1954-03-09

Mr. Speaker:: I have the honour to lay upon the table of the house a copy of a report of the civil service commission respecting the permanent appointment of certain employees of the House of Commons.



PRIVATE BILLS


[Stage Direction]
Bill No. 341, for the relief of Michele Grignon Ferguson.-Mr. Hunter.
Bill No. 342, for the relief of Emile Groulx. -Mr. Hunter.
Bill No. 343, for the relief of Doreen Jeannette Yvonne Sarah Mary Dorothy Sibley Cowans.-Mr. Hunter.
Bill No. 344, for the relief of Muriel Spencer Campbell.-Mr. Hunter.
Bill No. 345, for the relief of Yetta Frumkin Binder.-Mr. Hunter.
Bill No. 346, for the relief of Vera Mary Drummond Stafford.-Mr. Hunter.
Bill No. 347, for the relief of Alice Beatrice Cutler Murdoch.-Mr. Hunter.
Bill No. 348, for the relief of Maartje Stelling McLachlan.-Mr. Hunter.
Bill No. 349, for the relief of Wilfred Roy Fricker.-Mr. Hunter.
Bill No. 350, for the relief of Dorothy Adelaide Jorbahn Rosburg.-Mr. Hunter.
Bill No. 351, for the relief of Joseph Bernard Bertrand.-Mr. Hunter.
Bill No. 352, for the relief of Ann McKinnon Archibald Barnes.-Mr. Hunter.
Bill No. 353, for the relief of Joseph Gerard Arthur Valmore Tremblay.-Mr. Hunter.


[Stage Direction]
On the orders of the day:
Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, I would like to direct a question to the Secretary of State for External Affairs. Has he been able to confirm the statement by the Prime Minister
(Mr. St. Laurent) in regard to the recognition of communist China, and, if so, has he any comment to make?


Hon. L. B. Pearson (Secretary of Stale for External Affairs):: Mr. Speaker, by lunch time no reply had been received to our telegraph message requesting the actual text of what the Prime Minister is reported to have said in the Philippines, and in Korea.


REPORTED VISIT OF PRIME MINISTER TO WASHINGTON
Mr. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, I would like to direct a question to the Secretary of State for External Affairs. Is he prepared to say whether there is any foundation in a newspaper report today to the effect that the Prime Minister on his return will immediately go to Washington to discuss with President Eisenhower what he has seen on his world tour?


Lester Bowles Pearson: Mr. Speaker, I know of no foundation for that newspaper report.


ROYAL CANADIAN MOUNTED POLICE
[Stage Direction]
On the orders of the day:
Mr. Colin Cameron (Nanaimo):: Mr. Speaker, I would like to direct a question to the Minister of Justice. Is the minister aware that the person or persons charged by him with the duty of investigating the alleged leak in Victoria, B.C., from R.C.M.P. files failed to contact or interview Reeve Casey of Saanich, the person who was, in the first place, responsible for the allegation that there had been a leak from the R.C.M.P. files; and is the minister, in view of this circumstance, prepared to have a further investigation made of the matter?


Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, I wish to thank the hon. member for having given me notice of this question. I am aware that the persons charged with the investigating of the alleged leak of information in Victoria did not interview Reeve Casey, and I am also aware of the reason they did not do so, namely that the only occasion on which any member of the R.C.M.P. was in contact with Reeve Casey
2796	HOUSE OF
Inquiries of the Ministry in relation to this matter was a considerable time after Mr. Marshall was released by the Victoria public library board.
The federal government does not permit or condone the giving of information by the R.C.M.P. to private citizens from its special branch flies. Our investigation has established that there was no disregard or violation of this policy by the R.C.M.P. in respect of the person named. This language, Mr. Speaker, I believe, is quite clear, but lest there should be any misapprehension concerning it may I state the same facts in another way. The federal government forbids the giving of information to private citizens from its special branch files. In the present case the federal government is satisfied that no member of the R.C.M.P. gave information to anyone concerning Mr. Marshall from its special branch files.


LABOUR CONDITIONS
[Stage Direction]
On the orders of the day:
Mr. Angus Maclnnis (Vancouver-Kings-way):: Mr. Speaker, I would like to direct a question to the Minister of National Defence. Has the minister received a protest from labour organizations in British Columbia regarding the reduction of rates of pay for certain classes of work in the naval dockyard at Esquimalt? If so, will the minister comment on this protest?


Hon. Brooke Claxlon (Minister of National Defence):: Mr. Speaker, I thank the hon. member for having given me notice of the question. Representations have been received with respect to the proposed reduction in rates of pay concerning six, I believe, of the number of riggers on the establishment of the naval dockyard at Esquimalt. These representations are at present under consideration and in the meantime action with respect to the proposed reduction has been postponed.


THE BUDGET
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Does the minister yet know the date on which he intends to bring down the budget?


Hon. Douglas Abbott (Minister of Finance):: No, Mr. Speaker.
(Mr. Garson.]


Stanley Howard Knowles: May I ask a supplementary question, Mr. Speaker? Will it be before or after the 22nd of March?


Douglas Charles Abbott: I do not know, Mr. Speaker.


PRAIRIE FARM ASSISTANCE ACT
[Stage Direction]
On the orders of the day:
Mr. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. Has the federal government received any representations from the government of Manitoba concerning the possibility of amendments to the Prairie Farm Assistance Act which will allow the act to apply on a more equitable basis to Manitoba farmers in relation to the farmers of Saskatchewan and Alberta? If so, what has been the nature of these representations?


Right Hon. J. G. Gardiner (Minister of Agriculture):: Mr. Speaker, the hon. member for Brandon-Souris was kind enough to send me notice of his question. In reply I would say that the government of Manitoba has on quite a number of occasions communicated to us its view that Manitoba does not get as much assistance under the act as the other two provinces, and on each occasion on which these representations have been made we have pointed out that the same conditions apply in different parts of the provinces of western Canada. There are areas in all the provinces that never have crop failures and those areas, of course, never receive payment, but they make payment on delivery of grain to the elevators. I might say, for the benefit of the hon. member, that the hon. member for Provencher (Mr. Jutras) at one time in the house a few years ago moved an amendment to the act to deal with the question just raised. The question came up for discussion here and all of the members from Manitoba present, except the hon. member for Provencher, were opposed to making the change.


ROYAL CANADIAN NAVY
[Stage Direction]
On the orders of the day:
Mr. G. R. Pearkes (Esquimalt-Saanich):: Has
the Minister of National Defence an answer to the question I asked yesterday with reference to the statement he then made?


Brooke Claxton: I have the number of officers on strength today which is 2,318, representing 13-8 per cent of the total strength of the

Royal Canadian Navy today. The target for officers in the build-up to 21,200 men would be a total of 2,900 representing 13-6 per cent of the total strength. Numerically the relationship is satisfactory at the present time. However, it takes longer to train officers than to train men. On that account we should like to get an additional group of officers trained to match the men necessary to man the ships as we put them into commission. Hence we have instituted this new plan.


George Randolph Pearkes: I wonder whether the minister could elaborate a little bit more on the plan? Press reports indicate that there is a separate establishment or separate school.


Brooke Claxton: The press report was wrong.


George Randolph Pearkes: I thank the minister.


Brooke Claxton: I should correct this misunderstanding. We set up-and this is, I am sure, what misled the press-a new shore establishment with a new name, H.M.C.S. Venture, but that will be in the existing buildings at Esquimalt, with the existing staff, equipment, recreational facilities, educational facilities and so on. There is a new name but no new establishment.


George Randolph Pearkes: Is this a new principle as distinguished from the tri-service college idea?


Brooke Claxton: It is comparable to the
R.C.A.F. short-service commission plan or the army officer candidate school program which we used to raise the special force. This is to meet this particular situation.


George Randolph Pearkes: Just one other question. Do these other plans take in young men of 16 to 19 years of age and train them?


Brooke Claxton: The ages are about the same.


THE BANK ACT
[Stage Direction]
The house resumed, from Monday, March 8, consideration of the motion of Mr. Abbott for the second reading of Bill No. 338, respecting banks and banking, and the amendment thereto of Mr. Coldwell.
Mr. Victor Quelch (Acadia):: Mr. Speaker, before the adjournment last night I was stressing the point that during a depression we cannot hope to expand the purchasing power of the people by financing government expenditures through an expansion of taxation, especially an expansion of taxation upon people in the lower income brackets or of the sales tax or by borrowing from the
The Bank Act
savings of the people because that procedure is bound to reduce their purchasing power to the extent of their borrowing. We insist that it must be done at least in part by monetary expansion.
At the present time we are on a managed currency; and I would say it is a fully managed currency. We in this group support that policy. We have been a managed currency since the year 1940. Prior to that time, for a number of years, we were on what might be called a semi-managed currency; that is, we were on a gold parity although we were not on the gold standard. I would say that the real test of the efficiency of the government's management of currency has yet to come. Ever since 1940 we have had a high level of economic activity, largely as a result of the war; in the post-war period it has been largely as the result of consequences arising out of the war.
In the past the Minister of Finance has supported the general principle of cyclical budgeting. I think we will all agree that during the past few years he has not hesitated to budget for a substantial surplus. I think perhaps there was a good deal of logic in that action because during those years we had a high level of economic activity and we had present strong inflationary pressures. It therefore might be said that it was necessary to withdraw a certain amount of the redundant money from circulation in order to reduce the inflationary pressure.
But whilst I would agree that there was probably a certain amount of justification for that action, I would also point out that in the future, for the same reason, it may be necessary to budget for a deficit. What I mean by that is that if we have a condition where economic activity is falling off and where we are getting into a depressed condition, then the government must be prepared to budget for a deficit. In other words, if a system of equitable taxation and moderate borrowings from the savings of the people fails to provide the government with the money that is necessary to finance their program, then they will have to be prepared to indulge in a certain degree of monetary expansion.


Mr. Speaker:: Order. I am sorry to interrupt the hon. member but I cannot help noticing-and probably the hon. member who has the floor has also noticed it-that there is so much noise in the house-


Some hon. Members:: Hear, hear.


Mr. Speaker:: -that the hon. member who has the floor is speaking under extremely

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difficult circumstances. I would imagine that hon. members will keep silent from now on because I noted that those who were the first to applaud my remarks were perhaps the worst offenders.


Victor Quelch: The Bank Act
to provide for the difference between the published value of their assets and what might be considered the market value. This table reads as follows:
Fiscal years
1945	...
1946	...
1947	...
1948	..
1949	...
1950	..
1951	...
1952	...
1953	... Note
Transfers
to
contingency reserves, net .. $22,244 ..	6,902
..	17,243
..	15,524
..	20,993
.. 20,600 ..	27,965
..	27,069
..	24,834
(a) Amounts are expressed in thousands of dollars.
It is quite evident that they have substantial amounts in their reserves at the present time, and we can rest assured that the contingent reserves are adequate to take care of the writing down of any of their published assets. It is interesting to note also that they do not have to pay any income tax when they transfer earnings to that inner reserve.
I believe the figures I have quoted are enough to show that the banks are in a very prosperous condition. As a matter of fact, the hon. member for Winnipeg North Centre (Mr. Knowles), referring to the banks, said that they were drowning in liquidity. I think that was a poor analogy. I would say that the banks are floating luxuriously on that liquidity. Moreover, they are supported by the government in that floating because there are a number of measures under which the losses of the chartered banks are guaranteed by the government up to a certain percentage. As I say, from the figures I have quoted it is quite evident the chartered banks are doing very well. I feel we would all agree it is highly desirable that they should be doing well, and that they should' be in a sound position.
Just so long as economic activity continues at a high level, there is every reason to believe that the banks of this country will continue to prosper. Therefore, I see no reason why the chartered banks should not be required to service additional deposits arising from government expenditures that are made to maintain a high level of economic activity without any additional compensation for that service. After all, those deposits would only represent a small percentage of the total deposits which are represented by loans and investments that bear interest. I would say that such a service could well be regarded as a premium paid by the chartered banks to help assure

a high level of economic activity in the country, which would assure them a continued prosperous condition.
The chartered banks in Canada today are in a very preferred position. Many of their risks are safeguarded by the government and their profits practically assured. Therefore, the argument by the Bank of Canada that financing through the Bank of Canada would be too hard upon the chartered banks does not, I think, hold water.
In closing I should like to say a few words about the C.C.F. amendment. The leader of this group has already spoken on it. I would agree that if the chartered banks refused to co-operate fully in carrying out government policy, if they were in an unsound position or if they were operating inefficiently, then there might be justification for nationalization. It has been argued that the chartered banks have operated inefficiently at times in the past from the point of view of the borrower. Reference has been made to what happened in the thirties. The chartered banks refused to make loans to farmers and other organizations. As I pointed out in my speech yesterday, the chartered banks at that time were in reality the victims of circumstances. It was the result of the failure of the government of the day to maintain the economic activity of this country at a high level that few loans were made to industry to extend their production. What use is it to make loans to industry to expand production when they were not able to sell their present level of production? A lot of the criticism levelled against the chartered banks should rightfully have been made against the government's economic and financial policies.
On the other hand, if it is argued that profits are too great, there are many ways in which parliament can take action to limit those profits. I have shown one method by which the chartered banks could provide a greater service to the people of Canada, and of course to the extent that they did that their profits would be reduced.


Mr. Donald M. Fleming (Eglinton):: As the Minister of Finance (Mr. Abbott) said yesterday in opening the debate on second reading, Mr. Speaker, Bill No. 338 is a measure that is important but not controversial. One might have expected that a measure of this kind being largely technical would give rise to only a short debate. The amendments that the minister catalogued in his speech yesterday are not far-reaching. There are a half a dozen of them that merit mention, but broadly speaking there is no far-reaching revision of the Bank Act contemplated this year.

The amendments will have the effect of increasing the minimum cash reserve required on the part of the banks from 5 per cent to 8 per cent of their Canadian dollar deposit liabilities; the banks will be for the first time in Canadian banking history given the power to lend on the security of mortgages on real estate, through the medium of insured loans provided for in the new housing act which was passed through this chamber and given third reading yesterday. The other amendments are not of an extensive nature. Provision is made for facilitating loans on the part of banks for the development of the oil reserves of this country. There is a slight amendment to the important section 88 in relation to loans in the case of seed potatoes. There is a prohibition which has been expected for a long time against the issuance of notes in circulation and a provision for doubling the capital requirement on the part of new banks, both as to subscribed and issued capital.
There is nothing in amendments of this kind, Mr. Speaker, that would give rise to an extensive debate on second reading. However, the leader of the C.C.F., on behalf of his party, yesterday introduced an amendment that I think should engage the serious attention of the house. The amendment, as it is recorded on page 2778 of Hansard for March 8, 1954, reads as follows:
That Bill No. 338 be not now read a second time but that it be resolved that in the opinion of this house consideration should be given to the national ownership and public control of the chartered banks.
I welcome the introduction of this amendment. I do not welcome it because I am prepared to give any support to it or because it finds any degree of favour in my eyes. I welcome it, Mr. Speaker, for several reasons.
It may help to relieve something of the tedium of dull debate in a session that has, as a whole, been rather dull-although I do not pretend to confound contention with constructiveness, or to say that dullness is always the test of constructiveness. But I do welcome it, principally because there is revealed in this amendment an element of self-exposure on the part of the socialist party which, I think, is timely.
We have seen over a period of years a change of doctrine on the part of the C.C.F. from time to time. Perhaps some of them will think that is a harsh way of putting it. I think it has gone much beyond mere changes in emphasis. Those of us who have watched them in the house over a period of years have seen very pronounced changes in the doctrines espoused by the socialist party in the House of Commons. Some of
The Bank Act
these changes have been attributable, of course, to changes in personnel of that party in the house. For instance we recall that after certain by-elections in June of 1948, with the entry of several-two in particular-new members of the socialist party into this house, there was a definite leftist turn in the flavour of C.C.F. speeches. After the rebuke administered by the electorate to that party in 1949 we find them rather shrinking away from the tendencies which had been evident previously, and becoming more cautious and moderate. Indeed it reached the point where one hon. member of that party, then representing the riding of Moose Jaw, began to make speeches which by no stretch of the imagination could possibly be reconciled with the doctrines which had been espoused by the party to which he gave outward adherence.


Mr. Sinclair:: You are so right.


Donald Methuen Fleming: And, coming to the present parliament, we have seen some evidence again of a tendency to shift left, with the accession to the C.C.F. membership in the house of some whose views appear to be considerably to the left of those who sat as representatives of that party in the twenty-first parliament of Canada.


Mr. Stewart (Winnipeg North):: Would you like to tell us who they are?


Mr. Hodgson:: You know who they are; why ask that?


Donald Methuen Fleming: If the hon. member does not know, then I suggest he has not been spending his time to very good advantage.
Mr. Speaker, in this amendment we see the C.C.F. back at Regina. The leopard has not changed his spots. Notwithstanding the shifts of emphasis and the shifts of policy we have seen in the socialist party in recent years, they are right back at Regina. And we have waited-I think some of us with interest-for evidence that the C.C.F. stands firmly where it stood when its Regina manifesto was written in 1933.
Now, may I ask the house to put side by side the amendment introduced in this house yesterday with this extract from the Regina manifesto of the Co-operative Commonwealth Federation adopted in July of 1933. Under the heading "Socialization of Finance" we find this subheading:
Socialization of all financial machinery-banking, currency, credit, and insurance, to make possible the effective control of currency, credit and prices, and the supplying of new productive equipment for socially desirable purposes.
And then this paragraph proceeds:
Planning by itself will be of little use if the public authority has not the power to carry its

The Bank Act
plans into effect. Such power will require the control of finance and of all those vital industries and services, which, if they remain in private hands, can be used to thwart or corrupt the will of the public authority. Control of finance is the first step in the control of the whole economy. The chartered banks must be socialized and removed from the control of private profit-seeking interests; and the national banking system thus established must have at its head a central bank to control the flow of credit and the general price level, and to regulate foreign exchange operations. A national investment board must also be set up, working in co-operation with the socialized banking system to mobilize and direct the unused surpluses of production for socially desired purposes as determined by the planning commission.
Insurance companies, which provide one of the main channels for the investment of individual savings and which, under their present competitive organization, charge needlessly high premiums for the social services that they render, must also be socialized.
Mr. Speaker, the C.C.F. has marched now, for all to see, right back to Regina. There had been suggestions previously that the C.C.F. had turned its back on Regina. Indeed, Mr. Donald C. MacDonald, then national director of organization for the C.C.F. party, and now the provincial leader for that party in Ontario, on March 8, 1951, had occasion to object to interpretations placed upon decisions taken by the C.C.F. national council in that month of March 1951, and which had been widely commented upon by the press and public of this country. He was trying to reassure the public in a letter to the press, in which he said:
In the second place the C.C.F. national convention did not reject the Regina manifesto.
Well, on that occasion, if it refrained from rejecting it, it certainly did not say anything about the nationalization of the banks. Indeed, in other pronouncements from the C.C.F. it has been extraordinary that such a degree of silence has been observed on what was regarded in 1933 by the C.C.F. as something of such high importance that it found second place in the list of far-reaching planks written by that party into its platform.
And so, Mr. Speaker, I welcome this selfexposure on the part of the C.C.F. as to its true designs on the Canadian economy.
There is one sentence in the Regina manifesto, in the paragraph from which I have just read, which is absolutely correct. And it is so correct that I hope all members of the house, and the Canadian public, will realize its significance. That sentence is:
Control of finance is the first step in the control of the whole economy.
And, Mr. Speaker, the C.C.F. in proposing, as they are in this present amendment, the national ownership and public control of the chartered banks in Canada, is inviting the

House of Commons to take what they regard as the first step toward the control of the whole economy. Well, for my part, I wish to record as emphatic opposition as any I am capable of to this proposal.
It was a weak case, indeed, that the leader of the C.C.F. offered yesterday in support of this radical and sweeping proposal, such a case that it is not to be justified by expressions such as he used yesterday in describing the banking system as "an instrument of monetary policy". Mr. Speaker, to say that is a far cry from a proposal for the nationalization of the chartered banks of Canada. Indeed, if they are looking for avenues for undertaking whatever monetary and fiscal controls are necessary over the banking system of Canada, then what is the Bank of Canada for? A case could rarely have been weaker than the one put forward yesterday by the leader of the C.C.F.
Now, I wish to make this observation about the Canadian banking system in general. The Canadian banking system is unique in all the world. It is not just like any other banking system in the world. There are some who trace some aspects of it to Scottish sources and others to American sources. The fact is that the Canadian banking system has elements which are absolutely unique the world over. It is a system that has been tested. It is a system that has been submitted to very severe testing-and indeed probably the most severe within the lifetime of every member in the house. And no banking system in the world emerged from the acid test of the depression of the 1930's with a better record, or in a stronger or more healthy position, than the Canadian banking system. Much of that health of course is attributable to the fact that it is a system built upon branches. In that respect it has differed so much from the system in vogue in the United States. That branch system has drawn its strength from the whole far-flung economy of Canada.
It is so easy for hon. members to the left to picture the banks as if they were the enemies of the economy, as though all the ills in the economy were to be attributed to the banks. Mr. Speaker, anyone who knows anything about the banking system, or has studied the history of the Canadian banking system, well knows that in general what is good for business in Canada-and that goes for all aspects of the Canadian economy, our primary industries as well as secondary industries-is good also for the banks. The banks cannot prosper when the Canadian economy is stagnant or receding.
Sir, this banking system is such that there has been no failure of a chartered bank now

for more than 30 years. We do not want any more bank failures; we do not want such tinkering by theorists with the Canadian banking system as in any measure to jeopardize the soundness of that system, because the effects of the failure of a chartered bank extend far beyond the interests of its depositors, its creditors and its shareholders. That was so in connection with the last bank failure in Canada, the Home Bank. The effects of that failure extended very far into the Canadian economy. And, Mr. Speaker, we do not want in this house, I believe, to do anything that is going to subtract from the strength of this system. It is a system that has grown in strength and in public confidence.
Those factors do not occur by accident, Mr. Speaker. You cannot find any more effective tribute to the soundness of the Canadian banking system, or to the way in which it has served the banking needs of the Canadian people, than the fact that the system has grown stronger and that with it has grown the public's confidence in it. Indeed the leader of the C.C.F. party (Mr. Coldwell) felt called upon to recognize the service and what he called the impressive record of the Canadian banking system. At page 2772 of Hansard he is reported as saying:
I am going to say at once that the Canadian banks have a very impressive record of efficient management, of safety-
And then of course he added:
-and of profit to their shareholders.
Well, let us take that statement as we find it. It is at least a recognition of the banks' impressive record, in the way in which they have served the needs of the Canadian economy. Sir, yesterday the Minister of Finance, in opening his speech, used these words, at page 2761 of Hansard:
. . . there is general agreement that within the framework of our accepted economic structure our banking system is an excellent system; that it is efficient; it gives good service; it commands the confidence of the Canadian people; and it is highly regarded abroad.
Let me say at once that in so gauging the opinion of this house he certainly spoke for me, because those sentiments I do most heartily echo.
Let it not be forgotten, sir, that the Canadian banking system is a competitive one. That is one of the reasons for the strength of the Canadian banking system. It has been a system based upon keen competition. And in the last analysis, sir, its strength rests upon the way in which it has served the Canadian people; for businesses and individuals in this country from one end of it to the
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other have owed so much to the advice and guidance they have received at the hands of their bankers.
But we have attacks made, sir, on the Canadian banks. We have attempts on the part of socialists in this house to blame the banking system for all the ills of the country. Everything that is wrong can be laid at the door of the banks: such is their reasoning. Well, let us be fair about this. Let us recognize in the first place that limitations are imposed upon the business of banking; they are imposed by statute of this parliament of Canada and they are imposed also by sound common sense.
Banking is important; it is a factor of the highest importance in relation to our own economy; but it is not the only factor in the Canadian economy. And I cannot agree with those in this house who say that the regulation of the volume of bank deposits is the dominant factor in determining the strength of the Canadian economy. Sir, those who think along that line would do well to recall what Mr. Graham Towers, the governor of the Bank of Canada, has had to say before some of the committees in this house in recent years in commenting upon the preamble to the Bank of Canada Act. Let me remind the house of the provisions of the preamble:
Whereas it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of the dominion.
Mr. Graham Towers has had occasion more than once to shake his head before committees of this house when faced with that preamble and to question how the Bank of Canada could be expected to fulfil all the objects set forth therein. It is perhaps time that the house measured a little more realistically the possible scope within which even the central banking facilities of this country may operate.
And the second limitation, Mr. Speaker, is the sound and legitimate limitation against the taking of unhealthy risks. It seems that when anybody has some pet project, if the banks do not lend money upon it, that is fair occasion for denunciation of the banks. Let us remember, Mr. Speaker, that the powers of the banks are limited by law and many risks the banks and others are called upon to take are unwise, and in shrinking from

The Bank Act
those risks the banks are following the sound practice of protecting the deposits that are placed in their hands.
We heard criticism in this house yesterday of the fact that parliament had intervened in such measures as the setting up of the industrial development bank, in the provision of farm improvement loans, home improvement and extension loans and in the insuring of loans under the National Housing Act, and has underwritten risks which private enterprise and the chartered banks ought to be accepting.
Well, Mr. Speaker, who says that the banks ought to be accepting those risks? Surely, Mr. Speaker, those who are charged with the responsibility of administering funds placed in their hands, funds largely emanating in the first place from deposits in their hands, must be very calculating in their assumption of risks with money that after all, in the last analysis, does not strictly belong to them.
In reference to all these measures, why do the socialists in this house not be fair and say that the banks were pushed into loans of these kinds, were urged to embark upon fields which were foreign to their experience because it was public policy on the part of this parliament to encourage the banks to enter those fields? We had evidence just the other day-I am not going to comment on this at length-of the position of the banks in reference to the extension of their powers into new investment in insured loans on the security of real estate.
This is a new field, brand new to the banks. They say they do not know anything about it, and they would not have chosen to be in it. They did not ask to go into it. They are put in that field today only because it becomes public policy on the part of parliament to give them powers to go into that field.
In all these measures, Mr. Speaker, whether it is insured loans, home improvement and extension loans or the industrial development bank, it was the decision on the part of parliament that the banks go into a field which was largely at that time beyond the range of banking policy. It is quite proper in these cases, Mr. Speaker, it seems to me, when parliament is prodding the banks to take risks in new fields, and where substantial risks are involved, that parliament, if it takes the course of following what is considered to be sound public policy, should be prepared to facilitate those steps.
Let us look at experience elsewhere. The experience of other nations in this respect is interesting but we do not have to go beyond the experience of the United Kingdom. When

the socialists came into power in the United Kingdom in 1945 they had ample opportunity -no government ever had more-to take every step they wished in the direction of nationalization of the joint stock banks of that country; but when Labour went out of power at the end of 1951 they had not nationalized a single joint stock bank in the United Kingdom-not one. What more proof do you need that nationalization of banks is an imprudent and reckless course? The Labour party today in Britain is not making any proposals along the lines the C.C.F. party in this parliament has undertaken to put forward and espouse in this amendment.
I wish to examine, in the time that remains, what I consider to be the certain effects of nationalization of the Canadian banking system, if such a course were ever undertaken.
The first result would be to drive confidence away. Sir, you cannot have capital available for needed investment unless there is confidence. It was Lenin who said that all you needed to destroy the political system of the west, or democracy, was to have a series of recurring depressions. I am not sure he was altogether right, Mr. Speaker, but at any rate it remains a fact that if you destroy confidence then you certainly can destroy an economy, because a free economy depends upon confidence.
What are the sources of capital in an economy such as ours? The first source is profits, that much-maligned word, that word which is thrown around as though there was something inherently wicked about profits. I am not going to condone profits which are improperly made or are excessive. I am here to say, however, without fear of contradiction, that profits are absolutely essential to our free economy, and if there are not going to be profits there is not going to be national development, nor will there be the capital for the development of these great resources of Canada.
When our friends to the left decry the profits which the banks made in recent years, let us not forget the years when the banks, like other institutions, were not making profits, and when business was finding it difficult to succeed. Let us not forget also that in this prosperity the exchequer of the Canadian government is the principal shareholder.
The second source of capital is from abroad. One reason for the strength of the Canadian economy has been that it has given rise to confidence abroad, and no one factor has contributed more to the feeling of confidence abroad in the Canadian economy than has

the Canadian banking system. Indeed, that was recognized only last week in a speech made by President Gordon R. Ball of the Bank of Montreal when he said that the increasing foreign investment at stake in Canadian industry is an accumulating benefit to the nation. I would like to quote from a BUP dispatch of the speech made by Mr. Ball at Montreal on March 2. The report states:
The foreign stake in Canada has increased by $3 billion since 1945 to more than $10 billion at the end of 1952, Mr. Ball said. The increase, compared with $30 billion of new Canadian capital expenditure in eight years, represents less than 8 per cent of Canada's post-war spending of a capital nature.
Mr. Ball referred to Canada's oil industry as "a world industry," and he said it was to be expected that much of the stimulus to explore and develop the potentialities of the Canadian west should come from United States companies.
Of all United States foreign investment, Mr. Ball said, close to one-third is in Canada, and a considerable part of that came from the re-investment of profits, which made the investment "not a drain but an accumulating benefit."
Of this widening area of United States participation in investment in Canada, Mr. Ball said, "it was a natural development and it should be understood before it is criticized."
If you want to put a stop to the assistance given by foreign capital to the development of Canadian resources, and thereby to the provision of expanding opportunities for Canadian youth and workmen, then all you need to do is to support measures of the kind envisaged in this C.C.F. amendment. There can be no surer way of destroying confidence abroad in Canada's economy than to carry out the proposal made for the nationalization of the Canadian chartered banks.
Even the effect of speeches such as the kind which have been made by C.C.F. members in this debate has been harmful on this occasion, as on past occasions, when they affect that confidence.
The second result of nationalization would be a breakdown. There is not enough wisdom in any government to operate a banking monopoly in Canada. A year or so ago I heard the present Chancellor of the Exchequer in the United Kingdom, Mr. R. A. Butler, make this comment in the House of Commons at Westminster in reference to a measure taken by the government. He said: "The view of the government is that businessmen best know how to run business." By the same token, may I express my view that the bankers of this country, reputable, competent and highly respectable, best know how to operate the banking system of this country. One would imagine, listening to some of the speeches made in this house, that anyone without the slightest experience in banking, 83276-178
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or even in managing a business-with one sole exception in a certain party-could step in and manage not just a branch of a bank, not just one entire chartered bank, but all the banks in Canada. To reduce the position to terms such as that, Mr. Speaker, is to expose its utter absurdity. I do not know how many hon. members in this house have had personal experience in relation to banking in Canada. I doubt very much if there are many. Perhaps you could count them on the fingers of both hands. But I am perfectly certain, sir, that they are not to be found among those who are advocating nationalization of the Canadian banks. It seems to me that the less experience they have of the banking business the more freely they talk of taking the banks over and running them through some little cabal here in Ottawa.
The third result of nationalization would be an end of competition in our Canadian banking system, and with the end of competition would come the end of a factor which has been one of the greatest contributing factors to the strength of the Canadian banking system.
The next result would be regimentation. That is quite clear, and all one requires to do is to refer to that clear-cut and accurately expressed sentence in the Regina manifesto to which I alluded earlier, namely: "Control of finance is the first step in the control of the whole economy."
If those who are advocating nationalization of the banks had the right and the power to plunge this country into that course, you know perfectly well, Mr. Speaker, it would be the first step to complete socialization and the foisting upon the Canadian economy of socialistic regimentation-the inevitable accompaniment of socialism.
The fifth result, sir, would be centralization of power over the entire Canadian economy right here in Ottawa. Centralization of economic and political power has been the inevitable and invariable accompaniment of socialism. We have seen it in the United Kingdom. We have seen it in other countries where nations have plunged into a socialistic course. For a country like Canada, so widespread in geographical extent, so diversified in its nature, a nation that has every reason to avoid centralization by reason of the duality of cultures, the danger of centralization here at Ottawa of vast powers is an especially threatening peril and one that we must avoid at all risks. Do we wish to see all the bank employees of this country made civil servants? What bank manager, under those circumstances, is going to feel free to impart advice to those who are seeking loans

The Bank Act
from the bank? Being a civil servant, do you think he is going to set himself up to advise the public? That is not the role that is usually chosen by civil servants of their own volition.
When you examine in detail what this proposal would mean, Mr. Speaker, I think it serves to show how little serious thought and serious experience have entered into it. What man is going to go to a civil servant and discuss, in the intimate and confidential way that is customary today between bank customers and bank managers, his pressing private affairs? Under those conditions, I submit that the proposal smacks of absurdity.
The sixth result would be opening the door to political influences. Mr. Speaker, I ask you to think of the function of the branch manager of a socialized bank in dealing with an application for a loan, if political pressure through the local member of parliament or through the local political organization associated with the party to which the government in power belongs were exerted upon him. I contend that you are opening the door to the wrecking of any pretence of soundness in the Canadian banking system. Go further, Mr. Speaker, if you will, and think of the recovery of loans or security on the part of the banks in case of default. Think of the intrusion of political pressures into a situation of that kind. Again you are opening the door, by proposals of this kind, to a complete bedevilling of the whole Canadian economy and any pretence of sound business methods in the Canadian economy.
The seventh result would be to place depositors' funds at the mercy of political pressures and the whims of an oligarchy here at Ottawa. Put this up to the average Canadian. How many of them would wish to entrust their precious savings to the management of those who would be dominated here at Ottawa, if this proposal ever were carried into effect, by long-haired theorists who know jolly little about the operation of the banking system?
I have referred already to the matter of confidence abroad. I say that as an eighth inevitable result, the nationalization of the Canadian banking system would lead at once to the loss of confidence abroad and an end of investment of foreign capital in the development of our Canadian resources.
I submit to this house that the proposal contained in this amendment is just as unsound as any proposal could possibly be. Indeed it is difficult to understand how hon. members of this house could really seriously put forward such a proposal. It is dressed up. It is given, as best that could be done by those who have espoused it, a seductive attraction. But, Mr. Speaker, those who have

put forward this proposal and have urged nationalization of the Canadian banking system are simply singing the siren song of socialism.


Alistair McLeod Stewart: Mr. Speaker, having listened to the hon. member for Eglinton (Mr. Fleming) for the last 30 or 40 minutes I have come to the conclusion that he is going to vote against our amendment.


Stanley Howard Knowles: He refuses to be seduced.


Alistair McLeod Stewart: As usual, he waxed eloquent, he waxed wrathy and he waxed indignant. I know of nothing in this house against which he does not pour out his indignation. In judging between the various types of indignation, I find great difficulty in ascertaining which is the greater and which is the lesser. I find it difficult to ascertain whether he is more indignant at times against the government for its budgetary policy or its housing policy or against us for introducing into this chamber the subject of nationalization of the banks. However, I should really congratulate him. We appreciate what he did. Yesterday we dangled the bait in front of the supporters of the capitalist system-I refer to the bait of nationalization of the banks-hoping that somebody would gulp it and that we could then have a debate on our own terms. The hon. member for Eglinton has obliged us. I extend an invitation to other members to do exactly the same thing. This is particularly what we want.
The hon. member for Eglinton suddenly found out that we in the C.C.F. had exposed ourselves, that we had become socialists. Here we are coming to the Canadian House of Commons and saying that we want nationalization of the banks. A great light apparently has descended upon my hon. friend. But had he read the amendment we made ten years ago, he would have found that it was much similar in terms. I suppose one could say that being ten years out of date is not too much to expect from a Tory. But he is really twenty years out of date, on his own admission, when he reads to us the Regina manifesto and says, "Here is the C.C.F. actually proposing once again the socialization of the banks". Of course we are. We are doing it, we think, for a good reason. Some of his other arguments I shall take up during the course of my remarks.


Stanley Howard Knowles: And take apart.


Alistair McLeod Stewart: And perhaps take apart too. Apart from our own amendment, I think one of the most significant amendments was that moved by the government, namely that dealing with the lifting

of the prohibition of loans upon real estate. There has been a distinct change of mind on the part of the government over the last few years. It was just ten years ago when Mr. Ilsley said in parliament that ours has been a banking system of unusual strength, and that this is owing, in part to other causes, but in part to the prohibition of loans upon real estate. So ten years ago this government would have looked askance at such loans. Ten years ago this government would apparently have frowned upon such loans. They appeared to regard them as unsafe. But belatedly there has been a change of opinion on the part of the government and now they regard them as quite acceptable.
Of course it is a dramatic change in policy which the banks themselves do not want. One might perhaps ask this question. Is the government chipping and chiselling away at the foundation of security which these great banking edifices have built? Is the government deliberately trying to weaken the banking system by introducing this legislation? Obviously the answer is no. I would say that the government has come to the conclusion-and again a belated one-that the banks of Canada are not playing their full part in the economy of Canada and so the government is determined to try to induce them to do so. It will be difficult. Banks and bankers, in this country especially, are cautious and conservative. The banks do not like change. They do not want change. They will resist it. They do not desire change. They will oppose it. When change comes along, they oppose changing even change. They are thorough conservatives, to the extent that they are quite prepared to die defending that which their predecessors died opposing.
But why then should there be this amendment? I have a reason with which the Minister of Finance (Mr. Abbott) may not altogether agree. I think it is because, to some extent, the banks are being made instruments of government fiscal policy. It is a change which we appreciate because as we see it it is another socialist nail in the coffin of capitalism.
I said that the banks were conservative and cautious. The hon. member for Eglinton (Mr. Fleming) raised all sorts of bogeys as to what other people thought about the banks. As far as we are concerned, we do not underrate or underestimate the part they play in our society and in our economy. The banks perform functions of tremendous importance. In other days I know that the banks were maligned and blamed because they were creators of credit. But I maintain that the creation 83276-1784
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of credit is a necessary business. I maintain that the creation of credit is an honourable business as well as being necessary, and if the creation of credit were to stop then the economic system under which we are living would grind to a sudden and dismal end.
Nevertheless there are certain anomalies in the situation. For instance, the government insists, and rightly so, that the profits from the issue of money, that is, coinage, notes and so on, should revert to the state, and yet it agrees that the profit from the expansion of credit should not. We are told that the creation of money is the prerogative of the state. If the Minister of Justice (Mr. Garson) found somebody else creating money I imagine he would not rest until he had locked up that person for a certain number of years. It is a serious offence for individuals to create money in that sense, and yet it seems to be right and proper for the banks to do it by creating credit.
In view of the fact that the Minister of Finance is going to bring down the budget at some indeterminate time, and in view of the fact that he may be looking for a little extra money with which to satisfy the pressures that bear upon him, I suggest that here is an avenue of taxation. There could be an element of taxation upon this profit arising out of coinage, at the expense of the nation. I do not say these profits are fantastic, far from it, but there is an element of profit there which could well revert to the public treasury.
If the banks are as conservative as I believe them to be, what place is there for them in what is really a young and dynamic society? We are living in a free-enterprise world. It is one in which risks are allegedly taken, one in which we take various chances to achieve our ends. But the banks are not prepared to take risks. The hon. member for Eglinton said that my leader made out a weak case yesterday. He made out a case the purport of which was that the banks today were taking no risks whatsoever. I think it is a case which to some extent is worth repeating. The hon. member for Rose-town-Biggar (Mr. Coldwell) mentioned yesterday the Farm Improvement Loans Act of 1944. The purpose of that measure was to provide short and intermediate credit for the improvement and development of farms. The banks were not coming across. They were not prepared to take any risks whatsoever to give farmers the credit they wanted, and so the government had to step into the picture and introduce the legislation.
As the act says, the purpose of the measure was to assist the average farmer who ordinarily would not be able to obtain bank credit for such proposals. The banks by

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themselves were -unwilling to do it. The banks consented to do it only when the resources of the people of Canada were mobilized through the government and when the banks were told that they would be guaranteed against any possible loss up to 10 per cent of the total loan. Why should the banks not have accepted that risk? The hon. member for Eglinton asked that. Was there any great loss associated with it? History says no. Indeed, I believe the loss was in the neighbourhood of l/100th of 1 per cent up to 1952. Surely this was a risk which private enterprise could have taken, but the capitalist banks refused to undertake it until they were guaranteed by the resources of the people against loss.
There was a suggestion ten years ago that fishermen should receive the same sort of treatment as farmers. At that time the government was prepared to introduce legislation. For its own good reasons it did not do so, but it would be very interesting to find how much money was advanced by the banks to fishermen without the guarantee of the government which was given in the case of the Farm Improvement Loans Act.
In 1937 we had the Home Improvement Loans Guarantee Act under which the government hoped to create employment to some extent by means of loans issued through the banks to individuals who would use the loans to improve their homes. The banks were not prepared to go ahead with the scheme. Pressure was brought to bear on them by the government, but until the House of Commons again guaranteed the banks against loss, they would risk nothing. What was the measure of risk anyway? I am told that losses under the Home Improvement Loans Guarantee Act were less than 1 per cent, but before the banks would take the chance of losing 1 per cent they had to be guaranteed up to a total of 10 per cent of the total loans made.
What about the industrial development bank? That was a bank which we started ten years ago because we were told that it would harm the banks' liquidity if they were to undertake loans such as were envisaged under the industrial development bank. What happened? In the last ten years approximately $76 million net in loans has been advanced. That is an average of between $7 million and $8 million a year. Is there any member in the house who would suggest for a moment that $7 million or $8 million so invested each year by the banks would have harmed their liquidity by one iota? Of course not. The banks were not prepared to go ahead and so the government did so. What about the losses under this particular scheme? According to the last

balance sheet I saw losses totalled about $163,000, J of 1 per cent of the net loans or 3 per cent of the entire profit made over the period the industrial development bank was in operation up until last year.
Was this 3 per cent too great a risk for the private banks to undertake? Apparently it was. They did not want to go into the field. Now they are being asked to go into the field of lending money on mortgages. They do not like it. They have told us they do not like it, and I suspect that they feel like sacrificial goats upon the altar of capitalism. But no matter how much or how little blood they exude, the fact remains that they are going to be guaranteed against loss up to 98 per cent. The fact also remains that they are going to be given a very attractive rate of interest-we do not know what yet. I suspect it may be as high as 5J per cent, but if it is 5J per cent then that is akin to usury for what is a gilt-edged investment.
We are told about the liquidity of the banks. In the past that liquidity has been a fetish, but it is now a fetish which is losing some of its sanctity because the government is suggesting that the banks decrease some of their liquidity and put funds into mortgages. Of course the argument of the banks is that they must always be able to meet the demands of their depositors. That is true, but very frequently the banks do not look on the banking situation in Canada as a system. They are inclined to look upon it only from the point of view of their own particular bank. However, when a cheque is withdrawn from one bank then under the system it becomes a deposit in another bank and the system as a whole is not affected.
The deposits of the people of Canada are safe. Let there be no doubt about that. But why do the people know that their deposits are safe? The simple reason is that in the event of any calamity overwhelming a bank the collective resources of the people of Canada through their government would come to the rescue of that bank and the deposits would be more than adequately safeguarded. Their deposits would be secure and are as secure today as government of Canada bonds. The reason is that the government is behind the banks. Of course the government is behind them. The government protects, secures, guarantees and on occasion bails out the banks, as it did in 1931. The banks can pawn, pledge and mortgage without loss; the banks can lend, advance and invest without loss. The banks are protected in making profits. The banks have been guaranteed against losses. Was there ever a welfare state like this? Is there any group

in Canada that is so well protected? Is there any group in Canada that is so well off as this little empire which has been carved out of the Canadian economy? I doubt it.
Obviously, all the banks want is the cream. They are not prepared to take the skim milk. Others can take the risks, but the cream is for them. I do not deny for a moment that skim milk may be nutritive, but one gets tired of it, and perhaps one may aspire to a little cream. The fact is, however, when cream is the sole diet then one becomes fat, lazy and lethargic, a situation in which our banks are already. They are adamant for a riskless industry. So long as the banks are not prepared to play their part in a free enterprise system, the part they are expected to play, I can see no reason for their existence as members of a free enterprise system. Not for a moment do I deny there is competition. I know there is competition between banks, because I have seen it. But I submit that that competition is for business that involves loans, investments and securities which are as riskless as possible.
As I see it, the reason advanced for the existence of free enterprise is the willingness to take risks. The banks are far beyond that stage. They have graduated. They are looking now upon the Canadian economy from a much higher point of view-I will not say from an avuncular point of view, I leave that for the Prime Minister (Mr. St. Laurent)-but from a paternal point of view. It is not fatherly in the sense that we usually associate with fatherhood, but from a patriarchal point of view. They look upon the Canadian scene through cold, unfeeling eyes. They are against the rashness and wickedness of risktaking. They must be secure in everything they do. For all practical purposes they have immobilized themselves.
We, in the C.C.F., argue that the banks have a far more vital part to play in this country. We argue, from the evidence that has been submitted, that the banks are not prepared to play that part. One of the functions of a banking system is to help to maintain full employment. I do not say for a moment that the banking system can avert depression, but the banking system is ancillary to fiscal policies carried out by the government. It is conceivable that there could be situations in which our bank treasuries were brimming over with money to lend and nobody would want a loan. The demand for loans can only come through the fiscal measures instituted by the government of the country. The demand must be inspired.
There is one matter which has to be remembered, one figure I think which has to be remembered, even in a free enterprise system.
The Bank Act
It is an index figure which should be emblazoned on the minds of the cabinet. It is the index figure of unemployment, because that is the index of the health of the society in which we are living. We do not believe that we can get full employment consistently in a free enterprise system without the ownership and control of the banks.
The government disagrees. The government believes that control can be achieved through the Bank of Canada. Yet, if we are to call history as a witness, the fact remains that in the years from 1935 to 1939, when we had the Bank of Canada and when we can assume it had the powers it needed, nevertheless there was a steady half million of unemployed. Some 25 per cent of our resources were not used. The government had the control. The government had the power, but the government did not give Canada full employment. We have those controls which the government today insists are still adequate.
How adequate would those controls be in a time of declining prices; in a time of pessimism in the market; in a time of financial stringency? It is at that time credit should be expanded. Does the government believe, through the controls it has, it has sufficient power to compel the banks to expand credit at that particular time? Will the banks not be confronted, as they have told us so often in the past, with their obligations to depositors and their obligation to their shareholders? We say that we do not believe those controls will work in such a period of declining prices and pessimistic outlook, therefore the banks have to be nationally owned.
Today the banks in Canada are not only economic factors. They are social factors. They are not only social factors, but they are public utilities. They are to be used for the good of the whole economy. I noticed that the member for Eglinton became very worried today at the idea of nationalization of the banks. He felt there would be political control of the banks. He declares, along with other members, that the banks would not be independent of politics.
What worries me more, and what affects me more, is that politics is not independent of the banks. Whenever the banks are in trouble, whenever they want some security, whenever they want a guarantee, they come to the representatives of the people to bail them out of trouble or get guarantees. The banks are continually interfering with politics so I believe it is high time politics started interfering with the banks and telling them what they have to do.
I said earlier one of the functions of the banks is to help maintain full employment. I am not suggesting that the banks should

The Bank Act
suddenly go in for a rash, unwise expansion of credit. It is not always needed. I believe that even in the capitalist system there is always enough money to buy that which is being produced. In other words, I argue there is no inherent deficiency of purchasing power within the capitalist system. I say that for this reason. Every element of cost in industry, whether it be raw materials, wages, rent, interest or profits, must of necessity be an element in somebody's income. This means that at some stage in the game there is always equilibrium. At some or all stages in the game, the total income must equal the total costs.
The mistake which has been made in the past was the assumption that when that equilibrium was arrived at, it automatically meant there was full employment. It means nothing of the sort, because one could have that type of equilibrium with 10 per cent of our resources used, 50 per cent or 90 per cent. Only at one particular point could we have equilibrium where there is full employment, and that particular point can only be arrived at by conscious planning by the government. This government, which supports free enterprise, opposes conscious planning. Indeed, conscious planning would be the very antithesis of free enterprise. The government can argue that they have, in recent years, achieved' a state of full employment, but it was not by conscious planning. It was, perhaps, due in part to preparing for war; but as a normal, steady situation under a capitalist system full employment can only occur by the most amazing fluke.
Let me go further and assume that equilibrium with full employment and with a total effective demand for 100 units. This would imply total costs would be 100 units. In society as we have it today, 80 of those units might be spent on consumption goods, leaving 20 for savings. Out of that saving, 10 would be expended on capital goods and 10 would be hoarded. This means that there are 90 units available to buy that which costs 100. I need not enlarge upon the economic effects. It means there would be a downward trend in prices. It would mean we were headed to some extent for a depression unless the government were to take remedial action. This analogy does not mean there is insufficient purchasing power within the community. The purchasing power is there, but it is not being used. It is lying dormant, probably in the banks.
The way in which this dormant purchasing power should be taken up is by fiscal measures undertaken by the government. The government can increase consumption,

it can increase investments; or it can do both. But if the government wishes to maintain full employment it has got to take active and remedial steps.
As I said, this means conscious planning. We do not say there is insufficient purchasing power at that stage, but that there is maldistribution of purchasing power. And it is there in part where you find the basis of the socialist case. The money is there, but too few are getting too much of it, while too many are getting too little of it. There is only one way that situation can be alleviated, and that is by taxation and fiscal measures. If we want to make the poor richer, then we have to make the rich poorer. There is no secret way of achieving equality in society except by that sort of redistribution.


An hon. Member:: They have done that in Russia.


Alistair McLeod Stewart: No, they have not; and you do not know much about Russian economics if you believe that. There is more class distinction in Russia today than there is in Canada.
Our complaint is this. The banking system ought to be prepared to lend, to invest and to take risks, but our banking system is not always prepared to do those things. The commercial banking system ought to be prepared to play a more vital part in the economy of the country, if we are to have full employment and if we are to achieve something which I have no doubt all of us have in mind, the abolition of poverty. And yet recent history gives no guarantee whatsoever that the commercial banks are prepared in any way to take risks. They will not do so without guarantees. Well, if we are going to guarantee the banks in this way would it not be better and quicker just to take them over and do the job ourselves?
We argue that the government must plan consciously for the full use of our resources, and that can be done only, in part, by owning as well as controlling the machinery of credit. After all, the fundamental -case for socialism rests on a policy of removing economic privation and poverty. We maintain that poverty is probably the greatest evil in the world today, the evil from which all other evils spring. Poverty is the impassable barrier to things that give value to human life. Poverty is the lot of far too many in this country. I am not suggesting that nationalization of the banking system will remove it, but I do maintain that nationalization of the banks will be a substantial step forward to this end.


Mr. H. A. Hosking (Wellington South):: Mr. Speaker, I had no intention of taking part in this debate, but after listening for two days to a debate in which members of the C.C.F. party have been expounding their socialist views I have thought it necessary to say just a word or two, so that the people in my riding will know that I do not agree with their views.
First, I think the banks have done an exceptionally fine job. Any responsible person in a community can go to a bank and borrow money at a reasonable rate of interest. Far more people could and would borrow money from banks at this reasonable rate of interest, if it were not for the propaganda that has been spread across the country by people who have made speeches very similar to those we have heard in this House of Commons in the last two days.
The banks are good institutions: they are not bad institutions. They are good places from which to get money and with which to do business. They are good places from which to borrow money when it is found necessary to borrow money. And I just cannot understand the lack of consistency in the arguments offered by hon. members in the C.C.F. when at one time they condemn the banks and at another they say they are such great sources of revenue that the government should take them over. I think that is an inconsistency. If they are doing such a bad job, then surely the government should not be expected to take part in that bad job. If they are doing a good job, then why not allow the men who have done this good job to continue to do it.
Let me draw some comparisons between the banks and other institutions that lend money. I do not believe the average person should be encouraged to borrow money. That is not the policy my father taught me. In our house it was always considered dangerous to get into debt. And I think before the next ten or twenty years have passed it will be considered an unfortunate situation when a person is in debt. And when we hear it suggested loosely that we should borrow this, borrow that or borrow something else, I say it is very bad propaganda to be spread across the country from this House of Commons. But if a person does have to borrow money, surely the banks should not be criticized.
We have lending institutions in this country that charge as much as 24 per cent on many of their loans. And many of our citizens- far too many of them-are buying goods under those conditions. They will buy refrigerators and television sets in which they would have an investment of some $500
The Bank Act
or $600, and on this investment they would borrow as much as $500. In one year they will pay as much as $60 in interest charges on an average loan of $250. And when we find a rate of interest as high as 24 per cent, then I would highly recommend to the people who borrow at such a high rate that they consult their bankers, state what they are going to buy, and borrow the money at 6 per cent. Most of them could do this. There are not many people buying pieces of equipment of this kind who would be required to pay 24 per cent interest. Maybe our schools should educate our children to realize what their parents pay when they are confronted with the carrying charges demanded by finance companies in this country.
Some hon. members might be interested to know that many people who buy automobiles pay a higher rate of interest in carrying charges than they pay in the tax on those automobiles levied by the dominion government. On an automobile selling currently at around $3,000 the purchaser must pay at least $1,000 down. This means that he has to borrow $2,000, and usually this is spread over a period of 18 months. If this is done, the dealer would calculate his interest at 7J per cent on the $2,000 for a period of a year and a half. The interest that he would pay on the $2,000 would be $225. Thus the interest rate is 15 per cent. The tax he pays to the government on that same automobile is $469.
I suggest to people right across this country that they should stop and think before borrowing money at 15 or 20 per cent. We see the C.C.F. party, these socialists, coming out in condemnation of the banks. My recommendation to purchasers would be that they go to their banks and discuss the situation with bank managers. They will receive good advice and will be much farther ahead by getting the money through their bankers at a reasonable rate of interest than if they were to get it through finance companies.
This is one of the weaknesses of our day and age. People think it is quite all right to go out and pay rates of interest running up to 15 or 24 per cent on the articles they buy. My point is that if you borrow $2,000 you compute the interest at a rate of 7J per cent for the whole $2,000, and at the end of the year and a half there is nothing left of the amount borrowed, except perhaps one payment of $50. But he is still paying the interest computed on the $2,000 which he borrowed at first, and on the average amount borrowed the rate is 15 per cent. He pays 15 per cent on the actual money borrowed. I said he pays 7| per cent; that is a quick

The Bank Act
computation. It is actually 15 per cent that he pays when you consider he borrows $2,000 to start with and has nothing borrowed at the end of the year and a half. Therefore it is 15 per cent on the average amount of money borrowed. That is how it works out.
The only criticism I would make of the banks is of the service they offer to the people of this country. It is very difficult to go to most of our banks on Saturday in any of our large cities and borrow money. The only criticism I can find is that when they sell a service to the people of this country it is unfortunate that on Saturday, the one day when most people are free and should have access to the banks, the banks are not open. I do not think they should be criticized in the manner in which they have been, in this house in the past few days, because of that one weakness.
I would not want to suggest for one moment that I believe the people should borrow money. It is all right for businesses to borrow money because they intend to make more money with the money they have borrowed. But when a person borrows money in order to procure goods before he is in a position to pay for them, then he is paying far too much for those goods that he wishes to buy. If those individuals had the opportunity of approaching their bank managers and talking the situation over with them on Saturdays when they are off work they would find that the bank manager would generally give them the best advice that they could get. The banks could give a better service if they were open the whole week. But we realize that the bank employees should not have to work more days in the week than other people. Therefore we really cannot find much fault with them for closing one day in the week, which unfortunately happens to be Saturday, the same day that everyone else has off. We really cannot find too much fault with that.
We should encourage all the citizens of this country to deal with the banks, more particularly when they want to borrow money, because they will find that they will get a much better rate of interest from the bank than they will get from any other lending institution anywhere in the country.


Mr. H. R. Argue (Assiniboia):: Mr. Speaker, I listened with interest to the remarks of the hon. member for Wellington South (Mr. Hosking). In his opening remarks he said he did not think that the people should be borrowing money; that he was raised in a school where he was taught that he should pay cash on the line. Then he went on to say that the thing that worried him was that

the people were paying too high interest rates, and that they should borrow money from the banks. Therefore I really do not know whether he is for borrowing, against borrowing or just where he does stand. The ordinary consumer of this country will not gain much from the advice given him by the hon. member for Wellington South. He said he thought it was a mistake for people to go into debt to buy consumer goods. I do not think it is a mistake at all. It could be a mistake in given individual cases, but by going into debt for durable consumer goods people are able to make real savings by that means that they would not otherwise be able to make if they were endeavouring to put away a little cash from day to day until they got $400, shall we say, for a refrigerator.
I was astounded by the information he gave to the house that a great many people who buy automobiles pay more in interest charges than the automobile cost, and that happened under the regulations of the dominion government of which the hon. member is a part. Apparently thousands of people across Canada are allowed to buy automobiles, so the hon. member says, and the companies are allowed to charge such high interest rates that the charge for interest exceeds the price of the automobile. Perhaps that is so. If it is so, something should be done, and done immediately, to cut down the high interest rates.


Henry Alfred Hosking: I said a higher rate of interest was paid for the borrowed money than the government charges in taxes.


Hazen Robert Argue: The hon. member said a lot of things. I was not trying to quote the speech back to him in toto. The point I was making was that the hon. member was amazed that often people were paying more in interest charges in the purchase of automobiles than the total cost of the automobile-


Some hon. Members:: No.


Mr. Byrne:: The hon. member is deaf and blind.


Hazen Robert Argue: If I heard the hon. member incorrectly I withdraw the statement that those were his words. I wrote them down. If that is not his statement I shall let it go right here.
He went on to say that certain people were paying interest rates as high as 24 per cent. That is a shame, and the hon. member should be trying to influence the Minister of Finance (Mr. Abbott) to do something about it and to reduce the maximum interest rate that can be charged in Canada and stop the loan sharks charging legal interest rates up to 24 per cent a year. It is not just the little

finance company often off in the corner somewhere that charges high interest rates. The big retail companies, like Simpsons-Sears in Canada, charge interest rates of 15 per cent on what they call their budget plan. Those high interest rates demonstrate very clearly that today the banking system of Canada is falling down on the job, because if people could go to the banks and get the kinds of loans they want to buy durable consumer goods at 5 per cent or 6 per cent interest I am sure not one of them would be paying a rate of 15 or 20 or 24 per cent.
I read the speech of the Minister of Finance in introducing this measure, and the greatest weakness of the present proposal is the fact that the government, through its legislation in regard to chartered banks, has no program to prevent a recession, no program that I know of to increase the money in the hands of the consumers in Canada when we are facing a recession. Probably the Minister of Finance does not think we are facing a recession. I say we are in a recession now, and unless something is done about that recession very soon it may turn into a full-scale depression.
I am indebted to the hon. member for Prince Albert (Mr. Diefenbaker) for having suggested to me that the speech from the throne in 1929 would make very interesting reading, the speech from the throne by a Liberal government. This is what the second paragraph says, as recorded at page 2 of Hansard of February 7, 1929:
The unprecedented prosperity which is apparent throughout the dominion affords cause for the deepest satisfaction.
That was in 1929. I continue:
Never in the history of Canada has there been such industrial and commercial expansion as that which has taken place during the past twelve months.
We have already heard that during this session. I continue:
The industry and enterprise of our people have been rewarded under Providence with an abundant harvest.
That's for sure right now.
In the production of agricultural and other basic industries all previous records have been surpassed. New records have also been established in the volume of construction and in the volume of foreign trade. Employment has been maintained at a high level and all indications point to a continuance throughout the country of the present favourable conditions.
Back in 1929 the government of the day, of the same political complexion as the present government, told the people of Canada that everything was fine, that production was high, that employment was high, that we had a wonderful crop; yet a few months later 83276-179
The Bank Act
we were in the depths of a depression. I hope we do not have anything like that again. But you will not prevent a depression by failing to recognize the signs that are very evident now that point to depression.
During the discussion on the resolution I expressed the belief that the banks usually followed the wrong practice in making loans as far as the interests of the country were concerned. In periods of inflation loans are usually easy to obtain, but in a period of declining prices the banks start to tighten their purse strings and the public find it very difficult to obtain loans. The banks, in spite of their assistance in averting a recession, by their action, assisted in bringing on a full-scale depression.
When we moved our amendment we did not expect to receive the support of the hon. member for Eglinton (Mr. Fleming) or members of the Conservative party. We believe the banks should be nationalized, not because we think it is good to have more things being operated by the government, but because we say the history of the banks and banking practice in Canada demonstrates that the time has now arrived when, if certain objectives are to be achieved, the banks must be nationalized.
The government has used various methods of control but it is impossible, even with the best type of controls, to make the banks issue the type of loans which are in the best interests of the nation. Members of the Conservative party are in favour of leaving the banks under private enterprise because they say the banks should be in a position to take risks. But the banks are becoming less and less inclined to carry out that useful function, and the government very often has to give ironclad guarantees to the banks against loss. When the Minister of Finance (Mr. Abbott), with the assistance of the Minister of Trade and Commerce (Mr. Howe) and other members of the cabinet, have to guarantee the banks against the loss even of a single dollar, then I believe it is time they acquired the right to take some direct responsibility for the lending policies of the chartered banks.
The government has given the banks certain guarantees which have induced the banks to make loans. One outstanding example is the guarantee to the chartered banks under the Farm Improvement Loans Act. That guarantee has certainly resulted in the banks making very substantial loans. In 1952 total loans made by the chartered banks under the Farm Improvement Loans Act amounted to $98 million. In other words the guarantee by

The Bank Act
the government against loss to the banks amounted to a total of almost $10 million. The total loss incurred by the banks and paid by the government for that year amounted to just a little over $12,000. To put it simply, the total loss for that year paid by the national treasury amounted to ylon of 1 per cent. Very little loss was entailed in making these loans, yet before the chartered banks would make loans available they had to have a guarantee that amounted to $10 million for the year 1952.
One could make the same type of comparison in regard to the Home Improvement Loans Guarantee Act, and also in regard to the legislation approved the other day concerning housing.
We in this group would like to see the banks nationalized. We know perfectly well that this government will have nothing to do with the nationalization of the chartered banks. But members of the Liberal party have always professed support for cooperatives and claim that they believe in the co-operative principle. If that is the case they should be prepared to extend to the cooperative movement and to the credit unions the same kind of guarantee on farm improvement loans that is now given to the chartered banks in Canada. Our credit union movement is growing at a truly phenomenal rate. Credit unions now pay exactly the same kind of tax rate as any other corporation in Canada.


Mr. Trainor:: The same as every corporation?


Hazen Robert Argue: If the kind of corporation my hon. friend is associated with wishes to pay exactly the same tax that is paid by the credit union, then that corporation can adopt different principles of management and their taxes will be precisely the same. If some of the private grain companies wish to pay dividends to farmers on the basis of patronage, as of course is done now, they can do that also.
The credit unions and other co-operatives pay exactly the same tax as any other business organization in Canada. I would like to refer, Mr. Speaker, to a report on the credit unions in Canada for 1952 published by the marketing service of the Canadian Department of Agriculture. That report demonstrates the really tremendous growth of credit unions in Canada over the past ten years. In 1942 there were just under 300,000 members of the credit unions in Canada. By 1952 the membership had risen to 1,250,000, and in that year more than one out of every ten adult Canadians was a member of a credit union. The total assets of the credit unions in 1942 amounted to just under $44 million.

This figure had increased by 1952 to a total of $424 million. In ten years their assets have increased tenfold, and their membership by 300 per cent.
I believe the history of loans made by the credit unions in that ten-year period will compare favourably with the loans made by any of the chartered banks, with reference to losses sustained. I believe the government should give the credit unions exactly the same kind of guarantee it now gives the chartered banks. The government should not discriminate against the credit unions by giving the chartered banks a 10 per cent guarantee on farm improvement loans and no guarantee whatsoever to the credit unions who are engaged in a great many instances in exactly the same type of loan business.
The banks in Canada do not wish to take any risk in making loans. There are tens of thousands of Canadians who have gone to their bank, spoken to the bank manager, asked for loans, been turned down, gone to a credit union and obtained loans. In spite of the fact that many of the people dealing with credit unions are considered by the banks not to be good credit risks, nevertheless the history of the credit unions compares favourably with that of the banks in regard to losses sustained.
I wonder why the government has not given to the credit unions the same kind of guarantee it gives to the banks? Is it that the government does not want the credit union movement to expand at an increased rate over the years? Why are the banks any more deserving of guarantee by the government against loss than are the credit unions in Canada? I cannot understand why the government is not providing credit unions with exactly the same type of guarantee.
I notice that in the legislation before us this afternoon, as in the previous act, the banks are given the right to lend money to farmers on threshed grain. That is all very nice. The banks have the right to lend money on threshed grain, but the farmer has the problem of convincing the bank manager that he should be given a loan. If a farmer goes to a bank and asks for a loan on threshed grain, the banker will look to see if he owes any money in town, or if the farmer has a farm improvement loan from that bank. Unless the farmer can prove to the banker that he really does need a loan on his threshed grain, he will not get a loan.
The average farmer in Canada today- certainly that is so in western Canada- cannot get a loan on threshed grain. If he is a well-to-do farmer, with a huge quantity of grain on his farm, if he is out of debt, and if he has not delivered his quota he

may get a loan. But this section of the Bank Act is not being adequately utilized by the banks and for all practical purposes is not in operation at the present time.
When I began speaking I said that to my mind there was every indication that we are in a recession right now. Certainly the economy of western Canada is slowly grinding to a standstill. More and more businessmen are being forced to go on a cash basis. In this morning's Montreal Gazette there is a news report headed "Drake, Sask. Town Votes Out Credit". It reads as follows:
Drake, Sask., March 8.-Businessmen in this town 75 miles northwest ot Regina have voted to stop giving credit. The order is effective April 1.
R. E. Walker, a representative of the retail merchants association of Saskatoon, who addressed a meeting of merchants, said grain delivery quotas set by the Canadian wheat board are not large enough to take care of outstanding credit accounts. Merchants gave long-term credit to patrons but received only short-term credit from wholesalers.
From communications I have had from the retail merchants association and from businessmen in Saskatchewan it is fairly clear that this spring merchants will be going on a strictly cash basis. Anyone who is acquainted with farming operations in western Canada will realize just what a serious hardship that will mean to prairie agriculture.
I should like to see something done under this act, or some other appropriate steps taken, to put some cash in the pockets of farmers. The Minister of Finance (Mr. Abbott), members of parliament and everyone else who works likes to get paid. We all like to get paid, and to get paid on time. So does the wheat producer. He likes to produce wheat. That is what he is in business for. When he produces a crop, he thinks he should be able to get some money as a result of his efforts in producing that crop.
The Minister of Agriculture (Mr. Gardiner) is always good at giving the farmers advice. On previous occasions he said to them, "Build granaries and store your wheat. Wheat on the farm is as good as cash in the bank". I have not yet met a farmer who would not like to get rid of the wheat he has and get some of the cash in the bank. The merchants in our towns would also like to get a little cash. I feel sorry for a farmer when he cannot sell his grain; but I think a merchant is even worse off, because he can get into trouble with his creditors very quickly when he has on his books a great many customers with outstanding accounts.
For financing this crop in western Canada I should like to see a method by which the farmer would not have to pay interest. I do not think doing it through the banks is
The Bank Act
the best way. But if the only way by which the government will provide the farmers with money is through the chartered banks, I say it is better to be done in that way than not at all.
I should like to see the interest rate kept at the very minimum. I think interest rates in Canada are too high today. I believe the government's policy of strengthening interest rates is wrong. I believe that policy should be reversed, and that steps should be taken to lower interest rates. I should like to see banks giving farmers loans at a nominal rate of interest. I believe they could do that if given a guarantee by the government. We had such guarantees at one time in the past, for the 1951 crop. The darkest picture the Minister of Trade and Commerce (Mr. Howe) could paint-


Mr. Howe (Pori Arthur):: Leave me out of it, this is not my bill.


Hazen Robert Argue: I am just referring to the minister's statement at page 128 of Hansard. I cannot make a speech without bringing the minister into it somewhere, and probably this is as good a point as any at which to bring him in. At page 128 of Hansard he gave us some information as to the losses under that program. The minister's point was that the government's experience had not been good. I think the government's experience was good. The total amount the government can be liable for, as a result of that experience, is an amount not over 3 per cent of the aggregate loans. Most of those loans were made not for threshed grain but for grain out under the snow. If farmers will pay 97 per cent of their loans when obtained under those circumstances I believe they will pay, for all practical purposes, 100 per cent of any loans they may obtain for grain that has been threshed and is in storage.
We have in the act a section which allows the banks to lend money on farm-stored grain; but anyone from western Canada knows that very little money is being lent under that section. I therefore suggest that other steps must now be taken by the government or the economy of western Canada, going into a recession, will drag down the whole Canadian economy. We are losing markets-and we have lost a great many of them-for some of our most important grains. The farmer is looking for some money this spring. The merchants in western Canada need such a policy so the farmers can pay for the commodities they must obtain in order to continue their farming operations. Under this legislation I believe the government

The Bank Act
should be giving to the credit unions exactly the same type of guarantee it is now giving to the banks.
In another statement this session the Minister of Trade and Commerce said that it was his belief that now was the time for the government to loosen the purse strings. I agree with that statement. I think the government should loosen the purse strings at this time. As long as there are unemployed resources in the nation I do not agree that it is bad for the government to be spending large sums of money, more money than it collects through taxation. When there are half a million unemployed, when farmers are finding that their incomes are going down, that is the time for the government to adopt fiscal and monetary policies that will result in increased expenditures, an expansion of credit and an increase in the money supply so that our unemployed resources may be re-employed for the improvement of the standard of living of the Canadian people.


The Acting Speaker (Mr. Applewhaite):: Is
the house ready for the question? The question is the following-


Mr. E. G. Hansell (Macleod):: Mr. Speaker, I want to speak now because my subject matter has to do with the amendment, and if the amendment is disposed of my subject matter will become more or less obsolete. Maybe I can finish in five minutes if I am not interrupted and if I can talk fast enough.
I have listened to the members of the C.C.F. group who have spoken on this matter, but I have failed to hear them suggest how they propose to nationalize the banking system. Therefore I want to ask them a question or two. I should like to ask them if they propose expropriation. If they do, that may follow the socialist line. I do not know. But if they do propose expropriation I am quite satisfied that the banks would contest it in the courts.
If it were contested what would the C.C.F. do? Would they dare tell the courts what decision they must make? If they did not dare to do that, then the courts would have to make the decision. If the courts decided to grant the petition of expropriation, then the decision would be appealed. If they failed to grant expropriation then the C.C.F. as a government would appeal the case.
We will suppose that the decision was in favour of expropriation. I fancy the matter would then be submitted to arbitration. Having been submitted to arbitration, the authorities who had to arbitrate would then have to determine a valuation. That valuation would involve the taking over of assets 
and capital stock, and I quite suppose it would also involve the taking over of the banks' cash reserves.
What would our socialist friends use with which to purchase all this? The cash reserves of the banks amount to about $900 million. The assets and capital stock of the banks amount to somewhere between $3 billion and $4 billion. They could not pay cash for them because the cash reserves of the banks constitute the only cash there is in the country. Therefore they could not pay cash. They could not get any cash in order to pay the banks under the settlement arrived at by arbitration. If they resorted to taxation they would have to tax the people to the extent of almost $1 billion to compensate for cash reserves alone.
Furthermore, here is one thing they would have to recognize. They would have to take over the liabilities of the banks. It is not generally recognized that every deposit that people have in the banks today is a liability against the banks. I should like to ask the C.C.F. whether they would take over the liabilities too, because if they did they would be taking over about $9 billion in liabilities. If they started this, what guarantee would they have against a run on the banks? This is a serious thing. They have not told us how they propose to do it.
In the minute I have left may I suggest that there is not a socialist country among the free nations of the world that has yet favoured nationalizing its banking system. Great Britain had a socialist government, but they did not venture it. Australia had a socialist government, but they did not venture it. New Zealand had a socialist government, but they did not venture it. Over the years we have heard a lot about the virtues of the government of Sweden. They did not venture it. Even the extreme national socialist government of Germany did not venture it. Our C.C.F. friends are proposing to do something that no socialist government has ever done. Why have they not done so? I believe these governments have recognized all that is involved, and have found that for all practical purposes it was impossible to do it. Someone behind me said something about McCarthyism. I do not know what that jab was for.


Mr. Blackmore:: They cannot think of
anything else to say.


Ernest George Hansell: But there is something they
should answer if we are going to vote on this amendment. How do they propose to nationalize the banking system? Are they going to propose following the socialist line

of outright expropriation? I do not believe they would. But that is the only way it could be done, because if they attempted to buy the banking system outright there is not enough money in cash in Canada to do it.


Stanley Howard Knowles: Would the hon. member
permit a question?


Mr. Deputy Speaker:: Order.


Stanley Howard Knowles: Is he aware of the fact that he voted for this amendment-


Mr. Deputy Speaker:: Order. It being
five o'clock, the house will proceed to the consideration of private and public bills.


PRIVATE BILLS
[Stage Direction]
The house resumed, from Friday, March 5, consideration of the motion of Mr. Hunter for the second reading of Bill No. 325, to authorize Niagara Gas Transmission Limited to construct, own and operate an extraprovincial pipe line.
Right Hon. C. D. Howe (Minister of Trade
and Commerce):	Mr. Speaker, before I adjourned the debate when this measure was last before the house I pointed out that the government is unable to give the guarantee sought by the Leader of the Opposition (Mr. Drew) that the interests of Trans-Canada Pipe Lines will be protected. I pointed out that this measure is a private member's bill. The bill will be examined in the appropriate committee. It will then be returned here for third reading, and after the bill becomes law, all the decisions having to do with the project covered by this bill as well as the project covered by the Trans-Canada Pipe Lines bill will be in the hands of the board of transport commissioners, whose decision will be final.
I stated at that time I had not had the pleasure of meeting an officer of the company. Since this bill has been under discussion I have had that pleasure. This afternoon I had a call from the general manager of Consumers' Gas Company, and as a result of our conversation, my information as to the intentions of the company is more complete. I now appreciate the fact that Consumers' Gas have realized that the Trans-Canada pipe line will be built, and that it has contemplated that an agreement must be made so that the two projects can work together.
The only reason any question is being raised about the bill before us is the thought that it may interfere seriously with the financing
Niagara Gas Transmission Limited and construction of Trans-Canada Pipe Lines Limited. In introducing the bill the hon. member for Parkdale (Mr. Hunter) stated that Consumers' Gas Company wishes to bring United States gas into the Toronto area. He stated that Consumers', through its subsidiary Niagara, now has a 20-year contract with the Tennessee Transmission Company covering the importation of some 23 billion cubic feet of gas annually. He also stated that subsequent arrangements have been made for Tennessee to repurchase all or any of this gas at any time for sale within the United States, should Consumers' Gas Company be in a position to purchase Canadian gas, without any loss to Consumers' Gas Company.
Assuming these arrangements are carried into effect, the Consumers' Gas Company will be able to supply the greater Toronto area with United States natural gas before the end of this year. Then the hon. member for Parkdale said that if and when Canadian natural gas becomes available the company will be in a position, without loss to themselves, to switch to Canadian natural gas. Obviously these are rather vague intentions vaguely stated. I feel we must have something more definite than the statement contained in the remarks of the hon. member for Parkdale before we can agree to the passing of this bill.
I think all hon. members realize that the Trans-Canada pipe line is a great conception. I suggest that this discussion should be entirely removed from politics. In the first place, a private member's bill should be considered apart from politics. If it were not I would be tempted to congratulate the Leader of the Opposition (Mr. Drew) for having adopted Liberal policies with reference to oil and gas pipe lines. Since we are not talking politics, I shall refrain from doing so.
Mr. Fulton:: You know just the opposite is true. You have adopted ours.


Clarence Decatur Howe: Again we hear a peep from another quarter.


Stanley Howard Knowles: Who taught the both of you?


Clarence Decatur Howe: I point out that the government of Alberta is interested in the Trans-Canada pipe line, which will afford a badly needed outlet for the surplus gas of that province. The government of that province is co-operating with this government, and co-operating I think with the management of Trans-Canada Pipe Lines.
Saskatchewan is interested, of course, because the Trans-Canada pipe line will provide an outlet for gas which is already becoming surplus in that province, and which surplus is expected to grow in volume month by month. Manitoba is interested because it

Niagara Gas Transmission Limited would mean another competitive fuel in the province, which should greatly stimulate the growth of industry. Ontario is intensely interested in Trans-Canada Pipe Lines Limited for the reason that it promises an ample natural gas supply for all parts of the province as a competitive fuel. I would remind hon. members that Ontario now depends entirely on imported fuels for its energy other than hydroelectric energy. Quebec is interested for the same reason as Ontario. Therefore the great industrial areas of this country are vitally concerned with the building of the Trans-Canada Pipe Lines Limited project and with the additional energy that will be provided from that source.
It is a great project in another way. It is probably the greatest pipe-line project ever undertaken anywhere in the world. It is expected to cost around $300 million for the building of the pipe line. There will be gathering lines required in Alberta which will cost perhaps $50 million. Then chemical plants are required in Alberta to purify the gas before it goes through the pipe line. They will cost perhaps $100 million, and will provide an adequate supply of chemicals for industrial use in Alberta and throughout western Canada. In all the provinces concerned, there will be distributing systems and new apparatus for consuming gas. If everything is added up, Trans-Canada Pipe Lines represents a project running around $1 billion, all of which is to be spent before the year 1960.
The application for gas that is presently before the conservation board of the province of Alberta calls for a supply up to 540 million cubic feet of gas per day, whereas the bill before us calls for a supply of 23 million cubic feet of gas per day. Obviously the Trans-Canada Pipe Lines project is very much greater in concept than the project we are discussing. It is vital therefore to the interests of Canada, I believe, that there be no conflict between the two proposals. It would be tragic if the smaller proposal were permitted to interfere with the financing of the larger proposal. I believe, therefore, that this parliament must make sure that steps are taken so that interference will not occur.
There is a good deal of advantage to the larger project in undertaking the smaller project coupled with the proper safeguards. There are no very considerable markets for gas in eastern Canada built up at present, and such markets as there are have been built up to use manufactured gas. It would be very useful indeed if natural gas could be introduced into the Toronto area in volume


so that build-up could occur immediately and be well under way when western gas reaches Toronto. For that reason I think we must give sympathetic consideration to this bill.
Some will say there are other ways of effecting the build-up. We could perhaps draw on the natural gas reserves of western Ontario, which are considerable. But investigation has shown that the availability from that source would not be sufficient to accomplish the purpose. There is also a gas pipe line from the Detroit area bringing natural gas into the Windsor area at a very reasonable price. It is possible that that source of gas could be enlarged. But that would involve application to the federal power commission, and probably months of delay. I think that if the building of this proposed pipe line can be worked out on a basis that will protect the larger project, it may be a desirable step to take at this time.
Obviously, bringing gas in from Buffalo through a pipe line involves considerable investment, and one wonders what is to become of that investment if the line goes out of use in a matter of three years. I believe ways can be worked out so that investment can be assumed by Trans-Canada Pipe Lines Limited; and I believe we should know, before this bill becomes law, that such an arrangement is being worked out to the mutual satisfaction of the Consumers' Gas Company and Trans-Canada Pipe Lines Limited.
Therefore I suggest that when this bill is before the committee, the committee will wish to examine the intentions of Trans-Canada Pipe Lines Limited as well as the intentions of the Consumers' Gas Company Limited. And I believe it would be appropriate at that time to add another clause to the bill, a coming into force clause, which would provide that the bill would come into force at such time as a mutually satisfactory agreement between Trans-Canada Pipe Lines Limited and Consumers' Gas Company can be deposited with the board of transport commissioners. This agreement would then be considered by the board of transport commissioners, and the date of coming into force would be the date of its approval by the board of transport commissioners. I believe this procedure would allow us to obtain the benefit that would be incidental to the building of this pipe line from Buffalo, and at the same time protect both the financial and the sales position of Trans-Canada Pipe Lines Limited. I believe that this would represent a workable procedure for all concerned.
That is only my suggestion; there may be others. But I do think that to meet the

requirement laid down by the Leader of the Opposition-that the government should assure the house that the interests of the larger project will be protected-this may be as good a means as any for bringing about the protection asked for.


Mr. J. W. Noseworihy (York South):: Mr. Speaker, the project envisaged by the bill has had a great deal of advertisement. I am surprised to find that the Consumers' Gas Company, which apparently has been in the red for so many years, should suddenly put on such an expensive advertising scheme, and apparently do it solely for the benefit of the people of Toronto. In all the advertisements I have read and received I note that the sole concern of Consumers' Gas Company is the welfare of its customers in Toronto. They point out that they are very anxious to get cheaper gas into that city before Trans-Canada Pipe Lines bring western gas to that community.
The sponsor of the bill tells us that this pipe line will probably be completed by the end of the year, and that gas from the United States will be delivered to Toronto customers by that time. I doubt this very much. I also note that the fuel controller in Ontario has said that we may possibly have western gas in Toronto via Trans-Canada pipe lines in about two years' time. If these statements are correct I fail to see where Toronto customers are going to receive such enormous benefits from the delivery of United States gas for one year; because, according to these statements, that will be the time between the delivery of United States gas and that delivered by Trans-Canada pipe lines.
I suspect that behind this movement there is an attempt on the part of Consumers' Gas Company to be in the distribution field when western gas arrives. There has been some comment in Ontario to the effect that the Ontario hydro might undertake the distribution of western gas in that province. The bill now before us would certainly place Consumers' Gas Company in a position where it would have facilities available for the distribution of gas not only in the metropolitan Toronto area but also in Hamilton and other points in the Niagara peninsula.
I may be wrong in my supposition, but I do say there should be some authority in Ontario in a position to tell us how western gas is to be distributed when it arrives, and the agency through which such distribution is to be made. If there is any possibility of the Ontario hydro becoming the distributing agency, I would be inclined to oppose the granting of this right to Consumers' Gas Company. I do not think advantages would be
Niagara Gas Transmission Limited gained by Toronto consumers that would warrant our handing over this public utility even to a limited dividend utility company, to the exclusion of the possibility of having the Ontario hydro or some other publicly-owned utility handling the distribution of this gas.
Certain it is that the necessary safeguards mentioned by the Acting Prime Minister (Mr. Howe) must be taken before final approval is given to the bill. It is not enough, as the sponsor of this bill says, that there be an agreement between Consumers' Gas Company and the United States company to the effect that the United States company will undertake to buy all the gas Consumers' Gas Company may have contracted for when the Trans-Canada Pipe Lines Limited line is completed. That is not sufficient. Before this bill receives final approval in this house I suggest that there must be a hard and fast agreement made and shown to the committee or made public to the effect that on the arrival of western gas via the Trans-Canada pipe line, that gas will be distributed in Toronto in lieu of the United States gas that will be brought in prior to the arrival of that pipe line.
I might say that more than the Progressive Conservative party is interested in this Canada-first policy as it applies to an all-Canada pipe line, notwithstanding the statement made by the Leader of the Opposition (Mr. Drew) on Friday to the effect that that policy was advocated by his party-and it was; there is no question of that. I simply want to add that other parties, including the C.C.F. and others, and members of the Liberal party as well, were just as ardent in their support of an all-Canadian pipe line as was the leader of the official opposition or the Conservative party. Certainly no steps must be taken at this time that will in any way interfere with or impede the progress of that Trans-Canada pipe line.
I would approve the suggestion made by the Acting Prime Minister (Mr. Howe) that a clause be added to the bill which would enable the government or the board of transport commissioners to prevent this legislation from coming into operation until such time as satisfactory safeguards were provided to ensure that western gas would be distributed once the pipe line was completed into the Toronto metropolitan area. We should also add some understanding as to just what use is to be made of this pipe line from the Niagara boundary to Toronto when the Trans-Canada pipe line is built. Will this pipe line be used to transport Canadian gas from the main trunk lines to Hamilton, Welland and the Niagara peninsula, or is there
2820	HOUSE OF
Niagara Gas Transmission Limited a hope that it might be used to export Canadian gas across the boundary at the Niagara frontier? Certainly one does not suppose for a minute that this company proposes to build a pipe line from Niagara to Toronto, use it for two or even three years, and then scrap it. The use that is to be made of this pipe line, once Canadian gas has arrived, should be made clear to us before the bill receives final approval.
I am in agreement with both the leader of the official opposition and the Acting Prime Minister in their desire to see that nothing is done in this bill or in any other bill that will interfere in any way with the building of that Trans-Canada pipe line and the bringing of Alberta gas to eastern Canada.
We shall not oppose the passage of the bill at this stage, but we do reserve our right to oppose or support third reading after it comes back from the committee. What we do then will depend upon what safeguards or agreements can be reached before the bill comes before the house for third reading.


Mr. Daniel Mclvor (Fort William):: I should like to say just a word or two. To me the greatest hurdle in the Trans-Canada pipe line is the raising of the money to pay the bills. We have to be very careful about anything that would discourage that. Therefore as a member of this committee I am going to oppose the passage of this bill until we are assured that this company will have to pull out of Toronto and out of Ontario when western gas is available.
I know there has been a good deal of work done and a good deal of trouble taken in getting these companies together so this hurdle of raising enough money to build this pipe line can be overcome. Nothing should be done to discourage it. I am not particularly concerned about who distributes gas in Toronto, but I want to see that when Alberta gas comes to Toronto there will be no opposition from any other company from the south. That seems clear to me. If the company that is behind this bill is told decidedly that it will have only three or four years to distribute gas, then I doubt whether they will want to build the line. Who would put a new pipe line into Ontario and be permitted to sell gas for only two or three years?
The Minister of Trade and Commerce (Mr. Howe) is wise in suggesting that an additional clause be put in the bill. But even at that I would oppose it here and in committee, because I do not want there to be any danger to the principle of a great trans-Canada pipe line.


Mr. Carl O. Nickle (Calgary South):: I have listened with a great deal of interest to the comments made today by the Acting Prime Minister (Mr. Howe) and other hon. members. I may say that as a member from Alberta I am vitally concerned in seeing that Alberta and other western Canadian natural gas is sold as soon as possible and in as large a volume as possible; nevertheless I am strongly supporting this particular bill. My reasons for that I shall outline very briefly.
I believe that my community and my home province, like myself, are more vitally interested than any other part of Canada in getting markets for western Canadian natural gas as soon as possible and on the soundest possible economic basis. I realize, perhaps better than some of the proponents in this house of a strictly all-Canadian gas policy, that the policy they support must be substantially modified by the adoption of continental features in addition to purely national or nationalistic features.
That is, sir, this policy must be modified if Canada wants to achieve four things: First, the capture by Canadian gas of markets both here and in the United States big enough to absorb the expanding gas surplus in western Canada. For too long, both in my home province and in Ottawa, there have been expressions of fear concerning a gas shortage. The fear is of gas shortage for Canada's future needs, when our primary concern should be in blazing our way into markets, and with the much more serious problem of disposing of rapidly expanding gas surpluses.
Evidence was submitted by the Alberta conservation board a few months ago which dealt with the gas reserves proved up during the 18-month period to June 30 last, and in that province alone the increase in gas reserves over the period amounted to 4,700 billion cubic feet. In the meantime in British Columbia and Saskatchewan we have had other gas discoveries which bring gas reserve increases in western Canada to a rate exceeding 4,000 billion cubic feet in each 12-month period. This means that the gas found in each single year is adequate to supply one major pipe line for a period of 20 years. In other words, one year's discoveries in western Canada will provide eastern Canada, Ontario and Quebec, for a period of 20 years, and by the time we have the Trans-Canada pipe line in operation three years hence we will have enough natural gas resources in surplus to supply another two or three major pipe lines.
I believe, Mr. Speaker, that in our gas pipe-line planning we should deal with this project on a continental basis instead of piecemeal, as we have been doing by means

of private bills in this house for the last three or four years. We should have been concerning ourselves with what we were going to do with the continuing surpluses which are being built up in the west. I believe in a modification of this government's gas policy. If we are to achieve the capture of the nearest markets, first and fastest, regardless of the flag they wave, then that modification must be carried out in order that job and prosperity-creating gas field development and pipe-line construction can get under way as soon as possible in western Canada.
May I point out that during 1953 we had something of a recession in the gas exploration and development industry. Again, in connection with the modification of Canada's gas policy I feel certain this government and parliament will eventually approve an extension of natural gas supplies, regardless of their source, to as many Canadians as possible, as quickly as possible.
The fourth point in regard to the modification of Canada's gas policy, which I feel sure this parliament will accept, is that the policy should be so designed as to do the other things I have mentioned at a minimum of subsidy cost to the Canadian taxpayer. I feel, sir, that in our debates over the last two or three years on an all-Canadian pipe-line policy-and the blame for this must fall directly upon the minister in charge-we have argued about an all-Canadian gas system without any regard whatsoever to the economics involved. As regards the Trans-Canada bill which follows this one, let us argue it out against a background of public and parliamentary recognition that an allCanadian gas pipe line means accepting the principle of a subsidized pipe line.
I pointed out, sir, that we could, by redrafting our policy along correct lines, achieve the desired goal for Canada at a minimum cost to Canadian taxpayers. That is the major reason I am supporting this Niagara Transmission bill.
As a matter of fact, I believe that by immediately piping Louisiana gas by way of the Tennessee Transmission Company to the Consumers' Gas Company to service the people of greater Toronto, we will achieve four things. First of all, it will be the fastest method of getting natural gas to Toronto. It will mean the delivery of gas much sooner, providing parliament and the board of transport commissioners do not delay the implementation of this measure. It will mean the delivery of natural gas to Toronto at least two full years ahead of the earliest possible date of delivery of natural gas from western Canada.
Niagara Gas Transmission Limited
Second, approval of this Niagara Transmission project would provide lower cost gas to the people of Toronto than could be supplied two years later from western Canada under a strictly all-Canadian policy. In addition, the approval of the Niagara project would cut the cost to Canada's taxpayers, the subsidy on an all-Canadian pipe line, by several million dollars.
Again, and this is perhaps most important at this time when we are faced with an unemployment problem in this country, the approval of this Niagara Transmission bill would create many hundreds of new jobs this spring in Ontario in the construction of the transmission pipe line and the construction of a distribution system through Toronto. It would also create many hundreds of jobs this year in the industries which manufacture the appliances through which the people would use the natural gas. All these jobs would be provided this year instead of in 1956 or 1957, when the all-Canadian pipe line comes through. Approval of this bill will provide jobs for those who will distribute these appliances throughout the Toronto area and in the east generally. It will provide an immediate means of creating jobs without government handouts.
Mr. Speaker, I have indicated that there are some phases of the all-Canadian gas policy with which I do not agree. The house is well aware of my views in this matter. I am not going to belabour them now, because when the Trans-Canada pipe-line bill comes before the house that will be the proper time to discuss and debate the broader aspects of a Canadian gas policy. However, I would leave with the minister and the house-


Mr. Macdonnell:: He is greatly interested, though he does not appear to be listening.


Clarence Decatur Howe: Talking about me again?
Mi. Macdonnell: Yes.


Carl Olof Nickle: -the suggestion that when we do discuss the Trans-Canada pipe line we should do so against the background of a recognition of the need for subsidies; of the need for natural gas at competitive pricing in Ontario and Quebec; of the minimum possible price that can be paid in western Canada in order to obtain the gas which will fill that pipe line. There should also be full recognition on the part of this government that natural gas supply alone is only part of this problem. We will have to face the additional grave problem in the west of disposing of the by-products such as propane, butane gasoline and sulphur.
When we deal with a national gas policy we cannot, as this government is attempting

Niagara Gas Transmission Limited to do, simply by-pass the whole problem of by-product disposal and say it is something for the industry to solve. We cannot do that, simply because the degree of success in selling these by-products, no matter how great the difficulties, will determine the price at which gas can be sold to this Trans-Canada pipe line. It will determine the availability of gas to that pipe line and also the expansion of the western Canadian oil, gas and petrochemical industries. In other words, tremendous developments can come through the development of natural gas if the policy is based upon sound principles.
In conclusion, Mr. Speaker, may I say that, as I indicated earlier, this Niagara Gas Transmission bill has some measure of urgency. I have no interest in Consumers' Gas Company, Toronto consumers, Niagara Gas Transmission Limited or the Tennessee Gas Transmission Company. However I recognize this fact. Unless a firm order for the necessary pipe for the construction of this line can be placed in the next few weeks, this whole project will be held up at least one year because of the impossibility of getting the steel to do the job, and of getting the financing done and construction under way this spring. I trust that the house and the committee will do all in their power to facilitate this measure, recognizing of course that this importation of United States gas must be cut off when Canadian gas becomes available, as Consumers' Gas is quite prepared to do, and recognizing also that this pipe line between Buffalo and Toronto which we have heard discussed today is not going to go into disuse.
As I mentioned earlier, we have discoveries in western Canada of 4,000 billion cubic feet of gas a year. Where is that gas to go? Tennessee Gas Transmission Company will take back 50 billion cubic feet a year. Over 20 years they will use up three months' discoveries in western Canada. Surely we can keep in operation that short pipe line from Toronto down to Buffalo, finding an additional small market for part of the steadily growing surplus of gas that we shall have in western Canada.


Mr. Clarence Gillis (Cape Breton South):: Mr. Speaker, this pipe line and the many others on which this house has passed legislation in the past couple of years have been referred to by many hon. members as national pipe lines. I want to say that the statement made by the Acting Prime Minister (Mr. Howe) a few moments ago on this bill proves that they are not national pipe lines. Of course that is merely a repetition of what I have heard a good many times in this house, namely that Canada extends from Vancouver to Montreal and ends there.
[Mr. Nickle.l

In reference to this bill, the minister set out the fact that there were safeguards and that a clause would be placed in it which would prevent the operation of the legislation until all the evidence was taken. But going on a little bit further, he said that Manitoba was interested in this bill as were Ontario, Quebec and Alberta; and that ended Canada.
May I say that there are four provinces east of Quebec that are greatly interested in these pipe-line bills, but for a different reason. They are not going to make any money out of them, and they are not going to get any cheap fuel out of them. The whole objective of this and the other bills, as far as Ontario and Quebec are concerned, is directed toward one thing, namely to get cheap fuel regardless of the repercussions in any other part of the country. I expected the Minister of Mines and Technical Surveys (Mr. Prudham) to be on his feet objecting to this bill because it, as well as others like it, are creating headaches for the Minister of Mines and Technical Surveys at the present time.
Only last evening the minister had a delegation from Nova Scotia wait on him in reference to a mine closing for lack of markets. Of course he told them he could not do anything about it. He sent them on to Montreal to meet with the heads of the Canadian National Railways. On the 12th of this month the Minister of Mines and Technical Surveys again will be meeting a delegation from Nova Scotia consisting of representatives of the mine workers' union and the heads of the operating coal industry in that province. Their purpose in going to see the Minister of Mines and Technical Surveys is to determine the future of the coal industry of that province. The problem in the province is what? It is that of markets. Why are they afraid of expanding the industry or developing it? Because there is a threat from natural gas and oil.
While I have no objection to Ontario getting cheap fuel, I am blaming the government for not having a national fuel policy that is allembracing, whereby a study would be made of the whole question of fuels. Then gas or oil would be piped into the areas where it was most economic to do so, having due regard to the provincial economies that are based on other fuels and are going to be wiped out when these gas and oil developments are fully implemented.
The thing that irks me is this. Every time a member gets to his feet in the house he figures that if you can serve Quebec and Ontario from the western provinces, that is a national project.


Mr. Enfield:: Nonsense.


Clarence Gillis: That is what has been said; and if it went over the hon. member's head, that is not my responsibility. If he cannot absorb what he hears in this chamber I suggest that he do not interrupt somebody who has been listening to the discussion.


Frank A. Enfield: Mr. Speaker, I rise on a
question of privilege.


Clarence Gillis: I have the floor.


Mr. Deputy Speaker:: Order.


Frank A. Enfield: I should like to rise on a
question of privilege.


Clarence Gillis: There is no question of privilege at all. The hon. member interjected, where he should not have done so, a remark that indicated that he was not even listening to the debate.


Mr. Deputy Speaker:: Order.


Clarence Gillis: Mr. Speaker-


Frank A. Enfield: I rise on a question of
privilege.


Mr. Deputy Speaker:: Is the hon. member rising on a question of privilege?


Clarence Gillis: I am not taking any suggestion of a question of privilege from the hon. member at all.


Mr. Deputy Speaker:: Order.


Clarence Gillis: There is not any question of privilege.


Mr. Deputy Speaker:: Order. I understand that the hon. member has risen on a question of privilege. I think I must hear him state his question of privilege.


Clarence Gillis: Mr. Speaker, let me make this observation with regard to your ruling-


Some hon. Members:: Order.


Clarence Gillis: I have the floor. This hon. gentleman interjected a remark; that is all there is to it.


Mr. Deputy Speaker:: Order. As I said before, since the hon. member has risen and announced that he wishes to raise a question of privilege, I think I must hear him. Then I must determine whether or not he has a question of privilege.


Frank A. Enfield: Mr. Speaker, if it will make the hon. member opposite feel any better, I shall withdraw my previous interjection that he managed to provoke. However, on the question of the relevance of his remarks, are we discussing-


Clarence Gillis: That is not a question of privilege, Mr. Speaker. It is a matter of argument.
9,	1954	2823
Niagara Gas Transmission Limited


Frank A. Enfield: I submit that what the hon. member has been saying is not relevant to the bill before the house at the present time. He is discussing a whole national fuel policy.


Mr. Deputy Speaker:: Order. To date the hon. member's remarks do not indicate that he is discussing a question of privilege but rather that he is discussing a point of order. I think perhaps the hon. member for Cape Breton South should be allowed to proceed.


Clarence Gillis: Mr. Speaker, I want you to know that I did not start that incident.


An hon. Member:: But you helped it along.


Clarence Gillis: When the hon. member says that the discussion of a national fuel policy is not relevant to this bill, I suggest that he had better do a little bit of studying on the problem; and if he does so, I think he will find that it is relevant.
As I was pointing out, in all these discussions I have never yet heard any member of this house suggest that there was any problem east of Quebec in connection with this natural gas question. I was a member of the committee that considered the first natural gas bill to be introduced in the house. At that time I asked the witnesses who appeared before the committee whether they had made any survey east of Quebec, and they admitted they had not. No consideration whatsoever had been given. As I was pointing out when I was interrupted, there are four provinces east of Montreal, and the threat of natural gas and oil is creating the problem so far as coal is concerned. Delegations are coming to Ottawa to meet with the Department of Mines and Technical Surveys to determine whether there is any solution to the problem.
This bill is to be sent to a committee, and I suggest to the Acting Prime Minister (Mr. Howe) that when it goes there an examination should also be made of the repercussions on the whole maritime economy by virtue of the fact that in this house we are passing bills-with very little consideration, in my judgment-to provide for the piping of natural gas and oil from western Canada. It is not a question of considering natural gas or oil alone; but rather it is one that is related to the matter of other fuels. Unless an examination is made from the point of view of a national fuel policy, one of these days we are going to find ourselves with an emergency on our hands. We will find that fuels going into certain areas are needed somewhere else and for some other purpose. Mines are being closed indiscriminately across Canada today, and we are not going to be able to open them up the moment we need that fuel.

Niagara Gas Transmission Limited
I think it is almost time someone took a look at the question. The statement was made that this gas development is a billion dollar project which will bear full fruit about 1960. That is a lot of money. It is a big investment, and I should think those who are investing that money would sit down and take a look at the whole fuel question before that amount of money is invested. Only last night in Montreal the president of Dominion Steel and Coal Corporation, one of the biggest organizations in Canada, said that in the maritime provinces coal, steel and textile areas were depressed today. It is getting pretty bad when he will make such a statement, because he has always taken the other view.
We are asked to pass a bill that will make natural gas available to the province of Ontario and ultimately to the province of Quebec. Natural gas will replace coal for all domestic purposes and also in industry in Canada, with the exception of basic steel. When it is said that by 1960 this billion dollar program will be fully developed it means that natural gas will be supplying the whole area of Quebec and Ontario. It also means that the whole coal industry of Nova Scotia and New Brunswick is going to be a casualty in the path of technological advance.
The government has some responsibility to the four maritime provinces that depend to a large extent on coal. We also have some responsibility to them. What is going to happen then? Are no benefits to accrue to that part of the country as the result of this investment in gas and oil, and the money the federal government is going to spend in these projects?


Owen C. Trainor: Who said they are going to spend any money?


Clarence Gillis: They are spending plenty of it. Soihetime we shall go into it and show you. Perhaps we will before the debate is over.


Owen C. Trainor: I should like to know.


Clarence Gillis: I think the province of Saskatchewan has set an example in the field of natural gas. Private industry is developing the wells but the Saskatchewan government has set up a crown company to distribute the gas. The crown company there that is doing this job is also the company that is concerned with hydroelectric power. They are in the field of fuel, and are planning natural gas development in the Saskatchewan area in the way that will be most economic. It is not being done haphazardly as we are doing here by granting franchises for pipe lines all over the country, to pipe Canadian gas across the border into the United States and to pipe United States gas


across the border into Canada. If we are going to break down trade barriers on this continent in order to supply the province of Ontario with natural gas it is pretty nearly time we began to wipe out trade barriers all along the line.
If Ontario thinks it is good business to bring in cheap natural gas from across the line, then it is just as good business for Ontario and the four maritime provinces to be able to get cheap automobiles and not have to pay a tariff of 25 per cent on them. About 35 per cent is added to the cost of everything imported from the United States that the maritime consumer eats and wears, by the time it is hauled across the country to him. If we are going to start knocking down barriers in order to have cheap fuel, let us start knocking them down for everything else right down the line. You cannot retain trade barriers in order to protect central Ontario manufacturers for certain purposes, and knock them down for another purpose because benefits will accrue to the central provinces. If Ontario is going to take natural gas and distribute it, then in my opinion the body already in the field of fuel, the Ontario Hydro Electric Power Commission, is the organization that should control the distribution, because I believe they can plan it in a much better way than some pipe-line company which merely wants to pipe it in there for the purpose of making money.
I notice, Mr. Speaker, that you are looking at me. It is six o'clock. May I call it six o'clock?
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.

[Stage Direction]
The house resumed consideration of the motion of Mr. Abbott for the second reading of Bill No. 338, respecting banks and banking, and the amendment thereto of Mr. Coldwell.
Mr. W. Ross Thatcher (Moose Jaw-Lake Centre):: I should like to propose one specific change in the Bank Act tonight, Mr. Speaker, a change that has to do with agriculture. It seems to me that one of the major gaps or major weaknesses in our banking system over the past few years has been its failure to provide adequate long-term credit facilities for farmers. The banks seem to feel, and I admit with some justification, that marginal

farmers, because of climatic conditions, because of uncertainties of price and markets, are perhaps not good credit risks. As a result Canadian farmers, no matter in what province they live, seem to have difficulty today in obtaining long-term credit.
A few days ago this particular problem was discussed in the Saskatchewan legislature during the debate on a private member's resolution. According to a Canadian Press dispatch of last Thursday, the resolution, and I quote-
. . . asked the federal government to set up a lending agency to provide loans to young farmers starting out or extend limitations of present lending agencies.
In my opinion, Mr. Speaker, that resolution pinpointed the problem which should be considered by the banking and commerce committee when this particular act is being reviewed. The lack of long-term agriculture credit facilities in my opinion is having a harmful effect on our economy and is causing unnecessary trouble for farmers. As every hon. member knows, no matter from what province he comes, in recent years there has been a steady and persistent drift of farmers into the cities. I think one of the reasons for this trend is to be found in the fact that they are finding it ever more difficult to become established on the farms. The price of land today has skyrocketed. The price of machinery is becoming ever higher, and it is very costly for a young farmer to purchase a basic herd of cattle or of livestock.
In western Canada today if a young farmer wants to start out on a half section of good land, with all the equipment to farm it, it costs him roughly $20,000. Such a figure, of course, is out of reach of about 90 per cent of our farmers. There is no place where they can obtain adequate credit to purchase such a farm. As a result, I say again that many of these young farmers have left the rural areas and drifted into the city. It is quite true, as the Minister of Finance (Mr. Abbott) pointed out the other day, that the federal government has within the past few years set up the Canadian Farm Loan Act and the Farm Improvement Loans Act.
I want to say at once that both of these acts have been extremely beneficial. However, I believe most hon. members will admit that the provisions of these acts have been found to be too limited in scope. Trying to qualify for loans, most farmers either find the down payment required under these acts too high, or the proposed security required too severe, or the amount which could be borrowed too small. For instance, if my memory serves me correctly the ceiling in the farm improvement act is $4,000. When
The Bank Act
you realize that today in western Canada a tractor alone costs perhaps $3,000 and a combine about $6,000, most hon. members will realize that the ceiling is too low.
Thus I say that experience has shown the provisions of both the Canadian Farm Loan Act and the Farm Improvement Loans Act are completely inadequate to provide farmers with the type of credit which they need today. It seems to me the time has come for this parliament to remedy that weakness while we are discussing the banking system.
I suggest there are several methods which could be used. In the first place, the provisions of the Canadian Farm Loan Act and the Farm Improvement Loans Act could be extended, the ceilings could be elevated and so on. Parliament might also consider a second alternative. In this Bank Act, if I understand it correctly, the minister is proposing that the banks should be guaranteed by the government against losses on 20 to 30-year loans which they make to urban dwellers on the construction of new homes. Why would it not be feasible, under this act, to give the banks similar guarantees against losses which they might have in making 20 to 30-year loans to farmers for the purpose of purchasing new farms or new equipment?
As I see it the principle would be the same in both cases. In that way the farmer could obtain the long-term credit which he so badly needs in Canada today without undue expense being placed upon the taxpayers. If the banks are prepared to accept long-term mortgages on houses under a government guarantee, I believe they should be prepared also to accept long-term farm mortgages under the same type of guarantee.
I may say that I have discussed this matter with bankers I know, and they cannot see any particular flaw in the argument. I realize, of course, that certain safeguards would have to be established so the banks' liquid position would not be jeopardized. I say again, Mr. Speaker, I think the time has come for this parliament to do something to provide the kind of credit facilities that our agriculture needs. I have suggested these two methods, and if there is something wrong with them I hope the Minister of Finance will tell me precisely what it is.


Mr. Speaker:: I declare the amendment lost. Is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.

[Stage Direction]
The house resumed, from Friday, February 26, consideration in committee of Bill No. 7, respecting the criminal law-Mr. Garson- Mr. Robinson (Simcoe East) in the chair.
William Alfred Robinson: When the committee rose previously we were discussing clause 431. Shall the clause carry?
On clause 431-Seizure of things not specified.


Stanley Howard Knowles: Mr. Chairman, I am sure the minister recalls the discussion we were having in respect of clause 431 the last time the committee dealt with the Criminal Code. Is the minister awaiting his assistants?


Stuart Sinclair Garson: No; go right ahead.


Stanley Howard Knowles: As he may recall, some of us were concerned as to this clause. It is a new one and it seemed to me on the previous occasion we discussed it, and still seems to me, that its provisions grant rather wide authority. It makes it possible for one who is armed with a warrant for the seizure of certain things to seize other articles in addition to those set out in the warrant if, in the opinion of the peace officer who has the warrant, there are grounds for so doing.
I listened with interest to what the minister had to say on this matter on February 26, but I must say I was more impressed by what the hon. member for Digby-Annapolis-Kings had to say, particularly when he pointed out that the wording of a warrant can usually be made wide enough to embrace any of the articles involved in a particular offence. As the minister knows, it has been my concern and the concern of some other hon. members in

this house in going through the code that we do not go too far in the direction of providing peace officers with too much authority without a warrant being properly drawn.


Mr. Nowlan:: Mr. Chairman, may I amplify what I said in committee the other night when we were dealing with this clause. I feel it is necessary because my hon. friend has merely summarized the discussion, and frankly I believe the minister will have some difficulty in providing justification for this clause. It will be observed that clause 431 contains within it reference to clause 429. Clause 431 reads:
Every person who executes a warrant issued under section 429 may seize, in addition to the things mentioned in the warrant, anything that on reasonable grounds he believes has been obtained by or has been used in the commission of an offence, . . .
-and so on. But, Mr. Chairman, if you go back to clause 429 you will find provisions
(a), (b) and (c) are so wide that they include almost everything under the sun. To use a colloquial expression, they include everything but the kitchen sink. Paragraph (a) of clause 429 reads:
(a)	anything upon or in respect of which any offence against this act has been or is suspected to have been committed.
And then paragraphs (b) and (c) read:
(b)	anything that there is reasonable ground to believe will afford evidence with respect to the commission of an offence against this act, or
(c)	anything that there is reasonable ground to believe is intended to be used for the purpose of committing any offence against the person for which a person may be arrested without warrant.
It must be remembered that the information will be preferred by a skilled officer, perhaps of the R.C.M.P. or other branch of the police, and that this is not a warrant for the arrest of an individual where the charge is limited specifically. In such cases a peace officer cannot go beyond that charge; otherwise he would be guilty of complicity and the warrant or the indictment would become void. This is information upon which a search warrant will be taken out and within which the officer responsible, I suggest with all due deference, can include everything which any reasonable person could anticipate.
Having done that, it is not necessary to use the provisions of clause 431, unless by any chance the officer has been lax or careless, in which case I frankly do not believe we should require in the Criminal Code a clause which is quite so wide as this. Under this provision, if the officer has forgotten or fails to include within the information everything from Dan to Beersheba, he can in addition to the one thing mentioned in the
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warrant seize anything be believes on reasonable grounds has been used in that offence.
For example, Mr. Chairman, I can imagine a husband or wife buying a washing machine and stating that they can pay $10 per month, when actually their earning power is considerably exaggerated. It would then be perfectly conceivable under this clause for the vendor to seize that washing machine, because he could claim that the buyers obtained it by falsely representing their income, and that in fact they lacked the purchasing power.
I certainly do not want a situation of that kind created, and I know the Minister of Justice would be the first to oppose such a development. But I am saying to him with all the force I can command that if this clause is permitted to stand as it now is, then it will be open to a great many abuses, and we will find the Criminal Code being used for the seizure of goods which should actually be recovered under civil procedure, if they are seized at all.
I would be the first to admit that we should not handicap an officer of the law, and that we should provide him with all necessary powers; but I do not like umbrella clauses, or general catch-alls such as we have here. I know the minister will give an explanation which will undoubtedly appeal to reason, but I would also suggest with all due deference that if he were sitting on this side of the house, I would hate to think how much time he would take in opposing the enactment of the clause we have before us now.


Stuart Sinclair Garson: I think I should address myself to the last point made by my hon. friend, but first let me deny as emphatically as I can that in the improbable event of my sitting on the other side of the house I would oppose this clause. I am not supporting it merely because I am sitting on this side of the house. I am supporting it because I think it is a necessary provision to have in the bill.
I went to some considerable length in outlining the justification for this clause on the last occasion on which it was before the committee, and I do not believe it is necessary for me to cover the same ground tonight. However, I should deal with the points raised by the hon. member for Digby-Annapolis-Kings. He claims that if this clause is passed it will enable a creditor to seize, say, a washing machine.


George Clyde Nowlan: It is possible.


Stuart Sinclair Garson: Yes, but I would suggest that he look carefully at clause 429, under which the warrant has to be issued. When my hon. friend talks about subsection (a), covering

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anything upon or in respect of which any offence against this act has been or is suspected to have been committed-and the same sort of provision is in (b) and (c)-I think he will agree from his own experience that in order to get a search warrant under section 429 at all the informant has to satisfy the justice that he believes, upon reasonable grounds, that an offence has been committed.
When he establishes that by his information, then the information is issued only in respect of things which have to do with that offence. The warrant only applies to things under
(a), (b) or (c) in relation to that offence. It does not make any difference how broad
(a), (b) and (c) are. The restriction does not arise under these subsections. It arises from the fact that when the warrant is issued it is in respect of a certain offence which is disclosed in the information sworn before the justice. I see that my hon. friend from Digby-Annapolis-Kings is nodding his head in assent to that statement, and I am glad he agrees with what certainly is the case.
When the peace officer has this warrant, he goes to the place where he thinks he is going to find the property which was involved in that offence which was referred to in the information and in the warrant that is in his possession. When he gets there, he discovers that this particular thief has been active in more spheres than anyone had suspected, and that he not only has all of the swag from this particular offence but a lot of material from perhaps several other offences as well. This is not an imaginary situation. Time after time we see in the newspapers reports to the effect that when the police went to seize under a search warrant of this sort they found goods that had been stolen in a series of robberies in that community over a previous period of time.
What my hon. friends of the opposition are arguing is that under a set of circumstances such as that, the peace officer should solemnly seize the articles covered by the warrant he has, as being those that were connected with the offence in respect of which the warrant was issued; and then, so far as all the other ones are concerned, he says, "Well, I have not any authority to do that. I shall go back to the magistrate and see if I can get some more warrants to cover these other matters". Is that common sense?
I had perhaps better not ask my friend the hon. member for Digby-Annapolis-Kings the rhetorical question, "Is that common sense"; I shall merely say that it does not seem to me to be common sense. It is only after the peace officer has been armed with the warrant in respect of a particular offence disclosed in a sworn information before the justice, and he goes and finds ether goods

which upon reasonable grounds he believes to have been the subject matter of other offences, that he has any right to take them. To my mind this section is an improvement in this part of the code.


George Clyde Nowlan: With all deference, may I say this. We are not going to involve the minister in rhetorical questions or otherwise. He was suggesting that perhaps I was not talking common sense. Perhaps I am not prepared to offer an opinion because I might be slightly prejudiced.
Nevertheless I suggest, with all deference, that the minister has not met the point I raised. In other words, he says that section 429 deals with a specific offence. It is certainly possible for any embryonic lawyer or any embryonic police officer to draw up an information under section 429 which would be wide enough to cover any possible eventuality that might occur.
I am not going to waste the time of the committee by stressing this point again, having done it once. My complaint is not that anything might be done under section 429; but having laid the information, we come back and find that it is any person who can do this. Mind you, it need not be a police officer; this can be anybody. You are not limited to a peace officer. You are not limited to a constable. And even some of these people, I am rather afraid, have fearful ways of dealing with matters. I am just thinking of a peace officer who was on traffic duty in a city not too far away from here when a horse dropped dead in what was known as Confederation square. It was not Confederation square in Ottawa, I may say. He could not spell "confederation" so he unharnessed the horse and dragged it till he came to Prince street, which was his own name and he could spell it. Then he filled in the traffic report saying that he found the horse on Prince street. That sort of thing sometimes happens with peace officers.
You are going beyond even that class now. You are saying that any person who executes a warrant may seize things in addition to the things mentioned in the warrant. I say again with all emphasis-and I am not stressing it further-that everything should be mentioned in the warrant that could possibly be included within the scope of any particular crime with which you were concerned. If you are going on a fishing expedition I think you should at least fish within the ambit of the law, and not under a general umbrella. You add that to the fact that any person can do that, that he can seize anything. It might be a bootlegging offence. As I say, it might be something resulting from credit.

The minister says this is an improvement in the law. Possibly it is, Mr. Chairman. But I simply point out that the criminal law of this country has been fairly well administered since confederation, and the Criminal Code has been a fairly effective instrument of legislation. There are hon. gentlemen in this house who have been connected with its enforcement. For instance, there is the hon. member for Cumberland sitting on my right, who for years has been a crown prosecutor in his own constituency, and there are many others in this house who have had similar experience. It seems to me rather strange that we now find this new section being drafted which in my opinion, at any rate, goes farther than the code went previously.
I always object to the law being stretched to the limit. I think we must, as far as possible, maintain the old concept of specific offences, specific crimes and specific informations. I am not going to urge the matter further but I do say that I think this is not an improvement. I say that with all respect to the minister. He can refer to section 429 as much as he likes, but I am sure that any officer who is retained by the Department of Justice and lays an information which does not bring the matters which the minister wants investigated within the scope of that section, will not be retained a second time, unless there is a great deal of pressure brought to bear upon the minister. It is only when they fail to do that that you are back within the provision of this section. I say it is unnecessary and I say it is unwise; and I at least want to register my own objection.


William Alfred Robinson: Shall the clause carry?


Edmund Davie Fulton: No. I think there is another objection to this clause, Mr. Chairman, on the ground that in none of these sections so far as I can see is any time limit laid down within which a warrant must be executed. That may be a non-essential. When you act under clause 431 and seize anything else in addition, that is one thing. When you read that in conjunction with clause 432 (3) (a), under which the magistrate or the justice is now to be the judge of whether or not the thing was lawfully in possession of the person from whom it was seized, you have three things. It is not included in the warrant. It is seized on the suspicion of some peace officer that it was obtained unlawfully. Yes; my friend the hon. member for London corrects me and says it may not be a peace officer, but may be seized by any person who fancies that it was obtained by the commission of an offence. Then after it has been seized and is before the justice, that
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justice, without any sort of trial, if he thinks it was obtained unlawfully orders it to be forfeited. Then added to all these considerations is the fact that no time limit is specified within which this extraordinary power may be exercised. I think it is going much too far, and I would certainly propose to vote against the section.


Stuart Sinclair Garson: I wonder if, while we are on this section, I might bring to the attention of the members of the committee a representation which I have received from Mr. N. A. Munnoch, general counsel of the Bell Telephone Company. He had made representations before the special committee of the House of Commons last year in connection with this same question. Mr. Munnoch refers to section 171, subsection 6 of the bill, which hon. members will find on page 57. That is the section authorizing a search warrant in connection with gaming houses.


Stanley Howard Knowles: We are back to the corner stores again.


Stuart Sinclair Garson: No, not to the corner stores. This is a different kind of gaming house. This is a gaming house where a lot of telephone lines have been installed in order that those in charge may receive and place bets on race tracks. The complaint of the telephone companies, on the strength of which this subsection was placed in the code previously, was that when the police came in they took the telephones in the course of seizing exhibits and ripped them from the walls, and in doing so frequently damaged them severely. To meet that situation it was provided by subsection 6 of section 171 that-
Nothing in this section authorizes the seizure, forfeiture or destruction of telephone, telegraph or other communication facilities or equipment owned by a person engaged in providing telephone, telegraph or other communication service to the public or forming part of the telephene, telegraph or other communication service or system of such a person.
Before the House of Commons committee Mr. Munnoch represented that clause 431, which we are now discussing, might have this effect of permitting and I think I had better use his words rather than paraphrase them-
... "a person, armed with a search warrant pursuant to section 429, to seize telephone, telegraph and other communication facilities and equipment if, on reasonable grounds, he believed they had been used in the commission of an offence, despite the fact that they are exempt from seizure under section 171. This would seem to conflict with and nullify, or to a large extent impair, the protection given to communication companies by section 171.
In order to remedy this situation and give such companies the protection to which they are, in my submission, entitled, I respectfully suggest that

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either section 431 be amended by adding a provision substantially similar to that contained in subsection 6 of section 171 or that subsection 6 of section 171 be amended by adding after the word "section" in the first line thereof, the words "or in section 431", so that the said subsection would read as follows:
"(6) Nothing in this section or in section 431 authorizes the seizure, forfeiture or destruction of telephone, telegraph or other communication facilities or equipment owned by a person engaged in providing telephone, telegraph or other communication service to the public or forming part of the telephone, telegraph or other communication service or system of such a person."
The House of Commons committee rejected that argument, and when we were considering introducing the code last fall I advised Mr. Munnoch that we were going to introduce it-with the few minor exceptions I have called to the attention of hon. members, typographical errors and the like-in substantially the same form as that in which it had emerged from the House of Commons committee of last year. He then asked me if, when we came to clause 431, I would be good enough to present to this committee and myself endorse these representations of his which I have just finished quoting. I said I could not endorse them, because my view was that we should adhere to the decision that had been made by the House of Commons committee, but that I would bring the matter to the attention of hon. members of this committee as I have now done.


William Alfred Robinson: Shall the clause carry?


Edmund Davie Fulton: On division.
Clause agreed to on division.
On clause 432-Detention of things seized.


George Clyde Nowlan: What about the three months' provision in clause 432? I wonder whether the minister would comment on that. The note says that subsections 1 and 2 are the old section 631, but all section 631 says is that the thing shall be detained until the conclusion of the investigation or trial, and otherwise shall be returned. It seems to me that the period of three months during which the thing can be held while the investigation is being conducted, as provided in clause 432, is rather long. I wonder if the minister would comment on that briefly or comment -period.


Stuart Sinclair Garson: I should bring to my hon. friend's attention that the entire clause in which the three months appears, that is, starting with the words "but nothing shall be detained", was added by the Senate to the section in its original form as a saving clause to limit the period during which things could be detained. In that form it passed

the House of Commons committee, and I would think we might well approve of it here.


Edmund Davie Fulton: What about subclause 3 (a) of clause 432? Is that the one the minister is saying is a saving clause?


Stuart Sinclair Garson: No. I suggested that the last five lines of 432 (1) were added as a saving clause.


Edmund Davie Fulton: I think there are strong grounds for objection to subclause 3 (a), which I notice is new, and so that the grounds of objection may appear on the record I had better read it. It reads as follows:
(3)	Where a justice is satisfied that anything that has been seized under section 431 or under a warrant issued pursuant to section 429 will not be required for any purpose mentioned in subsection 1 or 2, he may
(a)	if possession of it by the person from whom it was seized is unlawful, order it to be forfeited unless he is authorized or required by law to dispose of it in some other way, or
(b)	order that it be returned to the person from whom it was seized.
There can be no objection to (b) because that is restoring it to the place whence it came, but under (a) nothing is laid down to indicate in any way what steps a justice has to take to satisfy himself whether or not it was unlawfully obtained by the person from whom it was seized. If there is any other provision in the code which applies here and makes it incumbent upon a justice to at least go through some form of judicial inquiry to come to a conclusion, I would be glad if the minister would direct our attention to it. As I see the section as it stands the thing can be disposed of on the merest whim of the justice.


Stuart Sinclair Garson: If my hon. friend will look at the following subsection 4 he will see that it indicates-


Edmund Davie Fulton: That merely provides a time limit. It merely reads:
(4)	Nothing shall be disposed of under subsection 3 pending any proceeding in which the right of seizure is questioned, or within 30 days after an order is made under that subsection.
The introductory words of subsection 3 emphasize the fact that this thing may have been seized although not named in the search warrant. The introductory words are:
Where a justice is satisfied that anything that has been seized under section 431 or under a warrant issued pursuant to section 429 . . .
This thing may have been seized although it was not included in the warrant. There has been no information laid with respect to it. A person enters to execute a warrant and he sees something else which in his belief-and he may believe it sincerely-has been acquired unlawfully by the person in

whose possession it is found, so he seizes it. Then it comes before a justice. It is not wanted in the judicial proceedings brought against the person in whose possession it was found. It may lie there for any length of time. No maximum limit is laid down within which it has to be disposed of or returned. After six months or a year somebody suddenly notices it lying around a police corridor. Possibly they have forgotten where it came from, or cannot find the records, or it involves a little bit of trouble to look them up. It is decided that the fellow was up on a charge, was not a very good character and probably came by it unlawfully in any event. Heaven only knows what disposition may be made of it.
I must confess that this seems to me to be very loose draftsmanship, and a form of draftsmanship which means that no one can say what are the principles upon which a justice must proceed in determining how to dispose of this seized article.


George Clyde Nowlan: In furtherance of that, may 1 point out to the minister that he has referred to subclause 4 as a saving subclause. I am prepared to admit that it has some saving value, but subclause 4 reads:
Nothing shall be disposed of under subsection 3 pending any proceeding in which the right of seizure is questioned . . .
Now, just what is meant by the "right of seizure"? You are not dealing now with something which is unlawful. This is a new phrase, new terminology entirely, "the right of seizure." To be quite frank, I believe the provisions of clause 429 are wide enough; and being as wide as they are, for the life of me I do not know how anyone could ever question the right of seizure, whatever may be included within that term. It apparently means if you go beyond the scope of machinery which has been set in motion.
As I said earlier, if the section had been drafted properly the right of seizure could not be questioned. Then, going back to subclause 3, who determines if possession is unlawful? A justice is satisfied that something has been seized, and then paragraph
(a)	goes on to say.
if possession of it by the person from whom it was seized is unlawful . . .
How is that determined? If one goes down to a later clause we find provision for some inquiry, I suppose, but I am not sure it is included in that. I want to emphasize what my hon. friend has said, that I believe it is loosely drafted, too widely drafted. For the life of me, which does not mean too much, I cannot understand what it means.
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Edmund Davie Fulton: I should like to ask one other question to indicate the difficulty. If the justice is satisfied that possession is unlawful, he may order it to be forfeited. To whom would it be forfeited? There is no provision in this clause. There is a provision in clause 433, covering explosives, which provides that the proceeds of sale will be forfeited. Under the existing code there is either committal or it is returned. Now there is this vague provision, and to whom is it forfeited? Would it be forfeited to the person who seized it, or what? The section is full of uncertainties and vagueness, and I would ask at least that it stand, if indeed it should not be dropped.


Stuart Sinclair Garson: I have no objection to having any of these clauses stand if there is any substantial doubt entertained by any member of the committee. I shall now endeavour to dispel that doubt, and if I do not succeed I am quite prepared to let the matter stand. Subclause 3 says:
Where a justice is satisfied that anything that has been seized under section 431 or under a warrant issued pursuant to section 429 will not be required for any purpose mentioned in subsection 1 or 2, . . .
My friend understands that is in connection with an investigation, preliminary hearing or trial. Then the clause continues:
... he may
(a) if possession of it by the person from whom it was seized is unlawful, order it to be forfeited . . .
Then if my hon. friend will look at clause 626 of the bill, he will see that fines, penalties, forfeitures and so on, go to Her Majesty in the right of the province as represented by the attorney general of the province. Suppose that the person from whom this article was seized was the lawful owner, and in lawful possession of it. Then the justice, presumably, would not issue an order of forfeiture because the possession of it by the person from whom it was seized would not appear to him to be unlawful. On the contrary it would appear to be quite lawful.
In the event, that he made a mistake-and judges are human and can make mistakes- it is provided in subclause 4 that:
Nothing shall be disposed of under subsection 3 pending any proceeding in which the right of seizure is questioned, or within 30 days after an order is made under that subsection.
If the person from which the thing was seized were the owner of that thing, if he did lawfully own it, and was lawfully in possession of it and it was taken from him, I think my lawyer friends of the opposition will agree that the owner if necessary could take

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out a writ of replevin in the common law provinces to recover it. But I am also certain that under those circumstances the justice or the peace officer who was holding the article would never seek to retain it, so I do not entirely share my hon. friend's apprehension about the difficulties which he alleges.


Edmund Davie Fulton: It would be rather difficult for him to bring an action for replevin if he were languishing in a jail 150 miles away. He has only 30 days to oppose the forfeiture.


Stuart Sinclair Garson: I am taking the case my hon. friend seems to be exercised about, where the article has been improperly seized from Mr. John Doe. It really belongs to him and they should not have seized it in the first place. They exercised an unwise discretion. Supposing it is a refrigerator they have seized. They cannot do anything with it within that period of 30 days, and during that time the man from whom it was unwisely seized can assert his claim in relation to it and if necessary have a civil process issued to take it back.
On the other hand, if his possession is unlawful, if it was a stolen article, it could be returned to the owner. If the owner was not known it would be forfeited to the crown.


Stanley Howard Knowles: I wonder if I could get in for just a moment to make a suggestion that it seems to me might meet the point or at least might help to get across the point that the hon. members for Kamloops and Digby-Annapolis-Kings have been trying to make. What about putting in line 6 after the first "is" the words "to the satisfaction of the justice." This part of the clause would then read, "if possession of it by the person from whom it was seized is, to the satisfaction of the justice, unlawful . . ." The hon. member for Kamloops says that is already in there, but he now agrees that the words "is satisfied" are only in line 1. It is from that that I gathered this idea. The justice does have to be satisfied that something that has been seized will not be required for any purpose mentioned in subsection 1 or 2; that does impose upon the justice the obligation of being satisfied. Why not do the same in line 6?


Stuart Sinclair Garson: The obligation is there anyhow.


Stanley Howard Knowles: Why is it stated in one case and not stated in the other? I go along with the view being expressed by my friends to the right that it would be wise to state the obligation again and thus make it necessary

for the justice to be satisfied, and have some way of showing it, that the article was seized unlawfully.


Stuart Sinclair Garson: I think the reason the words "is satisfied" are used in one instance and not in the other is that in the first case the justice has to be satisfied these articles will not be required for any purpose mentioned in subsection 1 or 2, whereas in the second case it is really a point of law he is deciding- if possession of it by the person from whom it was seized was unlawful. But they have to prove that it was unlawful. He will not act unless it is proven to him that it is unlawful. So it seems to me that without inserting the words "to his satisfaction", or words to that effect, the clause indicates clearly that they have to establish, first of all, that the possession is unlawful before the justice has any jurisdiction to make an order under the clause.


Stanley Howard Knowles: Where is that obligation set out?


Stuart Sinclair Garson: In the words of the clause. It says that "he may"-he may do what? He may "order it to be forfeited". On what condition? If possession of it by the person from whom it was seized is unlawful. But they have to show him that it is unlawful before he can make an order for forfeiture.


Edmund Davie Fulton: Who are "they"? Who has to show it? To what extent does it have to be shown?


Stuart Sinclair Garson: Anyone who is seeking a forfeiture order. It might be a representative of the crown who wanted a forfeiture order. It might be a peace officer. But whoever it is he must show the justice that it is unlawful before the justice can make a forfeiture order.


Stanley Howard Knowles: Does he have to do this only on a request for a forfeiture order, or could he do it on his own initiative?


Stuart Sinclair Garson: It has to be established to his satisfaction, notwithstanding the fact that such satisfaction is not mentioned here.


Stanley Howard Knowles: The minister is coming around to my point.


Stuart Sinclair Garson: Oh, no; I have always agreed with my hon. friend that the justice must be convinced that the possession of the person from whom it was seized was unlawful. What I disagreed with was that it needed some particular words like "to his satisfaction" here to make this point clear. The justice may, if possession of it by the person from whom it was seized is unlawful, order it to be forfeited. The question he has to decide is

this. Is the possession unlawful? And when he has decided that, but not before, he may order it to be forfeited.


Edmund Davie Fulton: And then, when the question is raised, to what extent and by what process does he have to be satisfied that it is unlawful? A crown officer comes before him. Is it sufficient that he make a statutory declaration as to the circumstances under which it was obtained and his belief that the possession of it by the person from whom it was seized is unlawful, or is it necessary to have judicial or semi-judicial proceedings? What kind of process is necessary to satisfy the justice? Let us look at subsection 4, because the minister has said that is the saving clause. It reads:
Nothing shall be disposed of under subsection 3 pending any proceeding in which the right of seizure is questioned-
-and so on. Mr. Chairman, there can be no question as to the right of seizure, because under section 431 it is provided that-
Every person who executes a warrant issued under section 429 may seize, in addition to the things mentioned in the warrant, anything that on reasonable grounds he believes has been obtained by or has been used in the commission of an offence.
He may have had reasonable belief on those reasonable grounds, but his belief may have been entirely wrong. His judgment may have been entirely wrong. The thing may have been obtained in a perfectly lawful fashion by the person in whose possession it was found. But so long as the person executing the warrant believes, on reasonable grounds, that it was not so lawfully obtained, he has a perfect right to seize it. There will not, in fact, be any subsequent proceeding unless the right to seizure is questioned.
The right to seizure is absolutely unquestioned under the terms of section 431. If a form of words were used which suggested that what was in mind was a proceeding in which the correctness or soundness of a seizure was being questioned, then I think that would cover the purpose in mind. But when the words used are, "Any proceeding in which the right of seizure is questioned", then I do not think it covers the purpose in mind, because surely it is not the right to seize which is in question. It is whether the seizure was in fact correctly and soundly made that is going to be questioned.


Stuart Sinclair Garson: May I go into a few elementary principles? Would my hon. friend not agree-


Edmund Davie Fulton: You have to have more than that to justify this section.


Stuart Sinclair Garson: Would not my friend agree that, first of all, the seizing officer has to have a warrant under section 429?


Edmund Davie Fulton: Yes, that is right.
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Stanley Howard Knowles: Or section 431?


Stuart Sinclair Garson: No, no. There is no warrant under section 431. He has a warrant under section 429. Please follow it carefully. He has a warrant and then, having the warrant, he comes along to this place where he has to seize goods which are covered by the warrant. When he gets there he finds a lot of other goods, and he seizes them too. But he does so only if he can justify that seizure by a belief on reasonable grounds that these other goods fall within the condition of this clause.


Edmund Davie Fulton: Surely.


Stuart Sinclair Garson: In the case posed by my hon. friend he has gone to this place and found there some goods covered by his warrant, and also another washing machine not covered by his warrant, a washing machine lawfully belonging to the person in whose possession it was. But the officer may think that because the goods he was seeking were stolen, the washing machine, too, was stolen. In those circumstances he might regard this as a reasonable ground for taking the washing machine away. Suppose then his right of seizure is challenged.
Under those circumstances, his right of seizure would be in question and it would be a very difficult thing indeed for any magistrate or justice to say that the man had reasonable grounds for seizing something that belonged to and was in the lawful possession of the person from whom it was taken. In this event he would issue an order releasing the washing machine to the lawful owner from whom it had been seized and the matter would be closed.


Edmund Davie Fulton: But he does not have to have reasonable grounds to seize it; he only has to have reasonable grounds to believe that he has the right to seize it. Take the case the minister has mentioned, where a man is suspected of having stolen several washing machines. Washing machines are rather large; let us suppose that he is suspected of having stolen a number of automobile tires. A warrant is taken out for the seizure of those tires, or for their detention. At the home of the person presumed to have taken the tires the officer finds a number of tires the accused is suspected of having stolen, and in addition he finds three or four more tires which he believes, upon reasonable grounds, have been stolen by this man who has been stealing tires and disposing of them.
The officer has perfectly reasonable grounds for supposing that the other tires, too, were stolen, and with that in mind he seizes them. This seizure is not covered by the warrant at all. There can be no question of the

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officer's right to seize, because it is conferred upon him by section 431. He may seize so long as he has reasonable grounds for believing. To him the grounds are perfectly reasonable and, as a reasonable man, he attempts to exercise reasonable judgment when he exercises the right to seize.
Now, what I am pointing out is that in fact the seizure may not be reasonable. But when the seizure is perfectly lawful under clause 431, and the right to seize exists under that clause, how can you question the right to seize under those circumstances? Yet the proceeding envisaged here, and the words used-and it is the words of the law that the courts will have to interpret, not what the courts believe the intention of parliament might have been-the words used are, "any proceeding in which the right of seizure is questioned".
In the circumstances which I have outlined and which the minister outlined, I submit that the right to seize could not be questioned, because he has an unquestionable right to seize once the clause is enacted. That is another example of why we should be more careful in the drafting of this and other clauses which are concerned with the exercise of very wide powers almost otherwise completely undefined. What is in mind here is the question of whether or not a seizure was in fact well founded, and whether or not there was the right to seize.
I am not going to attempt here to suggest the form of words which will put into legal phraseology the idea which I think should be incorporated in the clause, but I am quite clear in my own mind that the words now in the clause do not cover the idea, do not put into legal phraseology the intent which was there when that particular subclause was drafted.


Stuart Sinclair Garson: I suggest to my hon. friend that what he has just described as a very difficult problem could be quite simply resolved if he looked at 3 (a), which reads:
Where a justice is satisfied-
-that this article is not required for any purpose mentioned in subclauses 1 and 2 of clause 432, he may:
(b) order that it be returned to the person from whom it was seized.
So this great difficulty that my hon. friend has been explaining for the last two or three minutes could be resolved by a simple order under 3 (b). So far as his difficulty about the right of seizure is concerned, I am sure my hon. friend will agree that the right of seizure in this case is made up of two things. There must be a warrant, and there must

be reasonable and probable grounds for the peace officer's belief under clause 431. If either of those ingredients is missing, then the right of seizure is not complete.


Edmund Davie Fulton: Of course; that is the point. These ingredients may be there, yet a seizure may be effected which is perfectly proper and which in fact embraces things neither included in the warrant nor unlawfully in the possession of the person from whom they were seized.


Stuart Sinclair Garson: Will my hon. friend look at 3 (b) and say that they cannot be ordered to be returned to the man?


Edmund Davie Fulton: Of course they may be ordered to be returned.


Stuart Sinclair Garson: That is the whole point.


Edmund Davie Fulton: Under subclause 3 (a) or (b), as I say, it is going to be rather difficult, for the person from whom they were seized may have been found guilty of a crime with respect to other things and be incarcerated in a prison or possibly in a penitentiary. But he has to assert the right to have them returned, and how is he going to satisfy the magistrate of his right under those circumstances? That is putting all sorts of difficulties in the way; and yet, as I said earlier, there is no principle laid down for the guidance of the justice in determining whether or not the possession of the thing by the person from whom it was seized was lawful.
As I pointed out earlier, the minister has not said whether it can be done by statutory declaration on the part of the crown officer, whether it has to be by an affidavit, or whether there has to be some either quasicriminal or fully criminal or even civil action, brought to determine the lawfulness of the possession on the part of the person from whom it was seized. When I couple that with subclause 4, and I see the incomplete and inadequate wording there, I say this thing is just going to create difficulties in interpretation and in enforcement. It will be impossible to resolve it without amending this clause. I am suggesting that it be amended now rather than later on.


Stuart Sinclair Garson: I am afraid we are going to waste time over this clause if we discuss it at further length. I would suggest that we let it stand and, keeping my hon. friends' observations in mind, we shall see whether some method cannot be worked out to meet the point they have made, without spoiling the effectiveness of the clause itself.


Edward Turney Applewhaite: Clause 432 stands.
Clauses 433 to 437 inclusive agreed to.

On clause 438-Delivery to peace officer.


George Clyde Nowlan: This clause deals with the person after he has been arrested and delivered to the peace officer to be taken before a justice. The marginal note of clause 438 says:
Section 652 (in part) and new in part.
Well, now, section 652 of the code as it now stands says that a man who has been arrested may be detained, but must be brought before a magistrate or a justice before noon of the next day, as I recall it. Of course, that naturally does not include a Sunday or a holiday, but ordinarily he must be brought before a justice before noon of the next day. When you read clause 438 and get down to 2 (a) you find this:
Where a justice is available within a period of 24 hours-
Where a justice is available he shall be brought before him within a period of 24 hours. I wonder just what this question of availability means. Of course the minister can refer us to some actual situation which may exist in the Northwest Territories or somewhere in Baffin Land where a justice of the peace may be several hundred miles away, though even there probably the police officer has that power. I am not worrying about that; I am concerned about this clause which has abrogated the old law which says that he must be brought before the justice before noon the next day. It now says that where a justice is available he shall be brought before him within a period of 24 hours.
I think (b) is worse. It says:
Where a justice is not available within a period of 24 hours after the person has been delivered to or has been arrested by the peace officer, the person shall be taken before a justice as soon as possible.
Who is going to determine the "as soon as possible", Mr. Chairman, and just what does that phrase mean? We are dealing now with the liberty of the subject. We are amending a law which has been definite and conclusive heretofore as to timing. You will notice, Mr. Chairman, that the part we have before us, part XIV, has a subtitle which says "Arrest without warrant". This is not a case where you have laid an information, where you have arrested a man on a warrant pursuant to that information. This is a matter of an arrest without warrant; yet you have these, I suggest, rather vague provisions of either "if he is available" or "if he is not available". I have had some experience in trying to get people out on bail and the justice was not available because he had
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gone fishing. I wonder whether he is entitled to a 24-hour fishing trip, a 48-hour fishing trip or a 72-hour fishing trip?


Mr. Harris:: That is in Nova Scotia.


George Clyde Nowlan: That is in Nova Scotia, but probably the same thing would apply in Ontario and British Columbia. I think our administration of justice will compare very favourably with any; in fact it is better than most. I am not going to take that from the minister. And the fishing is just as good as anywhere else, Mr. Chairman.


Stanley Howard Knowles: Don't involve the chairman.


George Clyde Nowlan: I am not. The thing is obvious. There is no point in labouring it. I simply raise the question with the minister. I can understand that there are technical difficulties. As I said, I have seen cases when the justice was away on a fishing trip. I can imagine a man being arrested somewhere in the woods where you could not bring him before a justice within 24 hours or by noon the next day. When you are dealing with a clause which authorizes an arrest without warrant, which in itself is quite an infringement of human liberty, one which we all realize is attended with risk and one which should be guarded very carefully, you should be very careful.
I want to ask the minister as to the necessity for these changes, and to say without prejudging the matter that unless he can submit a very substantial reason then I strongly protest against them.


Stuart Sinclair Garson: First I think I should clear up one point made by my hon. friend. He said that under the code as it now stands-


George Clyde Nowlan: Section 652.


Stuart Sinclair Garson: -it is necessary for the person so apprehended to be brought before a justice before noon of the following day. The impression I got from my hon. friend's remarks, and if I am wrong I hope he will correct me, was that it applied to all persons who were arrested without a warrant. But that is not so. Section 652 is confined to one rather unusual offence. It states:
Any peace officer may, without a warrant, take into custody any person whom he finds lying or loitering in any highway, yard or other place during the night, and whom he has good cause to suspect of having committed or being about to commit, any indictable offence, and may detain such person until he can be brought before a justice to be dealt with according to law.
In other words he can detain such a person until he can be brought before a justice before noon of the following day. Besides the one offence under the present section 652

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there are scores of other offences under the present code for which a person may be arrested without a warrant if he is found committing such offences. If a person is thus arrested he must be brought before a magistrate only within a reasonable time.
When my hon. friend makes the suggestion that the clause we are discussing here introduces a great change in law, his suggestion is quite without foundation. Section 652 is of extremely limited application.
As a matter of fact the first draft of Bill No. 7 contained the same sort of general provision with regard to bringing an accused before a magistrate within a reasonable time that was in the existing code, and without the saving clauses to which my hon. friend is now objecting.
Those hon. members who served on the House of Commons committee will remember that the particular point my hon. friend from Digby-Annapolis-Kings is now labouring was discussed at great length before that committee, with this difference; that the House of Commons committee had a genuine case to discuss because as the section was originally presented it referred to persons arrested without a warrant and there were none of the protective provisions we have here now. There was then no time specified within which the accused must be brought before a justice. It was the Commons committee which suggested this redrafting; and the principal effect of the alteration is that where a justice is available the accused must be brought before him within 24 hours. If the arrest takes place in some remote area and a justice is not available, then it would be an obvious absurdity to say that he must be brought before a justice within 24 hours, because there would be no justice to bring him before. In that case it is provided that he must be brought before a justice as soon as possible.
My hon. friend, as a lawyer, should not raise the question as to what "as soon as possible" means. It means what it says, namely that he should be brought before the nearest justice as soon as it is possible to do so, which is a question of fact. After extensive discussion in committee this provision was put in to meet the very point which my hon. friend has raised; and I believe, upon reflection, he will agree that it meets the point pretty well.


George Clyde Nowlan: Mr. Chairman, apparently I made the fatal mistake of assuming that this code had been properly drafted. The minister now tells me that this matter has no reference to section 652 whatsoever, yet the explanatory section of the code opposite
[Mr. Garson.l
clause 438 states: "Section 652 (in part) and new in part." If section 652 has nothing to do with it, as the minister claims, why was this explanatory note put in? I believe there has been some very bad draftsmanship here and-


Stuart Sinclair Garson: On a point of privilege, Mr. Chairman, I did not suggest that section 652 had nothing to do with this matter. What I said was that my hon. friend's claim that section 652 provided that the accused be brought before a magistrate by noon of the following day and applied to all offences was incorrect, and that actually it applied only to one exceptional offence seldom encountered.


[Stage Direction]
Clause agreed to.
Clauses 439 and 440 agreed to.
On clause 441-Summons.
Mr. Winch:: Mr. Chairman, I would like the minister to comment on paragraph 3 of this clause, as to the purpose behind the regulation under which summonses may be served not directly on a person but left at their place of abode. I know that is very convenient for the person who has to serve the summons and who cannot locate the person to whom it is addressed. But it can also be very inconvenient for the person concerned if he does not receive that summons and learns nothing about it. Although he may not know anything about it and therefore does not answer the summons, a warrant may be issued for his arrest.
I know this very often occurs. As a matter of fact I had a rather unfortunate experience myself in this regard about two years ago. I arrived home one evening, to be told by my wife that there was a summons for me on my desk. I went to look for that summons and it had disappeared. Somehow or other it had been destroyed. I had not the faintest idea why I should receive a summons or where it could possibly come from, and it took me hours to find out. It so happened that it was a summons for jury duty, but it could have been something else and if I had not answered there would have been a warrant issued for my arrest. Why are summonses handled in this fashion?


Stuart Sinclair Garson: Mr. Chairman, this particular provision has been in the code for a long time and there has been no change made in the law by Bill No. 7. The words in this clause are the same as the words in the existing code. As to the point raised about serving a summons upon some irresponsible person, or as to the circumstances under which a summons can be served, it was held in the case of re Musial, 51 C.C.C., that the service on a person other than the accused is

permitted only if the accused "cannot be conveniently met with". This accordingly must be established before that type of service will be accepted. The mere proof that the accused was away from home when the constable called will not be sufficient to justify this substitutional service, as it is called, which cannot be used unless there has been a foundation established for its use.
If my hon. friend from Vancouver East were the gentleman in question, the mere fact that he did not happen to be home at that time in itself would not be sufficient foundation for serving the summons upon someone else in his household. If on the other hand it was left with some person in the household at least 16 years of age, after the peace officer had made other attempts to serve my hon. friend personally, and it could be shown that he could not conveniently be found within the meaning of clause 442 (3), then that substitutional service would be sufficient.


Mr. Ellis:: Mr. Chairman, according to paragraph 3 of this clause if a person is not home when a summons is served it can be left with a person who appears to be at least 16 years of age. I would like to know whether there is an obligation upon the person with whom that summons is left to serve that summons, and if he does not do so whether he is liable under this clause?


Stuart Sinclair Garson: 1 do not think he or she would be liable. In most eases substitutional service works quite satisfactorily. The fact that so many of those who were involved in the drafting had a great deal of experience in criminal law administration-some of them on the prosecuting side, it is true-and that they adopted the existing provision that had served for so many years, I think indicates that the existing provision must have appeared to them to have been reasonably workable or they would have made some change in it.


[Stage Direction]
Clause agreed to.
Clauses 442 to 444 inclusive agreed to.
On clause 445-Execution of warrant.
Stanley Howard Knowles: Whenever anyone rises with a question as to why a clause is worded in a certain way, if there has been no change the minister tells us that those who went into the matter must have been satisfied that it was all right. I would be interested in hearing what the minister has to say when a change is pointed out. I believe that a change has been made here. Formerly there was a reference to a seven-mile limit. Now that limit has been extended from coast to coast. Will the minister comment and explain?
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Stuart Sinclair Garson: Section 661-that is the existing section-authorizes an arrest, in the case of fresh pursuit, at any place in an adjoining territorial division that is within seven miles of the boundary of the territorial division in which the warrant was issued. This is changed in the bill.


Stanley Howard Knowles: That is what I pointed out.


Stuart Sinclair Garson: It is to permit arrest, in the case of fresh pursuit, at any place in Canada, in view of the present much speedier means of transportation as compared with what they had in the early days.


George Clyde Nowlan: There is one other point I should like to have clarified. It was probably covered in the committee, but I was wondering whether the minister would explain the fact that the subsection of the existing section dealing with arrest on Sundays and on holidays has been dropped. As I understand it there are statutory provisions which the present code recognizes-it is subsection 3 of the section, as a matter of fact- by saying that any arrest may be made on a Sunday or holiday. It says:
Every warrant authorized by this act may be issued and executed on a Sunday or statutory holiday.
That subsection is dropped from this section. I was wondering whether the dropping of it was owing to judicial decisions?


Stuart Sinclair Garson: No. It is in another part of the bill. If my hon. friend will look at clause 20, in the earlier part of the bill, he will
see it.


George Clyde Nowlan: I understand.


Mr. Nesbiit:: I have one further question on this clause. The minister mentioned that, as the result of modern transportation facilities, this provision was . extended from the seven miles to anywhere in Canada, on fresh pursuit. As to this question of fresh pursuit would the minister care to comment on how far that would go? Would it mean that the constable referred to could have a rest overnight or something of that nature?


Stuart Sinclair Garson: I should not like to attempt to answer a question of that sort in the abstract. I think the facts of any particular case that arose would have to be examined in order to see whether it could be maintained that these facts constituted fresh pursuit. But I have in my notes, under this subsection, reference to a recent case in which the actual fresh pursuit covered three provinces. It started out in Swan River in northern Manitoba and went to Banff, Alberta, and the pursuit was fresh all the way. I suppose it

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might just as well have gone to Vancouver or, if it had started in the other direction, clean to the Atlantic ocean. Under modern conditions that is not at all impossible. If we continued to limit it to the seven miles, under modern conditions it would be quite an anachronism.


[Stage Direction]
Clause agreed to.
On clause 446-Procedure to procure attendance of a prisoner.
Stanley Howard Knowles: Although the notes on the righthand page do not suggest that there is anything new in this clause, I believe there is something new in subclause 2. If that is correct, will the minister explain?


Stuart Sinclair Garson: I wonder if my hon. friend would allow that matter to stand.


Edward Turney Applewhaite: Shall clause 446
stand?


Stuart Sinclair Garson: Clause 446, subsection 2
stands.
Clauses 447 to 450 inclusive agreed to.
On clause 451-Powers of justice.


Stanley Howard Knowles: In clause 451 is there anything that bears on the reference of the question of insanity to a commission? I believe that paragraph (b) down the page a bit is new.


Stuart Sinclair Garson: Oh, yes; paragraph (b) is new. The only reference there that might possibly come under the royal commission that has been set up would be paragraph (a) which provides that a justice may remand an accused when in his opinion "the accused is mentally ill."


[Stage Direction]
Clause agreed to.
On clause 452-Corporation.
Stanley Howard Knowles: Clause 452 is new. It is a brief one and I might read it. It states as follows:
Where an accused is a corporation, subsections (1) and (2) of section 470 apply, mutatis mutandis.
Can the minister explain the effect of this new clause?


Stuart Sinclair Garson: It is legislation by reference. Section 452 refers to subsections 1 and 2 of section 470. If my hon. friend will turn to page 163 he will find that subsection 1 of section 470 reads as follows:
An accused that is a corporation shall appear by its counsel or agent.
And subsection 2 reads as follows:
Where an accused corporation does not appear pursuant to a summons and service of the summons upon the corporation in accordance with subsection (4) of section 441 is proved, the magistrate
TMr. Garson.]
(a)	may, if the charge is one over which he has absolute jurisdiction, proceed with the trial of the charge in the absence of the accused corporation and
(b)	shall, if the charge is not one over which he has absolute jurisdiction, hold a preliminary inquiry in accordance with part XV.
All that section 452 does is make those two subsections of section 470 applicable to preliminary inquiries under this part that is under discussion.


[Stage Direction]
Clause agreed to.
On clause	453-Taking	evidence of
witnesses.
Mr. Lusby:: There is one little point on which I should like to ask the minister a question. Is there in the existing code or in the draft any provision whereby a witness who has given his evidence which has been taken down by way of a deposition'-that is by the magistrate in writing-is required to sign it if he does not wish to do so?


Stuart Sinclair Garson: As to the witness himself signing it?


Azel Randolph Lusby: Yes; where the magistrate has taken it down in his own handwriting, not by way of stenographic transcription. It is provided here that he shall cause the deposition to be read to the witness and shall cause the deposition to be signed by the witness. Suppose the witness refuses to sign it. What happens then?


Stuart Sinclair Garson: I do not think I have ever heard of a witness having refused to sign in a case of that sort.


Azel Randolph Lusby: It seems to me that some years ago I had a case where the witness would not sign it, even though the magistrate offered to make any corrections that the witness said should be made. He just did not wish to sign it. My recollection is that there was no way by which he could be compelled to sign it.


Stuart Sinclair Garson: I must say I am rather nonplussed to know what the justice would do in those circumstances, but I suppose if the witness absolutely and resolutely refused to sign, the only course open to the justice under such circumstances would be to make and sign a statement himself certifying to the fact that the witness refused to sign it.


Azel Randolph Lusby: I think that was about what was done in the case I was thinking of.


[Stage Direction]
Clause agreed to.
Clauses 454 to 456 inclusive agreed to.

On clause 457-Witness refusing to be examined.
Harold Edward Winch: Is there any protection under this clause for a witness who refuses to give evidence because by so doing he may be implicating himself?


Stuart Sinclair Garson: No. That comes under another law, the Canada Evidence Act. This is just a straight case of the witness obdurately refusing to testify. There is no change here. This is the existing law.


[Stage Direction]
Clause agreed to.
Clauses 458 to 464 inclusive agreed to.
On clause 465-Judge of superior court may vary.
Stanley Howard Knowles: I believe subclause 2 of 465 is new. Would the minister explain the significance of this addition?


Stuart Sinclair Garson: Subclause 2 reads:
No application shall be made by way of habeas corpus for the purpose of fixing, reviewing or varying bail.
The purpose of this provision to which my hon. friend refers is to provide a simple method for obtaining bail in the certain cases to which it has reference, and it does away with the necessity of applying for habeas corpus. But for this section that would be necessary. The effect of the section is to simplify the obtaining of the bail without the necessity of securing a writ of habeas corpus.


Stanley Howard Knowles: I was confused when I read it, and I am more confused now. The minister says it does away with the necessity, but as my legal counsel to the right are pointing out it does away with the possibility of applying for this under habeas corpus.


Stuart Sinclair Garson: My hon. friend must read the section as a whole. Is it not perfectly clear?


Stanley Howard Knowles: I did, and I listened to the minister.


Stuart Sinclair Garson: The hon. member asked me a question on subsection 2 and I gave him an answer to his question. The clause reads from the beginning:
(1) A judge of, or a judge presiding in a superior court of criminal jurisdiction may, upon application-
In this connection there is no writ of habeas corpus or anything like that.
- (a) before an accused is committed for trial,
(i)	admit the accused to bail if a justice has no power to grant bail or if bail has been refused by a justice, or
(ii)	vary the amount of bail fixed by a justice, or
(b) where an accused is committed for trial,
vary an order for bail fixed under subsection 3 of section 463 by a judge of a county or district court or a magistrate.
83276-180J
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That is what he may do. Then subsection 2 goes on to provide:
(2) No application shall be made by way of habeas corpus for the purpose of fixing, reviewing or varying bail.
In other words, an accused or his counsel no longer has to go through the form of applying for a writ of habeas corpus before a judge in order to get an order for bail.


Edmund Davie Fulton: Is the effect of this possibly to do away with the second chance which a prisoner might otherwise have had? I do not know, but-


Stuart Sinclair Garson: That comes under the habeas corpus sections in another part of the code.


Edmund Davie Fulton: Let me put the point. Suppose a person applies for bail or an application is made on his behalf by his counsel and the judge acts without jurisdiction in refusing bail, or there is some error made. Perhaps it is a technical error in the application itself, and bail is refused. Would it then be possible for the applicant to have a second go at it by way of habeas corpus, and is that right now being taken away from him? I am asking a question to which I do not know the answer. Is it possible that a right of appeal or second chance is being taken away?


Stuart Sinclair Garson: I think what my hon. friend has in mind-I hope he will correct me if I am wrong-is the practice under the existing code whereby an accused may make an application for a writ of habeas corpus to a judge of a superior court, and if turned down may go and make another application to another judge. If he is turned down by him he may make a third or fourth application until he has exhausted the whole bench of judges. Quite seriously, that is within his privilege. That is a different provision altogether from this one we are discussing. We shall come to that in due course. The provision now before us has to do with the fixing of bail without the necessity for an accompanying habeas corpus application.


Alfred Claude Ellis: As a matter of information with respect to the whole process of granting bail, what is the general method by which the amount of bail is set? What I have in mind is that we believe in the principle of equality before the law, and I am wondering whether the minister has considered the fact that an accused in one case may have a certain bail set which to him may not seem a large amount of money, whereas in another similar case the same amount of bail would be almost prohibitive. What powers does a judge have with respect to varying the amount of bail in order to make some provision for the principle of equality before the law?

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Stuart Sinclair Garson: As I understand the practice of applying for and securing a bail order, it is that counsel for the accused would make an application under the clause we are now considering, of course after it is passed. The nature of the offence with which the accused is charged would be disclosed to the court, and the accused's counsel would urge the judge to admit his client to bail of so much. Perhaps crown counsel might agree with that sum. In many cases they do. But if the offence was a particularly serious one crown counsel might oppose the amount suggested by the accused's counsel, and then as between
the two contending viewpoints the judge, exercising his judicial discretion in the matter, would have to make up his mind as to what he thought was a fair amount at which to set bail under all the circumstances, one of which could be the accused's financial resources.


Alfred Claude Ellis: That was the point I had in mind.


[Stage Direction]
Clause agreed to.
Progress reported.
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, March 10, 1954