1956-08-11

[Stage Direction]
Second report of special committee on research.-Mr. Mcllraith.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I crave the indulgence of the house for a minute or two to perform a unique but very pleasant duty on behalf of my good friend Dr. L. E. Borden, who was surgeon and botanist with the first dominion government expedition to the Arctic, 1903-04. I cannot do better to inform the house on this question than to read Dr. Borden's letter accompanying the proclamation signed by Commander Low when he took possession of Ellesmere land and adjacent islands in the name of Canada. It reads:
To the honourable members of the House of Commons, Ottawa, Canada.
From Dr. L. E. Borden,
1315 Monterey Avenue, Victoria, B.C.
Sir:
I have the honour to present to you for your consideration this important document.
I have always felt that the permanent home of this proclamation in my possession should be the dominion archives. As it has now served its purpose as far as I am personally concerned, I have much pleasure in handing it over to its proper resting place.
This copy was made in my presence on board the D.G.S. Neptune, as was the copy that was placed in the cairn on Ellesmere land. My copy has reposed in my diary ever since and very few people have seen it. When I produced it for Mr. H. W. Herridge to see, he was a very much surprised man. As far as I know this is the only copy in existence, and is an irreplaceable proclamation.
I may at some future date give my original diary to the dominion archives as well.
L. E. Borden.
I take much pleasure, Mr. Speaker, on behalf of Dr. Borden in presenting this proclamation to the Minister of Mines and Technical Surveys so it may be placed in the archives of Canada.


Hon. George Prudham (Minister of Mines and Technical Surveys):: Mr. Speaker, the
hon. member for Kootenay West (Mr. Herridge) is to be highly commended for his part
in bringing this important document to the attention of the house. Through you, Mr. Speaker, I should like to thank him for his actions and to ask him to convey to Dr. Borden the thanks of the government and of members of this house for giving this historic proclamation to the people of Canada. The craftsmen of the archives department have prepared this album and have mounted the proclamation together with related correspondence so they may be preserved against the ravages of time. Dr. Borden has requested that this be placed in the dominion archives. I therefore have pleasure in handing this album over to my colleague the Minister of Citizenship and Immigration who is responsible to parliament for the archives.


Hon. J. W. Pickersgill (Minister of Citizenship and Immigration):: Mr. Speaker, on behalf of the public archives of Canada I have much pleasure in accepting this historic document.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mr. James A. McBain (Elgin):: Mr. Speaker, on June 13 question No. 524 in my name was passed as an order for return. I wonder when I may expect an answer to the question.


John Whitney Pickersgill: Mr. Speaker, I shall be glad to look into the matter.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. W. M. Hamilton (Notre Dame de Grace):: Mr. Speaker, does the Minister of Finance hope to obtain an agreement with the United Kingdom and other countries so that the privileges extended to United States companies with regard to withholding tax on dividends will be extended to the United Kingdom and various other countries?


Hon. W. E. Harris (Minister of Finance):: did not hear the opening words, so I do not know what the question was, Mr. Speaker.

Supply-Citizenship and Immigration


William McLean Hamilton: Does the Minister of Finance hope to obtain an agreement-	i


Walter Edward Harris: Mr. Speaker, the Minister of Finance hopes to do those things that would be for the benefit of Canada at all times.



CITIZENSHIP AND IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. W. Earl Rowe (Acting Leader of the Opposition):: I should like to ask the Minister of Citizenship and Immigration if he has any further comment on the question I asked the other day with regard to the commission in Europe seeking immigrants.


John Whitney Pickersgill: I was hoping the hon. gentleman was not going to embarrass me by asking that question because it appears that someone or other, in reporting what happened in the house the other day, got mixed up. I referred to a mission that was sent last winter or last autumn from my department to Europe to visit the refugee camps, and apparently it was reported in the press or over the radio as a mission that was going to be sent. It is all over and, I should not say done with, because we have a very good report from it and expect to get some very good people from these camps.


William Earl Rowe: I understood it to be a commission seeking immigrants to assist the farm labour shortage.


John Whitney Pickersgill: I think whoever was responsible for the report got rather mixed up.

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



DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

[Stage Direction]
59. Citizenship registration branch, $398,265.
John Whitney Pickersgill: I understood, sir, I was to get answers to a couple of questions and that was the only reason this item was stood. I was asked by the hon. member for Prince Albert to give the number of applications for citizenship which had been rejected. I asked him to be a little more specific about that and it was finally understood, I think, that I would give definitely the number that had been rejected by the minister in the year 1955 after being recommended by a judge. I had a count made and the number was 162. I found also that it was possible without very great difficulty to go through the


files and make a count of those applications which were rejected by the courts, that is to say where the applications came in and the judge had not seen fit to recommend them. There were 85 of those, so that the total number of rejections was 247. I gave the figure the other night of the number granted and that was 58,715.


William McLean Hamilton: The
information which the minister has given to the house this morning establishes one thing quite definitely, and that is that he accepts, and has accepted in given instances, the responsibility for examining citizenship applications which have been recommended by a judge and, with the authority given to him by the statute, of disagreeing with the judge, reversing the judge's findings by refusing to grant citizenship. I suggest, Mr. Chairman, that that is, in itself, largely in disagreement with the attitude taken by the minister when this point was first debated in this house, at which time he indicated he felt he was practically bound by the findings-


John Whitney Pickersgill: I do not think we should proceed along this line any further. I indicated very clearly on three separate occasions the other evening that these applications came to the minister with a recommendation from a judge. It was the duty of the minister to exercise his discretion, but in the exercise of his discretion it had never been the practice to look into what was done in the courts and try to review the work in the courts. I have looked back to see what my hon. friend the Minister of Finance said when the amendment was made two or three years ago, and I find that his view then was the same as the position I am taking now. What we do is to see if we have detrimental information, and I said this quite clearly the other night, in the citizenship branch or elsewhere in the department that is not available to the courts. We do not attempt to review what takes place in the courts, or to sit as a superior court over the courts. I think it would be quite improper if that were done.


William McLean Hamilton: Be
that as it may, we have the situation in which the minister says, "I do not attempt to review what has gone through our citizenship courts". And then we find that subsequently he sees fit to reverse 162 of those recommendations. To me, that is a clear-cut indication that in certain cases, for whatever reason, he chooses to reverse the findings of the citizenship court.


John Whitney Pickersgill: It is not a question of reversing at all. I wish the hon. gentleman

would use the proper terms as they are used in the act. There is a recommendation and the recommendation is accepted or it is not. There is no reversing of anything.


William McLean Hamilton: agree with the minister that he refused to go along with the recommendation of the citizenship court. I am prepared to accept that.
Now, Mr. Chairman, we will all remember from the evidence introduced when this item was last debated it was apparent that this citizenship application went through with the minimum of delay


John Whitney Pickersgill: That, sir, is not true, either. This application was considered on April 16 and the certificate was not signed until April 28. I could give many instances where it had been done much more quickly than that, several times at the request of certain hon. gentlemen opposite.


William McLean Hamilton: One
asks oneself-at least I certainly do-why this citizenship application should have been processed with such speed because the minister will, I think, agree with me that while other applications may have been processed speedily, this application was processed much more speedily than the average in the department.


John Whitney Pickersgill: I do not think, sir, the average is much more than 12 days.


William McLean Hamilton: In
that case, Mr. Chairman, it indicates that the average application in the citizenship department is being processed and citizenship papers put out on a Saturday morning. Since an average represents 50 per cent of the work, we have the peculiar situation in which the minister's department is doing most of its work on a Saturday morning, and he himself knows how foolish that is.


John Whitney Pickersgill: I do more work on Saturdays than on most other days every week in the year.


William McLean Hamilton: question why this application was handled so expediently and so successfully in the light of certain questions regarding it. One wonders how this could be done. I think one of the ways perhaps to do it is to have a good attorney, someone representing the applicant who is familiar with the procedures. That caused me to look back and find out who handled this particular application. I thought it might be of some value to people who wanted this sort of treatment in the future. I discovered that the person who appeared for this applicant before the citizenship court
Supply-Citizenship and Immigration in Montreal was none other than Mr. Paul F. Renault, of the firm of McMichael, Common, Howard, Cate, Ogilvy and Bishop, of Montreal. It is interesting, Mr. Chairman, because if this is the same Paul F. Renault who is so engaged and working with that firm, he is a nephew of the Prime Minister, and that establishes-


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: I think, Mr. Chairman, we might pass the item now. The hon. gentleman has at last arrived at the point he started for the other evening, and, having reached his destination, perhaps we can get on with the business of the house.


William McLean Hamilton: draw no inferences whatsoever from that but I do believe it is an interesting fact in connection with this case because it indicates at least one lawyer-


Mr. Mcllrailh:: It indicates the quality of your own mind.


William McLean Hamilton: -is
in a position to obtain this particular type of treatment. Let me make a further point, Mr. Chairman, because it has been somewhat obscure in newspaper reports in the last two or three days.
What is at issue here is not a question of a private quarrel between a mother and her daughter over an estate valued at several million dollars; what is at issue here is the procedure followed by this department in granting the most treasured possession which Canadians can have, their citizenship.
It is important that we take a stand on whether citizenship is going to be granted to those who will value and cherish it and use it here in Canada or whether it is going to be granted to someone who in this case is going to wear it on the shoulder of her dress like a little badge and show that badge practically all the time outside of Canada, refusing to live in Canada and follow the normal procedure of a Canadian citizen in that respect.
I suggest to the committee, Mr. Chairman, that it has been conclusively proven that during the last year when the act called for the applicant to reside continuously in Canada her residence here was of a very short duration. The evidence would indicate that actually it was in the nature of two weeks to a month during that entire year.
The evidence would indicate further that in the preceding years at which time the act also called for the applicant to reside in Canada for four out of a preceding six years, her residence in Canada was of a very temporary nature if indeed it can be said that
7436	HOUSE OF
Supply-Citizenship and Immigration there was any residence here. We also know that this woman's minor children have lived continuously in Europe and that no attempt has been made to establish their residence in Canada. We know, too, that immediately upon obtaining her Canadian citizenship this lady left for Europe and has remained there almost continuously since and that at the present time she is, to quote the words of her lawyer in New York, "on tour in Europe". I suggest to you, Mr. Chairman, she is hardly the type of person who is going to take a great interest in her Canadian citizenship.
Regarding the star chamber proceedings of this court in Montreal, let us remind ourselves that those who opposed her application offered to supply stenographers to take down the evidence and were refused.


John Whitney Pickersgill: Mr. Chairman, I think perhaps the hon. gentleman is as ignorant of the proceedings in these courts and the proceedings that have been carried on in all these cases everywhere as he appears to be of most of the true facts of this particular case in other respects.
I might point out that it is not the custom to carry on these inquiries in public in any case. The judge receives the applicant in his chambers and asks questions in order to determine whether the person is a suitable individual to receive citizenship. Some of these questions are of an extremely personal nature and I know of no case-I have never heard of any case since I became minister- where these inquiries have been held in public. I think it would be a very undesirable and retrograde step if they were to be held in public.
There is, as the hon. member for Cartier pointed out, a provision in the act for any person who wishes to oppose one of these applications to make representations in writing. Certain representations were made in this case and I am informed were considered. It was proceeded with in the same way as in any other case and the use of terms like "star chamber" is quite inappropriate and a misrepresentation of what really happened.


The Chairman:: May I draw the hon. member's attention to the provisions of citation 253 of Beauchesne's third edition which reads in part as follows:
All reference to judges and courts of justice and to personages of high official station, of the nature of personal attack and censure, have always been considered unparliamentary-
I hope the hon. member will remember that citation in his reference to this particular court.


William McLean Hamilton: The
minister went to great length to point out to us recently that this court is not of exactly


the same nature as a court of law. That was given as one of the reasons why they refused to permit the opposant to be present at the time of the hearing.


John Whitney Pickersgill: That is not a correct statement either. The only difference between this court and any other court that acts in matters of citizenship is that the clerk and other officials of the court are federal civil servants instead of being provincial civil servants, but the judge is appointed by the federal government as is the case with county court and superior court judges. I was indicted with great warmth the other day by the hon. member for Kamloops when he said I was contemptuous of the courts in connection with immigration matters, a statement that was completely untrue. He made a great deal of the allegation that I paid no attention to the courts and disregarded the courts. Now the hon. member for Notre Dame de Grace comes here and says that I should set myself up above the courts and review their proceedings and interfere with what happens in the courts. I say that that is a shocking suggestion for any hon. member to make.


William McLean Hamilton: The
minister says it is shocking but he did it 162 times last year.


John Whitney Pickersgill: That is completely and unreservedly false; I did not do that in any single case. When I receive a recommendation, in every case I consider our own records in the department and such other records as are available to us and any other information that is available and relevant, but we never look at the proceedings in the courts. We assume that the judge has done his duty properly and that what he has done is not for us to review.


Mr. Hamilton (Noire Dame de Grace):: can only draw hon. members' attention to the words in Hansard where the minister pointed out that in the past year he had rejected 162 applications which had been recommended to him by a judge of one of these courts, and that shortly afterward he said that he did not act as a court of appeal. He claims such action would be simply a shocking thing. I leave it to the committee to decide what is correct and what is not correct in the minister's statement.
However, I am not attacking the judiciary or the courts; I am pointing out certain facts in order to proceed one step further and bring forward certain other interesting facts which have since come to my attention in connection with this case. I was pointing out at the time of the minister's original interruption that despite the fact the opposant offered

to supply the proper stenographic assistance to transcribe the proceedings, that was refused by the court. Subsequently the hearings were held in chambers with the opposant and attorney for the opposant excluded. I shall not labour the business of the exclusion. The minister told us a few moments ago that to all intents and purposes this was a court. I suggest to you therefore that it is highly improper, in the light of his own statement that this is a court, that the completely traditional procedure of having attorneys for the opposants present at every stage of the proceedings should have been thrown overboard in this particular case. It leads us, however, to certain difficulties in assessing the evidence on which the minister presumably came to a conclusion because we find that the findings of the president of the court of Canadian citizenship, Paul Fontaine, on April 16, 1956 include the following. He refers to a certain time when the petitioner was in Brazil and then he continues:
From there she went to the United States where she stayed until November, 1950, at which time she came to Canada.
That is quite a statement, a very definite statement of residence on the part of this applicant in the United States. On the other hand, we find the same applicant on the 21st day of May, 1956, in a sworn statement which, incidentally, was also made in Rome, Italy, referring to her United States residence and denying it. There was a question of guardianship and her location in connection with that. This is the signed and sworn statement by the same person who was said by the judge of the court to have stayed in the United States:
With reference to such guardianship, it is true that deponent had a mailing address at 55 West 55th street, but neither petitioner nor deponent ever lived there. Annexed to this affidavit is the affidavit of Seymour Groshut, Esq., a member of the New York Bar and the president of New York Associates, Inc., the owner since 1943 of the premises located at 55 west 55th street.
As appears from said affidavit, the apartment in question was occupied by Mr. and Mrs. Ajo, their daughter and a governess. It consisted of four rooms, a kitchen, livingroom and two bedrooms. Neither deponent nor petitioner ever spent a night in that apartment. During this period, deponent's recollection is that she visited New York on not more than two occasions (petitioner not at all), and stayed for not more than two or three days. On no occasion did deponent stop elsewhere than at a hotel, the Langdon as deponent believes. Petitioner well knows that neither she nor deponent was domiciled in New York during the period in question. . . .
We have there, Mr. Chairman, what would seem to me to be evidence given to the judge-
Supply-Citizenship and Immigration


John Whitney Pickersgill: What is the date of that document?


William McLean Hamilton: gave it a moment ago. It is dated May 21, 1956 and it was executed in the province of Rome, city of Rome, embassy of the United States of America. It was sworn to before the vice-consul of the United States of America.


John Whitney Pickersgill: I should like to know how the Minister of Citizenship and Immigration or the judge of the court could have been expected in April to know the contents of a document that did not exist until May and then was prepared in Rome.


William McLean Hamilton: The
point I am making is that the minister rushed this application through with such expediency-


John Whitney Pickersgill: I presume the hon. member means expedition.


William McLean Hamilton: -.
that it was not properly dealt with and all the facts were not brought out. The house will remember that I drew attention to a telegram from the attorney for the opposition dated May 24, 1956 stating that he had certain facts that he thought should be produced to the minister and the minister refused to accept those facts and told the attorney that if he wished to proceed on the basis of them he should go to the courts himself.
Another document in connection with the case which is interesting is one which I hold in my hand, and to refresh the memory of hon. members I should like to refer to the findings of the judge in Montreal regarding residence on this lady's yacht. His findings read in part as follows:
From April 25, 1955, to December 3, 1955, the petitioner lived aboard a yacht owned by the Merida Co., an incorporated company under the laws of the province of Quebec flying British and Canadian merchant marine flags.
The date I would underline in that connection is April 25, 1955 because again I hold in my hand a document, the authenticity of which is sworn to before Mr. Pierre Dupuis in the Canadian embassy at Rome. The document is in Italian and I will therefore not attempt to read it. But it is the commissioning papers of this particular yacht on which the lady claims to have lived from April 25, 1955, and it is interesting that the yacht was commissioned on the 1st of July, 1955, a month and a week after she claimed to have taken up residence on the yacht. Incidentally, the document also indicates that the commission of the yacht expired at the end of August. It is quite possible that the commission may
7438	HOUSE OF
Supply-Citizenship and Immigration have been renewed subsequently to cover her residence on the yacht until December 3, but there seems to be very grave doubt that the yacht was even in the water until the end of June, 1955. There has been some indication that the yacht was in the shipyards during the early part of the period that Madame Feltrinelli claims residence thereon.
I would point out just in passing that the registry of the yacht is actually British and not Canadian, although it is owned in Canada.


Mr. Dupuis:: So much time for one case.


William McLean Hamilton: There is one other point I should like to bring up. Earlier in the debate the Minister of Trade and Commerce rose to his feet in the house, innocence dripping from him like water from a lake Ontario swimmer, and said in effect: "What is this all about? The rest of us should know something about this." Then he asked me a string of questions. That was three or four days ago. I drew to the minister's attention at that time that he had received letters and copies of letters to the Minister of Justice outlining the details of the case, but I was not aware at that time that another letter also was in existence. It is on the letterhead of the Minister of Trade and Commerce, is dated May 7, 1956 and reads:
I wish to acknowledge receipt of your letter of May 4, and copies of your correspondence with the Hon. Stuart Garson, Minister of Justice, and the office of the Minister of Citizenship and Immigration in connection with the application for naturalization of Mrs. Giovanna Feltrinelli. I appreciate having this information in the event that I am consulted in this case.
The letter is signed "C. D. Howe". I draw that to the attention of the house to indicate the cavalier attitude which has been adopted towards the case by various members of the government who wrote acknowledging receipt of the details and then when they came into the house claimed that they knew nothing about it. There are on file a goodly number of other letters acknowledging receipt of this material from such people as the Minister of Justice, the Minister of Transport, the Minister of National Health and Welfare, the Secretary of State. By the way, if I may stop at this point, the Secretary of State writes: Dear Mr. Levitsky:
I acknowledge receipt of your letter of May 4, with its enclosures, concerning the application for naturalization of Mrs. Giovanna Feltrinelli, which I shall discuss with my colleagues.
I am just wondering what the results of that discussion may have been. The Minister of Labour also acknowledged receipt of the material. The Minister of Fisheries also acknowledged receipt of this material.


George James McIlraith: They were very courteous.


William McLean Hamilton: On
behalf of the Prime Minister, it is acknowledged by Mr. J. S. Cross, his secretary; and on behalf of certain other ministers it is acknowledged by people in their office, such as the Minister of Public Works, the Minister of Agriculture, the Minister of National Defence, the Minister of Northern Affairs and National Resources, the Solicitor General and the Minister of Veterans Affairs. However, I would specifically point out to the house that the first batch of letters to which I drew attention were acknowledged and signed by the particular ministers. Hence the cabinet can hardly claim that they knew nothing about this particular case.
I do not propose to pursue this matter any further, although if one wished to do so, as the house can see from the various evidence that has been produced, one could make a case which, going beyond this into other detail which is available, would be even stronger. However, I do not feel that there is any point, once you build an impregnable stone wall, in continuing to pile stones on top. This case is so clear and so definite that I will try to conclude by restating the three principal points.


An hon. Member:: Time!


William McLean Hamilton: The
first point is the conduct of the citizenship court in Montreal in this most unusual case where an application is being opposed-that is unusual procedure and it makes it an unusual application-I refer to their conduct in refusing to allow the opposant's attorneys to hear the evidence being given on behalf of the applicant or to have a transcript made of that evidence so that they might be in a position to examine it in detail and to assist the court in arriving at its findings. The second point is the rather amazing expediency and speed with which this particular case was handled. While I cannot give any reason as to why these things may have happened, I know that if I have anyone who has a particularly difficult case of application for citizenship and they are wondering to whom to go, I will certainly recommend the Prime Minister's nephew.


John Whitney Pickersgill: I suggest that you recommend the hon. member for York West who wrote to me about a somewhat similar case and who received a very courteous and prompt reply.


William McLean Hamilton: Having established those two facts, Mr. Chairman, we come to the question of this woman's evident lack of desire and lack of intention to live in Canada. That more than anything else is the thing which bothers me in this

case, namely that this lady had not lived in Canada prior to getting her Canadian citizenship, that she is not living here now and that there seems to be no indication whatsoever that she plans to live in Canada. I suggest that it is an improper thing for citizenship to be granted to someone who does not expect to assume as a Canadian citizen the responsibilities of residence here in this country.
Then finally we come to the question of this evidence which I have introduced to the house this morning in connection with a couple of things and certain other evidence which the minister brushed off and personally refused to see, at the same time directing the person who had this evidence to make it his own private case in the courts of Quebec. The minister, having given the woman Canadian citizenship, apparently refused to have anything further to do with the matter and washed his hands of it, despite the well-known fact that it is possible for him to revoke his action. That is the case, Mr. Chairman. It is clear-cut. Would the minister care to answer one question in order to help me?


An hon. Member:: Time!


William McLean Hamilton: Who
signed the letter which is in the Feltrinelli file which came from Montreal to Ottawa, which urged particularly fast action on this case before the opposant took certain court proceedings which might prevent the issuance of the naturalization certificate and which I believe was directed to the minister himself?


John Whitney Pickersgill: Yes, Mr. Chairman; I should be delighted to answer that question. That assertion was made to me and I had the files searched. Not content with that, I searched the files myself and I was unable to find any such letter.


[Stage Direction]
Item agreed to.
National gallery of Canada-
80. Administration, operation and maintenance, including industrial design division, $328,910.
Mr. Nesbitt:: This item No. 80 is the other item that was permitted to stand because I had asked the minister two or three questions to which he undertook to get the answers.


John Whitney Pickersgill: I think I can answer the hon. gentleman now. There was a question as to how many Chardin paintings there were which were not identical with but similar to the one that was acquired in the group of four paintings quite recently. I am told that so far as is known there were four. The one belonging to the national gallery was formerly in the collection of the Prince of 67509-472
Supply-Citizenship and Immigration Liechtenstein about which there is a quite interesting history. It was bought by the prince when he was Austrian ambassador in France between 1737 and 1741. The picture itself is dated 1739. It is rather thought to be the first of them, although there is no absolute proof of that. But there is one in the Louvre, as the hon. gentleman has said; and the fact that there is one in the Louvre is of some comfort to the board of trustees of the national gallery. There is one in the possession of Baron Henri de Rothschild in Paris and one in the Nouveau Palais in Potsdam, all reputable collectors.
Then the hon. gentleman asked me about the storage building on Echo drive. I think I cannot add to the answer I gave. I was fairly sure that my answer was right.
Then the hon. gentleman also asked about the war record pictures. I am told that the national gallery does not own them but that it has custody of them.
Then the final question was about these paintings belonging to Professor Bangarth. I am told that on June 22, 1954, Professor Bangarth showed the then director, Dr. McCurry, a painting attributed to Rembrandt, "Portrait of Rembrandt's Mother" and "Interior of an Inn" by David Teniers. I hope that is the right pronunciation. My Dutch is not too good, althought I had Dutch ancestors. The file records the director's remarks: "These are not anything we want to enter into discussion about".
On August 11, 1955 the director was approached-that is the present director-by a Mr. Kingsley Jarvis of Norris, Allen Limited, of Toronto, who offered to show the national gallery four pictures: a Rembrandt, a Tiepolo, a Teniers and a Modigliani. The director replied on August 16 that the gallery would be interested in these pictures if the asking price was in line with present market values, and also if the paintings were of the quality of the notes which Mr. Kingsley Jarvis submitted would suggest. I am putting in the given names of these Jarvises so as to avoid as much confusion as I can.
Then, Mr. Kingsley Jarvis replied on August 17 saying the four paintings were then being offered to some other collector but enclosing photographs of two of them. The research department of the gallery recognized those pictures as belonging to Professor Bangarth, and pictures that had already been drawn to their attention. They came to the conclusion from an examination of the photographs and the other evidence that these were not pictures in which the gallery would be interested. I am told that the normal practice is for the gallery, when pictures are offered, to ask to have photographs submitted, to subject them to very
7440	HOUSE OF
Supply-Citizenship and Immigration careful scrutiny by experts in the gallery, and if that scrutiny reveals them to be of real interest, then they ask to have the picture itself sent to the gallery at the expense of the gallery for examination. But if they feel there is no real interest and the board would not be likely to buy them, they do not believe it is proper to use the funds of the gallery for this purpose.
Now, there may be one or two other pictures in this collection of Professor Bangarth's of which the gallery has not had photographs, and if there are they would be very glad to examine the photographs and follow the usual procedure. I have no doubt that if Professor Bangarth wanted to bring the pictures to Ottawa himself at his own expense, they would be glad to examine them. I think the hon. gentleman asked me what officials had examined them, and since this is a matter of expertise, I have no hesitation in giving the names of the officials. I would not pretend to take anything but a ministerial responsibility because I am not an expert on pictures. They were Dr. Hubbard and Dr. Dale, both of whom I think are known to the hon. member, and both of whom are doctors of the fine arts.


Wallace Bickford (Wally) Nesbitt: I am very pleased to hear the answer the minister has given. It answers a number of questions I had in mind regarding these Tillsonburg pictures. I am informed by a letter here that the gallery had seen the actual picture which was purported to be a Rembrandt, as the minister said, and also one by Teniers. Professor Bangarth has a number of other pictures, including a Titian, a Degoya and a number of others. I am assured again, by a letter received the day before yesterday, that these pictures are genuine and he can prove that they are. As the minister knows, I like him am not an expert and I would not know whether or not they were originals.
In view of the fact that these claims are made and apparently in the past they have been represented to the minister by responsible people, I do feel that a glance at a photograph of a picture would hardly be sufficient. I think most hon. members would realize that there is enough controversy very often over pictures, as to whether they are genuine, when people examine the actual pictures carefully, the kind of paint used and that sort of thing. A photograph would hardly be sufficient. The minister has said, as I understand it, that if Professor Bangarth wishes to bring these pictures to the gallery they will be examined.


John Whitney Pickersgill: I have no doubt whatever that would be done. I think the hon. gentleman would agree that we could hardly use


the taxpayers' money to have them brought here unless the gallery was practically certain it was genuinely interested and that the seller would, under the circumstances, have to bear the cost of making the pictures available for inspection. They would certainly be inspected. Of that, I have not the slightest doubt whatever, and inspected by the best expert they have.


Wallace Bickford (Wally) Nesbitt: I have just one further remark. I am inclined to agree with the minister but I would think possibly, in view of the fact that Professor Bangarth claims these pictures are genuine and if they are they are of obvious value to the gallery, and since it is a very costly and risky thing to transport pictures of this type around the country, perhaps in the near future Mr. Alan Jarvis or some other member of the gallery would be in Toronto and might go over to Tillsonburg to see these pictures. It is not a great distance and perhaps it would be possible for the minister to agree to that.


John Whitney Pickersgill: I do not think I should like to commit other people to go to Tillsonburg. It would give me the greatest pleasure to go up to Tillsonburg at any time because, as the hon. gentleman knows, I have special reasons for liking to go to that neighbourhood whenever I can find an excuse for it. I will draw it to the attention of the director, and I am sure he will do whatever is reasonable.


[Stage Direction]
Item agreed to.

[Stage Direction]
179.	Departmental administration, $702,905.
Mr. Gregg:: Mr. Chairman, these estimates were before the estimates committee on April 18 where I made a statement regarding the Department of Labour estimates proper. Then, on August 2 a statement was made by the chief commissioner with regard to the unemployment insurance commission. In addition to that, discussions were held in the estimates committee over quite a long period of time. On June 14 I made quite a long statement and for a full day these estimates were discussed in the house.


[Stage Direction]
Item agreed to.
180.	To provide for expenses of the economics and research branch, $547,762.
Wallace Bickford (Wally) Nesbitt: In connection with this particular item, this morning I could not help but hear over the C.B.C. news that Dr. Cyril James of McGill University made an announcement. I am sorry that I did not have facilities at the moment to take down exactly what the announcement said, but as I recall, it was to the effect that Dr. Cyril James announced that at a meeting recently held the

various heads of universities had discussed this question of training engineers and technicians. As a result of this conference the heads of the various universities estimated that the number of engineers and scientists being turned out by all the universities and technical schools in the United States and in the free world put together were just about equal to one-half of the scientists and engineers being trained in the Union of Soviet Socialist Republics.
As I recall the bulletin, Dr. James apparently said that a further meeting would be held later in the year to discuss this question of training engineers and scientists.


Mr. Dickey:: Order.


Wallace Bickford (Wally) Nesbitt: There is one thing that is quite clear to me, Mr. Chairman. We have heard this matter discussed repeatedly in this house on several occasions and under other headings.


John Horace Dickey: Order.


Wallace Bickford (Wally) Nesbitt: If the senior member for Halifax would keep still-


John Horace Dickey: I will rise on a point of order, and I should like the hon. member to indicate how what he is saying is in any way related to the economics and research branch of the Department of Labour.


Mrs. Fairclough:: I should like very much to answer. It is the item under which this whole question was discussed in the committee and in the house, and the hon. member is certainly quite in order.


William Alfred Robinson: If the hon. member for Halifax would care to wait a minute I, as chairman, would like to have some assistance from the Minister of Labour because I am not informed about this item.


Milton Fowler Gregg: The topic which my hon. friend is approaching now comes under several items in my estimates, some under labour and some under unemployment insurance. I agree with the hon. member for Hamilton West that under item 180, to provide for expenses of the economics and research branch, part of the duties of that branch is to carry out a study of manpower, womanpower and personnel for employment in Canada; whereas under the Unemployment Insurance Act and the national employment service comes more directly the role of assisting those people in the finding of employment.
While I am on my feet, perhaps my hon. friend would not mind if I anticipated one or two points he made. He has, I am sure, read the very long statement and the schedules and charts which I put on the record on June 14, which bear directly on his topic.
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Added to that, this year, 1956, is hearing not only many speeches on the part of the principal of McGill University, but by a great many other people. In addition to that, some intensive study is going on on this very topic. This week the second meeting of university representatives and others conferred with us in the Department of Labour and held meetings upon it. Another one is taking place down in my own province of New Brunswick at St. Andrews-by-the-sea early in September on this topic and I assure him, Mr. Chairman, that I do not believe the matter is being overlooked in so far as Canada is concerned.


Wallace Bickford (Wally) Nesbitt: I am delighted to hear the remarks of the Minister of Labour to the effect that this matter is being carefully considered. As I have already said on previous occasions, this matter has been brought up. It is giving great concern not only to members of this house but to responsible people all over the country.
The other matter I wish to raise at this point is a matter which no doubt has been considered, but I think it should be emphasized again. I believe, in the remarks attributed to Dr. James this morning over the air, the difficulty in Canada was with respect to training technical personnel, engineers and scientists. The difficulty is the fact that there are simply no facilities, or inadequate facilities, at the present time to train the people who might be required. Because of the great difficulty that the municipalities and provincial governments have in financing this matter I know that many universities rely on private donations, which is a very fine thing; but in this country I cannot think of any university that can rely entirely on private donations. They cannot possibly provide the facilities without very substantial help from the provincial governments.
We are faced at the present time-and I think the problem is recognized-with a shortage of technical people and scientists. If this matter is not corrected very soon it may be a matter of life and death to all of us in the near future. The municipal and provincial governments cannot handle it; they have not the finances to do it. The minister has indicated that the Department of Labour is apparently taking an interest in this matter, and is looking into it to see what can be done, or should be done. Undoubtedly, Mr. Chairman, it is a question that is going to land eventually squarely on the shoulders of the federal government. Unless the provinces and the municipalities have more money to construct training facilities for these people they are not going to be able to do it and

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the federal government is going to have to do it either directly or indirectly. If something is not done about it soon all of us here are going to suffer very severely, and our successors will be more likely to suffer in the future.


Ellen Louks Fairclough: Mr. Chairman, since the day on which the minister made his statement to the house there has been a veritable rash of announcements with reference to conferences and studies which are being made. The minister himself just referred to one that is taking place in St. Andrews from September 9 to September 11, sponsored by the dominion council of professional engineers. The conference that the hon. member for Oxford has just spoken about, of course, was announced on the radio this morning. In addition, statements have been made by responsible people on this subject.
In the committee on estimates I think the thing that bothered everyone was the inability to procure information, which we thought that branch of the department would have at its fingertips. When the minister spoke on the introduction of his estimates he produced a very important statement on this matter. At that time it was quite apparent that the information that had not been available in the study of the estimates had been produced in the interim, probably on instructions from the minister's office. If all of these conferences that have taken place and are taking place, and those persons who have seen fit to make statements on this very important matter, could be brought together and their resources and information pooled, probably we would then have the information we seek.
I ask the minister whether the green light has been given to this branch of his department to go ahead, because I am convinced the reason we did not have the information in the first place was that they did not have the authority to proceed with the compilation of the information. Certainly, it did not take very long to get once the matter had been threshed out in the committee. I suggest that the minister should give the green light to the economics and research division of his department to go ahead and procure this information, to pool the resources of those various bodies to see whether we cannot come up with the answer to an extremely important question. This should be done not only at the engineering and scientific level, but also at the technical and vocational level.


Milton Fowler Gregg: Mr. Chairman, I think my hon. friend's remarks deserve a comment because of the fact that I admitted at once at the first meeting of the estimates committee that

we were armed completely with those things affecting technical training which come within our jurisdiction in relation to the provinces.
As my hon. friend knows, this field divides itself very clearly into two parts. There are the professional, technical personnel and there are the non-professional. We have had the responsibility defined by this parliament to assist in the training of the non-professional technical personnel through the Vocational Training Co-ordination Act, which we have attempted to develop very fully and very successfully, I think.
In the other field we have approached it, I am frank to say, in part. Under the unemployment insurance commission we have the executive and professional branch, which undertakes not only to compile figures, but to give very active service to executive professional people in finding suitable employment, and to corporations and governments in finding executive and professional people for those services.
The hon. member was kind enough to admit that after a lapse of a few weeks we did procure a fairly creditable survey of the whole field, as is indicated in Hansard of June 14. Since that time we have followed that up. My colleague, the Minister of Trade and Commerce, has under his jurisdiction a great amount of material in the dominion bureau of statistics. We do not feel that it requires parliamentary sanction. Perhaps it does not require that the Department of Labour be especially earmarked for that purpose, but since it is related to manpower, and to the suitable employment of our manpower in Canada, we have this year strengthened our resources for dealing with it.
One other point was made that I should like to mention. It was made in the committee on estimates. The fear was expressed that we were losing a great many of our engineers, and of our professional and scientific people during those years. We are losing some, but we are not losing anything like the number that is sometimes said.


Ellen Louks Fairclough: How many?


Milton Fowler Gregg: I have figures for the last three years. This comes from the Department of Citizenship and Immigration and covers the influx of engineers from the United States into Canada and the average for those three years coming in from the United States is 140 per year. We have figures concerning those who are going out to the United States and the average is 249 per year so that the net loss is the difference between those two figures.


Ellen Louks Fairclough: About 100 a year.



IX, 1956

Mr. Howe (Port Arthur):: Is the minister able to tell us what the influx of engineers has been from England and Europe?


Milton Fowler Gregg: We have not yet been able to get anything like an accurate statement on that but I am glad my colleague has mentioned it because the net is certainly in our favour rather than against us.


Clarence Decatur Howe: I understand that the balance of exports and imports of engineers was about 1,000 in favour of Canada in the year 1955.


Ellen Louks Fairclough: Can the minister say whether that is a continuing figure? This is information we found it difficult to procure and no one seems to have this information. I am sure the minister has a personal interest in the matter. Can he tell us if that is a continuing figure or whether it was a sudden spurt in the one year?


Clarence Decatur Howe: I could not vouch for the figures but it is my understanding that in the post second world war years we have been a net gainer of engineers through immigration.


Milton Fowler Gregg: On page 5067 of Hansard of June 15 there is some information along that line.


Mr. Gillis:: Mr. Chairman, I agree with the minister that these estimates had a pretty good working over in committee and that several of us did make a general statement previously on these estimates before the minister went overseas, so we in this group have no intention of debating all the details or repeating what has been said.
With respect to the question now before the committee, however, I would just like to say that after discussing it in many places and listening to all the information that was available on the subject I believe the question that has been posed is misleading in that we have been pinpointing a shortage of engineers when actually the question the universities and the country must face is the lack of facilities at universities and the need for capital expansion. There is a shortage of all professional personnel; this is true of the medical profession and the dental profession, and there is a shortage of trained personnel for hospitals in general.


Mr. Martin:: That is not so much the case in medicine but there is a real shortage of dentists.


Clarence Gillis: What I am endeavouring to emphasize is the inability of our present university set-up to accommodate students for training in all the professions. If you make a canvass of the universities as to the number of applications that have come
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in this year from students seeking admission into engineering, medicine, dentistry and the other professions you will find that a great many have been denied admission due to lack of facilities.
I think the crux of the problem is not the shortage of personnel in any one particular group but rather it is the shortage of the capital necessary for universities to expand their facilities; that is the question. It is all right for Professor Cyril James and Mr. Duncan and others to take the Soviet union as a yardstick and to say they are doing so much better than we are in Canada or the United States but this again refers back to the question of the money that is available for the purpose of promoting education in the country. What they should remember is that the Soviet union has all the income that is derived from the whole economy to use as they see fit and to pin point any particular project they feel is in the best interests of the Soviet union. In this country our industries retain their profits but in the Soviet union these profits are used by the government without any restriction and they expend them wherever they feel an emphasis is desirable.
I was glad to note that in the last week at least one industry in Canada indicated that it has become conscious of the real problem in education. International Nickel, for example, a few days ago advertised through the press that they were contributing some $2J million. They use that money, of course, to promote the universities to the best advantage. If we are going to find the money that will answer the problem we are facing in so far as the universities are concerned I believe that more of the industries in this country that see the problem as it actually exists- that is, we are not training sufficient professional personnel because the universities in Canada have not adequate facilities to turn out such qualified graduates-will be led to take such steps. The universities have to find the money to provide facilities to accommodate the student population which is desirous of taking training in the professions. I think we are missing the boat and confusing the issue by merely stating there is a shortage in any one particular professional group.
You can take a look at the manpower situation generally and you will find right across the country that in the national employment offices which come under the jurisdiction of the minister there is a long list of requests for mechanics, bricklayers, carpenters and other skilled tradesmen. We can turn out as many professional people as we like including engineers, but unless there is someone to do the actual job of work that is necessary all our professional training goes by the board

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because the real producers of wealth and the builders of the nation along with the architects and draftsmen are the mechanics, bricklayers, carpenters and skilled tradesmen who take the diagram from the drawing board and translate it into something tangible.
The problem of education is not an isolated question relating to any one particular professional group. I believe we have to find the money to expand our university facilities. I think the minister and the provincial government have to step up their trade training program in the different provinces across the country in order to get the skilled personnel who are constantly being advertised for in the national employment offices.
I believe what the government is going to have to do is to sit down with all those who are interested and concerned and pin point the question as it actually is which involves getting enough capital to enable our universities to expand their facilities in order to take care of people who require training and in addition to expand trade training facilities across the country to fill the need for the skilled tradesmen who are required at the present time.


Milton Fowler Gregg: I am glad, Mr. Chairman, the hon. member for Cape Breton South referred to the steps taken by one of our great corporations in this field. I would like to remind the hon. member that the federal government is now doing quite a lot in assisting universities.


Clarence Gillis: I know that.


Milton Fowler Gregg: The federal grant is assisting in a very important fashion. The other day a friend of mine who is the head of one of the great universities of this country sent me his catalogue and attached to that was a thick book listing the scholarships that were available for that university. I took my pencil and ticked off those scholarships, bursaries and other forms of assistance that came from the federal government and they totalled $208,000 for that one year.
It is true, as hon. members who have spoken have indicated, that this professional field is one that needs and is, I think, receiving a great deal of co-ordination and study. The hon. member for Hamilton West mentioned other things that were happening. My deputy minister has reminded me that since we have discussed this there have been discussions going on under the auspices of the manpower committee of the Canadian Manufacturers Association.
We are planning another meeting with the representatives of the engineering, scientific and professional organizations and employers' organizations this fall under the Minister of Labour.
I think we should try to have a very clear understanding of what is happening over the top of the north pole and our task is to estimate how many professional engineers we need here in Canada for our own specific work and then do everything we can toward that end. There have been estimates made as to the requirements of professional manpower and it is the consensus of people who know most about it that our requirements for engineers are now about 3,000 per year. The graduates this year, that is last spring, numbered 1,700, but enrolments have been increasing over the past few years, so much so that the class of 1959 will probably graduate about 2,850. That will be getting close to closing the gap. One might hope that with further activities in the way of immigration of professional people and from other sources we may be able to bridge it reasonably quickly.


Ellen Louks Fairclough: Mr. Chairman, the minister made a sound statement when he said that first of all we must know what the problem is. This is a many-faceted problem and the picture is constantly changing. Before you can solve any problem you must know precisely what it is you are tackling. That is why under this particular item dealing with economic research we have to consider this question. As the minister has said, there is also the executive and professional division of the unemployment insurance commission which is studying the problem.
Just to show how quickly the picture can change, in the current report of the director of the executive and professional division of the unemployment insurance commission it is said that three years ago it was thought that Canadian employers would be looking for at least 2,000 graduates. It will be seen that in three years' time that demand will have increased 50 per cent, and by 1959, when the minister says that we will be graduating possibly 2,900, provided there are no dropouts, and there always are, we will still be falling far short of the mark.
I do not want to labour this point, but all those who have to do with this have shown concern. Obviously the first thing to do is to find out what the problem is and to get the best advice we can on how to meet it. I am not overlooking the need for technicians as well, which is most important. People like the Canadian Manufacturers Association and the professional and engineering societies can tell us what the relative need for technicians will be to assist those working in the professional field. It is my opinion that the first thing we should do is to make some projection into the future to find out what we will have to do.


Mr. Nicholson:: Mr. Chairman, 1 am glad the minister is specially interested in this matter because as a former university president I am sure he is quite aware of the problem. When the estimates of the Department of National Defence were before the committee I asked some questions which the minister told me would be more appropriately answered by the Minister of Labour. I should like to refer to two pamphlets, which I am sure all members of parliament have received, by the general manager of the Chemical Institute of Canada. One is entitled "Science and Mathematics Teaching in our Secondary Schools" and the other "Education of Professional Manpower in the U.S.S.R." In discussing the Canadian problem Dr. Garnet T. Page points out:
Canada faces an unprecedented demand for engineers and scientists, and the demand is likely to continue. This need has created a whole series of problems in education, ranging from the primary and secondary school level, through university undergraduate training to the post-graduate level. All of these problems are of concern to our professional technical societies, and the Chemical Institute of Canada has been studying some of them.
One of these problems-that of what immediate action should be taken to up-grade the level of the teaching of mathematics and science in our secondary schools-is surveyed generally in this article, and a series of suggested measures to ease this problem are put forward, with the objective of having competent and inspiring teachers of mathematics and science in our secondary schools.
Dr. Page then lists a number of constructive suggestions upon which I hope the minister will have some opportunity to comment. In dealing with the education of professional manpower in the U.S.S.R. he gives comparative statistics as between Canada and a number of other countries and points out that the increase in the number of students and teachers in the universities of the U.S.S.R. is a matter of great concern. Mr. J. S. Duncan, president of the Massey-Harris-Ferguson company, has indicated the tremendous interest there is in education in the U.S.S.R. Hon. members who heard him will recall that he visited one plant where 40,000 people were employed and he found that one-quarter of that force or 10,000 persons came back three nights a week from 6.30 until 9.30, some to take up elementary work, some secondary work and some university work. Here we have 10,000 out of 40,000 coming back after a hard day's work, and Mr. Duncan emphasized that it was hard work, because they felt the urge to improve their qualifications.
When the national defence estimates were before us I asked for a report on the conference which had been held some time earlier in the session when various departments of government had looked at this
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problem. We were able to draw from the Minister of National Defence the information that cadets are trained at a cost of $32,000 each. It seems to me that that presents a problem to Canadians. If we are able to find $32,000 to provide training for a cadet to qualify himself to enter the army, air force or navy, then the Minister of Labour must be prepared to give consideration to the problems which exist in the field of education in order to make it possible for Canada to meet the continuing challenge which is presented to us, particularly by the need of an ample supply of engineers and teachers of mathematics and sciences in our schools, so that we can train a sufficient number of these people.
Can the minister give some report on the question which I posed when the defence estimates were up and when his colleague intimated that he might have something to say later on?


Milton Fowler Gregg: The documents which my hon. friend has in his hands were on the agenda of the discussions which took place this summer and which will continue. My hon. friend referred to the great growth of scientific training in Russia, and spoke of those there who apparently had felt the urge to improve their qualifications. I am inclined to be a little suspicious of that; I am inclined to think that somebody outside felt the urge that they should improve their qualifications and probably used stronger incentives than we would want to use in Canada or that are available in the federal or provincial fields. I have come to the conclusion this year from observing the wholesome interest in Canada not only on the part of the universities but outside that what is needed here is the creating of an atmosphere in which private industry and the universities together with governments, but governments particularly, will take a leading part in carrying out studies and devising plans that should be put into effect to obtain the results that we all want to see as far as Canada is concerned. I can assure my hon. friend that within the limits of my department nothing will be left undone to carry that out.


Alexander Malcolm Nicholson: I do not wish to extend the argument. Dr. Page certainly does not give the impression that people are being forced to take education. If facilities are available so that those who want to improve their educational standards can take advantage of them I think that there are a great many Canadians who would be prepared to continue their education, even after they leave high school. Mr. Duncan gave the impression that the people who have a better education in Russia are the people who have better

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clothing, better living facilities and a chance to enjoy higher standards of living. He emphasized that their standard of living is low compared with ours, but there is a feeling that if a citizen can get a better education he can expect to have a higher standard of living.
There are many Canadians who would like to have a higher standard of living and who would be prepared to improve their qualifications if they could feel that at the end of one year's study, two years' study or three years' study they would be able to have a better house, a better car, a higher standard of living. I think the minister must get his other colleagues in the government persuaded that Canada can do something better than we are doing in this general field.


Mr. Blackmore:: On this very matter I wonder whether the minister would tell us if he knows whether there is any cost attached to the post-graduate work that these young people do in Russia. Are the night classes free to them? Does the minister happen to have information on that point?


Milton Fowler Gregg: No, I have not. My inference is that it is a part, as so many things are, of the great state plan to forward the interests of the country under the direction of the state.


John Horne Blackmore: The contrast between the situation of these Russian boys and girls and the situation confronting our boys and girls is a matter for very serious thought. If I want to send my boy to university just think of the amount of money I have to find to provide him with board and room and the other things he has to have and the amount of money I have to pay to get him into the university, the amount to keep him there, all the fees and so on. Look at the hurdles our boys and girls have to leap in order to get even an elementary education. I would imagine a good deal of thought should be given to that aspect of the question in our general search for a solution.


[Stage Direction]
Item agreed to.
184. Administration of the Canada Fair Employment Practices Act, $10,500.
Ellen Louks Fairclough: While this is not strictly pertinent to item 184, I should like to ask the minister this question. Now that the equal pay legislation has passed the house and will become effective shortly, I presume, what division of the department will administer it? Will it be put under the fair employment practices division, under the women's division or where will it be administered?


Milton Fowler Gregg: It will come in a general way under the industrial relations branch but the women's bureau will have certain duties with respect to it under that branch.


Ellen Louks Fairclough: That will be under vote 182.


Milton Fowler Gregg: Under both.


[Stage Direction]
Item agreed to.
185. International labour conferences, $67,720.
Herbert Wilfred Herridge: 
Milton Fowler Gregg: I wonder whether my hon. friend will allow me to reply to that question first?


Herbert Wilfred Herridge: Certainly.


Milton Fowler Gregg: It is quite a hard one and I do not want to be confronted with another one before answering it.
I know that my hon. friend is devoted to democratic practices not only in his political life but in his attitude toward labour particularly. It is not what the minister thinks in these matters that governs; it is what the organizations think; I refer to the organizations which provide their representatives for these special purposes. When we go to them and ask them if they will please nominate what they consider is their most representative delegate for this particular purpose, I do not think it is for me, as Minister of Labour, to question Mr. "X" when they give that name as a nominee or for me to question the Seafarers International Union when I make the same request of them. That is exactly what happened in these cases. The Canadian Labour Congress was asked and the Canadian Labour Congress in turn asked the Seafarers International Union. I have no doubt whatever that the Canadian Manufacturers Association, on the one hand, and the Canadian Labour Congress and their affiliated organization, namely the Seafarers International Union, on the other, felt that these two gentlemen filled the purpose that was needed at this special conference.


Ellen Louks Fairclough: Might I say just a word on that point, Mr. Chairman. When the minister's department solicit nominations, as I presume they do, from these bodies, how simple it would be for the department to ask for Canadian citizens. We assume they will be Canadian citizens. We just naturally assume that. I do not think that the Canadian Manufacturers Association on the one hand or the Canadian Labour Congress on the other

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ever thought about the fact that they were nominating persons who were not Canadian citizens. As the hon. member for Kootenay West has said, there is a difference in the two nominees. But nevertheless, even if they nominate citizens in ignorance of the rules of the ILO and if they nominate individuals who are not citizens of Canada, it would seem to me that it is the duty of the minister's department-and this particular division has a director paid by his department-to say to these organizations: "This individual, who may be a highly respected person and a well-qualified person in so far as he personally is concerned, is not an acceptable nominee to this department by reason of the fact that he is not a Canadian citizen".


Milton Fowler Gregg: While I have not gone as far as my hon. friend has gone, I should like to point out that during the last several years, in writing for nominations from employer and worker organizations we have pointed out and have stressed the desirability of the person nominated to us being a Canadian citizen, and we will continue to do so.


Herbert Wilfred Herridge: I was extremely glad to hear the minister say that, Mr. Chairman. I think it is most improper that this country should be represented abroad-either employers or employees-by citizens of other countries. I should like to ask the minister this question. Does he bring to the attention of these organizations this rule in the ILO constitution which says that they must be most representative? I think it takes a great stretch of the imagination to say that the citizens of another country are most representative of Canadians when they go to an international labour congress.


Milton Fowler Gregg: That rule is well known to those who nominate their representatives.


Herbert Wilfred Herridge: Can the minister explain why the Department of Labour paid the expenses directly of the delegate of the Canadian Manufacturers Association?


Milton Fowler Gregg: Yes. Without going into the details of the matter, may I say this. There are some of the activities of the ILO in connection with which the ILO budget takes care of the expenses. Mind you, we contribute to the ILO budget to quite an extent. We assist to that degree. There are also other meetings in connection with which the Department of Labour is called upon to pay the expenses of the delegates, I refer not only to departmental delegates or government delegates but other delegates as well. It just happens that way. There is nothing invidious about it.


Herbert Wilfred Herridge: Just in conclusion I want to say this. I trust that in future the employers organizations in this country and the trade unions will have sufficient pride in being Canadians to nominate Canadians to represent us at the ILO.


Milton Fowler Gregg: Thank you very much.


John Horne Blackmore: The matter on which I should like to ask the minister a question does not come under this item. I wonder whether he can tell me under what item I might ask it. We are given to understand that there is a heavy advance in the price of steel. I want to ask the minister whether there is any means whereby he consults -with people like the steel companies in respect of any proposed advance in price in order to make sure that that advance in price is completely justified. Under what item could I ask concerning that matter?


Milton Fowler Gregg: Mr. Chairman, I am afraid that matter does not come under any item that I can think of in my estimates.


John Horne Blackmore: Could the minister suggest under whose department it would come?


Milton Fowler Gregg: I would hate to suggest it, Mr. Chairman. Perhaps, as we go along, my hon. friend would give it consideration and we would see where it might fit in. But I am quite sure that I cannot think of any item in my estimates where it would appropriately fit.


[Stage Direction]
Item agreed to.
187. To provide for expenses of the women's bureau, $26,958.
Milton Fowler Gregg: Mr. Chairman, I am going to pause at this item because the hon. member for Hamilton West and the hon. member for Timiskaming in the corridors and the hon. member for Hamilton West in the house have put forward the point of view that there should not be any delay in the promulgation of the bill which is now awaiting royal assent. I think this would be the most appropriate place to make a statement on the matter. I can state that as soon as royal assent is given-which I hope will be before too many days-


Clarence Gillis: I certainly do.


Milton Fowler Gregg: -my officials will forward to our fair wage officers and to the larger employers of women coming under federal jurisdiction a copy of the act so that they may have it and be able to study it. I shall also recommend to the governor in council that the act be promulgated on October 1, 1956.


[Stage Direction]
Item agreed to.
[Stage Direction]
189. To provide for expenditures incurred in connection with manpower utilization, labour-management relations and related programs as may be authorized by the Minister of Labour, $30,000.
Mr. Hansell:: I had prepared a couple of 30 minute speeches on this item, but I am going to throw my notes to the winds and take about two minutes. This is not a very large item, only $30,000, but it involves, I believe, a very important principle and that is what can be done by the minister's department to help settle differences between labour and management. The question raised a moment ago by the hon. member for Lethbridge is a little bit pertinent to this item and I think it could have been discussed under this item, but I shall leave it with him to determine whether he thinks it should be.
The point is this. In my opinion labour and management can never get together to solve what we believe to be a flaw in the present system whereby, in the over-all picture, prices and wages can never come together. The present monetary policy of the government, based on a flaw, will never provide enough purchasing power within industry to buy back the products of industry. The result is that every time there is an increase in wages, then that must be written into costs and by reason of the rise in the price level the people suffer because that generates a shortage of purchasing power. All I would say is that it is a problem of automation; that is what labour calls it now. It does seem to me that the trend is to try to guarantee something within industry which cannot be guaranteed because it is not there. If industry does not generate enough purchasing power to buy back its products, then that flaw must be corrected.
In our social credit concept-I am not going into the details of economics on it-we have that problem solved by what we determine is the compensated price or what might be in the end a national dividend to make up that shortage of purchasing power.


An hon. Member:: Carried.


Ernest George Hansell: No, my friend, it is not carried, but I am not going to detain the house.


An hon. Member:: What item are you on?


Ernest George Hansell: On 189; I am advocating this, that the Minister of Labour, who has a responsibility in this connection together with the Minister of Finance who also has a responsibility in this connection, solve that flaw in a way whereby the economic system will work so that there will be enough purchasing power by reason of wages plus dividends or wages plus a compensated discount on price, to keep the system functioning 67509-473i
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so that the Canadian people can always buy back the results of the production of industry.
I have said a lot there. If it is not going to be solved that way, then the trend is to push all industry into the hands of government and what the socialists have been advocating, government ownership of industry, will be accomplished but not by the socialists but by a flaw that is presently and always has been in the financial policy of the government. Labour and management will do that themselves unconsciously, but that is exactly what will happen if that problem is not solved. I have compacted a 30 minute speech into a few sentences.


John Horne Blackmore: It may be in order here to ask this question in another form. I asked about the steel problem. We in the west, and in Alberta, are being absolutely crucified by freight rates. They seem to have the idea we can bear the full shot to remedy freight rates all over the country. They will not be satisfied until they are walking over our dead bodies. If the railway men ask for higher wages and the C.P.R. or the C.N.R. just increase their rates enough to cover that increase in wages, that is one thing. But if they say, very well, it is going to cost us $30 million more to pay the wages and we are going to take a little rake-off out of this thing, we are going to take $35 million; if that kind of think is done, and I am afraid it is, not only in the case of the railways but in the case of most industries in Canada, then it is obviously a most iniquitous situation. As the hon. member for Macleod has indicated, if it is not taken care of it will mean the utter destruction of our economy and our free way of life.
I just wonder if the minister has any department under which he does investigate to make sure that if a company has to pay an additional amount for wages, it takes out of its consumers just enough to cover that additional amount and not that additional amount plus a substantial rake-off. Has the minister any department that looks into that matter? It seems to me he should have the knowledge anyway; he should have the information.


Milton Fowler Gregg: When the hon. member for
Macleod was speaking I did not interrupt, Mr. Chairman, because I felt that there were some things he was saying very forcibly that were related to these estimates. However, I am quite sure the hon. member for Lethbridge has given unto the Minister of Labour powers that he could not gain. The minister's main preoccupation in the field the hon. member has mentioned comes under item 182. I am free to admit that there the primary consideration is to maintain industrial

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peace as between management and labour in those industries that come under the federal jurisdiction. It would probably be very good if the Minister of Labour could investigate all those factors scientifically and work out a formula that would achieve stability within our economy such as outlined by the hon. member for Lethbridge. But I would be untrue if I were to say he could do it under our present set-up. It would be true to say that I will co-operate with my colleagues in every way I possibly can in achieving some of the results that the hon. member would like to see.


John Horne Blackmore: I should like to make one more comment. I am not suggesting the Minister of Labour necessarily has the power to bring about the adjustment I am suggesting. I am suggesting that the knowledge should be accumulated in his department so he will be able to tell whether there is any form of extravagant increase blamed upon increases in wages. Has he any department through which he gains the knowledge?


Milton Fowler Gregg: We acquire information, and that is one of the roles of our research branch.


[Stage Direction]
Item agreed to.
The Deputy Chairman:: We have one item.


Ellen Louks Fairclough: I assumed that the
minister was going to call it one o'clock be-for he passed the last two items. I am willing to let it ride on 190.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Vocational training co-ordination-
194. To provide for carrying out the purposes of the Vocational Training Co-ordination Act and agreements made thereunder; to authorize the Minister of Labour to enter into agreements with any province on terms approved by the governor in council to provide financial assistance to vocational schools, and training under youth training projects and to provide for the expenditures thereunder and under vocational training agreements entered into in previous years-payments to the provinces, $4,515,150.
John Borden Hamilton: Mr. Chairman, I have looked over the report of the department and I have also read the minutes of the estimates committee and I find it difficult to reconcile the various amounts set out in various ways for vocational training. I wonder if the minister would simply break down the total of $4,515,150 for the provinces?


Milton Fowler Gregg: Does my hon. friend wish me to break it down in addition to the breakdown on page 259?


John Borden Hamilton: As I see it the
breakdown on page 259 relates to the various types of training and in the report it is broken down in the same way but on a somewhat more detailed basis. I wonder if the minister would break down the total for each of the ten provinces for all purposes covered by the section?


Milton Fowler Gregg: Mr. Chairman, at the very bottom of page 259 payments to the provinces are indicated for 1955-56 and for the coming year 1956-57 and the latter is shown in the left-hand column.


John Borden Hamilton: I am asking the minister to advise us how much was paid to Prince Edward Island, New Brunswick and to each of the other provinces, breaking down the total amount.


Milton Fowler Gregg: May I give it in round figures?


John Borden Hamilton: That would be quite satisfactory.


Milton Fowler Gregg: For the fiscal year 1955-56 for Newfoundland it was $835,000. I am sorry; the figure I have just given you is the total accumulated figure since the inception of the vocational plan but I think what my hon. friend wants is the breakdown for one year.
Payments to April 30, 1956 for fiscal year 1955-56 are as follows:	Newfoundland,
$135,000; Prince Edward Island, $34,000; Nova Scotia, $373,000; New Brunswick, $233,000; Quebec, $647,000; Ontario, $1,073,000; Manitoba, $352,000; Saskatchewan, $307,000; Alberta, $491,000; British Columbia, $309,000; Northwest Territories, $6,000; Yukon, $2,000.


Hector Dupuis: Mr. Chairman, I hope the
minister will not mind repeating the sums for the provinces of Ontario and Quebec.


Milton Fowler Gregg: Does my hon. friend wish me to repeat the figures I gave a moment ago?


Hector Dupuis: Yes.


Milton Fowler Gregg: For Quebec it was $647,000 and for Ontario $1,073,000.


John Borden Hamilton: Do those figures include the two items which are listed on page 83 of the department's report under tables 7 and 8 for the training of armed forces and defence industries?


Milton Fowler Gregg: Yes.


Hector Dupuis: Mr. Chairman, can the minister explain the reason for the difference-of course, I am not jealous-between the figures for the province of Quebec and the province

of Ontario? Is it a lack of co-operation on the part of Quebec or is it for some other reason that the amount for Quebec is so much lower than the amount for Ontario?


Milton Fowler Gregg: My hon. friend will see that in the figures I have given there is no particular relationship at all with the population of the ten provinces. There are a number of schedules of training; some provinces want to put stress on one and some on another. We co-operate with the provinces in doing what they think will serve the best purpose.


Hector Dupuis: Does that ippan the province of Ontario has done more lit that sphere of activity than has the province of Quebec?


Milton Fowler Gregg: That effort is indicated by the figures I have given.


Hector Dupuis: I am just asking these questions of the minister because we were told something different at the last provincial election.


Ellen Louks Fairclough: Where do you think that will get you?


[Stage Direction]
Item agreed to.
Unemployment insurance commission-
196. Administration of the Unemployment Insurance Act. including expenditures incurred in connection with other duties and responsibilities assumed and carried out as required by the governor in council on the recommendation of the Minister of Labour in accordance with section 4 of the act, $27,341,745.
Ellen Louks Fairclough: Mr. Chairman, concerning this item, which covers the administration of unemployment insurance, we in this group feel that we have had a very satisfactory survey of the department. When I say that,
I do not mean we are satisfied with everything that has happened but we feel we have had ample opportunity, both in the committee and during the stages of the recent resolution and bill with respect to amendments to the Unemployment Insurance Act, to ask questions and obtain the information we wanted.
I have only one more comment to make and although I have said it three times before I feel I must say it again. In the application of recent amendments to the Unemployment Insurance Act with regard to section 45 (2) I urge the minister from the start to keep a very close watch on the application of these amendments in order to make sure we do not get into any kind of difficulty during this coming period of seasonal unemployment as we did last year.
The revised act is still new. We have gone through one season when we did not measure up to the expectations of that act. Although we may think we have improved
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the act, for those will apply in the future, I feel very strongly that the portion of the
100,000	people, if that is the figure, who failed to qualify last year because of changed conditions from the old act to the new act, or other persons taking their places, should not again face the same problem nor should they be placed in a similar position.
There may be a tendency to think we have cured the situation and it may well be that it has been cured; but the people who suffered a serious period of unemployment even for one season without proper compensation-and they might well be excused if they thought they deserved compensation
do not re-establish themselves quickly. Such people pile up debts and go through a period of dislocation which is disastrous to them.
The people who were cut off from receiving benefits last year-whatever the number might have been-are going to suffer as the result of this cut-off for a long period of time. I hope the minister will start early to keep a watchful eye on this situation and instruct his officials to consider this matter seriously and that they will endeavour to the best of their ability to avoid a recurrence of the situation which developed last year.


Milton Fowler Gregg: Mr. Chairman, my hon. friend gives me the opportunity to say what I think should be said in relation to the first part of her remarks. It has been said in this chamber at other times that the estimates committee was to some extent useless and did not perform its purpose. I want to testify this afternoon that in so far as my estimates are concerned I value most highly the study and criticism and suggestions which were made in the estimates committee when we were before it.
On the other point, may I say that the new act came into effect on October 2 last year. This is August 11, not yet a year after, and yet we have tried to insert this session what was conceived by all of us to be something that should have been in the old act. I can tell my hon. friends of the committee that we will continue to watch it with the utmost vigilance.


Ellen Louks Fairclough: Obviously the difficulty arose when the regulations were put Into effect. We foresaw this potentiality when we studied it last year. None of us in committee had had any control over the regulations or the interpretation of the regulations or of the act. We had no control over that at all, we could only view it as we saw it. Then these things come along at the administrative level.
If I had a criticism to make it would be that I believe that the minister and his

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department are swayed by the findings of the actuaries. In my estimation the role of an actuary is to tell the department how much they will need to perform a given service, not to say to them, "You cannot do this because you have not enough money." I think the minister should make sure that the viewpoint of his department is what is required and how much do we need, not how much do we have and how much can we do. Let us proceed on that basis. The role of the actuary is extremely important, but he is not a policy making authority. So let us not get off on that track.


Mr. Bryce:: Mr. Chairman, I have a couple of grievances I want to bring before the minister. If he cannot give me an answer now perhaps he can let me have one some time in the near future. I will not go into these in detail but it seems to be the whole crux of the thing that one woman who is complaining is the wife of a man working in the air force. He was moved to Gimli in my constituency and apparently her crime was that she followed her man. She left her job in Montreal or St. John, Quebec, and followed her husband to Gimli and reported for work there. She cannot get any benefits according to the data I have here.
I think that is a most unreasonable stand to take simply because she gave up a job
2,000	miles away and followed her husband and tried to get work somewhere else. She has been paying into the insurance fund for a long time. Then I see here a rather hard blow to the town of Gimli because they say it is a small civilian settlement. I hope the people in Gimli never know that that is on the record. That is one of the oldest settled districts in the interlake country because the Icelanders settled there in 1871. There are approximately 3,000 people at the air base and the town is growing by leaps and bounds. There is a lot of work there. I do not want to be as bad as other people by talking too long.
The only crime this other woman committed was to stop work when she was going to have a baby. When she had her baby she applied for work and they said, "Go to Winnipeg." Winnipeg is 65 miles away so it would be a round trip of 130 miles. You cannot expect anyone to travel 130 miles a day unless he is well enough off to have a plane.
I do not think either of these women has committed a crime but they have both been denied any relief or recognition by the unemployment insurance commission.


Milton Fowler Gregg: First of all I want to apologize to the residents of Gimli because of the comment indicating that it is not a very large

place. I do not think the cases mentioned by the hon. member have been submitted to me. I shall not have much to do for the next few days and if my hon. friend will send them to me with such explanatory information as he may have I shall have them both carefully reviewed.


William Scottie Bryce: Thank you very much; I shall be pleased to do that.


Mr. Patterson:: Mr. Chairman, I should like to make one or two observations at this time. I did not participate in the debate to amend the Uneidpfoyment Insurance Act but I want to assure the minister that we appreciate the amendments which were brought in and are sure they will be of real value to the various groups of people concerned.
I believe the purpose of the unemployment insurance commission is to facilitate the granting of benefits to those who qualify and in order to do that I would imagine that to have offices in strategic places would be of great importance. A short time ago I brought to the attention of the officials of the department the situation existing in Hope, British Columbia, in my own riding. The people there have requested that an office be opened but apparently up to the present the officials have not seen fit to recommend this. This afternoon I should like to request the minister to look into this situation. I feel an office in Hope is justified because this is a vital section and there would be a considerable amount of work. I ask the minister to re-examine the situation.
Just one other thing. During the period when the C.P.R. bridge was not available, having collapsed, the unemployment insurance office at Mission was moved to Abbotsford on a temporary basis. However, we feel that the continuation of this office on a permanent basis is warranted after the bridge has been repaired. On request of my constituents I ask that this office be continued on a permanent basis for the benefit of the people there.


Milton Fowler Gregg: Mr. Chairman, I shall ask the commission to look into the two cases mentioned. I think I must point out to the hon. member that there are many hon. members on all sides of the house who would like to have offices opened up at additional points in their ridings, but I am sure the hon. member will understand the importance of economy. We have about 200 offices across Canada and in attempting to serve the needs of the workers in the best possible way we try to carry on from those offices without adding to the amount we must ask for for the administration of this act. I shall ask that these two cases be looked into.


Ellen Louks Fairclough: With reference to this section of the Unemployment Insurance Act, as I mentioned on August 6 at the resolution stage of the amendment to the Unemployment Insurance Act, this section 67 (1) (c) (iv) with reference to married women is pointed up again by the remarks of the member for Selkirk. I have heard all the arguments for years with reference to why there should be special provisions for married women in the act, but it occurs to me that the minister and his officials are quite willing to gamble in the application of the act to other groups of employees. When it comes to this one specific group, they lay down these hard and fast rules which cannot be altered. I have approached the minister previously on other grounds. I now ask him if he will not gamble a little and remove this provision from the act, that is, remove section 67 (1) (c) (iv) and section 161 of the regulations, and see what happens.


Milton Fowler Gregg: I am sure that my hon. friend would not want me to start gambolling at my age, but we shall continue to look at this question of married women with the utmost care as we have in the past. I am sure that in the past year we have improved the regulations to some extent.


Ellen Louks Fairclough: I should not like to ask the minister to do anything that he had not done up to this time of his life, but in regard to the Unemployment Insurance Act there was a big gamble in the act last year.


Milton Fowler Gregg: As it affects married women?


Ellen Louks Fairclough: As it affects the 100,000 workers.


Clarence Gillis: Whilst the married women section is part of the act, there is another question he raised-and it is not a new one-on the matter of administration. I think that this centre here is affected to a greater extent than any other part of Canada. At least to me, the problem seems to be mainly around Ottawa. There are many army, navy and air force personnel around this city, and in many cases both the husband and wife are working. The man in the service suddenly gets an order that he is being transferred to Vancouver, Halifax or some other point.
In order to maintain the home, naturally the woman wants to follow her husband, and so she goes to Halifax. The reason why she leaves her employment is that an order has been issued by the service authorities. To maintain her home she has to go with her husband and leave her employment. When she arrives in Halifax she cannot find similar work. Perhaps she has been contributing for ten years to the unemployment insurance.
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It is through no fault of her own that she has to go to another part of the country. There is nothing in the act that says that that woman cannot draw unemployment insurance in Halifax. I think it is a matter for the minister and the commission to determine the validity of permitting that woman to draw benefits under the circumstances I have just described.
That is one matter that the member for Selkirk raised. The other one, of course, has been beaten to death. As I said at the resolution stage, there has been considerable modification of the application of the regulations to married women.


Ellen Louks Fairclough: It should not be there.


Clarence Gillis: I have said that myself but I know now it is useless to repeat it. The minister, since last March, has been making efforts.


Ellen Louks Fairclough: He has been trying. He won't give up.


William Earl Rowe: He might start gambling.


Clarence Gillis: There are more cases than we get in this house. It is a matter for the commission to determine whether that woman is entitled to unemployment insurance benefits when she has to follow her husband to another part of the country. That is a matter of administration. There is nothing in the act to stop it. I believe the minister and the commission should take a good, square look at that. Quite a few people that were located in Ottawa had to go to Halifax. A woman cannot find the kind of employment there that she can here. It is not fair.


Mr. Van Horne:: There can be no question that the more you look into the unemployment insurance commission the more you come to the conclusion that it is one of the worst operated branches of the government. Last winter I brought up the question of some delays to unemployment insurance cases. At first the minister said there were no delays; then he admitted there were six; then he admitted there were 206; then it went up to 7,106 cases. That is the answer I got in March. That is the number of claims referred to the regional office at Moncton by the Campbellton and Edmundston offices. In each and every one of those cases there was an unwarranted delay, in some cases up to eight weeks, to determine the rights of the people to draw unemployment insurance benefits.
I maintain that there is no reason in this world why it should take so long to determine a man's rights to unemployment insurance benefits. I make this recommendation

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to the minister, that he take the means now, this summer and this fall, to make sure that next winter we shall not have a repetition of the debacle that happened in northern New Brunswick last winter with regard to the collection of unemployment insurance benefits. These people have families and they cannot get along without those benefits. Real hardship, of which the minister may not be aware, is inflicted on those families just because they have not taken the means to handle those cases expeditiously and quickly.
Another thing I should like to bring up is this. What is this idea of forcing people, especially people on the north shore of New Brunswick, to go 400 or 500 miles away from home? Last winter there was an order to send 300 or 400 to La Tuque, Quebec, to cut pulpwood. These people were made to work under such conditions in the woods outside La Tuque that they were not able to earn enough money to pay their fare back home, and it took months afterwards to get their unemployment insurance cases straightened out. There was no reason to give that order in the first place. I recommend that, before any such stupid order is given, an investigation should be made to determine the working conditions and the chances of earning a living in the place where they wish the men to go.
Some of the men were able to get by these stupid regulations in the Unemployment Insurance Act by saying that their wives were sick and they had to return home. Many had to lie, because not all of them had their wives sick, to get out of the obligation to go to La Tuque, where they could not earn enough money to get back home, and if they did not get their unemployment insurance benefits they would be cut off indefinitely.
The minister will say that he has fine employees in the unemployment insurance offices in New Brunswick, and he is absolutely correct. The fault is not theirs; the fault is with him here in Ottawa. Let us get that straight. In Campbellton, Edmundston and Moncton, the people in the unemployment insurance offices do everything within their power to accommodate the people. Every time I have gone to them, they have gone out of their way to find out the reasons for the difficulties, and then they point to some stupid regulation which forces the men to go to La Tuque, or some silly regulation which prevents the person from getting unemployment insurance benefits at a time when he needs it.
There is another matter I should like to bring up. How are we getting along in the matter of bringing about a reciprocity agreement with the state of Maine? In Madawaska

county, according to the figures given by one of the unemployment offices in northern New Brunswick, 1,800 people have to go to Maine to make a living. While in Maine, they have to pay unemployment insurance in that state.
I understand there are only two states in all the United States that do not have reciprocal agreements with Canada in regard to unemployment insurance. In other words, if a fellow went to work in New York state, he would get unemployment insurance benefits on his return to New Brunswick or to Canada. But in the state of Maine, as I am informed by the officials of the unemployment insurance commission, there is no such reciprocity agreement. I maintain that if there is not such an agreement, efforts should be made at the present time to make sure that this reciprocity agreement is entered into before the coming winter in order to make sure that these people-the ones that return home after working in Maine-will be able to collect unemployment insurance benefits. The case does not apply so much to the state of Maine, I will readily admit, because there is more woods work, and there are more activities going on, in northern Maine than there are in northeastern New Brunswick. But 1,800 people are affected, and that is only in my province. It is asserted that over 6,000 people are affected in other localities in Canada along the Maine border.
Another matter to which I would like to direct attention is this. We sometimes ask ourselves why it is that people are leaving the farm. It is bad enough, I think, when you see farmers in the position of being unable to do anything about getting unemployment insurance benefits. But here is the problem. The farmers' helpers, the people who are employed as farm hands, do not get unemployment insurance benefits. For that reason they are reluctant to work on the farms. One farmer after another in my area has come to me and said that if this regulation were changed he might be able to obtain help and to retain it.


Milton Fowler Gregg: I wonder if I might interrupt the hon. member for Restigouche-Mada-waska at this point. The first three points that he mentioned, of which I have taken careful note, are in order under this heading. The present one is not in order because under this item nothing can be done about it.


John (Jack) Henry Horner: About which?


Milton Fowler Gregg: If my hon. friend had wanted to debate that matter, he would have been able to debate it on another occasion.


John (Jack) Henry Horner: You have done nothing about it.



Milton Fowler Gregg: With regard to the application of unemployment insurance to workers on the farm, may I say that nothing can be done about it under this item which we are discussing at the present time. While I am on my feet-


John (Jack) Henry Horner: I am advocating it, and I am suggesting that you do something about it.


George James McIlraith: Advocate it on the proper occasion.


Milton Fowler Gregg: That is all right. An occasion existed during this session-


John (Jack) Henry Horner: I made the suggestion
during this session, on two other occasions.


George James McIlraith: You were not here.


John (Jack) Henry Horner: I brought this matter up on two other occasions.


William Alfred Robinson: Order.


Milton Fowler Gregg: Perhaps my hon. friend would permit me to answer his question. The only one that I think is deserving of an answer of the first three is the one relating to the state of Maine. I can assure him that the commission has consistently and steadily- as it has done with corresponding states right along the United States border across Canada -tried, and is still trying, to work out reciprocity arrangements with the state of Maine with regard to unemployment insurance. We have hopes that this result might be achieved. However, it takes time. I can assure the hon. member or rather I can assure the workers in New Brunswick that it is not the fault of the unemployment insurance commission that there has been delay.


John (Jack) Henry Horner: Mr. Chairman, the point I am making is this. I do not think the minister is taking the means to bring it about sufficiently well. He is not doing it properly, I think if it were done properly, this reciprocity agreement could be prepared within a very short time.


Mr. Jones:: Mr. Chairman, I should like to support the last speaker in what he has just said. I agree that he is probably out of order in dealing with casual farm workers, but the minister has not yet told us whether any steps have been taken to protect these people. In my own particular riding I know that fruit workers such as pickers and so on spend part of their time in the packing houses, that they are obliged to contribute their stamps but that they never get any benefits. Year after year we have brought this matter up. It is true, as the minister says, that it is out of order at the moment to discuss the matter but he has not this session given us an answer to our constant
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requests. That request is: Will these people at some time be taken care of? That is all the previous speaker wanted to know. It is also something that I should like to know because, when I go back to my riding, these people will ask me, "What are they going to do about the casual farm worker in the fruit industry?" It is a serious problem. At the present time, where they are obliged to contribute to the unemployment insurance fund while employed in the packing houses, I think the government is taking the money from them under false pretences because they are not being covered at any time.


John (Jack) Henry Horner: Hear, hear. That is very true.


William Alfred Robinson: Shall item 196 carry?


[Stage Direction]
Item agreed to.

[Stage Direction]
General administration-
116. Departmental administration, $2,035,230.
Walter Edward Harris: Mr. Chairman, there have been several occasions during this session on which I have promised to say something about fiscal and monetary policies. I propose to do so very briefly at the moment.
The fiscal and monetary policies of Canada are intended, among other things, to encourage the sustained growth of our economy within the framework of a stable, over-all price level. With steady economic growth we can support a rapidly-growing population and a steady increase in standards of living. I think it will be agreed that in the years that have passed since the end of the war in Korea this objective of sustained growth, stable prices and higher standards of living has been reasonably well achieved.
We all know, of course, that there are various external and internal forces that may from time to time prevent the stable growth of the economy. For example, Canada cannot enjoy steady growth and high employment if powerful adverse factors restrict or limit the markets for our products at home or abroad. Nor can we maintain stable prices if world price levels are being subjected to great fluctuations, as was the case during the Korean war and, of course, in all other wars. Having said all this, it still remains true that proper monetary and fiscal policies can exert an important stabilizing influence on the economy.
I turn now to consider the special economic circumstances that have had to be taken into account in formulating fiscal and monetary policies so far during 1956. Hon. members will recall that in my budget address four months ago I suggested that 1956 would be

Supply-Finance
another year of substantial economic progress. However, I pointed out that the high level of business activity that was anticipated for 1956 would probably exert considerable pressure on the available supplies of materials, manpower and other economic resources, and that it was, therefore, desirable that the spending policies of everyone should emphasize restraint and prudence. Only in this way would it be possible to avoid inflation or other distortion that might otherwise develop.
As one looks around the country today it is apparent that most of our industries are even busier than was anticipated earlier this year. The statistics confirm this observation, but I need not go into details as they have been discussed by my colleague, the Minister of Trade and Commerce. I should refer, however, to the latest survey suggesting investment outlays of about $8 billion. This level of capital investment, if it is achieved, would be 28 per cent above last year's. This gives one some idea of the momentum which is behind the present expansion of the economy.
I need hardly say that the steady year-by-year increase in the physical plant and equipment of Canada is the thing which more than anything else is making possible the growth in the productivity of our economy. As such it is providing for the steady increase in the welfare of the Canadian people and is therefore something to be welcomed by all of us.
However, this enormous increase in investment planned for 1956 must take place at a time when our export industries are producing more, at a time when the industries which produce goods and services for the consumer are also producing more, and at a time when employment is already at a high level. It is very doubtful therefore whether we have in Canada the plant, the raw materials and the manpower to achieve such a heavy increase in capital investment in full, along with the expected increase in exports, consumer goods and services and all the other things that are needed.
This huge scale of investment in plant and equipment is also reflected in the very high level of imports, and in the large inflow of non-resident money which in effect is financing the import surplus.
I think I have said enough to indicate that in my view there is some danger that, in the months immediately ahead of us, the total rate of spending will tend to run ahead of the ability of the economy to produce more goods and services quickly enough. This means that some additional investment which is being planned today simply will not

be fully realized because of the physical limitations already mentioned.
In these circumstances, what kind of fiscal and monetary policies are appropriate? In the first place I would say that government policies should not contribute unnecessarily to the increased demand for goods and services. With this in mind, and anticipating that 1956 would be a year of heavy private and industrial spending, government expenditures were carefully scrutinized before the estimates were brought down early in 1956. In particular, the capital programs of the various departments were reduced to the essential requirements.
So far as the monetary situation is concerned, the increase in the demand for credit has been the outstanding feature of the last 15 months. Money has been in demand for many purposes but especially to finance new business investment in plant, equipment and inventories, and the increased use of consumer credit. Evidence of this can be found in the tremendous increase of the chartered banks' loans. The total of their general business and personal loans outstanding, after remaining relatively stable through 1954 and the first quarter of 1955 at about $3J billion, has risen continuously since then, and at its present level of $4i billion is 39 per cent higher than it was 16 months ago.
Of course, the availability of funds has also been growing. Larger amounts are being saved out of our larger national income, more funds have been raised through new security issues and more capital has flowed into Canada from abroad. However, the increases in the supply of loanable funds has not kept pace with the increase in the demand for them. Consequently, interest rates have risen.
This growth in the demand for loanable funds is the fundamental explanation of rising interest rates and the increasing tightness of money over the last year or so. That is the real explanation of why it is more difficult and more expensive today for all borrowers to obtain the capital they need. This means, of course, that the tremendous rate of development of our economy calls for the encouragement of the maximum rate of saving in Canada. In this connection I am announcing today the terms of the forthcoming issue of Canada Savings Bonds, which will include an increased return to investors.
Of course it would have been possible for the Bank of Canada to facilitate such an expansion of credit that all these demands for money could have been satisfied without any increase in interest rates. However, if this had been done there would then have been

too much money competing for the available goods, and inflationary price increases would have followed. What the Bank of Canada has been doing has been to moderate the rate of increase in the expansion of credit, so as to keep it in a reasonable relationship with the growth of production. This helps to prevent the present condition of expanding production from spilling over into one of speculation, inflation and instability.
The government is satisfied, and I believe that the vast majority of informed observers are satisfied, that under the economic conditions of the past 12 months it was desirable to moderate the rate of monetary expansion. I know of no responsible person who argues openly for inflation as a solution to the problem of excess demand.
I need hardly say that a condition of "tight money" performs a very important function in our kind of economic system in present circumstances. That is because it compels the borrowers and the lenders of money to review their plans and, if necessary, to revise them. This helps to ensure that the aggregate of all spending plans is consistent with the aggregate production that is physically possible.
The demand for funds for different economic purposes will naturally change from time to time. Similarly, the view of lending institutions as to where they want to invest their resources will also change as economic conditions change. Such changes are necessary and desirable in a changing economy. However, one consequence is that no specific group of borrowers can expect to be provided with a continually growing supply of funds regardless of developments in the other parts of the economy.
Yesterday I was asked about the bank rate. In establishing the level of its bank rate, the Bank of Canada must have regard for the level of interest rates generally as they are determined from day to day in the bond-market. The federal government has a number of separate issues of bonds outstanding in the market and the market price and yield on each issue has some bearing on the appropriate level of bank rate. Attention is often focussed on the yield of treasury bills because this is the shortest term government security outstanding and its yield is well publicized each week through publication of the rate at which the weekly tender issue has been allotted. However, the yield on the 91-day treasury bills is only one factor in the general market pattern of interest rates and the degree of movement in the various government issues is usually by no means uniform. In recent weeks short-term bond yields have risen somewhat more than the yield on treasury bills.
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Perhaps I can summarize what I have been saying in a few sentences. First, 1956 looks like being the most prosperous year in our history for most of our industries and most of our people. The principal risk that we face- and it is one which we share with a number of other countries-is that the spirit of optimism that exists today may give rise to efforts to spend more on goods and services than the economy is physically capable of producing. If this should happen, distortions in prices and production would result, and the steady expansion of the whole economy might be jeopardized.
The growth in the demand for capital is reflected in higher rates of interest and greater difficulty in borrowing funds of one kind or another. This, of course, is part of the self-correcting process which helps keep our economy on an even keel. It is better to have rising rates of interest, if necessary, than sky-rocketing prices.
It is right and proper that our fiscal system at this juncture should emphasize additional restraint in public spending wherever possible. It is equally appropriate that monetary policy should assist by exerting a moderating influence on the expansion of credit.
With proper fiscal and monetary policies and with reasonable self-disciplines on the part of all of us, there is no reason why our economic progress should not continue in line with the growth in our external markets.


Mr. Fleming:: The estimates of the Department of Finance, Mr. Chairman, require a special word of comment at the outset because of their very large bulk. The estimates of this department this year total the tremendous sum of $979,412,104. It is well to remember however, that of this large total $940,369,028 are statutory items, the largest being interest to be paid upon Dominion of Canada bonds. The amount actually to be voted, in other words, the sum that this committee of supply is dealing with this afternoon, is $39,043,076. In that sum there are two substantial items, the grant to universities of $7,986,000 and the grants to municipalities of $7,065,500. The bulk of the remaining estimates is composed of salaries and wages.
Ordinarily a review of the estimates of this department does provide an opportunity for a wide review of such questions as fiscal relations between the federal and provincial jurisdictions, monetary policy, and indeed broad economic questions on which it is sometimes hard to define limits. However, we had in this house quite recently an extensive debate on federal-provincial fiscal relations and I have no intention of entering that field again today. The views of Her

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Majesty's loyal opposition were completely set forth in the speeches made at the various stages of the measure that was then under
debate.
There is, however, one question in regard to policy which does call at this time for special discussion in this house. The subject itself has become rather broader by reason of some of the remarks that have been made by the Minister of Finance and by the Prime Minister yesterday. The question arose, of course, out of measures that have been taken to restrict credit, and in particular to raise the interest rate of the Bank of Canada. In view of the turn the discussion has taken, particularly in the light of the answers given in this house to questions by the Minister of Finance and the Prime Minister, what we now have brought into question is the relationship between the government on the one hand and the Bank of Canada on the other, and also the relationship between the Bank of Canada on the one hand and this parliament on the other.
Without going back over all the answers that the Minister of Finance has given, both yesterday and on previous occasions about two months ago, I wish to say in all earnestness to the Minister of Finance that his answers have been evasive. I urge on him that, having regard to the responsibilities that he holds and the importance of the subjects to which the questions were directed, questions that affect all the people of this country, and questions that touch the prosperity and well-being of the country, I think his answers ought to have been much more direct.
Now, sir, the Prime Minister answered some questions yesterday in a way that I think startled hon. members of this house. At page 7352 of yesterday's Hansard the Prime Minister said:
The Prime Minister will not undertake to have parliament or the members of the opposition act as a court of appeal from the decision made by the governor of the Bank of Canada-


Mr. St. Laurent (Quebec East):: Will the hon. gentleman complete the answer I gave?


Donald Methuen Fleming: Yes. There was an interjection and then the Prime Minister continued: -unless and until parliament amends the act which now governs the Bank of Canada.
The Prime Minister also indicated there is no intention on the part of the government to introduce any such amendment. Therefore, as things now stand-and that is what we are talking about-the Prime Minister has said that as the law stands today he is not going to have parliament, or members of the opposition, act as a court of appeal from the decision of the governor of the Bank of

Canada. It was superfluous for the Prime Minister to say he was not going to have members of the opposition act in that capacity, because it has been made quite clear during this session that in the view of the Prime Minister the opposition has a very limited function; but I do take up the statement that the Prime Minister made that, in effect, as the law now stands parliament has no right to act as a court of appeal from a decision of the Bank of Canada.


Louis Stephen St-Laurent: Unless and until the act is changed.


Donald Methuen Fleming: We are saying, as the law now stands. I submit, Mr. Chairman, this is far from being a parliamentary doctrine; I think it is an enunciation of an anti-parliamentary doctrine. This parliament, surely, is a court of appeal with respect to any matter, any problem, that lies within the whole scope of federal jurisdiction in this country. Any problem that arises surely ought to be able to find its way for discussion at some time or another on to the floor of the House of Commons. And for my part, Mr. Chairman, I reject completely the doctrine that the Prime Minister enunciated yesterday that parliament has no right to sit as a court of appeal when objection is taken to the exercise by the Bank of Canada of its powers in any particular way. If Canadians feel that those powers have been exercised in any way that they disapprove of, then, surely, this parliament is the forum before which they ought to be able to bring their complaints. That is the view that we of Her Majesty's loyal opposition take. We repel, we reject, the doctrine enunciated by the Prime Minister in this regard.
Now, sir, a question has arisen very directly as to the extent to which the government has participated in, or bears any responsibility for, the decision made by the Bank of Canada with respect to increases in the interest rate. In this respect, I think the Minister of Finance has been hiding behind a smokescreen of his own creation. He admits that he takes advice from the bank, he admits that he is made aware in advance of the course the bank takes. He said yesterday at page 7351 of Hansard, concerning the last increase by the Bank of Canada in the interest rate:
I was advised of this course before it was taken.
But then, having said that, the minister asks the house, in effect, to believe that he has no responsibility for what the bank does. Now, Mr. Chairman, he said on the same page yesterday:
This action is the action of the governor of the bank and his responsibility alone.

If that is true at all, Mr. Chairman, it is true only in the narrowest and most technical sense. The minister has a very direct responsibility because the action taken by the Bank of Canada in this respect surely has a direct influence on the whole field of action and on the whole field of responsibility of the government in relation to fiscal matters.
Take the situation in England. One does not find there the chancellor of the exchequer withdrawing himself from this issue when the Bank of England takes steps to raise the interest rate. You do not find him saying: I have no responsibility for this; this is the action of the Bank of England. It happens to be a bank whose stock is fully owned by the government, but do not hold the government responsible. You do not have the government there taking an irresponsible attitude of that kind.
Now, sir, it may originally have been intended, when the Bank of Canada was established in this country, that it should have some measure of independence of direct government fiscal action. Under the original set-up of the bank one-half of the bank stock was held in small lots by the public and one-half was held by the government. After the King government came into office in 1935 it took steps to expropriate the half of the issue of stock of the bank which was held in the hands of the public, and from that time on the government has owned all of the stock of the Bank of Canada.
I say, sir, that the government cannot shed its responsibility for full fiscal policy in the broadest sense of the word, and that must include the actions of the Bank of Canada, even when, in a technical sense, those actions are taken by the governor of the Bank of Canada in the exercise of the powers conferred upon him by the Bank of Canada Act. We ask the Minister of Finance now to say, and to say for the first time, because he has not said it yet, did not say it in his speech today, and has not said it at any time yet, whether he approves the actions taken by the Bank of Canada in those various stages, both with respect to the rate of interest and also with respect to restriction of credit in other forms. Let him say whether he did approve of those actions before they were taken by the Bank of Canada.
Now, sir, let me come specifically to these actions because I wish to be fair about this. I am not overlooking the realities of the situation, the dangers that exist or the responsibilities that are carried by those who sit opposite. The first series of actions taken by the Bank of Canada that I wish to speak
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of was to make changes in the interest rate. There have been actually six changes made in the interest rate by the Bank of Canada in the past year and a half. The first was taken on February 1, 1955. At that time the bank lowered the interest rate from 2 per cent to 1J per cent. On August 5, 1955 the bank reversed that policy and raised the interest rate from lj per cent to 2 per cent. It followed this again on October 12 with a second increase, this time from 2 per cent to 2J per cent. On November 18 it raised the rate from 2\ per cent to 2J per cent. On April 4 of this year it introduced the fourth increase, this time from 2| per cent to 3 per cent-a record-and then this latest increase on August 9 from 3 to 3J per cent.
The inevitable effect of these actions has been that money becomes costly and every time an action of this kind is taken by the government with the consequent increase in interest it means the loss by bondholders of thousands-yes, and oftentimes millions-of dollars in the market value of their bonds, including the bond obligations issued by this government.
Every action of this kind has a disturbing effect. Whatever may be said about the case for taking such an action it cannot be denied that every time an action like this is taken it has a disturbing effect upon the financial market and upon public confidence.


Walter Edward Harris: It also has reassuring effect.


Donald Methuen Fleming: I have not yet argued the whole case with regard to this matter but I do wish to stress that every one of these actions has a disturbing effect of this nature.
The second type of action taken by the Bank of Canada was that it required the chartered banks to increase their ratio of liquid assets to a minimum of 15 per cent.
The Bank of Canada in its report for the year 1955 states at page 16:
After discussion, the banks have agreed to work to achieve by May 31, 1956, a minimum liquid asset ratio of 15 per cent which they will endeavour to maintain on a daily average basis from June on.
The effect of that increase in the minimum ratio of liquid assets of the chartered banks was, of course, to restrict commercial credit* In the course of conferences and communications between the Bank of Canada and the chartered banks the chartered banks were asked to curtail commercial loans. We had evidence to that effect from Mr. Nicks, the president of the Canadian Bankers Association, before the banking and commerce committee a week ago yesterday. The chartered banks complied with that request from the Bank of Canada. The result has been a severe curtailment of credit on the part of the banks.

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Now, why has this course of action been taken? Why has this result been risked by the Bank of Canada and by the government? We have not' yet been given a very clear answer to that question even after waiting until today for the statement of the Minister of Finance. Was this done because of the fear or the threat of inflation? The Minister of Finance is very chary about the use of that word "inflation". I commented on this when speaking in the budget debate on March 27 last that the Minister of Finance in his budget speech had found himself very unwilling to mention the word "inflation".
The government has not yet told us that this action has been taken because of the existence of inflationary forces. The minister's statement today was anything but lucid on that point. The government knows the reason, but the minister has not chosen to make the reason clear to the house. At least the Prime Minister stated yesterday that the reason had been disclosed to the government. He said as reported at page 7352 of Hansard:
. . . I can assure the hon. gentleman that the matter received very serious consideration . . .
That was on the part of the government and we were told that the government knew the reason. Well, it certainly has not been made clear here.
Mr. Chairman, if one looks at what the Bank of Canada had to say in announcing on August 9 the reason for this fifth increase in the interest rate in the past year, one finds the reason put down by the bank was quite different from that to be drawn with some difficulty from the statement made by the minister today. The Canadian press dispatch which appeared following the announcement of the increase contains these words:
A government official said the increase reflects the fact that interest rates both in Canada and the United States are climbing. The increase was in line with this trend.
We are not told the identity of this mysterious government official who made the statement, but the statement he made certainly was not confirmed by the minister 1;oday. It would have been an understandable reason to give because admittedly interest rates have risen both in the United States and Great Britain. As a matter of fact, interest rates have been raised in Great Britain to record heights. Hon. members will recall that in February the interest rate was raised to 5| per cent. The reason plainly given at that time for the increase was that it was taken to curb extravagant spending and to meet the trend of inflation, and it was recognized that it would probably mean a rate

of 6J per cent on bank commercial loans. However, we are not given frank statements of that kind here.
The minister has carefully skirted this question. While we may regret that we have not been given clear statements by the minister in this regard I am going to assume for the purpose of a few comments that there is in the mind of the Bank of Canada and in the mind of the minister a fear of inflation. I do not believe for one minute that the Bank of Canada would act in a vacuum. We all have respect for the governor of the Bank of Canada, Mr. J. E. Coyne; he is a very serious man who takes a conscientious and grave view of his responsibilities.
The bank must have had some reason for this action. The reason given by the government official who was the spokesman on the occasion of the increase was that interest rates here should rise because they had risen in the United States and Great Britain. If the minister would state the problem and tell us specifically how he relates the various steps that have been proposed either by himself or the Bank of Canada or both, we would have an opportunity then of relating those steps and judging the efficacy of them in relation to the problem that the minister recognizes and presumably is trying to cope with, but he does not do that.
Let me say this about inflation, sir. We of Her Majesty's loyal opposition look upon inflation as a peril to be avoided at all times. We have not forgotten the ugly results of the period of postwar runaway inflation, particularly in the period after the outbreak of hostilities in Korea. We then had to plead in this house because of the effect it had on those on fixed incomes, pensioners and others and the disturbance of the economy in every sector which came about by reason of runaway inflation.
The difficulty with the kind of measures the government has taken here is that they have an indiscriminative effect. The president of the Royal Bank of Canada, Mr. James Muir, made an interesting comment in a speech early this year in relation to the type of policy of credit restriction which is reflected in these increases in the Bank of Canada rate. He said:
Experience shows that monetary policy is more effective against inflation than against deflation. But there are dangers. As I have already pointed out, the policy may go too far. It may also be unselective, curbing healthy as well as unhealthy or excessive bank credit.
The great difficulty about the kind of government action which has been taken here is that it has an indiscriminate application.

In the language of Mr. Muir, it has been "unselective, curbing healthy as well as unhealthy or excessive bank credit". Look at its effect on housing. The restriction of credit with respect to housing applied across the board, and I think it may fairly be said that its effects are being felt most by those engaged in the construction of small homes. There has not been any attempt to work out any policy of restriction of credit on a selective basis in order to provide needed credit for those engaged in the construction of small homes. Let some of the luxury apartment construction wait for a while, in favour of small houses, but no, this kind of policy of credit restriction has been applied indiscriminately.
Similarly in connection with commercial credit the generality of the application of this restrictive policy has denied business expansion in quarters where the expansion of business, had it been permitted, would have been an antidote to the inflationary forces which the minister sees at work.
When one is looking for evidence of inflation one normally turns to the cost of living. Thank goodness the statistics we have in relation to the consumer price index are somewhat reassuring in this respect, because, looking at page 24 of the July issue of the Canadian statistical review published by the dominion bureau of statistics, we see that in June, the last month available, the index stood at 117-8, which is a trifle higher than it has been but which compares, for instance, with August, 1954, when it stood at 117-0.


Mr. Sinclair:: Good management by the Liberal government.


Donald Methuen Fleming: No, it is not good management by the Liberal government. That is a silly intrusion by the Minister of Fisheries, who will never leave it to his colleagues but who has to air his own views on other departments. It is not good management, unless it is good management to have the kind of situation arise that has resulted in the government apparently taking steps to restrict credit for many people who have justifiable claims for credit. The government takes all credit but-


James Sinclair: The Liberal government-


Donald Methuen Fleming: If the minister would just restrain his volubility, perhaps he had better wait his turn. If he is going to insist on talking and using up my time I shall be obliged to ask you to give me additional time, Mr. Chairman.
The food index for June stands at 112-5 which compares with 113-7 for September, 1955 and September, 1954 figure of 113-8.
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Shelter for June this year was 132-6, which is higher, having slowly come up somewhat rather steadily of late. Clothing has been quite constant. Other commodities and services stand at 120-6 for June, which is slightly higher than it was a year ago.
I think the figures on consumer purchasing are indicative of the steady rise in credit over a long period. I do not propose to put too many of these figures before the committee, but in the statistical summary of the Bank of Canada for 1955 we find at page 59 a record of the steady increase in consumer credit in this country, starting in 1948. Charge accounts in 1948 stood at $166 million, rising to $374 million by December 31, 1955. Retail dealers' instalment credit started at $81 million in 1948 and rose to $377 million at the end of 1955. Instalment credit through finance and loan companies started at $52 million in 1948 and rose steadily to $601 million at the end of 1955. Cash personal loans started in that period at $238 million and at the end of 1955 had risen to $830 million. The total of selected items in 1948 was $537 million, but at the end of 1955 had risen to $2,182 million. There has been a steady increase in consumer credit in this country, but there is no indication that this was a factor which led the government or the Bank of Canada into taking this action.
The July statistical review issued by the dominion bureau of statistics shows that in the last four years retail sales have increased rapidly, but the proportion of credit sales to the total has not risen. I do not wish to delay the committee unduly on this point, but I say that the figures show that cash sales have risen in amount but not in percentage of total sales, and that while credit sales have risen in amount, they have not risen in percentage of total retail sales.
If it is the threat of inflation which has led the government and the Bank of Canada to this series of actions then I suggest that there are responsibilities falling directly upon the government. Let the government begin at home. Let the government clean its own house. Let it look at its own swollen expenditures which represent one of the biggest and strongest inflationary factors in our economy today. At one point the minister almost admitted that. If the government would look around for ways and means of restraining inflationary factors I submit that it first ought to pluck the beam out of its own eye.
Hon. members should not forget that inflationary factors oftentimes have the subtle support of and exercise a siren attraction upon ministers of finance because the government always shares through the tax

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impositions in the benefits of inflation, through swollen returns of income tax, corporation tax, sales tax and other impositions.
The effect of these repeated increases in interest rates, five in a period of one year, has been a tremendous increase in the burdens cast upon provincial governments with respect to their borrowings and upon municipal governments with respect to their borrowings, and upon business, and punishing losses upon the holders of Canada's obligations. What the government should be directing its efforts toward in facing the threat of inflation is to seek an increase in productivity.


Edward Turney Applewhaite: I am sorry to interrupt the hon. gentleman but it is my duty to inform him that his time has expired.


Donald Methuen Fleming: I had reached the last sentence.


Mr. McCann:: Go ahead.


Edward Turney Applewhaite: With the consent of the committee the hon. member may continue.


John Horne Blackmore: I should like to hear the hon. member finish.


Some hon. Members:: Agreed.


Donald Methuen Fleming: This is my last sentence. I think that a good deal of the solution lies within the power of the government. On the one hand we have the government lauding the boom and asking political support because they claim we have a buoyant economy with expanding revenues, and on the other hand we have the government taking steps which look as though they were trying to apply the brakes and put a check on the very things for which they are claiming political credit. Let them stop applying conflicting and contradictory policies.


Mr. Cameron (Nanaimo):: The hon. member for Eglinton has taken the Minister of Finance to task for not having said in so many words in his statement that he approved of this increase in the interest rate by the Bank of Canada. The mystery seems to be whether the hon. member for Eglinton approves it or not because he has not told us. I must point out, however, that the change in the Bank of Canada rate is to a very large extent hardly more than an indicator, not having any really direct effect in the way of raising interest rates in other fields, as can be seen from the statistics published by the Bank of Canada in this financial supplement for 1955, in which you see that the highest amount of loans from the Bank of
(Mr. Fleming.)
Canada to the chartered banks was $15 million and that by the end of the year that was only $2 million.
The hon. member for Eglinton quoted some government officials as saying that this change in the Bank of Canada's rate was merely a reflection of changes in other places, and I think that is true. Much more effective are other actions of the Bank of Canada, and those are the actions that were outlined to us by the governor when he appeared before the banking and commerce committee, in which he told us of the agreement which had been reached with the chartered banks to achieve a certain ratio of liquidity in their assets which they were hopeful of being able to achieve shortly after the agreement was reached, and the other perhaps less formal agreement to curtail term loans from the chartered banks.
That there is a necessity for curbing in some way some of the tendencies in our economy at the present time I think will be revealed clearly by the figures issued by the Bank of Canada, figures which the hon. member for Eglinton put on the record of the banking and commerce committee last week.


Donald Methuen Fleming: Those are the same ones to which I referred this afternoon.


Colin Cameron: Yes. They clearly indicate the necessity for some sort of action, whether or not one agrees with the action taken or whether or not one agrees it is an effective action. The increase in the consumer credit from March 31, 1954, to March 31, 1956, shows that the trend is accelerated. From March 1954 to March 1955 there was an increase of $109 million, but in the next year, March 1955 to March 1956, there was an increase in certain selected items, as they were called, of $352 million. When we compare that with the figures for increase in labour income for approximately the same period, we can see that there is something very dangerous in our economy.
I am sorry that I have not been able to compare it with the same dates, but the statistics do not allow that. From May 1955, . from $637 million of labour income, the increase to May this year was only to $676 million, some $39 million. Those two sets of figures compared show that at least in one sector of our economy we are entering very dangerous grounds, but perhaps more dangerous still is the field to which the minister made reference in his remarks earlier this afternoon. That is the field of general bank credit issued in those periods.
I see from the Bank of Canada's report that the total of bank loans in January 1954 was $4,096 million, and in January 1955 there

was actually less, $4,050 million, whereas from January 1955 to January 1956 there was a climb to $4,884 million, or an increase of $834 million, some 20 per cent. When we take the increases after that period, for the rest of this year, we see them climbing even more rapidly, so I think there is perfectly plain evidence that some action ought to be taken by the financial and monetary authorities of this country.
I agree with the hon. member for Eglinton that there are certain weaknesses in the method used. I am not sure that other methods could have been used, but certainly those that have been used have been inevitably used in an indiscriminatory manner so that we have the general curtailment of credit all across the field. Where in many instances it might be certainly to our social advantage to have it curtailed, there may be other areas in which it may not well have been increased. That, of course, is the inevitable result of the set-up of our financial institutions in Canada.
There is, of course, another method that the Bank of Canada uses on occasion to attempt to curb such a period as we appear to be going into. Mr. Coyne told us in the banking and commerce committee that it was, by and large, the most effective method, apart from consultation with the chartered banks; and that is, of course, the method of open market operations. However, he denied the suggestion of some of us on the committee that there was inevitable conflict in the purposes of the bank in open market operations, a conflict between the aim of curtailing inflation and reducing total money supply and the position of government bonds, that that conflict was always there and largely hamstrings the bank when it attempts to deal with the situation by that method.
I would suggest that sooner or later in Canada we are going to have to take some very drastic steps with regard to the channeling of investment in this country. We have all observed the attempts by the government to channel investment into the fields that they think are socially and economically desirable. We have seen the rather desperate efforts to channel it into housing and the various roadblocks they have met in different places, because in the last analysis this government and this parliament has no control over the fields of investment in which those who have control of pools of capital place their funds.
I suggest that the step that was taken- and, I gather, rather deplored by the hon. member for Eglinton-with regard to the Bank of Canada is a step which eventually they are going to have to take with regard
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to the whole of the banking system of Canada. We cannot any more say that it is feasible to operate the central bank on a part publicly owned and a part privately owned basis. Sooner or later we are going to have to face the facts that the chartered banks and the central bank are parts of one integrated monetary and financial system and that they also must be placed under one control and under one policy. It is useless charging the chartered banks, as I have heard them charged in recent days, with failing in their social duty, because they also have a conflict in duties. When I hear members, as I have heard them, charging the chartered banks with having failed dismally in entering into the necessary field of consumer credit, I am rather astonished, because those same hon. members would be the very first to object were it proposed that the public authority should tell some of the privately owned institutions what particular business it should engage in, which particular line it should drop and which particular line it should continue.
We can only expect that those who are responsible to shareholders of private institutions, such as the chartered banks, are bound-in fact, it is their duty-to maximize as well as possible the returns to the shareholders of those institutions.
I suggest that we are going to have these conflicts, we are going to have these rather ineffective attempts to control inflation in our economy, so long as we have this rather anomalous situation of an important, perhaps the most important, part of our monetary system and our financial institutions, held in private hands by people whose interests are bound inevitably on occasion to conflict with the public interest. But I for one am very glad that the Bank of Canada has taken this action. I am doubtful as to whether it will be very effective, but it certainly is a warning to the country of the great dangers that lie ahead, a warning that we all ought to heed very carefully. Whilst these increases in total bank loans may not yet, as the hon. member for Eglinton pointed out, have caused any increase in the cost of living, by the time they are realized in investment we may very well be facing a very severe rise in the cost of living and very dangerous inflationary tendencies.
My complaint would be that the Bank of Canada delayed too long in this action and allowed the situation to get too far out of hand before attempting to curb it.


John Horne Blackmore: Mr. Chairman, we Social Creditors are not desirous of participating in the discussion of this particular item until we have heard what the other members

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have to say. I think there are some other hon. members who desire to speak.


Mr. While (Middlesex Easl):: Before we go on with the other items, there are one or two things I should like to draw to the attention of the minister. Each time there has been an increase in the central bank rate of interest the accompanying news item in the paper always says this is done to prevent inflation. I suggest that you cannot prevent a disease which you already have. Inflation has gone on to such an extent that our dollar of 1900 is now worth 12J cents. We are therefore starting rather late in the day to prevent inflation that has now reduced our dollar to that extent.
I do not want to go very deeply into the question today, in view of the rush of business, but I want to bring to the attention of the Minister of Finance some remarks made earlier this session dealing with the five day 40-hour week for employees in veterans hospitals across Canada.
As reported at page 5863 of Hansard, he indicated that he expected to deal with the matter on his estimates. So before he has sealed up the thing entirely I want to have him give it the thorough consideration that he should before making a final decision. I know that governments are prone to refuse to review a decision once they have made it and it has become public. Then as reported at page 7072 of Hansard of August 6 the Minister of Justice had this to say, when he was dealing with the pay and pension rates of the mounted police, in replying to some questions asked by the hon. [DOT] member for Prince Albert. Speaking to the hon. member for Prince Albert he said:
Should he become a member of the government with a government member's responsibility, he would realize then if he does not realize now that you cannot pick and choose in your treatment of those who are paid with taxpayers' money.
In other words he could not discriminate. When you come to veterans hospitals-


Walter Edward Harris: Mr. Chairman, what has this to do with finance?


Mr. White (Middlesex East):: It has this to do with finance; as reported at page 5863 of Hansard you stated that you would deal with the matter. That is what it has to do with it.


Donald Methuen Fleming: On his estimates.


Harry Oliver White: Yes; on your estimates. I am leaving it right on your doorstep. If the department want to deal with the employees of veterans hospitals in a way that is different from what the Minister of Justice said they must do with those who are paid by taxpayers' money in the R.C.M.P.,

that is their mistake. I am pointing out this inconsistency to them, and I hope they will act accordingly.


Mr. Montgomery:: Mr. Chairman, the other evening, on the discussion of the tariff, the matter of potatoes came up but I was unavoidably absent at the time. At the same time, in reply to a question asked recently, the Minister of Finance indicated that he would be making a statement on his estimates. I presume that I am not out of order in speaking to that matter now. I do not want to take very much of the time of the house, but I should like to refer to the statement made by the minister the other evening as reported at page 7017 of Hansard, because I think it can be misleading.
In discussing the question of the consideration of the Canadian potato growers in this application first, I think, to his department, concerning protection against potatoes, and second in their petitions to the tariff board, the minister said:
This request of the Canadian potato growers' association was simply that they might have access to the United States without paying anything whatever for the concession under the general agreement on tariffs and trade.
I do not think that is just the interpretation or at least that-


Walter Edward Harris: Mr. Chairman, may I interrupt my hon. friend by saying that he will find there was a specific question asked-I think it was by the hon. member for Kamloops- at which time I attempted to correct to some extent the incorrect impression that someone might have received from what I said at the time. I think both the hon. member for Victoria-Carleton and the hon. member for Kamloops as well as myself fully understand the position of the potato growers and their representations.


Gage Workman Montgomery: Not according to this statement, Mr. Chairman, in answer to the hon. member who interrupted at that time.


An hon. Member:: The hon. member for Kamloops.


Gage Workman Montgomery: If I read it correctly, what the minister said was this:
Yes, that was precisely the presentation they made to the tariff board.
According to the tariff board report, this is what they say; it is a summary:
The request was for the deletion of the provision for free entry of seed potatoes and for the application on a year round basis of the seasonal duty of 371 cents per hundredweight . . .
Which at present applies only to the period-


Walter Edward Harris: Put in the condition they attached to that.


Gage Workman Montgomery: That is the end of the paragraph.


Walter Edward Harris: They attached a condition to it, namely that the tariff for the admission of potatoes into the United States would not he altered. That was the point I was trying to make. That is the crux of the problem.


Gage Workman Montgomery: According to the New Brunswick brief the situation is this; and I think the growers in New Brunswick, possibly even more so than those on the island, are in an awkward position because we have to move our potatoes by rail, and freight rates are not quite so favourable there. Also owing to the fact that, from the point of view of the return from a cash crop, we produce close to 20 per cent of all the potatoes grown in Canada, I think these people down there understand the situation fairly well.
As I understand it, their requests may be a little bit different, and I think possibly this is what the minister was referring to. They first said, "We would be quite willing to have no duty at all, to have free passage back and forward across the international boundary". I am sure they feel that would be the best way. Nevertheless they realize that such a thing could only be brought about by negotiation and by this government being able to convince the United States government that their potato industry would not be injured in any particular manner. In other words it would be the United States government that would have to take off their duty.
Realizing that this would be possibly quite difficult to bring about, at least without some bargaining method, their second and strongest recommendation up to the present was that until such time as the situation expressed in No. 1, to which I have just referred, was brought about, there should be a countervailing duty of 37 J cents at all times on potatoes entering Canada from the United States.
The point is this, that when the minister's statement is read by our potato growers they are going to take a far different view of it than perhaps the minister intended. I am not going to go into this in detail at all because I do not want to delay the house. I do not think I can be accused of delaying these estimates, and I do not want to be guilty of that at this stage. The minister did make a statement at page 7108 of Hansard, and I do not want to repeat the whole of it. There is this line:
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However, there may be other means whereby we can meet the requests of the potato producers at least to some extent.
The minister has said it would not be possible to induce the United States government to change its tariff in accordance with the wishes of the potato growers, and I would say he meant in accordance with the wishes expressed in paragraph 1 of the New Brunswick submission. Since the minister made no statement today, and possibly intended that to be a statement in answer to my question the other day, I am wondering if he will not enlighten the house and the people across Canada who are interested in producing potatoes as to just what the government had in mind when he made the statement that there may be other means whereby the requests of the potato growers could be met.
The minister went on a few lines later to say that this matter is not very pressing though it may be on future occasions. Let me be very fair about it. I think that conveys to the potato growers of this country that they are not getting the consideration they feel they should be getting. If the minister had not qualified that statement the farmers would have been led to believe there was something being considered and an announcement might have been made before September 1, when the crop commences to move. If there is any announcement the minister can make I should like him to tell us what is being considered, so the growers will know before they start moving their crops.
Last year, for instance, the crop commenced to move in September, and farmer after farmer was forced to sell when the market was lowest in order to get money. Many of them had to sell at half the cost of production. During the first four months of the movement they were trying to get negotiations under way with the Department of Agriculture because they thought that was the proper department to approach in order to get some sort of program that would give some stability to the crop. When that did come the program did give some stability, though it came far too late for many producers who took heavy losses. Nevertheless the program not only stabilized the market, but from that time on the market commenced to go up.
There is one more thing the tariff board report does not mention. I do not know whether or not it was in the presentation, but it does affect the economy of the potato producer. Until last year Canada grade 1 potatoes measured two inches. This was changed in order to meet the competition from across the border. The state of Maine, one state in the United States, raised the size of their grade 1 potato; and according to federal law when

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any state took such action affecting the grade of potatoes it became effective in all states, so we were obliged to do something to keep the smaller sized potatoes, which would be considered culls by our potato growers, from going into the market as Canada grade 1.
I do not think there is too much criticism of that change, but remember when that action was taken our farmers then faced a larger number of culls. It is true that a potato anywhere from an inch and a half to two inches is a good table potato, but it is not accepted as Canada grade 1. This means that if a farmer has a large crop of potatoes, in some yields he gets a good many that are under two and a half inches and which are good eating potatoes, but he cannot market them as Canada grade 1. He must feed them to his stock or turn them over to a starch factory if there is one within an economic distance from him.
All these things affect the farmers position. The cost of machinery and the capital outlay to raise a crop of potatoes will be just as great if a lot of them are culls as it will be if a greater number of them are Canada grade 1. I think it is as the result of a lot of things like this that the matter is pressing, and I think the potato growers are entitled to know what the government has in mind.
There is something else that has affected us down east which does not affect some of the provinces, and that is the freight rate change. You may be surprised to know-


Walter Edward Harris: Not on my estimates, please.


Gage Workman Montgomery: I do not want to be out of order, Mr. Chairman, but this is all tied in with the potato economy. I would have taken it up if the minister had not said he was going to deal with it on his estimates. I do not want to infringe, but I do think I am entitled to say one thing about the statement made by the hon. member for Ottawa East the other evening.
I am sure he does not understand the situation. His statement is in Hansard, and I am only going to take a minute to deal with it. He said that someone should speak up for the consumers, and he mentioned paying $8 or $9 a bag, I presume a 75-pound bag, for potatoes. I should like to tell the hon. member, the members of the house and the consumers of this city and other cities, that when they pay that price, if they do, it is not for very long. If he did pay that price, I will venture the guess that he was buying United States potatoes. If those potatoes were grown in New Brunswick the producer would not be getting 7 cents or 8 cents a pound, and according to him he was paying 10 cents a pound in Ottawa.

I want to make this statement, and it has-been made before; that commercial potatoes cannot be grown-there are potato growers in this house and if they are from New Brunswick they will agree with me-even under the most efficient conditions for less than 1 cent a pound. During the first three months of last fall our farmers were receiving half a cent a pound. I should like to say that on June 7 of this year potatoes were being landed in Ottawa from New Brunswick at a wholesale price of 5 cents a pound. I cannot see any reason why the consumer who might pay another 3 cents, or perhaps 4 cents, for the local handling should kick at such a price, because there is far more stable food value in a pound of potatoes at 15 cents than in a pound of bananas or in three oranges. It is all in the point of view, and I am afraid the point of view of the farmers is not appreciated by the consumers.
I am not going to take any more time on this now, Mr. Chairman. I feel that in part of his statement the minister has held out a hope, and before he winds up the discussion I should like him to tell us what is under consideration, because I cannot agree with him that it is not a pressing matter.


Clarence Gillis: Mr. Chairman, the question of inflation that was posed first by the minister is one to which anyone who is thinking at all has to pay some attention. When the minister concluded his statement he quite clearly said they were faced with the problem of either having high interest rates or high prices, and the steps they were taking were designed to prevent prices rising.
I cannot agree with him on that. As I see the question now, there is no doubt about it that we are headed into a period of inflation. Whether the manipulation of bank credit and bank interest in this country is the device that can prevent it is doubtful, in view of the fact that the economies of Canada and the United States are so closely integrated that any rise in prices in the United States- and there are certainly going to be rises in that country-is going to affect this country very badly.
I think the action the minister has taken means this. The government is blaming the person who has to borrow when prices rise. I do not think that is the case at all. I am just going to bring this briefly to the minister's attention, because I sat in this house all during the war when the mechanics for the prevention of inflation were developed and applied. I went through the period of inflation in the 1920's. Everyone in my age group did. We know the effects of it. We went through the period of deflation in the 1930's,

or the 10-year period, without money. We do not want either of them again if we can help it.
If the minister will just think about this for a moment he will realize what is going on. In the United States in the last two years there have been two increases in the price of basic steel. The price of basic steel was raised $7.50 a ton in 1955 and $8.50 a ton just recently. That is an increase of $16 a ton in the price of basic steel in two years. The same pattern will be followed in Canada after wages are adjusted. An increase of $16 a ton on basic steel can mean an increase of at least $35 a ton on fabricated steel, and steel runs through the whole economy of both Canada and the United States.
Those increases in steel prices have not yet been reflected in our commodities. Within the next year or two they will be shown in practically everything we use in the country. I do not believe that just by increasing the bank rate in Canada to 3J per cent for the people who have to borrow in order to conduct their business you are going to prevent an inevitable rise in prices. I think what the increase in interest rates is going to do is to force the small operator out of business altogether. The big fellow will carry on because by and large the big companies, the big processors, the big contractors, are pretty well rooted in the banks anyway, and they have the necessary collateral to get money to carry on their business. But the fellow who is struggling along, depending on refinancing as he goes on, will be in this position.
In my judgment this device will put him out of business. The increase is an over-all increase that applies straight across the country. While it may help to some extent in some sections in Canada, it will hurt other sections. It will interfere with the government's program of public works. That is something that will hit the maritime provinces pretty badly, because any project that is designed for that part of the country at this time is needed in order to provide employment.
The second world war took us out of the bust and boom business and the war in Korea prevented another bust. I believe the minister, the government and the government of the United States are going to have to reconsider their position, because what Russia has been waiting for for a long time is for this country to boom and bust itself.


Walter Edward Harris: Boom too much and then bust.


Clarence Gillis: That is right. There is only one way to prevent it. Take a look at the profits. Take a look at them both in Canada
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and in the United States. Just check over the people who threw in the $16 a ton increase on basic steel in the past two years. Take a look at their profits over the last two years. They said they could not afford an increase in wages in 1955. I have the figures here. I am not going to bother to put them on the record and delay the house in doing so. In 1955, when United States Steel hiked their prices by $7.50 a ton, they could have reduced the price of steel on the basis of their profits in that year. They could have reduced the price of basic steel by $7.50 a ton. Mind you, those are the people who are not very much concerned about inflation, or about what it is doing to a country, as long as the profit picture is bright for them. That is their one concern.
I might refer to the increase that General Motors brought about just recently, after the wage negotiations. They said they could not pay the wage increases. Well, their profit pictures show they could have done pretty much the same thing. We are going to have to start considering the matter. The government of the country that gets blamed for everything is not managing the economy of the country. They have no control over people who will throw in devices of their own for their own convenience without any regard for the public interest.
I believe we are just beginning to think about this problem. If we are to correct the situation and keep ourselves in balance over the next two or three years we shall have to consider either an excess profits tax or a price control policy. In my opinion there is no other way out of it because, as I said a moment ago, the government is not responsible for the increases in prices. The small operator or the small businessman will be driven out of business, because he is not going to get money to refinance himself from year to year. The big fellow who has his roots in the banks will be able to control the whole economy of the country.
I just wished to say this briefly, because it is something we have to begin to think about. I do not think the device we are using now will be sufficient to take care of the situation.


Donald Methuen Fleming: In connection with the minister's earlier announcement as to the savings plan campaign, is he prepared now to indicate the rate to be offered on these bonds?


Walter Edward Harris: No, Mr. Chairman, I am not at the moment.


Edward Turney Applewhaite: Shall the item
carry?


John Horne Blackmore: I have chosen not to discuss the increase in the bank rate. I think it is a wrong move and I do not think it

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will do the things it is supposed to do, but I did feel there would not be any advantage in talking about that. There are other matters which I think are of more importance to us at the present time having to do with the Department of Finance.
Before leaving the matter of the increase in interest rates I might raise this question for the consideration of all hon. members and the minister. Is not this reported rapid expansion of consumer borrowing evidence that there is a shortage of purchasing power in the country, and that there are more goods than the people have the money to buy? I would say it is, and I am sure the expansion of consumer buying power to some $2J billion does not necessarily have an inflationary tendency unless there is a shortage of the kind of goods that money is borrowed to buy.
I do not know where I could obtain a breakdown of the articles for which people have borrowed, but I would say a very large amount of that money was borrowed to buy new automobiles, and a very large portion of it was borrowed to buy television sets, refrigerators, deep freezes, high class furniture and a great many other things of that nature which people today appear to feel they require when they set up housekeeping. Therefore they borrow in order to buy these commodities.
Before one could say with any certainty that the $2J billion which has been borrowed to buy goods would cause inflation, one should have to know whether there is a shortage of the particular kinds of goods bought with the money that was borrowed, and whether there has been a shortage of the material that went into the production of those goods; in other words is there any likelihood that there will not be more goods put on the market immediately to replace the goods which have been purchased.
Let us take automobiles, for example. There will be an automobile right in the yard to take the place of every automobile that is purchased. There will be plenty of manpower and material to manufacture another automobile upon the sale of the first one, and a great many people will be employed in the shops to produce the automobiles that are turned out. The money spent for the purchase of automobiles probably will not go into the market to buy milk, bread, butter, cheese, eggs, clothing and shelter and various other necessities of life; instead it will probably go into the bank or into the purchase of highly specialized materials.
Consequently I see no reason why we should assume that this great increase in consumer borrowing necessarily indicates an
[Mr. Blackmore.l
inflationary trend; and if it does, as the hon. member for Eglinton implied, if he did not in fact specifically state it, if we desire to relieve the market of that surplus buying power which is worrying the governor of the Bank of Canada why not ration the amount of that kind of purchasing power that can be borrowed to buy automobiles, deep freezes, refrigerators, high class washing machines and various other things? Why inflict hardship on the farmers and small producers all over the nation in order to make the big fellows be good? I think the whole trend indicates a shortage of purchasing power on the part of the people to buy the goods which the nation produces in abundance.
I would like to make a comment concerning the very fine statement the minister made. It seems to me that our finance ministers have always been able to paint the most glowing pictures such as would lead a person to imagine he is on the verge of floating into a paradise, until he gets out on the street and visits some old age pensioners who are trying to live on the niggardly pittance they get. Then he begins to feel differently about the matter.
The minister spoke about the danger of the shortage of goods. He did not tell us in what goods or services we are in danger of finding a shortage; it would have helped very much if he had done that. I will agree there are a number of commodities which are being stockpiled in the United States, Canada and other places in preparation for possible military trouble. If these are the goods of which we are in danger of running into shortage, then why not ration them and thereby prevent their prices rising? It looks to me as though that would be a far more sensible approach than raising bank interest rates.
In painting his beautiful picture in his statement the minister completely overlooked the fact that our provinces today are literally at their wits end to know how to get money with which to finance their affairs, and that our municipalities have gone even beyond that. Despite the facts, the ministers picture indicated that everything in this nation is lovely and prosperous and that there is no cause for anxiety at all. Well, that is a very unrealistic picture and I think the minister will probably be forced to realize that before he grows very many years older.
The matter I desire to speak about this afternoon concerns some of the dangers which confront us. I hope everybody in the house got around to reading a statement which was made by Professor Louis Budenz, the top ranking authority on communism on the North American continent. He made

certain portentous comments in Canada recently; these were his words:
Unless those who are in charge of the governments of the so-called western world are able, very shortly, to turn back the course of the past 20 tragic years in our international history, we are writing the downfall of the entire non-Soviet governments. We are writing the second chapter in the achievement of the world Soviet dictatorship with the hammer and sickle over Ottawa and Washington before the next generation has expired.
You will notice that he has said there must be a complete change. I ask the minister if there has been one single change in his way of conducting the affairs of his department. His speeches sound exactly like the speeches of Hon. C. A. Dunning, and all the men who have served as minister of finance throughout the years. There has been no change at all. My point, Mr. Chairman, is this. If what Mr. Budenz says is true, and if this country desires to change the trend we are following, we should see some evidence of adjustment in every department of government in this country and particularly in the Department of Finance. One sees no evidence of change anywhere.
I should like to speak about a possible change in our way of approaching matters pertaining to finance. There exists a confusion in the minds of hon. members in this house, as indicated by the way they talk, regarding the meaning of the word "inflation", and this confusion positively sickens me to the very marrow. The price of steel has increased by $6.50 a ton. I think we should have a show of hands among the hon. members of this house to see if anyone believes that this is inflation. Is there anyone here who could be deluded into believing that this increase in the price of steel is inflation? Well, it is not inflation. That is an increase in price that has been forced by an increase in the cost of the production of steel.
Is that increase in the cost of production of steel the result of inflation? No. They tell us that is the result of increased wages. Are increased wages inflation? How can you call an increase in wages inflation? If you have about 650,000 men banded together so they can force you to pay twice as much money as you were paying before, who in his right senses could call that inflation? That is a forcing up of the price by an increase in the cost. Inflation is a raising of the price which results from a scarcity of goods. Is there any scarcity of steel or of the ingredients of steel or of anything that enters into the production of steel? No. Is there a scarcity of men to engage in the production of steel? No, there is not. How can you call this rise in price inflation?
We have heard a certain amount of talk about inflation during the last 10 tragic years.
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We have had inflation, if you want to call price manipulation upward inflation, but I do not call it that. We have certainly had rises in prices. I should like to put on record for the benefit of people out in the country- no one in the house needs these figures-some information to help them do a little thinking. I should like to put on the record what has happened since this government or its immediate predecessor permitted an increase of $5 per ton in the price of steel in 1946. Let us follow through what has happened to prices, taking 1939 as being about 100. In 1940 the price index was 105-645600; in 1941,	111-916800;	1942,	117-223200;	1943,
119-474400; 1944, 119-956800; 1945, 120-600000.
Those were increases in prices during world war II. We will grant that those could have been the result of inflation, because there was actually a shortage of goods in the world during world war II and there was actually a surplus of money in the hands of the people during that period. In 1946 the index was 124-620000; in 1947 there was a jump to 136-358400. You see the effect the $5 per ton increase in the price of steel had. Then in
1948	it was 155-976000. See the way the increase in the price of steel was working? In 1949 it was 160-800000; in 1950, 165-463200; in 1951, 182-829600. We were in the Korean war at that time.
We will grant again that there might have been a shortage of goods and excessive purchasing power, though I do not think at any time we had a short supply of any goods in Canada; but we were still being affected by the increased price of steel. In 1952 the index was 187-332000; in 1953, 185-724000. It began to go down for the first time. In 1954 it was 186-849600; in 1955, 186-528000; in 1956, 189-422400.
Someone will say that we are not using the proper price index. No, we are not using the commonly employed index because in
1949	somebody began to be so much afraid of the price index we were using, which showed such a tremendous increase in prices, that they changed the price index and began to count 1949 as 100. From then on we had these indexes:
1949 		
1950 		
1951 		
1952 		
1953 		
1954 		
1955 		
1956 		
It looks very much better, does it not? So we are told that the price index now is 117-8, where it ought to be 189-422400.
The reason I mention this particularly is that we have an increase in the price of


Mr. Argue:: The what?


John Horne Blackmore: The Bradburys of Great Britain. Great Britain fought world war I on the Bradbury, which was nothing but a paper pound issued by the government debt-free.


William Alfred Robinson: Order. I am sorry to interrupt the hon. gentleman but I am obliged to advise him that his time has expired.


Mr. Zaplitny:: Mr. Chairman, it is not my intention to pursue the Bradbury story at

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this point; no doubt it will be resumed. However, I think the statement made by the minister today with regard to the increase in the interest rate of the Bank of Canada was extremely important. It is also important that we assess the effectiveness of the potential of that increase.
To me it was interesting to hear the minister describe what the trend was in his analysis with regard to what he called the possibilities of inflation. As to what may come about in this country if something is not done he used these words-and I wrote them down as he used them-speculation, inflation and instability. That was quite a revealing statement from the Minister of Finance in this parliament. In spite of all that has been said by him and his colleagues throughout this session about the soundness of our economy and of the great so-called prosperity that we are experiencing, he now refers to the possibility of speculation, inflation and instability being in store for us unless something effective is done.
I think those three words describe very well the kind of economic and financial system under which we are attempting to live in this country. In a way it is a sad commentary on a system whose motivation is based chiefly on profit making rather than the provision of services. From that standpoint he went on to say that in 1956 we have had a year which we describe as most prosperous for most industries and most people. I notice that he used the word "most" on two occasions in qualifying the statement, and it was well that he did so.
I think it should be pointed out that in this so-called prosperous year the position of agriculture, for example-this applies to a few other occupations but particularly to agriculture-is such that it could not be included in that statement. The income of that industry has slipped in the last few years by about 40 per cent. If it is compared with some of the industrial profits, then certainly the word "most" would have to exclude agriculture. I have before me certain figures taken from the bureau of statistics. They show that in the twelve months 1954-55 the profit increase was as follows:
Profits before taxes, manufacturing industries Percentage increase, 1954-1955
All manufacturing	 27 per cent
Wood and paper products	 22 per cent
Iron and steel products	 33 per cent
Electrical appliances and supplies .... 26 per cent
Products of petroleum, coal	 22 per cent
Chemical products	 24 per cent
Textile products	 74 per cent
Non-ferrous metal products	 57 per cent
Non-metallie mineral products	 44 per cent
Other manufacturing	 34 per cent
In fairness to the textile products section I mentioned I should point out that in 1954 [Mr. Zaplitny.l
there was an extremely low profit figure for that industry. Therefore a 74 per cent increase does not reflect an exact picture. But taking them as a group, showing an increase ranging anywhere from 22 per cent to 74 per cent or averaging in the neighbourhood of 35 per cent, when you relate that increase to the drop of about 40 per cent in the income of agriculture it is easy to see what the minister means when he says "most industries" and "most people" in relation to our country.
The part I want to refer to particularly is the remedy that apparently the minister is applying in prescribing for this danger of speculation, inflation and instability which he tells us is what will happen unless the action which is being proposed is taken. In giving us the choice he added these words, "It is better to have a higher interest rate than skyrocketing prices". I have heard of many hard choices to make, but this is Morton's fork and Hobson's choice all rolled into one. The people of Canada are being asked to choose between higher interest rates and skyrocketing prices.
To me it indicates a complete collapse of government policy when all they can offer the people of Canada is a choice between those two evils. Certainly if all our economy is anywhere nearly as sound and if our nation is anywhere nearly as prosperous as our friends on the government side have been trying to persuade us for the last six months, the Minister of Finance should be able to do better than offer the people of Canada a choice between higher interest rates and skyrocketing prices. But that seems to be all he has to offer at this time. I think it is a sad commentary on the kind of policy followed by his government and by his department if that is the best choice he can offer the people of Canada.
Then further on he gave us one of the reasons for this increase in the Bank of Canada rate. Though he did not say it would be the definite result, he more or less expressed the highest hope that it would have a moderating influence on the expansion of credit. What does that mean when you put it into ordinary words? It simply means the restriction of credit. Instead of saying "moderating influence", which is a more mellifluous way of putting it, the attempt apparently is to restrict credit, to make it tougher to borrow money, by raising the interest rate, so you will have to pay more for the service or the privilege of using somebody else's accumulated savings or somebody else's accumulated capital. That is what it means in plain, ordinary language.

What does it mean to the ordinary small operator, whether he be in business or on the farm or in any other occupation, in which his credit facilities or his credit standing or his credit potential is limited as compared with that of those who are operating on a massive scale in competition with the small operators, and who have almost unlimited credit? They are the ones who own the credit institutions from which both the small borrower and the big borrower must borrow. In effect what happens is this. The minister is telling this parliament and the people of Canada that the government policy is such that you are going to have to pay more for the privilege of using the credit of this country because it is in the hands of the people who have both the capital and the credit. Therefore if you have not the capital, and if you want to get some of that credit, you have got to pay more for it.
Where does that put the small operator in competition with big business? Where does it put the small independent merchant, for example, whether he be an implement agent or a grocer or in any kind of small business, when he is in competition with, say, the T. Eaton Company, Loblaws or any of the huge chains such as Safeway and all the others, or the huge insurance corporations? He must go to the credit facilities which are owned by those huge outfits and try to borrow money from them in order to compete with them. What chance has he when the government throws its weight on the side of the big operator and tells the people of Canada, "we are just going to make it that much tougher for the small operators to meet them in competition"? He is finding it tough enough already, and now they are going to make it that much tougher. According to the minister that is going to have a moderating influence on the expansion of credit. In his opinion that is going to end speculation, inflation and instability.
I want to make it quite clear that I share the views expressed by my hon. friend from Cape Breton South, when he pointed out that this is completely ineffective. It does not attack the root problem, and it is not going to do anything for the average small operator in this country. It is just another method by which an extra profit for the privilege of using the financial credit of this country is being handed to the big operator at the expense of the average person, the taxpayer and the average small operator in this country.
What is basically the trouble is simply the fact that we are attempting to operate a profitmaking machine, an economy based on economic motives rather than services. These 67509-4744
Supply-Finance
profits keep being channelled into the hands of the same people, the same financial institutions, and the rest of the people of Canada have to go to the same people to whom they paid high prices and ask for the privilege of using some of their own money at a rate of interest. This government is making it harder for the people to go and get back some of their own money by making them pay a higher toll for the use of that money.
I agree with my colleague when he said that if we are going to tackle the thing in a serious vein, if we really mean what we are talking about, if we are going to try to avoid speculation, inflation and instability, then we will have to look at it from the point of view of price control or at the very least from the point of view of an excess profits tax. There are ordinary corporate taxes, and some of the members of the government will argue we are already using the taxation system as a method of more or less redistributing the wealth. But let me quote something from a leaflet that came into my hands not long ago. It points out how limited the ordinary corporation taxation is from the point of view of the redistribution of wealth. It says:
All of the taxes which the corporations pay must, in the nature of things, eventually be passed back to people: either to the shareholders of the corporation in reduced dividends, or to labour in lower real wages, or to the consumer in higher prices for the corporation's product.
This is the significant sentence.
In the end all corporation taxes come to rest upon people, who are the only taxpayers.
That points out the very strict limitation in the use of ordinary corporate taxation for the redistribution of wealth. This points out that all the corporation does is simply pass on that tax in the form of higher prices or lower wages or lower dividends, as the case may be, and in effect it is the consuming public or the purchasing public, if you look at it from the point of view of labour, who pay the tax anyway. I would ask the Minister of Finance at this point if he agrees with this statement I have just read. Does he think that is the effect of ordinary corporate taxation? The minister does not answer, and while he is making up his mind I shall pass on and ask the Minister of Justice whether or not he agrees with that?


Mr. Garson:: When I wish to express my views upon economic questions such as this, I prefer to do so in my own language.


Frederick Samuel Zaplitny: I am glad to hear the minister say that, because what I was quoting was his own language. It is a quotation, from a speech made by Premier Stuart Gar-son over the C.B.C. on June 9, 1947.

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Stuart Sinclair Garson: May I suggest to my hon. friend that he state sufficient of the context so the quotation will make more sense.


Frederick Samuel Zaplitny: I would have to go beyond the ambit of the whole speech to make any sense.


Stuart Sinclair Garson: If my hon. friend is not willing to do so, if he will send my speech over to me I shall be glad to do it.


Frederick Samuel Zaplitny: I shall be glad to let the minister refresh his memory and see if he agrees with it.
I wish to point out that if we are going to really solve this recurring problem which has faced Canada more than once-and this is only one of the sources of the so-called inflation, instability and speculation which I believe is inherent in the very economic system which we are trying to operate-we are going to have to go down a lot deeper than raising the interest rate so far as the Bank of Canada is concerned. We are going to have to do something to bring ourselves closer to the efficient operation of our economy, and bring it as close as possible to service at cost. Because as long as we have to pay in large amounts in the form of profit for the services performed by someone else for things we can do better for ourselves, whether that be in the ordinary industrial sense or in the financial sense, then we are going to be faced again and again with the same situation. Every time the government takes this kind of action it is simply widening the gap and creating greater hardships to the small operator, whether it be the farmer or the small businessman in this country as opposed to the huge business concern.


Mr. Monieilh:: I should like to ask the minister two very brief questions. First of all, did he not intimate that the Bank of Canada could, if it saw fit, create a certain expansion of credit?


Walter Edward Harris: Yes.


Jay Waldo Monteith: Having that in mind, may I ask him this. Has he or the government or the officials of the Bank of Canada given any consideration to another possibility of, shall I say, holding inflation in check or creating a trend the other way, by allowing sufficient credit to cause enough expansion to supply the goods which would fill the demand.


Edward Turney Applewhaite: Shall the item carry?


Jay Waldo Monteith: No. I am wondering if the government or the officials of the Bank of Canada have given any thought to that?


Walter Edward Harris: I shall be glad to clean that up when I answer the questions.


Edward Turney Applewhaite: Shall the item carry?


John Horne Blackmore: No, Mr. Chairman, there are a number of other matters which-


Stuart Sinclair Garson: I wonder if my hon. friend would permit me to reply to the hon. member for Dauphin. He asked me to give the context, and I would be glad to give the context of this quotation. It reads:
Tonight I should like to reply to C.C.F. broadcasts in this and in another series. In these we of the Manitoba government are criticized rather severely because we are not providing at the taxpayers' expense more drainage, more roads, increased educational grants and pensions and social and health services, and a larger civil service to administer expanded governmental activities generally. To do these things would of course hugely increase the cost of provincial government in Manitoba. Yet not once in the broadcasts did any C.C.F. speaker even attempt to state the cost of what he was advocating, let alone give the slightest consideration as to how that cost could foe met.
Well, of course, everyone knows that it is a bit childish to advocate extremely costly measures with a complete unconcern as to how they are to be paid for. Broadcasts of this sort are made only for the uninformed.
Our opponents do not accuse us of recklessness or extravagance. On the contrary we are accused of being too thrifty. It is a disgrace, they suggest, that with war's buoyant revenues we have surpluses and use them to reduce the provincial debt.
Then I went on to examine the sources from which this revenue that would be involved in these vast expenditures which the C.C.F. were advocating would come. I pointed out that it will not come from natural resources revenues because they had -been absorbed into the budgets many years ago. I pointed out, amongst other things, the part my hon. friend from Dauphin was referring to and I said:
The third source from which the tax moneys to pay for increased governmental services do not come is large corporations. Corporation or joint stock companies are merely devices, pieces of machinery if you like, by which a number of people join together to do business which they could not do individually.
And, Mr. Chairman, might I say how intensely gratified I am that a member of the C.C.F. party, in the person of the hon. member for Dauphin, is accepting these doctrines and quoting them back to the members of the house with approval.
These corporations are organized-
-to make profits if they can, and amongst other things to pay taxes. All of the taxes which the corporations pay must, in the nature of things, eventually be passed back to people: either to the shareholders of the corporation in reduced dividends, or to labour in lower real wages, or to the consumer in higher prices for the corporation's product. In the end all corporation taxes come to rest upon people, who are the only taxpayers.

My hon. friend keeps repeating my language in a different context. Well, this is a new and different policy pattern for our socialistic friends of the C.C.F. I congratulate them on at last having seen the light; and it is a matter of pride to me that they have seen the light from a speech that was originally made by myself.


Frederick Samuel Zaplitny: Just one moment; since the minister has certainly widened the area of discussion a great deal by going back to the beginning of his broadcast, which has nothing to do with the subject under consideration today, and challenged the C.C.F. to point out where some extra funds could have been derived in the province of Manitoba to pay for the services we have advocated, in other to save time I shall give one source which he will recognize very quickly, and that was pointed out by a man who was his own leader at one time in the province of Manitoba, Hon. John Bracken, who pointed out that the government of Manitoba, of which the Minister of Justice was premier at that time, was paying the breweries of Manitoba $1 million a year more than they needed for beer over a long period of time. If they had put that into the public treasury they could have provided some of the services we advocated.


Stuart Sinclair Garson: Again my hon. friend is quite wrong in the statement he makes because, if he will examine the report made by Hon. Mr. Bracken closer than he has done, he will discover that it did not apply to the period of which I was speaking in this speech.


Frederick Samuel Zaplitny: You are merely trying to wiggle out of a position.


John Horne Blackmore: Mr. Chairman, when my time was exhausted a few moments ago I had been dealing with the matter of currency in the Guernsey islands, and pointed out that in the case of Guernsey island there was a very successful use of government credit, debt-free money spent into circulation. In that case the money was spent into circulation for building public works.
Before going on with the Bradburys, which I indicated I would be talking about, may I point out to all those who are interested that the Social Credit government would use the power to create debt-free money based upon the goods and services producing and consuming power of the governmental unit in which the money was being created and in which it was to be used, and with this debt-free money the first thing they would do would be to pay what they call the compensated discount on the goods coming into consumption over the retail counter.
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This compensated discount would bring down the price of the goods, which would mean that the effect of over-all Social Credit would be just exactly the opposite of inflation. It would bring down prices instead of allowing them to rise. Besides that, as soon as the compensated discount would be applied on any one or a very large variety of goods, on the goods of which there was an abundance, then it would enable people to get purchasing power into their hands directly by government distribution which would enable them to buy goods, so that the total markets in the country would greatly increase.
There will be some who will say this. Are we not in danger of running into inflation now? How can we afford to put more money into circulation now that the Bank of Canada is taking steps to curtail the amount of money going into circulation to prevent inflation? I reply with this observation. Can anyone here imagine that say $10 a month put into the hands of each of the people of New Brunswick for instance, who are receiving incomes lower than the taxation level would cause inflation, especially if that money went into circulation in the form of a discount which brought the price of goods down say 10 per cent? Is there any conceivable way in which that could cause inflation?
Would anyone argue that in Canada, if we had plenty of money with which to do it and did have to take the money out of the taxpayers' pockets, we would not raise the old age pensions to $65 without causing inflation across Canada? Would anyone pretend that it would be impossible to increase pensions to the blind and to allow other people who are living on fixed incomes, especially if that money took the form of discounts on the goods they bought? Would anyone contend for a minute that such a process would cause inflation? If so, then undoubtedly indeed we are faced with a hopeless situation.
My contention is that if money were put into the hands of, say, the common people of New Brunswick to the extent, we will say, of $10 a month in the form of discounts, it would enable them to buy a good many things such as milk, cream, butter, eggs, poultry products and a great many things that could be manufactured locally. It would increase the production in New Brunswick, the will to produce, and it would increase the consumption and raise the standard of living in New Brunswick.
The same thing would apply all over the nation. So when I say that Social Credit advocates distribution of a considerable

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consumption at the level we desire. He points out that basically the purchasing power of any country is its goods. Our lathers knew long ago and we know now that barter has been sound all through the generations. They were able to trade their beef for potatoes or any kind of commodities with each other, which simply means that goods are purchasing power. All that is now necessary is to put these goods into a monetary form so they can be used.
I should like to read three quotations. The first one comes from "The Principles of Currency", page 52, as follows:
In enunciating for the banks the simple principle which must guide them in this task of controlling an upward or prosperity phase, it is not difficult to lay down a rough and ready datum line from which to start. That line is simply such a level of prosperity as will keep the whole of our economic system functioning healthily, and will provide suitable sustenance to every man, woman and child in the land, and suitable employment to every employable person: a level which will yield a fair return to capital and make a fair provision for the development of social and other services which have become so important a factor in our national life.
We in Canada do not begin to approach that standard today. Here we are in a period of greatest prosperity, a nation producing something like $28 billion worth of goods this year, yet we have our old age pensioners on a disgraceful standard of living under which it is utterly impossible for a man and wife receiving the present old age pensions to go out and rent a house in Ottawa for instance and still live. It just cannot be done, and I defy anyone to say that it can.
That is far short of the standards set here in this quotation. Why is it short? Because all money that goes out into circulation today in Canada has to be borrowed into circulation, and the only reason for which people will borrow, except those who are borrowing consumer credit and have to pay it back, is to produce. The result is that when there is adequate production they will not borrow and the banks hesitate to lend. The result is that we have no way of controlling the amount of money going out into circulation. There is no way in the world of making sure there is enough money circulating in the right places in Canada to enable every Canadian to obtain the needs of life and have the necessary standard of prosperity.
Further, we know that with automation it is becoming yet more difficult to give every person a chance to live. The threat which haunts every man from coast to coast in Canada right now is the threat of unemployment. That is what faces every man except those who happen to have fortunes. I submit that that is so far below the
[Mr. Blackmore.l
standard which we have the right to demand that we should be ashamed of ourselves even to contemplate the continuation of that condition.
Surely every man who is willing to work and is capable of working should be assured that he will have a job at which he can support his family. Every man who is unable to work but who is willing to work should be given the means whereby he can support life in some kind of dignity and comfort. Why? Because the country which can produce $28 billion worth of goods is the land in which he lives.
So much for comment on that particular quotation. I now quote another one from "Currency, Credit and the Exchanges", pages 55 and 56. Notice again what this man says about what should be the absolute demands of the Canadian people, and I quote:
In other words, we regard the stage of complete reabsorption of economically employable labour as marking the return of full health to the body economic, and we define this stage as the datum level of general all-round prosperity, such as shall be productive of most happiness to men.
I interrupt the quotation. Have we in Canada arrived at that point? Not by any manner of means. We make full employment impossible for our people now. We have huge employment, but go down into New Brunswick and see whether you can get a job, or if you do get a job whether it will supply anything like a decent standard of living for your family. I call on the hon. member for Restigouche-Madawaska to testify to that. He has just come from down there. I was down there and was in the homes of many of those people. Unless those people happened to have pensions they were just in mortal dread of being unable to get jobs, and when they do get jobs in most cases the pay is so small they simply cannot support their families up to anything like a decent standard of living. And that in a Canada with a production of $28 billion a year! What a lasting disgrace that is to the government and to the Department of Finance particularly. I go on with the quotation:
We maintain that such is the datum line which we require, the 100 per cent level from which to start, and to which we should return. It will be the purpose and the duty of banking statesmanship to keep production and consumption swinging freely about that datum line in such a way that every economically employable man shall be at work, and wholesale prices may not fall and retail prices may not rise beyond the limits of healthy seasonal percentage variation, and within the natural limits of commodity production changes.
I suggest to the minister that he send copies of those quotations to Mr. Coyne and say to him, "Mr. Coyne, keep your eye on that and do your best. You are a lot short

of it yet. If you cannot do it as governor of the Bank of Canada, tell us what to do."
I suggest to the minister that the thing he will have to do is re-enact the finance act of 1914 and 1923, and use that act as a means of creating debt-free money which he can spend into circulation wherever in the Canadian economy he believes it needs to be spent, in the form of giving compensated price discounts to consumers of commodities going over the retail counters, or in the form of dividends where he wants to distribute it in that form, where people need income and are unable to obtain it.
He needs to re-enact the finance act of 1923. His illustrious predecessor, Right Hon. W. S. Fielding, said almost wl.at I am saying when he reintroduced the act in 1923, which act had been introduced and used by a Conservative administration under Sir Thomas White, that masterful minister of finance of world war I days. Mr. Coyne should be given a chance, and I maintain that we are not giving him a chance because he is running a banking system the business of which is to produce goods, and he is lending money for production. He simply cannot put money into circulation in everybody's hands by lending money to produce. There has to be money issued into circulation with which to consume.
So much comment for that. Here is another quotation which is of value from "Currency, Credit and the Exchanges" by William A. Shaw, page 67. I think I read this one before, but I shall read it again. It is as follows:
By its means we have evolved the true theory of money, and in the light of this theory our currency and banking legislation need no longer be the process of blindfold groping and experimenting which it has been in the past.
-and which it is right now. Here is Mr. Coyne trying, desperately trying, to find out what to do to attack the great problems which face him and which he sees in the future; he is doing everything he possibly can to remedy the situation, but because he has not the proper tools he simply cannot do the job. I go on to read one more brief paragraph from this quotation:
This theory of money rests upon one basic principle, viz., that goods purchase goods. In this axiom the word "goods" is used for brevity's sake as comprehending all economic goods or services which, as possessing economic value, possess thereby exchange value.
I read this from "The Principles of Currency, Credit and Exchange", by William A. Shaw, published in 1934:
There is no inherent or scientific necessity for an ever-recurring cycle of over-trading followed by disaster and depression. The cause of that recurrent phenomenon lies hidden in the financial structure of the modern world and it is removable.
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If our civilization is to survive it is imperative that such cause be removed without delay.
I suggest that the minister knows only too well that that cause has not been removed, and that the minister has not in his mind even the way of removing it. If he has, he must be having difficulty with the people in his department.
I should like to ask the minister casually, in passing, how many of the officers of the Department of Finance are graduates of the London school of economics, and how many of the men now employed in the Bank of Canada are graduates of that school of economics. If the minister wants a sound financial system he had better take those men out and give them lucrative positions somewhere else, because they will misguide him as sure as the sun rises. The London school of economics was not developed to enable people to learn how to run a country well; its object is to enable a country to run on the rocks, as we are in danger of doing right now. That may sound very queer, but I can back every syllable of every word I have said.
I quote the following from "The Principles of Currency, Credit and Exchange":
For the hidden mainspring of all the cyclical movements and evils of the past has lain in finance and not in industry.
Those quotations can be of the very greatest value, in my judgment. I might say that I have no desire to pretend to unusual knowledge in this respect, but I have read a great many books written by men of various attitudes all the way from the socialists to the extremists in the orthodox field and those along the borderline in the unorthodox field. The sum total of the information I have been able to gather from the works I have been able to read is that the principles embodied in the statements and quotations I have made and read here today are absolutely sound. If we are to provide a sound economic system in Canada, we must build on the principles that are therein involved.


Ernest George Hansell: Mr. Chairman, I can assure you, as I rise to speak, that this is in no way creating any type of filibuster. We have judged our time in fairness to this house in the process of this present session; but we are interested in financial matters and, as the Department of Finance has been called at this late hour, we want to accommodate the house but we want to do an effective job by reason of the fact that the people have sent us here to do that job. I shall not take very much time, only a few minutes, to say what I want to say.


An hon. Member:: You have only three minutes.

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Ernest George Hansell: What I rose to say was this. I want to add my voice to the voice of the hon. member for Eglinton with respect to what I believe to be a very vital principle which evidently has been enunciated in the last day or two. I was here when the minister replied to questions the other day, and he appeared to place the responsibility for the financial policy of this country on the doorstep of the governor of the Bank of Canada.


Walter Edward Harris: No, no, no, no.


Ernest George Hansell: It had all that connotation to it, as far as I am concerned. If the minister answers, "No, no, no, no", then I am quite willing to be satisfied with his answer; but let it be known that even though there is legislation under which the Bank of Canada carries on its duties, the government here cannot hide behind that legislation and relieve itself of the responsibility of determining the financial policy of this country which results in either a high standard of living for all the people or a lower standard of living with no purchasing power with which to live.
I have said that, and the government must be responsible for that. That is what they are here for. Furthermore, they go out in election campaigns urging the people to place the responsibility on them; then they are answerable to the people for the financial policy of this country. Let us make no mistake about that.
During the speech that was given by the hon. member for Cape Breton South the hon. member mentioned the cycle of boom and bust, and the minister interjected that his policy was designed to prevent too much boom and bust. I do not know whether or not there is too much boom now. I do not know whether this action of the governor of the Bank of Canada is to prevent too much boom, but frankly I am very much concerned about the bust part of the cycle. Very many people are very much concerned about inflation. I am too, but I think I am more concerned about the problem of deflation, which will happen as sure as you are born if the boom is to be followed by the bust. What I should like to learn from the minister is what his policy is going to be to prevent the bust. That is what I should like to know.


An hon. Member:: Six o'clock.


Ernest George Hansell: I am only going to detain the house a moment or so.


William Alfred Robinson: Has the hon. member leave to continue his remarks?


Ernest George Hansell: I can finish in less than five minutes.


Some hon. Members:: Agreed.


Ernest George Hansell: All I want to say is this. When there is a rise in prices, all the people of Canada suffer. Whether that rise in prices is caused by direct action, as has been described by the hon. member for Lethbridge, or whether it is a rise in prices that has been caused by too much money chasing too few goods, the government must be responsible for that because that is within the confines of financial policy.
I am interested particularly in the poor people of this country who have to stand the brunt of the rising costs of living. That is what I am concerned about. I urge the minister now to adopt a policy whereby the spending power of this country will aid the poor people of this country to have a decent standard of living.
I have a very interesting thing here that I shall hand to the minister. I do not know whether it has been brought to the attention of the house before, but here is an envelope in which an old age pension cheque was enclosed. I suppose it is just one of thousands. It has a postmark on it, and the postal service put some little advertising in their postmarks. The envelope is printed: "District Treasury Office, Department of National Health and Welfare, Family Allowances, Federal Old Age Pensions". This was sent to the old age pensioner and on it is a postmark which says: "Good hot breakfasts a winter must".
There is a great deal of irony in that, because this old age pensioner is a lady 75 years of age. There is that cheque for $40 a month. She said, "I am still healthy. If I buy a good hot breakfast and pay my rent and my other necessities, I am wondering what I will have for my other two meals for the day". There is some irony to that.
I met an old age pensioner on the street in my own home town not long ago. His vest was frayed; his shoes were not neat. He said, "Mr. Hansell, do you suppose they are going to do anything further for us old age pensioners? I cannot very well get along on my $40 a month". Why cannot he get along? Because the cost of living is too high. There is some reason for that.
I say what I have said in previous sessions. Even with respect to industrial pensions, when money was paid into industrial pension funds the cost of living was much lower that it is today. If they expected to receive $40, $50 or $60 a month 10 or 15 years ago, that looked fairly good then. But now they receive the $40, $50 or $60 a month, or whatever is the amount at which their pension was calculated, and of course the cost of

living has gone up so much that in reality when they are paid this amount it is just the same as saying to them, "Yes; you put aside enough to pay for a pension of $75 a month when you reached pensionable age. We are sorry but we can pay you only half that amount". That is really what it means. To me that is a steal-not an intentional one, of course-by reason of a faulty financial policy.
I know we are anxious to get through, and I am not going to take up any more time now on this matter.


[Stage Direction]
Item agreed to.
An hon. Member:: Six o'clock.
Progress reported.
Resolutions adopted in committee of supply this day reported and concurred in.



BUSINESS OF THE HOUSE

Walter Edward Harris: Mr. Speaker, last night I indicated the remaining items to be dealt with. I understand that today we have disposed of the estimates of the Department of Labour and the Department of Citizenship and Immigration. That being the case, on Monday we shall take up the remaining items in the order in which I indicated them last night.


[Stage Direction]
It being ten minutes after six o'clock the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply]:

[Stage Direction]
Citizenship-*
59. Citizenship registration branch, $398,265.
B-National gallery of Canada-
80. Administration, operation and maintenance, including industrial design division, $328,910.

[Stage Direction]
A-Department-general administration-
179.	Departmental administration, $702,905.
180.	To provide for expenses of the economics and research branch, $547,762.
181.	Annuities Act-administration, $1,071,447.
182.	Fair wages, conciliation, industrial relations. industrial disputes investigations, including the administration of legislation relating thereto, and for activities re promotion of co-operation in industry between labour and management, $454,706.
183.	Canada labour relations board, $5,875.
184.	Administration of the Canada Fair Employment Practices Act, $10,500.
185.	International labour conferences, $67,720.
Supply-Items Passed
186.	Labour Gazette, authorized by Labour Department Act, $122,635.
187.	To provide for expenses of the women's bureau, $26,958.
188.	To provide for payments to implement a program for the rehabilitation of disabled persons, in accordance with terms and conditions approved by the governor in council, and administrative expenses connected therewith, $196,700.
189.	To provide for expenditures incurred in connection with manpower utilization, labour-management relations and related programs as may be authorized by the Minister of Labour, $30,000.
Special services-
190.	To provide for expenses of special services branch including administrative costs connected with federal-provincial farm labour programs, the movement of workers from outside Canada and the program for combating seasonal unemployment, $175,798.
191.	To provide for the effective organization and use of agricultural manpower, including recruiting, transporting and placing workers on farms and related industries and assistance to the provinces pursuant to agreements that may be entered into by the Minister of Labour with the provinces and approved by the governor in council, $250,000.
192.	To provide for expenses incurred in arranging for and the movement of workers from outside Canada to work on farms and for other essential employment in Canada where Canadian labour is not available to meet the need including the costs connected with their reception, supervision and with the welfare of persons already immigrated to Canada and to provide for expenditures under agreements with the provinces authorized by the governor in council, $298,477.
Vocational training co-ordination-
193.	Administration, $80,745.
194.	To provide for carrying out the purposes of the Vocational Training Co-ordination Act and agreements made thereunder; to authorize the Minister of Labour to enter into agreements with any province on terms approved by the governor in council to provide financial assistance to vocational schools, and training under youth training projects and to provide for the expenditures thereunder and under vocational training agreements entered into in previous years-payments to the provinces, $4,515,150.
Government employees compensation-
195.	Administration of the Government Employees Compensation Act, $72,600.
B-Unemployment insurance commission-
196.	Administration of the Unemployment Insurance Act, including expenditures incurred in connection with other duties and responsibilities assumed and carried out as required by the governor in council on the recommendation of the Minister of Labour in accordance with section 4 of the act, $27,341,745.
197.	To provide for the transfer of labour to and from places where employment is available and expenses incidental thereto, in accordance with regulations of the governor in council, $75,000.

[Stage Direction]
General administration-
116. Departmental administration, $2,035,230.
67509-475$
[Stage Direction]

[Stage Direction]

[Stage Direction]
Monday, August 13, 1956

[Stage Direction]
Second report of special committee on research.-Mr. Mcllraith.