1954-06-23

Mr. Speaker:: I have the honour to present the second report of the joint committee of both houses on the library of parliament.


Hon. J. W. Pickersgill (Secretary of State):: By leave I should like to move:
That this house do now concur in the report of the joint committee on the library of parliament which has just been read.


[Stage Direction]
Motion agreed to.

Hon. L. B. Pearson (Secretary of State for External Affairs):: I should like to table two copies in English and two copies in French of notes exchanged between the United States ambassador to Canada and myself, on June 7 and June 16, respectively, on the subject of the St. Lawrence seaway.
Hon. members will see from these notes that the United States government, in transmitting copies of the Wiley Act recently adopted by congress, stated that it was anxious to undertake discussions with the Canadian government on the subject of the seaway. Canada is prepared to do so at the earliest date convenient to both governments.
Because it may not be very clear why discussions between the two governments should be held at this time, it might be useful for me to add a few words of explanation. In 1951, the Canadian parliament enacted the St. Lawrence Seaway Authority Act which allows a Canadian corporation to build the seaway from lake Erie to the port of Montreal in Canadian territory. By exchange of notes dated June 30, 1952, and tabled in parliament on July 1, 1952, Canada and the United States agreed that the power project in the international rapids section should be built jointly by Canada and the United States and that this project should be separated, as far as is possible, from the seaway project. As for the seaway project, the exchange of notes of June 30, 1952,
between Canada and the United States embodied an arrangement whereby Canada would build the seaway between lake Erie and the port of Montreal on its side of the boundary. This was, of course, before the passage of the Wiley Act which provided for United States participation.
With the passage of the Wiley Act, the situation could be summed up as follows: Canada is fully empowered by its own legislation to build the seaway from lake Erie to Montreal; an international agreement or arrangement between Canada and the United States has recorded the agreement of both countries to this course of action. However, hon. members will recall that as far back as January 9, 1953, and as late as May 6, 1954, the Prime Minister (Mr. St. Laurent) declared that the Canadian government was prepared to discuss any specific proposal which the United States government might wish to make, the sense of which would be to vary that portion of the arrangements of June 30, 1952, dealing with the seaway, provided no delay would be caused in the construction of the seaway or power projects, as a result of the consideration of such proposal. Finally, the congress of the United States decided, in May 1954, to build a segment of this seaway entirely within United States territory. Clearly, then, if the object of the Wiley Act is to be achieved, it becomes necessary to hold discussions between Canada and the United States in order to modify the existing arrangements between the governments as contained in the notes of June 30, 1952.
Because of the nature of the arrangements of June 30, 1952, and of undertakings given by Canada, talks must be undertaken soon if they are not to delay the seaway or power projects. Canada accordingly suggested on June 16 that discussions between officials of both governments be held in Ottawa in the week of June 28, for the purpose of preparing specific topics which might form the basis for subsequent intergovernmental discussions. I have not heard yet from the United States ambassador what exact date would be agreeable to his government, but I expect that the talks will get under way in Ottawa in the very near future.


Hon. George A. Drew (Leader of Ihe Opposition):: Mr. Speaker, I wish to say only a few words about this but with particular reference to one source of satisfaction which

St. Lawrence Seaway
I feel should be in the mind of every hon. member and every Canadian, that we have reached the point when talks of this kind can take place. Very naturally there has been great emphasis upon the opportunity for larger ships to pass up and down the St. Lawrence to the upper waters of our great inland waterways. Naturally also great emphasis has been placed upon the much needed and immense resources of electric energy which will become available.
I am inclined to think, however, that perhaps one of the most valuable features of the undertaking which is contemplated by this conference is the unique evidence which will be given not merely of our verbal and very real expressions of understanding between Canada and the United States, but of one of the most remarkable and practical examples of international co-operation the world has ever seen, and I am not aware of any similar undertaking along the boundary of any other two nations. As we see that waterway go ahead, as we see the power development take place and the greatly needed horsepower become available for industry and for the farms and homes of this province as well as New York state, let us thank God that two nations can live together, work together, and understand each other as these two nations do.


Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, I would just like to say that up to a certain point I agree with what the Leader of the Opposition has said. As I have said in this house before, I think that under certain foreseeable circumstances it might be better if one or the other of the two countries undertook this project of its own volition. I believe that would prevent any complications in the future. However, discussions are to take place with regard to a joint undertaking. I hope the Prime Minister (Mr. St. Laurent) and the government will carry out the pledge given that this co-operation and the preparation for it must involve no unnecessary delay. We have had so many years of discussion about this project that if there is any disposition to delay I think the matter should be proceeded with by Canada. We have the legislation and the government has the authority, and I think the project should be proceeded with by Canada alone if necessary.
I agree with the Leader of the Opposition, however, that the demonstration of the undertaking of a power project on a joint basis is sufficient evidence to the world that two nations can live together side by side with a contiguous boundary and be able to undertake a joint project of this description. However, I hope there will be no delay, and if there is any disposition to delay I hope the government will proceed to build this as a

Canadian project; because, as I have already said and I would like to emphasize this, I think that for the future it would be better if one or other of the two governments undertook this project of its own volition, and X would have liked to have seen Canada undertake this project in that way.



QUESTIONS


Mr. Balcom:: What is the per diem cost of hospital diet per patient in service hospitals (a) navy; (b) army; (c) Royal Canadian Air Force?


Mr. Blanchette:: Unless a member of the services requires a special diet, he receives the ordinary ration and the average cost of this is 93 cents per day. The cost of the special diets varies with the locality, the hospital and the diet.


OLD AGE SECURITY
Mr. Hansell:: 1.	How many liens have the government collected on estates of old age pensioners under the Old Age Pensions Act, since the Old Age Security Act came into force?
2.	What is the total amount collected?
3.	What amounts were collected from each province?


Mr. Martin:: Mr. Speaker, I wonder if the hon. gentleman would agree to perhaps reword this question or allow it to drop. We had a chat on it the other day.


Mr. Hansell:: Would the minister agree to allow it to stand on the order paper and not pursue the answer for a little while? I am in touch with the Alberta government respecting this, so perhaps it could be allowed to stand meantime.


Mr. Speaker:: Is it agreed that the question be allowed to stand?


Some hon. Members:: Agreed.


Mr. Speaker:: Question stands.


QUESTION PASSED AS ORDER FOR RETURN
Mr. Argue:: 1.	What were the wheat board receipts of tough grain by grades for the crop year 1952-53?
2.	What quantity of this grain was dried (a) by artificial means; (b) by natural drying?



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I wonder if the
Secretary of State for External Affairs is

yet in a position to answer several questions we put to him recently regarding the situation in Guatemala? I have in mind in particular my question of June 19 as to the source of the arms being used by the invaders, and the question of my colleague the hon. member for Winnipeg North (Mr. Stewart) on June 21 as to whether there has been any attempt at foreign interference in the dispute on behalf of either side.


Lester Bowles Pearson: Mr. Speaker, I had intended to make a short statement on this matter yesterday, but I thought it would be courteous for me to wait until the hon. member for Winnipeg North, who asked the original question, was in his place. I can say now, as I would have said yesterday, that there is not enough information to give any adequate or final answer to the questions that have been asked.
The political situation in regard to developments in Guatemala is certainly not clear, though the military position would appear, on the information at our disposal, to be reaching a climax. To the best of my knowledge, based on information we have received, the attacking forces in Guatemala seem to be Guatemalan, though some non-Guatemalans may be included in those forces.
As hon. members know, the United Nations has intervened. A meeting of the security council was requested by the Guatemalan government, and it was held, immediately after their request, last Sunday. At that meeting representatives of Guatemala alleged invasion and aggression by "foreign mercenaries", but made no charges against any other country, neighbouring or otherwise. Thereupon the delegates of Brazil and Colombia introduced a resolution at the security council to submit the question urgently to the Organization of American States. That resolution was approved by a majority but was vetoed by the delegate of the Soviet union. Thereupon the delegate of France introduced a resolution calling for the immediate termination of any action likely to cause bloodshed, and requesting all members of the United Nations to refrain from giving assistance to any such action. That resolution was carried unanimously.
We have received messages direct from Guatemala from the Canadian government trade commissioner in that city, and he has told us that the lives and property of Canadian citizens were not at that time in any danger. A later message received yesterday afternoon indicated that matters would be reaching a climax very shortly indeed. Apart from the trade commissioner and his 83276-412
Inquiries of the Ministry family, there are, as far as we know, about 24 Canadian residents in Guatemala.


George Alexander Drew: Mr. Speaker, I wish merely to make a comment in relation to the statement made by the Secretary of State for External Affairs (Mr. Pearson) because it does suggest that perhaps a good deal of caution should be exercised in approaching this subject. I was extremely interested when I received last Saturday morning a letter from the secretary of the communist party in Canada urging that, along with other believers in democracy, we should assert our views with regard to the Guatemalan situation. I was extremely interested in the speed with which the party line had been declared and duly indicated by the servants of Moscow here in Canada. I wish to make this perfectly clear: I am not for one moment suggesting that any question -and very proper questions they were- devoted to this subject should not be asked. I cannot, however, refrain from expressing my interest in the promptness with which our communists here in this country follow the party line and the orders from Moscow. I propose to keep with some interest that communication received only the day after the trouble started in Guatemala, as evidence at least of the efficiency of this world treachery.


Major James William Coldwell: I rise on a question of
privilege, Mr. Speaker, in view of the reference which has just been made. I too received that letter. I hope the Leader of the Opposition replied to it as I did, stating that I would pay much more attention to it if the communist party had made similar protest when the Czechoslovakian government and some other governments were overthrown, and that until they did that, their expressions of opinion-even when I shared them, as I did in part in this instance- could not impress me as being consistent or command our respect.


UNEMPLOYMENT INSURANCE
[Stage Direction]
On the orders of the day:
Mr. J. L. Gauthier (Nickel Belt):: Mr. Speaker, I should like to direct to the Minister of Labour a question of which I have given him notice: Has there been any change by regulation or otherwise in the interpretation of section 41 of the Unemployment Insurance Act-disqualification for benefits- in the case of a stoppage of work due to a labour dispute where only a small classified group of the main bargaining unit withdraws its labour from the service of the employer;


B520 HOUSE OF COMMONS
[Stage Direction]
Inquiries of the Ministry and what is the position under the act of the main body of workers in the bargaining unit?
Hon. Milton F. Gregg (Minister of Labour):: I thank the hon. gentleman for giving me notice of his question. In reply to the first part of it, I can tell him that there has been no change. In reply to the second part, I do not think I can do better than to quote part of section 41 of the Unemployment Insurance Act, which reads as follows:
41. (1) An insured person is disqualified from receiving benefit if he has lost his employment by reason of a stoppage of work due to a labour dispute at the factory, workshop or other premises at which he was employed unless he has, during the stoppage of work, become bona fide employed elsewhere in the occupation that he usually follows, or has become regularly engaged in some other occupation; but this disqualification lasts only so long as the stoppage of work continues.
(2) An insured person is not disqualified under this section if he proves
(a)	that he is not participating in, or financing or directly interested in the labour dispute that caused the stoppage of work, and
(b)	that he does not belong to a grade or class of workers of which immediately before the commencement of the stoppage there were members employed at the premises at which the stoppage is taking place any of whom are participating in, financing or directly interested in the dispute.
To that I would add that in a decision in 1951 the Canadian umpire, who is the final authority under our Unemployment Insurance Act, said as follows:
I readily endorse the following remarks made by the British umpire: "It seems to me that the intention of the act is to exclude from benefits, in addition to the workers who are directly interested, those who are indirectly interested by reason of the terms and conditions of their employment being the same as the persons who are directly interested".
In a number of decisions the Canadian umpire has maintained the principle set out in his 1951 decision from which I have just quoted. I would draw the attention of the hon. member to decisions-C.U.B. 981-1019- of the umpire, copies of which are available. I can send them to him if he wishes me to do so.


VETERANS LAND ACT
[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the parliamentary assistant to the Minister of Veterans Affairs. I must apologize for not giving him notice but in these hectic days one gets a good deal of unanticipated information. I am informed that consolidated copies of the Veterans Land Act, with the amendments recently passed by parliament, will not be

available for circulation until this fall. In view of the importance of these amendments and their length, can the parliamentary assistant say whether arrangements could be made to have this act, which is extremely important to veterans, printed and circulated at an earlier date?


Mr. C. E. Bennett (Parliamentary Assistant to the Minister of Veterans Affairs):: I will look into the matter and advise the hon. member.


INQUIRY AS TO DATE OF NEXT SESSION
[Stage Direction]
On the orders of the day:
Ernest George Hansell: Mr. Speaker, might I direct a question to the Prime Minister. I think it concerns all hon. members in that they will want to adjust their schedules throughout the coming months. Does the Prime Minister care to give the house some idea as to when we might reconvene? Can he say whether it will be in the late fall or the first part of the next year?


Right Hon. L. S. Si. Laurent (Prime Minister):: I am sorry that I cannot give the hon. gentleman any information about that matter, Mr. Speaker. The question has not yet been considered by the government.


PUBLIC SERVICE
[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I wish to direct a question to the Secretary of State. Have arrangements yet been made for stationary engineers and firemen employed by the federal government in the Ottawa area to be put on the five-day 40-hour week? If not, how soon will such arrangements be made?


John Whitney Pickersgill: The hon. gentleman sent notice of this question to my office but I did not arrive at the office until two minutes to eleven.


Some hon. Members:: Oh, oh.


An hon. Member:: Did you sleep in?


John Whitney Pickersgill: I did not have time to inquire about the matter. I find that on May 3 I said, in reply to a question, that this matter was under consideration. I imagine that as the hon. gentleman is asking the question, it means that the consideration has not been concluded or he would have

known about it; therefore I can assume that it is still under consideration. As the hon. gentleman well knows, it is not the custom of the government to anticipate announcements of things the government is going to do.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
Major James William Coldwell: Mr. Speaker, I wish to direct a question to the Minister of National Defence. May I say that I had the question drafted and ready to send to him but I did not arrive at the house until the bell was ringing; consequently it was not sent. Perhaps he can take it as notice and answer the question later. I may say that I intended to send him the clipping upon which the question is based. Has the Minister of National Defence any comments to make on a reported interview given by Lieutenant General Guy G. Simonds, in which he stated that "the vast majority of Canadian officers share his view that every youth in the country should receive two years' military training"? Was the subject of the interview discussed with the minister at any time before such a statement was made publicly by the head of our defence forces?


Hon. Brooke Claxion (Minister of National Defence):: When I noticed this report, Mr. Speaker, I naturally caused inquiries to be made, and I received from General Simonds a telegram explaining the circumstances of his statement and also stating more fully and perhaps more accurately what he said. He was at a meeting of officers of the Canadian Army in Saint John, New Brunswick, and after a talk he gave them he was asked a question which is quite frequently put on similar occasions. I myself have been asked it a great number of times. He was asked what his views were on the subject of national service. He made a reply which I think you could expect almost any officer to make, namely that he would be glad to see every youth in the country receive two years' military training. Then he went on to say:
I believe the vast majority of experienced soldiers would agree with me. But such training was impossible unless it received the wholehearted support of the people of this country and that was a matter for judgment and decision by political leaders, not soldiers. In any event experience tended to show that a period of universal military service of less than two years increased rather than diminished the problem of meeting commitment overseas. Further a system of universal military 83276-412J
Supply-Privy Council service was not a substitution for voluntary service, it could only supplement and never replace the voluntary system.


Major James William Coldwell: I think it is rather regrettable that, in the press as I saw it last night, that statement was not reported more fully.

The house in committee of supply, Mr. Robinson (Simcoe East) in the chair.


PRIVY COUNCIL
[Stage Direction]
Privy council office-
345. General administration, $373,405.
George Alexander Drew: Has the Prime Minister any statement to make?


Louis Stephen St-Laurent: No, I do not think there is any statement I could make about the privy council that would be of real interest to the house. If there are questions I will be glad to attempt to answer them.


George Alexander Drew: I merely asked the question in view of the fact that I have certain comments to make and wished to know whether the Prime Minister intended to say anything. It does seem to me that on this first item of the privy council estimates it is appropriate to mention certain subjects which are of concern to all of us and in regard to which the Prime Minister of necessity under our system must assume responsibility. I propose to direct my remarks to four particular subjects that it seems to me have emerged as extremely important subjects during the course of the present session.
I now wish to place these before the Prime Minister at this stage of the session in view of the fact that it is within his power to deal with them while the house is not in session. Moreover, I believe these things are things which should be dealt with before we meet again some time later this year. The first of these subjects is the business of parliament itself; the second is the judiciary; the third, a conference between federal and provincial governments; and the fourth a commonwealth conference. It is to those subjects that I propose to address my remarks because of my belief that all of them are subjects that can be, and under our system must be, dealt with upon the responsibility of the government itself. I have no intention of reviewing the extended comments there have been on different occasions about the business of the house during the present session, beyond such reference as it seems to me is appropriate to emphasize my belief that much can be done between now and the time we meet again to assure that we shall not have another session such as that which is now drawing to a close.

Supply-Privy Council
I know that there may be little occasion to emphasize the role of the prime minister under our parliamentary system. Sometimes, however, it does seem that even in this House of Commons there is a tendency to disregard the fact that the position of prime minister under our parliamentary system and similar parliamentary systems within the commonwealth is very different from that of a prime minister under any other system or even the head of state under a republican system. In Canada, in the United Kingdom, Australia, New Zealand or any of the nations of the commonwealth, in Asia or in other parts of the world, the prime minister has a measure of power and authority which has led some writers to speak of the position as a democratic dictatorship.
I refer to that description, used in textbooks which express complete approval of our system, with no suggestion of criticism but rather merely to emphasize the extent of the authority that is conferred upon the prime minister under our system. He is the individual called upon by the representative of the queen or the king, as the case may be, at any given time in the history of our system to form a government. Within this country we have had the good fortune to have nearly always a clear and satisfactory majority on one side or the other. In a country where the responsibility of office has been shared for almost an equal number of years by two parties, and only two parties, it has contributed greatly to the maintenance of our system that we have not found ourselves dependent upon an uncertain association of parties without a common purpose.
Where there is a clear party majority, no matter what may be said about the large majority on this occasion, the fact remains that as long as there is a working majority the result is very similar in any event. The government takes the responsibility for initiating legislation. The government rides or falls upon the confidence of parliament expressed in the legislation to which the government commits itself. Therefore any prime minister must of necessity be very careful to consult the sentiment of the members of his own party after having carefully canvassed the sentiment of the cabinet in the first instance. That is the strength of our system. That can also be the weakness of our system if the authority and power conferred in that way are not exercised in the manner that will produce the best results from both the administrative and the legislative points of view.
I come back to the position of prime minister. Having been called upon to form a government, he names the members of the
[Mr. Drew.l

cabinet. To that extent it is definitely a government of his choice. There are historic cases where prime ministers in other countries decided to have a general consultation respecting the composition of the cabinet with some disastrous results, as all students of constitutional history will recall. From that point on the prime minister by virtue of his office has, under our parliamentary system, a unique responsibility not only for legislation, for what is done, but also for the business of parliament itself.
During the past session there have been extended discussions with respect to amendment of rules. I do not intend to review the nature of the discussions in those committee meetings. It would be neither proper nor desirable that I should do so. However, it is a matter of common knowledge that much discussion has been devoted to the matter of rules which would expedite the proceedings of the house. At any rate, that much has been openly discussed in the press with full knowledge of what has taken place in the meetings of these committees. On different occasions when reference has been made to the manner in which the business of the house is dealt with and presented to the house, the comment on the other side has been that our sessions would not be so long if members of the opposition did not talk so long.


Some hon. Members:: Hear, hear.


George Alexander Drew: I was just going to say that I do not blame members on the opposite side for injecting comments of this kind because it is only human nature to find criticism of their own course unwelcome. However, today, and in this particular season of the year, I am not anxious to arouse unduly the sensitive nature of members on the other side in regard to this subject. I am simply recalling that it has been pointed out we have a very strong belief that there are those who would welcome complete silence from the opposition.


An hon. Member:: Hear, hear.


George Alexander Drew: Now, you see how far this has gone because one of the hon. members says, "hear, hear".


Some hon. Members:: Oh, oh.


Mr. Weir:: That would be the hon. member for Kamloops.


George Alexander Drew: I must admit that one of the problems with these microphones is that you no longer know exactly from what part of the house comments are coming. I simply want to point out, without in any way entering into an argument of this kind, that if there is to be an improvement in the conduct

of business in the house, it will be the prime minister-whether the present Prime Minister or any other prime minister at any time -who will very largely determine the way in which business is conducted. His must be the responsibility for guiding the meetings of the privy council, the estimates of which are now before us. His must be the responsibility of leading the house; his must be the responsibility of placing before the house, whether on his own part or through one of his ministers, the measures of the government by which the government will seek an expression of confidence from parliament.
I therefore wish to refer to those discussions which have been taking place in regard to the rules. The business of this house will not be expedited in any way by attempting to pass rules which limit the opportunity for debate. The business of this house will be speeded up and made more effective by the proper organization of the business of the house from the first day we meet.


Mr. Brown (Essex West):: This is out of order.


George Alexander Drew: On this occasion, the loud
speakers have not in any way led me to mistake the source of that remark. I would point out that anything is out of order in the minds of some hon. members if it happens they do not wish to hear any opposition expressed to the procedure here.


Mr. Harris:: On a point of order.


George Alexander Drew: I am making a positive suggestion that next session-


Walter Edward Harris: I did not hear the interjection, and I do not know who made it or what it was about, but if there is any doubt about this discussion being out of order, may I point out that the rules are being presently considered by a committee. This committee has made no report to the house, and therefore it is not proper to discuss the matter here.


George Alexander Drew: I am not discussing any recommendations to be made, Mr. Chairman. I am discussing what will expedite the proceedings of the house. I would also ask the minister who has just spoken, through you, Mr. Chairman, if recommendations are going to be made at this session in regard to the changing of the rules?


Walter Edward Harris: I can readily answer that question. Hon. members opposite asked that it should not be done.


The Chairman:: I believe the Leader of the Opposition is in order in discussing generally the business of the house. He realizes, of course, he cannot discuss this question of
Supply-Privy Council the rules, which has been before a committee, as no report has been presented and we must not anticipate that report.


George Alexander Drew: As you will recognize, Mr. Chairman, I have been discussing this subject from a general point of view for the very reason mentioned. I would point out that the interjection which has just been made by the minister illustrates the very point I have been seeking to make with regard to the conduct of business. The reason advanced was that a committee is discussing the rules, and therefore it would not be proper to discuss any aspect of the rules; yet the minister suggests that we are not going to consider the rules, so by that procedure a blanket is thrown over this whole discussion.


Walter Edward Harris: I hope we can be regular in our debates, and I know from former occasions it has been desirable to let hon. members make their speeches rather than to interrupt them. However, 1 did not make that answer. The committee has not finalized its recommendations, and what the committee may decide to do I do not know, being only one of 21 members.


George Alexander Drew: I have no desire to conduct a debate at arm's length with the minister, but I understood him to say there would be no report on the rule changes because some members on the other side did not wish it done. I took his words to mean exactly what they said. In fact, I was rather pleased that this was one of the first occasions upon which the views of the opposition were being accorded some recognition.
We can dispose of that, however, because the chairman has said that a general discussion is quite proper. I am pointing out that the speed with which we are able to proceed at the next session will depend upon what is done between now and the beginning of the next session. It is to that I am now directing these remarks. When the session begins, there will be a speech from the throne, as there was at the beginning of this and every other session. The speech from the throne, prepared by Her Majesty's advisers, is in fact a statement by the government of the business it intends to present to parliament. It is a guide to the members and to the public, as to what the government has already decided to do. It is a guide to the members on the other side of the house as to those things which they should try to bring forward if they feel there are subjects which are not otherwise going to be presented.
Since the government in that speech from the throne is stating what it proposes to do, then presumably before that statement is made a decision has already been made in

Supply-Privy Council cabinet in regard to each of these matters. In fact, it is not conceivable that any such statement would be made without a decision in advance by the cabinet. After that decision has been made by the cabinet, then in the ordinary course of events the legislation which is announced in the speech from the throne can be prepared in advance. In fact, unless it has been prepared in something approximating draft form it is difficult to understand how the cabinet could have given approval to the general idea. It is a matter of common knowledge that when any cabinet decides that a certain thing is going to be done, it does so upon the basis of a memorandum which substantially sets out what is contemplated in the form of legislation.
For that very reason, there can be no difficulty whatever in having most of the legislation ready at the time the session meets. Within a few days of the speech from the throne being read by Her Majesty's representative, a substantial part of the legislation could be put on the order paper. If that were done, then hon. members on both sides of the house would have the opportunity to examine that legislation, to avail themselves of the opportunities that are afforded for inquiry from people who are experts in the various fields, and to know in advance what it is that is to be considered.
Let us take just one example. For many weeks-I am inclined to think it is perhaps for some three months-we have been under the impression that legislation was to come forward to deal with amendments to judges' salaries. We were told that there was to be an amendment to the Judges Act. I believe that answer was given in response to a question I directed to the Prime Minister some time ago.
Even before that, however, there have been comments in the press about the likelihood of this taking place; and in this case the comments were shown to be well informed. However, the legislation that actually came down was not legislation of the kind contemplated. It will be recalled by hon. members that I have asked on different occasions if the Prime Minister would inform us in regard to the nature of the legislation, or when we might expect it; and, without attempting to give the exact words, the information received was that the government was not ready to give us this information.
Because it was thought that a measure dealing with judges' salaries was under consideration-incidentally, I might say it was known that consultation was taking place in regard to this subject between the government of Canada and representatives of at

least some of the provincial governments- hon. members did not raise this subject by way of a substantive motion, or otherwise.
Now we find that the amendment to the Judges Act is not an amendment such as had been contemplated by many members, but is an amendment which calls for the appointment of two new judges, one to the superior -court of Alberta and the other to the superior court of British Columbia. Without in any way considering the merits or the details of this subject, at least it can be said that hon. members were under the impression that the subject of judges' salaries was going to come forward.
Then, without any suggestion of raising another subject that, at least outside this house, might offer some possibility for extended argument, there is the fact that from the very time we heard the speech from the throne we were told that there was going to be an amendment to the Municipal Grants Act. For that very reason, substantive motions which we have presented on other occasions in regard to relief of the municipalities from certain taxes, and assessments on property, were not presented because we knew it had been stated that on the order paper there was going to be a resolution referring to the question of assistance to the municipalities.
Now we find, at this stage of the session, that the act is not going to be proceeded with. On the one hand we have the statement in the speech from the throne that an amendment was going to be presented-and, after all, that is a subject that must have been decided on, one way or another. It is a bill which surely should have been prepared. Not only do we not have the opportunity to deal with that act but, by virtue of the fact that a resolution has been on the order paper relating to it, we have been denied the opportunity to have other discussion take place which could have produced results.
When I made the comment I did make a short time ago in regard to members of the opposition being heard, may I say there have been occasions-and I certainly commend those ministers who have accepted these opportunities-to make various amendments on the basis of proposals which -came from the opposition. I can recall an amendment accepted by the Minister of Justice, and another amendment accepted by the minister of the new department which deals with northern affairs. I recall an amendment accepted by the Minister of National Revenue, as well as amendments accepted by other ministers. These were accepted in good spirit, as constructive suggestions which the government felt might improve the legislation they were presenting.

This is an indication of the value of having an early opportunity to consider legislation and to discuss it with those who can give sound advice. It would seem to me that well over half-perhaps three-quarters-of the legislation that would come forward in a session could be on the order paper within the first two weeks. After all, most of the bills are short, interpreting decisions already made by the government when the speech from the throne is prepared.
If those were on the order paper, particularly at the time we meet before Christmas, then during the extended Christmas holidays hon. members, who do take these tasks seriously-and the discussion that takes place indicates just how seriously they accept their responsibilities-would then come back with information that would make it possible to deal with these subjects much more rapidly.
Moreover, I am convinced that, if legislation were brought forward in this way, the debate on the speech from the throne would be greatly shortened. Hon. members would know what subjects were going to come up, and what the nature of the discussions would be within the framework of legislation they had already seen. For the same reason, the debate on the budget would be greatly shortened. This undoubtedly would encourage the direction of debate to positive measures before the house either by way of bills or by resolution.
Therefore in the light of what has happened during a session which is, at least, the second longest in Canadian history, and the least productive-


An hon. Member:: The third longest.


George Alexander Drew: I am informed that only the session of 1903 was longer. However, whether it is the second or the third longest, may I say that this is certainly the longest of any session which has produced very little of a positive nature, with the exception of the amendments to the Criminal Code.


John Whitney Pickersgill: Certainly the dullest.


George Alexander Drew: Yes, as one hon. member opposite has said, it is the dullest, because the house has floundered without any leadership in regard to its business during practically the whole of the session.
Hon. members have had to seek information by every device possible. We all know even within the last few days how rigidly the government refuses to open doors to information which is not confidential, by any ordinary meaning of the word, but which would have helped greatly to expedite the business of the house.
Supply

Privy Council
We do know that one of the departments, which proceeds most rapidly once its estimates come before the house, is the Department of External Affairs. And that is because, by custom, those estimates are referred to a committee, and dealt with there. When they come back to the house, hon. members know that representatives from both sides of the house have examined the items; and therefore, subject to such general debate as may take place in regard to external affairs, the house proceeds to deal with the estimates very quickly. I feel therefore that the same practice could be employed with very great advantage in the case of the Department of National Defence, in the case of the Department of Labour and in the case of other departments which naturally require some examination if the business is to be done expeditiously.
I recognize, Mr. Chairman, that there are always measures which cannot be ready when the house meets. I recognize that in this session there was a tremendous undertaking carried out by hon. members and by the other place in the amendment of the Criminal Code. The Minister of Justice and I do not always agree, but I wish to say without any reservation that hon. members greatly admired the patience and detail with which he dealt with these extremely important amendments to one of the heaviest and most important pieces of legislation of the House of Commons and the parliament of Canada. That work of course of necessity was bound to take a long time; but may I point out that the task of the Minister of Justice and of the committee would have been a hopeless one if the house had been suddenly confronted with that mass of legislation dealing with the rights of the individual in Canada under the Criminal Code. What made it possible for the minister to proceed in an orderly way, and what made it possible for the opposition to deal with it in an orderly way-and may I say that the chairman of the committee of our own party, the hon. member for Kamloops, is equally to be commended for the manner in which he followed section by section in the legislation before the house, as did other members of that committee-what made it possible for this legislation to be dealt with in an orderly way was that it was presented to the special committee early in the session. May I say that this could never have been done unless hon. members, and particularly the members of the legal committees of both sides of the house, had been able to examine this in advance, to check with legal experts outside, members of the bar association and others in regard to the implication of various amendments that were made.
6526	HOUSE OF
Supply-Privy Council
Compare that, Mr. Chairman, with the act presented a short time ago to provide what is described as insurance for the civil servants. Here we had a bill which came before us without any opportunity being presented to hon. members to explore this subject, and without any opportunity for the representatives of the civil servants themselves really to present their case and check with their own members on what they thought of this unusual measure which had been brought forward by the Minister of Finance. There is a contrast, there is an illustration of the difference. There is proof of the advantage of having legislation come before us early.
However, during the course of any session new subjects of immense importance will arise, and naturally it will then be the responsibility of the government to deal with those subjects. However, when that is done, let us have the legislation just as quickly as we can and not at the last moment, as we have on some occasions during this session. I therefore urge the Prime Minister with all earnestness to see what can be done between now and the beginning of the next session to have the legislation which will interpret the decisions of the government drafted in advance and placed on the order paper. Then, when that is done, the moment that we can proceed with the completion of the debate on the speech from the throne, to have the committees set up and start work right away, and not months afterwards, as is usually the case. That would hasten the business of the session and not crowd those reports in at the last moment, as now happens. I repeat, there is only one person in this house who can successfully bring that about, and that is the Prime Minister, the man who, under our parliamentary system, has been entrusted with the immense power as well as responsibility of Prime Minister of Canada. With great earnestness I seek consideration of the views I have expressed.
The second point I mentioned was the judiciary. I need not for one moment seek to emphasize the importance of the judiciary to the Prime Minister, who is a great credit to the profession of which he is a highly honoured member. Both as past president and as honorary president of the Canadian Bar Association, he recognizes in all its significance the importance to Canada of an impartial judiciary. The only comment I propose to make in regard to this vitally important part of our constitutional organization in Canada is that, now appeals to the privy council have been abolished, the importance of every appointment to the Supreme Court of Canada is greater than ever before. I am sure every hon. member will agree with me that we have reason for great pride


in the history, the traditions and the personnel throughout the years of the Supreme Court of Canada. I would not wish to pass from this subject without saying that I know that all hon. members regret that time in its inevitable course has brought the resignation of the very distinguished Chief Justice who retired the day before yesterday, because there is not one of us whose admiration for his work in that high office is not in itself evidence of our satisfaction with what has been done in that court.
However, I simply seek to emphasize that in maintaining our great legal traditions, each appointment to the high court will of course become more important than ever before. Then, there are the courts of the provinces, the superior courts and the county courts. There it is of vital importance that the impartiality of each judge be an assurance of the extension of open-handed justice on every level. The record of our judiciary in this country on every level is one of which we have every reason to be proud. I make these comments only because we know that this subject is one that is under consideration, and to the distinguished member of the bar who occupies the office of Prime Minister I simply direct these remarks as an expression of hope on the part of every hon. member that the appointments that are made to the bench throughout Canada, whether it be the Supreme Court of Canada, the superior courts of the provinces or the county courts, will be appointments which will command the confidence and increasing respect of every Canadian.
The third subject that I propose to mention is the need of a conference between the federal and the provincial governments. It is not necessary, nor do I intend, to provoke some of the interjections that would doubtless be made if I sought to review at any length this extremely important subject.


William Alfred Robinson: Order. I hesitate to interrupt the Leader of the Opposition, since it is extremely difficult to determine relevancy under this particular item. I did not interrupt him when he was discussing the business of the house, as I felt that of course government business must be brought forward by the government and that he was within his rights in pursuing that discussion. In view of the fact that the rules committee had been set up it would be out of order to discuss that particular matter. Then, also, I did not interrupt the Leader of the Opposition when he initiated a short discussion on the judiciary, although I felt that could more properly be brought up under the estimates of the Department of Justice which are still to come before us. Now I understand, from

the remarks previously made by the Leader of the Opposition, that he intends to discuss a federal-provincial conference. I do not wish to anticipate the manner in which he proposes to deal with that subject, but at present it would appear to me very difficult for the hon. gentleman to make such a discussion relevant to item 345. It must be realized that all manner of subjects will come before the privy council, but I cannot allow that to be taken as what I might call an excuse for discussing all manner of subjects under this particular vote. Therefore, I do feel the Leader of the Opposition should confine his remarks to the actual administration of the privy council office and not wander too far afield on other subjects.


George Alexander Drew: Mr. Chairman, that is just exactly what I am doing. This is the only vote under which I can properly direct to the Prime Minister, as head of the privy council, the point I am making, and it is to him in his capacity as head of the privy council that I am directing my remarks on a subject which I have already said I do not propose to discuss in detail for the very reasons put forward by the chairman of the committee.
As we near the end of this session I simply point out that it must be the responsibility of the Prime Minister, as chairman of the privy council, and it can be the responsibility of no one else, to call together between now and the time we meet again a conference of the federal and provincial governments to discuss the outstanding problems which are causing great concern to many Canadians.
I have no intention whatever of dealing with the merits of the issues which have been raised. No hon. member of this house, however, should disregard the fact that, unless there is some attempt to bring together the federal government and the governments of the provinces to explore the outstanding problems, increasing difficulties and friction may occur. I urge the Prime Minister, no matter what his views as chairman of the privy council may be in regard to the position of the government of Canada, or the position of any other government, to recognize what he himself has said. I would like to quote his words because they relate to this very subject.


William Alfred Robinson: Order. I must interrupt the Leader of the Opposition once more. In addition to the remarks which I previously made with regard to the relevancy of his remarks, I now find that a motion on a subject of this kind was negatived on division on April 12 of this year when there was an amendment to the amendment proposed by 83276-413
Supply-Privy Council Mr. Coldwell to reconvene the dominion-provincial conference from time to time, and so on. In view of the fact that such an amendment was negatived on that date, I feel the Leader of the Opposition is really out of order in attempting to discuss this question at this time and under this particular vote.


George Alexander Drew: Mr. Chairman, the subject under discussion in April was not a request to call a conference between now and the beginning of next session. The subject then under discussion related to facts that were then before the house. I would point out that the Prime Minister said this, as reported in the Ottawa Journal of June 1, 1954:
"Perhaps the most knotty problem of all which we had to face in recent years is that of the allocation of taxation revenues to enable governments in Canada at their different levels to carry out their constitutional responsibility.
"Under the terms of the British North America Act, both the provincial and federal authorities have the right to impose taxes in certain fields.
"Temporary agreements have been made with all the provinces but one, yet the basic problem of finding an acceptable solution that will allow all the provinces to preserve their rights and at the same time allow the governments to carry out their responsibilities, still remains."
It is to those words and that statement, and the problem before us now, Mr. Chairman, that I am directing my remarks, and I close my remarks in regard to this subject with the most earnest request to the Prime Minister that, whatever discussions may have taken place, whatever difference there may be, it be recognized that this is a subject of concern to all Canadians, that no one province alone is involved in this consideration, and that it would be extremely helpful to the parliament of Canada during the next session, in carrying out its responsibilities, if between now and that time a conference could be called at the instance of the Prime Minister, who is the only person who can call it, so that we know then something of what measure of agreement can be reached as to the procedure that will be followed in seeking a solution to our financial and constitutional problem.
Now, Mr. Chairman, I come to the fourth subject I mentioned, namely a commonwealth conference.


William Alfred Robinson: Order. May I point out to the Leader of the Opposition that remarks on the subject of a commonwealth conference would meet with the same objection that I previously raised. As I said before, all manner of subjects come before the privy council, but that does not give any hon. member the right to discuss any and all manner of subjects on this particular vote, and I must ask the Leader of the Opposition to
6528	HOUSE OF
Supply-Privy Council confine his remarks to this item and not discuss items which are far afield from this subject.


George Alexander Drew: Mr. Chairman, I am discussing an item that relates to the position of the chairman of the privy council and it is only the chairman of the privy council who can, on behalf of Canada, take any steps that would effectively lead to a commonwealth conference. There is no other item of these estimates under which I could discuss this subject. I do so with the knowledge that next week the, shall I say, greatest parliamentary democrat in the world today is going to be a visitor here in Ottawa. I would strongly urge that at that time, when Sir Winston Churchill and Mr. Anthony Eden are here, the Prime Minister, as chairman of the privy council and Her Majesty the Queen's adviser, shall indicate, as an expression of the hope of the House of Commons and the people of Canada, that there be as soon as possible a conference of representatives of the nations of the commonwealth to consider those many things which may be of some advantage to all of us in the years ahead.
I do not propose, Mr. Chairman, to strain any ruling that might be given by suggesting in detail the subjects that would come forward. I would point out that when the leaders of the governments of the commonwealth met in London last year at the coronation the opportunity was limited for that kind of discussion which could lead to such beneficial results on an occasion such as this. Other conferences have taken place. Other conferences have failed. Only a few days ago the disarmament conference ended in complete failure. We know that the Geneva conference simply carries on with hope, and with little but hope. Here, however, is a conference of nations bound together in a common parliamentary system and with a common loyalty to the great traditions of the rule of law and the supremacy of parliament to which we all adhere. Here within this fellowship of nations are material and human resources which challenge the imagination of every one of us. Within this fellowship of member nations are more than 600 million people in Asia, in Europe, on the North American continent, and in the distant waters of the Pacific as well as on the great African continent. Here is something which offers hope to us and to all the rest of the world.
Let us take first things first. Here we have presented to us a chance to show what conferences can do and, out of the success of such a conference as this, to offer hope of greater success at other conferences in the
[The Chairman.]

years ahead. With respect to a wider friendship still with the United States our nearest neighbour, with France our ancient ally, and with the other nations with which we have been so closely associated, what greater challenge could we present than to show what we can do to our mutual advantage in marshalling the material as well as the human resources for the common benefit of ourselves and of all mankind? That is something that presents both a challenge and an opportunity to the Prime Minister, the chairman of the privy council, who in his recent trip around the world, saw something of the way in which Canada can and will be heard by other nations without any suggestion that we are trying to impose our will. Let no one fear that, in establishing more effective understanding within this great commonwealth-with all its tongues, all its races, all its creeds and all its traditions-we would in any way be creating any barriers between ourselves and the United States. On the contrary, we would offer to them greater evidence of how other conferences can proceed.
May I just quote a few words written in a magnificent editorial in the New York Times last Sunday when, in a great newspaper, an effort was made to dispose of the suggestion of the existence of deep and fundamental differences between the United States and the United Kingdom. May I quote these words:
There will be no deep conflict between this country and Britain: Not until Moscow adopts the golden rule as its sole policy, not until the moon turns blue-and not then.
Mr. Chairman, not until the moon turns blue-and not then-can there be misunderstanding between Canada and the United States. Let us give to them dramatic evidence of the fact that we are members of a wider world fellowship and that when they deal with us in a friendly manner, as they do, they deal with us as a partner in a wider association. That in itself would bring the great human and material resources of the United States still closer in harmony and in fellowship, with resulting immense benefits for us, for the commonwealth, for the United States and for the whole world.


William Alfred Robinson: Shall this item carry?


Mr. Blackmore:: Does the Prime Minister desire to reply before others have something to say concerning this matter?


Louis Stephen St-Laurent: If there are others who have something to say concerning this matter, I think I should perhaps hear them before I make a reply in order that I may not have to make more than one.


John Horne Blackmore: I am glad that the Leader of the Opposition has noted that one of the finest occasions on which to raise matters of great national importance is the occasion on which the Prime Minister's estimates are before the House of Commons. I am glad that he raised the four points which he raised. I should like to ask the Prime Minister some questions which he will be able to answer when he answers the Leader of the Opposition. These questions of mine have to do in considerable measure with the matter of the great foe which we are engaged in fighting across the world, namely communism. The first question is this. Does the Prime Minister propose to win the cold war? That may seem like a silly question. I hope the Prime Minister can make it look silly.


Mr. Fulton:: I do not think he heard the hon. member.


John Horne Blackmore: I will say it again if he did not hear me. Question No. 2 is this. If so, what has he done in that respect since last August 10, designed to win that cold war: (1) to recognize communist measures; (2) to offset them; (3) to counter-attack? I now have reference strictly to the cold war. The third question is this. Has the Prime Minister had brought to his attention the communist over-all world plan to win completely domination over the world in the next twenty years, as that plan was outlined in a document recently presented before United States governing bodies by Senator Knowland and summarized in the Ottawa Journal on June 1, 1954, at page 2? Fourth, what specific measures has the Prime Minister taken to offset communism in Canada, first, in discovering what are the techniques communism has employed? When I began studying this matter I found that my lack of knowledge about communist techniques was astounding to me. Second, what is the degree of success communism has attained in Canada? Third, what are the possible means available to Canada of combating communism in Canada? Again I have particular reference to the cold war as it is being conducted in Canada. Just to indicate to the Prime Minister how serious this problem really is and what is going on right under his nose-


Walter Edward Harris: Mr. Chairman, I rise on a point of order. I must apologize for interrupting again, but you can see how far we are going to be afield if, on the estimates of the privy council, we discuss the cold war which has been discussed during this session on more occasions, I think, than at any other time since the Korean incident. We had a long discussion on external affairs and I would 83276-4131
Supply-Privy Council hope that we do not repeat it or even discuss the matter in any form on these particular estimates.


John Horne Blackmore: Mr. Chairman, I appreciate the virtue of what the minister has said. My object is to concentrate attention on something and what to do about it. One of the things that just desolate a person sitting in this chamber year after year is the tremendous amount of babbling there is against people-


Some hon. Members:: Hear, hear.


John Horne Blackmore: Just wait until I say the next thing and then see whether you will say "hear, hear". As I say, one of the things that desolate a person sitting in this chamber year after year is the tremendous amount of babbling against the wrongs which we have with never a suggestion as to what to do about them. Literally volumes are filled by members of the official opposition crying out against ills and trying to convey to the country that if only they were in the position occupied by the Prime Minister all would be perfectly well.


William Alfred Robinson: Order. I believe the point of order raised by the Minister of Citizenship and Immigration is very well taken. I have listened to the questions put forward by the hon. member for Lethbridge, and I should like to point out to him that in my opinion these questions might more properly be advanced under the estimates of the Royal Canadian Mounted Police. Therefore I would ask his co-operation at this time.


John Horne Blackmore: I agree with you that they would be quite suitable under the estimates of the Minister of Justice, but all the points which could be taken up with the Prime Minister on an occasion like this would be appropriate to be discussed under the estimates of one or other of the many ministers who govern under the Prime Minister. Consequently I think the suggestion the chairman has made rather loses its validity in the light of what I have just said. I still believe that I shall have plenty to take up with the Department of Justice after I get before the Prime Minister those things that I wish to say today. There are not very many of them. It will not take me more than seven or eight minutes, and if the chairman will let me proceed I think he will find that they are not out of order to be brought up on the first item of the estimates of the man upon whom the full responsibility rests for everything that occurs in Canada.


William Alfred Robinson: If I were to follow the hon. gentleman's argument to its logical conclusion we would be able to discuss any

Supply-Privy Council subject whatsoever under item 345. The hon. member will note that this item deals with the general administration of the privy-council office. I request the co-operation of hon. members in limiting their discussion to that item. At this late stage of the session I do not wish to be forced to make a definite ruling against a member, and I do ask the hon. member for Lethbridge to limit his remarks to this item and to refrain from the general remarks which he has been making.


John Horne Blackmore: My remarks from now on will be very specific, I assure you. I do think, however, with all deference to your opinion, that what I am saying is quite as relevant to this department as were the remarks made by the Leader of the Opposition.


An hon. Member:: Of course two wrongs do not make a right.


Mr. Nicholson:: That still does not make it right.


John Horne Blackmore: With your tolerance, Mr. Chairman, I should like to ask two more questions. Does the Prime Minister know specifically What is the communist line in America for 1954? This will be of importance when one undertakes to determine whether or not the remarks of any member of this house, any person speaking over the C.B.C., or any minister, are remarks that follow the communist line. There is a definite communist line for 1954. There was a definite communist line for 1953. Once one knew this line one could detect a communist speech anywhere. To illustrate to the Prime Minister what I have in mind, I am going to beg the permission of the committee to read a quotation from one of the radio commentators-


Alexander Malcolm Nicholson: Mr. Chairman-


William Alfred Robinson: Order. As I said before, I hope I am not forced to make a definite ruling, but if I am forced to do so I intend to do so very quickly. The hon. member said he had two questions to ask. One of them has been asked. I am not going to interrupt him if he wishes to ask the second question without further comment, but if there is further comment along these lines I am afraid I must make the definite ruling that this is out of order.


John Horne Blackmore: Mr. Chairman, I have no desire to cause you any annoyance or to be out of order in the slightest degree, but I have an excessively important message to deliver to the people of Canada.


Some hon. Members:: Oh, oh.
[The Chairman.]


John Horne Blackmore: I am the judge of that. Every member of this house has the right, by virtue of the responsibility that was placed upon him when he was elected, to put the case as he sees fit.


John Whitney Pickersgill: Within the rules.


John Horne Blackmore: I am going to ask you if you would consider that I would be out of order if I were to give an outline of the communist plans for the next twenty years as found in a document-


William Alfred Robinson: Order. I thought I had indicated sufficiently clearly when I was on my feet before that I do consider this line of discussion very much out of order under this item. If the hon. member wishes to ask his second question I will allow that, but I cannot allow any further discussion on this subject at this time.


John Horne Blackmore: I will bow to your ruling, Mr. Chairman, and I give notice to the Minister of Justice that I will have this in mind when his estimates are before us.


[Stage Direction]
Item agreed to.
Federal district commission-
347. To provide for maintenance and improvement of grounds adjoining government buildings at Ottawa, and to authorize an amount not exceeding $132,000 for construction, improvements and operation of the parks, parkway system and other works under the control of the federal district commission which is additional to the sum of $300,000 granted by chapter 112, revised statutes, $475,085.
Alexander Malcolm Nicholson: There are at least two problems that have been brought to my attention in connection with expropriation. I should like to draw the Prime Minister's attention to section 46 of the Exchequer Court Act. In quite a number of cases property belonging to citizens of Ottawa was expropriated by the crown in 1947, and settlement has not yet been made. As the act now stands, it requires that settlement be made as at the time of expropriation, which in this case would be 1947. I am sure the Prime Minister will be the first to admit that if it is necessary for the state to take the property of citizens they should not be worse off because of the taking of the property than they would be if it had not been done.
I would suggest that the Exchequer Court Act be amended to make provision for settlement as at the time of expropriation or as at the time the state takes the property. I am sure the Prime Minister will agree that it would cost twice as much now in some cases to replace the property as it would have in 1947. I wish the Prime Minister would give consideration to introducing an amendment to this act next year so that settlement

may be made as at the time of expropriation or as at the time that payment is being made by the state.


Edmund Davie Fulton: I notice that the amount here is in excess of the sum of $300,000 provided for under the statute. It is over the $300,000 this year and it was also in excess of that last year. I should like to ask the Prime Minister whether it appears to be established as the result of experience that the amount provided by the statute is apparently inadequate, and that possibly the proper way to handle it might be to amend the statute to provide for a larger annual amount rather than having to go on voting supplementary amounts each year.


Louis Stephen St-Laurent: Some consideration has been given to an amendment of the statute, but I think it is perhaps still desirable to have this distinction between the amount provided by the statute and the appropriation asked for each year. The amount provided by statute has been considered as the amount required to maintain the properties vested in the federal district commission, while under the other item we provide for the administration, care and upkeep of the grounds surrounding public buildings in Ottawa. Most of that work is done by the federal district commission so as not to have duplication of two organizations.
The federal district commission is responsible for the driveways and parkways, and has the equipment and personnel necessary for that work which is also appropriate to the kind of work that has to be done on the grounds surrounding government buildings. They have been required, therefore, over the last many years to have that personnel do the two jobs. The overhead is divided between the statutory grant and the vote on the basis of 50 per cent to each. The amount required for the proper maintenance of the grounds surrounding government buildings is increasing with the increase, of course, in the cost of labour, as well as the increase in the areas that have to be given attention. I feel it is really more economical than if public works had one organization and the federal district commission had another organization to take care of work of the same class. There is only one greenhouse which supplies all the bulbs and plants for landscaping both the parkways, driveways that are vested in the federal district commission and the other government property.


Edmund Davie Fulton: Then, this might be best
tidied up by providing in the statute itself that the federal district commission shall be
Supply-Privy Council responsible for the maintenance of the grounds, lawns, etc.; in other words, everything but the building itself.


Louis Stephen St-Laurent: There is consideration
being given to that.
When we get to the supplementary estimates the hon. gentleman will find a one dollar item to take care of that and regularize the procedure. In the meantime, the same thing has been done over the years.


John Horne Blackmore: May I ask the Prime
Minister upon which of his items he will be answering these questions?


Louis Stephen St-Laurent: I think I am out of order, but the general discussion we have had this morning on the administration of the privy council is one example of the many things that have prolonged this session. It is the first time in my experience that I have heard the suggestion the Prime Minister was responsible for everything that happened in Canada. It is the first time I have been described even as a democratic dictator. I have never felt that my dictatorship was of the same kind as is usually associated with that word.


George Alexander Drew: Just so there will be no mistakes on the record, Mr. Chairman, if the record is examined it will be seen I did not apply that word to the Prime Minister. I said that textbooks used that term in relation to the power of the Prime Minister under our parliamentary system.


Mr. Sf. Laurent:: With respect to the four points mentioned by the Leader of the Opposition, I believe everyone is agreed that we did make a genuine effort this time to have most of the legislation on the order paper within the first week that parliament was sitting. As early as November 18, parliament having met on November 12, there were 6 bills and 7 resolutions on the order paper; by December 8, there were
11	bills and 5 resolutions; on January 19,
12	bills and 4 resolutions; and by February
10, 14 bills and 3 resolutions. But I confess I have been disappointed at the time it took to get the drafts of some of the subsequent bills that had to be brought before parliament.	I can assure the Leader of the
Opposition and the house that I was just as disappointed as anyone else over the fact that it did take some time, but I assure the house also there is a serious effort to have legislation on the order paper as early as possible.
With respect to the judiciary, I think the Leader of the Opposition and all members of parliament are in agreement that we are

Supply-Privy Council very fortunate in having had gentlemen of the character we have had in the administration of justice. As a very old personal friend of the Chief Justice, who retired at midnight between June 21 and June 22 from his responsibilities, I wish to thank the Leader of the Opposition for the very kind remarks he has made about him. I know that the hon. gentleman has achieved what could be the highest ambition of any young man who enters into the profession of law, and who advances progressively and rapidly in that career. He was a distinguished barrister: that I know from having crossed swords with him almost half a century ago. He was also a distinguished superior court judge of the superior court of Quebec: that I know from having been before him on more than one occasion in that capacity. He was a distinguished puisne judge of the supreme court, and subsequently a distinguished Chief Justice of that court.
It was not my privilege to appear before him while he was Chief Justice because events had caused me to follow other paths. But I had been before him on many occasions when he was one of the puisne judges of the court. I know that it will be a great satisfaction to him to have had this tribute to his career expressed in this house. I do wish to thank the Leader of the Opposition for making it possible to have that tribute expressed this morning.
The hon. member suggests that there should be a dominion-provincial conference. There certainly will be a dominion-provincial conference just as soon as we can have something concrete to discuss in that conference. With respect to the fiscal relations, they are governed by a contract, in so far as nine of the provinces are concerned, which neither the Leader of the Opposition nor I would wish to repudiate. They have been contracts made in good faith by those provinces and so far as we are concerned they must be carried out in the spirit in which they were made. There would have to be some alternative suggested. In discharging the responsibilities, which are not of the over-all extent mentioned by the hon. member for Lethbridge but which are nevertheless heavy, I would not wish to call a conference and say to them: "Well now, gentlemen, you are here and what are we going to talk about; what can we suggest or consider as an alternative to what we have?"
That is one reason why serious consideration should be given, and is being given, to the suggestion from the successor of the Leader of the Opposition, as premier of


Ontario, of a preliminary discussion at the level of high, technical officials. With respect to a commonwealth conference-


Edmund Davie Fulton: Is that the economic committee?


Louis Stephen St-Laurent: The economic committee that has been referred to, that was referred to in 1945.
We are all, I think, in both the federal and the provincial fields, anxious to find something that will be satisfactory; because we are all not only Canadians but, I think, good Canadians. And we are all living together, and are bound to continue to live together. It is unfortunate that so much is required for public services at all levels; and it is particularly unfortunate that the federal authorities have to take such a large part of the taxation that is available for the services. That creates a difficult situation. I will not go beyond that.
With respect to a commonwealth conference, there is no doubt that that is something that will arise in the course of the informal conversations we will be having. But from the impressions I brought back from the East, a conference to deal with matters affecting the East would, I think, have a better chance of being successful if it were one that was sought by the governments of the East, and that implied no possible suggestion that we of the West wanted to direct the proper policies for the solution of these eastern difficulties.
There has been a suggestion that there be a conference either of prime ministers or of ministers of foreign affairs; and I think the suggestion has been made that it would be preferable if that conference were promoted by the governments of the East rather than by the governments of the West. In any event the aim would be, as the Leader of the Opposition said, something that would be helpful. And it will be through informal discussions that we will find out what is apt to be most helpful.
Then, with respect to the questions of the hon. member for Lethbridge, I must confess that I get no confidential information from any communist sources, and that I am not cognizant of what may be the real line of the communists for North America in 1954. The hon. member certainly was not putting his first question as anything more than just a preliminary, when he asked, "Do we want to win the cold war? Does the Prime Minister want to win the cold war?" The Prime Minister does not feel that he can win the cold war; the Prime Minister feels that Canada, and all the free countries, are doing their best and will continue to do their best to

win the cold war; because together they wish and they hope to win the cold war.
I do not think X would be prepared to suggest establishing as a proper precedent a procedure on estimates under which we would not consider the amounts to be voted, but simply use the discussion of the estimates as an opportunity to discuss anything with which a minister whose estimates are under consideration may be concerned. I think it may develop that there is much to be said for the suggestion that the details, respecting some departments, might perhaps be considered more appropriately in working committees, and that when they then come back to the house it might be proper to have these discussions on very interesting but somewhat academic aspects of government policy. But it would be difficult to have the business of the house arranged in such a way when there would not be several occasions when somewhat different aspects of the same questions would be up for discussion.
I do not think any of us believe it is by rigid rules that matters of that kind can be dealt with. It does not matter very much what the language of a rule may be; if there is a serious attempt to go around it, my experience in the house has been that that attempt is usually successful. So he will try not to give the opposition parties any occasion for feeling that anything is being held back, or any reason for feeling that we are not doing our best to make it possible to have the business of the country discussed in an orderly and perhaps in a somewhat more expeditious way than has been the case during this session.
But in order to proceed more expeditiously each one of us will have to be doing his best to that end. We will continue to try to have the legislation brought down just as early as possible, because we agree that that will be helpful.
I apologize to you, Mr. Chairman, for having taken this time; but I thought that, these general remarks having been made, it might have been looked upon by my hon. friends opposite as somewhat discourteous if I did not make some attempt to reply. And it is for that reason that I did venture to make these few comments.


[Stage Direction]
Item agreed to.
Privy council office-
700. General	administration-further	amount
required, $5,000.
Stanley Howard Knowles: I should like to ask the Prime Minister one question. He will recall that during the discussion of his estimates
Supply-Privy Council in April of 1953 I asked him whether he was making any progress with the implementation of the Massey commission recommendation that there be established a Canada council on arts, letters and humanities. He will probably recall the answer he gave at that time, as I do.
May I ask if he has made any progress in the meantime in his attempt to interest certain individuals in accepting appointments to such a Canada council.


Louis Stephen St-Laurent: I must be perfectly frank with the hon. member and say that I have not made any attempt to deal with that problem since I came back from my visit around the world. I had correspondence with several people prior to the session, but I must admit that since I came back from my tour I have not had any opportunity to go further with that project.
This special item is not something that deals particularly with that. It is because we did not expect, when the general estimates were prepared, that we would be able to start on the printing of the consolidation of the statutory orders and regulations during this fiscal year. We now find that it will be possible to make a start before the end of the fiscal year on printing them, and that is the reason for this supplementary item.


Stanley Howard Knowles: The Prime Minister does intend to pursue the matter of a Canada council when it is possible for him to do so?


Louis Stephen St-Laurent: 1 was discussing it with one of my colleagues yesterday.


[Stage Direction]
Item agreed to.
159. To authorize and provide for the reimbursement to the lieutenant-governors of the provinces of Canada of the costs of travelling and hospitality incurred in the exercise of their duties up to a maximum per annum for each as follows: (a) where the population of the province at the last decennial census did not exceed 500,000, $5,000; (b) where the population of the province at the last decennial census exceeded 500,000, $5,000 plus $1,000 per each 100,000 or fraction of 100,000 of population over 500,000, but not exceeding $12,000 in any case, $86,000.
Edmund Davie Fulton: Just a moment, Mr. Chairman, until I find the place.


Stanley Howard Knowles: On division.


William Alfred Robinson: Carried on division?


[Stage Direction]
Item agreed to.
At one o'clock the committee took recess.
[Stage Direction]
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The committee resumed at 2.30 p.m.

The Deputy Chairman:: Hon. members will find these estimates starting at page 31 and the details commencing at page 247.
202. General administration-estimates of the Clerk, $1,250,777.


Mr. Green:: Mr. Chairman, this is the item covering the general administration-estimates of the Clerk, and I would like to know what the situation is now with regard to the terms of employment of the protective staff of the House of Commons. We have here I think the finest corps-


Edward Turney Applewhaite: Order. I hesitate to interrupt the hon. member but I might inform him that that subject comes under the estimates of the Sergeant-at-Arms.


Stanley Howard Knowles: Mr. Chairman, I would like to say just a brief word under this item. First of all, I wonder if I could have the privilege of welcoming back to the floor of the house for a few moments our esteemed first commoner. Along with that welcome I should like to express once again my words of appreciation and commendation both to His Honour, Mr. Speaker, and to his deputy minister-I believe that is the status that is occupied by the Clerk of this house-for the excellent way in which they are administering the affairs of the House of Commons in so far as they come under their direction.
The one question I would like to put to Mr. Speaker relates to the pension situation in so far as the employees of the House of Commons are concerned. I know His Honour will recall that some years ago some of us had quite a bit to say about the desirability of having a pension plan for House of Commons employees, particularly those not otherwise covered. In the main the need for a special plan such as that which we used to advocate has been obviated by the change from the Civil Service Superannuation Act to the Public Service Superannuation Act. As I understand it the main difference between the two is that the act we now have goes beyond civil servants and includes all those employed in the public service providing they meet the conditions laid down in the Public Service Superannuation Act.
I have in my hand a very interesting little booklet prepared by the public service superannuation branch of the Department of Finance at Ottawa entitled "Your Superannuation Plan", on page 7 of which I read these words:
With a few exceptions, this act provides that every full time employee in the public service, male or female, married or single, with an annual
[The Chairman.]
rate of salary of $900 or more, will start to build up his superannuation credits after no more than a year of substantially continuous employment.
I realize that under that provision any employee of the House of Commons who is here the year round, whether that employee is on a permanent or classified basis or not, is covered by the new Public Service Superannuation Act providing his or her salary is $900 or more per annum. But what about our sessional employees? I am thinking of all the people who work here for as much of the year as we require them and who may earn more than $900 for that portion of the year and come back from year to year. Are they covered? If not, is consideration being given to finding some way in which they can be covered?


Mr. Speaker:: The sessional employees are not covered but it is our understanding that some consideration is being given to the establishment of some scheme or pension plan which would apply to sessional employees in the public service. As the hon. member knows, we have several employees who are hired on a sessional basis and cannot be employed otherwise because of the nature of the business which the House of Commons carries on. The house is in session only for so many months each year and therefore once the session is over we have to sever our connections with many of these employees.
Our difficulty at the moment is that once they have been in our service for 25 sessions, or 10, 15, or 20 years, we feel there should be some way of retiring them with certain compensation. As it is now, they are retired with, I believe, one month's leave together with one month's pay for every five years they have been in the service. I must point out in that connection that up until recently the system was that employees who had been working on a sessional basis or who had been working here all the year round and who were not under the Civil Service Act were upon retirement receiving only $100 together with $10 for every year of service. Take now, for example, a man who had been working here for 10 years. When he retired all he received was $100 and $10 for every year, which would mean $200 for his 10 years' service, and that would have been the end of the matter.
This situation was carefully considered and it was felt that pending any other arrangements the employees who had to be retired should be given the same benefits as those which they could enjoy if placed under the civil service commission, namely one month's retirement leave plus one month's pay for every five years' service. In other words,

an employee who had been working here 10 years would receive three months' full pay. That puts them in a position which is perhaps six or seven times better than the position in which they were a few months ago.


Stanley Howard Knowles: Mr. Chairman, 1 am glad that an improvement has been made along the lines that have been indicated with respect to employees who retire, and I welcome even more Mr. Speaker's assurance that the matter of some pension arrangement for employees in this group is under consideration. From the very good attention which the Speaker and the Clerk give to all these matters that come under their jurisdiction I know that, if they are pursuing it, it will be pursued with diligence. They certainly have my backing and, I believe, that of hon. members generally.
I just want to say this further word. I want to express the hope that as little time as possible will be lost in bringing this matter to a conclusion, for this reason amongst others. So often it happens that after a time employees who have been in a service for a certain number of years are accorded certain pension rights and with those rights is accorded the privilege of going back and covering past service. When that time comes, frequently the amount of money involved in covering past service can be quite a huge sum and it can become quite a problem for some of these people to know whether or not to try to cover that past service. For that reason I hope there will be as little delay as possible in dealing with the matter of some definite pension arrangement for all our House of Commons employees who come back year after year even although they may be on a sessional basis. I am sure I can speak for hon. members generally when I say to the Speaker and to the Clerk that, in their pursuit of this matter, they have our support.


Mr. Churchill:: I should like to say a word in support of what the hon. member for Winnipeg North Centre has said, and to commend Mr. Speaker for the action that has already been taken. He is well aware of the fact that there are in the House of Commons members who have already interested themselves in this problem and who are prepared to support any move that may be made along that line. The sessional employees have given and are giving faithful service. Through perhaps an oversight in the years gone by, the question of superannuation for them has not been considered. It is a welcome move now. We hope that the Speaker will be encouraged by the support
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he is getting from members of the committee and that he will press on with this particular needed reform.


Herbert Wilfred Herridge: I just want to say that I heartily support the remarks made by the hon. member for Winnipeg North Centre. I had intended to make similar comments in two or three minutes but he has taken the wind out of my sails. I shall therefore get on his boat.


Ernest George Hansell: There is one point I should like to bring out. It has reference to the comparative amounts spent for help required by the office of the Leader of the Opposition and by the leaders of other groups. In the details given with regard to the office of the Leader of the Opposition I notice that there are seven on that particular staff, which is composed of a private secretary, a secretary, a clerk and four stenographers. Mr. Chairman, I would not want that number of helpers on that staff to be reduced. In fact, if the Leader of the Opposition finds that he needs even more help, I would be quite willing to say that he should have it. However, there is this point to be considered. We know that the Leader of the Opposition occupies a rather special place on the opposition benches in the House of Commons. He is recognized as the leader of the official opposition. Nevertheless, the opposition or the work of his party has no reason, particularly, to be any more effective than that of the other smaller groups. The point I want to put over to you, Mr. Chairman, is that, when it comes to the matter of performing a vital function as leaders of opposition groups, the other leaders have just as much work to do as has the Leader of the Opposition. Yet the leaders of the other groups have to be satisfied with one or two on their staff.
I am therefore putting up this plea. It seems to me that more help should be given to the leaders of the other parties in respect of secretarial help, research and that sort of thing. I know that the leader of this party is exceptionally busy. Frankly, I do not know how he is able to get through all his work and do the job he is really doing here in the House of Commons. As I say, I have no idea whatsoever of intimating that seven on the staff in the office of the Leader of the Opposition are too many. I would not say so. However, I say that the help and the staff given to the leaders of the other groups should be increased.


[Stage Direction]
Item agreed to.
203. Estimates of the Sergeant-at-Arms, $726,540.
Howard Charles Green: May we have an explanation of the conditions of service of the protective

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force of the House of Commons? I have in mind particularly whether they are on a five-day week, the number of hours they work each day, and also what provisions are made for their holidays. I believe that the conditions are not nearly as favourable as they are in the civil service generally and in industry. I would ask His Honour to outline just what these conditions are and what prospects there are for improvement.
From my observations-and I think every hon. member of the committee will agree- this protective force of ours is doing a splendid job. I do not believe there is a finer force in the country. They not only have to keep order around the building but, in addition, they come in contact with hundreds of thousands of tourists every year. I do not know what is the number of tourists who go through this House of Commons in the course of a year, but I believe it runs into several hundred thousand. It is not always an easy job to handle, in a friendly and kindly way, these groups going through the building. Yet I have never known any other type of contact throughout the years I have been here. I think it is really wonderful the way these men handle the people who are in and out of the building. They of all people should have up-to-date working conditions. Perhaps His Honour could explain to us just what the conditions are at the present time?


Mr. Speaker:: I agree with everything the hon. member has said with regard to the loyalty and the effectiveness of the services rendered by the members of the protective staff. The problem presented to them during a few months of the year is the additional work due to the number of welcomed tourists who come to Ottawa. This was a matter of concern to the Clerk and to myself, and we have examined the situation. Of course, in years gone by we did not have as many tourists visiting us as we now have. There are members of the protective staff who, for one reason or another, do not act as guides. There are several of them who have to perform these additional duties, and who have to take around the building these groups of students and visitors and explain to them what is to be seen around the buildings. That caused them to work during the summer months on a more active basis than those who were only doing ordinary shift work. Having that in mind, we wanted to give some adequate remuneration in order to cover this additional work. That was a very difficult problem to settle because we did not want to put one constable in a position that would be unfair compared with the position of another. It was decided that many of the corporals who do this work of guiding

tourists around the building would be promoted to the rank of sergeant and would receive the additional amount of pay that that would necessarily involve. I think this went through the house recently after recommendation by the civil service commission, and if they are not now in receipt of the additional money which this promotion commands they should be receiving it very shortly.
There was another feature involved in the general promotion of corporals to the rank of sergeant. Arrangements had to be made to make sure that there would be a sergeant in charge of every shift throughout the week in order to bring about a fair distribution of the number of hours they have to work in a week. This building has to be protected every day of the week, including holidays. As far as the holidays of these men are concerned, I am not quite sure as to the exact position. The Clerk has given me certain information but I am not quite sure that I recall every detail. Perhaps I might give the correct explanation to the hon. member privately if that is agreeable to him.
However, I am certain of one thing. From conversations I have had with the chief of the protective staff and with the Sergeant-at-Arms, under whose jurisdiction the protective staffs happens to fall, I can say that there are no complaints whatsoever as to the conditions under which these men work at the moment, either with respect to hours of work or the holiday period.


Howard Charles Green: If I were His Honour I would not be too sure of that. I think he should make a thorough investigation to find out what the conditions are. For example, do these men get their holidays all at one time or are they given a certain length of time at one period and then further time later? I understand there is some such arrangement, and I do not see why they should not be given a proper holiday all at one time in the same way as other civil servants. I should also like to know whether or not they are on a five-day week and how long they work each day. The house has been sitting much longer than usual this session and probably will in future sessions. The time has come to review the whole situation. It may be that a larger staff is necessary. Can His Honour tell us something further about holidays, the length of the work week and the number of hours worked in a day?


Mr. Speaker:: I agree with the hon. member that something will have to be done by way of establishing better conditions with respect to the number of hours these gentlemen have to work, but that is under consideration at the moment. The first move in this respect

was taken by eliminating the rank of corporal and promoting the corporals to the status of sergeants, thus giving the chief of the protective staff more officers to take care of the direction of the men throughout the week.
One must keep in mind that the tourist season extends from the first of May until the first of November, and it is very difficult to arrange for the men of the protective staff to take their holidays during the summer months when most of them are employed guiding the thousands and thousands of tourists who visit the capital during those months. They are entitled to one month's holiday. With respect to holidays during the year to which they are entitled and which they are not able to take, their annual holiday is lengthened by the number of days on which they were called upon to work when they really should not have been on the job. I am talking about statutory holidays and the like.
As to the number of hours worked in a week, there are three shifts of eight hours each. However, as I said, we are looking into that situation. After all, it is not very long ago that the five-day 40-hour week was established and certain readjustment is necessary. But the difficulty is increased in the case of the protective staff because of the fact that while certain members of the force who have been here for many years do very well the ordinary work of the protective staff they do not work as guides during the tourist season. That creates difficulties in the establishment of an over-all uniform system for all the men because while they are all qualified as protective staff employees they may not all be particularly qualified for the position of guide which is an important duty that many of them have to perform in addition to their ordinary duties as members of the protective staff.
I can assure the hon. member that the point he has raised is receiving careful consideration at the moment, and we hope to be in a position to put these men on a basis which will give them full satisfaction and will be fair to all of them. So far as conditions of employment and personnel are concerned, from the contacts and conversations I have had with the gentleman referred to by the hon. member for Winnipeg North Centre as my deputy minister, I can say that no one is more human in his approach to these various employment problems, and I am satisfied that, having studied the matter as he has in the last few months, he will soon come forward with a recommendation that will be acceptable to hon. members.


Howard Charles Green: Apparently the force is not yet on the 40-hour week?
Supp ly-Legis lation


Mr. Speaker:: Not quite, but they will be. We are gradually working toward that under the new system, and the first step was taken by abolishing the position of corporal in order to create more sergeants. We are on our way to establishing something which will amount to the 40-hour week.


Herbert Wilfred Herridge: I shall only detain the committee for a minute or two because I presume that the Minister of Citizenship and Immigration is expecting a lengthy debate on his estimates. I want to support the remarks made by the hon. member for Vancouver-Quadra and to express my personal appreciation of the efficiency and courtesy of the protective staff, the messenger staff, the elevator staff and the other staffs of the House of Commons. They work under somewhat unusual and trying conditions at times involving on occasion long hours, and I think all members appreciate the work they do.
I also want to express my appreciation to Mr. Speaker and his deputy for their readiness to give sympathetic consideration to any staff problem that is brought to their attention. Their sense of justice and their willingness to remedy anything that appears to be wrong is in our best traditions.


Mr. Hosking:: Before the item carries, I should like to bring something to the attention of the Speaker. I am not sure it has to do with his estimates, but I am sure he will bring it to the attention of the proper person. I have never seen any member of the cabinet or the Speaker visiting the peace tower, but I suggest that there are thousands and thousands of visitors who do. It would be most helpful, and a service the parliament buildings should provide, if around the peace tower, on all four sides, bronze plaques were laid on top of the ramparts so that a person could look at the plaque and easily ascertain the important historical sites and buildings around the city of Ottawa. This sort of thing is done in many monuments, and if you happen to have visited Washington monument in the District of Columbia, you will find they have very beautiful ones there, which are very helpful.
I am sure that if the members of the government had heard many of the remarks of visitors in the peace tower, they would have realized that some type of map laid on top of the ramparts of the peace tower would be of great advantage.


Mr. Speaker:: I am sure the words of the hon. member will reach the Department of Public Works and most careful consideration will be given to his thought.


Ernest George Hansell: I do not like to rise to bring up trivial matters, especially at this late hour,

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but I should like to draw the attention ol hon. members to one particular point. I am wondering whether or not there is close enough liaison between those who are responsible for what takes place on the lawns outside in front of the parliament buildings and the protective staff here. Very often there are festivities taking place out there, usually on a Sunday afternoon, and when you make inquiries no one seems to know what is going on. I have had that experience two or three times. Sometimes there are activities there that are very enjoyable and inspiring. I recall that two or three Sundays ago there was a parade of cadets, and it was inspiring indeed. I have yet to get any information concerning what was going on; nobody seems to know very much about it.
There is just one other matter, and that is the old problem of parking space. I know that we do not want to have the grounds marred in any way, and I would not like to see a lot of cars lined up in front of the buildings, blocking the view. I know that is a problem that the Sergeant-at-Arms has had to wrestle with, and I am going to make this suggestion. I do not suppose it is new to him. I am wondering what purpose the lawn on the west side of the west block serves. I doubt very much whether anyone goes out there very often. Could that not be paved and turned into a parking lot? I do not think it would spoil the appearance of the building at all. It is too far removed and is up on top of a hill. Very few people pass that way, and I think the area would accommodate quite a number of cars. I make these two suggestions, and it is not necessary for Mr. Speaker to reply to them. Perhaps he could take them under advisement.


[Stage Direction]
Item agreed to.

[Stage Direction]
104. Departmental administration, $1,843,627.
Mr. Macdonnell:: Is the minister going to make any remarks?


Mr. Abbott:: No, Mr. Chairman; I usually make my remarks in the course of the budget speech and on a variety of other occasions during the year. I am ready to answer questions, but I have never felt any useful purpose was served by my making any extended statement on my estimates.


James MacKerras Macdonnell: The minister was very generous in not adding that he could not see there was any useful purpose in anyone else making any extended remarks.


Douglas Charles Abbott: No, I welcome that.


James MacKerras Macdonnell: The minister is much too polite to say anything like that. However, I hope I can show my appreciation and the reputation I hope I have earned for brevity by not taking more than a few minutes. The actual finance estimates in themselves invite very little comment, because, of the $936 million which is to be voted, only $34 million is really to be voted and the rest is provided by statute. A great deal of the money to be provided is for interest on government debts, grants to provinces, and so on. There are indeed only one or two items to which I want to refer particularly.
One to which I want to refer particularly was mentioned by the Auditor General in his report, at page 33, and it has to do with advances to the old age security fund. Hon. members will recall that the fund is operated under a special act. There are three taxes earmarked for it, and for reasons which seemed inadequate to many people in this house it has been dealt with separately and has involved a special accounting problem of its own to which the Auditor General refers. There has been a deficiency, and it has had to be dealt with. The minister referred to it himself at pages 3729 and 3730 of Hansard for April 6, 1954. I wish to refer to it very briefly.
In the year 1952-53 there was a deficiency of some $99 million, which was taken care of by an advance from the consolidated revenue fund. The minister, having carried that as an asset, and that is the reason really underlying the Auditor General's comment, has now written it off out of reserves which have been built up since 1940 or 1941 and Which now amount to something like $500 million or $600 million. This reserve is a genuine reserve because it has been taken year by year out of the annual receipts. The only reason I am referring to this, and I presume the only reason the Auditor General raised it, is perhaps to remind us again of the curious complicated situation which has arisen by reason of this special compartment in which we have kept the old age security fund. Perhaps the minister will later say a word as to whether he thinks that fund is coming to be anywhere near self-sustaining.
I am going to say very little about expenditures. A great deal has been said about them. Expenditures get to be like the weather, I am afraid. We talk about them, but do little or nothing. Gradually and unconsciously, and perhaps foolishly, we have slipped into a position where we apparently feel that we can afford to spend nearly $5 billion, without saying very much about

it. It seems almost the other day the minister was telling us, just before the Korea episode, that he did not believe we could expect to spend much less than we were spending that year, which was $2,400 million; in other words, about half of what we are spending now. The minister said to us then that we could not spend less than that if we wanted to get the things that we were getting at the time. It was hard to argue against that- that if we wanted those things, then we had to pay for them. Our economy is operating now at a substantially higher level, of course, and those who are good at figures will no doubt tell us that we can stand a lot more than we could stand then. Actually, we are standing it, and, in a way, we are becoming rather complacent about it.
I have quoted before, and I shall quote again, what the Minister of Trade and Commerce said last February about the budget. He said it was decided that this would be a year to loosen the purse strings and step up our public works program. It is hard to expect, when the Minister of Trade and Commerce, presumably with the approval of his colleagues, makes a remark of that kind, that economy is going to be in the air. And it is not going to be in the air until people become economy minded.
At the present time it seems impossible to interest them in doing very much along that line. Nevertheless I wish to register a question about this complacent attitude. Sometimes we are not as rich as we think we are. Sometimes people who have been riding along easily and making heavy expenditures find that they would have been wiser not to do so. Indeed, there are signs now that we are coming to the proof of the pudding. We have been prospering largely by reason of huge expenditures. Certainly we have a huge productive capacity. As I go around the outskirts of the city in which I live, and see the enormous expansion taking place, sometimes I become almost alarmed -although I entirely deny the title of pessimist.
I ask myself this question: Are we sure we are going to be able to sell all these goods? I remind myself, and I also remind the committee, that one of the reasons which enter largely into our prosperity at the moment is that the government is spending a lot of money. In other words we, the taxpayers, are providing a lot of money-billions of dollars of it-which go into expenditures, and which produce the same kind of wages as any other investment. We roll along, and this money accumulates, and everything seems just grand.
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But while we are doing that, and while the minister very appropriately points out the large amounts of public expenditure going into the gross national product, I point out that one aspect of these expenditures is that they are entering into our costs and increasing our costs, and if we are reaching the stage of really stiff competition, as many people believe we are, it is going to be a very important question to face.
Meanwhile I am not going to say any more about the problem of economy. We are not going to grapple with economy until there is a feeling for it abroad. That is the essence of democracy. You will hardly get a government to go very much ahead of public opinion. If the government can spend money, as they have been spending it, and go back and get elected, they just say, "So what!" They say, "Why should we not go on? The people like expenditures." And I think a good many people do. Economy comes only when we reach the stage of saying, "Can we do without it?" So long as we keep on saying, "It is very pleasant and convenient to have it"-which we have been saying-we will not get anywhere in curbing expenditures.
I know the minister feels that he is actually a kind of ogre to the other departments, that he treats them very rough, and that if it were not for him expenditures would be twice as great. And that may all be true. But I am reiterating what I have said before, that we will never get anywhere in economies until people are told, "That is what is to be spent, and no more".
As I said a moment ago, the estimates of the Department of Finance, so far as their details are concerned, do not invite much by way of comment. But the finance department has a significance which goes far beyond these actual items that we are voting this afternoon.
The tentacles of the finance department reach everywhere. Nobody can escape the long arm of the tax collector. The minister fully recognizes that in his budget speech. In fact the budget speech is really what is known in the United States as a speech on the state of the nation. That is one of the things which give the budget speech the importance that it has. In other words, we all recognize-and I am sure the minister recognizes it first of all-that tax measures cannot be considered in a vacuum.
The minister's speech covered as I said the whole state of the nation. We may think that it is always optimistic. This year I think the minister's glasses were a little bit rose-coloured and the speech had the aspects of a lullaby. But people like lullabies.

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I am accused of being a pessimist, but I deny that. To those who would accuse me I would reply that I think the ministers seem to me to indulge in orgies of optimism, whereas I am only a moderate drinker. And we reach somewhat different results.
We have grown somewhat accustomed to living in a boom in Canada. It has become embodied in our thinking. And now, if we have reached a stage where there is even a levelling off, it will give us quite a shock. In other words we have to run fast to keep where we are. If there is even a flattening out it will seem like being on the skids.
The minister reviewed 1953, and declared the gross national product as satisfactory. Of course 1953 constituted a record. I should like to read very briefly one or two of the statements the minister made in commenting on 1954. As reported at page 3727 he said:
It is clear that industry as a whole has such confidence in the future of the economy that it intends to undertake greater capital investment than ever before.
I think that is correct. Then he goes on to say:
The expenditures of the federal government on goods and services, as well as those of provincial and municipal governments, will increase moderately this year.
And finally, on the same page:
My general conclusion is that our national product in 1954 will be at least equal to 1953, and probably higher: in other words I think that an upswing in the second half of the year will more than compensate for the declines that are evident in certain branches of industry at present.
Now, as I say, we should remember that 1953 was a record year; and we should not be entirely disappointed if 1954 does not quite keep up. I think there are a great many signs that 1954 is not going to keep up to the 1953 level, and that we should prepare ourselves accordingly.
I want to add to what I said about the effect of government expenditures on cost. Because if we are getting into a more and more competitive field, then I think we have to remind ourselves of the portion of our selling cost which comes from taxes. I am thinking of the condition at home and abroad, but particularly abroad. Of course, at home both the sales tax and the income tax affect prices. Abroad the sales tax does not affect prices of our exports.
But, to return to the income tax, let me point out that a very considerable portion of the income tax on corporations, which yielded last year some $1,200 million, is and must be reflected in costs. The personal income tax, to the extent that it results in increased wages, is also reflected in costs.

I think we have to face the fact-and a very unpleasant fact it is-that the expectation we all had that when income tax would be spread out widely, that would make people economy minded, has not proved to be so. The income tax has in fact come to be regarded as just another deduction from pay envelopes. I think it is no exaggeration to say there is a feeling that there is almost a right, at any rate, a very strong argument, to get an increase in pay to compensate for any increase in the income tax. That is a matter which again will be significant if we are entering into a situation where we are going to face a real test of earning on these many billions of dollars of expenditures in a competitive market. The question of taxation will strike us from an angle that we have perhaps been rather insensitive to in these last years.
In his budget speech the minister did not neglect this. He told us of the difficulties that were arising. He mentioned tariff applications. I want to read two paragraphs from a recent letter of the minister. The letter is dated May 12 and is addressed to the tariff board. In this letter he directs them to conduct an inquiry into wool. The letter reads in part as follows:
I have received numerous representations from the woollen industry in Canada to the effect that, as a result of price changes, the 50-cent maximum duty prescribed under the British preferential rate of tariff item 554b has become anomalous and unrealistic, and that, as a consequence, the industry has suffered, and is suffering, serious injury; indeed, it has been claimed that the continued existence of the industry is in jeopardy.
Undoubtedly the Canadian government will wish to give special consideration to this tariff item, and particularly to the specific maximum thereunder, in the coming GATT renegotiations, and therefore will wish to have readily available all relevant information concerning the Canadian woollen industry and concerning as well the implications for the Canadian economy of imports of wool fabrics from the United Kingdom.
I am quite satisfied the minister wrote that letter with great unwillingness.


Douglas Charles Abbott: No, on the contrary; I was very anxious to write it.


James MacKerras Macdonnell: Let me explain myself. I am quite satisfied the minister regretted the situation which had arisen to cause the writing of the letter. Let me put it that way. I perhaps should warn the minister that he will be regarded with dark suspicion by the Winnipeg Free Press for even indulging in this inquiry, but I have no doubt he will be able to satisfy them that anything-


Douglas Charles Abbott: The minister believes in getting the facts, as my hon. friend knows.


James MacKerras Macdonnell: I am telling the minister that it may be of use to suggest that anything that he does that the Free Press does not like has been suggested to him by the naughty Tories. They will accept that explanation very readily indeed.
The minister-and this is the last reference I want to make to his prediction in the speeches-refers to the United States and to the upswing which he hopes and expects is going to come there in the last six months of the year. It seems to me that what can be fairly said of the present business situation is this. No serious person doubts the continued forward movement of Canada over the years. Nothing can prevent the development of our great resources, and the prosperity which that will bring, but nevertheless there may be minor hollows and rises in the general course. I think it is perfectly clear that since last autumn business activity has had a gentle tapering off; however I do not think anyone has the right to say there is any sign of a sharp drop. But we are at the moment in a way on the defensive, and the dynamic factors which have sped us along with almost breathless speed are, for the moment, definitely weaker. One of the questions that arise in men's minds is whether in this period of boom expansion we have built and expanded almost regardless of cost. I heard only yesterday of factories built where the costs had been vastly in excess of the estimate. That is not a new story, of course, but the person who told me this- and he was a shrewd observer-said, I sometimes wonder whether we have really had enough regard to costs. I heard the other day of one factory making the expenditure of a good many millions which is approaching completion where they were evidently perturbed. They are within a couple of months of production, but they have no business at the moment. That is one of those things that may cure itself.
It has become fashionable in certain quarters to suggest that anyone who is not going through the motions of a cheer-leader is dragging down the economy. My feeling is- and I hope we shall get something today-we are entitled to get from the government their serious assessment of the situation as it is today. It is almost three months since the minister spoke to us. He gave us his serious assessment then. We are going off now for months, and I hope he will bring us up to date today. What we want from the government is realism. We want to be treated as adults, and allowed to see the situation as it appears to the government, because sermons and admonitions are not enough. There are various classes and groups of people at the
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present time who are not finding it too easy and who are facing a competition such as they have not faced for some time, and of course the more competitive the situation the more serious the condition.
In a recent article of the Wall Street Journal there was a letter from the staff reporter which causes one a good deal of thought. This reporter had been here. He was reporting on the large import into Canada of United States goods, and said this:
Moreover, the larger-seale mass production techniques of many American producers permit them to offer many of their goods at prices well below those of Canadian manufacturers whose operations are geared to smaller and therefore higher-cost output.
Then he gives this illustration, which troubles one because it brings up very vividly the position of a Canadian manufacturer. He says this:
And look at what Empire Brass Manufacturing Company Limited has been doing. This firm, one of Canada's biggest plumbing fixture makers, in recent weeks has actually imported some United States made faucets and similar hardware and supplied them to its customers in place of its own Empire brand items. Meanwhile 800 workers at Empire's own London, Ontario, factory have been reduced to a four-day work week.
That, Mr. Chairman, just brings back to our minds the fact that for fifteen years we have been in a seller's market. Now, apparently we are in a buyer's market. The implications and results of that are definite, and could become very serious.
As to exports abroad, I am going to say nothing. We have had the classic question of wheat debated here, and I am not going to do more that remind people that it is a kind of symbol of what other exporters are going to find as well. I have referred to the optimism of the ministers. That is good; nobody wants anything else, but I want to mention in passing that some groups in Canada may be disposed to query this optimism. I refer to the textile people, and I need not do more than mention the letter which the minister has written. Then there are the electrical appliance people. I have already referred to Empire Brass. Farm income is down from $2,154 million after expansion and depreciation in 1951 to $1,900 million in 1952 and $1,656 million in 1953. These are the latest figures I could get. Business failures are troublesome. In the first quarter of 1954 they jumped to 680 compared with 382 last year, and liabilities jumped to $17,660,000 as against $7,151,000. These are serious things.
I come to the question of the maritimes, and I want to mention only what was said yesterday about the failure to decentralize. I

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think that is a place where we can legitimately complain against the government because I think there have been neglected opportunities with regard to the position of the maritimes. When we consider the amounts we spent, first of all during the war, and even more important perhaps, since the war, I can see no reason why more could not have been done. I have in mind the answers given by the Minister of Trade and Commerce. If we had a real sense of solidarity here and a feeling that our country cannot be prosperous if a substantial section is unprosperous, then I think a more co-operative attitude might have been taken with regard to the maritimes. There is trouble in the retail trade and I shall do nothing more than refer to a speech made by Mr. Burton of Simpsons-Sears the other day in which he, himself a huge retailer, referred, with sympathy and understanding and I am sure sincerity, to the position of the smaller retailers and, incidentally, remarked on the injuries which they were suffering by that ill-omened piece of legislation, the Resale Price Maintenance Act of two years ago.
Now, we come to the United States tariff attitude and I quote from a statement made in Montreal the other day by the Minister of Trade and Commerce as reported in the Montreal Gazette for June 17:
There is an obvious surge in the world today towards freer trade, Bight Hon. C. D. Howe, Minister of Trade and Commerce, said here last night.
And he told 150 commonwealth business leaders that their countries had made "great progress in getting rid of import controls which were rendered necessary by the post-war emergency."
If one considers the over-all situation it seems to me the minister had the wrong word because we cannot talk about this situation without including the United States; and to say there is any "surge" in the United States today towards freer trade is just a misuse of words. I am afraid that if we were accurate we would say that the tide is ebbing and not flowing. At the present time there is an anxiously awaited report from the federal tariff commission, I think it is called, in which it is greatly feared that zinc, lead, and fillets may be affected, which, added to the other things already affected, would certainly not be a good thing for our exporters.
Again, Mr. Chairman, one cannot ask the government for unreasonable things, but one can, I think, ask them for direct answers to direct questions, and I suggest we are not getting them. The situation reminds me a little of the exercises in our French textbooks at school, which I have mentioned before in this house which were in the form of question and answer and often the answer had nothing to do with the question. For
[Mr. Macdonnell.l
example, the question would be, "Have you the pen of the teacher?" and the answer would be, "No, but I have the knife of the butcher." In the same way, when we ask the Minister of Finance questions, imagine for example when a manufacturer comes to him and asks him if he can do anything to help him cut down costs, or do anything about taxes, the minister would reply, "No, but you remember me speaking about sharpening pencils, curtailing the cost of management, and making labour more efficient." In addition, if I may paraphrase the answer which the Minister of Trade and Commerce has given to those who asked, have you sold the 1953 crop, his answer might be, "No, but we had 32 [DOT] 5 per cent of the world wheat trade during 1951-52."
Now, Mr. Chairman, no doubt you and the minister will be glad to know that I am almost finished, and again I might urge that what we are asking of the government is quite reasonable and that I hope the minister will make a statement today. We want the problem stated. Of course, our future is bright in the main but there are special problems at the moment and I would like to hear the government's assessment of these problems. I think we are entitled to ask the government to give us a much better performance than has been the case in the maritimes. I think their efforts at decentralization have been weak and ineffective in the extreme. If in past history there had not been much broader and more courageous views than those adopted by the government at this moment, we would not be where we are today.
Another thing I want to mention is the purchases from Britain, mentioned yesterday by the hon. member for Eglinton, and I want to reiterate what he said then about the remark of Mr. Duncan of the Massey-Harris Company, who advanced the view that by switching seven per cent of the United States purchases to the United Kingdom we could balance our trade with the United Kingdom. That, of course, brings in the whole question of defence purchases from the United Kingdom which seem to me to be far below what they might be.
The last point I wish to make is on the possibility of a commonwealth conference which has already been mentioned here today; and I wish to remind you again, Mr. Chairman, of what I quoted a few moments ago from the Minister of Trade and Commerce in which he spoke about what had been done by the United Kingdom. One would hope, not for a policy of restrictionism but a policy of liberalizing trade if and when such a conference is held.

Those, Mr. Chairman, are the comments I wish to make. I feel that we might well hope that the minister will, pursuant to what he did almost three months ago, let us know how the problem looks now from where he sits.


Mr, Quelch:: Mr. Chairman, I have no intention of inflicting a long speech on the committee at this stage of the proceedings, because after all we have had a number of discussions on monetary policy at the various stages of the Bank Act and the Bank of Canada Act.
However, there are a couple of matters I wish to draw to the attention of the minister, and a couple of problems which were raised on several occasions during the discussion on the Bank Act to indicate that certain happenings have created a situation which poses a rather serious problem.
I think the minister would agree that the grain growers of western Canada today are facing a very difficult situation, in part from the fact that a large amount of grain has not been sold and in part from the fact that there has been a serious drop in prices during the past year to the extent where the price of wheat has fallen by over 30 cents a bushel. That is not going to affect merely the grain growers. That situation is going to have an adverse effect upon the whole of Canada, because we know that when the prices of farm commodities decrease the sale of products of eastern Canada become seriously reduced in the west.
In his budget speech the Minister of Finance stated that government intervention or expenditure is not a cure for the problems of those industries when supply has temporarily outrun demand at home and abroad. The basic solution for those industries must be to produce more efficiently, eliminate waste, reduce costs, and search for new markets. The minister's statement to that effect can be found at page 3727 of Hansard.
While I think we will all agree with the soundness of that statement, nevertheless I think the minister should also have added that the situation might require a change in government policy in order to meet that situation, and a change in certain government monetary policies. In so far as agriculture producing more efficiently is concerned, I believe they are producing as efficiently now as any other industry in this country. The Canadian Federation of Agriculture in their brief made, I believe, that statement, and I think their brief supports that contention. Consequently, I doubt very much whether it is possible for agriculture today to reduce their costs any further than they already have. They have eliminated labour
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costs wherever possible by utilizing the most modern machinery and, from the experience I have had with agriculture, and it covers a period of around 40 years, I believe agriculture is operating very efficiently.
I would agree that somehow or other we will have to reduce agricultural costs in order to feed the world. The Minister of Agriculture, speaking before the FAO conference, stated that the cost of agricultural products in this country was so high that he doubted whether other countries could afford to buy them. If that statement is true, are we just going to sit down and lose our markets, or are we going to do everything in our power to make it possible for our agricultural products to compete with those of other nations in the world?
How could the minister help in that situation? There are two things that I think this government could do that would help agriculture in that matter; not only would it help agriculture but I think it would help all other exporters. First of all, there is the question of the value of the Canadian dollar.
Does the minister believe that it is really an advantage to the people of Canada to maintain the Canadian dollar at a level higher than that of the currency of any other country in the world? If our dollar was back to the level at which it was when it was 90 per cent of the United States dollar, the farmers would be receiving approximately another 20 cents a bushel for their wheat. Of course the same thing would be true with regard to other agricultural products that were exported.
The minister might argue that all other exporters are in the same position, but that is not quite true because the price of agricultural products in Canada is determined by the price at which they are sold abroad. That is not altogether true of secondary industries. They very often maintain two price systems. They sell at one price in Canada and at another price externally. But in Canada the domestic price of farm products is governed entirely by the external price. Therefore when a drop takes place abroad, the price of the commodity in Canada falls at the same time.
I do not think the minister would suggest that that is a matter that is beyond the control of the government. I think the minister would agree that there are many ways in which this government could control the value of the Canadian dollar. Of course I know he will say that if you drop the value of the Canadian dollar, it is going to cost us more for our imports. I think the main thing at the present time is to try to sell

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more exports. In order to do that we have got to maintain our goods at competitive prices. At the present time we are having to compete with nations whose currency in every case is depreciated below United States currency. That fact has placed us in a very difficult position. Of course the United States is a competitor of ours. Our currency is even above that of the United States. That is one step that the government can take that I think would greatly help the agricultural exporter.
Then there is another matter which I think deserves consideration. It is one that I have raised many times in the House of Commons since 1945. I think probably my contention will bear more weight today because there are many more people today who realize the truth or the soundness of what we have advocated since 1945, namely that it is the responsibility of an exporting country to accept the currency of importing nations for a proportion of its exports.
The United States have been selling surplus farm products under the United States mutual security act since 1951, and the foreign currency they have accepted has been used for the purpose of financing defence projects. Now, however, they are considering going far beyond that. In the U.S. News and World Report I notice a statement showing that there is to be quite a change in the administration's policy with regard to the acceptance of sterling and other foreign currencies. I put this quotation on Hansard on June 15, as reported at page 5997. I am therefore not going to quote the whole thing at this time. It is interesting, however, to note that it is a disposal plan for farm surpluses and that it has received the administration's approval. Besides being utilized for financing defence projects it can be used for the following purposes:
In addition, the president would be authorized to use the foreign money for local improvements in the buying country, to pay U.S. obligations there, to buy military equipment, to help develop new markets for U.S. farm products, or for loans to promote world trade.
In fact, it could be used for almost anything. Now it points out that they expect to be able to have better trade with India because they would accept rupees instead of demanding American dollars. That policy is bound to affect the farmers in this country because we are having to compete with the United States in the sale of our commodities.
If the United States are going to sell their farm products to the other countries of the world and to accept their currencies instead of demanding American dollars whilst we in Canada insist upon their paying us in

Canadian dollars, it is quite easy to believe that many of those nations, lacking Canadian or American dollars, will buy from the United States instead of buying from Canada because they will have the wherewithal with which to buy. I hope the minister will be able to tell us whether or not any consideration is being given to that matter.
I suppose the minister might say we are doing it to a modified extent under the Colombo plan and that is true; under the Colombo plan we accept the currency of other nations, and then that currency is invested in projects within the country concerned. But that is only done to a modified degree, to the extent of some $25 million I believe. It therefore has little effect upon our trade as a whole.
The minister may say that we could not afford to do it and he may ask: What would we do with a lot of foreign currency? On the other hand I claim that where we have surplus goods that we cannot sell, we could very well afford to do it because if we do not sell those surplus commodities, what will happen? The producers of those surplus commodities are going to be told, as they are being told from day to day by the financial press, that they cannot expect to sell goods that are not wanted, that they must realize that in the final analysis there is only one law, namely the law of supply and demand. If therefore these producers are going to have to be governed by the law of supply and demand, there is only one thing that they can do and that is to reduce their production or cut their production down to the point where there will be a greater demand for their goods, so that the demand equals the reduced supply. Then the price will go up and the surplus will disappear. But if that is done, we lose those exports entirely.
It would be far better to export those goods at the present time and to accept foreign currencies for them rather than to reduce our production so that there are no surplus goods. I would say that for anyone to suggest that the solution is to cut our production is to take a defeatist attitude. It is taking the attitude that we have got to reduce our production in order to obtain a fair price. I think it would be far better to maintain our production at a high level so long as that production is needed in any part of the world. There is no question today that our production is needed. It is largely a matter of financing. If we are willing to do as the United States apparently are now doing, namely to accept the currency of other nations, I think we would find it much easier to dispose of our surplus commodities.

There is one other point I wish to refer to. A great deal of concern is being felt over the present price of agricultural products. I would point out to the minister that he cannot suggest that the farmers of this country should be prepared to compete with the farmers of other countries, because that is not the situation. The farmers of this country are not having to compete with the farmers of the United States. The farmers of this country are now having to compete with the United States treasury because the United States treasury is underwriting the price of farm products. When the United States cut the price of wheat by 10 cents a bushel it therefore was not the farmers that took that loss because the United States government has underwritten the price of wheat at $2.20 a bushel.


Douglas Charles Abbott: I hate to interrupt my hon. friend, Mr. Chairman, but do we have to discuss wheat again on my estimates?


Mr. Quelch:: I am only discussing wheat to the extent that the price of wheat or the sale of wheat is affected by the policy of the Minister of Finance. The Minister of Finance can greatly affect the sale of wheat or any other commodity either by accepting foreign currency in payment or by changing the value of the Canadian dollar. We raised that matter in the banking and commerce committee. We asked Mr. Graham Towers whether or not he thought it would be advisable to reduce the value of the Canadian dollar. He said that was a matter that he would discuss only within four walls in giving advice to the government. He was not prepared to make a statement outside. The minister, however, represents the government. He is not under that same limitation. I hope he will be in a position either to justify maintaining the Canadian dollar at the present rate or to give us some indication that, in the near future, there will be removed the handicap which the farmers are under as a result of having to sell under an appreciated dollar. Those are the only two points I want to raise at the present time.


Douglas Charles Abbott: Mr. Chairman, I feel I should perhaps say a word about what has been said by the two hon. members. I listened with a good deal of interest to what the hon. member for Greenwood had to say. By tradition I suppose it is possible to cover a fairly wide field on the first item of the estimates of any particular department. He certainly covered the waterfront.


James MacKerras Macdonnell: I just tried to imitate the minister in a small way.


Douglas Charles Abbott: I do not intend to imitate him in that respect. It is a tradition that once
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a year the Minister of Finance makes a comprehensive and considered statement of the financial and economic position of the country and ventures into the field of prophecy. In the eight years that I have been Minister of Finance I have only ventured into that hazardous field once a year. I do not intend to break that precedent now. As a matter of fact I think it is undesirable that the minister should attempt from month to month to make new prophecies about the condition of the economy. If something radical happened it perhaps would be wise to try to give some indication, but I shall content myself with saying that nothing that has happened since I delivered my budget speech two or three months ago has caused me to change the qualified forecasts which I made in that speech.
The hon. member referred to the advances to the old age security fund. There again I dealt with that in my budget speech. I indicated that I expected there would be a further deficit in the coming year of somewhere between $40 million and $50 million and that under ordinary circumstances it perhaps would be prudent to increase the contribution in order to take care of that. I did say that it seemed to me this was not a year in which one should increase taxes if that could be avoided, and therefore I postponed making any recommendation.
The hon. member for Acadia has raised two points with which I will deal briefly. I agree with him it is extremely unfortunate that the price of one of our great export commodities, grain, wheat in particular, has fallen to the extent to which it has fallen. That has been dealt with at some length by my colleague, the Minister of Trade and Commerce. It is due, as we appreciate, to a series of big crops not only in this country but in other countries. The hon. member suggested that exports of wheat might be helped by a depreciation of the Canadian dollar. We have a free exchange now. The government does not attempt to influence the level at which the Canadian dollar is quoted in terms of other currencies. That is the position which we have taken since we freed the Canadian dollar in September of 1950.
I am not one of those who believe in the competitive depreciation of currencies. I believe that when a nation depreciates its currency the advantages are very short-run indeed. We had experience with fixed exchange rates and exchange controls over a considerable number of years. That was necessary, I think, under war conditions, but the experience after the war was not too happy. I am sure a good many members of the committee will recall the drastic

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import restrictions which we had to put in effect in 1947 when we tried to defend the fixed exchange rate of the Canadian dollar at that time. I would hesitate to invite a repetition of that experience.
Therefore I do not believe that any action which the Canadian government might take to put a fixed exchange value on the Canadian dollar could possibly be successful without pretty drastic exchange controls. I for one would not be prepared to recommend at this time a return to that form of control.
As to taking sterling for our exports of wheat, that is not a new suggestion. Again, that was dealt with by my colleague the Minister of Trade and Commerce, in the course of his remarks. I do not know of any country today in which we can sell substantial quantities of wheat for sterling, and certainly not in the United Kingdom. The United Kingdom is interested in the price of wheat but not in purchasing it for sterling. So far as India is concerned today, they are not buying wheat at all. They have notified the international wheat agreement that they do not want to take their quota. They have had a fine rice crop, a good grain crop, and they do not need wheat and are not going to buy any substantial quantity.
I understand the Poles are short of wheat, and we might take some Polish zlotys, if that is the currency that is prevalent in Poland, but I do not know just what we would do with them. I doubt if that would receive very widespread support. Taking foreign currencies for any commodity, which we do not need for purchases in the area from which we take it, is simply selling that commodity on credit and, as I have said before, assuming not only the credit risk but the exchange risk as well.
My hon. friend referred to United States sales for local currencies. I am told these are on a very limited scale. They have made some sales to Spain and they are going to use the proceeds in Spanish pesetas to pay for air bases in Spain. We are not building any air bases in Spain. I believe there are other modest sales of a similar character, but I am personally convinced that even if we were prepared to extend credit by selling for local currencies it would not substantially increase our sales of wheat. I do not know if there is any other point.


Victor Quelch: May I ask a question? The minister has read statements from time to time by officials of the United Kingdom blaming their reduction of purchases from Canada, especially farm products, on the fact that they have not got the dollars to pay for them. They may be just whistling

in the air, but they keep coming over here and making that statement. It has been made by a number of their representatives.


Douglas Charles Abbott: They are trying to urge us to buy more in the United Kingdom. They would like to get into our market as a substitute for somebody else, and if they can do it competitively they can get in here. There is nothing to prevent them. They have a preference so far as tariffs are concerned over the United States, but they are not interested in buying wheat or any other commodity on credit today, whether it is in sterling or anything else.


Victor Quelch: Why would the United States be widening the use of foreign currencies if they did not think they were going to gain markets by doing so? According to a statement appearing in the U.S. News and World Report, they are going to widen the purposes for which foreign currencies can be used. They are not merely going to use them for investment in defence projects but utilize them for practically anything at all.


Douglas Charles Abbott: The information I have does not coincide with the information my hon. friend has read in the U.S. News and World Report.


Victor Quelch: It does not coincide with that?


Douglas Charles Abbott: No.


Mr. Michener:: With respect to departmental administration, I notice there is an item for professional and special services which is a recurring item in most of the departmental accounts. Would the minister explain what kind of expenditure is covered by that item, professional and special services? I see the amount is $7,000 for this year, but there are no details in the public accounts.


Douglas Charles Abbott: That provides for legal fees and court costs that may have to be paid by the Department of Finance in the coming fiscal year. That will include the expenses of court cases, if any, which have to be settled or disposed of under the old wartime prices and trade board administration and the foreign exchange control administration. We still have a number of those cases which are going through the courts, and that is what the item is intended to cover.


Daniel Roland Michener: Mostly professional services.


Douglas Charles Abbott: Right.


Daniel Roland Michener: In the absence of the hon. member for Hamilton West I should like to draw the minister's attention to the fact that whereas last year there were two office girls and one office boy on his general staff it

appears that this year there will be two office boys. I know that will not be very popular with the hon. member tor Hamilton West and is not in line with the practice of the department presided over by the acknowledged feminist, the Secretary of State. I notice he has one office girl whereas he had one office boy last year.


Douglas Charles Abbott: I understand the lady has been promoted. We still have her on strength but her remplacante is an office boy.


[Stage Direction]
Item agreed to.
Administration of various acts and costs of special functions-
107.	The Bank Act-salaries and expenses of the inspector general of banks' office, $35,670.
James MacKerras Macdonnell: I should like to take this occasion of expressing the feeling which those of us who are on the banking and commerce committee had, that we were fortunate in our inspector of banks.


Douglas Charles Abbott: I most heartily endorse the sentiment, and I thank my hon. friend for voicing it.


[Stage Direction]
Item agreed to.
108.	Administration of the Farm Improvement Loans Act, 1944, and the Veterans Business and Professional Loans Act, 1946, $86,465.
Victor Quelch: If the present situation continues in the west and the farmers are not able to sell their grain and thereby have difficulty meeting their payments under the Farm Improvement Loans Act, I hope the government will be very lenient in allowing the banks to extend the period of time over which these loans may be repaid. I understand the banks have to get permission from the government before they can extend the period of time over which these repayments are made.


Ernest George Hansell: May I ask the minister
whether the functions of the farm loan board under the Farm Improvement Loans Act are determined-


Douglas Charles Abbott: Those are two different things, of course. Under the Farm Improvement Loans Act, the loans are made to the banks. The farm loan board is a crown corporation which has the function of making mortgage loans on farms.


Ernest George Hansell: Under what item does that come?


Douglas Charles Abbott: There is no vote for the farm loan board because it is an independent crown corporation.


Ernest George Hansell: The policy of the board is not governed by the government itself?
Supply-Finance


Douglas Charles Abbott: Well, it is governed by the government itself because the members of the board are appointed by the government, but it is a self-sustaining organization just as is Central Mortgage and Housing Corporation. I could try to answer any questions my hon. friend wanted to ask.


Ernest George Hansell: My question is this. There are some areas in Alberta where the farm loan board will not make loans. Is that decision made by the farm loan board itself or has the government any influence in that respect?


Douglas Charles Abbott: Any decision of that kind must be made by the farm loan board. I was not aware that was the case, but that is a decision that would be made by the management of the farm loan board.


[Stage Direction]
Item agreed to.
Expenses of the Royal Canadian Mint and the assay office, Vancouver, B.C.-
110. Administration, operation and maintenance, $1,145,465.
Daniel Roland Michener: This is always a very interesting operation, namely the operation of the mint. I think I read, Mr. Chairman, that the Canadian government was minting a new nickel coin made of nickel. I wonder if the minister would give us an indication of how much it costs to make a nickel?


Douglas Charles Abbott: I doubt if I have got that information. We are changing back to the five-cent coin made of nickel, which was discontinued when that material was in critical short supply. My information is that the changeback will be on January 1, next. As to the breakdown of the cost of making that coin, I doubt if we would have that breakdown. There is a profit. The mint operates at a profit, but I do not think we have the breakdown of cost as between minting subsidiary coins and the minting of 25 cent, 50 cent and one dollar silver pieces.


Daniel Roland Michener: I take it there is a running account for it, an account for the silver and the nickel which is accredited with the value of the coinage that is minted and offset by the cost of minting and redeeming it. It would be interesting to know, within an approximate figure, how much it costs to make these new nickel coins.


Douglas Charles Abbott: I am sorry, but I have not that detailed information here. I have no doubt it is available. I have some gross figures in the report of the Royal Canadian Mint, and no doubt my friend has seen them, for the calendar year 1953. There are some gross figures and the totals of expenditure which shows an excess of income over expenditure

Supply-Finance
for the mint as a whole of some $3,800,000. I have not a breakdown as between the individual mint operations.


Daniel Roland Michener: I appreciate these coins have to be minted, but if I could just get that figure I should be happy to have it.


Douglas Charles Abbott: I shall be happy to try and get it and send it to my friend.


Daniel Roland Michener: Would this be the proper place to ask about the amount of gold bullion the government has accumulated and whether during the past year the government has accumulated all the newly mined gold submitted to it by the mines of Canada?


Douglas Charles Abbott: I believe that appears in the report of the exchange fund account. I have published those figures monthly, showing the proportion of gold. At the end of May, 1954, the official holdings of gold were $1,027-3 million, and the total gold processed for the mint in the calendar year 1953-I shall have to get that figure.


Daniel Roland Michener: Practically all the newly mined gold, I take it, is being retained.


Douglas Charles Abbott: I would think so, and perhaps a bit more. There is, of course, a small amount of gold that is sold on the free market, as my hon. friend knows. Then, there is a further amount that is supplied for the use of the arts. I have not a breakdown here as to the actual figure at the end of May.


Mr. White (Middlesex East):: Is there any gold purchased from any other source than Canadian producers?


Douglas Charles Abbott: No.


James MacKerras Macdonnell: To show how right the hon. member for St. Paul's was in saying how interesting the mint was, I might say that I had a school boy visiting me here. It was his duty to go back and report on what he had seen, and I was invited to be present. He gave a most eloquent speech all about the mint and did not even mention the fact that there was such a thing as the House of Commons here.
Inadvertently, Mr. Chairman, I missed the tariff board item. The minister, in his speech three months ago, indicated that applications were mounting and-


Douglas Charles Abbott: Are we reverting to 109, Mr. Chairman?


Edward Turney Applewhaite: I called item 109 but I think the hon. member might raise his question now.


James MacKerras Macdonnell: Can the minister say anything in addition to what he said in his

budget speech as to the indication of tariff-mindedness, let us say, arising. We have seen the minister's letter with regard to wool, and it may be he thinks that with that, and what he said in his budget speech, he has nothing to add. If he took that position, I would not press him, but if he could tell us anything more about it, we would be happy to hear it. We have been in the position for 15 years, really, of having tariffs, you might say almost, let out of our lives, with all their complexity. They seem to be coming back, and if the minister can say anything about it, it might be useful.


Douglas Charles Abbott: Perhaps this might be interesting to my hon. friend. Since 1949 the board has made a number of inquiries into customs tariff on subjects which have been referred by the Minister of Finance. At present there are four references before the board, the most recent one being the inquiry into woven woollen goods under tariff item 554B. Since 1949 the board has had 160 appeals lodged with it from decisions of the Department of National Revenue, of which 11 are still pending, and there are 10 I believe that have been appealed to the exchequer court. I believe it will be apparent the board has been pretty active in recent years.


[Stage Direction]
Item agreed to.
112. Administration of employees' instalment purchase plan, including sale and delivery of Canada savings bonds to government employees, and of employees' group insurance plans, $133,451.
James MacKerras Macdonnell: This item is concerned with the annual amortization of bond discount, premiums and commissions. I notice there is an increase of $6 million.


Douglas Charles Abbott: This is vote 112?


James MacKerras Macdonnell: Yes, it is at the top of page 17.


Douglas Charles Abbott: No, that is a statutory item. My friend has the wrong item. Vote 112 concerns administration of employees instalment purchase plan.


[Stage Direction]
Item agreed to.
Contingencies and miscellaneous-
114.	To provide, subject to the approval of the treasury board, for miscellaneous minor and unforeseen expenses including authority to re-use any sums repaid to this appropriation from other appropriations, and special compensation or other rewards for inventions or practical suggestions for improvements, $1,000,000.
James MacKerras Macdonnell: I should like to ask a question regarding the large increase in the amortization item at the top of page 17.


Douglas Charles Abbott: That is a statutory item.


James MacKerras Macdonnell: Yes.


Douglas Charles Abbott: That is the annual statutory item for amortization of bond discount, premiums and commissions on new bond issues. The explanation is that bonds totalling $200 million at 2J per cent for two years and four months were sold March 1, 1953, at 97 * 85 per cent less commission, and on November 1, 1953, $700 million was sold, $400 million 2\ per cent bonds due July 1, 1955, at 93-00 per cent and $300 million 3 per cent bonds due May 1, 1958, at 97-15 per cent.
As these are mainly short-term loans the annual amortization charges for discounts and commissions are high and exceed completed or reduced amortization on matured or maturing issues by some $6 million.
The bonds are issued at a discount. The bond discount and the interest rate reflect the true interest rate.


James MacKerras Macdonnell: Can the minister spell out the actual interest rate involved in the transaction?


Douglas Charles Abbott: That was done when the bonds were issued. I cannot say offhand what it was. It is a mathematical calculation.


[Stage Direction]
Item agreed to.
115.	Cost of telephone service at Ottawa for all departments. $987,400.
Daniel Roland Michener: This deals with telephone expense. Would the minister indicate how the telephone expense of the civil service is handled. I note that in each of the departmental estimates there is an item for telephone expense. We have here an item headed, "Cost of telephone service at Ottawa for all departments". That, I take it, is the actual cost to the Bell Telephone Company in this city for telephones in all departments.


Douglas Charles Abbott: Yes; the Department of
Finance carries the cost of the maintenance of Bell Telephone Company connections throughout the various departments of government in the Ottawa city area. That includes departmental direct lines, local and private, branch exchange equipment, operators' salaries, cost of printing the government telephone directory and so on. The item in the individual votes would relate, I presume, to the long distance calls made by those departments, as well as out-of-town telephones. But this item covers only the Ottawa telephone service. If various departments have, as most of them would, telephones in other areas, those would be included in the departmental vote.


Daniel Roland Michener: I note at the end of the item there is a credit for the amount recoverable for salaries and other expenses from
Supply-Finance
other government departments using the Toronto switchboard service. The amount is $84,200. What is the mechanics of that arrangement?


Douglas Charles Abbott: I will get that information. It is an inter-office credit, of course, as my hon. friend will appreciate.


Daniel Roland Michener: It seems to indicate that the Toronto telephone arrangement is like the Ottawa one.


Douglas Charles Abbott: I am informed that we operate a switchboard in Toronto which is paid for in this vote, and we charge it back to other departments.


Mr. Noseworthy:: Who is responsible for the fact that the departmental telephone directory we receive for use is always a year behind?


Douglas Charles Abbott: I am afraid my department must take the responsibility, but I am not sure why the delay occurs.


[Stage Direction]
Item agreed to.
116.	Amount required to cover losses incurred on foreign exchange tendered in payment of accounts receivable, $5,000.
Harry Oliver White: I should like to inquire about this item for a dollar. It seems to me a few years ago one of these dollar items moved the film board to Montreal.


Douglas Charles Abbott: This is not a dollar item. The dollar mentioned there is an appropriation not required; it is a balancing item.


Daniel Roland Michener: Under what item would we discuss payroll costs, including superannuation payments? If it has been passed I would ask the minister about the increase in the contribution to the superannuation account. It was $16 million last year and it is $39 million this year, or an increase of about $22 million.


Douglas Charles Abbott: It is a statutory item, but I shall give an explanation. We have not yet reached it, but I shall have the information for the hon. member when we do reach it.


Stanley Howard Knowles: Item 653 deals with superannuation, and I shall have one or two questions to ask when we reach it. Perhaps this information could be given then.


Douglas Charles Abbott: I have the information here. The substantial increase is mainly attributable to the influx of approximately 60,000 so-called temporary employees as contributors to the superannuation account. The remainder is attributable to such things as increased permanencies in 1953, promotions and the like. In classifying those persons as permanent, and making them eligible for

Supply-Finance
superannuation, the government had to pay into the fund an amount sufficient to cover the government's share.


Daniel Roland Michener: Is the superannuation fund maintained for the federal civil service on a sound actuarial basis, or is it a fund that is being built up, and is not yet on a sound basis?


Douglas Charles Abbott: As my hon. friend will recall .-i am not sure whether he was in the house at the time-I tabled a report made by the Department of Insurance. That was the last actuarial report. It showed at that time a substantial deficit on an actuarial basis. The government is taking steps to correct that situation. We have paid into the fund, I believe, some $175 million toward making up the deficit, and have indicated that a further amount will be paid in as it becomes possible to do so. But in the meantime the full actuarial deficit is carried as a deficit, and the interest is paid each year-credited year by year-on that deficit. So I think it is quite correct to say that the fund is on an actuarially sound basis.


[Stage Direction]
Item agreed to.
General administration-
652. Comptroller of the treasury-central office and branch offices administration-further amount required, $167,010.
Daniel Roland Michener: I should like to ask a question about the university grants. I realize we have passed it, but I notice it is a little larger than last year. My information is that the total university population has been declining since war-veteran students have graduated.


Douglas Charles Abbott: That is all the better for the universities, because the grant is based upon total population, not university population. It is 50 cents per head of population as determined by the bureau of statistics; and the grant is then divided among the eligible universities, based upon university enrolments. So that if there are a smaller number they would get a higher per capita amount.


Mr. Dinsdale:: If I might refer to the matter of university grants, I believe the national conference of Canadian universities recommended changing the base of payment from 50 cents per head of our population to a basis of $125 per student. The chief reason for this suggested change arises from the fact that the maritime provinces in particular are somewhat discriminated against on the present basis. I wonder if the minister has given consideration to this recommendation.


Douglas Charles Abbott: Various suggestions have been made, of course, that the base does operate

somewhat unfairly in respect of certain provinces. But on balance the government feels the present arrangement which is based on provincial population and enrolment in universities is as fair as can be worked out at this time.


Major James William Coldwell: Unfortunately, I was out of the chamber when item 113 was called.
I notice that last week when I was away, incidentally, the minister said, as reported at page 6047 of Hansard, in connection with the Municipal Grants Act:
When that Item is called we shall have an opportunity to discuss the matter and I can indicate, in a general way, the nature of the amendments which the government has in mind.


Douglas Charles Abbott: We can revert to that for a moment. Perhaps I might say this to my hon. friend. There is something in excess of $3 million which will be paid out to various municipalities which qualify this fiscal year. I suppose it would be inappropriate for me to indicate in detail the provisions of the proposed legislation, but I can say this. It is estimated that it will involve an annual expenditure of something of the order of $6 million in all, and will approximately double the number of municipalities which will be eligible to receive a grant under the act. Other than that I do not suppose I had better say anything at this time. As I indicated in my statement, it would be available for the calendar year 1955.


[Stage Direction]
Item agreed to.
653. Superannuation and retirement acts, administration-further amount required, $13,837.
Stanley Howard Knowles: I should like to say just a few words on item 653. First of all, I must confess that the last time I addressed a few words to the Minister of Finance on the plight of superannuated civil servants, namely, the great numbers of those already retired, I thought it would be the last time I would be doing so. I thought that by the time today rolled around the Minister of Finance might have left us. I am glad he is still with us. Mr. Abbott: Thank you.


Stanley Howard Knowles: Since he is still with us, I hope he will even yet give consideration to this matter. I have no intention of repeating the many arguments-I think strong arguments-which I have given to the minister in years gone by since he first came into the Department of Finance as to why the government, as a model employer, should do something about the pensions of retired civil servants, particularly those in the lower brackets. I agree with his contention that the Public Service Superannuation Act, as

it now stands, is an excellent pension plan; certainly for those who are now in the public service the minister and the government have done well. But in the case of those who retired before the plan was put on its present excellent basis, and in the case of those who retired at such a time that their pension was calculated on the basis of the years when their rates of pay were very low, the situation is certainly nothing of which the government as an employer can be proud. I urge as strongly as I can once again that something should be done to supplement the pensions of those people.
The minister knows what the figures are, and people generally must know because I have put them on the record, and they have been published in the press a good many times. There are far too many of these faithful servants who are on pensions of $20, $30, $40 and $50 a month, which I submit is not good enough for the government of Canada.
One of the arguments the minister has advanced from time to time-I am going to confine myself today to just one argument and one reply to him-is that this pension is on the basis of a contractual relationship. He says that these people paid certain amounts into the fund at the time they were employed, and they knew what the arrangement was. He says that if you alter the amount of the pension now, it would upset that contractual arrangement. I submit, Mr. Chairman, there are other instances which are somewhat similar, where increases have been made.
I have told the minister about other governments and other private bodies until, if he has kept all the material I have given him, he must have quite a file on the matter. I want to give him one more example, one that I happen to know about in a personal way. Perhaps that is the reason I have not referred to it in the past. I happen to belong to a trade union, the International Typographical Union, which has a pension plan of its own, a very good pension plan, good enough at any rate that the Department of National Revenue has approved it.


Douglas Charles Abbott: My hon. friend is going to have two pensions, then?


Stanley Howard Knowles: As long as the Minister of Finance is around they will both be taxable, and as long as I stay in parliament I will not draw either of them.
In regard to the pension under the International Typographical Union, I would like to point this out. The amount of that pension used to be $10 a week or $520 a year. During the past ten years or twelve years it has been 83276-414
Supply-Finance
increased, step by step, until at the present time it is $20 a week or $1,040 a year. Does the minister suppose that that union pays the higher rate of pension only to those who have gone on pension since the rate was increased? Not a bit of it! That higher pension of $20 a week, or $1,040 a year, is paid to all of those who are on the pension, including those who went on it when it was only $10 a week, and including those who were contributing to it when the amounts paid into the fund were a great deal smaller than they are at the present time. I have given that example because it is one the details of which I happen to be familiar with. I know there are many other plans like that.
I want to say to the minister quite frankly that I do not think the government has a leg to stand on in insisting that it cannot do something for these people. If the minister wants to do something that will really give him a place in the hall of fame before he lays down the portfolio of finance, I suggest he pay some attention to the plight of these people and make some arrangement to increase the amount of the pensions of those already retired, particularly those in the lower brackets.


Douglas Charles Abbott: There is no purpose in my rehashing the points which I have made before. Whatever may be done under the International Typographical Union pension plan-I am sure it is very generous-we are dealing with taxpayers' money here. These things have to be paid for out of taxes levied on all the taxpayers of Canada, and a great many of those who have had to provide for their old age by contractual arrangements or otherwise do not get any automatic increase in their pensions, with this exception, that we have introduced in the last few years the old age pension plan of $40 at age 70. Most of those pensioners to whom my hon. friend refers are very elderly people, people whose small pensions are due to the comparatively short time of their service in the public service. They benefit from the $40 old age pension, payable at age 70. That, incidentally, does not apply to some of the countries to which he has referred where civil servants' pensions were increased.


Stanley Howard Knowles: I want to add one word, Mr. Chairman. The minister says that this has to be paid for out of the money of the taxpayers. The plan to which I have referred is paid for out of the money contributed by the members of the union. What happens in that case is that the older members who contributed smaller amounts in years gone by are getting larger pensions now because those who are now working are paying in

Supply-Finance
larger amounts. I am proud to belong to a union that recognizes that principle, and I should like to see this government, and society as a whole, recognize it, too.


Walter Gilbert Dinsdale: I would like to say a word on this item. I recall last year there was discussion along this line on one particular problem. It was a rather extended discussion at the time and it related to the peculiar position of the former employees of the department of soldiers' civil re-establishment and the soldier settlement board. I followed the discussion last year with a good deal of interest, as did a good many hon. members in this chamber. Apparently the arguments that were put forward impressed the minister because he promised to give the matter serious consideration. The crux of the problem is that the employees of these two departments were not in a position to become permanent employees because of a policy decision and as a result they did not benefit on the five-year basis for superannuation, which is the right of superannuated civil servants under part II of the superannuation act of 1924. The minister made the statement that if any erroneous decision had been made he would be glad to consider the whole situation and if he became convinced that any substantial injustice in principle had been done he would be glad to give consideration to ways and means of redressing it. I would like to know what the present status of this special group of employees is.


Douglas Charles Abbott: Mr. Chairman, I promised last year that I would have a very extensive individual investigation made of these cases. It is not a new question, as I think hon. members realize, and it has come up here several times before. Legal opinion has been obtained on it and it has been refused before. I had a detailed investigation made of this particular case and I have a very long statement here with which I frankly hesitate to weary the committee. In essence I can sum it up by reading the last two paragraphs:
After giving careful consideration to all arguments that have been advanced, I cannot be persuaded that the Public Service Superannuation Act leaves any substantial injustices in principle unremedied. The basis of the Civil Service Superannuation Act was that to enjoy the benefit of the five-year average salary in calculating the allowance a person had to be a civil servant within the meaning of the act on July 19, 1924. No evidence has been advanced to show that the employees in question were permanent then and any action which might have been taken to provide for them at the time, while considered, was not, in fact, taken. Thus they, along with the thousands of other temporary employees in 1924, have come under the ten year average salary for superannuation purposes.

While it is true that this is the only case of which I know where a department has been excluded
almost as a whole,-
That was the old department of soldiers' civil re-establishment.
-yet it never was made a permanent department. Even if it were decided that something should be done for those employees whom the department thought should have been made permanent in 1924, how can one be sure how many would, in fact, have been. One brief on behalf of these employees has, in fact, requested that all of them be given the benefit of the five year average which, if granted, would have been altogether unfair to all other temporary employees in 1924.
I have come to the conclusion, therefore, that I cannot recommend to the government that this benefit of the use of the five-year average salary in determining superannuation benefits be conferred on these employees.
If my hon. friend would like to have it I would be happy to send him a rather more extensive memorandum breaking down the number of individual cases, and so on.


Walter Gilbert Dinsdale: I thank the minister for that statement. There is just one other point. The minister will probably recall that the emphasis during the discussion last year was not on the legal right as defined by the act, but on the moral right. These people would have become permanent civil servants had it been possible for them to do so, and the representations which were made last year emphasized the point that according to the act they were excluded. However, because there was a moral principle involved emphasis was placed on the fact that the department should do something by way of amendment to recognize this special case.


Douglas Charles Abbott: Here again, Mr. Chairman, the difficulty was that this was considered in 1924, 1925 and 1926 and during the early thirties, and it was rejected. A great many of the civil servants who might have been entitled to benefit through a change in the rule have, of course, long since died and, as I say, 30 years later I cannot recommend that an exception-and it would be an exception- should be made for this particular group. As I said, it relates only to the average period of service, and the question of superannuation might never have been raised had it not been for the fact that there have been quite substantial increases over the past 10 years.


Stanley Howard Knowles: The minister says these people should be considered as being in a position comparable to other temporary employees who have not obtained the benefit of the five-year average provision. What impresses me about this is that representations on behalf of these former D.S.C.R. and S.S.B. employees

have been made by associations of civil servants, and I cannot imagine that an association of civil servants would be making such representations on behalf of a restricted group, if those representations seemed to be unfair to other and larger numbers in that group.


Douglas Charles Abbott: The hon. member's imagination is not as great as mine. I not only imagine it but I know it happens every day.


Stanley Howard Knowles: Perhaps the minister has a better imagination than I, but it does not seem to me to be logical and I do not think that is the way in which responsible representatives of employee organizations operate. I want to support the representations made by the hon. member for Brandon-Souris that consideration might even, yet be given to this matter on its moral basis. These people know they have lost out so far as the law is concerned, and some of them have told me that if it were merely a legal battle they would have gone to the courts rather than come here. They feel a change in the law is necessary and hence their appeal to parliament. I hope that even yet the minister will find it in his heart to give consideration to this matter.


[Stage Direction]
Item agreed to.
DEPARTMENT OF NORTHERN AFFAIRS AND NATIONAL RESOURCES National parks branch-
National parks and historic sites services-
692. Construction or acquisition of buildings, works, land and new equipment-further amount required, $98,250.
Mr. MacLean:: Mr. Chairman, I would like some information on the breakdown of this item, and I would like to know what expenditures are available for Fundy national park.


Douglas Charles Abbott: Mr. Chairman, this is a supplementary item of $98,000-odd out of the main vote in this department of $3,600,000-odd which provides for capital expenditure in national parks, national historic sites, and includes construction and so on. It is to provide for the completion of certain projects started during the last fiscal year which it was hoped could be paid for before the conclusion of that year but which it was not possible to do. It includes such items as the construction of an open kitchen-dining room at Banff government camps and replacement of certain bridges in the Jasper national park and things of that sort. It is pretty well divided among the various national parks.


[Stage Direction]
Item agreed to.
83276-414J
Supply-Northern Affairs Northern administration and lands branch-
695. Construction or acquisition of buildings, works, land and new equipment-further amount required, $581,681.
John Angus MacLean: Will the minister be kind enough to make a brief statement with regard to the removal of these two towns in the Northwest Territories and the circumstances requiring it?


Douglas Charles Abbott: I am sorry that my colleague the Minister of Northern Affairs and National Resources is not here. He would be much better informed about the matter than am I. As I think the committee is aware-an announcement was made here some time ago -it is going to become necessary to remove Aklavik from its present site, because of the condition of the terrain, to some more solid ground not too far away. This will take place over a considerable period of time. This particular item covers the expenses of the sites selection party to proceed from Aklavik to Coppermine for investigation of the area, purchase of lumber for use in the construction of buildings and other work on the new site of the Aklavik settlement. There are also some smaller items for other matters. The amount included here for the Aklavik move totals $105,000. It is considered that this, with some other items, constitute a relatively modest amount compared with the total cost, and this amount is all that will be expended this year.


Edmund Davie Fulton: Is it the intention that the dominion government should pay the whole cost of the moving of this community? Does this represent only the cost of removing dominion government property?


Douglas Charles Abbott: No. I speak subject to- correction. Since the move is being made at-the suggestion of the dominion government and since there is no organized municipal: arrangement in that area, I think the cost off removing Aklavik from its present site to a more suitable site will be borne by the federal government.


[Stage Direction]
Item agreed to.
DEPARTMENT OF JUSTICE Supreme Court of Canada-
164. Administration, $195,485.
Harry Oliver White: When the minister's estimates were before the committee previously, I inquired with regard to the work of the R.C.M.P. at Ipperwash military camp. Will the minister report now?


Mr. Garson:: Mr. Chairman, I wonder
whether I might suggest to the committee that we follow the practice of raising these matters when the police estimates are

Supply-Justice
reached? I have a number of branch heads who advise me, and I should like to have the appropriate one beside me. When the police estimates are reached, I shall be glad to deal with any matter that is raised.


Harry Oliver White: That procedure is quite agreeable, Mr. Chairman.


Edmund Davie Fulton: This is the item which, as I understand it, covers the administration of the Supreme Court of Canada. There is naturally curiosity-it is more than curiosity; I think it is a proper interest-on the part of many as to the situation with regard to the appointment of a chief justice of the Supreme Court of Canada to replace the Chief Justice who has just retired. Do not misunderstand me, Mr. Chairman. I know that the government is obviously-and quite properly-not to be expected to give any hint as to whom it has in mind before it is prepared to announce the appointment. But the question I want to ask-which is, I think, a proper one-is this: may it be expected in the near future? What is the position with respect to the imminence of the appointment?


Stuart Sinclair Garson: The appointment of the chief justice is, I think, the prerogative of the Prime Minister. I think perhaps he could answer my hon. friend's question.


Louis Stephen St-Laurent: Mr. Chairman, I would not want to say just on what day it will be made, but it is not intended that we shall all get away for our holidays before it is dealt with.


John Horne Blackmore: X think the minister was in the chamber when I was asking the Prime Minister a number of questions about Canada's policy with regard to combating communism or the communist conspiracy.


Stuart Sinclair Garson: May I make the suggestion, Mr. Chairman-as was remarked this afternoon, I think to my friend the hon. member for Lethbridge, if I am not mistaken-that he ask that question on the estimates of the Royal Canadian Mounted Police? We shall be coming to them shortly, I hope. On that occasion perhaps he would raise the matter and at that time I should be glad to deal with it.


John Horne Blackmore: If the minister is quite satisfied to have it all discussed under the estimates of the Royal Canadian Mounted Police, that is all right. However, among the things about which I was asking the Prime Minister there are, as the minister will readily recognize, a good many which would not particularly come under the jurisdiction of the mounted police. They would

come under the jurisdiction of the government at a much higher level. If the minister is quite content to have the whole discussion under the estimates of the mounted police, I shall be quite happy to wait until they are reached.


Walter Edward Harris: Carried.


John Horne Blackmore: That is agreed?


Stuart Sinclair Garson: Yes.


[Stage Direction]
Item agreed to.
Combines Investigation Act-
168. Restrictive trade practices commission, $71,668.
Edmund Davie Fulton: I want to pause at item 168 for a moment because I think it is important that we should discuss investigations now being carried on by the restrictive trade practices commission into the subject of loss leaders. The whole situation arises out of legislation which was passed here in December, 1951, and which eliminated the only protection the retail trade of Canada had at that time against this practice, that is against the loss-leader practice. We gave quite extensive warnings to the government, on behalf of the retail trade, that there was then an imminent danger that if the protection of resale price maintenance was removed, many retailers would be ruined by resort to the loss leader and to other unfair competitive practices which had been previously followed and against which the device of resale price maintenance was worked out largely by the retail trade itself.
We now find, Mr. Chairman, that the loss-leader practice has, in fact, assumed the serious proportions which we forecast at that time, in 1951. It has unfortunately to be recorded that the government to date has taken no action whatsoever to deal in a positive way with the threat which the loss-leader practice presents to the retail trade. They have taken certain preliminary steps in that they have asked the restrictive trade practices commission to investigate and consider the matter. Recently the commission has commenced public hearings. I understand that those hearings will not be concluded for a month or two yet. We are therefore faced with the situation that nothing can be done until that report comes in, and presumably nothing effective can be done until this fall, if parliament should meet in November. Hence it is probably not until at least early next year that the retailers can expect any action to protect them against what is going on.
I want to ask the minister to let us know what the thinking of the government is with respect to this matter and to give us an

indication, if he can, of the action it is proposed to take and how soon it is proposed to take it when the report is made.
I do this because the figures with regard to commercial failures are quite disturbing. I do not wish to be taken as suggesting, because it is not my intention, that the trend shown by the increased number of commercial failures results exclusively from the legislation passed in 1951 and from the subsequent reappearance of the loss-leader practice. But I do suggest that when we find on the one hand that the retail trade itself is convinced, and has stated so publicly on a number of occasions, that this loss-leader practice is closely tied up with commercial failures, and when we find on the other hand a disturbing increase in the number of commercial failures, we are justified, and unfortunately justified, in saying that the forecast which we made in 1951 is now being fulfilled.
What we said in 1951 was that the retailers required some protection against the loss-leader practice and if that protection was not given it would have disastrous results on the retail trade. The government took a much more sanguine view. They said: Oh well, we do not think the loss-leader practice will ever recur under existing economic conditions but if it does we will consider it then and we will be in a position to do something about it. I obtained recently from the bureau of statistics tables of figures showing the number of commercial failures in Canada for every year since 1949, and I should like to put them on the record because they substantiate what I have said to the effect that there is a disturbing situation in that regard.
The first figures I shall give are for all types of commercial failures in Canada reported under the provisions of the Bankruptcy and Winding Up acts. There were 1,045 in 1949, 1,275 in 1950, 1,349 in 1951, 1,434 in 1952 and 1,617 in 1953. It will be seen that while these figures do not establish conclusively that the current increase in commercial failures results from the legislation of 1951, nevertheless there has been a disturbing increase in the last two years and an increase of 183 in 1953 over 1952.
In attempting to relate this specifically to the retail trade I was told by the bureau of statistics that they do not have the figures in that form but they do have a subdivision for "total trade" which they tell me would be mainly retail establishments. The record of failures under that subheading shows the same increase in 1953 over 1952. The situation is even more alarming if you compare the first quarters. I should point out that
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the figures for 1954, the current year, are only complete up to the end of the first quarter. They show a very much more disturbing increase in the number of failures in the first quarter this year over the first quarter last year. They also show a steady increase in the first quarter of each year since the first quarter of 1951. They do show a drop in 1953, but that trend seems to have been reversed at the present time. The total figures for the first quarter of every year from 1949 are as follows: 270 for 1949, 382 for 1950, 402 for 1951, 470 for 1952, 382 for 1953 and 680 for 1954.
Taking the subheading of "total trade", which is as near as the bureau can come with respect to the retail trade figures, the figures for the first quarters of each of these years, 1949 to 1954, are as follows: 93 in 1949, 149 in 1950, 168 in 1951, 186 in 1952, 146 in 1953 which is a slight drop, and then an alarming increase to 299 for the first quarter of 1954. I put these figures on the record to show that a discussion of the position of the retail trade and the impact on that trade of the loss leader practice is not one which is carried on in the realm of abstraction. It is a very concrete and disturbing situation that we are dealing with.
That of course is borne out by the statements of the retail trade itself. I have followed the press reports of the representations made to the restrictive trade practices commission in the course of its public hearings. I have not seen all the briefs and I can only assume and accept these press reports as representing accurate summaries of the presentation. I should like to place before the committee some of the views expressed by the retailers either individually or by association spokesmen, as reported-


Stuart Sinclair Garson: Will the hon. member permit a question? Were these views expressed by retailers or other commercial concerns which had failed, or were they views expressed by retailers generally?


Edmund Davie Fulton: The views I am now coming to are those of retailers generally. I do not think any of those who appeared before the commission were in fact bankrupt or had failed. That I do not know. That does not appear from the articles. As I read the articles, they were representations made by merchants continuing in business or else by trade associations.


Stuart Sinclair Garson: The hon. member is not citing these quotations as proving his point as to the cause of any failures that took place?


Edmund Davie Fulton: I certainly am. In the extracts which I shall read I will be quoting opinions to the effect that the re-emergence of the loss-

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leader practice has a very direct bearing on the number of commercial failures.


Stuart Sinclair Garson: Yes, but these are not the explanations of merchants who themselves have failed.


Edmund Davie Fulton: That I am not able to state conclusively. I do not think any of the representations I shall be quoting were made by people who had in fact failed. Some of them may have been, but I do not think so. This is a report that appeared in the Ottawa Journal of June 2, 1954 and it deals with the hearings held in Toronto. It reads in part as follows:
John Jardine, a spokesman for the Canadian sporting goods and cycle association, said large department and chain stores "seem bent on putting the small merchants out of business. We are meeting prices in what I am sure is a suicide race", he said. "If we don't maintain these prices we are sure to go out of business."
The wholesale hardware association urged a return of legislation to stop loss leader selling.
Then there is a reference to another spokesman, Fred R. Cavers of St. Catharines, Ontario. I have not had an opportunity to look up the genealogical tree of this gentleman, but I point out that his name bears a resemblance to that of one of the members of the house. He comes from St. Catharines, Ontario, and I think that city is very near the constituency represented by the hon. member whom I have in mind. The report reads:
Fred R. Cavers of St. Catharines, Ontario, speaking for electrical appliance dealers, condemned cut price sales on vacuum cleaners and television sets in his area as "vicious and predatory business practices". Cavers claimed some merchants were advertising "nailed down loss leaders", yet fining a salesman $5 if he sold the bargain item instead of "using it as a come-on" after getting customers in the store.
That refers to the criticism made by reputable retailers that a brand-name article will be advertised at a cut price, lower than the price for which neighbouring stores are selling it, as a come-on to get the customer in the store. But when the customer is in the store he is told: Oh, I am sorry, but the last of those was sold five minutes ago, but we have so and so and such and such which we assure you is every bit as good. But the customer finds the price is quite different. That is all tied up with the loss leader practice, which does not help the consumer.
Another presentation made before the commission in Montreal, as reported in the Montreal Gazette of June 8, was made on
IMr. Fulton.]
behalf of the Quebec retail tobacco association by Mr. H. J. Garfinkel, honorary president of the association. His presentation is summarized as follows:
Mr. Garfinkel said the last defence of the retailer had been demolished with abolition of price maintenance-the selling of goods at uniform prices by all retailers.
The small retailer's profit on cigarettes, he added, had not been excessive. It was a little more than
3	cents in 1939 for a 20-cent package and not quite
4	cents for the present-day 33-cent pack.
But if the small retailers were to compete with chain stores, he said, they actually would have to take a loss of a tenth of a cent a pack.
The large stores, the brief continued, selling cigarettes only as an incidental, can afford to take this loss if it brings in customers for other goods. But the small tobacconists depend on cigarettes for more than two-thirds of their sales.
He went on to describe the emergence of bankruptcy in some very large tobacco retail concerns in the United States and said:
Only definite action on dominion, provincial, or municipal levels can save the Canadian tobacconist from the same fate.
There was another presentation on the following day, June 9, reported in the Gazette, by Mr. F. G. Samis, commercial manager of the Northern Electric Company. The report reads as follows:
Mr. Samis included among predatory price-cutters retailers selling goods at a loss as a come-on for other products. He said all price-cutting was not bad, naming progressive price-cutting and protective price cuttings as ethical practices.
Price maintenance would allow these methods, he explained, but would prevent price wars.
George Pynn, appliance manager for Northern Electric, said in reply to a question he did not know of any manufacturer who had dropped a retailer cutting prices for justifiable reasons.
Then, the last report I have, and I think it was the last session of the commission in Montreal, is taken from the Montreal Gazette of June 11 and reports the presentation made by the radio-television manufacturers association of Canada as follows:
A member of the association's delegation, Harry Marpole, of the R.C.A. Victor Company of Canada, later said bankruptcy was up considerably among his company's retail dealers since the government had removed price maintenance.
"We have experienced", he said, "in the last twelve months, approximately 10 times the number of bankruptcies among our dealers as the average of the five years preceding that period."
He said the cause was that dealers were forced to sell at prices that were too low for their budgets.
He said he did not think there had been overproduction of television sets by his company last year.
Another witness who was heard at the time of this presentation was Mr. L. P. Fournier, credit manager of the Gerin, Trudeau Company. The report states that he-
-warned that unless price maintenance was reestablished many persons of bankrupt businesses would become unemployed.

They in turn would become dependent on public support paid for by the consumers whom the abolition of price maintenance was intended to help in the first place.
I have read those quotations, Mr. Chairman, to establish that in the view of the retailers, based upon their experience, and in the view of manufacturers who supply retailers, the re-emergence of the loss-leader practice has had exactly the result it was feared it would have by retailers at the time when protection against it was eliminated in 1951. The results which we forecast this would have, unless the government brought in some concurrent arrangements which would enable the retailer to protect himself in that regard, are exactly what has happened. I should be clear on that. What has happened is what we forecast. The government did not take any action when it removed the protection, and the disastrous consequences to the retailer have followed.


Mr. Studer:: What about the consumers?


Edmund Davie Fulton: My hon. friend asks about the consumer. I have some tables here which show to what extent the consumers may have benefited. I know that the figures are rather dangerous, and I said that although the figures show an alarming increase in the number of commercial failures, I am not prepared to say that that is entirely or exclusively attributable to the 1951 legislation. In the same way I hope that my hon. friends will not say that any reduction in the cost of living has been entirely attributable to that 1951 legislation. If they do make that argument, then I still do not think they could take very much comfort from it because the reduction is so small as to be virtually negligible.
The figures for the consumer price index are as follows:	On January 1, 1952, 118-2;
January 1, 1953, 115-5; January 1, 1954, 115-7 and on May 1, 1954, 115-7. It will be seen that in the three year period there has been a reduction in the consumer price index of 2-5 points. If my hon. friends are going to take much comfort out of that, then they can attribute the whole of it, if they like, to the action taken by the government in 1951. I still do not think it will comfort them very much, nor will it comfort the consumer. The consumer will be as disturbed as we are by what is happening to the small merchant in Canada as a result of the loss of protection he is now experiencing.
I should like to review for a moment what was said back in 1951, and show that not even the action forecast by the government has yet been taken. As reported on page 2451 of Hansard for December 28, 1951, we pointed out to the government this was a danger to the retail trade and we asked them what they proposed
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to do about it. Perhaps I could ask the indulgence of the committee while I read some remarks which I made on that occasion, because I want to show how clearly we warned the government as to what might happen. Discussing this situation I said, as reported at page 2451 of Hansard for December 28, 1951:
The proof of what I am saying is found in the statement of the Prime Minister yesterday when, as set out at page 2335, he was attempting to justify the government's willingness to rush the small retailers of Canada into oblivion, and leave with a few big giants of industry the control of the distribution of goods in this country. He said:
"I made the statement the other day, and I repeat it, that if as a result of this legislation or as a result of any other condition there develops a contrary abuse, the government will consider what recommendations it should make to parliament to deal with that contrary abuse."
He was referring to the possibility of the loss-leader practice. Well, I would ask the Prime Minister or, since he is not in his seat, the Minister of Justice, just how long he thinks it will take to consider and work out that recommendation? At what stage will the government decide that it has become necessary to work out some alternative form of protection? How many retailers will have to go to the wall? How many bankruptcies will have to take place in Canada? How many small concerns will have to be taken over by the giants of the distributive trades before the government decides the time has come at which they must give consideration to some alternative form of protection for the small retailer? Will it be one, or twenty-one, or a hundred or five hundred? How many thousands will have to be lost by small retailers before the government decides it is time to act?
The minister referred me to a statement he had made previously but which, as I pointed out to him, was not an answer to that particular question. At a later stage, at the top of page 2496 of Hansard for that day, the minister did say that the government would act quickly if a serious situation developed. He said that if the loss-leader practice emerged, and if it assumed serious proportions, then they would look very carefully at section 498A of the Criminal Code to see if something could be done. We asked him if that had been effective, and he said in his knowledge it had only been used once, so that is where that matter was left.
However, at an earlier stage he said that the government-perhaps I had better read the quotation from page 2496:
Should it become apparent that section 498A is not adequate to deal with any abuse of that sort which might make its appearance, then we are in a position, because of the work which has already been done, to follow out quite quickly any policy which might be agreed upon by the government at that time. But our own view coincides with that of the committee, that as long as present economic conditions continue there is no substantial likelihood of widespread predatory price cutting or loss leaders.
I think that is all I need to quote from the previous debate. What I have quoted

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proves conclusively that the government was warned that this loss-leader practice would re-emerge. They said they did not believe that it would re-emerge, but that if it did they would be in a position to act quickly as a result of the work which had already been done.
Yet we find this serious situation confronting the retail trade of Canada, where they are being very substantially prejudiced by this practice. And what has the government done? As I pointed out earlier, it has done nothing of a positive nature. After having said they would be in a position to act quickly, the best they have been able to do is to instruct a commission to consider the matter, to hold public hearings and to bring in a report.
I suggest it is a fair inference to draw from what was said by the Minister of Justice in 1951, that the government intended us to understand at that time that it would be ready to act quickly, and that it would not be necessary for it to go about the country three years later inquiring into the matter and asking retailers to state facts which are already known; that is, that they are now suffering, and suffering severely, as a result of what was done in 1951, and as a result of that action not being accompanied by the corresponding action we asked for in 1951, to enable them to provide their own protection against the loss-leader practice.
I have made this brief review of the situation because I believe the House of Commons and the country should now hear from the minister just what the government proposes to do by way of action to protect the retail trade. And I say this because I do not believe there is anyone in the house or in the country who, if he stops to think, will not agree with me when I say that there is no more important group of people in Canada and in the maintenance of a sound economy than the small and independent retail dealers.
We believe that the health of the economy is indicated by the number of people who are self-employed, and gainfully employed, in commercial pursuits of one kind or another. We do not believe that it is either safe or healthy to see developing a tendency where the small and independent man goes to the wall, and his place is taken by the giant concern, with an inevitable drift toward a situation where everybody will be the employee of somebody else. Where everybody is an employee of somebody else, it means you will have a few giant concerns in the country for whom, in the long run, far too many people work. And it is that danger and that trend we are concerned to see dealt

with. And it is because of the desirability of preserving in Canada the maximum number of small and independent concerns that I say the government is bound at this time to indicate what action it intends to take to protect those interests.


Stuart Sinclair Garson: My hon. friend's case seems to be that, inasmuch as he alleges that commercial failures are on the increase, and that they follow the government's legislation in 1951 banning resale price maintenance that therefore the legislation is the cause of the commercial failures. This is the ancient and hoary fallacy of post hoc, ergo propter hoc- because B follows A, therefore A is the cause of B; or because A is associated with B, therefore one is the cause of the other.


Edmund Davie Fulton: Would the minister permit me-


Stuart Sinclair Garson: My hon. friend may deal with it when I have finished.


Edmund Davie Fulton: The minister has misinterpreted and distorted my argument. But I will correct it later.


Stuart Sinclair Garson: Moreover while I reject this reasoning completely, I reject with greater vehemence the premise upon which it is based.


Edmund Davie Fulton: Tell us what you are going to do for the retailer.


Stuart Sinclair Garson: I do not know that I could tell my hon. friend anything, but if he will let me make my speech I will endeavour to explain my own viewpoint.
To begin with my hon. friend has quoted figures from an unimpeachable source as establishing the commercial failures in Canada. But if he had examined those figures with a little greater care he would have seen that the bankruptcies included those estates, whether commercial or otherwise, which are under $500 in value, after deducting claims of secured creditors. He would also find there is a very heavy element in the figures he quoted of estates of wage earners where the assets of the estate are $500 or less, after deducting the claims of secured creditors.
For example, in the first three months of 1953 the total number of estates were 375, and out of that total number there were 178 bankruptcies in which the value of assets, exclusive of preferred claims, was less than $500. By no stretch of the imagination could all these, many of which involved wage earners, be regarded as commercial failures. Thus even if my hon. friend argued more logically than he did, he could not fail, since he started from a false premise, to reach a fallacy, and that is what he has reached.

Now, my hon. friend has raised this question at a time when this matter of loss leaders is under consideration by the restrictive trade practices commission. This commission is going about the country hearing from those sources from which my hon. friend quoted, commercial organizations of one kind or another who are opposed to the government legislation, and hearing also from sources from which my hon. friend did not quote, the Canadian Association of Consumers, for example, who are supporting the government legislation.
Until that report is brought in I think perhaps he would agree that the best course we could follow in this chamber is to await the considered view of the commission-the considered view which I am sure it will bring forth. But if my hon. friend did not wish to do that, at least he could have gone to an appropriate source to get figures which would have been clearly relevant to the point he was attempting to make. I suggest he could have gone to a recent study made, not by any government agency or by a royal commission appointed by the government, but by the well known firm of Dun and Bradstreet, which is an outstanding authority on commercial failures. This firm recently made a study of commercial failures. Their statistics relate wholly to commercial failures, and they include not only those cases which have got into the bankruptcy courts, but commercial failures which have not got into bankruptcy courts but which, for the purposes of my hon. friend's reasoning, are as closely relevant as if they had.
And what do they find? My hon. friend will see their finding in a recent issue of the Financial Post, that of June 19, 1954, under the heading "Why 1,093 Businesses Failed in 1953". This is a complete analysis grouped by cause of failure and by class of business. Surely here is the very point with which my hon. friend professed to deal in his speech. He was attempting to argue that it was the loss leaders, made possible in some measure as he would contend by the government's legislation in 1951 abolishing resale price maintenance, which was the cause of these commercial failures.
Well, this is the same kind of problem to which the firm of Dun and Bradstreet addressed themselves in their study. And they found that the principal causes of the 1953 commercial failures can be divided into two groups-first, underlying causes and, secondly, apparent causes. The underlying causes are 5-8 per cent neglect; 1-1 per cent fraud; 18 per cent lack of experience in the 83276-415
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line; 35-9 per cent lack of managerial experience; 13-1 per cent unbalanced experience. The footnote to the heading is:
Experience not well rounded In sales, finance, purchasing and production on the part of an individual in case of a proprietorship, or of two or more partners or officers constituting a management unit.
Then the next heading is: 22-8 per cent, incompetence; 3-1 per cent, disaster. These constitute the underlying causes.
Then, under the head of apparent causes they give: 1-3 per cent, bad habits; 3 per cent, poor health; -1 per cent, marital difficulties; 1-4 per cent, other; -4 per cent, false financial statements; -2 per cent, premeditated overbuy; -4 per cent, irregular disposal of assets; -1 per cent other; 51-3 per cent, inadequate sales; 7-8 per cent, heavy operating expenses; 18-9 per cent, receivables difficulties; 8-1 per cent, inventory difficulties; 6-7 per cent, excessive fixed assets; 3-5 per cent, poor location; 14-1 per cent, competitive weakness; -47 per cent, other.
Under the next heading:	Fire, 1-7 per
cent; burglary, -2 per cent; employees' fraud, [DOT]4 per cent; other, -8 per cent. That accounts for the whole, and there is not under either one of those headings underlying causes or apparent causes any suggestion whatever that loss leaders have been the cause of those commercial failures. This is the report of a commercial concern which is an authority upon commercial failures and which after studying this problem has brought out this report to their customers.


Edmund Davie Fulton: Of course there is not.


Stuart Sinclair Garson: By way of replying to this argument-because that is the argument he has to reply to-and if I wished to I could cite another article by Mr. Honderich, financial editor of the Toronto Star, substantially to the same effect that loss leaders were not the cause of these bankruptcies-by way of replying to this type of authentic material, my hon. friend brings into this house statistics that ignore a lot of non-commercial bankruptcies. He wants us to believe, by the simple process of his telling us so, that on the basis of the increase in bankruptcies, therefore it was loss leaders that caused the increase in bankruptcies.
It is true that commercial failures have been increasing in Canada as in the United States. A copy of an article, for example, from the New York Journal of Commerce of June 10, 1954, indicates that although resale price maintenance, as the hon. member for Kamloops well knows, is not forbidden except in three states, and in the District of Columbia of the United States of America; in spite of the fact that these conditions, as he

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appears to argue, are ideal for commercial retailers in the United States, who can indulge in resale price maintenance as much as they like; in spite of that, failures in the United States, have been higher in 1954 than in 1953 particularly in the fields of automotive retailing and household appliances. This is also the Canadian experience. But I would suggest to my hon. friend that where we have a phenomenon of that kind occurring on both sides of the line, and in the United States no abolition of resale price maintenance, but the great benefits of that which my hon. friend urges in full force there, and they have a particularly heavy rate of failures in the same lines as we have; in spite of that we on this side of the line have abolished resale price maintenance, the answer to the business failures in each case has to be found in other causes than loss leaders.
Take again a breakdown of some of these figures. It will indicate that we have no reason to believe that the increase is due in any significant degree to the resale price maintenance legislation. For example, the number of commercial failures under the heading of "furniture and household furnishings", a field in which complaints about price cutting on appliances have been numerous, have ranged from 24 in 1949 to 39 in 1951 to 64 in 1953, or an increase in 1953 of 64 per cent over 1951.
On the other hand failures under the heading of "automotive products", a field in which resale price maintenance has not been significant, have ranged for the same years from 35 to 40 to 85, an increase in 1953 of 112 per cent over 1951.
My hon. friend from Kamloops is alleging that the increase in bankruptcies is the result of these loss leaders that he is complaining about. How does he explain that there is a higher number of bankruptcies in the case where there has been relatively little price cutting, as compared with a lower number of bankruptcies in another industry where there has been a greater amount of it? By every test that one can apply to both his facts and his reasoning, his case is disproven by his own arguments, and certainly disproven by studies such as the one by Dun and Bradstreet, to which I have made reference.


Edmund Davie Fulton: Unfortunately the minister cannot deal with an argument on its merits, but has to resort to a misinterpretation of it, or at the best a careless interpretation of it. The minister has sought to twist my argument, by ignoring those parts of it where
[Mr. Garson.l
I stated that I had been careful not to attribute the whole of the effect to one particular cause, and by saying that I was doing exactly that which I said I was not doing. I could not have said more clearly that I was not claiming that simply because commercial failures had increased subsequent to the elimination of the protection against loss leaders, I was arguing that therefore the whole of the increased number of commercial failures was due to that action. I could not have said it more clearly, and yet the minister rises in his place and deliberately ignores that fact and says that I am saying that because there has been an increase in the number of commercial failures I have therefore argued that it followed that it was exclusively attributable to the government legislation in 1951. That is the kind of argument-


Stuart Sinclair Garson: Will the hon. member permit a question?


Edmund Davie Fulton: No; I shall complete my argument first. That is the kind of argument the minister tries to use, a kind of setting up a straw man to knock down that he uses to divert people's minds from the main arguments made, and in doing so of course completely failing to deal with the merits of those arguments.
Then he also carelessly jumped to the conclusion that I had not carefully analysed the figures that I quoted, and he said that I had included a lot of the failures which were not trade failures at all. It is perfectly true that I gave first of all figures for the total of all types, but I was careful to add that I had discussed the matter with the official of the bureau of statistics with whom I was speaking and he had pointed out to me this could not be presumed to be an accurate guide-


Stuart Sinclair Garson: Why use it, then, if it is not an accurate guide?


Edmund Davie Fulton: -and I therefore said, I will give a subtotal. I gave two sets of figures, the first to show the trend of increased failures in this country, then I said I was giving a subtotal which is headed "total trade", and I pointed out that the bureau told me that would be mainly retail trade. I gave that set of figures, and how on earth the minister can then stand in his place and say I was giving figures which included a number of wage earners passes my comprehension. That is the sort of argument that the Minister of Justice uses in answer to the case I was seeking to make.


Stuart Sinclair Garson: Will the hon. member permit a question?


Edmund Davie Fulton: I wish the minister had listened to me instead of sitting there with a closed mind, having apparently concluded at the outset that there could not be any merit in the case. I used the exact figures, but he appears to have sat there with a closed mind and thought that we on this side of the house would use the same sort of futile and puerile argument that he himself might have used. I can assure him that would not be the case.
Then, he goes on to give the result of a survey by Dun and Bradstreet. I have the highest regard for Dun and Bradstreet but I cannot agree when the minister says that my argument is demolished by that survey and because neither Dun and Bradstreet nor any other statistical survey has attributed the causes of bankruptcy to the loss-leader practice. If it is the loss-leader practice which has resulted in the bankruptcy of many of these retailers, then that means they are being driven out of business by the loss-leader practice followed elsewhere than in their own stores. They probably went bankrupt because as a result they could not sell a sufficient volume of goods at a price which would meet the cost of operation.


Mr. Dickey:: Would the hon. member permit a question?


Edmund Davie Fulton: Just one moment. Because of that, bankruptcy would be ascribed to one of the ordinary commercial headings with respect to that business. It is perfectly obvious that the cause of the bankruptcy would not be ascribed, in a cold statistical survey, to the fact that somebody else was following the loss-leader practice. The merchant might say, "I am being ruined by the loss-leader practice being followed elsewhere. People do not come to my store because they are being lured into other stores by this predatory practice-"


John Horace Dickey: Would the hon. member not agree that in making this study of the causes of bankruptcy Dun and Bradstreet officials would ask retailers the causes of their going into bankruptcy and if they felt that the use of the loss-leader practice by their competitors was the reason then surely they would have said so.


Edmund Davie Fulton: If the hon. member had listened carefully he would have learned that according to the second table read by the minister there was a heading referring to competition -was it "excessive competition"?


Stuart Sinclair Garson: No, competitive weakness.


Edmund Davie Fulton: Well, that is the sort of heading that would be used. Because if a merchant being asked these questions were to say, 83276-4154
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"Well, I went out of business because the fellow down the street undersold me," it is hardly feasible to expect a reputable statistical firm such as Dun and Bradstreet would draw the conclusion and put it down statistically that these bankruptcies resulted from the loss-leader practice being followed elsewhere. It is much more probable that a number of such bankruptcies would be ascribed to managerial incompetence. I suppose one might argue that the dealer, finding himself at a competitive disadvantage as a result of the loss-leader practice being followed elsewhere, should, strictly speaking, close up his doors and go out of business before he became bankrupt. Therefore, the fact that he struggled along and finally went bankrupt could in the cold-blooded realm of statistics be ascribed to managerial incompetence. But that does not alter the basic reason behind it, for it is due to the loss-leader practice-the unfair competitive practice- being followed by a number of large commercial firms, and chain stores in particular.
While the Dun and Bradstreet figures are interesting, that survey in no way deals with the case and, in fact, the minister, by this smokescreen he endeavoured to throw up, has carefully avoided dealing with the basic question, namely, what are you going to do to protect the retailer? Or is the minister asking us to draw the conclusion from his failure to deal with that question that the official government attitude at the moment is that the retailers are all wet when they say they are being severely injured by this loss-leader practice? I think we are still entitled to an answer to the question as to what the government proposes to do, and I would press the minister to give an answer.


Stuart Sinclair Garson: My hon. friend does not need to press me about giving him an answer to that question. I have said, not only during the present exchange but on previous occasions, that we had instructed the restrictive trade practices commission to examine the whole problem of loss leaders and they are at the present time engaged in holding a series of meetings in various cities in Canada hearing from retail and wholesale merchants, manufacturers, from the Canadian Association of Consumers and others. Indeed if my hon. friend from Kamloops wishes to make representations to that body as to his views on the situation with regard to loss leaders then he is quite at liberty to do so. The government intends to receive the report of this commission and to decide in the light of that report what policy, if any, it will recommend to parliament. Now, I do not know how more rationally or more intelligently a controversial problem of this sort-and it is controversial

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because by no means every person in Canada accepts my hon. friend's views on this matter; indeed there are a great many people who have views in the other direction-can be handled. The government's course is an eminently proper one and that is to have an objective examination made of this controversial question by a competent body and then base its consideration of the matter upon the report of that body.


Edmund Davie Fulton: Let me just wind up my remarks in this way. While I do not accept for a moment the minister's view as to the meritorious nature of the course to be followed, I must say it has been clearly established that if this course is to be followed, it should have been followed two or three years ago. As I indicated at the outset of my remarks, it was pointed out to the government clearly in 1951, both when the special committee of the house was sitting and in the course of the discussion which followed in this chamber, that there was the gravest danger of the re-emergence of the loss-leader practice as a result of the government's legislation. The government cannot deny that it had that danger clearly pointed out to it both by the retail trade itself and by hon. members of this house. What the minister said at that time has already been quoted by me but I will quote his words again:
We are in a position because of the work which has already been done to follow out quite quickly any policy which may be agreed upon by the government at that time.
We pointed out that the loss-leader practice could re-emerge and assume serious proportions and it did emerge and it did assume serious proportions some time ago, and yet the government is still not in any position to do anything about it.
I can only repeat what I said before, that particularly in the case of those retailers who are going to the wall, whatever action the government may take obviously comes some two or three years too late. In spite of the fact that they had repeated warnings the government declined to take action until it was too late.


Major James William Coldwell: I want to ask the minister this question in view of the discussion on loss leaders. I have heard a great deal about this throughout the country and I would ask the minister how he proposes to obtain a competitive free enterprise system and at the same time deal with this particular problem. I think it would be very difficult for the government, or indeed for any party that was wholly wedded to free enterprise and the competitive system of trade and commerce, to draw up legislation which would deal with this problem. Can the minister

answer that conundrum now, or shall we leave it until he receives the report from the commission?


Stuart Sinclair Garson: I do not mind attempting to comment on my hon. friend's question even if I cannot answer it. But by the way I think it might more properly have been addressed to the hon. member for Kamloops.


Major James William Coldwell: I agree with that.


Stuart Sinclair Garson: He is a great exponent of free enterprise and he should answer that question.


Mr. Fleming:: Do you not believe in free enterprise?


Stuart Sinclair Garson: Indeed we do and we act accordingly. That is the difference between my hon. friend from Eglinton and the members on this side of the house. The answer to the question of the leader of the C.C.F. party is this. This is the great difficulty in regard to this question. In our disposition of the problem of loss leaders which has arisen we must be careful that, in an attempt to protect certain persons against loss leaders, we do not seriously impede or even prevent the operation of free enterprise. I am glad that my friend, the hon. member for Rosetown-Biggar, asked the question. I think he probably knew this when he asked that rhetorical question. That was the reason why we have appointed a competent board to hear both sides of the case and so that we can have the best possible material upon which to judge what line of action should be taken as between preserving free enterprise on the one hand and relieving difficulties of individuals on the other.


Donald Methuen Fleming: Mr. Chairman, this debate today recalls to the minds of those of us who were in the House of Commons in December, 1951, the debate at that time which occupied some days in the house after the matter of resale price maintenance had been considered at some length in a committee of the house. It recalls an episode in which the government with great haste sought to perpetrate a hoax upon the consumers of Canada, and to seize upon a scapegoat in the form of the practice of resale price maintenance as the means by which that hoax would be perpetrated upon the consuming public of Canada.
This legislation which was enacted in December, 1951, came at a time when prices were rising swiftly in this country and when the effects of a rapidly rising cost of living were being keenly felt by the consuming public of Canada. The government was a party to the rapid rise in the cost of living

for in that year the government, not satisfied with an already too high burden of taxation which it had imposed upon the Canadian people, chose that very time to increase the burden of taxation, particularly those taxes which entered into the cost of living. That was the year in which they raised the sales tax from 8 per cent to 10 per cent. That was the year in which they raised the excise tax on many commodities that entered into the cost of living of the average Canadian household up to figures like 25 per cent and 35 per cent. That was the year in which they applied excise taxes up to 15 per cent on many commodities on which no excise tax had been levied up to that time.
We now see chickens coming home to roost in this year 1954. In December 1951 the government sought to fool the Canadian people. They sought to make the Canadian public believe that the practice of resale price maintenance was contributing to this soaring increase in the cost of living that plagued the consuming public at that time. The fact is, Mr. Chairman, that the legislation then passed, which had the effect of banning resale price maintenance, contributed nothing to lowering the cost of living. Indeed, before the inquiry conducted in the fall of 1951 in committee had run its course, the Prime Minister had given the government's whole case away.


John Whitney Pickersgill: May I ask the hon. gentleman a question?


Donald Methuen Fleming: A little later I shall be glad to have my hon. friend's question. I will pause in a moment for that purpose. As I say, the Prime Minister had given the government's whole case away when on October 15, 1951, he admitted to the house that the abolition of resale price maintenance would make no material contribution to reducing the cost of living. That admission gave away the whole government case on this point. Indeed that was apparent when the Minister of Justice sought so desperately, after the legislation was back before the house, to try to justify that legislation.
I shall now be glad to deal with my hon. friend's inquiry.


John Whitney Pickersgill: Mr. Chairman, from what the hon. gentleman has said, I infer that he is maintaining that the abolition of resale price maintenance had no effect whatsoever. If that is the case, how does the practice of loss leaders become possible after it has been repealed to any extent that it was not possible before? Either he is arguing against the hon. member for Kamloops or there is nothing in his argument.
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Donald Methuen Fleming: That is a sample of the kind of question that the Secretary of State quite frequently of late has been obtruding into the remarks of members of the House of Commons.


Stuart Sinclair Garson: Why does the hon. member, not answer the question?


Donald Methuen Fleming: He takes the floor to ask a: question, but he does not content himself' with a question. He goes on and tries to. smuggle these speeches of his into the remarks of other members.


John Whitney Pickersgill: I am learning fast from my hon. friend.


Donald Methuen Fleming: There he is again, Mr. Chairman, with springs in his trousers; he cannot keep his seat. I well recall the remark made by an eminent Ontario judge on one occasion to a counsel who kept bouncing up and down. As the Secretary of State seems to have the same difficulty I will pass on the same advice as that which was given on this occasion by this eminent Ontario judge when he addressed the counsel in these words: "Mr. So-and-so, may I suggest that you take a seidlitz powder".


Stuart Sinclair Garson: In reply to the question of the Secretary of State is my hon. friend's answer that he should take a seidlitz powder?


Donald Methuen Fleming: If the Minister of Justice will possess his soul in patience he will hear my answer to the remarks of the Secretary of State who, after all, is not interested in getting an answer. He is not even listening to anything right now. He is engaged in conversation over there. He was only interested in trying to interrupt my speech and to interpolate his own views for what little they are worth. If the Minister of Justice will now just pay attention he will hear that I have a good deal to say on the subject to which the Secretary of State referred in his comments.


Henry Alfred Hosking: Let us get on with the business.


Donald Methuen Fleming: We will get through with the business much faster if the hon. gentlemen over there will possess their souls in patience and will try to control their vagrant tongues.


An hon. Member:: Patience is a virtue.


Donald Methuen Fleming: I think my patience is as great as theirs. I can stand here as long as their tongues wag to no effect. If they wish to get on with the business, let them stop their silly interruptions.


Stanley Howard Knowles: Wag away.

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Donald Methuen Fleming: Can we get on with the business, Mr. Chairman?
I was saying that the chickens are coming home to roost. The fact is that it may have been relatively easy, as the government surveyed the situation in December, 1951, to expect that they would get away with what they were doing, because we then had a situation where there was a sellers' market; people could sell virtually whatever they had to sell. Therefore the problem of the loss leader, which is inherent in this question, did not arise in pressing form. However, in June, 1954, we have a far different situation. Competition is infinitely keener today than it was two and a half years ago. In the retail trade as well as in industry and commerce generally in this country the situation is far different. We can see arising now, Mr. Chairman, the effects that were inevitable in this legislation. It took time for those effects to demonstrate themselves, but they are demonstrating themselves today. The practice of the loss leader-a vicious practice, if ever there was one-was inevitable following upon the legislation of December, 1951.
That question of finding some way of dealing with the vicious practice of the loss leader did engage the committee that wrestled with this subject, and I recall that some hon. members opposite-the hon. member for Spadina, for instance-did try to come to grips with what they realized was a problem that would inevitably arise, namely, the loss-leader practice. They were not able to work out any satisfactory legislative formula to deal with the problem of the loss leader. That, sir, is the inherent weakness and defect of the legislation that was passed in December, 1951.
The government, determined to carry "through the project on which it had started -at that time, that hoax I have referred to, was prepared to go ahead willy-nilly, recklessly, and to see to it that legislation passed [DOT]without having put before parliament any Satisfactory legislative formula to prevent the rise of the loss-leader practice. The fact is that efforts were made at that time to devise some legislation to deal with the problem of the loss leader, but nobody was able to come up with a satisfactory legislative formula to deal with it.
But the government was not to be deterred. Loss of face was one thing they would not brook. The Minister of Justice was quite concerned at that time in trying to appear to do something in this field of competition to help the public, forgetting that he was the man -who had suppressed for ten long months in

defiance of the law of this country the McGregor report on the alleged milling combine. When the minister talks today about his belief in free enterprise, tries to make the rafters ring in this chamber, and says that he acts according to his belief, let me recall to his apparently deficient memory the fact that nobody who has held the portfolio of justice has done any more to weaken the system of free enterprise or the people's belief in it than was done by his wilful and illegal suppression of the McGregor report on the alleged milling combine.
The situation that we see today arising out of keen competition is the kind of situation which brings about a resurgence of the loss-leader practice. The Minister of Justice has not denied today the resurgence of the loss-leader practice. Indeed, he could not. It is known by everyone who has any knowledge of current commercial practices, particularly in the retail field, that the loss-leader practice is flourishing today and is doing very great harm to the legitimate retail trade. That, indeed, is the reason the Minister of Justice appointed this commission. He waited two and a half long years until the chickens had come home to roost, until this vicious practice was flourishing again, before he took any steps to initiate an inquiry into it.
Nobody quarrels with his institution of an inquiry. What we deplore is that he waited for two and a half long years to set up this inquiry. The warnings were there, given to him in December, 1951, but he just would not listen to them, and he has waited until this evil practice has flourished again before he has taken even this elementary step of beginning an inquiry into the practice. The practice is in existence. He knows it. He has been dilatory in the face of the revival of a vicious practice, a practice whose return was inevitable once parliament passed the legislation that this government imposed upon it in December, 1951.
The retail difficulties are all there today. The practice of loss-leader selling is wreaking its havoc in the Canadian retail trade. It is not confined to any one particular commodity. It has become quite widespread in the Canadian retail trade. It is accompanied by its usual evil geniuses, misleading advertising, refusal to give service, as well as those other features of the loss-leader practice which were so clearly described before the committee in its sittings in the autumn of 1951.
In a very shallow approach to this question today the minister has sought to distract attention from some very real points that

were raised by my colleague, the hon. member for Kamloops. The way he handled figures in the course of his remarks was something weird and wonderful to behold. He took the figures of commercial failures, figures which are issued by government sources and which show that the rate of commercial failures in the early months of this year is double that of a year ago-as a matter of fact it is more than double in terms of the liabilities-and sought to discount all that argument by saying that the figures included failures on the part of wage earners.
Let us just put the Minister of Justice straight on this. I have before me the publication of the dominion bureau of statistics in relation to this matter. It carries the figures of commercial failures down to the end of the first three months of this year. What do we see as to the number of failures of wage earners in this total? The total of commercial failures in the first three months of this year was 680. The number of failures of wage earners was just fifty-nine, something like
8	or 9 per cent of the total. Because the 8 or
9	per cent of wage-earner failures are included in this total, the Minister of Justice, following his concepts of logic, proposes to discard all the figures that were put before us. He knows perfectly well that it is not necessary to bring before the house any figures of actual failures. He knows all too well that there exists in the commercial retail trade today a situation which has been developing for some time under his eyes while he has been so dilatory, a situation which has become infinitely more serious and is today becoming more and more acute by reason of the flourishing of the loss-leader practice. We hold the Minister of Justice, the government-


Mr. Kirk (Anligonish-Guysborough):: Will the hon. member permit a question?


Donald Methuen Fleming: -and its legislation of 1951 responsible for the resurgence and revival of the loss-leader practice in the retail trade in Canada today.


James Ralph Kirk: Will
the hon. member permit a question? I wonder whether the hon. member has taken this fact into consideration, that we have gone from a sellers' market into a buyers' market. Where is the balance then, and why blame the Minister of Justice, the Minister of Trade and Commerce or anybody else? We have gone from a sellers' market into a buyers' market so far as retailers, wholesalers, manufacturers and everybody else are concerned.


Donald Methuen Fleming: Apparently the hon. member was not following what I said earlier because
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I said that very thing not more than ten minutes ago. He was over there talking to the Secretary of State when I was saying that very thing. I brought that point forward to illustrate the fact that the situation that exists today in the Canadian retail trade is a very different situation from that which existed in December, 1951. It was all very well for the government to put over this hoax in December, 1951, to abolish resale price maintenance without the public then being able to see the inevitable evils that would follow, but today with a buyers' market we do see the inevitable consequences, namely, the revival of the vicious practice of the loss leader.
It was inevitable once the government had this legislation passed in 1951. It has taken time for the situation to change, but the situation has changed, as my hon. friend has said. Now we see the return of the loss-leader practice, and we see it flourishing today. It is a deplorable fact that it is a practice that is doing very great harm in the retail trade of Canada today, and we hold the government responsible.


James Ralph Kirk: Would you say that is the difference between the big dealer and the marginal operator?


Donald Methuen Fleming: Pardon?


James Ralph Kirk: The
big dealer and the marginal operator-is that the difference?


Donald Methuen Fleming: I am glad to have my hon. friend raise the point about the big dealers because he might remember that the biggest retailer in Canada supported the government's legislation in 1951. We said at that time that we were fighting for the small retailer and that if you permitted the return of the loss-leader practice, inevitably you would see more small retailers close up and more and more of the retail trade of Canada being concentrated in the hands of the big retailers. That is what was said at that time, Mr. Chairman,-


Major James William Coldwell: It is after six o'clock, Mr. Chairman.


William Alfred Robinson: Do I understand that there is unanimous consent to proceed through the usual dinner adjournment?


Some hon. Members:: No.


William Alfred Robinson: There not being unanimous consent, and since it is six o'clock, I do leave the chair.
At six o'clock the committee took recess.

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The committee resumed at seven o'clock.


Donald Methuen Fleming: Mr. Chairman, prior to the dinner recess there had been some discussion indicating that there might possibly be a difference of opinion between the two sides of this house as to what may be cause and what may be effect in the present situation. Now, we may not agree on the causes, but we can agree, surely, on the effects as we see them today. And those effects are a revival, in a flourishing condition, of the vicious practice of the loss leader. And, so far as cause is concerned, whether the practice itself has brought on much or little of the present condition, the fact is that the present condition in the Canadian retail trade, one of increasingly keen competition, is the kind of situation in which the loss-leader practice was bound to be revived. And that has followed; and we say it has followed inevitably. It followed because of the enactment of the legislation in December 1951 at the behest of the government. Had that legislation not been enacted we would see today the benefits of the practices that had, before that time, eliminated the loss-leader practice from Canadian retail selling.
There are those who profess to see advantages to the consumer in a situation of this kind. Well, of course there are advantages to the consumer in a competitive situation such as we have today. Wherever you have a buyers' market, as at the present time, naturally there are advantages to the consumer-just as in December 1951, in the midst of a sellers' market the seller did possess an advantage in dealing with the consumer.
But it would be a very great mistake to think that the practice we are complaining about now, this evil loss-leader practice, has brought benefit to the Canadian public. Competition may be-and I have indicated that it is-of advantage to the Canadian consumer. But it is a very different thing to say that the loss-leader practice works to the advantage of the consumer.
There may be thought to be some shortterm advantages to the consumer in the loss-leader practice. Some consumers think that there are bargains to be had under these conditions. Well, as hon. members who have had experience in retailing well know, the fact of the matter is that the first victim of the loss-leader practice is the consumer himself, as a class.
These so-called price wars are in many cases simply fictitious. The loss leader that is put out and becomes a bait for attracting the unsuspecting public into the retail store
[The Chairman.]
is put on sale at only short intervals, then withdrawn, and more expensive merchandise is put in its place. These are but some of the phases of the loss-leader practice which have been exposed whenever inquiries have been held, whether in this country or elsewhere. And in the 308-page volume published in April following an inquiry made by the restrictive trade practices commission, at the request of the Minister of Justice, we see catalogued on page after page these iniquitous phases of the practice of loss-leader selling.
I am sure no one in the house will have the temerity to justify or defend the loss-leader practice. It is vicious from start to finish, and in every respect. And the extent to which the loss-leader practice flourishes marks also the extent to which the small retailer is placed in jeopardy, because the effect of this practice inevitably and invariably has been to concentrate retail business in the larger outlets at the expense of the small retailer.
From what I have seen of it of late in Toronto, it is the small retailer-in many cases the young veteran who established himself in business since the war-who is feeling most keenly the effects of the loss-leader as practised by larger retailers.
So let no one try to justify this practice, as though it were of some benefit to the consumer. The consumer is the person who will lose out in the long run by reason of the curtailment of retail outlets and the gradual submergence of the small retailer in favour of the concentration of business in the hands of the larger retailer.
Finally, I offer one word in reference to legislation in the United States. This afternoon the minister made some reference to this subject and sought to draw an inference from it which I suggest is not warranted, and which is not particularly material to the point at issue. It is undoubtedly a fact that there are bankruptcies in the United States in retail trade today. But in those cases it is part of the general picture of meeting competition. It is part of the general condition that exists in the retail trade today. In their case it is not the result of legislation which opens the way for the loss-leader practice.
In 45 of the 48 states of the American union there is legislation commonly called fair trade legislation which permits resale price maintenance and thus combats the loss-leader practice. The constitutionality of that legislation was upheld by the Supreme Court of the United States when it refused leave to

appeal from a decision affirming the constitutionality of this state legislation. Something of this kind would be altogether desirable in this country.
There must be legislation, Mr. Chairman, which will make it possible for business to be cleansed of the loss-leader practice. Can it be done by a legislative enactment which will specifically prohibit the loss-leader practice? Well, all that I can say on that subject is this. Out of the experience of sitting in that committee in the autumn of 1951 and through the debates of this house which preceded and followed the sittings of the committee, all I can say is that at that time at any rate no member of the committee, no member of the house, no adviser of the Department of Justice was able to bring forward a satisfactory enactment to prohibit the practice of loss-leader selling.
The hon. member for Spadina attempted to write such a section in the committee. It was found, in the view of the committee, not to offer a workable solution. If the commission that the Minister of Justice has set up and is now holding sittings is able to bring forward some legislative formula to prohibit the loss-leader practice then they will have done something that nobody has been able to do effectively up to the present time. In truth, Mr. Chairman, the effective antidote to the loss leader, the vicious loss-leader practice, is the kind of practice within industry which was permitted under the laws that existed prior to December 1951, and which is prohibited today by legislation enacted by this parliament at the request of the government.
While I have no wish to prejudge the findings of the commission I will say this, Mr. Chairman. It seems to me that if they are being asked to write a legislative provision prohibiting specifically the loss-leader practice, they have been assigned an impossible task. It will have to be left to other methods to grapple with this vicious practice, and I for my part express my regret that the government, for partisan reasons, in 1951 denied to business the opportunity of cleansing the retail trade in this country from the vicious loss-leader practice.


Mr. Yuill:: It might be interesting to the minister to get a little firsthand information pertaining to the loss-leader business. I happen to be one of those small merchants who unwittingly found himself enmeshed in these very tactics. I have been running a retail business for a number of years. I have always run it on a live and let live principle. I enjoy quite a considerable patronage in our town. It is only a small town of about 1,600 or 1,700 people. We had two other meat merchants there. We have a nice business and are doing it legitimately. Just about the
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time that I was elected to come to Ottawa a very fine supermarket was set up in our town. I know that most people who are familiar with the meat business know that the hamburger trade is perhaps the same to the retail butcher as the cough drops are to the Smith Brothers. It is very important. As a matter of fact, you cannot survive without it. I enjoyed a very large trade. I gave them the very best that was to be had. It was always fresh and good, and the price was always right. Therefore I obtained about 90 per cent of all the hamburger business in our town. I have 95 per cent of all the restaurant and hotel business. It was very important business.
So far as the hamburger was concerned, I was selling it pretty well on a break-even basis. But this famous unit came to town and perhaps they felt that the hamburger level was most vulnerable so far as my business was concerned, and they concentrated on that. The result was they were quoting hamburger at less than 25 cents a pound. They were paying the same as I was, 37 cents and 39 cents a pound for beef. You can see the effect that would have on legitimate trade.
I believe the retail merchants serve a very useful purpose in a community. We enjoy the confidence and the support, not only of the people of the town but of people from quite a distance away from the community. They were quite happy and satisfied. As a matter of fact in the twelve years or thirteen years that I have been there my business has increased about thirteen times what it was when I bought it in the spring of 1942. That should be proof enough that the people must have felt they were getting a square deal. This unit came to town with perhaps a hundred times as much money as I had, and they viciously tried to put the skids under my business as well as under the other gentlemen who were doing a legitimate business in our town. If you need any evidence, I can give it to you. I can tell you where to go and get that evidence. There is no monkey or no funny business about this; it is a reality.
I sincerely hope it will not result in two or three more cases of bankruptcy because of unfair tactics from that angle. I am not pleading particularly for myself. I am not afraid of legitimate business. I happen to be mayor of that town. I am serving my fifth term there now. I have never yet tried to discourage anyone from coming in there and opening up in opposition to my own business or to any other business. When people come to a town and make a gentleman's agreement that they are going to do business on the level and then they come out with those tactics, it is about time that this government or somebody started to reckon with that kind of condition.

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What I am saying goes for small merchants in our town or anywhere else. If I am going to be steamrollered and pushed aside because big business likes to come in there and steamroller us out of business, it is about time that this government took some action in the matter. I am not particularly in favour of price controls. I have worked under price controls and I do not relish them too much, but the minister would be well advised to consider ways and means of keeping this business on the level and to give every man the opportunity to live in a free country.


Edmund Davie Fulton: Will the minister tell us when it is expected the commission will conclude its inquiries and be able to make a report?


Stuart Sinclair Garson: I expect that they should conclude their inquiries some time before the end of August, and we would hope that the report would be available some time this fall.


Edmund Davie Fulton: They have finished in Toronto and Montreal? Are they now in the mari-times or going west?


Stuart Sinclair Garson: They are going west.


Major James William Coldwell: I am going to pass one remark. I am wondering whether I am really with "Alice" in "Wonderland". We have free enterprise parties all over the house and they are asking the government to interfere with free competition.


Edmund Davie Fulton: The hon. member for Rose-town-Biggar said a little while ago-perhaps I will not say any more; it was a private conversation. I will say, however, that the hon. member for Rosetown-Biggar knows very well that the remark he has just made is not a proper interpretation of what is asked for here. I can tell the hon. gentleman if he really expects the house to be closed by Saturday he should refrain from making that sort of remark. I suggest that as a matter of fact what the hon. member for Rosetown-Biggar would like to see, in keeping with the political doctrines to which he subscribes, is the continuance of conditions which would create a demand for government interference and control of everything. That would suit the purpose of the hon. gentleman.
We recognize that human nature has certain weaknesses and what we are trying to prevent are the abuses which will result from the kind of thing which the hon. gentleman wants continued. We maintain that these abuses are brought about under the system which is permitted as a result of the government legislation of 1951. The protection that had been worked out previously by business and commercial interests on a voluntary and co-operative basis was working well, as the
[Mr. Yuill.l
hon. member for Eglinton pointed out, in the interests of both the buyer and the seller. But it is now made illegal to follow that form of self-protection as a result of the ill-advised course followed by the government in 1951. We are not asking for any governmental protection for anyone. We are merely asking that those interested in the matter should be allowed to work out their own means of self-protection, a means which at the present time is made illegal by the government.


[Stage Direction]
Item agreed to.
Combines Investigation Act-
169. Office of investigation and research, $334,580.
Edmund Davie Fulton: Could the minister tell us what other inquiries are now in hand in the investigation and research branch?


Stuart Sinclair Garson: I cannot very well disclose those that are in hand by the investigation and research branch. I can indicate those that have been reported on to the commission itself within the past fiscal year or are still pending in some form or other. I will give the list. There is resale price maintenance of chinaware, coarse paper, household supplies, electric wire and cable, fine paper; price discrimination in hardware; the match case; resale price maintenance of soap, rubber and gasoline in Vancouver.


Donald Methuen Fleming: May I ask whether all of the reports that have been submitted have been made public?


Stuart Sinclair Garson: All reports submitted by the commission have been made public.


[Stage Direction]
Item agreed to.
Combines Investigation Act-
665. Office of investigation and research-further amount required, $43,000.
Edmund Davie Fulton: I notice that for the office of investigation and research there is this further amount requested of $43,000. I wonder if this is for the expansion in the field of investigation and research undertaken by this department. Is the minister able to comment?


Stuart Sinclair Garson: My hon. friend is quite right in his assumption that this covers a general expansion of the work.


[Stage Direction]
Item agreed to.
172.	Yukon Territory-administration of justice, $49,808.
Daniel Roland Michener: Mr. Chairman, it is perhaps rather a long jump from loss leaders to judges' salaries but I would like to say one word on that subject. I speak as a former member of the legal profession, or at least I was a member of the legal profession until last November, and I speak as one who has

no expectation of being appointed chief justice of Canada and indeed has no aspirations even to be a puisne judge. I say that in case I might be suspected of being interested. I think many of the members of the legal profession in this house are greatly concerned about the problem of judges' salaries and I rise to express the hope that the minister has not abandoned his efforts in this field because I feel there is a problem and an important one. Everyone knows the necessity for maintaining the independence, impartiality and quality of the bench.


Walter Edward Harris: This covers police magistrates, not judges.


Daniel Roland Michener: It may not be entirely in order but I want to say that I for one do hope that although we have not before us a solution we will in due course have one.


[Stage Direction]
Item agreed to.
General-
173.	Expenses of committee appointed to advise on principles and procedures relating to remission service, $10,000.
Mr. Winch:: Just a brief question. Can the minister tell us what progress has been made with this inquiry and just when he anticipates a report will be available?


Stuart Sinclair Garson: I would not think the report would be available until next year. I would not like to say exactly when but I do not think it will be available before that time. This is quite a full inquiry into the whole field of remission and parole and the committee will examine the matter carefully here and will then examine the systems they have in England and Belgium before making a report to us.


[Stage Direction]
Item agreed to.
667. Expenses of the royal commission on the law of insanity as a defence in criminal cases and on the criminal law relating to criminal sexual psychopaths, $72,250.
Edmund Davie Fulton: Can the minister give us any indication as to when the commission will conclude their study and make a report?


Stuart Sinclair Garson: That too will take some time since it is intended to be a definitive study. In addition, as my hon. friend is no doubt aware, the chairman of that commission, Chief Justice McRuer, is the chairman of another body made up of himself, Judge Kinnear and Dr. Gustave Desrochers, which is dealing with criminal sexual psychopaths. We hope there will be a simultaneous report.


Edmund Davie Fulton: Have you any indication as to when?
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Stuart Sinclair Garson: No, sir.


Edmund Davie Fulton: Perhaps they do not know themselves.


Stuart Sinclair Garson: Quite right.


[Stage Direction]
Item agreed to.
174.	Administration of the office of the commissioner of penitentiaries, including $40,000 for grants to recognized prisoners' aid societies, as may be approved by the treasury board. $375,296.
Harold Edward Winch: Could the minister tell us if there is any examination under way at the present time regarding some of the regulations in force in our penitentiaries? I fully realize that a person who breaks the law must pay the penalty and such persons must not be coddled. There is no question about that. But I do think the time has come for the revision of some of these regulations. I think they are a little bit too onerous. For example, I think an inmate of the penitentiary is allowed two letters per month. If a man is in a penitentiary for a considerable number of years it seems to me a little bit tough that he should be tied down to two letters a month, or three if he does not have any visitors for a period of four weeks. I have spoken to men in the penitentiary and they tell me they can send a letter to their wives, one to their mothers, and that is all. They cannot write their brothers, sisters, or others. I am wondering if there is any possibility of reconsidering regulations such as that and introducing some slight change for the better.


Stuart Sinclair Garson: The hon. member must be clairvoyant because it so happens that that particular matter is under consideration at the present time.


Alexander Malcolm Nicholson: The last time we had the
minister s estimates before us he had a report on this twelve-year-old boy who is serving a two-year sentence in St. Vincent de Paul penitentiary. The hon. member for The Battle-fords suggested that there certainly must be two sides to this story. The minister promised to get a report from his officers. I wonder if he has that report available?


Stuart Sinclair Garson: Yes. I have it here somewhere. I undertook with my hon. friend from Mackenzie to get a report as to how this boy was getting along in the penitentiary. This is the report. I am not going to give his name, of course, or his number:
-has been transferred to the federal training centre on the 26th March, 1954, one day after his admission to St. Vincent de Paul penitentiary. Because of his youth and need of sympathy and comprehension he was given special treatment. A scooter was provided,-

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That sounds rather extraordinary but I think those members who saw him in the penitentiary will realize that it makes sense in an exceptional case like this to provide a scooter for an inmate of a penitentiary. The report continues:
-he was given small toy trucks, a meccano set etc., etc.-and as it is known that every boy wants to be the owner of a dog, he was given a young pup. -is segregated from the older and wiser inmates-he has a room, all by himself, in the hospital wing, where he has contacts with the hospital orderlies. Takes his meals in the chief steward's office under the supervision of a trustee-inmate-works at light duties-goes to school and does much physical exercises in the gymnasium under the coaching and guidance of the P.T. instructor. Seems to have adjusted fairly well to his new mode of living and no doubt is better off here than any other place he ever went-
Then it is noted here by the conscientious officer that it was only the scooter that was paid for at public expense. The other playthings were supplied by voluntary contributions from the officers.


Alexander Malcolm Nicholson: This report supports the opinion that I expressed here. I think the content of the minister's report would indicate that the young lad is really quite a promising lad. I am sure that he is now having a better time than he ever had before. I wonder whether the minister sent along the report he placed on Hansard the last time he discussed the matter? Would he indicate whether he has sent that report along to the officers at the training school and has asked them to comment on that sort of report.
The point I am trying to get at is this. Here is a lad who, I think, should not have been in the penitentiary at any time in his life. The fact that he has had this preferred treatment from the officers at the federal training school would indicate that they think he has the makings of a citizen. But as I understood the situation before, he would be a problem of the provincial authorities and, if he gets a long enough sentence, he becomes a problem for the federal authorities. I think that the report that was placed on the record before was certainly a very one-sided report. I wish at the same time the minister would ask his officers to comment on the sort of report that he placed on the record.


Walter Gilbert Dinsdale: On June 3, when the Department of Justice estimates were before the committee, I made a short statement on the problem of after-care of the discharged prisoners. I was glad to hear the minister say that recidivism has decreased to an encouraging extent since the new reform program was instituted. I just want to pursue the matter further at this time and to obtain some further details, if possible, as to how the problem of after-care is being met by the department.

First of all may I say this. Under this item 174 I notice that again there is $40,000 set aside for grants to recognized prisoners' aid societies as may be approved by the treasury board. I presume that that amount is divided among the three voluntary societies that were mentioned on June 3, namely the John Howard Society, the Elizabeth Fry Society and the Salvation Army. I wonder whether it is possible for the minister to indicate just what the percentage of distribution is.


Stuart Sinclair Garson: I think perhaps my hon.
friend's previous remarks were confined to a local situation, and that it would perhaps be more accurate if I were to give the figures for the whole of Canada.


Walter Gilbert Dinsdale: That is fine.


Stuart Sinclair Garson: They are as follows for 195354: The Canadian Penal Association, Toronto, $1,500; the Canadian Welfare Association, Winnipeg, $3,500; the Catholic Rehabilitation Service, Montreal, $500; the Elizabeth Fry Society, Kingston, $250; the John Howard Society at the following places: St. John's, Newfoundland, $500; Halifax, Nova Scotia, $2,000; Moncton, New Brunswick, $1,000; Saint John, New Brunswick, $500; Montreal, Quebec, $1,750; Toronto, Ontario, $7,750; Saskatoon, $1,000; Calgary, $3,000; Vancouver, $3,250; Victoria, $750; la Societe d'Orientation et de Rehabilitation, Montreal, $5,000; Salvation Army public service, Toronto, $2,000. That is a total of $35,000.


Walter Gilbert Dinsdale: I wish to thank the minister for that information. As he has indicated in those figures, the support is widely distributed across the country. I think any money spent in this way is used to the best possible advantage because from any knowledge I have of the problem the only facilities available outside the penitentiary for carrying out a program of after-care are provided by these voluntary groups.
I have one further question in this regard. The minister indicated that in the case of these prisoners coming up for discharge a trained psychologist makes a thorough examination of the case. I presume that when he uses the word "psychologist" he indicates that there is just one person engaged for this activity for all the institutions in Canada.
I looked in the estimates and I note that there is a vote for one psychologist only. On this point, may I say that an employment circular was sent out from the remission service of the Department of Justice-it is competition number 54594, June 3, 1954-advertising for a clemency officer. I conclude that this is an addition to the staff and is in addition to

the psychologist who has already been referred to. Perhaps I had better complete my remarks on this topic while I am on my feet.


Stuart Sinclair Garson: Might I answer these questions now? By doing so I will not overlook any of them.


Walter Gilbert Dinsdale: All right.


Stuart Sinclair Garson: The clemency officer is not an officer of the penitentiary service at all. He is attached to the remission service, and he investigates and advises upon the exercise of clemency in remission matters. As regards the psychologist, I think my hon. friend from Brandon-Souris will find if he will look at Hansard that what I said before was that we had a psychiatrist in nearly all of the penitentiaries, and that we had likewise in each penitentiary an official who is called a classification officer but who is a trained psychologist. It may be that my hon. friend has reference to another psychologist who will come on the staff under the name of psychologist, but all our classification officers are university graduates trained in psychology, and we have them in addition to our psychiatrists.


Walter Gilbert Dinsdale: Perhaps I have misunderstood that point. I was looking specifically for psychologists and I could find a reference only to one. On the question of after-care, I am interested in the re-establishment credits that are available to prisoners. While voluntary organizations, particularly the Salvation Army, provide hostel facilities and so forth for the discharged prisoner, in the first few weeks following his discharge he is pretty largely dependent on any re-establishment credit he has built up during his stay in the institution. Has there been any increase in the per diem allowance within recent years? It was a very small sum. I should also like to know whether it is given in a lump sum or apportioned over a period of time so that the man will not, in the first flush of freedom, spend it on riotous living and get himself into further difficulty.
The same problem confronted the serviceman. There were various checks and balances on re-establishment credits so that the serviceman would make the best use of the money. In the case of a discharged prisoner the problem is of course all the greater. Finally, is it possible for the prisoner while he is in the institution to build up additional credits as the result of his work in the prison workshops and, if so, on what basis?


Stuart Sinclair Garson: Every prisoner when he is discharged gets a suit of clothes and his transportation. Prior to 1951 prisoners were paid
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-it was not by way of gift at all-a flat five cents per day for the work they did while in prison. They had the privilege of spending a small portion of that. As a matter of fact there was not too much on which to spend it and the bulk of it would be saved against release. We felt that this was a rather inadequate wage. At the present time, as the result of a change made in 1951, 15 per cent of the penitentiary inmates are being paid a wage of 20 cents per day, 45 per cent are being paid 15 cents per day and 40 per cent 10 cents per day. The great bulk of this accumulates and since it is the prisoner's own money we do not hold it back over a period of time after his release. We give him the whole amount when he is discharged.
I think I should add that he is discharged under an arrangement made before his discharge between the classification officer and the prisoners' aid society in charge of his case, such as the John Howard Society, the Salvation Army. The employment service of Canada also are interested in seeing to it that he can get employment. Therefore although he has not much money he has a pretty good chance to become re-established, particularly with the assistance he gets both from the penitentiary officials and these other re-establishment bodies.


Harold Edward Winch: Actually when a man comes out of a penitentiary he has not a great deal of money. I am told that the average is around $25. While in prison he has to spend money for tobacco and other things which he can buy at the commissariat in the penitentiary. Everything possible should be done to encourage these men to build up their own resources because if they come out of the penitentiary with a sufficient amount of money there is only a small chance that they will go back to a life of crime.
I feel there is one way in which the penitentiary officials can give greater encouragement, and I should like to commend it to the attention of the minister. In my estimation the penitentiary authorities are doing a magnificent job at the present time in the encouragement of hobbies. I know that in the British Columbia penitentiary the work, attitude and encouragement of the officials are excellent. The men are responding, and they are taking to hobbies in such a manner that some very skilled work is being done. Unfortunately, however, they are up against the problem of really making any money out of their hobbies on account of the lack of a market. I understand that in the past organized labour has always objected to anything manufactured in a penitentiary being sold on the open market, but I fail to see why organized labour should be afraid of the

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marketing of the quantity of hobby goods that would come out of our penitentiaries.
I should like the minister to give consideration to giving greater assistance to inmates in the marketing of their hobby products. I think it would give them a great deal of encouragement. It would enable them to have more money at the time of their release and to a great extent might provide them with trades which they could enter on being released. I have been asked in the past few days where I got this wonderful tie I have been wearing. It is a hand-painted tie. I have been asked by members where they can buy one. It came from the British Columbia penitentiary. It is the hobby work of one of the inmates, a chap who is serving seven years. This is not the first time he has been in the penitentiary, but now he is doing this beautiful work. Inlay work, straw work and needlework are also being carried on and some marvellous things are being done.
I am certain that what are hobbies to these men at the present time can become trades or professions if they are given a little more assistance in the marketing of their products. I hope the minister, with all his other duties and responsibilities, will see if more attention cannot be given to overcoming the problem of the marketing of hobby products.


Walter Gilbert Dinsdale: I believe that the work done in our penitentiaries extends far beyond hobbycrafts. The inmates engage in rather extensive furniture construction, shoe manufacturing and so forth. Can the minister tell us whether any of these products are disposed of to government departments? For example, public works uses considerable quantities of furniture and the armed forces use quite a number of shoes. If there is a problem in marketing these goods, as indicated by the hon. member for Vancouver East, it seems to me that might be a potential outlet. In my opinion the competition that might be provided by prison labour is greatly overexaggerated. I do not have the statistics, but I do not imagine that the total penitentiary population engaged in this type of activity would be more than 2,000. They do not work the full day because of the institutional schedule; they work only four hours a day five days a week. This would not represent a very formidable labour force, and yet it seems to me that they might find a ready market for their articles with some of the government departments. Just what is the situation in that regard?


Stuart Sinclair Garson: I want to express my gratification at the remarks which have been made by the hon. member for Vancouver East and

the hon. member for Brandon-Souris. One of the problems in providing genuine work for the inmates of the penitentiary, than which there is no greater rehabilitative agent -I mean real work and not just some make-work exercise that the prisoners do grudgingly-one of the great problems, I say, is public opinion which is opposed to having the production of prison labour come into competition with commercial articles. I am glad to have the members of the opposition express the views that they have expressed tonight.
The hon. member for Brandon-Souris is quite right in saying, and I think his figures are approximately right too, that our prisoners form such a small proportion of the total working force of the nation that the competition of their product cannot be very alarming. Actually, however, this product is surprisingly good; our production has gone up from some $600,000 to over $1,200,000, although there is included in that a lot of the goods and services which are produced by the inmates of penitentiaries for their own use. As minister I am very glad to have this expression of opinion because we are considering the matter at this time and the suggestions made by hon. members are very apropos.
With regard to the sale of the hobbycrafts, the prisoners may send their products to relatives or they can sell them to the officers or visitors in the prison. From time to time special sales are arranged by service clubs or John Howard societies, where the sponsorship of an organization of that sort invites public interest and avoids public criticism.


[Stage Direction]
Item agreed to.
175.	Operation and maintenance of penitentiaries, including supplies and services relating thereto; administration, operation, repair and upkeep of buildings, works and equipment; maintenance, discharge and transfer of inmates; compensation to discharged inmates permanently disabled while in penitentiaries. $8,497,572.
Gordon Minto Churchill: I should like to ask a question concerning the employees in penitentiaries, and the number of veterans among that group. The total of employees appears to be 1,543. Of that number I should like to know how many are veterans? In the report of the commissioner of penitentiaries on page 9, dealing with appointments for the year 1952-53, there is a statement that reads as follows:
During this fiscal year there were 244 appointments; eighty-two were veterans with overseas active service.
This means that in that year one-third of those who were appointed were veterans with overseas active service. Has the minister available the figures by institutions,

showing the total number of employees and the number of veterans in that particular institution?


Stuart Sinclair Garson: I believe I should point out, Mr. Chairman, that veterans have the usual veterans preference in appointments to the staff of the penitentiary. If there are not more veterans on the staff than there are it is not through any policy on our part. It is simply because those who would be eligible under the veterans preference for positions in the penitentiary have not applied. I will give my hon. friend the figures he asked for in just a moment.
I am afraid I have not with me the totals for the whole staff, but the total number of veterans appointed from April 1, 1953 to March 31, 1954, is as follows-this is the total number of veterans by institution: Kingston, out of a total of 30, the number of veterans was 11; St. Vincent de Paul, 4; federal training centre, 10; Dorchester, 16; Manitoba, 11; British Columbia, 29; Saskatchewan, 6; Collin's Bay, 1; there was a total of 98 in the institutions and then 4 at headquarters for a total of 102.


Gordon Minto Churchill: That is 102 veterans?


Stuart Sinclair Garson: That is 102 veterans with
overseas service.


Gordon Minto Churchill: In giving the list the minister started in with Kingston and gave the total number appointed as 30, 11 of whom were veterans. Could the minister give the same figures for the other institutions?


Stuart Sinclair Garson: Yes, certainly. St. Vincent de Paul, total 47; federal training centre, total 44; Dorchester, total 18; Manitoba, 18; British Columbia, 33; Saskatchewan, 19; Collin's Bay, 23; headquarters, 18.


Gordon Minto Churchill: I accept the minister's statement, Mr. Chairman, that the veterans preference is recognized. From these figures it is obvious that quite a number of veterans are being employed. I hope that every care is taken to see that that is the case, and at no institution are veterans applications not received. Would the minister have any knowledge of any instance of applications of veterans not being received and dealt with?


Stuart Sinclair Garson: Absolutely not, sir.


William Gilbert Weir: I should like to make an
observation or two in connection with this item. I think we all appreciate very much the improvements that have been made in more recent times in so far as our penitentiaries are concerned, and more particularly the craftwork and the training of the inmates of the institution for useful occupations when
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they go back into civilian life. In our own penitentiary in Manitoba, those of us who have had the privilege of visiting the institution recognize the very valuable groundwork of training that is being done there in fitting these people to take their part in life when they get out again.
I happen to have in my hand another little innovation which I thought indicated a very useful effort on the part of the institution. It is the publication of a little pamphlet in the form of a monthly news bulletin known as the Mountain Echo. It is a well prepared booklet having to do mostly with the institution, the life therein and some of the personnel. I look upon it as a creditable effort, and one in which those who are associated with the institution, particularly those within it, can take pride. The publication is in my opinion something that should be commended.
Then I understand an effort has been made recently to introduce sports to these institutions. From what I can gather, and from the contacts I have had with the institution in Manitoba, this innovation has played a very important part and is well accepted by those who are there. When outside teams and competitors take part in the games the results are good not only for the institution but for those from the outside, in that it gives an opportunity to see just what the rules of the game are, and it also gives the opportunity for the participants from outside and inside the institution to meet each other.
However I have risen more particularly at this time to ask the minister a question concerning the hours of labour guards who are associated with the institution are obliged to work. I realize the government introduced a 40-hour five-day week in many government services, but that it did not apply to the penitentiaries. It may well be that it is not possible to do all this at once. But I do submit to the minister-and I hope he will keep this in mind-that in my view guard duty at penitentiaries is one of the most hazardous, if one may so describe it, one of the most dangerous, and certainly one of the most nerve-straining occupations in which one could indulge. And if any branch of government service is to be recognized as being entitled to shorter hours of employment, then I suggest the guards and others in the penitentiaries are in that position.
I recognize immediately that a project of this kind would go beyond the guards. At the same time it would have to include personnel who are carrying on training, and things of that nature. At the same time I believe it would be admitted that, after all, the guards have the greatest measure of responsibility, and are perhaps under the

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greatest strain of any group in the institutions. I would hope that early steps could be taken to place them in the same position as others in the government service, so that they may have the advantage of the shorter hours of employment, and that such a program might be worked out in the not too distant future. I wonder if the minister could indicate any plans directed to that end, or if he would tell us what is being considered in this connection.


Stuart Sinclair Garson: My hon. friend from Portage-Neepawa will recall that when the Minister of Finance announced the granting of the 40-hour week in the federal civil service he indicated at that time that there were some operating services in which it was not possible to introduce that provision. The penitentiaries form one of those operating services. One of the reasons as provincial governments have found is that, in institutions such as federal penitentiaries, provincial mental hospitals, provincial prisons and the like, up until the present time the difficulties of introducing the 40-hour week have proven to be insuperable, with the result that they have not been introduced in any of those institutions. I think it is likely that the introduction of the 40-hour week in our institutions would probably coincide with that in the corresponding provincial institutions.


Walter Gilbert Dinsdale: Mr. Chairman, I have one further question.


An hon. Member:: Ah!


Walter Gilbert Dinsdale: Somebody over there is in distress.
I note at page 227 that considerable sums are set aside for construction, improvements and new equipment in the penitentiaries. In that connection I presume that, as is indicated by the heading, the new equipment concerns the extension of training programs. When the minister replies I would appreciate it if in a general way, and without giving too much detail, he would indicate the purpose for which this money is being used. I would ask him particularly to tell us how much of the vote is distributed between technical training and vocational training.
Contacts I have had with this type of work going on in the penitentiaries indicate that there is a substantial percentage of money for penitentiary training being used for the training of machinists, and that the investment in machinery is high. It is pointed out however that the enrolment in that particular type of work is low in proportion to the amount of money invested in the machines.
In the institution I contacted the suggestion was put forward that perhaps the emphasis might be placed upon broader vocational training rather than training in a specialized category, and that the net results would be more beneficial. That is, it seems difficult to get a sufficient number of prisoners interested in strictly technical training as contrasted with other vocational opportunities. What is the situation?


Stuart Sinclair Garson: I do not know where my hon. friend got the information that there is any difficulty in persuading prisoners to take, for example, machinists courses. I have been through the Collin's Bay vocational training school, and when I was there all these courses were up to their full complement. There were as many pupils as the instructors could handle. I believe that is typical. The equipment used in all the courses-plumbing, steamfitting, carpentry, masonry, machinists and the like-has been most effective in producing good results. I believe I am right in saying that the rate of recidivism is less than 15 per cent among those inmates who have taken these vocational training courses, and have subsequently been released from prison. This is a very low rate indeed when one considers that the percentage of recidivism among prisoners in the penitentiaries is up around 38 per cent in respect of previous penitentiary sentences and 77 per cent in respect of the service of previous terms in penitentiaries, reformatories or provincial jails sentences. Therefore, while this is a fairly large item of expenditure I think we get big dividends from it not only in the rehabilitation of prisoners but in the saving of future costs of maintaining them if they have to come back in prison again.


Walter Gilbert Dinsdale: I do not want to press this matter too closely. Are there any statistics indicating the numbers involved in the various trades?


Stuart Sinclair Garson: Yes, my hon. friend will find it in the penitentiary report. If he has not one I will send him one.


Gordon Minto Churchill: Just on the subject of education, I want to say one word. I will not delay the committee. Two years ago I discussed this subject and asked for more complete information with regard to the education of those who are in our penitentiaries. I note that more complete information has been supplied. I thank the minister for that. I do not for one minute think that it came as a result of my discussion in the house. I note on page 177 the complete list of excellent tables. Would it not be much better to show the recidivists by the same system as is

shown elsewhere. On page 177 the recidivists are grouped under school grades 1 to 13 rather than putting them into the more normal division of elementary and high school. I suggest that that is a change for another year.


Stuart Sinclair Garson: I would be inclined to agree with my hon. friend, but those statistics are prepared by the dominion bureau of statistics.


Gordon Minto Churchill: Pass the word on to them.


Stuart Sinclair Garson: Fine.


James MacKerras Macdonnell: I want to ask a question by reading a sentence from page 12 which refers to overcrowding conditions. I understand that this has not been mentioned before:
Owing to the overcrowding conditions at these two institutions,-
The reference there was to St. Vincent de Paul penitentiary and Kingston penitentiary. -transfers were arranged to Dorchester and Manitoba penitentiaries where more accommodation was available.
Will the minister say a word as to overcrowding? It seems to me to be a serious matter. I should like to know whether this is further taken care of, or are arrangements in hand to take care of it.


Stuart Sinclair Garson: The answer to the question that was asked a moment ago by the hon. member for Brandon-Souris is that these moneys were being spent largely for buildings, and this is also the answer to the question which my hon. friend has just asked. We are providing in these estimates that are under consideration fairly substantial sums of money to increase our accommodation for prisoners.
The fact of the matter is that our penitentiary population reached its low point in 1943, at which time it was slightly under
3,000	inmates. It stood fairly constant until about 1943, and from that time started to increase, and has increased pretty steadily year by year, until as of April 30 of the present year it went over the 5,000 mark. We have had to receive these inmates, and house and care for them.


James MacKerras Macdonnell: Are these figures strictly comparable? Do they refer to exactly the same classes?


Stuart Sinclair Garson: That is the total population of the penitentiaries, and that has presented a substantial problem because it is an increase of 66 per cent in a fairly short period. And that is one reason why we appreciate the suggestions of the hon. member for Vancouver East and the hon. member for Brandon-Souris about finding greater acceptance of the products of prison labour. We have not only to house those prisoners, we have to
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keep them employed at some useful occupation. This heavy increase in penitentiary population has come about notwithstanding the fact that we have been able to improve the rate of recidivism of those inmates who are discharged from the penitentiary. Usually it is not our own graduate coming back upon us. We have been holding down our own rate of recidivism; but as the rate of recidivism from our institutions went down the rate of crime in society generally has been going up.
One of the purposes of our commission on remissions is to see if we cannot by some different system of parole, not only remission in the federal field but also parole in the provincial field, have a smaller number of inmates in our provincial prisons or federal prisons to take care of in proportion to the total number of prisoners convicted. On the American continent we have as compared with Britain and some of the European countries a quite high percentage of prisoners who upon being convicted are sentenced to imprisonment in our institutions. If we were able by a new system of parole or remission to cut that percentage down it would be one way of reducing the prison population both in our federal and in our provincial institutions. As matters have been up to the present time, we have just had to accept this increase in persons sentenced to imprisonment in federal penitentiaries. We have had very little control over this ourselves. We try to keep the factors over which we have control in order. It is the factors over which we have no control which are not in good shape. As a result we have to accept these prisoners and make provision for them.


[Stage Direction]
Item agreed to.
Royal Canadian Mounted Police-
407. Administration, operation and maintenance, $7,223,936.
Edmund Davie Fulton: I have a question or two about this item. I understood that the Royal Canadian Mounted Police were acquiring a large building out here as a new headquarters at a cost of some $6 million. I do not find it listed anywhere under acquisition of buildings, works, land and new equipment, or under the administration item or anywhere else.


Stuart Sinclair Garson: I am afraid that I cannot assist my hon. friend in that regard. We are the occupants of it as the mounted police, but the purchase of it would be arranged through the Department of Public Works.


Edmund Davie Fulton: That is different from the other items in the minister's department. There

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is a substantial amount provided for acquisition or construction of buildings and works for the Royal Canadian Mounted Police.


Stuart Sinclair Garson: I think my hon. friend will see in the details that they are for the most part buildings and works for detachment headquarters, and residences for officers, scattered throughout Canada.


Edmund Davie Fulton: The details are not given, but that is the explanation. It is being acquired by the Department of Public Works. Has the minister readily available information as to the total number of officers and men in the force and a comparison of the number of officers and men who are accounted for under this first item, headquarters administration, national police services, and so forth, and the number of men who are accounted for under officers and men under land and air services, and marine services.


Stuart Sinclair Garson: The figures that my hon.
friend wants are as follows: Headquarters administration, the present strength 335; national police services, present strength 97; training establishments, present strength, 540. The grand total of these, 972. Does that cover the point?


Edmund Davie Fulton: That is the first part. I take it that the figure of 540 covers recruits undergoing training as well as the administrative personnel of this department?


Stuart Sinclair Garson: Yes.


Edmund Davie Fulton: Then I come to the other part of the question. Could the minister say the number of officers and men accounted for under the items for land, air services, and marine services? The total would do.


Stuart Sinclair Garson: The present strength of the land services is 3,639; the air services 32; and marine services 210.


Edmund Davie Fulton: I suppose the grand total would account for the pay figures.


Stuart Sinclair Garson: No, there are other items. We have 455 civilian employees.


Edmund Davie Fulton: But they would not be covered under the pay item dealing with members of the force.


Stuart Sinclair Garson: They come under that total. There is another item covering 917 civil servants but they come in under a different primary. My hon. friend can therefore leave out the figure 917, but the remaining 455 civilian employees are included in the total he has before him.


Edmund Davie Fulton: Are they stationed at headquarters or included in the land, air, or marine services?


Stuart Sinclair Garson: I do not know what my hon. friend is looking at but if he looks at the grand total of pay for the forces then that will include all the items we have stated, namely, headquarters administration, national police services, training establishments, land, air, and marine services, and civilian employees.


Edmund Davie Fulton: Then I will come to the reason for my question. I notice that under this first item, which puzzles me, details of which are given at page 474, there is an item listed for pay for members of the force amounting to $4,385,630. Then under item 409, details at page 476, there is an amount of $14,132,180 for pay for members of the force. And under item 411 details of which are at page 477 there is an item covering the marine services in relation to pay of members of the force, amounting to $900,151. My question was directed to the fact that the total pay for the headquarters staff members of the force is over one-quarter of the total for the land, air, and marine services. The total for the headquarters staff is $4,385,630 while the total for the services other than headquarters is approximately $15,032,000. Therefore more than one-quarter of the pay of the members of the forces is devoted to the pay of those at headquarters. That is why I asked for the breakdown because it occurred to me to ask whether that is not a rather high proportion of the total personnel of the force. It appears there is approximately one-quarter of the total force stationed at headquarters. I realize my comment might have to be modified and that this apparently includes the training establishment. That is why I would like to be certain that the figure of 540 is inclusive of all the recruits who are undergoing training and does not merely indicate administrative personnel.


Stuart Sinclair Garson: I do not know whether my hon. friend has this breakdown before him but the total to which he refers does include 425 constables who are undergoing training. That is to say they are not included there in the training establishment, but from time to time there will be constables at this training establishment receiving training who would normally be elsewhere and that loads the headquarters payroll by the 400-odd constables who come to headquarters from time to time to take training courses in these training establishments.


Edmund Davie Fulton: That is the factor which probably explains the high proportion who are

on headquarters strength. Now does this training establishment, whose strength has now been given as a total of 540, include those at the training establishment here in Ottawa, or does it cover whatever other training establishments there may be elsewhere? I understand there is a training establishment at Regina. Would that be carried on headquarters strength?


Stuart Sinclair Garson: This item does exactly what it says. It covers training establishments at Ottawa or elsewhere. The main training establishment outside of Ottawa is at Regina.


Edmund Davie Fulton: All attributed for this purpose to headquarters?


Stuart Sinclair Garson: Yes. It includes two superintendents; four inspectors; one sub-inspector; one company sergeant major; eight staff sergeants; 19 sergeants; 32 corporals, 425 constables; and 48 special constables.


Edmund Davie Fulton: What about recruits? Would they be included in the total for the purposes of pay?


Stuart Sinclair Garson: The recruits are included in the 425 constables.


Edmund Davie Fulton: One other matter in this regard which is common to the detail in all three of the main divisions deals with headquarters, and land, air, and marine services. I notice, for example, by reference to page 474 of the details with respect to civilian personnel that there is an item covering approximate requirements for increases in rates of pay amounting to $92,000. When it comes to pay of members of the forces amounting to $4,385,630 and other items relating to the force there is no provision for any increase in the rates of pay. I am wondering whether the increases in rates of pay which have been provided or are in contemplation are, in fact, confined to the civilian personnel?


Stuart Sinclair Garson: As my hon. friend will recall from time to time during the period he has served here in the House of Commons there have been increases in the rates of pay of the members of the force; I refer to the actual constables, officers and so forth of the force. The increases applicable to officers and members of the force are so provided, whereas these civilian employees come under the civil service rates and have to be set up separately.


Harry Oliver White: Is the minister now in a position to give a statement or report on the Ipperwash matter?
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Stuart Sinclair Garson: Yes. I think I have that here, Mr. Chairman. As my hon. friend will recall, the question he asked is set out at page 5486 of Hansard. I do not think it is necessary for me to read that question into the record again. The report that I have with regard to that matter is as follows. It takes the form of a letter dated June 14, 1954, from deputy commissioner J. D. Bird to myself relative to the question which my hon. friend asked. It reads as follows:
Re: Theft of stores from Department of National Defence (Army)-Camp Ipperwash, Ontario
The news clipping from the Free Press,-
I suppose that would be the London Free Press.
-dated April 30, 1954, and the page from Hansard of June 3, 1954, forwarded with your memorandum of 7-6-54, are returned herewith.
A review of all reports on file at this headquarters which deal with this investigation, has been made. There is no indication that a civilian was stopped on a street to effect seizure of any article. The news clipping indicates that a Thed-ford man was stopped on the street and his shoes removed. We have no report of such an incident having taken place. Further, reports do state that on two occasions, civilians were found to be in possession of army footwear and, as they had no other shoes, the civilians were allowed to retain them until they were able to purchase others and then hand over the army boots to our investigator.
This investigation is being conducted to ascertain whether or not infractions of the pertinent sections of the Criminal Code of Canada have been contravened (sections 433 and 439) and, in some cases, exhibits have been handed over voluntarily and, in others, were seized under the authority of a search warrant. We have no record of any case where one of these procedures was not followed.
That is to say, they were either handed over voluntarily-which would be quite lawful-or they were seized under the authority of a search warrant, as I correctly surmised when my hon. friend asked the question the other day. Hence there is no impropriety of any kind.


Harry Oliver White: I thank the minister.


John Horne Blackmore: I realize that the minister would like to finish these estimates tonight, Mr. Chairman. I am wondering whether he would rather go on with the other items and let me say what I have to say later on or whether he would rather let me say what I have to say now?


Stuart Sinclair Garson: I have no preference, Mr. Chairman. If there are no other points that any of the other hon. members wish to raise, perhaps my hon. friend might make his remarks now.


Edmund Davie Fulton: I have one or two items I want to ask about later on.

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John Horne Blackmore: The minister was in the house this morning when I began asking the Prime Minister concerning his preparations to meet communism. My own feeling is that, as a nation and as individuals, we are not taking communism nearly seriously enough and that we are not taking anything like the measures we ought to take to cope with it. That is why I asked the Prime Minister those questions this morning. I think probably it might be well just to review those questions briefly so that we shall have them in our minds as I begin asking the questions I desire to ask.
I asked the Prime Minister first of all whether he intended to win the cold war. He implied that he intended to do so all right, but he did not say it as though he meant it very much, as far as I was concerned. This being so, what has he done in that respect, since last August 10, designed to win the cold war? The Prime Minister did not get around to answering that question at all. I should like to know what the Minister of Justice would say with respect to that matter. If I conceive the matter aright, the minister is the custodian of the internal security of Canada just as the Minister of National Defence is the custodian of the external security of Canada. If the minister disagrees with my conclusions in any of these respects, he might tell me so. Is that not a satisfactory way of putting it?


Stuart Sinclair Garson: Yes sir.


John Horne Blackmore: Then we shall proceed on that basis. If that is the case, one would naturally conclude that the Minister of Justice would have charge of moves made to offset the attack of communism. In other words, in the cold war he would not be remaining just on the defensive. He would be counterattacking and he would be able to give us the measures which he had used in the counter-attack. He would also be able to give us some idea concerning the success or the lack of success of his attack. I may be all wrong, Mr. Chairman, but I have not been able to find a single measure on the part of Canada that could by any stretch of the imagination be looked upon as a Canadian attack. We just seem to be sitting here in Canada like a lot of sitting ducks and to be letting the communists blaze away at us with all their methods of propaganda, shedding the shot as best we can and hoping that we shall be able to survive the last one. That is just the impression that Canada gives me.
I hope I am wrong but I am afraid I am right. I should like to open up that whole matter and to have the minister talk frankly to us as he likes to do. I admire the way the minister talks frankly to us and takes us 
into his confidence. I should like to hear from him. I am really anxious about this whole thing.
I asked whether the Prime Minister had had brought to his attention the communist over-all plan. The communists never stop. They have never stopped since 1917. In fact, the people who built up communism before 1917 were at work for many generations before that time. They never miss a trick. They never lose a play. They never stop. Long before they have won one victory, they know what the next victories are going to be and where they are going to strike. For example, I point to Guatemala. I imagine that they had the taking over of Guatemala all planned five years ago. I just hope that they are not planning on taking over British Columbia next. Certainly they have the stage all set for British Columbia next. That is just how close danger could be to us, I am afraid. Of course, I am not reflecting on the vigilance of the people in charge of British Columbia.
But later in the course of my remarks I probably will refer to a rather alarming article which appeared in the Financial Post of December 12, 1953. I think I will send it to the minister. Has he seen it? Then I take it he knows what is in the article. It certainly spoils a person's sleep for several weeks to contemplate that. That article says that there are 90,000 communists in British Columbia, and they are probably all ready to march. The writer of the article says 90,000, and in a general way I think he is not a man who should be disregarded.
Therefore I am afraid the Prime Minister would have to say that he had not done a single thing since August 10 to meet this situation. He did not know anything about the communist over-all world plan and he had not done anything to meet the offensive which is coming into Canada constantly from communist countries in the form of a cold war. I asked the Prime Minister also what specific measures he has taken to offset communism in Canada. How much does he know about the state of affairs in Canada?
I asked him particularly about three matters. What has he done to find out what are the techniques that communism has employed; what is the degree of success that communism has attained in Canada, and what are the possible means available to Canada to combat communism in Canada?
I am afraid the answer to every one of these three would be just plain nothing. If that is the case, then probably the responsibility rests on the minister.
If at any time he wishes to put me right as I go along I will welcome his speaking

because I have no desire at all to misrepresent the situation as it is. I have all respect for the minister. Then I asked: Does the Prime Minister know specifically what is the communist line in America for 1954? I pointed out that if a person knew what their line is in 1954 he would be able to tell when anyone spoke supporting that line. If anyone should speak supporting that line we would say at once, "That fellow is a communist, he will bear watching".
I asked the Prime Minister if he knew what the communist line was in 1953. There has been a change. They change their line every once in a while just like skilful players of chess, checkers or any other game. As a matter of fact, the communist high command just plays across the world like a skilful performer playing the piano. It just has us so completely dazzled, so completely bewildered that we do not even know what is going on. All we know is that something is happening to us but we have not the slightest idea what is causing it or how it is being produced. In many cases we blunder right into their line and help them just like a person playing checkers who jumps his own man. That is my general impression with respect to this matter.
I wanted to give the Prime Minister an idea of the sort of thing with which he is confronted here in Canada. I offered to read a passage from a broadcast in May and to comment on that broadcast. I want to be perfectly fair in every way both to Canada and to the man concerned. The other day I asked the question:	Who selected J. B.
McGeachy to be on the Speakers' list of the C.B.C.? There are several reasons why I asked that question. As hon. members will recall, I did not accuse Mr. McGeachy of being a communist. I did not accuse him of being disloyal. Some people try to make out that I did but I did not. But I was concerned. Let me read a short passage from his broadcast of May 9 as it was monitored to me. There may be errors in these words but I think they are accurate. Those who got them got them pretty accurately. He is talking about the Indo-China situation at a time when we were all greatly concerned about Indo-China and wondering if there was not something we could do to stop the progress of the Chinese communists, representing the Russian communists, into Indo-China. Here is what he told the Canadian people:
But without going in for prophecy, I will venture these opinions: First, that the best result to be hoped for in Indo-China is an armistice, followed by some compromise arrangement which, if possible, will give the Indo-Chinese a chance to decide what form of government they prefer; and second, that the west must come somehow to terms with, and live with, the Asian social revolution-
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Notice the words, "social revolution", which it is not.
-whether it takes a communist form or. as in India, Pakistan and elsewhere, a non-communist form. No amount of military force exercised by the west will decide, from this day forward, the destiny of any Asian state.
May I tell the house how that affects me. In the first place, we were hoping to contain communism. I do not think there is anyone in the house who relishes seeing China extend her control to all of southeast Asia, including India, Pakistan and Burma, and then to Japan, Malaya and the Philippines. Is there any person in this country who would contemplate a prospect like that with equanimity? Is that not exactly what this man is suggesting?


Daniel Roland Michener: On a point of order, as I understand it we are dealing with the estimates of the Royal Canadian Mounted Police. As far as I know their jurisdiction does not extend to southeast Asia, and it seems to me-


John Horne Blackmore: I did not get the last
words.


Daniel Roland Michener: The jurisdiction and responsibility of the Royal Canadian Mounted Police do not extend to southeast Asia. If we are to finish these estimates tonight, I suggest that we stick to the point. Not only is the hon. member out of order but he has made some highly improper aspersions against a very reputable journalist by the name of McGeachy who is a person known to many members of the house, and such aspersions are resented.


John Horne Blackmore: I hope the hon. member, being a new member, learns better how to interpret what a man says than he has during this session. I have made no aspersions against this gentleman.


Edward Turney Applewhaite: Order. A point of order having been raised at this time, I think perhaps I should indicate my reaction to the point of order of the hon. member for St. Paul's. The remarks of the hon. member for Lethbridge have been causing me some worry because I did not want to interrupt him. I believe that it is my duty as chairman not to seek ways and means of ruling a member out of order but to so interpret the rules of the house that he is not hampered in what he has to say. However, it is perfectly correct that the item before the house is the Royal Canadian Mounted Police.
It is my understanding that the physical combating of communism in Canada is in the hands of the Royal Canadian Mounted

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Police. Therefore the hon. member for Lethbridge is entirely within his rights in discussing the combating of communism in Canada. I cannot help but agree that so far as we are aware the Royal Canadian Mounted Police have nothing to do with the combating of communism outside of Canada. Therefore when the hon. member for Lethbridge gets into countries far afield he might perhaps be in order under the Department of External Affairs but I cannot agree that he is in order under an item dealing with the Royal Canadian Mounted Police.
I think that the members of the committee are anxious to give the hon. member for Lethbridge a chance to say what he wishes to say in connection with the problem in Canada. If the hon. member will confine his remarks to Canada, I will do what I can to ensure that he proceeds uninterrupted.


John Horne Blackmore: Mr. Chairman, you have established a most enviable record for fairness in the past, and I am sure you will do the same tonight.


Daniel Roland Michener: Would the hon. member permit a question, Mr. Chairman, which I think will clear up the whole matter. I may have misunderstood the hon. member, and I am glad to accept his statement, if I understand it correctly, that he does not cast any reflection on Mr. McGeachy in what he is saying tonight.


John Horne Blackmore: I made that clear. How many times does a person have to say that in good plain English before it registers?
I believe you were not in the chair, Mr. Chairman, or perhaps not in the chamber when I raised this matter this morning when the estimates of the Minister of Justice were opened. It was understood at that time I would be discussing the cold war, the whole struggle of the cold war and not necessarily in its relation to the way the mounted police would exercise their function in the country, so that would give me considerable latitude in order to reach out and deal with the communist question as a whole.
Now, it was to clear myself for that kind of attack that I pointed out to the minister, at the outset of my remarks, that as I thought the Minister of National Defence was responsible for the external security of Canada, the Minister of Justice was responsible for the internal security. May I now proceed to discuss the cold war? I believe that everyone will recognize that when Indo-China was attacked it strengthened the hands of communists in Canada and weakened the hands of those opposed to communism. Every one of these moves that I have indicated, the fall of the rest
[The Deputy Chairman.]
of eastern Asia, the fall of Japan, the fall of Korea, would certainly be steps in the cold war that would win victories over the people of the United States and of Canada.
I believe that with these considerations I am quite in order in the way I am proceeding. I would be glad to hear if the minister thinks I am not, but I cannot see how one could deal with communism and the cold war without looking upon it in a global way. After all, every move that they make is designed to accomplish a certain objective. If I, in your judgment, Mr. Chairman, begin to err as I go forward then I wish you would call my attention to the fact. I have no desire to do that, but I do have a desire to meet this problem of communism as a responsible member of the Canadian House of Commons in this fateful year of 1954 ought to do, having in mind that there are 15 million people in Canada who are dependent for their security upon us. I do not want to see a Guatemala in Canada or in any part of Canada.
Now, if I may proceed, I shall deal with the question of Mr. McGeachy's speech. I should be glad if the hon. member who raised the question would follow now, and if I seem to be casting any aspersions on this hon. gentleman I shall be glad to hear it and to modify my remarks. I have no desire to hurt anybody. My opinion is that Mr. McGeachy had no intention whatever of following the communist line in this speech, but I believe he was following the communist line in this speech. This is what I gather from this speech. His statement from, "without making any prophecy . . ." down to ". . . any Asian state", constituted an announcement to Russia and China that the green light is turned on. They are free to go ahead and conquer Japan, Malaya or the Philippines because we cannot stop them, and we have to learn to get along with all these people if they rebel under the direction, and with the assistance, of China.
In so far as Syngman Rhee and Chiang Kai-shek are concerned we are abandoning the freedom of their peoples by announcing there is no hope. To the United States it was an announcement that she should stand alone. If she wants to go over there and stop the Chinese, well and good; it is her lookout and we are not having anything to do with it. To all freedom-loving people in southeast Asia, and there are plenty of them who took part in the struggle in IndoChina, it amounted to this: you better make terms, boys, because you are going to be under the communists anyhow and there is no use getting them angry. To all the people of Canada it amounted to saying it is very

little concern of ours. To communists everywhere it amounted to saying: full steam ahead, boys; the sun is shining, so make hay.
Moreover, all through this passage ran two implied falsehoods. I am not saying that Mr. McGeachy intended them to be falsehoods but I am going to point them out and let hon. members draw their own conclusions as to how he should have made these two mistakes. He implied quite clearly that communism is a revolution. Communism never has been a revolution. From the beginning it has been a conquest by a conspiracy of men who went from the United States in large measure, were financed from the United States, and went across to Russia and beat down the Russian government. They established control and extended their control over Russia and from Russia to where we see them now. To call such a movement as that a revolution is to misuse the word "revolution".
The second error was even to suggest that communism may ever be satisfied with less than world conquest. We have made some terrible mistakes as American people since 1945 because we persisted in believing that somehow, somewhere we could get Russians to be satisfied, sit down and live peacefully. They have no thought of doing that. They take every move as a beachhead from which to make another move. They have told us over and over again that they intend to conquer the world. Why could a man like Mr. McGeachy make two such blunders as that, and why would the C.B.C. employ a man who would make blunders like that? You have these two blunders going to the people all over Canada and down into the United States as far as his voice would carry. I believe that is altogether different from the way it ought to be.
Perhaps I should give some evidence against the idea that communism is a revolution. May I read this very small excerpt from the economic council's letter in the United States dated April 1, 1954, letter No. 332. I read these words:
The U.S.S.R. is not a world power In the sense we have always thought-a government naturally looking out for its own interests but maintaining certain general standards of honour and integrity in international dealings. Rather, this Soviet government is nothing else than a gang of plotters who succeeded in the confused days of 1917 in making itself master of Petrograd formerly St. Petersburg, now Leningrad and extending that mastery to all of Russia.
May I interrupt now to ask if there is any hon. member in the house who can offer any reason why that statement is not absolutely correct? It is entirely in accordance with all the evidence that has come
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down to us right from the time that the United States conducted their most searching inquiry into communism in 1919, when they were so close to the event they could name all the people who took part.
The next paragraph reads this way:
And now with the astounding assistance of the United States, it controls most of the Eurasian continent. It threatens to take over all southeast Asia, Japan, the Middle East, Italy, even France. It has a third of Germany under its inhuman control. There is not a country in the world, including the United States, that is not threatened with subjugation.
I do not think anyone would seriously question the accuracy of that statement. The people who prepared this letter are generally very careful, scholarly and reliable in what they say. And as I said, the information I have concerning the whole communist conspiracy bears out exactly what they say. In the light of that I ask whether J. B. McGeachy was following the communist line. He was saying just exactly what Russia would like him to say. He was giving comfort to the enemy, and in great volume. He was saying what every communist in the world would like him to say. And he was demoralizing every person opposed to communism who heard him, and making us feel unhappy.
Now, that is just one simple little illustration of the cold war, and the methods which Russia is using. People say: "What! Do you say Mr. McGeachy was an agent of Russia?" Oh, I would hate to say that, but there may be men in Canada with a good deal of power who have much more sympathy with Russia than they have with Canada, and those men could have had a lot of influence in getting that man put on the C.B.C. list of speakers. That is as far as I will go in that respect.
Then, before I finish what I have to say tonight, I wish to place on record a statement which apparently is authentic and which shows what the plans of the Chinese and the Russians are, right from here to 20 years from today, when they are confident that they will be ruling the world, including us. But I will come to that after a while.


Edmund Davie Fulton: Oh, do it now.


John Horne Blackmore: I will ask the minister if he agrees that we are in a fight to the finish against the communist conspiracy that rules Russia. I do not believe the minister will say under the circumstances that we are not. Very well, if we are in a fight to the finish, we are spending $2 billion a year preparing our army to go and fight. I said to the Minister of National Defence the other day that it was just simply idle to spend all this money, in preparing the army if we are going

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to allow ourselves to be beaten through the back door and the basement window. And that is exactly what we are doing when we turn a man like J. B. McGeachy loose on this country, through the C.B.C. Speeches like this-and certainly he has given others though perhaps not as bad as this-but a speech like this I think everyone will agree should not be allowed; and it will be agreed that I have not put an unfair interpretation upon it, especially as it was delivered on May 9.
And now may I read a statement coming from an exceedingly valuable book. I hope the minister has read it, but as he is a very busy man perhaps he has not had time to read it. I hope he will have a very dependable man in his department read the book and study it with the utmost care. I refer to "The Iron Curtain Over America" by Dr. John Beaty, published in 1952. I imagine this book is the most pertinent one bearing on what we are talking about tonight. Dr. Beaty says this in his introduction:
Only an informed American people can save America, and they can save it only if all those to whom it is given to know will share their knowledge with others.
That is all I am trying to do tonight, to share the little knowledge I have with others. This book, by the way, was published in 1952 and Dr. John Beaty is one of the finest scholars to be found anywhere in the world on this particular subject. He is an American who has had a most impressive career.
Now may I give an outline of the communist aims, as they are contained in a document which was read into the Congressional Record by Senator Knowland quite recently. He is not sure this is authentic, but it bears all the evidence of being authentic, and would appear to be the work of Chou En-lai, who is one of the master minds of China, and one of the master minds of the world today. This statement, by the way, is to be found at page 2 of the Ottawa Journal of June 1, where hon. members may read it if they wish. These are the steps Chou En-lai, or whoever wrote this document, says will be followed:
1.	We will avoid war until victory is certain.
How long will we have to avoid war before
victory is certain if China goes on and takes over all of Asia, including Japan with her 87 million people and her wonderful productive potential?
2.	Isolate the United States by all possible means.
3.	Britain must be placated by (a) the possibility of settling major issues,-

And that is what is troubling them today- the possibility of getting these people to be satisfied.
- (b) opportunities for trade, which Britain sorely needs.
Britain is not like us, possessed of rich resources. She has to trade to live. If we will not trade with her, she must trade with the east. And the sooner we understand that in America, the better.
4.	France has to be influenced by war-weariness and fear of Germany.
France is going that way right now, isn't she?
5.	We will liberate Indo-China.
6.	We will liberate Burma next.
As though Burma needed liberating!
7.	We will liberate Thailand next.
8.	The whole of Indonesia will be in the hands of communists by 1960.
In the light of the progress they have been making recently, that does not look extravagant, does it?
9.	Japan will capitulate after peaceful revolution backed by force by China and the Soviet union.
All we have to do is bear in mind the very serious difficulty Japan has with her 87 million in those restricted islands, with the small empire she once had now taken away from her, the extreme difficulty she has in securing the means to live. All we have to do is keep those conditions in mind with respect to Japan, and we will see what must almost certainly happen to her.
10.	If war can be averted the success of our plans for other parts of Asia is almost assured. This task will be completed in 1965.
11.	Then would follow a wave of revolution throughout Africa.
We do not put that beyond the realm of possibility, do we?
12.	Total economic collapse in capitalistic western Europe would follow as soon as Asia and Africa are disconnected from western Europe.
They would have no place to sell their goods, nowhere to buy from, and being capitalist, they would think they could not live. Then western Europe will capitulate and fall to communism.
13.	With the fall of western Europe, remaining capitalist countries will face economic collapse and industrial breakdowns.
That may sound extreme until one looks at the pathetic spectacle that Canada and the United States are making right now in respect of wheat. Because we cannot sell wheat abroad, we fear we cannot live! We bring down the price of our wheat. We begin to create a price cutting panic. We would simply have to sell abroad! If we could not

we would have to sit down, droop our shoulders and cry because we could not sell it.


Mr. Habel:: What has the R.C.M.P. to do
with that?


John Horne Blackmore: The point is that if we cannot manage our affairs better than that, we should be able to. And surely the hon. member, who has been a member of a legislature-


Joseph-Alphonse-Anaclet Habel: May I ask-
^ Mr. Blackmore: May I finish my speech. Then this hon. member will answer any question the hon. member wishes to ask.


Edward Turney Applewhaite: Order. Will both hon. members resume their seats, please. The hon. member for Lethbridge who has the floor can be interrupted only with his own consent, which he will indicate by resuming his seat and which he refuses by not resuming his seat; unless some hon. member rises on a point of order or of privilege, which I will then hear. The hon. member for Lethbridge.


John Horne Blackmore: Thank you. May I say to my hon. friend-he is new to the house and I want to be courteous-if he wants to ask a question, just rise and say: Will the hon. member permit a question? Let me finish the statement, and then he can put his question. That is the only sensible way of going about it. I was just pointing out the fact that our wheat experience right now is one of the clearest evidences of what would happen to the whole of America, including Canada, if being orthodox in our monetary thinking, we could no longer sell our production abroad to Europe and other foreign parts. We just have not learned how to distribute our wheat. We shall not be able to maintain ourselves any longer, we will think, although we are one of the richest areas on earth! Surely the hon. member can see that. That is in accordance with hard economic facts.


Stuart Sinclair Garson: I wonder whether the hon. member for Lethbridge would permit me to interrupt, if I may use that word, his very interesting speech, to give him the answers to the questions he asked.


John Horne Blackmore: I will be very glad to.


Stuart Sinclair Garson: And he may resume his speech afterwards.


Edmund Davie Fulton: No.


John Horne Blackmore: Let me finish with Chou En-lai, so that we shall have the whole thing together. The fourteenth point: Canada and South America will find themselves in 83276-416
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the same hopeless and defenceless condition. Twenty years from now, that Chinese statesman says, the world revolution will be an accomplished fact.
I shall take the hon. member's question if he would like to ask it.


Joseph-Alphonse-Anaclet Habel: It is not for me to defend the mounted police. The minister is much more capable of doing that than I am. This is my question. Has the hon. member had any dealings with the mounted police in regard to communist activities?


John Horne Blackmore: Of course I do not see
just what bearing that has on the point I am dealing with now.


Joseph-Alphonse-Anaclet Habel: If the hon. member has any information to give to the mounted police he has only to do as I have done at different times and he would find them to be most co-operative and in fact ready to act at any time. I can relate one circumstance where the parish priest in my riding-at that time I was a member of the provincial house- was very much worried about the activities of one man in his parish, a newcomer in fact. I met the mounted policeman who was at that time stationed at Timmins. 1 asked him to stop on his way back at that place and see the parish priest. He had no sooner walked into the parish priest's house than he was greeted by the parish priest and he said: "Most likely, Reverend Father, you are going to ask me about Mr. So and So." The parish priest was really surprised. He said: "Yes, that is exactly the case." The policeman said: "You need not worry; we know all the facts about that man; we are following every move he makes." I can tell the hon. member it would be far better for him to give any information he has to the mounted police. By so doing he would certainly serve his country better than to try to start in this country what other countries have tried to do by throwing smears on everybody in the country.


John Horne Blackmore: In the first place, "the member" did not try to throw a smear at anyone, and I challenge the hon. member to show that I did. I am telling the absolute truth, not smearing anyone. If the facts are smearing a man, it is his own fault.
The next point is this, if the mounted police are as magnificent a force as the hon. member believes they are, and I believe they are too, why not give them the ghost of a chance and not have propaganda coming in here making their work many times more difficult? Surely, there is a limit to the endurance of any force of men! I am merely pointing out the terrible dangers that confront us, and which will probably run right on

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if we do nothing to offset them. The hon. member will be lost before he will realize what is happening.


Stuart Sinclair Garson: First of all, I want to express my appreciation to the hon. member for Lethbridge for the very very kind and rather unusual action on his part in allowing me to interrupt his remarks to answer the questions which he has asked. As the hon. member has correctly stated, the responsibility of the special branch of the Royal Canadian Mounted Police and of myself as the minister in charge of the Royal Canadian Mounted Police is the internal precautions against communism in Canada. Those internal precautions have already been the subject of reference in the debate on the justice estimates previously this session. I made a statement then in reply to the hon. member for Vancouver East, which I should like to repeat now because I think what I said then is precisely relevant to the points which the hon. member for Lethbridge has been raising this evening.
As I understand the hon. member he wants to get an answer to these questions. He asked:
What specific measure has the Prime Minister- and in that connotation I include the Prime Minister, the government and the mounted police- taken to offset communism in Canada?
(a)	In discovering what techniques communism is employing?
(b)	What is the degree of success communism has obtained in Canada?
(c)	What are the possible means available to Canada of combating communism in Canada?
I pointed out when this matter was before the committee previously that what we were discussing in questions like these was the practice of espionage and counter-espionage, and I said that I was sure hon. members upon the least reflection would agree that it would be a grave error indeed to discuss here any of the activities of the special branch of the mounted police and especially to admit or deny any allegations of sometimes irresponsible people claiming to have been in our employ in counter-espionage. I said, and I now quote directly from Hansard at page 5464:
We are all aware that the practice of espionage and counter-espionage, the contest between enemy nations to secure and to prevent the securing of intelligence involves the building up, as completely as possible, of a large mass of information; and oftentimes the answer in the affirmative or negative to some simple statement of fact may be the last item needed to complete the general pattern of, if I may use that figure of speech, the jigsaw puzzle which the intelligence department is trying to put together; and this last simple answer may finally determine what that whole pattern is.
In counter-espionage work there is therefore only one safe policy to follow, and that is the policy of complete reticence about our counter-espionage and complete reticence in respect of the espionage against which we are trying to protect Canada. It

is for that reason that we have consistently refused to say anything with regard to the allegations of gentlemen like-
A certain gentleman whom I then named; and it is for that reason, Mr. Chairman, that I am sure my hon. friend, the hon. member for Lethbridge, would be the last man in this house to take any action or to ask any questions the answers to which would give any aid or comfort to the communists whether inside or outside of Canada. I pay him that tribute.
But I think the hon. member himself will agree upon reflection that if we were to discuss in this house the techniques which communism is employing, and made disclosures as frank as those disclosures I like to make in relation to other branches of the Department of Justice, there is nothing in the world that would be more helpful to the communists than to know precisely how much we do know about them and therefore by inference what we do not know. No one would be more happy to have this information than the communists themselves.
In the same way, if we were to indicate the opinion of our experts in the special branch as to the degree of success communism has attained in Canada-and we think we know something about this matter-then that information disclosed in this house would be carried thence in the press of the world. What action could we take which would help the communists more than that?
If I were to answer the third question as to what other possible means are available in Canada for combating communism in Canada I would be giving away our whole program of counter-espionage and by that means largely destroying its usefulness. It is for that reason and that reason only that I must reluctantly refuse to answer the questions my hon. friend from Lethbridge has asked. Even after what I said the other day in this debate upon the Department of Justice estimates in reply to the hon. member for Vancouver East, I have not reached that conclusion nor did I reach that conclusion with regard to the specific questions asked by my hon. friend, until I had again conferred, after my hon. friend has asked questions of the Prime Minister, with the high officials of the special branch of the Royal Canadian Mounted Police. This is the opinion which they expressed with regard to the specific questions asked by the hon. member for Lethbridge:
Upon a study of (a), (b), and (c) -
These were the three branches of my hon. friend's question.
-it becomes very apparent that they are allembracing and if answered would supply intelligence to not only communists themselves but to

foreign powers, and as we know that both the communists and certain foreign powers are continually attempting to procure this type of information,-
And may I say, Mr. Chairman, that I think pretty largely unsuccessfully.
-we deem it most inadvisable to supply this to them, in even the barest detail. It is, therefore, suggested that the question be answered along the following lines:
And they suggested the type of answer which I am now giving. I must say, Mr. Chairman, I have always admired the frankness and candour of the hon. member for Lethbridge and I am temperamentally disposed to be frank and candid myself. I would have very much preferred to have given him a detailed answer on all these questions but I am sure he will agree upon reflection that to do so would certainly not be in the best interests of Canada.
Now, if I may, while I am on my feet, I think I should discharge an act of friendship to a gentleman whose name has come into this discussion. The gentleman to whom I refer is Mr. J. E. McGeachy. I have known him for many years. Indeed, I know him better than I know the hon. member for Lethbridge and I have known the hon. member for quite some time. I knew Mr. McGeachy when he was a reporter and editorial writer on the Winnipeg Free Press back in the 1930's. He afterwards became a very distinguished member of the staff of the British Broadcasting Corporation and on his return to Canada he has had an equally distinguished journalistic and broadcasting career here. One does not have to agree with all of his utterances to be sure that those who know him as I do would agree that he is not disposed to favour communism. As one who knows Mr. McGeachy I can say that whatever my hon. friend may say about his views, Mr. McGeachy is certainly not a communist by any stretch of the imagination. He is a good, loyal, intelligent Canadian and while my hon. friend from Lethbridge may not agree with all of his opinions I do not think that that warrants any accusation of him being in any way disposed to favour the communists or communism.


Ernest George Hansell: I hope the hon. member for Lethbridge will not mind if I say a few words at this juncture. I do not want to interrupt the continuity of anything he might wish to say, but I would like to say briefly that I listened with a good deal of interest to the minister's reply and I would sum it up by saying that the minister seems particularly responsible for matters that might be stressed in terms of physical sabotage, and that the R.C.M.P. is certainly doing a 83276-416i
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good job in preparing information and warning the government of what is going on particularly in a physical sense. Perhaps they know everything that is happening within those organizations in which communist card holders may be at work. They are ready to pick up anyone who may sabotage a piece of machinery, or something of that kind. But it seems that some of us are not quite satisfied with government action in another field of sabotage and that is in the sabotaging of our minds and our moral standards, and action in helping to prepare the people to withstand the onslaught of communist propaganda which might come from innocent sources.
The name of a certain reporter has been brought into the discussion. Fortunately or unfortunately it may be a matter of interpretation, and it is true that the discussion could have taken place without any names being brought into the picture. But just as sure as I was born if the hon. member for Lethbridge had read some extract from a speech given over the air someone would be bound to rise and ask who gave the speech, so there is little difference. It might come from an innocent source but the fact remains that there is a process of conditioning going on, a conditioning of the mentality of our Canadian people to accept the enemy as they attempt to come in by the back door, and some of us are not satisfied that the government is taking appropriate steps in that respect. That is something you cannot handcuff. You cannot handcuff an idea. The only way you can meet it is with a counteridea and we are not satisfied that that is being done.
The minister could have answered on behalf of the mounted police along the lines I have indicated. We are all free to say we believe they are doing a good job, but it is this other angle about which we have so much concern. You can have sabotage by the back door method just as easily as you can have it by the blowing up of a few factories, and more so. That is where the greater danger may lie in this whole thing.
I hope the hon. member for Lethbridge will excuse me for just butting in at this particular point.


John Horne Blackmore: Mr. Chairman, the hon. member for Macleod has made it unnecessary for me to answer the minister. I think he has done an admirable job. He has put the situation in just exactly the way it needs to be put. I will just refer to the question of Mr. McGeachy since he has been mentioned. I am sure all that I have heard about him indicates that the estimate made by the


S586 HOUSE OF COMMONS
[Stage Direction]
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Minister of Justice is exactly right concerning him. I am satisfied that he is an admirable gentleman, although I have never met him. I hope to meet him some day and to have him as a good friend.
I would say this to the minister. In the first place, if there are speakers like Mr. McGeachy who are following the communist line, maybe unwittingly, over the radio, surely the government should know enough about what the communist line is to be able to detect all these speeches which are along the communist line and cause them to be modified; or if it is deemed wise that such speeches should be given, why not have speeches too that will answer them?
An hon. Member:: Who will censor them?


John Horne Blackmore: We can easily find people to censor them. I am sure the hon. member can ask questions which are much more worth while than that if he tried to do so.
What I have said concerning this passage from Mr. McGeachy's speech I believe will istand up flawlessly under the interpretation which I have placed on it. There will be no answer to what I have said. Coming as it did, it was comfort to the enemy in every respect. That speech could have been answered by another speech by some other gentleman putting forward the other point of view. That is a measure that the minister might have mentioned, but did not mention.
I thank the minister very much for the interpolation. I think I will now follow on and give some other considerations which I believe to be of tremendous importance at this time in Canada. Certain it is that regardless of all that we may say we are losing the cold war. I think there is not a responsible member in this chamber who will not agree that we are losing the cold war.


An hon. Member:: That is comfort to the enemy.


John Horne Blackmore: That is true. It is comfort to the enemy. But we may just as well confess it and then try to do something about it.
The next thing is this. We won world war II. We poured out blood and treasure. We won it. But certain people inside the administrations of the nations that won the war threw China into the hands of the enemy and put the whole body of freedom-loving nations in a position where it is doubtful that we shall be able to survive. That is a terrible thing. For us to contribute to that process any further borders on simple foolhardiness. We simply must do something to change all that.

May I now go on commenting to some extent on certain other aspects of this question as I see them. There are three main aspects of the fight against communism. In the first place, we have to deal with spying. Then we have to deal with sabotage. Then we have to deal with propaganda which influences public opinion and shapes our policies. I think the hon. member for MacLeod did fairly well with regard to the subject of sabotage and its danger.
As far as spying is concerned, may I say that although the minister thinks that Russia does not know our secrets, I doubt whether we have in Canada a secret that Russia does not know better than we know it. When ministers of the government tell us that they do not want to let us have information because the enemy will get it, I often think that about the only people in the country who do not know it are the Canadian people generally and the members of the House of Commons. All the Russians and Chinese will know our secrets. That is what they have done with regard to United States secrets and that is what they are doing with ours-make no mistake about that-because they had already done it in 1945 and 1946 when Gouzenko came out and made the surprising revelations he made to us. As far as spying to obtain secrets is concerned, I have dealt with that matter. As to sabotage, it is extremely dangerous. Those 90,000 people in British Columbia are cause for genuine concern.
The minister feels that the mounted police are able to deal with them. Individually, man for man, I would say that the mounted police are as capable of dealing with a situation like that as are any force of men on the face of this earth. But I believe that it is well that we should look across the fence and see what is happening in the next yard. Here is something that J. Edgar Hoover told the United States subcommittee on appropriations on December 9,	1953,
regarding the 1955 appropriation request for the federal bureau of investigation. From page 163 may I quote a paragraph:
The investigative burden in covering the communist underground has been increased tremendously as is shown by the tact that where one agent was formerly needed for proper coverage, we now require as many as 9 or 10 by reason of their greater security consciousness in carrying out their conspirational activities. We have to change our surveillances more frequently by reason of their shifting of party members.
This report goes on through several pages giving material concerning difficulties being encountered down there in the United States

because the communists have gone underground. They have stopped carrying communist cards. They have stopped using telephones. They have stopped meeting in public. Many of them live right down underground. The report gives many other facts concerning them. I am just doubtful that the minister has put such an additional number of mounted police into the fight against communism in Canada as would be necessary to counter-balance the increased number which the F.B.I. have put into the fight against communism in the United States. If he has done so, well and good. I do not ask him to tell us. But if he has not done so, I would suggest that he had better take steps to increase the mounted police force in order to give them a fighting chance.
With regard to propaganda, I wonder whether the minister has read the book "While you Slept" by John T. Flynn, published in 1951, if I remember the date correctly. "While You Slept" is an account of the way in which the American people were softened up to the loss of China and how China was consequently thrown away by the United States into the hands of Russia. The betrayal was achieved by certain agents within the United States, including Owen Lattimore, Edgar Snow, Dean Acheson and several others. The whole story is given concerning the articles they wrote, the books they wrote, the criticisms of books they made and all the various other devices whereby the whole United States people were deceived concerning China until it was too late and China was gone, with 400 million people. There is not anything that the minister could read with greater profit than that book. If he has not read "The Iron Curtain Over America" I suggest that he read that book with great thoroughness, because it shows exactly the same thing that Flynn showed, only with much more extensive documentation. It contains unanswerable evidence showing the kind of techniques which are being employed by the communists in the cold war in order to achieve their objectives. I just wanted to mention that in passing.
I should now like to go a little bit further into the communist techniques in the cold war, coming a little bit closer to our own selves and what is happening to us just now.
There is a man in the United States, Professor Louis Francis Budenz who is, I presume, one of the greatest authorities on communism in America, a man who was himself in high command in the communist party, a man who was himself editor of the communist Daily Worker, who discontinued his
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connections with the communist party and came over to our side, as Gouzenko did, and who has since that time been very useful in all the investigations of spies which the United States has conducted. This man Budenz has written several articles, two of which I have before me. I am going to quote some information from some of the articles that he has written. He says-


William Alfred Robinson: Order. When I took the chair a few minutes ago the hon. member was discussing members of the Royal Canadian Mounted Police who might be devoted to a particular purpose. I thought that was quite in order. But now that the hon. member seems to be going farther afield, I am, quite certain that a general discussion of the kind upon which he is now entering is not in order under this item dealing with the, Royal Canadian Mounted Police. I would ask the hon. member to devote his attention more particularly to the item under discussion.


John Horne Blackmore: Your Honour will remember that I rose to take up this matter on the first item, where it would have been completely in order, and the minister, requested that I defer the discussion until we came to the mounted police.


Alexander Malcolm Nicholson: On a point of order-


John Horne Blackmore: Let me put my case first. Surely the hon. member can let me do that. There was, I think, a quite satisfactory understanding between myself and the minister that if I deferred the discussion until we got to the mounted police it would be quite all; right to urge the matter and discuss the whole, question on the broadest scale. Is that not correct?	.


Alexander Malcolm Nicholson: Mr. Chairman, I think there was a misunderstanding. We had already-passed the first item of the Department of Justice before we started tonight. We were on remission service, and I think the Minister of Justice would have no right to commit us to go back to the first item when we passed that the last time these estimates were considered.


William Alfred Robinson: Order. I recall that earlier-today I suggested to the hon. member for Lethbridge that a question he had asked dealing with the communist threat might more' properly be asked under the estimates of the Royal Canadian Mounted Police. That was by no means an invitation to enter into a general discussion of the kind upon which he is now entering. I do not wish to hamper him unduly, but at the same time I must point out that I must attempt to enforce tho rules of the house with regard to debate, and

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I cannot take undue cognizance of some alleged agreement entered into between the hon. member and the minister. I must protect the privileges of all hon. members and see that the debate is relevant to the item under consideration.


John Horne Blackmore: Mr. Chairman, the minister did not reply, as I recall it.


Stuart Sinclair Garson: I think the situation was this, Mr. Chairman. The hon. member for Mackenzie is quite right in saying that we had passed the first item. We were, I think, on the fourth item of my estimates, and the sense of observation which I made at that time was that inasmuch as my hon. friend's remarks concerning the mounted police could not be applied to the remission service, or any of the other specific items of my department, he might defer them until we got to the mounted police where it would be quite appropriate for him to make them. But I think that is as far as my remarks went.


John Horne Blackmore: That is not in accordance with my recollection of the matter. I watched for the first item with great care, and if it passed it was because I could not hear the number called by the chair. I fully intended to speak on the first item and I believe I did. Whether or not Hansard will show that, I am not sure. However, I fully intended to discuss this matter on the first item. I realized fully that it was an advantage to the minister in getting his estimates through and an advantage to the house to consider all the items of the minister except this last one before I opened this discussion because I knew there would be a good deal of disagreement concerning the subject matter inasmuch as it is information of vital concern and upon which there is much disagreement.
I do feel that under the circumstances I would not be infringing on the rules of the house very much if I went on with what I was planning to say for the remaining part of my speech. But if you feel that I would be doing so I shall have to desist from speaking further. I have here two or three very striking illustrations of the devices and techniques which the communists have used in the United States and Canada and I think they would simply astonish hon. members and would be of great value to the Minister of Justice in dealing with the communist menace. Now, Mr. Chairman, I am in your hands.


Alexander Malcolm Nicholson: Further to the point of honour-the point of order-the hon. member for Lethbridge is a very co-operative member, and I think he understood we were on item No. 1 of the Department of Justice when we started. But if he was here when these
[The Chairman.l
estimates were considered by the committee before he will recall that the first item was passed at that time, and it really was not in order for him to start a discussion on the first item today. When we started today we were on one of the items farther down in the list, item 163, I believe. We passed the first item of the minister's estimates some time ago.


John Horne Blackmore: I am in your hands, Mr. Chairman. If you say I should discontinue my speech I will discontinue.


William Alfred Robinson: Shall the item carry?


[Stage Direction]
Item agreed to.
Royal Canadian Mounted Police-
Land and air services-
409.	Operation and maintenance of divisions, $23,488,839.
John Angus MacLean: I think I can probably put my question on this item. I notice that the details in the back of the book give an estimate of the revenue derived from the services of the Royal Canadian Mounted Police. I also notice that it is estimated that the expenditure for the year 1954-55 will be considerably more. Yet at the same time I believe it is estimated that the revenue for the year 1953-54 will be about $1 million less than the revenue for the previous year. Can the minister give us any indication of the estimate of revenue for 1954-55 and also the source of this revenue? I presume it stems from services performed by the mounted police on behalf of provinces and municipalities. I should also like, if it is convenient, a statement of the amounts paid by the various provinces for services rendered by the R.C.M.P. in the enforcement of provincial laws.


Stuart Sinclair Garson: The following is the breakdown:
Royal Canadian Mounted Police revenue, 1953-54
Policing provinces	$2,953,307.30
Policing municipalities	 883,880.47
Sub-total	 3,837,187.77
Personnel on loan to remission branch,
Department of Justice	 4,606.32
Protection to Bank of Canada	agencies 58,892.83
Racetrack supervision	 22,974.49
Deductions from pay for quarters	 562,068.38
Deductions from pay for meals and rations	 369,305.45
Grand Total	$4,855,035.24


John Angus MacLean: One further question in that connection; I notice the total amount is the same for the previous year?


Stuart Sinclair Garson: Yes.


John Angus MacLean: But I notice that last year, 1953-54 was about a million dollars less than the year before that. Would the minister

be kind enough to indicate why this sudden drop of about 20 per cent?


Stuart Sinclair Garson: I did not hear my hon. friend's last question.


John Angus MacLean: On page 475 of the estimates book it indicates the revenue for the year ending 1954, as compared with the year ending 1953 has taken a sudden drop. Why is that so?


Stuart Sinclair Garson: Mr. Chairman, the explanation for the approximately $1 million difference is that in that year the Minister of Finance requested that the books be closed for the first time on March 31. The result was that the revenues for the year in which that cut-off applied, were reduced, and the revenue for the subsequent year increased, by the amount of revenue of that month of April.


[Stage Direction]
Item agreed to.	[DOT]
Land and air services-
410.	Construction or acquisition of buildings, works, land and new equipment, $3,779,049.
John Angus MacLean: This item comes under a general heading of land and air services, and is concerned with the construction or acquisition of new equipment. Would the minister say if there is an item included for the replacement of any aircraft?


Stuart Sinclair Garson: The answer to my hon.
friend's question is that the item to which he refers on page 477 does not include payment for any new aircraft, but the cost of aircraft is included in a supplementary which we will be passing shortly.


Edmund Davie Fulton: Would the minister mind explaining, in general terms, the sort of buildings, works and land that is covered by this item. I realize that the operations of this force are farflung, but I observe the amount being spent on buildings, works, land and equipment runs in the order of $3,800,000 this year, as it did last year. This is a fairly substantial item. In view of the fact that the force, when it gives service to municipalities or provinces, requires those municipalities to provide accommodation, I am wondering what continuing requirement could necessitate such a heavy sum?


Stuart Sinclair Garson: I would be glad to do that, but it would take a good deal of time.


Edmund Davie Fulton: I am not asking for any details, but for what sort of things are these moneys to be used? Why is there a continuing need? Is it for new housing in the far north or what sort of thing is it?
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Stuart Sinclair Garson: I shall give my hon. friend the first group of items. There are detachment quarters in Newfoundland; then detachment quarters in Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan and so on. Those items take up some six pages.


Edmund Davie Fulton: In that connection, are these quarters for detachments which are involved in policing at the request of the province or for policing that comes under federal responsibility?


Stuart Sinclair Garson: I do not think that distinction which my hon. friend is drawing actually fits, because in those eight provinces of Canada in which there are not only agreements between the federal government and the provincial government but also agreements between the federal government and certain municipal governments to provide for policing, the Royal Canadian Mounted Police is the only police force in those provinces for federal and provincial purposes, and in the municipalities they serve, the only police force for municipal purposes as well. It is in relation to that over-all responsibility which the force is discharging that the provision for these buildings is made.


Edmund Davie Fulton: Is it not the case where, for instance, in a municipality-I am quite certain it is-the mounted police have an arrangement with the municipality, the municipality provides the police with office accommodation and jail accommodation? I understand that is provided direct by the municipality, and not even by the mounted police and charged back, but detachment offices are provided by the municipality. It is for that reason I want to know whether these items are connected with strictly federal responsibilities of the force or whether they are in any sense for provincial requirements?


Stuart Sinclair Garson: I think my answer still stands. When the force is in a province doing all the federal work, all the provincial work and some of the municipal work in those provinces in which it has municipal contracts, the provision of accommodation for members of the force is a provision of accommodation for that number of men required for the purpose of doing all the federal work, plus all the provincial work, plus whatever municipal work is being done. So far as the accommodation the municipality itself provides, that is limited to office and lock-up accommodation.


Edmund Davie Fulton: This is housing?


Stuart Sinclair Garson: Yes, this is housing as well.


[Stage Direction]
Item agreed to.
[Stage Direction]
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Marine services-
411.	Operation and maintenance, $1,385,264.
Mr. Charlton:: Can the minister give us any idea as to the extent of these marine services?


Stuart Sinclair Garson: The vote for marine services, Mr. Chairman, is to meet the operating expenses of the marine division of the mounted police. It includes the salaries of the members of the mounted police and also civil servants that are employed in connection with marine services. It is used in the enforcement of federal statutes along the seaboard and inland waters, for example, in connection with the matter of smuggling, customs inspections and the like. It maintains all the preventive controls and it assists the land division of the police force in the transport of personnel, and in carrying out police investigation in areas where the only means of travel is by water.


John Alpheus Charlton: Would there be a boat on the great lakes, for instance?


Stuart Sinclair Garson: Yes, there are boats there, although I am sure my hon. friend realizes that the bulk of the work and the ships we have under this division are on the two coasts, the Atlantic and the Pacific. We have for example the R.C.M.P. Carnduff at Kingston, Ontario, and another at Sauit Ste. Marie, and others at Sarnia and Windsor.


John Alpheus Charlton: Patrol boats in each of those locations.


Stuart Sinclair Garson: Yes.


[Stage Direction]
Item agreed to.
413. Grant to the Chief Constables' Association of Canada, $500.
Donald Methuen Fleming: I should like briefly to discuss a matter on this item, as it involves a grant to the chief constables' association. It draws attention to the desire of the R.C.M.P. to maintain close liaison with the various police forces in Canada. I am concerned, as well, with the maintenance of liaison between the R.C.M.P. and the Department of National Revenue.
If my information is correct, representations have been made over a period of some considerable time by various associations of chief constables and police forces in Canada to the Department of National Revenue and the R.C.M.P. with a view to banning the importation of slingshots and Malayan style throwing daggers. It is a serious enough matter for the association of chief constables and police forces in this country to make representations with respect to it.
I brought this matter forward in the house on March 25, and asked if representations had

been made on the subject recently. On March 26, as reported at page 3365 of Hansard, the Minister of National Revenue said:
Our records indicate that no such representations have been received of recent date.
Now unless the minister was splitting hairs in the use of the word "recent" then my information indicates that there has been faulty liaison between the Department of National Revenue and the R.C.M.P. on the point, because I am told there was one communication dated June 5, 1953, that went from Mr. A. S. Kenney of the department to the R.C.M.P. Would the minister indicate the position?


Stuart Sinclair Garson: We have not the files of 1953 with us tonight, but I shall be glad to look into this matter.


Donald Methuen Fleming: I am not asking for the production of any particular letter. But I am concerned about the maintenance of some semblance of liaison between the Department of National Revenue and the R.C.M.P. when matters are important enough that associations of our chief constables and police forces make representations to the government.


Stuart Sinclair Garson: I can assure my hon. friend there is no lack of liaison between the R.C.M.P. and the Department of National Revenue. I shall be glad personally to look into this matter and see what has been the fate of the letter to which he has referred. If it has not been attended to, it would be a very strange thing because I can safely say that all communications of that kind are carefully attended to as a matter of routine.


[Stage Direction]
Item agreed to.
DEPARTMENT OF NATIONAL REVENUE Taxation division-
299. General administration, $2,413,361.
Hon. J. J. McCann (Minister of National
Revenue): Mr. Chairman, when dealing with the estimates for the customs and excise division of the Department of National Revenue I undertook to provide for the information of the house typical examples of the operation of section 35(6) of the Customs Act. At that time I read to the house a list of typical goods which were being affected by this legislation, and I mentioned various things about it. Among these I referred to printed acetate foulard piece goods. The question was asked by the hon. member for Calgary North.
At this time in connection with the estimates of the Department of National Revenue I would answer the hon. member's question

in this way: This case is a typical illustration of the effect of the section. An importation of acetate foulard piece goods was made on February 22, 1954. The invoice price to the importer was 65 cents per yard. The goods had been originally introduced to their home market around May, 1953, at a price of 85 cents per yard. From May, 1953 to the date of the importation the price on the home market declined gradually from 85 cents to 65 cents, the price paid by the importer. The officers of the department, on examining the invoices, felt that investigation was necessary in accordance with our instructions which I read to the house on Friday, and personal investigation was accordingly made in the United States at the office of the exporter. This investigation provided the department with the volume of sales made on the home market and the prices prevailing during the six months immediately preceding the date of shipment to Canada, as is required by the act as amended last December.
As a result, the appraised value was set at 74-45 cents per yard. The difference, therefore, in the price to the importer and the appraised value on which duty and taxes were applied was the difference between 65 cents and 74*45 cents, that is, 9-45 cents.
Without the same elaboration as I have given in this case, I will refer to one or two other similar instances, one concerning a different type of textile, another one concerning refrigerators.
An importation on March 23 of over 100 pairs of drapes was invoiced at $6 per pair. These drapes, over the six months immediately preceding shipment to Canada, had dropped in price from $8.25 to $5 a pair. Following investigation by the department, the goods were appraised at $6.64 per pair, an increase in value for duty of 64 cents a pair.
Another typical example relates to the importation of household refrigerators entered at customs on February 22 last. This particular model was invoiced at $154.50. Investigation on the home market showed that during the six months immediately prior to shipment, the price had dropped from $179.70 to $163.70. After investigation the weighted average price over these six months was determined as being $178.48 which, under the law, is the appraised value for purposes of applying duties and taxes.
Then, Mr. Chairman, on this item in the estimates concerning the taxation division 83276-417
Supply-National Revenue of the Department of National Revenue I should like to make the following statement:
For some years now it has been my custom to make a few preliminary comments regarding the taxation division's estimates so that hon. members might be assisted in their consideration of these figures.
The taxation division will require $26,166,993 to operate for the 1954-55 fiscal period. This represents an increase of about $2,750,000 over last year, practically all of which is due to our salary requirements. The income tax appeal board is being provided with $74,920 which is $3,700 more than last year. All of this increase is due to the increased rates of pay.
As at April 1, 1954, there was a full-time staff of 6,134 people employed by this division. At the same time last year the staff was 5,918. The total payroll provided in these estimates is $22,756,343. After eliminating the amount provided for the revision in rates of pay, there is an increase in this year's salary requirements of about $950,000. As I have indicated in previous years at this time, every effort is being made to secure highly qualified technical personnel who must be made available to the division if the work is to be carried on promptly and efficiently. This increase in staff over last year is an indication that we are meeting with some success in this direction. However, we will continue in the present fiscal year to seek out these technical people and funds are provided in these estimates for that purpose.
In addition to the full-time staff we are continuing the policy of engaging temporary employees during the filing period. The use of these temporary employees has gradually increased from year to year until this year during the filing period just passed 1,164 temporary employees were hired. Through the use of this casual help we are able to dispose of the peak work-loads promptly and avoid building up backlogs. It has been possible, too, to reduce the number of permanent clerical employees.
During the fiscal period ending March 31, 1954 the division received 4,858,438 individual returns and processed about the same number. This represents an increase of 300,000 returns over the last fiscal period and the inventory remains about the same at 42,137 returns.
During the same period 70,965 corporation returns were received, compared with 66,206 received during the fiscal period ending March 31, 1953. The inventory of corporation returns at March 31 this year was 18,723, compared with 18,102 last year.
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Supply-National Revenue
These figures show, therefore, that although the number of income tax returns being filed is increasing each year, the division has been able consistently to maintain or improve its position.
As at May 22, 1954, refunds had been issued to about 1,900,000 taxpayers who had filed 1953 returns. The total of these refunds was $100,591,000.
During the 1953-54 fiscal period the revenue collected by the division totalled $2,613,000,000. The administrative costs of collecting these taxes was 86 cents per $100. I submit that that is a very low rate.
Dealing with items other than salaries there are no new allotments of any significance provided for in this year's estimates. On the other hand, the division has been able to effect notable reductions in certain of its expenditures. For example, there is a decrease in the provision for travelling expenses of $95,000. This is due partly to a reduction in removal expenses as compared with last year and partly to certain other economies which it will be possible to make during this fiscal period. The provision for office stationery and supplies has been reduced by $40,000 and advertising by $12,000.
The provision for office machine equipment, which shows an increase of $94,000, is to be used to replace obsolete and worn-out accounting machines with more modern equipment which will, in addition, make it possible to simplify and improve our accounting procedures. This will conclude the replacement program commenced two years ago. It also provides for the installation of cash register machines in the district offices in order to properly protect crown funds and to eliminate existing cumbersome methods of accounting for the division's revenue.
Hon. members will be interested to know that during the past year the district office at Dawson city in the Yukon has been closed and the new district office at Whitehorse is now in operation.
Construction of new premises is being carried on at Whitehorse, Yukon Territory, Hamilton, Ontario, and Sherbrooke, Quebec. Alterations to provide better accommodation are being carried on at Saskatoon, Saskatchewan, and Windsor, Ontario. The alterations to premises at Victoria, British Columbia, have been completed. It is proposed to open a district office in the Rouyn-Noranda district when the premises are ready.
With respect to the income tax appeal board, there were 393 appeals filed in 1953 and during the same period the board disposed of 387. As at April 1 there were 199 appeals being dealt with.
[Stage Direction]

I believe that these few brief remarks have brought out the more important factors in connection with the estimates of the taxation division, but I shall be glad to provide any additional information that hon. members may require.
James MacKerras Macdonnell: I am grateful for the minister's statement which gives us a great many relevant facts. He has drawn our attention to various satisfactory features. I noticed with approval that advertising and travelling expenses were down. I do not propose to go in detail into the further figures which the minister has given because he has given us an adequate statement. I want to spend just a few minutes in talking about what I will call the spirit of the administration of the act because it is very important.
The minister has already indicated that a very large percentage of our whole taxation, roughly three-fifths, is derived from income tax. I think he said $2,600 million odd, about 50 per cent corporation and 50 per cent personal. The view is almost universally held now that the tax is a fair one; that the right basis of taxation is to pay according to ability to pay. It is rather ironical for me to recall that in a certain city in Canada in the 1920's the board of trade passed a resolution to the effect that they approved of the principle of income tax. There were two contrary expressions of opinion which reached me regarding that. One of my friends said: "Why did you not pass a resolution that the telephone was a useful thing?" But other people at that time were very indignant that the income tax had been approved by a responsible body of men. I mention that merely to indicate how opinion has moved in those years.
What I want to say about the act is that there are really two attitudes toward it. One is that certain types of citizens employ clever lawyers to enable them to evade the intent of the act. The other is that the act is administered in a heartless way in certain cases, quite contrary to common sense, and therefore contrary to what must have been the intention of parliament. I propose to give one or two illustrations for the minister's consideration, but I want to stress for a moment those two contrary attitudes.
I hold in my hand an interesting article on the income tax which appeared in the "Canadian Chartered Accountant" for April. It quotes at some length from a British case in which Lord Simon, the then lord chancellor, referred rather critically to citizens who were inclined to employ clever lawyers who he suggested were trying to evade the intent of the act. On the other hand, the writer of this article goes on to state the other side

and to say that there are cases where the government seeks to place interpretations on the provisions of the act which are both inequitable and diametrically opposed to ordinary legitimate business practices. I want to dwell on that just for a moment because it seems to me that it is very important to try to get our minds clear on that.
On the one hand, there is nothing I detest more than the person who manages to evade his just tax and thereby puts burdens on other people. Therefore, one wants vigilance on the part of the department. On the other hand, I am equally sure that one wants fairness, because there is the type of mind, there is the type of person who, if he is able to convince himself that the act is not administered fairly, then regards himself as quite justified in practising any evasion which he is able to practise. Therefore I say that we want vigilance and fairness, and I propose to bring to the minister's attention a few instances, seeking to explore this situation and to satisfy ourselves as far as we can in the short time which can be available for this discussion at this time, that the two are fairly held in balance.
The minister has given us a good deal of evidence of vigilance. We have had some complaints as to the method in which vigilance has been manifested and I propose to bring to the minister's attention one or two cases where I think vigilance, or perhaps vigilance plus an extreme interpretation in the courts, seemed to be in a fair way to work injustice.
I believe that that has been corrected by statute, in one instance I want to give, viz. the averaging of farm income. I believe that has been corrected by an amendment to the statute. But I want to read briefly the effect of the legal interpretation, which I believe was the accepted law for a time, because it seems to me to show that there is a danger for legalism to run riot. The description of this case I shall read now, and then comment further on it:
In the series of cases arising from the administration's attitude on the proper interpretation of section 39(1), we have the courts placed in the humorous position of deciding that ''parliament's intention" was that if a farmer did not file all of his tax returns in the averaged period on time, he was not entitled to average. I doubt very much if anyone, knowing parliament's attitude towards farmers, would seriously contend that that was parliament's intention. Can you imagine parliament passing on that section if the Minister of Finance, or someone for him, had said at the time, "This section means that any farmer who has failed by inadvertence to file one of the returns of the five averaged years on time being late by so much as one day, may lose thousands of dollars of tax refund, while at the same time remaining subject to the normal penalties for late filing, which parliament has previously decided were fair punishment for the offence"?
83276-417i
Supply-National Revenue
When I read that it seemed to me to be an indication of what I call the necessity for fairness, because I cannot believe that anyone would argue that parliament did intend that. The point I stress is that here is a case where a penalty was provided by the act itself for failure to file a return and yet another surely unintended penalty was also exacted. I feel that this is contrary, not only to the words I read a moment ago, namely legitimate business practice, but so contrary to common sense that the Department of National Revenue should have taken immediate steps to have that set right by legislation if necessary. I understand that has been done by my reading of what the Minister of Finance said with regard to this Nielsen case. In answer to my question the minister said as reported at page 5607 of Hansard for June 7:
I understand that the difficulty in the Nielsen case was taken care of in the amendment last year.
I am assured that is correct. I have forgotten what the Nielsen case was.
I would like to stop at this point and ask the minister if he will comment on that and let me know whether that is correct. Following that I have some further questions to ask but may I just say before I take my seat at this stage that I think that in the interests of the act and in the interests of all concerned there should be a fine balance between vigilance and fairness, and that ought to be possible to achieve. I think there should also be vigilance on the part of those whose duty it is to examine the affairs of the department and bring to the attention of the minister cases in which it looks as though legalism had run riot.


Mr. McCann:: Mr. Chairman, I am informed by the officers of my department and I know it to be a fact that the Department of National Revenue in the preparation of the budget brings up such cases and makes; recommendations with reference to what1 appear to be instances of unfairness or anomalies in the act. But I think in view of-the fact that it had been discussed this year in the amendment to the act that position from now on will probably be well taken care of.


James MacKerras Macdonnell: But can the minister not give me something more definite than that on this particular point? I understood from the Minister of Finance that the amendment to which he referred was passed a year ago. I feel I should have an assurance on that point.	.


James Joseph McCann: The fact is that this case to which my hon. friend refers took place before the amendment was introduced a year ago.

Supply-National Revenue Since that time it has been administered in strict accordance with the act and the amendment to that act.


James MacKerras Macdonnell: I have no reason to doubt that, but what I want to know is whether the minister can say that the amendment as interpreted to me by the department will remove this entirely oppressive and to me unfair situation which existed before, and under which a man who had been late one day was penalized and not allowed to use that year in his averaging.


James Joseph McCann: As I understand it, and having listened to the discussion here on the Income Tax Act, the year in which the taxpayer was late in filing his return is dropped and the averaging is then for another period.


James MacKerras Macdonnell: That does not seem to me to be entirely satisfactory.


James Joseph McCann: Well, Mr. Chairman, that is the explanation I have. I submit this is neither the time nor the place to be arguing about the provisions of the law. If the hon. member has questions to ask with reference as to how the law is to be administered we will attempt to answer.


James MacKerras Macdonnell: But that is what I am asking.


James Joseph McCann: What is the hon. member's specific question?


James MacKerras Macdonnell: I am asking whether the law as now administered has got away from this situation which I read to the minister and which reads:
This section means that any farmer who has failed by inadvertence to file one of the returns of the five averaged years on time, being late by so much as one day, may lose thousands of dollars of tax refund-
I understood he was not allowed to use that year but now the explanation the minister gives me is that he might not still be allowed to use the year but that that year may go out and he will have to wait for another year. If that is the situation I do not see how it has been improved at all.


James Joseph McCann: In this case and prior to the amendment, if a man had, say, two or three years and arrived at 1950 and was late then he lost the advantage there, he would then have to start again and did not get the advantage of the averaging until he had come to 1955.	,


James MacKerras Macdonnell: The minister means he lost all those years?


James Joseph McCann: Yes. Under the amendment he loses only that year and the three previous years are brought into effect. He

loses that year and the average is five. Three and two more afterwards which would bring him up to 1952.


James MacKerras Macdonnell: That certainly is a substantial improvement for the better and, as the minister says, we are not here to write law. However, I wish to bring up another case and this case is Collins v. the Minister of National Revenue and it deals with the position of a news vendor who was not allowed in the judgment of the court any allowance for his liability to accept returns of unsold magazines. The courts held that the two contracts involved in that case were not conditional on each other but were independent. An article I have on the subject in the magazine I have already mentioned states:
Would any businessman or member of parliament seriously contend that a retailer would have signed a contract to purchase magazines unless the distributor bound himself by contract to take back those which could not be sold?
Would the minister let me know what the situation is on that? I take it the case is familiar.


James Joseph McCann: There is nothing in the law
which allows that. This is not in the same class as returned milk bottles, oil barrels, and the like. And there is nothing in the law covering unread, unused, and unsold magazines. If the hon. member wants to advocate that we will bring it to the attention of the Minister of Finance.


James MacKerras Macdonnell: I am seeking to find out the spirit which prevails in the department. Let us get away from the law for a moment. The minister told me a moment ago that in cases regarded as unfair his department would take the initiative. When the statute is producing perhaps unexpected results which appear to be unfair, the minister indicated a moment ago that his department would raise the question with the Department of Finance.
Let me now ask the minister this question with regard to this case to which I have just referred. Does the minister regard that as a fair situation? Does he regard it as the ordinary relationship between man and man in business? That is the test.


James Joseph McCann: Whether or not it is fair or unfair is not for me to judge. But in dealing with the particular item which the hon. member has under question, namely, the people who deal in magazines and get them from a wholesale concern, if they destroy them they get no allowance. If they return them to the party from whom they have bought them they get an allowance with reference to them and they can deduct that

amount from the amount of money which was owing to the concern from which they bought them.


Donald Methuen Fleming: I have one question to raise, Mr. Chairman. It is with regard to the work of the various assessors. Does the department keep any record of the results of the work of the assessors, as to how much they are able to raise the tax over that which is estimated as payable in the return? Is a record kept of the results of their work in that regard?


James Joseph McCann: No. There is not a record kept of their particular work. A record of the office is kept. A record is kept of how much is collected over and above what the assessment is as made by the taxpayer and what is actually concerned, along with the extra money that is collected by reason of reassessment. I think I know the point that the hon. member has in mind. It has been asserted that some of our assessors are working on the basis that the more they produce, the better it is for them in the matter of advancement in the office. That is not the case. Individual records are not kept. Records are not kept of individual assessors as to the amount by which they have raised the assessment of those taxpayers whose returns they have been examining.


Donald Methuen Fleming: I am glad to hear the
minister's statement on that point. When he speaks about a record being kept for the whole office, I take it that he is referring to the district?


James Joseph McCann: The district office.


Stanley Howard Knowles: Under the heading of administration of the taxation division there is a matter which I should like to put to the minister. My question arises out of a subject that I have been following with a measure of interest for a couple of years. I confess that I was first attracted to it because I happened to notice an article in the New York Times about two years ago written by a namesake of mine. I do not know him but his name is Clayton Knowles.


An hon. Member:: It must have been a long article.


Stanley Howard Knowles: I hear someone across the gangway suggesting that it must have been a long article. It was. At any rate, from that time down to the present I have been noticing that a good deal of publicity has been given to a case which seemed to start in Canada and which has now resulted in nine men being indicted in the United States on a charge of evading $16,400,000 in United States income taxes.
Supply-National Revenue
I am not going to go into all the details of this story for I have no doubt that the department has a file on it. It is on that assumption that I wish to ask a question or two. The fact is that these nine men included three Canadians, Isadore J. Klein, Albert McLennan and George Norgan, all of Vancouver. There was a story on this matter under a Canadian Press dateline in the Ottawa Journal of Wednesday, May 12, 1954. There was also one under BUP dateline in the Vancouver Sun of May 11, 1954. In these stories and in other items which I have it is indicated that these three Canadians, along with one American, who was the brother of one of them, did fairly well in the liquor business at the end of world war II and shortly thereafter. According to testimony given at one of the committees set up by the United States congress and which went into the matter of shortcomings on the part of employees in the department of internal revenue in that country, it came out that these four men-the three Canadians whom I have named and the brother of one of them-started off back in 1944 by throwing $1,000 each into a firm-


James Joseph McCann: We know the history of that whole case.


Stanley Howard Knowles: I am glad to hear that.
That means that I can shorten up my remarks. But perhaps for the record, a little bit of the story should be told. These men put $1,000 each into a firm known as United Distillers Limited. As I have it, within a few years they had pyramided that $4,000 to $20 million.


James Joseph McCann: Would it satisfy the hon. gentleman if I told him that as far as the Canadian taxpayers are concerned, returns have been made, assessments have been made and the tax in full collected. It was one of the largest amounts of taxes from that type of business that were ever collected in this country. The crown has been protected.


Stanley Howard Knowles: That is very close to my point. What I should like to know is this. I appreciate the fact that the minister and the department are most zealous in matters like this. The minister has already given evidence of that fact by showing that he is familiar with the case. In view of the fact that it has now been brought out that these people appeared to have defrauded the United States income tax authorities, has there been since that time a review of the case to determine whether or not these people short-changed the Canadian income tax authorities?

Supply-National Revenue
I have one other question, apart from any that might arise out of the minister's answer. Perhaps the minister can answer that question before I put the other one.


James Joseph McCann: We have followed with great interest what has been taking place in the United States. I just want to assure the hon. gentleman that we were one jump ahead of the American authorities. When these same people attempted to bring that money back into Canada or when it came back into Canada, it went into revenue and they paid the taxes on it.


Stanley Howard Knowles: I suppose if I were to ask him a question as to the amount of money that was paid-


James Joseph McCann: You would not get it.


Stanley Howard Knowles: -I would be reminded of the secrecy provision of the Income Tax Act, references to which have been appearing in the newspapers lately because of a recent supreme court decision. I take it that if there was any criminal charge involved in this matter all that information would have to be brought out. I am glad to have the minister's statement that Canada was one jump ahead of the Americans in connection with this matter. Did he say "a jump ahead of the Americans" or "a jump ahead of these three men"?


James Joseph McCann: A jump ahead of the American revenue department in the matter of collecting taxes.


Stanley Howard Knowles: My point is this. Even if the minister feels that Canada was a jump ahead and obtained a fairly sizeable chunk of income tax out of these people, since it has now been charged that they evaded $16,400,000 liability in respect of income taxes in the United Stats, it would seem to me that it is a matter for reviewing again.
These people apparently were pretty smart. If they pyramided $4,000 into a profit of $20 million in a matter of a very few years they are people who certainly should be looked at very carefully.
The other question I want to put to the minister is this. In the article that appeared in the Vancouver Sun on Tuesday, May 11, which characterized this matter as the biggest tax charge in United States history, there was a postscript to the story about the Canadian aspect of the matter, and it is to that I particularly want to direct the minister's attention. It reads as follows:
The suit was launched following investigation of the tax charges in the United States in 1952, and the B.C. court of appeal is now threshing out the action of the three men in refusing to answer questions in connection with the lawsuit.


The three men are the three whose names I have already given, and this part of the article has to do with a lawsuit which is something in the nature of a family squabble. At any rate, the article goes on to say:
Mrs. Netta Bell, widow of Nat Bell, and their two children, Angela and Jack, are asking $2] million as their share of the $25 million profits made by United Distillers.
That is the company I was referring to, and I take it that the large sum of taxes the minister says the treasury got was either from United Distillers or from the three individuals. Does he care to say, or does that contravene secrecy?


James Joseph McCann: It was from the corporation, United Distillers, but this Bell case is the case of an individual shareholder against the company.


Stanley Howard Knowles: Yes.


James Joseph McCann: Our department has nothing to do with that whatever.


Stanley Howard Knowles: Just a minute. I appreciate the interruption so we can realize we are both talking about the same matter. The next paragraph in the story in the Vancouver Sun of May 11, 1954, reads as follows:
The Bells allege that through intervention of Canadian income tax authorities $15 million of the huge profits was returned to the company, and they say this was used to purchase shares in the company in the names of secret nominees.
Can the minister explain that startling statement? I do not think he would want to slough it off. The Bells allege that through the intervention of the Canadian income tax authorities $15 million of the huge profits was returned to the company. What does that mean?


James Joseph McCann: I am familiar with the case but I would not like to make a comment on a lawsuit and allegation of that type while the matter is still under consideration. It would be very injudicious of me to make any statement in connection with it on behalf of the department. I can only say that we are not involved in this lawsuit, nor have we an interest in it except if it should turn out that the money goes to Bell as the result of the suit. Then we would have to look into the matter of whether or not it was taxable.


Stanley Howard Knowles: Has there been any request by either side in this legal dispute for information regarding income tax returns of United Distillers Limited?


James Joseph McCann: Well-


Stanley Howard Knowles: If there was such a request -did the minister say no?


James Joseph McCann: The only place we could
give that information would be in court, and none of our officials has been subpoenaed to go to court.


Stanley Howard Knowles: If such a request were to come what would be the attitude of the minister, especially in the light of the recent ruling of the supreme court?


James Joseph McCann: We have not got that judgment yet and have not had an opportunity to read it.


Stanley Howard Knowles: I will not pursue the matter further at this time. But even though the minister is satisfied that the matter has been taken care of properly, I express the hope, in view of the rather staggering way in which these people seem to have defrauded the United States treasury, that another look be taken at the matter to determine whether or not the Canadian treasury got all that it should have got out of these people.


James Joseph McCann: Our interest in this case continues just as consistently and as diligently as when we started five years ago, and we will continue to maintain that interest and take such action as may be necessary if action is indicated.


Stanley Howard Knowles: See that you do.


James MacKerras Macdonnell: The minister will probably regard it as a very obvious comment, but I take it that in view of this extraordinarily complicated international financial and legal tangle the department has availed itself of the very best available legal talent on both sides of the border. I say that is obvious, but I should like to feel perfectly reassured.


James Joseph McCann: It is not only obvious; it is a fact.


Walter Gilbert Dinsdale: I think the minister is aware that from time to time complaints come from the west concerning income tax problems, and it seems that this year they have been even more numerous than before. Rather than make a formal statement on the problem, perhaps I can get the information I desire by asking one or two questions. How many inspectors are employed by the department, and how many are located in each of the prairie provinces? I ask that question because the idea is abroad that the prairies are a special target for income tax inspectors.


James Joseph McCann: Our set-up does not go entirely by provinces. It goes by taxation districts. For instance, the office here for the Ottawa district takes in part of the province of Ontario and that part of the province of Quebec adjacent to Ottawa. The hon. member asked about farm assessors. There
Supply-National Revenue are three in Charlottetown, five in Halifax and Sydney, four in Saint John, New Brunswick, fourteen in Quebec, Sherbrooke and Montreal, eighty in Ontario, fifty-five in Winnipeg, Regina and Saskatoon, forty in Calgary and Edmonton, eleven in Vancouver and none in Whitehorse.


Walter Gilbert Dinsdale: Thank you for that information. How many additional assessments have been demanded from prairie farmers in the past fiscal year? Some farmers complain that it is unusual not to be asked for an additional income tax contribution, and they resent particularly the 6 per cent interest charged on the so-called unpaid balances. How many additional assessments were made last year?


James Joseph McCann: Additional assessments?


Walter Gilbert Dinsdale: Yes, reassessments, demands.


James Joseph McCann: I think I can clear up this whole matter. As a matter of fact I promised to give an answer to the hon. member for Calgary North when he discussed the matter of farm assessment earlier in the session. I have given very careful thought to the subject, and I think if I were to put this statement on the record-it will only take a few minutes-it might answer many of the questions that have been asked and would be an answer to some of the criticism. May I put in on the record without reading it? If not, I will take the time to read it.
In view of recent critical statements made in the house and elsewhere with respect to the taxation division's assessing and investigation methods, particularly in dealing with farmers, a few general remarks in this connection may help to clarify our position.
In order to bring my remarks into proper perspective, I should like to state some of the things which are well known to all hon. members and which must be borne in mind when considering the income tax.
The majority of the citizens of this country honestly and conscientiously pay their proper taxes. There is, however, a minority who, not having enjoyed the opportunity of much formal education, do not understand the income tax law, or are not capable of correctly calculating their tax liability. There are still others, unfortunately, who resent having to pay their taxes and who take every means to avoid or evade the payment of their proper liability.
Now the majority who pay their taxes depend on the activities of my officers in the taxation division to discover those who have not paid and to make these delinquents aware of their obligations and to ensure that they pay their share of the cost of their government. This does not apply to farmers only;
6598	HOUSE OF
Supply-National Revenue it applies to taxpayers in all walks of life. Farmers are one group in the community and they must receive the attention of my officers in the same way as all other groups. I am sure that no person would suggest that the farmers should be overlooked or ignored.
It has been again suggested that farmers in some parts of the country have been singled out for discriminatory attention as compared with those elsewhere. Hon. members may recall my statement of March 12, 1952, Hansard page 361, refuting previous criticisms of this type, and pointing out the hazards inherent in attempting to use averages and broad generalizations of statistical data prepared for one purpose to establish specific conclusions for other purposes. At that time I freely admitted that our officers, being human, occasionally made mistakes, but they were honest mistakes which they were most anxious to rectify when they became apparent. I do not propose to embark on a further review of what I said at that time, but I believe it is equally applicable today and my current remarks may be considered as a further development and clarification of the stand then taken.
There have been from time to time a variety of approaches used in checking farmers' returns, and other classes of returns, in different areas. Methods tried and found satisfactory in one district are adopted by, or adapted to, others. Methods found wanting are rejected. New methods are continually being developed. As is recognized in all types of checking, auditing or investigational work, improvement in methods is only achieved by the use of imagination and experiment. We cannot overlook the wide variation in types of farming in Canada, many of which require different checking methods.
As our experience broadens a certain amount of standardization in general methods is taking place. For example, in the past exception has been taken to the division's procedure in some prairie districts of making requests by mail for farmers to meet assessors at central points for the purpose of reviewing their income tax returns and supporting records. It was originally thought that this approach was both satisfactory to the farmers and most efficient from an administrative viewpoint. However, as a result of our experience it has been found preferable to have the assessors in the prairie districts call on farm taxpayers at their home addresses, unless individual circumstances make alternative arrangements more convenient to the farmer. It is unreasonable, however, to anticipate elimination of local variations found necessary to meet local conditions.

Representations have also been made respecting some of the techniques in general use, particularly the so-called "net worth" approach. It has been suggested that we either abandon this assessment basis completely in so far as farmers are concerned, or restrict the net worth period to one or two years.
Before dealing with these suggestions I would like to give the house some indication of the extent of the activities to which such violent objection has been taken in some quarters. As a result of a special survey made recently it has been ascertained that in the fiscal year ended March 31, 1953 less than 6 per cent of farmers' returns filed with the offices serving the three prairie provinces were assessed on a net worth basis. Now, remember that, less than 6 per cent were on a net worth basis. In the same period those offices assessed about 5 per cent of the returns filed by all other unincorporated businesses on that basis. To my mind, these figures indicate that the number of cases in which it was necessary to resort to a net worth basis of assessment was not unduly large. While the percentage of net worth actions with respect to farm returns was slightly higher than for other businesses this can, I think, be accounted for by the fact that farmers as a class do not keep as good records of their income and expenses as other classes of taxpayers.
Perhaps a word or two of explanation on the basic principle on which net worth assessments are based will be helpful. A net worth computation of income is based on the premise that the increase in a person's net assets between two dates, added to the amount of money spent for personal and family purposes, represents his income for the intervening period from all sources. If this result is adjusted where necessary by deducting moneys received from non-taxable sources, such as inheritance, gifts, or other capital gains, and by adding thereto any losses of a capital nature, we arrive at the income subject to tax. This principle is recognized as sound from an accounting viewpoint, and has been accepted on numerous occasions by the courts.
Hon. members should appreciate that an assessor does not resort to the comparative net worth basis of assessment as a matter of choice. He would much prefer to base the assessment on the taxpayer's actual income as disclosed by complete and accurate day-to-day records. However where there are no records or the records are shown to be incomplete and serious discrepancies in the taxpayer's returns cannot be reconciled

with known facts, the assessment must be made on the best information available. Under these circumstances the net worth approach is often the only reasonably accurate method remaining for the assessor to use in determining the taxpayer's income. It is used under similar conditions for all classes of taxpayers.
There has been critical comment on the fact that our assessors ask certain personal questions in compiling their statements which, it is suggested, have nothing to do with income tax. I assure you such questions are not an expression of idle curiosity on the part of the assessors. It must be obvious that one cannot determine a person's expenditure for food, clothing, recreation, furniture, education of children, medical bills, and the many other items entering into his family cost of living, without asking personal questions. Nor can one ascertain the assets or liabilities at certain dates, or the source and amounts of non-taxable income received, without asking such questions. We must not overlook the fact that these questions are directed as often as not to ascertaining facts of direct benefit to the taxpayer. In one recent case there was criticism of the fact that an assessor questioned the amount and use made of an ex-serviceman's gratuities. I believe that criticism was made by the hon. member for Calgary North. The fact is that the assessor was endeavouring to establish the amount of capital gain he could deduct from the veteran's income subject to tax.
An argument frequently encountered is that farmers generally have neither the time nor the education to keep proper records. All taxpayers in business, or who pay or collect taxes, are required by law to keep sufficiently detailed records to permit accurate determination of their net incomes. It has never been suggested that complicated formal accounting records are necessary for the average farmer, but he should keep a simple day-to-day record of his business transactions affecting revenue and expense. To exempt farmers from the responsibility of keeping records, or from net worth determination of income where necessary, or to drastically curtail the period applicable, could only be interpreted as unwarranted discrimination against other classes of taxpayers.
The advocates of such restrictions in the division's activities contend that, having once accepted a return without question or investigation, the division is showing bad faith in going back at some future date to reopen a return. This seems to resolve itself into an argument that if the taxpayer succeeds in an understatement or wilful suppression of income, or fails to keep accurate records
Supply-National Revenue without immediate detection, the division should be forever barred from collection of the proper tax. I assure you that we have resisted and will continue to resist such suggestions.
There are, I believe, adequate legal safeguards to prevent the authorities from unreasonable zeal in this matter of reassessment. I quote from subsection 4 of section 46 of the Income Tax Act:
(4) The minister may at any time assess tax, interest or penalties and may
(a)	at any time, if the taxpayer or person filing the return has made any misrepresentation or committed any fraud in filing the return or supplying information under this act, and
(b)	within 6 years from the day of an original assessment in any other case,
reassess or make additional assessments.
It will be noted that while the division's authority to assess or reassess is unlimited in the event of misrepresentation or fraud, a six-year limit is provided in all other cases.
A brief outline of our administrative methods illustrating the practical effect of our policies will indicate that this six-year general limit is not unreasonably long. The Canadian system of taxation is one of selfassessment and the taxpayer is required to make a return of his income and calculate his tax. In order to give proper service in such matters as the issuance of notices of assessment and the payment of refunds, as well as to improve the over-all administration of the division, we have in recent years subjected all returns to a rapid examination at the time of filing and, after correction of obvious errors, issued assessment notices almost immediately, acknowledging payments received and showing balances apparently owing or refunds of indicated overpayments. This phase of the program has met with almost unanimous public approval.
It is obviously necessary, however, as time and staff permit, to re-examine some of these returns. Methods of selection used vary but such considerations as complexity or scale of operation of the taxpayer, the necessity to check discrepancies, or the discovery of errors or omissions not previously discernible, all play their part. It may be said that all adjustments should be completed on the first examination, but when one reflects that over four million returns were filed in 1952, it will be evident that this could be done only by sacrificing the objective of prompt handling noted above, or by the use of an abortively large untrained seasonal staff, with a consequent loss of assessing quality, not to mention revenue. An important consideration is also the fact that errors of returns, particularly sustained suppressions of

Supply-National Revenue income, are frequently only apparent on concurrent examination of several years' returns of the same taxpayer. This is not feasible at a time when most of our district offices' daily intake of returns may number in the hundreds or thousands.
The re-examination of returns is therefore an orderly, continuous process throughout the year, interrupted to a limited degree by diversion of sufficient regular staff during the peak filing season to supervise and assist a comparatively small temporary clerical staff employed for that period to complete the first recording and examination of returns. I am satisfied that the relatively small but well trained permanent staff we now have employed under the present system is preferable, both from an efficiency and economy viewpoint, to the possible alternatives available.
Another frequently misunderstood phase of income tax administration is enforcement. It has doubtless come to the attention of many members that we sometimes find it necessary to take punitive legal action under the act. All classes of taxpayers have on occasion been prosecuted for failure to file returns of income, or for filing fraudulent returns. Such actions are invariably only initiated after the most careful review of all circumstances by senior officials of the division. The Income Tax Act, like any other law of vital importance to the national revenue, contains provisions necessary to its enforcement, but I can assure the house that the penalties provided are used only in cases involving refusal of taxpayers to comply with reasonable requests for returns or other information, or where wilful tax evasion is established.
We are keenly aware of the importance of good public relations in the difficult task of tax collection, and much has been done by way of radio and newspaper publicity, and through the medium of departmental publications, such as the farmer's and fisherman's guide, to explain our functions and requirements to the taxpaying public. I feel, however, that our best public relations medium is the day-to-day contact of our staff with the public, and all officers of the division are instructed to use the utmost tact and courtesy in their duties. In exercising their combined functions of collection and enforcement the psychological difficulties encountered cannot be overlooked, as it is too much to expect a tax collector to be welcomed with open arms. Consequently, we must expect some complaints-indeed the relatively small number is gratifying-but we cannot permit these complaints to curtail the legitimate and vitally necessary activities of the division.


We are glad to look into all reasonable objections raised, but we ask the co-operation of the public, their advisers, organized trade groups, and the members of this house in ensuring the representations made are reasonable in the light of all relevant facts.
I am sorry to take up so much of the time of the house in putting on the record this information, but I think it will be very useful to hon. members particularly in explaining methods which we use in the taxation branch. We are open at all times to suggestions from members of parliament with reference to giving a better service and guaranteeing revenues to the crown.


Walter Gilbert Dinsdale: I think I should have stuck to my question. I have only one brief comment arising from the minister's statement. I agree that the problem is partially one of public relations and educating the farmers. But it seems to me, too, that the educational process might very well work both ways. Assessors are skilled in financial matters and in systems of accountancy; but sometimes I suspect that they lack insight into the psychology of the prairie farmers, and also agricultural procedure. Otherwise they would not rub the farmers the wrong way so frequently.
Information I am getting continuously is that in many cases they approach farmers with an attitude of suspicion and mistrust, and sometimes of superiority. One illustration of this is in connection with a group of Mennonite farmers who are upright and Godfearing people, as all hon. members know. The attitude displayed to many of them is that they are deliberately defrauding the government. As one of these farmers said to me, almost with tears in his eyes, "We would not defraud the government; in fact we pray every day for this government".


James Joseph McCann: Most people do.


Walter Gilbert Dinsdale: And I suggested to him that in view of my knowledge of the situation they had better spend their time praying for the country.
But we will not pursue this matter further at the moment. I think the statement does answer some of the questions asked. There could be further discussion as to detail if time permitted. I should like to emphasize again that I think the educational process is a twoway process; and if assessors will remember that they are the servants, not the masters of the public, some of this friction might be avoided.


James MacKerras Macdonnell: I am told that private soldiers in the reserve army are now being assessed for income tax on their pay, and that

Supply-National Revenue
that has now begun after some years during it is, and sent in to the department. He is which they were not so assessed. Is that in the same position as if he was working correct?	for the Massey-Harris Company.


James Joseph McCann: The fact is that they were always taxable. The hon. member has referred to their return. When they are back in this country the tax deductions are made at the source.


James MacKerras Macdonnell: No, I am dealing with the reserve army. My understanding is that whether or not they are taxable, the tax has not been exacted. They have not been assessed and they are now automatically to be assessed. Furthermore they are being pursued for the arrears of the years during which they were not assessed. That seems to me a great hardship, if it is true.


James Joseph McCann: That is hardly correct. They are not being pursued for arrears. It is not likely that they were in arrears because they were always taxable but the deductions were not made. The practice now is that deductions are made from their pay whether they get it monthly or quarterly, just the same as with any other taxpayer.


James MacKerras Macdonnell: Am I wrongly informed when I am told that though taxable the department did not exact the tax from them for this year? Is that in error?


James Joseph McCann: That is not correct.


Walter Edward Harris: You are in error.


James Joseph McCann: You are in error. The member of the army is in default; you are not in default. The soldier was probably in default, and they may have gone back on him to collect.


James MacKerras Macdonnell: Just one further question. I want to be quite sure that there is no change in the policy of the department? It is apparently clear there has been no change in the law, but I am informed from a pretty responsible source that there is a change in the policy and that the department, whether they thought it was wise to put the telescope to the blind eye in connection with this matter, did get I suppose very little from their pay as privates. The minister has now told me, as I understand it, there has been no change in policy at all. Is that correct?


James Joseph McCann: No, just a change in method. John Jones was in the reserve army and he was getting army pay. He put in his return like anybody else at the end of the year, and he paid his tax. Now he gets his pay and deduction is made from each pay, whether it is monthly, quarterly or whatever


James MacKerras Macdonnell: That may be the explanation.


Mr. Palleit:: In answer to the question put by the hon. member for Brandon-Souris the minister indicated that as I heard it there were, 14 assessors in Quebec and 80 in Ontario. Is there any explanation for the difference in the number?


James Joseph McCann: As I explained it at the time, the figures I gave were for three offices in the province of Quebec, at Quebec, Sherbrooke and Montreal. There are ten farm assessors in that group. Then, when you come to Ottawa, the Ottawa office has ten, but they are probably serving as much in Quebec. The offices are not set up within the borders of the provinces. Therefore you cannot compare the ten in the province of Quebec and say that these are all of the Quebec assessors that there are. There are more than that. However, there are more farm assessors in Ontario than in any of the other provinces. We have 11 offices in Ontario. In Winnipeg we have 31; in Regina, 32; in Saskatoon, 23; in Calgary, 20 and in Edmonton, 20. It depends upon where they are needed most.


John Cameron Pallett: One further question. Can the minister tell me what is the total number of farm assessors in Quebec as opposed to the 80 in Ontario?


James Joseph McCann: Fourteen as opposed to the 80. If you take another five or six who are working out of Ottawa in the province of Quebec it would probably work out as 20 working in the province of Quebec as against about 70 in Ontario.


John Cameron Pallett: Is there any explanation for the difference in number? Are there three times as many farmers in Ontario as in Quebec?


James Joseph McCann: I have not got the statistics here of the number of farmers in either of the provinces, but there are more returns from farmers in the province of Ontario than there would be in the province of Quebec. The situation in Quebec is a different thing. That has to be understood. We have heard that complaint for years with reference to getting after farmers in Alberta and in Saskatchewan. The raising of wheat in these prairie provinces is an industry. In the province of Quebec farming is a way of life, where they raise big families and they do not have any income tax to pay.

Supply-National Revenue
Mr. Pallet!: The baby bonus is supposed to take care of the big families.


Some hon. Members:: Cheap!


James MacKerras Macdonnell: I notice on page 370 that the number of special investigators has multiplied by two or three times.


James Joseph McCann: The answer to that, Mr. Chairman, is that it is mostly a change in classification. A lot of these people who are now designated as special investigators were formerly assessors.


[Stage Direction]
Item agreed to.
Taxation division-
300. District offices, $23,753,632.
James MacKerras Macdonnell: I have one question about the distribution of forms. It has been suggested to me that not sufficient forms get to certain post offices. Can the minister indicate in a word the system which is used in distributing forms?


James Joseph McCann: We engage what may be called professionals to do that for us and pay them a fee, and they use the post offices as a distributing centre. It costs the government $420,000 a year to have these forms printed. In order that there might be a better distribution we engage a firm-I have forgotten the name for the moment-and pay them a fee, and they look after the distribution. In most communities they are distributed either through the taxation office, if there is one in the community, or through the local post office in smaller places. Anybody who cannot procure them that way can drop a letter to the department and they are sent to them.


James MacKerras Macdonnell: About half way down page 371 I notice that there is a chauffeur added to the staff who was not there last year. Does that mean that some officer has grown in status to the point that he is entitled to a chauffeur, or is it a general utility one?


James Joseph McCann: I think we are too frugal in that. We have one automobile for the whole of Canada in the taxation division, and that is in Montreal.


[Stage Direction]
Item agreed to.
Progress reported.
Resolutions reported, read the second time and concurred in.

Walter Edward Harris: I move that the house do now adjourn. It would seem that we are narrowing the field of activity considerably, but we shall need a lot of time tomorrow to complete the work before us. We should

like to alter the program I have already indicated by taking the post office items first, and then follow in the manner I indicated the other day.
Motion agreed to and the house adjourned at 11.22 o'clock.
[The following items were passed in committee of supply]:



PRIVY COUNCIL

[Stage Direction]
Governor General and Lieutenant-Governors-
158.	Office of the secretary to the governor general, $185,168.
159.	To authorize and provide for the reimbursement to the lieutenant-governors of the provinces of Canada of the costs of travelling and hospitality incurred in the exercise of their duties up to a maximum per annum for each as follows: (a) where the population of the province at the last decennial census did not exceed 500,000, $5,000; (b) where the population of the province at the last decennial census exceeded 500,000, $5,000 plus $1,000 per each 100,000 or fraction of 100,000 of population over 500,000, but not exceeding $12,000 in any case, $86,000.
Privy council office-
345.	General administration, $373,405.
Prime minister's residence-
346.	Maintenance and operation, $25,000.
Federal district commission-
347.	To provide for maintenance and improvement of grounds adjoining government buildings at Ottawa, and to authorize an amount not exceeding $132,000 for construction, improvements and operation of the parks, parkway system and other works under the control of the federal district commission which is additional to the sum of $300,000 granted by chapter 112, revised statutes, $475,085.
343. Expenses of the national capital planning committee (including expenses of the national capital planning service formerly under Department of Public Works), $95,226.
349. To authorize payment of the seventh instalment to a special account in the consolidated revenue fund, known as the national capital fund, established under vote 809, Appropriation Act, No. 4, 1947-48, $2,500,000.
Privy council office-
700.	General administration-further amount required, $5,000.
Federal district commission-
701.	To provide for maintenance and improvement of grounds adjoining government buildings at Ottawa-further amount required, $41,715.
702.	Expenses of the national capital planning committee-further amount required, $10,079.
703.	To authorize the federal district commission to expend for construction, improvements and operation of works under its control, revenues accrued or accruing to the commission from the rental of properties under its control or from other sources, $1.

[Stage Direction]
The Senate-
The Speaker of the Senate-
198.	Allowance in lieu of residence, $3,000.
199.	General administration, $453,249.

House of Commons-
The Speaker of the House of Commons-
200.	Allowance in lieu of residence, $3,000.
Deputy Speaker of the House of Commons-
201.	Allowance in lieu of apartments, $1,500.
202. General administration-estimates of the Clerk, $1,250,777:
203.	Estimates of the Sergeant-at-Arms, $726,540.
204.	Subscriptions to publications of the commonwealth parliamentary association to be distributed to members of the House of Commons, and to provide for the Canadian share of expenses of the commonwealth parliamentary association, $10,000.
205.	To provide hereby, notwithstanding anything contained in the Financial Administration Act or the provisions of the Senate and House of Commons Act respecting the independence of parliament, for the payment out of the consolidated revenue fund to each member of the House of Commons appointed by the governor in council to be a parliamentary assistant (which appointment shall not render such member ineligible or disqualify him as a member of the House of Commons) to assist a minister of the crown in such manner and to such extent as the minister may determine and to represent his department in the House of Commons in the absence of the minister therefrom, a salary of four thousand dollars per annum and pro rata for any period less than a year, $56,000.
206.	To provide for an allowance to the deputy chairman of committees, $2,000.
General-
207.	Printing of parliament, including salaries of staff of the joint distribution office, $313,054.
Library of parliament-
208.	General administration, $222,836.
Pensions and other benefits-
209.	Pension to the unmarried sister of the late Colonel Harry Baker, M.P., $700.
The Senate-
672.	To provide, notwithstanding anything contained in the Senate and House of Commons Act, for payment of indemnity to members of the Senate for days lost through absence caused by public or official business, by illness, or on account of death. Payments to be made as the treasury board may direct. $21,000.
673.	To provide, notwithstanding anything contained in the Senate and House of Commons Act, for the payment to each member of the Senate who attended the second part of the first session of the twenty-second parliament which commenced on January 12. 1954. and ended on April 14. 1954. of an amount representing the actual transportation and living expenses of such member while on the journey between Ottawa and his place of residence after the Easter adjournment of parliament on April 14, 1954, and on the return journey from his place of residence to Ottawa at the end of the recess which commenced on that date, or at any other one time during that session, $5,000.
House of Commons-
674.	To provide, notwithstanding anything contained in the Senate and House of Commons Act. for the payment of indemnity to the members of the House of Commons for days lost through absence caused by public or official business, by illness or on account of death. Payments to be made on the recommendation of the board of internal economy and as treasury board may direct. Each such payment to be deemed for the purposes of the Members of Parliament Retiring Allowances
Supply
Act, to be part of the sessional indemnity of the member for the session in respect of which he received it. $25,000.
675.	To provide, notwithstanding anything contained in the Senate and House of Commons Act. for the payment to each member of the House of Commons who attended the second part of the first session of the twenty-second parliament, which commenced on January 12, 1954, and ended on April 14, 1954, of an amount representing the actual transportation and living expenses of such member while on the journey between Ottawa and his place of residence after the Easter adjournment of parliament on April 14. 1954, and on the return journey from his place of residence to Ottawa at the end of the recess which commenced on that date, or at any other one time during that session. $20,000.
Library of parliament-
676.	General administration-further amount required, $62,010.

[Stage Direction]
Auditor General's office-
52. Salaries and expenses of office, $673,990. Insurance-
160.	Departmental administration, $497,820.
161.	Expenses of work in the interests of fire prevention, $90,288.
General administration-
104.	Departmental administration, $1,843,627.
105.	Comptroller of the treasury-central office and branch offices administration, $15,028,392.
Administration of various acts and costs of special functions-
106.	Superannuation and retirement acts, administration, $451,557.
107.	The Bank Act-salaries and expenses of the inspector general of banks' office, $35,670.
108.	Administration of the Farm Improvement Loans Act, 1944, and the Veterans' Business and Professional Loans Act, 1946, $86,465.
109.	Expenses of the tariff board, $101,993.
Expenses of the Royal Canadian Mint and the
assay office, Vancouver, B.C.-
110.	Administration, operation and maintenance, $1,145,465.
111.	Construction or acquisition of new equipment, $341,535.
112.	Administration of employees' instalment purchase plan, including sale and delivery of Canada savings bonds to government employees, and of employees' group insurance plans, $133,451.
Payments to municipalities-
113.	Grants to municipalities in lieu of taxes on federal property-to provide for payments to municipalities in accordance with the Municipal Grants Act, and the rural municipal grants regulations established by order in council of August 6, 1952, P.C. 3729; and to provide for payments to municipalities under order in council of July 19, 1950, P.C. 3456, in respect of the cost of medical and hospital services and supplies furnished to federal employees and other persons specified therein, $3,190,000.
Contingencies and miscellaneous-
114.	To provide, subject to the approval of the treasury board, for miscellaneous minor and unforeseen expenses including authority to re-use any sums repaid to this appropriation from other
[Stage Direction]
Supply
appropriations, and special compensation or other rewards for inventions or practical suggestions for improvements, $1,000,000.
115.	Cost of telephone service at Ottawa for all departments, $987,400.
116.	Amount required to cover losses incurred on foreign exchange tendered in payment of accounts receivable, $5,000.
General items of payroll costs including superannuation payments-
117.	To provide, subject to the approval of the treasury board, for supplementing other votes for the payment of salaries, wages and other paylist charges, $1,500,000.
118.	To provide for the government's contribution, as an employer, to the unemployment insurance fund in respect of government employees paid through the central pay office, $1,000,000.
Grants to universities-
119.	To provide grants to institutions of higher learning recognized in each province by the government of Canada and the government of the province as being universities or institutions of equivalent standing equal to an amount, for each province, not exceeding 50 cents per head of its population as certified by the dominion bureau of statistics divided among the recognized institutions of the province proportionately to their enrolment of full time intramural students in personal attendance at the recognized institution or at an institution in the same province affiliated with it who are registered in courses of university level recognized as leading to and counting year for year toward a university degree awarded by a university in Canada and the Minister of Finance may for this purpose more particularly define the terms "university level" and "university degree", $7,567,000.
Miscellaneous grants-
120.	Canadian general council of the Boy Scouts association, $15,000.
121.	Canadian council of the Girl Guides association, $12,000.
122.	Royal astronomical society of Canada, $3,000.
123.	Royal Canadian academy of arts, $4,025.
124.	Canadian writers foundation, $4,000.
125.	Boys' clubs of Canada, $10,000.
126.	Canadian association of consumers, $6,000.
127.	Grants to the British empire and commonwealth games Canada (1954) society to help defray the anticipated operating deficit from the holding of the British empire and commonwealth games in Vancouver in the summer of 1954, $100,000.
128.	Grant to the Canadian general council of the Boy Scouts association towards defraying a portion of the operating costs of the eighth world jamboree and international conference to be held in Canada in the summer of 1955, $50,000.
General administration-
652.	Comptroller of the treasury-central office and branch offices administration-further amount required, $167,010.
Administration of various acts and costs of special functions-
653.	Superannuation and retirement acts, administration-further amount required, $13,837.
Contingencies and miscellaneous-
654.	To provide, subject to the approval of the treasury board for miscellaneous minor and unforeseen expenses including authority to re-use any sums repaid to this approDriation from other
appropriations, and special compensation or other rewards for inventions or practical suggestions for improvements-further amount required, $500,000.
655.	To authorize in respect of fiscal year 1953-54: (a) a reduction of $99,483,323.49 in the amount owing by the old age security fund pursuant to section 11 of the Old Age Security Act, representing the amount of temporary loans made by the Minister of Finance to the fund during the fiscal year 1952-53, and (b) a charge in the amount of the said reduction to the reserve in the accounts of Canada entitled "reserve for possible losses on ultimate realization of active assets", $1.
Miscellaneous grants-
656.	To authorize a grant for rehabilitation of the Maison des Etudiants Canadiens in Paris, France, payable in French francs owned by Canada and available only for governmental or other limited purposes, $50,000.

[Stage Direction]
National parks branch-
National parks and historic sites services-
692.	Construction or acquisition of buildings, works, land and new equipment-further amount required, $98,250.
Engineering and water resources branch-
693.	To provide for advances made in the fiscal year 1953-54 by the Minister of Finance to the Northwest Territories power commission for power development in accordance with section 15 (2) of the Northwest Territories Power Commission Act, $3,000.
Northern administration and lands branch- Northern administration division-
Northwest Territories, including Wood Buffalo park and Eskimo affairs-
694.	Operation and maintenance-further amount required, $14,932.
695.	Construction or acquisition of buildings, works, land and new equipment-further amount required, $581,681.
Forest conservation and wildlife management, including Wood Buffalo park-
698. Operation and maintenance-further amount required, $17,320.
Yukon Territory, including forest conservation-
697.	Operation and maintenance-further amount required, $14,000.
698.	Construction or acquisition of buildings, works, land and new equipment-further amount required, $51,980.
Loans, investments and advances-
763. To authorize and provide for a continuing special account in the consolidated revenue fund, notwithstanding section 35 of the Financial Administration Act, to be known as the Eskimo loan fund, from which loans or investments may be made to or in respect of individual Eskimos or groups of Eskimos to promote the commercial activities thereof and to provide housing under conditions fixed from time to time by the treasury board and to authorize the crediting to this special account of repayments by or in respect of such individual Eskimo or groups of Eskimos and the readvancing of such moneys; the excess of the amounts charged over the amounts credited to this special account at any time not to exceed $150,000, of which $50,000 has already been provided under vote 546, Appropriation Act, No. 3, 1953, $100,000.

department of justice Supreme Court of Canada-
164.	Administration, $195,485.
Exchequer Court of Canada-
165.	Administration, $106,063.
Yukon territorial court-
166.	Administration, $16,242.
167.	Payments of gratuities to the widows or other dependents of judges who die while in office, $20,000.
Combines Investigation Act-
168.	Restrictive trade practices commission, $71,668.
169.	Office of investigation and research, $334,580.
170.	Bankruptcy Act administration, $42,836.
171.	Northwest Territories-administration of justice, $66,530.
172.	Yukon Territory-administration of justice,
$49,080.	. _ I
General-
173.	Expenses of committee appointed to advise on principles and procedures relating to remission service, $10,000.
B-Penitentiaries-
174.	Administration of the office of the commissioner of penitentiaries, including $40,000 for grants to recognized prisoners' aid societies, as may be approved by the treasury board, $375,296.
175.	Operation and maintenance of penitentiaries, including supplies and services relating thereto; administration, operation, repair and upkeep of buildings, works and equipment; maintenance, discharge and transfer of inmates; compensation to discharged inmates permanently disabled while in penitentiaries, $8,497,572.
176.	Construction, improvements and new equipment, including provision for the establishment and construction of a new institution in the province of Quebec for the confinement and reformation of federal prisoners, $1,362,830.
Royal Canadian Mounted Police-
Headquarters administration, national police services and training establishments-
407.	Administration, operation and maintenance, $7,223,936.
408.	Construction	or	acquisition	of	buildings,
works, land and new equipment, $972,918.
Land and air services-
409.	Operation and maintenance of divisions, $23,488,839.
410.	Construction	or	acquisition	of	buildings,
works, land and new equipment, $3,779,049.
Marine services-
411.	Operation and maintenance, $1,385,264.
412.	Construction	or	acquisition	of	buildings,
works, land and new equipment, $377,100.
413.	Grant to the chief constables' association of Canada, $500.
Supply
414.	Grant to the Royal North West Mounted Police veterans' association, $300.
Pensions and other benefits-
415.	Pensions to families of members of the mounted police who have lost their lives while on duty, as detailed in the estimates, $6,439.
416.	Pension to Basil Burke Currie, $685.
A-Department-
Combines Investigation Act-
664.	Restrictive trade practices commission-further amount required, $12,000.
665.	Office of investigation and research-further amount required. $43,000.
General-
666.	Expenses of committee appointed to advise on principles and procedures relating to remission service-further amount required, $7,000.
667.	Expenses of the royal commission on the law of insanity as a defence in criminal cases and on the criminal law relating to criminal sexual psychopaths, $72,250.
B-Penitentiaries-
668.	Construction, improvements and new equipment. including provision for the establishment and construction of a new institution in the province of Quebec for the confinement and reformation of federal prisoners-further amount required,
[Stage Direction]
Royal Canadian Mounted Police-
Headquarters administration, national police services and training establishments-
723.	Administration, operation and maintenance- further amount required, $60,000.
Land and air services-
724.	Operation and maintenance of divisions- further amount required, $393,759.
725. Construction or acquisition of buildings, works, land and new equipment-further amount required, $127,834.
Marine services-
726. Construction or acquisition of buildings, works, land and new equipment-further amount required, $225,000.
Pensions and other benefits-
727.	Government's contribution to the Royal Canadian Mounted Police pension account, $691,648.

[Stage Direction]
Taxation division-
299.	General administration, $2,413,361.
300.	District offices, $23,753,632.
Income tax appeal board-
301.	Administration expenses, $74,920.
[Stage Direction]
Thursday, June 24, 1954