1956-05-07

Mr. Speaker:: Today is one of those happy days when it is quite cheerfully that I say, "Let the doors be opened." I am sure that we all want to feel that although it is against the rules to bring exhibits into the house we are responsible for the one which is now standing on the desk of the Leader of the Opposition (Mr. Drew) whose birthday anniversary it is. On behalf of hon. members and for myself I wish to extend to him and to Mrs. Drew our best wishes for continued health and happiness and many happy returns of the day.


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, I had the opportunity earlier in the day of expressing my personal congratulations and good wishes to the hon. Leader of the Opposition (Mr. Drew), but it is a great pleasure to have the privilege of repeating them publicly and assuring him that speaking, I am convinced, for every hon. member of the house we join enthusiastically in the good wishes expressed for us by Your Honour.


Hon. George A. Drew (Leader of the Opposition):: Mr. Speaker, I wish to thank you very much and I wish to express my appreciation to the Prime Minister (Mr. St. Laurent) for the good wishes extended to me on this occasion. I do feel that evidence of friendship extended in this way is a happy expression of the real and deep friendships which do exist in this house and which are in no way affected by the sometimes strenuous differences of opinion which are expressed in regard to public affairs. That neither diminishes our convictions in relation to the subjects we are discussing nor does it diminish the effectiveness of our contribution. On the contrary, I think it is a happy thing that all of us with different political opinions may meet here and respect those differences and yet build warm friendships which I hope will last for all of us through the rest of our lives.



APPROVAL OF REPORT RESPECTING COMPENSATION OF PERMANENT STAFF

Hon. W. E. Harris (Minister of Finance) moved:: That the report of the civil service commission, respecting the staff of the House of Commons, laid upon the table of the house Thursday. May 3, 1856. be now approved.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I wonder if this would be an appropriate time, before the minister sits down, to make an announcement regarding what may be done with respect to employees of the House of Commons other than those covered by the general civil service increases and those covered by the increases before us in this motion.


Mr. Speaker:: May I inform the hon. member that if he looks at Hansard of April 9 he will find that I announced then that the board of internal economy had decided that increases in line with those granted to civil service employees will be granted to our sessional and temporary employees.


Stanley Howard Knowles: I appreciated that, as did the entire house. What I am wondering is whether any announcement could now be made as to the amount of those increases.


Walter Edward Harris: Not at the moment, but we shall make the announcement in due course when it has been arranged.


George Alexander Drew: Since the question has been raised, and without in any way questioning the fairness or the appropriateness by which these have been made, is there any way in which this could be placed before a committee that would consider the various adjustments and the effect of those adjustments in regard to the staff?


Walter Edward Harris: Mr. Speaker, if I may have permission to speak for a second time, the procedure for setting the wage levels of the employees of the House of Commons is set out in the Civil Service Act and it comes before the house by way of recommendation from the civil service commission, to be adopted or otherwise as the house may deem desirable. If there is any question, after the new schedule is published, that is, of the additional employees who are not covered

Pipe Lines-Financing by this schedule, I am sure that we could arrange that suitable consideration be given to it, but until the schedule is made available I suggest we might suspend judgment on it and consider it at that time.


[Stage Direction]
Motion agreed to.


Walter Edward Harris: That the report of the civil service commission, respecting the staff of the library of parliament, laid upon the table of the house Thursday, May 3, 1956, be now approved.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Fifth report of standing committee on railways, canals and telegraph lines.-Mr. McCulloch (Pictou).


Mr. M. J. Coldwell (Roselown-Biggar):: I beg
leave to move, seconded by the hon. member for Vancouver-Kingsway (Mr. Maclnnis):
The adjournment of the house under standing order 26 for the purpose of discussing a definite matter of urgent public importance, namely, the advisability of this house expressing its opinion on the method to be employed in the financing of the western portion of an across-Canada gas pipe line.


Mr. Speaker:: The hon. member for Rose-town-Biggar has just moved the adjournment of the house under standing order 26. The matter that he wishes to bring to the attention of the house is:
The method to be employed in the financing of the western portion of an across-Canada gas pipe line.
A matter to be dealt with on a motion of this kind has to be a definite matter. I wonder how definite it is to discuss the method of financing of the western portion of an across-Canada gas pipe line. Furthermore, as hon. members know, there is on the order paper a resolution which has already been taken up in committee of the whole and it certainly deals with the financing of a portion of a pipe line, called the trans-Canada pipe line, in the northern section of the province of Ontario. Of course, if there is to be further financing for another portion of the line another resolution will have to be introduced.

At this moment I am asking myself if the purpose of this motion today is not to ask the house to give its opinion on a matter which is usually introduced in the house after notice. A question of financing is one that must be introduced by a resolution recommended by the governor general.
I have no doubt that before the hon. member for Rosetown-Biggar decided to make this move today he looked at the authorities and felt assured that the move was in order. In the circumstances he would certainly be of great assistance to me if he would tell me whether it is his contention, after having looked at the authorities, that whatever I have said so far is, as far as he is concerned, of no value whatever.


Major James William Coldwell: I am very glad to do that. First of all, I will take your point that this matter is already on the order paper. I would draw your attention to the fact that it is not covered by the resolution on the order paper nor by any discussion we have had in the house up to the present time. As for the urgency of the situation, I think that even a casual reader of the press will realize that this matter has some urgency, and because of the apparent internal situation within the government itself it seems to me that the time has arrived when the members of the house should give some consideration to the matter. The urgency is, I may say, also due to the fact that the agreement regarding the trans-Canada pipe line as such has, as far as the province of Ontario is concerned, already lapsed. It is true that there has been an extension by the federal authority but there has been no extension by the government of the province of Ontario.
Since this matter has been under advisement for five years and apparently no conclusion has been reached and because of the state of public opinion regarding it in the country and as shown by the press, I think the time has arrived when, if the government cannot come to a conclusion, this house should take a hand in this very important and serious matter from the point of view of the people of Canada.


Walter Edward Harris: On the point of order, it seems to me that we are doing by indirection what cannot be done by direction. The leader of the C.C.F. party is seeking to have an expression of opinion in favour of an expenditure of money for a particular purpose which can only be recommended by the government to the house.


Major James William Coldwell: That is not in the motion.


An hon. Member:: Who said that?
[Mr. Harris.)


Walter Edward Harris: Then I am not just sure what else could be in the motion except that. If my hon. friend makes the point that he does not propose to seek to have the house declare itself in favour of a public ownership system, then I am not aware of what the point of the motion is. In the resolution before the house we are proposing a certain limited form of financing for a part of the line. It has already been indicated by the group for which my hon. friend speaks that they intend to oppose that plan on the ground that they think it ought to be publicly financed throughout. If that is a defence and objection to the resolution on the order paper, then I do not think the rules permit a second debate by having a motion to adjourn the house to discuss that very point.


Stanley Howard Knowles: Mr. Speaker, may I point out that the urgency which in our opinion now faces the house and the country relates not to the matter covered by the government motion on the order paper, namely the line through northern Ontario, but rather to getting something done without further delay in western Canada. This motion merely suggests that the house should without further delay discuss the method to be employed in financing a line in western Canada, the purpose being so that the government might have the benefit of the discussion here in the house.


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: Hon. members laugh; but the very members who are laughing realize that the government needs the benefit of some advice. Your Honour realizes that the urgency that confronts us today is that unless some action is taken before long the western leg of the across-Canada pipe line cannot be built this year. Because of that urgency we feel that the house should have a chance today to express its opinion in debate on the matter. The Minister of Finance (Mr. Harris) raises the question as to the authority of the house on a private member's motion in the matter of an expenditure of money. It is perfectly correct that a private member could not move a motion involving the expenditure of money. That is the reason we ask not for a decision on a motion but for a chance to discuss this matter so that hon. members may lay before parliament their views on the rumours as to what the government has in mind or their views as to what they feel should be done to get this project under way without further delay.


Mr. J. G. Diefenbaker (Prince Albert):: Mr. Speaker, the Minister of Finance (Mr. Harris) said that this motion apparently intended to do by indirection that which could not be
Pipe Lines-Financing done by direction, if I understood him correctly. As a matter of fact, I think it is the other way around. This motion intends to give the government the benefit of the direction of the House of Commons in order to avoid the results of the indirection that has characterized the government for so long. Hence it is indeed a matter of urgent importance, for we find ourselves today in a position in which every hour, on the hour, the press of this country-and it has been singularly correct in its assumptions and conclusions-is informing parliament as to what has taken place with regard to this matter. I feel that this is a matter of urgent importance in order to clarify the atmosphere and to ascertain the degree to which there has indeed been withheld from parliament information that parliament had a right to receive.


Walter Edward Harris: Just in order to clear up the final point, Mr. Speaker, may I say this. It seems to me that when the present resolution on the order paper with respect to Trans-Canada is called for discussion, every avenue of discussion with respect to the building, the financing or the like is open to opposition members. It may be true-although I do not think in this house we accept these statements at face value-that it is the case that the western section will not be built this summer unless certain action is taken immediately. But in any event that is not a reason for urgency. The urgency is on the matter of debate and the urgency of debate is only in case there cannot be another occasion for a debate. On the Trans-Canada resolution all these things can be said.


Mr. Regier:: You are embarrassed.


Mr. Colin Cameron (Nanaimo):: Mr. Speaker, following on the remarks of the Minister of Finance, I would refer you to the actual wording of the resolution on the order paper. You will find that it is a resolution apparently for the introduction of a measure to provide for the constitution of the corporation to be known as the Northern Ontario Pipe Line Crown Corporation. Mr. Speaker, I would be greatly surprised if, when the matter is being debated, the Minister of Finance were not on his feet quickly if some hon. member attempts to debate something beyond the purview of that resolution.


Walter Edward Harris: It has already been done and I did not object.


Mr. Quelch:: I think this motion is a very timely one because it is certainly a matter of urgent importance that work be started on the western end of this pipe line at the very earliest date possible.

Pipe Lines-Financing


Mr. Speaker:: May I thank hon. members for the consideration that they have given to this matter. I come back to the point I raised earlier about the word "definite". I am reading the motion now, not because I accept it, but I am reading it to myself in order to analyse the terms-"... adjournment of the house be moved under standing order 26 for the purpose of discussing a matter of urgent public importance." According to standing order 26 the word "definite" means that the matter must be one that is specific and well defined.
In this case we have as the definite matter a reference to a method of financing. Now, how many methods of financing are there, and upon which one is the house going to express an opinion? In debate, it is true, there will be many methods of financing mentioned but I think that the method of financing should have been defined in the motion. Then, the motion refers to an across-Canada pipe line; it presupposes there will be an across-Canada pipe line.
Then, there is the reference to a matter of urgent public importance and I stress the word "urgent". Hon. members have referred to the urgency of having a pipe line built across western Canada. Hon. members know that here the word "urgent" does not apply to the project itself but it applies to the debate. Is there urgency of debate? The hon. member for Rosetown-Biggar (Mr. Coldwell) said this matter has been under consideration for five years, and between now and the end of the session there will be other opportunities for debate.
I would ask hon. members to look at citation 176 of Beauchesne's third edition, page 77, which reads:
The "definite matter of urgent public importance", for the discussion of which the adjournment of the house may be moved under standing order 31,-
That is now standing order 26.
-must be so pressing that public interest will suffer if it is not given immediate attention.
I ask hon. members, is the method of financing a matter that is so pressing that the public interest will suffer if it is not given immediate attention today?


Stanley Howard Knowles: Yes.


Mr. Speaker:: The hon. member and I may feel that way, that whatever is on the order paper today appointed for discussion should be put aside in order to discuss this matter. The urgency of this motion applies to the debate, and I am inclined to think there will be opportunities shortly for the discussion of this matter. Of course, it is of public importance and it is urgent in the sense that

all Canadians wish to keep things moving. We are a progressive, expanding country, and we all want to do things as soon as possible. But is there urgency of debate in connection with this motion? I am inclined to think there is not.


Mr. J. M. Macdonnell (Greenwood):: Mr. Speaker, may I ask a question-


Mr. Speaker:: I have heard comments from several hon. members, and when I rose I took it that all those who had something to offer had expressed their views. I believe hon. members will have to bear with me when I say that I think if they do not want to be too harsh on their Speaker they will have to consider whether or not, every time he makes a ruling, they have to argue every point he puts forward. I am making a ruling now and it is not debatable nor appealable. Let us stop having that traditional rule that Speaker's rulings are not debatable be an illusion.
The other point I wish to make is that the matter must be one of recent occurrence. This is a matter that has been dealt with everywhere, in the press and in this house for many, many months now. I come to the conclusion that in my humble view this is not a matter of urgent public importance in the sense which is traditionally the one known to be the sense in standing order 26 and therefore I do not accept the motion.


Major James William Coldwell: Did you say that your ruling would be appealed, Mr. Speaker? That is not my understanding. If it is your opinion it can be appealed-


Mr. Speaker:: No. We settled that on Friday. I want to say that precisely because of the strength the hon. member gave me I feel fortified and I can assure him that as far as I am concerned any decision that I make under standing order 26 will not be appealable as long as I am Speaker. That is quite definite.



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 70-Mr. Brooks:
For a copy of all letters, telegrams, memoranda and other documents exchanged during the past three years between any department or officials of the federal government and the international joint commission, the government of the United States of America, and any other government or organization or individuals, relating to a survey or surveys of the economic feasibility of the development of the Passamaquoddy tidal power project.
Hon. L. B. Pearson (Secretary of State for External Affairs):: This correspondence will be produced subject, of course, to the usual rules of privilege regarding international communications.


Mr. Brooks:: May I ask the minister what he means by "international communications"? Does he mean that as long as the consent of the United States is given their correspondence can be produced but the correspondence of the international joint commission cannot be produced? Is that what the minister means?


Lester Bowles Pearson: Mr. Speaker, in so far as the correspondence with the United States government is concerned, naturally the consent of that government will have to be obtained. In so far as international joint commission correspondence is concerned, it has been customary to regard correspondence of this international agency as privileged in this house.


Alfred Johnson Brooks: I would like to ask-


Mr. Speaker:: This motion is not debatable. Does the hon. member wish me to call the yeas and nays?


Alfred Johnson Brooks: On a question of privilege-


Mr. Speaker:: It will be a fraudulent question of privilege. However, I will allow the hon. member to make his point.


Alfred Johnson Brooks: My point is this. If the United States gives permission to produce their correspondence I do not see why correspondence of an international body composed of members from the United States and Canada cannot be produced. I do not see why United States permission cannot be obtained to produce correspondence of the international joint commission. It is very important.


Mr. Speaker:: This will have to be explored on other occasions. When the hon. member wishes to have his motion debatable he will put it on the order paper without an asterisk. Is it the pleasure of the house to adopt the motion subject to the remarks made by the minister?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Motion No. 74-Mr. Reinke:
For a copy of all letters, telegrams and other documents exchanged, from January 1, 1950 to date, between the Minister of Public Works and the minister of highways of the province of Ontario, regarding the high level bridge over the Burlington ship canal.
Motions for Papers
Hon. Robert H. Winters (Minister of Public Works):: I have no objection to this motion carrying subject to the usual reservation about first communicating with the government of Ontario.


Mr. Speaker:: 


[Stage Direction]
Motion agreed to, subject to the reservation of the minister.

[Stage Direction]
Motion No. 75-Mr. Stuart (Charlotte):
For a copy of all letters, telegrams, memoranda and other documents exchanged during the past year between any department or official of the provincial government of New Brunswick and the Department of National Health and Welfare, relating to the proposed federal plan for national health insurance.
Mr. Robertson:: We are prepared to accept this motion subject to the usual reservation of communicating with the government of the province of New Brunswick.


Mr. Speaker:: 


[Stage Direction]
Motion agreed to, subject to the reservation of the parliamentary assistant.

[Stage Direction]
Motion No. 76-Mr. Diefenbaker:
For a copy of any report furnished to the Department of Justice in connection with the causes of the riot which took place in the Saskatchewan penitentiary at Prince Albert in July, 1955.
Hon. Stuart S. Garson (Minister of Justice):: Mr. Speaker, following the riot in question charges were laid against 30 persons who were implicated. Of those, 18 have been convicted, 8 have been acquitted and 4 still remain to be tried. We would prefer not to publish this report at the present time for fear that it would prejudice the trial of these other cases. For that reason I would ask my hon. friend who has moved this motion if he would agree to our not complying with it for the time being. I have no hesitation in saying that I shall be glad to show it to him personally if he would like to see it.


John George Diefenbaker: In view of the fact that the publication of this report might be prejudicial to the trial of the cases still outstanding I accept the minister's suggestion and would ask that the motion be dropped subject to the right to reinstate it later on.
Motion dropped.



GRAND PRE PARK, NOVA SCOTIA

[Stage Direction]
Motion No. 78-Mr. Nowlan:
For a copy of all letters, telegrams, memoranda and other documents exchanged, during the past
3616	HOUSE OF
Inquiries of the Ministry three years between the Minister of Northern Affairs and National Resources, or any other minister or official of the government of Canada, and any person or persons, corporations or organizations whatsoever, respecting the acquisition and/or use and occupancy by the government of Canada, or any agency thereof, of the park at Grand Pre, in the province of Nova Scotia, heretofore operated by the Dominion Atlantic Railway Company.
Hon. Jean Lesage (Minister of Northern Affairs and National Resources):: I have had some correspondence with the premier of Nova Scotia in connection with this matter. I would agree to the motion subject to the usual reservations in that regard.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
George Alexander Drew: Mr. Speaker, I should like to ask the Prime Minister if he has informed himself regarding the message from the Minister of Trade and Commerce to Mr. Frank J. McMahon and, if so, will he inform the house what the details of that communication were?


Louis Stephen St-Laurent: No, I cannot inform the house what the details of the communication were. I understand that there was a telephone communication in which the Minister of Trade and Commerce asked Mr. Frank McMahon if he would allow the removal of the notation "private and confidential" which had been placed on the communications he had addressed to the Minister of Trade and Commerce. In reply to that telephone communication there was a telegram which was tabled in the house.


Major James William Coldwell: Mr. Speaker, may I ask a supplementary question. I have now seen the correspondence and I should like to ask the Minister of Trade and Commerce if he replied to those letters in any way. They were not replied to in writing.


Right Hon. C. D. Howe (Minister of Trade and Commerce):: No.


Major James William Coldwell: No correspondence?


Stanley Howard Knowles: Careful now.


Clarence Decatur Howe: I may have acknowledged them, I am not sure.


Major James William Coldwell: That is the point I have in mind. There is no acknowledgment included in the file and I know the minister's usual courtesy is to reply.
[Mr. Nowlan.J


Clarence Decatur Howe: I shall see if I can release myself from the "private and confidential" seal; if there are any I will see that they are tabled. I asked the department to table the McMahon correspondence and as they did not table anything from me, if there is anything I will be glad to table it.


Major James William Coldwell: If there is an acknowledgment I think the minister would be wise from his own point of view to file that.


Mr. E. D. Fulton (Kamloops):: In the telephone conversation referred to on May 3 did the minister make it clear whether he was calling in his capacity as a minister of the government or in his private capacity as "good old C. D"?


Clarence Decatur Howe: There is nothing very secret about my telephone conversation. I called him and I said, "This private and confidential correspondence with me seems to be no longer private and confidential." I asked him if he could explain that and he said that he had given out two other copies of the private and confidential letters. That was my first knowledge of that. I said, "I hope you realize the 'private and confidential' can no longer stand and that you have now put in an official offer to the government." He said, "Is that the case?" I said, "Yes." He said, "I am being driven nearly frantic here with telephone calls; what do I do?" I said, "That is up to you to decide; all I am asking you now is that the 'private and confidential' be withdrawn." He said it was and that ended the conversation.


Edmund Davie Fulton: In which capacity was it carried on, by the minister as minister or by the minister personally?


An hon. Member:: Sit down.


Edmund Davie Fulton: I think that is something we are entitled to know in view of what was said last Friday that this was not regarded as an offer to the government.


George Alexander Drew: May I ask the Minister of Trade and Commerce if at that time Mr. McMahon indicated to him that he had learned that Trans-Canada Pipe Lines were in a privileged position and was there any discussion about the fact that it might embarrass the operation if the McMahon offer was not withdrawn?


Clarence Decatur Howe: No, Mr. Speaker, nothing whatever was said of that. I can assure my hon. friend of that. I simply referred to the question that I asked. I asked him if he would permit me to disregard the "private and confidential". I may say that I had previously explained to Mr. McMahon that it was hopeless to have letters

of that kind marked "private and confidential". He wanted it kept that way until he could formulate a more definite proposal. That was his original reason for writing me a private and confidential letter.


Major James William Coldwell: When was that?


Clarence Decatur Howe: I do not know the date, but it was the date of the second interview I had with him. I had two interviews with him, both in the presence of my assistant deputy minister. It was at the second interview that he brought along the letter marked "private and confidential" which I tabled. It was the first letter. I said, just to have no doubt about it, "You want this private and confidential, will you please initial the 'private and confidential'?" which he did.


Major James William Coldwell: Did he think when he was discussing the matter with you in the presence of your assistant deputy minister that he was discussing it with you personally in a confidential manner or as a member of the government?


Clarence Decatur Howe: That letter was addressed "Dear C.D.".


Major James William Coldwell: It was addressed "Right Hon. C. D. Howe, Minister of Trade and Commerce." That is the thing that puzzled me. The minister says the assistant deputy minister was there, so it would not be a personal and confidential interview with Mr. McMahon as the letter indicated.


Mr. George H. Hees (Broadview):: During the conversation with Mr. McMahon was there any indication to Mr. McMahon that he should disengage himself from his offer or did he indicate his disengagement from his offer? Was the telegram which arrived very shortly after the conversation a complete surprise to the minister?


Clarence Decatur Howe: Yes, the contents were a surprise.


George Harris Hees: Was there no mention of his disengagement from his offer during the telephone conversation?


Clarence Decatur Howe: The conversation was very short, as I indicated. He did say he was very unhappy about his position.


John George Diefenbaker: should like to ask the Minister of Justice whether an agreement has been entered into between the government, represented by the Minister of Trade and Commerce, the Prime Minister and the Minister of Finance (Mr. Harris) with Trans-Canada Pipe Lines whereby at the end of nine months, unless Trans-Canada Pipe Lines has put its line through 67509-230J
Inquiries of the Ministry to Winnipeg, the government will take over? Was that decided on Saturday last and was such an agreement drafted?


Stuart Sinclair Garson: I would assume that my hon. friend, as a distinguished lawyer, is aware that in the absence of authority from this parliament no such contract as he relates would be possible.


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce. Is Blair Fraser of Maclean's magazine correct in his statement that if Trans-Canada Pipe Lines do not start building the pipe line soon the government will do it under public ownership? If so, how soon will this begin? May I have an answer from good old C.D.?


Clarence Decatur Howe: Why not get the
answer from Blair Fraser? He must know the source of his information. Why not ask him?


George Harris Hees: I should like to ask a question of the Prime Minister. Was there sufficient agreement in the meeting held by the cabinet Saturday morning to make possible the bringing forward of the debate on the pipe line early this week?


Louis Stephen St-Laurent: There was no meeting of cabinet Saturday morning. I did have a conversation Saturday morning with certain of my colleagues, as I frequently have even on Saturday and sometimes on Sunday, when we discuss matters about which each one of us has to make up his own mind; and that is what took place Saturday morning.


George Harris Hees: Could the Prime Minister indicate to the house if it will be possible to bring this debate forward early this week?


Louis Stephen St-Laurent: I hope it will be possible to bring this debate forward and to have all such information disclosed as will satisfy the natural curiosity that is promoted by what has been published in the newspapers and broadcast over the radio.


John George Diefenbaker: And found to be correct.


Louis Stephen St-Laurent: I shall be very happy to have this done just as soon as we can reach that point.


John George Diefenbaker: Then I should like to ask a question of the Minister of Mines and Technical Surveys. Did he on Saturday communicate with any gas companies with a view to ascertaining whether or not these gas companies in the far middle west in the United States would be prepared to purchase amounts less than 400 million cubic feet of

Inquiries of the Ministry gas per day from Trans-Canada Pipe Lines at the same price as they are willing to pay to the McMahon interests?


Hon. George Prudham (Minister of Mines and Technical Surveys):: On Saturday more than one member of the cabinet had a telephone call from a certain gentleman representing a gas company in the mid-west, and as yet I have not had the opportunity to report my conversation to my colleagues. I do not care to make any comment until I have had that opportunity.


James MacKerras Macdonnell: It was not private and confidential?


Mr. Carl O. Nickle (Calgary South):: should like to direct a question to the Minister of Trade and Commerce. Did the minister obtain from Mr. Frank McMahon an explanation as to why the minister was bound by a private and confidential commitment on the letters addressed to him by Mr. McMahon when, concurrently with the sending of those letters to the minister, copies of those confidential letters were submitted by Mr. McMahon to other parties, through whom the information reached the press and public?


An hon. Member:: Who are the other parties?


Clarence Decatur Howe: That is a very good question. I could have become quite indignant about that, but I was too disgusted to pursue the subject.


George Alexander Drew: May I ask a question of the Prime Minister? At any time that the extension of the agreement with the Trans-Canada Pipe Lines was under consideration prior to April 30, was the Prime Minister aware of the fact that there was a firm offer by Mr. Frank McMahon in regard to the construction of the pipe line?


Louis Stephen St-Laurent: No. As I
said the other day, I did not consider that there had been a firm offer from Mr. Frank McMahon at any time. It was not to my knowledge that there had been or that there has been any firm offer made by him at any time.


George Alexander Drew: Does the Prime Minister not think it was a matter of importance that the government should know that there was an offer at the time it was dealing with the extension of a contract which was then terminating on April 30?


Louis Stephen St-Laurent: If there had been any responsible Canadian who had wished to make an offer to the government at that time, it would have been of interest to the government to have that offer.


James MacKerras Macdonnell: I
should like to ask a question of the Minister of Trade and Commerce. Why did the minister not answer any of the letters, of April 4, April 16 or April 24, from Mr. Frank McMahon?


Clarence Decatur Howe: The reason was that I understood they were preliminary to a formal proposal. As the formal proposal did not arrive, I saw no necessity to write to him. As a matter of fact, one of the letters, the first one, was presented by Mr. McMahon in person, and it did not seem that an acknowledgment of that letter was necessary. The other two were simply follow-ups, and it seemed to me that no acknowledgment was necessary.


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Finance? Did the Minister of Finance receive a telegram from Mr. Jack St. John, Liberal M.L.A. for Winnipeg Centre, asking for a reply indicating what is happening with regard to the western leg of the pipe line? Can he say what reply he gave to Mr. St. John?


Walter Edward Harris: Yes, I received a telegram, I think, on Thursday. I regret to say that, because of having to sit in the house listening to questions, I have not been able to answer it yet.

On the orders of the day:


Edmund Davie Fulton: May I ask the Prime Minister if he will inform the house, and indeed the country, how it is possible to make an offer to the government otherwise than through the responsible minister?


Louis Stephen St-Laurent: By addressing an offer to a responsible minister and not marking it "private and confidential".


Edmund Davie Fulton: Then does the Prime Minister take the position that any correspondence marked "private and confidential" cannot contain a firm offer?


Louis Stephen St-Laurent: If it is
expressed in the letter that though the letter itself is marked "private and confidential" the offer that it contains is intended to be made public, that procedure could be followed.


Edmund Davie Fulton: Then the Prime Minister will admit that the mere marking of the letter "private and confidential" does not detract from the firmness of the offer?


Louis Stephen St-Laurent: The Prime Minister has no admissions to make to the hon. gentleman. I am trying to state to him my appreciation of the questions he has asked me, but I am not accused of anything and I am not pleading guilty or not guilty.


John George Diefenbaker: Except lack of knowledge.


Louis Stephen St-Laurent: Furthermore, I do not think the terms used by the hon. gentleman are appropriate to the obtaining of information through the medium of questions and answers on the orders of the day.


Edmund Davie Fulton: Perhaps the Prime Minister, when he has thought the matter over at his leisure-


Some hon. Members:: Question.


Edmund Davie Fulton: -might himself decide what terms would be appropriate to give the information sought in answer to the question-


Some hon. Members:: Question.


Edmund Davie Fulton: -how one makes an offer to the government except through a responsible minister and whether the marking of a letter "private and confidential" detracts from the firmness of the offer.


Louis Stephen St-Laurent: I think it does, Mr. Speaker, if the notation "private and confidential" is placed in such a manner as to cover the whole contents of the letter. That is all.


Mr. Speaker:: I think all hon. members will agree that the through-put of questions on pipe lines has been pretty considerable. Does the hon. member for Winnipeg North Centre wish to pursue the "private and confidential" matter?


Stanley Howard Knowles: No, but I have one other question.


Mr. Speaker:: I suppose because I am asking hon. members to change to other subjects they will think that I am pretty severe. I think they ought to consider the sort of free-for-all we have had up to this time.


Stanley Howard Knowles: May I ask a question-


Mr. Speaker:: Not on that subject.


Stanley Howard Knowles: Not on the "private and confidential" subject, no. This is quite out in the open. I should like to ask a question of the Prime Minister. Did the Prime Minister receive a telegram from Mr. Jack St. John-


Some hon. Members:: Order.


Stanley Howard Knowles: -of Winnipeg, similar to the one received by the Minister of Finance-


Mr. Speaker:: Order. I think we have had enough of that.


Stanley Howard Knowles: Mr. Speaker-
Inquiries of the Ministry


Mr. Speaker:: The matter is bound to come before the house at a time when a motion will be under discussion and there will be a full debate. Hon. members will have full rights to speak, each in his turn, for 40 minutes. Then if an amendment is proposed they will be able to speak, each in his turn, for another 40 minutes. Then if that amendment is disposed of and another amendment is moved they may speak, each in his turn, for another 40 minutes. They will have plenty of opportunity to speak, so let us wait for that time. The hon. member for Lambton West.


Stanley Howard Knowles: Mr. Speaker, with great
respect, may I suggest that I am not seeking to pursue-


Some hon. Members:: Order. |	[DOT]; *


Some hon. Members:: Sit down.


Stanley Howard Knowles: -any aspect of the question that has been before the house to date. I am asking something that is entirely different, whether the Prime Minister received a telegram from a certain public individual, a Liberal M.L.A. in Winnipeg, and if the Prime Minister received that telegram what reply he made to it. I submit this is of public interest and that I have a right to expect a reply from the Prime Minister.


Mr. Speaker:: Does the hon. member, who has asked a similar question of the Minister of Finance, think that this special period set aside for oral questions without notice and answers thereto is for the purpose of ascertaining whether a certain telegram, of which he has knowledge, has been received and what reply has been made to the sender? He could telephone the Prime Minister's office and find out.


Stanley Howard Knowles: Mr. Speaker, the knowledge to which Your Honour refers is knowledge obtained from the press. Precisely because the Minister of Finance did not reply to the telegram he received I think we should know whether the Prime Minister replied to the one addressed to him.


Mr. Speaker:: This reminds me of a statement I made not very long ago on the matter of asking questions based on reports appearing in the press. Beauchesne says that if a member bases a question on a report that has appeared in the press he must make himself responsible for its accuracy. I said at that time that as there was no penalty for irresponsibility I did not think the rule meant very much and that the citation was meaningless. It so happens that I was told that it was not meaningless. I received private and confidential advice from a very high authority to the effect that when

Inquiries of the Ministry a member uses a press report he must make himself absolutely responsible for its accuracy and if it turns out that the report on which he bases himself in putting his question to the house is not accurate he is abusing the rules of the house. Now that I have had that advice, which is contrary to what I had thought was the correct interpretation of the citation, I should like hon. members to think that one over because it seems to me that the practice is wrong.
Any newspaperman who is not a member of the house may write anything in the newspapers that he feels like writing. If hon. members are to take for granted that because a certain statement has appeared in the press it is right and they do not make themselves responsible for whatever questions they base on such articles and ask such questions in the house, we are going to lose a tremendous amount of time. See citation 303, Beauchesne's third edition.


Stanley Howard Knowles: Mr. Speaker, my first question was asked without any reference to the press. That came in later. My original question was a very simple one to the Prime Minister, and I should like his answer.


Louis Stephen St-Laurent: Yes, I did
receive a telegram from the gentleman the hon. member has referred to in which he said that he was making the telegram available to the press. As I did not remember that I knew the gentleman personally-


Stanley Howard Knowles: He is just a Liberal M.L.A.


Louis Stephen St-Laurent: There
are Liberal M.L.A.'s and many other Liberals throughout the country whom I admire but whom I do not know personally. I gathered from the tone of the telegram that he wished an answer that would also be delivered to the press and as I did not have an answer that I wished to be published at that time I was, in the face of that telegram, in the same position that I am in in the face of several of the questions that have been asked me in the house. I have not a reply yet.


Edmund Davie Fulton: Do you admire the particular Liberal M.L.A. referred to?


Stanley Howard Knowles: The confusion is still confounded.



REPORTED INCREASE IN OVER-ALL TRADE DEFICIT

[Stage Direction]
On the orders of the day:
George Harris Hees: I should like to ask the Minister of Trade and Commerce a question on a totally different subject. Would he care to comment to the house on the trade figures published over the week

end by the dominion bureau of statistics showing that in Canada exports were $21,700,000 less in March than they were in March 1955, and imports were $89,700,000 greater than in March 1955, giving an over-all trade deficit six times greater than in March a year ago?


Clarence Decatur Howe: I have made inquiries. The figures were certainly unexpected. I am told, that, as these are only preliminary figures, it is very likely due to delays in reporting of exports and imports at the end of the fiscal year. I do not know just what effect the timing had, but I am finding out, and if there is anything unusual I shall be glad to report it. I may say that it looks as though there was something wrong, because the fall in dollar balances was very small indeed and not at all consistent with the apparent difference in the trade figures.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Walter Edward Harris: May I say that on Friday night I announced certain business for today. I suggested that the Minister of National Defence might go on with his resolution. That has not been possible to arrange. After those items have been disposed of that I mentioned, we shall take the National Housing Act, the Canadian Citizenship Act and the resolution with respect to the Canadian National Railways.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: May
I direct a question to the Secretary of State for External Affairs? I think he will allow me to congratulate him on having been chosen one of the "three wise men". Having done that, I should like to ask the minister whether he would give to the house a general report on the activities of the council; and, if unable to do that today, would he say whether or not the progress made towards the implementation of article 2 was disappointing in that no final or tentative conclusion was arrived at by the member nations.


Lester Bowles Pearson: I hope I may be excused from giving a considered report on the council meeting, which ended only yesterday morning at 1.30 o'clock in Paris. I would be glad to do that at the very first opportunity. I may say at once, however, that, in regard

to the discussion of non-military co-operation in the NATO council, I think we were all encouraged rather than otherwise by the results of that discussion.


WATER RESOURCES
[Stage Direction]
On the orders of the day:
Mr. J. W. Murphy (Lamblon West):: I should like to direct a question to the Secretary of State for External Affairs. Perhaps he could take it as notice. Have any representations been made to him by anyone respecting the diversion of water from the Albany river drainage basin, which drains into Hudson bay, into the great lakes? If so, what answer has he made?


Lester Bowles Pearson: I do not know of any such representations. I will be glad to look into the matter.


AIR TRANSPORT
[Stage Direction]
On the orders of the day:
Major James William Coldwell: May
I direct a question to the Minister of Transport? Has he received a copy of the rather serious report issued by the Canadian Association of Pilots regarding the manner in which supplies have been taken to the D.E.W. line and commenting on the loss of life incurred by airplanes that were not airworthy? Has the minister received such report and, if so, could he tell the house whether further inquiries will be made into the somewhat serious charges contained in that report?


Hon. George C. Marler (Minister of Transport):: I should like to say that I received the report only this morning, though it appears to have been already rather widely circulated in the press.


Major James William Coldwell: Will the minister comment on the report later when he has read it?


George Carlyle Marler: When I have had an opportunity of ascertaining the truth of the statements made in the report and of having them examined, I shall be glad to make a statement.


EDUCATION
[Stage Direction]
On the orders of the day:
Erhart Regier: should like to direct a question to the Minister of Finance. In view of the announcement by
Inquiries of the Ministry the University of Toronto that they are raising their student fees, would the minister recommend to his colleagues an increase in federal grants to universities?


Walter Edward Harris: This is the usual question as to my intentions with respect to expenditures, which will only be made known when they occur.


FISHERIES
[Stage Direction]
On the orders of the day:
Mr. H. R. Argue (Assiniboia):: I should like to direct a question to the Minister of Fisheries. Can the minister say whether a Canadian fishing vessel on lake Erie was fired upon and hit three times by a United States patrol? Also can the minister say whether the Ontario fishermen's association lodged a protest with the federal government over what the manager has termed an unprovoked and unnecessary attack on a Canadian craft?


Hon. James Sinclair (Minister of Fisheries):: Mr. Speaker, if the hon. member refers to Friday's Hansard he will find that I answered the hon. member for Oxford (Mr. Nesbitt) with regard to that matter.


Hazen Robert Argue: Mr. Speaker, is it still the minister's opinion that the shot that was fired went over the bow, as he suggested last Friday, and did not in fact hit any vessel?


James Sinclair: Mr. Speaker, for the information of the hon. member from the prairies may I say that shots are not fired over the bow; they are fired across the bow. As I reminded the house on Friday, this is the accepted way of halting a ship in order to put it under arrest. Our own ships on both coasts do it with regard to our Canadian nationals and also with regard to American nationals who occasionally drift across our boundaries. Just as the police, in order to stop motor vehicles, sound their sirens, in the case of vessels a shot is fired across the bow.


Hazen Robert Argue: May I ask the minister whether the T.V. report and picture of .a Canadian ship alleged to have been hit three times is in fact incorrect?


James Sinclair: Mr. Speaker, I recall that a week or two ago my colleague the Minister of National Defence spoke about a television broadcast on that United States aircraft which was forced down. That broadcast was arranged long after the occurrence. I suspect that the T.V. broadcast of this shot was also arranged long after the occurrence. It is quite obvious that no T.V. cameras were out at the time of the arrest.
3622	HOUSE OF
Judges Act JUDGES ACT


AMENDMENT TO PROVIDE SALARIES FOR ADDITIONAL JUDGES IN QUEBEC AND BRITISH COLUMBIA
Stuart Sinclair Garson: the second reading of Bill No. 252, to amend the Judges Act.


Mr. G. H. Castleden (Yorklon):: Before this motion is carried, Mr. Speaker, I just wish to refer to a statement which was made on Thursday last during the debates. At that time I took exception to the remarks made by the hon. member for Prince Albert (Mr. Diefenbaker) who inferred that probably the action of the provincial government in reducing the number of their judges was not motivated entirely out of consideration for the relative demands of justice nor for the necessity that justice be obtained with all possible speed. I made objection at that time. Since that time I have been in contact with the attorney general of the province. He issued a statement to the effect that the hon. member for Prince Albert was wrong on a number of points. First, it was not within two years that the legislation was passed but that it was passed in 1951-


John George Diefenbaker: That is right. It was in 1951.


George Hugh Castleden: -and not in 1953 which would be two years ago. The second point on which he was wrong was in the inference that the Saskatchewan government, in reducing the number of judges of Queen's Bench was in some way taking action to prevent the appointment of a judge who was a member of this house. The hon. member for Rosthern (Mr. Tucker) was at that time the leader of the Liberal opposition in the province of Saskatchewan. I do not think he had any intention of trying to become a member of the bench or to be appointed to the bench. At that time he was doing his best to become premier of the province of Saskatchewan. He fought very hard and I think he probably put up a good fight. But we cannot take the charge that the government of Saskatchewan was moving in any way to hurt the administration of justice in that province. As a matter of fact, while the hon. member for Prince Albert states that he might be desiring to become a member of the bench or to be appointed thereto, I think it should be pointed out that at that time when the hon. member for Rosthern was sitting in the house in the province of Saskatchewan and when this legislation was brought down, he supported it as every member of the Liberal party in Saskatchewan at that time supported it. It should also be pointed out that the attorney general in


the province of Saskatchewan and the government of that province were acting entirely in the best interests of the province. As the attorney general stated in his press release:
We felt in the public interest and in fairness to the taxpayers, as each judge costs nearly $20,000 annually, that the number of judges should be kept in line with the judicial work to be done. Apparently Mr. Tucker agreed because as house leader of the Liberal opposition he voted for the legislation as did all Liberals in the house.
I think the hon. member for Prince Albert would perhaps like to get to his feet and state that it was not his intention to cast any reflections on the province of Saskatchewan and their motives in having the number of judges reduced in that province at that time.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Applewhaite in the chair.
Clauses 1 and 2 agreed to.
On the title:
Edmund Davie Fulton: Just before the title carries, Mr. Chairman, will you just give me one moment? May I ask the minister when this amendment will come into effect? Will it be effective immediately on passing?


Stuart Sinclair Garson: Yes.


George Hugh Castleden: I have one question I should like to direct to the minister. I can hardly be charged with having ulterior motives in asking this question since I belong to neither the Liberal nor Conservative party. I wonder whether the minister is aware of any case in which a Liberal government ever appointed a Conservative lawyer to the bench or in which a Conservative government ever appointed a Liberal lawyer to the bench? If so, in how many cases?


John George Diefenbaker: That must be a witticism.


Stuart Sinclair Garson: If the hon. member will refer to a rather lengthy speech which I made in this house about four years ago-I can give him personally the Hansard reference-he will see quite a long statement there by me in which I outlined all of the Conservative lawyers who had been appointed to the Supreme Court of Canada and to the courts of the various provinces. If it is not invidious, I may say that one of the points I then made was that Liberal governments had appointed more Conservatives than Conservative governments had appointed Liberals.


George Hugh Castleden: How many more?


Stuart Sinclair Garson: About three times as many.


Stanley Howard Knowles: How did they pan out?


John George Diefenbaker: I do not want to enter into that controversy because that was one of the witticisms of the minister. I do not want to enter into any discussion of it. I want to ask him one question, though. Has he at any time in the last six years asked any provincial government to reduce the number of superior court judges in any province in this dominion?


Stuart Sinclair Garson: Mr. Chairman, the answer is no. The reason for that is that under the British North America Act the province's power to administer justice, to create and to set up provincial courts in the provinces, and to name the number of the judges who are to be in those courts is one which this federal government, I think, has always respected and which it will always respect as long as I am Minister of Justice.


[Stage Direction]
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Applewhaile):: When shall this bill be read a third time, now?


Stanley Howard Knowles: By leave.


Mr. McCann (for Mr. Garson) moved: the third reading of the bill.
Motion agreed to and bill read the third time and passed.


TRANSPORT
[Stage Direction]
The house resumed, from Wednesday, May 2, consideration in committee of Bill No. 249, to amend the Department of Transport Act- Mr. Marler-Mr. Applewhaite in the chair.
On clause 1-Duration.
John George Diefenbaker: I do not want to pursue this matter any further as far as going into the detail is concerned. I do, however, want to ask the minister whether or not, on the basis of the experience of some years in the operation of the transport controller's office, it is the intention of his department to amplify, expand or extend the purview of any of the regulations that were passed in order to make this legislation effectual. I do so because of the circumstances brought to the minister's attention when this matter was up for debate, that there had not been that enforcement of the regulations which their amplitude would permit. I am wondering, in view of the experience that has taken place in connection with the allotments that have brought a measure of serious
Department of Transport Act injustice to various marketing points in Saskatchewan and the other prairie provinces, whether there is any intention to alter, amend or otherwise change any of the provisions of the regulations?


George Carlyle Marler: Mr. Chairman, there is no intention to make any change in the regulations at this time.


Mr. Nicholson:: Since this matter was
before us last week, the Minister of Trade and Commerce made an important announcement in connection with the policy on deliveries. It so happens that my constituency is in a favourable freight rate region with reference to the port of Churchill. In the past it has been the policy to hold a considerable volume of grain in the area of my constituency to have it accessible to Churchill when the ships arrive. It was possible, in the past, to make some adjustment after the new crop was begun so that the people in that area could send some wheat to Churchill. According to the new policy-


George Carlyle Marler: I should like to raise a point of order, Mr. Chairman. I know that during the resolution stage of this bill we had a very full discussion of a number of matters which were more or less related to the question of transport control. Then, on second reading of the bill we went through exactly the same process. It seemed to me that was quite in order because at that particular time the house was considering the principle which was at issue in this bill, should transport control be extended for two years.
The house has passed second reading unanimously, which I take it meant there was a unanimous decision that transport control should be continued for two years. It seems to me, therefore, that although the situation at Churchill may be interesting and although it may have been relevant at an earlier stage, in view of the decision of the house that control should be extended for two years my contention is that we are now considering how it should be extended for two years and whether the bill does or does not do that. The house has already decided that control should be continued for two years, so it is my contention that a discussion of the situation in Churchill is not relevant to the bill before the committee.


Stanley Howard Knowles: May I ask whether it is possible to make a distinction between what was in order on second reading and what is in order in committee of the whole on the bill, in view of the fact the bill means the same thing at the two points, namely whether it is in order to continue the powers of the

Department of Transport Act transport controller. Surely, if it were in order to discuss the powers of the controller on second reading of the bill, the same thing should be in order now.


Edward Turney Applewhaite: I think the committee as a whole appreciates the point the minister was endeavouring to make that there is a difference-I think there is a difference-between the general discussion of principle which is always allowed on second reading and the very specific discussion we are supposed to have under standing order 59 (2) which says that speeches in committee of the whole must be strictly relevant to the item or clause under consideration.
At the same time I have to realize that while the only change being made in this section is the change from the words 1956 to 1958, it does have the effect of extending the life of section 6A of the Department of Transport Act. I cannot really rule that a discussion of the activities of an official appointed under that section would be out of [DOT]order. At the same time I think I would be justified, and perhaps I should endeavour to hold the discussion more practically to its effect on transport than to its secondary effect [DOT]on the marketing and storage of wheat. I feel confident that members of the house, having thoroughly discussed the bill, are anxious that discussion now should be orderly and practical. I think perhaps from there we can go on without too much difficulty.


Alexander Malcolm Nicholson: I am very glad, Mr. Chairman, that you did not rule me out of order. I submit the argument I am about to make is valid and it is related to a new situation which was not before us either in the resolution stage or the debate on second reading of the bill.
I was pointing out that 20 per cent of the points in Saskatchewan were on a one-bushel quota, and in Manitoba one quarter of 1 per cent were on a one-bushel quota; in Alberta, 3 per cent were on a one-bushel quota. The Minister of Trade and Commerce announced that the year 1956-57 is to be unlike any previous year when the transport controller was permitted to try his best to see that the allocation was fair all across the prairie provinces. It so happens my constituency is an area where we have a very low quota, partly because the grain is being held there to have it available for Churchill when shipping opens out of that northern port.
In previous years, as a result of having the period extended, it was possible in August and even September to have grain accepted in that area and handled on the previous year's quota. A real hardship is being experienced in that area where they have this


very low quota now, and if something is not done between now and the end of the present crop year to give them a chance to get grain out that hardship will be even worse. I submit this regulation is also going to work an injustice at Churchill. It is going to make it very difficult to hold sufficient grain in that area to supply the ships with their cargoes, since the shipping season opens later in Hudson bay than it does in Vancouver and in the eastern ports. I submit that the minister must give directions to the transport controller to take into consideration the new factors which were announced by the Minister of Trade and Commerce last week, which have been partly ignored in the past, and make it possible for the people in all sections of the prairie provinces to be able to look forward to getting their fair quota out some time before the end of the crop year.


Victor Quelch: I also think that the statement made by the Minister of Trade and Commerce the other day shows that it is necessary that an altogether new type of policy regarding the allocation of box cars be introduced. The minister said that there were 14 stations on the 1-bushel quota, 478 on a 2-bushel quota, 572 on a 3-bushel quota, 602 on a 4-bushel quota and 400 on a 5-bushel quota. It is very hard to understand how it is that some of those points were allowed to have a 4 and 5-bushel quota while other points had only a 1-bushel quota.
The Minister of Trade and Commerce told the house that it may not be possible to attain a uniform quota before the end of the crop year' 1955-56. He said that all quotas in effect on July 31, 1956, would expire on that date. Therefore, I think the minister will agree it is very essential from now on that no more cars should be allocated to those points that have a 4 and 5-bushel quota until such time as the points with a quota of one or two bushels have been brought up to the 4 and 5-bushel level. The whole trouble arises from the fact that we have this peculiar situation. The wheat board has the responsibility for allocating orders but it has no authority. The transport controller has the authority to allocate cars but it has no responsibility to give the orders which will move the cars to those points. It seems to me we must have a man somewhere with not only the responsibility but also the authority to carry out that responsibility. So long as we have two different people, one with the responsibility and the other with the authority, we are bound to have just the same kind of confusion and chaos that we have at the present time. Therefore, I am hoping the minister will be able to instruct the transport controller that in future cars will have to

be allocated in such a way that those points that are still on the 1 and 2-bushel quota shall receive cars until such time as they are brought up on a level with the points that have a 4 and 5-bushel quota.


George Hugh Castleden: Has the minister discovered many instances where the transport controller has found that his directives to railway companies have not been fulfilled? The condition which has resulted in several points in the province with which I am particularly familiar is that on main line points, particularly on the C.N.R., there appears to be a sufficient number of box cars available, but on branch line points-and this is true in my own area-of the C.P.R. the farmers find it very difficult to get cars and when they do get the cars they find it difficult to get a proper allocation. If there appear to be cars required at certain points it has been reported to me that a certain elevator had shipping orders and another elevator belonging to a line company had no shipping orders. The line company got the cars without the shipping orders and the wheat pool elevator with shipping orders could not get cars. The cars were allocated on the basis of one to one. I do not think that condition should occur. I was wondering whether or not it was the result of the railways failing to carry out a directive of the transport controller? What action could the transport controller take if he found that his directives to a railway company were not being carried out? Suppose he asked them to direct cars to certain shipping points on a branch line because of the congestion of wheat there, because there was a backlog of shipping orders or shipments out from that point, what would happen?


George Carlyle Marler: All I can say is that so far as I am aware only one directive has been issued by the transport controller. Information was given, I think last year, in reply to a question asked in the house, but I know of only one which was issued, and I do not know whether that was issued under section 6A of the Department of Transport Act or whether it was issued under the regulations that existed previously. However, I do not think there is any doubt that the regulations provide adequate penalties for the failure to carry out directives. I am quite sure the hon. member will understand that legally one should make a distinction between an order which is given by the transport controller over the telephone, and which the railway promises to carry out and does carry out, and a formal order. I do not think anybody looks on that as qualifying as being a directive. When it is reduced to writing and put
Department of Transport Act in a formal way to the railway, then it becomes a directive. As I say, only one of those has been issued. I am sure all hon. gentlemen will realize that the facility with which a telephone call can be converted into a formal directive makes a telephone call very effective.


Mr. Smith (Battle River-Camrose):: Can the
minister give us some assurance that he will instruct the present transport controller to take his responsibilities more seriously than he has in the past to see that box cars are moved into those points where wheat board orders are now available? It does seem to me that if this situation is allowed to continue the Canadian wheat board will be taking the blame for the failure to move the grain from the west when, as far as I can see it, it is not the body that is responsible for seeing that box cars are spotted after orders have been given. I do know this. There are certain powers in the west and throughout Canada generally who would like to see the Canadian wheat board discredited. I have the feeling that unless this government does something to clarify this matter and to say, for example, to the transport controller, "Now, you see that box cars are moved into those points that have shipping orders from the wheat board and at the time they are given", the wheat board will get the blame. If that is done the Canadian wheat board will not be subject to the rough time they are experiencing through no fault of their own.
Is the minister prepared to give this committee some assurance that he will instruct the present transport controller to exercise the power which this act gives him to a greater degree than he has in the past? As the minister pointed out, he did not have the responsibility to do it. The minister should tell us right now that he is going to instruct the transport controller to take it as his responsibility.


George Carlyle Marler: Mr. Chairman, I shall merely answer by saying that in order to carry out a proper and efficient job in moving wheat to export points we must have the closest degree of collaboration between the Canadian wheat board and the transport controller himself. I would be unwilling to give the assurance in the terms which the hon. member has just suggested. I think that so long as marketing is the responsibility of the Canadian wheat board wheat can be moved most efficiently when the transport controller cooperates closely with the Canadian wheat board and sees jointly with the board and with the railway companies that the cars

Department of Transport Act are put in the right place at the right time. I do not think I can go farther than that, Mr. Chairman.


James Alexander Smith: I know of cases where the wheat board has given shipping orders to certain points. I have in mind one particular place where there were 42 orders for shipment. I took this matter up with the transport controller away back in February and he told me that was not part of his duty but that he would watch this particular subdivision. Over the weekend I received a statement of the various quotas established in my particular part of the province and I find that there are four points still on a two-bushel quota. Those four points lie along the branch line which the transport controller assured me he would look after.
It is not a case of the grain not being there, it is not a case of wheat board orders not being there, it is simply that the C.P.R. has failed to move in the box cars. It is situations like that that I would like to have straightened out. The minister should instruct the transport controller to keep a close watch on what is going on throughout western Canada.
Before closing, I should like to substantiate the remarks made by the hon. member for Acadia. The announcement that was made last Thursday makes the movement of wheat from western points of urgent importance. I hope that something will be done before July to see that all points in the west are able to market their fair quotas and certainly that we do not again get into a mess such as the one we saw last winter.


John George Diefenbaker: Mr. Chairman, arising out of the minister's statement and now that this subject is being discussed at some length-
I thought it was going to be restricted-may I ask the minister, having regard to the statement he made a litttle while ago that the achievement of the best possible allocation of cars in a just and perfect way would come about through close co-operation between the transport controller and the wheat board, if there has not been that co-operation and if that is the explanation for the diversity of distribution of cars and the fact that adjoining towns find themselves in a position where there is no degree of justice and where fair distribution has not been attained. I do not belong to those who believe in making attacks upon individuals who cannot defend themselves. I do not believe in taking advantage of my position in the House of Commons to refer to individuals outside the house who cannot answer in their own defence. I ask the minister


whether there has been that co-operation which he advised us was of the essence of a good and proper distribution, or whether in his opinion much could be done to improve that spirit of co-operation to which he referred so warmly?


George Carlyle Marler: I do not think it could be implied from anything I said that there is not the fullest co-operation between the transport controller and the Canadian wheat board. In fact I feel perfectly convinced that if there had not been that kind of collaboration the transport controller and the railroads would not have been able to have done as successfully as they have in these last winter months the job of transport that has been accomplished. I was not referring particularly to relations in the past between Mr. Milner and the wheat board; I merely was endeavouring to reply to the hon. gentleman opposite by indicating that I did not believe that a literal adherence by the transport controller to the regulations would procure the best results. I believe the best results will be procured, as I said a moment ago, when there is a high degree of collaboration between the transport controller and the wheat board which could be translated into procuring from the railroads the necessary box cars to carry our wheat to points for export.


John George Diefenbaker: A reading between the lines of what the minister has said may offer an explanation for the incongruous position that has arisen in the distribution of box cars, beginning with the first of last August and continuing until January 18 or 20, at which time there was some improvement. I am not going to pursue this matter further except to say that the minister might give a little fatherly advice as to the needs of the western farmer with the laudable desire in mind of seeing that a similar iniquitous situation shall not again arise this coming fall when the farmers in certain areas might find themselves to all intents and purposes discriminated against or certainly denied their fair and equitable share of the distribution of box cars.


Mr. Mclvor:: I think if somebody would give fatherly advice to the opposition and tell them not to ask questions which have been asked before it would be most timely at the present time.


Mr. Knight:: It is rather hard to find who is responsible as among these three bodies. Even in the railway committee we had the greatest difficulty in finding out who was responsible. In connection with directives, we were informed that there had been no directives issued to the railway companies

by the controller. Then Mr. Gordon said that he would admit no responsibility. He said that they had nothing to do with this, that they just did what they were told. I have a picture of Mr. Gordon doing what he is told, but that is by the by.
Then when we inquired into the situation as between the railroads and the transport *controller we were given a description of a sort of loose liaison such as that which the minister has described. Somebody would pick up a telephone and talk to somebody at the other end and they apparently would come to some sort of amicable agreement.
As the hon. member behind me has said, there should be some definite responsibility so that we would know where public criticism should be directed. When I say that, I do not mean virulent attacks such as those referred to by the hon. member for Prince Albert. There should be some final responsibility.
I have heard the situation described as a dodging of responsibility or, in the vernacular, a passing of the buck. There should be some definite way of fixing responsibility in connection with this undeniably dangerous and uneconomic situation which existed in certain places last winter and which still exists in many points on the prairies.


Mr. Johnson (Kindersley):: Mr. Chairman, I was glad to hear the minister state that there was going to be a degree of collaboration between the transport controller and the Canadian wheat board, but I would have preferred to have had him use the word "cooperation". I have two specific questions which I should like to ask. Seeing that there is this collaboration between the wheat board and the transport controller, to whom would individuals, say members of wheat pool committees or interested farmers, address their grievances? For example, if there is a shortage of shipping orders at a marketing point, do they draw it to the attention of the Canadian wheat board? Further, if there are adequate shipping orders at a marketing point but insufficient box cars, is that then drawn to the attention of the transport controller?
I think we must define this collaboration, and I would ask the minister to answer those two questions and indicate to me that, if there is a shortage of shipping orders, then that is the responsibility of the Canadian wheat board, but, if there is a shortage of box cars, then that is the responsibility of the transport controller.
Last Wednesday I brought a case to the attention of the minister and pointed out that a marketing point was only on a three-bushel quota. I followed his advice and took it up
Department of Transport Act with the Canadian wheat board, who informed me there were 26 outstanding shipping orders. I presume that that becomes the aspect of the collaboration that concerns the transport controller. I hope I am right in my assumption that individuals in the country will make their appeals to the transport controller or to the wheat board, depending on whether there is a shortage of box cars or a shortage of shipping orders.


George Carlyle Marler: I think the hon. member has answered his own questions.


Hazen Robert Argue: Someone says that the hon. member for Kindersley might be able to get a better answer that way. It seems to be generally agreed that there has been some real difficulty in moving the grain in recent months, and it is being said that there was an improvement about last January. If we could look forward to continued improvement, if we could look forward to these anomalies of which we have been speaking being removed, if we could look forward to equitable quotas being forthcoming, then there would not be any need for us to take part in this discussion. But it seems to me that right at this moment there is very gross discrimination in the allocation of box cars and that the efforts of the wheat board and the efforts, perhaps to a considerable extent, of the transport controller himself are being thwarted and being set aside by the failure of the railway companies to co-operate and to supply the box cars and to allocate them in a fair and equitable manner.
I am afraid that the railway companies are doing a very grave disservice at this time in their handling of box-car allocation and distribution to the Canadian wheat board itself, because it is a fact that there is not a fair allocation of box cars, either among shipping points or among the producers at shipping points. We had only last Thursday the statement of the Minister of Trade and Commerce as to the distribution of wheat delivery quotas at this time. Those figures have been put on the record. Fourteen points were on a one-bushel quota; 478 points on a two-bushel quota; 572 points on a three-bushel quota; 602 points on a four-bushel quota; 400 points on a five-bushel quota. That is a very unfair distribution of quotas at this moment. I trust that steps will be taken to bring these quotas together within a few months. But what bothers me is the statement of the Minister of Trade and Commerce last Thursday, in which he took a very large part of the time used in delivering a rather comprehensive statement to the house on the grain situation to inform us that there would not be, at the end of July, any steps taken to equalize

Department of Transport Act quotas among producers and that there would in tact be an unequal distribution of quotas at that time.


George Carlyle Marler: Does the hon. member not think he is an awfully long way from the question of transport?


Hazen Robert Argue: No, I think I am right on the point, because it is impossible for a farmer to deliver a load of grain to an elevator unless there is space in the elevator, and it is impossible to get space unless the elevator gets box cars. It is just as simple as that.


Mr. Pickersgill:: May I ask the hon. member a question?


Hazen Robert Argue: Surely.


John Whitney Pickersgill: I have read the bill since I have been listening to him, and I wonder how he relates his remarks to a section of the bill that merely extends the operation of this act for two more years. Some of us from other parts of the country who have listened to the same observations over and over again feel that perhaps there must be an end even to this road, and I am asking the hon. member in a kindly way.


Hazen Robert Argue: Speaking about an end to something, there must have been an end a little while ago to the minister's presence in this house. I say that with great deference, because I know he is busy and cannot stay here all the time, but that point of order was in fact raised and a ruling was made.


John Whitney Pickersgill: I was not raising a point of order.


Hazen Robert Argue: I say that a point of order has already been raised. It has already been dealt with by the chairman, and his ruling was, as I understood it, that we could ask those questions and raise those things at this time that we were able to do on second reading. I come back to the point that I was making-


An hon. Member:: You have made it several times.


Hazen Robert Argue: -that because of the grossly unfair allocation of box cars at this moment we have among producers in Canada great discrimination in the allocation of quotas. I would be the first to say that this widespread difference has been brought about because of the distribution of box cars. It cannot be brought about by anything else. What bothers me is the statement made in this house last Thursday by the Minister of Trade and Commerce that, no matter what may be done between now and the end of July, there will be at that moment a discrimination, a difference in quotas affecting various marketing


points, and no effort will be made at that time to extend the quotas so that that unfairness and that discrimination may be removed in time. .
The Minister of Transport talks about cooperation between the wheat board and the transport controller, and that co-operation is certainly necessary, but I am suggesting to him that the railway companies must not have co-operated with the transport controller, because we are not getting distribution and allocation of box cars in a way that would equalize these quotas.
Words of commendation have been used in this house, referring to the work of the transport controller, and I have had some experience in that way myself. Very often, if a member brings to the attention of Mr. Milner the fact that at a given point or a given number of points the quota is very low and that at those points there is a great shortage of box cars, at times almost within hours box cars are spotted at those marketing points after Mr. Milner had taken it up with the railway. That shows me at any rate that action can be taken when Mr. Milner gets after the railway companies on a specific point or a specific number of points. I am suggesting now that the railway companies are not co-operating, that the railway companies are not providing a fair allocation of box cars. I ask the minister whether any new policies or any new consideration will be given to this very knotty problem between now and the end of the crop year so that we may have in fact a greater equalization of the grain delivery quotas than we now have.


Edward Turney Applewhaite: Shall the clause carry?


Hazen Robert Argue: No, I want to repeat to the minister the question I have asked him, namely, if any further consideration will be made between now and the end of July to an improved distribution of box cars or allocation of box cars so that there may be an improvement in the quotas and an equalization of the quotas so far as may be possible between now and the end of July.


George Carlyle Marler: All I shall say in reply to the hon. gentleman is that I think that not only has there been very close co-operation between the transport controller and the Canadian wheat board but there has also been the same kind of co-operation with both of these bodies by the Canadian railways. The hon. gentleman seemed to imply that recently there had not been that co-operation on the part of the Canadian railways. I should merely like to tell the committee that, according to my information, the railways are expected,

during the period from April 16 to May 31, to load a total of 54,715 cars to the lakehead, the west coast and western domestic points. In other words, over the space of a period of approximately six weeks they are expected to load a total of some 54,715 cars.


John George Diefenbaker: In what period?


George Carlyle Marler: April 16 to May 31. That means that they will have to load an average total of 1,368 per day. On the 17th of April the total was 1,905 cars, on the 18th it was 1,810 cars and on the 19th it was 1,615 cars. I could go on and give the figures day by day since the 16th of April, but I shall merely summarize by saying that at no time have they fallen below 1,490 and they have actually reached a total of 2,340 in a single day's loading.
I suggest, Mr. Chairman, that those figures dispose effectively of the criticism that there is no co-operation on the part of the railway companies. I am not able to talk about individual points because I do not know about individual points. I have got to take an overall view of the situation just as I think hon. members of the house ought to take an overall view of the situation. I should also like to add that in contrast to last year the total number of cars moved up to the 3rd of May was only 6,103 less than the corresponding period of last year and that there was an actual increase of some 2,371 cars loaded by Canadian National Railways.
I think if hon. gentlemen would examine this subject a little bit more objectively than some of them have done they would reach the conclusion that the loading of box cars is related directly to shipment for export purposes. I think that if they would examine the export shipments in relation to loadings they would find that there was a parallel between the two which explains this condition about which hon. gentlemen opposite have been complaining. I think that is the answer. If you go back to the early part of the crop year you will find that exports at that time were substantially less than usual but that they are now proceeding at a rate that imposes great burdens on the transportation system which must also meet other demands.


Hazen Robert Argue: Mr. Chairman, I welcome the statement of the minister as to the total number of carloadings of grain that are moving to forward positions. Apart altogether from the minister's remarks, it has been apparent to me for a long time that there has to be a very real correlation between exports of grain and box car loadings and shipments of
Canadian Farm Loan Act grain. These two cannot get out of line for any great length of time. You either run out of grain or you run out of space for grain so that there has to be a real correlation. But I come back to my previous statement-


An hon. Member:: Again?


Hazen Robert Argue: -that the railway companies in fact have not been making a reasonable or fair allocation of box cars amongst shipping points. It is common knowledge among people intimately connected with the grain business on the prairies that in actual fact the railway companies often almost overlook entirely one elevator marketing point or even two elevator marketing points and drop off their box cars at the larger points. It has become so bad at certain marketing points that producers have threatened, and in some cases have already carried it out, to transfer their permit books from a small marketing point to a larger marketing point because of the discrimination in the allocation of box cars as between marketing points.
I express the hope that the transport controller will use his clearly defined authority to so allocate box cars in conjunction with wheat board shipping orders, and as the wheat board lays down its shipping orders, as to provide farmers at every marketing point in western Canada with a reasonable opportunity to market their grain, and I suggest that has not been done yet.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 84, to amend the Canadian Farm Loan Act-Mr. Harris-Mr. Applewhaite in the chair.
Edward Turney Applewhaite: May I mention to hon. members that this bill comes to us after consideration and report by the banking and commerce committee, which has reported it with an amendment.
On clause 1-Repeal.


James MacKerras Macdonnell: Does the parliamentary assistant intend to make any statement?


Mr. Benidickson:: I was not going to make a statement again in connection with the bill. The general purposes of the legislation were

Canadian Farm Loan Act outlined at the resolution stage, and I refer to Hansard of March 8, page 1948. As the chairman has stated, the bill has been before the banking and commerce committee and that committee has amended it in one respect. It has lengthened the maximum term of the loan from 25 years to 30 years. For the convenience of hon. members I merely point out that the report of the committee is referred to on page 449 of Votes and Proceedings of April 27.


James MacKerras Macdonnell: Mr. Chairman, as the parliamentary assistant has said, this bill has been before the banking and commerce committee and there is not a great deal that one can or should say about it. I should like to make one or two general observations to remind us that in our glorious boom that gives us such immense satisfaction there are some people who are not sharing, notably the farming industry. I do not propose to weary the committee with a lot of figures. We have been over that ground a good deal. This bill is an attempt to deal in a rather inadequate way, I suggest, with the problem.
I often wonder whether we take it seriously enough. My own feeling is that no prosperity that does not include the farmers can be durable or satisfactory although of course the day is past when nobody can be a success unless he has been born in the country and walked four miles every day to school. We have got to the stage now when such a large percentage of the population is non-agricultural that the farm dwellers no longer provide the percentage of leaders in the community that they used to. Nevertheless I should like to correct any feeling we may have that the farm industry is not important by saying that I myself think it is of great importance and also-and much more significantly-by quoting to you two or three things which have been said by well-known people about the farming industry. The great French writer Rousseau says "The first and most respectable of all the arts"-you will notice, Mr. Chairman, that he calls it an art-"is agriculture". The well-known American Daniel Webster says this:
Let us never forget that the cultivation of the earth is the most important labour of man.
But the quotation I should like to impress upon hon. members is one which I am sure will interest them, because it refers to the calling of those of us who are at present seated in this chamber. It comes from the sharp tongue of Swift and is taken from *"Gulliver's Travels":
And he gave it for his opinion, that whoever could make two ears of corn, or two blades of .grass, to grow upon a spot of ground where only-one grew before, would deserve better of mankind,


and do more essential service to his country, than the whole race of politicians put together.
I have quoted that excerpt just so it may reduce us to a proper state of humility, Mr. Chairman, and also as a preface to dealing with the efforts of the politicians to help with regard to the farm problem. I think we can say-and I repeat it-that agriculture is lagging behind in prosperity. We have discussed in this chamber the problems with regard to wheat, cheese and butter, and I need not dwell upon them. So far as this board is concerned, my criticism is not that the work has not been well done. I think the board has done the work well. They have done it, at any rate, carefully and prudently. If a criticism could be made, perhaps it is that they have been too prudent.
My criticism is that I think the basic purpose of the board has rather been lost sight of. My feeling is that this board should regard itself as a public service board whereas, so far as I can make out, it seems to have regarded itself-and to have been allowed to do so-primarily as a profit-making institution. When I say "primarily" what I mean is that I think those running the board have had it much in their minds that they were obliged to show a substantial margin on the right side.
That perhaps is partly because of the circumstances of its organization. At that time they talked about profit and dividends whereas, when the housing act was before this house, I suggest that what was being considered was service to those who needed service with, of course, a proper regard for the safeguarding of public investment. There, much more than with regard to the operation of this farm loan board, I think was the feeling that the legislation was primarily a matter of public service.
Again I am not going to give a large number of figures. However, if we turn to the statement of the board we find that in the year 1955 the board had net earnings of $162,000 and that they paid income tax of $73,000. I think there is a certain irony in that fact. When we come to crown corporations that are in the business of making money and selling goods, that are in the business of competing in the open market with others such as, let us say, the Polymer Corporation, it seems to me that there, when you are in ordinary business-I was going to say "competitive business" but I suppose Polymer is largely a monopoly; but at any rate it is competing with other products if with nothing else-I suggest that considerations arise which do not and should not arise in the case of what I suggest should be an

organization serving the public. I am not going to pursue that point.
Let me say again that I think the chairman of the farm loan board has been carrying on the operations of the board as he was intended to carry them on, namely to make a profit. He has done that, and I have no doubt he felt that he was entitled to feel that that was his job. Having said that I do not propose to dwell at length on the matter. There were certain main points of discussion which arose and which will no doubt be discussed further this afternoon.
The three points of change in the bill were mainly the valuation, which under the bill is increased to 65 per cent; that is to say, loans may be made up to 65 per cent of value. Amendments suggesting that the percentage should be higher than that were moved in the committee and were defeated. The second matter was the total amount of loans. There again there was a question in the committee and an amendment raising the amount was moved and defeated. In the third place there was the question of the duration of the loan. As to that matter, the government accepted an amendment raising it from 25 years to 30 years. I think perhaps it would be more sensible to discuss the other two points-that is to say the raising of the valuation figure and the ceiling on the loan-when we come to the relevant clauses. I shall therefore defer my comments until then.


Hazen Robert Argue: Mr. Chairman, it is essential to the agricultural industry that we have a type of long-term mortgage credit at reasonable rates of interest. The whole question of financing the purchase and sale of farms is different from the financing generally of other businesses in the nation. It is different, first of all, because you have a rather fixed amount of land which may be bought and sold. It is different because over the years, in almost every single year the farmer on the land has received a lower income than have other Canadians generally. On the basis of net income agriculture has long been a depressed industry. If you do not provide some form of long-term credit to this underpaid industry you are going to see the growth of corporation farms, and you are going to see a great many farmers pushed off the land.
I want to agree with the remarks of the hon. member for Greenwood when he said that apparently the board had been conducting its policy over the years generally from a profit standpoint, and that its business was being carried out more from the standpoint of making at least some profit for the corporation than from a public service standpoint. Before the bill was taken to the committee
7.	1956	3631
Canadian Farm Loan Act we heard in the house the criticism that the board and its appraisers had generally been too cautious in making appraisals, and that the length of time taken to process an application was much too long. I do not know whether the parliamentary assistant will agree when I say that it seems to me that ample evidence was brought forward in the committee to substantiate those statements to the effect that the board was too cautious in its lending policy and that its appraisals took an undue length of time.
It is essential that farmers have access to long-term mortgage credit at reasonable rates of interest. It is essential not only from the standpoint of maintaining family farm units as distinct from corporation farms, but it is also necessary if we are to save prospective purchasers of land from paying exceedingly high rates of interest. I take it that by this act we want to provide money to prospective purchasers at 5 per cent interest rather than force them to seek loans at what are bound to be much higher rates of interest. We have had ample evidence before the committee, in discussing another measure, to show that even persons who operate businesses with a very high net worth sometimes must pay mortgage rates of interest of from 8 per cent to 15 per cent. Unless we provide mortgage money to prospective land purchasers at a reasonable rate of interest we are going to turn over the purchase of farms and the credit entailed therein to loan sharks and persons charging phenomenal rates of interest.
I suggest that the future attitude of the board should be one of seeking business, looking to do a job for agriculture, and not being so overly cautious as it has been in the past and not taking nearly so long in processing applications for loans. There have been a number of suggestions by members of this group as to how the present legislation should be improved.


Edward Turney Applewhaite: Order. I wonder if perhaps at this time I had not better give voice to something I have been thinking ever since the committee started discussing this bill. There are two points I think I should make clear to the committee, and perhaps they will not be accepted too happily in all quarters. One is that we are not discussing the principle of this bill. We discussed that at the resolution stage and we discussed it again in the debate on second reading. We are now discussing actually-I am not going to hold the committee too closely to this as I will explain in a minute-according to the rules of the house, whether or not we should drop from the Canadian Farm Loan Act the definition of "farm loan bond". This is clause 1 of the bill.
3632	HOUSE OF
Canadian Farm Loan Act
There has been growing up the general impression, and I think it is my duty to warn that I feel it is a false impression, that when we get into committee of the whole on any bill we can then discuss anything remotely related to the subject on clause 1. May I break one of the standing rules of the house and refer to another debate in the same session. I permitted that line of action on the bill we just finished because there was only one clause in that bill and that clause relegislated the whole principle. I considered, therefore, that under the last bill anything dealing with the transport controller was in order because we were relegislating the whole provisions dealing with the transport controller. In this bill we are not relegislating the provisions dealing with the Canadian farm loan board. We are not in a position now where we can discuss the shortcomings or methods of operation of the farm loan board, except in so far as they are referred to in some of the specific clauses.
If the matter of interest is included in one of the sections which we are going to discuss, then of course the matter of interest may be discussed at that time. If no change is made in the rate of interest, then I am afraid this committee is not in a position to discuss the matter of interest rates.
May I point out one other thing at the same time, because I think it is lost sight of sometimes. Even if we were discussing the principle of this bill No. 84, we would not be discussing the principle of the Canadian Farm Loan Act. We would be discussing the principle of the amendments which are now before the committee. A famous case, reductio ad absurdum, of course, is the Criminal Code. If a bill were introduced to amend the Criminal Code with respect to the pollution of rivers, the committee certainly could not discuss the principle of the Criminal Code in connection with perjury or murder. I have a very similar case before me in connection with the game laws, in which there was a bill to revise part of the game laws but the principle of the game laws as such could not be discussed on that particular bill.
I do believe, on the other side of the picture because most pictures have two sides, that as a matter of courtesy it has been the practice in committee of the whole to permit at least one spokesman from each of the different political groups to outline in general the attitude which that group is going to take to the bill before the committee. I think, therefore, it would not be out of the way or a breach of the rules if the hon. member for Greenwood, the hon. member for Assiniboia or whoever follows the hon. member for Assiniboia from the Social Credit group, were to
rThe Deputy Chairman.]

say in a general outline that it is the intention of his group to follow such and such a line in connection with this bill. But I must advise the committee, while I hope not to be unfair by permitting one member to go farther afield than another, that at the moment we are not in a position where we can discuss all the ramifications and the activities, the shortcomings or the merits of the Canadian farm loan board. We must restrict ourselves to a discussion of these amendments to the Canadian Farm Loan Act which are included in Bill No. 84. I think the hon. member for Assiniboia, having listened patiently to what I have had to say, will be able to wind up the general part of his remarks in short order.


Hazen Robert Argue: I think I have always endeavoured to follow any ruling that you might make, and I shall certainly endeavour to do so at this time. It is true that some of the remarks I have been making might have been made more properly on certain clauses of the bill because they had to do with certain clauses. Any other remarks of a general character I might make I shall endeavour to keep as brief as possible.
I have said we were in favour of the passage of this bill because there was a need for keeping interest rates as low as possible. I would even suggest that the rate of 5 per cent should be further reduced, as was suggested in the committee, to 3-5 per cent, by the government agreeing to pay the administration costs. However, Mr. Chairman, I will not pursue that particular suggestion.
At this time I want, if I may, to pay tribute to the Canadian Federation of Agriculture for the brief they presented to the committee, and more particularly to their economist, Dr. E. C. Hope, who appeared as a witness on their behalf. I have had the advantage, as compared to at least some other members of the committee, of being rather close to the farm problem for some years. I felt I at least had some knowledge of the general agriculture credit situation. I want to say that the brief presented to the committee by Dr. Hope, and the discussion that followed, improved my knowledge immensely. I believe the discussion was very helpful to all members of the committee.
I think the evidence taken by the banking and commerce committee in dealing with this bill, which makes changes in the Canadian Farm Loan Act, will stand as an important and valuable reference in the future to students dealing with the very complicated problem of agriculture credit.


Victor Quelch: Mr. Chairman, having noted what you have just said I shall be very brief in my comments at this time. At the outset

I would also like to pay tribute to Dr. Hope for the help he gave the committee in its consideration of this bill. He gave us a great deal of valuable information, and did not hesitate to give us the time we required of him. The evidence we received from the Canadian Federation of Agriculture and from the briefs of other farm organizations showed quite clearly that the farm loan board perhaps have been overconservative in the appraisals they have made, and also perhaps have been taking a little too long in executing the loans. When we had the chairman of the farm loan board under examination we felt that, as a result of the answers he gave us, the charges that had been made by those organizations were well-founded.
I want to make it clear that we in this group are not at all keen in trying to get the farmers farther into debt; far from it. We would be quite happy if the farmers could continue without having to borrow from any farm loan board or from any other organization but unfortunately, owing to the government's present farm policy or perhaps I should say lack of farm policy, the majority of the farmers are being driven into debt whether they like it or not. However, they have to go into debt or quit farming. Since we have the position where, in order to continue, the farmers have to go into debt, then I think we have a duty to see to it that they have the best kind of credit available to them as far as the type of payment and cost are concerned.
Apparently the three main reasons why farmers today are pleading for loans under the farm loan board legislation is that first of all many of them are trying to expand their land holdings. Some may ask, "Is that wise?" Farmers have not very much choice. They are in a cost-price squeeze, and no matter how much they may try to reduce their costs there is a certain overhead that they cannot reduce. Therefore the only way they can reduce the impact of their overhead is to expand the size of their operation so that the cost per bushel or unit will be that much less.
We have had evidence in the past to show that the economic unit for a grain farm is around two sections of general land or one section of really good land. We have many farmers who are trying to operate on a half section or a three-quarter section basis. A farm of that size cannot support the cost of a full line of machinery. Therefore the farmer appeals to the farm loan board to get a mortgage in order to try to add to his land holdings and in that way reduce the impact of the overhead.
Then today we have many sons wishing to tske over the farms of their fathers. The
Canadian Farm Loan Act fathers need cash for their farms in order to retire, so the sons endeavour to get mortgages from the farm loan board to buy the farms from the fathers. Another rather unfortunate reason is that some of the farmers have obtained loans under the Farm Improvement Loans Act and are not able to meet their payments today. Because of that they try to get a loan from the farm loan board in order to amortize the amount of the payment to the farm loan people over a long period of time, because loans under the Farm Improvement Loans Act are made for machinery and only for a 3-year period. That means that in many instances the size of the payment is far beyond their ability to pay today. Therefore we feel that the farm loan board can perform a useful service. It has performed a useful service for many farmers, but we feel those services are probably going to be required, unfortunately, to a far greater extent in the future than they have been required in the past. Since this bill will undoubtedly bring about a number of improvements we intend to support it.


[Stage Direction]
Clause agreed to.
Clauses 2 to 4 inclusive agreed to.
On clause 5-Capital stock.
Mr. Hamilton (York West):: Perhaps the parliamentary assistant will explain the recapitalization. Do I understand that from now on it will consist entirely of what we might describe as common shares, and no longer will there be an investment by way of bonds?


William Moore Benidickson: The bond provisions are being eliminated, Mr. Chairman. As a result the capital structure is being considerably simplified. The capital will consist simply of common shares of a par value of $3 million. From then on the needs of the board will be met by borrowing from the government. Then the matter of the reserve funds themselves is simplified because, as my hon. friend will see, in subsequent sections they have a direct relationship proportionately to the amount of the capital.


John Borden Hamilton: Do I understand the situation to have been this previously? There was a fixed amount of interest which had to be paid to the government annually under the previous capital structure, and that has now been changed and the only amount that will be repaid, since this is a common stock set-up, will be the difference set up here as provided later on in connection with the reserve fund.


William Moore Benidickson: My hon. friend will recall the evidence in the committee that the board had never paid interest on the small amount
3634	HOUSE OF
Canadian Farm Loan Act of original capital that was provided. The amount of that, I think, was roughly $2,200,000. It was indicated that the board had been able to accumulate reserves. In fact it was obligated under the statute to establish reserves in proportion to its profit, and the reserve funds were retained by the board. Now, the board had the use of that capital money and reserves for the purpose of relending without the necessity of borrowing. From now on there will simply be the $3 million share capital. What needs the board has for further finances will be met by applications to the government for direct loans, and they will pay the going government rate of interest at the time the requirement originates.


John Borden Hamilton: Then, Mr. Chairman, I understand in fact there has been no change created here and that the board previously did not pay interest on the bonds which were provided and now will be in much the same position under the continuing legislation?


William Moore Benidickson: No; the board always paid interest on its bonds and it paid on its notes. The 1952 legislation enabled the government to loan on notes. Except for the item of $2,200,000 the board has always paid the cost to the government of obtaining those funds for them.


Hazen Robert Argue: Can the parliamentary assistant give some indication of the general cost of funds to the board at the present time?


William Moore Benidickson: The obligations of the board are set out in the annual report. I am referring to the last annual report for the year ended March 31, 1955. In the balance sheet on page 6 the liabilities of the board are indicated. The hon. member for Assiniboia will note that there are advances by the government which have rates of from 3| per cent to 3f per cent, depending upon the money cost at the time the application was made to the government for those funds. Then the old bond structure is referred to after that, and it will be noted that $20 million of the funds of the board were provided by bonds which had a flat rate of 3 per cent. Then there is reference to the initial capital, which is shown also on the liability side.
I did have a little summary of that when we were in committee, but I think my hon. friend can do the mathematics of dividing the various liabilities and establishing that the rates have been from 3 per cent to 3| per cent. From now on the board will be obligated to pay the government what the government's cost is of borrowing money for this purpose.


Hazen Robert Argue: The balance sheet to which the parliamentary assistant has been referring indicates that the farm loan board have been operating on a relatively narrow margin. They have been paying their way and have made a small net earning in addition.


William Moore Benidickson: Moderate.


Hazen Robert Argue: 
William Moore Benidickson: I certainly would not make the firm commitment that there would not be a change in the rate of interest with respect to farm loans. My hon. friend will remember that the chairman of the board said that based on the normal amount of applications he had been receiving in past years and the thought that in the current year the applications would be similar, he felt that probably for a few months hence he could see no likelihood of a change in the interest rate. That is assuming that it is the intention of parliament that this board should continue to operate without a subsidy.
Some reference has been made to whether or not this is a service organization. It was indicated in committee that if the board had paid interest on certain funds that could be considered as funds of the government, as the shareholders of the board, in recent years it would scarcely have broken even. Its surplus is a most modest one of around $161,000. If it had paid interest on the capital a large portion of that surplus would have been eliminated, even in last year's operations.
Some suggestion was made in the committee that the board should actually go out and do more supervising in connection with loans, which would increase its expenses. We do know that at the present time the board's costs of operation are about 1-39 per cent of the funds it has out on loan. The present

cost of money borrowed by the government is about 3-3 per cent, and if you add that to the 1 [DOT] 39 per cent you can see that there is not much of a margin. As my hon. friend says, certain costs are rising, particularly the cost of money, and I would not care to make a very long-forward commitment.


Hazen Robert Argue: I had hoped the parliamentary assistant would have gone a little further in assuring the committee that there would not likely be an upward adjustment in the interest rate charged by the board. I speak from memory, but in answering the question put to him the chairman of the board was a little more positive than was the parliamentary assistant. If I remember correctly, his answer was to the effect that if there was no further change in the cost of money-and he expressed the opinion that he did not know of any change that might be forthcoming-they could hold the interest rate for the next six months.
It is true that suggestions were made in the committee that the supervising of certain loans might be done, but I think it is fair to add that this suggestion, which would add to the cost, was made in conjunction with the suggestion that the government should bear the administration costs of the board. Whether or not you would have got an affirmative answer if the witness had been asked whether he wanted this additional cost undertaken without any further acceptance of cost by the treasury, is something that is rather doubtful.
I want to express the hope that there will be no further increase in the interest rates charged by the board. In recent months and weeks we have seen many instances of the increased cost of money. There has been an increase in the Bank of Canada rate, and generally speaking there have been increased interest rates. I trust that the policy of the government in connection with increasing interest rates generally will not interfere with much of the effective work that can be done by the board, work that can be done only if the interest rate of the board is placed at a reasonable figure. In my submission anything over 5 per cent should be resisted, should not be tolerated.


James MacKerras Macdonnell: Mr. Chairman, as the hon. member for York West has pointed out, you have a situation here where income or net earnings of $162,000 are possible because the government investment is in the form of shares and not in the form of a money advance on which interest might be charged. Without dwelling on that point may I suggest to the parliamentary assistant that the regarding of this board as a profit-making institution is in my view unsound. It should
Canadian Farm Loan Act not be considered in the same light as, let us say, Polymer and other corporations of the crown which are actually in business. There would also seem to be a certain anomaly in paying income tax on income in this case, which arises largely because much of the government advance is in stock and gets no return. To me it is something almost like Alice in Wonderland financing. I am going to ask the parliamentary assistant to consider that at the present time.
Dealing with what the hon. member for Assiniboia said about the interest rate, I think if we weighed the caution of the chairman of the farm loan board when before the committee with the caution of the parliamentary assistant it would be a dead heat.


Victor Quelch: I should like to echo the hope of the hon. member for Assiniboia that the interest rate will not be raised. It is interesting to note that a short time ago the interest rate on money provided to the board did not rise beyond 3J per cent. Even then they were able to maintain a 5 per cent rate by, if I remember rightly, making a small service charge or a charge of some kind. According to this, it was 3J per cent. There was some charge.


William Moore Benidickson: The only charge is the $10 appraisal fee. I think we have evidence that if the volume of lending went up the cost of administration would go up considerably due to the costs of appraisal. The average cost of appraisal was about $30, and the applicant paid only $10, but that is the closest reference I can recall.


Victor Quelch: I do not have the record, but I remember the chairman saying that they have been able to maintain the 5 per cent rate by some means. I understood it was some kind of service charge. But the point is that though their cost went to 33 per cent they maintained the 5 per cent rate. So far there is no reason to believe that the cost of money will be over 3| per cent, so I am hoping that the 5 per cent rate will be maintained.


[Stage Direction]
Clause agreed to.
On clause 6-R.S. c. 309, s. 6.
Mr. While (Haslings-Fronlenac):: I should like to ask the parliamentary assistant a few brief questions on this clause. First, does he know whether it is the intention of the board to attempt to simplify the application? Second, can he give the committee any idea as to the approximate period from the time the application is made until the property is appraised; after the appraisal what is the average time before the application comes before the board; and, after the board has

Canadian Farm Loan Act approved the loan, what is the approximate time before the loan is completed and the money is actually paid?


William Moore Benidickson: I do not think I can answer my hon. friend in detail. I would point out to him the difficulty with averages. The chairman of the board, in concluding his evidence, did say that he felt he too had profited very much by the opportunity of hearing the views of members of parliament throughout the sittings. I have no doubt that, as he has been doing in the past, he will continue to make every effort to reduce the time lag, but I think all members of the committee were aware that the routine procedures connected with the making of a loan are not entirely in the hands of the board.
First of all, loans can be made only within a certain portion of the year; I think it was roughly seven months. In the opinion of the board, except perhaps in one province it is not possible to appraise farms when snow is on the ground. Then the chairman of the board said that even though frequently they were able to process their side very expeditiously, they had encountered difficulties that were not of their making, such as delays, on the part sometimes of the applicant, in providing the necessary information as to his liabilities. Sometimes checking those items with the bank or other creditors involved delays. It was indicated that sometimes a search of title by the solicitor in the area in which the farm is registered is responsible for a fair amount of delay. The difficulty of getting assignments of insurance policies, and so on, all takes time. We, of course, have no evidence that these procedures were any slower than in the normal lending business on farm property.


George Stanley White: Could the parliamentary assistant say how many evaluators there would be in what is called eastern Ontario, that is east of Toronto, and about how many applications could be handled after May 1 to the closing period for inspection?


William Moore Benidickson: That evidence was given. I think it was broken down by provinces. No, the detail in the appendix refers only to one province, the province of Saskatchewan. I could obtain that information for my hon. friend and send it on.


George Stanley White: I should like to ask one other question of the parliamentary assistant. Would he like to give us his opinion, as a member of the bar, as to whether these matters could be speeded up in every detail? The time of the inspection and the whole of the processing is not a matter of a lawyer's time. They always try
[Mr. White (Hastings-Frontenac) .1

to put the blame on the lawyer, but the parliamentary assistant knows there is nothing to that. The delay is in the making of the evaluation and all the endless government red tape after the application is made. Can the parliamentary assistant not get out of his dual role as parliamentary assistant and speak as a lawyer and say that there is no reason why this whole procedure could not be speeded up?


William Moore Benidickson: I would certainly not say that one party to the transaction is chiefly to blame for any delay, particularly my own profession, but several factors have contributed to delays in particular applications. I certainly think that as a result of the discussions before the members of the banking and commerce committee there will be another look to see whether procedures cannot be shortened and streamlined.


George Stanley White: The parliamentary assistant knows that the trust companies that loan money in fact in practically the same way would never tolerate a system like this that takes months and months, and they are just as cautious as the farm loan board. If they can process a loan in a matter of two weeks, there is no reason why the Canadian farm loan board cannot do the same thing.


James MacKerras Macdonnell: I should like to make a comment on that. I think the parliamentary assistant will agree that this matter was discussed at length and very earnestly in the committee. My recollection was that we were given 50 days as the average, which of course means that many were much longer. I think the chairman of the board was impressed. Certainly every effort was made to make him feel that, particularly with the five months' dead period due to snow, there should be a great shortening of that loan period. I think he had in mind the possibility of perhaps some more staff. I believe the question of staff was important. I shall be very disappointed if there is not a substantial shortening.
Whether we can ask the parliamentary assistant if there is some way to keep track of that, whether it would be reasonable for us to be allowed to pursue that and get a report made by the board from time to time, I am not clear, but I feel it is a very important matter. The committee certainly felt that, and I have considerable confidence that the chairman of the board, who I am sure wants to do a good job, will realize that delay is one of the complaints that registered most deeply.


William Moore Benidickson: I agree with my hon. friend, and I can tell all hon. members.

Canadian Farm Loan Act
having served on that committee and become better acquainted with the work of this board, that if any hon. member has an individual case where he feels there has been undue delay I would be very happy to extend my co-operation by acting as liaison between the board and the member to examine that particular file; because there is, as I say, a great danger in speaking about averages. You have to look at the individual case and see what caused any special delay in that particular instance.


Mr. Fraser (Peterborough):: I just want to follow up what the parliamentary assistant said on that. The parliamentary assistant said that if a member had an individual case he would take it up, but what about the farmers who do not go to their members? They are absolutely stuck.


Mr. Charlton:: Mr. Chairman, I had intended to make a few general remarks on the first clause but you ruled against that. It has always been considered to be the practice in committee that general remarks could be made on the first clause and I still wonder whether that matter should not be cleared up once and for all so we may know whether it is a matter of right or simply a privilege.


Mr. Lennard:: When would you do it if
you did not do it on the first clause?


John Alpheus Charlton: Clause 6, however, is quite broad; therefore I feel that any remarks I might have made on the first clause can be made here. I want to express my personal appreciation to all those who presented briefs before the banking and commerce committee. These briefs were most helpful, especially the brief presented by Mr. Brodrick of the federation of agriculture. Later we had Dr. Hope as a witness before the committee and he was very helpful indeed. We appreciate the fact that the government has brought in one or two amendments to the act. There was also one amendment made by the standing committee. However, we believe there are many changes that could be made so far as the administration of the act is concerned.
One very important thing, and it has been mentioned before, is the speeding up of appraisals and the processing of applications. In its brief the federation of agriculture suggested that there should be an advisory committee in each county. During the hearings of the committee I suggested that it would often be possible to use the services of some retired farmer in the district who knew the county very well and could be paid so much for each appraisal he was called upon to make. It would not be necessary for him to go into all the details in getting information that a stranger coming to the area would
require to obtain, and these local people would be invaluable in speeding up the processing of loans.
From questioning the chairman of the board it was learned that apparently some such individuals are used, but there are still a great number of permanent employees going around the country making appraisals. I suggest sincerely that the board give the most serious consideration to trying to get a good local farmer, retired or otherwise, in those districts where no local man is being used to do appraising at the present time. These men know the local situation and would be of very great help to the board in valuation and appraisal work.
It has been mentioned by the hon. member for Peterborough that there are hundreds of these applications that members of parliament do not see because they are personal matters. A person making such an application does not always like to come to his member about it unless he has trouble. If he has trouble then he probably will go to his member of parliament and in that case we do hear about these cases. I know that so far as any cases I have had to do with are concerned, the appraisal value has in most instances been very low compared with the actual value of the farm. The chairman of the board said they appraise a farm on the basis of its earning capacity.


William Moore Benidickson: Productive capacity.


John Alpheus Charlton: That is probably a good idea,, but if that is the case then they are actually making loans on the basis of the person rather than the farm, because if a poor farmer was operating the best farm in the world the earning capacity of that farm would be very low. Therefore what they are doing in effect is lending money on the basis of the owner of the farm instead of on the farm. At the present time the situation is, as has been said, that farmers are in a low category so far as earnings are concerned. Their earnings are the lowest they have been for years. Ordinarily I suppose a farm would be remortgaged about every 20 or 25 years. Many farmers want to obtain one of these loans to consolidate their debts. They are probably paying off debts to the implement company or the bank and they want to consolidate them in one place where they will have a reasonable interest rate.
I always understood that the farm loan-board was supposed to be a service organization for the farmers, and that its purpose was to take up the slack in mortgage money when trust companies and private individuals who would ordinarily lend money were-making fewer and fewer loans. It was my

Canadian Farm Loan Act understanding that the purpose of the board was to be of service to people who found it difficult to get loans from any other source. But we find that the board had a profit of practically $163,000 last year and paid income tax amounting to $73,341. While it is to be hoped that the board will be able to pay expenses and make some profit, it seems to me to be a little out of the ordinary that the board should make that much profit on its operations.
. ' Take the case of the young man who wants to start farming. It is very odd that when he goes to the farm loan board and tries to get a loan he cannot get sufficient money in order to start farming unless he has a considerable amount of his own or unless his father turns the farm over to him free of cost. Ordinarily the farmer depends on the money he gets from his farm in order to retire, but the present situation means that he cannot retire. He must remain on the farm and either hire his son as a labourer or else operate on a share basis with him. It seems to me that if the young man wants to make farming his life work it should be a little easier for him to do so. The board should make it possible for him to start farming on a reasonable amount of capital and at the same time allow the father to retire, move off the farm and leave it to the son to run.
We all know that father-son arrangements sometimes create difficulty. The young man has new ideas and wants to carry on in a little different way than his father did. The father of course is sometimes just a little reluctant to do that. Such a situation often means that the boy leaves the farm because he does not have the amount of capital required.
The strange thing is that the same boy can go to the city, get a job and, through Central Mortgage and Housing Corporation, have a new home built for him in the city for 10 per cent of the cost of the house. But if he goes into farming he has to have 60 per cent to 75 per cent of the value of the operation; that is, machinery, livestock, the value of the farm. He would probably have to have 60 per cent to 70 per cent of the amount of money he would require to start farming. He certainly cannot get credit on livestock. He cannot get very much credit on implements. Up to now you have only allowed him a loan of 60 per cent of the appraised value, and under the amendment it will be 65 per cent.
I suugest most sincerely that the appraised value is low, and that a loan of 65 per cent of the appraised value is a pretty poor show so far as the young man is concerned who
	I

is starting in the business of farming. As I said at the outset, I think most people appreciate the amendments that have been brought forward, but they do not go far enough. In the committee we tried to get 75 per cent of the appraised value established as the basis for a loan. That was turned down by the majority of the committee, but I suggest that it has to be either the one thing or the other. There either has to be an easing so far as appraisals are concerned or the percentage of the present appraisals should be increased.
If the farm loan board appraisers will ease up on their appraisals and appraise farms closer to their actual value at the present time, then 65 per cent might be sufficient. But it is either one thing or the other. If they are going to maintain the inadequate appraisal values they are using now, then I say the percentage should be increased.
It was suggested that the maximum loan be raised from $15,000 to $20,000. Even $20,000 on a large operation would not set a young farmer up in business. The maximum loans as originally provided was $10,000 on the first mortgage and $3,000 on the second. This amount has been increased to $15,000. That is a step in the right direction. But with values increasing in the way they are increasing at the present time, I personally feel-as do our party-that $15,000 is not enough for the maximum.
We are glad the government saw fit to increase the number of years from 25 to 30. I am sure that is a good move. As I said at the outset, ordinarily farmers remortgage, generally speaking, every 20 or 25 years. It naturally follows that the farm must be remortgaged when a son takes over, unless the farmer is wealthy enough so that he can turn over the farm to his son without compensation. As I say, it naturally follows that it must be remortgaged. Ordinarily a farmer wants to retire at somewhere about the age of 55 or 60, if he can do so. I suggest it is almost necessary that he retire at that age unless he wants to hold his son on the farm until he is 35 or 40 years of age before he is able to take that farm over. I think that is rather bad policy, as a rule, if it can be arranged in any other way. I think 30 years is a very good limit. Certainly the maximum should be increased under present conditions. I hope there is some way in which the government can see fit to do that.
As to the percentage, I hope the farm loan board will take into consideration getting a good local farmer in each county to help them with the appraisal of these farms, and to give them the information which they would necessarily be obliged to go out and dig for if

they did not have a local man. The suggestion made by the federation of agriculture is perfectly all right; I refer to the suggestion with regard to having an advisory committee. Under that suggestion you would have three when, in my opinion, one would probably be sufficient. As I said before, this legislation is acceptable. We intend to support the bill. However, we should like to see these various changes made.


Mr. Jones:: I am interested in clause 6, especially subsection (i) with reference to loans of up to 65 per cent on the actual value of such lands and buildings. I am interested because the provision does not mean a thing as far as my part of the country is concerned, where the average farmer makes his living from fruit trees. I should like to ask the parliamentary assistant later on to define the policy the department has in valuing mature fruit trees.
I get from my riding constant evidence that the present system of valuation is entirely wrong, that it has no relation to actual value. If future loans are to be made on the basis of 65 per cent of the actual value, I think it is time the government had in the interior someone competent to value fruit trees. I am satisfied that at the present time they are not properly valued, and that they are definitely valued at only a fraction of the value of such fruit lands on the open market.
Actually, some time ago I had instances of two fruit farmers who were turned down by the farm loan board on the basis of the valuation of their fruit trees, but in both cases they were able to go, with the same security, to an orthodox chartered bank and arrange a loan, at probably the same rates of interest. I do not know the rates of interest, but they were able to satisfy the orthodox bank that they were capable of meeting the payments on the loan. There is something wrong when this happens with a board which is supposed to assist in getting out of a bad spot those who normally cannot get their assistance from the banks; that is, if they are a fairly good risk otherwise.
As far as we in British Columbia are concerned, I think having the operations of the farm loan board concentrated in New Westminster is wrong. That is on the coast, where the climate is totally different and where growing conditions are different. They have nothing to speak of in the way of fruit trees. We should have one of these people situated in the interior-in the Okanagan valley or the Kootenay valley-in order to become acquainted with fruit growing conditions and with the value of growing fruit trees in order that a fair assessment can be made. Even with the 65 per cent provision I am satisfied 67509-231
Canadian Farm Loan Act that on these appraisals the average fruit grower could get only half that on the market value of his 10 acres or maybe 15 acres of fruit land.
These are the questions I should like to pose to the parliamentary assistant. What definitely is the policy of the government in valuing fruit trees? How do they arrive at the low valuation that is now in existence as far as the board is concerned? I should like to know whether fruit trees could be included in this bill as well as farm buildings. It is far more important to have the farmer prosperous and have him getting a loan on his trees rather than on his house, to my mind. Hence it is just as important to include fruit trees in this clause as it is to include the house and the land itself.


Mr. Herridge:: I just want to support what has been said by the hon. member for Okanagan Boundary because we have similar experience particularly in connection with the fruit industry. I represent a number of fruit farmers and small mixed farmers, the great majority of them with a long record of successful operation of small acreages compared to the giant farms looked after by my colleagues around me.
They have managed with remarkably few mortgages. I mention that fact to indicate the soundness of their small farming operations. They have few mortgages indeed. For some years I have not seen a single farm in my constituency advertised as delinquent with regard to taxes. I mention that fact to indicate that these are good farmers and that they are engaged in good, sound farming propositions. They run their farms mostly with family labour. They have not much equipment. They are more acquainted with the cross-cut saw, the axe, the walking plow and the mattock than they are with large machinery requiring large investment. Their operations are modest. You will not find them in California, in Arizona or at the Empress hotel in Victoria. They are obliged to stay home all winter in order to attend to their pruning and things of that sort.
As I say. there is a tendency to underestimate the production value of these small orchards. Like the hon. member for Okanagan Boundary, I should like the parliamentary assistant to explain to the committee on what formula they operate with respect to the valuation of fruit farms particularly.
As I mentioned at the resolution stage, I believe it was, I am of the opinion that the activities of the board should be diversified. At present they are centralized in New Westminster, and as far as I can see they are hypnotized by Fraser valley conditions. They know little from experience of Okanagan and
3640	HOUSE OF
Canadian Farm Loan Act Kootenay conditions. There should be at least a representative in central British Columbia and in the interior of British Columbia representing the Okanagan and the Kootenays.
I would seriously suggest again that the officials of the board would be well advised to get in touch with the farmers' organizations, to visit the fruit growers' organizations and to get an abstract from the books in order to see what has been the production of some of these people. I know of instances where $6,000 or $7,000 worth of cherries have been produced a year on five acres and with very little overhead on account of family labour in the pruning, spraying, picking and even in the packing house and things of that sort. A very small percentage of these people require loans from the Canadian farm loan board.
Like the hon. member who has just spoken, I have on a few occasions run into instances where I could not understand why good, hardworking people with a long record of successful operation on what is to us good soil and good properties should be refused the modest loans they required at the time. I do suggest that officials of the organization would be well advised to visit the district and get in touch with farmer organizations; then they will have some understanding of the capacity of the land and the people on it to produce.


Mr. Hahn:: What the hon. members for Kootenay West and Okanagan Boundary have said concerning the appraised value of property is possibly quite true. I am not sure that it is intended as an affront to the individual in New Westminster. As the hon. member for Kootenay West suggested, he is not familiar with farm conditions in the interior of British Columbia, and therefore possibly should not be the appraiser. I should like the parliamentary assistant to indicate to us just exactly who does the appraising of these farms in British Columbia and whether there is any connection with the appraiser under the Veterans' Land Act, and possibly whether or not there is any method of appeal by which a reappraisal might be made of property which has not been appraised at the value at which the farmers felt it should have been appraised.
In the lower mainland area of British Columbia we find that the appraisers under the Veterans' Land Act are very thorough and are quite familiar with property values in that area. Possibly for that reason some examination should be made into whether or not the appraisals made under the farm loan board are quite as fair as the appraisals made under the Veterans' Land Act on the same piece of property.


James MacKerras Macdonnell: Mr. Chairman, it is not often one can do anything in this chamber


that carries the approval of the government, but I think if I moved an amendment to subsection 2, paragraph (f), it might carry the approval of the government. I would move:
That the word "twenty-five" be stricken out and be replaced by the word "thirty".


Edward Turney Applewhaite: I think I might point out to the committee that the bill, as reported from the banking and commerce committee, contains that amendment according to the copy I have before me. The section now reads:
Every loan under this section shall be repayable upon such terms and within such periods not in excess of thirty years as the board shall prescribe;


James MacKerras Macdonnell: That change does not appear in my copy. I have another amendment I should like to move. I move:
That clause 6, subparagraph (ii) be amended by striking out the word "fifteen" and replacing it by the word "twenty".
That is the ceiling on the loan. I am not able to see any objection to that. I understand that when the deceased wife's sister bill was being passed in England there was one member who was vehemently opposed to it, and somebody pointed out to him that it was not a compulsory measure. In the same way I should like to point out that if we raised the ceiling from_.$15,0.QQ-ta-$2Q,0Q0_it is
not forcing anyone's^ hand. It_____is-mereljL
permissive. It gives the right to the board, if they find a loan which they think otherwise satisfactory, for an amount above $15,000, to make that loan.
When we have regard to the very substantial increase in prices over the years, in many cases running to twice what they were, and having regard to what I said a moment ago that we are not forcing anybody's hand but merely enabling the board to make a loan between $15,000 and $20,000 if they want to do so, it seems to me there is no danger in it. The board are experienced; they have had experience over the years. As I said earlier in the afternoon, if there is any question to be raised about their operation I think it would be that they have been too prudent, too careful, too unwilling to be a little progressive. I feel, therefore, that in moving that this $15,000 be raised to $20,000 I am not asking the board to take any additional risk. I am merely creating a situation where they will have a little more elbow room.


Hazen Robert Argue: We are quite prepared in this group-


Edward Turney Applewhaite: Order. I have not received the amendment. Having received the amendment now, I have before me the resolution which received His Excellency's

recommendation and was passed by this house. The appropriate part of it reads:
-to allow loans to be made up to sixty-five per cent of the value of the lands with a maximum loan of fifteen thousand dollars-
When I heard the hon. member speaking I was inclined to come immediately to the conclusion that he was raising the amount of public funds which would be expended, but I was not too sure I was right. There may be an over-all ceiling in the bill which would meet that question. However, there is no question in my mind at all that the resolution preceding the bill was very specific. We have the following quotation taken from the booklet of the Journal of the Society of Clerks-at-the-Table in Commonwealth Parliaments, to be found at page 167, where apparently a similar motion was made:
In asking the chairman to explain the reason for his ruling, Mr. Shackleton quoted the following passage from May (fifteenth edition, page 748):
"The approval or the reduction of the expenditure under consideration, or an increase in the stringency of the terms and conditions of the charge thereby created, are the matters specially entrusted to such a committee-
I insert "this committee".
-and to these objects amendments are directed.
If it was in order for the committee to interfere with the Queen's recommendation to the extent even of striking out all the money proposed to be voted, he could not see why it should not be in order merely to say that it should be repaid.
The chairman said:-
And this is the point:
"If the hon. member will look at the next page of Erskine May, he will find that this amendment would alter the conditions under which the Queen's recommendation was given, and therefore it is out of order. It is correct that the amount of money may be reduced, but we cannot alter the conditions."
In this case the resolution which came before the committee of the whole preceding this bill was very specific. The amendment proposed by the hon. member for Greenwood would not only materially alter the resolution but would alter it upward, so that the effect, if any, would be to increase the financial drain upon the resources of the crown. Therefore I am afraid I must rule the amendment out of order.
Mi. Macdonnell: Might I submit one consideration which you yourself have raised, Mr. Chairman, namely that this would not necessarily affect the over-all expenditure? Second, the suggestion which you just made is that this may not be regarded as an expenditure but a loan.


Edward Turney Applewhaite: I think we can meet the hon. member's second point very easily. It would become an expenditure if the loan were not paid. I myself said it was possible 67509-231J
Canadian Farm Loan Act there was an over-all limit and, therefore, the purely financial consideration might not be binding. It does most definitely alter the conditions under which the Queen's-in this case His Excellency's-recommendation was made to parliament. The conditions were: "That it is expedient to introduce a measure to amend the Canadian Farm Loan Act". Then it goes on, and one of the conditions is that the loan shall be made up to 65 per cent of the value and that there shall be a maximum loan of $15,000, and so forth. It is my opinion that the proposed amendment does materially alter the conditions under which His Excellency's recommendation was made to parliament, and therefore is not in order.


Hazen Robert Argue: Mr. Chairman, had you allowed the amendment we in this group certainly should have supported it. Even though the amendment is not before the committee, since we have a provision in the clause to increase the amount of the loan to $15,000, I make this suggestion. Like the hon. member for Greenwood I think it would have been desirable to have the $15,000 increased to $20,000. I might say this is in conformity with the recommendations made to the committee by the Canadian Federation of Agriculture.
I am not too sure what form the amendment to the present bill takes. In the banking and commerce committee the hon. member for Greenwood was successful in moving a motion that may have been seconded by the parliamentary assistant. He certainly expressed his willingness to second the motion at that time; but since an amendment at that stage may not require a seconder there may not have been a seconder listed. The motion of the hon. member for Greenwood in the banking and commerce committee, heartily supported by members of this group, I might say, and members of all political parties, it was approved.
I suggest, Mr. Chairman, that if the period of the mortgage is to be extended from 25 years to 30 years, you have the same general effect that would result from changing the $15,000 to $20,000. I am not attempting to raise a point of order at all; I am merely saying that the amount of money that is made available to the board and the conditions under which it is made available have already been set forth. Therefore any change as to the length of period in which it will be repaid, the amount of the loan, the percentage of the appraised value, and so forth, are merely apportionments of the total amount of money that is controlled in another way. Certainly we are in favour of the suggestion made by the hon. member for Greenwood.

Canadian Farm Loan Act


Edward Turney Applewhaite: In view of the remarks that have just been made by the hon. member I should point out that certain specific conditions, including the $15,000 maximum and the 65 per cent figure, were included in the resolution which was adopted by this house. There was no inclusion in the recommendations of His Excellency dealing with the length of the amortization period. If there is a maximum gross amount in the bill, then the larger you make the individual loan the fewer the number of individuals who can partake and, therefore, it is in my opinion a material alteration.
Shall clause 6 as amended by the committee carry?


Frederick George Hahn: Before the clause carries will the parliamentary assistant indicate whether or not the Veterans' Land Act appraisers are ever used on appraisals of these properties and whether there is provision to appeal an appraised value?


William Moore Benidickson: I am informed that the Veterans' Land Act appraisers are occasionally used to supplement the appraisal organization of the Canadian farm loan board. In the British Columbia area there is a full-time appraiser and then a seasonal appraiser is employed, and sometimes, as a matter of convenience but not often, a Veterans' Land Act appraiser is used. But the board relies on both its permanent appraisers and on its seasonal or part-time appraisers.


Frederick George Hahn: Is there a provision to appeal an appraised value?


William Moore Benidickson: Other than the complaint of the applicant in correspondence? He would have every right to address a complaint to the head office of the board if he was not satisfied with the decisions made either in his regional office or by the appraiser.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at eight o'clock.
Willis Merwyn (Merv) Johnson: Mr. Chairman, this clause proved to be the most contentious one before the banking and commerce committee. It deals with the basis upon which loans are made. There seems to be a considerable variation in the policies followed by the appraisers of the Canadian farm loan board. Experience has been that anyone attempting to get a loan from the board finds that the value put upon his property by the

appraiser is significantly less than the current resale value of his farm.
Another aspect of the problem was discussed under an earlier clause. The Canadian farm loan board operates upon the difference between the cost for which they can borrow money and the interest rate they charge the farmer. One way they can make certain that no risk will be involved is to be very conservative in their appraisal policy. Section 6 (1) (a) reads in part:
-the principal amount of which shall not exceed sixty-five per cent of the actual value of such land-
The term "actual value" is very vague indeed. It has been claimed that it is based upon the productivity of the land, but in order to have a valuation based upon productivity you must give consideration to the market prices of the products which are produced. I think in the final analysis the actual value should be based on the longterm productivity of the land.
It is evident from the experience of many farmers that the actual value placed on a piece of land by the appraisers of the Canadian farm loan board is significantly less than the appraisal of the actual value of a piece of land by the Department of National Revenue for succession duty purposes. There should be some consistency in the policies. In one case we have the Department of National Revenue putting the highest possible valuation on a piece of land for succession duty purposes, and then we have the farm Joan board apparently determined to put a very low value on a piece of land so a smaller loan may be made and the risk thereby reduced.
Considering the experience of other countries I do not think we need be as niggardly as the government has shown a desire to be in the percentage of the appraised value. The farmers' home administration and the farmers' credit administration in the United States grant loans on the basis of 100 per cent of the appraised value, and the losses have been small. There is a slight variation in the administration of those boards as compared with the Canadian administration, but I think our officials would do well to study those credit agencies in the United States.
It is generally thought that the government is increasing the percentage of the actual value by this new bill. Previously the percentage of the actual value was 60 per cent and it has been raised to 65 per cent, but I submit that percentage is deceptive. Prior to this amendment the board was taking 60 per cent on the first mortgage and then there was an additional $2,000 for the second mortgage. Under the present bill it is 65 per cent

of the actual value, so that when the two are correlated it will be seen that the percentage of the actual value has not been increased.
The Canadian Federation of Agriculture is aware of this problem and has advocated that the percentage of the actual value be increased to 80 per cent for loans up to $8,000. It is significant to note that the largest proportion of the loans made by the board are well under $8,000. In an effort to keep the legislation in line with the desires of the farm organizations in Canada who have made a complete appraisal of the situation, who have made a study of it and who have realized that the percentage of the actual value of the land upon which a loan is made is much too low, I take advantage of this opportunity to correct that situation by moving.
That clause 6 be amended by deleting the word "sixty-five" in line 19 and substituting the word "eighty" therefor.
If this amendment is adopted it will broaden the whole scope of the Canadian farm loan board so it may be able to fulfil more adequately its role as the primary credit agency in Canada, without being limited to the small loans which have been made in the past. By having a larger percentage of the appraised value upon which a loan can be made we will be in position to establish young farmers on economic units, since we will be allowing them sufficient money to permit them to become thoroughly established.
It will also give us an opportunity to keep the procedure of the Canadian farm loan board in pace with the continuing depreciation of the Canadian dollar. It must be recognized that as our dollar depreciates, land values increase. Land which sold for $30 an acre some years ago is now selling for $60 an acre. Unless the percentage of the appraised value is increased it will be virtually impossible for young farmers to get the money required to establish themselves on farm units.


Edward Turney Applewhaite: I am sure the hon. member will not be surprised when I rule this amendment out of order for exactly the same reasons I gave just before the dinner recess when ruling out of order another amendment to the same clause. I do not intend to repeat all that I said before dinner, but I would point out that I am ruling this amendment out of order on the ground that it alters materially the conditions in the resolution which had His Excellency's recommendation. The resolution stated:
That it is expedient to introduce a measure to amend the Canadian Farm Loan Act ... to allow loans to be made up to sixty-five per cent of the value of the lands.
Canadian Farm Loan Act
For the same reasons I gave in connection with the previous amendment I rule that this amendment is out of order.


Mr. McCullough (Moose Mountain):: Mr. Chairman, I should like to make some comments on clause 6. I listened with great interest to the hon. member for Greenwood when he more or less philosophized on farming in general. He quoted some very fine words from equally quotable people. I quite agree with the sentiments he expressed.
I feel that what we should do is strike at the hard core of what this bill is proposing. The members of this group feel that we should be thankful for small mercies from this government, but we submit that the present bill as it is constituted, with the amendments that have been made thereto, does not meet the farm financing problem in this country. It falls far short of providing the kind of farm credit administration we need for farming generally in Canada.
I want to support the hon. member for Kindersley and other hon. members in what they have said. I think a new perspective is needed in Canada with respect to farm credit. It has been indicated that this clause which provides for a loan on the basis of 65 per cent of the appraised value of the land is not satisfactory. Anyone who is familiar with agriculture today will agree with that statement. I certainly agree with those who say today that a great extension of farm credit under conditions where farmers, particularly those in western Canada, are operating under a great disparity between their prices and costs and the returns they receive, could be a dangerous thing to the farm economy. However, when one recognizes that the farmer finds himself in a price-cost squeeze and that we have had increases in farm machinery costs and increases all along the line, it is readily recognized that something more adequate should be provided for the Canadian farmers if we are going to maintain and promote the family farm.
There are four objectives we should have in mind when we are thinking of farm credit. The first is the achievement of security of the family farm. Second, attention should be given to the extension of credit which will provide an economic farm unit. Third, the tenant farmer who is presently farming rented land, and who has in mind the final ownership of that land, also needs credit with which he can operate that farm as an economic unit, with the final hope of owning it. Then there is a fourth objective we should have in mind, and that is the father-son relationship, where the father perhaps has been farming over the
3644	HOUSE OF
Canadian Farm Loan Act years and wishes to turn over his farm to his son and have his farm become the property of that son. If the older farmer wants to retire and turn it over to his son, we need adequate credit so the son may readily get it and carry on in the footsteps of his father.
When we consider that the best this government has to offer in the way of farm credit on a 5 per cent long-term basis, one can readily see that under present conditions, when we have had already this bill to extend farm credit, it could be very dangerous to the farm economy, because everyone recognizes that farming is a hazardous occupation and that the farmer has his economic ups and downs.
I am suggesting, while at the same time we should have long-term credit, that the first problem, of course, is to guarantee fair prices to the farmer. I am not going to enlarge upon that, but I should like to bring to the attention of this committee what is done in the United States, the great capitalist country to the south. Whilst I seldom recommend any of the economic policies of that country for this country, I think this government should at least look across the border and see what is being done in many ways to help the farmer there.
The agricultural attache here was kind enough to send me certain information in respect to broad policies undertaken with regard to farm credit in the United States. I should like to draw to the committee's attention one important aspect of assisting and financing agriculture in the United States. I have reference to the rural electrification program of the United States, under which over 4,468,000 farms have been electrified. Their interest under that program, which is repayable over a 35-year period, is not 5 per cent or 3J per cent, such as we have under V.L.A. in this country. The interest rate is 2 per cent; but this government is bringing in legislation, when farmers from one end of the country to the other are in the worst financial difficulties they have ever been in, to offer us nothing better than a 5 per cent long-term program for farm credit.
So I say this bill is completely inadequate, t am suggesting, first, along with the hon. member for Kindersley and others, that the term of credit should be extended from 25 years to 40 years. As was pointed out in the committee of the house which made an investigation into farm credit, if the extension of credit were amortized over a period of 40 years instead of 25 years it would reduce the interest rate payable on an amortized basis so the farmer would in effect be paying less interest than he does under


the short-term amortization period. So I am suggesting, if we pass this bill this year, that next year this government take a good hard look at farm credit in this country.
I feel that farming today is in great jeopardy. It is once again hitting the kind of depression we had in the 1930's; and it seems hard, for those of us in close touch with the agricultural picture in this country, to place before this government enough information so it will take seriously the problem facing the farmer today. So I just want to point out that this bill today, as amended, falls far short of the kind of farm credit we should have in this country. The farmers' union, the Canadian Federation of Agriculture and all the great farm bodies have indicated to the government that something more far-reaching than this bill should have been presented to the house at this time. It seems to me that this bill, which was framed many years ago, has been overhauled from time to time, but there has been very little indication that the government has any knowledge of the kind of credit we need for farmers today.
Before sitting down I wish to re-emphasize that the picture I have obtained by surveying the financial situation throughout my constituency-and I think it is comparable to many, particularly on the prairies-is that this is not going to meet the problem. This is nothing more than putting a millstone around the necks of many farmers. Today they cannot sell their grain, and they cannot meet the price-cost squeeze. They will be forced to get bank credit at 5 per cent amortized over 20 years. In effect this will be a millstone around their necks for many years. Rather than having something adequate given to this house, a bill that would play fair with the farmer, one by which the farmer would be able to liquidate his debts, become the full owner of his farm and be able to farm an economic unit on a family basis, we may go back to the corporation farm and more and more see the family unit farm go off the Canadian scene.
In closing I may say that I think the government has been remiss in its duties when it cannot see any way of extending, through the Bank of Canada or otherwise, low interest rates to our farmers. Sometimes we hear it said that the farmers are subsidized. The reason the farmer today needs the kind of credit I am suggesting is the very fact that the farmer, in paying the high prices for farm machinery and other costs, is in effect subsidizing General Motors and the farm machinery companies because he is paying their profits. For example, when General Motors can make over a billion dollars profit

this year, when Canada Packers are able to rebuild complete plants in four years, I say the farmer is subsidizing many industries in this country, and it is not the farmer who is being subsidized.


John Borden Hamilton: I have just a few questions to ask the parliamentary assistant. I notice that in subclause (f) a change has been made so that what would appear to be blended payments of principal and interest are provided on a monthly basis. I wonder if the parliamentary assistant would tell me how that interest is calculated. Is it calculated on a monthly basis as well? The reason for my asking is that if I recall correctly, under the mortgages act of Ontario interest cannot be calculated monthly. I wonder if this ties in with the original part of the legislation.


William Moore Benidickson: This act has not had this provision since its inception. As my hon. friend knows, the blending of principal and interest payments by a monthly method of payment is becoming very common. This bill provides a monthly payment option which has not hitherto been provided. The farmer might have a fairly steady income by the month. Suppose he was in the dairy business; he might prefer to meet his mortgage obligation in this way. The actual calculation of interest and method of blending would be similar to that found in the case of payments under the National Housing Act, with which my hon. friend will be familiar.


John Borden Hamilton: I understand that under those circumstances they are calculated quarterly although payments are made monthly. Is it the same provision here?


Edward Turney Applewhaite: Shall the clause carry?


Hazen Robert Argue: No, Mr. Chairman. The bill as it was sent to the banking and commerce committee provided for a maximum loan period of 25 years. Members who were on that committee will recall that an amendment was moved and accepted by the committee changing the period from 25 to 30 years. At that time some of us expressed the hope that the committee would go one step farther and provide a maximum amortization period of 40 years. If that had been done we would have followed the recommendation made to the committee by the Canadian Federation of Agriculture.
I believe there are good reasons why the committee of the whole should consider extending the maximum period for farm mortgages. A 25-year period with an interest rate of 5 per cent establishes a repayment rate of 7-25 per cent. That rate, with farm income as it usually is established, is a relatively high rate. Extending the period to
Canadian Farm Loan Act 30 years will reduce the 7-25 per cent to something under 7 per cent. But if we extended the maximum period to 40 years, even assuming the maximum interest rate were left at 5 per cent, the repayment rate would be reduced to 5-83 per cent. I suggest that a repayment rate of 5-83 per cent is more in keeping with the actual rate that agriculture can bear than the rate of over 7 per cent brought about by the bill.
I was very interested in the committee to hear Dr. Hope relate to us on this point the results of a survey made of the length of term of farm mortgages in Ontario. He gave us this breakdown. Eight per cent of the farms in Ontario were mortgaged for a period in excess of 50 years. Fourteen per cent of the farms were mortgaged for a period of 41 to 48 years. Fourteen per cent of the farms were mortgaged for a period of 33 to 40 years. Seventeen per cent were mortgaged for a period of 25 to 32 years, 16 per cent for a period of 17 to 24 years, 13 per cent for a period of 9 to 16 years, 12 per cent for a period of 1 to 8 years, and 6 per cent had no mortgage at all.
Therefore, according to his sample survey a majority of the farms in Ontario were mortgaged for a period of 25 years or more; to be exact, 53 per cent. We were given this further information by way of breaking down mortgage capital and its source. Fifty per cent of the mortgages were held by individuals other than the seller. Thirty-three per cent of the mortgages were held by the seller. Nine per cent were held by loan companies, 4 per cent were family mortgages and only 3 per cent were mortgages from government agencies, with 1 per cent listed as being under the Veterans' Land Act. Therefore the total mortgage business done in Ontario by government institutions, of which the Canadian farm loan board is certainly the main one, is approximately 3 per cent.
That fact, Mr. Chairman, together with the fact brought out in the survey that 53 per cent of the farms in Ontario carry mortgages for periods in excess of 25 years, suggests to me that the burden of mortgages that must be paid for and serviced by agriculture is indeed high and that the committee should give sympathetic consideration to any improvement that can be made in the bill before us. Therefore I suggest that the maximum period of repayment should be increased from 30 years, as provided in the amendment, to a period of 40 years. I do so with the full support of the Canadian Federation of Agriculture and with the full support of authorities who have looked into the field of farm mortgage credit very carefully. As far as I know, no authority has recommended a maximum

Canadian Farm. Loan Act period of less than 30 years, and some authorities have recommended periods even in excess of 40 years. Therefore, Mr. Chairman, I move:
That clause 6 be amended by deleting the word "thirty" in line 35 and substituting the word "forty" therefor.


William Moore Benidickson: I should like to advise the committee that this proposal was presented to the banking and commerce committee. A motion was made in that committee that the term be increased from 25 to 30 years. The motion was then subject to an amendment suggesting that the term be 40 years instead of 30. The vote in the committee on the 40-year term was 6 for and 21 against. When the vote was taken on the 30-year term the vote was 26 for and no one opposed to the term of 30 years.
At that time I for one indicated that I felt there was some evidence that should be taken into account that there was a need of lengthening the term. Some evidence was given as to the term of mortgages in other countries, but I pointed out that having in mind our general practice and mortgage terms in Canada-and I made reference to the National Housing Act-I felt that 30 years was generally considered to be a fairly lengthy mortgage term in this country. As I say, this does not come before us as something new. It is a matter that was dealt with in the banking and commerce committee, where the official opposition and the government supporters opposed a 40-year term but voted for a 30-year term.


James MacKerras Macdonnell: Those who were in the house earlier will perhaps remember that I favoured an increase in the ceiling of the loan and would have voted for an increase in the valuation percentage, but we did vote in committee against increasing the term from 30 years to 40 years. While you cannot prove that 30 years is the right figure, nevertheless there was an increase from 25 to 30 and it seems to me that 30 years is a pretty long loan. After all, there is such a thing as renewal, and I see no reason to change the vote I gave in the committee.


Edward Turney Applewhaite: Is the committee ready for the question?


Hazen Robert Argue: Mr. Chairman, I think there is a very good reason why a terrfi of 40 years should be provided in the law rather than 30 years. That is the fact, and it is a fact, that it is impossible for farmers generally to meet a high rate of interest on mortgages. The history of mortgage repayments bears that out. Dr. Hope's evidence has been referred to in a very favourable way by members of

all parties, and in my opinion he showed conclusively that a long repayment period is necessary.
Some of us have endeavoured to get the mortgage rate of interest reduced by getting the government to accept the carrying and administrative costs of the board. We have not done that because we believe the government should subsidize everything but because we believe a total interest rate of 5 per cent is probably all that agriculture can bear over a long period of time. Even if we provide a mortgage period of 40 years, the effective repayment rate will still remain at 5-83 per cent. A 30-year mortgage is a long mortgage, perhaps, for a private business; I do not know. It may be a long mortgage for a corporation. It may be a long mortgage for individuals other than farmers. But I suggest that in the history of agricultural credit a mortgage term of 40 years over which repayment is to be made is not too long when you consider that any shorter period will increase the repayment rate.
To support my contention that a 5 per cent rate over a 40-year period is the maximum that agriculture generally can support, I should like to refer to the evidence given by Dr. Hope showing the return to the farm operator and for farm family labour over a period of 29 years, from 1926 to 1954, in Canada. Those figures show that the average return to the operator for his labour and management over this 29-year period is less than $1,000 a year; in fact it is just $967, and you may add to that the return to the farm operator for his management and the wages of his unpaid family help, namely another $219, bringing an average total net income to the farm operator and his family of $1,186 a year over a period of 29 years.
With that history of agriculture before us, I think it is fair to say that a rate of 5-83 per cent is the very maximum rate that agriculture generally can bear. I therefore believe the suggestion that the maximum amortization period should be 40 years deserves support by the committee. I would point out to the hon. member for Greenwood something that is obvious, namely that anybody who can repay in 30 years or a shorter period of time has that right. But I am making this plea for a longer period so that many farm operators who must have a longer period in which to repay and a smaller rate of repayment may have this further assistance.


William Moore Benidickson: Mr. Chairman, I think it would be of interest to the committee to have some information as to the experience of the board in their 25 years of operation in so far

as the actual need for longer terms is concerned. I am informed that while most contracts are entered into for the maximum term, which has been 25 years and now will be 30 years, the rate of prepayment of loans is such that the average term over the 25-year period is only 14 years.


Mr. Hodgson:: Mr. Chairman, I did not intend to take any part in this debate, but as time has gone on the spirit has moved me to do so. We hear talk about a 40-year term for a mortgage. My friends have mortgages which run for 10-year or 12-year periods. Forty years is the working life of any farmer. A fellow goes on a farm at 25 years of age. That is about as soon as he will get on a farm of his own. With this suggested provision it is going to bring him to the age of 65 or 70 before the mortgage is paid off, or he may die with the mortgage still hanging over the farm. That is like the fellow who lives on the farm all his life and leaves it to his son with a greater mortgage against it than it is worth.
I agree with the hon. member who said that probably the interest rate could be reduced to 4 per cent or 4J per cent. I think everybody would be pleased about that, even the fellow who is buying the mortgage. As to the 40-year period, I cannot agree with the suggestion at all. If a man cannot see some daylight, or if he does not see some time ahead when he is going to have the mortgage paid off within his lifetime, I think it would be poor business for the farmer who is borrowing the money and also for the government that is lending it.


Willis Merwyn (Merv) Johnson: I am interested to hear our friends in the Conservative party disagreeing with the Canadian Federation of Agriculture so pointedly. One of the specific recommendations of the Canadian Federation of Agriculture is that the amortization period be 40 years. In presenting evidence before the committee they indicated that this was necessary in order-as the hon. member for Assiniboia has pointed out-to reduce the annual payment that must be made. I think anyone who is really concerned about the welfare of agriculture will support the amendment he has moved because, as was pointed out, there are no flexible terms of repayment in the present act-something which the federation is also advocating-so the amount you would repay annually would have some relationship to the productivity to the farm in that particular area. Correspondingly, if there were an extremely low return from the farm, the repayment would be lessened.
By increasing the period of repayment we give to the farmer a greater opportunity to repay the money he has borrowed. He will
Canadian Farm Loan Act therefore have a greater amount of capital with which to keep his farm operating. I think we cannot assume that a farmer must be any different to those in a great many other businesses. I believe you will find many businessmen who are 40 years of age or 50 years of age who might happen to borrow $20,000 or $30,000. I do not believe we expect them to have that loan fully repaid in their lifetime, and I do not think it is a terrific burden on them. But in the case of agricultural land which has a significant mortgage-holding capacity, the better the terms of repayment we can give, the better chance agriculture will have to equate itself with the other occupations in Canada.


Victor Quelch: Mr. Chairman, I might say that we intend to support the amendment, because by increasing the period to 40 years we shall, of course, reduce the amount of the annual payment. The parliamentary assistant referred to the fact that during the past 25 years there has been prepayment, bringing that term down to 14 years.


William Moore Benidickson: On the average.


Victor Quelch: But the parliamentary assistant must remember that during that period we had a war, which was an inflationary period, followed by another inflationary period; and it is always far easier to pay off debts during a period of inflation than it is during a period of deflation. At the present time we have a situation where net farm income has dropped by 40 per cent in the past five years. If the situation we have today continues I would say that the farmers will not be able to pay their mortgage off in 40 years, let alone in 25 years. I think probably the best thing we can do is to support the amendment to increase the period to 40 years, in order to get the annual payment down to as low a figure as possible.


John Borden Hamilton: Mr. Chairman, my remarks will be few. It seems to me that we very easily could have gone along with a new type of valuation program which would have placed the farmer in a position to make a purchase with a smaller down payment. In that respect I think we might have brought this legislation more in line with the National Housing Act. In providing monthly payments I believe we have set up a program here that will bring within the reach of more people the orderly payment of their indebtedness. But no matter what type of business is involved, if we are going along with the system as we have it now it seems to me that we have to leave some pride in ownership and the acquisition of ownership. If there is not a sense of responsibility left in connection with those things which we attempt to acquire,

Canadian Farm Loan Act we might as well have the government buy all the property and lease it out on a 40-year basis to whomever wants to work it. If ownership means anything, therefore, you have to put something into it. If we are going to provide a period of time so long that in the ordinary course of events many of the people who will be living on these properties will not have paid for them by the time they die, then I think that sense of responsibility will disappear and the country will be the worse for it.


Mr. Montgomery:: I did not intend to say anything about this, but since the amendment has come up I wish to say a few words. I have had the opportunity of living in a rural community in which the farmers need loans and apply for them. I think we should be consistent. In requesting the 40-year term I believe the federation of agriculture also had in mind increasing the amount of the loan to $20,000 and the amount of the appraised value from 75 per cent to 80 per cent.
Since we are not going to get an increase in the valuation of the property beyond 65 per cent-I am sorry about that because I feel the government could very well have brought that up to 75 per cent-and since the total amount of the loan is not to go beyond $15,000, I think we must be consistent and say that a 30-year term is a fair term on which to make that loan. A good many of the people to whom I have had the opportunity of speaking thought a term of 30 years or even 25 years would be quite satisfactory, provided they could get an increase in the appraised value. They would rather have had an increase in the appraised value. For these reasons I cannot support the amendment.


Gordon Knapman Fraser: What is the payment per month on a $10,000 loan for 30 years as compared to the payment on the same loan for 40 years? Has the parliamentary assistant the figures there?


William Moore Benidickson: I have a figure here. Assuming an interest rate of 5 per cent, per $100 of loan the annual payment would be $6.51 on a 30-year term and it goes down to $5.83 for a 40-year term.


Gordon Knapman Fraser: That is less than a dollar, about 70 cents difference per $100 for 10 years. This does not amount to very much on a $10,000 loan; therefore I am not going to vote for the amendment.


Mr. Michener:: I wonder if the figure could be given of the total amount that would be repaid if the loan were for 30 years and 40 years, per $100?


William Moore Benidickson: It is just a matter of mathematics. You multiply $6.51 by 30 and $5.83 by 40.


George Hugh Castleden: I should like to point out, Mr. Chairman, in support of the argument that has been advanced for the 40-year period, that it amounts to about this. In the case of the 40 years the payments are less. If agricultural conditions are good, the farmer will be able to repay his loan and be clear of it. If agricultural conditions are bad, then what is going to happen if he does not pay within the 30 years? He is put off the farm. If hon. members to the right look at their argument they will find they are really jeopardizing the farmer, because the whole thing depends upon the agricultural conditions which exist during that period.
The parliamentary assistant has already pointed out that experience shows that even if the period of repayment is 25 years, when farmers are in a position to pay they prepay and get rid of the debt. By extending the period of time you are reducing the likelihood of a foreclosure. It gives the farmer an extra 10 years of grace. As we know from experience in Canada, agricultural conditions change rapidly and on numerous occasions the period of bad times in agriculture has extended over a long period of time. This extra 10 years merely affords these farmers a safeguard and lessens the likelihood of a foreclosure because of inability to pay.


Daniel Roland Michener: I have taken the opportunity of making the calculation and perhaps the parliamentary assistant would verify the figures. It is not a one-way street. If a man borrows $100 for 40 years instead of 30 years, in the 40 years he pays back $233.20 for the $100 he borrowed as against $195.30 that he would pay back in 30 years. In other words there is a difference of $37.90.


William Moore Benidickson: Those are the figures I arrived at.


Hazen Robert Argue: I am amazed at the position of the official opposition in this regard. I can understand the government, which has control of the public purse, feeling that it should look at this matter cautiously, carefully and in a conservative manner before agreeing to further extend the period when they have already extended the 25 years to 30 years.


James MacKerras Macdonnell: Don't you do that?


Hazen Robert Argue: If the Conservatives are announcing tonight that they are going to be across the way after the next election, as the hon. member for Kamloops is suggesting, then I suggest that by their statements they are saying that so far as policy is concerned they are going to do exactly the same as the

government now in office. In this discussion the parliamentary assistant has been able to sit back rather contently and allow the members of the official opposition to advance arguments against the position taken by the Canadian Federation of Agriculture. Perhaps the 30 years, as the period of the loan under the Liberal government, would not be any different from 30 years under a Conservative government. The Conservatives say you should not extend the 30 years to 40 because it would cost the farmer too much. Why then do they want to extend the 25 years to 30 years? Why did the hon. member for Greenwood try so hard-and I admired him for that-to be the person who would extend the 25 to 30, and hold his position for 10 minutes by beating down government members on an amendment which had been agreed to by the government? If the hon. member for St. Paul's had been coaching him, he could have pointed out that the farmer would save a lot more if the period had been 25 years instead of 30. As a matter of fact the farmer would save a lot if he did not have to get a loan at all. If the Conservatives followed their argument to its logical conclusion they would want to reduce the period even further.
Then the hon. member for Victoria-Car-leton said the federation of agriculture had three proposals. One was to increase the percentage of the appraised value; the second was to set the maximum loan above the 65 per cent and then he said they wanted the maximum loan to go beyond $15,000. The third proposal was to increase the 25 years to 40, and he said that depended on getting the other two, and that unless they got all three they were not going to support one of them. I suggest that even if the government has said no to an increase in the 65 per cent, as it has; even if the government has said no to an increase in the maximum amount of the loan, that is no reason why we should not at this time attempt to get an increase in the period of repayment.
The rate of repayment, as has been pointed out, for a 30-year period is $6.51. The rate of repayment for a 40-year period is $5.83. Someone may say there is not too much difference between these figures, a difference of some three-quarters of 1 per cent; but I suggest' to the members of the committee that in a period like the present, when farm income is so low, there is a great deal of difference between $5.83 and $6.51, and that farmers will have real difficulty in meeting even $5.83 and, of course, even more difficulty in paying $6.51. All of us would like to see farm mortgages kept in practice to as short a period as possible; all of us would like to see farmers in the position where they would be able to 67509-232J
Canadian Farm Loan Act pay their mortgages in a short time. But we should not penalize the farmer by keeping the period at 30 years if there is any possible chance of getting the maximum period extended to 40 years.
Someone has said we would be keeping the mortgage on the farm until the farmer is 70 years of age. Well, that is nothing new; and any change we make in this legislation is not likely to change the position in Ontario, the statistics of which I referred to a moment ago.
I do not think it is necessarily a question of a given farmer taking out a mortgage and himself repaying it. That is desirable, but I do not think it is essential. We have a National Housing Act. Some of the mortgages are a very high percentage of the sale value. I have never had the privilege of buying a house, but I am told by those people who buy houses and by people who sell them from time to time that you have a much better chance to sell a city house at a reasonable price if there is a substantial mortgage against it and therefore the cash payment is low.
I suggest that a farmer is more likely to sell his farm with ease at a fair market price if the down payment is not too high. If a man on reaching the age of 70 has a farm with a Canadian farm loan board mortgage on it which has not reached the period of 40 years and he decides to sell the farm, I suggest that he will dispose of his property more easily if there is a mortgage on it at a reasonable rate of interest and the cash payment to obtain the farm is therefore lower than if there were no mortgage against it and the farmer had to demand full cash when he sold the farm. Therefore I suggest we should not compare the 40-year term with the normal productivity of a farm. That is not too material. I think it is good business that agricultural mortgages generally should carry a low rate of repayment.


John Alpheus Charlton: Mr. Chairman, I had not intended to say anything about this bill at all, but I think our friends to the left are being very pessimistic. If they were in power would farm conditions be so poor that they would require 40 years to pay back a mortgage. I suggest that by saying what he has just said the hon. member for Assiniboia is being so pessimistic that he thinks farming is not going to be any better in the next several years. I suggest to him that our policy would make farming so much better that we would not need any legislation like this.


Edward Turney Applewhaite: The question is on the amendment. Will those in favour of the

Industrial Development Bank Act amendment please rise, and will hon. members please remain standing until requested to take their seats.
Amendment negatived: Yeas, 20; nays, 83.


[Stage Direction]
Clause agreed to.
Clauses 7 to 11 inclusive agreed to.
Title agreed to.
Bill - reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 165, to amend the Industrial Development Bank Act-Mr. Harris-Mr. Applewhaite in the chair.
On clause 1-Industrial enterprise.
William Moore Benidickson: Mr. Chairman, the minister when introducing this legislation, gave quite a lengthy outline of its purposes, which is contained in Hansard of March 8, commencing at page 1921, and I do not think any further explanation is required in a general way.
This bill now comes to the house after having been considered by the banking and commerce committee, which had the benefit of hearing, among other witnesses, the president and also the general manager of the bank. I think an attempt was made there to try to eliminate discussions that did not have particular reference to this bill and might go a little further afield on to general monetary and banking policy. The reason was that it was known in the banking and commerce committee that the president of the bank in his capacity as governor of the Bank of Canada would, within a few days, be again appearing before the banking and commerce committee to discuss the Bank of Canada report. I would hope, Mr. Chairman, that on the same basis, difficult sometimes as it may be, it would appeal to the judgment of the committee similarly to try to keep the discussion to the industrial development bank amending bill rather than have a general discussion of monetary policy.


James MacKerras Macdonnell: Mr. Chairman, as the parliamentary assistant has said, this bill was discussed at length by the committee and I shall be very brief in the remarks I shall make. But I think it might perhaps be of some use to those here present who were not on the committee if I were to make one or two general observations as to the purport of this amending bill.
[The Deputy Chairman.]

In the main the amending bill does two things. It extends the scope of "industrial enterprise" or "industrial business" and it alters the proportion of the lending funds of the bank which may be used for loans of $200,000 and over. It does not increase the total amount the bank may lend, which depends upon the capital and reserve of the bank.
I would remind hon. members that the industrial development bank was designed really to fill a gap in our financial structure. A loan may be required for a longer term than a bank may be prepared to give it, yet it may not be large enough to warrant a bond issue in the ordinary course. You have thus an in-between situation which is filled by the industrial development bank, I think to the satisfaction of virtually all concerned. Although there was some misgiving on one point which I shall come to later, the banks have found that the industrial development bank fitted into the pattern of the financial structure of the country. One satisfactory aspect of the operations of the industrial development bank is that it has kept in close touch, and I think in useful touch, with the chartered banks.
I would point out the safeguards that exist. The bank is given the power to deal only with certain things. Those of us who had the advantage of hearing the governor of the bank I am sure will feel that it has remained in the area it was intended to cover. The impression we got from him was that he was content and did not wish to step outside. The governor put aside certain suggestions for expanding the operations of the bank, saying they were organized and equipped to scrutinize and deal with industrial enterprises, that that was really the scope of their operations and they should not extend it.
One of the questions he was asked was in connection with the provision that a loan may not be granted by the industrial development bank unless evidence is given that it has not been possible to obtain it elsewhere on reasonable terms. We asked him if that provision was taken seriously or treated in a routine manner, and he said it was far from routine. He told us that in a great many cases the industrial development bank would be in actual touch with other institutions from which loans had been requested, such as the chartered banks, and therefore the borrower had the advantage of having discussed the matter with both agencies.
The important point of this bill is to raise the amount which may be lent out in loans of $200,000 or more. Originally that was put at $25 million, it was raised to $50 million and it is now proposed to raise it to $75 million. The actual amount now outstanding

in loans of $200,000 or over is substantially less than $50 million. When we asked the governor why he wanted this substantial ex-tention he said that they were doing a job and they might as well do an adequate job. He said it seemed worth while to get a substantial further authorization.
Having regard to the fact that the bank was established originally to fill a gap, to do what the chartered banks were not completely organized to do, I was reassured to find that while the bank has played a useful part there has been no wild attempt to rush out for business. Indeed I would say that the bank has pursued the even tenor of its way. As far as I am concerned I think that is what it was intended to do. I think anyone who needs a loan of this kind can easily get in touch with the bank and get whatever accommodation he is entitled to.
There was one answer made by the governor of the bank I was interested in. When speaking about large loans he said that the largest loan made was for $4 million, which was much larger than any other loan. He said that there had been only three or four other loans as high as $1 million. The $4 million loan was made in special circumstances to a defence industry because of the type of work it was called upon to do.


William Moore Benidickson: That was some years ago, close to the Korean war outbreak.


James MacKerras Macdonnell: I mention that because there may be others who like myself did not want to feel that this organization was trying to rock the boat by entering into competition with the chartered banks and other financial institutions.
Another point I had in my mind when this bill was announced was that it might be in effect going contrary to the restrictive credit measures we have been told about, that to some extent this would be going in the opposite direction. The question was whether this implied in effect a substantial creation of new money. Was it going contrary to the other things that were being done? I think the governor replied to the questions in that connection quite satisfactorily. When we asked if money loaned in this way would mean the creation of new money, while in a sense he said yes it could be, in the same breath he said that the bank by marketing methods could prevent a situation from actually resulting in the creation of new money.
But even more impressive than that, the feeling I got was that they were not going to be rushing out to make a number of large loans, that there was no intention of trying to change the bank from what it' had been into an organization which would try to spread
7, 1956	3651
Industrial Development Bank Act itself all over the landscape. To sum up, I think one can fairly say that up to the present the bank has gone along the lines it was intended to follow, that it has been well run and has worked in harmony with the other agencies in the financial structure of this country. The main thing is that the new bill is not intended to increase the total amount which the bank will have available for lending but merely to increase the amount which may be lent in loans of $200,000 and more.
As I listened to the governor of the bank I felt that it had been conducted in a sensible fashion and that this was not going to be taken as an occasion to rush out and try to change the present character of the bank.


Hazen Robert Argue: Mr. Chairman, we in this group, unlike the hon. member for Greenwood, would like to see the industrial development bank expand. We would like to see it stretch out. We would like to see it act aggressively in going after new business. We would like to see it do these things mainly because we would like to see new industries developed, and further because we would like to see new industries developed by Canadian capital.
We hear much about the desirability and the necessity of increasing the proportion of Canadian industries being developed by Canadian capital. Here is a bank, here is a Canadian enterprise in the business of promoting new Canadian industry with Canadian capital. I do not think the members of the official opposition are being completely consistent when they express the hope that the industrial development bank will not become aggressive, will not stretch out, will not expand at a rapid rate.
I repeat that I would like to see the industrial development bank use its authority and the money which is being made available to it by parliament in an aggressive way to establish new Canadian industries. I would like to see the industrial development bank come back to parliament in the near future for more funds; for the reason that it has in a short period of time successfully invested the funds it now has in new Canadian enterprises for the benefit of Canadians generally.
Looking over the annual report of the industrial development bank and the amount of business it has done in various provinces,
I cannot help being struck by the overwhelming preponderance of business that is done in the two central provinces as compared with the little amount of business being done, generally speaking, in the maritime and the prairie regions. I express the hope here that the industrial development bank will be successful in promoting new

Industrial Development Bank Act industries, not only all across Canada but to a greater extent, particularly, in the mari-times and on the prairies. I like to see Canada industrialized, but I like to see all parts of Canada share in that industrialization. To the extent that the industrial development bank can use its policies to allow Canadians in all provinces to share in that industrial development, I wish it great success.


William Moore Benidickson: The president does not disagree with that policy.


Hazen Robert Argue: No, I do not think he does. I do not know that he agreed with that policy, but I think, all other things being equal, he would agree with it. I pointed out to him in the committee that the trend seemed to be adverse, as far as industries on the prairies are concerned, as compared to industries in central Canada. The trend seemed to be downward instead of upward; that the prairies seemed to be getting a relatively smaller portion of business generally. When I asked the president those questions, he said to me that there was no thought at all of discrimination, that it was a matter of applying the same set of rules to a given number of applications, and that these just happened to be the results.


William Moore Benidickson: And your test period was relatively short.


Hazen Robert Argue: The test period I used was the test period in the annual report. The report points out the authorization for the full ten-year period, the full period the bank has been in operation, and then gives the gross authorizations for the fiscal year 1955. If I might refer to those figures at the present time, the figures for authorizations to September 30, 1955, show that Ontario got some $29 million in authorizations, Manitoba just under $4 million, Saskatchewan just over $4 million, and Alberta somewhat under $7 million. However, the gross authorizations for the fiscal year 1955 were $5J million for Ontario; three quarters of a million for Manitoba; $150,000 in round figures for Saskatchewan; and $450,000 in round figures for Alberta.
If you add up the authorizations for the full period to September 30, 1955, for Manitoba, Saskatchewan and Alberta combined, you arrive at a figure of about $14 million, or approximately half the amount made available for industries in the province of Ontario. If you take the single year 1955 and add up the figures for the three prairie provinces, you get some $l-4 million as compared with $5 * 5 million, or about one-quarter of the amount that was disbursed in Ontario. In other words, for the full period

the three prairie provinces combined obtained about half as much money as Ontario alone.
For the latest year, the three prairie provinces combined obtained approximately one-quarter of the amount obtained by Ontario. Then, as I am from Saskatchewan, the figure that naturally comes to my attention is the extremely low figure of $153,000 for that one-year period for Saskatchewan as compared with most of the other provinces.


An hon. Member:: What are the figures for the maritimes?


Hazen Robert Argue: include loans to hotel operators and hotel proprietors. Mr. Caswell went on to point out that the hotel industry was very essential to this nation; that hotel facilities in many, if not all, cities in Canada left much to be desired, and that adequate hotel accommodation would in fact improve the wealth of the nation by improving our tourist traffic.
Though I cannot refer to this at any length, we have just concluded the discussion of a loan policy for agriculture, and particularly a policy of making credit available for agriculture. The government has a policy, as defined in the Industrial Development Bank Act, to promote industries and new industrial development, and we are now discussing that policy. But there is an important section of our nation that is completely overlooked, I am afraid, as far as government policy is concerned. I refer to the ordinary independent businessman of this country. I refer to the hotelkeepers, the general merchants, the independent merchants whose services have meant so much to the country.
I suggest to the parliamentary assistant that the government should consider the extension of this act, and if that is not appropriate then the introduction of new legislation to provide for long-term credit at reasonable rates of interest to the ordinary independent merchant and businessman, the small businessman if you like, whose services are important to the nation and who at the moment, through no fault of his own, is unable to stand up against the ruthless competition of the big monopolies in these fields.
I do not know what other members may think, but I was certainly amazed to hear Mr. Caswell make the statement that the vast majority of hotel proprietors who wish to obtain new long-term mortgage capital to extend their businesses or for major renovations have in fact to pay a very substantial bonus on the capital they obtain. He told us of a personal experience he had when, in asking for a certain loan of $90,000 on a hotel, he was offered a mortgage with a face value of $117,000, in other words with a bonus attached of $27,000, together with an interest rate of 8 per cent. He did not have to take it because he was able to get his money elsewhere, but he was offered mortgage money at a rate of approximately 15 per cent a year. If that had been an isolated case one would not need to mention it, but Mr. Caswell told the banking and commerce committee that the majority of hotel proprietors in this country who want to obtain new capital to expand their businesses must pay a very heavy bonus when they obtain a mortgage, and that the final rate they pay is anywhere from 10 to 15 per cent per year.
7. 1956
Industrial Development Bank Act
I suggest that gives further impetus to the need for a new credit policy in this field in order to give the ordinary businessman something of a break and provide him with longterm credit at an interest rate that will more closely approach the interest rate at which the big chain stores and monopolies in the nation are able to obtain their credit. We in this group are pleased to support the measure. We hope the industrial development bank will be used to a much greater extent in the future.


Mr. Blackmore:: Mr. Chairman, the members of the Social Credit group have studied this legislation both in the committee and outside the committee and we are in favour of it. We feel that it is only a small beginning in the direction of a much greater development which must take place in Canada if industry is to develop as we all desire to see it develop. We are living in an age of great combines and mergers and powerful monopolies that are able to compete more than successfully with their less fortunate smaller neighbours. Unless, therefore, government assistance is made available to the struggling smaller concerns they will simply have to succumb to the greater power of the competition they face.
In the United States this problem was met years ago by the establishment of the reconstruction finance corporation. The time is long overdue for Canada to have an extensive reconstruction finance corporation. When we stop to consider the experience we Albertans have had in trying to develop the oil industry in Alberta and now a gas industry, just to use those two as examples; when we remember that our men who began to develop the oil industry went to every concern in Canada and Great Britain in an endeavour to find capital with which to develop these oil resources and found that it was impossible to obtain capital from either one of these sources and finally had to go to the United States in order to get the necessary capital to drill the wells and develop these resources, these things alone should impress upon us the fact that it is utterly impossible for Canada to develop her industries and resources as she should unless she has the assistance of powerful government aid backed by no less a concern than the Bank of Canada itself.
What has already been said by the hon. member for Assiniboia and the hon. member for Greenwood is sufficient; it is not necessary for me to repeat what they have said. I will simply say that the Social Credit group is heartily in favour of the act and wishes it to be extended with all possible speed and at just as great a scope of growth as is possible under the conditions that confront us.

Industrial Development Bank Act


John Borden Hamilton: Mr. Chairman, I should not like to let this occasion pass without saying a few words in connection with the industrial development bank, and I shall try to avoid any repetition of what I might otherwise have said. I happen to have seen the bank in action at close range, and there is no doubt about the very useful function it performs as part of our general financing set-up. I believe it fills very ably the gap between the legislation which enables our chartered banks to carry on certain phases of business and the system that exists in the United States which enables their local banking houses to take such security as mortgages on real property and to lend money on chattels and articles of that kind.
I think too the bank has filled a very useful function with respect to the financing of air companies. As a matter of fact, I might say that for a period of time it was most difficult for that type of company to obtain the necessary financing to cover the expansion of their services. There was a period in which the ordinary type of financing available through finance houses with respect to the acquisition of planes ceased to exist, and until this type of loan came along it was most difficult for such companies to add to their roster of planes.
I said once before and I should like to repeat that certainly if the bank is going to fulfil its true role it must be expanded. I might be sorry that some of this financing is not being carried out by the chartered institutions, but if this is the vehicle to provide this type of financing then very definitely, as has been suggested, it should be expanded from coast to coast. I am delighted to see that in a small way at least there is a beginning along that line. As a matter of fact, I am more delighted to know that the very loyal employees of the bank, who had a definite ceiling put on their future, now have the opportunity to have their services made much more use of in the expanding affairs of the bank.
If I may say one other thing, and I perhaps will refer to it when we come to one of the specific sections, I think there should be a considerable increase in the discretionary power of the local managers in this type of institution. I do not think it is something that should be carried on by a manager at Vancouver with a low discretionary limit of $5,000 or some type of limit of that kind, anything exceeding that amount having to be forwarded to the head office of the bank for approval. It seems to me that there should be greater manoeuvrability in the various offices of the bank in order to see that the servicing of the customers is done in

a quicker manner so that in the long run they will be much better satisfied with the services.
Generally speaking there is no doubt about the usefulness of the really essential function this bank is performing in our economy. I believe we welcome strongly the indication that this influence is to be spread on a much broader basis.


Mr. Gillis:: Mr. Chairman, I feel that I would be remiss in my duties if I did not say a few words on this item. As most hon. members of the house know, industrial development is badly needed in the maritime provinces, and it has been badly needed for some considerable time. I was in the house when this bank legislation was introduced, and I visualized that the bank was to be an instrument by means of which capital could be secured at lower rates of interest and on longer terms of repayment than could be obtained from the regular chartered banks. The name itself suggests that the intention of the legislation was to assist in industrial development and expansion.
However, it seems to me that the figures that are contained in this report and which were put on the record by the hon. member for Assiniboia confirm the old adage, "To him that hath shall be given", because in the central provinces where capital is available and where industrial expansion has gone on apace since the end of the war, it seems that is where the greatest amount of money has been lent by the industrial development bank for industrial expansion, I would assume in the provinces of Ontario and Quebec.
The reason I am interested at this time is to inform the house that in speaking recently to the Canadian Labour Congress in Toronto and commenting on resolutions that were before that convention setting out the difficulties and disabilities of the maritimes, the Prime Minister issued a challenge and said that the initiative for the solution of these problems rested with the maritimes themselves, and that when they laid the proper ground work and had recommendations to make, the federal government would be glad to help.
I should just like to say that a great deal of ground work has been done in the maritimes over the years. The Nova Scotia government have a department of industry. I notice they are running to the United States looking for money largely to help in developing some industry in that area.


Mr. Studer:: Saskatchewan does, too.


Clarence Gillis: They must go somewhere. Apparently there is not any risk capital in

this country. When dealing with things all the way from a pulp mill to a pipe line you must go outside for the money or come with your hat in hand to the government and say, "You can establish the thing for us, but you do not have any say in the operation of it." However, we have tried in that end of the country. The government has set up a department of industry. In addition to that we have seen the formation of the Atlantic provinces economic council that is doing the economic surveys as to the possibility of the location of industry, as to marketing and what can be done. All that material is being assembled. In many communities there are industrial development boards. They are trying to raise some local money. But any project that is worth while is too big to be financed in the community.
I always understood that the industrial development bank was an instrument that should be available to the provincial governments, and that if they wanted to establish a project funds should be made available to the provincial government through this medium. The department of industry in Nova Scotia at least will make loans-they are not very substantial-to projects that are economically sound in the community; and when companies are formed and the legal formalities have been gone through, they can raise some money, but it is not adequate in most cases. I am wondering why under this legislation this bank could not be used as a public investment body for the purpose of assisting in areas where it is not so easy to raise capital.
During the years 1953, 1954 and 1955 the maritime provinces have been doing a great deal in regard to bringing about their own rehabilitation. But on looking at the report I notice that there is not even an office in the maritimes. The report lists the officers and supervisors. It sets out Toronto, Winnipeg and Vancouver; but for the Atlantic provinces it lists 901 Victoria Square, Montreal, Quebec. That is a long way from the maritimes.
In any case, this legislation is little known. Not much is done to advertise it. During the years it has been operating my conception has been that anyone who can qualify for a loan under the legislation setting up the industrial development bank can get that money at the chartered banks, because your collateral must be fairly substantial and fairly secure. Anyone whom I have seen apply and who did get his loan, could have got it from the chartered banks. I know quite a few people who were turned down and who told me that, as far as they were concerned, if they could have met the requirements of the industrial development bank they could have obtained
7, 1956
Industrial Development Bank Act the money at the regular chartered banks, but they just did not have that kind of credit.
There is another consideration. I do not think this bank is serving the purpose it should serve. The municipalities across this country are floating bond issues for school projects. They put their bonds on the market and in many instances they are sold in the United States, and they are losing 5 per cent to 8 per cent on the dollar.


John Whitney Pickersgill: How could they do that?


Clarence Gillis: By them giving you 90 cents on your dollar for your bonds; that is how they do it.


John Whitney Pickersgill: The dollar is at par.


Clarence Gillis: Not when you are floating bonds. If the Minister of Citizenship and Immigration were going to invest $100,000 in a community, I am sure he would not take bonds for $100,000 with no interest. He would naturally expect to make 4 per cent or 5 per cent or 6 per cent. Even the industrial development bank want 6 per cent on their dollar. Hence if you borrow $100,000 and you pay back that $100,000 plus interest, that is the same thing the small communities that are floating bonds are doing. Why could not the bond issues of municipalities be financed through an instrument like the industrial development bank?
I know that in the end of the country from which I come there were communities in which credit unions, out of the earnings of the workers, had to buy up bond issues to finance school projects. Of course over the long pull they will make money out of that, and that money is staying in the community. It is a thing I advocate; but the finances of credit unions are not adequate to handle such projects.
So far as I am concerned I go along with the hon. member for Assiniboia. It seems to me that most of our legislation in this country today is not national legislation. When you have offices across the country starting in Vancouver and ending in Montreal, you have not a national organization. The same thing could be said of most of the projects in which the federal government is engaged. It is true of the pipe line. Somebody says it is an across-Canada proposal, but it is not. It is coming from Alberta and ending in Montreal, yet everybody in this country will be expected to finance some of it out of taxation. That is true of the industrial development bank. If this bank is to serve the purposes I heard outlined when the legislation was introduced, then there should be offices in at least all the major cities across Canada.

Industrial Development Bank Act


William Moore Benidickson: My hon. friend will be glad to know that an office is soon to be opened in Halifax.


Clarence Gillis: I am glad to hear that. It has taken us a long time to get around to it. If that office had been in Halifax during the last three years when there has been an upsurge in that end of the country, when they have been trying to pull themselves up by their bootstraps, people would have been able to go in and talk over their problems. They might have been able to get some help, or at least ascertain the defects in the legislation and try to get them cured.
I am disappointed in the report. I am sure the Minister of Citizenship and Immigration will be quite pleased to know that for the year 1955 Newfoundland is zero, and so is Prince Edward Island. I qualify that by saying that the premier of Newfoundland is doing an excellent job in financing his own industries and keeping them out of the hands of other people. He is not farming out the resources over which he has control to capital outside the country, and possibly that is the reason the figure is zero. Prince Edward Island is a rural province, and perhaps there would not be too much demand for loans.


William Moore Benidickson: There would have to be an application.


Clarence Gillis: The figures for New Brunswick and Nova Scotia are deplorable. I believe this legislation was passed in 1943, and I am glad to hear that in 1956 we have come to the point of realizing we should have at least one office in the maritimes. That is progress. I hope when this matter is under discussion again in the Department of Finance the parliamentary assistant will try to broaden the scope of the legislation to the extent that provincial governments, like Newfoundland, who set up their own projects will be able to borrow from this bank for industrial purposes. They should be able to go there and talk over their money problems with the expectation of getting something rather than having to run all over the country or to the United States. After the trial period the bank has had, I am disappointed. I do not think it has done very much in so far as my end of the country is concerned.


Mr. Barnett:: I have one or two questions I should like to ask the parliamentary assistant while we are on clause 1. Is it the opinion of the government that the word "goods" in paragraph (d), subparagraph (i) of the definition section would include ships and vessels?


William Moore Benidickson: Yes, Mr. Chairman, under British law "goods" would include ships and vessels.


Thomas Speakman Barnett: The reason for asking this question is that in the former definition section ships and vessels are specifically referred to, whereas in the new definition section there is no reference to them.


William Moore Benidickson: That question was specifically raised with the president, and according to his advice vessels and ships are covered by this definition.


Thomas Speakman Barnett: Perhaps I may pursue that matter further. Would it be the understanding of the government that the warehousing of goods would include the warehousing of ships and vessels? In other words, would an enterprise which was designed to provide facilities for the docking and storing of vessels be classified as an industrial enterprise?


William Moore Benidickson: Well, "goods" continues to have the same definition. The warehousing of goods-goods includes ships and vessels.


Thomas Speakman Barnett: So that a private dock or warehouse could conceivably qualify if it met the other terms and conditions under the act?


Herbert Wilfred Herridge: Will the parliamentary assistant say whether the industrial development bank has been in the habit of lending money to companies operating in Canada but completely owned and controlled in the United States.


William Moore Benidickson: I think that question was asked of the president. As I recall, he said the bank did not particularly look at the nationality of the shareholders of a company borrowing from the bank and conceivably in the many hundreds of loans made it was possible a loan had been made to the subsidiary of a United States company. He felt it was a rather rare situation.


Herbert Wilfred Herridge: In other words, yes; and not too rare, either.


William Moore Benidickson: He said "likely rare".


Mr. Zaplitny:: I should like to ask under clause 1, which defines an industrial enterprise, whether a co-operative association is eligible for consideration?


William Moore Benidickson: I do not think so, Mr. Chairman, any more than it is anticipated that this section would cover refinancing for a commercial bank.


Frederick Samuel Zaplitny: I missed the last part of the parliamentary assistant's answer where he referred to the refinancing of some type of bank. Would he repeat it?


William Moore Benidickson: I may have thought my hon. friend was asking about a co-operative lending institution, and if that is not so then


the mere fact an enterprise was on a cooperative basis would not prevent consideration. I was thinking of a credit union.


Frederick Samuel Zaplitny: Perhaps I should make my question a little more specific. There are a number of co-operatives which are in the business of either manufacturing or assembling, like the co-operative implement industry. Let us say they wanted to build an addition to the plant they now own, would they be considered an industrial enterprise within the meaning of this act?


William Moore Benidickson: I recall specifically that the president illustrated a loan of a similar nature to a co-operative warehouse organization, a cold storage organization.


Frederick Samuel Zaplitny: Then I take it a co-operative association, provided it is engaged in one of the enterprises described in clause 1, would be eligible for a loan in the same manner as any other enterprise?


William Moore Benidickson: I think so.


John Borden Hamilton: I wonder
whether the parliamentary assistant would look at the wording of paragraph (d) (iii). It seems to me that there may be a surplus of language in this section starting at line 15. If we go back to the definition section we find that it says:
"industrial enterprise" means an enterprise in which is carried on a business of (i) . . . transporting or warehousing of goods.
If we carry the same wording through we Set:
-in which is carried on the business of (iii) . . . the transportation of persons.
That is line 16 of subparagraph (iii). Mixed in there are these words:
... or operating a commercial air service.
A previous reference to commercial air service was in section 15 (a). It seems to me there was no necessity of taking the actual words out of that section and adding them to the definition section, because the transportation of goods and the transportation of persons would appear to cover the situation. The only other thing I might be able to guess from this wording is that perhaps it was meant to cover "or operating a commercial service for the transportation of persons". Perhaps the parliamentary assistant might be able to throw some light on the wording of the section.


William Moore Benidickson: Mr. Chairman, my hon. friend will recall that when the act was opened up the last time and the definition of "industrial enterprise" was widened, one of the major classes of industries that a loan was provided for was a commercial air service.
7, 1956
Industrial Development Bank Act Because of that and its relative importance I think air services has been given an additional specific mention here.


John Borden Hamilton: Does it not leave some confusion here, though? Is it necessary for these words to be in? I thought the parliamentary assistant might say well, there was some type of commercial air service which was involved in doing something other than transporting persons and goods. I can think of some type of aerial magnetic survey, but at the same time it is covered by the words "transportation of persons or goods". I would think that the words "or operating a commercial air service" in this case are surplus words which might lead to confusion, and they should be deleted. I give you that suggestion, sir. Whether I should move an amendment to have these three or four words deleted I do not know, but I should like to have your comments on it.


William Moore Benidickson: Mr. Chairman, I think my hon. friend would be about the last person to take any chance by eliminating the words "commercial air service", because I know that in his riding the air industry is of great importance. I am sure these words are put in here by the draftsman of the bank after very careful consideration. As I say, I certainly think he would be the last one to suggest removing them when they certainly might include a class of air business that might not specifically involve the transportation of goods or persons. I think he gave an illustration when he mentioned hiring planes for some scientific purpose.


[Stage Direction]
Clause agreed to.
On clause 2-Bank continued.
John Borden Hamilton: Mr. Chairman, this clause apparently deletes the reference to the assistant deputy governor, who apparently was an additional party when referred to along with the board of directors in various clauses of the act. Has there been someone else appointed who carries out the functions of that particular person, or have his duties been eliminated pretty well completely?


William Moore Benidickson: This amendment to the Industrial Development Bank Act is consequent upon an amendment that was made two years ago to the Bank of Canada Act. This particular title was eliminated in the Bank of Canada. Under the Industrial Development Bank Act that official, when the office existed, did have specifically a place on the board of this bank.


[Stage Direction]
Clause agreed to.
Clauses 3 and 4 agreed to.
[Stage Direction]
Industrial Development Bank Act
On clause 5-Loans, investments and guarantees.
Frederick Samuel Zaplitny: Mr. Chairman, clause 5 describes the conditions under which the board can consider making those loans. The first part of the section says:
Subject to section 14, where In the opinion oi the board or of an officer authorized for that purpose by the board.
(c) the amount invested or to be invested in the industrial enterprise by persons other than the bank and the character of that investment are such as to afford the bank reasonable protection.
I would like the parliamentary assistant to tell us, on the basis of experience so far, what has been considered as a reasonable protection to this bank so far as security is concerned. What is the ratio? If I may use the example that was used half an hour ago, it was defined that the amount of the loan should be in relation to a certain appraisal of the property concerned. This does not specify any particular ratio. What is said to be reasonable protection?


William Moore Benidickson: The president, in giving evidence on this question, indicated that there was no hard and fast rule as to the equity that should be in the business by the borrower. The reason is that the type of investment varies, particularly in a complicated corporate structure. You would have several types of securities, one junior to another, and it requires an analysis of the exact position and equity of the borrower. There is no hard and fast rule. I think the officers of the bank indicated they would normally like about a 50 per cent equity on the part of the borrower.


Frederick Samuel Zaplitny: I have just one more question on that. I notice in the paragraph they refer to the amount of the investment and also to the character of the investment. Can the parliamentary assistant tell us where the distinction lies as between the amount of the investment to be considered and the character of the investment? What is the distinction between those two terms?


William Moore Benidickson: The character is the type of security in which the bank is going to make its investment or take as security. Now, it could be real estate, the fixed asset of the business. Under this amendment we are giving the bank rather wider powers, and now they can not only make a loan, they can purchase debentures of the borrowing company, and that is the character. The security could very well be a bond or a preferred stock or it might be equity capital or assets in real property.
Clause stands.
Progress reported.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, tomorrow we
shall continue this debate and then take the Canadian Citizenship Act; then the resolution in my name with respect to the Tariff Board Act and then the budgetary resolutions with respect to income tax and the Customs Tariff.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.