1959-06-25

[Stage Direction]
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[Stage Direction]
Thursday, June 25, 1959


Right Hon. J. G. Diefenbaker (Prime Minister) moved:: That on Monday, June 29, 1959, and on every Monday, Tuesday and Saturday thereafter until the end of this session, the hours of sitting shall be as follows:
Mondays and Tuesdays: 11:00 a.m. to 1:00 p.m., and 2:30 p.m. to 6:00 p.m., and 8:00 p.m. to 10:00 p.m. and;
Saturdays 11:00 a.m. to 1:00 p.m., and 2:30 p.m. to 6:00 p.m. and;
That the order of business and procedure on Saturdays shall be as for Thursdays (government day).


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, on the introduction of this motion, which as a general rule means that the house will prorogue within about three or four weeks, may I ask the Prime Minister whether his anticipation is that the house, with the co-operation of the government, will close before the end of July?


John George Diefenbaker: Mr. Speaker, the customary view of the government always is, when this kind of motion is introduced, that we are reasonably approaching the end of a session and that a month away is considered to be the normal anticipation. May I say that, as far as the government is concerned, it will present its program and of course ask for the co-operation of the opposition because, as has been often said in the past, the length of the session generally depends on the opposition.
I think I should mention one piece of legislation at this time in view of the visit of Her Majesty the Queen. Instead of having the gift of the Canadian people constituted within an estimate, it is the intention to introduce legislation to set up the fund and to provide in general for its administration. I hope it will be possible early next week, possibly on Monday-in view of the need to have this matter considered at the earliest possible date-for the resolution to be proceeded with and then possibly after the resolution consideration may be given to the bill itself. I would think hon. members generally would want to co-operate in this regard to the end that by the date of the Queen's 66968-9-326
arrival here the legislation will have received approval-provided it meets with approval-of this house and the other place so it may become official.


Harold Edward Winch: In view of this announcement -and I am sorry I did not ask the question previously-may I ask the Prime Minister whether all major legislation has been introduced or whether there is any other legislation still to come forward.


John George Diefenbaker: Mr. Speaker, I can give a statement on that early next week. The legislation which is to be introduced was naturally mentioned in the speech from the throne, and I do not know of anything in particular in addition to that mentioned in the speech from the throne. The Minister of Justice has pointed out to me that legislation with respect to humane slaughter might very well receive consideration, depending upon the recommendation of the committee.


Harold Edward Winch: May I also ask the Prime Minister if it is the intention of the Prime Minister to introduce the bill of rights this session?


John George Diefenbaker: Mr. Speaker, at the
present time the intention is to cover the legislative program. There have been various representations made, as the hon. member knows, with regard to the bill of rights. Only this morning representatives of the community of Canadians of Chinese origin-


Harold Edward Winch: I am just asking whether the intention is to introduce it.


John George Diefenbaker: -met with me and made further representations. However, there has been no decision made not to proceed, and the general idea at the moment is that the legislative program should be presented at this time during this session, rather than postponing it until a fall session, a short session if you will. I believe the general feeling of the house is that we should complete the legislative program as it was enunciated by the government. The program is ready and it is being introduced as legislation receives the attention of the house, as well as the necessary passing of the estimates.


Harold Edward Winch: Can the Prime Minister give a definite answer? Is he introducing the bill of rights at this session or not?

Business of the House


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, we do not propose to object to this motion. The Prime Minister, however, has said that a motion of this kind is normally introduced when the session is coming to an end. In that connection, Mr. Speaker, I would like to point out that there are still five committees sitting. This will, of course, create a problem for the opposition, but I am not complaining about that. Committees will have to be sitting while the house is sitting, but they are five important committees. In addition to the committees we have still before us for consideration and decision, Mr. Speaker, the bill of rights, crop insurance legislation, farm credit legislation, export credit legislation, combines investigation legislation, which we think should go to a committee before it is finally disposed of, legislation regarding term 29 of the act of union with Newfoundland, amendments to the Criminal Code, and the coal production assistance act.
In addition to that formidable legislative program which includes some of the most important bills of the session, we have still to consider the estimates of certain important departments. Perhaps I can mention particularly the Department of National Defence, which will cause some discussion, I hope. Therefore, Mr. Speaker, it requires a good deal of optimism to feel that this motion is being introduced as we are approaching the close of the session. However, I agree that if the session is to close perhaps this motion is necessary.
I would also like to ask the Prime Minister whether he will give us an assurance, so far as possible, that no additional legislation, except emergency legislation because that exception has to be made, will be introduced, and also whether all the legislation which is to be proceeded with at this session will be on the motion paper by next Monday so we may know exactly what we have to deal with in the closing weeks of the session.


Mr. H. W. Herridge (Kootenay West):: Members of this group agree at this time to this resolution in order to facilitate Her Majesty's business, but I think I should take this opportunity to say on behalf of this group that we are of the opinion it is about time we used some common sense with respect to the planning of our sessions. We are, I think, one of the worst groups in Canada for inflicting punishment upon ourselves. Consideration should be given not only to the welfare of members and their families but also to the press and staff of this house by so planning our session that

we could meet possibly for a couple of months before Christmas and then reconvene early in January in order to clear up the session's business by, say, the first of June. On behalf of this group I urge the Prime Minister to give some consideration to the introduction of the C.C.F. planning policies in the arrangement of the sessions of the house.


Mr. Alexis Caron (Hull):: Everybody is trying to find a way to shorten the session, and I would suggest to the Prime Minister that if he really wants to shorten the session, keeping the Minister of Finance away as much as possible would help to do it.


Hon. J. W. Pickersgill (Bonavisia-Twillin-gate):: Before this motion passes, I should like, speaking for myself, to dissociate myself from the views expressed by the hon. member for Kootenay West about starting a session in the autumn. I think the sessions are long enough as it is, and this would simply have the effect of making them longer.


Harold Edward Winch: I should like, in view of the fact that we have this motion before us which involves the hours of work and, what is more important, the days of sitting of the House of Commons, to ask the Prime Minister whether in consideration of our support of this resolution he will give consideration to the fact that the House of Commons now meets for approximately seven months a year, to the fact that Canada is growing and that the business of Canada and the business of this house is bound to grow in consequence. I suggest to the right hon. gentleman that consideration will have to be given not only to the suggestion made by my hon. friend from Kootenay West but also to the period during which this house sits. I would remind him that it is not enough to think of the convenience of those who live 100 miles or even 500 miles from home. There are those whose homes are 2,500 or 2,700 miles away. There are some of us here who have been home for only five days in the last six months, and who will have been home for only five days in seven months by the time this house rises.
For these reasons serious consideration should be given to a plan by which the house would meet say in the middle of October to debate the speech from the throne and consider preliminary legislation. Then there might be a month's recess, and we could come back in the middle of January to deal with the general business of the house. Then after approximately a month's absence at Easter we could return to deal with the budget and the legislation which flows from

it, and be away by the end of June. Consideration should be given to a plan of this kind without delay. I know, however, that we are all in agreement with this motion, and that we shall support it, because after seven months' absence, I want to find out if I still have a home, a family and grandchildren, and meet them all again.


[Stage Direction]
Motion agreed to.

Hon. Howard C. Green (Secretary of State for External Affairs):: 
Lester Bowles Pearson: Mr. Speaker, we welcome the statement the minister has just made. I think a visit of this kind by representatives of these European agencies to Ottawa at this time is important and I am sure the discussions have been useful. All of us are very conscious of the importance of these developments, both political and economic, toward European integration, and I think they are to be welcomed. But in the economic field it is to be hoped, as the minister has pointed out, and indeed it is very important to Canada, that the removal of trade barriers within a European group should not mean the raising of trade barriers against those outside the group.
No country, Mr. Speaker, has a greater stake in this matter than Canada. The time
5138	HOUSE OF
European Communities Trade Discussions is coming when we shall soon have to work out our relationship with such agencies as the common market. It had been hoped that the common market would be extended to the European free trade area. Delay in that extension has resulted in those European countries outside the common market beginning to consider the establishment of another European common market. It would be a most unfortunate thing for the world, and certainly most unfortunate economically for Canada, if the development of those great trading agencies took place in a way which prejudiced the multilateral trade of a country like Canada. I know the government is very much aware of the importance and indeed the danger of that development.
It is interesting to recall, Mr. Speaker, that the European share of international trade is increasing. In 1952 United States and Canadian exports accounted for 27 per cent of all world exports, but in 1957 that had gone down to 26 per cent. The sterling area accounted for 26 per cent in 1952, and that had gone down to 23 per cent in 1957; but Europe exported 28 per cent of all goods in 1952 and 32 per cent in 1957. The increase was accounted for almost entirely by the countries of the European common market. The same situation prevails in imports. North America purchased 20 per cent of all world imports in 1952 but only 19 per cent in 1957; the sterling area 28 per cent in 1952 and only 25 per cent in 1957, while the comparable European share, confined almost entirely to countries of the common market, was 29 per cent in 1952 and 34 per cent in 1957. These figures are a graphic indication of the importance of this European economic development, and it is especially important that these developments should take place in a way which will not prejudice multilateral trade in the world.


Herbert Wilfred Herridge: Mr. Speaker, because of the great dependence of Canada on exports and the value of her external trade, these common market proposals are of first importance to our country. We support wholeheartedly the emphasis placed by the leader of the official opposition on that aspect of this question and the necessity for the full development of multilateral trade relations. However, Mr. Speaker, we hope the spirit of the words "common market" will become a reality in our multilateral trade developments in association with this common market group.
We have the word "common", meaning equality, belonging, working together; then the word "market" meaning gathering together for the purposes of trade or satisfactory exchange. Mr. Speaker, if the terms are


given effect as the result of discussions, meetings and co-operation, as evidenced by the report of the meeting the Secretary of State for External Affairs has referred to; and if we bestir ourselves in the proper spirit and purpose, these arrangements will be to our mutual advantage, and prove a worthwhile project by the results in years to come.

On the orders of the day:


Mr. Erhart Regier (Burnaby-Coquiliam):: should like to ask the Secretary of State for External Affairs whether any advances or proposals were made by spokesmen for the European common market to the effect that Canada might be invited to become a member? Or has the government of Canada, at these meetings, made any proposals to the European countries whereby Canada would offer to associate itself with the countries in the European common market? Or, failing either of these possibilities, has the department undertaken any exploratory work to investigate the possibility of Canada becoming actively associated with the members of the European common market?


Howard Charles Green: No, there was no such discussion, and there is nothing under way leading in the direction of Canada becoming a member.
[Later:!
On the orders of the day:


Lester Bowles Pearson: May I ask the Minister of Trade and Commerce whether any discussions took place with the head of EURATOM on the question of supplying Canadian uranium to that international agency?


Hon. Gordon Churchill (Minister of Trade and Commerce):: I was unable to participate in those discussions because of attendance at the agriculture committee, where the wheat board were present. However, we have kept closely in touch with the organization of EURATOM and have pressed the point with regard to the supply of uranium from Canada. We have the closest co-operation with that authority in Europe, and representatives of that authority have been closely associated with the development work going on at Chalk River, so I think our position is quite clear in respect of the possibility of supplying uranium to meet their requirements.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to direct a question to the Prime Minister. Can he tell the house whether it is intended to introduce this session the amendment to the Broadcasting Act forecast in the speech from the throne?


Hon. George C. Nowlan (Minister of National Revenue):: No, Mr. Speaker, it is not intended to introduce an amendment this session.



CIVIL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: May I ask
the house leader this question. In view of the fact that he says that before the end of next week we will be discussing the estimates of the Department of National Defence and the Department of Defence Production, will it be possible to bring on before the end of next week the estimate for civil defence under the Minister of National Health and Welfare?
Hon. Howard C. Green (Minisier of Public
Works): As the estimate dealing with civil defence comes under the Department of National Health and Welfare, and I am quite sure the hon. member for Essex East will be making at least one and probably more long speeches on the first item of the estimates of that department, I therefore think it would hardly be appropriate to call both estimates at the same time.


Paul Joseph James Martin: I have a supplementary question. My hon. friend is quite right in saying that when we come to the Department of National Health and Welfare the hon. member for Essex East will have many constructive things to say. But as my friend the Secretary of State for External Affairs knows, the government has decided now to apportion the responsibility for civil defence among three departments of government, namely the Minister of National Defence, the Minister of National Health and Welfare, and the Prime Minister and civil defence is not normally regarded as fully integrated under health and welfare.


Some hon. Members:: Order.


Paul Joseph James Martin: I would say-
Inquiries of the Ministry


Mr. Deputy Speaker:: I must point out to the hon. member that the purpose of asking questions is to secure information, not to make statements.


Paul Joseph James Martin: Now that Your Honour has recognized the foundation for my question I would simply ask the Minister of Public Works or the Secretary of State for External Affairs or the leader of the house whether he would be good enough to arrange that all defence matters, including civil defence, might be discussed at the same time.


Howard Charles Green: Mr. Speaker, I am always anxious to meet the wishes of my old friend the hon. member for Essex East, but I am afraid I cannot do so on this occasion.


Paul Joseph James Martin: Then we will have to continue on civil defence.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Harold Edward Winch: should like to ask the Minister of National Revenue, as the responsible minister for the C.B.C., if he is now in a position to give a report on the situation in that organization which, it is apparent, is most important to all of us.


George Clyde Nowlan: No, I am not. As hon. members know, I was not in the house yesterday because of a commitment which I made months before to address the biennial conference of the taxation officers of the Department of National Revenue who were meeting in St. Catharines. I left here the night before last and unfortunately was away from the house yesterday when several questions were asked of me, one detailed one by the Leader of the Opposition asking for specific information and others by the hon. member for Essex East, the hon. member for Laurier, and so on.
On the way to St. Catharines yesterday morning I saw some of the directors in the Royal York, had a cup of coffee with them and discussed the situation briefly. They told me that later in the day they were meeting some of the senior directors of the corporation and having a consultation with them. I went on to St. Catharines, returned late last night and caught the train. I bought a Globe and Mail, and after the train had left Toronto I read the Globe and Mail and found that some developments had taken place during the day. That was the first intimation I had about it.

Inquiries of the Ministry
The senior officials and Mr. Bushnell, I am told, are still in Toronto although I believe the directors finished their regular session last night. I have not been able to communicate with them. I do not want to make a statement of any kind unless I have very specific information from the corporation. I would ask that the house permit me to deal with this matter on Monday, and in the meantime I shall be able to obtain detailed instructions from the corporation on what are the facts.


Harold Edward Winch: May I ask a supplementary question. Has the minister noticed a report in the newspaper to the effect that the C.B.C. has not accepted the resignations of the 32 people, I believe it is. In view of the fact the committee has asked three of these people to appear on Tuesday at 9.30 and they have said they would do so but not on the basis of being still employed, would those three be protected on that basis?


George Clyde Nowlan: I do not know what the hon. member means by "protected". I said I will answer the questions on Monday when I have accurate and detailed information, which I do not have now.


Lester Bowles Pearson: In order that the house may be fully and accurately informed-I might say I appreciate the minister's position, and the fact that he will reply to some of these questions on Monday-will the minister consider making available to the house copies of statements made by the acting president of the Canadian Broadcasting Corporation over the radio or television or to the press in connection with this matter?


George Clyde Nowlan: If such copies are available I would do so.



IMMIGRATION


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: I wonder if I might ask the Minister of Citizenship and Immigration if she has any further information to communicate to the house about the Latvian refugees in St. John's?


Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: I think the answer must be in the negative, but we are in constant touch with the situation. As the hon. member knows, it is not an easy problem to solve, but the officials of this department are working constantly on it and I hope to have an announcement to make the first of the week.


John Whitney Pickersgill: Can the hon. lady answer the supplementary question I asked yesterday, as to whether the government still follows the policy of making no deportations behind the iron curtain?


Ellen Louks Fairclough: No, Mr. Speaker.



DEFENCE PRODUCTION


[Stage Direction]
On the orders of the day:
Hon. Raymond O'Hurley (Minister of Defence Production):: I have this morning deposited the English copy of the report of Defence Construction Limited. I am sorry to inform the house that the French copy is not available as yet. I expect to have copies of the report of Crown Assets Disposal Corporation in both English and French available soon, and I expect the French copy of the defence construction report will be ready in a few days.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Harold Edward Winch: should like to direct a question to the Minister of National Defence. In view of the fact his estimates are coming up shortly I wonder if, prior to the consideration of his estimates, he would make a statement on behalf of the government concerning the reequipping of the armed forces overseas, and in particular the R.C.A.F., which I think is of interest to all hon. members.


Hon. G. R. Pearkes (Minister of National Defence):: The fact that my estimates have not been before the house before now is not entirely my fault, as they were to come up a few weeks ago but at the request of the Leader of the Opposition, who was not available when they were proposed, they were postponed.
With regard to the other part of the question, the matter is still under consideration and I hope that by the time the estimates are considered I shall be able to make a statement regarding the re-equipping of the air division.


Lester Bowles Pearson: On a question of privilege, Mr. Speaker, the minister mentioned that his estimates would have come up some time ago had it not been for a request I made, and a statement that I would not be here. It is true that there was one day during the last month when I said I would not be here if the minister's estimates were brought up, and

the house leader was courteous enough to say that they would not be brought up at that time. However, since then we have been discussing the estimates of other departments during the last few weeks, and these estimates could have been considered on any one of those days.


Howard Charles Green: It is expected that these estimates and those of defence production will be brought up next week.


Harold Edward Winch: Did I understand that there was a statement as to when the estimates were coming up?


Howard Charles Green: Yes, we expect to bring the estimates of national defence and defence production before the house next week.


Harold Edward Winch: That would be the end of next week?


Some hon. Members:: Sit down.


Harold Edward Winch: That would be the end of next week; the beginning or the end of the week?


Howard Charles Green: Under the rules we have to take legislation on Monday and Tuesday. We shall not get to the estimates until Wednesday or Thursday.



SUFFIELD, ALTA.-EXPERIMENTS IN GERM WARFARE

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I regret once again to have to disturb the Minister of National Defence from his angle of repose but I wish to ask him a question at the request of a religious organization in Alberta. Is the Department of National Defence conducting experiments in germ warfare at Suffield, Alberta?


George Randolph Pearkes: Yes, Mr. Speaker. The department has been conducting experiments of a defensive nature at Suffield station. The objective of these experiments is to ascertain how best the spread of diseases which might be started by an enemy using biological warfare practices could be restricted.


Herbert Wilfred Herridge: I have a supplementary question. Is the minister quite certain that these tests do not present any hazard to the health of people in the surrounding communities?


George Randolph Pearkes: Suffield station comprises a very large area and movement is restricted in that area. I am satisfied that there is no danger of the results of these experiments affecting in any way personnel, cattle or crops in the surrounding districts.
25, 1959	5141
Supply-Justice SUPPLY
The house in committee of supply, Mr. Rea in the chair.



ROYAL CANADIAN MOUNTED POLICE

[Stage Direction]
Headquarters administration and national police
services-
362. Operation and maintenance, $6,270,114.
Mr. Howard:: Mr. Chairman, I will just wait a moment until the private discussions cease.


Joseph Pierre Albert Sévigny: Order. I wonder whether hon. members who are leaving the chamber will do so quietly so we may hear the hon. member for Skeena, who has the floor.


Charles Benjamin Howard: The important part, Mr. Chairman, is that because of the chit-chat and noise that is going on I did not hear the comment made by an hon. member down at the other end of the chamber. Last evening I had occasion to make quite a few remarks. In order to consolidate my thoughts all at one time, perhaps I may be allowed the liberty of covering a bit of the same ground again.
I mentioned that as far as the Royal Canadian Mounted Police enforcing particular laws is concerned, sometimes in the enforcement of those laws the R.C.M.P. make quite a number of enemies and bring a bit of discredit to the force itself. This does not arise because of the actual enforcement of the law itself or the manner in which the R.C.M.P. conduct themselves during the enforcement of some particular laws, nor from the exertion of force which they might find necessary in order to maintain law and order. Sometimes they fall into disrepute because the law itself is considered to be inequitable, especially by the people who fall afoul of it.
I am not suggesting in any way, of course, that our laws should not be enforced, but I make specific reference to what I and many other people consider to be an inequitable set of laws, notably those relating to alcohol and liquor as it applies to native indians. In speaking with members of the force in private conversations, I have asked for their opinions as to whether they think the liquor laws-and this applies to British Columbia particularly-as they apply to our Indian people are equitable or whether they could be changed. Without exception the members of the force with whom I spoke were of the opinion that there should be an alteration in the laws in so far as they apply to native indians. They felt that they were inequitable because the liquor laws apply differently to Indians than to non-Indians.

Supply-Justice


Mr. Fulton:: Mr. Chairman, I rise on a point of order. My hon. friend is touching on a matter which I must confess presents a number of problems to the force. But the fact of the matter is that the provisions of the liquor laws as they affect Indians are not the responsibility of the Royal Canadian Mounted Police. Their only responsibility is to enforce them. Nor does the Department of Justice have the direction of policy that should be incorporated in those laws. While I appreciate my hon. friend's interest and his desire to be helpful, may I suggest to him that he might be more helpful if he would direct his remarks to the Minister of Citizenship and Immigration when the question of Indian affairs arises.


Charles Benjamin Howard: If I may I should like to make a comment on the point of order. It is not my intention to discuss the actual laws themselves, which involve both the Department of Citizenship and Immigration and the provincial governments. What I was seeking to do was to relate the enforcement of the law-* whether it be provincial or federal is immaterial because the R.C.M.P. in certain circumstances enforce the laws within a province -and to develop the theme that by the enforcement of certain types of laws the Royal Canadian Mounted Police fall into disrepute and can have charges levelled against them.
That is the theme I was seeking to develop rather than the actual law itself, and perhaps I may be in order in that regard in pointing out that the force itself loses some of the stature it may have developed over the years, as police forces should develop such stature, because the laws they seek to enforce may be inequitable and may not be accepted by the citizens to whom they apply.
As to the question of alteration of the law, my friend the Minister of Justice is quite correct in saying that this question not only should be but has been discussed under the estimates of the Indian affairs branch, and I am sure will be gone into in more detail during the proceedings of the joint committee on Indian affairs which is currently meeting.
In that regard-and as I said I have spoken with members of the Royal Canadian Mounted Police about this one specific phase of the enforcement of the law, the liquor laws, in so far as native Indians are concerned-I wonder whether at this stage I might pose a question which the minister might answer now or later. I would like to know whether the views of the R.C.M. Police, not the administrative or top officials at Ottawa or elsewhere but the ordinary rank and file members of the force, are ever ascertained or requests made for suggestions for the better use and operation of the force itself.

This question of the R.C.M. Police falling into disrepute in the eyes of some people and the resulting verbal charges which have been made, such as charges that they were engaged as strikebreakers, results merely from the application and enforcement of the present laws applying to private property, obstruction of roads, and so on. In one sense of the word the people who level these charges of strikebreaking against the R.C.M.P. could be quite properly justified in so doing, not because of the fact that thej are in the strict sense of the word strikebreakers, as they are commonly known, but merely because of their actual enforcement of the law itself. That is the theme of my remarks.
There is another problem which I think the minister could take under advisement. Perhaps he has done it already, but in any event it relates to the respect or degree of respect for the force itself which people in various parts of the country may have. I have noticed, though I do not know the percentages, that there are quite a number of young people in the R.C.M. Police. In fact in some instances I believe there are members of the force who are actually under the age of 21 and have difficulty in entering beer parlors in order to see that the law is maintained in those particular establishments because they are not old enough to go in themselves.
Because there are a number of young persons in the force I believe some difficulty arises in the actual enforcement of the law in certain parts of the country, where there may be a large number of young constables, because of the fact that they may be immature and may not have been in the force very long. As in the case my hon. friend from Athabasca mentioned yesterday, the constable concerned was only in the force a short while and had not even been supplied with a uniform, yet he was asked to go out and participate with other members of the force in some sort of engagement, and he wondered whether with his lack of experience he should be called on to do that sort of thing.
There is this attitude existing, and I think it is rather widespread among the population, especially those who may come into close contact with the R.C.M. Police; not people, say, in large metropolitan areas but people in outlying areas who have the opportunity to come into closer contact with the force and meet them personally in their activities as law enforcement officers. They find there is a lack of diplomacy on the part of certain younger members of the force which tends to aggravate the relationship between citizens of the nation and the force itself and I am sure if we can engage to a greater extent

in some sort of Dale Carnegie course amongst the younger members of the police force on how to influence people and use tact and diplomacy in the enforcement of the law, in that way we could overcome much of the difficulty and the aggravated and upset feelings that many honest and upright citizens in the community have with respect to the R.C.M. Police or certain members of it.


Mr, Broome:: Mr. Chairman, I would like to draw one item to the minister's attention; it may be covered in other legislation but I have not been able to determine that. I refer to the case of men who enlisted with the R.C.M.P. in the first world war as reinforcements to overseas units. In the particular case I am referring to a man while training at Regina was thrown from a horse and suffered shoulder injuries, and was later discharged from the R.C.M.P. Later on he enlisted in an army unit but was again discharged as medically unfit.
People in his position find that the revisions of the R.C.M. Police Act have not taken care of them, although they did with regard to the second world war. The provisions were not extended back far enough to take care of people who suffered this type of injury in the first world war, and this man is precluded from receiving medical treatment at military hospitals because he has not had service. Yet his injury took place while he was training with the R.C.M.P. on the basis of going overseas.
My question to the minister is this. Is there any provision in the act as it is being amended, either in the pensions act or the Royal Canadian Mounted Police Act, which will take care of cases such as this?


Edmund Davie Fulton: Mr. Chairman, first with reference to the remarks made by the hon. member for Skeena, he asked me whether there was any definite policy of encouragement given with regard to suggestions made by members of the force in connection with problems they encounter in administering or enforcing the law. As I indicated when I rose to suggest that perhaps this was not strictly in order on these estimates, I do appreciate that there are always some laws which are not greeted with absolute favour by various segments of the population, and this does bring difficulties in enforcement.
The responsibility of an individual member as a policeman is not to question the propriety or wisdom of the law, but to discharge his duty of enforcing it with tact and diplomacy. We are aware that the liquor laws, particularly, are the subject of criticism by the Indian population and by others interested in their behalf, and I am very hopeful that the 66968-9-327
Supply-Justice
joint parliamentary committee, now sitting, may make some wise and constructive suggestions in that regard.
It is the policy of the force to encourage suggestions from its members, and there are various channels and means by which this can be done. There are the regular annual inspections by personnel officers, in the course of which or in the preparation for which every member is interviewed every year, and either the personal problems or the suggestions he may have with respect to difficulties he has encountered in connection with the discharge of his duties as a member of the force may be brought up by him, and should be brought up by him, with the personnel officers in the course of the annual inspection. Section n.c.o.'s are encouraged to make reports, not only factual reports as to what has gone on but reports containing recommendations or suggestions with respect to the problems they have encountered in the course of administering their sections. It is also open to any member to make recommendations whenever amendments to such laws as the liquor laws might be up for discussion. I would also point out that the R.C.M.P. are part of the suggestion award system organized by the civil service, and that it is open to a member to make any specific suggestion in that way at any time he feels inclined to do so.
With regard to the other comments of the hon. member, that members of the force should at all times be encouraged to exercise tact and diplomacy in the enforcement of the law, this is something which forms a definite part of the training they receive at the police training institutions here and in Regina. We do not claim to be able to produce perfection, but we do claim to be able to set a high standard and to place a great deal of emphasis upon the fact that every police constable in the discharge of his duties has the duty to maintain the Queen's peace; that he is not there to adopt an attitude, in any sense, of being somebody superior to the ordinary citizen of the country. He is there primarily to protect the citizens of the country from those who seek to break the laws of the country, and it is instilled into him that no person is guilty until he is proved to be so and that it is not his job to make a decision as to the guilt or innocence of anyone he may be investigating. That is for the courts of the land to decide.
In all these ways we try to impress upon the constable his proper role, and I think it is fair to claim that we achieve a satisfactory degree of success. But no system can produce perfection, and there are errors made by individual constables, as there always will be errors made by human beings; but as far as

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possible we endeavour to instil into these recruits the principles I have briefly outlined. We do also make a very serious attempt to maintain a close supervision of the activities particularly of the younger members of the force, and to counsel, advise and help them to discharge their duties in a responsible manner acceptable to the general public. While I do not deny that there are occasions -and we investigate those occasions-when things go wrong, I think in general the public of Canada is well served by the force and by the training system through which the recruits go before they are sent out to discharge their duties.
With regard to the question raised by the hon. member for Vancouver South, the new pension legislation which is now before the committee of the whole does contain a provision in clause 36 which I believe may be the answer to the problem he has outlined. If it is not out of order, perhaps I could just read it. If enacted it would read:
Where a person has, either before or after the coming into force of this subsection, suffered a disability as a result of any injury or disease or aggravation thereof that arose out of, or was directly connected with, his service in the force, he may be granted compensation, including medical and hospital expenses, at such rates and in such manner as the governor in council may prescribe.
That may take care of such cases, but of course the bill provides that the adjudication of such cases is the responsibility of the Canadian pension commission. It is for the commission to determine the extent of disability and whether or not a member is entitled to hospital treatment.


Mr. Fisher:: The minister will remember
that on previous occasions when his estimates were before the committee there was some discussion and some statements by him with regard to investigations carried out by the R.C.M.P., the directorate of security and intelligence and that aspect of the work of the force. He indicated that there was a considerable study going on in so far as the files kept on individuals are concerned, and especially in relation to the case which the hon. member for Bonavista-Twillingate brought up relating to the Canadian Broadcasting Corporation.
In the past year I have had a number of cases brought to my notice which indicate to me that the amount and kind of investigation which the R.C.M.P. do in cases where they sometimes, for example, recommend that citizenship applications should not be allowed is really rather superficial, and some of the information that must be garnered, or at least the information that is garnered, hardly seems to me to be sufficient, judging from my conversations with people who have been turned down.
The one thing that has struck me about all those to whom I have talked whose applications have been turned down is that for the most part they are simple people. There is nothing complex about them; they have given me no indication of anything scheming or Machiavellian about them. I am thinking especially of the case I brought up in this house in connection with the Finnish organization of Canada and some of its cultural activities. There is no question at all in the minds of people at the lakehead that the Finnish organization has, to a certain extent, a connection with communism or communist organizations, but where you have an organization which is carrying on gymnastic activities, road racing and drama activities, and drawing people from the Finnish community into those innocuous activities, it does seem to me unwarranted that membership in that organization should be used in order to deny citizenship, and it does give rise to certain qualms.
I should like to ask the minister whether he is continuing the study of the files that are kept and of the role of the R.C.M.P. with regard to them. I should also like to ask him if he has considered further the suggestion made two years ago that this whole aspect of the functions of the R.C.M.P. should be divorced from that force and put under a separate staff under the Department of Justice. The logic of this move is, it seems to me, that the R.C.M.P. are engaged in a great many activities including common police work, and one of the most disturbing features in a number of cases going back through the parliamentary record is the fact that the ordinary constable trained in police work is quite often collecting information regarding activities of a possibly subversive nature. When you have 20-year olds or 22-year olds out gathering information and going from door to door around a neighbourhood in connection with someone who seems to be suspect, I think we can really doubt both the efficacy and fairness of this kind of procedure. I think this is a very good point in favour of the suggestion that the whole of this anti-subversion work and intelligence work be divorced from this police force and put into the hands of specialists who would be directly answerable to the Minister of Justice. I should be very interested in the minister's comments on these remarks.


Edmund Davie Fulton: The type of investigation to which the hon. member has referred in his closing remarks would, I imagine, be a routine security check which would not involve a high degree of judgment in assessing the information. The hon. member knows that we are called upon from time to time to report upon the activities and associations of

individuals in connection with various matters. We, of course, only carry out such functions when we are requested to do so by an organization such as a government or a department which is properly entitled to request them.
The important point to bear in mind is that it is not the function of the R.C.M.P.- indeed, I can state on the basis of knowledge I have acquired that they are scrupulous in avoiding the exercice of this function-to assess the acceptability or the unacceptability of an individual on the basis of security. It is the function of the police exclusively to collect information as to what have been the activities of this person, what the record shows, and then they pass on that information to the agency concerned which makes its assessment as to the suitability or otherwise of the person for the employment for which he is applying or for citizenship or whatever the case may be.
The police themselves do not judge and render a verdict whether or not a man is suitable. They simply report what are the facts, and with respect to what I call such routine investigations it is true that on occasion we may employ the services of relatively young constables because it is to that extent a routine investigation. But the security and intelligence work of a type which involves assessment or judgment of what is going on is, of course, invariably done by specially trained and relatively senior personnel of the force.


Douglas Mason Fisher: If the basis of the judgment is material gathered, as the minister seemed to indicate, by young and inexperienced people-


Edmund Davie Fulton: I said that occasionally we may use a young and relatively inexperienced constable for the purpose of a routine investigation to establish the facts, not to form a judgment.


Douglas Mason Fisher: What about the question of the facts which seem to determine the judgment?


Edmund Davie Fulton: Those are reported to the
agency making the inquiry, and it is left to that agency to reach their own judgment on the basis of the facts reported.


Douglas Mason Fisher: How long are facts kept on file? For example, take someone who 15 years ago was a member of the Finnish organization and may be completely away from it now. I have to come back to this point because in two cases I can think of I can go to people who have been turned down with respect to bringing relatives into the country from behind the iron curtain or with regard to having a citizenship application 66968-9-327J
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approved, and I can get affidavits from a number of people as to their good citizenship. I know one person who was turned down who had been recommended very strongly by the provincial Conservative member for Port Arthur. I should like to know more about the standards that are applied. How can we be sure that some information that no longer has any relevance to the state or political attitude of the person involved is not taken into consideration?


Edmund Davie Fulton: Mr. Chairman, it is the duty of the force to make a report to the government or department of the government in every case where we are called upon to give information. As I say, we do not attempt to influence the decision of the department as to the judgment it may come to on the basis of the facts we may report. If we are asked to report on an individual and we have a file on that individual, then as I conceive it it is the duty of the police to make the report available; but I know on the basis of my experience, from discussions with my colleagues and in another capacity in another department, that my officials and I myself feel free to exercise a judgment and that judgment will be influenced in all cases, I would assume, by the length of time that has elapsed since the last report of any association such as that which my hon. friend indicates, and will also be influenced by the presence or otherwise of affidavits from responsible persons indicating that these matters are all well in past years and that there is a new pattern established at the present time. It still remains the duty of the force, if we are called upon to do so by some properly authorized person, to report upon the facts available with respect to an individual.


Douglas Mason Fisher: I will not quarrel with that, but in all the statements I have read in connection with this matter the minister has said that information in the files cannot be released, for example to members of parliament. You cannot even find out whether there are files on members of parliament. But is there not some way we can discover what your standards are for keeping information, and what you consider properly subversive or dangerous to the state? Could not some kind of general memorandum be prepared so we could get some idea of what is involved when a person is turned down? It hardly seems to me that you have to be secretive as to your standards.


Edmund Davie Fulton: Mr. Chairman, I think my hon. friend is getting into a realm which again is not the job of the police because, as I say, we do not form the judgment. There are, of

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course, different standards required for different positions. Positions classified as security positions may require a higher standard of certainty and of safety with respect to subversive activities or actions than other types of positions, but those are all matters which are determined by departments other than the R.C.M.P. They are determined by the department concerned with the employment. We, as I have said before, maintain records- that is admitted-and, if called upon to do so by a department or agency entitled to call for it, we are required to make a report as to the information in our possession with respect to that individual.


Douglas Mason Fisher: Mr. Chairman, the minister is emphasizing the passive nature of this particular directive, but in the brochure issued by the Royal Canadian Mounted Police it is stated:
The directorate of security and intelligence must be prepared at all times to counter subversive activity. In the job of preserving national security, its chief tasks at present are to investigate communist activity and subversive organizations, maintain a watchful eye on the stream of immigrants, and in co-operation with other government departments foil efforts to place subversives in the federal government employment and vital industry.
Those are pretty positive chores that are given in this directive. I think the communist scare in terms of internal risk has certainly subsided enough that we should have some kind of assessment as to what you consider subversive. Give us an idea of some kinds of organizations that are subversive. I am sure that a great many people in the lakehead region would have nothing to do with the Finnish organization of Canada if they were perfectly clear in their minds that the government considered it subversive. Where are the definitions in this field? In all innocence people can get tied up with an organization like that; yet, judging by the experience of this lady who applied for citizenship, it is a definite black mark. Why do we have to have this zone of silence or this area that is unknown? Why can we not have a statement? It does not involve giving away any particular secrets that I can see. It is just an enunciation of what is considered subversive.


John Whitney Pickersgill: Before the minister answers I should like to put a question to him supplementary to that asked by the hon. member for Port Arthur, and then the minister can perhaps answer both at once. I think the minister has rather left the impression from his answers that the information gathered by the police is given in the raw or crude form to other government departments. I wonder whether the minister can tell us what steps are taken to make an evaluation of information gathered, as the minister himself says,

sometimes by constables without much experience, and what the police do before they supply information to other departments. Obviously it is not supplied just in the form in which it is collected.


Edmund Davie Fulton: To reply to the last question first, as I am sure my hon. friend knows the answer might vary according to the form of the request. If the request is for advice with respect to whether there is any record of association with subversive organizations, that answer would probably be given by a relatively short yes or no; not exactly yes or no-


John Whitney Pickersgill: I do not think the minister-


Edmund Davie Fulton: I think I will come to it in a moment-in a manner which is pretty well just an answer to the question. If the department concerned asks for particulars and says, "We want to look into this matter further", then the force will supply the particulars by showing what information is on file as to the record.
There are occasions when the force is asked to make an evaluation, and I shall come to this directly. As I have said, I have had experience on this from both directions, both as the acting minister of citizenship and immigration and as Minister of Justice; and I can say, that the force is scrupulous not to make any evaluation and to be the judge as to whether or not this person is a security risk. They will, however, make an evaluation, if asked, as to the nature of any subversive organization to which the persons concerned may be shown to have belonged. But again this is a statement of fact, and it is up to the department or the agency concerned to make its own decision as to whether or not the facts disclosed warrant a favourable or unfavourable decision on its part.


John Whitney Pickersgill: I do not think the minister has answered the question I asked. Probably it is because I asked it clumsily. This information about an individual is not necessarily all gathered by one constable, and certainly I think I am not betraying any secrets when I say that the information which is provided to another minister by the police is not the question-perhaps the minister would let me finish-and answer type that a policeman gets when he goes out and interviews people. It is a statement which is obviously, in many cases, a composite of various bits of information.
I thought that would help the hon. member for Port Arthur. I think he has a very legitimate question here which is in the minds of many people. I know many people came to me when I was minister of citizenship and

immigration about the very kind of thing the hon. member is talking about. I think the public might be very much reassured if we were told not how the police made an evaluation as such, but how they assess the information; because some of the information is of such of trivial character that it would not be passed on. What trained and competent people do this?


Edmund Davie Fulton: My hon. friend, I am sure, did not try to suggest that my answer had suggested that the constable reports directly to the agency asking for information. These reports are, of course, sent in to the directorate of the security and intelligence agency of the force. As my hon. friend said, there may be a number of reports from different sources. These are evaluated in the security and intelligence agency. Perhaps what my hon. friend is asking me is what is the process by which they are evaluated as to the importance to be attached to them. There are, of course, different degrees of importance. If that is the question I think I can answer it in this way.


John Whitney Pickersgill: I did not want to be unfair to the minister in any way. I think I know the answer myself.


Edmund Davie Fulton: They are evaluated-


An hon. Member:: Why ask the question, then?


John Whitney Pickersgill: Because I think the public would like to know.


Edmund Davie Fulton: If I may be permitted to answer, they are evaluated with respect to the reliability of the source of information. That is perhaps a feature that I should have realized would be of interest to the hon. member for Port Arthur in asking the question, because the department asking for the information will, of course, have the responsibility for making its decision, of assessing the weight to be attached to the information, and they are advised by the force as to the reliability of the source of information from which this record is compiled, or the various sources from which the record is compiled.
In the light of this discussion I should say, however, something with reference to a remark made earlier by the hon. member who started the discussion, and that is that we have absolutely no information to indicate that we would be justified in relaxing the security precautions that we took with regard to subversive activities in this country, no information whatsoever that would justify us in relaxing those at all.
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Douglas Mason Fisher: Does the minister mean by this that the threat is as dangerous in terms of numbers and potential as it has been ever since 1946?


Edmund Davie Fulton: Mr. Chairman, I do not want to be drawn into a discussion of degrees of danger. I will say this, that the efforts being made now are as great as they were in 1946, and I have already said we have no information or indication that would justify us in relaxing those efforts.


Douglas Mason Fisher: Mr. Chairman, let me return to one example that I used. There are approximately 20,000 people of Finnish stock at the lakehead. They are referred to as red Finns and white Finns. This is a cleavage that tends to split the community. I might say, to be fair, that the majority of this particular group have proved their loyalty, their allegiance and everything else. In the main I feel you can apply this to almost the whole group. If you want to analyse the Labour Progressive party vote you will find there has been a diminution that is exceptional.
When I brought up the matter of this woman who was turned down for citizenship I got all this publicity from the Toronto Star, and one of my acquaintances in the police force, who works in close association with the R.C.M.P., flatly said to me, "You want to get out of that. The Finnish organization of Canada is a communist organization; it is on the list of the bad ones". Why could we not know what organizations or groups there are in Canada that the R.C.M.P. consider subversive or dangerous? Is it a question of trying to protect the innocent people who may unsuspectingly get into such organizations? Should we not as the general public have the opportunity to judge the validity of the decisions made by the R.C.M.P. as to what organizations are subversive? Is it not possible that organizations can change and alter in their attitudes and in their personalities, and so alter the relative nature of their subversiveness?
Whenever we have a discussion of this kind from this new broom that was going to sweep clean and check up the bureaucracy all we get is the same type of stone wall. I do not see why there cannot be more frankness in this particular area and why we cannot know more of the standards that are applied in determining security risks and subversiveness. The situation in the last couple of years has given us so few indications of real risk that I think it is about time we looked at this again.
I like to feel that I am in the liberal tradition and always have suspicion of any police activities which are protected from the

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knowledge of the communality. I think we have to keep alert and vigilant in this particular field. Any time we give an organization authority and work to do that we cannot examine openly and know how they are working, we have to watch very closely; we have to check on it on occasion to make sure it is needed; that the dangers are so severe and terrible that we allow this particular type of police organization to be free from the surveillance of the elected representatives.
I do not feel personally that we have had that kind of reassurance from the minister either this morning or on the two previous occasions he has spoken on this topic. I do not think any member of this committee needs to be ashamed or even worried about standing up and questioning from this particular point of view, because a police organization is fundamental to the laws and the security we have in this country. However, when in certain areas you give a sort of carte blanche and the general public or the elected representatives do not know the standards under which the police agency operates, then I believe you have to keep prodding to find out what those standards are and keep reassessing the position that led to this particular aspect of police work being made so secret.


Edmund Davie Fulton: Mr. Chairman, I do not believe the hon. member appreciates the point I have made, and I will repeat it. The police in this field do not pass any judgment or perhaps I should say do not give any effect to the information obtained by translating it into a judgment to deprive a man of any status or any thing to which he thinks he is entitled. The police function is almost exclusively ascertaining the facts and reporting the facts to others who have to exercise their judgment as to what they will do in the light of those facts so reported. It would be very different indeed if the police had the responsibility not only of collecting the facts but also of exercising a judgment as to what should be done as a result of those facts or as a result of the information so collected.
Viewed in that light, then, I think it can be seen why it is proper that security and intelligence activities of the force should not be disclosed in detail. In the first place it is not, as I have said before, the responsibility of the force to lay down the standards of security that will be followed by any government department or agency in connection with its work; that is a matter of collective government responsibility.

As to the suggestion that we should name and list the organizations which have a record or an indication that they are undesirable, from a specific point of view this would be the most self-defeating policy or practice I could imagine. Practically every piece of information that was known to the police would immediately have to be made public; the extent of police knowledge would be made public, and the value and effectiveness of the work would be immediately almost completely negated. Efforts would have to be recommenced from the beginning to build up a file of information, a body of information which is now available.
Indeed, if we started naming names and naming organizations we would lose, I would think, at least 80 per cent if not more of the sources of information we now have.


John Whitney Pickersgill: Is that really correct in the case of an organization like this Finnish organization? It is common knowledge that there are a certain number of communist front organizations in this country, particularly appealing to some people who have come to this country fairly recently. I do not believe there is any doubt but that, as the hon. member for Port Arthur has said, a good many people get inveigled innocently into these organizations. There may be some secret organizations that the minister and the police would not want to reveal, but in the case of organizations that conduct their activities in public it does seem to me that there is a point the government ought to consider. I do not refer to the minister because the minister is quite right when he says this is a matter for the security panel and for the government, not for the R.C.M.P. However, I do believe there is a real point here which is deserving of consideration.


Edmund Davie Fulton: Mr. Chairman, I wish to point out that at no time, certainly since I have been minister and at no time prior to that of which I am aware, have the R.C.M.P. ever identified any organization as being a subversive organization. I should like to make it clear here that I am not accepting what my hon. friend says he was told by some other policeman. I am not saying he was not told, but I am simply saying that so far as the R.C.M.P. are concerned I am making no comment upon it because at no time have we ever identified any organization as being subversive. For the reasons I have given we do not intend to make such a statement. If we were required to say, in answer to a question, is this or that organization subversive, then the whole list would have to be named and we would then be in a position where we

would have to give the house an answer with respect to every organization or every individual named.
Then indeed you would have a witch hunt, if you like. In the first place, you would have names being named on a basis that would possibly be unfair to the individual or the organization concerned. In addition, as I have said, the information that has been carefully built up over the years, including the sources of this information, would be rendered practically valueless. I am indeed surprised at what my hon. friend from Bonavista-Twillingate has said. He had some responsibility for many years as a very senior civil servant closely connected with this work, and later as a cabinet minister he assumed a different sort of collective responsibility. It is indeed surprising to think it has taken him all this time to come to the point of view he has put forward and which I am rejecting. I have never, when in opposition, said that this should be done.


John Whitney Pickersgill: I never suggested, and I would never have used the word, that any agency of government should give the names of subversive organizations, because if there are any subversive organizations the government should prosecute them. However, there are communist front organizations- everybody knows this quite well-which are not classed as subversive. They have a legal existence in this country and have not been made illegal. They are generally known to sophisticated members of the public and officials of government departments. The suggestion that in some way the security of the country would be jeopardized by admitting publicly what we all know as a matter of fact is, I think, quite wrong.
I rose merely to say that I never suggested subversive organizations be named, because I realize how ridiculous that suggestion would be.


Douglas Mason Fisher: I feel it would be ridiculous too, Mr. Chairman, but I should like to come back to the minister. He is, for example, changing the definition of obscenity in the Criminal Code in an effort to enable the country to cope with the menace of indecent books, and that sort of thing. He is trying to set out a better definition so we can have something that will be more operative. Today we lack a definition of the subversive types of organizations, the genuine security risks. Surely the minister must be the first to recognize the anomaly when we talk about communist organizations in this little brochure, while at the same time we have a political situation in this country where the communist party and communist candidates are quite legitimate.
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So long as this situation prevails I think we need a reassessment, often and regularly. It is nice, from a cloak and dagger point of view or the sort of quick look you take at magazines on the newsstand which suggest that this sort of thing is threatening us, to believe that this magnificent red shield is protecting us from the menace.
I should like to know more about the menace from which we are being protected in the light of the fact, too, that we may have to depend upon the integrity and honesty of the minister himself in the assurances he gives us. I cannot see why, as elected representatives, we cannot know more about the standards of what is subversive, what is a security risk.
In so far as the point made by the hon. member for Bonavista-Twillingate is concerned, there are a host of organizations which have had the label "commie" pinned on them. I can think of a number of unions that have had that label pinned on them, and a number of cultural organizations. If the minister suggests that by keeping things secret while the gossip runs abroad he is protecting people from a witch hunt, then I think he is putting up a rather shallow defence.


Edmund Davie Fulton: I do not know that there is a great deal more I can add. I respect the point of view of my hon. friend and his sincerity in seeking to get what one could call a standard definition of subversive. Perhaps the point at issue between us therefore really is whether or not we can get a standard definition of "subversive", and I doubt that very much. It is for that reason that the responsibility for judging as to the suitability or otherwise of the applicant-be it an applicant for citizenship or for employment in the government service or by an agency of the government-is left to the department or the agency concerned. They assess the suitability on the basis of information which the force provides to them, that information having been screened at the headquarters of the director of security and intelligence with respect to its weight in this sense, particularly as to the reliability of the source from which the information is received.
We recognize that there may be prejudice and other motives, or that certain things may be based on hearsay or surmise, and a conscientious effort is made to make an accurate, independent and fair assessment of the reliability or the weight to be attached to the particular source of information. But as to laying down a standard definition of what is subversive and what should be judged to be a subversive or what should be

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judged to be a communist front organization, I do not think it is possible to arrive at such definitions. The methods of the communists are so infinitely various or devious or skillful I should think you would have to have a 500-page book before you could define every one of the members they might have and therefore every type of organization that should be deemed to be suspect on security grounds. I just do not think we can get a simple, over-all, standard definition of what is a subversive or security risk and leave it at that.


Douglas Mason Fisher: May I just give an example to the minister. A couple of years ago when I was teaching grades 10 and 11 students an official of the department of education was trying to line up for me and several others just what our duties and responsibilities should be. He said to us, "You have a very serious responsibility. Many of these young people are going to drop out of school just about now, so in your social studies and in your teaching of citizenship and that sort of thing you have to prepare these young people to go out and face the communist menace".
At the time I thought it was a nonsensical bit of advice and I still think so. How are you going to prepare 15 year olds and 16 year olds in social studies to go out and face the communist menace? I do not know. If a teacher is obliged to assume that kind of burden he has a complete cloud or haze in which to work.
This is exactly the kind of analogy or parallel that I think we are facing today in so far as subversiveness is concerned. What is this communist menace, this subversive danger that we face, that requires these directives, that requires you to send constables around the country quizzing neighbours and that sort of thing? We just do not know what it is. We do not know its scope. We just have the assurance of the minister, which I respect very much, that he feels there really has been no change.
I think we could have a little bit more of a definition. The minister says the communists are so varied and so clever in_their various approaches. I do not doubt that at all, but where is the public evidence of their cleverness? In a political way they have gone down the drain to quite an extent. They have lost or are losing daily their grip on any organizations where they have been strong in the labour movement. Where is this cleverness, this great worry that you have? It seems to me that the people of Canada in a very reasonable way have met the menace. I think it is about time we knew a little bit more or had a redefinition of what the Royal Canadian Mounted Police 
director of security and intelligence feels the menace is at the time and how they go about defining it and fighting it.


Lester Bowles Pearson: I confess that I have some sympathy with the minister's reluctance to attempt the definition of "subversive". He might have exactly the same difficulties as if he were trying to define "freedom", "democracy", "appeasement" or "fascism". No doubt he had similar difficulty when he was attempting to define "obscenity", as I gather he has done although the results may appear to be inadequate to some members of the house.
I think he was right, of course, when he defended the practice of not making public lists of subversive organizations, which is perhaps not quite the same as lists of communists or communist front organizations which are known to be such. That is in contrast, of course, to the practice-and I think it is a good contrast-across the border where they do have their blacklists or lists of subversive organizations, and where I suspect they have lists of Canadian organizations which they consider to be subversive and perhaps a list of members of those organizations.
That leads me to ask the minister a question which I think is an appropriate one. He will know how far he can go in replying to it. The question is this. How are the arrangements working between the appropriate security authorities of the two governments in respect of the exchange of security information? Is the minister satisfied that these arrangements are not being abused? I am not suggesting that the arrangements themselves are not required and are not in certain circumstances quite proper. But are these arrangements being conducted in such a way that they are not being abused to the prejudice of Canadians who, for instance, may want to get into the United States and who find themselves on some United States immigration list as a result of information which the United States immigration authorities have obtained?
Is the minister satisfied that the security information which is sent to the United States authorities is not being used in Washington by agencies of the United States government, executive or legislative, in a way which would be inappropriate? That is the mildest word I can use in that connection. I am asking whether he thinks the arrangements-with which I am not necessarily quarrelling-are working satisfactorily, and by "satisfactorily" I mean in a sense which will not prejudice the rights or freedoms of Canadians.


Edmund Davie Fulton: In so far as the basis of the exchange of information is concerned-that is to say, whether it is exchanged on an equal basis-I am informed that the feeling is that it is fairly worked out. We have no feeling that we are giving more than we have received or that anyone is holding out on us. So far as the basis is concerned, I am informed that we are satisfied.
It would be difficult for the force and I think unwise for us to attempt to make an assessment as to how in every individual case the other agency may use that information. However, we feel that by a relatively free exchange of security information on the basis that I have described previously-that is with an assessment of the reliability of sources and so on-we can in fact in some cases prevent innocent persons from being refused admission or pilloried in other ways, to which danger they might otherwise be exposed.
As is well known, of course, there have been cases in which we in this country have not been altogether satisfied with the ways in which the information given to others has been used, but I do not think that is a matter for the security officials of Canada to comment on. I think I am recollecting correctly what I have read in the official files on the matter when I say that if there is any criticism, I do not think it is directed so much against security agencies as against some other agencies of the other country which may not have used information given into its possession in a manner altogether acceptable to us. On the whole, with respect to the actual exchange of information I am informed that we feel it is to our advantage, and that it is exchanged on a fair and equal basis.


John Whitney Pickersgill: One very factual question I want to put to the minister, and it may not be reasonable to expect a direct answer to it. The question is this. Is the minister satisfied, or are the police satisfied, that the same security is given to the information in the United States that it is given in Canada? There were occasions in the past when we were not satisfied with that.


Edmund Davie Fulton: As far as we can ensure it and do anything effective to bring it about, we are satisfied that that is the case. I do not want to give an absolute blanket guarantee for the future, of course.


John Whitney Pickersgill: Oh, no, and I am not asking for that.


Edmund Davie Fulton: I would like to point out that we know of cases where as the result of the exchange of this type of information we arranged for a Canadian to enter the United States who had been previously refused entry.
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Herbert Wilfred Herridge: Mr. Chairman, the point raised by the leader of the official opposition -I am careful to say "leader of the official opposition" since I was corrected some time ago-interests me a great deal because I have knowledge of two or three cases where it was obvious that good Canadian citizens suffered some injustice. It was explained to me later on by a person well able to give such information that United States authorities sometimes place a somewhat different assessment on information than we would in Canada.
On three different occasions I have been down to the United States on behalf of people in my constituency and met their junior officials. In one case I said, "I want to know what information you have", and they told me. They said, "This man attended a meeting in the civic arena in Nelson addressed by Tim Buck in 1942." I said, "Good Lord, the place was packed because everyone was curious to hear him." This official, who I thought was somewhat ignorant, tried to suggest to me that this was a sound basis for denying a man admission to the United States. Finally I went further than that and got bank managers, mayors, aldermen, church leaders and lawyers to suport his appeal; I had to mobilize many of the prominent people in the district to support the representations made on behalf of this man. That injustice was suffered strictly as the result of a different assessment of information than would be given here. I think they thought there were some other activities connected with attending this public meeting.
Mr. Chairman, I have had three cases like that, and that is why I was very interested in the question raised by the Leader of the Opposition. I do hope the minister can assure the house that information given to the United States authorities is given with the understanding that they should not make an entirely different assessment, as appears is the case, than that made by the R.C.M.P. and those responsible for security in Canada.


Harold Edward Winch: But the information is giver, them.


Edmund Davie Fulton: Yes, there is exchange of security information; I admit that and make nc bones about it. But we cannot assume responsibility for the assessment they make of security information they receive. I am told, as I have said before and repeat now, that as a result of the exchange and the discussions we have had relating to this exchange, we have been able in more than one case to secure the entry of a person into the United States who had previously been

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refused, perhaps on these grounds of a mistaken assessment of the information available. We just do not stop at the official exchange of statistics or written reports; we talk these things over as well.


Herbert Wilfred Herridge: Mr. Chairman, I should on recollection, in fairness, make it clear that the official I was talking to was not by any means a senior official. I thought he was most unsuited to assess information of this sort.


John Whitney Pickersgill: The government or someone in the government did manage to get a situation cleared up, if I remember rightly, where because of the peculiar name of the hon. gentleman's party, the Progressive Conservative party, there was some feeling in the United States that he was a dubious character.


Edmund Davie Fulton: They are not as well informed down there as to the appropriate names of political parties as we are up here.


Mr. Johnson:: Je me demande-Mr. Chairman, I wonder since it is two minutes to one whether we might call it one o'clock?


The Deputy Chairman:: Is it the pleasure of the committee to call it one o'clock?


Some hon. Members:: Agreed.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
(Translation):
Paul Léo Maurice Johnson: Mr. Chairman, just before the house took recess, we were still dealing with the first item of the R.C.M.P.
While commercial shipping and even pleasure boating are under the jurisdiction of the Department of Transport, the R.C.M.P. is responsible for the enforcement of the provisions of the Canada Shipping Act and its regulations. That is why I am taking the liberty of dealing with this subject while we are considering estimates relating to the R.C.M.P. We are now at the start of the shipping season and everybody realizes that civilian authorities, especially municipal authorities in communities that have boating clubs, are quite interested in the matter and concerned about possible accidents at the height of the pleasure boating season.
We, in the riding of Chambly-Rouville, are fortunate enough to live on the banks of the splendid Richelieu river which rises on the

American border and ends up at Sorel. All along that grand river there are boating clubs, like those at Beloeil, Chambly and St. John. In those communities, quite a number of people-I might even say thousands of people -are interested in pleasure boating. The Beloeil boating club has several hundred members and it is my privilege to be one of them.
Now I know for having discussed the matter with the directors of those boating clubs, that children who indulge in such recreation in the summer time, just outside Beloeil and in the Chambly basin, are exposed to serious accidents because of the lack of supervision on waterways at those spots.
I know that, under the Canada Shipping Act, there is a control of light craft traffic. However, there are certain problems of jurisdiction with regard to the control of mixed traffic of pleasure craft and merchant ships. At Beloeil, more particularly, the boating club is located quite close to the McMasterville dock, where rather large barges take on cargoes of explosives for transport to the United States via the Richelieu. Now, it happens that when those commercial ships, returning to or coming from Sorel, head for the McMasterville dock, they travel at full speed up to the spot where the club's pleasure yachts are berthed and where there are a great many American tourists who expect to find a proper welcome in Canada.
Now, the captains or pilots, or any other person in charge of those ships, hardly bother to consider whether there are any small boats or craft tied up nearby so that frequently considerable damage is done to those light craft. This also represents a serious hazard for children bathing or using light pleasure boats in the vicinity.
Under a departmental order-and the minister may correct me if I am wrong-the R.C.M.P., generally referred to as "Mounted Police", has the responsibility of patrolling those waterways. In fact, under that order, the R.C.M.P. may control and ensure compliance with the regulations governing the traffic of both commercial and pleasure boats.
Even a provincial or municipal police officer has the right to see that the law is observed with regard to light boats, but there are serious doubts as to their jurisdiction over commercial shipping. Therefore, operators of commercial ships are little concerned with the local police, whether provincial or municipal.

More R.C.M.P. men should be assigned to patrol work there, or greater authority given the local police. I know that, in Beloeil itself, one constable is prepared to offer his services and ensure the enforcement of the law on week ends. Incidentally, 1 invite hon. members who are interested in regattas, as well as the Minister of Justice, to come out to Chambly next Sunday. They can then see for themselves that as a result of the heavy traffic of pleasure boats on the Richelieu, between Beloeil and Chambly, there will probably be a number of slight accidents or even serious ones, as there were on the occasion of previous regattas.
Mr. Chairman, would it not be advisable to consider the possibility of increasing first of all the number of R.C.M.P. agents doing that type of work?
I believe that, in Montreal, there are only two constables and one corporal to patrol the whole Montreal area on the St. Lawrence and on the Richelieu. In my opinion, this is utterly inadequate. In the first place the only job those men are able to do efficiently is checking up. They are doing the job now and I have only congratulations to offer to the agents of the Montreal division office. However, as I said a moment ago, they cannot do any more than check up. They call at boating clubs, check boats, warn people who do not comply with the regulations and advise them on water safety.
That is about all the work they can handle, and when regattas are held anywhere, those men, who are busy supervising boat traffic here and there along the St. Lawrence and the Richelieu, cannot attend. They can't be everywhere at once and therefore can't supervise all areas and lodge complaints against people who break the regulations.
I therefore urge the minister to consider the possibility of increasing the number of R.C.M.P. constables assigned to that type of work. Obviously, my request brings up another problem, that of additional expense. When municipal and provincial police are asked to supervise traffic on those waterways, it means increasing the personnel, and we know that if the provincial government should establish a division of the provincial police to supervise navigation, and if municipal governments should do likewise, it would lead to additional expenditure which it would be rather difficult to require from the province and especially from smaller towns like Beloeil and Chambly.
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I therefore urge the government, and particularly the hon. Minister of Justice, to consider the problem in that light.
Mr. Chairman, may I also take this opportunity to do my small bit to arouse public opinion with regard to water safety. All kinds of campaigns are organized every week end for the prevention of highway accidents. We profess to be shocked by traffic congestion on week ends; solemn statements are made, and this or that highway is described as a "death trap", etc., etc. Violators of traffic regulations are roundly tongue lashed; in short, attention is paid to highway safety. However, I feel that in the summer season too little attention is paid to the problem of insuring safety on the waterways. Why could the R.C.M.P. not sponsor, organize or support a public education campaign on water safety?
I have here a pamphlet issued by the Department of Transport information division, under the title "Safety afloat for owners of small boats", which deals with this problem. I wonder just how many people who own some kind of boat are aware of the existence of this pamphlet, or have some slight knowledge of regulations governing the operation of watercraft.
I therefore urge officials of the Department of Transport or Justice to organize, sponsor or support-through the R.C.M.P.-a large scale campaign that might be designated "Water safety campaign".
Mr. Chairman, I have one more problem to refer to. It is the matter of joint jurisdiction with regard to pleasure boating and commercial shipping. There should be closer supervision over barges and other commercial craft on such rivers as the Richelieu, where pleasure boats account for most of the traffic. It is a question of safety for the lives of Canadian citizens.
On behalf of all boating clubs in my area, I submit this request to the Minister of Justice.
(Text):


Mr. Tucker:: Mr. Chairman, only time will tell why the federal government withheld permission to send Royal Canadian Mounted Police reinforcements to Newfoundland when the province was facing a great crisis. It cannot be denied that it is the government's first duty to preserve peace and order in every province where the mounted police act as the provincial police, and Newfound-

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land should be no exception. When that duty has not been performed, Mr. Chairman, the whole nation has been betrayed.
Newfoundland is a province which has always lived and abided by the laws of the province and of the dominion. Pressure came from church, state and laity. Telegrams and letters were sent and telephone calls were made to Ottawa, but to no avail. It is unnecessary for me to take the time of the house to recall all the factors that led up to the chaos which threatened to destroy our province. If law and order cannot be maintained, then the freedom of Canadians becomes meaningless.
For a period the city of St. John's was left without sufficient police protection, and I shall now read some messages which will help the house to realize the tension which existed at the time. The president of the Newfoundland conference of the United Church of Canada sent an urgent message to the Minister of Justice which reads as follows:
St. John's practically deprived of police protection because of necessity of sending all available trained men to central Newfoundland where emergency conditions exist and are liable to erupt into further mob violence. This has arisen because of your failure to honour contract with government of Newfoundland to supply extra personnel to R.C.M.P. which is exclusively responsible for all police work outside St. John's. Only this afternoon news release discloses conditions look ugly at Grand Falls.
Having learned with consternation that board of evangelism and social service of our church at Toronto has requested your withholding sending reinforcements of R.C.M.P. to our province, the executive committee of the Newfoundland conference of the United Church is now meeting in emergency session and condemns this action which was taken by that board without full knowledge of situation in and your obligation to Newfoundland, and without consulting Newfoundland conference of the United Church of Canada as to facts, and urgently request of attorney general of Newfoundland that adequate police reinforcements be sent forthwith to maintain law and order, as reports indicate men are available and are being withheld on your instructions.
That powerful request came from Rev. Albert N. Holmes, president of the Newfoundland conference of the United Church of Canada. I have another message to illustrate the gravity of the situation. The following telegram was forwarded by his worship Mayor H. G. Mews of St. John's to the Minister of Justice:
I am informed officially that at least half of the police force required for the normal services in St. John's have been dispatched to central Newfoundland to assist R.C.M.P. in the maintenance of law and order pending the arrival of additional R.C.M.P. personnel.
Under these circumstances I am compelled to request that R.C.M.P. reinforcements be dispatched immediately to central Newfoundland in order that normal police services may be restored in St. John's.

We have heard appeals for help from the church and from the provincial council, and now a few brief words from a working N ewf oundlander:
I am not a die-hard Liberal nor am I a Progressive Conservative, but an ordinary broad-minded citizen, with no axe to grind, always giving my privilege of voting an amount of thought.
The refusal of the federal government to comply with the request of Premier Smallwood to send additional R.C.M.P. to Newfoundland, and the attack by Prime Minister Diefenbaker on our premier, and the government, and the opposition has shocked many of us extremely. Mr. Diefenbaker certainly did not make any friends in Newfoundland by his recent statements.
I shall now read excerpts from a letter from a housewife:
We just came from the funeral of the late Constable William Moss. We are sick in Newfoundland, sick with sorrow, anger and sick with our representatives in the federal government, and with the mainland press. Surely you must have seen how right the premier was when the members of the opposition were with him all the way. Surely you must have seen how they were in accord to a man, because of their concern for Newfoundland.
We are a simple folk in Newfoundland, living in peace with our neighbours, with life in our small towns and villages centred closely around the church, and now these mainland reporters have told that they were refused sanctuary by two priests, one an Anglican, and the other a Roman Catholic.
Let us hope that on Monday you will stand to a man in the commons, and condemn the action of the federal government in not sending R.C.M.P. reinforcements; that you will condemn the mainland reporters for their lies; and that you will pledge your support to the provincial government in the step that they have taken. May it never be said that you helped to quench the small candle which has been lit in Newfoundland, and that you made denial to your own people. If you are tempted to take the easy way and say nothing, remember the boyish face of a rookie cop.
I think I have written pretty strongly, but I am only one woman who feels this way, there are thousands more like me. The women have been aroused, and feelings are running high. I have not always been with the premier, but now I back him all the way, and 98 per cent of Newfoundland with me.
What really happened when the minister refused to send extra police assistance? Police had to be sent anyway, and who suffered? Not only the area directly concerned, but the city of St. John's and the immediate area. Reinforcements were sent from St. John's following the refusal of the Minister of Justice, who has taken full responsibility for withholding extra police assistance.
Yesterday the minister referred to the fact that no further violence had taken place. He credited it to the fact that reinforcements had not been sent. The minister used this as evidence of his wisdom in

refusing to send extra reinforcements. It is true, Mr. Chairman, that there was no further outbreak of violence, but it is not true that this happy outcome is due to the fact that the Royal Canadian Mounted Police in central Newfoundland were not reinforced, because they were. Members of the Newfoundland constabulary were dispatched to the scene of violence, and further help was volunteered by war veterans. The situation was such that this had to be done, and as a result St. John's was left almost entirely without police protection.
Telegrams were sent by the premier of Newfoundland and requests were made by the attorney general of Newfoundland and by other prominent Newfoundlanders. And because much needed help was not sent, Commissioner L. H. Nicholson submitted his resignation. He has, as I am sure we will all agree, helped to place our federal police on a level second to none in the world.
The hon. member for Bonavista-Twillingate has been continually criticized for statements he has made regarding the situation, but Newfoundlanders and people all over Canada have expressed their desire to back fully many of the remarks he has made. This has been proven through the medium of the press, radio and television. I hate to think, Mr. Chairman, what might have happened had this outbreak gained momentum.
There is no doubt in the minds of millions of Canadians but that reinforcements should have been sent to Newfoundland. Because they were not sent the present government broke faith with the province of Newfoundland. I suggest that doubts have been created in the minds of many of our people as to the efficiency of the present justice department because even now, months after the crisis, Canadians are still questioning the action and final decision taken by the Minister of Justice.
The reference made by my friend the hon. member for Timiskaming yesterday to police policy and personnel in Newfoundland is entirely incorrect. We have now, and always have had, as good police personnel as could be or can be found in any other province in the Dominion of Canada. As Newfoundlanders we have been entirely satisfied with the manner in which they have performed their duties as rangers, as provincial police or as members of the Royal Canadian Mounted Police.
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Finally, Mr. Chairman, Newfoundland is proudly represented in all branches of our federal police, many of whom served as rangers and as provincial police in my riding.


John Whitney Pickersgill: Mr. Chairman, I want to speak very briefly partly to draw attention to the fact that yesterday the minister tabled a telegram from the mayor of St. John's, which was read by my hon. friend from Trinity-Conception, but there is no evidence that the minister tabled the reply. It would appear to me from having heard it read that that telegram was and can only be construed as a protest against the failure of the government to send the reinforcements, and therefore should properly have been included in the order that was tabled.
I am not making any particular point of that, but I think we should be told before the item is passed what the minister said in reply to the mayor. I am not going to make anything of the point of order, but I would ask him to put it on the record.
While I am on my feet I should like to draw attention to the fact brought out by the hon. member for Trinity-Conception that the net effect of what the government did-I say what the government did in refusing to reinforce the mounted police-was to deprive the city of St. John's of a police force for a very critical period because the Newfoundland constabulary had to be sent in place of the reinforcements which were denied. So far as that area was concerned it made much less difference than it would to an area that was not affected at all, but was deprived of police protection by the action of the government.
I should like also to put on the record the fact that whatever his present views may be, the mayor of St. John's is very well known to hon. gentlemen opposite and was not only a strong supporter of their party but at one time was provincial leader of their party. It seems to me that is not without significance in indicating what the feeling was in Newfoundland generally about this action.
There is one other question I should like to put to the minister. The hon. member for Trinity-Conception has reminded us of the references which were made by the hon. member for Timiskaming to the Newfoundland constabulary. The Newfoundland constabulary, as the minister knows, were serving under the command of the Royal Canadian Mounted Police. I do hope the minister is not going to ignore these slurs upon a police force which he told us by arrangement, as he suggested when the subject of reinforcements first came up, were sent to central

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Newfoundland. I hope the minister is not going to allow these slurs upon a splendid force to pass without any reference from him.


Mr. Batten:: Mr. Chairman, I do not want to make any extended remarks on this topic at this time, but I do want to make some comments with regard to the failure of the government to send the Royal Canadian Mounted Police reinforcements to Newfoundland when they were requested and when they were required. In the few comments I have to make I shall follow the members from Newfoundland who spoke yesterday and I shall not, of course, discuss any of the contractual obligations, neither shall I go into a discussion of the situation which brought about the need for reinforcement of the Royal Canadian Mounted Police.
I would, at the beginning, like to comment on the remarks made yesterday by the hon. member for Timiskaming. The hon. member made reference to the fact that some of the R.C.M.P. in Newfoundland at that time may well have been, in years gone by, members of the old Newfoundland ranger force. Those who know anything about this force will remember that it was brought into being at the time when Newfoundland was under commission government. I am not now in a position to say how well these men were trained, but they were trained and during the time they were operating in Newfoundland they did a very effective job. After 1949 a number of the members of the Newfoundland ranger force were taken into the Royal Canadian Mounted Police, as were a number of members of the Newfoundland constabulary.
Well, that happened 10 years ago, and during that 10 years these men have had considerable training given to them; and with the training they were able to bring into the force they are now very creditable members of the R.C.M.P. I know a lot of them personally. I knew them when they were members of the Newfoundland ranger force, and I know them now. Even if some of these former rangers were amongst the group of R.C.M.P. at Badger-I am not saying they were-I am very sure that their presence had no effect in reducing the efficiency or effectiveness of the R.C.M.P. Again, if there were two or three of them there they did not directly reduce the effect of the collective body.
I take exception to the remarks made by the hon. gentleman, because I feel that those men who were brought into the R.C.M.P. are now well trained, and those who have been given promotion were certainly given promotion on the same strict standards as

any other member of the R.C.M.P. I feel that they are able to give the force as efficient service as the men from any other province who have been promoted. Whatever the actions of the R.C.M.P. in Newfoundland, I certainly think there can be no reflection on their efficiency because of the fact that included amongst their numbers there may have been members of the Newfoundland ranger force or the Newfoundland constabulary. This is a reflection that I could not accept.
The hon. gentleman went on to refer to the attorney general of Newfoundland. It is true that some time ago he was a director of Bowater's Newfoundland Pulp and Paper Mills Limited, but only under an elective position. When the government's interest in this company had been changed he was no longer there officially to advise. If he had to make recommendations to the Attorney General of Canada he was making them through or on the recommendation of the inspector of the R.C.M.P.
In all, Mr. Chairman, I feel the effectiveness of the R.C.M.P. in Newfoundland in this particular situation is something that is not deserving of the slurs and the most uncomplimentary remarks that have been made concerning it. Certainly there was a very difficult situation at that time. An extremely tense situation existed, not only between the parties to the dispute but also amongst the general populace. There was a need to preserve the peace, not only between the two parties concerned but also amongst the people in general. There was a need to protect life and property, and there was a need to protect the general public.
There is little need to give an account of how the people felt about this. I am sure many hon. members in the house have received letters from the various parts of this country, and I am sure that many have seen the newspaper reports. It is a fact that the people of Newfoundland did expect the R.C.M.P. reinforcements to come at this particular time because they were needed. They were needed to preserve law and order and to protect those who required protection. The claim that the R.C.M.P. acted in Newfoundland as strikebreakers is one that is completely invalid.
I can understand that there are people who would feel that the R.C.M.P. were carrying out their regular duties, not only in instructing people in what the law was but also, unfortunately, in having to enforce the law. There may be others who were of the opinion that they were strikebreakers, but I think it would be very difficult to sustain that position so far as the R.C.M.P. are concerned. I feel

they conducted themselves in a most commendable way under most difficult circumstances.
I do believe that when the situation became so tense that further reinforcements were required-I am going to have to differ with the minister here-they should have been sent forward at that time. When the minister says he was informed by the inspector in Newfoundland that these reinforcements were not required to protect the personnel already there, I think that is a fair statement.
Yesterday the minister explained his position in that regard, and I am quite willing to accept his explanation except for the fact that the feeling is abroad that this was a major reason why the R.C.M.P. enforcements were not sent. As my friend the hon. member for Trinity-Conception has explained, a serious situation developed when members of the Newfoundland constabulary were taken from the city St. John's and sent out to the troubled area, leaving St. John's without the necessary police force that it requires. I think this was a serious thing, and would not have been required if the necessary R.C.M.P. reinforcements had been sent to Newfoundland when they were requested.
It was also suggested yesterday afternoon that the R.C.M.P. were required in Newfoundland in order to evict a union from the province. No such thing, of course, is true. These men were required to go to Newfoundland in order to preserve law and order, and were not concerned in the dispute that happened to be going on there at that time. I am sure nobody knowing the facts would accept the statement that they were required to be sent to Newfoundland to evict a union.
I am also wondering whether, in making his decision, the Minister of Justice really entered into sufficient discussion with the officials of the Newfoundland government to determine exactly what the position was. There are many today who feel that this decision was not the right one and they are wondering now, if in the future such an emergency were again to arise, what protection they could hope to get if they were living outside the city of St. John's, which is the only centre that has any provincial force in any numbers. The result is that there are many in Newfoundland today who feel that the decision made in this regard was the wrong one and it has left grave doubts in their minds.


Mr.   Carier@: Mr. Chairman, I should like to take just two or three minutes in which to reply to some of the remarks made this morning by the hon. member for Port Arthur. It will be remembered that the hon. member for Port Arthur was having a number of exchanges with the Minister of Justice on the
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topic of subversive activities, and in the course of these exchanges asked the minister to provide a definition of "subversion". He also pressed the minister to divulge the names of organizations that might be considered subversive; and when he was not getting from the minister a suitable answer he went on to imply that there was no menace. "Where is the menace?" he asked. Then to prove his point he referred to the decrease in the votes which the Labour Progressive party had received in recent elections.
I think it is dangerous to allow that argument to remain on Hansard unanswered, because that is one of the favourite means employed by the communist party to lull us into a false sense of security. In order to prove how worthless that argument is I should like to inform the house that in Berlin last May Mr. John McGovern, a British member of parliament belonging to the Labour party, while in Berlin at the request of Mayor Brandt, made the statement that among the members of parliament of the Socialist party in Britain there were 26 who were actually undercover agents, and there were another 70 members who were fellow travellers. That statement by Mr. McGovern caused quite a bit of trouble in his party and Mr. Morgan Phillips, secretary of the Labour party in Britain, asked him to recant. He has steadfastly refused to do so because he says it is the truth and he has never made false statements even against his opponents.


Erhart Regier: And you believe it?


Mr.   Carier@: I certainly do.


Erhart Regier: Have you any evidence?


Charles Edward Rea: Order.


Mr.   Carier@: You produce your evidence when your turn comes. The difficulty of defining "subversion" is obvious, because the most insidious subversive activities occur in the realms of thought and ideas. The aims and objects of the communist party are to undermine our confidence in our institutions, our values and our leaders. All that, of course, involves the use and the planting of ideas and the breaking down of our values.
This is done in many ways. It is done by broadcasts, films and plays. One of the most fruitful sources of this activity, of course, is in our universities. We know that most universities have communist agents planted on their staffs for that very purpose, and it is reasonable to assume that the same thing is happening here in Canada. Surely we cannot expect the Minister of Justice to divulge to the house what people or what universities are concerned or what activities are going on in this field.

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It was only a few days ago that a prominent member of the communist party in Canada was asked whether membership in his party was growing. He said, "No; we are not getting very many new members, but that matter is not important because there is already a wide public acceptance of the issues which we have advocated". That is where the most dangerous subversive activity is being carried on.
I realize that the hon. member for Port Arthur has a problem-and I think it is one that deserves attention-in that some new citizens, when they come here from other countries, are likely to become involved in subversive organizations without knowing their true nature. I believe this situation could be met, in some measure anyway, if the department of immigration would in some way warn these new immigrants that before joining or associating with such an organization, or any organization at all, they should make careful inquiries from people in whom they have confidence, as to their true nature.


Herbert Wilfred Herridge: Mr. Chairman, I must take the time of the committee for a moment or two in order to refer to the most unusual statement made by the hon. member for Burin-Burgeo, in which he said that a member of the British Labour party while in Berlin said that there were over 20 undercover communist agents in the British Labour party.


Mr. Carter:: Twenty-six elected members.


Herbert Wilfred Herridge: Members of parliament?


Chesley William Carter: Members of parliament.


Herbert Wilfred Herridge: That there were 26 members of parliament of the British Labour party who were undercover agents of the communist party.


Edmund Davie Fulton: Mr. Chairman, on a point of order, I rise to raise with you the question of how anything that members of the British Labour party said or did not say in Berlin, is related to the estimates of the Royal Canadian Mounted Police.


Harold Edward Winch: Why did you not stop him?


Edmund Davie Fulton: I was reading something else. Otherwise I would have done so, I assure my hon. friend.


Charles Edward Rea: The point is well taken. The hon. member for Burin-Burgeo made that point. In order to be fair I think I should allow the hon. member for Kootenay West a moment or two for the purpose of giving his side of the story.


Herbert Wilfred Herridge: I just want a minute or two, Mr. Chairman in which to reply on behalf of this party. The hon. member said there 
were 26 members of parliament belonging to the Labour party in Great Britain who were undercover communist agents, plus over 70 fellow travellers.
Mr. Chairman, I would like to correct the record. I know the hon. member who made the statement did so in good faith, because he is not the sort of person who would willingly state an untruth to the house; but to correct the record I want to say that the secretary of the British Labour party, on behalf of the leadership of the British Labour party and the national executive of the British Labour party, denied this statement as being completely untrue, and denied it most emphatically shortly after it was made.


Edmund Davie Fulton: Perhaps at this time, Mr. Chairman, I should deal with the remarks of the hon. member for Chambly-Rouville. He raised a matter which I think requires some reply when he drew attention to the situation in his constituency resulting from the fact that there are on the waterways in that constituency, if I followed him correctly, a number of pleasure boats and at the same time a substantial amount of commercial shipping. He made the request that we be more aggressive in our enforcement of the small boat regulations. I think he suggested that we do not have sufficient members of the force enforcing the regulations, with the result that dangers arise from the conduct of the boats in that area. I can assure the hon. gentleman that I will be very glad to do what I can to make a contribution to solving the problem, and I will be pleased to bring his remarks to the attention of treasury board.
I do not like making excuses, so I will merely state this as the fact. I said on an earlier occasion that we are faced constantly with the problem of establishment limitations. There are a number of additional functions we would be prepared to undertake and a number of functions now being discharged which we feel we could do better if we had additional personnel. But in this as in every other department of government activity there is the problem of over-all expenditure and the limitations which must necessarily be placed upon the strength of the force, as is the case with the civilian personnel employed in the department. We have rarely if ever been able to persuade treasury board that we should have as large an increase in our establishment as we think is necessary to meet the requirements we are called upon to meet.
However, this year for the first time treasury board did authorize one position at Montreal for this purpose; that is, the

purpose of the enforcement of small boat regulations through the criminal investigation branch establishment at Montreal. I should perhaps remind the hon. member, however, that there is in addition a provision in the small boat regulations published in the Canada Gazette for March 25 of this year under which a peace officer for the purpose of these regulations is defined as including a member of the Royal Canadian Mounted Police, a member of any harbour or river police force, and a member of any provincial, county or municipal police force. So it will be seen that there are other personnel available for this work besides the members of the Royal Canadian Mounted Police.
It may well be, therefore, that the problem here is one of co-ordinating the activities of the mounted police and the local municipal police forces. That is a matter which I shall be glad to ask my officers to discuss with the Department of Transport, to see whether there is any room for improvement in the situation by a greater degree of co-ordination of those forces.


Paul Léo Maurice Johnson: Would the minister permit an observation at this point. I raised the question of different peace officers authorized to enforce the law, but I was questioning the possibility of these peace officers excepting of course the R.C.M.P.-I am referring to harbour, river, provincial, county and municipal police forces-having authority to enforce the law so far as commercial navigation is involved. I believe these regulations cover the small vessels section but not the commercial, and I was calling the attention of the minister to this particular point, that since these police officers might not have this power with commercial vessels they could be laughed at- and that is a fact; they could actually be laughed at-by some of the pilots or masters on board big ships travelling close to marine clubs.
For example, I know that in Beloeil the officer there is doing a fine job in this field trying to stop these commercial vessels from running too fast on the river near the marine club, but he was laughed at and so was a sergeant or a corporal of the R.C.M.P. last year when he tried to warn certain persons. He was told that he could not do anything to them because they were travelling in their boats on the river. I believe what caused the whole problem in Beloeil in particular was that the corporal was laughed at by masters or pilots who they did not care whether they caused damage by running their boats too fast close to the marine clubs.
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Edmund Davie Fulton: Mr. Chairman, I will be glad to discuss this matter in the light of the remarks of the hon. gentleman, and in particular to discuss the question with the Department of Transport and see whether any amendment to the regulations is necessary to give the officers a greater degree of authority.


Paul Léo Maurice Johnson: Without committing the government, of course, is there any possibility that the R.C.M.P. could take the lead in a vast campaign on this particular matter of safety on waterways?


Edmund Davie Fulton: It is a matter about which we have a certain amount of sensitivity still, Mr. Chairman, but we recognize the importance of the subject. We feel that the lead perhaps should be taken by the Department of Transport, and I understand that department is doing its best to give wide circulation to its safety pamphlet and also to the regulations regarding the operation of small boats. But as we are interested in the question of enforcement, and as enforcement is made more satisfactory when you have the co-operation of those concerned, we also have an interest in acquainting the public with the necessity of obeying the regulations in this regard. That is also a matter that I would be glad to have my officers discuss with the Department of Transport in order to co-ordinate efforts and see if we can contribute to bringing the importance of this matter to the attention of the public.


John Whitney Pickersgill: Would the minister ask the Minister of Transport to establish a coastguard on the Richelieu?


Edmund Davie Fulton: 1 hardly think so, Mr. Chairman.


Mr. Badanai:: Mr. Chairman, I wish to touch on a point which has not been dealt with, and it concerns the role of the Royal Canadian Mounted Police in connection with our tourist industry. The classical reputation of the Royal Canadian Mounted Police for intelligence, efficiency and training, as everyone knows, and for good looks as well, is practically world-wide. Tourists from other countries, especially from the United States, as soon as they cross the border expect to see our Canadian mounted police, the red-coated mounties.
Unfortunately they can only be found around our parliament buildings. I suggest that border points be considered as suitable locations for members of the force to be on hand to gratify the desire of these tourists to meet these world-famous men. I should like to ask the minister if any consideration is being given to this question and, more particularly, to the presence of these men

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on the Pigeon river border near Fort William at which point many thousands of tourists from the United States enter Canada every summer.
Our country has built up a great tourist business which is growing every year. Would it be asking too much of the government to consider an increase in the force in order to take care of this extra service, the expenditure for which would consist only of a very modest contribution toward the encouragement of the tourist industry in which both private enterprise and provincial governments have invested huge sums of money? Would the minister give an indication whether he is ready to consider this suggestion?


Edmund Davie Fulton: I appreciate the interest shown by the hon. gentleman. This is a continuing problem for the force and it was dealt with specifically and quite conclusively in the last annual report for the year ended March 31, 1958 and if the hon. member would look at page 47 of that report I think he would see that a complete answer is given to the problems he has raised.


Hubert Badanai: The minister has not, however, given me any indication that the Pigeon river border area is being considered. That is not mentioned in the report.


Edmund Davie Fulton: No, Mr. Chairman. I have not referred specifically to the Pigeon river area because that is only part of the larger problem of making R.C.M.P. personnel available as tourist attractions, and this problem was covered in the annual report to which I made reference.


Lester Bowles Pearson: May I ask the minister one question regarding the proposed conference of the provincial attorneys general to discuss the contract which, I understand, has been postponed until the autumn. In view of the fact that one of these contracts is now before the courts, may I ask what it is proposed to discuss at this conference?


Edmund Davie Fulton: I felt that one of the reasons why this conference should be postponed was because of the difficulty of discussing a matter which I felt we should discuss, namely the clause regarding reinforcements, while that clause was before the courts. That was one of the reasons why I found difficulty in holding the conference at the time we arranged it orginally, namely late April or early May.


Lester Bowles Pearson: Will the minister postpone this conference further if the case has not been completed?


Edmund Davie Fulton: That is difficult to say. The original purpose of the conference was to

discuss the financial basis upon which the services of the police were made available to the provinces. Since the difficulty with Newfoundland arose it became evident to us, and it was our intention, that the conference should also devote specific attention to this difficult question of the reinforcement clause. I had hoped that feelings might die down-if I might use that expression-by the fall, and for that reason I discussed with a number of the attorneys general the postponement of the date and that was generally agreed to. In the meantime, however, legal action was started and that does make the whole position difficult. If the action to which the hon. gentleman referred should not be settled or disposed of shortly it may be that we shall have to see if we can have a conference in relation to the financial aspects of the matter, leaving the reinforcement question to be discussed later. That is a difficult situation to visualize. I do not think I can say very much more. We did not start the action, and I think I must leave it there.


John Whitney Pickersgill: In a manner of speaking you did start it. The minister was going to read the telegram he sent to the mayor of St. John's.


Edmund Davie Fulton: Yes. This telegram was not, in my view, a protest against the failure to send reinforcements, and for that reason it was not tabled in the return which was made. The hon. gentleman spoke to me about the matter yesterday and said that in his view it should be tabled.


John Whitney Pickersgill: I also asked the minister before I asked for the return and he agreed to table it.


Edmund Davie Fulton: Yes, when the hon. gentleman spoke to me about it yesterday he drew my attention to the fact that earlier, in March, he had asked for the tabling of the telegram, and I suggested that in the circumstances rather than make a supplementary return now, I would simply table it in accord with the earlier request. That earlier request did not ask for a copy of my reply. That is why I did not include it. This is the reply. It is a telegram dated Ottawa, March 13, 1959, addressed to His Worship H.G.R. Mews, mayor of St. John's Newfoundland, and it reads:
Your telegram received and in reply I wish to assure you that all aspects of this situation including the effect of the move of constabulary from St. John's are before the government here and the whole situation is being continuously watched and urgently studied. Your representations will be drawn to the attention of my colleagues and given full weight.
It is signed: "E. D. Fulton, Minister of Justice".

(Translation):


Mr. Pigeon:: Mr. Chairman, I merely wish to ask a question of the Minister of Justice.
Has the Cuban government, led by Mr. Fidel Castro, applied to the Minister of Justice for information in regard to the organization of the Royal Canadian Mounted Police?
(Text):


Edmund Davie Fulton: We did have some communication from Mr. Castro and a meeting was arranged with him when he was in Montreal at which time the attitude of the force with regard to any forthcoming request was indicated in general terms. Since that time we have received no further communication.


Harold Edward Winch: If I may make a brief comment on something which was said by the minister a few minutes ago on the taxpayers' money being spent in cases where the R.C.M.P. is used as a tourist attraction, as I understand it sometimes is. May I say that I have no objection to that at all-


Edmund Davie Fulton: But we do not have the men.


Harold Edward Winch: It might pay good dividends to Canada, and as to the force being a tourist attraction, the minister should go out in front of this building and he would understand that. I do not think they are doing anything much in the way of our protection, but they are certainly an attraction to tourists. No one questions that.
But I should like, if I may, to get some answer from the Minister of Justice with respect to the taxpayers' money being spent on the use of the R.C.M.P. to investigate honest, decent, upstanding citizens of this country, and although this may not be admitted officially, it is nevertheless a matter of fact. I know that the minister, and naturally so, has already made clear his pride in the R.C.M.P. and that he objects to any attack being made upon them. May I say through you, Mr. Chairman, to the minister that anything I have to say-and I think this applies to everybody else in this group-is not an attack on individuals, nor on their position, but on the use made of them by successive governments over a long period of time. I am not just talking from hearsay when I say there is great objection to their use in the manner I have indicated. I think I have had a greater experience than many hon. members with regard to this way of using the force. I do not blame the individuals.
I can go back to when I was only nine years of age, when no less than once a week the R.C.M.P., between four and six o'clock in the morning, invaded my own father's home. They did so because he was the president of the one big union and at that time it was
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something terrible to be a trade union leader. I have been kicked out of my bed at five o'clock in the morning by the R.C.M.P. in the period between 1916 and 1919 because they wanted to search under the mattress to see if there were any books on Marxism or something of that nature. That is my first recollection. I am not complaining about the individuals who were involved because while they were doing that in the bedrooms of our home my father was downstairs pouring tea for them.
Why did I enter politics? Because in 1930 I happened to become involved in an unemployment demonstration and was very severely beaten by the R.C.M.P. I do not think the R.C.M.P. wanted to beat up me and the others but they had their orders to clear the streets. I simply give these two examples. When we ask questions now about the use of the R.C.M.P. they are not questions about individuals but about the use that is made of them and the orders that are given, especially when they are used in connection with strikes.
I have been leading up to a question which I and others have raised over the past few years and I hope that for the first time I will be able to get a direct answer from the Minister of Justice this afternoon. The R.C.M.P. come under his jurisdiction, at least as far as estimates are concerned and, in fact, I believe the Minister of Justice has complete authority over the force.
A few moments ago we heard a discussion of subversive activities and investigations. I should like to ask the Minister of Justice this question. Since he has held office has he put an end to utilizing the time and services of the R.C.M.P. under somebody's orders, whose I do not know, to report on the travels, activities and statements of active trade unionists and those who do not belong to either the political party of the government or of the official opposition? Has the minister done anything at all to investigate why that was done in the past and to ascertain what records are now held by the R.C.M.P.?
I will stand in this house and say that nobody in the House of Commons has a greater belief in and love for democratic procedures and principles and a geater love of this country than I have. There is no person in this house who is more anticommunist than I am and many others whom I could mention. Yet I know of at least one member of the house who, although he is not supposed to have seen it has seen a record concerning himself compiled by the R.C.M.P. I have never seen my own but members of the R.C.M.P. who have resigned

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have told me that there is a file on myself. I have actually seen quotations from it. When we are as democracy-loving and anticommunist as we are, I should like to know whether this is still going on. In my opinion there is only one man who should know. We have been told in the past that the minister did not know but I say that the minister must know where the money comes from because it is in his estimates somewhere, and if this practice is still being carried on in Canada I maintain that it constitutes subversive activity on the part of the force.
I should also like to know about this man Pat Walsh. I have inquired for years about his statement that he did more to create subversive activity in the communist party than almost any other man in Canada. Seven years ago when he got out he said that all the time he was engaged in subversive activity he was an agent for the R.C.M.P. I have never been able to get any answer with respect to that matter because the reply always is that the R.C.M.P. and the minister cannot give us that kind of information. I should like to know the answer from the Minister of Justice because we have never yet been able to get an admission with respect to whether the R.C.M.P. were being used to incite the communist party to engage in disturbance and aggression through a paid official.
What is the position now of Pat Walsh? In view of the fact that I am so strongly anti-communist I am getting a little bit fed up with receiving through the mail week after week publications from this man addressed to "Commie Lover, Harold Winch." Is he still on the R.C.M.P. payroll and is it still part of his work to antagonize those who are true democrats simply because we do not happen to be Conservatives or Liberals?


Paul Léo Maurice Johnson: Why don't you sue him?


Harold Edward Winch: That is what I am asking. Is this a democratic country or are you only a democrat if you happen to be a Conservative or a Liberal? I think this is a serious matter. We have never yet been able to get a straight answer as to the use of the R.C.M.P. with respect to active trade unionists and those who happen to be opposed not just to the two old political parties but to the economic system. We have never had a direct answer in the six years I have been in the house. The Minister of Justice is a democrat and I know he would never question my love for or loyalty to this country. I also know he would never question my anticommunist attitude. I am going to ask him here and now if he will have the decency,

the fortitude, the honesty to get up in the House of Commons right now and tell us what use is made by the R.C.M.P. of a certain fund that is under his jurisdiction and why and under what conditions a particular section in the R.C.M.P., and I know there is one, checks on certain individuals. I should like him to tell us on what basis they make these checks on trade unionists and certain members of the House of Commons. I think we are entitled to know the answer.


Edmund Davie Fulton: With respect to the questions asked by the hon. member for Vancouver East, I do not know whether I shall be branded as lacking those qualities which he hypothetically attributed to me if I fail to answer his questions to his satisfaction, because I am not going to be able to answer his questions to his satisfaction. I think that on reflection, when he reads tomorrow what he said in Hansard, he will find that he has asked me questions resembling, have I caused the R.C.M.P. to stop beating their wives? That is not a question that can be answered, nor can the questions that the hon. gentleman has asked be answered for a variety of reasons, but most of the reasons are that he phrased his questions in that form.
With regard to the interest of the hon. gentleman in preserving the democratic way of life, I unreservedly state that I respect his interest in that thought and I respect his anti-communist feelings and I make no suggestion that he is not entitled to the answers because of any suspicion of his motives or of his patriotism. The hon. gentleman was here this morning when we had a discussion and the reasons were given at that time why these questions cannot be answered.
With regard to the question of files on individuals, I did on an earlier occasion, July 8, 1958, in answer to a question in the house asked me by the hon. member for Skeena, make an extended reply explaining the reason why questions of this sort, asking whether there were files on individuals, whether we make investigations of individuals, whether we have individuals who are on the payroll as agents, cannot be answered. I would refer my hon. friend to page 2047 of Hansard of July 8, 1958, where he will see the reasons which I gave at that time for my inability to answer such questions.


Mr. Peters:: Mr. Chairman, a great deal has been said on this matter.


Edmund Davie Fulton: It was all said this morning.


William Arnold Peters: I realize some of it was said this morning but I do not agree with what was said. I am of the opinion that Canada is not in a condition of war or of threat of

security risks of that nature. I think that this force has been built up by some of the officials-


Edmund Davie Fulton: Vote against the item and let us get on with it.


William Arnold Peters: I think some of these forces have been built up by that department and now it is growing beyond all proportion. I understand that we are now enlarging the headquarters of the R.C.M.P. I might suggest we are probably enlarging it because what the minister promised a year or two ago did not come to pass and will not come to pass, namely his statement that if these files proved inactive for a period of years-and I think at that time he mentioned the period of five years-they would be destroyed.


Edmund Davie Fulton: Mr. Chairman, I am not aware that I made any such promise. Before my hon. friend makes such statements of a general scattered nature I think he should turn up Hansard and give us the reference. If he has a specific undertaking in mind that he wants to deal with I shall be glad if he will refer me to it and I will deal with it, but I do not accept general allegations of that kind.


William Arnold Peters: I did not know this matter was going to be raised again and therefore I have not the reference in Hansard. It happened the first session I was here, in 1957. I do not say the minister gave the assurance that those files would be destroyed; I think he said at that time his officials informed him that if they were inactive for a period of time-if I remember rightly, it was a period of something like five years-they would be disposed of. I cannot speak from personal knowledge either as to whether they have been or not; I have not been across the border for a number of years and I do not know. I cannot speak from personal knowledge that I have a file at the border point, that this information has been given to the United States immigration authorities or the Canadian immigration authorities because I have not been there recently.
If the minister wishes to carry on this type of department, if this is going to be done, then the next time the minister's estimates come up we are going to have to personally mention some of these files, and I am not sure that that is advantageous. If the minister is going to continue in this way, then we shall have to produce the names of some of these secret service agents. I am quite sure we can find out who some of them are who are operating in the Kirkland Lake and Timmins areas. I do not think it will be too difficult to find out the names of some of those people. If we want the names and information on what they are doing and who they
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investigate, what kind of investigations they carry on, and so on, I think that because of the connection that some of us have with municipal police and municipal authorities we can obtain that information, and I think this will eliminate their usefulness in those areas.
If this is what the minister wishes to do, if he wishes definite proof each time of these things, then I think we can probably get it. I suggest that we may be able to get some of these files from their offices. I think we may even be able to do that if we are going to have to play with the Department of Justice, or it is going to carry on activities against members of parliament and others. Maybe it is time to start a little private investigation of our own. We have some connections, and I think they will give us some information on some of these matters. I think the time has come for us to quit chasing after this political dilemma.


Edmund Davie Fulton: So do I.


William Arnold Peters: We should cease thinking that everybody who has ever said anything in public is a subversive, anybody who has ever attended a meeting held by the communists, the fascists or practically anybody else, is a subversive. It might be interesting to the committee to know that I am informed that the leader of the former minister of justice was also investigated not so very long ago when he was premier of Ontario, by a man whom he appointed as his security officer in the province of Ontario for the department of highways. It seems that at one time or another he had attended a meeting and therefore, I presume, would be suspect. The same gentleman informed me that he also had checked his attorney general at that time who was a member of the same party and that he had a file also because he had committed an indiscretion in younger days and had attended a meeting that was held by what would be considered to be a front organization.
I was informed by the commissioner of the R.C.M.P. a number of years ago of some of the facts that were in my own particular file.
I do not think there is any secret as to what they were. I was going to a veterans school under the veterans university extension grants. I became president of a council in that school and we had a number of difficulties with the government of the day. We objected for one thing as a council to the food we were getting. We circulated a petition that came to the House of Commons and some objection was raised to that, but when it ended up in my file, according to the information from the commissioner of that day, I was considered to be a rabble rouser to be watched.

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Another matter that entered into the file had to do with some difficulty we had when I was in the air force. We had a problem which was quite a simple one. We lived in town, lived off the station. We arrived at the station on several occasions a few minutes late because the buses, just as the buses in the city of Ottawa are at the present time, were very crowded at peak periods. We got to the station late and they confined us to barracks. A number of us were sitting around having coffee and we decided that this was not fair. We were working from eight o'clock in the morning until about five at night and it was not fair to confine us to barracks because we were late. The minister can laugh; the minister can think this is a big joke; but this is in my own particular file. This is the type of evaluation that the minister and his department are giving to the immigration authorities which causes people embarrassment every time they cross the border. You say you give it no evaluation, but I am telling you what is in it. It is the type of file you would have, too, if you had attended a communist meeting for one purpose or another.
In this particular case you may even refer to it as a sitdown strike. We did not repair the aircraft on which we were working. We accumulated, by arrangement, more aircraft on the field than were normally held there and a meeting was held in the squadron I was with. They told us if we did not come in, if we were late or did not work overtime at night, then we had to put in another four or five hours. Now, nothing was ever said about it but, according to the commissioner of the R.C.M.P. at that time, these were the two things that happened to be on this particular file on me. These things were in the R.C.M.P. file. One of them came from the air force and another one came from a veterans' school.
I suggest that these are not the kind of files that protect us against security risks. I have done many things that were much stronger than those since then, and the file might be accumulating a great deal of weight. I do not believe any of those things were unpatriotic. I do not believe any of them have been breaches of security of Canada as a nation. These files are the type that should be disposed of. If the minister says that we cannot disclose this information because it would be a security risk, then I say I believe the minister is wrong. If he gets up and tells me that is his opinion, then I am going to spend the next six months finding out just exactly what some of these individuals in the R.C.M.P. do. I am going to check and find out what some of the officials do, because some of these officials must have small,

narrow, little minds that should be investigated. If this is the type of security that they are affording to our country, it is time for a change in the regulations that govern it.
I have no objection whatever to investigating and keeping a file on people who are acting against the security of this nation; that has to be done. There are many people, even housewives of whom I know in the town of Timmins who have been investigated because they knew somebody who had a brother or was connected in some way with the labour progressive party. We are going to have to deal with these files, and we are only going to keep those files which serve some purpose. The rest of them should be thrown out the window.


John Whitney Pickersgill: Just before the item carries, I wanted to ask the minister if he was aware of a publication called Canadian Intelligence Digest. I should like to tell him why I am asking this question. This periodical- I suggest that is the way to describe it- that is distributed gives the impression that it has some official or quasi-official connection. I know it reaches my desk in some fashion unsolicited by me. I think it would be useful if the minister would indicate quite clearly it has no connection whatever with the police or with the department.


Edmund Davie Fulton: I have not seen what is known as the Canadian Intelligence Digest for some time, and upon which my friend bases his statement that it does give some impression it is a semi-official publication. The reason I have not seen it is that it does not get any closer to me now than my wastepaper basket.


John Whitney Pickersgill: The minister has a secretarial staff, and I have not.


Edmund Davie Fulton: I have not seen it myself, but I have no hesitation in saying it has no connection whatever with the R.C.M.P. or any department or agency of government.


Lester Bowles Pearson: Can the minister also give the committee the assurance that the kind of information which my hon. friend has spoken about could not get into the hands of the authorities of the United States in a way which would prevent him being permitted to enter the United States? I do not question the right of the United States to keep out anybody they want to keep out, but I should like assurance that they could not keep Canadians out on the basis of information obtained in that way.


Edmund Davie Fulton: Nothing that the hon. gentleman thought was on his file was of a nature that would be communicated in the manner raised by the Leader of the Opposition. I was

tempted to ask the hon. member for Timis-kaming what commissioner it was, and what the details were that were given but I was afraid he might say that I was persecuting him or following up an unfair investigation. I should be very surprised indeed if any commissioner of the R.C.M.P. gave all the information with which the hon. gentleman has regaled the house. I just want to say that I do not for a moment intend to try to follow all the implications of what the hon. gentleman said because the very vehemence and absurdity gave their own answer. I do not, for a moment, accept the implication that a particular member of parliament is picked out, if any members of parliament are picked out, and investigated, whereas those favourable to the government or the official opposition are not. I have indicated in my statement to which I have already referred on July 8, 1958, page 2047, how these flies are started. Files are started in that way only whether the subject of the file is a member of parliament or not a member of parliament.


Harold Edward Winch: I am going to say a word about these files. I am going to challenge the Minister of Justice right now to tell the members of this house whether the R.C.M.P. do keep track of any members of parliament, in what they do and in what they say?


Edmund Davie Fulton: I am sorry. I did not want to take the time of the committee, but apparently I shall have to read the answer I gave on an earlier occasion. The question was this:
Does the R.C.M.P. maintain any files or dossiers on members of parliament? If so, upon which members of the present parliament are such files or dossiers maintained?
The answer is recorded on page 2047 of Hansard for July 8, 1958 as follows:
All Royal Canadian Mounted Police files on individuals are confidential and many are secret. One of the primary duties of all those responsible for such files is to respect and preserve the confidential or secret nature of their contents.
It will be appreciated also that a large number of such files are started by reports, statements or knowledge of activities coming to the attention of responsible members of the police which they are bound to investigate in the course of their duties. The follow-up on such reports in many cases reveals no necessity for further action, yet there is still a file. This means that many files will be in existence under the names of individuals against whom there is nothing of a substantial, let alone a criminal, nature.
It will therefore be generally agreed that it would be grossly unfair to any such individual to have it revealed or even suspected that there exists a police file under his name, yet there may be many ways in which such a suspicion could be raised. One of the surest ways of laying the foundation for the raising of suspicion would be to isolate a group of individuals, such as members of parliament, start answering questions as to whether there are any files on any of them and
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then refuse-as would have to be done-to go any further when questioned as to the existence or non-existence of a file on a specific member or members of such group. But this is exactly the door which would be opened by an answer to this question.
Not only would this lead to the possibility of prejudice to an innocent individual, but if there were in fact with respect to any one or more members of such group a file or files which contained information serious enough to warrant further investigation, the success of the investigation and possibly the security of the state, might be seriously prejudiced by giving any information whatsoever.
It therefore follows that, both in order to protect innocent individuals on whom there may be files and to preserve the interests of the state, the answer must be that it is considered to be contrary to the public interest to give a specific answer to this question.


Harold Edward Winch: All I can say is this: I have no objection whatever, and you can produce my file any time you like. As a matter of fact, I should like to see exactly what is in it. But beyond that, I do want to say that, if you are continuing your investigation under your gestapo in the R.C.M.P.-


Some hon. Members:: Oh, oh.


Harold Edward Winch: -I do not mean "your" in a personal sense because I have-


Edmund Davie Fulton: On reflection I do not think the hon. member would want to apply that language to our present people. I do not think he would really want to use that word in respect to the force.


Harold Edward Winch: If you have in any police force of a nation a secret force investigating individuals at all times, including active, honest and true patriots in trade unions and in parliament, then I say that is a gestapo.


Paul Léo Maurice Johnson: Why don't you say N.K.V.D.?


Harold Edward Winch: However, if you do not like the word "gestapo" I will withdraw it and I will say that I object to the principle in a democracy of a secret force making secret investigations which cannot be known to the individual at any time and as a result of which he can be condemned and damned without himself knowing anything about it or being able to answer any of the charges.
What I rose to say was this, Mr. Chairman. As far as I am concerned, I appreciate the remarks of the Minister of Justice that he himself in no way questions my own democratic attitude, my own loyalty or my own patriotism. What I want to say is this. If the R.C.M.P. wants to carry on spending the taxpayers' money, it is going to be a waste of it because I never intend to change my loyalty and patriotism and I think the taxpayers' money can be better spent in other directions.

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William Arnold Peters: The minister wanted to know when this information became available to me. In 1947 or 1948 I attended Carleton college. At that time there was some question about the student group at Carleton making inquiries to join a student organization which I previously had known to be communist dominated coming out of a university in Montreal. Also there was a chap at college at the time who was known, certainly to one or two other members of the house here, or considered to be communist and who headed up the L.P.P. at the time. He produced the request in a meeting in which we were asked as students to join this organization. At that time I objected to joining the organization. 1 objected to joining the organization because I understood it was a front organization. One of the members here may remember this occasion as I believe he was there at the time.
The meeting finally broke up with the suggestion that I approach the R.C.M.P. and find out whether this was a communist front organization or whether it was not. Because of this, 1 went to the headquarters of the R.C.M.P. and asked the man at the desk whether that organization was a communist front organization. He immediately showed me in to see an officer who immediately, after I put the question, showed me in to the officer in charge and in about four jumps I was in Commissioner Wood's office. He at that time discussed the matter with me. He asked me a number of questions about it, why I assumed it was, and a number of other questions. Then he turned to a corporal and he said, "Would you go in and see if we have anything on this particular gentleman and also see if you have anything on Peters?" When he came back with the communist file it was a small thin one. When he came back with the one that was mine, it was quite a big one and he pointed out some of the things that were in this particular file at the time.


Charles Benjamin Howard: I should like to make one brief inquiry not on this particular theme that has been the subject of discussion here. I wonder whether the minister could tell us how many members of the force there are who are assigned to what I would classify as the narcotics detail or the one that deals specifically with tracing or looking after the flood of narcotics into the country and the apprehension of the people who are either in possession of or are trafficking in narcotics.


Edmund Davie Fulton: Mr. Chairman, I think it will take a minute or two to get that information. I wonder whether I could answer the question under item 364. I hope to have the information by that time. That is under land,

air and training division, operation and maintenance. I shall try to have the information by the time that item is reached.


Charles Benjamin Howard: I should like to pursue the matter a bit beyond the actual statistical figure. Would I be able to discuss narcotics under item 364?


Edmund Davie Fulton: Yes because it is under land and air operations that the narcotics squads of the C.I.B. operate.


[Stage Direction]
Item agreed to.
Land, air and training divisions-
364. Operation and maintenance, $35,227,872.
Edmund Davie Fulton: I have not the information yet. The reason we are a little bit slow in getting it is that the narcotic squad are parts of the criminal investigation branch and the general breakdown is C.I.B. in each division and subdivision but they are not broken down by narcotic squads. We would therefore have to isolate the men in the narcotic squad in each division. We are working on that now. Perhaps my hon. friend would like to make his general remarks and I will see whether I can get him the details.


Charles Benjamin Howard: Generally my remarks relate primarily to the question of where have we discovered that narcotics come from. From what country do they enter Canada or from what ports of entry is the concentration of the inflow of narcotics. What countries do they originate in generally speaking? Is there any close liaison between the narcotics division or branches in other countries of the world, specifically the United States because of its proximity or countries in which narcotics originate, in order to keep in touch at the international level with the channeling or distribution of narcotics from one country to another? Generally, how effective is this sort of watch?
Apparently with the continued increase in the number of people who are addicted or are becoming addicted to narcotics, it would seem to me that inasmuch as we do not- and this is only a belief of mine-grow and produce narcotics here in Canada-somebody may grow in his backyard a row of poppies but beyond that I do not think that Canada itself produces any narcotics-just how effective, if there is such a thing, is this international liaison with other countries. Do we exchange information with other countries, say particularly the United States because of its proximity and because of the easy manner in which people travel from one country to another? Do we exchange information with the United States narcotics officials about known addicts and traffickers here in Canada and do we receive from the

United States or other countries dossiers or information about known narcotic addicts or traffickers or agents who are in those countries.


Edmund Davie Fulton: I am informed that there are 68 members of the force on full time narcotic squad duties, mostly in Montreal and Vancouver and some in Toronto. In addition, of course, any member of the C.I.B. can be detailed specially to narcotic work at the time of any special investigation or round-up. With regard the country of origin of narcotics, they come mainly of course from countries of the Middle East and the Far East. I am told that the main port of entry into Canada is Montreal. The amount of actual entry through Vancouver, oddly enough, is comparatively small, although Vancouver is one of the main centres of narcotic activity in the sense of the presence of addicts. In view of the presence of addicts, I believe, it is what might be called an attractive place for pushers or peddlers, but it is not one of the main sources of entry for narcotics themselves into the country.
With regard to the exchange of information, we do exchange full information on narcotics with respect to known addicts and all other phases of anti-narcotic law enforcement with the United States and with all other countries who are members of an organization called Interpol, which is an international police organization. We have maintained the normal contacts with the United States through Interpol, and I am informed in addition we have a special continuing liaison with the United States on narcotic problems because of the proximity of our two countries.


Charles Benjamin Howard: Mr. Chairman, it is very kind of the minister to give that sort of information. I was a little surprised, pleasantly so. I would have thought the concentration of addicts in Vancouver may have been occasioned because Vancouver was the port of entry of narcotics; but I guess we can attach the reason for it to our balmy and well tempered weather out there.
The minister mentioned that the Middle East and Far East countries are the major sources of origin of narcotics for distribution to other parts of the world, and I wonder if he could indicate to what extent narcotics are supplied out of Hong Kong, and whether or not those which come from Hong Kong, say to Montreal in this case or to other parts of the world from that area, originate in the mainland of China? To what extent is China, as far as we know,
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participating in the growth and distribution of narcotics to the rest of the world?


Edmund Davie Fulton: Mr. Chairman, I am told we are not able to trace directly the narcotics coming into Canada to red China. It is believed that the majority of the supply coming into Canada comes in from countries in the Middle East. The raw material is grown in countries in the Middle East, processed in Italy and France, and comes into this country mainly via Montreal and New York.


Mr. MacLean (Winnipeg North Centre):: Mr. Chairman, I just want to ask the minister a brief question. It has appeared to me over the past few months that there seems to have been a great number of arrests and prosecutions in the city of Winnipeg with regard to possession and trafficking charges. I do not know the number but it appears to me there are more this year than last year. I have not got comparative figures so perhaps I am wrong and the minister can correct me. I would also like to know, if the minister has the figures there, whether or not there is any evidence or reason to believe that there is any greater trafficking or possession of narcotics in the city of Winnipeg than has been the case previously.


Edmund Davie Fulton: No, Mr. Chairman. I am told the activity in Winnipeg both with respect to the number of men working on antinarcotic work and the number of prosecutions is about normal.


[Stage Direction]
Item agreed to.
365. Construction or acquisition of buildings, works, land and equipment, $5,826,605.
Herbert Wilfred Herridge: Mr. Chairman, I want to make a brief reference to the recent policy of the department in building R.C.M.P. headquarters and facilities in the smaller communities to a much greater extent than in years past. I must say I heartily approve of it because I think it makes for much better administration and provides better facilities for the members of the force who have to serve in the smaller communities sometimes with very poor and inadequate facilities. I presume the policy is now developed and more stable because of the continuing contracts with provincial governments for the services of the R.C.M.P. I am very pleased at the program of the department in undertaking the construction of these smaller buildings in the smaller communities at a time when it will provide employment instead of some measure of unemployment. I think it is very wise that planning is undertaken in that respect particularly in smaller communities where work possibly

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to some extent is more seasonal. I understand the department is planning to have construction undertaken where it will employ people who would otherwise be unemployed.
I understand the department is building several of these smaller buildings in the Switzerland of Canada, which is Kootenay West. I am very pleased to know' that the one at Castlegar is about completed. There is a good deal of local interest in this question. 1 have received letters from organizations and individuals as to when construction will start, what is the type of building which will be built, and so on. Could the minister inform me when it is likely that construction will be commenced in the village of New Denver and in the Elysian village of Nakusp?


Edmund Davie Fulton: Mr. Chairman, I am grateful to my hon. friend for his interest in this matter and for his appreciation of the construction policy of the force. We are trying to work this out on a national basis, on the basis of a complete program, assigning to the various points where R.C.M. Police are stationed a priority with regard to their accommodation requirements. Then we can arrange to meet the requirements at a set annual rate, and by the time the program is finished we will have provided accommodation at every point, we hope, where it is needed. I make that general explanation because I want to explain why some places where police are stationed are not having buildings built this year whereas other places are. I know it does give rise to hard feelings as far as certain areas are concerned. They say that if such and such a place with perhaps a smaller population has a building built there, why cannot they have a building built where they have more people. The program of priorities being worked out is worked out having regard to all the factors properly to be taken into consideration, one of them being the state of the accommodation at each point, so that a point which has a reasonably adequate building now, although it may not be all that is desired, is likely not to be given as high a priority as an area where the building is pretty well totally inadequate.
With regard to specific points, at New Denver the site has been purchased and we will probably go ahead with preparing plans and specifications this year or early next year; but it is not intended to commence construction this year because the priority assigned to New Denver does not call for construction this year. As regards Nakusp, I believe tenders are out and construction is expected to be completed this year.


John Whitney Pickersgill: Could the minister tell me how many of these buildings are actually
[Mr. Herridge.l
under construction in Newfoundland, or projected for this year, and where they are?


Edmund Davie Fulton: With respect to Newfoundland, at Corner Brook we expect to go ahead this year with the construction of a sub-division administration building and a garage, $100,000 being provided for this in this year's estimates. Construction of detachment quarters is proceeding as follows: At Gander, now in progress and to be completed this year; at Port Saunders, now in progress and to be completed this year; Grand Banks, now completed; Channel, under construction but may not be completed this year.


John Whitney Pickersgill: Why is the hon. minister discriminating against Bonavista-Twillingate?


Edmund Davie Fulton: I have no knowledge of what constituencies these quarters are in. If there is no place in Bonavista-Twillingate selected for construction it is because in accordance with the program I have outlined, it does not rate the priorities necessary. It has just been pointed out to me that a new building was completed at Twillingate in 1953, and I hope that the rigours of the Newfoundland climate have not made a new one necessary yet.


John Whitney Pickersgill: Buildings have been put up more recently than that. There was one at Glovertown more recently. In fact, the R.C.M.P. has done well in that part of the country.


[Stage Direction]
Item agreed to.
Charles Edward Rea: That completes the estimates of the Department of Justice.



DEPARTMENT OF TRADE AND COMMERCE

[Stage Direction]
380. Departmental administration, including fees for membership in the international organizations listed in the details of the estimates, $2,636,084.
Gordon Minto Churchill: Mr. Chairman, on Friday
last I tabled the Department of Trade and Commerce annual report for 1958. Copies of the report were at the same time made available to all members of both houses of parliament. The form of the department's annual report has been considerably altered this year. The usual factual account of the trade situation has been expanded and a new section "Trade Policy Developments" has been introduced. The discussion on administrative matters has been greatly reduced. The objective is to give hon. members a clearer and more comprehensive account of the department's activities and objectives. In these remarks I will bring the material in the 1958 annual report up to date. I will deal with the various subjects in the order in which they appear in the report.
I turn now to world trading conditions. Section A of the department's annual report

indicates that world production and trade declined in 1958. There were, however, encouraging signs of general recovery by year-end. Since then, expansionary forces have broadened and gained further momentum.
In the United States, economic activity has been expanding steadily since the spring of 1958. Aggregate production in that country regained its previous maximum by the beginning of 1959 and has subsequently moved into new high ground. By May industrial production had increased 20 per cent from the recession low and was four per cent above the previous peak of early 1957.
Recovery in the United States has had a stimulating effect upon conditions in other parts of the world. A rising level of purchases by the United States in other countries has helped to stimulate physical activity, and has contributed to a further strengthening in the balance of payments and reserve positions of overseas areas. Sterling area reserves have continued to mount since the end of the year.
Recovery in other industrial countries has lagged behind that in North America. Nevertheless recessionary trends were checked during 1958, and there is now a clear indication of renewed expansion in the United Kingdom, West Germany and Western Europe generally, and also in Japan.
Meanwhile, the less developed areas of the world, though still handicapped by foreign exchange limitations, stand to benefit from the moderate improvement under way in world commodity markets and from greater availability of funds from international financial institutions and other sources. An increasing supply of foreign earnings and capital funds will permit more rapid development in these countries and this, in turn, will stimulate world production and trade.
In general, the international economic climate is better now than a year ago and is improving steadily. In Canada the pace of activity picked up sharply in the closing months of 1958. Previous peaks in aggregate production and employment were surpassed even sooner here than in the United States. This upward movement in general activity has continued in the current year. The improvement under way is forcibly illustrated in recent economic statistics. Figures on Canada's gross national product recently released by the dominion bureau of statistics show that the value of national output in the first quarter of 1959 increased by two per cent from the previous quarter and by six per cent from the corresponding quarter of 1958. Industrial production, which for the most of 1958 was below the level of the previous year, is, on the basis of the latest figures available, running nine per cent higher than 66968-9-328J
25. 1959	5169
Supply-Trade and Commerce a year ago. Total employment, which had remained fairly stable during 1958, showed a stronger trend than usual in the early months of the current year. In May, 100,000 more persons held jobs than in the same month last year, an increase of about two per cent. Unemployment has been declining and is now appreciably below the recession level.
Widespread increases in operating rates throughout Canadian industry have brought a simultaneous pick-up in both business and employee earnings. By the first quarter corporation profits had increased by one-fifth from the recession low and were already up to the maximum level reached in the previous boom. Labour income, which had declined briefly during the business slow-down, has moved sharply ahead since last fall and by March was seven per cent higher than in the same month last year. So far in 1959 returns to farmers have held to the sharply improved levels of the previous year.
These indicators of general activity reflect a substantial and continuing improvement in economic conditions in Canada. The current upswing to date has been relatively free of physical dislocation and strain and the general level of prices has remained steady.
A major stimulus underlying the current expansion has been a freer spending attitude on the part of the Canadian public. Consumer incomes had continued to rise even during the recession, and this upward movement has been reinforced by the recent upsurge in employee earnings. For a time spending lagged behind incomes. However, new consumer interest, particularly for automobiles and other durables, appeared in the closing months of 1958 and has been maintained throughout the early part of the present year. This pick-up in consumer spending appears to have been based, in large part, on cash sales. Increases in instalment credit have so far been quite moderate, indicating sustained strength in the financial position of the Canadian consumer.
Another important expansionary influence has been the change in business attitudes toward inventory holdings. Substantial liquidation of stocks in the early part of 1958, followed by a general strengthening in sales, has led to a renewed build-up of inventories. Since the beginning of 1959 this inventory accumulation has added materially to the flow of new orders.
Favourable market prospects both at home and abroad are also having their effect upon the capital investment climate. The year-end survey of investment intentions for 1959, which became available early in March, indicated a projected level of capital outlays, both private and public, amounting to $8.3

Supply-Trade and Commerce billion, slightly below the $8.4 billion expended in 1958. The customary mid-year review of spending plans is now under way. Although the final figures will not be available for another two weeks or so, the results to date indicate upward revisions in anticipated outlays sufficient to raise total projected spending for the year up to and probably a little above the actual outlays in 1958. This improvement is indicated despite the present decline in housing starts which had been indicated in the earlier estimates. Realization of these revised investment plans would entail a rising volume of work on construction projects and machinery and equipment orders during the balance of the year. In other words, aggregate demands arising from capital spending are likely to be another important expansive influence in the economy in the months ahead.
The favourable effects of the current strengthening in market conditions are already evident in most sectors of Canadian industry. Among the material-producing industries notable advances have been made; in primary iron and steel, where output is up 20 per cent so far this year; in lumber products and wood pulp, and in various chemical fields. The growth in automobile sales, while still favouring European-type cars, has nevertheless brought a nine per cent rise in domestic passenger car production in the year to date. The increase in output of commercial vehicles has been more pronounced at about thirty per cent. Home appliance trades have been unusually active with sales of larger items such as refrigerators and freezers, stoves and washing machines, up by substantial percentages. Clothing and textile industries, though slack in some areas, have been operating at considerably higher levels than last year. The present resurgence in industrial construction along with continuing growth in commercial and public building should mean another very active year for the construction industry and related trades despite the current fall-off in housing.
Competition from imports continues to cause difficulty for a number of Canadian industries. In addition to automobiles, clothing and textile trades, rubber footwear and some other sectors have experienced a diminution in their share of the domestic market. For a majority of lines, however, shipments from domestic sources have been rising more than imports during the initial phase of the current upswing.
1 In the trade field the department's annual report indicates that a high level of exports over the course of the 1957-58 recession Was an important sustaining influence in the Canadian economy. This stability in total exports in the face of a general decline in

world trade was a notable achievement, especially when considered in the light of Canada's dependence upon traditionally volatile world food and material markets. This achievement can be interpreted as a reflection of the diverse nature of Canada's trade and of the broadening out into new export fields, which has proceeded at an accelerated pace during the present decade. As a result of this diversification, declines in the sales of industrial materials were offset last year by increases in other items, including newly developed export lines such as uranium.
For the first five months of 1959 total sales abroad have held within three per cent of last year's high level. This slight decline in exports so far this year is not to be considered as indicative of an underlying weakness in Canada's export prospects. Quite the reverse would seem to be the case. Rising production in the United States and in other countries has yet to exert its major impact upon material requirements from Canada. Sales of certain items, such as lumber, chemical pulp and iron ore have strengthened materially. In the case of a number of other commodities, however, the initial increases in material requirements arising from the world upswing in production are being met through the utilization of idle capacity within consuming countries themselves. The current increase in aluminum consumption in the United States, for example, is being supplied from domestic sources, a development made possible by extensive additions to capacity within the last few years. A somewhat similar situation applies in the case of newsprint. As the current upswing broadens, greater reliance on Canadian sources of supply can be anticipated.
Meanwhile some of the special market situations which had contributed to the high volume of exports in 1958 have been changing. Wheat exports in the current crop year are a little below the unusually high sales of 1957-58 but are still at a good level; higher, in fact, than the average of the last five years. Following the completion last fall of deliveries of military aircraft under certain NATO contracts, exports in this category so far this year are down by $35 million, accounting for most of the decline in total exports. However, these figures do not tell the whole story. Large orders recently placed from the United States for Canadian transport aircraft will give an immediate lift to the industry even though this new business will not appear in trade figures until shipments are under way. The success achieved in this highly competitive field is further indication of the opportunities open to Canadian manufactured products in export markets.

Despite the somewhat mixed trends now evident among different categories of exports, underlying influences are encouraging. Rising production levels in the principal industrial nations should lead to a general upswing in world trade. While existing surpluses and restrictive measures affecting individual commodities may, for a time, limit the movement of certain goods, Canadian export industries generally are in a favourable position to benefit from further general strengthening in world markets.
Meanwhile steady expansion in the Canadian economy has resulted in increased imports which so far this year have been running eight per cent higher than a year ago. More imports, coupled with slightly less exports, have resulted in a deficit on merchandise trade larger than a year ago although still below that of 1957. This growth in the trade deficit is a natural consequence of Canada being in the forefront of the world economic advance and in these circumstances is not a reflection of weakness.
Looking at shifts in the geographic pattern of Canada's trade so far this year, it is noteworthy that sales to the United States have been increasing. On the other hand, the increase in Canada's imports has been shared by all major trading areas. This means that the regional balances in Canada's trade have continued to move in such a way as to benefit overseas trading areas.
This broad look at conditions in both foreign and domestic markets suggests generally bright prospects for the Canadian economy. As the year goes on the expansion in business activity now under way should be supplemented by strengthening demands from abroad and rising investment domestically. We have as yet to experience the full force of the current economic expansion.
I wish now to report on the main developments that have taken place since the beginning of the year in the field of commercial policy and in Canada's trade relations with other countries. As indicated in the annual report of the department the broad initiatives that were taken at the commonwealth trade and economic conference at Montreal, looking toward freer trade and payments, are being actively followed up in other international forums. Reference is made in the report to the decisions taken at the end of the year establishing the external convertibility of sterling and of other major trading currencies. These steps are of particular significance and create a new situation in world trade.
Canada, in concert with many other countries, is giving high priority to ensuring that the full logic of convertibility is translated as soon as possible into concrete trade
Supply-Trade and Commerce results through the removal of discrimination and through further progress in the dismantling of import restrictions generally. There now exists a unique opportunity for the restoration of a truly multilateral system of trade and payments which would be of direct benefit to Canada and to the world trading community as a whole.
In reviewing our trade relations with commonwealth countries, the steps taken in recent months by the United Kingdom, Australia and other countries to dismantle import restrictions are of particular interest. We warmly welcome these measures. We have reason to expect that, in line with policy objectives pursued by the commonwealth, there will be further substantial progress made in this direction in the course of the year, and these moves will provide increased opportunities for Canadian exporters in commonwealth markets. The new trade agreement between Canada and Australia, which has been the subject of negotiations in recent months, should provide a framework for expanded trade between our two countries. Arrangements are now being made for the formal conclusion of this trade agreement and I hope soon to be in a position to report to the house on this matter. Preparations are now under way for a review of our trade relations with the West Indies Federation and it is our intention to proceed at the earliest opportunity with trade discussions looking toward further strengthening our traditionally close association with that area.
I turn now to the United States. The meetings of the joint Canada-United States cabinet committee on trade and economic affairs, which took place in January of this year, provided us with a valuable opportunity to review with our United States colleagues many matters of mutual concern and interest. I feel sure that as a result of these discussions closer understanding and good will have been developed between Canada and the United States. The subsequent decision of the United States to exempt Canadian oil from restrictions is a recognition of the importance of Canada's economic and industrial development to the well being and security of both our countries. No solution has, however, as yet been found for the problems created for Canada by the maintenance of United States restrictions on imports of lead and zinc. We continue to be seriously concerned about these restrictions, which place an unfair burden on Canadian producers. We have made our views on this matter perfectly clear to the United States on various occasions and have urged them to remove these unjustified restrictions.

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The European common market is now in its first stage of development. In January of this year these six countries implemented the first steps in the reduction of tariff barriers and quantitative restrictions among themselves and some of these tariff cuts were extended to other members of the GATT, including Canada. The six common market countries are at present in the process of formulating their common agricultural policies and are also working out the level of the common external tariff which is to replace gradually the existing separate national tariffs. The development of this new economic entity in Europe is, of course, of major significance and importance to Canada and to all other trading countries.
Canada has already indicated its sympathy and appreciation for the broad economic and political objectives pursued by these countries. At the same time and bearing in mind the contractual obligations of the common market countries under GATT not to raise new barriers to trade, Canada and other countries are keeping the common market arrangements as they develop under careful review. Detailed discussions and consultations are actively being pursued within GATT to ensure that the views and interests of all trading countries are taken into account by the common market in the formulation of its policies. We will have an opportunity to make careful examination of the agricultural arrangements being developed by the six. In addition, arrangements have now been made within GATT for the negotiation of the levels of the common external tariff before it is put into effect.
We feel sure that the European common market, as one of the world's major trading groups, will wish to play a positive and constructive role in world trade, and will join with Canada and other countries in a common endeavour to expand world trade on a truly multilateral basis. As hon. members are aware, the distinguished presidents of the three agencies which administer the affairs of this new European community visited Ottawa recently and at that time we had a welcome opportunity to discuss these matters with them.
Apart from the common market itself, certain other countries in Europe, including the United Kingdom, are currently exploring the possibility of a free trade area among themselves, looking toward a broader association covering all of western Europe. These discussions are, of course, of great interest and significance for Canada. It is too early to be able to give any precise indication of their possible outcome, but I can assure the committee that we are following developments closely.

Through our participation in the general agreement on tariffs and trade we have now had an opportunity to review with other countries the full implications of the moves toward convertibility of currencies. At the meeting of the contracting parties in May of this year we were able to press home our case for the complete removal of discriminatory restrictions against Canadian goods and were encouraged by the response. There was general recognition by the contracting parties that, in accordance with the GATT provisions, there is no longer any financial justification for continued discrimination and we have a right to expect other countries now to implement their full GATT obligations toward Canada and take early steps in the removal of these controls.
Another major issue dealt with at this GATT meeting was the question of import restrictions maintained by Germany. We were successful in obtaining a firm undertaking from Germany to remove its import restrictions on a wide range of products, including certain basic materials of importance to Canadian trade. Germany was, however, unable at this time to undertake the removal of restrictions on a number of agricultural commodities. Arrangements have, however, been made under GATT which, while permitting Germany to maintain these controls subject to agreed conditions for a maximum period of three years, ensure that German policies in this regard will be brought under detailed and continuing scrutiny by GATT. This settlement, while not fully satisfactory, goes some way to resolving what has been a difficult issue in Germany's international trade relations.
At this May session of GATT we were happy to welcome the accession of Israel to GATT and the association of Yugoslavia with the work of the contracting parties. This will not only strengthen our own trade relations with Yugoslavia and the new state of Israel, but also provides evidence of a continuing and increasing interest among trading countries in this agreement.
We have continued to pay close attention to our trade relations with the countries of Latin America. A Canadian observer attended these recent meetings of the economic commission for Latin America, which were held in Panama. Canada also joined in the work of the coffee study group set up last year in Washington. This organization is of particular interest to a number of Latin American countries which depend on exports of coffee for a large proportion of their foreign exchange earnings. We also had an opportunity within GATT to consult and co-operate with representatives of Latin American countries

on a range of problems including proposals to achieve an expansion of world trade in agricultural products. We have customarily bought close to twice as much as we sell in our trade with Latin American countries. Last year our export sales to the area declined in the face of import restrictions, which many of these countries were forced to impose as their exchange earnings declined in a period of world recession. Now that international economic conditions are improving we look forward to the removal of these restrictions and to a substantial improvement in our trade with this important group of countries.
In the Far East, markets for Canadian goods are important for such products as wheat, coarse grains and industrial materials. In this area Japan is by far the most important trading partner. Our exports to Japan and to most of the other Far Eastern countries declined during 1958, reflecting the effects of the world recession. The outlook this year, however, is for improved business projects in Japan and elsewhere in the region.
There has been very little change in the level or distribution of Canadian trade with Middle Eastern countries despite the political changes which occurred in that region. Traditionally, Canadian crude oil imports from the Middle East result in a trade surplus for that area with Canada. Middle Eastern prosperity stemming from oil production and exports is reflected in a demand for Canadian durable consumer goods, basic foods and industrial materials. Opportunities seem to be open for Canadians to develop this market. There has not been any change in the framework of our commercial relations with Middle East or Far East countries.
The department's annual report reviewed some of the more important developments in the field of international commodity conferences and agreements during 1958. Early this year an important lead and zinc conference was held under the auspices of the United Nations in New York. On May 18 I tabled the report of this conference and indicated that there is now some prospect that world production and consumption of lead and zinc will be brought closer into balance.
It is premature to suggest that our lead and zinc industries are out of difficulties. There is presently a substantial surplus of idle production capacity in various countries. Stocks are large. However, it seems that the corner may have been turned. There is a downward trend of producers' stocks in the United States apparent from the most recent figures. It is to be hoped that these developments will encourage the United States government and
Supply-Trade and Commerce other governments similarly affected to resist pressure for increased protection for their domestic producers.


The Acting Chairman (Mr. McCleave):: regret to inform the Minister of Trade and Commerce, but his time has expired.


Mr. Mcllrailh:: Carry on.


Robert Jardine McCleave: Is
it the wish of the committee that he continue?


Some hon. Members:: Agreed.


Gordon Minto Churchill: Thank you, Mr. Chairman. In April Canada ratified the international sugar agreement. A number of signatory countries have yet to complete ratification formalities and the deadline has consequently been extended until October of this year.
In the international tin council there have been some favourable developments of benefit to commonwealth and other producing countries. At the request of the council the U.S.S.R. has agreed to reduce its exports of tin to western countries during 1959. Russian exports have been depressing world market prices and this new development will have a stabilizing effect.
At its meeting in February the council was able to increase export quotas permitted under the agreement to producing countries. Canada and other countries participating in the agreement have removed import controls on tin imposed in 1958, also as a result of the understanding reached with the U.S.S.R.
Another important development in the international commodity field was the successful negotiation of a new wheat agreement which will run from August 1 of this year until July 31, 1962. There is now a resolution on the order paper for ratification of the new agreement and I expect to give the house a detailed statement when this item is called. For the present I will only point out that the new agreement has the full support of all farm organizations in western Canada and has been signed by all the nine exporting countries and by 26 importing countries. Under the new arrangements a larger proportion of the world trade in wheat will come under the agreement and new administrative facilities will be established for intergovernmental consultation on wheat production and marketing policies.
The administration of Canada's foreign aid programs is the responsibility of the department's economic and technical assistance branch, formerly the international economic and technical co-operation branch.
During the first six months of this year foreign aid programs have been expanded. Colombo plan funds have been increased from $35 million to $50 million and are

Supply-Trade and Commerce earmarked primarily for capital aid to underdeveloped countries in southeast Asia. As in previous years a large proportion of the total funds has been set aside for aid to India and Pakistan for specific development projects, ranging from cobalt beam therapy installations to hydroelectric projects, and for commodities, such as wheat, nonferrous metals and fertilizers. This continues the pattern of last year and reflects the continuing urgent need for development in industry and agriculture in Pakistan and India.
The level of assistance to other Colombo plan countries is being generally maintained, and in the case of Malaya increased. The Mekong river development project, which will benefit Laos, Viet Nam, Cambodia and Thailand, is in an early stage of preparation, and over the next two years $1.3 million of our Colombo plan funds will be channelled into this undertaking. A further amount of approximately $200,000 will be spent in financing the Colombo plan medical book scheme, which will make available to individual universities in southeast Asia a supply of up to date medical texts and works of reference.
In the second year of the Canada-West Indies assistance program, $2.1 million have been allotted from the $10 million fund to be spent over the 5-year duration of this scheme. Much of this money will be used to pay for the initial stages of constructing the two ships which Canada will present to the West Indies Federation.
The Canada-Ghana assistance program is being expanded this year to include all commonwealth regions which have not until now benefited from Canadian bilateral aid; compared with last year's allocation of $135,000 an amount of $500,000 is required in 1959 to finance the larger scheme, which will be known as the commonwealth technical assistance program.
Our expanded foreign aid activities are also taking the form of increased technical assistance. Since January 1, 1959 we have sent five more technical experts to Colombo plan countries, and three new advisers to Ghana. Meanwhile 52 trainees have been brought to Canada for specialized technical instruction under bilateral aid programs. In the first five months of this year the cost of these endeavours amounted to over $232,000. Canada has also co-operated with such multilateral aid agencies as UNTAA and UNESCO by recruiting five technical experts for overseas service and providing facilities for a further 79 trainees.
Finally, an entirely novel aid program which was foreshadowed at last September's Montreal conference is taking shape largely

on Canadian initiative. This is the commonwealth scholarship scheme. The objective here is to provide 1,000 scholarships to deserving students in the commonwealth. Canada has undertaken to provide for 250 of these scholarships at an annual cost of about $1 million. The scheme will be a major topic of discussion at next month's commonwealth education conference at Oxford, England, and will go into effect in the fall of 1960.
At this point, Mr. Chairman, I should like to pay tribute to the Canadian business community. Our expanding trade and economic opportunities are not the result of physical resources alone. In the final analysis it is individual businessmen who translate ideas and opportunities into transactions and who take the risks and the consequences required under our free enterprise system. In an economy as heavily dependent on foreign trade as ours the high standard of living we enjoy is to a very great extent a measure of the enterprise and efficiency of Canadian businessmen.
Over the past year, I have met with hundreds of individual businessmen and have participated in many meetings of trade associations. My officials are constantly in touch with manufacturers and exporters. They visit businessmen in their plants; they participate in study groups and meetings organized by trade associations; they receive company officials in the department in Ottawa; and they provide a commercial intelligence service to businessmen which is unequalled by any other country. We value this regular contact highly. No new initiative is taken in the trade policy field, no new trade offices established or trade fair planned without consultation with our exporters.
It is, of course, not always possible to adopt all the suggestions we receive from industry. There are often conflicting interests within the business community itself or among the various sectors of the economy. On occasions we are asked to do things which do not fall within the jurisdiction of the federal government. The department, however, welcomes suggestions and representations from Canadian business and ensures that these views receive serious attention.
The two trade fairs sponsored by the department in the West Indies in January, February and March of this year are good examples of how this close liaison with exporters works to the advantage of our foreign trade. Officers of the department meet regularly with businessmen and trade associations interested in foreign trade fairs and when it became clear that the situation in the

West Indies was favourable for the development of increased trade with Canada, arrangements were immediately put in hand in co-operation with all interested exporters to present Canadian trade shows in Kingston, Jamaica, and Port-of-Spain, Trinidad.
Ninety-three Canadian firms exhibited at Kingston and 118 at Port-of-Spain. Over 166,000 West Indians visited our pavilions to view Canadian goods and to meet Canadian exporters, bankers and provincial and federal trade officials. As a result, many thousands of dollars of new export business was developed and many new friends made for Canada in this rapidly emerging sister nation within the commonwealth.
These trade fairs in the West Indies were two of the 28 separate events the department had in hand this year. The business community is convinced that participation in trade fairs abroad will lead to the development of new markets and our program is being stepped up in response.
I have mentioned our trade fair program as one example of co-operation between the Department of Trade and Commerce and the business community which has contributed to the expansion of our trade. There are, of course, many other areas of the department's activity in which this co-operation is proving invaluable. Our trade commissioners abroad are providing exporters with a growing flow of information on commercial possibilities and they in turn receive each day suggestions from Canadian businessmen about new products for which markets may well be developed. Our trade negotiators consult with industry before every international conference. As a result, they proceed with a clear understanding of exporters' interests.
There is on the order paper, Mr. Chairman, a further example of co-operation and consultation between government and industry to be found in the bill to amend the Export Credits Insurance Act. Through the amendments that the government is proposing new credit facilities will be provided in order to enable Canadian exporters to compete on even terms with exporters from other countries when they are competitive in other respects. These amendments, if passed by parliament, will enable the Export Credit Insurance Corporation, when authorized by the governor in council, to provide direct guarantees to lenders on approved export transactions. The amendments will also authorize the corporation to buy, sell and make loans on guaranteed export paper. The government's proposal has the strong support of the business community. I cited that as an example of our interest in the attempts to expand the export trade of Canada.
66968-9-329
Supply-Trade and Commerce
I have now reached the conclusion of my remarks. It is impossible, without taking much more time, to cover all the activities of such a wide-ranging department as that of trade and commerce; but through the annual report which has been expanded this year I think hon. members will have an opportunity to see how extensive the work of this department is and to see its ramifications throughout the world. During the course of the discussion of the estimates we shall be able to assess the work of the department during the last year and consider the program for the coming year.


Lester Bowles Pearson: Mr. Chairman, the committee has listened with interest, I know, to the comprehensive statement of the minister on this extremely important matter. As I rise to speak at this time I do not feel that I shall be able to cover on this occasion all the points he has raised or indeed all the points that I may wish to deal with. As I will not myself be able to be here at eight o'clock, I shall make some preliminary observations now and perhaps will have an opportunity later of contributing to the discussion. Particularly, Mr. Chairman, I do not wish to repeat-and I am sure the committee does not wish to hear-observations from this side of the chamber on the general economic and trade picture of the country, a subject which was rather exhaustively covered by the budget debate. However, the minister has given an optimistic picture of the economic and trade situation. He has shown that the economy, during the year he covered in his statement, has given indications of strength, recovery and resilience and that there has been economic improvement both nationally and internationally. Certainly for Canada the two things go together.
Naturally we on this side of the chamber as Canadians welcome any indication of this strenghtening of the economic and trade situation in the country. We must welcome every move that is being made in that direction. As I have said, the minister has given an optimistic picture. It is an optimism which is based on the favourable evidence that he has been able to muster, a great deal of which appears in the annual report. He has mentioned how things like consumer spending and inventory accumulation held up and have made their contribution to that which he has called national expansion but which I think more realistically could be termed national recovery from recession. Expansion has not taken place but recovery has to some extent taken place. Of course, recovery is a necessary foundation, I admit, if expansion is to take place.
On the basis of the evidence that he has submitted the minister talks about national

Supply-Trade and Commerce expansion and compares what he calls international expansion with what has happened in the years prior to 1958. He refers then to the world recession from which we are nationally recovering and expanding. In his statement he has made it quite clear that in this recovery which we must all hope will be the foundation for expansion, nevertheless our dependence on international developments is as great as it ever has been. We cannot escape that particular hostage which we in this country have given to fortune. In that dependence on international conditions it is clearer than ever that our economic and trade relationship with the United States plays a most vital part. If this country has ever been economically dependent on the United States and United States conditions-and of course it has always been dependent to some extent-I suggest that dependence now-and I think the figures will show this, notwithstanding the varied nature of our international trade-is perhaps greater than it has been at any other time.
I do not know how we will escape this. I am not asking at this stage whether it is desirable or not to escape it, but I know that the minister and his colleagues in former years pointed out in no uncertain terms and with great vehemence the danger to Canada because of this economic dependence. It was a danger to Canada's political and national development generally because of the undue importance of our commercial and trade relationships with one country, a country so close to us in every way as is the United States.
We now have all the detailed information concerning the Canadian balance of international payments for the first quarter of 1959, and the minister has made reference to it in his statement. That information reveals that while there are forces of recovery at work, as I have mentioned, there are also weak points in the economy. There are some dangers and difficulties ahead, and just as the minister has emphasized the bright side of the picture, it is our right and our duty to point out some of the difficulties and dangers which, if they are not met and dealt with in so far as any national government can do so, will impede and hinder these forces of recovery which are at work.
A dominion bureau of statistics publication of June 18, 1959, the Daily Bulletin of that date, gives some indication of the nature of these difficulties and dangers, and what I mean when I talk about the serious side of the economic situation. Here are some of the headlines from that particular bulletin for the first quarter of 1959. We had during that quarter a current deficit of $450 million in


goods and services with other countries, compared with $282 million and $427 million, respectively, for the first quarters of 1958 and 1957. Indeed, Mr. Chairman, the current deficit is the highest in our history for this particular period of the year. I recall what my hon. friends opposite used to say about deficits of this kind and the threat that they involved to our economy and stability.
During this period there was a rise of nine per cent in the value of merchandise imports, to which the minister has given his own interpretation, which along with a slight drop, a very slight drop, in the export total had the effect of producing a trade deficit of $188 million in the first quarter of 1959, compared with $63 million deficit in 1958. It is just about three times the deficit for the same period last year. The deficit from non-merchandise transactions continued to rise and reached $262 million, compared with $219 million in 1958, $201 million in 1957, and $176 million in 1956.
The current account deficit with the United States-and we used to hear so much about the danger to this country from increasing deficits with the United States-rose from $320 million in 1958 to $428 million in 1959; but at the same time the surplus with the United Kingdom continued at about $12 million. This deficit was compensated, as indeed it had been compensated in the past when it occurred, by a net movement of foreign capital into Canada, the main supplier being the United States of America. We have been informed more than once in the past of the difficulties which involve our country in this type of influx of capital to such a great extent from one source, the United States of America.
Mr. Chairman, last year I recall the minister making quite a virtue out of the fact that the deficit with the United States had been reduced. We pointed out to the minister at that time that indeed that was the case, but it was the case because the imports had gone down faster than the exports, and that was not the right way to reduce a deficit. Nevertheless the minister felt that was an encouraging feature in the situation, the reduction of the deficit. This year the minister admits, of course, that the deficit with the United States has increased, but he gets a different kind of encouragement out of that. The minister says that it is due to the fact that business expansion has developed and we are importing more than we used to from the United States, and if the deficit has increased it is encouraging because of the nature of the increase. In other words, it is impossible to make the minister anything but

optimistic with regard to trade figures. If the deficit is reduced it is a virtue; if it is increased it is a virtue.
Here is another bureau of statistics Daily Bulletin, dated June 23 which gives detailed information on imports during the first quarter of 1959 and which has a bearing on some of these developments which I have mentioned. Let us see what these figures show. The United States and the United Kingdom were the respective sources of 71.8 per cent and 8.8 per cent of Canadian imports during that first quarter. There is certainly no indication of any trade diversion in those figures. In relation to that famous diversion proposal or policy about which we used to hear so much, but not so much now, it is interesting to note the following changes in our import trade in 1959 as compared with 1958.
The minister said a few minutes ago, if I recollect it correctly, that the increase in our imports was spread over the whole field of foreign trade. But the figures in the report to which I am referring do not indicate that, because imports from the United States during this period rose by almost four per cent while imports from the United Kingdom-and remember it was the policy of the government to divert imports from the United States to the United Kingdom-during this same period declined by about six per cent. Therefore it does not seem to me, Mr. Chairman, that this policy of trade diversion is working out very successfully. As I have already said in the house, it seems to me to be working in reverse.
I wonder what there is to show for this trade mission of a year and a half ago to the United Kingdom. What is there to show for this pilgrimage to the United Kingdom which was conducted with so much publicity and great expense, the purpose of which was to increase British exports to Canada, or to increase our imports from the United Kingdom, and reduce them from the United States? It is true that imports from the commonwealth exclusive of the United Kingdom did rise by about five per cent. It is also true that our imports from Europe rose by more than 22 per cent, and from Latin America by three per cent. But the real diversion has not been the diversion we heard so much about a year and a half ago or so; it has been the opposite to that. We are importing less from the United Kingdom and more from the United States.
Let us look at the figures for exports about which the hon. gentleman had something to say. The same dominion bureau of statistics bulletin published on June 19 contains information on our export trade in May and for the first five months of 1959. The minister 66968-9-329i
Supply-Trade and Commerce maintained that our export trade in a period of what he called world recession had held up remarkably well in 1958. That is true in the sense that the figures were just about the same. There was a very slight decrease, but the figures were just about the same as they were a year before. But that is not good enough for a country such as Canada which depends so much on the export trade. Exports must increase every year or we are going to be in trouble in this country, and the nature of our export trade in 1958 shows that we would have been in serious trouble at that time had it not been for three things. The development of our uranium exports under an agreement concluded in 1956 to the point where uranium is now our most important mineral export figures for which this year may reach $300 million, was one thing that held our exports up. Exports of cattle were something else, and our exports of aircraft under NATO arrangements and under the Colombo plan, which were not strictly speaking exports but were gifts or transfers, also helped. Had it not been for these particular items we would have been in a serious situation last year with regard to exports.
In comparison with last year, when there was no increase over 1957, our exports in May were down by more than 10 per cent and they declined by about 3 per cent in the first five months. This is partly explained, as I think the minister mentioned, by the fact that last year there were exceptionally large deliveries of aircraft to Germany and a rather high volume of financed exports but, nevertheless, it represents a situation which must cause a certain anxiety, whatever the reason may be.
Both in May and during the first five months our exports to the United States increased, but our exports to the rest of the world, including the United Kingdom, declined. As a result, in the first five months of 1958, 58.1 per cent of our exports went to the United States as compared to 62.5 per cent in 1959. Our eggs are more and more concentrated in only one basket, this United States basket, and the danger of this kind of concentration should be very apparent to members of the government who talked so much about it when they were on this side of the house.
These statistics which I have quoted-and they are the latest available-show that we are now experiencing the highest deficit in goods and services with other countries in our history, and that our export trade on the basis of the first five months is declining. We join the minister in the hope that that decline will be arrested during the rest of the year, but at the present time we are

Supply-Trade and Commerce faced with this decline and we are becoming more and more dependent on the United States with respect to our trade arrangements. Our imports are rapidly increasing and that increase comes from all countries in the world except the United Kingdom, but again mainly from the United States. Our net imports of capital are also increasing, and I suggest the committee will want to give serious attention to the policy implications of this particular picture, and we shall want to hear more from the minister as this discussion goes on about the trade policy of the government in this respect.
Perhaps at this time I might mention one thing which, as the minister knows, is a matter of immediate and great importance, and I have asked him a good many questions about it in the house. In the light of these decreasing figures for exports it becomes all the more important-indeed, it becomes a matter of the most vital significance-to make the necessary arrangements with the United States government to continue its imports of uranium from Canada once the present treaty arrangement lapses. The minister has been to Washington to discuss this matter with the United States government. He spent a day there a couple of months ago, I think, but I suggest to him that the importance of this matter justifies the most formal and the most impressive representations that can be made to the United States government at the highest possible level.
I am very familiar with the background of this particular arrangement because I had something to do with its negotiation, and I remember that at that time the United States said: "Go ahead and develop every pound of uranium you have in Canada; it is vital to our security and to the security of the free world and to your own security; commercial considerations must take second place; we need this; the supply is not equal to our demand; this is a matter of first importance, to develop these fields in Canada; we will help you; we will make this contract with you; we will do anything necessary; we will see that you get a good price for it, so go ahead."
Canadian producers went ahead and made a very good arrangement for the longest term possible, namely five years, with an option to continue this contract at the end of the five-year period. If it should happen- and I certainly hope it does not happen; it seems to me there is no reason why it should happen-at the end of this period that the United States authorities should come along and say: now we have a lot of uranium of our own-and they have got a lot of uranium- we have developed our own fields during


these five years; we have our own political problems and we have our own economic problems; we have had to take care of our own interests and our own producers; and while we have been very happy to have your uranium during the past five years we do not need it now, it would be an intolerable position and one that could not be accepted by any Canadian government.
Yet the time is coming when the Canadian producers will have to know whether in fact arrangements of this kind can be made to continue the conditions under which they are operating and I think it would be a great relief to them if they could be told before the end of this year. There have been suggestions made in the United States by officials-and I hope they are not well founded-that it may be difficult to continue the present arrangement with Canadian producers. I hope that not only will the government give this matter the attention it deserves on the highest diplomatic level but that before long it will be able to make an announcement that a specific arrangement has been made with the United States. If continental defence means anything at all-* and, of course, it does mean something-it means that some consideration has to be given to the economic and industrial aspects of defence on a continental basis as well as to the strategic aspect and if there was ever an important economic and industrial aspect of defence it is the supply of uranium for defence purposes.
There is no doubt in my mind that the long term prospects for uranium production in Canada are good, and I think this will be the view of all hon. members. The world is going to need this commodity. But there may be a difficult period between the end of this contract and the development of new uses for uranium for industrial purposes, a period which would be very difficult indeed if the United States decided not to take into full consideration the position of Canadian producers. I sincerely hope that this will not happen and I certainly hope it will be a major policy of the government to see that it does not happen because it involves export trade this year, as I have said, of some $300 million.
It is not possible, Mr. Chairman, to talk about the importance of our export trade in any of its aspects without at the same time referring to our import policies because we are not going to be able to develop our export trade unless we can make satisfactory arrangements with our customers for a reasonable import of goods from those countries into Canada. I thought of this the other day when the Minister of Finance

made an announcement regarding a voluntary arrangement which had been made with the Japanese government for the reduction of certain imports into this country from Japan. I certainly appreciate the problem involved in the importing into this country of goods with which it is difficult, if not impossible, for Canadian producers to compete because of the conditions under which these goods are manufactured in the country of origin. When competition is not fair, then, of course, the government has to take steps to meet unfairness of competition and protect and help Canadian producers.
But I should like to point out that we shall have to be especially careful in the steps we take in respect of a customer which already buys three or four times as much from Canada as it sells to Canada. I do not have the exact figures but I think it is about that proportion. I am talking about Japan now. The Toronto Globe and Mail will not be accused of being a paper which is unfair to our manufacturers or unduly starry-eyed about free trade, and in the issue of June 22 it had this to say in an editorial:
Considering the fact that Japan buys far more from Canada than it sells to Canada, the Japanese government is most obliging when it agrees, at the Canadian government's request, to curtail Japanese exports to Canada.
The editorial goes on to say:
The steps taken to restrict imports will undoubtedly help those industries which have been hurt by them, and in that respect the government's policy will reach its goal. But it is a very limited role, and one which in being achieved may do considerably more harm than good. There is much more to this question than mere protectionism.
The final paragraph reads in part as follows:
We are more concerned, apparently, with the effect on our domestic producers of imported Japanese underwear than with the catastrophe looming over the Pacific horizon.
What was meant by that, and it is a very good illustration of the interrelation of politics and economics, was that if Japan is driven from or discouraged from entering the markets of the west she will find her own markets on the continent of China because there will be no alternative, and if Japan begins to build up a trading relationship with continental China because she is denied it by the west that relationship may have political results which would be very unfortunate indeed for the west.
The minister had something to say about the development of the European common market, the development toward European integration. I was glad he spoke about this because I do not know of anything more important that has taken place in the economic and, indeed, perhaps almost in the political
Supply-Trade and Commerce sphere at the present time. It is true that in the last dozen years we in this country and other free governments have worked out our multilateral trading relationships quite satisfactorily and on the whole successfully through GATT, and I think GATT has performed a most useful function in those years in the removal of restrictions and the building up of multilateral relationships.
But while GATT in recent years has been retained as a general framework, the conditions under which GATT was formed in the earlier years are changing and I think it is becoming more and more apparent now that perhaps a new look will have to be taken at this whole idea of international trade and the basis on which it should rest. The practical operation of GATT has become increasingly altered by the domestic policies of many countries and many of those countries who are members of GATT and who pay lip service to its arrangements are beginning- some of them have more than begun-to base their trading policies on more restrictive arrangements than those of GATT.
The sterling area has been maintained as an important trading group. The United States continues to be a vast and relatively isolated trading area. The Sino-soviet bloc is rapidly expanding as a trading area and the European common market, which was not considered when GATT was formed, is becoming a reality, a reality which I think on more than economic grounds we should welcome provided it is brought about in the right way.
Then, only recently the Latin American countries have initiated discussions about the possibility of forming some kind of economic union of Latin America, and world trade therefore is increasingly becoming dominated by economic giants and economic trading blocs. In the intermediate period at least we may expect a further extension of extranational systems of pooled currencies, customs unions and large scale bilateralism and perhaps even a more limited application rather than a wider application of the multilateralism as envisaged in GATT.
No country stands to be affected more by this development than Canada. It is still, of course, too early to say what will happen to world trade within this new context and to those countries like Canada whose prosperity, whose independence, whose economic stability, depend to such a large extent on an expanding multilateralism. This contrary evolution, presents serious potential dangers which should be considered most carefully by any Canadian government.
For instance, the establishment of a common market in Europe, to which the minister has made reference, will undoubtedly produce benefits both economic and political, I



S180 HOUSE OF

[Stage Direction]
Supply-Trade and Commerce hope, but it may also bring new difficulties for world trade and even for the maintenance of the western alliance. What I mean when I say that is simply this. If this European movement takes place without some kind of association with North America we will have an economic trading area in Europe increasingly divorced from a North American trading area, let us say at present from the United States. If that happens the effect will be political as well as economic on the Atlantic alliance, and if we do have this kind of European development which has not been able to make arrangements with the United States, what is the position of Canada going to be at a time when the continental aspects of security are also becoming increasingly important in the United States as opposed to the Atlantic aspects? If somehow the European development cannot become an Atlantic development, and I have said this many times, Canada will probably have to make one of the most difficult choices in her history and, as I ventured to say this morning, not only is this important for Canada politically but it is going to be very important for Canada economically because this new European development promises to become one of the major trading areas in the world. It is already increasing its percentage of world trade while North America's percentage is going down.
Because of the memories, experience, devastation, destruction, poverty and distress after the war, we are accustomed to think of Europe as still being a kind of distressed area. Perhaps that is too complacent a view, as the figures which I put on the record this morning would seem to indicate. Therefore I suggest that there can be no more important aspect of trade policy at the present time than the conversion of the European free trade area into an Atlantic freer trade area. The common market has begun to work out its own difficulties but the European free trade area, which it was hoped would evolve from the common market, is not making very much progress.
But, as the minister pointed out in his statement, those countries which are now in Europe outside the common market are beginning to consider forming another European common market. In the discussions which have just been held in the last few weeks-I think they were held in Stockholm-there was a good deal of support given to the idea of building up this other European area, which would include the United Kingdom if the present common market could not be expanded into a free trade area. If this is done,
[Mr. Pearson.l
[Stage Direction]
what will be the relationship of the United Kingdom in that market to her commonwealth trading relationships?
Perhaps the minister has noticed this, as I have, in reading British weeklies such as the Economist and the Times. High officials of the British government are now willing to consider the position of the United Kingdom in that kind of European organization and the relationship of that position to their commonwealth trading obligations. Therefore, this is a matter not only of economics but of very considerable political importance. Also, Mr. Chairman, if this European movement is developed, and if it develops in the right way through the removal of trade barriers against those outside the arrangement, then surely it is not too soon for the Canadian government perhaps to take the lead in trying to work out arrangement by which the United States and Canada can be associated with these developments.
You have the European common market. They are now discussing over there a second common market which might join the other into a European free trade area. The time has come to try to expand the discussion at least of these arrangements to an Atlantic basis. And if, as we are so often told these days, the real problem ahead of us in our relations with the countries behind the iron curtain, the Sino-soviet bloc, is going to be more economic than political, if the danger to us is economic as much as it is political, then on political as well as on economic grounds it becomes a matter of the first importance to build up the European into the Atlantic area.
There are some other things I should like to talk about arising out of the minister's statement, but perhaps, since it is almost six o'clock, I will reserve my observations on this until a later stage in the debate.
Charles Edward Rea: Shall we call it
six o'clock?


Lester Bowles Pearson: No.


George James McIlraith: Mr. Chairman, there is an unfortunate circumstance in connection with the discussion of these estimates that perhaps is just one of those things that nothing can be done about at this stage and it is this. The committee concerned with the operations of the wheat board and the board of grain commissioners reports is sitting at the same time as the committee of the whole house is discussing these estimates. It means a duplication of demands on the same members who are interested in being in both places at the same time. I would hope that another year it will be possible to arrange the programming of the committee's sittings and of the sittings of the committee of the whole house on the estimates a little more

conveniently so that that can be avoided. I know the difficulties this particular year in detailing the arrangements and I am therefore not objecting to the agriculture committee sitting today while these estimates are before the house.
There are many general remarks which could be made because the subject of trade is so wide ranging and perhaps if I sought to deal with one or two of the matters of policy on which we are seeking to get clarification at this stage of the estimates that is on the first item of the department's estimates, it would be a more orderly way of proceeding.
I should like to raise for further discussion from the minister the subject of trade with the West Indies; that is, something fuller by way of report as to what progress has been made in the development of the trade relationship with the West Indies area since the estimates were before the committee one year ago. In particular, I should like the minister to elaborate on our relative position in that market. I fear that in the development of the federation and the economic development going on in that area, which we hope will continue and accelerate, Canada may be in danger of not holding its relative position and developing the potential of trade in that area to its maximum possibilities.
The trade in that area is particularly important to Canada to a degree more than is indicated in terms of dollars because of the nature of the products which we exchange; that is the products we import from that country seem to supplement the products we produce here to a greater degree than is true of most of the trading areas.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
George James McIlraith: Mr. Chairman, another
reason why the trade with the West Indies has extraordinary significance for Canada beyond the number of dollars indicated in the figures, important as that aspect of it is, is that the products the West Indies take from Canada come largely from the Atlantic region where the problem of finding markets for their output is undoubtedly more severe than in many other parts of the country. This trade, therefore, has abnormal significance to that area.
There is a great deal of capital development going on in the West Indies and I have the impression-I should like the minister to comment on this-that the capital development
Supply-Trade and Commerce going on as a result of enterprise supplied from outside the area is not being contributed to by Canada to as large an extent as we would wish. I believe that some of our competitors in that market may be supplying a larger porportion of the capital development than their trade with the area would warrant. If we are not supplying our proportionate part, this would ultimately tend to result in a lessening of our trade with the area, that is a lessening of our proportion of the trade with the area.
I dealt with this subject at some length a year ago on a private member's motion which I put on the order paper. At that time I indicated my criticism of the government for having disposed of the Canadian National steamships and, in that way, having impaired shipping to the area at a time when the federation was just in the process of being formed. I thought that was a wrong action for the government to have taken, although I was quite willing to concede that there was some difficulty in carrying on that shipping and that a subsidy was required. I then went on to deal with trade agreements and tariff matters. I fear that the tariff aspect of that discussion became overdeveloped because tariffs are not the main barriers to trade with the area. The tariffs are relatively low. The difficulties seem to arise from other sources, one of them of course being that the federated area has no customs union within itself. There are different duties applicable to each part. In addition, they do not have control of their own currency and this makes things more difficult.
I should like to hear the minister's report on any discussions he has had with the United Kingdom on the subject of trade with the West Indies, and particularly the currency aspect of the matter. When one considers what a tremendous achievement the development of Canada's own currency was some 100 years ago one can fully appreciate that it is a somewhat restricting force when an area like the West Indies does not have control over its own currency. I do not want to discuss matters that are internal to that area and are not our concern here, but I do hope that the area is able to solve these problems that are peculiarly within its own control or should be within its own control in a way that will help them develop their economy. I hope when that comes along we will be able to develop our trade with the area to our mutual advantage. I am one of those who attaches a great deal of importance to the control of the currency in the area so far as it affects our trading relations. I would hope that the minister would take every proper opportunity he can to

Supply-Trade and Commerce discuss this aspect of trade relations, particularly with the United Kingdom government, to the end that we can enlarge the volume of trade in that part of the world.
Another matter with which I wanted to deal at this stage of the estimates is our trade with Japan. The trade figures, as I have them here, show the imports from Japan in 1957 at $61,604,000 and the exports from Canada to Japan in that year at $139,151,000; in 1958, imports from Japan, $70,215,000; exports to Japan, $104,890,000; for the first three months of the current year imports from Japan amounted to $21,468,000 and exports for that period amounted to $27,175,000. It is interesting that the main export seems to be barley, as I recall. I believe in the year 1958 the barley exports to Japan amounted to something of the order of $62 million in value, a very large part of the total exports. I should think that the members from western Canada would be particularly interested in this particular trade with Japan.
The Minister of Finance made an announcement to the house on June 19 concerning the suspension of certain exports from Japan to Canada. His statement is found at page 4927 of Hansard of that date. I shall not read it, but there is a sentence or two which might help me make my point. The minister was referring to the representations made to the Canadian government by certain manufacturers in Canada on the subject of the damage being done to their industries by imports from Japan. I am very well aware of that and I do not wish anything in my remarks to underestimate the importance of looking after that matter.
The point I want to discuss is that the minister went on then to say that the Canadian government, following these representations from the Canadian manufacturers, had made representations to the Japanese government. I will quote him precisely as follows:
Accordingly discussions were undertaken with the representatives of the Japanese government in Ottawa and Tokyo, in the course of which the views of the Canadian government were communicated to them. Within recent days I have held discussions with the Japanese ambassador which gave me the opportunity to state the Canadian position. This meeting was followed up by meetings between senior officials of the Canadian government and representatives of the Japanese government.
We were informed only last night of the decision of the Japanese government respecting the suspension of the issuance of new export licences.
Then he goes on from there. What concerns me is this. The figures of trade with that area, and particularly our exports to Japan, show that the exports are very much larger than our imports from Japan. There is a very substantial imbalance of trade between


our country and Japan. They show further that our exports to Japan decreased sharply from 1957 when they were some $139 million in value to 1958 when they dropped to $104 million in value. The first thing I should like the minister to do is to explain that drop in our exports to Japan. I suspect that one of the factors-and I think he will agree with this statement-was the shortage of dollars that the Japanese had with which to buy our goods. That factor poses a real problem because, as our western friends will be very quick to remind us, it is extremely important that we retain that market for the export of the many products we ship there. I took barley by way of illustration for Japan is much our biggest market for barley. I should therefore like the minister to deal with that problem.
Then I want the minister to deal more fully with the whole subject. The Minister of Finance, in making the announcement to the house, very appropriately confined himself to a statement of the bare facts but I should like the minister to elaborate on this somewhat difficult subject very fully so that we will know what the policy of the government is with respect to the trade in this particular area.
I have spoken only of the trade significance of it. My leader this afternoon, in speaking about this same subject, made reference to other aspects of the matter that are of tremendous importance to the welfare of this country and to our future in this country, aspects that are even more important than the trade aspect. However, I want to confine my remarks at the moment to the trade aspect.
This statement of the Minister of Finance is fairly factual and fairly blunt, if I may say so. I should like to know from the minister just what representations were made to the Japanese government. This statement, as it stands in Hansard, almost looks as though fairly firm pressure was applied or fairly firm representations were made as to what would be done. My point in raising that matter is this. I hope that we are not embarking on any program of undue force or improper force, if I may use that term, in our position in these matters. While I believe in great firmness, I do not believe in threats of any kind or anything of that nature. I am not saying that the statement of the Minister of Finance contained that implication but I am saying that the subject requires further elaboration and development.
Then the matter of the treaty with Japan, the rights we have under the treaty and so on, should be developed. There is, of course, the whole aspect of the matter of protecting our industries in Canada that may be unduly

hurt by products coming in that are priced below what is a fair and reasonable price and so on. I am not unmindful of that problem in discussing the trade aspect of the matter but it is a very severe thing to have exports to one country drop by a third in one year. There probably is some explanation for this but as the figures stand, that is what they show. It is something that I hope the government will keep in mind and that I hope the minister will deal with at some length.
Then there is one other matter with which I should like to deal. The minister this afternoon in his statement, as I recall it, in speaking about the * expansion of the economy, of the increase in imports this current year, about exports and the deficit on merchant trade being wider than it was last year as I noted his remarks, said this among other things:
Looking at shifts in the geographic pattern of Canada's trade so far this year, it is noteworthy that sales to the United States have been increasing. On the other hand, the increase in Canada's imports has been shared by all major trading areas.
What I should like him to clarify a bit for me is this. The figures of sales to the United States, as I have them, show that there was a decline of some $425 million in exports to that country last year and that exports to that country are up some $30 million in the first four months of this current year but that in the first three months of the current year they were down. I think the figures support this statement. I have the statistical summaries here if the minister wants them but I think they support that statement. The May figure is not distributed yet, but from what the minister says I assume it may also be up. The point I want to make on that matter is this. If the minister is taking a one-month period only as the factor to indicate a change in direction or trend, his statement is surely straining the desire to be optimistic a bit too far. If you have three months in which there is a decline in the trade and then in the fourth month you have an increase, surely it is hardly a fair way in which to leave the matter just to say that sales to the United States have been increasing. It is true as far as it goes if you take last month as an example, but surely that is not a fair way of presenting trade figures to the house. I for one certainly do not want to read into any such short term figures as that a long term trend. I think it is just not a realistic way in which to handle this subject, because exports can vary quite sharply from month to month as the minister well knows. If you pick out any one month, I suppose you could prove almost anything
Supply-Trade and Commerce from the statistics. I wish the minister would elaborate a bit more on that point. Then in the next sentence he went on to say this:
On the other hand, the increase in Canada's imports has been shared by all major trading areas.
I have the figures for the imports from the United Kingdom, a very important customer indeed. As I read the figures for 1957 our imports for consumption from the United Kingdom amounted to $521,957,000 and for 1958, $526,650,000 or in other words an increase in imports from the United Kingdom of $5 million in the year 1958 over the year 1957. But when I come to the year 1959 I find that the imports from the United Kingdom for the first three months of 1958 had been some $116,170,000 in value and for the first three months of 1959, some $108,872,000. In other words, there is a decline in imports in the first quarter of this year over the comparable period for last year of some $7.4 million or something of that order. On the other hand, the statement that the increase in Canada's imports has been shared by all major trading areas seems to require some further explanation, because the United Kingdom is a very important trading area and it is not sufficient to have a generalization like that when we remember that one of the problems in trade with the United Kingdom is that we have a substantial surplus of exports over imports from that country. In addition, and I think this is fair comment, the minister and his colleagues made a great deal of how they were going to lessen that differential in trade with the United Kingdom; they talked a great deal about that. They were going to divert some of the imports from the United States to the United Kingdom, and so on. But that problem has not been met, and indeed any figures available, for example the figures used some months ago when the government talked about how they had succeeded in effecting that situation, when analysed show that what happened was a lessening of the differential in trade by reduced exports from Canada to the United Kingdom. Therefore I would like to have that item explained a little more fully.
Then there is a further matter I would like to speak about, and that is the whole problem of the export of farm surpluses as it relates to trade. In other words, I am not seeking to reopen the discussion we had with the Minister of Agriculture about farm incomes and that sort of thing. What I want to deal with tonight are the implications of that policy carried out by the government of disposing of farm surpluses at considerably below their cost; the taxpayers buy them from the farmers and then they are sold in the export

Supply-Trade and Commerce market at a very much lower price. It will be recalled that on March 6 of this year, as appears at page 1720 of Hansard, I asked a question about the sale of eggs to Venezuela by the Canadian government since December 1, 1958, their price, and so on. The answer I received, which I can summarize, shows that the Canadian government was adopting a policy of buying eggs at 44 cents per dozen, grade A large, Montreal, and had sold these eggs, in this particular case to Venezuela, at from 5 cents to 16 cents per dozen below that price, and there may have been additional costs involved too. That will indicate-


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


George James McIlraith: Yes.


Clifford Silas Smallwood: Has the hon. member any proof that they were grade A eggs which were being sold?


George James McIlraith: I only have the statement of the Minister of Agriculture. He stated that was the basis of the price paid, and I would not want to quarrel with the word of the Minister of Agriculture on this occasion. I certainly do not think it would be fitting for me to do so; the hon. member may do so if he wishes.
Then on April 13 I asked a further question on this same subject, which appears at page 2652 of Hansard. The question concerned certain agricultural products being purchased by the government and sold abroad. I will just pick out one or two of the items to illustrate my point. We were buying powdered skim milk at a price up to May 1, 1958- perhaps I should give the figures for the whole period-of from 12 cents to 17 cents per pound and we were selling that product to a great number of countries at as low as 3.15 cents per pound; in other words, something of the order of a quarter of the price we paid for it. That sale was presumably ,on a feed basis, though the answer does not say so in so many words. However, the point I want to make here is this, that we have embarked upon a policy of using the public -revenues of this country to buy these farm products and then to sell them on the foreign markets at very much below the cost to the taxpayers.
Mr. Chairman, there are two or three implications of that, and I can find no statement of policy from the government on the trade aspects of the subject. It must be pointed cut that in shipping products like this to countries like Denmark, we are in fact subsidizing competitors in certain of the other markets of the world to the detriment of our own product. We have lost some of the markets in the United Kingdom for agricultural

products because our prices are already too high. But the government is now subsidizing a competitor who has taken over most of the market, or a large part of it to compete against our product, our product being, as I say, already too highly priced. It seems to me that is not a reasonable way of meeting the difficulty which we have in Canada of keeping the farmers' incomes sufficiently high. This so-called solution is not a solution at all.


Charles Edward Rea: I am sorry; I must inform the hon. member his time has expired.


Mr. Broome:: Mr, Chairman, we have been reminded that Canada is dependent on foreign trade to perhaps a greater degree than any other nation. I have seen figures which state that one job out of every five is dependent on foreign trade. As far as British Columbia is concerned, I believe the figure would be one out of four, and this figure would be higher for the prairie provinces. So the economy of western Canada is even more dependent upon export trade than that of eastern Canada.
We are particularly interested in promoting an increased trade with the United Kingdom, because the products of western Canada are more or less complementary to products produced in the United States. The United States market represents a large and most important market to us but it represents products which the United States domestic producer can also produce and with whom we must compete to sell in that market. The sterling area, however, represents not a limitless market but a market which could be developed to a far higher degree than it is today if our trade pattern could be so increased or if our trade volume between the sterling area and Canada could be increased so that we could take advantage of that market.
The British Columbia lumber manufacturers association, the British Columbia fisheries council-all our primary producers- have made numerous representations along these lines. We believe more could be done in that way to promote the sale of United Kingdom products in Canada. For instance, I happen to know that in the engineering field a British manufacturer who wishes to enter this market is told that service must be of such and such a standard, that his design must be in conformity with the United States standards in the form of screw threads, pipe sizes and so on and that there must be good delivery. I should like the committee to know that many a United Kingdom manufacturer has come over to this country and been able to fulfil all those requirements yet he still does not get

any business even with a low price because our technical people know the United States product and they do not know the United Kingdom product.
It will be said that this is a matter of salesmanship, and it is, but even after the manufacturer has gone to a lot of expense and trouble he is still in an inferior position visa-vis his United States competition because they are entrenched in the market, their product has been accepted and there is a bias toward that product in many cases because of the control of the company and the policy of that particular company. I know of many instances where equivalent United Kingdom producers were low bidders but because instructions had been received by the firm concerned that they were not to buy that equipment, the bid was not accepted. I think the same process takes place, though not as a result of instructions, with regard to government purchases because I know of examples where, because the engineers in the field were familiar with the United States product, that product has been supplied for some reason or another in place of a competing United Kingdom product even though the United Kingdom product has been acceptable and in use in this country for a good many years. So I say that a program of education is required in the lower echelon of even our own civil service in the way of training to carry out the policy of the government in achieving a widely diversified and multi-lateral trading program.
I have here some newspaper clippings which might illustrate some of the troubles we run into, because these clippings have to do with selling in the United States and buying from the United States.
The second major market is the United Kingdom but I have a clipping from the Vancouver Province of May 12 in which it states "Low Canadian Tender Shakes U.S. Bidders" and continues:
The offer of a Canadian firm to build eight hydraulic turbines for the Big Bend dam in South Dakota for 30 per cent less than the lowest U.S. bidder has American electrical industry leaders deeply concerned.
Now the "Buy American" act does allow United States firms a 12 per cent price advantage over their competition, but the thing that shook the United States firms was the fact that these turbines were not going to be made in Switzerland or the United Kingdom but in Canada where our manufacturing costs are comparable with those in the United States and it could not be claimed that this price advantage would be a product of low wages.
Supply-Trade and Commerce
And then in the Financial Post of May 16 under the heading "Inglis Expects Big U.S. Order", one paragraph says:
A Liberal member said in Ottawa this week that the bid had been rejected, and suggested that the U.S. had violated its production-sharing arrangements with Canada.
Then on May 30 there is a long story on the same subject. As far as I know, a decision has not yet been made but it is the office of civilian and defence mobilization which will be making the decision on this matter and the only reason this office has authority to reject a low bid would be in the interest of national security.
The other clipping I have is from the Globe and Mail of June 2 and it is headed: "Mayor Irked but TTC Sticks to U.S.-Made Buses". This article says that the TTC bought General Motors buses at a much higher price than Canadian buses because it believed they were better buses and felt they would be better value. The moral of this story, to me, is this. We are a small industrial nation with a wide open free market here, yet the industrial giant of the world, the United States, must have protection against us. I think there is a job to be done in opening up the United States market, not just for Canadian primary products and semi-processed goods such as pulp, minerals, asbestos and newsprint, but for our manufactured goods. I suggest that some of the troubles which our manufacturers have in reaching the United States market are artificial ones such as a hodgepodge of U.S. customs regulations particularly against manufactured goods. Everybody remembers the case of the ping pong balls being classified as ammunition, but the fact is that the Canadian exporter to the U.S. is under a liability which may extend up to seven years for any extra duty which may be suffered from reclassification. I believe it is possible for our manufacturers to enter the United States market to a far greater degree if they are given the opportunity.
Then, of course, there is the final barrier in that so much of our manufacturing industry is controlled from the United States and they are not going to have their Canadian subsidiaries competing with their own plants within the United States. But there is a United States market there which can be developed and which will help to make that bigger trade pie we are trying to develop by means of greater imports from the United Kingdom and greater exports to that country, and greater sales to the United States because, after all, we are running a deficit with the United States of about $1 billion a year and there is certainly room

Supply-Trade and Commerce in that area for the United States to buy much more from us. Then, of course, there is our own Canadian market. I was interested in a paragraph in Industry, a publication put out I believe by the Canadian Manufacturers' Association, and in one paragraph it said:
In 1957, despite our position as one of the leading manufacturing nations of the world, we imported, fully finished manufactured goods to the tune of $262 for every man, woman and child in the country. By comparison the British figure was $48 and the U.S. a mere $28.
We have within our own country a large market which could be supplied by Canadian manufacturers at, I suggest, no increase in price to the Canadian consumer. I suggest we might improve our position by developing our own internal trade and also by widening the range of our multilateral trading program and, in that regard, devising some way of operating a massive export credit program for dealing with nations such as Brazil and other South American countries who operate almost on a barter basis.
I think we can continue to increase our trade and build it to the point where it will provide more employment and greater prosperity in the country than today.
With regard to the rather belittling attitude taken by the opposition as to our export trade last year when the level was just about the same as the preceding year, the highest figure on record, I was interested to note in a trade publication that United States export trade had fallen by some 12 per cent, I believe. Having in mind the comparison between the performance of Canada and that of the United States and the fact that we maintained an export volume equal to the highest level in the history of this country in a year of recession, I think this is a tribute to the work of the department and a tribute to the minister.


Hubert Badanai: Mr. Chairman, the former minister of trade and commerce, the Right Hon. C. D. Howe, led several delegations to various countries and with remarkable success. At the recent Atlantic congress held in London one of the major objectives of the NATO alliance was emphasized to be the promotion of trade within the European community. I wish to read a couple of paragraphs from one of the resolutions dealing with the subject of trade.
The aims and interests of the North Atlantic community will be best served by ensuring the maximum possible freedom of trade and stability of prices and exchanges. Governments should regard further progress toward freedom of trade and currencies as a major and urgent objective of economic policy. Governments, while recognizing that during this process they may have to resort to temporary expedience, should not take measures which involve a return to restrictionism.

The question I wish to ask the minister is this and I hope he will be able to hear me. Does the minister intend to visit the countries of the European community for the express purpose of stimulating trade with these countries and does the government intend to give consideration to a complete study of international trade? It appears to me that the government should regard further progress toward greater freedom of trade as a major and urgent objective of economic policy for the government of Canada. I sincerely trust that the minister will give due consideration to these proposals and that I will have an answer from him.


Mr. Jones:: Mr. Chairman, I should like to bring to the attention of the committee certain problems which vitally affect not only my own constituency of Saskatoon but also other centres in Canada which at present have similar problems that affect their economic growth, the development of their commercial potentials and the expansion of their abilities in the field of trade.
Agreed charges and competitive rates are growing at a fast rate in western Canada as a whole but they are naturally being applied to those movements where alternative forms of transport offer serious competition to the railways. Saskatoon is too far from the west coast to share the advantages of sea transport via Vancouver, which has brought about some relief in freight rates in British Columbia and Alberta. Rail competition through the United States has led to some agreed charges for centres near the international border but Saskatoon is too far north to benefit from these.
The only effective competition with the railways as far as Saskatoon is concerned is highway transportation and load limits on the highways in the province of Saskatchewan are so low as to prevent this being an effective force. Cities on the trans-Canada highway to the south and others in Alberta and Manitoba where weight limits are higher have benefited considerably from agreed charges resulting from highway competition. Thus, while agreed charges are rapidly bringing lower transport costs to western Canada as a whole, Saskatoon is not sharing these benefits because it is poorly placed for service from competing forms of transport.
The development of agreed charges and competitive rates has operated to the disadvantage of Saskatoon in that most other major cities in western Canada have received a competitive advantage in the form of lower transport costs. Already this means that both producers and consumers in Saskatoon face higher costs than in other prairie cities, but its most important impact is on the future development of our city.

Saskatoon is naturally situated so as to become a major centre for the planned development of mineral resources in the northern part of the province. The existing freight rate differentials between Regina and Saskatoon for movements to and from eastern Canada and the west coast mean that any industry locating in Saskatoon faces severe disadvantages vis-a-vis locating, for example, in Regina. Thus, while geographic and economic consideration would naturally lead to the rapid development of Saskatoon as a manufacturing centre, the present freight rate structure is a severe handicap which threatens to slow down the development of Saskatoon and with it the prosperity of the whole of the province and, indeed, the success of plans to develop the northern areas will be handicapped with the handicapping of Saskatoon. This type of effect which results from a system of agreed and competitive charges is most undesirable from our viewpoint.
It was not intended originally and it certainly was not foreseen but it does none the less suggest that a critical reappraisal of the whole system of competitive freight rates is urgently needed. This problem, which is a very real one as far as Saskatoon is concerned, is repeated in other centres throughout Canada facing similar difficulties. An industrial centre does not benefit from low cost highway transportation until it is developed to a considerable extent unless it happens to lie on an existing route. It does not benefit from agreed charges until it has effective competition, and thus the development of new centres on which we rely so much for the expansion of the Canadian economy, particularly in the north, is hampered by the fact that the present freight rate structure gives substantial competitive advantages to existing industrial centres.
It is argued that the basis of agreed charges is sound and it is also argued that there are sound reasons against extending the lower rates of agreed charges to all movements, including those where no effective competition exists. Perhaps both these arguments taken independently could be used to justify the lower charges for most centres and the higher charges for Saskatoon respectively, but I do not agree. When they are used together to justify the existing differential they are unsound as further considerations become important. Professor Winch of the University of Saskatchewan has given a hypothetical example of this situation. He says:
A new industrial plant planning to develop mineral resources is considering its location. Unless it can pay its full costs, including transport costs, it is not a sound proposition ... If rail were the only means of transport and rail rates were consistent on a mileage basis, geographic and other considerations would dictate that it settle in Saskatoon. But if it settles in Regina it would have
Supply-Trade and Commerce
the advantage of lower highway transport costs. It is therefore offered an agreed charge for Regina but not for Saskatoon. It settles in Regina and ships by rail. The net effect is that the industry uses rail transport whether it settles in Saskatoon or Regina, and on the basis of rail and other costs Saskatoon is the preferable location. Yet the industry is forced into locating in Regina because of the existence of highway transport which it will never use. Clearly there is something wrong with a railway system which brings this about, and it is typical of the distortion which the present system will inflict on the rapid industrial development planned for Canada in the future.
The solution is to recognize that the principle of agreed charges is sound, but that it has much wider application than is at present realized. The essential position in the above example is that the agreed charge for Regina is a competing form of transport with the standard rate for Saskatoon and therefore justifies an agreed charge for Saskatoon. But the future of Canada, and particularly of the prairie provinces rests on new industrial development, and the industry with the most flexible location is that which is not yet built. In other words new industrial settlement is the one problem which the present rate structure ignores, and unwittingly impedes, yet it is one vital to the future economy of Saskatchewan, and indeed to the whole of Canada. One of the most important undesirable effects is that of industrial location, and this effect constitutes a severe problem for the whole future of the city of Saskatoon.
I must say that in this connection I am indebted to the board of trade of the city of Saskatoon, the Saskatoon Star-Phoenix and Professor D. M. Winch of the University of Saskatchewan and others who have put effort, time and research into the exposition of this particular problem.
I should like also to refer briefly to another aspect of the trading problem of the west. Here I refer to the use of the port of Churchill as a port for the western provinces. The Hudson bay route association in their annual presentation to the cabinet this spring advocated increased grain storage in the port of Churchill. They suggested on different occasions that increasing the storage facilities there by five million bushels would be of real assistance in the development of this port. They have suggested that more loading berths are necessary. The suggestion they make is that perhaps three more berths are necessary in addition to the ones already located at Churchill. They point out that two only would be required if at least one tie-up wharf for advanced customs inspection was otherwise granted.
There is the problem of the right to ship grain and potash through Churchill from C.P.R. points. Saskatoon has a rapidly developing industry in the industry of potash production. Saskatoon has now come to be rightly called the potash centre of the world. The potash deposits around Saskatoon and in the province of Saskatchewan as a whole are extensive; the markets for potash are very considerable. In order to aid in the
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Supply-Trade and Commerce further expansion of this potash industry it is necessary that consideration be given to making a proper reduction in freight charges through the port of Churchill over the railway in order that the potash producing companies may sell their products in the southern states, for example, and in South America, using the port of Churchill, the Hudson bay railway and the maritime transportation facilities. I am assured that were suitable freight rates granted on the railway, potash from Saskatoon could be placed in the southern United States, using maritime transportation facilities from Churchill, at a competitive rate with United States potash.
I will not deal at this time with the grain car demurrage rates at Churchill except to say that so far as that phase of this particular problem affects the rates at the opening of the season they should be made to equate with those rates charged at Fort William. By the suggestions that I have mentioned tonight the economy of the city of Saskatoon, the surrounding area and the economy of the province as a whole could be significantly and materially improved.


Harold Edward Winch: Mr. Chairman, we all realize the importance of export trade to our Canadian economy. I think we all realize that export trade does not come to Canada automatically. In the majority of cases it is essential for the companies of our country and for the government of this country to put on a selling campaign. In view of the present situation in the export field and the growing need for expanding trade for Canada, I sometimes wonder whether the minister or any of the officials of his department have any knowledge of the number of companies in Canada, in particular the large companies of Canada, which have not and are not now putting on any selling campaign and are not trying to get markets outside of Canada because of the fact that they are controlled by parent companies in other countries, and are not permitted, because of that control, to have the temerity to seek markets outside the borders of Canada. I need not make reference at all to the incident of over a year ago where a Canadian car manufacturer was not allowed to sell to the southeast Asian market because of control by a foreign company. We all remember that very well. Of more recent date, we all remember the situation in which the Aluminum Company of Canada declined to make a sale to China, not because they did not have the authority but because they did not want to take a chance of antagonizing their market in the United States in any way.
Now, as a result of incidents of that nature I think it is a reasonable question to ask


how far policies of this type extend to the detriment of Canadian companies and, of necessity therefore, to the detriment of fuller employment in this country. About three years ago an export-import company in British Columbia was interested in finding out if a large number of companies in Canada were interested in exporting to Asian countries, so they wrote a series of letters to varying types of manufacturers across Canada. This company was surprised to receive replies, in a great many instances, not from the Canadian companies interested in these matters but from the parent companies in the United States conveying the information that the Canadian companies were not permitted to deal with production and export outside of the boundaries of Canada. This subject was dealt with wholly and solely by the parent company in the United States.
You will remember, Mr. Chairman, that when the aluminum company declined to make an export to the mainland of China I took up the matter in this house and the newspapers of our country were kind enough to make some mention of that fact. As a result of that I received a letter from this export-import company in which they told me of their experience of some 2J or 3 years ago. In this letter, which I have here, they give excerpts from the replies received from some of these companies. In order to illustrate how far-reaching this control is, I should like to give the committee a number of the excerpts from this letter. There is an excerpt from a letter from Canada Sandpapers Limited, Preston, Ontario, datel February 15, 1956, which reads as follows:
At the moment it would be impossible for us to ship any goods to China, for we are affiliated with a U.S.A. concern, and with the current U.S.A. state department policy, this precludes our shipping any goods to the iron curtain countries.
Here is an excerpt from a letter from Chain-Belt (Canada) Ltd., Willowdale, Ontario, dated February 27, 1956:
All the export business of Chain-Belt Company and Chain-Belt (Canada) Limited is carried on through our export department in Chain-Belt Company, Milwaukee, Wisconsin.
The third excerpt is from a letter from Garlock Packing Company, Pallmyra, New York, dated March 12, 1956:
This refers to your letter of March 5, addressed to our Canadian subsidiary, Toronto. As the latter does not engage in any export operation, at present our business is necessarily restricted to Hong Kong and Taiwan.
This excerpt is from a letter from Canadian Allis-Chalmers Limited, Lachine, Quebec, dated March 12, 1956:

Your offer to represent our company in China has been noted with interest. Canadian Allis-Chalmers is a wholly owned subsidiary of Ailis-Chalmers Manufacturing Company, Milwaukee, Wisconsin. All of our export negotiations are handled through Mr. P. Dietz, manager, export department, industries group, Allis-Chalmers Manufacturing Company, Milwaukee, Wisconsin.
The next letter is from United States Rubber, International, Rockefeller Centre, New York city, dated March 14, 1956:
Your letter of March 6 to Dominion Rubber Company Limited, Montreal, has been referred to me. As Dominion Rubber Company is one of our subsidiaries, we handle any export business that might be developed through Canadian organizations.
Then there is a letter from Jones & Laugh-lin Steel Corporation, New York city, dated March 22, 1956:
Your letter of March 13 addressed to our company in Toronto has been referred to this office for acknowledgment and reply, since all matters pertaining to export are handled here.
I shall just give one more example, although I have plenty more. This letter is from Johns-Manville International, New York city, dated March 29, 1956:
Your letter March 6 addressed to Canadian Johns-Manville Company Limited has been referred to this division, since all overseas matters are our responsibility.
We thank you for your offering to assist us in sales in the Chinese market but regret that we cannot accept your kind offer.
I believe, Mr. Chairman, that we in this house have a responsibility to try to find out just how widespread is this control of Canadian companies by parent companies in the United States. We should ascertain to what extent they are restricted in their desire or their potentiality for employing Canadian labour working on our Canadian resources, and their freedom to export to any market to which we have any opportunity or desire to export. I feel, Mr. Chairman, that this is not only an important matter but a very serious one. I believe that we can look upon it as a very disturbing situation. There must be some foreboding about Canadian companies, and therefore Canadian workers, being not only under the control of parent companies outside this country but also dependent upon the whims and policies of a government of another country.
I should like to ask the minister if any consideration has been given to finding out how widespread this control is with regard to exports from Canadian companies. If it is as widespread as is indicated by even the excerpts which I have placed on the record, I wonder whether any consideration is being given to establishing the necessary policy, taking the necessary steps to introduce legislation to guarantee that we have control of
Supply-Trade and Commerce our own resources, our own export policies, without domination from outside.


Douglas Mason Fisher: The fundamental source of income, Mr. Chairman, in our particular part of the world is the pulp and paper industry and the newsprint aspect of it. One of the most disturbing things about the newsprint and pulp and paper industries has been the fact that its percentage share of its main market in the United States has been going down in relation to the expansion of that market and in relation to the expansion of United States production. Since pulp and paper products are the largest single item of export trade, being much more important even than uranium that was mentioned by the Leader of the Opposition, it seems to many of us that the position in which this industry is and its trend toward having a lessened share of the United States market, and of course the world market, is perhaps the most disturbing thing on the economic horizon.
The committee on mines, forests and waters of this house was so greatly interested in this particular point that it brought before it a number of witnesses, including the president of one of the pulp and paper organizations. I refer to Mr. D. W. Ambridge, head of the Abitibi corporation. I wanted to bring to the minister's attention, if he missed it, some of the points that were made by Mr. Ambridge. I should like to qualify, before I give this point, that while I agree with this particular aspect of Mr. Ambridge's evidence there was some of it with which I disagreed. But after reviewing, through questions, the situation that he had seen in Brazil where Canadian firms were not able to compete with Swedish firms because of Swedish government facilities in dealing with Brazilian currency, Mr. Ambridge went on to say this:
The Canadians have about as much chance of selling anything in Brazil as a snowbaU in hell. You cannot do it because there are too many of these arrangements around. We have nothing like that.
Later on Mr. Payne of the committee asked him this question:
Are you in an way satisfied, even in an indirect way, that help is provided to your industry in the search for new markets, through a government agency? Is there such help or is there not?
I should like to point out that Mr. Payne is a member of the minister's party and that the very way in which he phrased the question suggests that he had some concern as to whether this help was available. Mr. Ambridge's answer was:
Not that I know of. The only thing I might name as being of help to us is that the government does provide statistics, through the commercial councillors at the various embassies, legations

Supply-Trade and Commerce
and what-have-you. I think probably we in our newsprint association have the most complete and accurate statistics of anyone in the world.
I am sure Mr. Ambridge is referring to his own product.
Most of those figures overseas come from our commercial councillors in those places. They are helping us in that way.
Mr. Payne came back:
Is there any method you might suggest by which assistance could be given of a practical nature?
I like to see this example of a Conservative member searching for ways of improving the service of this government. Mr. Ambridge came back in reply to this question and said:
I certainly think that the government should give some very serious study to the question of how we are going to finance exports, because this business of cash on the barrelhead is absolute nonsense; it is out of date. We cannot compete. We say, put the money, the American dollars, on the table before we will ship anything. That is crazy. We should certainly have some government body or-I hate to say-committee. You know what they say about a committee. They say a camel is an animal which looks as if it had been put together by a committee.
This led to our turning a bit astray and then we came back and Mr. Ambridge went on to say this:
I think the first thing to do is to get a change of attitude. I do not know who is responsible for this. However, for many years in the Canadian government, the general idea has been that we are not going to get ourselves involved, in extending credit. We are not going to get ourselves involved in barter deals. We are not going to do a damned thing, except take the money when they have it for the products they have to sell. I think that whole attitude might have been valid in the first decade after the war. Since then, it is not valid. We have to face the powerful competition all around the world and we cannot deal with it in any such primitive manner as that. It is primitive.
The business of just going to the market and selling and getting American dollars in New York, is primitive, compared to our competitors.
That is fairly strong stuff and from a free enterpriser like Mr. Ambridge it is very strong when he wants the government to get into this particular field. One of the things I notice is that when anyone ever quotes a Globe and Mail editorial in this chamber there is a tendency to say "That good friend of the government". One of the points that I am almost willing to make, following the Globe and Mail editorial policy in recent months, is that it is no longer a good friend of this government. I think this particular editorial gives an indication as to why that is the case. This is from the Globe and Mail of May 21 and it refers to what Mr. Ambridge said. It states:
The president of Abltibi Power and Paper Company, Mr. D. W. Ambridge, is the latest executive to complain about this dangerous lack of foresight.

It goes on to quote a short extract from what I have already read. Then the Globe and Mail editorial goes on to state as follows:
The government at present has no facilities for granting credit to foreign customers. The limit of its assistance is to insure the sales of Canadian exporters so that the exporters may collect up to 85 per cent of the value of the order if the buyer cannot pay. This service is handled by the Export Credits Insurance Corporation, a crown corporation which in the past five years has made a profit of $136,000.
There is nothing in this country remotely similar to the export-import bank of the United States, a government agency which for 25 years has loaned money to foreign buyers for purchases of American goods and services.
Then the editorial goes on to point out that the dominion government in those good old Liberal days was not always so aloof to this problem; that between 1945 and 1948 it extended credit worth some $750 millions. It goes on to say that that program was a courageous step. Then it goes on to lament that really this government has not done much about it and has not given any indication that it is going to get into this extremely important field. The concluding paragraph states as follows:
The important thing is to establish credit facilities now, before it is too late. They will be of no value when our customers have gone for good.
The problem of the pulp and paper industry is much larger than just a question of exports. There is the question of competition. I hope the minister will do a bit of reading on the competition we are getting from southern pine and from the increased use of hardwoods in the lake states and in the New England states. All this is leading to more and more investment and development by United States manufacturers to look after their own domestic market and our share is going down. The main point is that we still have tremendous forest resources that, on a sustained yield basis, we can exploit, but we are not getting any of that. I do not know whether the minister is aware that there are pulp and paper companies in the constituency of the hon. member for Kenora-Rainy River which for a long time have been trying to make up their mind about putting a pulp mill into the Sioux Lookout region. For some reason they always back out. These various companies have been delaying for years now. This has tended to be a pattern in the past 10 years. We are getting expansion in plant of mills that are already established but we just cannot seem to get new ones in, especially in the eastern interior and in the boreal forests where we are close to markets.
I am not suggesting this whole pattern is part of the minister's responsibility or interest. But one of the claims that is getting everyone exercised in connection with the pulp and

paper business is that this government or the federal government does not give leadership in financing or credit facilities for this industry in world markets. One of the other things they claim, of course, is that it overtaxes the industry. With all the informational sources that the Minister of Finance and Minister of Trade and Commerce have I think they should be able to come up with some suggestion that would help out this particular industry which at the present time and for many recent months has been producing below capacity.
One of the difficulties, Mr. Chairman, in ever making remarks when the estimates of the Minister of Trade and Commerce are before the committee is that he has such a wonderful capacity of sitting there and shaking his head or giving little smiles to indicate that he feels that what is being said is nonsense.


Gordon Minto Churchill: No; on the contrary. I object to that remark, Mr. Chairman. I was shaking my head on getting a report from my friend to the effect that just a few minutes previously the hon. member read into the record part of the proceedings of a committee that has not yet reported to the house and he is completely out of order. That is why I was shaking my head at it.


Douglas Mason Fisher: I wish you had raised the point.


Gordon Minto Churchill: I would have done so if I had known that the committee had not reported.


Douglas Mason Fisher: I did not realize I was out of order. I could have managed it anyway because Mr. Ambridge's words have been reported very extensively in the press and in the trade magazines. I think I could have managed it but I apologize if I have broken the rule.
One of the points I want to make more seriously than any other point I have ever made in this House of Commons is that the pulp and paper situation in Canada is extremely serious, and if this industry does not pick up our part of the country can almost figure on packing up for a while. I have not exactly a lack of confidence in the particular region, but if pulp and paper does not prosper our region does not prosper. I can point out to the minister that we have had the shipyards closed down in that particular area. The third largest airplane manufacturing plant in Canada is in danger of closing up. We just are not getting secondary industry development, even of a minor character, and if pulp and paper gets into deep trouble in the next couple
Supply-Trade and Commerce of years we will be in a situation comparable, I suppose, to some of the have-not provinces down in the eastern part of Canada. It is about time the Minister of Trade and Commerce and the Minister of Finance did some serious thinking on this particular problem, or at least gave us the assurance that the people in the industry and the unions who are crying calamity should not be crying calamity.
One of the other points I want to touch on deals with the much mooted small business aspect of this government's policy. One of the largest sources of support for this government in past elections, it seemed to me, was from many of the people in the small manufacturing businesses and I think one of the most appealing aspects the government put forward in its election campaigns was a strong indication that it would help small business. Without going into too much detail the minister has now had two years to get some kind of program under way. One of the great examples in this particular regard is the small loans administration in the United States which, not in a major way but in a minor fashion, has been doing what is considered to be very successful work in the United States for a long time. I would like the minister to confirm that it did not take the United States government two years after it got the idea to commence that particular administration. The United States government got it going very quickly and with a certain sense of urgency.
One of the prime problems in Canada today in a political sense is to try to determine whether the small type of business has a future and whether we should try to preserve it in the face of the build-up of the huge national corporations, or corporations working in a regional sense. They can very soon put small business out of the way. It often seems that small businesses in the present trend have a very bleak future. I had assumed from the stand taken by the government and the minister that it had been decided that small businesses were worthwhile and that the encouragement of small businesses and small manufacturers was very important. But so far all we have had is an indication that there is a senior official who is interested in the problem and that a certain amount of research has been done; that this bureau, or whatever it is, will be prepared to assist small business in an informational sense. But I think they want more than that.
The periodical or brochure which was put out by the department, "The Techniques of Export Trade", is an excellent thing on an informational basis. One of the things, however, which is missing in it is any indication of extended government credit facilities that

Supply-Trade and Commerce the Globe and Mail and Mr. Ambridge called for. I am sure the minister and his assistants in this small business field will be able to turn out just as good a brochure advising the small businessmen how to take care of themselves.
However, I think the minister does recognize that they want more than that. They want a loans administration for small businesses and manufacturers. I cannot see why the example of the United States has not been some encouragement to the minister, and I would like him to give us at some time during his estimates an analysis of why it has not been an encouragement to him to get into this thing. He might at the same time tell us why the example of this United States export-import bank has not been any stimulus to him. It seems to me it is one of the great ironies that the United States, which is usually considered a great free enterprise nation, should be the one that in these particular fields can give our country which has been labelled much less enterprising than the United States such leads or indications of government leadership and initiative. I would hope that in these two fields, and especially in relation to the predicament in the pulp and paper industry at the present time, we will hear more from the minister before his estimates are through.


Mr. Benidickson:: Mr. Chairman, I believe the minister has consented to allow this item to stand eventually if it appeals to the members of the committee to proceed to other individual and specific items. I want to assure the minister that on that account I am not going to ramble unduly or deal with matters which I do not think specially appropriate to this administration item. I would be very glad to deal with some of the matters we heard about today such as the diversion of trade, the United States conference in January, the 1959 capital investment intentions, of course, and a few matters of that kind. But I cannot find any other appropriate place to say a few words and ask a few questions of the minister with respect to the small business section referred to in the annual report. More than that, it was, of course, given a great deal of prominence, as the minister knows, in both the 1957 and 1958 election campaigns. I think the people of Canada have been led to believe that the government would have moved much further under a new government and something much more tangible would have been done with respect to aid to small business than we yet see either in referring to the report or in the remarks which have been made so far in this debate by the minister. In fact, I think he has made no reference to small business.

Just to indicate that I think I am on pretty sound ground in this respect in outlining what I think is the public opinion with respect to it, these are some of the strong statements which were made by the leader of the Conservative party in 1957 and 1958. I have here some quotations from the Prime Minister. In the last election he said that only minor tax concessions had been made; but he indicated there would be greater assistance. We know that the recent budget actually increased taxes rather than reduced them. Then at Cornwall on February 24, 1958, he said that small business was crucified by the Liberal policy of tight money. I do not need to elaborate on that, but that surely gives even the small group in this chamber tonight a fairly good opportunity for a hearty laugh. Then in starting this campaign at Campbell-ton, New Brunswick, on May 4, 1957 he said:
We intend to do something to assist small business in this country. They find themselves today caught, irretrievably caught, in a situation where they cannot survive.
That was more than two years ago.
We believe the time has come to provide very much alter the fashion of the federal government of the United States.
About six months after this government took office the United States government very considerably widened the availability of loans to small businesses in that country; that is about 18 months ago. I would hope that before we pass the item the Minister of Trade and Commerce will tell us what progress has been made with this particular small business section that has been set up in his department with much fanfare and flurry. May I say that I thought the assistant deputy minister appointed to take charge of this section was very quick to make public policy statements after assuming office, statements which, I thought, should more properly have come from the minister or from the government. But I have watched the papers carefully since, and a number of months have elapsed during which there has been a singular silence about the activities of this particular section, and I hope we shall hear more about it now.


George James McIlraith: Mr. Chairman, when I was speaking earlier this afternoon the elapse of time allocated to me interrupted a point I was seeking to make concerning the sale of surplus farm products in the export markets of the world at prices well below the cost to the Canadian taxpayer, and I referred the hon. gentleman to two answers to questions given in Hansard indicating particular sales by way of example. One of the sales to which I referred at the point of time when my argument was curtailed was the problem which arose in connection with the export of surplus dried skim milk for feed

purposes to Denmark at a price of the order of something like one-fifth of its cost to the Canadian taxpayer, and I pointed out that one of the implications, in a trade way, of that kind of action was that we were directly subsidizing a competitor in a market in which we were seeking to sell, and I referred particularly to the United Kingdom market.
Now I want to make further reference to another question and answer as it appears in Hansard of June 22, 1959, at page 4993. In reply to a question of mine addressed to the Minister of Agriculture concerning the sale of surplus canned pork by the Canadian government to Czechoslovakia, the minister confirmed that there had been such a sale, and I will read part of his answer:
We have been negotiating with several European countries for some time in an effort to dispose of some of the surplus pork which the stabilization board has held, and particularly from the point of view of attempting to get back into the European market, as far as pork and other agricultural products are concerned.
Then the minister went on to explain that there had been a sale of some 2,200,000 pounds, and he referred to it as being in the nature of a trial shipment and expressed the hope that we should be able to sell in constantly increasing quantities pork and other agricultural products in the European market.
That is a hope which I think everyone will wish to see fulfilled, but what I want to make clear is this: the implications of this policy are manifold. With regard to the example I have just quoted, the minister did not state the price at which the pork was sold, but I understand from outside publications that it represented a loss of the order of nine cents or slightly more a pound. I have not been able to verify that figure as yet, and the minister can correct me if it is wrong. At any rate, on this one product alone there is a surplus of canned and frozen pork of the order of 100 million pounds at the present time, so the loss to the taxpayer would be of the order of $10 million if the figure I have given is correct or substantially correct. That, indeed, is an important item when we bear in mind that we already have a substantial budgetary deficit. So there is this implication of the loss to the taxpayer. And the matter does not end there.
There has been a great deal of debate in this house on the question of the budgetary and financial policy of the government, and I do not wish to enter upon this argument during a discussion of these estimates, but I would point out that one cause of increasing the interest rate in this country is, undoubtedly, the large deficit. This kind of policy contributes to that deficit, and the
Supply-Trade and Commerce deficit, in turn, contributes to increasing interest rates which makes it harder for exporters, manufacturers and producers who are engaged in the export trade to borrow money. It makes it more costly for them to develop their export business, and this in turn increases the cost of our exports and makes it harder for them to compete. In other words, the effect of this policy of disposing of surplus farm products as far as the export market is concerned is to take us in a vicious circle in which, in some cases, the continuation of such policy for these exports tends to destroy the possibility of continuing our normal exports.
There is yet another aspect of the matter. We have had some reason to complain about the farm surplus disposal policy of the United States because we felt that they have been interfering with our markets, and always in earlier years when we made complaints of this kind, we were able to argue with considerable force and put forward a very strong case. We ourselves are now dumping the surplus farm products on world markets at below cost and doing the very things of which we were complaining with regard to the operations of another country. For these reasons I should like the minister to deal fully with this subject and explain the precise nature of our policy in so far as it concerns the disposal of these products outside Canada. I have sought in putting this forward to confine my remarks to the trade aspects of this matter. I appreciate, of course, the attempt which is being made to keep up the level of farm incomes, but I suggest that this is not the best way in which farm incomes can be supported and that there are other ways of dealing with the farm income aspect of the problem.
There is one other question I wish to direct to the minister. His colleague the Minister of Agriculture, in giving the answer to which I have referred, spoke of using this shipment as an attempt to get back into the European market as far as pork and other agricultural products are concerned, and then he spoke of this being in the nature of a trial shipment. I should like to ask the minister if he would elaborate on that part of the answer by telling the committee precisely what is being done and what the government has in mind in its effort to get back into the European markets for agricultural products. Are we to seek to get into those markets by having the Canadian taxpayer subsidize these exports? Is that the new attempt that is being made, or the new policy? If not, what is the policy and on what lines is the government endeavouring to work it out?

Supply-Trade and Commerce
The market prices of these various products in the European market would seem to indicate that our agricultural products are much higher in price than those coming from other competitive areas. We have only to refer to the comparative prices of New Zealand dairy products and our own in the London market and the comparative prices of Danish bacon and our own in the London market. Would the minister indicate to the house just what this new policy was to which the Minister of Agriculture referred and how is it to be carried out? Does it involve a new principle of subsidizing exports, which we have not embarked on hitherto and which even in this case was only an incidental by-product of what happened with 1'egard to the particular transaction? Just what is involved in the matter?


Charles Edward Rea: Is there any further discussion on item 380?


George James McIlraith: Is the minister not going to answer some of the points raised?


Gordon Minto Churchill: In view of the fact that we have arranged to let item 380 stand in order that the hon. member for Assiniboia may speak on it when he returns, I think it might be wiser for me to make the complete answer to the others who have spoken after he has finished his remarks some time next week rather than to attempt to answer in the short space of time available tonight. I would only be able to answer in part some of the questions that have been asked. If there has been a full discussion of the first item I hope we may be able to move on and pass some of the other items.


George James McIlraith: I have no objection to moving on. There may be a question about trade with Italy that I hope the minister will deal with when he is making his further remarks. There appears to be a considerable drop in our exports to Italy and I would ask the minister to deal with that when he makes his remarks on this item later. In other words, I do not want to preclude the subject matter of the first item from the subsequent discussion. With that understanding I am quite agreeable to moving on.
t The Deputy Chairman: As I understand it, it is the desire of the committee that item 380, which is nominally known as the first item, be allowed to stand and that we continue with the other items.


Some hon. Members:: Agreed.
Item stands.
Trade commissioner service-
381.	Administration and operation, $3,747,293.


George James McIlraith: Would the minister deal briefly with the increase in this item?


William Moore Benidickson: There is a slight increase in money and in staff too.


Gordon Minto Churchill: This has to do with the trade commissioner service. The increase amounts to $277,366 and the increase in the staff is seven.


William Moore Benidickson: Is there any significant addition to the countries we are represented in or is that for the first year of change handled by the unallocated item that is shown on page 476?


Gordon Minto Churchill: An office was opened in Ankara and we anticipate other new positions during the course of this year and have made allowance therefor.


George James McIlraith: Were any offices closed?


Gordon Minto Churchill: No, no offices have been closed.


George James McIlraith: Would the minister give consideration to increasing the service in the United States with a view to seeking the sale of more of our manufactured products in that country?


Gordon Minto Churchill: That is a good point which is really worthy of consideration. We have seven offices there now. I had the pleasure of visiting the one at New York, the one at Chicago and the one at Boston during the last year or so and I was very much impressed with the work that is being done by our trade commissioner service in these places. I also talked to the other trade commissioners stationed elsewhere in the United States. They have been doing some very impressive work in interesting Americans in Canada and in purchasing from Canada.
Just a little while ago I was at the trade fair we held in Boston. It was a good trade fair, was well attended and the exhibits by Canadian businessmen were very good. Last fall I attended a meeting at Chicago organized by the Canadian-American committee of the chamber of commerce of that city. There was a large attendance and a great deal of interest in the problems affecting trade between our two countries. It is noteworthy that that area of the United States is the greatest importer of goods from Canada and the largest exporter, by areas in the United States, to Canada. It is also the area from which a great deal of capital has flowed into Canada and from which subsidiaries have been set up in our country. I found it s very stimulating and interesting experience. I was encouraged by that activity and by the work of our officials in Chicago in getting Americans interested in our country. The results of that work show in a place like Chicago where there has been intense activity as between our two countries.

The trade fair at Boston and the other work being done there will be helpful too. Other areas of the United States that are not as close to Canada naturally have not been affected to the same extent.
My hon. friend's suggestion that we might perhaps extend our trade commissioner service in the United States is something that is well worth considering because trade between our two countries is developing and we want to do everything in our power to encourage the import into the United States of Canadian manufactured products as well as the raw materials which are going there now. I thank the hon. member for drawing the attention of the committee to that particular aspect.


George James McIlraith: Because many Canadian manufacturing companies are comparatively small they are not aware of the export potential that is possibly available to them. If they could obtain an export market in addition to the market they supply at the present time in Canada, it would tend to permit them to lower their costs. I would feel that is particularly true of exports to the United States in a way that it is possibly not true of exports to certain other foreign countries because many Canadian companies are not large enough to have the facilities for handling normal export trade, but could handle export trade to the United States because of similar trade practices. These smaller firms just have not got the facilities and are not thinking about export, and the trade commissioner service may be able to assist them to increase our exports to the United States if we give more attention at this time to extending their activities, whether by opening new offices in additional areas of the United States or supporting the present offices with expanded services and staff.
This is well worth following up rather closely because, it seems to me, our exporters have a constant problem of operating in a comparatively high cost economy. It is going to be a continuing problem and anything that can be done to get export markets for many of these manufacturing companies not only will be a good thing from the point of view of the business involved but it will be a good thing in that it may help such manufacturers to lower costs both to Canadian consumers and for the export market.


[Stage Direction]
Item agreed to.
382.	Construction or acquisition of buildings, land, equipment and furnishings, $222,000.
George James McIlraith: Will the minister explain the increase in this item?
Supply-Trade and Commerce


Gordon Minto Churchill: The increase is $61,000. This vote, of course, is for the purpose of providing homes for trade commissioners who are living in areas where in some instances the climate is difficult and in other instances other types of accommodation cannot be rented. Each year an assessment is carried out as to whether or not it is proper to purchase a piece of property or to continue to pay rent. The question of supplying motor cars comes under this item as well. It is rather a modest item, I think. In the long run, where we have been able to purchase rather than to continue to pay out rent, it has been proved to be quite satisfactory.


George James McIlraith: I had rather direct experience with this particular matter in 1952. It occurred to me that the department was losing a great deal of the efficiency of its staff through lack of proper accommodation in some of the areas of the world where health conditions are not as good as they might be and accommodation is rather difficult to obtain even although for health reasons it is more necessary than in other parts of the world.
I am very glad to see this policy of acquiring properties in such areas is being continued by the present government. I do not know that it is proper for me to name the particular country I had reference to. On that occasion the situation was simply that the trade commissioners and their families were in a state of ill health owing to lack of proper accommodation, bearing in mind the climatic conditions in that area. Can the minister tell us in what countries properties are being acquired.


Gordon Minto Churchill: The committee will be interested in this. We own houses in these locations: Accra, Kingston, Singapore, and two in Tokyo. Then there are houses which are leased and furnished by the department, two in Bombay, one in Colombo, one in Copenhagen, one in Jakarta, one in Hong Kong, one in Karachi, one in Leopoldville and two in New Delhi. Consideration is being given to purchasing accommodation in Teheran and in Paris but that may not occur until next year.


William Moore Benidickson: The minister made reference to automobiles acquired by foreign service officers which would be paid for out of this item. Is there a standing regulation with respect to using Canadian manufactured automobiles?


Gordon Minto Churchill: Yes, that is quite right, Canadian manufactured cars.


[Stage Direction]
Item agreed to.
[Stage Direction]
Business of the House
383.	Exhibitions branch, $790,592.
George James McIlraith: Will the minister indicate the activities of the exhibition branch this year?


Gordon Minto Churchill: Mr. Chairman, the committee has been very co-operative. 1 will be quite content if the clock appears to you to represent ten o'clock.
Resolutions adopted in committee of supply this day reported and concurred in.



BUSINESS OF THE HOUSE

George James McIlraith: Will the acting house leader indicate the business of the house for Monday?


Gordon Minto Churchill: Yes, Mr. Speaker. There will be a slight change from the announcement made last night. Last night the house leader indicated that the business for Monday and Tuesday would be four items which are the responsibility of the Minister of Justice. It now appears that the Minister of Justice will be unavoidably absent after the noon hour on Monday. In consultation with him I therefore suggest to the house that the order of business will commence with item No. 1 on today's order paper, Bill No. C-57, respecting the superannuation of members of the Royal Canadian Mounted Police.
The second item will be item No. 8 on today's order paper, Bill No. C-58, to amend the Criminal Code. I might say that the Minister of Justice will be present until one o'clock on Monday and these might be taken before his departure. The third item would be item No. 11 on today's order paper, the second reading of Bill No. S-24, respecting the testing, inspection and sale of seeds; item No. 4 would be item No. 14 on today's order paper, the resolution in the name of the Minister of Agriculture with regard to crop insurance; item No. 5 would be item No. 16 on today's order paper, the resolution in the name of the Minister of Agriculture with regard to mortgage credit to farmers under the Canadian Farm Loan Act; then No. 17 on the order paper dealing with amendments to the Coal Production Assistance Act, a resolution under the Minister of Mines and Technical Surveys. Then, if that business happens to be completed, we would go on, as item No. 7, with Bill No. S-20, to amend the Length and Mass Units Act; then, second reading of Bill No. S-21, to amend the Weights and Measures Act. Those are rather small bills, and as a standby, item No. 10 on today's order paper, an act to amend the Export Credits Insurance Act.


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

[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:

[Stage Direction]
Question 463-Mr. McWilliam:
1.	Did the government sell their properties in Charlotte county, New Brunswick, known as Camp Utopia and Pennfield airport?
2.	If so, who purchased these properties and what was the purchase price in each case?
Answer by:	Hon. Raymond O'Hurley
(Minister of Defence Production):
1.	Yes.
2.	The government of the province of New Brunswick has purchased the camp Utopia property for $90,000.
An offer of $26,300 from the same government for the Pennfield airport property has been accepted by Crown Assets Disposal Corporation subject to the approval of the governor in council.
[The following items were passed in committee of supply]:

[Stage Direction]
Headquarters administration and national police services-
362.	Operation and maintenance, $6,270,114.
363.	Construction or acquisition of buildings, works, land and equipment, $282,515.
Supply-Items Passed
Land, air and training divisions-
364.	Operation and maintenance, $35,227,872.
365. Construction or acquisition of buildings, works, land and equipment, $5,826,605.
Marine services-
366.	Operation and maintenance, $1,633,618.
367. Construction or acquisition of buildings, works, land and equipment, $427,022.
368.	Grant to the Canadian association of chiefs of police, $500.
369.	Grant to the Royal Canadian Mounted Police veterans' association, $300.
Pension and other benefits-
370.	Pensions to families of members of the mounted police who have lost their lives while on duty, as detailed in the estimates, $15,162.
371.	Government's contribution to the Royal Canadian Mounted Police pension account, $1,432,171.
Land, air and training divisions-
578.	Operation and maintenance-further amount required, $189,100.
Marine services-
579.	Operation and maintenance-further amount required, $64,480.
580.	Construction or acquisition of buildings,
works, land and	equipment-further	amount
required, $21,000.
Pensions and other benefits-
581.	Government's contribution to the Royal Canadian Mounted Police pension account-further amount required, $16,792.

[Stage Direction]
Trade commissioner service-
381.	Administration and operation, $3,747,293.
382.	Construction or acquisition of buildings, land, equipment and furnishings, $222,000.
[Stage Direction]

Monday, June 29, 1959