, presumably products that they could export to us; that would shut out machine tools. He comes close to home there. Only a few months ago he made a thoroughgoing speech on the subject of textiles, and the import of textiles into Canada. The United Kingdom is a large exporter of textiles. Did he mean, first of all, that we would subsidize the export of cheese to the United
[Mr. Mcllraith.l

Kingdom in that barter deal? In the second place, did he mean that the product we would take in return would be textiles? He certainly did not mean anything of the sort, as will be realized by anyone who knows the fine constituency he represents.
I point those two things out in order to show just what nonsense is being talked on occasion in this chamber on the subject of barter. There seemed to be an inference all through the remarks that have been made that we were not doing all we could with respect to increasing our trade. In answering that argument let me just point out one thing. These so-called barter deals, which seem to be so attractive to the opposition, are usually resorted to only by countries which are in an extremely adverse financial exchange position; indeed many people would say they are almost bankrupt. Not only that-I could elaborate on barter deals but I will not do so-certainly their net effect is to restrict trade, not to expand it.
The position of this government has been constantly to seek to expand trade by every possible means. That position has been stated by the ministers of the crown on every proper occasion, and it has been repeated continuously over the years. Indeed, when the Minister of Trade and Commerce (Mr. Howe) chose to make reference to his own remarks in London a couple of years ago on that particular subject, the financial critic of the opposition, the hon. member for Greenwood (Mr. Mac-donnell), sought to belittle the Mansion House speech and to dismiss it. But on this question of the expansion of trade, let me remind the house of just one or two facts.
At the present time Canada is maintaining some 102 trade commissioners in various parts of the world. Those trade commissioners are operating in some 49 cities in the world and in something over 40 countries. Let me remind the house that last year Canada sold wheat to 37 countries and that it sold flour to
69	countries. It is no wonder that today, when one hon. member devoted his speech to a limited selection of farm products, he refused to discuss the question of wheat and wheat flour. Let me also remind the house of one fact with respect to the lumber that is exported from this country. The vast percentage of the lumber exports of course go to the United States and the United Kingdom; the remainder is exported to some
70	countries. Is that the record of a government that is not doing anything to further international trade? It certainly is not. Those figures are the record of a government which has always believed in international trade

and which has done everything in its power, regularly and consistently, to support international trade.
But there is another aspect of the matter. This discussion has ranged off onto the question of trade. I admit that I like a discussion on the question of trade. I think it is an important subject. I believe that the future of the country is unalterably linked up with successful trade. If there is any country in the world that over the years has a record of successful trade, that country is Canada. My hope is that we shall be able to continue that record as the years go on.
This motion deals with convertibility. That is the subject matter to which the motion addresses itself, and the matter of trade was incidental to it. As I understand convertibility of currencies, that is something that is inextricably linked up with such matters as the internal fiscal policy of the country concerned, the investment policy of the country concerned, and the attitude with respect to foreign investment in that country. Those three matters were not dealt with to any extent by the official opposition. They were dealt with at some length by the hon. member for Acadia (Mr. Quelch) today and members of the other groups touched on them, but the official opposition seemed to fail altogether to appreciate those matters. Do I understand the leader of the opposition (Mr. Drew) and all his supporters to want us to convene, at the earliest possible moment, a conference of the commonwealth to deal with convertibility? That is what the motion says. And do they want us to seek to tell Britain how they should handle their internal fiscal policy? Surely that is not the way they want co-operation among the countries of the commonwealth. Surely it is not the way to the successful resolution of a problem of this kind!


Mr. Smith (Moose Mountain):: They never thought of it.


George James McIlraith: Does the leader of the opposition want this country to convene a conference-I presume he wants it here and not, as the hon. member for Dufferin-Simcoe (Mr. Rowe) wants it, in some other country-to deal with foreign investment in the United Kingdom? Canadian currency is convertible; it is sterling that is not convertible. When you are discussing convertibility of sterling, you are discussing the attitude of the United Kingdom and of the other countries in the sterling area with respect to foreign investment within their countries. Surely the leader of the opposition does not imply that we in Canada should call a conference here, at the earliest possible moment, and bring the United Kingdom here and tell them what 55704-192
9, 1952	3047
Suggested Commonwealth Conference their attitude should be with respect to foreign investment in the United Kingdom. If that is the implication I must make it clear that it is not my idea of how to co-operate with the United Kingdom in this difficult period with respect to this matter of convertibility of sterling.
Incidentally, Mr. Speaker, you will note one feature of the resolution. Somebody in the opposition took me to task a moment ago for saying that in it I detected a strange similarity to the 1930-32 attitude in this same chamber. Perhaps hon. members of the opposition have forgotten that I remember some of that period and that I watched it at as close range as did some others. But there is a strange similarity, as you will note, Mr. Speaker, involved in this resolution. In those years, of course, they were going to blast their way into the markets of the world; were going to sell wheat regardless of price, and a few other things. I am quite sure the official opposition do not want a return to those years.


Mr. Fulford:: They want to forget them.


George James McIlraith: For the reasons I have outlined, I do not think anything would be contributed to a solution of this problem by Canada convening such a conference. The first implication in the amendment is that Canada convene the conference. Well, that is the wrong way to go about it. Obviously, since it is sterling currency that is to be convertible, Canada is not the one to convene the conference. It seems to me that is quite obvious.
Second, the amendment speaks about the earliest possible moment. Do the opposition suggest that the time of freeing sterling from the various exchange restrictions is of no consequence? Surely that is a matter about which the United Kingdom should have the most to say. It is not a matter for us to raise and shove on them. Then what about the investment policy? The same remarks apply to that.
It will be seen by a first and second reading of the speech of the leader of the opposition (Mr. Drew) and the speeches of the members of the opposition that they have not dealt with the main part of the amendment, and the main part of the amendment is quite improper and wrong. Canada is not the one country to convene a commonwealth conference for the convertibility of sterling currency. The timing is a matter not for Canada or the Canadian government to determine. The timing of achieving convertibility of sterling currency is something to be determined primarily by the countries concerned in that area.


Jean-François Pouliot: Well said.
3048	HOUSE OF
Suggested Commonwealth Conference


George James McIlraith: The other part of the resolution tacks on a bit about trade, so technically discussion of trade is in order; but it will be seen that it is not the main part of the amendment. Of course the government here is for doing anything and everything to achieve increases in trade with the United Kingdom or trade in general, but the fact is that in addition to the many trade conferences-and it has been my fortune to attend some of them and to deal with this subject ia bit-we have maintained with the United Kingdom for the last few years a permanent committee on the departmental level of Canadian officers who are dealing continuously with the internal aspects of this problem, and the aspects affecting particular products of one or the other. That body has a formal conference as a part of its regular dealings twice a year, so it will be seen that the amendment in so far as it deals with trade in particular products is not beneficial or helpful. For these reasons, Mr. Speaker, 1 think it is most important to the welfare of this country and for the furtherance of these very objectives, both of convertibility and increased trade that all hon. members are seeking to achieve, that this amendment be rejected.


Mr. Rodney Adamson (York West):: 
figures of 1938 should have a multiplier in them of 2-17 or 2-2 to bring them up to the 1952 dollars.


George James McIlraith: How do you arrive at that figure? The bureau of statistics have never been able to arrive at a figure on either exports or imports that would reduce them to constant dollars. They have never been able to arrive at that though considerable work has been done on it.


Agar Rodney Adamson: The chambers of commerce have estimated that that figure, or a figure slightly below, between the 45 and the 50 cent mark, is what the constant dollar is worth at the present time.


George James McIlraith: I do not know whether you can use those because the bureau of statistics have done a great deal of work on it and have not been able to arrive at it.


Agar Rodney Adamson: These are estimated figures.


George James McIlraith: If you use them as estimated figures there is no objection'; otherwise there is an objection.


Agar Rodney Adamson: These are estimated figures, and they were published in a paper I read just before coming into the house.
Let us put it on a basis of even the cost of living, the wholesale index, or any other indices which the bureau of statistics will give. The figure for 1938, which was the year before the war, is at least half the figure for 1952. The cost of living is 188, I think; both the wholesale index and labour statistics are over 200. I will not quarrel with the parliamentary assistant if he just takes it as two to one, but even so it is certainly more than twice what the present figure gives. That is, in terms of constant dollars the exports in 1938 should have a multiplier of over 2 to bring them up to terms of 1952 dollars. So much for that. I submit that is a fallacy, and the fipires are misleading. But coming to the other point, as to our percentage of trade with the United States: I admit our exports to that country in the first four months of the year come to 55 per cent of our total exports; but our imports from that country come to 76 per cent of our total imports. It is axiomatic that if we wish to sell to anyone we must be prepared to buy from him. A disproportionate amount of our imports are coming from this one country. One of the benefits of a conference such as the one suggested would be to encourage other countries to enter our market, and to make it possible for them to do so.
At the present time there are difficulties in the way, and I propose to discuss those difficulties a little later when I refer to the question of convertibility. There is no time

more dangerous than the present for the government to sit back and say, "Look at our marvellous figures; look at our wonderful prosperity; look at our billions of dollars of exports and our billions of dollars of imports." Certainly those are impressive figures, but we must scrutinize them and do everything possible to see that the volume of trade is more equally distributed over the rest of the world than it is at the present time. I submit that a condition under which more than half our exports go to one country and 76 per cent of our imports are received from it, is an unbalanced one.
The necessary climate for the convertibility of currency is very similar to the necessary climate for international trade. Currency convertibility requires three basic conditions. The first condition is that internal fiscal stability shall be maintained as a national policy. In other words there must be no resort to the issuing of money not represented by goods; the printing press must not be used. Inflation must be curbed in every possible way. There must be a balanced budget. If this factor is not present, no country whose internal fiscal policy is not sound can maintain a currency which will stand free convertibility. No matter what other conditions may exist, unless the internal fiscal policy is sound the national currency will not be sound.
The second condition is the removal by governments of artificial barriers to trade such as quotas, embargoes and all the devilish devices generally classified as exchange controls. Included in that are also government trading agencies. Never has international trade been carried on prosperously with a government as one of the parties to a deal. It may be urged that what, any other country does is none of our business. It may be said that we are offering advice to others if we mention these things. But, Mr. Speaker, these are inevitable and essential economic truths; and unless these conditions pertain there can be no really free and adequate convertibility of currencies. You cannot have a free currency or a freely exchanged currency unless a government will allow that currency to move in or out and be exchanged. At the present time those of us on the North American continent are in possibly the only
area in the world where there is a degree 
and it is not in any way complete-of free currency exchangeability. That is the second condition which must be present in order to make a currency convertible.
The third condition is that there must be a common denominator which fulfils the function both of a currency-the counter-and of a store of value-the security. There has been in history, and is at the present time, 55704-192J
9, 1952	3049
Suggested Commonwealth Conference only one agent which will fulfil this function, and that is gold. Until we can establish complete freedom and maintain gold as a freely exchangeable denominator for currency, we cannot really have currency convertibility. Today we are basing our currency convertibility in terms of the United States dollar. That may be a very fine currency. It may be, and probably is, the world's leading currency at the moment. But, Mr. Speaker, it is just as unsound to take that currency as the exchange medium for all other currencies as it would be to take the Swiss franc or even the French franc, because the internal fiscal policy is subject to the same inflationary forces as apply to all other managed currencies.
In other words the internal fiscal policy in the United States constantly reduces the purchasing price of the American national currency. There was an example this very week in connection with the negotiations regarding the steel strike, in which was involved an increase in the basic wage by something more than 20 cents. This will inevitably mean an increase in the price of basic steel. An increase in the price of basic steel inevitably means a depreciated purchasing power for the national currency. It cannot mean anything else. Therefore our adherence to this policy of using the United States dollar as an exchange medium is one of the greatest fallacies we could follow.
Mr. Speaker, would you call it six o'clock?



BUSINESS OF THE HOUSE

Alphonse Fournier: Mr. Speaker, before
you call it six o'clock, I have to make some changes in the announcement I made on Friday evening with respect to the business of the house. I had announced that at eight o'clock we would go into supply and take up post office estimates. Hon. members will understand that is an impossibility if I want to remain within the rules of the house. Therefore we will continue this debate until we get a vote, go into supply, call two departments and then follow the procedure I outlined on Friday. We will ask leave to sit again and then take up the bill concerning the recapitalization of the C.N.R. before we take up post office estimates.


Mr. Fleming:: What about the immigration bill?


Alphonse Fournier: No.


Donald Methuen Fleming: Not today?


Alphonse Fournier: As to the other two bills, no.
At six o'clock the house took recess.
3050	HOUSE OF COMMONS
Suggested Commonwealth Conference


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.
[Stage Direction]
The house resumed consideration of the motion of Mr. Fournier (Hull) for committee of supply, and the amendment thereto of Mr. Drew.


Agar Rodney Adamson: Suggested Commonwealth Conference companies, 8 per cent; the small or nuisance taxes, 2 per cent; customs and excise, 14 per cent; sales and other excise taxes, 23 per cent; personal income tax, 25 per cent; corporation income tax, 28 per cent. In other words corporations are our largest source of revenue. It is upon those corporations that we depend for our manufacturing exports. If we run into severe competition, as we must expect to do, that tax structure on those corporations is going to act as a deterrent and a brake on the competitive efficiency of those corporations exporting to the world market. Not only that; it is going to jeopardize our own internal fiscal structure when you have such a high degree of taxation from one source.
It is all every well if you have no unemployment and your plant is working at 100 per cent efficiency. But just as soon as you get a recession, and just as soon as that plant stops producing at 100 per cent of capacity, your taxation source is going to drop. If your plant reduces capacity by as little as 10 per cent, your tax revenue may drop off as much as 40 per cent, because it is on 100 per cent operation that the profits are made. Hence from our corporation taxation we are running a danger in this way. If, as we must expect, production falls off from the peak even by a small amount, the profits fall off by a large amount and the revenue for government purposes falls off by that corresponding amount. In other words with a high-year system of taxation on corporations, we are betting that we shall produce at 100 per cent of capacity. If we do not produce at 100 per cent of capacity our tax revenues will fall off. With such a large increment of taxes from one source, we stand in grave danger of having an unbalanced budget.


George James McIlraith: Will the hon. member permit a question?


Mr. Gibson:: Of course.


Agar Rodney Adamson: Yes, surely.


George James McIlraith: Mr. Speaker, how does the hon. gentleman reconcile the argument he has just been making about the taxation of export corporations being a factor in competitive export-as it undoubtedly is-with the demand his colleague the hon. member for Broadview (Mr. Hees) made in the house the other day for a heavy expenditure immediately on national health insurance? How does the hon. member reconcile the two arguments?


Mr. Dickey:: And the resolution for double family allowances.


Donald Methuen Fleming: He did not say any such thing.


Agar Rodney Adamson: That is dealing with another subject completely.


Gordon Graydon: Hon. members opposite do not always agree with the hon, member for Fraser Valley (Mr. Cruiekshank) either.


Some hon. Members:: Question.


Agar Rodney Adamson: My time is nearly up.


George James McIlraith: My point was limited to the taxation aspect.


Agar Rodney Adamson: I am speaking about taxation and exports.


George James McIlraith: Yes; that is my point.


Agar Rodney Adamson: If the parliamentary
assistant to the minister of all the talents will contain himself, I should like to put on record some very simple figures.


John Horace Dickey: Just a simple answer is all we wanted.


Agar Rodney Adamson: I want to put on the record some figures showing what corporation taxation is doing. I have worked out, for the 1951 period, what corporation taxation has meant to a number of corporations. I have worked it out on this basis: for every dollar the shareholder received, what did the government get in taxation?
I have the figures here and they are as
follows:
Aluminum Ltd	   $2.55
Asbestos Corp	 1.28
Abitlbl Power and Paper	 3.24
Fraser Companies	 3.76
Great Lakes Paper	 2.40
Dominion Tar and Chemical	 2.40
Imperial Oil Ltd	 2.90
Canadian Industries Ltd	 1.80
International Nickel Co	 1.20
Noranda Mines	54


John Lambert Gibson: Mr. Speaker, will the hon. member permit a question? I think he should put these figures on the record so they are clear. Will he just say what they are?


Agar Rodney Adamson: This is taxation per dollar of dividends. If the hon. member would like me to do so, I will table this compilation. It is very simple.


John Lambert Gibson: It is an excellent table.


Agar Rodney Adamson: To continue:
Hudson Bay Mining and Smelting	 $ .71
Steel Company of Canada	 4.15
Canadian Ingersoll Rand	 1.71
Canadian General Electric	 2.88
Canada Cement	 2.42
I would ask permission to have this complete table appear on Hansard.


Mr. Deputy Speaker:: Is it the wish of hon. members that the table appear on Hansard?


Some hon. Members:: Agreed.

Suggested Commonwealth Conference


Agar Rodney Adamson: The table is as follows:



WHAT ONE DOLLAR IN DIVIDENDS REPRESENTS IN TERMS OF PRODUCTION. TAXES AND WAGES FOR SEVERAL REPRESENTATIVE CANADIAN CORPORATIONS

[Stage Direction]
Company	Corp. Income Tax Paid Per $ of Div.	Wages Per $ of Div.	Gross Production Per $ Div.	Production in Kind Per $ of Div.$ 2.55	$	$ 19.75	
1.28	3.32		1-99 tons Rock.
				
Abitibi Power and Paper	3.24	13.60	21.30	362 lbs. Paper.3.76	21.00	202 lbs. Paper. 10-7 bd. ft. Lumber.
2.40		11.85	240 lbs. Paper.
				
	2.40	7.80		
				
	2.90		28.50	3 -83 bis. of Refined Oil. 143 gals. Gas.
				
	1.80		19.20	
				
International Nickel Co		1.20		7.25	61 lbs. Nickel. 5-9 lbs. Copper.
			2.33	15*1 lbs. Copper.
				
Hudson Bay Mining and Smelting	.71c.	4.00	6-5 lbs. Copper. 13*1 lbs. Zinc.Steel Company of Canada	4.15	11.15	635 lbs. Steel.1.71	
Canadian General Electric		2.88		65.00	
				
Canada Cement		2.42	Over 2.50	13.67	
				
That makes an average of $2.26 that the government gets through taxation for every dollar the shareholders get, in connection with this group that I have given. The Canadian manufacturers association have arrived at another figure running well over $2. I just want to show that the government's take from the owners of the production plant in this country is more than twice the take by the owners.
Jean-François Pouliot: On a point of order; it is very interesting, but I think the hon. gentleman exhausted his time long ago.


John Lambert Gibson: He should have more time for a good speech.


Agar Rodney Adamson: I was just going to close, and I have had a reasonable number of interruptions. I merely mention these things beoause if we are going to continue to compete in the world markets, the old man of the sea, which is the government,
has to be taken off the back of the production plant of this country; otherwise we are living in a daydream, which could rapidly become a nightmare.


Mr. Johnston:: I was paired with the hon. member for Halton (Mr. Cleaver). Had I voted I would have voted for the amendment.


John Horace Dickey: I was paired with the hon. member for Annapolis-Kings (Mr. Nowlan). Had I voted I would have voted against the amendment.
Motion agreed to and the house went into committee, Mr. Beaudoin in the chair.
DEPARTMENT OF NATIONAL DEFENCE Defence services-
24S. To provide for the Canadian forces, the defence board and other expenditures relating to defence, including contributions toward the military costs of the North Atlantic Treaty Organization, and notwithstanding section thirty of the Financial Administration Act, to authorize total commitments for the foregoing purposes of $3,988,568,232 regardless of the year in which such commitments will come in course of payment (of which it is estimated that $2,346,221,325 will come due for payment in future years); and to provide for the estimated actual expenditures in the fiscal year 1952-53, $1,642,346,907.
Item stands.
DEPARTMENT OF THE SECRETARY OF STATE 433. Departmental administration, $213,883. Item stands.
Progress reported.
IMr. Adamson.]



CANADIAN NATIONAL RAILWAYS


Lionel Chevrier: the second reading of Bill No. 308, to revise the capital structure of the Canadian National Railway Company and to provide for certain other financial matters.
He said: Mr. Speaker, in the debate on the resolution preceding the introduction of this bill I made some general remarks on the principle outlined in the resolution. I shall now review in more detail the provisions of the bill. The Canadian National Railway system is made up of four principal railways. The Canadian National Railway Company has absorbed by amalgamation the old Grand Trunk system. It controls by stock ownership the Canadian Northern and the Grand Trunk Pacific systems. The Canadian National Railway Company has also been entrusted with the management and operation of the Canadian government railways which include the Intercolonial Railway, the National Transcontinental Railway, the Newfoundland Railway and the Hudson Bay Railway.
These four principal railways including their subsidiaries are generally referred to under the collective name of Canadian National Railways. Operations as a unified system commenced on January 1, 1923 and have continued under different forms of management to the present day. At the present time the management of the national system is conducted by a board of directors appointed by the governor in council. This system of management has met with conspicuous success.
The capital structure of the Canadian National Railways has always presented a problem to the government of the day. In 1937 parliament dealt with this problem by enacting the Canadian National Railways Capital Revision Act. That act transferred to a corporation called the Canadian National Railways securities trust certain indebtedness of the national railways to His Majesty. This had the effect of eliminating from the balance sheet of the railways the amount of old loans for capital purposes and for deficits, together with accrued interest thereon, amounting to $1,218,642,195. Of this amount $270 million representing loans for capital purposes was transferred on the balance sheet to proprietors' equity as the value placed on the capital stock of the securities trust.
The capital revision act, however, did not deal with the large funded debt in the hands of the public and did not go further than I have indicated with respect to loans made by

the government to the national railways for capital purposes. In addition, the act of 1937 did not establish any policy for future financing of the railways except to proceed along the well-worn path of borrowing either from the public or the government as the need arose. In 1948 the government directed the royal commission on transportation to review the capital structure of the Canadian National Railway Company and report on the advisability or otherwise of establishing and maintaining the fixed charges of that company on a basis comparable to other major railways in North America. The recommendations of the royal commission on the recapitalization of the national system are found in chapter 6, pages 196 to 198, of the report. I propose to deal briefly with the recommendations of the commission and the corresponding provisions of the bill.
1.	Conversion of a portion of Canadian National Railways' debt into income debentures, recommendations 2 and 5 of the royal commission. The royal commission recommended that the fixed interest-bearing government loans outstanding on December 31, 1949, totalling $743,661,000 be converted into 3 per cent income debentures on which interest would be paid only if earned, and would not be cumulative. The government considered that it was undesirable to relate the amount of relief granted to the total amount of government loans outstanding at any given time. Such a course of action leads to the expectation that this type of loan could be written off at any time in the future that might appear to be expedient. It might also set an undesirable precedent in dealing with other crown corporations.
The bill on the other hand provides for writing off an amount of $736,385,405, being 50 per cent of the total indebtedness of the national company to the government and the public outstanding at December 31, 1951. In exchange for this release of indebtedness the national company will issue to the government an equivalent amount of 4 per cent non-cumulative preferred stock. In addition to this relief from excessive debt charges the bill provides for a ten year moratorium on interest due on $100 million of funded debt owing to the government.
2.	Newfoundland railway and steamship services, recommendation No. 1. The royal commission in its first recommendation considered that as a temporary measure the Canadian National Railways should be reimbursed annually by the government for the operating losses of the Newfoundland railway and steamship services and also for capital expenditures in respect thereof. Past experience indicates that segregation of
Canadian National Railways financial operations from the general accounts of the national railways is not desirable and that the railway management is in a better position to resist proposals for unnecessary or extravagant expenditures if funds are provided through the railway budget instead of being voted as a direct obligation of the government. For this and other reasons the government does not favour this recommendation of the royal commission. However, the government recognizes that the Sydney-Port aux Basques ferry is in a somewhat different position and the government proposes, although this is not included in the bill, to assume the operating deficits of that ferry service. This will be done by submitting to parliament each year an appropriation to cover the operating deficits of the ferry service similar to the procedure adopted by parliament in the case of the Prince Edward Island car ferry. In 1951 the deficit of the Sydney-Port aux Basques ferry was approximately one and a quarter million dollars.
3.	Reserve for something to come and go on, recommendations 4, 5 and 6. The royal commission recommended that after payment of interest due the public the Canadian National Railways be allowed to accumulate out of earnings in each year a reserve or something to come and go on, such reserve to be not more than the lesser of (a) one-third of the income after providing for all charges and deductions from income except interest on the company's obligations, or (b) the balance of the income after payment of interest on debts due to the public. It further recommended that to the extent that such reserves and surpluses had been accumulated losses, if and when realized, should be charged against such reserves and surpluses. It appears from this that the real objective the commission was seeking was the establishment of the principle that some portion of the annual capital expenditures of the railway for additions and betterments should be financed without adding to the fixed interest-bearing debt of the railway.
There are probably some additions and betterments required from year to year which do not add perceptibly to the earning power of the railway, and unless these can be financed in part at least out of earnings or by equity capital there will be a constant increase in the fixed interest-bearing debt of the railway and perhaps a continuing tendency for annual interest charges to rise beyond the railway's earning capacity. The bill provides for the annual purchase by the government during the period 1952 to 1960 inclusive of additional 4 per cent preferred stock in an amount equivalent to 3 per cent of the railway's gross revenues to provide

Canadian National Railways the company with a reserve to be used for ordinary additions and betterments. This percentage of gross revenue is a figure which would be subject to review at the end of that period in the light of circumstances existing at that time. Any capital requirements which could not be met out of this reserve and other reserves of the railway should be financed by interest-bearing loans either from the public or the government. These are matters in regard to which appropriate decisions can only be made at the time the financing is required.
4.	Securities trust; recommendation No. 3. The royal commission recommended that the shares of the Canadian National Railways securities trust now held by the government be turned over to the Canadian National Railways in exchange for an equal number of the company's shares. The bill provides for this to be done and for the continuance of the securities trust for the purpose of protecting the priority of government claims in respect of collateral securities.
5.	Future financing; recommendation No. 7. The royal commission recommended that any capital required to finance the company, in addition to reserves accumulated from operations, be obtained from the sale of bonds to the public and income debentures to the government. The government felt that this recommendation should not be adopted, not only because it implied that the national railways were to remain in a state of semibankruptcy but also because of the very serious consequences such a principle, once accepted ini respect of the national railways, would have in relation to the future financing of other crown corporations.
6.	Surplus earnings and deficits; recommendation No. 8. The royal commission recommended that surplus earnings, if any, after payment of interest on debts due to the public, the provision for reserves or something to come and go on, and the payment of interest on government loans be dealt with at the discretion of the directors. The bill provides that surplus earnings remaining after payment of interest on funded debt, income taxes and dividends on preferred stock shall be remitted annually to the government or the governor in council may direct that the whole or any part of the surplus remaining shall be applied toward the discharge of the obligations of the national system. If in any year railway earnings are not sufficient to cover all expenses, including payment of interest on funded debt, parliament will be asked to vote the deficit.
The government considers that the provisions of the bill provide a generous solution


to the problem of enabling the national railways to finance capital expenditures without an undue accumulation of fixed interestbearing debt and annual fixed charges. If these proposals are adopted the national railways would be relieved of fixed charges on government loans which amount to some $22 million, and in addition would have a moratorium for ten years on interest charges on another $100 million. The railways would also be relieved of the burden of the operating loss in respect of the Sydney-Port aux Basques ferry service. It should also be noted that the bill provides for a substantial amount of equity financing by the issuance of preferred stock which would be done even in years of poor earnings or no earnings at all, whereas the royal commission's formula would provide additions to the reserve only on the basis of a relationship to net income.
All things considered, I think the bill provides an acceptable solution to the problem of revising the capital structure of the Canadian National Railways.


Howard Charles Green: Mr. Speaker, this bill is a rather complicated measure. For that reason, and also because it is to be referred for study to the special committee on government owned railways and shipping, my remarks this evening will be comparatively brief. On the whole, we believe this measure is a good one and that it will be of benefit to the men and women who are serving this country in their capacity as employees of our Canadian National Railways.
In the annual report of the railways for the year 1951 I notice this statement with regard to recapitalization:
The Canadian National has never failed to meet operating expenses, but except for the years 1926, 1928, and 1941-1945 has been unable to meet the heavy fixed interest charges with which the system has been faced since its inception in 1923. The royal commission-
Referring there, of course, to what is commonly known as the Turgeon commission.
-having studied the evidence presented in public hearings, reported:
Then there is a quotation from that report:
The Canadian National Railways has established
a case tor reduction of its fixed charges and for the desirability of the company being able to accumulate out of earnings a reserve or something to come and go on.
This recapitalization has been looked forward to for a good many years by those who are interested in our national railway. To me there seem to be two very important features about this measure. There is first of all the reduction of the fixed charges and, secondly, the desirability of the company being able to accumulate out of earnings a

reserve or something to come and go on. Those, of course, are the two points stressed by the president in his annual report.
Dealing in the first place with the fixed charges: in the annual report at page 33 we find that there is a very large debt held by the general public, amounting at the end of 1951 to $615,197,035, on which there was an annual amount of interest payable of $23,467,703. As I understand the bill, this debt to the public will not be affected at all. It will remain outstanding and will have to be met in due course by the railway. In addition to the debt owing to the public there was owing at the end of 1951 to the government of Canada, for loans of various kinds, a total of $857,573,774 on which there was an annual interest payment due of $23,347,412. This figure, of course, is after the reductions granted by the act of 1937.
In 1951, in order to meet these interest payments to the public and to the government, aggregating almost $47 million, the railway had available $31,783,119. That figure is to be found at page 26 of the annual report. It means that last year the railway was short $15,031,996 in the amount required to meet interest payments to the general public and also to the government.
The plan contained in this bill apparently is to take the total of these two debts, namely, the amount owing to the public and the amount owing to the government, and divide it in two. In that way we reach a figure of $736,385,405. That amount is to be taken away from the $857 million odd which is owing to the government, leaving a balance owing to the government of about $121 million, according to my calculations. In addition, of course, there will be $615 million odd owing to the general public. If I am wrong with respect to these figures I would ask the minister to correct me.


Lionel Chevrier: Yes, there is another hundred million to go off for a period of twenty years.


Howard Charles Green: Yes; I am coming to that. This $736 million, which is to be taken off the debt, is in fact to be changed to 4 per cent preferred stock, which of course will be held by the government. The dividends will not be cumulative, and will only be paid by the railway if earnings are sufficient. The result of this change, I take it, will be to wipe out the income deficit of the railway, and that is a very good thing.
However, the Turgeon commission recommended action of a little different kind. They recommended that all the money owing to the government should be changed, not to 4 per cent preferred stock but to what they described as 3 per cent income debentures.
55704-193J
Canadian National Railways This evening the Minister of Transport (Mr. Chevrier) has said that the government decided not to wipe out the total amount of the loans made by the government, in the belief that it was wiser to keep a certain amount hanging over the head of the railway. I doubt very much whether that was necessary. It does seem to me that when we were making this change it would have been better to follow the recommendation of the commission, and change all of this loan to the 4 per cent preferred stock. This would have given the railway just that much better start in its new day. After all, with this recapitalization the Canadian National Railways turns the page and begins with a clean sheet. I think perhaps it would have been wiser to change all of that debt, rather than leaving over $121 million still outstanding as a loan.
There is a second provision in this bill to the effect that on $100 million, which I suppose is $100 million of the $121 million to which I have just referred, there need be no interest paid for a period of 10 years, and no principal for a period of 20 years. During the second period of 10 years the amount of interest is left indefinite, with the figure to be set by the cabinet. It is difficult to understand the reason for this plan. There is no such recommendation in the report of the Turgeon commission, and the $100 million seems to have been an arbitrary amount pulled out of the air by the government.
When the resolution preceding this bill was under debate the minister rather led us to believe that one of the reasons this provision was made for the $100 million was the recommendation by the Turgeon commission that advances should be made annually for the losses incurred on the Newfoundland railway. However, he has cleared that point up tonight. I think it must be pointed out, however, that the Turgeon commission made very definite recommendations in favour of annual reimbursements to the Canadian National Railways for losses on the Newfoundland railway, and also for losses on what are called developmental lines. This reference will be found at page 198 of the report in these words:
It is also recommended that in the case of any developmental line which may hereafter be constructed or acquired by the government, in respect to which the capital expenditures required are large and losses in operation are likely to be incurred for some time, the entrustment of the said line to the Canadian National Railways be made on the same terms as are proposed herein in regard to the Newfoundland railway.
Those recommendations, if accepted, would have provided a means of helping Canadian National Railways in the years that lie ahead.

Canadian National Railways But instead of doing that, this measure just gives the right to waive interest on $100 million for a period of 10 years, and then allows the railway to pay a low rate for a further period of 10 years. It does not seem to meet the situation which was outlined by the Turgeon 'commission.
I wish to say a few words also concerning the second main feature, which is the accumulation out of earnings of a reserve, or what is described as something to come and go on. The Turgeon commission dealt with that feature at page >195 of the report, and apparently the suggestion was advanced by officers of the railway who appeared before the commission. This is what we find:
The Canadian National Railways has established a case for reduction of its fixed charges and for the desirability of the company being able to accumulate out of earnings a reserve for "something to come and go on."
On the following page the commission made very definite recommendations on how it might be possible for the railway to do that. In paragraph 4 of the recommendations we find the following:
That after payment in the first place of the interest charges on debts due to the public-
Your Honour will note that there is no reference here to debts due to the government, but merely to debts due to the public. -the Canadian National Railways be allowed to accumulate out of earnings in each year a reserve or "something to come and go on," such reserve to be not more than the lesser of-
Then there are two measuring standards.
(a)	one-third of the income after providing for all charges and deductions from income except interest on the company's obligations, or
(b)	the balance of the income after payment of interest on debts due the public.
Then there is a further recommendation contained in paragraph 5:
That after payment of the interest on the debts due to the public and the setting aside of the reserve or "something to come and go on" referred to in, (4) above, an amount equal to three per cent of the then outstanding government loans, or the balance of the earnings, whichever is the lesser, be paid to the government.
That recommendation had a psychological advantage. If it had been implemented in the legislation, then the railway officials would have been able to accumulate a reserve out of the earnings of the railway each year; and I think that would have been an attractive plan for them. As a matter of fact it seems to have been the plan which they proposed to the commission. But in section 6 of the bill we find that, instead of provision being made for the railway to accumulate a reserve out of earnings, the government for a period of nine years only, commencing with the present year, is going to pay to the


railway in each year three per cent of the gross earnings of the railway for that year.
In 1951 the gross earnings were something over $633 million. Had this measure been in effect last year, that would have meant the government would have paid to the railway about $19 million under this section 6. That money is to be paid into a special account and is to be Used for additions and betterments. In exchange the railway will give the government more four per cent preferred stock.
In such a plan there is, of course, in reality no provision for any reserve out of earnings. Instead of the earnings going, as the Turgeon commission recommended, first on the debt to the general public and then into a reserve we find that, under this bill, the earnings are to go first to pay interest on securities held by the public; second, to pay interest on indebtedness of the company to the government; third, to pay taxes under the Income Tax Act; and fourth, to pay dividends on these four per cent preferred shares. Then any earnings remaining over and above that will be paid to the Receiver General of Canada, with power given to the cabinet to apply any part of those earnings which remain over and above the first four items in discharge of such obligations of the national system as the cabinet prescribes.
I point out again that there is no provision for the railway to accumulate a reserve; and the provision for payment by the government is only for a period of nine years. I would ask the minister, when he closes the debate, to explain why that change is made from the definite recommendation of the commission.
Finally I think a word should be said about the difficulty of comparing the Canadian National Railway Company, which is a state-owned railway, with the privately-owned railways; and that is true both in respect of the Canadian Pacific Railway and in respect of class I United States lines. We are all tempted to think that by recapitalizing the Canadian National Railway Company we can place it in a position where it can be compared with these other companies and can be made subject to exactly the same considerations. But the Turgeon commission was careful to point out that such is not the case. For example, at page 194 of the report of the commission we find this statement:
What should be realized is that, while the Canadian National Railways and Canadian Pacific Railway Company could and should compete in so far as operations and services are concerned, there are many ways in which the two systems are not comparable, and it is neither practical nor desirable to establish the capital structure and the fixed charges of the Canadian National system on a basis comparable with the privately-owned railway.

At the foot of page 199, setting out the differences, there is a further reference which reads in this way:
A realistic approach to the recapitalization of the Canadian National Railways must recognize: First, that it is not a privately-owned company and has, as such, advantages, e.g., exemption from income tax-
Of course that advantage will no longer apply, as I understand it.
-and relief from credit problems; second-
And here we have one of the great handicaps of the state-owned railway.
-that it must operate railways in the public interest regardless of whether or not they may be profitable; third, that its earnings are consequently harder to forecast than in the ordinary case; fourth, that considerations ordinarily applicable to private companies on a recapitalization do not apply to it with anything like the same force or effect.
The Minister of Transport (Mr. Chevrier) himself said something to the same effect during the debate on the resolution. I am referring to page 2908 of Hansard. At that page it will be found that I asked him a question as follows:
Is it the intention that this measure will put the Canadian National Railways in the position of being used as a yardstick for the setting of freight rates? At the present time I understand that the Canadian Pacific Railway is used as that yardstick. Will the result of this measure be that the Canadian National Railways will be used instead of the Canadian Pacific Railway as the yardstick for setting the rates?
To that question the minister replied as follows:
Well, in so far as I can ascertain, the Canadian Pacific Railway will remain the yardstick by which rates will be fixed under the jurisdiction of the board of transport commissioners. This bill does not change that position. It would be for the board of transport commissioners to determine whether or not they want to use another yardstick. Whether they will or not, I am not in a position to say, but it is their responsibility.
The commission also dealt with that question. I read again from page 199 where they said:
In recent years Canadian National Railways' earnings have resulted from rates established on the basis of Canadian Pacific Railway's requirements. If this continues to be the case in the future, and if rates are established which will enable the Canadian Pacific Railway Company to earn its requirements as determined by the board of transport commissioners, it seems assured that on the average Canadian National Railways' earnings will be more than sufficient to pay interest on its debt to the public.
If the recommendations of the commission are carried out, and if good judgment and common sense are exercised in the future in the financing of improvements and betterments, there is no reason why the Canadian National Railways should again be burdened with excessive fixed charges.
As I said in opening, Mr. Speaker, the bill is to be reviewed by a committee, and it will be possible for that committee to call officials of the railway in order to get further
Canadian National Railways information concerning this measure. We hope it will be possible for the committee to make changes in the bill, should it be found that there are ways of improving it. We hope also that the bill will be of great benefit to the country at large, and that it will give encouragement to our railwaymen. They have been waiting for this measure. I have here a statement made by Mr. Donald Gordon, president of the Canadian National Railways, just last month when speaking in Toronto to the interdepartmental educational association, in which he summed up very neatly the hopes and the wishes of the company with regard to recapitalization. He is quoted as saying that he expected the C.N.R. recapitalization plan would be brought into operation in the near future, and then he went on to say:
This will clean the windows of our financial house. Once the legacy of excessive debt has been lifted from our shoulders, we will be judged entirely on our merits, and it will be a challenge to everyone in the organization to show what we can do.
We hope this bill will put Mr. Gordon and his fellow workers in that position, and we wish them all good luck as they start out under this new plan.


Clarence Gillis: My remarks are going to be brief and to the point. For a good many years, as the minister is aware, we have raised in the house the necessity of the revision of the capital structure of the Canadian National Railways. I think he will remember also that we very seldom got any support on it. However, the bill before the house now has for its purpose the revision of the capital structure of the Canadian National Railways, and we welcome it as a step in the right direction. The Minister of Transport (Mr. Chevrier) has developed the habit lately of quite frequently bringing good news to the house, and this is another occasion when he has taken a step forward. Any time he does that we shall be glad to support him.
As to whether the bill will serve the purpose the president of the Canadian National Railways had in mind, and the purpose I have had in mind for some years, remains to be seen; but I do not think this is the place to discuss it. I am a member of the committee; I have read the bill, and I have listened to the president of the Canadian National Railways express his opinion. I have read the submission he made to the royal commission on transportation and the commission's report. In my opinion the bill before us at the present time fairly well meets the recommendations of the royal commission.
3060	HOUSE OF
Canadian National Railways
As the hon. member for Vancouver-Quadra (Mr. Green) stated, he is a member of that committee, and we shall have an opportunity of examining the bill clause by clause and of having people from the railways there to give us information where our minds may be clouded.
The group to which I belong have never regarded railways as a profit-making organization, as such. They are necessary services to the country, and particularly to a country like Canada, because if we are to develop this country it has to be served from the standpoint of transportation; otherwise you will never develop it.
The second thing I should like to say is that there is no comparison between the Canadian National Railways and the Canadian Pacific Railway. I know we shall hear a lot in the days that lie ahead about the failure of government enterprises; but I should like to point out to the guardians of the Canadian Pacific Railway in this house that the Canadian Pacific Railway was organized in the first place as an integrated railway system. The disadvantage of the Canadian National Railways was that it inherited a hodge-podge of many railways that were necessary in this country but which perhaps should have gone to bankruptcy. The Canadian National Railways took them over and the debt that went along with them, and the handicap the Canadian National Railways has suffered over the years has been an interest debt on bonds that should have been written off, or carried as equity capital, as the president of the Canadian National Railways has recommended.
Anyone who starts to make an analysis of the Canadian National Railways, the United States railways, and the Canadian Pacific Railway is getting on very slippery ground. If I were backing the Canadian Pacific Railway I would not want to go back to 1871, 1872 and 1874 and make an examination of the financial manipulations under which that railway was built. A government resigned over the Pacific scandal, and I do not think it adds anything to the debate to bring in that kind of comparison at this time; but I have no doubt we shall get a lot of that, and we shall have a great many people across the country, and many sections of the press, in the days to come trying to prove that the government is pap-feeding the Canadian National Railways, and so forth, in comparison with the other operating company. The hon. member for Vancouver-Quadra made a kind of lefthanded suggestion in that direction-


Howard Charles Green: Well, now, Mr. Speaker, that is a very unfair remark. I said exactly the
[Mr. Gillis.l

opposite. I said that the state-owned railway could not be compared with the private railways. I mentioned not only the Canadian Pacific Railway but also the United States lines, and I read from the Turgeon report. The hon. member need not try to say that I was taking any left-hand cracks at the Canadian National Railways.


Clarence Gillis: Who has the floor, Mr. Speaker?


Howard Charles Green: The hon. member had no right to make a statement of that kind,


Clarence Gillis: I sat here and listened to the hon. member for Vancouver-Quadra perhaps more carefully than did the hon. member for Greenwood (Mr. Macdonnell), because I knew I was following him. And there is not a member in this house, you know, that I like more to agree with. We work together quite a lot. What I heard the hon. member for Vancouver-Quadra say was that the commission's recommendations were such that if they were followed a comparison between the Canadian National Railways, one of the United States lines, and the Canadian Pacific Railway would be possible from the standpoint of financing and profits.


Howard Charles Green: No, I did not say that.


Clarence Gillis: If the hon. member says he did not say that, I will have a look at Hansard tomorrow and if I am wrong I shall be quite willing to take it back.


Mr. McLure:: Correct it now.


Howard Charles Green: I said the opposite.


Clarence Gillis: I am not a bit doubtful as to the kind of propaganda you will get. But, as I suggested a moment ago, we will know more about the bill when it comes out of committee. So far as making a comparison between the two railways is concerned, there is no comparison. It is not possible to make a comparison. The Canadian Pacific Railway was built as an integrated railway system right across the country, and not only was it heavily assisted by the government but it received grants of land. It is interested in oil, and in many other ventures, and acts as a corporation. It is out to make money, and not to serve the country.
On the other hand, the other system grew up just like Topsy. It took over every uneconomic railway operation in the country, and has been carrying that debt load for a good many years. I agree as to the psychological value of the bill, and there can be no doubt that a revision of the capital structure of the Canadian National Railways is most important. For many years the workers-and I mean those who operate and maintain the trains along the line-have had a

complex and have asked themselves: What is the use? They feel that no matter how hard they work, no matter what they do, no matter how they move the trains across the country, all their earnings may be going into the pockets of the bondholders, or into the vaults of the banks and trusts.
With this debt removed there will be an incentive for the workers to get behind management and do an even better job than they have in the past, though their service thus far leaves no cause for complaint. I do believe, however, that the psychological shock they have had to absorb from year to year, when they have earned $46 million only to find it paid out as interest on bonds and loans without in any way reducing the principal sum, has been a factor that militated against the national railway system in no small degree.
I am not going to discuss the bill section by section. It will go to a committee and at that time I will have an opportunity to discuss it with officials of the railway company and the government who have studied the proposal and who may know more about it than we do. However, if the bill is not what I think it should be, then on motion for third reading in the house I shall be prepared to tell the house about it.


Jean-François Pouliot: Mr. Speaker, this is legislation to write red entries in black ink. We will examine it together, and then I shall draw my own conclusions. The bill makes reference to three amounts: $736,385,405, $396,518,135.02 and $378,518,135.02. The total amount involved in the bill is, then, $1,511,421,000.
But this is not the first time parliament has helped the Canadian National Railways financially. On today's order paper it will be seen that question No. 10 is divided into seven paragraphs. I could answer some of those paragraphs tonight, myself, and thus save the minister and the management of the railways the trouble of doing so. The first paragraph in my question is as follows:
Did the cancellation of capital stocks and certain indebtedness of the Canadian National Railway system to His Majesty, in virtue of chapter 22 of 1 George VI (1937), amount to more than one billion two hundred million dollars, and what was the exact amount of that cancellation?
As I was told to look into the statutes, I have done some research work, and have found the fine figure of $1,218,642,195.27.
Then the second paragraph in my question is as follows:
What was the total amount of the Canadian National Railway system securities held by the Canadian government at various times since 1923?
I do not have an answer to that question, but it would be easy for the accounting branch of the Canadian National Railways to give it.
Canadian National Railways
Then the third paragraph in my question is this:
What amounts have been loaned or advanced to the Canadian National Railway system in virtue of the Canadian National Railways financing acts of 1934, 1935, 1937, 1940, 1940-41, 1942, 1943, 1946, 1947, 1948, 1950, 1951 and 1951 second session?
This information I have found in the statute books; therefore the answer by the hon. member for Temiscouata (Mr. Pouliot) to the hon. member for Temiscouata, with respect to financing acts of the Canadian National Railways, shows that the following amounts are involved:
Year	Chapter In Statutes		Amount
1934 					 $16,387,835
1935 	"	17.	
14,200,0001937 	6.	44,000,000 	
30,731,7001940 	24.	
15,104,0001940-41 ..	12.	
29,414,2061942 	22.	
22,360,0001943 	22.	
6,046,3001946 	42.	
22,550,0001947 	29.	
46,723,0001948 	37.	
85,882,2001950 	30.	
24,582,4891951 	45.	
111,512,9201951 (2nd	session) "	9.	
55,581,816That is	the total	of	$525,076,466 Canadian Nations
Railways financing acts from 1934 to the second session of 1951.
Paragraph 4 of question 10 reads as follows:
4. Besides, what advances, loans or refunds were made by the Canadian government to the Canadian National Railway system in virtue of the Canadian National refunding acts of 1929, 1930, 1935, 1938, 1944, 1947 and 1951?
Here is the answer respecting the Canadian National refunding acts:	.
Chapter 11 of the statutes of 1929 $18,000,000.00
Chapter 8 of the statutes of 1930 20,042,038.84
Chapter 3 of the statutes of 1935 200,000,000.00
Chapter 22 of the statutes of 1938 200,000,000.00
Chapter 9 of the statutes of 1944 200,000,000.00
Chapter 30 of the statutes of 1947 200,000,000.00
Chapter 46 of the statutes of 1951 200,000,000.00


Stanley Howard Knowles: Is there not some duplicating or overlapping in those figures?


Jean-François Pouliot: I have mentioned the figures that are in the statutes, and if there are some accounting distinctions to be made I am willing to accept them.


Stanley Howard Knowles: I was merely asking for information. I wondered if some duplicating of figures was not involved when there was a refunding but perhaps the hon. member will come to that.


Jean-François Pouliot: It may be, but my hon. friend understands that it is worse than eating a barrel of molasses to check the figures in these

Canadian National Railways statutes. I took a note of what was in them, I have given the references, and anyone can check them if he wishes to do so. To summarize, under the Canadian National Railways Capital Revision Act of 1937, which was entitled "An act to provide for the cancellation of capital stocks and certain indebtedness of the Canadian National Railway system to His Majesty and for adjustment of the accounts of the system", there was an amount of $1,218,642,195.27. The total under the C.N.R. refunding acts from 1929 to 1951 amounted to $1,038,042,038.84. From 1934 to the second session of 1951 the total under Canadian National financing acts amounted to $525,076,466. These three figures make a total of $2,781,760,700.11. If we add the total of the amounts mentioned in Bill No. 308, namely $1,511,421,000, we have a grand to*al of $4,293,181,700.11.


Stanley Howard Knowles: Is this bill not writing off some of these other amounts?


Jean-François Pouliot: It may be so, but I should like my friend to wait a minute for my argument. I am merely laying the basis of my argument, and a difference of a million in the figures I have quoted will not change my argument at all. I am not here to establish the debt of the Canadian National Railways. I am here to make an argument and to appeal to the minds of my hon. colleagues, and particularly to that of the hon. member for Winnipeg North Centre (Mr. Knowles). Then paragraph 5 of question No. 10 reads:
Referring to the said refunding acts of 1935, 1938, 1944, 1947 and 1951, was the amount of $200 million respectively mentioned in each act a revote or are these five amounts amounting to a refund of $1 million?
Apparently the latter is the case. There are only three paragraphs left in that question and I will deal with them when the question is called on Wednesday. Paragraph 2 of the question reads:
What was the total amount of the Canadian National Railway system securities held by the Canadian government at various times since 1923?
I refer to security, stock or shares without par value. Paragraph 6 of the question reads:
What is the total amount of the loans, advances and refunds made by the Canadian government to the Canadian Railway system since 1923?
The figure of $4,293 million is the answer to that. Paragraph 7 of the question reads:
How much of it was cancelled, and when?
It is a question to which I should like to have an answer, and I may redraft the question after that. It shows one thing, Mr. Speaker: how difficult it is for a member of parliament to carry on research work, as was suggested to me, without any help. I had to go and look at the statutes. Reading


them is the dullest thing on earth. I did my best to try to make a compilation of these figures in order to come to a certain conclusion and know approximately where we are. This is the first part of my argument. I have not reached the second yet.
The other day I asked for the bylaws of the Canadian National Railways in virtue of chapter 172 of the Revised Statutes of Canada. I got the answer, as I said this afternoon, and I noticed one thing. I hold in my hand a certified copy of these bylaws which were passed on the 30th day of June, 1927. I noticed that there was an executive committee. I wonder if my colleagues would be interested in seeing that document on Hansard. If they are interested and if the house is unanimous about it I will give the document to Hansard. If not, I may read it but I do not see why I should read it at all. It is a document which should be read quietly to be understood, and hon. gentlemen will realize its importance if they read it at leisure.


Stanley Howard Knowles: May I ask whether this is the document that was the subject of discussion this afternoon on notices of motion for production of papers?


Jean-François Pouliot: No. I will tell my hon. friend what it is. It is the bylaws at the time of Sir Henry Thornton. If the hon. gentlemen prefer me to read it I will read it, and it is a very interesting document. It shows how the executive committee was formed and how the powers of the directors were transferred to the executive committee in 1927. It is the basis of the bylaws under the new administration. Those bylaws were passed four years after Sir Henry Thornton took charge of the railway, and it shows how these people were governed by their own bylaws.


Mr. Depuiy Speaker:: The hon. gentleman has asked that a certain document to which he has referred be taken as read and printed in Hansard. Before I ask hon. members for their consent perhaps I should ask the hon. member for Temiscouata if the document has reference to the principle of this bill.


Jean-François Pouliot: Is it agreed?


Mr. Deputy Speaker:: If the document to which the hon. member refers does not have anything to do with the principle of this bill the document is not in order and therefore would not be put on Hansard. I have listened very carefully to the remarks of the hon. gentleman since he started and I expected that at a certain moment the arguments he had so far advanced would prove that he was coming to the principle of the bill. So far I do not think that he has dealt

very much with the revision of the capital structure of the Canadian National Railways.


Jean-François Pouliot: With due respect I will tell you what it is. The first part of my argument was very dull, I admit, but it was to establish where we are, approximately. I have been told here in the house that I could make my own research. I have made it as well as I could have without the help of an accountant of the railway. I did it myself in the library of parliament. I have not exhausted my argument, and I am just coming to the second point. The second point is that I have no objection to this bill provided the government has a certain control on the management of the railway. That is my point.
I am unquestionably in order in making that argument tonight and explaining the position. I have been very careful about it and have been proceeding step by step to inform the members of the magnitude of the problem. It is not an ordinary thing, and I have no grouch against anyone. I wish to draw the attention of the members who are here and of all my colleagues to the importance of the problem. $4,293 million is something-let us say it is only $3 billion; it is still something in 25 years. It is enormous.
My contention is that I have no objection to that refinancing provided there is a certain control by parliament on the expenditures of the railway. What I am going to show, according to the bylaws which are official, and which are countersigned by Mr. Grant, secretary of the Canadian National Railway Company, is that there was such control at the time of Sir Henry Thornton in virtue of the bylaws, and this is the document I wanted to show. It is perfectly in line with my argument.


Mr. Depuiy Speaker:: Is it agreed that the document appear in Hansard?


Edward Turney Applewhaite: Mr. Speaker, I think one should be consistent. My understanding is that my hon. friend proposes to put on Hansard an unread document which is certainly not a table of figures. With great respect to my hon. friend from Temiscouata (Mr. Pouliot), if it is in the nature of a document which requires consent before being placed on Hansard I have no intention of giving that consent for reasons which I outlined to this house not very long ago.


Stanley Howard Knowles: With great respect for my hon. friend from Temiscouata, I was just going to raise the same point, but now that the member for Skeena (Mr. Applewhaite) has done it I congratulate him on his consistency.
Canadian National Railways


Jean-François Pouliot: I hope that my hon. friend from Winnipeg North Centre (Mr. Knowles) will not give all his congratulations to my hon. friend from Skeena for his consistency and that he will give me a little solace.


Stanley Howard Knowles: I may tell my hon. friend that I would like very much to see the document.


Jean-François Pouliot: Then I will read it. I will satisfy everybody.


Lionel Chevrier: If the hon. gentleman is going to read the document-and I gave the information to the hon. gentleman in answer to an order for return which he moved in this house-it is my opinion for what it is worth that the information he is about to read has absolutely nothing to do with the bill. As a matter of fact it has to do with the manner in which a committee was. appointed in the days of Sir Henry Thornton, long before there was any question of the capital revision act of 1937 and certainly long before there was any question of this act. I say, with respect to my hon. friend, that in my humble opinion it has absolutely nothing to do with this bill.


Jean-François Pouliot: Mr. Speaker, I regret to have to disagree with the Minister of Transport (Mr. Chevrier), but my idea of the debate we have before us now is that we should give more importance to facts than to the report of the royal commission on transportation; and facts are there and they speak for themselves. If I am not allowed to read this extract from the bylaws of the Canadian-National Railways, public documents and part of the argument I am making now, I will' summarize them. I will do so by saying that in 1927 the deputy minister of railways and canals was a member of the executive committee of the Canadian National Railways which was empowered to exercise all powers which the directors were authorized to exercise. My contention, and I say that without offence to anyone and just because I believe in control of expenditure, is that it was a safeguard for -the government and for the country, as well as for Sir Henry Thornton and the management of the Canadian National Railways at that time. A representative of the government was there attending each sitting of the executive committee of the Canadian National Railways. It was a safeguard for everybody because I do not find it fair for the Minister of Transport, for the government itself and for all of us to be responsible for such tremendous expenditures when we cannot have any information about what is going on, and when we have reports that are beautifully illustrated, that may be very costly, but which mean nothing because when we ask for any information in detail

Canadian National Railways we are told that the matter should be dealt with before the committee adjourns, or things like that, as was said to me at a sitting which concluded at a quarter to seven at night. We are not at ease to scrutinize the expenditures made by the Canadian National Railways in order to protect the management just as well as to protect the government and to protect ourselves in this matter.
According to chapter 8 of the statutes of 1945 there was an amendment to the Canadian National Railways Capital Revision Act. I can summarize it as follows: The corporation is to be known as the Canadian National Railways securities trust, consisting of five trustees, the deputy minister of finance, the deputy minister of transport, the deputy minister of justice, and such two officers of the Canadian National Railways as may be named from time to time by resolution of the board of directors of the national railways. The trustees shall serve without remuneration. The same principle was applied by the act in 1945 as was applied by the bylaws voted by the directors to create the executive committee, of which the deputy minister of transport was a member ex officio.
Therefore, sir, I shall draw my conclusion. I had something else to say. You know, Mr. Speaker, we cannot deal just as easily as that with such huge figures. This $4,293 million in 25 years represents a yearly expenditure of approximately $172 million, and a daily expenditure of half a million. It is worth looking at it. When I think of the importance that members of parliament give to some picayune expenditure for wars or things like that, small things, they seem to be indifferent to a control being exercised by parliament-not by the government alone but by parliament-over that expenditure. I say that because I am convinced that the conclusion at which I have arrived is in line with the policy of the government at the time of Sir Henry Thornton, and which was followed afterward. The war changed it, but there is no reason not to apply it again for the welfare of the railway and for good government as well as the satisfaction of the Canadian people.
Very often we hear some members of parliament insinuating that everyone who is not a member of parliament shall be given a free rein, that everyone who has not been elected by the people is a genius or a wonder. It may be true, but we are responsible for what the genius and the wonder do. We have to render an account to our people. When we are asked a question about the management of the railway by any one of our constituents or anyone we meet on the street we say, "Well, they are great men; they


do not have to render account to parliament." They say, "How is that?" They would be shocked. They would not believe it. They would be astonished. What I cannot understand is the indifference of members of parliament with regard to the control that must be exercised on such huge expenditures, when they attach such importance to some minor details of administration. I do not say that in a way to criticize the Minister of Transport (Mr. Chevrier), because I have a profound admiration for him. I have known him for a long time. I know that he has a big department, and he is one of the hardest working ministers in the cabinet. He has a lot of responsibility, but let him be responsible only for the decisions he makes and let him not be responsible for the decisions that are made by others who are outside of the range of control of parliament.
I am not going to insist any more, Mr. Speaker, now that I have explained my case. I hope it is clearer than it was at the outset, when I had not completed my argument. I am very serious about it, and I have spoken about it to some of my friends down home and here. They said that it was pure common sense. How is it we cannot have these regulations for which I asked this afternoon? Time will tell, and I hope I shall get them so we can make a comparison with the past. I hope the government will not be shy in tabling these bylaws, because legislation was passed in 1945 which was precisely in accordance with the bylaws that were passed by the directors to transfer their powers to an executive committee of which the deputy minister of transport was a member. It is precisely because I have great confidence in the minister, and great confidence in his deputy, that I hope that in a short time the deputy minister of transport or anyone chosen by the minister will be a member of the executive committee of the Canadian National for the common good.


James MacKerras Macdonnell: I shall be very brief, Mr. Speaker. If this matter goes to a committee, that is one reason for being brief. The other reason is that we have already discussed it at some length, and a third reason is that we are agreed on the principle of this measure. The only thing we are trying to do is make sure it carries out the purposes which are intended. We have already pointed out that we feel the operating officials of the Canadian National Railways should have some relief from the burden they are carrying. It may not be amiss, having regard to something that was said earlier in the evening, to say that even in the representations made by the Canadian Pacific Railway before the Turgeon commission there was a most generous reference to the operation

of the Canadian National. I shall read a sentence from page 185 of the commission report, and this refers to the representations of the Canadian Pacific:
It believes that the present management of Canadian National has achieved a high degree of efficiency in the operation of the railways committed to its charge. Any measures designed to provide an incentive to continued and increasing efficiency on the part of the Canadian National or any other railway are desirable.
That is true and we can accept it. On the other hand there is a question of being realistic about this matter, and of not taking off more of the burden than need be. The real question in my mind is this. This is the second major operation. There was a major operation in 1937, which I think we might all say was not a good year to make the change because we were still just struggling out of a depression. One looks at what was done then with respect, therefore; but now we have had a succession of what I think must be called good years. We come now to 1952, and I think it is very important that this second major operation, if possible, should do the job and that we should not have another hanging over us. It is with that thought in mind that I want to raise one or two points, though they may be gone into in more detail in the committee. The first thing I want to raise is a question which has already been raised by my colleague, the hon. member for Van-couver-Quadra (Mr. Green). This being a subject which is quite uncontroversial, and a matter in which we are all aiming at the same thing, I am going to consider myself free, if necessary, even to differ a little bit from my colleague on details. We are all trying to get to the same point. There are various questions to which we are all trying to get the right answer.


Lionel Chevrier: I hope that means that the hon. member is agreeing with us.


James MacKerras Macdonnell: Oh, he did
not disagree with you. The point I want to make is this. We are forgiving a large part of the debt, namely $736 million, through the instrumentality of a large issue of preferred stock. The common stock is put on the books at a value of $396 million. Altogether this makes a total of $1,132 million. The thing that bothers me a little bit is this. From one point of view it may not matter much, when we have the position of both proprietor and creditor, whether in fact we accept the advice of the Turgeon commission and turn this approximately $337 million into income bonds or whether we turn it into stock. From one point of view it does not matter a great deal. But I am a little bit troubled at the thought that we are setting up the appearance of an equity of $1,100 million in an enterprise whose earnings we are not quite sure will be
Canadian National Railways substantial or which, as far as we can see, will not be sufficient to warrant a capitalization of anything like that amount. I am not going to press the point. I merely raise it. I think it is of some importance. No doubt it has been carefully considered.
The second point I want to raise is this. It seems to me that, in one way, we are to a certain extent beaten before we start because we are not dealing with the whole problem. For example, the minister told us tonight that the Sydney and Port aux Basques ferry service was to be left out and dealt with separately.
There is just one other point I want to make, and I think that is all I need detain the house with tonight. It is with regard to section 6, which provides an amount equal to 3 per cent of the gross revenues of the national system; and the amount realized is to be used for additions and betterments. Three per cent of the gross revenues would be something like $18 million, between $18 million and $20 million. The question I am raising is this; and, as I say, it may be gone into more carefully in the committee. Has that figure any real relation to the actualities of the operation?
I have here the statutes of 1950-51 and of 1950, and I just read the amounts appearing in the statutes passed for Canadian National Railways purposes. I am going to read the amounts for additions and betterments and also the net amounts for new equipment. First of all I read from the statutes of 1950: Additions and betterments, $30,872,000; new equipment, a total of $36,698,000 less $26 million which was financed separately, leaving a net of $10,698,000. That is roughly $40 million in that year. In the following year additions and betterments were $37 million; and in that year apparently the amount for new equipment-I have forgotten the exact reason-was considerably larger, namely $56 million. There may be figures that lessen that amount. Maybe I am not putting the problem quite accurately; but at any rate I am raising this point in connection with this figure of 3 per cent of the operating revenues which is the amount, under section 6, that apparently is considered necessary to give the railways, you might say, a working start. If actually that is not going to give them a start and if we are still going to have large amounts under the statutes year by year, then I again raise the question whether this operation is really doing the job.
I am not going to take more time tonight, Mr. Speaker; we shall have another chance to discuss this matter when we go into committee. I want to say again that, like every serious person who has looked at this matter,

Canadian National Railways I recognize the need for giving relief. My remarks are wholly addressed to the question I raised at the outset, namely whether this second major operation is a successful one. I think I agree entirely with the objective which the minister has in view, namely that of giving the amount of relief which he suggests. I think the only point for debate is as to the techniques that are used to reach it.


Mr. Deputy Speaker:: If the minister speaks now he will close the debate.


Lionel Chevrier: Mr. Speaker, there is not
much that I can usefully add to this debate at this time; but first I should like again to express my gratitude to those who have taken part in this debate for the constructive remarks they have made with reference to this not too easy to understand piece of legislation.
I stated earlier on the resolution, and I repeat it now, that the formula advanced by the government in the bill is, to my mind, far simpler, far more practical and, I think, far more useful to the railway-and I say this with great deference-than the one which was recommended by the royal commission on transportation. After all, what we are seeking here is to grant to the Canadian National Railways relief from fixed charges. I think we have gone a great distance in doing that.


James MacKerras Macdonnell: May I just ask the minister a question? I should like to ask the minister to bear in mind that my only question was as to the income bonds which of course are not fixed charges.


Lionel Chevrier: I was not dealing with my hon. friend's question; I was speaking generally. Then I thought I might take just a few minutes to deal with some of the points that were raised. I was saying that in this measure we have gone a great distance to grant to the Canadian National Railways relief from their fixed charges and to bring them to a position not on a parallel with that of class I railways of the United States or with that of the Canadian Pacific Railway, for that matter, but to bring tnem on a more comparable basis.
I do not think it was the intention of the royal commission, by the formula which they recommended, to put the Canadian National Railways forever and a day in the position that they would never again have deficits. Neither is that the intention of this formula. The intention of this formula is to lessen the charges, to give more incentive to railway management and railway employees, and to encourage the railway to earn greater gross revenues. If that can be done, then a position should be arrived at which would free
(Mr. Macdonnell (Greenwood).]

the Canadian National Railways from these large deficit operations. We are proceeding to cancel the $736 million of the total indebtedness of the company, and in exchange therefor we are taking the preferred stock. We have postponed the payment of interest on $100 million for a period of ten years and of that amount of principal for a period of twenty years. We have included, or will include, in the estimates of the Department of Transport an item to cover the deficit operation of the Port aux Basques-North Sydney ferry service. That is going some distance. But it is argued by the hon. member for Vancouver-Quadra (Mr. Green) that it is not going far enough. Why do we not wipe out the $100 million altogether? Well, the government considered both the formula of the royal commission and the formula of the interdepartmental committee, and decided in favour of the latter. I think the royal commission would not have brought down the recommendation which it did, so far as a reserve for something to come and go on is concerned, had the government at that time decided to charge the Canadian National Railways with the payment of income and corporation taxes. When the royal commission brought down its recommendation on the reserve for something to come and go on that decision had not been taken, and they were not aware of it. It was discussed, I believe, at the time the financial administration bill came down, wherein most crown companies are placed in the same position as the Canadian National Railways.
I have been asked to explain why the change was made from a reserve to the 3 per cent of gross revenues. Well, the answer to that is what I have said already concerning the income tax, and also what I said in my statement, that the real objective the royal commission was seeking was the establishment of a principle that some portion of the annual capital expenditures for additions and betterments should be financed without adding to the fixed interest-bearing debt of the railway. If you take 3 per cent of the gross revenue it amounts to $18 million or $19 million, on the figures of 1951. But to that you must also add another $16 million for depreciation which the railway writes off and has the use of during the course of the year. It runs you up to $35 million or $36 million.
Then there is also the question which the hon. member for Vancouver-Quadra (Mr. Green) raised, that under the royal commission's recommendation the railway would have had incentive to earn a larger amount. Well, the position is even better now because

if I could establish, and unfortunately I cannot, a dollars and cents application of the royal commission's recommendations and those of the formula as included in the bill I think I could show that the position under this bill will be better for the Canadian National Railways in the long run than it would have been under the recommendations of the royal commission. Will there not be -and I submit with deference that there will-a greater incentive to increase the gross revenue of the Canadian National Railways so that the 3 per cent of gross revenues will be a larger figure to the railway for additions and betterments?
Then the hon. member for Vancouver-Quadra seems to think there is no reserve here at all. If he looks at section 6 (3) of the bill he will find that there is provision for a special account, and it is labelled a special account; and in a sense that is a reserve.


Howard Charles Green: That is the whole of the 3 per cent, is it not?


Lionel Chevrier: Yes.


Howard Charles Green: Paid by the government into that account?


Lionel Chevrier: Yes, but it is in essence a special account and a reserve which is being established, because you must compare that reserve with the recommendation of the royal commission for something to come and go on, and if you put the two in juxtaposition I think you will find that the benefit which comes from the formula under this measure is more satisfactory.


Howard Charles Green: Is it not a case of one being a payment direct from the government and the other a reserve from accumulated earnings?


Lionel Chevrier: Yes, it would have been. But if you take into consideration the fact that the Canadian National Railways will hereafter have to pay income tax, then the amount to be received by the Canadian National Railways under the bill is larger, in my opinion, than it would have been under the recommendation of the royal commission.
Some statements were made by the hon. member for Temiscouata (Mr. Pouliot) that unfortunately I cannot let go by without answer. My hon. friend said the total amount involved in this measure was $1,400 million by way of relief. That is not so. The amount under this bill, as I said earlier, is $736 million. That is cancelled, and payment of $100 million is postponed. There is no $1,400 million.
Then my hon. friend proceeds to make it up by quoting section 13, the latter part of which says that the amount on the books of the securities trust shall be $378,518,135.02.
Canadian National Railways That, as the house knows, is the amount which was established as the value of the capital stock of the Canadian National Railways securities trust away back in 1937, plus the amount that has been accumulated on it until this day. That is not being wiped out. That is just the value placed on the shares of the securities trust, and the amount which my hon. friend quoted under section 10, namely $396,518,135.02, is simply $18 million added to the amount under section 13 (3). Eighteen million dollars is the value of the one million shares of the Canadian National Railways, no par value. Therefore these two amounts which have been referred to are not being wiped out at all, nor being cancelled. They have nothing to do with the cancellation of the indebtedness.
My hon. friend says that it makes a grand total of $4,293 million of benefit which the Canadian National Railways have received. I am unable to agree with that, and I must say to him respectfully that under the 1937 capital revision act $1,218,642,195.27 was cancelled, and under this legislation the amounts I have mentioned.
May I take just one more moment to deal with the point raised by the hon. member for Greenwood. I do not think there will be any difference in so far as the accounts of the railways are concerned after this legislation goes into operation from what it was before, because prior to this act the government had in its hands about $780 million of securities through the Canadian National Railways securities trust and the Canadian government railways and the like. After this goes into effect it will have as equity capital $1,517,000,000. That is a little more than my hon. friend stated, but that will be simply because of the transfer of the $736 million which is being cancelled and for which shares of preferred stock of the Canadian National Railways are being taken in exchange, so that all of this the government had before as security either in the form of notes, loans or bonds from the Canadian National Railways. Therefore nothing is being changed, and from the point of view of the public accounts there will be no change in the active assets of the government. The only difference will be in the wording or in the phraseology that will appear opposite these active and non-active assets in the public accounts. I do not think I have anything more to add, Mr. Speaker.


Donald Methuen Fleming: Will the minister permit a question?


Lionel Chevrier: Yes.
3068	HOUSE OF
Canadian National Railways


Donald Methuen Fleming: In the view of the minister does the bill purport to ibe the final solution of this long-standing problem of the Canadian National Railways debt and capitalization? Is it put forward as a final solution of the whole problem?


Lionel Chevrier: I am sure my hon. friend does not expect me to give him a satisfactory answer to that question, because if he will read section 6 of the bill he will see that provision is made for a review of the position after the year 1960. In any event, to summarize the answer for my hon. friend I would say this, that the proposal now before the house is a measure granting relief to the Canadian National Railways at this time. Whether or not it will be necessary to grant additional relief I am not in a position to say. However, if my hon. friend will look at the 1937 act he will realize that it was some considerable time before additional relief was granted. It might not be necessary in the future, because of these provisions, to grant additional relief. But if it is necessary-well, I think the government will have to consider the position as it then stands.


Stanley Howard Knowles: This bill will put the Canadian National Railways in the black, so far as current operations are concerned?


Lionel Chevrier: Well-


Mr. Deputy Speaker:: I should remind hon. members that we are not in committee. The minister has used his right of reply. The hon. member for Eglinton (Mr. Fleming) has asked a question to which the minister gave an answer. Now the hon. member for Winnipeg North Centre (Mr. Knowles) is asking a question. May I suggest that questions be asked in the committee on railways and shipping.


Gordon Graydon: But it is very interesting.


Mr. Deputy Speaker:: The measure will be returned to this house when it is reported by that committee, and at that time also questions could be asked. Therefore I do not think they should be asked at this time.


Lionel Chevrier: May I answer the last one?


Gordon Graydon: The minister will close the debate.


Lionel Chevrier: I am told I should not answer because I would be out of order.


Howard Charles Green: Go ahead.


Donald Methuen Fleming: Don't pay any attention to Alphonse.


Lionel Chevrier: In that case, Mr. Speaker,
I move that the bill be referred to the committee on-


Stanley Howard Knowles: No; you are out of order now. It has not yet been given second reading.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the special committee on railways and shipping owned, operated and controlled by the government.
[Stage Direction]
The house in committee of supply, Mr. Beaudoin in the chair.

[Stage Direction]
311. Departmental administration, $1,118,455.
Gordon Graydon: Mr. Chairman, I understand the minister has a long and involved statement to make, covering all the activities of his department. I hope he will now avail himself of this opportunity to make that statement.


Alcide Côté: Mr. Chairman, I appreciate the kind invitation of my hon. friend. I have known that he was interested in mail couriers, and probably that is why he has insisted upon having this statement. Perhaps I should say that this is a matter in which the department has been interested for a long time. As a matter of fact we have been working on it since the beginning of the session. A special departmental committee has been formed in the hope that we may be able to give further study to the whole question.
Many hon. members on both sides of the house have asked for a special committee of the house to deal with this matter. I am sorry to say that, as a result of circumstances, it is impossible to have the committee set up at this session. I may say to my hon. friends, however, that I would welcome the setting up of such a committee, and I would hope that at the next session this whole matter may be placed before a committee of that kind for further study. We would welcome any suggestion which would help to give further direction in this matter.


Donald Methuen Fleming: A good start; keep it up.


Alcide Côté: So far the only way to let contracts is through tenders. By that method the contractor would make the selection. We have given thought to the principle of prevailing rates, and I suggest that is a matter worthy of some further study. It is possible that the best method would be found in a modification of both, embracing a combination of the principle of tenders and of prevailing rates. However, this would be for the members of the committee to decide.
[Mr. Chevrier.!

Then the Post Office Act passed last year placed power in the hands of the minister in respect of amounts up to $1,000. As a result he could make readjustments after one year of service. This too is a matter the special committee could consider. As a matter of fact the whole question will be given to the committee. Let me add that those of us in the department do not pretend to have a monopoly on wisdom, and would welcome any suggestions which would have the effect of bringing to the department an easier solution of these problems.


Gordon Graydon: May I suggest that the minister have prepared an illuminated address of what he has just said to the effect that, as a minister, he does not claim a monopoly on wisdom in the House of Commons, and I would suggest that such address be circulated among the other eighteen members of the government.


Donald Methuen Fleming: A noble example.


Gordon Graydon: I am sure it would have a salutary and stimulating effect, if it is not too late. I believe all hon. members will welcome the suggestion respecting the appointment of a committee to study the problems of rural mail couriers, problems that have engaged the attention of hon. members from rural parts of Canada over a number of years. Year after year the suggestion has been made that a special committee be established to study the problem. To tell the truth I never could see any valid reason why previous ministers have declined a study of that kind. I know they had what they thought were valid reasons for refusing, but the explanations they gave to the House of Commons never seemed to satisfy anyone. They seemed to have the idea that all wisdom was confined to the department.
The minister's statement this evening ought to clear the air in that respect. When the committee meets it will have the opportunity of hearing some of the couriers themselves give firsthand information about their problems. I am one who from time to time both publicly and privately has indicated the belief that the problems connected with rural mail couriers were about as difficult as any found in parliament. It has been my belief for some time that the proper way to handle the matter was to place it before a committee which would have authority to hear from all interested parties, including the patrons on the routes. I am hopeful that the committee to be set up will give careful and detailed study to the problems that have arisen.
While I am on my feet I would make one further appeal to the minister, who seems to be in an open-minded mood. I refer to a
Supply-Post Office
problem that particularly affects districts such as the one from which I come. In many parts of Canada today population changes have been rapid, and the complexion of certain areas has turned from rural to city or suburban. When I first entered the house we had a population in my constituency of approximately 28,000 people. The census will show that this population has doubled in numbers. In other words there are about 56,000 people in the county of Peel now, and a great portion of them are in the southern end of the constituency. That has brought about great problems with respect not only to rural mail service but also other services. Many people who have come from the large, concentrated and well-developed urban areas, particularly the cities, are anxious to have something at least approaching the kind of services they have been accustomed to all their lives. That has created problems of course for the municipalities and the county, and they have attempted to solve them as quickly as conditions would permit. I may say that the period of readjustment in most of these places has been fairly satisfactory.
However, so far as the mail courier system and the post office service is concerned, there has been a great deal of trouble in keeping abreast with changing conditions. I think I appreciate the problem of the Post Office Department because the changes have come about very rapidly and of course it has been difficult to adjust their organization overnight to take care of them. The necessity has developed for an intervening area of service between the strictly rural mail route where stops at rural mail boxes are a long way apart and it is necessary to travel a considerable distance in order to service them, and the actual postal letter delivery service to the door. Between those two services there is a very great and difficult area that has to be considered. I understand that in the United States they have attempted from time to time to bridge that gap by a sort of suburban delivery which is more or less a combination of rural mail service and postal delivery service.
I am not sure that it has worked satisfactorily in the areas in which it has been instituted, but I do think the Post Office Department should not wait for petitions from people who want to be served. So far as possible I believe the federal government should make periodic surveys of these rapidly changing areas with the hope that in some of them in any event the surveys will show the need for a postal delivery service such as is provided in the larger cities. I know the arguments that can be raised against that proposition. There is the question of the

Supply-Post Office
numbering of streets, the type of sidewalks and roadways and many other problems.
Nevertheless I do not think the Post Office Department can very well postpone the solution of the problem much longer, because in one section of my constituency that I know very well a rural mail courier coming up the centre road north of Port Credit toward Cooksville has to try to service at one stop literally a forest of posts with rural mail boxes on them. At one stage it was so bad that the safety of the area was endangered. If I may, I should like to pay a tribute to the Postmaster General and his staff with respect to a part of the area of south Peel. After recommendations made by organizations and myself as the federal member, the Post Office Department instituted a survey in the southern end of the county of Peel which takes in Port Credit and parts of Toronto township. I understand from a newspaper report that appeared in the press only last Thursday that those who made the survey have reported favourably with respect to a postal delivery service in that area. I want to point out to the Postmaster General that according to the news item it would appear that the survey was perhaps much more limited in its scope than we had hoped because the whole area that includes Port Credit, Lakeview and other parts of Toronto township is now to all intents and purposes a city.
I am hopeful the Postmaster General will see to it that that whole area of south Peel is given a postal delivery service as soon as it may be possible from a practical point of view. I am not making these criticisms in anything but a constructive way. I assure the minister that from personal knowledge of the circumstances and conditions of the area I know that a postal delivery service is very badly needed. If there is any delay it will cause inconvenience, which I think should be avoided if possible, to those who have come there in such large numbers to make their permanent homes in that most favoured part of Canada.


Alcide Côté: I might say to my hon. friend that as a matter of fact we do make surveys and endeavour to determine the best way to give service. I might add that he need not despair because in the estimates for 1952-53 we are giving active consideration to the establishment of a letter carrier delivery service in the following cities and towns during the fiscal year: Port Credit, Dakeview, Ontario, twelve letter carriers; Prince Rupert, B.C., six, Renfrew, Ontario, and so forth. Therefore the locality the hon. member has just mentioned is actually under study, and we are trying to solve the problems he has mentioned in the house.
[Mr. Graydon.l


Donald Methuen Fleming: Would the minister make some comment to the committee with respect to the anticipated revenues this year? I note that at page 371 there is a figure of estimated revenue for the past fiscal year. Can the minister give us the best estimate the department has been able to make of the anticipated revenue for the present fiscal year?


Alcide Côté: As far as I can see here, estimated revenues are $122,266,674.65, but all the returns are not at hand yet.


Donald Methuen Fleming: I can appreciate it is the best estimate the department is able to make at the moment.


Mr. Cole (Si. Jean-Iberville-Napierville):: Yes.


Donald Methuen Fleming: That appears to indicate an anticipated increase of about $18 million over the revenue for the fiscal year 1951-52.


Mr.   Coie@Si. Jean-Iberville-Napierville: Excuse me; I might make a short statement on that. The operations for the fiscal year 1951-52 just closed resulted in a continued expansion of the service both as regards volume and revenue. The revenues were helped by the increased postage rates which went into effect during last year. The increase in rates helped to meet the increased costs of transportation and increased salaries to employees. The revenue for the past fiscal year reached a total of $122,260,000. Expenditures were also higher, amounting to almost $115,630,000, thus indicating a "paper" surplus on the year's operation of $6,630,000. On a basis of commercial accounting, that is taking credit for services rendered such as franking, savings bank, etc., and charging ourselves with the cost of buildings provided by the Department of Public Works, and other such features, the surplus on the year's operation would be approximately $1,250,000.
From this it will be seen that the Post Office Department is operating within its revenues, which is our aim and object, and turning back into service any surplus we make from time to time.


Louis-René Beaudoin: Shall the first item carry? It appears to me that the general discussion in this department will be mostly on operations. There is not very much here, apparently.


Donald Methuen Fleming: There are some more questions, Mr. Chairman.


Gordon Graydon: A good try.
Item stands.
Progress reported.



BUSINESS OF THE HOUSE

Alphonse Fournier: Mr. Speaker, tomorrow we will proceed with the following bills and resolutions: First, Bill No. 305, respecting immigration; the resolution of the Minister of Labour to amend the Unemployment Insurance Act, 1940. We debated that last week but did not complete the debate. Then we shall take up the resolution in the name of the Minister of Resources and Development to amend the Northwest Territories Act; the
Business of the House resolution of the Secretary of State for External Affairs to amend the International Boundary Waters Treaty Act; the resolution of the Minister of Veterans Affairs to amend the Army Benevolent Fund Act, 1947; then Bill No. 306, an act to amend the Combines Investigation Act and the Criminal Code.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Tuesday, June 10, 1952