1958-07-11

PRIVILEGE


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, I rise on a question of privilege affecting the members of this house. It arises out of a report in the press of a statement made in the other place about the hon. member for Vancouver Centre (Mr. Jung) with reference to his racial origin.


Mr. Speaker:: Order. I rather anticipated that point might be raised. Some hon. members have already spoken to me about it. In my view a question of privilege cannot properly be raised against a member of the other house for something said in the other house. The other house has its privileges just as we have, and its powers over its own members to deal with their conduct in the other house. It does not seem to me to be appropriate to raise, as a matter of privilege, something said by a member of the other house when this house has no power to deal with the matter. I do not say that it is not a proper matter for comment at a proper time or that one cannot refer to or cite the proceedings of the other house. However, I do not think it is appropriate to raise what the hon. member has in mind as a matter of privilege.


Lester Bowles Pearson: Of course, Mr. Speaker, I
accept your ruling; but as this statement in the other house referred to a member of this house, and as this statement has appeared in the press under headlines which I think are derogatory to the members of this house, I had thought and hoped I could bring it forward in this way under these circumstances.


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I would think that the person who might raise the matter, if it can be raised at all, would be the hon. member for Vancouver Centre. Whether he will entertain the same resentment as do members as a whole will remain for him to say when he comes here. In any event the matter could be discussed next week in a general way when the subject of external affairs is up for consideration. I feel that Mr. Jung-and I refer to him as Mr. Jung-should be here when this matter is referred to because whatever answer he gives will be in keeping with the tradition that we are all Canadians.


Mr. Speaker:: As this is a rather novel matter, perhaps I might take it under further consideration. May I say that I appreciate what hon. members have said.


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, we greatly appreciate the attitude Your Honour has taken on this matter. However, there is one point which has not been mentioned by you but which we feel means a great deal, and it is this. If a reflection is made on a member of the House of Commons, is that then not a matter of privilege in the House of Commons?


Mr. Speaker:: I have already expressed my immediate view on the subject and, as I say, I will give it further consideration.



RAILWAYS AND SHIPPING


[Stage Direction]
Hon. W. Earl Rowe (Dufferin-Simcoe)
presented the first report of the sessional committee on railways, air lines and shipping, and moved that the report be concurred in.
Motion agreed to.


John George Diefenbaker: Mr. Speaker, yesterday the Leader of the Opposition asked whether I could make a statement regarding the discussions which took place as between the President and Secretary of State of the United States, various members of the government and myself. While I have not had an opportunity during the intervening hours to make very much preparation in this regard, I will outline in general the discussions which took place, leaving, however, detailed discussion until the debate on external affairs which is set for next week.
The members of this house and our fellow citizens in this city have shown very clearly how happy they were to welcome the President of the United States to Ottawa. A visit of this kind is an opportunity for us to demonstrate the ties of history and kinship which bind us together, and I know we were all very pleased to have the President address this house. He stated his views frankly and in a straightforward manner, as we have done for this government. We appreciated
2140	HOUSE OF
Discussions with President Eisenhower the opportunity to hear him explain the views of his country on those important issues which are of consequence to both our nations. Nothing better illustrates the strength of our relationship than that we can talk honestly to each other without endangering the association which holds us together.
The same spirit which was evidenced in this house was also apparent during the discussions between the President and the Secretary of State of the United States, the Secretary of State for External Affairs, other ministers and myself. We were aided by the presence of Mr. Dulles, who shared with us his broad experience and wide grasp of the problems of international relations. He had just returned from Paris and was able to give us a general idea as to the attitude of France respecting the great problems which particularly affect her and those which affect Canada jointly with France as members of NATO.
I think what has taken place illustrates the need of some continuing body to permit of a general discussion from time to time of our respective points of view. Respecting the earlier reference to the need for arrangements to permit of discussion from time to time between members of the congress of the United States and the parliament of Canada, while constitutionally as far as the President is concerned no decision in that regard could, of course, be achieved, the success of the meeting in general, as a meeting between the President and myself and the others to whom I have referred, indicates how very important it is that something in the nature of an exchange of opinions should take place from time to time as between the parliament of our country and the congress of the United States. My hope is that the recommendations which were made by the committee composed of Congressmen Hays and Coffin will be accepted; that a committee on Canadian-United States relations will be set up in the United States congress, and that we in our House of Commons will set up a similar committee, and that from time to time mutual exchanges will take place between members of these committees or between members of parliament and members of congress outside those committees, to the end that in general discussion the views of each nation may be ascertained and thereby, through discussions, causes of disagreement removed.
As far as the general discussions which took place are concerned, the President and I touched upon most of the pressing issues of the day as well as upon matters of more particular bilateral interest. There was very broad agreement on these fundamental issues, and whatever differences we may


have on details there was never any question either before these meetings or during them-nor will there be, I know, in the days ahead-that either of our nations will lose sight of the fact that we must remain united in our objectives and in our determination if freedom is to be maintained.
The Secretary of State for External Affairs and I discussed with President Eisenhower and Mr. Dulles such matters as progress toward disarmament and the changing nature of Soviet policy with reference to the economic challenge of the critical situation in the Middle East. The Minister of National Defence had an opportunity to talk over our mutual defence problems with Mr. Dulles. The Minister of Finance and the Minister of Agriculture discussed trade and economic questions, and the Minister of Public Works and the Minister of Northern Affairs and National Resources had a talk on the problem of boundary waters. In addition to these more formal talks there were, of course, opportunities for a less formal exchange of views in the atmosphere of the social occasions during which we met.
With respect to the international situation, members of the house are aware that discussions have taken place during the last year or so with regard to the providing of safeguards against the danger of surprise attack, and Canadians and Americans have a particular and special interest in these arrangements for the polar regions. These matters were discussed with reference to the recent letter which Mr. Khrushchev sent to the President signifying Soviet readiness in principle to enter into direct discussions on the technical aspects of the problem of preventing surprise attack.
Hon. members will not expect me to indicate even in general terms the contents of the President's contemplated reply, but that its broad purpose is to bring about such technical talks will be evident from our agreement that experts should work together on this problem. Studies have been under way for some time, and I understand that similar work has also been done in the United States. The meaning of our agreement is not only that there should be consultation between our officials; such exchanges of views on disarmament matters have long been a feature of our normal relations. It signifies rather that in the immediate future our collaboration should concentrate in a practical way on this particular and very important matter.
As to the general question of defence, it has been the aim and purpose of this government-and I think that view has been accepted by the Canadian people as a whole- that at all times in our joint defence efforts

we must assure and maintain over and above every other consideration the political and civilian control with respect to military matters. During the course of the President's visit we reviewed the complex issues which arise from the joint efforts of our two governments in the field of continental defence. There was mutual recognition of the increased necessity for regular consultation between our two governments, both on the specific requirements with which the two governments may expect to be faced in providing for the security of North America and on international events which could lead to the necessity of activating the continental air defences. There was full realization that our joint efforts in the defence of North America must continue to serve the objectives of the NATO alliance in which we have banded together with other like-minded countries in the search for collective security in an uneasy world.
In these discussions we took note of the intimate co-operation of our two countries over the past two decades in matters relating to continental defence and of the machinery which had been established to provide for the consideration of defence problems of common concern. We recognized that these interdependent defence relationships must continue and, indeed, that they would become even more important and more complex in the face of the advanced weapon technology which is now available to potential aggressors. We agreed that while existing machinery in the defence field had served us well in the past and would undoubtedly continue to do so in the future, the need existed to supplement existing channels for consultation by providing for a periodic review at the ministerial level of problems which might be expected to arise. We recognized that decisions in this field would involve not only consideration of the military aspects of our common defence but also political and economic factors. We thought it particularly important as well that every step should be taken to maintain the principle and the fact of civilian control and guidance of these common military activities.
We agreed therefore that we should establish a joint ministerial committee to be known as the Canada-United States committee on joint defence, with scope to consider all matters bearing on the common defence of the North American continent. This committee will consist for Canada of the Secretary of State for External Affairs, the Minister of National Defence and the Minister of Finance; and for the United States of the Secretary of State, the Secretary of Defence
11, 1958	2141
Discussions with President Eisenhower and the Secretary of the Treasury. We agreed that such other appropriate cabinet members as either government might designate from time to time might participate on an ad hoc basis in the committee's deliberations. The committee will normally meet alternately in Washington and Ottawa under the chairmanship of the Secretary of State when the meeting is held in the United States and of the Secretary of State for External Affairs when the meeting is held in Canada.
In regard to the question of defence production, we examined together the situation which arises in these days of mounting defence costs and the need for rationalizing whenever possible and consistently with national requirements the industrial base for our own defence needs. In anticipation of a meeting of the newly-announced committee at cabinet level on defence matters, some consideration has been given to the sort of items which might be placed upon the agenda. Further consideration, of course, will have to be given in consultation with our colleagues in each country to prepare ourselves to discuss in adequate detail many of these matters.
That in general represented the tenor of the discussions with respect to the subject of defence. So far as particulars are concerned, they will be available in committees; in the committee on defence, as an example, when the minister might be asked further questions with respect thereto.
I now come to the problem of economic questions. Consideration was given to the principal economic issues that are now facing the free world. It was agreed that some of those have become intensified by the Soviet economic offensive. It is more important now than ever before that measures be considered which might be expected to strengthen the economies of countries in the free world through the expansion of international trade and the promotion of programs of economic development. If progress can be made in these directions, as I believe it can, it may become easier to make fully convertible the main currencies in which world trade is conducted; but it would be quite wrong to suggest, as one newspaper did this morning, that any plans had been agreed upon, or been determined in part, with respect to convertibility of sterling since, of course, such action is entirely for decision by Her Majesty's government in the United Kingdom.
We received from the President and his Secretary of State reports concerning the prospects for the trade agreements legislation. We described the preparations being made for
2142	HOUSE OF
Discussions with President Eisenhower the commonwealth trade and economic conference. Within those limits various matters were discussed, all of which, of course, cannot be referred to at this time. However, there is one matter of particular interest and that is the necessity, as we see it in Canada, of revising the list of strategic materials which come under either prohibition or control for export to the Soviet bloc and to communist China. This matter is going to be considered at length at a conference that is about to take place in Paris of representatives of nations of the free world.
I raised with the President the question that some Canadian subsidiaries of United States companies may have been prevented from accepting orders from communist China, or from peoples in that country, by the application of United States foreign assets control regulations, even though acceptance of such orders would be permitted by the policy of the Canadian government. The President expressed the view that the United States regulations should not be applied in any way to the disadvantage of the Canadian economy. If cases arose in the future where the refusal of orders by companies operating in Canada might have any effect on Canadian economic activity, the United States government would consider favourably exempting the parent company in the United States from the application of the foreign assets control regulations with respect to such orders.
It was made perfectly clear, and I want to underline this fact, that there was no question at any time that, with respect to the operations of Canadian companies, Canadian law shall govern and Canadian wishes shall be respected. Further consideration of this question will naturally require some days. I go no further at this time except to reunderline what I have said to re-emphasize the stand taken by this government, that Canada as a sovereign nation has the right to the maintenance in its full amplitude of its legislative enactments, both dominion and provincial.
I think that in general is a summary of- not in particular-the discussions that took place. I must say that during the course of the three days I was more than ever impressed with the very reasonable and cooperative attitude that was taken to assure that at all times anything that takes place in the economic field which might conceivably cause difficulty to either of our countries will to the limit of our respective capacities be resolved to the end that our unity shall be maintained; that in whatever we do there will be a full realization on the part of each of us that in taking our individual courses
[Mr. Diefenbaker.I

as individual nations every regard and respect will be paid to the fullest consideration that nothing that is done shall detrimentally affect the other country; and that indeed we now approach an era internationally where it becomes more important than ever before that the nations of the free world must, in the interests of survival itself, bring about economic changes in unity that might 15 or 20 years ago have been regarded as impossible of achievement.
I conclude by saying in very simple words that this conference did represent a forward step. There was a spirit of mutual respect and forbearance and a common desire to arrive at decisions which will assure that the unity that we all desire to attain will be preserved, and that the sovereignty of each of our countries will not be impinged upon in any way.


Lester Bowles Pearson: I am sure, Mr. Speaker, that the members of the house-certainly we on this side-are grateful to the Prime Minister for his statement, and all the more so because he has not had very much time in which to prepare it after coming, I suppose, straight to the house from seeing off the President and Secretary of State. We will, as the Prime Minister has said, have an opportunity next week in the discussion of external affairs to go into these matters in greater detail, because their importance certainly justifies that discussion.
We on this side of the house share the satisfaction of the Prime Minister and his colleagues in the good results which have been achieved during this visit. We share with him the pleasure of having had in our capital at this time the President and Secretary of State. I am sure the conversations between the Prime Minister and President have been fruitful and useful, just as those between the Secretary of State for External Affairs and the Secretary of State have been.
The Prime Minister has indicated that some new prices of international machinery have developed out of this meeting. He made reference to the joint committee on defence which is being set up. This should, I think, be a useful development, though speaking as one who has had some experience with international machinery in recent years, just as is the case with other such pieces of machinery this will be as valuable and as useful as the participants desire to make it. I am glad the Prime Minister mentioned the desirability of a joint committee of parliament and congress being set up. This is a matter which was recommended from the United States side by Congressmen Hays and Coffin in their

report, and by Senator Aiken. It was referred to also by the Prime Minister in the United States a few weeks ago.
I cannot think, myself, of anything at this time which might be more useful than such a joint committee. I quite realize that this is a matter concerning which the President would have to be very careful in his talks with the Prime Minister because of the division of powers in Washington. Nevertheless, perhaps the initiative which has been taken could be followed up on the legislative level, and something permanently useful could result.
I noticed with much interest the Prime Minister's reference to the economic aspects of his talks. I agree with him that too much stress cannot be placed on the necessity for expanding trade, not only in the interests of the prosperity of the countries concerned but because the necessity to expand trade in the free world will perhaps become more and more important as a defence against the kind of aggression from the other world which reflects itself not so much now in aggression across borders as in aggression in markets. The Prime Minister, I think, was quite right when he mentioned that one aspect of this expansion is convertibility, though neither the President nor the Prime Minister, or their governments, can themselves bring about this convertibility. It is one of the objectives they both have in mind. It is an objective which might be encouraged and sought at the forthcoming commonwealth economic conference.
The Prime Minister mentioned that from .time to time difficulties arise between our two countries because of our differing regulations in regard to trade with the communist countries. It seems to me, and I know the Minister of Trade and Commerce must be very much aware of this, that the sooner we can agree among the NATO countries-I know talks are going on to this end-on a uniform list of commodities which are on the strategic list and therefore not exportable to countries which we fear, the sooner those difficulties will disappear.
This question of the China differential has been before us now for years, and the sooner it can be cleared up the better. This morning the Prime Minister said, and it was a very interesting part of his statement, that he felt sure as a result of these talks-I do not want to misquote him or say anything which does not reflect his meaning. However, I gathered the impression that he felt sure that the difficulties which have developed in one or two cases over the export of goods to communist China can be cleared away by the application of United States law in such a way that it will not prevent Canadian
11. 1958	2143
Discussions with President Eisenhower subsidiaries of United States companies from exporting goods to other countries if that is within our laws and our regulations. I am sure that must be a welcome development to all members of this house. It was therefore with some mild disappointment that I read in the press conference report last night that the spokesman of the United States delegation was not able to go any further in his statement than to say that in these matters consultation would take place when difficulties arose.
The Prime Minister referred to the initiative that has perhaps been taken-one is never quite sure in these matters whether or not a genuine initiative has been taken- by the Soviet government with regard to technical discussions for the prevention of surprise attack. I am sure that members of the house will have heard with great satisfaction that both the Canadian government and the United States government are determined to follow up this move in case it turns out to be a valuable and useful initiative. It is, of course, something that has been in the minds of the Canadian government for a long time, especially in its relationship to Arctic defence. It is encouraging to know that the reaction in Washington and in Ottawa-and I am sure in London and Paris -has been quick and positive to what may turn out to be a useful move.
I am sure that the talks that have now been concluded have been carried on with that frankness which is characteristic of a tried and tested friendship such as that which exists and must be maintained between our two countries. It has been said that neighbourhood is a geographical fact but that neighbourliness is a relationship between people. I feel certain, Mr. Speaker, that the talks which have just been, concluded have deepened and strengthened that neighbourliness which is now more essential than ever in both countries in the tense and dangerous world in which we live.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, the members of this group listened with anticipation, interest and attention to the Prime Minister's preliminary and, naturally under the circumstances, brief review of the discussions with President Eisenhower and his colleagues. Naturally there is great interest in what the Prime Minister had to say this morning because of the great concern in Canada with the many problems that face us at the present time-I refer to our difficulties with respect to defence; disarmament; markets for lead, zinc, copper and other metals; markets for oil; markets for wheat and many other Canadian commodities-and also, Mr. Speaker, because of the growing interest and concern with respect

Discussions with President Eisenhower to the settlement of the issues between us and the United States concerning the development of boundary waters.
The substance of the arrangements reported by the Prime Minister, in the opinion of this group, will be revealed only after discussion on the estimates of the Department of External Affairs, after further explanations and details are given by the Secretary of State for External Affairs and as a result of action taken in the days ahead by the governments to meet the problems that concern us all.

On the orders of the day:


Mr. Hazen Argue (Assiniboia):: I should like to ask the Prime Minister a question arising out of his extremely informative statement to the house a few moments ago. Can the Prime Minister say definitely whether or not in the future a Canadian company like the Ford Motor Company would have the right to export automobiles to China? Would the Prime Minister also say what consultation took place on the question of Canadian oil exports to the United States and whether, as a result of this conference, anything is being done or is likely to be done to increase the market for Canadian oil, a very important point for many geographical areas in this country?


John George Diefenbaker: In so far as the last question is concerned, Mr. Speaker, I may say that there was discussion respecting oil and also the other matters to which the Leader of the Opposition made reference a few moments ago. While discussions took place and while representations were made, I do not think there is any useful information I can give on these questions at this time. There will be a meeting shortly, I hope, of the members of the economic committee, when in particular these questions will be discussed. During our talks naturally they were dealt with at some length in general between the President and myself but, of course, in detail as between the Minister of Trade and Commerce, the Minister of Finance and the Secretary of State for External Affairs.
However, as to oil, I can say that the problem is a difficult and complex one. We placed before the United States representatives most strongly the position of the oil industry within our country and the need of the amelioration of any unnecessary embargo or reduction in import by the United States. These discussions are still continuing. As I say, these matters cannot be determined in a matter of a few hours or

a few days. However, the fullest discussion took place with regard thereto with, of course, the realization by this government of the need of markets being extended and expanded not only for oil but also in respect of other products of Canadian mines. Without going into detail, I would mention in general iron, lead, zinc, copper and also aluminum and nickel.


Hazen Robert Argue: And wheat?


John George Diefenbaker: I was dealing with the others. As one who was raised in the west, I may say that wheat never gets too far away from my thinking.
As to the first question, I would say that while the discussions were, naturally, particularly directed to the export of Ford cars, I was rather surprised to read this morning in a statement purported to have been made by the president of the Ford company that at no time was there anything in the nature of finality, and there was apparently no more, as I understood his statement, than some negotiations and discussions. I do express the hope that if the Ford company can secure an order from communist China it will be able to ship the cars.


Hon. Paul Marfin (Essex East):: Might I ask the Prime Minister if it was clear from the discussions between the President of the United States and himself that the directions of the United States in this matter are simply pursuant to treasury regulations, or do they involve any act on the part of congress itself?


John George Diefenbaker: I would say at this moment that the situation comes within the expression used by the hon. gentleman. If the regulations are dependent upon immediate congressional action in the United States- by a congress seemingly more desirous of an early conclusion of the session than is sometimes apparent in this house-I would think that any such legislation which might be introduced during the current session of congress would not have much hope of being passed.


Paul Joseph James Martin: Mr. Speaker, may I ask the Secretary of State for External Affairs if, with regard to the joint ministerial committee on defence, it will be within the terms of reference of that committee to include consideration not only of defence matters as such but the related matter of civil defence? Could the Secretary of State for External Affairs also give some information to the house as to why the Minister of Defence Production should not be included as one of the Canadian ministers on the proposed joint international ministerial body?


Hon. Sidney E. Smith (Secretary of State for External Affairs):: Mr. Speaker, with respect to the first part of the hon. member's question having to do with civil defence, there was no discussion of that matter in the discussion concerning the setting up of this committee. I have the text of the announcement given to the press, and the committee will consult on matters bearing upon the common defence of the North American continent which lies within the North Atlantic treaty area. I believe it could well be demonstrated that civil defence bears on military defence. It could well be that civil defence could be discussed in the committee. I do not contemplate that in the meetings of that committee we will abide by strict rules of procedure; it will be a forum for a discussion of common problems in the field designated by the announcement.
With respect to the second part of the question raised by the hon. member for Essex East, as has been indicated to the house, this is going to be a six man committee, but I would draw his attention particularly to this paragraph:	"Other ministers may
participate on an ad hoc basis on a request by the committee." I can well anticipate that the Minister of Defence Production will be called into the discussion from time to time.


Lester Bowles Pearson: May I ask the Secretary of State for External Affairs whether it is anticipated that the present joint defence board, Canada-United States, will report to this proposed joint defence cabinet committee?


Sidney Earle Smith: That has not been considered. I draw the attention of hon. members to this statement: "The committee will not supplant but will supplement existing joint boards and committees." I can well anticipate that at the military level -there are two other committees which provide for consultation across the border at military level, so there are three altogether, including the joint defence board- on occasion we will have to get the views of those two committees.
(Translation):



ROYAL VISIT


[Stage Direction]
On the orders of the day:
Mr. Alexis Caron (Hull):: May I put a
question to the Secretary of State (Mr. Courtemanche)? I am sorry I have not had time to give him proper notice, but I think he will be able to answer it just the same.
Inquiries of the Ministry
According to an item in yesterday's Toronto Star, Premier Bennett of British Columbia had to cancel an official reception for Her Royal Highness Princess Margaret because of undue interference in this matter on the part of the Prime Minister of Canada. Will the Secretary of State tell us whether that report is true, and would he be so kind as to produce all correspondence exchanged on the subject?


Hon.. Henri Courtemanche (Secretary of Slate):: I have not seen this news report in the Toronto Star. I will check the accuracy of the report, will look into the matter, and will then be in a position to reply to the hon. member for Hull.
(Text):



TELEVISION


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, might I ask the Minister of National Revenue what are the possibilities of having the Holt-Durelle fight televised in the maritimes next week?


Hon. George C. Nowlan (Minister of National Revenue):: Mr. Speaker, this matter has been raised in this house and outside of this house on several occasions by the hon. member for Westmorland, the hon. member for Saint John-Albert and others. The television rights are controlled by the international boxing commission, I am advised, and that commission at first refused point-blank to allow any telecast of the fight. However, this is a fight for the British empire championship, and the Canadian Broadcasting Corporation has discussed the matter at length with the commission. I am glad to say that arrangements were finalized this morning whereby this fight will be telecast on the night of July 16 at ten o'clock p.m. eastern standard time. We have also made arrangements with the South African broadcasting commission so that the fight will be broadcast in South Africa, and possibly in other parts of the British commonwealth.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I would like to address a question to the Postmaster General, arising out of a newspaper report that a newspaper, faked by the communists to look exactly like Ceske Slovo, a free Czech paper published in Munich, has been received by mail by more than 1,000

Inquiries of the Ministry Czech Canadians. Does the Postmaster General know it there is anything that can be done to stop this communist propaganda by misrepresentation which is coming through the mail in increasing numbers and causing especially a great deal of irritation and concern to ethnic groups?


Hon. W. M. Hamilton (Postmaster General):: Mr. Speaker, I will look into this matter and give the Leader of the Opposition an answer next week.



TRANSPORT


[Stage Direction]
On the orders of the day:
Harold Edward Winch: May
I address a question to the Prime Minister, arising out of the fact that I believe all the members of the House of Commons who come from British Columbia received a wire this morning from Hon. Mr. Bonner in his capacity as minister of industrial development, trade and commerce of that province, informing us that he understood that within a few days a decision will be reached by the federal government on the route of the northern development railway extensions and asking the British Columbia members of this house to inquire of the Prime Minister whether, if such is the case, serious consideration is being given to a tie-in of routes for railways so there will be a planned basis of development in British Columbia?


Hon. Alvin Hamilton (Minister of Northern Affairs and National Resources):: Mr. Speaker, perhaps I could answer this question. The matter of the Pine Point railway has been before the government for some time. We have received representations from the government of British Columbia and from many bodies in Alberta, and when a decision is made on the route it will be announced at the proper time.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kenora-Rainy River):: Mr. Speaker, could I ask the Prime Minister whether he found an opportunity, as reported in the press, to discuss again with his United States visitors the views of his government, which I believe are not dissimilar from those of the former government, with respect to the United States tax claim against a Canadian corporation, namely Premium Iron Ores Limited?
Right Hon. J. G. Diefenbaker (Prime
Minister): Mr. Speaker, discussions were held with regard to this matter and there was an exchange of ideas on the question, which has been a vexed one for a considerable period of time.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. L. D. Crestohl (Cartier):: Mr. Speaker, I would like to address a question to the Minister of Labour, which might also perhaps be properly addressed to the Minister of Transport. Has the minister been made aware that Canadian Car and Foundry Company is being forced to close its Turcotte works in Montreal, resulting in the lay-off of about 1,000 people for at least four months? Is the minister also aware that this is due to the fact that the railway companies are no longer placing advance orders for capital goods because of the freight rate question? Since the Montreal area is deeply concerned, has the minister any comment to make on this question?


Hon. George H. Hees (Minister of Transport):: Mr. Speaker, I am not aware of this pending lay-off, but from time to time during the past year I have been in touch with both railways regarding the possibility of orders being placed with those companies which manufacture rolling stock in Canada, and I have been continually assured that the railways place all orders as early as possible for their anticipated requirements and that they keep such companies advised well in advance of pending orders. I am afraid there is nothing more I can say at this time.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulion (Minisier of Justice):: Mr. Speaker, yesterday the hon. member for Kootenay West asked if I could report to the house with respect to co-operative arrangements between the federal government and the government of British Columbia in connection with the problem in the Kootenays created by the sons of freedom members of the Doukhobor sect. I must advise the hon. gentleman that we have not yet received a reply from the government of British Columbia to the letter we wrote them some two weeks ago.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: Mr. Speaker, I wish to address a question to the Minister of Transport. In view of the statement made in Saint John, New Brunswick, on June 26 last by Mr. Alex B. Hill, president of the Atlantic Sugar Refineries Limited, to the effect that his company was "being pushed out of Saint John", could the minister advise the house what action, if any, is being taken by his department or by the government to prevent the contemplated closing of the Saint John sugar plant and its transfer to another point in central Canada?


George Harris Hees: I am not aware of the statement, and since the hon. member did not take the trouble to send me a copy of it I am afraid I cannot comment.


Mr. Speaker:: I think the question was asked before in the house, though my memory may not be correct.


Hédard-J. Robichaud: The minister said he was not aware of the statement, but the matter was discussed in the house, even though a question was not asked about it. May I ask a supplementary question. Has the minister been made aware that the construction of another pier at Saint John harbour together with the application of more favourable and competitive freight rates would assure the continuation and even the expansion of this company's operation at Saint John, to the benefit of New Brunswick and of the Atlantic region generally?


An hon. Member:: There is no answer.


George Harris Hees: There was no question.


Mr. Speaker:: The question seems to be the advancement of an argument.



DELIVERY QUOTA POSITION IN PRAIRIE PROVINCES

[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I have a question for my friend the Minister of Trade and Commerce which I am sure he will welcome. Will the minister say what progress is being made toward the equalization of delivery quotas on the prairies, whether the producers will have an opportunity to deliver an equal quota by the end of the crop year, and whether there is anything
Inquiries of the Ministry to the belief that delivery quotas will be raised to eight bushels or more, or perhaps
removed altogether?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, I should like to thank the hon. member for having given me notice of this question, and for deferring it for 24 hours when I informed him that I was assembling this information. I welcome the question, because the reply is very favourable indeed. Other hon. members from western Canada have asked me about this quota position.
The first part of the question is, what progress is being made toward the equalization of delivery quotas. The answer is, excellent progress. There are in the western provinces 2,070 delivery points to which the farmers bring their grain. Ninety per cent of those are now on a 6-bushel quota or have completed the 6-bushel quota. The figures are as follows: on the 5-bushel quota, 71 points; on the 6-bushel quota, 1,967 points; completed or closed, 32 points, for a total of 2,070.
The breakdown by provinces is as follows: All the 375 delivery points in Manitoba are now on a 6-bushel quota. In Saskatchewan 67 are on a 5-bushel quota, 1,026 on a 6-bushel quota, and 28 are closed. In Alberta four are on the 5-bushel quota, 562 are on the 6-bushel quota and four are closed. In British Columbia, where there are four delivery points, all are on the 6-bushel quota.
The second part of the question asked whether all producers would have an opportunity to deliver an equal quota by the end of the crop year. I think the figures I have given indicate that this will likely be the case.
The final part of the question asks whether in the light of the present marketing and crop conditions the quota may be raised to eight bushels or more. It is obvious that present marketing conditions are very good. Our exports of wheat will exceed the 300 million bushel target which was set last summer, and because of the large volume of exports these marketings from the farms have been made possible. Whether or not the quota can be raised to eight bushels or more I do not know. I do not know, either, why the hon. member should have set it at eight bushels rather than moving just one step at a time and suggesting seven bushels.


Hazen Robert Argue: Let us call it seven, then.


Gordon Minto Churchill: But the C.C.F. always go just a little beyond what other people consider reasonable. I will ask the wheat board

Income Tax Act
to give me a comment as to whether or not the quota may be raised beyond what is now in effect.



U.S.-CANADA  REQUEST FOR MINISTERIAL GOLF SCORES

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I have an important question to ask the Prime Minister. Having regard to the fact that the President of the United States, in that spirit of frankness which characterized his visit, saw fit to declare his golf score yesterday, would the Prime Minister ask his two colleagues if they would be equally frank with the house and tell us how they scored?


George Harris Hees: Terrible.


John George Diefenbaker: If the President had gone fishing there would never have been any argument about the score.



WAYS AND MEANS


[Stage Direction]
The house resumed, from Thursday, July 10, consideration in committee of the following resolution-Mr. Fleming (Eglinton)-Mr. Rea in the chair:
Resolved, that It is expedient to introduce a measure to amend the Income Tax Act and to provide, among other things:
1.	That amounts paid after June 17, 1958, for drugs and medicines which have been prescribed by a medical practioner and recorded by a licensed pharmacist be included in the medical expenses that are deductible in computing taxable income.
2.	That amounts paid after June 17, 1958, for eyeglasses, artificial eyes, laboratory or other diagnostic services or transportation to or from a hospital by ambulance be included in the medical expenses that are deductible in computing taxable income.
3.	That for 1958 and subsequent taxation years the maximum amount deductible by corporations for contributions to charitable organizations be increased from 5 per cent of income to 10 per cent of income.
4.	That the rate of interest payable to taxpayers on overpayments of tax for 1958 and subsequent taxation years be increased from 2 per cent to 3 per cent.
5.	That the two year period within which a taxpayer may apply for a refund of an overpayment of tax for a taxation year be increased to four years from the end of the taxation year.
6.	That for 1958 and subsequent taxation years a gift to the spouse of a donor of real property to be used by the donor and the spouse as their home, or a gift to a child of the donor of farm real property to be used in farming operations carried on by the child, or by the child and the donor, shall be exempt from gift tax to the extent of $10,000, provided that no such exemption shall apply more than once during the lifetime of the donor.
7.	That the amount by which any gift tax paid on a gift made within three years prior to death

exceeds any succession duty or estate tax subsequently imposed in respect of a death after June 17, 1958, on that gift under any Act of the Parliament of Canada will be refunded.
8.	That with effect after June 17, 1958, the exemption from the tax on income of non-resident persons now granted in respect of dividends paid by a non-resident-owned investment corporation be changed so as to apply only in respect of dividends paid after the time when the corporation has paid out dividends which in the aggregate equal the undistributed earnings accumulated by the corporation in years when it was not a non-resident-owned investment corporation.
The Deputy Chairman:: Last night when the committee rose we were discussing paragraph 6 of the resolution. Is the discussion on this paragraph now concluded?


Alexis Pierre Caron: Mr. Chairman, as I am very-interested in the gifts given under a marriage contract, would the minister promise that he will study this matter and consult with his legal advisers with a view to adding something to these provisions so that such gifts may be protected when the bill comes before the house?


Mr. Fleming (Eglinton):: 
Donald Methuen Fleming: Mr. Chairman, I can assure my hon. friend that any suggestion from any part of the house that has merit will certainly be given consideration.


Alexis Pierre Caron: I am not speaking of the principle, I am speaking of the practice. If the minister would bring in an amendment himself we on this side of the house would be very happy.
(Translation):


Mr. Dorion:: Mr. Chairman, may I allowed a few remarks with regard to paragraph 6 which has been commented upon by our learned friends in the opposition. According to them, it would seem that in its present form this paragraph would put the province of Quebec in a rather unfavourable position, the provisions of the civil code being what they are.
Two things are, of course, authorized by this paragraph: a tax exemption in respect of a gift made by a husband to his wife, during his own lifetime, of real property to the extent of $10,000, and a further tax exemption in respect of a gift made by a

father to his son of real property to the value of $10,000.
I feel that everybody will agree that this provision is excellent in principle. As for the second part, in particular there is no doubt that it is such as to be of great benefit to our farmers, in so far as it allows the maintenance of the family farm, thus encouraging the father to make a gift to his son in his own lifetime, of the land he farms.
Where the problem becomes somewhat more involved, if my understanding of the first part of the paragraph is correct, is where a gift is made by a husband to his wife.
Every body knows-and our learned friends reminded the house of the fact yesterday-that community property is the general rule in Quebec. This common property is made up of all movable property belonging to the husband and wife before marriage, all movables acquired by them during their marriage, either by gifts or succession, fruits, revenues, interests falling due or received during marriage, and all immovables acquired during marriage.
On the other hand all immovables owned by the consorts on or before the day when the marriage was solemnized, as well as immovables acquired by them, during its continuance, by succession or equivalent process, do not go into the community. Our civil code also provides for a third type of property: property reserved to the wife.
Under the principle of community property, the husband alone has sole control and management of his property and he alone may dispose of it.
As far as any personal property of each spouse, the husband alone administers it but he cannot, without the wife's consent, dispose of any property belonging to her. Finally, there is a third category of property called property reserved to the wife; it is property acquired by the wife as a result of her own savings or use thereof, or resulting from the sale of real estate which she owned. Control and administration of that third category of property rest exclusively with the wife. One point which must not be overlooked is that this institution, community property, gives the wife a half interest in the property. Each spouse has an equal share. Consequently, on the death of the husband, or when in certain cases during marriage, separation of property is declared by the courts, the result is that the wife is entitled to half the community property and
Income Tax Act
her half is not subject to income tax, nor to succession duty tax.
That is one advantage resulting from the principle of separate property. Besides, the matter was referred to yesterday,-and my excellent friend from Hull Mr. Caron recalled it very precisely,-except when ordered by the courts, separate maintenance is instituted by marriage contract which, necessarily, is entered into before marriage. I know that here, in Ontario, this type of contract is entered into after marriage, or at any time during marriage.
The marriage contract can provide for all sorts of conventions, even those which might be void in any other intervivos arrangement. In this way not only can such donations be made in respect of present property but also in respect of future belongings. Those future belongings, if they are set out in the contract, may take effect during the lifetime of the consorts. In this regard I believe that the jurisprudence established by our courts is quite clear. Moreover, Mignault, in his writings on the Quebec Civil Code, volume 6, page 139, clearly expresses that opinion which, in any event, has been abundantly supported by our jurisprudence.
Therefore, nothing stands in the way of taking advantage of this paragraph, since, by way of a marriage contract, a tax exempt gift of $10,000, of real property, for instance, can be made, even though at time of marriage that property may not be at the interested party's disposal, or though he may not have a cent to his name. This real property can be claimed at anytime during the marriage, as long as such a gift has been provided for prior to the marriage and determined by the contract itself.
Obviously, as was rightfully pointed out yesterday, no gift intervivos can be made between husband and wife. They can make no changes in the contractual matrimonial conventions. However, it must be admitted that, when our notaries draw up a contract of separate property, they generally are careful to specify in the contract: a gift in cash or real estate. Through a legal provision under the resolution now being considered, such gift could very well be some real estate worth up to $10,000, which might therefore be exempt from income tax. Of course, the proposed clause under discussion would not affect existing marriage contracts, except where they already provide for such a gift. Therein lies the difficulty. I am

Income Tax Act
sorry that my learned friends in the opposition did not find-and probably for a very good reason-any realistic suggestion by which this paragraph might be adjusted to present conditions in the province of Quebec.
It will be admitted that the principle announced in this paragraph is excellent. It will also be recognized that the second part of the paragraph will be of very great help to the farmers not only of Quebec, but of other provinces as well. Otherwise, I readily admit that the first part of the paragraph will raise some difficulties for the province of Quebec with regard to the provisions of our civil law as they are now.
However, I wonder how it would be possible to amend that paragraph so that it might automatically apply to already existing marriage contracts, unless we encroach upon a field coming exclusively under the jurisdiction of the provinces, and especially of the province of Quebec. We all know to what extent the province of Quebec is jealous, and rightly so, of her institutions and notably of her civil code since, as everyone knows, the settlement of all individual conflicts that might arise, every day as it were, between citizens of the same community, come under the civil code. It is precisely by reason of this vital function that the civil code constitutes the most solid bulwark acquired and preserved by our ethnic group, a bulwark which no doubt has largely contributed to its maintenance and survival.
Under the circumstances, how could the federal parliament compel the province of Quebec to enforce this paragraph without automatically encroaching upon provincial jurisdiction? Unless we simply do away with such an eminently social and familial provision-no one in this house would be in favour of such a solution-there seems to remain but one possible solution, one which lies outside our jurisdiction and comes exclusively under the provincial legislature: i.e., to amend, if it so chooses, section 1265 of the civil code to allow any citizen of that province to take advantage of the clause now under discussion.
This obstacle should not, in my opinion, hamper the work of the federal government. After it has legislated within the limits of its own jurisdiction, it is up to the Quebec provincial government to complete its work and insure its full effect by taking action within its own field and enacting legislation which under the constitution, comes under its exclusive jurisdiction.
Before closing, I must add that for the last few years, a commission in the province of Quebec has been busy redrafting our civil code. I seem to remember, although I [Mr. Dorion.l
could not positively vouch for this, that the Right Hon. Thibodeau Rinfret, chairman of that commission, has indeed observed in the course of interviews given to the press, to the radio and to a group of people concerned, that the problem which we have tackled in connection with section 6 is already being considered: i.e. should we maintain, as a general rule in the province of Quebec, the community property system or should we not substitute for it the separate property system, which is now the exception. In any case, I am convinced that the commission will take note of the amendments made to the Income Tax Act and will definitely endeavour, in the suggestions which it will submit to the government of the province of Quebec, to ensure that all Canadians of the province of Quebec, as well as all Canadians of any other province, may take advantage of that section which, in my opinion, I repeat, seems highly familial and social in its nature.
In view of the fact that, in my opinion, all the steps that the federal government could take to impose upon the province of Quebec the obligation of taking advantage of this section, would constitute an encroachment upon the responsibilities which are exclusively provincial, and it seems to me that we should, under the present conditions, accept this section, leaving the province of Quebec the choice of taking advantage of it by amending the civil code accordingly.


Alexis Pierre Caron: I am very grateful to the member for Bellechasse (Mr. Dorion) for so clearly and accurately outlining the matter. To a person like myself, who has not too much legal knowledge, this was all very interesting but I do not feel quite clear in my mind about one particular matter. As it is, the member for Bellechasse seems to believe that if the federal government were to recognize as gifts between husbands and wives those which are made under a marriage contract, this would be an infringement on provincial jurisdiction. I would appreciate an elaboration on that point.


Noël Dorion: I am sorry, but what I meant was this. What would be an encroachment, would be to authorize gifts during marriage, in some way or another, if such gifts had not formerly been provided for in the marriage contract. But gifts made under the terms of the marriage contract are altogether different. To my mind advantage may be taken of these gifts mentioned in the marriage contract, even though such gifts be for the future.


Alexis Pierre Caron: In that case, I would ask the hon. Minister of Finance (Mr. Fleming) to

consult with the member for Bellechasse, who could surely be able to inform him in that regard.
(Text):


Leon David Crestohl: I was certainly very pleased, Mr. Chairman, to hear the hon. member for Bellechasse present to the committee his studied expose of this situation. It is so typical of him that anything he tackles he does thoroughly and he does well. Certainly there is no difference of opinion on the basic principle which he so clearly enunciated to the committee. There is certainly no difference of opinion on the second half of the resolution, in which we all concur. However, by his presentation the hon. member has just confirmed that in so far as Quebec is concerned, the problem exists. I do not think there is any issue between the opposition and the government on the principle which they are attempting to establish. We are only concerned as to whether or not this principle covers the province of Quebec as clearly and as adequately as it covers the rest of the country.
The presentation by the hon. member for Bellechasse is quite clear. But even so he suggests, and I say this with great respect, that if the legislature of Quebec would amend article 1265 of the civil code the problem would be solved. Since we do not know what the Quebec legislature will do now, when we are debating this legislation, we might not be giving the benefits which are intended by this legislation to the province of Quebec. I was wondering whether we could not suggest an amendment in some form which would cover the situation.
I might say now to the minister that we are seeking to obtain for the husband in Quebec the very same rights which husbands enjoy in the rest of the country; that is our objective. I suggest to the minister that he might consider this form of amendment, because in my humble opinion this is how we might be able to attain our objective under present conditions. I am not moving this as an amendment, but I am merely putting it forward for the minister's consideration. When the time comes this amendment might be made to paragraph 6:
Where the making of a gift as herein contemplated is prohibited by provincial law, but a desire to make such a gift is recorded, there shall be no tax assessable if in the last will and testament of a husband he specifically bequeathes to his wife a legacy, which in effect is similar to the gift as herein contemplated. The deceased's estate shall in that case, for estate taxes, be considered reduced by the amount of the said gift.
I tried to word this as clearly as I could. The intention is that if there is a prohibition in the civil code of Quebec against the making of such gifts, there is no prohibition against
Income Tax Act
the husband making such a gift by will. The husband would have, during his lifetime, declared in writing that he desired to make such a gift but could not do so because of our code. Then if it is later found in his will that he bequeathes to his wife a legacy of $10,000 or less, providing it comes within the framework of being in connection with their home, that $10,000 should not be considered a part of his estate under the new act which we discussed the other day. It may be excluded. If it were declared now that such gift, by legacy, was intended to be a gift under this section, then the intent is clearly expressed and I believe the legal difficulties are surmounted if the federal government will go along and say they will exempt that amount for estate tax.
Later if the legislature of Quebec, as the hon. member for Bellechasse has declared, comes to the aid of husbands in Quebec, I would say tant mieux; then we would have confirmation of it.


Mr. Roberge:: At page 2136 of Hansard for yesterday the minister was speaking on this clause 6 of the resolution, and he had this to say:
This provision, which has much to commend it, is available to anybody in Canada once parliament enacts it. If it is my hon. friend's opinion that the law of Quebec prevents some spouses there from deriving benefit from this provision-
The minister was referring to a question put to him by the hon. member for Hull.
-I think in all fairness that should not be pleaded as a reason for denying this benefit to spouses in other provinces-
We on this side of the house quite agree with that, Mr. Chairman. However, I should like to ask the minister whether, in framing the amendment to the act, any consideration was given to the laws of the provinces, and in this instance especially to the laws of Quebec in so far as gifts to spouses are concerned.


Donald Methuen Fleming: Yes, certainly. As a matter of fact this resolution is, in part, designed to give to the spouses in the common law provinces of Canada the benefit that the wife enjoys in Quebec by virtue of the community of property.


Gabriel Roberge: I beg to disagree with the minister. 1 do not believe that spouses in Quebec are going to benefit at all from that provision as the law of Quebec stands now, even under community of property or with a separation as to property.


Donald Methuen Fleming: In the case of marriages in Quebec where community of property exists, if I understand it, the benefit that this particular proposal would create in favour of the wife already exists in the province of Quebec. I think that point has

Income Tax Act
been clearly made. My friend may not agree with it, but I think the point has been clearly established.


Gabriel Roberge: I shall try to elucidate this situation in so far as community property is concerned. When a man and woman are married in Quebec-I am referring to those who are now married, not those who may be married in the future-community of property exists if there is no marriage contract signed before the marriage. Then the community property belongs to both at the same time; it is not divided. It is divided only when the death of the husband or wife occurs. Before that, it is administered by the husband alone, without his wife taking any part in the administration of the property.
The exception to this was mentioned by the hon. member for Bellechasse, where property may be reserved to the wife, but that does not enter into our considerations. In so far as community property is concerned, it is not divided before one of the spouses dies; therefore I do not see how they could benefit from this amendment.


Donald Methuen Fleming: I have tried to make this point as clear as I could. When my friend says that no benefit will directly accrue to spouses in Quebec under this resolution, what I am submitting to the committee is that in such cases joint ownership already exists under community of property in the province of Quebec.


William Moore Benidickson: But does it help in any way? There is the group where the husband and wife have an ante-nuptial contract.


Donald Methuen Fleming: In the case of an ante-nuptial contract you have a different situation, because there the parties can exclude community of property by the terms of the marriage contract.


William Moore Benidickson: And do.


Donald Methuen Fleming: Yes; and in those cases, as I understand it, it will be competent for them to make gifts. After the very clear exposition of this matter by the hon. member for Bellechasse I would have thought the point had been clarified. There has been a useful discussion. It seems to me the point has been established reasonably clearly now.
I can assure hon. members, Mr. Chairman, that this matter was very carefully canvassed from all aspects. All hon. members are aware that in the province of Quebec, in cases where community of property does exist, the wife has already, by the fact of the marriage, acquired a joint ownership in the property of the husband. Consequently she already enjoys the benefit that this legislation is intended to make it possible for the 
parties to a marriage in other provinces to create in favour of the wife in respect of their home, and as well for the benefit of those parties to marriages in the province of Quebec who have, by ante-nuptial contracts, excluded the principle of community of property.


Leon David Crestohl: I should like to clear up one point for the minister, if I can. The minister is under the impression that where there is community of property, the wife already has what is rightfully hers, halfinterest in the property. But that is not quite the case. Even where there is community of property the husband and wife can have property of their own. There are certain things which husbands and wives have which do not fall into the community. One of these is property which they inherit.
For example, if a husband inherits the home in which he resides, that is the husband's property. The maintenance of the home is the community obligation, but that property is the husband's and he can do away with it by will if he wishes. The wife has no interest in that. I hope the minister sees the difference under those circumstances. If a husband has property which is exclusively his own and which does not fall into the community, or within that property which we are talking about, why should not the husband who has his own property which does not form part of the community not be able to give away part of that property and make a gift to his wife of $10,000? Under our present law he cannot give his own personal property, not the community property; he cannot give that to the wife.
There is a material and serious difference there, I submit to the minister, and that is the butt of our entire discussion of this whole thing. It is with reference to that $10,000 of the husband's own estate which he is prevented from giving to his wife under our law. The law as contemplated here intends that to be the case but it cannot be the case in the province of Quebec. A husband cannot even give his own personal property to his wife if he wants to do so, if they live under the regime of community as to property. It is that difficulty which we are trying to remedy in order to give that husband the privilege not of giving community property but of giving his own property which does not form part of the community.
That is the basic difference. If the minister will look at the matter I am sure he will understand it perhaps in another light. I understand certainly that the hon. member for Bellechasse gave an excellent expose and a complete review of the situation in the province of Quebec. But even so he left a

doubt, and he would call upon the legislature of Quebec to make it possible to give effect to the law which we are now attempting to pass in this house. I am all in favour of that law, but I am apprehensive that it might not be possible for the matter to be dealt with in the province of Quebec as effectively as we should like to see it done.


Mr. Grafftey:: I should like to add a word or two, Mr. Chairman. I think the hon. member for Cartier must realize this, and I should like to say this for some other people in the house who perhaps have had more experience in the common law than in the civil law. If we are dealing with article 1265 in the province of Quebec I think he must admit that it is perhaps one article that has had more jurisprudence on it, even within our own province, than most other articles. I think he is doing a little bit of crystal-ball gazing and is prejudging the situation a little bit.
After the clarification by the hon. member for Bellechasse I feel that we should get on with this thing. Even in the province of Quebec I say we have a great deal of jurisprudence on this very point. I can quite easily visualize, especially on the federal level, this debate going on for weeks and weeks. I repeat I think he is prejudging the situation. After the remarks made by the hon. member for Bellechasse I can quite easily see this matter being straightened out in the near future. In view of that possibility I hope hon. members might consider these remarks.


Mr. Carter:: I am in the position of a juryman in this case, because I know nothing about the Quebec law except what I have listened to here this morning.


William Moore Benidickson: Jurymen do not decide on the law.


Chesley William Carter: In listening to the arguments that have been put forward on both sides of the house, and especially those by the minister himself, it seems to me that everybody is overlooking the real principle in this clause. The real principle is not security of the family-something which the minister stressed-which he is giving to provinces other than Quebec but which is already enjoyed in Quebec; and it is not the fact that some people in Quebec cannot make gifts unless they separate their property before marriage. The real principle is surely tax relief. This measure is designed to give a certain amount of relief to taxpayers. That is all it is for. We are giving an exemption for tax purposes in a case of this kind. Surely we must keep to the main principle and treat all taxpayers alike. If we are not treating
57071-3-136
Income Tax Act
certain taxpayers in Quebec in the same way as we are treating taxpayers in other parts of Canada, then we should take some other measure to try to bring about that result.
(Translation):


Gabriel Roberge: Mr. Chairman, I have followed with much interest the statement made by the hon. member for Bellechasse (Mr. Dorion). I agree with him that the easiest way to reach the desired objective would be to amend the civil code. I also recognize that it is not within the powers of this government to amend the civil code or to ask the government of the province of Quebec to do so. However, I wonder if there is no other way open to us. I would not like the Minister of Finance (Mr. Fleming) or the government to take my remarks, or those of my colleagues, as criticisms. We are just endeavouring together to find a compromise so that spouses living in the province of Quebec can also benefit from that $10,000 exemption.
(Text):
Mr. Chairman, if I recall rightly what I learned in my courses at the university, there is such a thing as the ancillary power of the federal government with regard to matters that come within the jurisdiction of the provinces. I refer especially to the Bankruptcy Act. I think it was decided by the privy council that the Bankruptcy Act was in-tra vires of the federal government inasmuch as it was ancillary to its power.


Donald Methuen Fleming: No, no.


Gabriel Roberge: I might be wrong.


Donald Methuen Fleming: Bankruptcy is one of the heads of jurisdiction especially enumerated in section 91 of the British North America Act.


Gabriel Roberge: That is true. But at the same time I submit that the Bankruptcy Act was infringing a little bit on provincial rights because it was dealing with property and civil rights. It was decided by the privy council, if I remember rightly-


The Chairman:: Order.
(Translation):
I regret to interrupt the hon. member, but the debate is drifting away, to a certain extent, from the main subject. This morning, hon. members went into the matter of federal provincial relations; the debate has dealt in part with community property in the province of Quebec and various points were raised which perhaps in their time and place are important. However, it remains that at this time we are dealing with section 6 of the resolution which has to do with a tax

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exemption granted on gifts of real property between spouses, and between father and son especially as regards farm property. Hon. members should now try to confine their remarks as much as possible to section 6 of the resolution without starting a debate on irrelevant questions. I therefore ask hon. members to stick to the subject under consideration.
(Text):


Mr. Pickersgill:: If I may I should like to say a word on the point of order, Mr. Chairman. Surely my friend the hon. member for Megantic was merely trying to give an analogy between something that happened in another field of law and something that we are seeking to do here in this particular clause. Surely it would be restricting debate to an inordinate degree to deny to an hon. member the right to give an analogy between one set of circumstances and another. Even if the minister did not agree with the analogy I think we should be allowed to hear it.


Joseph Pierre Albert Sévigny: I wish to bring to the attention of the hon. member for Bonavista-Twillingate the fact that I did not call the hon. member for Megantic to order. I simply asked the hon. member for Megantic as well as other hon. members to please stay as closely as possible to the item being discussed without straying into federal-provincial fields.


John Whitney Pickersgill: I accept cheerfully the chairman's suggestion.


Mr. Harkness:: You need a translator.


John Whitney Pickersgill: Oh, no.


Gabriel Roberge: Mr. Chairman, I quite appreciate the fact that I was rather far from the point in question, but as my colleague the hon. member for Bonavista-Twillingate has said, I was just giving an example. I did so in order to come to the suggestion I wish to make. In speaking of these ancillary powers, which I well recognize, I wonder if the minister would consider adding something to the bill which would differ slightly from the present resolution to provide, notwithstanding the provisions of any other act in so far as a gift is concerned, a clarification of the situation. Surely this suggestion is worthy of consideration by the minister. I do not know whether it is completely applicable or not, but I do believe the ancillary powers of the present government could be of use in the case in question.
(Translation):


Mr. Denis:: Mr. Chairman, the hon. member for Megantic (Mr. Roberge) surely does not need my help, since he gave us a clear
[The Chairman.]
picture of the situation. We believe, however, that the province of Quebec is being discriminated against because of our laws. And in order to prove to the hon. Minister of Finance (Mr. Fleming) that there seems to be discrimination, one has to explain our law regarding community of property and separation of property, in the province of Quebec. Unless section 6 is amended, we shall have to rely solely on the amendments brought in by the government of the province of Quebec to its own legislation, as the hon. member for Bellechasse (Mr. Dorion) said. However, I have reason to fear that no such amendments will be made. On previous similar occasions, this house has enacted laws that were beneficial to all the provinces of the country, save Quebec. It was so, for instance, in the case of the trans-Canada highway, and likewise so as regards grants to universities.


Some hon. Members:: Order!


Azellus Denis: I only want to show to the hon. members that, on several occasions, when a federal bill was introduced in order to assist the other provinces, we were willing to support it because we felt it was reasonable, while regretting that it did no good to the province of Quebec, although the citizens of that province are taxpayers, just as much as others elsewhere. That is why, Mr. Chairman, I believe that the hon. Minister of Finance should reconsider this resolution so that, when the bill is introduced, he might find some way to give the province of Quebec a chance to profit from the provisions of this amendment on the same basis as other provinces in the country.
There is, in my view, a further discrimination. As a matter of fact, in the second part of paragraph 6, the children of farmers are entitled to this gift, whereas, according to the first part, the children of the workers of Montreal, Quebec, Toronto or any other city area, are not entitled to the same benefit. So, in urban areas, children cannot receive the paternal house as a gift on the same basis as the farm children, because the first part of paragraph 6 applies only to the wife or husband, whereas according to the second part, the children are included. There are in urban centres small properties which have been by tradition familial properties, homes in which the whole family has lived and to which cherished memories are attached. Family spirit can exist in cities as well as anywhere else, and children of carpenters, bricklayers or any other tradesmen might wish to keep the

paternal house and take advantage of this legislation. I ask the minister, when he introduces this bill, to look for some way to correct something which, I feel, is a discrimination against city children. I ask the hon. minister to be kind enough to take that suggestion into favourable consideration so that city children might benefit from that legislation to the same extent as do rural children.
(Text) :


Donald Methuen Fleming: I should like to make two brief observations on the remarks just delivered by the hon. member for St. Denis.
In the first place, this resolution and the bill to follow will do all the federal jurisdiction can do to extend this benefit to everybody in Canada, regardless of the province in which he or she lives. The federal government can do no more than legislate for the benefit of all, and that is what this legislation will do. I do not think, notwithstanding all the repetitive arguments to which we have been listening, that it can be contended, as my hon. friend assumes, that there is going to be any portion of this benefit denied to those who live in the province of Quebec, and I simply refer him to the exposition on this subject delivered this morning by a brilliant advocate of the province of Quebec in the person of the hon. member for Bellechasse.
On the second point, my hon. friend complains that in the case of gifts from parent to son the benefit of exemption should not be confined to those cases where the gift is that of a farm. This resolution has been deliberately drawn in this form because of the desire to keep the sons of farmers on the farms, and because so many of these questions arise with respect to property located in rural areas. This is a situation which occurs over and over again in all parts of the country and has given rise to this particular amendment.
I do ask the committee to recall that we had a very extended discussion on this subject, and I think it is clearly understood that we are trying to bring forward two new types of alleviation of the tax burden. Most of the hon. members who have been speaking in this house this morning and who spoke last night have been here for a long time, but at no time have they brought forward such suggestions as those for which they are so strongly arguing this morning. The need has existed all this time, if there is any such need at all, but I do ask hon. members to weigh 57071-3-136J
Income Tax Act
well the fact that in this paragraph are attempts to bring relief, and I think very useful relief, to all parts of Canada.
First, this alleviation is with respect to a gift by one spouse to the other of an interest in the home; we are here proposing that up to the amount of $10,000 that gift should be free of tax. This means, with the present exemption on gifts between spouses of $4,000 per year, we have now created a means by which the wife can be secure in the ownership of the home of the couple in all parts of Canada. Second, in the case of a young man on a farm, the father can now convey to the son, up to the amount for which provision has been made, an interest in that farm which will have the effect of keeping such a young man on the farm and will, we think, contribute not only to the easing of the tax burden but will serve the socially desirable need to maintain agricultural production and retain the ownership of these farms in those families where it is clearly to the national advantage to do so.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Joseph Pierre Albert Sévigny: Order. The committee of ways and means was discussing the resolution respecting the Income Tax Act, clause 6.


William Moore Benidickson: Mr. Chairman, I was not proposing to enter into a discussion of the situation in the province of Quebec as I would not be competent to do so, but I am concerned about the expectations raised by this section with respect to the correction of the type of thing so aptly described last night by the Minister of National Revenue. I think he very well described the situation in the common law provinces when he described how a husband dies and, in the case where there has been a joint tenancy, it is suddenly found that there is a gift tax because the property is owned by the husband and the wife had not paid any money into it. Time and again complications have arisen because of the gift tax, and it seems to me that it was to avoid cases such as this that the section which refers to the home of the husband and wife was designed.
I think the practice of having joint tenancies with respect to the resident's property has been growing in volume in recent years, and I want to know whether or not it is intended, as referred to in this section, that the bill should provide that only joint tenancies created since 1958 will avoid gift tax.

Income Tax Act


Donald Methuen Fleming: Oh no, it is not
confined to the creation of a joint tenancy-


William Moore Benidickson: Well, a gift-


Donald Methuen Fleming: -in the home of the couple. But one can see that with a gift of $10,000 permitted under this clause, if the property were of the value that most city homes cost nowadays it would not be adequate to pay the value of the home in full.


William Moore Benidickson: I was really referring to retroactivity with respect to, say, $10,000 of a gift with respect to real estate. I was agreeing with the Minister of National Revenue when I was saying that so many of these difficult cases arise from a joint tenancy that has been in existence for many years, and only discovered by the tax administrators as a result of the death of one of the tenants, and the minister was indicating that this resolution was designed to avoid that kind of trouble. The point I want to make is that if it is not going to have reference to tenancies of this kind created prior to 1958 we are not accomplishing very much.


Donald Methuen Fleming: It will still be
possible, undoubtedly, for a husband and wife in such a situation to take advantage of this legislation so long as the gift of the interest in the property which is the home of the couple, after the date on which this legislation comes into effect, does not exceed $10,000 in value. It will be possible for the husband, if he so wishes, to give an increasing value to the widow's interest in the property by a gift of $4,000 a year. That is what he can do at the present time. I am sure the hon. gentleman is not going to suggest that where you introduce alleviating provisions of this kind you should make them retroactive; you must start at one point. We might regret that this kind of legislation was not put into effect sooner, but here we are bringing it on. Now let us put it into effect.


William Moore Benidickson: If some retroactivity of
the type suggested last night by the Minister of National Revenue does not apply, it seems to me that the administration is simply obliging people to go through a lot of legal rigmarole, if a joint tenancy has been created, as a result of some of the publicity that will attach to these discussions and the presentation of the bill, if people do seek legal advice, in that they will be warned by their solicitors that if no contribution was made by one of the spouses to the joint tenancy that was created in the past they had better re-transfer the property into the name of the person who contributed solely to the investment in the real estate and then subsequently provide for another transfer back into the joint

tenancy. Would that be satisfactory to the department? Would that come within the provision as intended here?


Donald Methuen Fleming: One must be very
careful about this matter of going back. I think that what the legislation will provide for is quite clear, and I trust it will be worth while for those who propose to take advantage of this measure to take the steps that are required to bring their gift clearly within the scope of the alleviating provisions.


Leon David Crestohl: I should like to say a word
about the minister's statement before we adjourned. I have a feeling that the minister thought that perhaps we were labouring this question unduly. I want to assure him that from our standpoint we were not. We agree with the legislation. I have said that before. We are not opposing it in any way, but we are concerned as to the certainty of this legislation in obtaining the objective which it seeks, and I wonder whether the minister would not again consider my suggestion that he should obtain an opinion from the Minister of Justice or from the Department of Justice if he has not already done so. I have a feeling that he thinks the legislation is infallible.
I suggest again that I would be quite content to accept the minister's statement that this has been carefully reviewed by the Department of Justice and whatever legal advisors he has had. I have a great respect for the legal ability of the hon. member for Bellechasse and I would be prepared to accept his opinion except for the fact that I feel his opinion was not unqualified. I should like to hear an unqualified statement because I do not think that the legal interpretation which I and my colleagues are placing upon this is correct or infallible. Because the legislation is so important I feel that the committee should have, under these circumstances, the benefit of an unqualified legal opinion from the best authority that is available in the country.


Gabriel Roberge: Mr. Chairman, I should like to direct a question to the Minister of Finance for the purpose of clarifying paragraph No. 6 and in order to remove any doubt as to the interpretation placed upon it by the government. I refer to the first part of paragraph No. 6 which reads as follows:
That for 1958 and subsequent taxation years a gift to the spouse of a donor of real property to be used by the donor and the spouse as their home-
I should like to know if that would apply in cities, villages and rural areas? I am asking that question because the second part of the paragraph relates only to farm property.


Donald Methuen Fleming: Mr. Chairman, the first part of the clause relates to real property wheresoever located. The second part, in the case of a gift from father to son, relates to farm property.


Mr. Brunsden:: Mr. Chairman, may I say to fellow hon. members of this house from the province of Quebec, through you, sir, that those of us who are new members and perhaps particularly those who are new members from the west have been extremely interested in the discussion that occurred this morning and last evening. Since coming to this house on May 12 we have heard frequent reference to one word in particular on the part of hon. gentlemen from Quebec. It is one of the very few French words that I have had time to learn. I refer to the word "unity". Certainly if we are to attain unity in this country we need to know more and more about the problems of the various sections of the nation. Speaking for myself I have gained a new conception of at least one problem in the province of Quebec and it is for that reason that I ask the indulgence of the house for a few moments while I endeavour to explain, as best I may, the relationship of this particular paragraph to the people of the prairies.
Let me say at once that we believe this represents an admirable amendment to the Income Tax Act, one that has long been needed. I say that for this reason. Our part of Canada, unlike the provinces of Ontario and Quebec, has been more recently settled. The people who live there are to a large degree the original pioneer settlers. Many are reaching the age where death is taking its toll and disability is rendering many of them unable to work any longer.
I am not a member of the bar but I have had a rather extensive experience with farm people both as a technical agriculturist and as a businessman. We have, as the hon. member for Kenora-Rainy River has indicated, adopted the practice of joint tenancies in that part of the country and we have found that the principle of joint tenancy is becoming more and more popular. I would not say that at this moment it was widespread throughout the part of the country from which I come, but certainly it is being viewed with a great deal more favour than it was a few years ago.
With respect to a joint tenancy in Alberta, should the husband die within a few years of the establishment of the joint tenancy the widow is required by the income tax branch to establish the validity of her claim under the joint tenancy. In many cases, of course, this is impossible. Frequently she is unable to produce any evidence that she has an actual
Income Tax Act
financial right in the property and as a result taxation is applied and the widow is at some disadvantage.
It seems to us as laymen, that women in our part of the country-this question is frequently discussed there-I feel I can say this since the election of March 31 is now over and I cannot be accused of a motive- and particularly the pioneer women have never been fully recognized at law. This is a strange situation because the wife and daughter have played an equal part to that played by the husband and son in the development of that part of the country. Certainly these women have done their full part m developing western Canada. We appreciate this amendment for the very valid reason that to some degree at least it gives to the women of our part of the country, regardless of what may be the situation elsewhere, recognition at law and a right to which they have been long entitled.
Let me add that what is true of the wife and the widow is also true of the working son and the fatherless son. Did I wish to take the time I could cite a number of instances where a young man has worked with his father from boyhood into early manhood and yet at the time of his father's death he has had no equity in the farm which he has helped to build up. From the point of view of those of us who have to some degree studied this problem on the prairies and from that point of view of those of us who have had contact with actual cases, we believe the amendment is to be commended and we wholeheartedly endorse it.


Mr. Cardin:: Mr. Chairman, may I say first of all that I greatly appreciate the introductory remarks of the hon. member for Medicine Hat. I believe they were in themselves a valuable contribution to our national unity. We were pleased to hear the hon. member explain the interest he has in the problem we are trying to raise with respect to the province of Quebec and that he is anxious to acquaint himself with our problems. Hon. members from the province of Quebec feel that the question we are seeking to raise at this time is one of considerable importance to us. I think it would be regrettable if an important aspect of this piece of legislation were to go through, leaving behind it some misunderstandings as to its exact meaning. I agree, and hon. members on this side of the house have agreed from the beginning, that this is highly useful legislation applicable throughout the country in most of its aspects but with respect to one particular aspect there is some doubt as to its application in the province of Quebec.
I listened with interest to the hon. member for Bellechasse in his very learned, fair and

Income Tax Act
complete expose of the civil code relative to this matter. The minister has asked us to refer to the remarks made by the hon. member for Bellechasse and I think he will recall that the hon. member for Bellechasse said there was only one part of this section which was not necessarily applicable to the province of Quebec. He made the point that we, as the federal government, could not legislate in order to force the provincial government to modify its civil code with which I fully agree, but I believe it would be possible for the federal government to slightly amend the wording of this clause in order to eliminate what I believe is a discrimination affecting some of the people in that province under this important legislation.
I am not going into the problem of the community of property; I think the hon. member for Bellechasse has explained that quite well. I believe that the part that deals with those people who are married, and there is separation of property, is the nub of this whole problem. I would like to clear up the matter in my own mind by asking the minister whether or not it would be applicable to those people. For instance, take the case of a couple who enter into a contract prior to marriage in which the spouse makes a gift of, let us say, $10,000 in real property to his wife to be payable during the course of marriage. Would this gift be exempted or not; would he be able to benefit from this section of the act?


Donald Methuen Fleming: I answered that question last night, Mr. Chairman. I was asked if a donation in cash would qualify and I answered no; it must be a donation of an interest in real property which is to constitute the joint home of the spouse and the donor.


Louis-Joseph-Lucien Cardin: Am I to understand that a contract that was entered into by two people before marriage in which there was a gift of real property would be exempt from taxes even though-


Donald Methuen Fleming: No; my hon. friend is asking me about the position of a gift of money, or successive gifts of money. These are recognized at the present time as gifts. The act exempts gifts up to $4,000 per annum. This new exemption is in addition to that. This applies to a gift of real property, or an interest in real property, which constitutes the home of the spouse and donor, and it applies in the case of a gift to the spouse by the donor; if the gift takes effect on the marriage, then it will qualify. If it is something that preceded the marriage and the parties were not at that time in the relationship of spouses, then it could not be expected to qualify.


Louis-Joseph-Lucien Cardin: That is exactly the point. We have this problem in the province of Quebec. In order to be able to make a gift it has to be done before marriage.


William Moore Benidickson: A contract has to be entered into before marriage.


Louis-Joseph-Lucien Cardin: The contract has to be entered into before marriage. It seems to me relatively simple for the government to include those particular circumstances by way of amendment in order that these people who are in separation as to property might be able to qualify, would it not?


Donald Methuen Fleming: If the gift takes effect at the time the parties become spouses, then obviously it will qualify under this clause. As I understand it, the contract is entered into on what is a provisional or a conditional basis, the condition being that it shall not come into effect unless and until the parties wed. If the gift of real property or an interest in real property takes effect on the marriage, then-


William Moore Benidickson: Or after.


Donald Methuen Fleming: -I think it clearly qualifies.


Louis-Joseph-Lucien Cardin: Then, the answer is in the affirmative.


Donald Methuen Fleming: Yes, if the gift takes effect on the marriage then at that moment the parties are in the relationship of spouses and I think the gift comes within the terms of the clause.


Gabriel Roberge: On the same subject, I understand that people from Quebec who are married or thereafter get married and include in their marriage contract, where there is separation as to property, a gift of real property to a spouse, will benefit from this clause. What about those people who are now married and who did include, let us say, 10 years ago, a donation of $10,000 of real property, the donation to take effect tomorrow, would they benefit tomorrow?


Donald Methuen Fleming: Mr. Chairman, for all persons in all provinces in all parts of Canada this provision will extend the exemption in the case of such gifts occurring on or after January 1, 1958.


Leon David Crestohl: I should like to direct the minister's attention to another problem. The minister in referring to the second part of this section speaks about a gift from father to son. The section makes no reference at all to a father or even a mother; it speaks of a spouse and a donor.


Donald Methuen Fleming: It speaks of a child of the donor.


Leon David Crestohl: That is right; the donor can be the mother or the father. That is the point I am trying to make. The hon. member for Medicine Hat spoke quite properly about the rights to which women in his part of the country are perhaps entitled. Among other things is the right to make such a gift by a donor within the meaning of section 6. I draw to the minister's attention the fact that women in Quebec, common as to property, cannot be donors of immovable property. Therefore, here again the women of Quebec are unintentionally being discriminated against while women in other parts of the country can donate to their children. Women in the province of Quebec cannot, if they are common as to property, be donors because the husband has the administration not only of the community property but also of his wife's property. Perhaps the thing should be looked at again and if possible give the women of Quebec the same right.


Donald Methuen Fleming: If there is any discrimination it is not created by this provision; indeed, it is not created by any federal legislation. We cannot remove any discrimination, if discrimination has been imposed, under the law of the province of Quebec. This is taxing legislation. We have made it universal in its application in all parts of Canada. It is fair, it is equitable legislation. There is no discrimination created by this legislation and there is nothing that we can do about that situation which my hon. friend mentioned.


Leon David Crestohl: There is no doubt that what the minister says is perfectly correct; the legislation is not discriminatory and has not that intention. That is perfectly true. But its end result in so far as a section of this country is concerned is that it is indirectly a discrimination. It is on that that we should like to get a legal opinion. In other words, we are prepared to give something to the citizens of the country, and yet in a certain part of the country they are not able to take advantage of it and that in itself, although the legislation is not discriminatory, is a form of discrimination.


Donald Methuen Fleming: Does my hon.
friend suggest that the hands of parliament must be tied and that this kind of alleviation should be denied to persons elsewhere? We are creating no discrimination. So far as parliament can do it, this is given to all.


Mr. Woolliams:: Does the argument not boil down to this? Even if the minister could go along with the suggestion, would it
Income Tax Act
not be ultra vires. Is that not the whole point? We have spent about three hours on it now.
While I am on my feet, Mr. Chairman, I would like to say this. I believe one other hon. member spoke on it. In western Canada we certainly go along with it because in Alberta we have a Torrens land titles system in which there is joint title. Where the land is in joint names, a homestead, a farm, a home or probably an estate, the legal fees can be cut down because all you have to do is to file an affidavit in the land titles office in Alberta rather than probate the estate. As a lawyer I look at this in one way and as a Canadian I say it is a very good thing. We have spent a long time on legal argument. I am a lawyer, but I say let us get down and settle this. It appears to me as though this is something that could be remedied by one province and could not be remedied by this house anyway.


Joseph Pierre Albert Sévigny: Shall we continue with discussion of clause 8?


William Moore Benidickson: I believe that this is one of those loophole corrections which probably does not affect a great many taxpayers. Am I right in thinking that under the present law if a company is, and always has been, what is known as an n.r.o. company, the dividends paid by it are exempt from withholding tax?


Donald Methuen Fleming: That is correct, Mr. Chairman. This is to meet that situation, where a company that has not been a nonresident investment corporation but is turned into one; if an effort were made in that direction, it could take advantage of two exemptions that exist at the present time where there should be only one.


William Moore Benidickson: The proposed amendment does not affect the situation that I described?


Donald Methuen Fleming: No, the proposed amendment will permit one exemption, and properly so, but not the two. The house may be interested in the meaning of this. These non-resident investment corporations are corporations of which the shareholders reside outside of Canada. The n.r.o. company is subject to a tax of 15 per cent each year on its income from all sources, but is exempt from the 15 per cent tax normally paid on dividends by Canadian corporations to non-resident shareholders.
Now, if non-residents invested directly in shares of a Canadian company or in Canadian bonds they would pay to Canada only the 15 per cent non-resident tax on their dividends or interest. But if these non-residents formed an n.r.o. holding company to hold their investments in Canada, they still pay

Supply-Agriculture
only the 15 per cent tax in Canada on their income from their investment. But for certainty of collection, it is paid each year by the n.r.o. instead of when actually withdrawn from the country in the form of dividends. Now, that is the present situation.
This is the loophole that could occur under existing law. Where a company in Canada was acquired by non-residents, and which was carrying on an active business and was not up to that time an n.r.o., and then became an n.r.o. it might have undistributed income accumulated while it was an ordinary company which it could now pay out as dividends to its shareholders since dividends from n.r.o.'s are free from non-resident tax. This resolution proposes that this loophole be plugged by providing that dividends from mr.o.'s shall not be exempt from non-resident tax until all the income accumulated while the corporation was previously not an n.r.o. has been paid out.


[Stage Direction]
Resolution agreed to.
Resolution reported and concurred in.
Mr. Deputy Speaker:: When shall the committee have leave to sit again? Next sitting of the house?


Some hon. Members:: Agreed.

The house in committee of supply, Mr. Sevigny in the chair.


DEPARTMENT OF AGRICULTURE
[Stage Direction]
1. Departmental administration, including advisory committee on agricultural services, $674,164.
Douglas Scott Harkness: When the estimates of the Department of Agriculture were briefly before the house on Wednesday afternoon I had been giving a brief summary of some of the changes that had taken place during the past year so far as agriculture is concerned, as well as a brief outline of the agricultural situation as it appears now. I had been dealing with these matters in a general way and had dealt with some of the more important agricultural products such as wheat and cattle.
I had made reference to the amount of beef exported during the past year.
I should like now to continue with those remarks and say something about the prices received for a few of our other major agricultural products. In 1957, the price of good steers at Toronto averaged $19.05 per hundred pounds live weight, 25 cents higher than in 1956. The average price of all cattle marketed was $16.10, almost the same as the $16.05 average in 1956. The strong domestic demand for cattle-


Paul Joseph James Martin: Was that $16.25? [Mr. Fleming (Eglinton)J


Douglas Scott Harkness: No, the average price of all cattle was $16.10 and in 1956 it was $16.05, almost the same.
The strong domestic demand for cattle, in conjunction with the heavy United States demand that developed in the last part of
1957,	resulted in a substantial increase in cattle prices between October 1957 and April
1958.	Good steers at Toronto averaged $22.26 per hundred pounds in March, 1958 compared with $18.78 the year previously, an increase of upward of four cents a pound. The high level of marketings and the strong demand was reflected in the total value of commercial marketings, being $116 million in the first quarter of 1958 compared with $69 million in the corresponding period of 1957. The gain in cattle prices has been responsible to quite a considerable extent for the fact that the total cash income of farmers during the first quarter of 1958 is considerably greater than in the first quarter of 1956 or 1957.
The figures are given in the dominion bureau of statistics farm cash income publication, and they show that in the first quarter, that is January to March of 1958, farm cash income was $618 million, which is up $42 million from the $576 million of a year earlier. I think that we have been very fortunate, so far as our cattle prices are concerned during these past nine months in particular, in the fact that we had increased numbers of cattle available to market at these higher prices.
After cattle the most important meat production which we have is hogs and I should like to say just a few words about that matter. At June 1, 1957 hogs on farms numbered 4.9 million, only slightly more than the 4.7 million at June 1, 1956. In 1957, 5.4 million hogs were slaughtered and graded in federally inspected and approved plants, 9 per cent less than in 1956. The retention of hogs for breeding indicated by the drop in output in 1957, in spite of the large number on farms, is reflected in the current and anticipated increase in marketings during the present year. In other words, although there were more hogs on farms in 1957, there were fewer slaughtered than in the previous year, which indicated a considerable number was retained for breeding purposes which means that we shall have a much larger flow this year and in the early part of 1959.
Gradings in the first three months of 1958 were 1,542,000, 7 per cent higher than in 1957 In other words, this increased movement of hogs to market is already showing up in the first quarter of 1958. That increase has been mainly on the prairies. The amount of increase in hog production in the eastern part of the country has not been very great but in the prairies it has been very marked.

Per capita consumption of pork was 46.2 pounds in 1957, 6.7 per cent more than in 1956. In the first quarter of 1958 a further increase in consumption is indicated. Domestic disappearance from commercial marketings totalled 177 million pounds in that quarter, a rise of 9 per cent over 1957. In other words, although we have more hogs now coming to market, the market has been able to absorb those. The consumption has increased.
The equivalent of 322,000 hogs were exported as pork products in 1957. Exports amounted to 6 per cent of total commercial marketings in 1957 as compared with 9 per cent of the total in 1956. In other words, we were able to consume sufficiently more at home so that we had a lesser amount available for export.
In the first quarter of 1958 exports were 14.5 million pounds compared with 11.3 million pounds a year earlier. In other words, exports are going ahead. They have gone ahead again in this first quarter of 1958.
Grade A hogs at Toronto averaged $31.05 per hundred pounds dressed weight during the first quarter. That is exclusive of the federal government premium of $2 per head. In 1956 the average price was $27.50 and the ten-year average-that is from 1948 to 1957- was $29.68, which means that the price of hogs has been relatively quite high during this last year of 1957. The estimated value of hogs marketed and inspected in approved packing plants was $65.9 million in the first quarter of 1958 and $66.3 million in the same period of 1957 or approximately the same.
The production of sheep and lambs is one branch of agriculture in which we are deficient.


Joseph Pierre Albert Sévigny: Order. I regret to interrupt the hon. member but he has now spoken for more than 30 minutes.


John Whitney Pickersgill: Go on.


Joseph Pierre Albert Sévigny: However, if he has the leave of the house, I will permit him to carry on.


Some hon. Members:: Agreed.


Douglas Scott Harkness: I was just saying, Mr. Chairman, that as far as the production of sheep is concerned, Canada is quite deficient. We import the great bulk of the wool which we use and we import quite a large number of the lambs and sheep which we eat. The national flock numbered 1.7 million at June 1, 1957, only slightly more than at the same period of 1956. The 1957 total was only about half the pre-war numbers and the prewar numbers were less than they had been in the earlier period. In other words, we have had a marked decline during the past 20 to 25 years in sheep production in Canada.
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The stabilized price which was put into effect for wool at 60 cents a pound was intended to act as an incentive to sheep producers, to encourage them to stay in the sheep business and to encourage them to increase their flocks because this is one branch of agriculture which we need to encourage. We are certainly not threatened with any surplus as far as it is concerned. Sheep, of course, are a type of livestock which can be used profitably on very poor land which will not profitably support cattle and other types of livestock. The import of mutton and lamb -and it was mainly lamb-amounted to 12.3 million pounds in 1957, which was 19 per cent more than in 1956 and about half the output of the Canadian product from inspected plants. It is the intention, of course, that we could and should increase our sheep production in order to meet our local needs. Practically the entire amount imported originated in New Zealand and Australia.
In the first quarter of the present year prices for lambs averaged higher than in 1957, largely owing to the influence of prices of competing meats. In March of 1958 good lambs at Toronto averaged $24.44 per 100 pounds compared with $22.37 a year ago.
Next I should like to say something about the dairying industry. Dairying is a branch of agriculture in which more farmers have some interest and from which they derive part of their revenue than is the case in any other branch of the agriculture industry. The great majority of farmers in Canada keep at least a few cows. It is therefore an industry of extreme importance to the entire agriculture picture.
Milk production in 1957 was 17.3 billion pounds, only slightly above that of 1956. Since mid-1957 production in each month has exceeded output in the corresponding period of the preceding year. This, of course, is undoubtedly due to better prices as far as most milk products are concerned.
Production during the first quarter of 1958 exceeded that of the preceding year by about 300 million pounds, an increase of 10 per cent. That is quite a marked increase in the amount of milk produced in the first quarter of 1958 as compared with the first quarter of 1957. This year the bulk of the additional milk has gone into the production of creamery butter. Production of this commodity in 1957 of 303 million pounds was about the same as in 1956. Domestic disappearance, which showed an increase in the early months, began to decline around October, 1957. This decrease has continued into the present year. However, in spite of the drop in domestic disappearance stocks were reduced and at the

Supply-Agriculture
end of 1957 totalled 69.9 million pounds compared with 88.2 million pounds at the beginning of the year.
Prices of butter remained stable at approximately the support level during the first seven months of 1957, and then strengthened because there were some indications of the possibility of a tight supply position early in 1958. As a matter of fact, shortly after taking over as Minister of Agriculture, I found that the butter trade and the officials in the department were quite fearful that we would have a definite shortage of butter and be forced into the position of having to import butter into the country.


Mr. Gour:: This was said by the previous minister.


Douglas Scott Harkness: It therefore seemed obvious that some measure was necessary in order to encourage the putting of whole milk into butter rather than into cheese and other products and of course action was taken in order to increase butter prices and this had the object of diverting considerable amounts of milk from cheese and other types of production into butter so that we now have ample supplies of butter.
Production in the last few months of the year rose well above year-earlier levels and prices continued fairly stable at the higher level. Current receipts at Montreal-this is not in new boxes as we buy it in the agricultural stabilization board but in used fibre boxes-were quoted at 57-57J cents per pound at mid-July, 1957 and were 62 cents per pound in December.
Output of butter in the first three months of 1958 continued at the high level of late 1957, and production was 8.6 million pounds more than a year previously. At the same time consumption continued below the preceding year's level and was 2.8 million pounds less in the first three months of 1958 than in the same period of 1957.
Stocks of butter at May 1, 1958-that is, a little more than a month ago-at the beginning of the 1958-59 dairy year, amounted to 35.2 million pounds compared with 36.9 million pounds at that date in 1957.
From this I think it is clear that the stocks are about the same as they were a year ago, and bearing in mind the fact that consumption is down a little while production is up, we are sure of ample stocks for the balance of this dairy year, that is to say, up until next May. The prices of butter have remained steady in the last few months and have averaged 62f cents per pound in the last week of March, 1958 as compared with 58 cents per pound a year ago.

Cheddar cheese production in 1957 was 95.6 million pounds and so was substantially higher than in the preceding several years and exceeded production of 1956 by 12.8 per cent. The year 1957 was a big year so far as cheese production was concerned; that is, as far as recent years go, because during the first world war and prior thereto we produced a great deal more cheese than we do today. In the first quarter of 1958 output dropped to the normal level over recent years of 7.4 million pounds but manufacture in that period was considerably more than in the year previous. Exports dropped sharply in 1957, the 8.1 million pounds exported being 3.4 million pounds less than in 1956 and 5.3 million pounds less than in 1955.
This decrease in exports of cheese, of course, is due to the high price at which our cheese sells on the United Kingdom market compared with the prices paid for Australian and New Zealand cheese, which sell there at around 16 to 18 cents per pound or less than half at which our cheese sells, namely approximately 40 cents per pound. We have therefore a very limited market for our cheese. The domestic market accounted for 75.2 million pounds of cheese in 1957 compared with 72 million pounds in 1956. With the sharp upturn in production and the reduction in exports, stocks in storage were built up during the year and at the end of December, 1957 they amounted to 52 million pounds as against 39.6 million pounds in the previous year. Domestic consumption in the first three months of 1958 was approximately normal, the relatively large stocks at the end of March of 41.2 million pounds reflecting last year's heavy production and accumulation in storage.
Cheese prices were strong early in 1957 but eased as a result of the high level of production accumulated in storage. During March, 1957 prices at factory in Ontario were about 34 cents per pound and at year end were approximately 32 cents per pound. The prices in the first quarter of 1958 have fluctuated within a narrow range and were 34 to 34J cents per pound during March. The increase in price has been due, of course, to the price having been stabilized at 34 cents in Ontario and 33 J cents at Montreal.
Dry skimmed milk, which is the final dairy product on which I wish to say a word, has been one of the most difficult products for us to handle and dispose of. Domestic disappearance rose during the year, but at a lower rate than production. Since exports accounted for only 719,000 pounds during the year there was a considerable accumulation of powder in storage and as the situation developed import controls were applied in order to prevent

the great influx of dry skimmed milk from all countries of the world, which had been going on during the early part of 1957.
Output of dry skimmed milk continued at a high level in the first quarter of 1958 and at the end of March this year totalled 19.6 million pounds, roughly double the 9.5 million pounds produced in the same period of 1957. The extreme difficulty in disposing of this dry skimmed milk either in Canada or overseas made it necessary to reduce the support price which, it was quite evident, had acted as an incentive price and had resulted in a considerable increase in the number of dry skimmed milk plants and in the first three months of this year, as I have said, had doubled production compared with the previous year.
At May 1, 1958 there were about 40 million pounds of this product in storage, compared with about 5 million pounds at May 1, 1957. The recently announced stabilization price of 15 cents per pound for spray process powder and 64 cents a pound for creamery butter mean that last year's price relationships in terms of milk will be roughly maintained. In other words, the return to farmers for their marketing will be roughly the same this year as it was during the last three or four months during 1957.
I have a lot of notes in regard to other products such as apples, potatoes, fowl, eggs and so on, but I do not think I had better take the time of the house to go into these matters at this time. Undoubtedly questions will be asked on these matters and we will deal with them as they come up during the course of the estimates.
I would, however, like to say something about the research activities of the department. I think we have concentrated a great deal too much on the question of prices during recent years with respect to agricultural matters. Most of the discussions in this house for a great many years have been concerned with the prices of agricultural products and very little attention has been paid to the scientific activities carried on in order to improve the yields of many such products and to eliminate the diseases which cut down those yields. Actually, the activities of the research scientists have contributed a very great deal to farmers' incomes during the past several years and I think it is quite apparent that the introduction of Marquis wheat and latterly Selkirk wheat has improved farm incomes to a considerable extent. Many other improvements have been brought about and it will be possible to bring about many further improvements. In many cases the results of the research in the agricultural field have actually increased yield, two, three, four, five or more than five times. Such increases in yield have, of course, meant a greater return to the 57071-3-137J
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farmer, and are more important than a great many of the things about which we have heard so much, such as trying to improve market facilities, to secure very high prices for particular products and to keep price supports under them and many other things along that line. I think we have neglected our research scientists and the wonderful work they are doing in our discussions on the agricultural estimates.
I would like therefore to briefly indicate some of the activity carried on in this respect over the last few years and to tell the house of some of the advances made to illustrate the great contribution these men are making to agriculture. Firstly, may I mention the Lacombe bacon hog. This particular breed, developed at Lacombe, was released to the public in October, 1957 by the Canada-wide distribution of 50 Lacombe boars. Crosses between the Lacombe and Yorkshire exhibit hybrid vigour for growth and they are at least equal to the parental breeds in respect to quality. We have high hopes that this new breed will improve grading and will also enable hogs to go to market earlier. This will of course mean that the farmers will be able to make considerably more profit from them.
A team of biochemists and physiologists has joined the animal husbandman in an intensive search for the factors causing urinary calculi in range cattle. A breakthrough should provide information of great practical value in controlling the problem.
There have been some interesting experiments on pasture. At Nappan, Nova Scotia, an average gain of 548 pounds per acre of beef was secured on fertilized dikeland pasture as compared with 445 pounds on fertilized upland pasture. Corresponding gains on unfertilized pasture were 363 pounds and 233 pounds per acre, respectively. This work is of considerable importance, particularly in the maritime provinces, because we are reclaiming quite large areas down there through the activities of the Maritime Marshland Rehabilitation Act and I think this reclaimed marshland provided the basis upon which a very thriving beef industry can be built up in the maritime provinces, placing the agriculture of those provinces upon a much sounder basis than for many years past.
Cattle warbles have proved a troublesome problem and do great damage to our leather production. Work is progressing favourably on new chemical control methods that destroy cattle grubs before they reach the animals' backs and damage their hides. This promises a distinct advance on previous measures which kill the grubs after they have completed their migration through the body. However, much work remains to be done in

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evaluating the total effects of this type of treatment and new materials are under constant test.
The department has an all-out program designed to protect and improve the wheat of the future from both genetic and quality standpoints. Varieties are being developed to meet all foreseen eventualities. Increased emphasis is being placed on superior quality in the new lines. Selkirk, rust resistant, and Chinook, wheat stem sawfly-resistant, are examples of contributions.
The department has released a new malting barley, Parkland, by name, which is at least equal to existing varieties in quality, and superior in agronomic characteristics. It is outyielding Montcalm by seven to ten bushels per acre and has much better lodging resistance.
Cumino sweet clover is another development. The use of this new variety, developed in our laboratories at Saskatoon, will remove the danger of sweet clover poisoning of livestock, and will eliminate melilot taint resulting from volunteer sweet clover in wheat fields. It is the first coumarin-free variety of white blossom sweet clover which has been made available to agriculture.
For the first time in the history of Canadian agriculture a hardy variety of perennial rye grass, capable of surviving winter throughout large areas in eastern Canada, as well as in British Columbia, has been made available in 1957. This variety, known as the Norlea, was developed at Ottawa as a result of 17 years of breeding work. That gives you some idea of the amount of time required in order to develop new varieties and, in other cases, to eliminate certain types of disease and things of that kind.
Rambler alfalfa was developed at Swift Current and licensed in 1955. It is a creeping-rooted, drought resistant variety suitable for dryland pasture.
Annual surveys provide advance information on impending outbreaks of insect pests and enable provincial governments and growers to take proper precautionary measures. This service has contributed greatly to reduced losses from such occurrences as the white grub outbreak of 1957 in Ontario and Quebec, the constantly shifting hazard of the spruce budworm throughout eastern Canada, and the present grasshopper menace that threatens the prairies. A selective spray program has been developed in Nova Scotia against the codling moth and other fruit tree pests. In this program chemicals are selected that also allow control by the natural enemies of the pests involved. This has resulted in a reduction in costs of spray materials from $50 per acre, in comparable areas of eastern

United States where this method is not used, to $4.80 per acre, as revealed by independent economic studies. This saving is very important to the established method of production and the type of market available to growers in Nova Scotia, and is a good example of what I said at the beginning regarding the way in which the efforts of our research scientists in agriculture can and do improve the return that farmers get from their crops.
There are several other examples which, perhaps, I will not take time to deal with; various types of experiments, all of which are interesting. I think, perhaps, that I should refer to one or two more. One concerns strawberries. Four new varieties, Cavalier, Grenadier, Guardsman and Redcoat have been introduced from Ottawa. I do not know why those names were considered particularly appropriate for strawberries coming from Ottawa, but perhaps they are. These varieties should have wide adaptation in the east as well as possibilities on the west coast. Cavalier is an early variety, while Guardsman may have a special place as a late ripening variety.
Reliable methods for testing the cold resistance of fruit tree seedlings are being developed. If this program is successful it should practically eliminate the present severe losses from winter killing.
Summerland experimental farm is cooperating with industry in evaluating the 25-bushel containers for handling apples and introducing them to growers; what is known as bulk handling. These are expected to reduce capital outlay for containers and labour handling costs, something which is essential in the fruit industry if growers are to receive an adequate return.
Even Newfoundland has not been neglected in these researches. The peat bogs of Newfoundland have received considerable attention. Agricultural engineers and agronomists are studying methods of drainage and fertility requirements. There have been marked yield increases from applications of both nitrogen and phosphorus on newly drained and limed bogs.
A good deal of work has been done with regard to irrigation as well as drainage, and agrometeorologists and agronomists working together are evolving formulae regulating irrigation to a schedule which permits optimum growth of crops, protects the soil, and economizes in the use of water.
Mr. Chairman, these are only a few of the numerous scientific studies which are going on, and each of them which comes to successful fruition is, of course, extremely helpful to agriculture and, taken together,

these studies do a great deal to improve the general economic position of farmers.
Just before I close I should like to pay tribute to the employees of the Department of Agriculture. I have found them extremely competent and co-operative; I have found that they are deeply interested in agriculture and in the people engaged in agriculture, and they are undoubtedly making a great contribution to this, our most important basic industry.


Joseph-Omer Gour: Mr. Chairman, at the beginning of my remarks I want to say to my good friend the Minister of Agriculture that I am in 100 per cent agreement with him with regard to what he said in the last part of his speech about the employees of the Department of Agriculture. I have dealt with them on many occasions over 30 years and found them very loyal. They have done great work for the Canadian farmers, as a whole, in this country.
Secondly, I am 100 per cent in agreement with the minister in what he is doing about raising the standards of animals and produce of every kind produced on the farms. Over 30 or 35 years I have noticed that there has been an improvement in every way of working the land so as to produce better crops and raise finer animals. This improvement is due to the fine work that has been done by federal and provincial representatives of agriculture.
As I said at the beginning of my remarks I wish to make known to hon. members the situation in my riding. There are very many new members and unfortunately for the good of the Canadian people too many of them are Tory. However, those new members I have met since the beginning of the session have been very nice people but, as I said, far too many of them sit on the wrong side of the house and do not advocate a good policy.
The riding of Russell has a population of about 96,000 of whom approximately 32,000 live in the rural districts. Many of those live in small villages and towns; perhaps 8,000 in all. Therefore only about 24,000 of my constituents are real farmers. I want to tell you that I have the best farmers that one can find in this country. Most of them are engaged in mixed farming. They raise every kind of cattle. Some raise chickens and there are many garden farmers who grow the vegetables and fruits to supply the city of Ottawa and surrounding territory. It is not uncommon in Russell to see a farmer milking more than 40 cows a day. Many raise from between 100 and 300 pigs each year. Many raise over 40,000 chickens annually. The farmers there work very hard but, as the
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minister pointed out, they could improve a great deal in their methods of operation. In many cases they could derive twice the revenue from their farms and their operations in cattle and chicken raising than they are now getting.
I want to draw to the attention of new members the agricultural picture in my riding. I need not do this for the older members many of whom I have known for 12 years and so we are good friends. I am interested in the farmer but not for political reasons because less than one-quarter of the electorate in my riding engages in farming.
I am interested in the farmer because I have some knowledge of farming. I was one of a family of 13 born on a farm. I have had business dealings with farmers for 40 years as well as with labourers and people in every conceivable occupation in cities and towns.
I have been dealing not only with farmers but with labourers and business people in Casselman for 35 years. I had over 1,000 acres of good farm land under cultivation and was responsible-although not personally -for the milking of between 75 to 80 cows.
While I am referring to Casselman I wish to point out to the Minister of Agriculture that we had a nice plant there dealing with flax and linen. It had up to 4,000 acres under flax. This brought good money to the labourers and farmers in the district and gave them an opportunity to buy additional grain from the west. At that time I was more interested in grain from the west. Many years we had over 100 carloads of grain from the west including wheat, oats, barley and mixed feeds. That fine plant is going down because Britain offered us starvation prices. I do not know if the minister could help us. Britain got flax from Latvia which offered it at dumping prices. We will not be able to carry on and we will have to close the plant. If that happens, a manufacturer from Canada or from any other democratic country in the world will be welcome to step in and start any kind of manufacturing plant there. We will rent or sell it at a sacrifice, perhaps 25 per cent of what it would normally cost. The plant would cost about $300,000 if one were to build it today.
Because I deal with at least 600 farmers a year and approximately 600 customers engaged in other occupations including labourers and business people within a radius of 60 miles of my home, I feel that I am qualified to speak about the needs of the farmer and what we should do for him. Not only should we assist in educating them but we should also improve the prices they receive for their goods. Many of the needed

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improvements cost much money and the farmer requires sufficient money to carry on his operations.
I will complete my remarks in English in order to provide an opportunity for Englishspeaking hon. members to listen to me and try to understand. It will be easier for them than if I were to speak in French. I am interested in seeing the simultaneous translation system installed in the house because then it will be easier for me to speak in French. I want the English-speaking hon. members to know that I had to work 13 hours a day at the rate of 50 cents a day in order to go to school to learn the English language. I therefore feel I have done my duty and I must express the wish that more Englishspeaking people would make an effort to learn our language. We should not really have a translation system in the house. It is not natural. It is far more natural and interesting to listen to a person speak in his own language.
The Minister of Agriculture referred a moment ago to the fact that we import mutton and that the raising of sheep should be encouraged. Something should be done to raise the price of meat and wool. In my part of the country dogs are a serious menace to sheep. The destruction of flocks in my riding has been due mostly to dogs but in other districts sheep are menaced by bears and other animals. In some districts the farmers are compensated for sheep destroyed in this way but the price is very low.
I have explained my position. I am not a farmer but I still have 200 acres of farm land. I am a businessman. In my business I carry every important piece of goods from puzzles to bulldozers. Therefore, if any of my good friends need something for themselves or for their good wives they will be welcome at my home and they will be just as well served if they are Conservatives as if they were Grits.
If the minister wants to do something to help the farmers of this country I will give him a five-point program. First, the farm loan board should be permitted to lend money on a farm at 90 per cent of the appraised valuation, up to $10,000, and any amount over this at something around 70 per cent of the appraiser's evaluation. As it is now, the appraisers value the farms at only about 80 per cent of their value and allow very little on the buildings. Usually in the east and in the maritimes where we find mostly mixed farming, the buildings on the farms are much more expensive than the land. The interest should be reduced to 4 per cent on a 30-year payment and should be paid by the farmers in any amount at any time without notice. That is the practice [Mr. Gour.l
I carry out in my own business. They are always welcome to come after 12 o'clock noon and if it is not after seven o'clock in the morning we call it the day before. Therefore, I make the suggestion that the farmer be given the chance to pay without notice at any time before the due day. This encourages them to pay and it would be an advantage for them to do so.
My second suggestion would be to ask the Minister of Agriculture to use his influence on the Prime Minister, the Minister of Finance and the Minister of Trade and Commerce so that they may be more careful in the words they use when they talk about diversion of trade from our friends and neighbours, the United States of America. Diversification does not bring anything to anybody. If they get dissatisfied on this question of diversion they may stop buying our cattle, our pork, our sheep, and so forth. At the present time the United States are buying our cattle and other animals, and that is the reason for our high prices. If tomorrow the United States were to stop buying our cattle the price of cattle would drop by 50 per cent. I defy anybody to say anything else because I have had the experience of dealing with farmers for 35 years. There has been too much talk about diverting trade from our good neighbours. I would prefer that we did not talk so much about it because our friends may get dissatisfied. Good business people do not talk along that line.
My third suggestion, Mr. Chairman, is that there should be an increase in freight subsidies of $3 a ton on all feed and grain from the west which are shipped to the maritime provinces and to Ontario and Quebec so that the farmers may be encouraged to feed more of the grain. Unfortunately, the people of my riding are selling their cattle unfinished. Some of those cattle are only a year or two years old. The farmers do not make a profit when they sell their cattle that young. We should buy western grain and feed it to our cattle and sell those cattle to our friends to the south and to our people at home. In that way our people would use more western grain and would thereby help the farmers of the west and at the same time make more money for themselves. This would encourage our farmers to give better grazing to their cattle and raise more of them. This applies also to the raising of chickens and pigs. Too many farmers are selling their cattle too young and in an unfinished state to the United States and by doing this they lose their profits.
My fourth suggestion is that we should have a farm credit bank system which should be extended to the fishermen and potato growers

as well as to the small business operators. With the farm loan legislation and the farm development legislation we are in need of a farm credit banking system under which the government will guarantee short term loans of the bank at around 90 per cent and permit the farmers to obtain loans when they are in urgent need, at a low rate of interest. Such legislation should permit the government to send government experts to supervise the farms and advise the farmers. This is one of the great needs of the farmer. They should be in a position to receive help from people who can advise them. That advice could be given in conjunction with advice from the agricultural representatives of the Ontario government.
My fifth suggestion is that the so-called stabilization farm price should be raised on cheese, beef, pork, eggs, poultry, butter and skim milk at least 10 per cent higher than it is now, because the stabilization price is no good to the farmers at the moment because it is less than the price at which they have been selling their farm products for the past two years. In the meantime the cost of operating the farms has gone up from 15 per cent to 25 per cent and this applies also to the things which the farmer has to buy. A cheese factory in my riding is not selling cheese at all at the moment. They have not sold any cheese for two months; they are stuck with it. The price of machinery and the price of everything else has gone up. I keep everything in my store and I am in a position to know what I am talking about. I have a report from my manager which indicates that the cost of shoes, pants, and everything else has gone up. I will not name all of the commodities. The cost of labour has also gone up. Nobody wants to work on a farm any more. They work in the city. It is easy work in most cases and they work only 40 hours a week. The farmers, unfortunately, have to work on Sunday and holidays, on confederation day, Canada day, not Dominion day. The farmer has to work on those days as well, and there is no holiday for him. The prices of everything the farmer has to buy have risen.
Therefore, Mr. Chairman, I submit this idea to the minister in the hope that he and the government will give it every consideration. They will do so if they wish to do something to help the farmers remain on the farms and keep their sons with them. We have to be careful to encourage them to produce on a high scale. It is estimated that the population of Canada will greatly increase in the next few years. We hope to be in a position to supply food for our own people as well as the people in other parts of the world, and in that way keep
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communism away from us. In this way we shall be able to prove to other nations, as we have in the past, that we in Canada are doing our duty in every way. We will show that we want to be friendly with every country which wants to give liberty and freedom to its subjects.
I know that my friend, the Minister of Agriculture, will take these remarks as a friend's opinion. I am not playing politics in connection with this question. I am only hoping that the farmer will receive more.
I know when I say that that my city electors will say, "Gour is for the farmer." I do say that the more prosperous the farmers of this country are, the more prosperous the country will be. Then, too, if the farmer is prosperous he will not go into the city and take jobs which the people in the city need. Therefore everything within reason should be done for the farmer because that will be of advantage to every citizen in this country; that is my opinion, and I think I am right. It is because I think I am right that I am saying these things to the minister.
I ask the minister to try to convince the rest of the cabinet of these facts, as I am sure he is convinced of them. The time for politics is over. It may be too bad, but you are elected for the next four years, so there is time to do something.


Mr. Macdonald (Kings):: Since I come from a province whose economy is, to a very large extent, dependent on agriculture, I should like to refer in this opening discussion to several phases of that economy which are vital to us at this time. One of our biggest problems is that of obtaining adequate farm credit facilities, and in that respect I include funds necessary for rehabilitation. In speaking on agriculture at the last session I outlined the alarming decrease in the number of farms being operated in our province. As we all know, this results in a serious decline in the general economy of any province, a great loss in production, and eventually a great expense in returning those farms to a state of production which we feel will be necessary at a later period. One of the chief reasons for such an exodus from the farms is the lack of proper credit facilities.
The provisions of the Canadian Farm Loan Act have long been outdated and fail to serve the needs of many of our farm population. I would suggest that it is extremely urgent that steps be taken to either bring this board up to date or replace it with a body which will meet the needs for farm credit under present day conditions. If we are to return these abandoned farms to production, it is necessary in most cases that we inaugurate

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a scheme which will allow young farmers, or immigrants, to take over these farms under certain conditions and return them to a productive paying basis. For some years now, many of us have followed closely the successful operation of the Veterans Land Act, as administered by the Department of Veterans Affairs. We feel strongly that if arrangements were made to set up good prospective farmers, under conditions such as those provided under the Veterans Land Act, well supervised and controlled, then we would have a rehabilitation scheme which would be eminently successful. I hope steps will be taken soon along these lines which will achieve, in a large measure, the desire that many of us have for the repopulation of these abandoned farms.
Closely allied to such a program should be the experience and information derived from investigations into land use. I know there has been a committee of the other place studying this problem, and I hope that there will soon be tangible results from their investigations. Here again, I would urge the government to pursue their policy of investigation into this matter, as it would be extremely helpful to any rehabilitation scheme.
One of the major crops in our province is potatoes. Having been very familiar with this phase of our agricultural industry as a dealer and a small grower since world war II, I feel I should make some comment concerning present conditions in that industry within our province. First of all, I must say from practical experience that the humble potato is probably one of the most difficult products in the world to market. The potato market is a most sensitive one for a large variety of reasons which would take a long time to explain. Most of our farmers agree that potatoes are a highly speculative product in which to deal, and appreciate that if a permanent support price is placed under the product that policy could be fraught with many dangers. Of course, our farmers would expect to be subjected to many controls. In general, they do not wish to be placed in this position. However, they do expect that when an emergency arises it will be treated with due consideration.
During the past year we have had an abnormally large crop, not so much as a result of any increase in acreage as the result of ideal growing conditions throughout the whole season. The average price has been fairly good, and in midwinter was reasonably high. Unfortunately, because of our insular position and the fact that we are serviced by only one railway, as well as the fact that reefer cars have only one-way freight, we are seldom, if ever, in a surplus position with regard to this type of rolling stock. During [Mr. Macdonald (Kings) .1
the past winter, when prices were high, our farmers shipped to the capacity of reefer cars available. When the price started to drop they still kept shipping at a high rate. Unfortunately, as a result of the mildness of the winter, there was an abnormally early closing of the side roads and paved highways to heavy traffic. Many of our farmers were unable to ship until a much later date because of the load restrictions on highways, the early calling in of snowplows, and the unusually muddy conditions of the roads for a long period. This left many of our farmers, who normally do not ship until midwinter or later, in the awkward position of not being able to dispose of their potatoes.
I have mentioned earlier the extreme sensitivity of the potato market which is due to many factors pertaining to the marketing of potatoes throughout the whole of the North American continent. In some years we have new and entirely different factors entering the picture. This year one which seemed to have a great deal of influence was the manipulation of the New York mercantile exchange. At any rate, prices had a continual downward trend from mid-winter, with a dull and sluggish market which would not absorb the potatoes being offered.
As a result a number of our farmers were caught with fairly large holdings on their farms. The potato marketing board in our province then asked for some assistance to market the balance of the crop. After several submissions a figure of 45 cents per 75 pounds bulk on the farm was offered. Keeping in mind that this was a distress measure, as a number of farmers had been fortunate enough to market all or most of their crop at reasonably good prices, the price offered by the stabilization board was fairly adequate. Yet, in view of the fact that some farmers were in the unfortunate position of being located where they could not have shipped, it was felt by many, including my colleagues from Prince Edward Island and myself, that the price should have been somewhat higher.
In fairness it might be noted, however, that it does compare more favourably than that offered at the beginning of the marketing season of 1955, when the prices offered were first 15 cents, 20 cents and 25 cents per bushel and later 20 cents, 25 cents and 30 cents per bushel over a marketing period of three phases. It must be remembered that this price was for the whole of the crop in that year, whereas we were asking for a distress price to look after the tail end of our potato crop. In view of the small amount of money spent in assisting the potato grower as compared to the amount used in

supporting other phases of the industry, we did not feel averse to requesting support- and fairly generous support-in an instance such as this. The price support to be granted has been settled for this season, and I do hope that, if the occasion again arises when support is needed, we shall be dealt with in a generous manner by the government and its official advisers.
Our agricultural picture is very closely interwoven with our transport problems. Although we have a great advantage with regard to isolation from diseases among our farm crops and cattle, we are at a distinct disadvantage where importation of feeds is concerned and, of course, in the carrying of our goods to market.
As I have on the order paper a resolution on the Northumberland causeway which I hope will come up for discussion, I will not deal with that phase of our transportation problem at the present time. However, for reasons I have just mentioned, I should like to deal briefly with present services; particularly that provided by the existing railroads and ferries.
As in many other parts of Canada, our rail service has been curtailed, with the approval of the board of transport commissioners, and I feel that it has been cut down too much, to a point where it is to the disadvantage financially of both the railways and our people, particularly our farm people. This is especially so in the constituency of Kings which I have the honour to represent. During the winter I made a trip on each of the three main lines in our county, familiarizing myself with the service from the viewpoint of the train crews, station agents and the travelling public. It is strongly urged that the present daily winter service be set up one month earlier in the fall and run one month later in the spring. In that way it would be providing many places with a service which would allow shippers of produce and other bulk products to compete on the same footing with those in other sections of the province, and it would not cost the railways any more than does the present irregular shortened service of the summer months.
Our passenger and vehicle service at both ferries has continued to grow regularly each season, and the present service at both Borden and Wood island is inadequate. A new boat has been provided for Wood island which will assist in that service greatly and by this fall, on the completion of the causeway survey, we should perhaps be in a better position to decide whether or not a new one will be necessary also at Borden. When the causeway is built there will still be great pressure for greater outlets in the eastern
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part of the province. I would suggest that strong consideration be given then to the transfer of some of the facilities now at Borden to the port of Georgetown. This port is the finest one in the province with almost year round ice free conditions. A connecting link from here to Pictou in Nova Scotia would be a practical proposition and would provide an all year round and very much needed service to the eastern sections of Prince Edward Island and Nova Scotia. It would provide this section of our province with better and more accessible markets for farm products, as well as a better service for our tourists and the travelling public generally.
It would be greatly appreciated, Mr. Chairman, if the government would give every consideration to these major farm problems which I have dealt with briefly. They are chiefly the rehabilitation of our abandoned farms, with due consideration of the Veterans Land Act as a model a wider expansion of farm credit facilities; progress in land use study; due consideration to adequate prices for support when warranted; and any assistance which could be provided in drawing attention to the importance to our transportation problems.


Mr. Peters:: I have been very much
surprised this afternoon to note the usage the minister makes of certain words. He refers always to a moderate decrease and yet when he speaks of the same sum of money, if it is an increase, it is a substantial increase. I think that probably explains fairly well what the policy of the government in the past year has been with regard to agriculture. Where there is an increase, it is substantial but where there is a decrease of the same amount, it is very moderate. I think the farmers will eventually be wondering just where the substantial increase arises.
Some of the members have asked why I should be speaking on agriculture. There are a great number of new Conservative members from agricultural fields who probably do not know that in northern Ontario we have what is called the little clay belt which is probably one of most outstanding and most fertile agricultural areas in all of Canada. Western members may be interested to learn that this area which is in northern Ontario and-that there is a great quantity of available agricultural land-suitable for mixed farming. We have many farmers who farmed in the west. It may be of interest to hon. members to learn that when our house leader came to northern Ontario last week he met two or three farmers near whom he had farmed in his

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own area but who are now farming in northern Ontario. It is a mixed farming
area. Unless this particular government does something about the problems of wheat I am quite sure they will be able to explain to some of the new members who wish to go into farming that they will be able to go into northern Ontario, if the price of wheat continues to fall.
This government since its inception has continually tried to maintain, in my opinion, the poor conditions under which the farmers have existed for the last five or six years and they have striven very hard to do that. I am surprised to hear that some consideration has been given to agriculture when we note the amount provided in the estimates that are now being discussed. In the 195758 estimates under a Liberal government $87 million was the amount involved in the agriculture estimates, and in the current ones, those for 1958-59, only $90 million is involved. So that if this government has done such a great deal for agriculture and for the people in that field, they have done it or hope to do it with the sum of $3 million over and above the former estimates.
The minister made a good deal of the Agricultural Stabilization Act and he mentioned some of the things which had been happening. On page 2075 of Hansard for July 9 last he had this to say:
As I have said, I think a great deal of the improvement has been as the result of policies followed by this government, including the introduction of the Agricultural Stabilization Act.
He goes on to say something about a formula and the general opinion has been expressed during and since the last election that this Agricultural Stabilization Act did have a formula. I think it is very interesting to note the words of the minister when he referred to this formula and when he was comparing the changes in the new act with the provisions of the old act. He said:
A formula was included for establishing a base price for any agricultural commodities.
He does not say the base price for these agricultural commodities was established on a formula but he says that the formula was included for the establishment of this base price. I suggest there is a great deal of difference between a formula used in establishing a base price and a formula for the establishment of that base price. I presume that when you have a stabilized price you do have a formula but I do not think there is any formula which has any relationship to anything else in this base price.
The minister goes on to mention an advisory board comprised of representatives from farm organizations and outlines the general intentions of the act and so on, but I would

like to know from the minister before his estimates are completed how often this stabilization board is meeting, what they are doing and just what they have accomplished which was not accomplished by the previous act.
I know that the officials of the government, in particular of the department concerned, who have been appointed to administer the act were the people who administered the old act and I have personally found them very courteous and helpful at all times. Let us look at some of the prices which have been stabilized, however. It is generally understood that prices were to be stabilized at 80 per cent of the average price for the last ten years and it has been pointed out that butter, for instance, has been stabilized at 107 per cent, steers and lambs at 80 per cent and the highest percentage quoted was 112 per cent. We also know that in the case of many of these commodities the floor price established is considerably higher than formerly under this formula- as the minister calls it-of 80 per cent. Some commodities, however, were receiving greater prices prior to the introduction of this act and it is probable that prices received do not have too much relationship to this legislation.
We believe that the Conservative government has done very little to stabilize agriculture in our country. In my own particular area, and I think this applies across Canada, the number of people leaving the farms has not decreased since this government came to power. In fact, their problems are just as great today as they were under the old administration; the standard of living in rural areas has not improved and neither have conditions generally.
As in all other parts of our economy the prices of consumer goods have continued to rise, which has forced up the cost of living and these prices are continuing to rise. Yet we are given an assurance that conditions are improving. I believe and my party believes that the solution to some of these problems is the implementation of a parity price. In the last few years there has been an increased interest in deficiency payments but it would appear to me that deficiency payments are merely a substitute for a parity price, the only difference being that a deficiency payment is paid on a product already sold-


Eldon Mattison Woolliams: Would the hon. member permit a question? Would he mind giving the house his definition of parity of prices, that is to say the C.C.F.'s definition? I have been wondering about that and I would like

to hear it from the hon. member this afternoon because some of us may be answering him in this debate today.


William Arnold Peters: I would be more than pleased to do so, but I would first like to say that there have been many explanations of parity prices because all political parties, unfortunately, have used this term in the course of every election with which I have been concerned.
I believe and my party believes that a parity price is a price which will take care of cost of production on a regional basis. It would mean, for example, with respect to a dairy product such as whole milk, where it is not called a parity price but that is what it means, that you would have to take into consideration the wholesale index, the weekly wage index, the commodities and services used by farmers index, the price of butter fat index, the prices of condensed products index and the prices of cheese index. You would have to add up all these figures and put the total over 100 in order to arrive at a base. We feel that account must be taken of all facets of cost of production, including farm labour, cost of living, cost of machinery, a certain return on investment and allowance for interest on loans and all those things which are necessary in order to produce your product. Your selling price must be equal to this amount and we do not consider that profits should enter into this question. A parity price would only be cost of production which would include all the divisions I have outlined.


Eldon Mattison Woolliams: May I ask a supplementary question of the hon. gentleman? I am sure he knows that the cost of producing a bushel of wheat in some sections is less than others, and would he take into account the regional costs?


William Arnold Peters: Yes, it would be on a regional basis.


Eldon Mattison Woolliams: Would the hon. gentleman say the cost of producing a bushel of wheat even in the same community might vary from farm to farm?


William Arnold Peters: I would say it would.


John Whitney Pickersgill: Mr. Chairman, on a point of order, I am wondering if this edifying debate is in order on the minister's estimates.


William Arnold Peters: The Canadian Federation of Agriculture carry out surveys and they at one time had the services of an exceptionally fine economist who, unfortunately, has passed on. However, they have the benefit of considerable research and I am sure they could tell the hon. gentleman what he wishes to
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know. These facts are all available and they could tell him exactly the average price of producing a bushel of wheat in any given area of the prairie provinces, or Ontario or the maritimes, for that matter. These are things which can be worked out and have in fact been worked out and if the hon. member represents a wheat growing community I am sure he would be most interested to know what is the formula price for wheat in his particular area.
We believe that no farmer, and for that matter no person, should be asked to produce a product for nothing or in respect of which over a given period of time he is in effect losing money. Those in labour a few years ago implemented a very similar program to this when they attached to their wages the matter of the cost of living. They computed the cost of living on the dominion bureau of statistics figures, and every time the cost of living went up a point they had their wages increased. We feel that if the farmer is going to maintain his position on the farm -if that is the wish of the Conservative government-they are going to have to do something not only to see that the farmer gets along as well as he did last year, because that was not very good in my area, but that he gets a much better deal than he has had in the last two or three years and that he returns to the plane he was existing on in the years between 1945 and 1951 when he came closer to maintaining a parity price than ever before. I do not think many farmers throughout Canada would say that that parity price between 1945 and 1951 was a bad thing.
There are many other considerations which the minister must take into consideration. Certainly, for the benefit of those members from the west who have not been here before, I think they will be very concerned with this matter of crop insurance. I understand that in the west there is a serious drought condition. In my area it is not a drought condition. We have had lots of rain, but we have not had much good weather and we are faced with a poor hay crop, and unless conditions improve we are not going to have good grain either. Some consideration must be given to the stabilization of the products that agriculture is producing. The agricultural producers of this country want to market as good a product as possible. To enable them to do that and maintain a standard for Canadian products that will sell across the world the government is going to have to insist on much better grading and much better marketing than we have now. We have had over the last year a great deal of difficulty concerning bacon. That one commodity, bacon, has been done up in packages

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and it looks very nice. The packages have had red cellophane on them, and you buy a package of bacon and think you are getting good bacon but you end up getting mostly lard. If we are going to work for international markets or to increase local markets we are going to have to provide the means whereby we can provide a much more stabilized product than now.
I am very pleased to hear from the agriculture committee that they are going to be discussing the matter of credit for agricultural loans. This is one of the great problems that we face in northern Ontario and I am sure we are facing it across the country, and while I do not want to discuss this matter at any length I do hope that the minister will give consideration to providing for the farmers loans on a similar basis to those which are provided for under the Veterans Land Act which have in most cases worked out very satisfactorily. It has been apparent to the Veterans Land Act authority that they must to some extent supervise the credit they are extending, and there comes a time when credit must be extended beyond what is considered now satisfactory under our chattel mortgages and loan mortgages, and I think the Veterans Land Act has found some solution to this question.
The matter of crop insurance is, I suggest, going to be very important to western farmers. It has been said that they have four or five years of wheat built up in their yards or in their granaries, but I am quite sure that they are depending this year on a crop that they may not produce. While this matter is provincial in scope and has been handled by some of the provinces, I think the federal government has an obligation to provide leadership for those provinces who have not seen fit to look after this matter on their own behalf. If we are sincere in our talk about extending benefits to farmers under other acts, I think we could provide unemployment insurance in a manner in which it could be provided to a farmer, namely by the implementation of crop insurance.
Again, we are concerned with the matter of the wheat surplus. Some people maintain that with a better price for agricultural products there might be a surplus. At the present time, and for a number of years, the only major surplus in agriculture in Canada has been in wheat, and according to reports that surplus may not be as much this year as it has been in other years. But this is, again, a matter which needs a great deal of consideration and sympathetic study. This is a commodity maintained by the federal government and the federal government must take care of that portion of the product that must be sold on the international markets. We are

pleased with the work that has been done in this field, but certainly would support any constructive decision that is made to have a two-price system on wheat, where one price could be available on a competitive basis on the international market and the other one handled perhaps under the Agricultural Prices Support Act where we think it should have been put in the first place.
Another problem which faces agriculture is this matter of farm efficiency. There have been a number of very comprehensive articles written about this. The Conservative candidate in my area was very concerned about where the farmer was going, whether he was efficient enough to operate and just how he could be helped, and one of the ways in which big business is helping the farmer is through this matter of vertical integration. While this has taken place and some of our farmers have accepted it because of cash restrictions and because they have to borrow money from the bank in order to develop, they have signed contracts with feed companies and other companies such as packing companies that are less than what would be called desirable. Unless some consideration is given to this matter the small farmer who has been the backbone of agriculture in Canada for years will gradually disappear and we will find the farmer in the position of a hired man for the local packing company or for the local feed dealer.
Some consideration must be given to examining this vertical integration program. Legislation should be developed that would be much more effective in dealing with combines which would take place and could take place very easily in the feed industry and in the packing industry where they are supplying the money. If the farmer is going to be forced into this vertical integration, then I think the federal government has an obligation to protect the farmer and enact legislation that will prohibit the abuses present in the contracts farmers are now signing, and make it imperative that if a farmer is going to sign this type of contract he will be at least protected so that at the end of the year he will have a decent standard of living.
On this same business there is a conclusion that has been reached that I think will be of interest. It is from an organization that I do not usually quote. It is the Searle Grain Company Limited. I am quoting from a booklet entitled "This matter of farm efficiency -a commentary":
It has been said that farming can no longer be considered a way of life, that it is strictly a business which must be run on strictly businesslike lines. We venture to say, however, that desirable and necessary as it will always be to aim for the greatest efficiency possible, farming will still remain very much a way of life to many.

Life is made up, after all, of apparent inconsistencies and that is why the human desire to cling to farming in the face of difficulties is something which cannot be explained in terms of the dollars and cents return any more than it can be fully understood by those who concern themselves with efficiency. The present trend toward larger farming operations will undoubtedly proceed but with two-thirds of our prairie farms still under three-quarters of a section in size there is little doubt that for many years to come the moderate sized or relatively small holdings will continue to occupy an important place in the whole farming industry in western Canada. To our way of thinking this is very desirable.
I suggest this is desirable to the agricultural industry of all Canada. We endorse it and urge the minister to take some steps to see that it comes about.
A problem has developed in my area which I should like to bring to the attention of the minister. We have been farming in northern Ontario for approximately 50 years. The farmland has been heavily worked. The prices that have existed in years gone by with a very few exceptions have been such that the farmer has not been able to take steps to replace the minerals in the depleted soil. Such action is now necessary. Mixed farming takes more from the soil than does the type of farming that is done in the west. Now the farmer is faced with increased costs for providing commercial fertilizer and agricultural limestone.
There is a federal statute in existence called the Agricultural Limestone Subvention Act, revised April 1, 1951. This is a joint program involving the railway companies, the provincial governments and the federal government. Its purpose is to provide at the lowest possible cost agricultural limestone for use by farmers subsidized with respect to freight rates. The railways have made a reduction for the farmer who imports agricultural limestone. The reduction is 25 per cent. The Ontario government in southern Ontario pays 75 per cent of the reduced freight rate up to a maximum of $2.50 per ton. In northern Ontario the provincial government will pay 75 per cent of the reduced freight rate with no limit and the purchaser will pay the balance. The federal government will pay 60 per cent of the provincial contribution to the freight rate for the hauling of agricultural limestone when billed by the provincial government. If the limestone is hauled by truck from the source to the farmer the federal will pay five cents per ton up to a maximum of $2 which would be 40 ton miles. This has been advantageous to the people of northern Ontario. They have had to use increasing quantities of limestone which they have purchased by the carload through farm co-operatives, the federation of agriculture and the farmers' union. They have
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appreciated this arrangement. Because commercial fertilizer falls in the same category as agricultural limestone and because they have to buy fertilizer in such large quantities the farmers in that area would like the act extended to apply to fertilizer as well. This would mean that the farmers could put more fertilizer on the land.
From my experience with farmers I know they are the original conservationists. The farmer owns his land. He likes farm life and puts all the money he can into his farm. If the coverage of the agricultural limestone subvention policy were to be extended the farmers themselves would make an increased contribution to the betterment of the country and would increase the production of agricultural products on their farms.
May I conclude by expressing the hope that in the near future the Minister of Agriculture will introduce legislation that is not a copy of the kind of legislation the Liberal government implemented many years ago. Farm prices have been steadily decreasing. Farmers are leaving their farms in great numbers. The agricultural economy of Canada in my opinion is one of our greatest heritages. It is a renewable resource of which we should be proud. We should take good care of it and give the industry all the assistance we can.


Hédard-J. Robichaud: Mr. Chairman, a week or so ago when I addressed myself to the coal problems of the maritime provinces it was pointed out by the minister concerned that I was an ex-inspector of fisheries attempting to speak on the coal problems of the mari-times. If this afternoon I participate briefly in this debate on the first item of the estimates of the Department of Agriculture I hope I will not be accorded similar treatment by the Minister of Agriculture.
When introducing the first item of his estimates on Wednesday the minister made a general statement on the situation of agriculture particularly during the past year. In his statement, the minister stated that farm cash income had declined slightly from 1956 level but it was $47 million higher than the average for the ten-year period 19481957, and higher than the amount realized in five years out of this ten-year period. In order to make his statement clear and logical, the minister should also have mentioned the increase in population which took place during that same period and which normally would mean a much larger consumption of our agricultural products.
With an actual farming population of approximately 17 per cent of the total population of this country, it is true that the productivity per man hour has advanced far

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more rapidly in agriculture than in any other industry in Canada. It is a well-known fact that our country today is almost self-sufficient in the production of food for its growing population, with food imports averaging only approximately 4 per cent of our total farm production. It is therefore logical that an industry which affects such a large percentage of our population, with total gross revenue of approximately $2J billion per year, should receive considerable attention from the parliament of Canada. The total estimates for the present fiscal year for the Department of Agriculture amount to approximately $97 million, or less than 2 per cent of the total budget for the present fiscal year.
In the course of his statement, the minister stated that a considerable number of commodities had been stabilized under the Agricultural Stabilization Act and had so far authorized 16 products in addition to turkeys and potatoes which were authorized under the Agricultural Prices Support Act. This report shows that out of the 16 commodities quoted, 11 have been supported at a percentage below the 100 per cent average base price for the last ten years, and in fact, five of these commodities have been supported at the minimum price of 80 per cent based on prices paid for the last ten years.
Before this first item is passed by this committee could the minister inform us what was the total amount paid under the agricultural prices stabilization program from January of this year to June 30? We will also be interested to know how much was paid in subsidy, or deficiency payments for asparagus and soybeans.
Now, Mr. Chairman, while the number of cattle exported in 1957, as stated by the minister, was seven times as high as the exports for the previous year, we must also take into consideration the fact that on account of this large increase in exports the Canadian consumer is paying from 25 per cent to 30 per cent more for beef than he was paying a year ago. This is adding, accordingly, to the cost of living and we must also take into consideration the fact that this increase in export of cattle is only a temporary one and could easily be reversed when the United States have increased their production, as they are doing now.
Notwithstanding the accusations made by members of the present government about the legislation brought in by the previous administration, we must all admit that the present policy of the government is based almost entirely on the sound foundation of Liberal legislation. The only major changes made since June, 1957, are the cash advances on farm-stored grain and amendments to the Agricultural Stabilization Act.

Measures such as the freight assistance policy, the Farm Improvement Loans Act, the Prairie Farm Assistance Act, the Prairie Farm Rehabilitation Act, the Maritime Marshland Rehabilitation Act were all enacted by the previous administration. The Liberal administration also assisted and supported the Canadian wheat board through vigorous sales policies, with wheat sales in previous years reaching record proportions.
As I have just stated, it is evident that the present government so far has done nothing more than build on the sound legislation introduced by the previous administration. We of the official opposition realize that the ever-increasing farm production in Canada requires a new approach to the problem of agriculture, with proposals that will be of long range benefit to our farmers and which will assure them the place which they deserve in our economy and in our national life.
The importance of a national policy on farm problems, farm credit and others, must be one of the main concerns of the present government. It is the duty of the government of this country to maintain a healthy and efficient agriculture and this cannot be done unless prices paid for farm commodities can assure our farmers a fair profit for their farming operations. With our increase in population our agriculture . should become more and more stabilized but for the time being our farmers want constructive action from the present government.
While certain farm commodities have been included for price support or deficiency payments under the agricultural stabilization bill, other important commodities have been left out from the permanent list and may be included only after acceptance by the governor in council. It may be all right to support such commodities as asparagus or soybeans, but we from the maritime provinces want to know why potatoes are not included on the permanent list of commodities coming under this act or at least why our potato growers are not given the protection received by growers of other products in other sections of the country.


Douglas Scott Harkness: They have had a great deal of protection; a lot of money has been paid out to them.


Hédard-J. Robichaud: The minister seems to be satisfied with the protection which has been given so far. Unfortunately, our farmers are not of the same opinion. The Prime Minister has said on numerous occasions that "there is a distress price in Canada below which all agricultural prices cannot fall." The potato is an important commodity for farmers in Prince Edward Island and New

Brunswick and our farmers have a right to expect the same protection which is being given to farm producers in other sections of the country. The recent offer made to Prince Edward Island farmers, averaging 33 cents a bushel for their potatoes, is not sufficient. It is not a sufficient offer to our producers and the government without delay should come out with a farm policy for our potato growers.
Another commodity which has been given the run around by the Minister of Agriculture is the pulpwood sold on the small farms in eastern Canada. We all realize that a large number of our small farm owners depend on the sale of pulpwood cut from their woodlots as a source of ready cash or revenue to meet the payment of their municipal taxes and other urgent obligations. Those small farmers are receiving today for their pulpwood a price which is far from satisfactory and which barely meets their expenses of cutting this pulpwood and taking it to the roadside.
On January 21 last, as reported at page 3809 of Hansard, for the 1957-58 session, during the course of the debate on the agricultural products prices stabilization bill I asked the minister the following question:
I would appreciate it if the minister would be more specific and explain why he is opposed to the inclusion of pulpwood as one of the commodities to be covered by the bill, or can he assure us that pulpwood could be included under subparagraph (ii) of clause 2, "any other natural or processed product of agriculture designated by the governor in council."
On that occasion I received the following reply from the minister:
Yes, Mr. Chairman, Clause 2 provides for support prices being established for any agricultural commodity which is accepted by the governor in council on the advice of the committee and of the board as one which should be supported.
This, Mr. Chairman, could be considered as a rather vague reply, but during the political campaign, while speaking in Rimouski on February 27, the Prime Minister said, as reported in the Toronto Daily Star of February 27, 1958, something which was rather more specific, and I quote:
I hope that the advisory committee and the stabilization board would give consideration to including farm-produced wood so that they will know the lowest price they will receive in a year in advance.
It is five o'clock, Mr. Chairman.


Charles Edward Rea: It being five oclock, it is my duty, pursuant to standing order 15, to rise, report progress and ask leave to sit again later this day, or at the next sitting of the house, as the case may be.
Progress reported.
Private Bills


Mr. Speaker:: It being five o'clock, the house will now proceed to consideration of private and public bills, the former pursuant to standing order 15 (3) having precedence.


PRIVATE BILLS
Mr. Speaker:: Since there are a number of divorce bills standing for second reading, is it the wish of the house that these bills be taken in one motion?


Some hon. Members:: Agreed.
Bill No. SD-79, for the relief of Benita Gertrude Kozlov Cohen.-Mr. McCleave.
Bill No. SD-80, for the relief of Marie Marguerite Amelia Genier Wright.-Mr. McCleave.
Bill No. SD-81, for the relief of Winifred Jean Garrett Somers.-Mr. McCleave.
Bill No. SD-82, for the relief of Frances Erdanova (Erdan) Weiskopf, otherwise known as Esther Weiskopf Weiskopf, otherwise known as Frances Erdanova (Erdan) Stern, otherwise known as Esther Weiskopf Stern. -Mr. McCleave.
Bill	No.	SD-83,	for	the	relief	of	Mac
Bernard, otherwise known as Manny Bernard. -Mr. McCleave.
Bill No. SD-84, for the relief of Marcelle Gagnon Lachance.-Mr. McCleave.
Bill	No.	SD-85,	for	the	relief	of	Jean
Claude Albert Leonard.-Mr. McCleave.
Bill	No.	SD-86,	for	the	relief	of	Anne
McCluskey Templeton.-Mr. McCleave.
Bill No. SD-87, for the relief of Lillian May Seymour Perez.-Mr. McCleave.
Bill No. SD-88, for the relief of Lucille Esther Hudson Donnelly.-Mr. McCleave.
Bill	No.	SD-89,	for	the	relief	of	Dorte
Glahn Carnie.-Mr. McCleave.
Bill	No.	SD-90,	for	the	relief	of	Marie
Therese Carmen Pauline Legault Lortie.- Mr. McCleave.
Bill No. SD-91, for the relief of Joseph Leo Nolet.-Mr. McCleave.
Bill No. SD-92, for the relief of Naomi Ruth Wolfson Fischel.-Mr. McCleave.
Bill No. SD-93, for the relief of Florence Lillian Henderson Pinkney.-Mr. McCleave.
Bill No. SD-94, for the relief of Francine Major Daigneault.-Mr. McCleave.
Bill No. SD-95, for the relief of Odette Lemay Dussault.-Mr. McCleave.
Bill No. SD-96, for the relief of Joan Collie Showier.-Mr. McCleave.
Bill No. SD-97, for the relief of Johanna Hendrika Jilderda Haring.-Mr. McCleave.

Private Bills
Bill No. SD-98, for the relief of Patrick Charles Stanford.-Mr. McCleave.
Bill No. SD-99, for the relief of Beryl Elizabeth Scrase Laliberte.-Mr. McCleave.
Bill No. SD-100, for the relief of Barbara May Ramsey Bryant.-Mr. McCleave.
Bill No. SD-101, for the relief of Joyce Sherman Fogel.-Mr. McCleave.
Bill No. SD-102, for the relief of Wilfred David Oliver.-Mr. McCleave.
Bill No. SD-103, for the relief of Joseph Urban.-Mr. McCleave.
Bill No. SD-104, for the relief of Olive Margaret Lester James.-Mr. McCleave.
Bill No. SD-105, for the relief of Florence Mildred Matthews Dawe.-Mr. McCleave.
Bill No. SD-106, for the relief of Marie Berthe Helene Guerard Maher.-Mr. McCleave.
Bill No. SD-107, for the relief of Marie Juliette Pauline Josette Beaudoin Said.-Mr. McCleave.
Bill No. SD-108, for the relief of Judith Margaret Bianchi Sartori.-Mr. McCleave.
Bill No. SD-109, for the relief of Clarabel Ellement Vaillancourt.-Mr. McCleave.
Bill No. SD-110, for the relief of Alice Elizabeth Edden Aumais.-Mr. McCleave.
Bill No. SD-111, for the relief of William Gordon Heughan.-Mr. McCleave.
Bill No. SD-112, for the relief of Roland Doutre.-Mr. McCleave.
Bill No. SD-113, for the relief of Gerald Edward Burnham.-Mr. McCleave.
Bill No. SD-114, for the relief of Ottilie Wilhelmine Auguste Stegelitz Carpentieri.- Mr. McCleave.
Bill No. SD-115, for the relief of Francine Josephine Ghislaine Boisdenghien Lebrun.- Mr. McCleave.
Bill No. SD-116, for the relief of Doris Cahill Chabot.-Mr. McCleave.
Bill No. SD-117, for the relief of Ruth Marsha Yanover Caunter.-Mr. McCleave.
Bill No. SD-118, for the relief of Joseph Wilfrid Rene Fortier.-Mr. McCleave.
Bill No. SD-119, for the relief of Ingeborg Alves-Probst Wright.-Mr. McCleave.
Bill No. SD-120, for the relief of Paulette Priscilla Benning Buchanan.-Mr. McCleave.
Bill No. SD-121, for the relief of Irene Georgina Descyca White.-Mr. McCleave.
Bill No. SD-122, for the relief of Eszter Jeszenszky Tahy.-Mr. McCleave.
Bill No. SD-123, for the relief of Alice Latou Tubbs Wood Green.-Mr. McCleave.


TRANS MOUNTAIN OIL PIPE LINE COMPANY
Mr. E. J. Broome (Vancouver South) moved: the second reading of Bill No. S-6, respecting the Trans Mountain Oil Pipe Line Company.
He said: Mr. Speaker, the purpose of this bill, as set out in the bill, is to subdivide each of the shares without nominal or par value into five shares without nominal or par value. Such a subdivision would result in a reduction in the unit price per share and a corresponding increase in the number of shares held by each shareholder and in the number of shares available for future issue. It is believed that the lower unit price and larger number of shares should encourage a wider distribution of the company's shares among investors in Canada and would facilitate future financing by the company. After this bill has passed second reading, I undertake that the officials of the company will be available to the members of the committee on railways, canals and telegraph lines to explain the bill in detail.
Before I go on to the financing of the company, I should like to go into a certain amount of detail concerning the operation of Trans Mountain Oil Pipe Line Company and pipe line companies generally, so that the members of this house will have a knowledge of the oil pipe line industry. As hon. members will recall, Trans Mountain was incorporated by an act of parliament in 1951 for the purpose of transporting oil from Alberta to the Pacific coast. It was originally conceived and built as an all-Canadian line at a time when it was considered politically desirable that the oil reserves of Canada should be reserved for Canadian use. For this reason the terminus of the line was to be in the Vancouver area, with a provision for shipping any surplus oil to export markets by tanker or by barge. However, the fantastic growth in Canadian oil reserves soon made it apparent that development of these Canadian oil fields would be held back unless export markets were secured, and to this end Trans Mountain incorporated a wholly owned United States subsidiary, Trans Mountain Oil Pipe Line Corporation, which owns and operates the company's pipe line system in the state of Washington. This Washington system is connected to the refinery of the General Petroleum Corporation at Ferndale, and to the refinery at Anacortes of the Shell Oil Company, as well as to the new Texaco refinery which is presently being built in the same area. The total for these two refineries, excluding Texaco, will be 90,000 barrels a day.
When Trans Mountain was built approximately 2,500 men were engaged on the original construction of the project, of whom


II. 1958
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90 per cent were Canadians who gained experience in the complexities of pipe line construction. Since the completion of the original line a number of substantial contracts have been awarded to Canadian construction companies, giving additional employment. In this regard, it might be well for members of the house to understand the purchasing policy of Trans Mountain Oil Pipe Line Company, which is set out in the purchasing manual as follows:
General policy is to purchase materials and equipment made in the following areas with preference given in the order they are shown:
1.	Canada-western area
2.	Canada-eastern area
3.	United Kingdom
4.	United States
5.	Other countries
The preference referred to is given only on the basis that materials and equipment are of equal quality and price.
Policy as regards distributors and wholesale houses will be to place orders for use in Alberta with firms located in the Edmonton area, wherever possible, and for British Columbia requirements with Vancouver firms. Consideration is also to be given Kamloops firms where they are able to compete.
In a most recent expansion of the system, two leading Canadian manufacturers of electrical equipment were given the opportunity of producing in Canada, for the first time, large capacity explosion-proof electric motors and complicated control systems for pipe line pump stations. When it is not possible to obtain our requirements from Canadian manufacturers the manual states preference is given to the United Kingdom and commonwealth suppliers. Every effort has been made and will be made to allow them to participate in our business. In some cases we have been able to delay our delivery dates in order that they might participate in this business.
As to the staff of the company, as called for in the Companies Act the majority of the directors are Canadians. In regard to the employment of other personnel for Trans Mountain, the employment policy from its very start has been to obtain qualified Canadian and British commonwealth personnel, with preference given to those with oil industry experience and especially pipe line experience. To this end, more than 2,000 applicants were reviewed during the hiring of the first 150 employees. Of these 150 Canadians and British commonwealth citizens very few had previous important pipe line experience. The company paid for and sent these men around to various pipe line companies, both in Canada and the United States, in order to gain this experience. At the present time Trans Mountain Pipe Line Company is wholly staffed with Canadian personnel. This should
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be a bit of an object lesson to a lot of other pipe line companies who have not shown that same initiative.
Because of the publicity which has been given to pipe lines and pipe line matters, Mr. Speaker, both in the press and in parliament over the past few years, it would seem desirable at this time to say a few words about an oil pipe line as compared to a gas pipe line. On land, the main arteries of transportation of both petroleum and natural gas are the pipe lines. At this moment, I am reading from the submission of Trans Mountain Oil Pipe Line Company to the Borden commission. These pipe lines are similar in size, extent and general trunkline constitution. It would appear that, generally speaking, the public does not differentiate between the two. However, there are characteristic differences which are of major importance when considering government regulation and control as well as such matters as finance and operation.
Oil pipe lines generally transport a commodity that is owned by others, a raw material that is eventually delivered to a refinery for further processing into many products before reaching the consumer. Gas pipe lines, on the other hand, frequently function as public utilities, owning the material they transport and delivering it as a finished product. An oil pipe line frequently has no guaranteed business and is essentially a high-risk venture; a gas pipe line, before construction gets under way, generally has long-term contracts for both supply and delivery that will guarantee the high load factor essential to economic operation, thus making it a relatively safe undertaking. In fact, in the case of Trans Mountain it was necessary, because of the risk element, to obtain from the major backers of the project deficiency agreements which will be further explained when I deal with the financing of this company.
In the United States, controversy over the pros and cons of ownership and control of pipe lines by the major integrated companies has existed since the early days of the oil industry. Out of this controversy have come such regulatory measures as the Elkins act, prohibiting rebates, the consent decree regarding permissible dividend payments and various Sherman act anti-trust cases. Divorcement of pipe lines and disintegration of major companies have been seriously considered by the authorities concerned. In this regard, I should like to refer to the Merrill foundation for the advancement of financial knowledge which financed the work of Mr. Leslie Cookenboo, who produced a study on this very important subject. This study is contained in this book entitled
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"Crude Oil Pipe Lines and Competition in the Oil Industry". I should like to quote from page 143 where Mr. Cookenboo, in discussing public policy and public control of pipe lines, has this to say:
A similar development, which is even closer to the best that any public policy could hope to achieve, is illustrated by the two Canadian lines mentioned above-
Namely Trans Mountain Oil Pipe Line Company and Interprovincial.
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which were built under special permits from the Canadian government.
He goes on further to state that in these lines the financing was shared by independents and majors alike as well as public participation. He closes his paragraph on page 143 by stating this:
If future crude lines built in the United States were to imitate those built in Canada (most of the ownership is by United States companies or their subsidiaries), then there would be little ground for complaint about major exclusion of the market-oriented independent refiners from crude supplies.
Again on page 168 he states:
-the latest such joint venture,-
That is of independents and majors combined.
-Trans Mountain is an almost ideal example of how a pipe line should be built-
I should now like to turn to the financial structure of the company. When Trans Mountain was first financed it was based on an estimated completion cost of approximately $80 million, and it was decided that $65 million should be produced by the sale of bonds and $15 million by the sale of shares. Shares to the number of 450,000 were sold to the public at $10 per share to yield to the company $9.50 per share after deduction of underwriters' fees. The remainder of the shares issued originally were sold directly at $10 per share. With respect to the 450,000 shares sold to the public, the underwriters were asked to effect a wide distribution to Canadian purchasers. That this objective was accomplished is evidenced by the fact that the first shareholders' list included over 5,000 names; and I believe that number has increased to date, to something in the neighbourhood of 7,000 names. The shares were not offered for sale in the United States and no registration of the shares of this company has been effected with the United States securities and exchange commission. I may say that this again is from the submission to the Borden commission.
The prospectus of the company contained a clear warning of the risk and speculative nature of the undertaking. Because of this an important added feature is the fact that all the bonds issued are guaranteed by deficiency

agreements entered into between the company and the six major oil company shareholders. Those shareholders are Imperial Oil Limited; Shell Oil Company of Canada, Limited; Canadian Gulf Oil Company; Standard Oil Company of British Columbia, Limited; Union Oil Company of California and Richfield Oil Corporation. These companies are referred to as deficiency agreement guarantors. In other words, these companies have to guarantee the bondholders. That is, if the pipe line did not make a profit, and if it did not carry its charges, then these companies would have to make good to the bond holders. In addition, a group of independents signed deficiency agreements but these agreements were subject to lapse on December 31, 1956.
The effect of that is rather interesting, Mr. Speaker, in that the shareholding as of March 27, 1958 as compared to December 31, 1951, varies as follows. On December 31, 1951 some 670,000 shares were held by the major oil companies which were guarantors under the deficiency agreement. That number has dropped by only 100,000 shares to 570,000 shares as of March 27, 1958. However, the group of independents and smaller oil companies-and I am referring to oil company shareholders-which at December 31, 1951 owned 250,000 shares now own only 53,025 shares. This means that those shares have now a wider distribution than they had at the time when the company was first formed.
The intent of the bill is to divide the shares five for one in order to give a broader base in the way of participation by Canadians in the holding of shares of this company. This participation is considered to be good policy on the part of the company. I have tried to stress the Canadian nature of the company, the Canadian nature of their operations and the way that they are operating for the good of this country, in the way that I think a Canadian company should operate.
This bill was before parliament in 1957. At that time it was suggested that the treasury had 3,500,000 shares approximately and that this wider distribution could be effected simply by issuing those shares to present shareholders. Mr. Speaker, that procedure would not effect wider distribution in the way that this amendment will effect it. As I have pointed out, the oil companies which are guarantors of the line hold 670,000 shares, or rather 570,000 shares as of today's date. That would simply mean that the treasury stock would be turned over in relation to the present shareholders and in fact it would be watering the stock. The company prefers to do it in this way which

in effect is simply taking a $50 bill and changing it into five ten-dollar bills so that it is easier to trade. There is no watering of the stock. There is simply the chance of wider distribution of the stock. The equity that was behind each share of stock will be behind it in the proportion of one to five for each new share of stock. In addition, the company will have in their treasury unissued shares which can be used as required in the way of gaining funds for future financing.
Mr. Speaker, there is in this bill nothing of a contentious nature. In the Vancouver area alone this company, through the facilities it provides, has developed a refining industry which at the present time has increased employment in British Columbia by about 750 persons engaged in the refinery and oil transportation business. The municipality of Burnaby has benefited to a marked degree by the building of this pipe line as has the economy of Canada, because this pipe line has provided an outlet for many millions of dollars' worth of oil to the northwestern states.
As I said before, the company is ready to go before the standing committee on railways, canals and telegraph lines for the purpose of answering all questions and divulging all information which the committee may require. I would ask that hon. members pass this bill on second reading so that it may get into the committee stages.
Harold Edward Winch: Mr. Speaker, back on March 11 of last year, in rising to speak on a bill, as reported at page 2093 of Hansard of 1957, in my opening sentence I had this to say:
-I have listened with a great deal of interest to all the debate on this bill, because it has to do with a company that is connected with the oil business and because the exact effect of the bill now before us is to ask the authority of parliament to split shares.
I can commence my remarks this afternoon with exactly the same words because we are dealing with the same bill. It is obvious that the officials of Trans Mountain Oil Pipe Line Company are very keen on having this parliament give them authority to split their shares five to one. Their interest is shown not only by the fact that this bill was introduced in 1957, at which time it failed to pass this house, but that the company has seen fit to place it before parliament again at the present time. In addition to these facts we also recognize the interest of the officials between the non-passage of the bill in 1957 and its re-introduction at this present session because those officials have endeavoured to make their position understood, if I may put it that way, to those who successfully blocked the bill in 1957. I can say that because Mr. Morrison, the president, came
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to see me in my office in Vancouver between sessions-in between elections, as a matter of fact-and also because the officials of the company asked to meet with our group in this House of Commons just a few days ago.
I am not making this statement in a critical way; I think it was most commendable of the officials to try to see that we have a full understanding of what they have in mind. I assure all members of this house that we not only listened with a great deal of interest to the information we were given but we asked a great many questions of the officials of the company. But we are still in some doubt as to just what is behind the proposal to split the shares five to one. This is a further reason why we have listened very carefully to the remarks of the hon. member who sponsored this bill.
I am certain that all hon. members noted the emphasis placed upon what I presume is the main intent behind the measure which is, in the words of the sponsor, a wider distribution of shares and, later on, he said that the splitting of five to one would give a broader base of share holdings. I am sure that is a commendable motive but, quite honestly, we in this group cannot tie in that motive with the declared policies of the officials of the company. A large portion of the outstanding shares are held by oil companies-I think the figure is 33 or 35 per cent-and I believe those companies are nine in number. We have been told by Trans Mountain Oil Pipe Line Company officials within the last few days that there is no intention on the part of the oil companies to dispose of their shares and therefore there can be no greater distribution or broader base, because if they intend to hang on to their shares-


Ernest James Broome: May I explain that point?


Harold Edward Winch: If the hon. member wishes to say that I am giving wrong information, most certainly, but I do not think he does.


Ernest James Broome: No.


Harold Edward Winch: So there is no broader base of distribution except that the oil companies will hold five times the number of shares they now have in their possession.


Ernest James Broome: On the same equity.


Harold Edward Winch: I said they had no intention of selling but that their holdings would amount to just five times the number of shares with the same equity, that is right. There is therefore no broader base for distribution and that is my first point. Secondly, the officials told us right in this building just a few days ago that there was no intention in the foreseeable future of the issuance of further stock. That was not contemplated

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If the companies are going to hold their shares and Trans Canada Oil Pipe Line Company is not going to issue any more shares, then on what basis is the passage of this bill going to give a greater distribution of shares or establish a broader base of shareholding? The position explained to us by the officials- and this was confirmed by the sponsor-is that the intent of splitting the shares is merely for the purpose I have just outlined so far as the foreseeable future is concerned.
We have been given to understand, and this was mentioned in brief by the sponsor of the bill, that in the event of the necessity of the expanding of the operations of this company it would be in a better position in connection with the issuance of shares in order to obtain additional capital if it could present to the buying public shares of smaller denomination than those presently existing. In other words, to use the same terminology as the sponsor of the bill, by changing a $50 bill to five $10 bills then on a stock-selling basis they might be able to attract more people to buy on the basis of $10 than on the basis of $50.
That sounds as though it might be a commendable idea but one question which arises in all our minds is whether there is any move contemplated or any need for the expansion of the operations of the company. I think the best way to judge that would be to make a study of the company's operations. The company started operating in 1953 and I have before me both the annual report of the company for 1957, which gives a breakdown of operations from 1953 to 1957, and also the quarterly report for the first three months of this year. What do we find in the company's own report? If we study their actual daily deliveries we find that in 1953 the figure was 21,096 barrels, in 1954 it was 39,787 barrels, in 1955 it was 83,982 barrels, in 1956 it was 129,103 barrels and in 1957 it was 154,891 barrels. The annual highest average, therefore, works out to 154,891 barrels but as the officials pointed out to us, partly because of the recession, but particularly because of the United States policy with respect to oil, there has been a decline in their operations with the result that for the first three months of this year the average daily delivery of this pipe line is 102,180 barrels. And it looks as if on this delivery they are not losing money but still making it.
The reason I read this report, Mr. Speaker, was to show their low figure in 1954, their high in 1957, their present delivery rate, which is 102,000 barrels daily, and to ask you to relate that to the dumping capacity of the company, which according to the report is 250,000 barrels a day. Now, they have never come anywhere close to this capacity and on

the basis of their present operation they could carry on with their present equipment doing almost two and a quarter times the business they are doing today, and even on the basis of their high year of 1957 they would still have an additional capacity of approximately 100,000 barrels on a daily basis.
That being the situation according to the company's own figures, it seems highly improbable that in the foreseeable future they will have to go on the stock market in order to raise funds for the expansion of their delivery facilities, and the company has admitted that there is no such intention. So, on the basis outlined a few minutes ago of not issuing shares, on the basis of their facilities for increased business, we cannot see why there should be this pressure to have the House of Commons this session give the company the right to split their shares five to one.
I think that we, as public representatives, have the right to look very carefully into this situation and to ask the plain question whether or not this company, with its earnings and earning capacity, should be given this right to split its shares. Admittedly, in 1953 there was a loss in the first year of operations of $470,000, and in 1954 there was a loss of $1,256,000. But then they got into real operation and between 1955 and 1957, after all expenses, after all income tax, nearly $16 million was secured in net returns which added up in 1957 for example to net earnings per share of $5.52. Now $5.52 net earnings on what was basically a $10 share is quite a considerable return, and even on the basis of dividends paid out, which amounted to $2 a share, it was pretty good on $10. Of course, many of the shares were not purchased at $10 because of profit taking on the stock market, but even if they have not been sold on the stock market they are of that value to those who paid $10, which brings to my mind what happened with regard to Imperial Oil and other oil companies in this country.
The greatest and probably the only existing study ever made of share-splitting was made by the late Chief Justice M. A. Macdonald of British Columbia, who was appointed in 1934 as a royal commissioner to investigate the coal and petroleum industry. He filed his report in 1936, a most exhaustive report. I have a copy here and I regret that we have not time to read it into the record, because it is most interesting. One of the highlights of Mr. Justice Macdonald's findings concerned this matter of the oil companies and, in their operations, the splitting of shares in order to hide profits and in order to build up capital gains without the investment of new moneys. I will quote just one brief example of the Imperial Oil situation, and I take this directly from the report. It shows on page HH 251 a

table of the increases in authorized capital of Imperial Oil, which company, by the way, is a heavy shareholder in the Trans Mountain Oil Pipe Line Company; I believe it is one of the largest of the shareholders.


Ernest James Broome: Equal with the other five major ones.


Harold Edward Winch: From 1880 to 1929 the capital of that company increased from $500,000, 5,000 shares of $100 each, to 32 million shares of no par value which, on the stock market, at a valuation in July of 1935, represented a value of $139,119,200. This was done, starting in 1913, by splitting shares; 150,000 into 500,000; 500,000 into 2 million; 2 million into 8 million; and 8 million into 32 million, with the result that the original share of $100 became worth $1,216 in July, 1935.
Mr. Justice Macdonald warned against the practice of splitting shares, and so, in view of what I have tried to point out from the company's own records, and in view of the history of the oil companies and of the profit derived by the method of splitting shares, we feel that the full story has not been told and that the reasons we have been given for the purport of this act cannot stand investigation.


Ernest James Broome: I object to those words, Mr. Speaker.


Harold Edward Winch: We have come to the conclusion that our position is unchanged from the position we took in 1937 and we must again in this quarter of the house and in these circumstances oppose the House of Commons giving authority to this company to split the shares in the ratio of five to one.


William Arnold Peters: I sat in
on the meeting the other day when the officials of the Trans Mountain Pipe Line Company consented to meet with a number of us to hear if there was any change in the attitude of the company compared with what it previously has been. I, personally, was very much interested in the fact that after they had talked for some time they informed us that this split from one share to five was not going to accomplish anything in the way of more money in the treasury. And I was particularly surprised to note that they maintained that they did not need any more money in the treasury, and that this was the only reason for this split. They have in the Trans Mountain Pipe Line Company 5,000,000 shares of no par value. Of these shares, about 1,000,000 have been issued, about 450,000 to private individuals.
If this company is interested in expansion and in raising more money for capital expenditures, then because of the value of the stock it would be a simple matter for it to raise the money by issuing some of
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the treasury stocks it now holds to the general public. If the company wishes to raise more money it would appear logical for it to do so in the normal business practice. It could issue the stock it now has to the general public which would make available to the company enough money with which to expand and possibly make whatever investment it feels is necessary.
In the committee we asked why the company did not sell more stock. Frankly,
I was not impressed with its reasoning. Some hon. members may recall the history of this company. It came to parliament and asked to split its stock on one previous occasion. In the last application the main reason stated was that it wanted to split its stock again, not to eliminate the oil companies that are affected in the capitalization program, but because the company was distressed by the fact that the shares were rising on the market very rapidly and the profit of the company was becoming embarrassing in view of the small number of shares it had out. If this should be true it would appear that parliament is required to pass legislation to control the method of stock evaluation under which the profits can prove to be a source of embarrassment to the people who own the stock. In all fairness I must point out that when we asked the officials of the company about this matter they agreed they would also like to see legislation which would eliminate the necessity of their having to have these matters handled in this way.
I am in complete agreement that something must be done to control these companies. While their representatives pointed out that they are not similar to companies engaged in distributing gas, the situation over the years has developed to the point where federal legislation is required with respect to pipe line companies. The lack of legislation to control pipe lines is becoming more obvious to this parliament and the people of Canada every day. This applies not only to the federal field but to the provincial as well. The investigation into pipe line companies in Ontario has revealed that disastrous decimations have been made in the cabinet ranks of the legislature of that province.


Mr. Speaker:: Does the hon. member not think he is going a bit far afield? After all, we are dealing with the splitting of the stock of the Trans Mountain Pipe Line Company which does not operate in Ontario. May I suggest that the hon. member relate his remarks more closely to the subject of stock splitting.


William Arnold Peters: Thank you, Mr. Speaker. I was attempting to suggest that the problem with

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respect to this company is being reflected in other companies. The presumption would be that it will not be too long until some of the other pipe line companies for the same reason would have to come to this parliament to seek permission to split stock. If that is the solution to the problem which appears to have developed, then I can see other companies having to do the same thing.
I feel I am safe in saying that the company did not convince us that it had a legitimate reason for splitting its stock. Without regard to the fact that money was necessary the officials of the company pointed out they would like to have $40 million in their treasury for capital investment. They also pointed out that the capital investment was not going to take place immediately, that the splitting of the stock in itself was not a method of raising money for capital expenditures. The company did not have a program which, in my opinion, would indicate that it was going to increase its subsidiary industries that resulted from the establishment of the line in the Vancouver area. I do not think, therefore, there is much justification at the present time for this novel method of disposing of the high profits the company has been enjoying.
I feel it is basic common sense to say that if a company is making so much money that it is ashamed to face the Canadian people then the parliament of Canada should not play a part in concealing the matter in this way. If the company had come to parliament with a proposal for expanding industrial development in the immediate area of Vancouver or in the lower mainland of British Columbia then there might have been some justification for its application. The company stated independently that this would not allow them any additional money for that type of development so it could not be accomplished in this manner. I feel that this company should take another look at its method of disposing of stock. I feel the Canadian people are not much interested in seeing companies do this sort of thing. If the company issued the stock it has in its treasury for use in capital expenditures it would assist the Canadian economy but it is seeking only to split its stock in this fashion.
I wish to express my appreciation of the opportunity afforded me of meeting the officials of this company. With only a small investment this has become a large, economical company. These gentlemen came to Ottawa and by using a great deal of tact and finesse they pointed out, to me at least, the new trend that must be taking place in big business in terms of stock promotion and business operations. It is indeed a contrast with what occurs in the mining industry; in

fact, it could be described as being completely the reverse of what occurs there. In the mining industry instead of ending up with five shares for every one you find that you end up with one share for every five that you held and you are lucky if this does not happen several times a year. This appears to be stock splitting that is completely the reverse of the kind of stock splitting to which I am normally accustomed.
The mining industry, which has been splitting stocks for many years, in reverse, should take a look at the situation and in particular at the tactics these gentlemen use. It has been normal in the mining industry to tell my friends and me, yes, and other parliamentarians, this is the way it is going to be done, you can take it or you can leave it, and sometimes they have even offered some stock in the deal, but this appears-


An hon. Member:: How do you know?


William Arnold Peters: I do not know it from firsthand knowledge because I have never had enough money to buy stock. Normally, stocksplitting involves something like this. Every time you buy one share of stock you end up with five or six for one. If this did not happen every time they came to parliament with a matter of this kind probably we would be more interested in buying stock.


An hon. Member:: Have you ever bought any stock?


William Arnold Peters: I never have enough money to buy any stock.


Mr. Frank Howard (Skeena):: Mr. Speaker, I hesitated in rising because I thought the hon. member for Calgary South (Mr. Smith) was going to participate in this debate. I did, as did I am sure the hon. member who introduced this bill, look up past issues of Hansard in an attempt to familiarize myself with the background of a similar bill which was introduced in 1957. I noticed that at that time the then member for Victoria, Mr. Fairey, introduced the bill. In his introductory remarks, or in his remarks on second reading, he was very short. In fact, he said at that time that it was a simple bill and did not require too much expansion and he hoped that the bill would pass. Perhaps that was one of the reasons why he got into difficulty with the passage of it.
I would like to extend my congratulatory remarks to the hon. member for Vancouver South (Mr. Broome), and not the least for expanding his remarks much farther than did his predecessor in introducing the bill. Even though he was more expansive and made more references to the structure of the company and its relationship with its employees, nevertheless I do not think he covered

adequately all of the ground or came anywhere near answering the objections which were raised when this bill was before parliament in 1957. In my opinion the questions which were raised at that time are still valid questions and still require answers.
I wonder, too, why this particular company, if this is the approach that they use-


Mr. Smith (Calgary South):: May I ask a
question? Is this part of the speech of the hon. member for Burnaby-Coquitlam (Mr. Regier) of last year or of Mr. Cameron's.


Frank Howard: I did not catch the question.


Arthur Smith: Is this part of Mr. Cameron's or of the hon. member for Burnaby-Coquitlam's speech of last June?


An hon. Member:: Mr. Cameron's.


Frank Howard: I must admit we do have excellent taste. If this is the approach that Trans Mountain uses, I wonder why the company did not approach one of the members representing the Burnaby constituencies. I can well appreciate why they did not approach the hon. member for Burnaby-Coquitlam (Mr. Regier) and ask him to introduce and support the bill, but I wonder why they had to go so far afield as Vancouver South to find someone to support and introduce this particular bill.


Ernest James Broome: This is obviously part of the speech of the hon. member for Burnaby-Coquitlam, which he made last year.


Frank Howard: It may be as my hon. friend says.


Harold Edward Winch: Why does the hon. member not ask me if I make my own speeches?


Frank Howard: In any event, Mr. Speaker, with respect to the comments made by hon. members opposite, when I opened my remarks I said the hon. member for Vancouver South did not come anywhere near answering the questions which were raised during the debate on this bill a year ago, and did not come anywhere near dealing with the objections which were raised at that time. Inasmuch as the subject matter of the bill is the same, and inasmuch as it was given a most exhaustive debate and study a year ago, where else would one go than to the past records of Hansard to see what the problem is all about. Actually, in reading those references in Hansard, just as we do in other research work in attempting to deal with other problems, we must deal with points that were dealt with in the speeches and debates of the past.
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Hazen Robert Argue: The Tories should do their
homework, too.


Frank Howard: If the remarks that I am making now and the remarks that I intend to make about this bill in the future are similar to remarks made by hon. members of this house in previous debates, or by present hon. members, well, it is only natural that they should be so.
In the operation of pipe lines, whether they be gas or oil, the hon. member for Vancouver South attempted to differentiate between the two and to say that the promoters, owners and operators of oil pipe lines were lily white pure compared with the buccaneers and pirates interested in the operation of gas pipe lines. Be that as it may, we have seen over the years that both oil pipe lines and gas pipe lines, in the operation of the oil and gas industry, have done nothing but enrich the pockets of a number of promoters. It has been a most lucrative industry-the gas pipe lines and the oil pipe lines-both here in Canada and in the United States.


Ernest James Broome: Will the hon. member permit a question? Is he not aware that not one cent was made in promotion fees in the promotion of the Trans Mountain Oil Pipe Line Company? In reading the prospectus I tried to point out that every cent raised went into the treasury of the company and was used for the development of the company.


Frank Howard: What was the question?


Some hon. Members:: Six o'clock.



BUSINESS OF THE HOUSE

Harold Edward Winch: May we ask about the business for next week?


Mr. Badanai:: What is the business for
Monday?


Mr. Green:: On Monday, Mr. Speaker, we intend to take a supply motion. If we get into supply we shall go on with trade and commerce.


Hazen Robert Argue: May I ask the Minister of
Public Works whether he does not feel that, according to the rule book of this house, it would be more appropriate to take a private member's motion, which would be just a second day for private members' bills, rather than one supply motion following another?


Howard Charles Green: No, Mr. Speaker; I think it is more important under existing conditions to have a supply motion.


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

[Stage Direction]
The following answer, deposited with the Clerk of the house, is printed in the official report of debates pursuant to standing order 39:


Mr. McWilliam: Does the federal government assume responsibility in whole, or in part, for the construction of highway bridges solely within provincial boundaries, other than trans-Canada highway bridges?
Answer by; Hon. Howard C. Green (Minister of Public Works):
Yes, in special circumstances where there is a federal responsibility.

Monday, July 14, 1958