1959-04-28

EXTERNAL AFFAIRS


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, on April 17 I made a statement about the forthcoming food for peace conference and stated that a little later I would place before the house the composition of the Canadian delegation.
This ministerial meeting will take place in Washington on the 4th and 5th of May and the Canadian government will be represented by the Minister of Trade and Commerce and the Minister of Agriculture. The delegation will also include Mr. McNamara, chief commissioner of the wheat board, and government officials from the departments of trade and commerce, finance, agriculture and external affairs, as well as from the Canadian embassy in Washington.
The chairman of the Canadian delegation to the meeting of officials which is now taking place in Washington is Mr. G. R. Paterson, chief of the agricultural and fisheries branch of the Department of Trade and Commerce, who will be assisted by officials of the departments concerned, the wheat board and the Canadian embassy in Washington.



GERMANY


John George Diefenbaker: Mr. Speaker, on April 22 I gave the house an account of the stage that had been reached in the preparations by the four western powers for the negotiations with the Soviet union which are to commence in Geneva on May 11. I mentioned on that occasion that a committee of experts from the United States, the United Kingdom, France and West Germany was engaged in compiling draft proposals for the western side. That work has been completed.
Yesterday in the United Kingdom House of Commons the foreign secretary, Mr. Lloyd, gave an account of the hopes and expectations for the Geneva meeting. It is apparent from a reading of his speech that as yet it has not been found possible to go
into detail about the exact negotiating position of the western countries. However, Mr. Lloyd was able to say enough to show that the United Kingdom, in its thinking on the problems to be examined in Geneva, is following much the same viewpoint as that expressed on behalf of the Canadian government. We have been aware of the similarity of our views as a result of discussions with the United Kingdom Prime Minister and Mr. Lloyd when they were in Ottawa recently.
Specifically, the Canadian government is associated in public, as it has already been in private, with the United Kingdom belief in the need for real negotiations, and we give complete support to the three major aims which Mr. Lloyd set forth. The western powers should try to achieve some progress first toward the reunification of Germany on acceptable terms. Canada reaffirms the right of the people of West Berlin to choose their own system of society along with satisfactory arrangements for free access to that city. As well, there should be a reduction in tension and an improvement of stability in Europe.
These three aims represent in general the viewpoint expressed by Mr. Lloyd. There are formidable difficulties in the way of achieving them. It may turn out that the foreign ministers' conference at Geneva and the summit meeting which it is expected will follow may be but the beginning of a series of consultations with the Soviet union on these vital problems. That in itself would be an advance. As the western foreign ministers are about to begin the final preparations I think the house would want me to assure them that they have the full understanding of this house and of the Canadian people in the task that faces them.



NOVA SCOTIA


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Minister of Mines and Technical Surveys. Would the minister tell the house whether he saw the premier of Nova Scotia yesterday, and whether he has anything to say about the long term coal policy of the government?

Inquiries of the Ministry


Hon. Paul Comtois (Minister of Mines and Technical Surveys):: Mr. Speaker, I thank the hon. member for Laurier for having given me notice of his intention to ask this question. The best I can do, I think, under the circumstances is to read the press release issued yesterday afternoon after the conference:
A conference was held today between representatives of the government of the province of Nova Scotia and that of Canada to consider the scope of the study into the long term problems of the coal industry, which was promised by the Prime Minister when he announced the subvention program for the current year.
Representing the province of Nova Scotia were Premier Robert L. Stanfield and Hon. E. A. Manson, minister of mines, who met with the Minister of Mines and Technical Surveys, the Minister of National Revenue and Mr. Wilbur Uren, chairman of the dominion coal board.
The conference considered the industrial as well as the mining problems of the coal mining areas of Nova Scotia. There was agreement as to the importance of the coal industry, and the urgency of conducting such a study in order that a solution could be reached of the problems which have confronted this industry for such a long period of time. It was agreed that the improvisation and uncertainty which has dogged the lives of those associated with the industry should be removed in so far as possible.
There was also a full expression of views between the parties concerned and the ministers will report to their respective governments where the matter will be further considered by their colleagues.
It was emphasized by spokesmen in the group that this was simply a preliminary meeting to be followed by further consultations in the near future.


Lionel Chevrier: May I ask a supplementary question, sir. Has any consideration been given to those who will be undertaking this study?


Paul Comtois: We will consider the matter, Mr. Speaker, and as soon as we reach a decision the house will be informed.


Mr. H. W. Herridge (Kootenay West):: would like to ask a supplementary question. Have there been any discussions between members or officials of the government of British Columbia and members of the federal government with respect to the difficulties of the coal mining industry in that province?


Paul Comtois: No, Mr. Speaker.



DRIED POLLOCK


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I would like to direct a question to the Minister of Trade and Commerce, notice of which I sent to his office at 11.45 this forenoon. In view of recent action by the government of Jamaica in placing a low ceiling of 13J cents at the retail level on dry pollock, and this

at a time when Canadian exporters have over 4 million pounds of this commodity on hand, what action, if any, is being taken by the government to protect this market for our Canadian producers?


Hon. Gordon Churchill (Minister of Trade and Commerce):: Mr. Speaker, notice of the question of the hon. member was duly received at 11.45 a.m. The answer had already been prepared, because a week ago we were aware of this situation. On April 21 we were advised of the Jamaican government's intention to place a retail price ceiling of one shilling per pound on dry salted pollock. Immediately on receipt of this information our trade commissioner in Jamaica was instructed to make strong representations to the Jamaican authorities. The trade commissioner has now advised us that effective April 27 the retail price ceiling on dry salt pollock has been removed.
It is my understanding that the Jamaican minister of trade and industry will be meeting tomorrow with fish importers in Jamaica to work out new conditions covering the importation of salt fish. I can assure the house that the strongest representations will be made by our trade commissioner in Jamaica to ensure that Canadian exporters continue to enjoy favourable terms of access to this important and traditional market. It would be unfortunate if discriminatory action were taken by the Jamaican authorities which would lead in any way to a deterioration in the close and friendly relations between Canada and Jamaica.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Paul Hellyer (Trinity):: I should like to address a question to the Minister of National Defence. Can the minister inform the house whether all Avro Arrows other than the first five have been destroyed?


Hon. G. R. Pearkes (Minister of National Defence):: The disposal of the Avro Arrow is, as I stated in the house last week, a matter which comes under the direction of the Minister of Defence Production.


Paul Theodore Hellyer: May I direct the same question to the Minister of Defence Production?


Some hon. Members:: He is not here.


Paul Theodore Hellyer: I know, Mr. Speaker, that the Minister of National Defence does not wish to mislead the house and the country, and I am sure he is aware-


Some hon. Members:: Question.


Paul Theodore Hellyer: Is the minister aware that No. 6, the first mark II Arrow, has not yet been destroyed?


George Randolph Pearkes: As I stated, the disposal of the Avro Arrow is under the direction of the Minister of Defence Production, and I have no knowledge whether No. 6 has or has not been destroyed.


Paul Theodore Hellyer: May I direct my question to the Acting Minister of Defence Production. Or, if he is absent, may I ask a supplementary question of the Minister of National Defence. In view of the fact that No. 6 is still in existence, will the minister order that it be not destroyed but that it be completed and then test flown in order to win the world's air speed record for this country?


Paul Theodore Hellyer: Mr. Speaker, I should like to direct a question to the Prime Minister. I wonder if the Prime Minister will intervene and save the No. 6 mark II Arrow in order that it may be completed and test flown?


John George Diefenbaker: Mr. Speaker, I will naturally take under consideration any suggestions that come from the hon. gentleman, and give them the weight they deserve.


Paul Theodore Hellyer: This one will have to be given rather urgent consideration, Mr. Speaker. [Later:]


Paul Theodore Hellyer: Mr. Speaker, I should like to direct a further question to the Minister of National Defence. Has the minister inquired of the United States air force about the possibility of the first five or six Arrows being used as flying test beds?


George Randolph Pearkes: Mr. Speaker, I have received no communication from officials of the government of the United States regarding the employment of the Avro Arrow for test purposes.


Paul Theodore Hellyer: A supplementary question, Mr. Speaker. Has the department taken any initiative in this respect? I understand that some doubt exists as to what should be done with these aircraft.


George Randolph Pearkes: The government has taken the initiative in trying to find some useful purpose for the Avro Arrows that have been completed.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. J. A. McGraih (Si. John's Easl):: I have two questions for the Minister of Labour, notice of which has been given him.
66968-9-197
Inquiries of the Ministry
In view of the fact that the Dominion Steel and Coal Company have announced that they will be closing down No. 6 mine at Bell Island on May 1, thereby placing 575 miners out of work, would the minister tell the house what steps have been taken to meet this situation?
Further, is the minister prepared' to say whether consideration will be given to declaring Bell Island a labour surplus area, thereby making it possible for financial assistance to be given to those miners to secure work elsewhere?


Hon. Michael Siarr (Minister of Labour):: I wish to thank the hon. member for having given me notice of this question. My department has been very active in attempting to ease the situation of those affected by this lay-off. Our officials from both Moncton and St. John's, Newfoundland, have visited Bell Island, and the process of registering and interviewing the men is now under way. I may say that we have had indications from at least two mining companies in Ontario that they require over 200 men for jobs which would be available to those miners who are able to take them.
In answer to the second question I may say that this area has been declared a labour surplus area, and that movement expenses will be paid.



INDUSTRY


[Stage Direction]
On the orders of the day:
Hon. George H. Hees (Minister of Transport):: Mr. Speaker, yesterday the hon. member for Skeena asked a question regarding the reported campaign by the Canadian National Railways to attract United States industry to Canada.
The management of the railways advise me that for many years its industrial development branch has offered a specialized service to industry designed to assist plant location and expansion. This program is mainly directed to Canadian industry. As part of its endeavours to make Canada and the Canadian National Railways economically attractive to industry, there is currently a direct mail campaign being aimed at a carefully chosen list of senior executives of United States firms, with a view to interesting them in building plants in Canada and also informing them of the industrial location services provided by the railway. This is not a new venture but merely a different approach, as direct mail was considered to be more economic and effective.

Inquiries of the Ministry


Mr. Frank Howard (Skeena):: Mr. Speaker, as a supplementary question I wonder if I might ask how the minister reconciles this wooing of United States industry by the Canadian National Railways with the stated policy of his party that there is already too much United States domination of Canadian industry?


George Harris Hees: Mr. Speaker, as the hon. member knows very well this party has never been against United States industry coming to Canada and employing Canadians, providing jobs for Canadians and making it possible for the standard of living of Canadians to be enhanced through increased employment of that kind.



A. V. ROE COMPANY REPORTED LOSS OF SKILLED WORKERS TO U. S.

[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I have a question for the Minister of Labour, notice of which went to him just before 2.30. My question arises out of a report in this morning's Globe and Mail to the effect that
1,000	former Avro workers have applied for United States visas, indicating that these highly skilled personnel may be lost to Canada. Can the minister now say whether steps are presently being taken by his department to the end that jobs may be found at an early date for the remaining unemployed persons in this industry, thereby retaining for Canada their highly developed skills?


Michael Starr: Mr. Speaker, as I pointed out when these lay-offs took place, all the facilities of the national employment service offices were being utilized in this effort, and they are still being utilized to the fullest extent. It is difficult to say how soon all these men will be placed, but we are doing everything we possibly can to this end.


Hazen Robert Argue: A supplementary question, Mr. Speaker. Can the minister say whether prospective employers are still reluctant to hire Avro workers on the basis that these workers may soon be recalled to the industry, or whether that situation has been overcome?


Michael Starr: I have not had a recent report on that aspect of the question.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Hon. Henri Courtemanche (Secretary of Slate):: Mr. Speaker, on March 13 and again

on April 21 the hon. member for Skeena asked whether my attention had been drawn to a newspaper article to the effect that strife and intrigue is being created in the selection of federal government employees through the actions of officials in various departments, and whether I could make any comment on that report.
The only comment I wish to make, Mr. Speaker, is that no complaint of this character has ever been made to me by the professional institute of the public service of Canada, the civil service employees' associations or the civil service commission, which latter body is responsible for the maintenance of the merit system in the civil service of Canada.



CANADIAN PACIFIC RAILWAY


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I wish to direct a question to the Minister of Labour, notice of which was given to him. Would the minister explain a statement made by Mr. J. Graham, general chairman of the brotherhood of locomotive firemen and enginemen, Canadian Pacific Railway lines, to the effect that his request to the Minister of Labour to prosecute the
C.P.R. under the federal labour code, because of violations of both labour control and the law by the railway, was refused for reasons which he described as sounding "spurious"?


Michael Starr: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question. In answer I want to advise him that I did indeed receive such a letter from Mr. Graham, the general chairman of the brotherhood of locomotive firemen and enginemen, along the lines indicated by the hon. member.
The letter was then referred to my officials, since it dealt with matters of a technical nature. Their reply was to the effect that the points raised by Mr. Graham were of a nature normally dealt with under grievance procedures.



PROVISION FOR MOVEMENT OF TOUGH AND DAMP GRAIN

[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I should like to address a question to the Minister of Trade and Commerce. Can he inform the house whether he has anything further to add to the answers previously

given regarding the movement of tough and damp grain in the northeastern corner of Saskatchewan?
Hon. Gordon Churchill (Minister of Trade
and Commerce): Yes, Mr. Speaker. This is a matter which is of considerable concern to the producers of that area, and every effort has been made to meet their requirements. The wheat board has advised me now that while very little space is available for local deliveries at the points in northeastern Saskatchewan which are affected, there are outstanding shipping orders in the hands of the elevator agents for 30 cars, 12 cars and 15 cars, respectively, for three areas, Hudson Bay, Veillardville and Erwood. As navigation at the lakehead has just opened, grain to that destination will be moving more freely from now on, and it is anticipated by the Canadian wheat board that the railway company will be in a position to furnish box cars in fulfilment of the outstanding orders and additional orders commencing within a few days. As space becomes available for further deliveries by producers, delivery quotas will be increased accordingly.
The shipment of tough and damp grain to lakehead terminals will be continued by the board on a first priority basis, and the board expects that opportunity will be provided to market most of the tough and damp grain in the area during the course of the next few weeks.


Hazen Robert Argue: A supplementary question. I appreciate the action that the minister has indicated is being taken. Can he say whether any thought is being given to providing additional or emergency quotas over the general quota this year, if that is necessary to move the grain before it does in fact spoil?


Gordon Minto Churchill: Consideration will be given to that, Mr. Speaker, if there is some difficulty in moving the grain during the course of the next two weeks, but with the opening of navigation in the great lakes I think there will be storage space available and this movement will continue as planned.

The house resumed from Monday, April 27, consideration of the motion of Mr. Fleming (Eglinton) for committee of supply, and the amendment thereto of Mr. Mcllraith.



DEBT MANAGEMENT AND MONETARY POLICY

Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, in the course of my brief introductory remarks last evening I laid some emphasis on one or two points. The first was in reference to the bank rate, 66968-9-1974
Monetary Policy
that is to say the Bank of Canada rate. I had pointed out that that is a rate established by the Bank of Canada under the provisions of the Bank of Canada Act, and the government has no power over the rate that is established by the Bank of Canada. I had given some indication, Mr. Speaker, of what I think is a fairly widely recognized fact, that in Canada and some other countries with relatively new central banks the bank rate, that is to say the rate established by the central bank only, has exerted no direct or strong influence on market rates. Its movement has rather reflected changes in market rates and market conditions, and could never have been properly considered a cause of those rates and conditions.
I had also pointed, Mr. Speaker, to the fluctuations that have occurred in various rates. I had pointed out that in this country the rise in interest rates began not recently but in 1955, and that in the summer of 1957 a decline in interest rates set in which lasted for nearly a year, until the spring of 1958. We have been, since that time, in a period of rising interest rates in company with some other countries.
I pointed out also, Mr. Speaker, the extent to which the prime rate established by the chartered banks of Canada has fluctuated. I pointed out that the rise to 5J per cent which became effective yesterday simply returned that rate to the figure it had reached at the peak of the movement in interest rates in the summer of 1957, climaxing at that time a rise in interest rates that had then continued, broadly speaking, for two and one half years.
I am sure I do not need to say to the house that the government has no jurisdiction whatever over the prime rate established by the chartered banks. Section 91 of the Bank Act is quite clear in its provisions in this regard. It prohibits the banks from charging any rate of interest or any rate of discount exceeding 6 per cent per annum. It does not give the government any power whatever over the rate established by the banks. Therefore in pointing to that rate hon. members in the opposition who have sought to make something of it are simply pointing to something over which the government has been given no jurisdiction or measure of control by parliament.
Now, sir, having mentioned these points again, let me pass on to further observations on the theme upon which I touched last night, as to the effect of the operation of the law of supply and demand in the money market. I had indicated that when this law is left alone it operates in the same way the law of supply and demand operates in the-commodity markets. When the supply factors are stronger than the demand factors,,

Monetary Policy
then obviously the price goes down, in this case interest rates. On the other hand, when the demand factors are in the ascendant over the supply factors, then the price goes up, in this case the price of money being interest.
One would have thought, sir, listening to the speeches that were made by opposition members yesterday, that something extraordinary had happened, something that was quite unprecedented. Well, Mr. Speaker, the fact is that hon. members opposite, as I pointed out last night, chose for their favourite illustration the treasury bill rate, which is the rate which has shown, in the period from the summer of 1957 to the spring of 1958, the sharpest drop in interest rates and since that time the sharpest rise. It is the most volatile of all government securities in its response to factors at work in the market affecting interest rates. One does not find in the case of any of the government bond issues movements in interest rates to compare with those which did occur in those two periods in the treasury bill rate.
I could give the house detailed figures, but I do not wish to weary the house. However, whether one looks at short, medium or long term bonds, the fact is that in one of these cases have the movements in interest rates been as sharp as in the case of treasury bills, and that is obviously the reason hon. members of the opposition, in seeking to exaggerate this situation out of all recognition, have chosen to talk about the treasury bill rate and have completely glossed over the position in regard to bonds. The fact is also that hon. members of the opposition, in speaking yesterday left the impression that this situation is confined to our country. I am sure the house is not going to be so easily misled. We are, in this respect, experiencing a problem that is shared with other countries.
I gave the figures last night showing the rise in the treasury bill rate. Let us look at the United States. One hon. member opposite yesterday pictured the United States as enjoying reduced rates on its borrowings. Well, Mr. Speaker, here are the figures on United States treasury bills, beginning with the first of this year. The opening rate on a treasury bill issue of the United States for this year, January 7, was 2.68 per cent. Their last offering, on April 22, went out at 3.11 per cent.
The rise, as hon. members will see, was .43 per cent, and that condition has been similar to the one we find in the United Kingdom. Basic conditions in the United Kingdom may be somewhat different at present from those on this continent, but with respect to the treasury bill rate we see,

though not to the same extent, nevertheless the same general condition. The opening treasury bill rate in the United Kingdom this year, on January 7, was 3.14 per cent. The last issue, on April 22, went out at 3.28 per cent. This rise is smaller, it is true, nevertheless it is a rise.
Now, Mr. Speaker, the rate in Canada on treasury bills has, in its movements, paralleled the movements that have occurred in other countries. If the treasury bill rate, which is only one rate, has moved farther in this period than in these other countries, there are good reasons for it, and I think reasons that commend themselves to this house and to the country. I point out also that much sharper rises than we have experienced in this country in our treasury bill rate have occurred in other countries. Look at the experience in the United Kingdom in 1957. On July 31, the treasury bill rate in that country was 3.82 per cent, and by September 25 the rate had jumped to 6.6 per cent.
When hon. members opposite talk about the jump in our rate, it would be well if these things were seen in their true perspective. The fact is that the treasury bill rate in this country, since the beginning of 1959, has jumped just 1.47 per cent. We are not at all happy that this increase has occurred but, Mr. Speaker, it is well, in all honesty, that the facts should be understood and that the kind of misleading impression that was created yesterday should not be permitted to linger. I have indicated also that when the treasury bill rate recedes, we derive immediate benefit from the reduction because of the weekly offerings.
Now, sir, we are told that we have influenced rates on bonds and on treasury bills. It is undoubtedly a fact, Mr. Speaker, that a government would like to affect those rates to its advantages as it may be able. No government likes to pay more than it must for the money it must borrow to meet the purposes of government. What has been our record, Mr. Speaker? Our record has been this. In the matter of issuance of bonds we have taken advantage of the decline in interest rates which, as I pointed out, set in in the summer of 1957, and we took advantage of that right through until the rate began to rise again in the late spring of 1958.
Here have been our issues, Mr. Speaker, and I give the effective rates. On October 1, 1957, we put out an issue of $400 million of 3 per cent short term bonds, and the effective rate was 4.81 per cent. On the same date we also put out $300 million of two year bonds with an effective rate of 4.99 per cent. Note, Mr. Speaker, what had happened by the time the next issue was put out; already the interest rate had declined. On December 15,

1957	we put out an issue of $250 million of 3 per cent, approximately two year bonds at a rate of 3.81 per cent. Between October 1 and December 15 our borrowing rate on these two year bonds had declined by over 1 per cent. We also put out on December 15 a 3 per cent issue of longer term bonds maturing in 1960 carrying a yield of 3.85 per cent.
By May of 1958 interest rates had declined still further, and we were able to take advantage of that decline. On May 1 we put out four issues totalling $950 million, the maturities falling due in 1959, 1961, 1970 and 1978, and the actual yields to final maturity respectively were 2.94 per cent, 3.35 per cent, 3.71 per cent and 4.01 per cent.
The house will see, Mr. Speaker, that in that very substantial issue of $950 million we were enjoying the benefit of the decline in interest rates. It is also an illustration of the fact that the preference of the market at that time was for the shorter maturities, and we were able to borrow in the shorter range at substantially lower rates than in the longest maturity.
Then we move forward to July 15. We issued another $400 million on July 15 maturing at the end of 1958, and they were put out at a rate of 2J per cent. I will pass over the conversion loans for the present because I will be coming back to them later. On October 1 we put out two issues aggregating $600 million, these maturing in 1959 and 1960 respectively. Here the yield to maturity was 2.77 per cent and 2.96 per cent respectively. The house will see what advantage we were enjoying from the decline in interest rates.
Then on December 15 we put out a loan of $300 million maturing at the end of 1959, at a rate of 3.77 per cent. In the fall of
1958	interest rates, in response to conditions about which I shall have something more to say, had begun to rise. That rise continued into 1959, as the house well knows. On January 1 we put out an issue of $100 million maturing in 1963 at an effective rate of 4.34 per cent. On March 1 we put out two issues totalling $200 million, both maturing in 1960, one in April and the other in December, the effective yield to maturity being 4.76 per cent and 4.94 per cent respectively.
It is well, I think, that these facts should be placed on the record to correct the misleading impression that was created yesterday by hon. members opposite. They have taken no little satisfaction in their speeches over the fact that interest rates have risen in recent months. They seem to gloat and glory in the fact that interest rates have risen and
Monetary Policy
that the government, like every other borrower in Canada, has had to pay higher interest rates. Where were these voluble members a year ago, Mr. Speaker? Where were they with their speeches in the days when interest rates were receding and the government was enjoying in its borrowings the advantage of these substantially lower interest rates? Did we hear talk from them then about the strength the government had imparted to confidence in Canada? Oh, no, not these hon. members; no, they save what they have to say on the subject for the days when they can gloat and glory in the higher cost that the government, along with every other borrower in Canada, has to pay under the conditions that exist today. Such is the test, such is the mark of their sense of responsibility to Canada.
Let me address myself now, Mr. Speaker, to the situation which has been created today in which all borrowers have had to face higher interest charges. The situation we have today is a striking reflection of the operation of the forces of supply and demand in the economy, and it is a very interesting reflection of the strength of the expansive forces in the economy today. When we are asking these questions about the respective strengths of the forces of supply and demand in the money market I suggest that we begin with demand, and then I shall have something to say about supply.
On the demand side the most striking force at work in our economy in these recent times has been the strength of the recovery in the Canadian economy and the expansion of the forces of recovery at work in the Canadian economy at the present time. I do not expect hon. members opposite to like that fact.


Paul Theodore Hellyer: It is not true.


Donald Methuen Fleming: They just do not like any talk about recovery in the Canadian economy-


Mr.   Marlin@Essex Easl: Nonsense.


Donald Methuen Fleming: -and they did not have the fairness yesterday to bring this factor into the discussion. In that way they gloss completely over the most important factor at work today influencing the relative play of the forces of supply and demand.
How is demand evidenced? Demand is evidenced in a very striking way, in bank loans. The banks do not hold their funds idle. They seek to employ them; and in order to keep their funds as liquid as possible they invest them in government of Canada bonds and in treasury bills, depending upon when they desire their maturities in the interests of liquidity.

Monetary Policy


Paul Theodore Hellyer: Elementary, my dear Watson.


Donald Methuen Fleming: If it is elementary,
I have had to resort to elementary approaches for the benefit of hon. members opposite, to put a stop to the way they have been trying to mislead the house and the country on this issue.


Paul Theodore Hellyer: Why don't you tell us about your big deficits?


Donald Methuen Fleming: I say, Mr. Speaker, that the banks of Canada have been called upon to meet an extraordinary demand for bank loans. The situation has attracted widespread attention in recent times. Mr. Speaker, here are the figures of loans of the chartered banks in recent weeks. At the beginning of this year the total of chartered bank loans was $5,402 million. By April 15 that figure had jumped to $5,658 million. Sir, that is an increase in bank loans of $256 million since the beginning of this year, 1959. And look, sir, if you will, at the way in which this increase has occurred. On April 1 the total of these loans outstanding was $5,528 million. Within a week

and I pointed this out a week ago in my speech-by April 8 that total had jumped to $5,629 million; that is an increase of $101 million in bank loans in one week. The following week, Mr. Speaker, by April 15 a jump of another $29 million occurred in outstanding bank loans.
Mr. Speaker, having regard to the function of the banks in our system, to provide credit to meet commercial necessities, we see mirrored in these figures of bank loans the extent to which recovery is going on in the Canadian ecoonmy today. It is going on at an extraordinary rate.


Mr. Pickersgill:: Would the minister permit a question? Could he give the comparable figures for the same months in 1957 and 1956?


Donald Methuen Fleming: I can give them for 1957 and 1958, if my hon. friend will be content with those.


John Whitney Pickersgill: Quite.


Donald Methuen Fleming: In 1957 the total of bank loans at the commencement of the year was $5,411 million. At April 22 it was $5,448 million. The rise in 1957 was only $37 million. Let us move forward to 1958. The total of bank loans outstanding at the opening of the year 1958 was $5,405 million. At April 22 it was $5,247 million. It had contracted in those first four months of 1958 by $158 million whereas, as I have pointed out to you, Mr. Speaker, in this year, 1959, the expansion in the total of bank loans has been $256 million. I appreciate my hon.

friend asking that question, because it gives me the opportunity of bringing out that interesting contrast which so clearly illustrates the extent of recovery of the economy of the country this year as compared with the conditions of a year ago.


John Whitney Pickersgill: Would the minister permit one further question?


Donald Methuen Fleming: If the hon. member will ask another like the last one I would be delighted.


John Whitney Pickersgill: It is in fact almost exactly like the last one. Could the minister give for those same three years the demands which the government has made in the way of loans, just in order to illustrate this factor of demand? I want the amount which the government has borrowed.


Donald Methuen Fleming: I have already given the figure of demand in terms of all of the issues of government bonds by this government since it came into office in the summer of 1957.


John Whitney Pickersgill: But that does not answer my question.


Donald Methuen Fleming: I can go back and give the figures of issues of the government of which he was a member, if he has forgotten them. Perhaps he would like to forget that as well as some other features of the administration of his government.


John Whitney Pickersgill: I think the minister did not quite understand my question. I wanted the figures for precisely the same three months that the minister was using for purposes of illustration; that is to say, those issues between January 1 and April 22 for those three years.


Donald Methuen Fleming: Yes, I will be glad to get that information for my hon. friend, or any other information that will be of assistance to him.
Now, Mr. Speaker, how have the banks met this extraordinary demand for commercial loans? As I have said, the banks do not keep cash sitting idly around. They have to keep their money profitably employed. Just what happens in the face of an extraordinary demand like this on the banks? The fact is that the banks liquidate their holdings of securities in order to provide themselves with cash. The figures I am about to give the house now will illustrate the extent to which the banks have been realizing on their treasury bills, or taking their cash out of those bills as they mature week by week, and also reducing their holdings of government of Canada bonds by selling some of

these bonds in the market in order to put themselves in cash to meet this extraordinary demand for commercial loans. Here you have the reason why there has been pressure on the rate on treasury bills and the rate on government bonds in the market. It is because there has been selling by these institutions in order to put themselves in cash to meet the extraordinarily heavy demand for commercial loans arising out of the extent of recovery in this country.
Here are the figures. I do not wish to weary the house with a multitude of figures; perhaps it will suffice if I indicate to the house at this point the changes from week to week in the bank holdings of (a) bonds and (b) treasury bills, say from the beginning of February. Here are the figures, then, on bonds, showing the fluctuations from week to week. In the first week in February the banks showed an increase over the last week in January of $5 million in their total holdings of government of Canada bonds. The next week they were down $19 million. The next week they were about the same. The next week they were down $25 million. The next week they were up $41 million; the next week, down $4 million; the next week, up $16 million. Then, sir, will you note these next four weeks; down $15 million; down $19 million; down $57 million; down $54 million. If you wish to know why there has been pressure on the bond market and why this pressure has been reflected in rising interest rates, you have only to look at those figures of realizations by the chartered banks of their holdings of Dominion of Canada bonds.
Then let us look at the movement in their holdings of treasury bills; this is again for the same period. The first week in February showed an increase over the last week in January of $28 million. Then watch the next weeks. The second week, down $46 million; the next week, down $29 million; the next week, down $48 million; the next week, up $12 million; the next week, down $28 million; the next week, down $18 million; the next week, down $22 million; the next week, up $15 million; the next week, down $29 million; the next week, down $15 million.
Mr. Speaker, that succession of reductions illustrates as well as any figures can the essential facts in this situation, which are these. The banks have been liquidating their holdings of government bonds and treasury bills in order to put themselves in cash to meet the demands for commercial loans.


Mr. Mcllrailh:: I wonder if the minister would clarify that point. Dealing with commercial loans he used a figure which, I take it, was based on the situation early in January, early in the year. He gave the composite figures, but in giving the holdings of
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the chartered banks he started with the first week in February, which represented their peak over the last series of months. Is there any significance about not taking the corresponding dates for the two sets of figures?


Donald Methuen Fleming: Oh, no. I can go
on giving more figures if the house wishes them. The fact is that this significant reduction in the holdings of government of Canada bonds and treasury bills began at the end of the first week in February, and from that time on with only rare interruptions we have seen this process of liquidation continuing. The reason for this can be seen in the increase in the total number of bank loans outstanding, an increase which illustrates the extent of recovery in Canada.
This is again a reflection of the forces of supply and demand at work in the economy, and those hon. members of this house who are prepared to be fair in their approach to this problem can take some satisfaction from the fact that the demand factor at work in the Canadian economy today is so strong, and that it is a reflection of the forces of recovery at work in the economy. This fact was completely glossed over yesterday by hon. members opposite and was cheerfully ignored by them while they chose to dwell upon the more unfavourable factors of any situation that they found available for their purpose.
The total of bank loans has a further interest for this house. As hon. members are aware we, as a government, have urged the banks to lend, and lend substantially, under the provisions of the National Housing Act in order to assist in home construction, and in that way to spur employment in this country. Well, the chartered banks have responded, and I wish to indicate the way in which the needs of our housing program have also created demands upon the available cash resources of the banks. Here I give the figures of insured residential mortgages held by the banks. I begin with June, 1957 as a significant date, and the house will note a steady rise in investment by the chartered banks of Canada in insured residential mortgages under the National Housing Act.
When we came to office in June, 1957 the chartered banks were holding a total of $501 million of these mortgages. By January, 1958 that figure had risen to $591 million; by January, 1959 to $791 million; by March 25, 1959 to $823 million, and by April 15, the last date for which figures are available, to $828 million. Here again is a factor in demand which I think will give satisfaction to the house and to the country.
I have spoken about the forces of demand at work in the money market today. Let me turn now to the forces affecting supply. I am sure I do not need to remind the house

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that Canada is a country which chronically suffers from a shortage of capital. It is a young country with tremendous resources to be developed. It needs capital for the development of those resources. Canada is the largest net importer of capital in the world, not just on a per capita basis but on a national, an absolute, basis. There is an impression in some parts of the world that because Canada has a high standard of living, Canada must have available a substantia] volume or surplus of capital. That is not so. I had frequent occasion in the talks I had with governments in Asia last autumn to point out that fact. Canada is the largest importer of capital in the world.
What are the sources of capital? In the first place, savings are an important source of capital, the savings of persons and the savings of corporations. The other source, so far as Canada is concerned, is the capital imported from foreign sources. We need to give encouragement to individuals and corporations to practise the virtue of saving in order to create capital so they may rely on themselves and in that way help to sustain the growth of the economy. And when socialist members of this house seek to crush the corporations in this country, they should bear in mind that corporations are themselves a source of capital, and that if the corporations are to be crushed there will be so much less capital available for the expansion of the economy and the creation of more jobs for Canadians.
As far as foreign sources of capital are concerned, we may wish as Canadians that we had available from domestic sources all the capital we need and that we did not stand in need of foreign capital. However, we are not in that happy situation. We do need this foreign capital; and therefore we must-and this is the policy of this government-create a climate hospitable to foreign capital investment.
What has been the course of the movement of capital into Canada? In 1956 the total of capital movement into Canada measured by the balance of international payments was $1,372 million. In 1957 it was $1,366 million. In 1958, notwithstanding the economic situation we experienced, especially in the earlier part of the year, foreign capital came into Canada to the extent of $1,112 million. And while one cannot prophesy with any certainty what may be the amount of foreign capital coming into this country in this year of 1959, it is quite evident from the figures I have given that there is no substantial reduction in the volume of such capital entering Canada. Therefore we may look with reasonable confidence for the continuation

of a substantial volume of foreign capital coming into Canada for investment.
We shall, of course, have to bear in mind what effect this will have on exchange rates. The Canadian dollar has been at a premium since 1952. To some Canadians this is a matter of pride. It is a matter of economic advantage to people who have to meet obligations in terms of United States dollars. It helps some Canadians, and it works to the disadvantage of others. When the Canadian dollar is at a premium in relation to the United States dollar, the import of foreign goods into Canada is facilitated. An obstacle, to the extent of the premium, is placed in the way of exports of Canadian goods to other countries. Similarly, in relation to the movement of capital, the inward movement of United States capital into Canada has the effect of boosting the premium on the United States dollar, and this is what we have to bear in mind. The outward movement of capital from Canada to the United States, or the return of capital to that country, would of course have the effect of reducing the premium on the Canadian dollar in relation to the United States dollar. We need United States capital on proper terms, and the premium is the price that is being paid at the present time. One regrets the fact that it works to the disadvantage of exporters. This is not a matter of government choice at all; this is a matter of the operation of the free forces in a free economy.
Let me now address myself directly to the question of supply within Canada to meet the extraordinarily heavy demand at the present time. Last night I spoke of the components of money supply in Canada. I pointed out that they consist of currency in circulation and deposits in the chartered banks. We are told by hon. gentlemen opposite that there is something heinous about the increase in the money supply that occurred in the year 1958. Certainly and admittedly a substantial increase occurred in the money supply in Canada in that year.
At the end of 1958 the money supply was $13,247 million and at the end of 1957 it was $11,923 million. The increase in money supply in 1958 in Canada was $1,324 million. But, Mr. Speaker, there was a very good reason for that increase in money supply in Canada last year. I say to you that if the money supply had not increased in Canada in 1958 the first persons to be critical of the fact that it had not increased would have been hon. gentlemen opposite, the members of the official opposition.
The fact is that the amount of currency was increased last year and the chartered bank deposits of Canadians increased last

year. Apparently that is a matter of regret to hon. gentlemen in the official opposition. These increased, however, not because the government decreed any increase in currency or in money supply. The Bank of Canada, as I pointed out last night, has the authority and is the only body in Canada that has the authority to determine the volume of currency issued. What the government did in the parallel field of fiscal action was to take steps with a view to imparting vigour to the Canadian economy. We deliberately budgeted for a deficit last year with a view to giving impetus and strength to the forces of recovery at work in the economy.
Let us look at what has happened since October 1 of last year. Hon. gentlemen in the official opposition who have something critical to say about the increased money supply should have been saying it in 1958 when such criticisms would have had some relevancy to the conditions then existing; but oh, no, these Rip van Winkles wake up in 1959 and discover a situation existed in 1958 which, if you please, ceased to exist on October 1, 1958.


Paul Theodore Hellyer: How are you enjoying your slumber at this moment?


Donald Methuen Fleming: The situation has been substantially different since. Indeed, the money supply in Canada has contracted since then. I give you just the figures from December to April 15. The figure for the money supply in Canada on April 15 was $13,205 million. There was an actual drop of $42 million in that 3|-month period.


Paul Theodore Hellyer: Mr. Speaker, I wonder if the minister would permit a question. Would the minister care to tell us what kind of capital was the increase in the money supply of last year in the amount of something over $1 billion to which he referred.


Donald Methuen Fleming: Mr. Speaker, it is money supply. The hon. gentleman will have to distinguish as best he can between capital and money supply. This is money supply measured in terms of the combined total of currency in circulation and deposits in the chartered banks. What hon. members in the opposition had to say about this matter yesterday is stale. They were complaining about a condition which ceased to exist on October 1, 1958. Indeed, as I have indicated, the money supply has been dropping in recent months.
As to the future, I am not going to attempt any prophecy as to what is likely to be the trend in the volume of money supply. I do know that the Bank of Canada watches this situation very closely, and in whatever may be done in this respect I am sure the house 66968-9-198
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would expect a balance to be preserved between the needs of expanding business on the one hand-the forces of recovery-and on the other hand restraints against the dangers of inflation.
There is one other possible source of supply to which I shall give just a word of comment. It is the bank reserves. The government has no control whatever over bank reserves; I wish to make that abundantly clear. It is the Bank Act of this country which in section 71 lays down the requirements imposed by parliament upon the chartered banks of Canada in relation to the maintenance of their cash reserves. Section 71, subsection 1 reads:
71. (1) The bank shall maintain a cash reserve in the form of a deposit with the Bank of Canada and of Bank of Canada notes held by the bank, and such reserve shall be not less on the average during any month than 8 per cent, or such other percentage as may be fixed by the Bank of Canada under the provisions of the Bank of Canada Act, of such of its deposit liabilities as are payable in Canadian currency.
That is the statutory obligation of the banks, to maintain a cash reserve of 8 per cent measured in terms of deposit liabilities. In addition to that figure the banks of this country have for the past three years maintained an additional reserve of 7 per cent which has been held in the form of treasury bills and day to day loans. The reserves of the banks in the period since this government came into office reached their peak in May of 1958, when the average liquid asset ratio of all the chartered banks reached 18.1 per cent. From that time, as the forces of recovery have gathered more and more momentum, that figure has been reduced and the last figure available at April 22 showed that the over-all average liquid asset ratio of bank reserves, had dropped to 15.48 per cent, a very substantial reduction since the high of May, 1958.
If hon. members opposite are going to deal fairly with this question when they criticize the situation of today they will have to tell the house what their position is in relation to money supply, the creation of an increase in money supply, and what their position is in regard to bank reserves. They have not said a word about those subjects, and I think we well know why. If the 7 per cent reserve that the banks hold in terms of treasury bills and day to day loans were reduced it would result in a liquidation of treasury bills and more pressure on the treasury bill rate in this country. But hon. members opposite did not have the frankness to face up to that fact yesterday or even to acknowledge it. I do not think, Mr. Speaker, that anyone in this house is going to propose that the Bank Act of this country should be

Monetary Policy
amended to reduce the requirement under section 71 that the banks should hold an 8 per cent reserve in cash.
I should like to turn now to what I think is a very interesting commentary upon the kind of speeches we listened to yesterday from hon. members of the opposition. They gloried in the increase in interest rates, and they gloried also in whatever signs of weakness they could find in the bond market. They would have left the impression, had they been able to do so, that this is a new phenomenon and that it has not occurred before. Well, Mr. Speaker, I know the house is not going to be misled by that type of erring propaganda on the part of the opposition, but let me place on the record some interesting figures illustrating the way bond prices went in the days of the Liberal government.
I am going to compare two dates, March 29, 1955, with June 21, 1957, when that Liberal government went out of office, and I am going to give the house seven or eight outstanding Canadian bond issues so the house can see what happened to the quoted values of those Canada bonds in the market between those two dates. Three per cents, due May 1, 1958, dropped from 103.35 to 98.90, a loss of 4.45; 3 per cents, due October 1, 1963, dropped from 102.45 to 90.625, a drop of 11.825; 3 per cents, due September 1, 1966, dropped from 102.50 to 88.375, a drop of 14.125; 2| per cents due June 15, 1968, dropped from 99.50 to 84.75, a drop of 14.75; 3J per cents, due June 1, 1976, dropped from 102.125 to 87.25, a drop of 14.875; 3| per cents, due June 15, 1978, dropped from 108.50 to 94.50, a drop of 14; 3i per cents, due October 1, 1979, dropped from 102.125 to 86.875, a drop of 15.25; and the 3 per cent perpetuals dropped from 96.625 to 79.75, a drop of 16.875.
All these drops Mr. Speaker, occurred before we ever came into office, and you will see, therefore, how hollow in the mouths of hon. members opposite rings the cry about the weakness of the bond market and the rise in interest rates, and the talk about the loss of confidence in government of Canada issues. I will tell you, Mr. Speaker; if there was loss of confidence it occurred in that period from 1955 to 1957, infinitely more significantly than in any period since.


John Whitney Pickersgill: Will the minister permit a question? Will he tell us whether during that period the government was a net borrower in the market?


Donald Methuen Fleming: Mr. Speaker, with respect to the entire period I am not prepared to make a quick answer to that question. There were periods when the government

was a net borrower; there were periods when the position was reversed.
The figures I have given, Mr. Speaker, were for government of Canada bonds, but I think it is worth reflecting also upon what happened to the values in the market of outstanding provincial issues in this period of Liberal rule. Again I have the figures for the two dates, March 29, 1955 and June 21, 1957. Alberta, 2| per cents, due March 1, 1970 dropped from 98.50 to 84.50, a drop of 14; British Columbia 3 per cents, due December 15, 1969 dropped from 98.25 to 83, a drop of 15.25; Manitoba 4| per cents, due October 1, 1968 dropped from 107 to 93.25, a drop of 13.75; New Brunswick 4-J per cents, due February 2, 1965 dropped from 106 to 95, a drop of 11 points; Nova Scotia 3J per cents, due November 15, 1970 dropped from 99 to 84, a drop of 15 points; Ontario 4 per cents due June 30, 1972 dropped from 106.75 to 91.25, a drop of 15.50; Quebec 3 per cents, due July 1, 1969 dropped from 97.25 to 84.75, a drop of 12.50; Saskatchewan 3,1 per cents, due April 15, 1972 dropped from 97.75 to 81.75, a drop of 16 points.
In the face of that unhappy record, Mr. Speaker, hon. members of the opposition undertake to say any evidence of weakness in the bond market today, or any evidence of increase in interest rates, in the face of the extraordinary demand for commercial credit today, is the responsibility of the present government, and that the people have lost confidence in government of Canada credit because of some failure on the part of the present government. Let them clean their own house before they undertake to level empty, baseless charges of that kind against others.
I have drawn attention to the fact that the field of monetary action belongs to the Bank of Canada; the field of fiscal action belongs to the government. I emphasize, Mr. Speaker, that the increase in money supply in 1958 was accompanied by deficit financing, deliberate deficit financing on the part of the government, all done with a view to stimulating the forces of recovery in the economy. Today recovery is clearly under way, and the policy in regard to money supply was moderated as from the first day of October so as to permit recovery to proceed but without inflation. Similarly, in the present budget fiscal policy was modified by the government with the same object in view, to avoid inflation while at the same time putting no obstacle in the way of the recovery movement in the Canadian economy.
This requires the best judgment that the Bank of Canada on the one hand and the government on the other can muster; but,

Mr. Speaker, let hon. members be fair about it and recognize where responsibility rests and the extent to which the conditions that exist today are attributable to the steps taken to stimulate recovery in Canada. They do not want recovery; that seems to be the net effect of their observations here today.


John Whitney Pickersgill: Yesterday.


Donald Methuen Fleming: Yesterday.


John Whitney Pickersgill: We have not had a chance to speak today.


Donald Methuen Fleming: Well, they have made some interjections and asked some questions which are of the same old, tiresome sort, but are quite in keeping with those irresponsible statements that were made by them yesterday.
We have drawn attention to the fact, and it is significant in relation to the factors about which hon. members sought to complain yesterday, that the government this year is going to be reducing substantially its borrowings of new money from the Canadian markets. We have substantial maturities to meet. I do not need to dwell on them. Hon. members opposite like to remind the house of them every day. But we have, by the expedients put before the house in the budget, taken steps to reduce substantially the demand that we will be making upon the supply this year to finance the government deficit.
As I pointed out in the budget speech, Mr. Speaker-


John Whitney Pickersgill: I rise on a point of order, Mr. Speaker. The hon. gentleman realizes, as the Prime Minister (Mr. Diefenbaker) pointed out to me the other day, that it is contrary to the rules of the house to quote from another debate in the same session. Since the rules have been rigidly enforced against this side of the house, I trust Your Honour will enforce them against the minister as well.


Donald Methuen Fleming: What a power of anticipation! I was not going to quote-


John Whitney Pickersgill: You were going to read the table.


Donald Methuen Fleming: I was not going to read the table, at all.


An hon. Member:: Are you psychic?


Donald Methuen Fleming: Psychic John, I think, had better be renamed-


John Whitney Pickersgill: Just anticipation.


Donald Methuen Fleming: -as the man with the broken crystal ball.
As I pointed out, with a good response to our Canada savings bond campaign next
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Monetary Policy
autumn our own market borrowings in 195960, should be less than one-half of the $1,220 million which we borrowed in the market in the fiscal year 1958-59.
There is one other subject, to which I am obliged by the amendment to turn; not that I enjoy making a speech of such length as this, far from it. However, hon. members opposite in their amendment sought to embrace every possible subject that in their ingenuity they could think up for the occasion. If I may use common language, they have taken in the whole waterfront in this amendment and they have obliged me to speak on these subjects at some length.
Amongst the many matters of which they complain in this extraordinary fake amendment of theirs is the conversion loan. It is significant, I think, that they have not chosen to condemn the conversion loan. What they have talked about instead has been one aspect of it, or two at the most. They talked about "the errors and inequities" associated with the conversion loan. I would have thought that if hon. members opposite had any pretence to fortitude they would have come out and said they did not like the conversion loan and invited the house to condemn the conversion loan. However, courage failed them at that point; courage fled, and what they resorted to was a reference to what they called the "errors and inequities" associated with the conversion loan. There were no errors or inequities associated with the conversion loan.


Lionel Chevrier: Just blunders.


Donald Methuen Fleming: If the hon. member for Laurier (Mr. Chevrier) had been here yesterday perhaps he would have supplied what was lacking in this amendment. He would have had the courage to come out and condemn the conversion loan in this amendment instead of taking part in this hide and seek game that his colleagues played yesterday with this subject.
I am obliged to say something about this conversion loan. This subject was discussed quite a few times in this house during the last session, and on one or two occasions in this session, but if hon. members opposite insist upon a further discussion then I am happy to accommodate them. I shall make some general comments, Mr. Speaker, about the features of the loan and the conditions associated with it before I come down to deal with some of the statements that were uttered here yesterday.
The conversion loan of 1958 was the greatest financial operation in Canada's history. It was a very great success, and indeed far exceeded our expectations. I should like to remind the house of the conditions in the

Monetary Policy
summer of 1958 under which this enterprise was undertaken. In April, 1958 the rising trend in bond prices was arrested and indications of economic recovery appeared, with their prospective concomitant of a growing demand for money from non-government sources. In the United States worry about the size of the government's deficit and borrowing requirements and fears of inflation emerged at an early stage, and a sharp and continuing decline in bond prices set in. The last reduction in the discount rate of federal reserve banks of the United States was made on April 18. Bond prices in that country hit their peak on April 21. A decline then set in which was temporarily interrupted in the latter half of May, but then continued with little interruption until October. A further decline of bond prices began in the last week of November, and hon. members are familiar with what has happened since that time.
It was not to be expected that Canadian bond prices would always follow United States bond prices, even in direction over short intervals, let alone in degree of movement. But undoubtedly developments in the United States are bound, soon or later, to have a weighty influence on developments in Canada; and so it was in 1958. The average maturity of public debt had been shortening for several years, both in the United States and Canada. The large volume of securities falling due for repayment each year was a matter of concern to fiscal authorities in both countries and a serious handicap to the sale of new issues for cash in a period of government deficits. By the end of June the market atmosphere was very unfavourable to new financing.
While the government of Canada needed large sums of new money in the immediate future funds could be obtained as a last resort from the banks, with the Bank of Canada providing increased cash reserves to the chartered banks, but after the large scale purchase of government securities by the banks and corresponding monetary expansion in the preceding 12 months this would have been regarded as dangerously inflationary, unless other steps could be taken simultaneously to deal with the public debt structure and make possible the sale of future issues of government bonds to non-bank investors. At the same time some way had to be found to reduce the heavy proportion of short term bonds and increase substantially the proportion of long term bonds.
The five victory loans totalling $6,416 million had ultimate maturity dates between January 1, 1959 and September 1, 1966. In addition, all these issues were callable on or before September 1, 1961. This prospect, in

addition to the non-victory loan maturities and the need for heavy new borrowings, made debt reorganization imperative if a high degree of confusion and demoralization of the bond market was to be avoided, and a sound basis created for financing Canada's expansion and development.
Conversion of all five victory loan issues was more equitable, more efficient and less costly than a piecemeal approach could possibly have been. Fundamental to the project was the idea that it would be easier to sell the public long term bonds in exchange for bonds which they already held than to sell them long term bonds for cash. The prospects of cash requirements of the Canadian government for several years ahead were also a major consideration. It was urgently important to improve the government's debt structure, to reduce the overhang of refinancing which would have to be done in addition to new money financing and to put as much of the government's debt as possible on a long term basis.
The terms of the conversion loan were developed on the best advice having regard to the objective, the erosion which had occurred in the market and the measures necessary to attract public investment in the long term sector. The conversion loan was an overwhelming success. A total of more than $5,803 million, or more than 90 per cent of the outstanding victory bonds, was converted.
The interest rates set on the new conversion loan bonds reflected market yields prevailing at the time while taking into account the size of the operation. Exaggerated and distorted statements have been made as to the burden which these higher conversion loan interest rates will impose. Such statements, and we have heard many of them in the house, all of them mistaken and misleading, erroneously assume that each victory loan issue could have been refunded at maturity at a 3 per cent interest rate. The evidence is all to the contrary, especially having regard to the fact that the overhang on the market would still have persisted. Rates at the time of such refundings would almost certainly have been higher than is now the case.
The coupon rate on all of the victory loans was 3 per cent. The average coupon rate on all of the bonds converted is now 4 per cent. Since 61 per cent of the conversion went into the 14-year and 25-year maturities and since, having regard to call dates, all of the victory loans were of three years or less maturity, this is a very satisfactory average coupon rate. The interest payable on the $6,416 million of bonds before conversion was $192,480,000. It is now $250,705,000, an increase of $58,225,000 or about 30 per cent.

The conversion loan was a constructive and stabilizing factor in the market, particularly in the long term sector. The benefits of its influence accrue to provincial and municipal borrowers who would otherwise have had to face a high rate structure inevitably resulting from the uncertainty and imminence of these huge maturities overhanging the market.
I have said that the conversion operation was an overwhelming success. It has earned the outspoken admiration of the governments of other countries. This success was achieved with the full co-operation of the Bank of Canada. Before conversion only 17 per cent of the government of Canada's debt, other than savings bonds, was in maturities over ten years. After the conversion fully 43 per cent was in such maturities. Before conversion 39 per cent of the debt, other than savings bonds, was in market issues with maturities of less than two years. After the conversion 25 per cent was in such issues. The average maturity of the public debt, other than savings bonds, was lengthened from 6i years to 10J years in Canada and became double the comparable average maturity in the United States.
While prices of government bonds have declined in recent months, the benefits of the conversion loan operation continue. I should like to add a comment on the market price quotations of these new conversion bonds. I think it is fair that in making this comparison we compare the rates prevailing in the market prior to the time the conversion loan operation was launched with those prevailing in the market on these issues in the autumn following.
The government at no time said that it would support current market prices on the conversion loan. While the Bank of Canada, acting as the government's fiscal agent, normally operates in a manner to stabilize the after-market for a short period for each new loan, it is not the government's policy to support the bond market over longer periods.
The government's obligation is to pay a fixed rate of interest on the conversion loan bonds and redeem them in full at maturity. Far from having given any indication of supporting the market price of the conversion loan, the government expressly disclaimed any such undertaking in the House of Commons.
I point, Mr. Speaker, in this connection to the question asked in the house by the Leader of the Opposition (Mr. Pearson) last September and my answer to his question. It is the play of the forces in the market which determines the day to day price of bonds. It happens that largely as a result of the continued erosion of the United States bond market there were weakening effects on market offerings for government issues in Canada evident in the
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autumn and winter of 1958-59. There is no way of insulating the Canadian bond market from such influences, but had it not been for the constructive effects of the refunding represented by the conversion loan and its overwhelming success the Canadian market would have undoubtedly displayed much more weakness than has been evident since.
The fact clearly emerges that the decline in the bond market in recent months is in no sense attributable to the conversion loan but has occurred in spite of it. With the exception of the period during the conversion loan campaign and immediately following the decline in government bond prices in Canada has paralleled but has not been as extensive as the decline in the United States. Here I offer the comparison that I mentioned a moment ago, Mr. Speaker. In the longest term category United States bonds declined 12J points from April to December, 1958 while Canada's dropped lli points. In the mid-term field the decline in Canada was distinctly less than in the United States. Thus United States 68's declined 10J points in this period while Canada's 68's declined less than 7J points. The removal of the bulk of the Canada 3's of 1963 and 1966 from the market as a result of the conversion operation is the chief reason for this relevant and striking difference in midterm bond price changes.
In Canada the longest victory loan, the 3 per cent of 1966, was not completely converted, and its market price declined over the period in question, that is to say, from April to December, 1958, from 97.50 in April to 94.50 in early July and to 92.13 at the end of December, a decline of about 5J points. However, the typical holder of this victory bond converted into the new 4J per cent 1972's or 4J per cent 1983's which on December 31 traded at 95.63-


Mr.   Marlin@Essex East: May I ask my hon.
friend a question? I have to leave the house.
I would be very interested in knowing whether the very short statement that my hon. friend has been reading for the last half hour is one of his own speeches. Would he kindly identify the document?
Mr- Fleming (Eglinion): Mr. Speaker, my hon. friend is always kind in his observations.
I am referring to papers in my possession containing some factual statements which I hope will interest him and which I hope will engage his serious attention and study, for no one needs this information more than he.


Mr.   Marlin@Essex Easl: Would my hon. friend do what I am sure he is prepared to do, accommodate himself to the rules of the house and identify the document? Who is. the author? How can we find the document

Monetary Policy to verify whether my hon. friend has read it all correctly? I am sure he would not leave anything out but he has been reading a long time and we would want to know that he has not missed any significant words. Who is the author? What is the publication?


Donald Methuen Fleming: I happen to be reading from some papers in my own file and I identify them as my papers in my file.


John Whitney Pickersgill: Mr. Speaker, I am rising to a point of order. I submit that it is a rule of the house that speeches cannot be read even if they are described by hon. gentlemen as "my papers out of my files". If an hon. member of this house chooses to read a document, under the rules he must indicate who the author of that document is, where it has been published and where it can be obtained by other hon. members, and the Minister of Finance (Mr. Fleming) is not exempt from the rules which apply to the rest of us.


Donald Methuen Fleming: The Minister of Finance observes the rules of the house, and it is a pity that the voluble member for Bonavista-Twillingate (Mr. Pickersgill) does not. Mr. Speaker, all hon. members will realize that the members of the official opposition will have reason to tremble in their places if the rule of this house in regard to the reading of speeches is enforced. We will be hearing a great deal less of Professor Lamontagne's writings.


Hédard-J. Robichaud: Shame on you! You cannot take it.


Donald Methuen Fleming: We have just heard the Gloucester edition of Professor Lamon-tagne.


John Whitney Pickersgill: Mr. Speaker, I raised a serious point of order for Your Honour's ruling.


Donald Methuen Fleming: My hon. friend flatters me. I do not pretend to be able to carry all of these figures in my head at any one time. Therefore I continue with the assistance of the papers which I have in front of me and which contain the copious figures which I commend to my hon. friend, whose speeches would profit by being factually based upon correct figures.
The typical holder of the victory loan bond of 1966, converted into the new 4J per cent-


Mr. Denis:: Mr. Speaker, on a point of order may I interrupt this two-day marathon speech and get a ruling on the point of order raised by the hon. member for Bonavista-Twillingate (Mr. Pickersgill).


Mr. Deputy Speaker:: It is indeed preferable not to read speeches in their entirety. However, though it has been decided to enforce this ruling at the present session, it has been found almost impossible to force hon. members on both sides of the house to deliver their speeches without some assistance, and consequently a certain tolerance has been permitted in this particular matter. With regard to the point of order raised today, the hon. Minister of Finance (Mr. Fleming) is carrying on a lengthy speech which is fully documented, and he is making frequent reference to various documents. It is obvious that it would be difficult for him to give the precise contents of the documents to which he is referring unless he were reading the same.
I think that to permit the hon. Minister of Finance to carry on with his comments is possibly the best way to hasten the business of the house today. I also think that the interjections which have been raised by the hon. members of the opposition are not really so serious that they deserve the very solemn ruling of the Chair.


John Whitney Pickersgill: Mr. Speaker, on a question of privilege, does Your Honour not think that the point of tolerance has been passed?


Donald Methuen Fleming: Mr. Speaker, it might so seem to an intolerant member like the member for Bonavista-Twillingate (Mr. Pickersgill).


John Whitney Pickersgill: Could I substitute "long-suffering"?


Donald Methuen Fleming: No one has inflicted more suffering on the house than good old Bonavista-Twillingate.


Hédard-J. Robichaud: They will not stand for such long speeches in external affairs.


Mr. Deputy Speaker:: Order.


Donald Methuen Fleming: Monetary Policy
capital gain. Well, there was indeed a cash adjustment payment made to holders of victory loan bonds who would convert, and there had to be this cash adjustment in order to equalize the five outstanding victory loan issues which were quoted in the market at various rates. Differences in maturity dates create differences in market values, and in converting them all to the same basis we had to equalize these differences in the quoted market valuations of these five issues. That is the reason the cash adjustments were made. We are told now that we put too high a value on the bonds. What hon. members are really complaining about is the success which attended this conversion loan operation. They are saying now: would it not have been better not to have given such good terms? Mr. Speaker, had we not given those terms we could not have converted over 90 per cent of these issues.
Then there was the complaint about the enlargement of the money supply at the time this was done. Why did the hon. member for Ottawa West not say that we did borrow from the banks during the period between July and the end of the year? Why did he not say that we kept out of the market during that period when the conversion loan campaign was proceeding? And as for the enlargement of the money supply, why did the hon. member not say to the house that while we did borrow a substantial amount from the bank in July of last year, all of it was paid back before the end of 1958? But the hon. member did not say that. He talked about the enlargement of the money supply in the summer. He did not talk about the contraction caused by the return to the banks of the borrowed money by the end of 1958. We hear only part of the story at any time from hon. members opposite.
Then we had the statement from the hon. member for Welland (Mr. McMillan) that only 55 per cent of the bonds had been extended in maturity. We have heard everything now. The fact is that every bond that was turned in was turned in for one of a later maturity. Those who held the last two victory bonds were not, of course, permitted to convert into the short first two of the four maturities offered in the conversion issue. This led the hon. member for Welland into making the extraordinary statement he did, a statement which would mislead anybody who would pay any attention to it. Let us put the facts alongside that misleading statement. The fact is that everyone who turned in a bond and converted it took in return a bond for a later maturity than the bond which was turned in.
I have spoken of the effect of the conversion loan in resisting the rising interest rates

and declining values in the bond market in the last eight months of 1958. It is true that the Bank of Canada withdrew its support from the conversion issue at the end of October. That is not a government responsibility. I wish to make that perfectly clear. That was not done by the government; that was done by the Bank of Canada.
Then the hon. member for Ottawa West went on to say that people had suffered capital losses. Mr. Speaker, no one who has held his conversion loan bonds has suffered one copper of capital loss, neither will he suffer one copper of capital loss if he holds his bonds. What the hon. member for Ottawa West is trying to say is that anybody who sold his bonds on the market since the conversion would have sustained a loss. Well, yes -but we never promised that we would support that market. On the contrary, I point to the statement I made in this house in the first week of September, 1958, as the complete answer to that baseless assertion.
Did hon. members opposite consider telling this house what position we would have been in-not only the government, but Canada as a whole-if we had not undertaken that conversion operation last year and if we had arrived in January of this year facing, along with our other obligations, a maturity of $950 million of the fifth victory loan? They did not, and they never attempted to answer that question. They make all these assumptions, but they dodge the facts.
Nor have hon. members opposite faced the fact that as a result of the lengthening of the term of the outstanding Canadian debt we have introduced into the Canadian debt a measure of management and control which has not been present for many a year and which could not possibly have been achieved but for the success of the conversion loan campaign.
Why do not hon. members opposite, who have bleated at times about inflation, be frank and admit that the effect of the conversion loan was anti-inflationary? I quote a couple of sentences, if I may be permitted by the sensitive members opposite to do so, from the report of the governor of the Bank of Canada for the year 1958 at page 5:
It must be remembered that important and valuable benefits were achieved by the success of the conversion loan campaign through the lengthening of the term of the debt. The reform of the structure of the government debt, and the contribution it made to improving conditions for the sale of future issues of government bonds to non-bank investors, were important elements in monetary policy in the broadest sense and an essential anti-inflationary achievement.

Those are not my words. Those are the words of the governor of the Bank of Canada. The results of the conversion loan campaign were constructive, they were beneficial and they were fair.


George James McIlraith: Just before the minister
leaves the quotation he has placed on the record, Mr. Speaker, may I be permitted to ask if that was not the conclusion of a longer paragraph where the Bank of Canada report had just spoken about the money supply and was explaining what you might call the good side of the conversion loan? In other words, would the minister not agree that he has taken this statement out of context?


Donald Methuen Fleming: I have not taken that statement out of context at all.


Lionel Chevrier: Yes, you have.


Donald Methuen Fleming: I have taken the words of the governor of the Bank of Canada which are directly relevant to the point I am discussing. The hon. member for Laurier says, "Yes, you have". I do not suppose he has even read the report of the Bank of Canada. If he had he should know more about it and would not make such an empty, baseless assertion.


Lionel Chevrier: If the hon. member for Laurier had made a contribution it would be much better than that made by the hon. member who now has the floor.


Donald Methuen Fleming: Mr. Speaker, the statement I have read by the governor of the Bank of Canada is directly on the point of the effects of the conversion loan campaign. He points here to the beneficial effects of the conversion loan campaign as well as to its anti-inflationary consequences in relation to another aspect of it.
I would leave this subject of the conversion loan campaign with only one further comment. It is to answer the entirely erroneous and misleading statements that have been made about the cost of the enterprise in terms of commissions. The commissions were normal or less than normal commissions on the sales of government bonds. On the 3 per cent 3J

year issue the commission we paid was i of 1 per cent. On the 3f per cent 7-year bond issue the commission was J of 1 per cent. On the 4J per cent 14-year bond issue the commission was f of 1 per cent. On the 41 per cent 25-year bond issue the commission was 1 per cent. The issuing fee on all maturities was J of 1 per cent.
I remind the house that no sales commission or issuing fee was paid on bonds converted by the Bank of Canada, government
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accounts or chartered banks for their head office portfolios. Furthermore, there was an exempt list of about 2,500 names, including all the large corporate investors in Canada who were exempt on a co-operative basis by the investment dealers under the direction of a national committee and the commissions paid on sales to that very large exempt list were paid at the rate of l of 1 per cent on the 3J-year bond issue and J of 1 per cent on all other maturities. It remains only to add that the average rate on the total was less than that paid on Canada savings bonds.
There is one other, and I believe only one other, of the many misleading statements made yesterday which I should detain the house now to answer. The hon. member for Ottawa West evidently prided himself on being fully prepared for something that he knew I was going to say. You will find at the bottom of page 3069 of Hansard of yesterday that the hon. member was holding forth on the subject of the issuance of bonds by the government of Canada at a discount. If you look at the top of page 3070 you will find an interjection of mine in these words:
The Liberal government did it many times.
The hon. member for Ottawa West promptly retorted:
The Liberal government did not do it many times. I want to clear up that canard once and for all. I expected that interjection. If the minister will check the records he will find that when the Liberal government issued bonds below their face value, as indeed it did on many occasions, the bonds were of long term, the interest rate was lower and there was no such windfall to be made on them. There were no 13-month or other short term bonds of that sort issued in that way by the Liberal government.
It will be observed that the hon. member began to introduce numerous qualifications in his statement. The further along he went the more qualifications he introduced.
What are the facts? Here are some of the facts to which I alluded on an earlier occasion. The former Liberal government on November 15, 1935 put out an issue of $55 million of bonds maturing June 1, 1955 at 3 per cent and at the discount price of 98.75. On June 1, 1935 they put out an issue of $40 million of bonds maturing June 1, 1955 bearing interest at 3 per cent, at the discount price of 98.50. On June 15, 1950 they put out an issue of $350 million of bonds maturing June 15, 1968 bearing interest at 2f per cent, at the discount price of 99.50.
On January 15, 1953 they put out an issue of $100 million of bonds maturing January 15, 1978 at an interest rate of 3| per cent and a discount price of 97. On June 1, 1954 they put out an issue of $300 million maturing June 1, 1976 at 3J per cent, at a

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discount price of 99. On September 15, 1956 they put out an issue of $250 million of bonds maturing March 15, 1998 at an interest rate of 3| per cent, at a discount price of 97. Does that look as though the Liberal government put out issues at a discount or not?


George James McIlraith: It proves my point precisely.


Donald Methuen Fleming: But what is the hon. member's point?


George James McIlraith: If you will just read page 3070 of Hansard of yesterday's date you will find that those discounts were only put out on longer term issues with the exception of the very first one to which the minister referred which was brought out in 1935 at a time when the income tax had nothing like the impact it has had since world war II.


Donald Methuen Fleming: Mr. Speaker, I
thank the hon. member for his interjection.
1	anticipated that he would say this and that is the reason I came prepared with the figures on the Liberal issues on discounts in the short term field.


John Whitney Pickersgill: Mr. Speaker, would the hon. member permit a question?


Donald Methuen Fleming: Later. I do not wish to be interrupted in replying to this mistaken observation of the hon. member for Ottawa West. I should like to put him right and not leave him in suspense any longer.


Azellus Denis: Do not take more than two days.


Donald Methuen Fleming: I have here the figures. On November 1, 1950 the former government put out an issue of bonds maturing July 1, 1956-that was 5 years and 8 months- a total of $400 million of bonds bearing an interest rate of 2\ per cent and a discount price of 99.375. On June 15, 1950 they put out an issue of $395 million of bonds maturing December 15, 1954-in other words, 4 years and 6 months-at an interest rate of 2 per cent and a discount price of 99.80. On March 1, 1950 they put out an issue of $325 million of bonds maturing March 1, 1953-in other words, a 3-year issue-bearing an interest rate of 1J per cent and a discount price of 99.30.
On November 1, 1950, they put out an issue of $300 million of bonds maturing November 1, 1952. You will observe this was a 2-year issue. The interest rate was If per cent and the discount price 99.70. On November 1, 1951 they put out an issue of $200 million of bonds maturing November 1, 1953-in other words a 2-year issue-bearing an interest rate of
2	per cent and a discount price of 99.15. On November 1, 1952 they put out an issue of $150 million of bonds maturing December 15, 1954-in other words an issue of 2 years, 1J months-bearing an interest rate of 2 per cent and a discount price of 97.75.

On November 1, 1952 they put out an issue of $300 million of bonds maturing November 1, 1953-in other words, a 1-year issue-bearing an interest rate of 2 per cent and a discount price of 99.05. On November 1, 1953 they put out an issue of $300 million of bonds maturing May 1, 1958-in other words, 4 years and 6 months-bearing an interest rate of 3 per cent and a discount price of 97.15.
On November 1, 1953 they put out an issue of $400 million, maturing July 1, 1955 -in other words, one year and eight months -2J per cent coupon, and a discount price of 98; on March 1,	1953 they put out
an issue of $200 million, maturing July 1, 1955-in other words two years and four months-at a coupon rate of 2J per cent, and a discount price of 97.85; on March 1, 1953 they put out an issue of $100 million, maturing July 1, 1954-in other words one year and four months-at a coupon rate of 2 per cent and a discount price of 98.75.
On October 1, 1954 they put out an issue of $700 million, maturing October 1, 1957- in other words a three-year issue-a 2 per cent issue and a discount price of 99.75; on June 1, 1954 they put out an issue of $550 million, maturing December 15,	1956-in
other words, an issue of two years and six and one-half months-at a coupon rate of 2} per cent and a discount price of 99.70; on December 15, 1956 they put out an issue of $250 million of bonds, maturing December 15, 1957.-in other words a one year issue- at a coupon rate of 2\ per cent and a discount price of 98; on December 15, 1956 they put out an issue of $150 million, maturing June 15, 1957-in other words a six months issue-at 2} per cent, at a discount price of 99.125.
I hope the faulty memory, the failing memory of the hon. member for Ottawa West has now been corrected with this factual assistance.


John Whitney Pickersgill: Will the minister now permit my question?


Donald Methuen Fleming: Yes, with pleasure.


John Whitney Pickersgill: Has the minister the corresponding figures for the period from 1921 to 1930? I find this so interesting that I am sure the house would like to hear them all.


Donald Methuen Fleming: Mr. Speaker, I
am sure if the hon. member's interest persists he will demonstrate sufficient industry to consult the records for those figures. If he is no longer capable of locating them, then I will be only too pleased to obtain them for him. I always like to do what should be done to assist those who are advancing in years and suffering decrepitude.

We are now faced with an amendment in which the hon. members opposite in one of their most extraordinary flights into the realm of Liberal fiction have-


Azellus Denis: Not vision.


Donald Methuen Fleming: I said "fiction". The hon. member knows about fiction. What he knows about vision is jolly little; he knows plenty about fiction.
This is what they now invite the house to say in expressing itself. They are asking the house, if you please, to censure the government for what they say has been our failure in the field of debt management and monetary policy. I pointed out that the field of monetary policy does not lie within our control. We are responsible for fiscal policy and will bear our responsibility. But the hon. members opposite who are not familiar with the statutes in this respect have chosen then to go on to say that they have complaints about the conversion loan, about the Bank of Canada interest rate, about money supply, about the national debt and about the public debt charges.
Mr. Speaker, I hope I have succeeded in my endeavours to make it clear to the house that the situation in which we find ourselves today, that this rise in interest rates is attributable to conditions that are contributing, and contributing very substantially, to the forces of recovery at work in the Canadian economy today. What hon. members opposite are really irked about is not the slight increase in the interest rates or the situation in the bond market today. What irks hon. members opposite, Mr. Speaker, as has been clearly proven by their approach to this question today and on other occasions, is the fact that under the far-sighted action, the constructive action, the vigorous action for which the Canadian government I hope is entitled to its fair share of credit, measures have been concerted which are bringing about in the Canadian economy today that recovery which is sought, I think, by most Canadians even if hon. members opposite in the opposition do not seem to like it and seem to try to deride it and speak it down at every opportunity. Mr. Speaker, if they want to oppose the recovery of the Canadian economy why have they not the minimal courage to come out and say so in a straightforward way instead of introducing these smoke-screen, fake amendments?


Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, if I were unkind I would say that while listening to the Minister of Finance (Mr. Fleming) speak today and yesterday I could not help but think of the filibustering tactics which the Conservatives are known to have used in the past where they read into the record everything but the telephone
Monetary Policy
directory. In spite of the long and very laborious speech that the minister has made I doubt very much whether he has convinced anyone of the points he was trying to make.
In the opening remarks of this very laborious, lengthy and unconvincing speech, the Minister of Finance said this, as reported at page 3092 of Hansard, when speaking of the Liberals:
They were under no inhibitions or restraints or restrictions in the things they had to say that pilloried the credit of Canada. Apparently the responsibility which they bear as members of parliament in discussing matters that mean a great deal to the welfare of Canada is something that is of small concern to them.
I may say, Mr. Speaker, there is a definite improvement in the approach of the Minister of Finance to such a question, a great improvement. Under the old formula the Minister of Finance would rant and rave and state that by bringing on such a debate the Liberal opposition was again playing the role of prophets of doom and gloom and that we in fact rejoice because the government's monetary policy has proven to be a failure, and that we were happy to have the bank rates at the highest point they have ever been in the history of Canada and that we were glad that there were marked indications of the lack of confidence in the government bond market.
Although the approach of the Minister of Finance may have improved, it is still ridiculous and unjust for the Minister of Finance to say that the situation in which we find ourselves today, where the economic welfare of the Canadian people is at stake, is one which is of little concern to any member in this house. As a matter of fact it is because we are very much concerned with the economic welfare of the Canadian people that we have introduced this debate. Because we fear that the monetary policies and the deficit and debt management of this government are unsound, we will in fact prove that the government was wrong and indeed there is ample cause for us to complain and to criticize the government.
As a matter of fact, Mr. Speaker, we would be remiss if, under those conditions, we did not bring to the attention of the people of Canada the monetary pitfalls into which the government apparently is leading us. Since it is quite difficult, and understandably so, for the government to be impartial in its interpretation of the results of its own administration, it is the responsibility of the members of the opposition to keep the Canadian people informed of the problems and dangers they are now facing, and the mistakes the government has made in its debt management policy. It is our

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duty also to warn the Canadian people of the consequences that the administration may bring upon our whole economy.
The government has been reproaching the members of the opposition for bringing to the attention of the public the dangers that we face, for instance, in relation to the question of inflation. I am not alone in saying that it is not only the right but the obligation of members of the opposition to bring these important factors to the attention of the public. I should like to quote an article that appeared in the Commercial and Financial Chronicle of April 23. This article was written by Hon. Robert Anderson, secretary of the treasury of the United States. He has this to say about inflation:
There are those who say that in this period of stability no voice should be raised about the dangers of inflation. There are those who say that the realities of the moment should shield us from the disturbing prospects of what future inflation might produce. There are those who say that if we warn against future dangers we are contributors to the inflationary process.
What would they have us do? Would they have us ignore the future consequences of what we now propose or do? Such a doctrine must be alien to those of you who have the responsibility of keeping the nation informed as to the problems of today and equally alert to the problems of tomorrow.
What the government has been preaching, and what the Minister of Finance has been preaching, has been to discourage us from bringing the facts to the attention of the Canadian public, when they are not flattering to the government. It would be unwise, indeed, for Canada not to be warned that the monetary policies and debt management of this government have already created and are creating a disquieting monetary problem in Canada today, the consequences of which we may feel even stronger in the relatively near future.
When we speak of debt management and monetary policies we are, of course, inclined to remember the great conversion loan which, as the minister reminded us this afternoon, was the greatest conversion loan in the history of Canada. He still insists that this great conversion loan was a colossal success. We also recall the eloquence with which the Prime Minister (Mr. Diefenbaker) and the Minister of Finance spoke over the nation-wide TV hookup when they were acting as bond salesmen. We recall the appeal they made at that time to the patriotism of the Canadian people. They said the Canadian people could do in peacetime what they had done in time of war. The conversion loan was the only way to arrest the creeping inflation that was being felt at that time. If the Canadian people subscribed to this loan they would not only be helping Canada but they would be helping

themselves because the high interest rate would make them more financially secure. This conversion loan would also be a help to the provinces and municipalities in their borrowings. We might read into the record an item that appeared in the Montreal Gazette of July 15, 1958 which was entitled, "Sound Money Policy-The Prime Minister". It reads:
Prime Minister Diefenbaker tonight urged victory bond holders to participate in the huge bond conversion campaign with the same spirit and determination that brought distinction to Canada in the second world war.
He emphasized, in speaking over the largest radio and television network ever set up in Canada, that there was no element of compulsion in the bond-swap plan.
Holders of victory loan bonds didn't have to trade for the new, higher-yield conversion bonds if they didn't want to.
But he argued that the conversion of some $6,400 million in victory bonds, together with other federal operations being planned and undertaken, "will make it possible for our nation to embark on a new era of peacetime prosperity far and beyond anything we have ever known".
The conversion was "in every sense antiinflationary," he added as he and Finance Minister Fleming joined forces to explain the conversion plan to the public. It was in line with a "sound money" policy, not involving any new borrowings by the government.
Later in the article, we find this:
Mr. Fleming said the conversion loan will "simplify our debt structure" and make for more orderly debt management, easing the way to financing of future developments without creating inflation.
This great mass of $6,500 million of short term bonds (the victory bonds) overhanging the bond market has produced a feeling of uncertainty in the minds of both borrowers and lenders.
This uncertainty has made borrowing more difficult and more costly to the provinces and municipalities and to other borrowers. I am sure that when we have successfully refunded this great mass of bonds and spread them out over a much longer period of time, a healthier tone and much greater confidence will develop in the bond market.
This will benefit not only the dominion government but also the provinces, the municipalities and directly or indirectly all other classes of borrowers as well.
According to the minister this conversion loan has proven to be a colossal success. I am not an expert in these financial matters nor are the 17 million Canadian people. It seems to me that the real test of whether or not this conversion loan was a success is to examine whether or not the government achieved the objective it had in mind when the conversion loan campaign was launched. Have we actually embarked on a new era of prosperity, the like of which we have never seen in the country? Are higher interest rates the new Conservative barometer which indicates a new prosperity we are having? Have increased interest rates made it more

easy for the municipalities and provinces to be able to extricate themselves from the financial plight in which they are now placed?
It is evident now that the conversion loan was not a well thought out plan which the government had conceived in order to stabilize our economy and in order to stop inflation. It was no such thing. It was another political expedient and the government embarked on this method in order to face the great deficits that it foresaw not only for this year but for several years to come. Whether or not the government admits it, up to now the conversion loan has been a failure because it has not achieved the objectives which the Prime Minister and the Minister of Finance set forth with respect to the loan. The very fact that the bank rate increased after the anti-inflationary budget, as some people call it, was brought down a short time ago is complete indication that we have very little hope that the conversion loan will be a success in the future.
In his statement on television as part of his effort to sell the conversion loan the Prime Minister stated that the conversion loan was in every sense anti-inflationary. As a matter of fact, even for an amateur it was quite difficult to understand how the conversion loan would be anti-inflationary because in order to sell the bonds the government decided to pay an interest rate the like of which had never been paid before. Of course, if federal government bonds were bearing high interest rates all other bonds would indeed have to carry higher interest rates. To my mind that has started the ball of inflation rolling with even greater rapidity than before.
But there is another thing which I believe was inflationary and it is something which I think we might well stop to consider. The government fixed an artificial price on the bonds and bonds that were worth $94 on the market were being sold for $100. Those people who are greatly experienced in the matter of bonds, who have been dealing with bonds all their lives, indeed foresaw a wonderful opportunity whereby they would sell their bonds for $100, a price they had never hoped to get, and reinvest their gain in shorter term bonds. As a matter of fact, $371 million was "disinvested" in this way.
But the great majority of people who held bonds, the people to whom the Prime Minister and the Minister of Finance appealed on television, the people to whom the Prime Minister gave assurances that Canadian bonds including victory bonds had the strength of the rock of Gibraltar, were a little dismayed, because of their inexperience in dealing with bonds, to see that the value of their bonds
Monetary Policy
kept declining. As a result, they sold their bonds for $92.50, having lost confidence in the government and in the victory loan bonds.
I am beginning to wonder whether there is not something absolutely immoral and economically unsound about fixing an artificial price for a bond which has no relation to its real market value.
In order to facilitate the flotation of the conversion loan the government also expanded its money supply so that the conversion loan, which was supposed to be antiinflationary, was accompanied by an alarming increase in the money supply. In my opinion, . since the Conservatives have had the responsibility of office the government has created every penny it has borrowed.


Donald Methuen Fleming: What nonsense!


Louis-Joseph-Lucien Cardin: This, of course, is no different from the straight printing of currency. For the more than 20 months from the end of July, 1957 to April 1, 1959 the entire increase in the government debt, including savings bonds, has been paralleled by an increase in the money supply. During that period the gross debt increased by $1,764 million and the money supply was increased by $1,795 million. Moreover, the increase in the marketable debt, that is, gross debt less savings bonds, has been $1,187 million which corresponds to an increase of $1,217 million in the holdings of the Bank of Canada and the commercial banks. This means that the Conservative government has in fact decided to monetize its deficit.


Donald Methuen Fleming: Will the hon. member tell me how the government can operate in the field of monetary policy?


Louis-Joseph-Lucien Cardin: As a matter of fact, it has acted in the field of monetary policy-


Donald Methuen Fleming: The government?


Louis-Joseph-Lucien Cardin: -and what I have just said is in fact the result of the government's administration in this field.


Lionel Chevrier: The minister does not understand. He is hard of hearing.


Donald Methuen Fleming: The hon. member for Laurier does not understand the difference between fiscal and monetary policy or the difference between the government and the Bank of Canada and their respective responsibilities.


Lionel Chevrier: I can explain it to you very quickly.


Donald Methuen Fleming: You were not here last night.


Lionel Chevrier: No, but I have listened to a lot of guff from you this afternoon.

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Donald Methuen Fleming: Is it over your head?


Louis-Joseph-Lucien Cardin: As I say, I think it is clear that the Conservative government has in fact decided to monetize its deficit. I admit that I had to look into the matter of monetization and in my research I came across an article in the Commercial and Financial Chronicle of April 23 by the secretary of the treasury of the United States, Robert B. Anderson, and this is what he says:
The fact that fiscal matters are little understood, even by some rather prominent and otherwise well informed people, was brought home to me one day when a visitor in my office remarked: "You talk of the dangers of monetization of the debt, Mr. Secretary. You know I just don't believe there is such a danger, probably because I don't quite understand what monetization means."
The Hon. Robert Anderson gave this explanation:
I said this to my visitor: "Now suppose I wanted to write cheques of $100 million starting tomorrow morning but the treasury was out of money. If I called up a bank and said, 'will you loan me $100 million at Si per cent for six months if I send you over a note to that effect,' the banker would probably say, 'yes, I will.'
Where would he get the $100 million with which to credit the account of the United States treasury? Would he take it from the account of someone else? No, certainly not. He would merely create that much money, subject to reserve requirements, by crediting our account in that sum and accepting the government's note as an asset. When I had finished writing cheques for $100 million the operation would have added that sum to the money supply. Now certainly that approaches the same degree of monetization as if I had called down to the bureau of engraving and printing and said: 'Please print me up $100 million worth of greenbacks which I can pay out tomorrow.' ''
That is exactly what the government has done. The government has paralleled the increase in our national debt by an equal increase in our money supply, and to my mind that is a classic definition of inflation.
Then, of course, it is also quite difficult to understand how, according to the Minister of Finance, the highest bank rates in Canada's history can be helpful to the provinces and the municipalities. We recall all the speeches that were made by members of the government and all the crocodile tears that were shed about the financial plight of the provinces and the municipalities and the fact that they were so greatly in debt it was very difficult for them to get out. We also remember the promises that were made that the provinces and the municipalities would have a greater share of the tax dollar and that borrowings would be made far more easy. It seems to me that the increase in the bank rate and the increase in rates generally will make it virtually impossible for

the provinces and municipalities to extricate themselves from the financial plight they are in.
As a matter of fact, this particular increase can only ensure the provinces and the municipalities that they are going to stay with their debt. Promises made were to the effect, "We will allow you a greater share of the tax dollar; We will facilitate your borrowing powers," but as a matter of fact the action of the government means that the federal government will collect the tax and the municipalities and the provinces will have to borrow at higher interest rates.
I would like to quote also from the Montreal Gazette, an article which I think is quite accurate and which reflects very much my own way of thinking. It is an article by Mr. John Meyer in the Gazette for July 16, 1958:
The federal government is exchanging one set of fixed charges, the interest it must pay on victory bonds outstanding, for another, higher, set.
At the same time, it has established a higher base cost for credit. All other borrowing must now conform to these new rates at a subsequent higher cost to the borrowers.
The next paragraph is entitled, "Tough on Taxpayers":
The higher cost of borrowing, in so far as governments are concerned, means an increase in the fixed charges which taxpayers must meet. It means that more of the tax revenue must now be committed to payment of interest rates, leaving less for other purposes.
The higher cost of borrowing means too that the possibilities of tax reduction are that much more limited.
As a matter of fact, we really know now that that turned out to be very true. I continue:
It means further that the proceeds of borrowing by corporations are reduced by the higher interest rates they must pay. Some corporations will be forced, undoubtedly, to postpone their borrowing or, alternatively, increase the amount: neither is desirable.
Finally, it will mean an increased American demand for Canadian dollars as junior governments and corporations try to reduce their borrowing costs by borrowing at the lower interest rates prevailing in the United States.
And that demand for Canadian funds will push an already high premium higher still, to the further disadvantage of Canadian producers for export and domestic consumption alike.
Does this sound, as though we were entering into a new era of prosperity, the like of which we have never seen before? Does this sound as though we were entering upon a sound monetary policy? The conversion loan and all that goes with it was supposed to be anti-inflationary in every respect. I do not believe that anyone can come to the conclusion that the Prime Minister did, and as

the Minister of Finance has today when he claims his conversion loan was indeed a complete success.
Before finishing there is something I would like to read into the record which I believe is important at this time. It is an extract from a television broadcast that was made on April 21, 1959. I believe this transcription to be correct. It was taken from the sound track directly. However, if it is not correct I am quite sure that the Minister of Finance will correct me, and I wish to be fair about this.


Donald Methuen Fleming: May I ask the hon. member who took it? Did my hon. friend take it?


Louis-Joseph-Lucien Cardin: No, I did not take it, but it was taken from the sound track.


Donald Methuen Fleming: Who did take it?


Louis-Joseph-Lucien Cardin: I could not tell my hon. friend who took it, but it was taken by a machine and transcribed by one of the stenographers. However, if the hon. minister feels it is not correct then I shall be happy to have his correction. During the conversation questions were asked of the minister. One of these questions, asked by Mr. Blakely, was:
But governments can also contribute to high costs. I know that the Conservatives argued this most forcefully for about 22 years. They used to say, what's wrong with this Liberal government? They say that if you spend your own money it is inflationary, but if they take it from you and spend it for you, why then, it is non-inflationary. What nonsense this is. Are you not doing the same thing here?
Then the Minister of Finance:
No, no, no, no. You are quoting the things that we said in the days in opposition, when the government of that day was making a virtue of taking money from people, not to meet the exigencies of balancing the budget or even coming close to it or in view to reducing a deficit. But they were taking money far more than what was needed to meet the ordinary expenses of government on the theory that they could do a better job of managing the expenditure and handling of the people's money than they could do themselves, and we never have been of that opinion and I hope we never will.
Of course, Mr. Speaker, I could make the very obvious observation that it must take an incredible amount of gall, sanctimony and cockiness for the Minister of Finance to make such a self-accusing and boomerang statement so soon after the "We knew it all" budget that he brought down just a few weeks ago. But if this statement means anything at all it means that the government does not intend to budget for a surplus in order to reduce the national debt, and that the government proposes to continue to balance the increase in the national debt by an increase in the
Monetary Policy
money supply. As I said before, I think that is absolutely inflationary and detrimental to the Canadian economy.
The last thing I should like to mention, is this. In his remarks the minister asked that the Liberal opposition should make some constructive suggestions. We feel a little as though it would be almost impertinent on the part of the Liberal opposition to make any suggestion to the Conservative government who, in 1957, had, according to them, all the answers and all the solutions.


An hon. Member:: Give them the chance and they will hang themselves.


Louis-Joseph-Lucien Cardin: I would say, that I am a little surprised now to hear, after 20 months in office, the Minister of Finance calling on the Liberals for help in order to get himself out of the predicament he has put himself into. But if we were to make suggestions from this side of the house, then we would have to start right from the beginning. First of all, the Liberals would not have made the extravagant promises which the Conservatives made, and not having made the promises we would not have such a great debt. Not having the great debt we would not have had to borrow so much. Not having had to borrow so much we would not have had to raise the interest rate so high. Not having had to raise the interest rate so high we would not have had to have such an increase in the supply of money. Not having had to have such an increase in the supply of money, we would not have had as much inflation. Not having as much inflation we could go back to the very useful method of budgeting for a surplus when there was the danger of inflation, and bugeting for a deficit when there was a danger of recession.
I will admit that this method, which proved to be so successful in the past, is not as spectacular or as fancy as the Conservative's great conversion loan, but it certainly had one distinct advantage-it worked.


Hédard-J. Robichaud: In his
long introductory remarks last evening and in his two-hour marathon speech this afternoon, the Minister of Finance (Mr. Fleming) has insisted that the government has no influence on the rate established by the Bank of Canada for the chartered banks. And then he told us that interest rates have now returned to those of the summer of 1957, but he was very careful to add that the government has no jurisdiction over them. He next accused members of the opposition of flaring up when interest rates are rising, and of saying nothing when interest rates were going down. We know where the Minister of Finance was when the

Monetary Policy
rates were going down, and we know where he is when the rates are going up. In fact, when the rates were going down the minister, both inside and outside this house, took credit, or gave credit to the government, for the decline in the rates, and I should like to remind him at this time of the reply he gave in this chamber a little over a year ago on January 31, 1958, as reported on page 4089 of Hansard, when he was asked a question by the then hon. member for Nanaimo.


Mr. Colin Cameron (Nanaimo):: May I address a supplementary question to the Minister of Finance? Can he inform the house if this change from a tight money position has been the result of some action by the government, and what the action has been?


Donald Methuen Fleming: Yes, Mr. Speaker, there has been action on the part of the government. I do not say that the reduction is attributable entirely to the government's action, but it certainly is in line with government policy, and is in part attributable to it. The fact is that we have been seeking to bring about, with the means open to us, a reduction in this rate. I am not at liberty, and it has never been the practice, to indicate to the house all the government operations or the operations of the fiscal agent of the government in these matters, but I can assure my hon. friend that this reduction, which I am happy to report this morning, is fully in line with government policy.
Those were the words of the Minister of Finance when interest rates were going down.


John Whitney Pickersgill: But that was before the election.


Hédard-J. Robichaud: Yes, fortunately for them it was before the election. But what is the minister's new doctrine in this respect? The doctrine which he expressed last evening was that the government is responsible for fiscal policy and that the Bank of Canada is responsible for monetary policy, including the bank rate. This is a complete vindication of what Mr. Harris was saying when he was minister of finance. It is, in fact, exactly what he used to say. What a change has come about in the attitude taken by the minister. He contends that our amendment seeks to hold the government responsible for all that has happened in the field of monetary action. That is not so. We certainly did not do this in our amendment, and I will come to that later on. But that is certainly what the minister was doing when he was sitting on this side of the house as the hon. member for Eglinton. Does this mean that the minister, then, had not read the statute law enacted by this parliament, as he accused some of the members on this side of the house of not doing when he spoke last evening and this afternoon? It certainly would appear so if we are to judge the

minister by the statements he made when he was sitting on the opposition side.
I am sure that no one who followed the remarks made by the minister could fail to realize that the hon. gentleman has completely missed the nature of our indictment. He is trying to avoid his responsibilities and trying to blame the Bank of Canada for what is happening today in the field of debt management and monetary policy. It is typical of the attitude of the present government to lay all their troubles on the shoulders of someone else, if not on the shoulders of the previous administration, then on those of the Bank of Canada. What does our indictment really seek to do? We blame the government for the mistakes and inequities associated with the conversion loan, which was a failure notwithstanding the statement made this afternoon by the minister himself. We blame the government for the error it made when it offered to buy victory bonds at par, thereby inducing well-informed people not to convert. We blame the government for including the seventh, eighth and ninth victory issues in the operation, thereby giving a scope to the procedure which was quite unnecessary and ill-timed in the light of the depressed condition of the market.


Donald Methuen Fleming: Would the hon. member permit a question? Are we to infer from his remarks that he approves of the conversion loan as applied to the fifth and sixth victory loans?


Hédard-J. Robichaud: If there was a necessity to convert those loans, the hon. gentleman was in a better position to obtain this information than any member on the opposition side.


Donald Methuen Fleming: Would the hon. member answer my question?


Hédard-J. Robichaud: Monetary Policy
exert our efforts in the international field towards achieving conditions of durable economic growth and monetary stability throughout the world.
Here we had a warning from the governor of the Bank of Canada to the effect that the threat of inflation was far from being checked as the minister claimed it was on November 14 of 1957.
Let me place on the record a further statement made by the minister in November 1957. This has to do directly with the bank rate situation. Again, at page 1162 of Hansard of November 14, 1957, we find a statement by the minister in these words:
In this house two days ago I referred to the fact that in the past two months interest rates paid by this country on its treasury bills had dropped by 3/10 of 1 per cent. I am happy to report that in the weekly issue of treasury bills today we have achieved a further reduction which now brings the reduction in the last two months to 4/10 of 1 per cent.
It was the minister who claimed "We have achieved a further reduction" on that occasion but today when the rates are going up he tells us that the government has no responsibility and that it is the responsibility of the Bank of Canada.


Donald Methuen Fleming: Would the hon.
member distinguish between treasury bill rates and Bank of Canada rates?


Hédard-J. Robichaud: Yes, Mr. Speaker. May I point out that the distinction has been made two or three times in the course of this debate-


Donald Methuen Fleming: You have missed it.


Hédard-J. Robichaud: -by hon. members who have spoken and it was made by the minister himself in his lengthy marathon speech.
The minister clearly stated and I repeat again:
I am happy to report that in the weekly issue of treasury bills today we have achieved a further reduction-
When things are going well the minister is prepared to take full credit but when the rates go up-and this was especially true when the Liberals were in power-the minister blames someone else. He used to say the Liberal government was responsible when the rates went up during the time we were in office but today when we have a Conservative government the minister tells us when the rates go up it is the responsibility of the Bank of Canada. The minister admitted this last evening when he stated as reported at page 3099 of Hansard of April 27:
The government does not exercise any sway in the field of monetary policy.
Those are the minister's own words. He went on to say:

The right to issue currency is vested exclusively in the Bank of Canada. Notwithstanding this fact this misguided amendment-
That is how the minister characterized our amendment. I continue:
-seeks to hold the government responsible for all that has happened in the field of monetary action.
How clearly he expressed his opinion when he stated further on:
I point out to you that the government oi Canada has no responsibility whatever for the establishment of the Bank of Canada rate.
Again, Mr. Speaker, no responsibility when the rates are going up but all the responsibility and credit when the rates are going down; this is another proof of the inconsistency of the Minister of Finance who is prepared to take the credit when the rates are going down but relegates the responsibility to where it belongs when the rates are going up.
It is not very long ago since we heard the Minister of Finance state in this house that the monetary policy of the present government was helping the municipalities by making it easier for them to borrow. In other words, faced with the largest expansion of the monetary system in any year since the war, with the largest increases in peacetime in the national debt, the highest public interest charges in Canada's history and the highest bank rate since the Bank of Canada was established, the Minister of Finance tells the provincial governments and the municipalities: "We will tax; we will collect, but you can borrow". He is very careful, however, not to mention that these municipalities will have to borrow under the highest interest rate in many generations; thus adding further to their heavy burden of taxation.
How different is the attitude of the Minister of Finance today compared with statements which he made previously either in this house or outside of this house! I mentioned a while ago some of the statements he made in his first year as Minister of Finance. It is true that the Minister of National Revenue (Mr. Nowlan) has claimed that there is a difference between statements made outside this house and those made inside the house. Other members of the present government have made the same claim. They make a difference between statements made as pre-election promises and accomplished facts when they have the responsibility of power. How can the minister account for the statement he made on February 23, 1958, when he said:
We have eased the burdens of the municipal governments by bringing about easier credit and lower interest rates.

How can he account for the statement he made at St. Paul, Quebec, and at Montmagny on September 28, 1958, exactly seven months ago when he said:
Credit is much easier: the provinces and municipalities in their financial operations will derive much benefit from this conversion operation.
It is now true that the benefits which were mentioned by the Minister of Finance have turned out today to be the highest interest rates in Canada's history.


Donald Methuen Fleming: They are not.


Hédard-J. Robichaud: It was on July 14, 1958, in an announcement over the radio and TV about the Canada conversion loan that the Minister of Finance said:
Through this Canada conversion loan, the government is reaffirming its determination to follow policies that will maintain the soundness of our currency and the purchasing power of your dollar.


Mr. Regnier:: Mr. Speaker, on a point of order-


Hédard-J. Robichaud: And again, when referring to higher interest rates, one could but recall that statement-


Laurier Arthur Régnier: On a point of order, Mr. Speaker, the hon. member is reading his speech.


Lionel Chevrier: Mr. Speaker, I presume the hon. member was not in the house this afternoon when the same point was raised and the Speaker ruled very clearly on the issue at that time.


Mr. Bell (Saint John-Albert):: There is a difference between the Minister of Finance making a technical speech and an hon. member making a speech.


Mr. Speaker:: The point has been raised by the hon. member that the hon. member for Gloucester is reading his speech. The hon. member for Gloucester knows that the practices do not permit the reading of his speech verbatim, and the house will rely on him not to breach such a practice.


Lionel Chevrier: May I simply and respectfully draw to your attention the ruling which was made prior to this speech being made when the minister rose and spoke this afternoon, attention, attention.


Mr. Speaker:: I was not aware that such a ruling had been made. The ruling of the house is that in introducing technical and difficult matters, the Minister of Finance (Mr. Fleming), the Leader of the Opposition (Mr. Pearson), or other persons making principal speeches, are allowed to follow their text more closely than other members are expected
Monetary Policy
to do. I have not heard the hon. member for Gloucester. He can tell us what he is doing and then we shall proceed.


Hédard-J. Robichaud: I have substantial notes, Mr. Speaker, and I have been reading some quotations from press reports and radio and television talks by the minister himself, and these had to be quoted verbatim. I have given the reference, the dates and the places where the remarks and the statements have been made.


John Whitney Pickersgill: Which the minister did
not do.


Hédard-J. Robichaud: Again I want to refer to the statement which was made about higher interest rates. One could not but recall the statement which was made in Calgary on March 14, 1958, by the Prime Minister when he claimed that:
Interest rates had fallen sharply as a result of government action since last June, from a high of 4.33 per cent to 2.89 per cent in recent weeks.
Again the Prime Minister was taking full credit for the reduction when he said the reduction had come about "as a result of government action since last June". Today the Minister of Finance and his government are dodging the responsibility when the interest rates are on the way up and are the highest in Canada's history.
Again, when speaking in Halifax on March 24, 1958, the Prime Minister in referring to finance, said, and I quote from the Halifax Chronicle-Herald, of March 25, 1958:
This government reversed the tight monetary policy of the Liberals and the interest rates have been decreased from 4.3 to 2.8 per cent.
The taxpayers today have not forgotten his federal election telecast on May 22, 1957, when the Prime Minister said:
"I think I might summarize our general view in this regard. We feel that the action taken by the government-and after all it was the government that took the action,"-raid the Prime Minister, "in restricting credit, raising interest rates and the like, has not been effective."
Following the example of his Minister of Finance, the Prime Minister himself-


Mr. Speaker:: Order. Perhaps this would be a convenient place for the hon. member to interrupt himself.


Thomas Miller Bell: Why do you
not mark the page so you will know where to begin?


John Whitney Pickersgill: He will also know where to end.
At six o'clock the house took recess.

Monetary Policy AFTER RECESS
The house resumed at 8 p.m.


Hédard-J. Robichaud: 
An hon. Member:: Ten.


Hédard-J. Robichaud: I hear one member say
"ten". I hope, for the good of the country, we will not have to face such a situation.
The fifth point was:
5.	The highest public debt charges in Canada's history.
Is this right or wrong? If it had been wrong we would have heard the Minister of Finance interjecting "nonsense" or "it is not true". The fact that the minister did not call it nonsense shows he agrees with this statement. Oh, I know that the Minister without Portfolio for Newfoundland would say, "So what; what is the difference?" It makes a big difference to the taxpayers of this country.

What are the requirements which the Minister of Finance will have to face in the years ahead? The minister will have to again face a deficit in the year 1959-60 of over $850 million. The minister will have to provide refunding for $1,735 million before April 2, 1960. How is he going to raise the money? There are only three courses of action open to him. The first one is to increase the money supply. The second one is to increase the interest rate on government bonds, and thus make them more attractive. His third course -well, we hope he never has to take this course-would be to use force or coercion to get the money he requires. The minister did not have time to deal with this most important question in his long speech.
How is he going to get these requirements for 1959-60 which amount to well over $2.5 billion? Unfortunately, the Minister of Finance, in his swan song this afternoon, did not see fit to give us this information.
We on this side of the house are sincerely hoping that it will not be the end of the Minister of Finance. Rumours are circulating that the Prime Minister has better days ahead for the present Minister of Finance but we also realize the predicament of the Prime Minister in trying to find a successor for the present minister. I know that someone may say, "Well, maybe it could be the Minister of Justice". We all recall the statement made by the Minister of Justice (Mr. Fulton), as reported in the Vancouver Sun of March 29, 1958:
Justice minister Fulton said Friday night the Bank of Canada will be made more responsible to parliament if the Conservatives are re-elected in the federal balloting Monday.
In view of the present policy of the government we cannot see how the minister can qualify. We have the Minister of Transport (Mr. Hees). The Minister of Transport does not believe too much in budgets. After all, has he not said that very little is accomplished by budgets? We know that the government of this country needs a budget and with the Minister of Transport as minister of finance we might have to do without one.
Then there is the Minister of National Revenue (Mr. Nowlan) who believes in two kinds of promises, those made inside the house and those made outside the house. It would be unfortunate if the Prime Minister had such a man as minister of finance because he could not trust the promises or statements he made outside the house. Then we have the Solicitor General (Mr. Balcer), but I think it would be too much of a task for the Solicitor General because it would be imposing capital punishment on himself.
We also have the two ministers without portfolio. Maybe the Prime Minister will
Division
choose them. They could act together, be given certain responsibilities for a change and without additional cost to the treasury because they would share the task. With regard to the Minister of Northern Affairs and National Resources (Mr. Hamilton), who has just taken his seat, I am afraid that his vision might be too much for the country to face because the deficits which would be the result of his vision would be almost unbelievable. As far as the Minister of Trade and Commerce (Mr. Churchill) is concerned, we might be against him taking the office because, as I said a while ago, we want a budget. The Minister of Trade and Commerce might want to keep the budget secret and we would be up against it again. The budget might be one of those hidden reports which are so hard to get and if he ever produced it we might have to go to the national Liberal federation to get copies of it.


Mr. Speaker:: It being 8.15 o'clock, it is my duty, pursuant to section 4 of standing order 56, to interrupt these proceedings and put forthwith the question on any amendment now before the house.



SUGGESTED INCREASE IN MEMBERS' INDEMNITIES

Douglas Mason Fisher: Mr. Speaker, I have a grievance, and I am very pleased to see the Prime Minister (Mr. Diefenbaker)

and the Minister of Finance (Mr. Fleming) in the house. This is a subject to which I have given considerable thought, and it is one which is of interest to all hon. members in this house. It concerns the question of the inadequate recompense paid to members of parliament in the present economic circumstances.
I wish to make it perfectly clear that I am making these remarks as an individual and that I have had no consultation with my party colleagues in regard to them. I feel this is a grievance which will need to be examined, and need to be examined fairly soon. This particular parliament happens to contain a higher proportion of younger men than was found in most previous parliaments and it is upon these younger men, I think, that the cost of living, and of performing the duties of a member of parliament, bears most hardly. It is true that there are a number of gentlemen who are members of parliament who do not need the extra increment which might come from a change, but the majority of members or, at least, many of them, are suffering at the present time from being involved in expenses so high that they do not allow them to carry on a proper family life and discharge their duties properly.
I know it can be said that each one of us got himself into this position and that we can get ourselves out of it. I know this is true, and I know, also, that there are many hon. members of this house who are now thinking of ways and means of getting themselves out of it without disturbing the loyalties which they have built up in their constituents. It seems to me that this is a serious question, when there are so many hon. members who are wondering how they can continue in present circumstances. It seems to me that if we want to keep the best and most active people here we will have to pay them more. And if people say to me, as no doubt some of my constituents will say to me "You are probably being overpaid now", I am willing to stand up and tell them "It is time you paid us what we are worth for the job we are doing." I hope other hon. members will say the same to their constituents.
I do not wish to go on developing this subject at the moment. If nothing is done this session, I firmly intend to put a resolution on the order paper next session asking that the government consider establishing a salary of at least $12,000 plus expense accounts paid to, at least, $3,000 a year. At any rate, that will open up the discussion. However, I hope that in view of the opinion generally held by the majority of hon. members in this house the government will give very serious consideration to the whole problem.

I cannot leave this topic without saying one word in passing about the gentlemen who report on the activities of this house and upon the doings of the members of parliament. It always seems to me that there is a tendency on their part to ridicule members of parliament and politicians in general as always looking for something extra which, perhaps, they do not deserve. I hope some of them will get down to work and do some research into the facts. Perhaps they would then find out how burdensome the situation has become for members of parliament at the present time. I think it would not be difficult to produce some actual evidence which would bear out what I have said tonight.
It is customary, when raising a grievance such as this, for anyone concerned to follow on. All hon. members have the opportunity -it is like asking a supplementary question -and if there is agreement with what I have said, I hope this opportunity will be taken to express it.


Mr. John MacLean (Winnipeg North Centre):: Mr. Speaker, it is not very often that I agree with the comments of a member of the C.C.F. party. Still less do I agree with the philosophy adopted, or the stand taken by the C.C.F. group in this house, but I may say that I am in complete agreement with the remarks which have just been made by the hon. member for Port Arthur (Mr. Fisher).
I should think offhand that many hon. members of this house if indeed not the majority of them are in agreement with the hon. member's remarks, but whether or not they will stand up and say anything at this point is another question. The possibility of any increase in our salaries or expense allowances is probably a matter for the government to decide. I am a new member of this house and perhaps I am being somewhat presumptuous in getting up and stating my views and making reference to my own circumstances. As a young man out of this house I perhaps might not be making enough money per se. Nevertheless if the press or other interested people in Canada would care to take a second look at the amount of money it costs us to come down to parliament to serve as members of this house I believe they would be quite prepared to say we should be allowed an increase whether it be in the form of an increased car allowance, or an increment in regard to expense allowances, a salary increase or whatever form it may take.
May I say only this with respect to my own position. I came out of law school only three years ago. Emerging from school I found myself in debt. Since becoming a member of parliament and coming to Ottawa to represent the people of my constituency-
28, 1959	3133
Proposed Members' Indemnity Increase which was represented formerly by a member of the C.C.F. party-I have found myself further in debt than I was before. I say this for the benefit of the cabinet which I see here in appropriate numbers tonight. I say this only in recognition of the heavy-duties imposed on our cabinet ministers. If those hon. gentlemen were free to state their cases this evening they would probably agree with my remarks. I do not like to use the word "underpaid" in reference to members of parliament and of the cabinet but I am sure hon. gentlemen would agree with me that they are not reimbursed to the full extent of the expenses imposed on them by their duties in office.
It is with these few words that I as a member of the Conservative party support the hon. member for Port Arthur. As a new member of this house perhaps my remarks will be taken the wrong way but I have spoken this evening as a young man who has recently come into the house and perhaps my circumstances are somewhat similar to those of the hon. member for Port Arthur. I wholeheartedly support everything he has said tonight.


John Whitney Pickersgill: Mr. Speaker-


An hon. Member:: Here is another poor law student.


Mr. Speaker:: Is the hon. member for Bona-vista-Twillingate rising on the same point?


John Whitney Pickersgill: No, Mr. Speaker.


Mr. Speaker:: I will recognize the hon. member for Stormont.


Mr. Grant Campbell (Stormont):: Mr. Speaker, despite the fact that the previous speaker in this debate is a roommate of mine, I want to make it clear that there has been no collusion between us even though I am rising to address myself to the same subject.
I wish to commend the hon. member for Port Arthur (Mr. Fisher) for his courage and integrity in raising this matter. One factor we should consider is this. We in North America are living in a capitalistic and commercial economy where there is a price tag on everything. There exists here a tendency to judge things according to the value on the price tag and the attention accorded hon. members of this house is largely dependent on the amount that is paid them.
Although this is beyond my personal sphere of concern I believe the same thing applies to members of the judiciary. I believe that the most drastically underpaid and underestimated persons in this country are members of the judiciary. It should be remembered that originally they were accorded

Request for Aid to Fishermen the status of law lords with all the perquisites involved under the British system of law.
Then next to members of the judiciary I would say that men in public life, Canadian politicians, are the most underpaid and underestimated group. When I think that the manager of an innocuous little manufacturing concern is probably earning five or six times the amount paid the Prime Minister (Mr. Diefenbaker) of this country I am appalled. It is a fantastic situation when one considers the relative responsibilities and capabilities of the two men. For that reason alone, if for no other, I believe that the matter of the remuneration paid to those in public life should be the subject of a thorough investigation.



NEWFOUNDLAND


John Whitney Pickersgill: Mr. Speaker, I am speaking on a very different grievance. I am rising to speak primarily on behalf of my own constituents who in the main, I can assure the hon. member for Port Arthur (Mr. Fisher) and those other hon. gentlemen who have spoken, have very much lower incomes than we in this house have and have no tax-free expense accounts or anything of that sort.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: In saying that I am not implying any kind of criticism of what was said by these hon. members at all. I am merely seeking to draw attention to the fact that the fishing industry, which I think unfortunately and regrettably in this country still has perhaps a lower average income than any other industry in Canada although it is the oldest industry in the nation, there was in part of the community where fishing is the main occupation a very regrettable failure of the fisheries last year. I am going to try in the most uncontroversial way I am capable of, to make an appeal to the government and particularly to the Prime Minister (Mr. Diefenbaker)-and I am very glad he is here this evening-on behalf of this group of citizens.
In order to found my grievance I should like briefly to refer to a question which was asked by my friend the hon. member for Trinity-Conception (Mr. Tucker) on April 14. He directed his question to the Minister of Fisheries (Mr. MacLean). I will not even read the question. It had to do with price supports. I should, however, like to read one paragraph of the minister's answer as reported at page 2659 of Hansard of April 14, in which the minister said:


I feel, Mr. Speaker, that the hon. member has in mind chiefly the problem which everyone admits existed in Newfoundland last year. The fisheries prices support board held special meetings last September in Halifax and St. John's to look into the problem of the income of the Newfoundland fishermen who fish cod to be processed into dried salt cod. The advice of the fisheries prices support board was that the problem in Newfoundland was one of catch failure rather than of prices-
I believe the minister was completely right in expressing that view. If it is not contrary to the rules to say so I should like to state that although the minister and I do not agree politically I do appreciate-and I think all hon. members who are interested in the fisheries appreciate-the genuine interest that the minister has shown in the fishermen ever since he became Minister of Fisheries. I believe the minister has done everything he could be reasonably expected to do within the sphere of his department to help the fishermen and we appreciate it. I am glad to have the chance to say so. I made this comment in the committee but I am very glad to say so in this chamber if I am not transgressing the rules of the house.
This problem is one that the minister rightly pointed out in the committee. I know I should not be talking about the proceedings of the committee and I am not going to break the rules of the house by referring to it in detail. The minister pointed out that to deal with this problem was something for the cabinet and quite beyond the scope of one minister. That, of course, is quite right.
I should like to recall to the Prime Minister's mind what I am sure I do not need to do because I am sure it is very much in his mind, but I wish simply to remind him of what he said in another context in the house on August 30 of last year when he was speaking about agricultural policy. He made this statement which I am sure everyone in the house accepts in principle:
What we are trying to do is establish a concept of national policy designed to ensure equality oi opportunity for all Canadians.
Now I must say I was also encouraged to make my plea this evening by certain words used by the Prime Minister on television the other evening about the province, for part of which I am a member. I would just like to recall to hon. members' minds the words used by the Prime Minister-a very brief part of them:
There should be neither doubt nor misunderstanding about the equality of Newfoundland's status in the Canadian partnership. That equality exists as a right of our newest province's membership in the Canadian confederation. It is the earnest hope of my government that the differences may be settled as quickly as possible so that we may get together,-

And these are the words I especially want to draw to the attention of the house:
-and achieve together the raising of the general standard of living of the province and its people to that which we covet for all Canadians.
This is a problem about which I wrote to the Prime Minister a suggestion last October. I am not going to enter into any recriminations at all but the suggestion I made at that time did not commend itself to the government and it is now no longer possible for them to do anything about it. As a result of the fact that at least half the fishermen on the northeast coast of Newfoundland did not qualify for unemployment insurance because of the failure of the fisheries most of them have been driven on to relief. Most of those who did not qualify, and even some of those who did qualify for the minimum benefits, have been driven on to relief-that is at a lower scale-during this winter and many of them because of the stormy season and the other difficulties found themselves at the end of the season with cod traps that were in a bad state of repair, or cod traps that were lost entirely.
What the fishermen need if they are to be self-sufficient this year is enough money- and it would not be very much-to buy twine to fix up their traps or, in some cases where their traps are lost, enough money to get new traps so that they can go fishing and earn their own living this summer when we hope there will be a good fishery again.
Since fisheries are exclusively within the jurisdiction of the federal government, this is not a big problem in its dimensions in relation to the country as a whole. I know it applies to certain parts of Newfoundland, perhaps to most; but at any rate to the Atlantic side of Newfoundland. I believe it applies to the Magdalen islands and possibly to the Quebec-Labrador area, but there is an hon. member who represents that constituency and he can speak for himself, and perhaps to one or two limited areas in Nova Scotia. But there are those areas, and there is a problem.
It is a problem that I am sure if I put it in certain terms the Prime Minister and a good many hon. members will understand; it is the kind of problem that existed in Manitoba, Saskatchewan and Alberta, particularly in Saskatchewan, in 1937, and in one or two other years, namely the problem of seed grain, when the farmers had such poor crops that many of them did not have enough grain to reseed their fields. The provincial governments lend money to the farmers and those loans were underwritten by the federal government. There, of 66968-9-199
28, 1959	3135
Request for Aid to Fishermen course, there was a divided jurisdiction under the constitution. Here there is an undivided jurisdiction. The appeal I am making to the government is in one way or another, by one device or another, to make this very small sum available by way of loan. I am not suggesting that it be a gift, or anything of that sort. It could be easily administered by the excellent officers of the Department of Fisheries who know the fishermen intimately. The loan could be made perhaps without interest until the end of the season but to bear interest thereafter.
I would not like to hazard a guess as to how much it would be, but the Minister of Fisheries would probably have some notion. I think it would be ridiculous for me to make a guess.


John George Diefenbaker: Make an estimate.


John Whitney Pickersgill: Well, I am sure it would be well below $100,000. It is a problem, a human problem. These people are Canadians like the rest of us. They are faced with a difficulty in a primary industry, and it does seem to me, being reminded of this problem and reminded, as I tried to remind the Prime Minister of the analogy which he and I knew so well over 20 years ago, I hope it would appeal to the Prime Minister, as I am sure it would to the Minister of Fisheries and that perhaps-I do not ask for any immediate answer-the government would take it into consideration.


Frank Howard: Will the hon. member permit a question?


John Whitney Pickersgill: Gladly.


Frank Howard: I ask it because in his introductory remarks he may have left the wrong impression when he referred to the question raised by the hon. member for Port Arthur. My question is, is the hon. member for Bona-vista-Twillingate now writing the biography of Mackenzie King for love or money?


John Whitney Pickersgill: It is a personal question, sir. I do not know whether I should answer or not, but I am writing it for money. I have to earn my living and, as a private member of parliament, I have always taken the view *-it is perhaps an old-fashioned and Liberal view, but I think it is a view that the Prime Minister would probably share-that being a private member of parliament is not and should not be a full-time occupation. And though I would not object at all to being called a professional politician, I do still think that one can represent the people better by being-and I notice Your Honour is going to call me to order-an ordinary citizen than a professional. But I thought that the question had to do with the question which is much
3136	HOUSE OF
Request for Aid to Fishermen closer to my heart than the one asked by the hon. member for Skeena.


Mr. C. R. Granger (Grand Falls-While Bay-Labrador):: Mr. Speaker, I should like to add a word to what was said by the hon. member for Bonavista-Twillingate. In my own riding a great many of the fishermen are still suffering from the effects of the almost total failure of the fishery last year. This applies to Green bay, White Bay south and White Bay north, and Labrador south, particularly where very few fishermen caught enough to qualify for unemployment insurance. They caught so few fish that many of them were on relief and are still on relief. This condition is due to no fault of their own but to the failure of the fisheries. The fish simply disappeared from the coasts of Newfoundland last year. This is a poor background for a start on the new season's activities.
As has been said before, there was no special assistance to help meet what was an economic disaster to many fishermen in Newfoundland. At the present time the fishermen are beginning to outfit for the fisheries. They have to prepare their boats, replace twine, replace nets and some have to procure traps. All in all it is a considerable expense which has to be met at this time of the year if the fishermen are to be able properly to prosecute the fisheries and catch enough fish to earn a living. We hope that this year the fish will be there for them to catch.
In many instances the economic plight of the fishermen is such that they have no money and are unable to obtain credit from their merchants with which to purchase the needed materials. Unless something is done they will find themselves next fall in the same position as they were last fall. In addition to the particular plight, due to the failure of the fisheries, the fishermen of Labrador and northern Newfoundland suffered another disaster this past winter when high winds and heavy seas destroyed much fishing property; stages and fishing wharves were washed away and it is doubtful whether they can be replaced in time to prosecute the fishery unless something is forthcoming in the way of governmental help. The provincial government is sending down twine for nets and helping out to some extent in Labrador. I believe that if a proper job is to be done in helping the fishermen to reestablish themselves for this year's fishery they will need the assistance of the federal government.
I should like to say a word of tribute to the Minister of Fisheries (Mr. MacLean). I would say that all the fishermen in Newfoundland appreciate his sincere and earnest endeavours on their behalf. It is generally recognized that he has taken his job very
[Mr. Pickersgill.l

seriously and that he has at heart the interests of the fishermen, not only as important economic factors but also in the humanitarian sense.
I should like to add a word or two about those parts of the province of Newfoundland where the fisheries have been industrialized. You do not have these same recurring economic crises in those parts. It is true that this year every part of the province has been affected by the total failure of the fishery last year. However, generally speaking, wherever industrialization has taken place the fishermen are in better circumstances and find it easier to continue their operations; easier to obtain credit where necessary and generally speaking their earning power, too, is closer to that of the people in similar jobs.
I should like to mention one particular place and that is the port of St. Anthony in the northern part of Newfoundland where the fresh fish plant burned down several years ago. Ever since this great northern town has been to some extent economically depressed. At the same time St. Anthony is close to prolific fishing grounds and fishermen from isolated places are moving in to settle in St. Anthony. I would hope that the minister would take a long and careful look at the plight of this important fishing town. I would like to say a word about the moneys which have been spent by the federal and provincial governments to encourage the industrialization of the fisheries. These investments have paid dividends already and in the future they will pay richer dividends, not only in money but in human happiness.


Mr. J. R. Tucker (Trinity-Conception):: In
view of the poor fishery last year and the lack of employment during the past winter, I strongly support the remarks of the previous speakers who have spoken on this matter. We have approximately 17,500 fishermen in Newfoundland, many of whom were unable to get unemployment insurance benefits last year because of the failure of our fishery. There was a shortage of winter work as well, and yet in spite of all this it seems that this year we will have more men prosecuting the fishery than ever before.
Now, I agree wholeheartedly with the winter works program, but because of climatic conditions in Newfoundland we did not benefit from that program to the same extent as the other provinces. Last year the federal government approved the construction of 20 community fish stages in Newfoundland at a cost of approximately $500,000. It was impossible to build these stages because of the stormy weather and heavy seas, so the program had to be abandoned. I feel that consideration should be given to doing as much of this type of work as possible during

the early summer and spring, because this would give our fishermen an opportunity to get money to assist them in buying lines, twines and ropes to repair their traps and trawls. They would get assistance in purchasing the materials required for making repairs to the boats and stages.
I feel also, Mr. Speaker, that the Department of Public Works should give serious consideration to doing some of the work on wharves and launchways in the spring rather than in the fall. If this were done, as I said previously, the men would have some money in the spring to assist them in financing their operations and thus making it unnecessary for them to depend upon the merchants to give them supplies for fishing.
I should like to add my tribute to the Minister of Fisheries (Mr. MacLean) and also to the Minister of Public Works (Mr. Green) for their interest in Newfoundland. I hope that their interest will continue to grow. I feel both of these ministers have the welfare of Newfoundland at heart, and I hope that they will continue to give consideration to our fishermen who are working so hard and so long in an attempt to get a living. At the present time more than 30 per cent of the working class in Newfoundland are without employment, and I think that every assistance should be given them to earn a dollar which is so badly needed.


James Aloysius McGrath: listened with interest to the comments of the hon. members for Bonavista-Twillingate (Mr. Pickersgill), Grand Falls-White Bay-Labrador (Mr. Granger) and Trinity-Conception (Mr. Tucker) with regard to the plight of the Newfoundland fishery, and more especially and what is perhaps of greater concern of us, the plight of the Newfoundland fishermen. This question is a complex one. It has been perplexing the governments down through the years. One has but to look briefly at the history of Newfoundland to see that the economy, up to perhaps a few years ago, was based solely on fish; it was a one-product economy. The folly of this economic condition became evident in Newfoundland during the world-wide depression in 1933, for at that time we found ourselves unable to sell our fish in the world markets. Of course, the results of that were catastrophic.
Now, I am one, sir, who is of the opinion that the future of Newfoundland, and to a very large extent the future of Canada's tenth province, will ultimately depend on the attitudes and policies of this government and the provincial government toward the fishery of Newfoundland. Whatever else can be said about industrialization, our forest resources and our mineral resources, the world will 66968-9-199i
Request for Aid to Fishermen always require food. As we all know, fish is a high protein food and fish is one thing we have in abundance in Newfoundland.
Without being partisan on this subject, Mr. Speaker, and I do not mean to be, although the temptation is great, I am reminded of the provincial election campaign in Newfoundland in 1951 when we heard much about industrialization; the great new factories, the growing industrialization; the great Latvian industrialist, and what have you.
At that time the Newfoundland premier went to the province to ask for a mandate for his industrialization program. One slogan used in that campaign was, "We will take
10,000	fishermen out of the fishing boats and put them into plants." This situation came about at a time when the Newfoundland fisherman, as a result of the prosperity of the second great war, was tending to get away from his fishing boat and to take more lucrative employment at United States bases in Newfoundland and other construction projects that had been started in the province as a result of union. This was hardly an encouragement to the fishermen of the day to go back to that industry which I maintain is our mainstay.
At one time there were several settlements in my constituency which were fishing headquarters, the most prosperous fishing communities in Newfoundland. The fisherman had his own cod trap and perhaps he had his own boat. He caught his fish and had his own plot of land in his backyard. He could supply himself with enough supplemental agricultural products to take care of his own needs over the winter and if he could get a good price for his fish he had a good year. In other words, the Newfoundland fisherman at that time was independent. He did not depend on unemployment insurance. He did not depend on family allowances. He did not depend on social security. He depended on his own sweat and toil, as did his forefathers, to get a living from the sea and he was a better man for it.
What do you find today if you go into these same settlements? You will find the little potato field grown over with weeds. He no longer keeps dairy cattle or poultry to supply his own needs. His fishing gear is rotting. His nets have rotted away and in some cases the people have not even bothered to request that the wharf be rebuilt. I maintain this is a sad plight for a region that was considered the fishing centre of the world. Perhaps the day will come again when Newfoundland can point with justifiable pride to its fishery and lead the world in that very important industry.
I support the views put forward by the three hon. members from Newfoundland who

Request for Aid to Fishermen sit opposite but I am sure they did not mean to suggest that the government will be able to pull a trick out of a magic hat and come up with the answer to this very complex problem. Having in mind the comments that have been made this evening and bearing in mind the unfortunate circumstance of the failure of the Newfoundland fishery last year, perhaps the result will be a reappraisal of what was at one time a great industry. We hope it will perhaps result in our taking a more realistic approach to this primary industry because in the final analysis, as has been suggested before, this is not a problem of economics but a human problem. It is a problem of whether or not a great number of Canadian citizens will be able to continue proudly the task of the fisherman as their forefathers did before them and as I am sure Newfoundland fishermen will do in years to come.


Mr. Erharl Regier (Burnaby-Coquillam):: Mr. Speaker, you may well wonder why a member from the west coast of Canada should interpose in the discussion of the grievance that has been raised. However, it does cause us considerable concern when the pulpwood and fish of Newfoundland are able to compete so successfully in world markets with the same products produced in British Columbia. Most of the population of my riding are engaged in the lumber industry. However, I also have a large number of people who are engaged in what I take to be the main occupation of the people of Newfoundland-they make their living from the sea.
There are a few things concerning Newfoundland that we completely fail to understand. We are the first to admit that if there was a failure of the Newfoundland fishery last year the nation owes to those fishermen whatever assistance Canada can afford to render. I do not want any misunderstanding about that. If there has been an unfortunate fishing season, then the Canadian people as a whole should lend a brotherly hand to those most affected.
As I have said, there are a number of things that we cannot fully understand. We understand that in round figures the population of Newfoundland is 450,000. We understand also that 180,000 are under the age of 16 and in receipt of family allowances. That leaves a total population of those 16 years and over of 270,000. Assuming that half of them are wives, that leaves a total of 135,000 males 16 years and over. We also understand that there are
123,000	unemployed in Newfoundland. That leaves a net balance of 12,000 working people. Assuming that five per cent of the population are entitled to the old age pension, that leaves a working force of less than zero.


Mr. Speaker:: Order. I am not sure whether the hon. member is coming to the subject by a roundabout method but it seems very roundabout. The grievance raised originally by the hon. member for Bonavista-Twillingate had to do with the cod fishermen of Newfoundland and more specifically with the possibility of lending them money to help them restore their traps and gear. I am afraid I have allowed the discussion to range a little too broadly. This is not a general debate on fisheries nor on Newfoundland.


Erhart Regier: Mr. Speaker, I was about to make my main point. We regret very much that when our cod fishermen on the west coast receive eight cents a pound Newfoundland fishermen only receive two cents a pound for the same kind of fish. It is our contention that one of the basic problems of the Newfoundland fishermen is their inability to help themselves. We feel that they have been exploited over the years by the fishing companies operating in that province. I know that certain ministers of the government have been very much concerned and have in their own way attempted to aid the fishermen of Newfoundland to help themselves and to organize in such a way that they will be masters of their own destiny. I only wondered at this point as to what the hon. members who had participated in this debate had done in years past to help the fishermen of Newfoundland to become masters of their own destiny and to bring them from the bondage of slavery which is now taking place, indeed which has always taken place, amongst the people who sold their souls to the company store, namely the fishing companies.


Mr. R. S. MacLellan (Inverness-Richmond):: Mr. Speaker, I have often wondered if the people of Canada in general appreciate the value of fisheries to this country and sufficiently understand its trials and problems. In the first place, the fishing industry is one of our great export industries. It is worth $90 million to $100 million a year to our economy. Most of the fish which is caught and processed is sold abroad, chiefly throughout the eastern seaboard of the United States. It is an export industry which is growing very fast. I think it is safe to say that it is one of the brightest industries in the Atlantic provinces. It is modernizing itself every day. Costs are kept down in producing the product; and our fishermen are learning new techniques and advancing as fast as they can.
Before I go any further to discuss the matter raised by the hon. member for Bonavista-Twillingate (Mr. Pickersgill), I would like to take a moment to pay tribute to a group which I think is perhaps the most courageous of Canadians. They are both

courageous and self-reliant, and in two ways. First, they face a great physical hardship in earning their living. They leave the shore in small boats to go on the high seas to catch their product. Physically they are brave men and courageous. They are strong Canadians.
Secondy, in an economic sense I think it should be pointed out that our fishermen are amongst the most self-reliant and independent of Canadians. Other industries come before the government asking for tariff protection and other aid. In the case of the fishermen we have men who catch their product and put it on the markets of the world without help from anybody. The fisherman does not ask for tariff protection. He is prepared to keep his costs down and fight the battle on the straight basis of economic supply and demand. The fishermen whom I know on the Atlantic coast in my province, particularly in my own constituency, are men who bring their product to the shore, process it and put it on the markets of the United States in competition with every other nation.
Fish caught off the shores of my riding are processed at plants at Louisburg, Petit de Grat and Cheticamp and finds its way across the whole continent, even as far as Texas and to markets in Chicago.
There we have a prime example of a Canadian product being able to enter and compete in a foreign market without help. Again I say that I believe the fishermen, in the way their industry is growing and in their economic self-reliance, are an example to all Canadians. Look to the Canadian fisherman to see how we can pick up a market and expand an industry if we are ready to compete and meet another man's costs in order to put our products on the markets of the world.
I would like to digress for a moment and pay tribute to the Minister of Public Works (Mr. Green) for the help he has given the fishing industry in my riding. My people feel that never before in our history has there been such co-operation from the Department of Public Works. Never before have we had such assistance to build much needed harbour facilities; for dredging and for many other things the fisherman needs in order to carry on his work. Again, I would like to join the other hon. members who have spoken in expressing my thanks to the Minister of Fisheries (Mr. MacLean) for the interest he takes in his department and for his closeness to the fishermen and their problems. It is a great tribute to him that on all sides of this house members rise in their places to congratulate him. We all appreciate his sincerity and tenacity in meeting the problems of the fishing industry.
28, 1959
Request for Aid to Fishermen
While the fisherman is certainly self-reliant and works hard, asking no quarter from anyone, he is a Canadian who has much less of life than many others. He is a man who takes great gambles. He takes gambles not only physically on the sea but also on his market. The great fluctuations in the price of fish and consequently in the income of the fisherman is a vital matter which should be faced by this house, and I think all members would like to see continuing attempts made to solve that problem.
In the past year we have seen, as other hon. members have mentioned, a great shortage of fish off the Atlantic coast, and as a result prices were high and for the catches which were brought to shore a good profit was available. But it is very common to see more fish caught and produced than the market can absorb. It is much more common to see low prices than sufficiently good prices, although we hope the future will show a general increase in prices as the market grows. But I would suggest that some more help be provided for the fishing industry in this respect; it would be of great value to this very important industry to effect greater stabilization of good market prices.
The fishing industry is unique in this respect, that there is really no large units of production in the industry. It is not carried on by large companies but by small companies and small units of fishermen, such as co-ops and others. The result is that there is no concerted, well organized attempt to advertise and to market fish on this continent. We are modernizing very fast our methods of catching and producing fish, but I feel there are many more things we could be doing in selling. I submit that one of our chief problems is too much competition among all these small companies which at times causes gluts on the market and great instability in price.
I think it would be very worthwhile and greatly appreciated by the fishermen of our Atlantic provinces if some effort were made by the government, under the benevolent guidance of the Minister of Fisheries, to bring together many of these small companies which are competing in the great United States market in a common selling program. The United States is our chief market for fish. These small companies might be brought into a joint advertising program whereby they would contribute to a special program, and with help by the government in the way of an advertising grant there would be great advantage in such a program. We all know that other industries, such as the appliance and automobile industries, plan more in respect to selling sometimes than they do in
3140	HOUSE OF
Request for Aid to Fishermen producing. Our problem in the fishing industry has been that we have neglected to properly sell our product. Oftentimes this important food product which should be much more widely used, does not find a sufficient market to absorb it. Over the years ahead I would suggest to the minister that he try to help organize the proper advertising and marketing of fish chiefly in the United States of America. At the same time, Mr. Speaker, I should note that the United States fisheries are also an important competitor in their home market, and it might be an example of how our two nations should work together in economic matters if leadership were provided by Canada to bring together not only Canadian but United States companies into an organization which would market fish and provide the joint market that there should be for this product.
Another problem which arises in my riding, and I am sure in many more as well, is that while we are developing fast into a modern and growing industry, while our dragger fleets are increasing, and modern fish plants are replacing the older system, we are in danger of neglecting that great body of fishermen who fish out from the shore in small boats. The inshore fisherman is being replaced by the dragger, and I have no doubt that in the years to come the industry will tend more and more toward larger boats and modern plants. At the same time there are in my riding a great number of inshore fishermen, and these men find that small draggers coming in, particularly at night, destroy or carry off their gear. The damage thus done to the inshore fisherman in a single night can be almost irreparable. I know that the minister is doing everything he can to meet this problem and preserve a proper balance between the inshore fishermen and the draggers. Every effort should be made to see that as the draggers and trawlers increase, the inshore fisherman is protected, because the latter does make a significant contribution toward the catching and marketing of fish and represents a most important sector of the economy.
In conclusion I wish to endorse warmly the remarks which have been made by other hon. members tonight. I hope that the country as a whole will appreciate the problems which the fishermen face and do all that can be done to help them in their job of catching and marketing a vital Canadian product in very difficult circumstances, and to help in bringing greater stability to the industry.


Hon. L. A. MacLean (Minister of Fisheries):: I intend to be very brief because this is a problem which I have very much in mind and I look forward to being able to discuss it
[Mr. MacLellan.l

further on my estimates. Besides I do not wish to talk at any length tonight and crowd out other hon. members who may have grievances to raise on other subjects.
However, I do wish to say that I myself, and everyone in the government, in addition to the officials of my department, are very much aware of the problem which existed in Newfoundland last year due to the failure of the catch. The effects are still being felt, especially on the northeast coast of Newfoundland. I may say, as has already been said tonight, that the problem is not merely an economic one; it is a humanitarian one, because in many of these outport settlements where the fishermen live there is no alternative employment available, and it is very difficult to provide any alternative employment since they are situated in a one-economy area where there is nothing else to which to turn. I do not have the figures with me, but I may say that the number of fishermen who were not qualified for unemployment insurance last winter was not by any means as high as most of us feared it might be. I think the percentage which qualified in the winter just past showed a decline of somewhere between 12 and 15 per cent. I realize, of course, that in some areas it was much worse, and I do not want to fall into the error of the statistician who was drowned in a lake, the average depth of which was two feet. I know there were some areas where the catch was a failure and where almost all the fishermen failed to qualify.
The government has endeavoured to play its share in relieving this situation by embarking on a program of stage building, the procurement of materials and the building of wharves. This work was carried on even through the winter as far as was possible under the weather conditions. Although this is of little assistance to fishermen who experienced a catch failure, we are continuing to provide salt assistance to help the fishermen who cure their cod and produce dry salt codfish.
As far as special loans to fishermen are concerned-loans to enable them to engage in the industry at a reasonable level-I may say that there have been times when the governments of the maritime provinces-two of them, at least-have approached the federal government in a similar situation where the fishermen had had quantities of gear destroyed by storms. The two levels of government did, between them, make loans to fishermen in certain circumstances. This was some years ago, and I may say that the federal government of that day had a somewhat unhappy experience because they found that the recipients of the loans looked upon

them as grants, and in many cases they were never repaid. Those who did repay the loans looked upon themselves as having been gypped, and felt that honesty was not the best policy. I mention this only so that the house should realize that the problem is not a simple one. It is a very thorny one indeed. I do not want to say more at the present time except that, of course, as hon. members are aware, the Fishermen's Loan Act is in operation and there are some cases where that act might meet the needs of the fishermen involved.
Tuesday, April 28, 1959
(Translation):



UNEMPLOYMENT ASSISTANCE


Mr. Augustin Brassard (Lapointe):: Mr. Speaker, I should like to point out to the government a grievance that concerns not only the people of my riding but those of the whole province of Quebec. I therefore ask the government if they could not enter into negotiations with the Quebec government so that the unemployed in Quebec might qualify for benefits under the Unemployment Assistance Act.
Mr. Speaker, I note that the Minister of National Health and Welfare (Mr. Mon-teith) is in his seat. May I therefore ask him if he personally could not initiate talks with Quebec cabinet members with a view to reaching an agreement so that people in Quebec may so qualify.
Everybody knows-at least all my colleagues are aware of the fact-that the Unemployment Assistance Act provides financial assistance for persons who are no longer entitled to unemployment insurance benefits. That legislation also makes it possible to give assistance to unemployed persons who could not qualify for unemployment insurance benefits.
I know, Mr. Speaker, that unemployment is not the subject matter of this debate, but I want to mention by the way, as I did last week, that in the four constituencies of the Saguenay-Lake St. John district one family head out of four is out of work. 1 don't know just how many do not receive unemployment insurance benefits, or will soon no longer qualify, but there is now a great deal of suffering in my riding and I ask all members, no matter to what party they belong, to forget their political differences and to urge the
Request Quebec Accept Federal Aid federal government, as I urged it many times in this house, to enter into negotiations with the government of the province of Quebec in order to reach an agreement on the administration of the Unemployment Insurance Act.
Mr. Speaker, I see there are still a few minutes left before closing the discussion on that matter and I would like to give an opportunity to speak to some other hon. colleagues. Perhaps, one of the Conservative members would support the proposal I have made to the government, that is to work out an agreement whereby the provisions of the Unemployment Assistance Act would extend to our fellow citizens in the province of Quebec.


Mr. Gerard Loiselle (St. Ann):: Mr. Speaker, in submitting a very important grievance, my colleague the hon. member for Lapointe (Mr. Brassard) appealed to the Conservative members who seem to believe that there is no unemployment in their constituencies. Well, Mr. Speaker, I am not a Conservative member but I may say that there is unemployment in my constituency. I therefore heartily support the appeal made by my colleague for Lapointe in order that our workers, more particularly those of the larger cities like Montreal and others, may qualify for unemployment assistance. My constituency has a great many citizens who have not received unemployment insurance benefits for three or four months and, in view of the accumulating expenses that family heads must meet to provide for their families, I believe that there might be other steps that could be taken. However, I believe the Minister of Labour (Mr. Starr) should give serious consideration to this grievance, one made without ulterior motive, and solely for the general welfare of our workers, even if the suggestion came from someone in the opposition.
Mr. Speaker, it has been claimed that business is picking up and that more jobs are available but I can assure you that in a constituency of workers, like the one I represent, the unemployment situation is still alarming. Many family heads are still unemployed, and I would be very happy if the Minister of Labour would make a thorough study of the situation.


Mr. Jean-Paul Racine (Beauce):: Mr. Speaker, I readily support the grievance raised by my colleague from Lapointe (Mr. Brassard), as well as the remarks made by the hon. member for St. Ann (Mr. Loiselle).
3142	HOUSE OF
Request Quebec Accept Federal Aid
It is true that the constituency I represent is not wholly a labour riding. However, there is, in my district, a rather high percentage of family men who are not receiving unemployment insurance benefits because they do not have enough insurance stamps or because their stamps are used up.
Mr. Speaker, it is easy to imagine a family head who, overnight, is not only deprived of his daily revenue, but of his unemployment insurance benefits as well. The whole family feels it and I believe this to be a main cause of the kind of social problems that jeopardize society. Another inevitable result is an immediate decrease in the taxpayer's buying power. Of course it is also very damaging to our economy, as stated by hon. members who spoke before and it might be opportune and proper for the federal government to take steps and make some suggestions to the government of the province of Quebec so that the workers in my province-
(Text):


Mr. Monteith (Perth):: Mr. Speaker, I rise on a point of order. May I inquire whether or not this is actually a grievance against the federal government? The hon. member appears to be addressing his remarks to the fact that the province of Quebec is not participating in the unemployment assistance program.


Mr. Speaker:: As I understand the grievance it is to urge the government to extend its efforts to bring the province of Quebec under the unemployment assistance scheme. That, of course, is a matter of agreement between the two governments, as I understand the legislation. As the federal government is a party to the arrangement I would think it would be in order to discuss the matter as a grievance.
(Translation):


Jean-Paul Racine: Thank you, Mr. Speaker.
That is a problem prevailing in Quebec. Just now we heard hon. members deal with the problem of fisheries in Newfoundland. Now the issue I am referring to is of great significance to people back home, and I dare hope that the federal government will take steps in order to come to an agreement with the Quebec government, which would allow the unemployed who are no longer entitled to unemployment benefits to avail themselves of the advantages offered by this legislation, which would certainly not fail to give a great many families their daily bread.


Mr. Speaker, I would like to raise another point but not tonight, because I am afraid it would be out of order. Yet, I think that if an agreement were concluded to this effect, a certain number of our bush-workers who are now employed in the United States could benefit from this legislation, not only in the riding I represent, but in the greater part of eastern Quebec province.


Azellus Denis: Mr. Speaker, I waited a few moments before taking the floor to deal with this matter, in order to allow some of the fifty Conservative members from Quebec to support the proposal made by the hon. member for Lapointe (Mr. Brassard). In my opinion, Mr. Speaker, there is no question, at this stage, of encroaching upon autonomy. There are times in life, for instance, when a family is suffering from hunger, where autonomy is an obstacle to the moral and material health of the people of a province. The citizens of the province of Quebec are entitled to benefit from the sums of money spent by the federal government, since that money was obtained from the taxpayers of the province of Quebec as well as from those of the other provinces.
This is then a formal request from the Liberal members from Quebec-since no Conservative member dared take the floor to deal with that question-urging the minister to get in touch with the Quebec leaders, by telephone, telegraph or in person, if need be. In fact, the present government is sending missions to England, is it not? And yet Quebec is not so far away. I understood, during the last federal election, that the Conservative candidates were sympathetically inclined toward the leader of the Union Nationale. There was enough agreement between them to tell the population, for instance, in connection with the Colombo plan, that the Liberals were about to give everything to the foreigners, and that the same trend applied in several fields.
I shall not insist on that for I might be accused of being out of order, which happens in any case each time we try to tell hon. members opposite the truth and remind them of their election promises . . .
(Text) :


Mr. Speaker:: Order. If I follow the hon. member correctly he seems to be directing his grievance in the wrong direction. The opportunity given is to present grievances

against the government of Canada, the government which sits here. The grievance would then necessarily relate to its action or lack of action with respect to the unemployment assistance scheme and not the action or lack of action of some other government or individual or party.
(Translation):


Azellus Denis: Well, Mr. Speaker, I thank you for your ruling.
In that case, I shall use a different approach. Let me tell my friends opposite that in Montreal alone we had more than 85,000 unemployed this winter. The celebrated winter works program encouraged by the federal government brought only $45,000 which, according to the hon. member for St. Henri (Mr. Lessard) meant 50 cents for each unemployed for a whole year. This applies only to those who are registered and who are entitled to unemployment benefits. How can we determine the number of those who do not get these benefits, who do not qualify for them, or who have exhausted their benefits? I believe that their number might be surprising.
I can readily understand that Conservative members from the province of Quebec interrupting me to say that there are none, because they do not visit their constituencies. They do not go out and meet their constituents; and yet, they were elected for that purpose, to find jobs for their constituents, since they promised that after the elections there would be no more unemployment here in Canada.
Therefore, I invite the Conservative members to approach the Minister of National Health and Welfare (Mr. Monteith) and, if he agrees to my request, I am sure that the province of Quebec in particular, and Canada as a whole, will benefit by this commendable action. It would give him another opportunity to make friends again with the premier of the province of Quebec. And at the same time, other grants could be discussed which would be of some assistance to the unemployed of the province of Quebec which, ever since the Conservatives took over, holds the very poor record of being the province with the greatest number of unemployed in Canada.
Therefore, Mr. Speaker, I think the government should welcome this suggestion. We are often asked to put forward constructive suggestions. Here is one that is so simple that it can be understood by the lowliest Conservative member from Quebec, unless he 66968-9-200
28, 1959	3143
Request Quebec Accept Federal Aid deliberately confuses the issue-as was done this afternoon by the Minister of Finance (Mr. Fleming) with regard to his budget- or unless he talks for three days and so confuses the issue that the Canadian people will be unable to make it out, or that no further suggestions can be offered.
I therefore ask Conservative members from the province of Quebec, whether the fact that Quebec receives unemployment assistance is an encroachment on its autonomy. If a single one of them has this view, I ask him to rise in his place and to declare it to this house. Otherwise, I ask him to give us his support and to request the minister to urge upon the premier of Quebec to accept that share of unemployment assistance to which the province of Quebec is entitled, because, contrary to what some people claim, Quebec is a province like the others, and it is entitled to its share of unemployment assistance since it is required to pay its share of federal taxes.
I feel sure that such a gesture on the part of the Minister of National Health and Welfare would be deeply appreciated by the Liberals. Personally, I thank him very much in advance, and I hope that tomorrow he will get in touch with the premier of the province of Quebec in the best interests of the people.
(Text):


Jay Waldo Monteith: I might just say a word on this so-called grievance. It is not a grievance whatsoever against the federal government. The various acts of the parliament of Canada in which the provinces may participate and which are cost-sharing pieces of legislation are available to the provinces. This is known, and far be it from this government to try to dictate to any province in Canada, Quebec or any other province, what it must do or should do.
The case is simply this. Legislation is available for participation by the provinces if they wish to take advantage of it. We do not try to dictate to any province and we have not tried to dictate to the province of Quebec.


Azellus Denis: I do not know whether the minister is talking about what I just said. I never said-


Mr. Speaker:: The hon. member is not entitled to make another speech. If there is some correction or some misunderstanding

Request Quebec Accept Federal Aid relating to him personally which he wishes to make, yes, but not to debate this matter further.


Azellus Denis: I want to correct what the minister is trying to say about what I said. I did not say anything about dictating. May I ask the minister a question? Did I or any Liberal members of parliament ever ask the minister to dictate to the province of Quebec? All I asked was that they get in touch with each other and try to understand each other.


Lionel Chevrier: The minister should listen and he would not make that kind of statement.


Jay Waldo Monteith: I listened to it during my estimates last year and I suspect I shall again this year. I am quite happy to sit and listen, but I do not wish the misapprehension to be left with the house that we are trying to tell the provinces what they must do.
(Translation):


Mr. Gabriel Roberge (Megantic):: Mr. Speaker, I appreciate the scruple shown by the Minister of National Health and Welfare (Mr. Monteith)-he is less scrupulous in other fields-but it should be remembered just the same that government members, whether from the province of Quebec or from the other provinces, did promise during the 1958 election to solve everything, including the unemployment problem-


Lionel Chevrier: Hear, hear.


Gabriel Roberge: -including federal-provincial relations-


Lionel Chevrier: Hear, hear.


Gabriel Roberge: -including unemployment assistance.


Lionel Chevrier: Hear, hear.


Gabriel Roberge: We are not asking the government to dictate to the province of Quebec any more than to any other province, to participate in this plan; we are merely asking the ministers who represent the province of Quebec in this house, as well as the Conservative members from the province of Quebec, to use their influence with their provincial colleagues to bring the province of Quebec to participate in it.
(Text):


Mr. Speaker:: Order. There seems to be a misapprehension that grievances may be directed against other private members of the house. I assure hon. members that this is not an opportunity for directing grievances

to private members because of their conduct or their actions. The grievance procedure is basically to direct it toward the government before supply is voted, to call the government to account for its deeds and its misdeeds.


Gabriel Roberge: I appreciate very much your remarks. May I say that we understand the procedure, and we would appreciate it very much if the province of Quebec were to share in this plan.
Motion agreed to and the house went into committee thereon, Mr. MacEwan in the chair.
The estimates of the following departments were first taken up and entered for consideration:



DEPARTMENT OF DEFENCE PRODUCTION

[Stage Direction]
68. Departmental administration, $7,507,609.

[Stage Direction]
214. Departmental administration, $3,380,550.

[Stage Direction]
318. General administration, $9,335,045.
Proceedings reported.

Lionel Chevrier: May I inquire what the business will be for tomorrow, and can we get some idea what it will be for the succeeding days of the week?


Mr. Green:: Mr. Speaker, tomorrow we shall commence with item No. 10 on today's order paper, which is a motion to refer the estimates of northern affairs and national resources to a standing committee; then, item No. 11, to set up a special committee on the Canadian National Railways and Trans-Canada Air Lines; then, item No. 7, to set up a joint committee on the Indian Act; then, item No. 19, to set up a committee on broadcasting. Then item No. 18, the motion having to do with the standing committee on privileges and elections; then item No. 8, the resolution concerning the Federal-Provincial Tax-Sharing Arrangements Act; then the budget resolutions in the following order: income tax, Old Age Security Act, Excise Act, Excise Tax Act and Customs Tariff. We may go into the estimates later in the week, and if so they will be the estimates of the Department of Agriculture followed by those of the Department of Labour.


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

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


Mr. Baldwin: 1.	What companies or individuals have been granted licences or permits to carry on logging operations within Wood Buffalo national park?
2.	On what dates respectively were the said licences or permits granted?
3.	Under terms of the said licences or permits, what is the number of board feet which could be cut: (a) in each year; (b) in the aggregate?
4.	How much timber has been cut in each case to date since the granting of the said licences or permits?
5.	Under what regulations were the said licences or permits granted?
Answer by: Hon. Alvin Hamilton (Minister of
Northern Affairs and National Resources):
1.	Swanson Lumber Co., Edmonton, Alberta; K. O. Watkins, Corvallis, Oregon, U.S.A.; G. T. Fuller, Redding, California, U.S.A.; Denney Logging Co. Ltd., Fort Smith, N.W.T.
2.	Swanson Lumber Co., August 1, 1955;
K.	O. Watkins, February 1, 1956; (Assigned in two parts to Swanson Lumber Co.), May 7, 1956; October 25, 1956; G. T. Fuller, June 1, 1956; (Assigned to Denney Logging Co. Ltd.), March 12, 1957; Denney Logging Co. Ltd., August 1, 1956.
3.	(a) No limit specified, (b) The total estimated volume on the respective areas: Swanson Lumber Co., Berth No. 367, 170 million F.B.M. spruce; Swanson Lumber Co., Berth No. 396, 290 million F.B.M. spruce; Denney Logging Co. Ltd., Berth No. 408, 700 million F.B.M. spruce; Denney Logging Co. Ltd., Berth No. 408, 150 million F.B.M. poplar; Denney Logging Co. Ltd., Berth No. 378, 190 million F.B.M. spruce; Denney Logging Co. Ltd., Berth No. 378, 10 million F.B.M. poplar.
4.	Swanson Lumber Co., 22,519,786 F.B.M.; Denney Logging Co. Ltd., 2,235,753 F.B.M.
5.	The disposal of timber cutting rights and the execution of these agreements were authorized by separate orders of the governor in council.
In addition to the timber agreements listed above, there is also an operation on the Peace river conducted by Eldorado Mining and Refining Limited, a crown company. This company has cut timber to supply their mine at Beaverlodge since 1951. An agreement similar to those entered into with the Swanson and Denney companies is now being completed with Eldorado. From 1951 to 1959, the Eldorado timber operation has been carried 66968-9-200J
Questions
out under a series of individual permits, each covering a 160 acre parcel. These permits were issued under authority of the national parks timber regulations. The total volume cut by Eldorado Mining and Refining Limited, in the period 1951-58, was 28,535,905 F.B.M.



ST. LAWRENCE SEAWAY AUTHORITY CLAIMS

Mr. Brassard (Chicoutimi): 1.	How many claims are there against the St. Lawrence Seaway authority?
2.	What is the name of each claimant and the respective amount of each claim?
3.	What is the name of the solicitor acting for each of the claimants?
Answer by: Hon. George H. Hees (Minister of Transport):
The St. Lawrence seaway authority advises as follows:
1.	27.
2.	McNamara-Pigott-Peacock Construction Co. Ltd.-$1,301,220.00; Iroquois Constructors Ltd.-$5,939,396.84 (rejected by authority); Miron et Freres Ltee-$198,768.41; Miron et Freres Ltee-$19,985.70; Walsh-Canadian Construction Co. Ltd.-$2,061,337.50; Northern Const. Co. & J. W. Stewart Limited-$2,080,077.13; Atlas Construction Co. Ltd.-$18,302.09; Canamont Construction Ltd. and Canit Const. Ltd.-$5,768,696.16; Atlas Construction Co. Ltd.-$60,625.00; Northern Const. Co. and J. W. Stewart Limited-$1,919,114.70; Miron-Mannibec Construction Co.-$3,033,236.70; McNamara-Pigott-Peacock Construction Co. Ltd.- $2,659,650.27; Swansea Construction Co. Ltd. -$310,759.62; Atlas - Winston Limited- $1,314,530.00 (rejected by authority); Canit Construction Quebec Limited-$2,997,089.00; United Waterways Constructors Ltd.- $4,519,214.94; Carriere des Trois Pistols Inc. -$18,475.37; Dominion Bridge Co. Ltd.- $83,225.00; S. D. Miller & Sons-$226,919.89; Canadian Dredge & Dock Co. Ltd. and McNamara Construction Co. Limited- $2,998,289.00; Pentagon Construction Co. Ltd. -$14,078.00; J. D. Stirling Ltd.-$107,000.86; Dominion Bridge Co. Ltd.-$20,086.81; Canadian Vickers Ltd.-$86,744.33; S. D. Miller & Sons-Unstated; P. Baillargeon Ltee -$187,599.04; Magil Construction Ltd.- $122.00.
3.	The attorneys known to the authority to represent claimants are as follows:
Geoffrion et Prud'homme re Canamont Construction Ltd. and Canit Const. Ltd.; Miller, Thomson, Hicks & Sedgwick re McNamara-Pigott-Peacock Construction Co. Ltd.; Roebuck & Walkinshaw re Swansea Construction Co. Ltd.; Genser & Philipp re S. D. Miller & Sons; Miller, Thomson, Hicks & Sedgwick re Canadian Dredge & Dock Co. Ltd and McNamara Construction Co. Limited.

Questions



MAIL CONTRACT, OTTAWA-PEMBROKE

Mr. Leduc: 1.	Has a contract been awarded for the conveyance of mails between Ottawa and Pembroke via Waltham, Quebec?
2.	If so, for what amount and to whom?
3.	How many tenders were received, from whom, and what was the amount of each tender?
Answer by:	Hon. W. M. Hamilton
(Postmaster General):
1.	Yes.
2.	Mr. Cecil Archie McCallum, $11,300.00 per annum.
3.	26-Cecil Archie McCallum, 1466 Clementine Blvd., Ottawa, $11,300; Ross Pearce Cowherd, 475 Bay St., Ottawa, $11,700; Emil M. Vaillancourt, Demers Centre, $12,000; Leopold Proulx, 508 Notre-Dame St., Gatineau, $12,800; John L. Bray, 1255 Walk-ley Road, Ottawa, $13,600; J. Rheal Laviolette, 8 Augusta, Ottawa, $14,000; Frangois Tremblay, Luskville, $14,948; John Kelly, Quyon, $14,990; Leo A. Valiquette, 957 St. Laurent Blvd., Ottawa, $15,960; Marcel Raymond Allen, Luskville, $16,000; Leslie A. McMillan, Beech Grove, $16,500; Sterling Hobbs, Shawville, $16,550; Archille Soucie, Fort Coulonge, $18,150; Arthur Amyotte, Fort Coulonge, $18,500; George M. Paterson, 248 Pembroke St. E., Pembroke, $18,570.50; Allan McKinnon, R.R. No. 2, Pembroke, $21,100.40; George Henry Grimes, R.R. No. 2, Aylmer East, $22,495; Alan Perley, Box 13, Shawville, $23,750; Emile Amyotte, Fort Coulonge, $24,750; Harold Herbert Wilson, Campbells Bay, $25,000; Pontiac Bus Lines Limited (Joseph McGahern), Campbells Bay, $26,500; Roland Valliere, Box 156, Fort Coulonge, $28,000; L. L. Baird & Son Reg'd., (L. L. Baird), Campbells Bay $29,952; Richard Edey Campbell, Beech Grove, $33,000; Clifford Joseph Spottswood, Waltham Station, $42,500; William Cuthbert Kelly, Box 239, Campbells Bay, $52,700.



UNEMPLOYMENT INSURANCE CLAIMANTS, GALT., ONT.

Mr. Anderson: 1.	How many persons were registered as qualified claimants for benefits at the unemployment insurance commission office at Galt, Ontario (a) on April 17, 1959; (b) on April 17, 1958?
2.	How many qualified claimants were entitled
to regular benefits on (a) April 17, 1959;	(b)
April 17, 1958?
3.	How many were entitled to seasonal benefits on (a) April 17, 1959; (b) April 17, 1958?
4.	How many of the total number of qualified claimants on April 17, 1959 were (a) male; (b) female?
5.	How many of the total number of qualified claimants on April 17, 1958 were (a) male; (b) female?
Answer by: Hon. Michael Starr (Minister of
Labour):
Counts of claimants currently reporting are made at the end of each month only.
It is not possible to separate those who are qualified from those who are not because there are always a number of claims in process whose qualification or otherwise cannot be determined until the processing is completed.
The following figures, therefore, represent the number of claimants currently reporting at the Galt local office as at 31 March in each of the years shown:
1.	Total claimants reporting; (a) 1503; (b) 2489.
2.	Claimants having regular claims; (a) 1015; (b) 2024.
3.	Claimants having seasonal claims; (a) 488; (b) 465.
4.	Claimants reporting as in 1 (a) above; (a) male 972; (b) female 531.
5.	Claimants reporting as in 1 (b) above; (a) male 1599; (b) female 890.



UNEMPLOYMENT INSURANCE FUND BALANCE

Mr. Michaud: 1.	What is the amount of the balance in the unemployment insurance fund as of March 31 1959?
2.	What are the totals for the revenues and expenditures in the unemployment insurance fund, for the period June 30, 1957 to March 31, 1959?
Answer by: Hon. Michael Siarr (Minister of
Labour):
1.	$496,251,386.48 (subject to year end adjustments for the fiscal year 1958-59).
2.	(a) Revenue $426,316,719.92. (b) Benefit Payments $782,794,595.22; (both amounts subject to year end adjustments for the fiscal year 1958-59).

Wednesday, April 29, 1959