1961-06-26

WELCOME TO PRIME MINISTER OF JAPAN AND PARTY

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, by leave of the house I should like to mention the presence in the gallery of various distinguished visitors including Hon. Hayato Ikeda, the Prime Minister of Japan, and his charming wife. The Prime Minister is accompanied by the foreign minister, Hon. Mr. Kosaka. This is the first visit the Prime Minister has made to Canada, and because of his very busy schedule his visit will be brief. It is my hope that a further opportunity, not too long removed, will again bring him to our country to enable him to know Canada and the Canadian people better.
The Prime Minister of Japan, together with the foreign minister and the Secretary of State for External Affairs, and I have had useful talks this morning with respect to matters of common interest and concern. Canada's relations with Japan have been, as the house knows, particularly close in recent years. We have a similarity in approach to international problems; we have close and ever increasing mutual relations in trade. Indeed, during the past four years the increase in trade between our countries has amounted to 40 per cent. Last year the total trade between Canada and Japan was almost $290 million, and I believe it will continue to expand to the mutual benefit of both our countries.
Within the past two or three years there has been an increasing number of Canadian visitors to Japan and Japanese visitors to Canada. The result has been an improvement in the understanding that each country has of the other. Another, but not the least, of the links between our countries is the fact that some 26,000 Canadian citizens who are making valued contributions to Canadian society, industry, the arts and professions are of Japanese origin, deriving much of their cultural heritage from Japan, Canada's nearest neighbour across the Pacific.
I believe, and that belief is intensified on each occasion I meet with leaders of the various countries, that these meetings are
most valuable. Particularly is that so at this time. Close co-operation is necessary among the leaders of the countries which believe in democracy because, if Mr. Khrushchev is to be believed, we are now entering into the potentially momentous remaining six months of this year which will be of great importance to the nations everywhere in the world, and in particular to those who believe in the maintenance of democracy and parliamentary government and those abiding principles to which Japan now gives its adherence.
I wish, therefore, to express a very wholehearted welcome to the Prime Minister. I can say this: having talked with him yesterday and today, I believe Japan has a leader wise and far seeing, who is dedicated to the principles of democracy.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, we on this side in the opposition share wholeheartedly and most warmly the welcome that has been so fittingly expressed by the Prime Minister to the Prime Minister of Japan, his wife, the foreign minister and all the members of his party. I am sure all Canadians also want to share in that welcome.
One of the happiest developments, I think, since world war II has been the growth in political and economic relations between our two countries. We all hope there may be even a strengthening in these political relations and an expansion in these economic relations. Japan and Canada are two Pacific countries now in more than a geographic sense. We stand together in the Pacific, in the United Nations and indeed in the world for freedom, democracy and peace.


Mr. H. W. Herridge (Kootenay Wesi):: Mr. Speaker, this group joins with the Prime Minister and the Leader of the Opposition in extending a hearty welcome to the Prime Minister of Japan and his colleagues, and through him sends greetings to the people of his country.
As a member of the Canadian delegation to the interparliamentary union meeting held in Tokyo last fall I, with the other members of the delegation, will long remember with great satisfaction our visit to a beautiful and hospitable country. Our association with the Japanese people left us all filled with admiration for their progressive ideas, their industry, their charm and their unmatched

Bank of Canada
hospitality. I think I can best express the feelings of the Canadian delegation by saying this:
When Time, who steals our years away, Shall steal our pleasures, too,
Fond memories of those days will stay And half our joys renew.
On behalf of this group, Mr. Speaker, I express the hope that the visit to Canada of the Prime Minister of Japan and his colleagues will strengthen the ties between our nations and will result in agreement on economic and other matters that will further cement and strengthen our present bonds of understanding and friendship.



COMMITTEES OF THE HOUSE

[Stage Direction]
Third report of special committee on research-Mr. Murphy.
First report of special committee on the Civil Service Act-Mr. MacLellan.


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, this is not the day on
which starred questions are called, but on Saturday the hon. member for Bonavista-Twillingate asked me if I would endeavour to bring to the house, prior to today's debate, the answer to starred question No. 420. I would be prepared to do that now if I have leave of the house to do so.


Mr. Speaker:: Has the minister leave to answer the starred question at this time?


Some hon. Members:: Agreed.


Donald Methuen Fleming: The question is as follows:


Mr. Pickersgill: 1.	Has the Bank of Canada a contributory pension plan for its staff?
2.	When was this plan established?
3.	Is any contribution made to the pension plan from the federal treasury?
4.	Is Mr. J. E. Coyne a contributor to the pension plan?
5.	If so, when did he begin to contribute, and what percentage of his salary has he contributed in each year since that date?
6.	Is there any statutory authority for the supervision of the pension fund of the Bank of Canada by the Minister of Finance or any other minister, and, if so, what is the authority?


Donald Methuen Fleming: Mr. Speaker, there are six parts to this question. The answers to the first five are suplied by the Bank of Canada and I am supplying the answer to the sixth one. The answers are as follows:
1.	Yes.
2.	March 12, 1936.
3.	No.
[Mr. Herridge.l
4.	Yes.
5.	In accordance with the provisions of the pension fund rules, Mr. Coyne's contributions commencing from the time of joining the bank on February 7, 1938, have been at the following rates:
February 7, 1938 to December 31, 1949-
5	per cent of his salary.
January 1, 1950 to December 31, 1953- 10 per cent on the first $15,000 of his salary.
January 1, 1954 to December 31, 1956- 12 per cent on the first $25,000 of his salary.
January 1, 1957 to February 15, 1960-
6 per cent on the first $25,000 of his salary.
February 16, 1960 to date-6 per cent on
the first $40,000 of his salary.
With regard to No. 6, Mr. Speaker, this is a matter of legal interpretation.



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 151-Mr. Herridge:
For a copy of all correspondence, telegrams, and other documents exchanged since January 1, 1960, between the government and the chartered banks, any organization, or person or persons, regarding the monetary policy being pursued by the Bank of Canada.
Donald Methuen Fleming: Mr. Speaker, subject to a matter of interpretation there will be no objection taken to the passing of this motion. However, in case there is question about the implications of the words "any organization, or person or persons" I would have to stipulate, in the light of decisions taken by the house last week and having regard to the fact that communications between the government and the Bank of Canada are confidential, that those words do not include the Bank of Canada.


Herbert Wilfred Herridge: Mr. Speaker, the word "organization" is used in my usual innocent sense as meaning private organization.


Mr. Speaker:: Subject to the explanation given, is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to.

[Stage Direction]
Motion No. 152-Mr. Howard:
For a copy of all correspondence, telegrams, and other documents exchanged between the federal government or any agency or branch thereof, and any other person or government since January 1, 1960, dealing with the construction of a by-pass road at or in the vicinity of Terrace airport, B.C.
Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, there is no objection to this motion, subject to the usual reservation as to the consent of the province to the production of any correspondence there may have

been between the government and the province of British Columbia.


Mr. Speaker:: Subject to the reservation, is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to.

[Stage Direction]
Motion No. 153-Mr. Howard:
For a copy of all directives or instructions issued by the Department of Transport to any of its officials or employees since January 1, I960, dealing with the construction of a by-pass road at or in the vicinity of Terrace airport, B.C.
Léon Balcer: Mr. Speaker, this motion calls for the production of any directives or instructions issued by the department to any of its officials or employees since January 1, 1960 regarding certain road construction.
I would point out that it has been the long established practice of this house that correspondence of this type, that is intradepartmental correspondence or documents, have always been regarded as privilege. Therefore in the circumstances I would ask the hon. member if he would withdraw his motion.


Mr. Howard:: Mr. Speaker, it seems to me that directives or instructions are things which normally might reflect government policy. I have reason to believe there is some divergence between policy and directives issued in this case, and I think the motion should be put.



BUSINESS OF THE HOUSE

[Stage Direction]
Aiken	Campbell
Badanai	(Lambton-^
Balcer	Campeau
Baldwin	Cardiff
Barrington	Cardin
Baskin	Caron
Batten	Carter
Bell (Carleton)	Chambers
Bell (Saint John-Albert)	Charlton
Benidickson	Chevrier
Best	Churchill
Boulanger	Clancy
Bourdages	Clermont
Bourque	Coates
Broome	Comtois
Browne (Vancouver-	Crestohl
Kingsway)	Crouse
Brunsden	Danforth
Cadieu	Deschatelets

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I wonder whether the Prime Minister can give the house some indication of the plans of the government for the business of the session in the days immediately ahead.


John George Diefenbaker: Mr. Speaker, I would say to the Leader of the Opposition that the government has given some thought to this matter. I have found on the part of members in all parts of the house a desire to have available

Inquiries of the Ministry to them the summer months of July and August. However, there are some-


Some hon. Members:: Hear, hear.


John George Diefenbaker: Mr. Speaker, for just a moment until that belated interruption I was almost convinced that I did not have the feeling of the house in this regard. There are some matters that must be dealt with before we adjourn. I have in mind, if the house agrees, to adjourn until some date in September, but before adjournment takes place there are certain matters which will require to be dealt with. In that connection I might point out that there is the budget, and the resolutions and bills under the budget. Second, there is the Canadian National Railway financing bill, which cannot be postponed. Then there is the question of dominion-provincial fiscal relations. There is a tariff bill dealing with goods and commodities of a class or kind similar to those produced in Canada, which was passed by the house and found its way to the other place where it was amended. Finally there is something that I omitted to give consideration to earlier, the need of providing interim supply in respect of those departments that have not received attention or have not been fully dealt with. There is also a short matter connected with the supplementary estimates having to do with the provision of the necessary funds for assistance in Cape Breton, and another item dealing with war veterans allowances.
I would hope that if we apply ourselves to these items and deal particularly and fully with those in respect of which there is disagreement, the date of adjournment will not be long delayed.


Lester Bowles Pearson: Mr. Speaker, in thanking the Prime Minister for the information I wonder if he will permit me to ask him whether he does not think, in view of what he has said, that the recess which the house has so richly earned is likely to begin about the proposed date of reassembling.


John George Diefenbaker: Mr. Speaker, in the same spirit in which the question was asked I say to the hon. gentleman that while governments naturally begin sessions, oppositions end them.



REPORTED PLAN FOR SALE OF U.S. AGRICULTURAL SURPLUSES

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question to the Minister of Agriculture. In view of the announced change of policy by the United States department of commerce which will permit the sale of subsidized farm surpluses

to the Soviet union and her European neighbours, and in view of the fact that Mr. C. W. Gibbings, president of the Saskatchewan wheat pool, has called the United States change of policy a new threat to Canadian wheat producers, is the minister in a position to inform the house what effect this change of policy will have on Canadian overseas wheat sales?


Hon. Alvin Hamilton (Minister of Agriculture):: Mr. Speaker, it is our understanding that the announcement made by the United States government relates to the sale of agricultural products on a commercial basis to European communist nations. It is impossible to state what effect such a policy will have on Canadian sales in this area. Canada will, of course, continue to make every effort to maintain and increase our sales to these European countries in competition with all other exporters, including the United States.
If the hon. member is talking about public law No. 480, it is our understanding that it does not apply to this particular announcement by the United States government.



CONTINUATION OF SALES FROM ALBERTA


[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. In view of the fact that the Prime Minister of Japan and other delegates are here, I wonder whether real consideration can be given when they are discussing questions of trade between Canada and Japan to the continuation of coal sales from the province of Alberta to Japan.


Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, I feel sure that this important matter will be considered during the discussions which will take place today.



HOUSING


[Stage Direction]
On the orders of the day:
Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, for the purpose of clarification may I ask the indulgence of the house to refer to a question asked on Thursday last, as reported at page 6860 of Hansard for that day, by the hon. member for Nipissing concerning my answer in reply to his question of the previous day appearing at page 6849 of Hansard with regard to the sale of mortgages to approved lenders, investment dealers and ultimately the public in 1960.
I wish to reiterate that no sales of this kind had been made in 1960 and 1961 until the first offering. However, the trustees of Central

Mortgage and Housing Corporation's pension fund, believing that this fund should give a lead to other pension funds in its holdings of insured mortgages, have in recent years bought such mortgages from the corporation itself. This amounted to $403,000 in 1960 and $928,000 in 1961.
In the context of the hon. member's question concerning general offerings to approved lenders and other institutions I had, of course, indicated that this was the first such auction.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask the Secretary of State for External Affairs, in view of the implications involved, whether he has anything to say about the announcement made by Prime Minister Kassem of Iraq regarding the taking over by Iraq of the newly independent sheikdom of Kuwait.


Hon. Howard C. Green (Secretary of State for External Affairs):: Yes, Mr. Speaker. As members of the house are aware, the United Kingdom government announced on June 19 that it had signed an agreement with the ruler of Kuwait cancelling the Anglo-Kuwait agreement of 1899 which recent developments had rendered obsolete and inappropriate. The exchange of notes between the United Kingdom and Kuwait by which this was effected, however, stated that relations between the two countries would continue to be governed by a spirit of close friendship, and reaffirmed the readiness of the United Kingdom government to assist Kuwait if the government of Kuwait should so request.
We have not yet received any official reports on the statement reportedly made in Baghdad yesterday by Prime Minister Kassem in which he laid claim to Kuwait as an integral part of Iraq. If, indeed, a dispute does exist between Iraq and Kuwait, I should naturally hope that the parties concerned would refrain from any action which would exacerbate the situation, and that the recognized international procedures would be followed for a peaceful settlement.
It so happens that our ambassador to Lebanon, Mr. Beaulieu, is now in Baghdad in the course of presenting his credentials as the newly appointed ambassador to Iraq.


Paul Joseph James Martin: Mr. Speaker, I should like to ask a supplementary question. Has Canada any treaty commitments with Kuwait?
Inquiries of the Ministry


Howard Charles Green: Mr. Speaker, I do not know the answer to that question off hand but I will get the information for the hon. member.


[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Roslhern):: Mr. Speaker, may I direct a question to the Minister of Agriculture. In view of the fact that there are still approximately 100 delivery points with a 4 bushel quota, could he indicate the progress being made with regard to box car allocations and quotas at these points, leading to the end of the crop year?


Francis Alvin George Hamilton: Mr. Speaker, although speaking from memory I think the figure for June 19 was 103 points on a 4 bushel quota. Since that time there have been some changes, and I should hope the report due this morning will show that these points are off the 4 bushel quota. It is the expectation of the Canadian wheat board that nearly all points in western Canada, some time in the first ten days of July, will be on the 6 bushel quota and that we will then be able to strive for a 7 bushel quota for as many places as possible.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I should like to direct a question to the Minister of Northern Affairs and National Resources. On June 3, 1961 I asked the minister the following question, as reported at page 5805 of Hansard for that date:
I should like to ask the Minister of Northern Affairs and National Resources if he has yet received a reply from Mr. Finlayson, president of the Canadian Marconi Company to the letter sent by the minister regarding the so-called non-fraternization clause in the contracts of employees of the company and, if so, whether he would be prepared to table it.
His answer at that time was that he had not as yet had any reply. I wonder whether the minister since received a reply from Mr. Finlayson.


Hon. W. G. Dinsdale (Minister of Norlhern Affairs and National Resources):: Yes, Mr. Speaker, I received a reply from Mr. Finlayson in which he requested further clarification on the matter. I have in turn replied to him pointing out that the present administration is encouraging the best possible intereultural relationships, and that it is our intention to provide equal opportunities and rights for all Canadians everywhere and to remove any

Inquiries of the Ministry element of discrimination that existed in the past under the former administration.


Frank Howard: I should like to ask a supplementary question. The correspondence prior to this date was tabled in the house by virtue of a motion for the production of papers, and I wonder whether the minister would be prepared to table these letters as a matter of courtesy rather than having to go through the formality of a notice of motion for production.


Walter Gilbert Dinsdale: Mr. Speaker, the subject is a matter of current discussion, and I think on that basis I should have to delay compliance with the hon. member's request.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question to the Postmaster General relating to postal regulations. My question results from a resolution adopted by the Ontario young Liberal association last Saturday urging that efforts be made to seek an alliance with the C.C.F.-New party. This resolution causes us some concern, Mr. Speaker. My question is, in view of the possibility of thousands of invitations and greeting cards being sent to members of the young Liberal association, could the minister inform the house whether these cards should be sent first, second, third or fourth class mail?


Hon. W. M. Hamilton (Postmaster General):: Mr. Speaker, in view of some of the attitudes of Her Majesty's opposition I would think that any invitation to join the socialist party would be somewhat redundant at the present time. If the invitations are to be sent I should think they might go as third class mail, because it includes "matter which is wholly in print without reference to process", and such things as "plans without specifications", "reproductions obtained by a multiplying process, easy to recognize", and "miscellaneous articles such as pathological objects rendered harmless by the mode of preparation and packaging".


Mr. Speaker:: It sounds to me like a conspiracy.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. Alexis Caron (Hull):: Mr. Speaker, I should like to put a question to the Postmaster General.

Could the minister explain to the house how it is that in a competition for advancement to the position of director of district No. 2, which covers part of Pontiac county, the counties of Gatineau and Hull, and part of the counties of Labelle, Argenteuil, Glengarry-Prescott, Russell, Stormont, etc., where French Canadians form the greater part of the population, the incumbent is not required to be bilingual?


William McLean Hamilton: I shall take this question as notice, Mr. Speaker, and provide an answer tomorrow for the hon. member.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Léon Balcer: Mr. Speaker, on Friday last the hon. member for Fort William asked whether a licence had been granted to Aero-Flight Service Incorporated of Minneapolis to operate an air service into Saskatchewan, Manitoba and northwestern Ontario. I am advised by the air transport board that an application has been made by Aero-Flite Service Incorporated for a licence to operate a class 9-4 international non-scheduled charter commercial air service from a base at Minneapolis, Minnesota, to points in Saskatchewan, Manitoba and Ontario, using group C aircraft. The application was advertised on June 15 and is being processed in the normal manner. A decision by the board has not yet been given.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. Ellen L. Fairclough (Minisier of Citizenship and Immigration):: Mr. Speaker, a question was asked on Saturday by the hon. member for Burnaby-Coquitlam. The answer is as follows.
On April 14, 1961 Mrs. Frances Maloney, a citizen of the United Kingdom and colonies was ordered to be deported on the expiration of her prison sentence. Although there is no provision for an appeal against a deportation order such as the one issued to Mrs. Maloney, I ordered this case to be reviewed by the general board of immigration appeals. As a result of this review and because of information provided in the written representations of Mr. W. A. McLennan, M.P., I decided to suspend the order of deportation for a period

of six months to give this woman an opportunity to rehabilitate herself.
Mrs. Maloney was released from detention on Friday, June 23.



REPORTED FINANCIAL IRREGULARITIES RESPECTING FORMER SECRETARY OF STATE

[Stage Direction]
On the orders of the day:
Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, I wonder whether the Prime Minister would care to comment this morning on the fact that the Canadian Parliamentary Guide for 1959 listed Mr. Courtemanche as a director and treasurer of l'Hopital Jean-Talon, Montreal.


Mr. Speaker:: I am not sure what administrative responsibility of the Prime Minister is involved in the Parliamentary Guide and what it contains.


Louis-Joseph-Lucien Cardin: A few days ago, Mr. Speaker, we were told that all the ministers had been asked to resign from any participation as directors of companies.


Mr. Speaker:: My recollection is that the hon. member asked this question last week and that I indicated to him that I did not think it was an appropriate question, that it was rather in the nature of an argument than a search for information.


Louis-Joseph-Lucien Cardin: I had asked two questions the other day, Mr. Speaker, and you allowed the Prime Minister to answer the first one. Today I am asking another question which has to do with the Parliamentary Guide for 1959. If the question was allowed with regard to the Parliamentary Guide for 1960, I do not see why my question would not be allowed when I refer to the Parliamentary Guide for 1959.


Mr. Speaker:: As I understand it the hon. member is asking the Prime Minister to comment on the contents of the Parliamentary Guide for 1959. Surely that is not an urgent matter. That Parliamentary Guide has been in publication for two years.


Lester Bowles Pearson: Mr. Speaker, surely the hon. member is asking the Prime Minister to comment on a fact which appears in the Parliamentary Guide and which appears to be in conflict with a statement by the Prime Minister about government policy on the matter.


Mr. Speaker:: Then I suggest that the hon. member frame his question appropriately having regard to the Prime Minister's previous answer.
Inquiries of the Ministry


Louis-Joseph-Lucien Cardin: In view of the statement made by the Prime Minister a few days ago concerning ministers of the crown not having directorships in companies, will the Prime Minister tell the house whether he feels that the listing in the Parliamentary Guide for 1959 which gives Mr. Courtemanche as a director and treasurer of l'Hopital Jean-Talon, Montreal, is contradictory to the statement he made previously?


John George Diefenbaker: Mr. Speaker, I think the hon. gentleman answered his own question when he quoted what I said, namely that the ministers were asked to remove themselves as directors of companies. The hon. gentleman realizes that, as an eleemosynary or philanthropic organization, a hospital organization does not come within the category of companies. I am surprised that he is so shocked that the Parliamentary Guide so records the fact after the experience we had through the years of ministers of the crown being directors of companies that were dealing with the previous government.


Mr. Pickersgill:: Are we going to have a debate?


Louis-Joseph-Lucien Cardin: I have a supplementary
question. Would not the Prime Minister feel that an association such as a hospital that has direct dealings with the government in the form of subsidies-


Mr. Speaker:: Order. I think the hon. member is entering into a debate on the point which the Prime Minister introduced himself.


John George Diefenbaker: I am glad that question was asked, Mr. Speaker, because it was answered the other day by the hon. member for Bonavista-Twillingate. There are no dealings with hospitals on the part of the federal government. The dealings are between the provincial government and the hospital. Each month, as I understand it, the provincial government states that certain advances are being made and then an account is sent to the federal government. There are no dealings as between the federal government and the hospitals.


John Whitney Pickersgill: Mr. Speaker, the right hon. gentleman chose to bring my name gratuitously into this matter and to enter into a debate. I think I should remind the right hon. gentleman that this hospital was in receipt of federal grants at a time when a cabinet minister was its treasurer. Anything more improper is hard to imagine.


Mr. Speaker:: Order. The hon. member is making gratuitous statements.

Inquiries of the Ministry TRANSPORTATION



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Frank Howard: Mr. Speaker, I wonder if I might direct a question to the Prime Minister. My question is based upon an article in The Machinist of June 22 relating to a railway route through northern British Columbia to Alaska. It reads in part as follows:



P.N.R.-

[Stage Direction]
Meaning Pacific Northern Railway.
-also has applied to the Canadian government for a licence to build another 460 miles of track through Whitehorse to the Alaska-Yukon border.
I regret not having been able to send the Prime Minister notice of this question, but the matter just came to my attention. My question is this. Can the Prime Minister indicate whether the P.N.R. has made such an application? If, so what has been the disposition of the application?
John George Diefenbaker: Mr. Speaker, I have no knowledge of that matter. The question is one that should be put on the order paper.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask
the Secretary of State for External Affairs whether he can add anything further to what has been said regarding the disarmament talks between the two great powers. Has any development taken place since the question was asked a few days ago?


Howard Charles Green: Yes, Mr. Speaker. I have an answer ready for the hon. member for Essex East on this question also.
Hon. members are aware that these talks, which began on June 19, represent the continuation of discussions between the United States and the Soviet union which took place at the fifteenth general assembly. They are designed to prepare the way for the early resumption of general disarmament negotiations which Canada has been striving to achieve. Our understanding of the purpose of these talks is to settle the framework in which resumed disarmament negotiations would take place and procedural questions such as the composition of the negotiating forum.
As the house is aware, these negotiations are confidential in nature, but I can assure


hon. members that Canada is in close consultation with United States authorities and that we are receiving full and detailed reports of the progress of the talks through our embassy in Washington.



SHIPPING


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: I should like to ask the Minister of Transport whether the government has yet prepared the regulations governing the assistance for shipbuilding which was announced as a matter of urgency early in May.


Léon Balcer: Mr. Speaker, just about a week ago I said in the house that these regulations should be ready within two weeks or ten days. They will be ready in accordance with what I said last week.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Francis Alvin George Hamilton: On Friday, Mr. Speaker, the hon. member for Timiskaming asked a question about the interim deficiency payment on eggs. The support price for eggs is for the 12 month period October 1 to September 30. The accumulated weighted average price to producers for grade A large eggs for the 37 week period, October 3, 1960 to the week ended June 17, 1961 is 33 cents. The support price for eggs is a national average of 33 cents per dozen for grade A large for the 12 month period. There is therefore no basis for making an interim deficiency payment, since the accumulated average price received by producers to date is equal to the support price.
Mr. Speaker, I have made no secret of the fact that I am not entirely satisfied with the working out of the legislation in regard to eggs. I put this up to the advisory board at their last meeting last month. The advisory board is composed of representatives of farm organizations right across Canada. They unanimously recommended that I make no change in the price support for eggs until they had time to examine more carefully the experience of this year's operations.



BANK OF CANADA

[Stage Direction]
CREATION of vacancy in office of governor
Donald Methuen Fleming: the second reading of Bill No. C-114, respecting the Bank of Canada.

He said: Mr. Speaker, when I spoke on this matter in the house on June 14 I opened my remarks with this observation:
I should prefer to speak on an occasion of this kind with restraint. I do not wish to add to the injury which X believe, and believe with deep regret, the governor of the Bank of Canada has done to himself. Least of all would I wish to see any prolongation of controversy, particularly political controversy, in relation to the Bank of Canada.
It is in that spirit, Mr. Speaker, that I speak today in moving second reading of this bill. First let me make it very clear that there has at no time been a personal aspect to the present issue. There has been an attempt in the press and elsewhere to dramatize this issue and picture it as a Coyne versus Fleming issue. It has been no such thing at any time. There is no personal element whatever in this issue, and there never has been.
I say that notwithstanding the fact that in the attacks which the governor has been making upon the government in recent days he has singled out the Minister of Finance for special mention. Let me make it very clear, Mr. Speaker, that throughout this entire situation I have acted as the spokesman of the government, on the instructions of the government, carrying out decisions of the government, decisions that were not lightly arrived at.
On the other side let me make it clear, Mr. Speaker, that the bank as such has not been involved save to the extent to which the governor has, I say improperly, embroiled it in a controversy that has assumed a political character. On the contrary, the board of governors of the bank has taken a clear line and the governor has acted in a manner diametrically opposed to the views expressed by the board of directors of the bank in a resolution passed on June 13.
Therefore this bill is not, as it has been represented in some quarters, the outcome of what is called a feud. There has been no feud. So far as I personally am concerned I have endeavoured to work with the governor of the bank in matters in which our respective positions required contact. Certainly this is not, as it has been represented in at least one journal, the outcome of "a long struggle for economic power between two men". Mr. Speaker, statements of that kind are simply nonsensical. So far as differences exist, and of course there are deep seated differences, there was no acrimony in these differences until the governor injected it in his attacks commencing on June 13.
The real issue presented to parliament, Mr. Speaker, is one not simply of government versus governor. It is that in the broad sense. It is more specifically an issue of government plus board of directors versus the governor.
Governor of Bank of Canada In a more complete sense it is the government serving the public interest, plus the board of directors serving the best interests of the Bank of Canada, versus the governor in his determination to cling to office, unwanted, for six months more.
I say, Mr. Speaker, and I speak with deep regret here, that after being afforded every opportunity to go quietly, decently and with dignity, the governor has chosen to force an issue before the public and into parliament. He has defied the government; he has defied the board of directors in the most deliberately provocative manner. In this situation either the governor must go, and go now, or the government must go.


Paul Joseph James Martin: They should have gone long ago.


Donald Methuen Fleming: Parliament must decide who governs this country.
Here, Mr. Speaker, let me refer to an observation appearing at page 2201 of the Hansard of the present session, an observation for which I am indebted to the Leader of the Opposition. He said:
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
Note the words:
-the governor has no alternative, of course, but to resign.
Incidentally, Mr. Speaker, I did refer to that quotation when speaking in the house on June 14. I find there has been some liberty taken by the Hansard printers with the quotation and it reads, not that "the governor has no alternative, of course, but to resign", but that "the government has no alternative, of course, but to resign".


John Whitney Pickersgill: How right they were.


Donald Methuen Fleming: Perhaps the Leader of the Opposition might consider this an improvement, but it is not what he said on the occasion when I quoted him, at page 2201 of Hansard.


Lester Bowles Pearson: Mr. Speaker, the minister is quite correct and I should have made that correction at the time. It is a regrettable inaccuracy.


Donald Methuen Fleming: It was not a matter for correction by the Leader of the Opposition. This was my quotation of his speech on this occasion, so I do not hold him responsible. The governor of the Bank of Canada is not required to account to the sovereign electors of Canada for his administration, but the government is. We will not accept responsibility for the governor and his actions when we have lost all confidence in him. The government has no power, under the law of this

Governor of Bank of Canada parliament, to remove the governor. That power is reserved to parliament, and to parliament alone. Parliament, sir, must now decide.
In presenting this bill to the house it has therefore been deliberately drawn in a form which will present the issue to parliament for determination in its clearest and most direct form. The measure is stripped of nonessentials and presents the house with the opportunity and the challenge to make a clear cut decision. The one clause in this bill reads:
The office of governor of the Bank of Canada shall be deemed to have become vacant immediately upon the coming into force of this act.
Mr. Speaker, it will be observed that effort has been made to deal with this issue in the measure as impersonally as possible. The governor is not mentioned by name. As I said, this measure presents the issue in a clear and direct form. Other questions can be resolved in due course and at the proper time. All other questions depend on the outcome of this issue before parliament. The issue presented by this measure is essential; the decision on it must precede anything else.
In the statement which I made on June 14 I laid certain facts before the house in relation to the matter. I shall enlarge somewhat today, though clearly and briefly, I hope, on the facts as they pertain to the issue now before the house.
When the present government came to office on June 21, 1957, the present governor of the Bank of Canada had already been in office for two and a half years. He had been associated with the tight money policy which we who now sit on the treasury benches had, when we were in opposition prior to 1957, attacked in parliament. Nevertheless, having come to office, we resolved to work with the governor as far as it was possible to do so. I have no wish to speak personally of the present governor. No one will ever say that he is an easy man to work with, but the government has done its best to work with him. He is a man of very great ability, but I think many people have found him sadly lacking in judgment and in ability to see the other person's point of view.
In the winter of 1957-58 I conveyed to him a request for an easing of the requirements respecting the liquidity reserves of chartered banks. That request, which was designed by the government to ease tight money, was rejected by the governor firmly and angrily. That sent me scurrying to the Bank of Canada Act-particularly in the light of things I had been arguing in this house while in opposition about the relationship of the Bank of Canada and the government in matters pertaining to monetary policy

and money supply-only to find that parliament had there given the government no power over the bank in such circumstances. Hon. members will understand the effect of this situation in the light of subsequent events which I may take occasion to mention.
In his annual report for the year 1957, which reached me on the last day of February, 1958, or the first day of March, in the middle of an election campaign, the governor chose to insert a couple of paragraphs in which he firmly asserted that there had never been a tight money policy. I had to make the decision as to whether that report should be released to the public in the middle of an election campaign. The government was widely dispersed. It was customary to release the annual reports of the governor of the Bank of Canada in the month of March. I knew very well that if that report was released in the middle of an election campaign, assertions of that kind on a subject which was a burning issue in the 1958 election as well as in the 1957 election would be seized upon by the Leader of the Opposition and an endeavour made to make political capital out of them.
I had to make that decision, and I reached the decision to allow the release of that report in March, 1958, in the middle of the election campaign. I did not intend to have anyone tell me afterwards that I had endeavoured in any way to suppress views which had been put forward by the governor of the Bank of Canada. That report was released. It was broadcast and, of course, the anticipated result immediately followed. The report had not been public more than a matter of several hours before the Leader of the Opposition in that election campaign seized upon this political manna from heaven and sought to make political capital out of it.
I am sure there are those who will say, with the benefit of what we know since, that the government in those circumstances ought to have asked for the resignation of the governor at that time. The fact is that we as a government could not compel his resignation. Only parliament could do so. In the light of what has happened since, perhaps we ought to have taken steps at that time. Perhaps there were other occasions when we should have done so. I am sure that had we known our efforts to carry on and make the best of the situation would be frustrated, as they have been, and that this matter would eventually come before parliament for the kind of decision the house is being asked to make today, we should all have agreed it would have been better if this issue had been brought before parliament earlier.

We did hope for better relations and we desired, above all, to avoid creating controversy involving the Bank of Canada. We attached, as a government, the highest importance to the bank and its functions. It was a creation of a Conservative government. We recalled that under the previous governor and under the same statute there had been harmony and co-operation between the governor on the one hand and the government on the other, between the bank on the one hand and the public on the other. Therefore we resolved to carry on and hope for the best, knowing that the governor's term of office would in any event expire on December 31, 1961. Let me tell the house that as far as my responsibility is concerned I have done my best to carry on in a co-operative attitude.
In the field of debt management, the field for which the government holds responsibility, the governor of the bank has rendered to the government good service. In this field the bank operates as an adviser to the government and as its agent. It supplies technical assistance. The government takes full responsibility in this field. Often when advice was tendered we did not accept the recommendations so far as they related to interest rates or prices. Nevertheless I wish to make it very clear that the government takes full responsibility for what has been done in the field of debt management, and we have in respect of this field of operations made full use of the bank's very efficient facilities.
In the second place, in the field of foreign exchange operations, here again the Bank of Canada acts as the government's agent; and in this field, which is directed by Mr. Ras-minsky, the deputy governor of the bank, the bank has operated very efficiently. The government, of course, takes full responsibility for what is done in this field.
Third, in the field of fiscal policy which is, of course, the government's responsibility, the bank, through the deputy governors, has been consulted on general aspects of budget policy in the writing of the budgets. It has never been the practice of the governor him-helf to sit in on these discussions. In this field I stress again that the responsibility is entirely that of the government.
Fourth, in the field of monetary policy, let me be very explicit. The government's relations with the governor of the Bank of Canada in regard to monetary policy and monetary operations have been set within the framework of the position which the governor took in that meeting to which I referred in the winter of 1957-58. The Bank of Canada has operated monetary policy, in full control of it. The government has had no control
Governor of Bank of Canada over monetary policy. The bank authorities were always willing to explain and defend their operations, but the policy followed was always the policy of the governor. The government had not determined it. Dealing with various criticisms which have been made during discussions in the house, I have endeavoured at all times to make it clear that the government was not to be associated with monetary policy for the reasons I have mentioned.
Until the autumn of 1959 the governor had not made a practice of making public speeches, but at that time be began to do so. For the next year and a half he made them with increasing force, frequency and fervour. Never was I or any other member of the government consulted at any time in any respect whatever in regard to the making of those speeches or their contents. They quickly attracted public attention, which increased with each of those public utterances, principally because they were devoted almost entirely to fiscal, not monetary, policy and thus entered upon one of the most controversial subjects in the whole political spectrum. The governor did not directly attack the government, but it was not long before the government was bearing the full weight of his criticisms and strictures. He contended time and again with ever increasing vehemence that the country was suffering from wrong fiscal policies and the absence of needed fiscal programs. Such, under our constitutional system, Mr. Speaker, are the responsibility of the government, not the responsibility of the Bank of Canada.
The press and the public quickly grasped the significance of the governor's criticisms. Indeed, everybody in Canada seems to have been well aware that the effect of those speeches was to direct criticism at the government; everybody seems to have been aware of this except the governor himself. The opposition in this house seized on the governor's statements and debated them in this house with a view to exploiting the embarrassment, the political embarrassment, which the governor was causing to the government. You have an example, Mr. Speaker, in the debate in this house on February 20 and 21 of this session. You have another example on March 22, in a discussion on the annual report of the governor. These statements of the governor were variously pictured by the opposition as government policy, which they were not, or as showing that the governor was at odds with the government; or they were made the occasion of taunting the government.
Perhaps, in the light of what has now happened, Mr. Speaker, the government should have intervened drastically earlier. However, we were very reluctant to attempt to place a curb on the governor, knowing well that in

Governor of Bank of Canada the political atmosphere which was becoming more tense on the subject we might have been ourselves denounced by the governor or the opposition, or both, for attempting to muzzle free speech when it was critical of government policy.
It has to be remembered that the governor is not a civil servant but the official head of a most important public institution, so we endeavoured patiently to live with this situation hoping that the governor might adopt a wiser course, and one more in keeping with the responsibilities of his high office, or that December 31, 1961 might come soon. In the meantime the governor was being warned by members of the board of directors of the bank that the course he was pursuing was involving him and the bank in politics; as one director put it to the governor, involving the governor "right up to his neck in politics".
The governor did not yield to advice from this quarter to discontinue those speeches. I was receiving communications from investors in the United States, in the United Kingdom and Canada who were very disturbed by the governor's pronouncements against foreign investment in Canada. It was as difficult to explain to them that the governor spoke for himself alone and not for the government as it was for them to understand this fact. For example, in January of this year I made a speech in New York to the Canadian club of that city, designed to clarify Canada's attitude toward foreign investment and to reassure those investors in the United States who had investments in Canada, or who contemplated useful investments in Canada, as to this country's intentions and attitudes. In March the governor made a speech in New York which was interpreted to the very opposite effect from my speech in January.
I am sure I do not need to remind the house that the fiscal policies which the governor was advocating in his numerous public utterances were in their nature isolationist, bureaucratic, anti-American, centralizing. They could have done violence to our international obligations; they would have provoked retaliation against Canada by other countries; they would have increased taxes, restricted trade, increased the role of government in business in this country, and would have centralized more authority in the federal government at the expense of the powers and authorities of the provinces under our constitution.
The suspicion inevitably grew that he was building up some kind of case. His speeches seemed to fall more and more into a pattern openly challenging the government. The memorandum which he sent to me on February 16, and which he made public on June 19, bore in tone, content and timing all the 

earmarks of an indictment and challenge directed against the government. The appearance of creating self-serving evidence was very strong. I deliberately refrained from public comment on the governor's public utterances, accepting much unjustified criticism in consequence, and I did so for the sake of avoiding controversy affecting the Bank of Canada.
This, however, did not deter the governor from pursuing with undiminished vigour the same course which had given rise to controversy. It reached the point where I was frequently asked by serious people whether the governor was deliberately seeking to undermine the government. I was placed in the equivocal position of appearing to defend the governor because of my desire to preserve the bank from the weakening effects of harmful political controversy, while at the same time I disapproved strongly of the public course the governor was following.
That position could not continue. It was obvious that parliament and the Canadian public would be entitled at some time to expect from me an accounting for the position of the government in a situation in which the governor appeared to be openly challenging the government.
It was, even in the face of the views that many serious people expressed to me, hard for me to believe that a man in such circumstances would deliberately attack the government or seek to undermine it. Personally, for myself, at that time I expressed the view that the governor was not doing this for the deliberate purpose of seeking to undermine the government, but I did hold him responsible for the creation of this result, whether or not it was by deliberate design on his part. And in the circumstances, Mr. Speaker,-and for this I have no apology to make to anyone-I could no longer give the governor my confidence.
We met at my request on Saturday afternoon, March 18. He gave me his categorical assurance that all communications between us, including the memorandum he had already sent me and my reply dated February 20, were confidential. I shall say only that our discussion was frank and I spoke plainly.
His published letter to me of June 9 that he had stopped making public speeches then is to be qualified, if it is to be regarded as a virtue, by his accompanying statement that he had no further speeches scheduled at that time. However, he did say as he has said in the letter of June 9 that he has now published:
I saw nothing Improper in the making of speeches or in anything that I had said.
So, Mr. Speaker, the governor on his part, while expressing regret that his speeches

might have hurt the government politically, asserted that he withdrew none of the things he had said in his speeches.
It became increasingly clear to the government that the governor had so deeply involved himself and the Bank of Canada in political controversy that there could be no possible redemption of the situation as long as he remained governor. The government was engaged in formulating a budgetary program of far-reaching proportions about which I wish to say two things. First, that program could not be fully implemented without strong co-operation on the part of the Bank of Canada. Second, that program was built upon certain fundamental principles which were widely at variance with the views repeatedly expressed by the governor and held by him firmly, yes, even dogmatically, in his numerous public utterances.
If we credited the governor with sincerity in these views that he expressed, and I told him that I did, it was abundantly clear, therefore, that if he was sincere he could not be expected by the government to support a program which the government deemed necessary in the public interest. The government had long since decided that it could not approve his reappointment as governor on the expiry of his term on December 31. It now concluded that there was no other course open to it in the national interest but to ask for the governor's resignation.
In this situation the government made inquiry concerning the pension provision made for the governor. It was then for the first time that the government or myself became aware of an amendment to the pension bylaw passed by the board of directors of the bank at its meeting on February 15, 1960. At my request I was furnished with an extract of the minutes of that meeting and, as I explained to the house on June 14, as found at pages 6315 and 6316 of Hansard, the government was shocked to learn that as a result of that bylaw the governor purported to become entitled immediately on the conclusion of his service to a pension for life on retirement of $25,000 per annum, compared with a pension entitlement prior to that meeting under the same circumstances of just under $12,000 per annum. The fact that the governor, though not participating in the board proceedings at which the bylaw was passed, and notwithstanding the fact that he possesses veto powers under the Bank of Canada Act, did not inform the government of its passing nor publish the bylaw or notice of it in the Canada Gazette was in the view of the government a serious dereliction of duty on his part.
On May 30, in pursuance of a decision taken by the government, I invited the governor to
Governor of Bank of Canada my office where, in the presence of the deputy minister of finance, I informed him with deep personal regret-and I emphasize that, Mr. Speaker-that the government, after full consideration of the matter, had decided to ask for his resignation. I further said that I was prepared to give him the reasons for the government's decision if he wished those reasons.
The governor in his public statement of June 13 has given the impression that the only reason related to his pension. He has had something to say on this subject of which I should remind hon. members. Referring to me, he said:
To aid me in my consideration of this matter he-
That is myself.
-said the cabinet were upset by the fact that the bank's board of directors had taken action in February, 1960, to improve the conditions of the pension which, according to the rules of the bank's pension fund, had always been provided immediately on the termination of service of a governor or deputy governor. He said the government were considering what action to take in the matter of the pension, had not yet come to a decision, and wanted my resignation before they came to a decision.
That last statement is not correct. I certainly did ask for his resignation. I did say that we had not come to a decision, but I did not say that the date of the resignation related to the decision. He continued:
Mr. Fleming also said the cabinet were of the view that I had failed to discharge the responsibilities of my office in allowing the board of directors to take the action they did take unanimously and after thorough consideration in amending the pension fund rules, an action which the Department of Justice had said was entirely within the powers of the board. This slander upon my integrity I cannot ignore or accept.
That passage is the only one in the public statement issued by the governor on June 13 in which he purports to give the reasons which I stated on that occasion had led the government to ask for his resignation.


John Whitney Pickersgill: No, it is not.


Donald Methuen Fleming: It is on this interpretation that certain articles have appeared in the press and statements have been made over the radio. The fact is, Mr. Speaker, and I do hope I can make this clear for all to understand, that in the course of our discussion on May 30, one hour in length, I gave the governor five reasons. In the order in which I advanced them they were as follows: First, in his speeches he had shown that he was openly at odds with the government on important policy questions. Second, he had embroiled the Bank of Canada in political controversy. Third, his views were incompatible with far-reaching programs upon which the government was about to embark. Fourth, he did not possess the confidence of Canadian financial institutions with which the Bank of

Governor of Bank of Canada Canada must work. Fifth, his pension arrangements, and failure to notify the government or the public of the bylaw increasing his own pension.
These were the five reasons. Each of these was discussed as fully as the governor wished on this occasion. I stress that the government had given the subject very full consideration, and that he was asked to submit his resignation in time for the board of directors to take action on it and to appoint his successor at its meeting scheduled to be held in Quebec city on June 12 and 13. I stressed the fact that in the view of the government it would be most undesirable that there should be anything like an interregnum at a time when the co-operation of the bank was required in the fulfilment of these important and far-reaching programs.


John Whitney Pickersgill: Would the minister permit a question at this point?


Donald Methuen Fleming: Mr. Speaker, I am trying to finish by one o'clock. There will be an opportunity for questions when we go into committee on the bill.


John Whitney Pickersgill: My question has to do with-


Some hon. Members:: Sit down.


Donald Methuen Fleming: The governor asked me three questions which with my answers I related to the house in my speech on June 14, which will be found at page 6353 of Hansard, for that date. He said he withdrew nothing of what he had said in his speeches. After an hour of quiet discussion, the governor asked for time to think the matter over. He said nothing about any attack on his character or his integrity. We shook hands and quietly said goodbye.
In his statement of June 13 he denounced my reference to his failure to report his pension increase as a slander upon his integrity which he could not ignore or accept. People who hear words that they regard as slander upon their integrity usually react very swiftly to them. There was no such reaction on the part of the governor in our hour-long discussion on this occasion. Our conversation was carried on quietly throughout, and we shook hands and parted with, on my part, an expression of personal regret that matters had given rise to this situation.
I received no direct answer from the governor, apart from several letters of an obviously self-serving nature, carefully timed to reach me on the morning of June 12, and which he has since evidently released to the public. I think his letter of June 13 was mentioned in this house by the Leader of the


Opposition, that letter having reached the Leader of the Opposition apparently as soon as it reached me.
In taking the action that he did on June 13 the governor rejected firmly and flatly the resolution passed by the board of directors of the Bank of Canada by a vote of 9 to 1 requesting his resignation.


John Whitney Pickersgill: It was dictation.


Donald Methuen Fleming: That is a false statement, Mr. Speaker. It was no dictation. The board of directors of the Bank of Canada had reached a decision, as responsible men would under the circumstances. What we have just heard from the hon. member for Bonavista-Twillingate is the same kind of insult to the intelligence of these responsible men on the board of directors of the Bank of Canada as the governor himself directed toward those persons.
The governor issued his public statement on June 13 at a time when the board had, at his request, suspended its discussions on the resolution and before it had adopted that resolution to request his resignation. He deliberately timed the release of his statement, according to his own admission, so that it would hit the House of Commons at its opening that day, and would reach the public before the Minister of Finance could make any statement on the question.


John Whitney Pickersgill: What is the minister quoting from there?


Donald Methuen Fleming: I am quoting from a statement that was made by the governor on this occasion.
I had taken elaborate and careful precautions to avoid publicity in order to spare the governor embarrassment to the utmost possible extent. Had the government wished to make a scapegoat of him, as is falsely alleged by some malevolent and prejudiced persons, the government would certainly not have followed this considerate course. It was by the governor's deliberate act and intent that this question became a public issue. He has pursued his objective and attracted to it the maximum publicity regardless of the harm it may do to relations between the Bank of Canada and the government and between the Bank of Canada and the public. He has sought to keep himself in the headlines, and has evidently enjoyed the personal publicity which he has attracted to himself. He has repeatedly made himself heard by the entire nation not merely in his own defence but in audacious attacks on the government. No public servant in Canada's history has ever been heard so much and so often. There have been many hearings, including an appearance just two months ago before a Senate committee.


Mr. Marlin (Essex Easl):: But not before the banking and commerce committee of the House of Commons.


Donald Methuen Fleming: I guess the hon. member for Essex East is glad now that he did not appear before that committee.


Lester Bowles Pearson: The appearance was denied by this government.


Donald Methuen Fleming: Since June 13 the house has debated this subject. It was debated on June 14. Having openly declared war on the government in his statement on the morning of June 13 and in his press conference that night in the board room of the Bank of Canada, the governor has pressed his political campaign against the government with ardour. Had he resigned he would have regained his full right to debate the political issues publicly. He did not wait, however.
Making full use of the facilities of the Bank of Canada and continuing to draw his salary as governor, he used his office in the bank as a base for operations against the government. He has made very wide distribution in Canada of his statement of June 13, mimeographed by the bank, presumably at bank expense, mailed out in Bank of Canada envelopes stamped by the postage meter of the Bank of Canada. Some of these envelopes have been sent to me by recipients who have expressed indignation and disapproval of this improper use of bank property. It would be interesting to know what the cost to the bank has been in mounting this political attack against the government. Let me say that if the facilities of the bank had been used on this scale and in this way, not to attack the government but to aid it, I am very sure that the opposition in this house would have been up in arms because of this abuse. That is not so now.
In the publicizing and distribution of June 19 of this memorandum he sent me on February 16 in confidence, a confidence which he reaffirmed on March 18, I say that the governor acted most improperly. I say that the governor's conduct since June 12 has of itself been such, without regard to what had happened before that time, as to have made necessary his dismissal from his high office.
Mr. Speaker, I see that it is now one o'clock and I have been unable quite to finish.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Donald Methuen Fleming: Mr. Speaker, the last point with which I was dealing prior to 90205-6-445
Governor of Bank of Canada the luncheon recess concerned the events transpiring on and after June 13; and in the light of the actions taken by the governor in this period I had submitted to the house that the governor's conduct since June 12, of itself, has been such as to have made necessary his dismissal from his office.
I turn now to certain specific points. This morning I made mention of this subject of the slander upon his own integrity that the governor purports to find in the reference to his failure to notify the government of the action taken by the board of directors on February 15, 1960, in increasing his pension by more than double. I leave it to the house, Mr. Speaker, to decide whether or not this is to be regarded as a slander. Certainly no such expression was used at any time before the governor resorted to this expression on June 13.
I disclaim completely the kind of article that has been written in certain quarters picturing what has been done in this situation as a "political assassination". That, I regret to say, is the title that appeared in The Economist of London on June 16 over an article written by the Ottawa correspondent of that journal, namely Mr. Michael Barkway. I wish to make it very plain that there has been no such thing as character assassination here. The governor did not on May 30 interpret to that effect anything that was said on that occasion. Never a word or hint did he drop of interpreting anything that had been said as being a slander upon him or upon his integrity. If there has been a slander in his misinterpretation of it, then the broadcasting of it is his own personal responsibility.
The next point I wish to draw attention to is the fact that on this very subject, in his statement on June 13, the governor chose to go completely outside the scope of the issue that he saw between himself and the government in relation to his tenure of office as governor of the bank. Having used the sentence to which I have referred concerning the alleged slander, he added:
It appears to be another element in a general campaign of injury and defamation directed against crown corporations, their chief executive officers and other public servants. I cannot and will not resign quietly under such circumstances.
I ask the house to draw its own inference from the fact that the governor, who was saying at this time that he should have been permitted to continue in office until the end of December, chose to go completely outside the scope of the Bank of Canada or its relations with the government in order to engage in a political accusation against the government concerning its relations with other national institutions or crown corporations or persons heading them. I leave it to the house

Governor of Bank of Canada to decide whether, under those circumstances, it was proper for the governor to engage in that kind of deliberate, omnibus, general political accusation against the government. This accusation came at a time when he was asserting that the government should have had confidence in him and in his co-operation. It is an interesting sidelight on that kind of assertion on his part.
The next point I wish to make, Mr. Speaker, is that the government takes full responsibility in the realm of fiscal policy. Its program-I refer to the kind of program that was introduced in this house last Tuesday evening-requires effective co-operation of the authorities in the fiscal and monetary fields. The governor's campaign has been aimed at absolving monetary policy of responsibility for economic conditions and for action to meet economic conditions. He has deliberately sought to throw on to fiscal policy the full burden of meeting economic problems. In my respectful submission, this is not only an unsound and untenable proposition but it was part of the campaign to pillory the government. He has carried it on in his statement of June 15. He states:
As I see it, the trouble has not been in the field of monetary policy-
And so on. Further down he states:
What has been lacking so far is adequate action in the field of fiscal policy.
If that is not a deliberate attack on the government, I do not know what can be an attack. What is required, in the view of the government-and it was implicit in what I said to the governor at our meeting on May 30-is that for the solution of Canada's present economic problems there must be a co-operative approach by the authorities in the fiscal and monetary fields.
As to the extent of the deep seated differences of approach to economic problems and responsibilities of the authorities in these two respective fields, fiscal and monetary, I shall not repeat what I said last Tuesday night. It is on record on pages 6666 to 6668 of Hansard, and any further comment on this subject no doubt could be more appropriately reserved for the budget debate. In that, Mr. Speaker, I include any comments upon the February memorandum which the governor released a few days ago.
Next, Mr. Speaker, I have drawn attention to the governor's disclaimer of the responsibility of monetary policy for meeting economic conditions. But the governor in his statement of June 15 chose to go further, and indeed he has sought, as I have indicated, to throw responsibility off his shoulders and all responsibility on to the government in a field where the view of the government is 
that responsibility must be shared and action must be co-operative. Well, sir, he may say now that he disagrees with the view I have expressed in this house, that the government has not had responsibility for monetary policy. He has in these statements undertaken to express disagreement with my interpretation in that respect. All I have to say, Mr. Speaker, is that he was well aware of that interpretation. It was given to the house under the circumstances of the situation at the time in various debates in this house over the past two sessions, and although he must have been well aware that statements were being made in Hansard, never once did he express himself to me personally as not sharing the view I was expressing, or taking issue with it. This statement that he has recently made in this respect is the first intimation that has ever come from him to me of a view that the responsibility for monetary policy was a responsibility of the government and not simply that of the Bank of Canada under the provisions of the Bank of Canada Act.
Next, Mr. Speaker, let me draw attention to what the governor has said in his statement of June 19. Referring to the February memorandum which he released-the confidential memorandum-he has said:
1 have been anxious to have constructive discussion of these matters but the Minister of Finance has not found time to discuss the substance of them with me.
Mr. Speaker, I must take issue with that statement. A number of these matters that are referred to in the February memorandum were discussed last autumn at meetings in which the governor and others and myself participated. There were, I should say, a large number of various items that appeared in the February memorandum which had already been discussed. Let me say this, that having read the February memorandum I did not need extended discussion to satisfy me that such a program as he was putting forward in broad outline in that memorandum was in many of its aspects not acceptable to the government. I have referred to the fact that it would have involved a breach of our international obligations; that it would have provoked retaliation against Canada by other countries; that it would have restricted our trade; raised taxes; involved more governmental intrusion into business in this country, and would have necessitated for its fulfilment a federal intrusion into the affairs of the provinces, and other reasons.
It was not necessary for us to have extended discussion in the light of those facts. But let me draw attention to this; that when the governor complains that I was not sitting down and talking to him at length on the contents of that memorandum, I asked him-

this is when we met on March 18-if he had made any attempt to call me, telephone me, or make any appointment for the purpose, and the answer of course was in the negative. He had chosen, rather, to sit in his office and write these letters, and then complain that he was not being properly used because I had not sat down to discuss these questions with him at length.
The next passage in the statement of June 19 I think is of interest to the house as well.
It proceeds:
He-
That is referring to myself:
-has also for four years refused to allow the banking and commerce committee of the House of Commons to study my annual report or to examine my views as to whatever extent might be desired by members of parliament.
Mr. Speaker, that statement is untrue.


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: It was in 1959 that a question was asked by the hon. member for Kenora-Rainy River. He did not press it. He asked if the government was going to refer the report to the banking and commerce committee. A halfhearted question was asked in the 1960 session by the hon. member for Burnaby-Coquitlam. It was only in the present session that this matter has become an issue.


Lester Bowles Pearson: That is entirely wrong.


Donald Methuen Fleming: When the governor of the Bank of Canada makes this assertion that for four years I refused to allow the banking and commerce committee to study the annual report, what he is saying is not true.


John Whitney Pickersgill: At which time did you not refuse?


Donald Methuen Fleming: Mr. Speaker, let me refer to something one of my predecessors had to say on this subject. I am putting this on the record to refute the statement of the governor and also to clarify issues that have been beclouded in this house in the present session. There has been only one year when the annual report of the governor of the Bank of Canada has been referred to the banking and commerce committee for study. That was in the year 1956. Let me draw attention to the year 1957, not after the change of government but the session of 1957 that preceded the general election and change of government of that year. The request was made at that time for reference of the report to the banking and commerce committee. I refer to Hansard of February 14, 1957 at page 1277. The hon. member for Greenwood put this question to the then minister of finance: 90205-6-44SJ
Governor of Bank of Canada
Mr. Speaker, I should like to direct a question to the Minister of Finance. In view of the fact that I understand the Bank of Canada report for 1956 will be down shortly, will the minister be able to tell us that the banking and commerce committee will have an opportunity of having the report presented and discussed by the governor of the bank, as was done last year?
The answer was:


Hon. W. E. Harris (Minister of Finance):: Mr. Speaker, I shall give consideration to what appears to be a request.
Then we find that the matter was revived a month later. Hansard of March 11, 1957 indicates at page 2064 that the hon. member for Greenwood returned to his question and asked the minister of finance:
Mr. Speaker, may I ask the Minister of Finance whether it is the intention to have the governor of the Bank of Canada, now that the report is out, appear before the banking and commerce committee as he has done in the past?
To this question the minister of finance, Mr. Harris, made the following reply:
Mr. Speaker, I think I may have slightly misled the house-
He was obviously referring to what he had said earlier on February 14, which I have read:
Mr. Speaker, I think I may have slightly misled the house and the hon. member for Greenwood by a reference I made in answer to a question such as this earlier in the session. I find that it has not been a custom for the governor of the Bank of Canada to appear before the banking and commerce committee. It is true that the former governor and the present one have appeared before it on occasion but a good deal less frequently than I had thought when I made the answer. It would therefore not be correct to say that it has been customary, although on occasion it has been done. I shall consider whether or not it ought to be done in this case.
That is the end of the quotation and having considered it he did not propose that the report go to the committee.


Mr. Mcllraith:: Dissolution came.


Donald Methuen Fleming: Dissolution did not come for another month. I think that puts that matter in its proper light.
To what I have already said in reference to debates in this house, let me add this further comment on what the governor has said. Never once in all these years did the governor say anything to me about wishing to appear before the banking and commerce committee or wishing his annual report to be referred to the banking and commerce committee or to any other committee. This statement of June 19 is evidently calculated to give the impression that he was telling me he wanted to appear before the banking and commerce committee to discuss his annual report and that I did not let him.
Such impression could not be further from the truth; and when the governor talks about

Governor of Bank of Canada my refusing to allow the banking and commerce committee to study his report, if he is referring to anything that passed between us in this regard I have to say categorically that nothing of this sort has passed between us. If he is referring to debates which took place in the house, then I have to say to him that this is an intrusion into political debates in the house that ill becomes a man who aims to cling to office as governor of the Bank of Canada.
What is more, his statement does not accord with the facts, as the records of this house will plainly show.
The only time the governor ever talked to me about appearing before any committee ol the House of Commons was not in relation to his annual report or to the banking and commerce committee at all; it was in relation to his appearance before the industrial relations committee of the house on June 9, 1959, when he was called as a witness in relation to the investment policy of the investment committee under the Unemployment Insurance Act. I may say that on that occasion he expressed himself to me in terms of outrage-that is not too strong a word-over the shockingly unfair way in which, he asserted, he had been treated in that committee that morning by the hon. member for Essex East who, the governor said, had made lengthy speeches instead of asking questions, and who would not give him an opportunity to answer the questions.


Mr. Chevrier:: May I ask the minister what he is quoting from?


Donald Methuen Fleming: The comment of the governor himself arising out of that experience.


John Whitney Pickersgill: Did you write it down at the time?


Donald Methuen Fleming: I wrote it on the tablets of my memory and it is very plainly written there.


John Whitney Pickersgill: Your memory.


Donald Methuen Fleming: Yes, Mr. Speaker, that is the fact.


Murdo William Martin: I would like to have the opportunity of questioning the Minister of Finance in the committee.


Donald Methuen Fleming: I would love to have the opportunity of exposing the hon. member for Essex East and all the shillyshallying he has done on this subject for a long time.


Murdo William Martin: Let us go to the
committee.


Donald Methuen Fleming: That is the attitude which the governor took in relation to the kind of questioning which was directed to him by the hon. member for Essex East on June 9, 1959.


John Whitney Pickersgill: According to your say so.


Donald Methuen Fleming: The next point
which perhaps merits mention was the observation in the governor's statement of June 13 that he has always co-operated with the government and would, of course, do so. This is a case where the governor invites the government to believe that he has never failed to co-operate. Although he has carried on this campaign which has embroiled the Bank of Canada in controversy and has put himself plainly at odds with the government on basic questions of policy, he is asking the government to believe that his co-operation can be counted on at a time when he is accusing the government of having slandered him and of having carried on a general campaign of injury and defamation against crown corporations. In the face of that, and all it amounts to, he asks that he be permitted to continue in office and that his protestations of readiness to co-operate should be accepted at face value. This assertion that he had always cooperated and was prepared to co-operate was never made until some days after a request had been made for his resignation.
I have found, to my great regret, that the governor has not possessed the confidence of the public and of those institutions in the Canadian economy with which the Bank of Canada must work. I shall not go into the question of the attacks which have been made upon monetary policy in this country by those in the academic field who are students and authorities of this subject, but I would point to the fact that there is a reflection of the relationship of this issue to public finance in what has happened in the bond market since this matter became public by the act of the governor on June 13. The bond market has been stronger since that time. Bond values have been rising and interest rates have dropped slightly.
It must be plain to all concerned that there is a dispute, and a deep seated dispute, between the governor and the government here. I refer to the statement made in this house by the Leader of the Opposition on February 20, as reported on page 2201 of Hansard:
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
There may be one question remaining. Suppose a case arises where the government on its part says there is a deep seated dispute between itself and the governor with respect

to general policy. Suppose the governor then says oh, well, I really should not be interpreted as having attacked government policy or as differing with it; I am ready to cooperate; I say there is really no deep seated difference between us. In these circumstances who is to judge whether there exists in fact a dispute, a deep seated difference in policy? Again I am indebted to the Leader of the Opposition for supplying the answer to this question. He did so at a television conference, broadcast from Ottawa last Thursday evening. From the script I quote the two following questions and answers, the answers being supplied by the Leader of the Opposition.
Who is to be the judge of whether there is or is not a dispute? If the government says, yes. there is a dispute, and the governor of the Bank of Canada says he knows of none, whose judgment-
A. Oh, the government's views must prevail in these matters. The government, of course.
Another question:
Q. You take the position, then, that if the government asserts that there is a dispute the governor of the Bank of Canada must resign?
A. I think that if there is a dispute of that kind the governor of the Bank of Canada should resign, of course.


Lester Bowles Pearson: Read on.


Donald Methuen Fleming: Let me make it very clear that the government asserts that there is a dispute with the governor of the Bank of Canada.


Paul Joseph James Martin: After four years.


Donald Methuen Fleming: There are deep seated differences to which I have now made reference, and in the face of this situation the house should be under no misapprehension. We say there is a dispute and, therefore, having regard to the principle put forward by the Leader of the Opposition himself, it is the duty of the governor to resign. Indeed, that is the only course.
Perhaps it would have sufficed if instead of my detaining the house at such length I had simply read the statement made by the Leader of the Opposition on February 20, told the house that in the view of the government there is a deep seated dispute between us, and then referred to the further statement of the Leader of the Opposition that the government is the judge of whether there is a dispute, and that if the government says there is a dispute the governor must resign. That would have been a complete presentation of the case.


Lester Bowles Pearson: The minister having quoted part of my answer, I wonder whether I might ask him-
Governor of Bank of Canada


Donald Methuen Fleming: I am making my speech. The Leader of the Opposition will have an opportunity to make his, and we shall be in committee later on and there will be opportunity there for questions.


Lester Bowles Pearson: On a question of privilege-


Donald Methuen Fleming: I say that this regime must, in the public interest-Mr. Speaker, there is no question of privilege whatsoever.


John Whitney Pickersgill: You are the Speaker as well as the executioner. Sit down.


Mr. Speaker:: The Leader of the Opposition rises on a question of privilege. I have to hear him.


Lester Bowles Pearson: I rise on a question of privilege because the minister has quoted from a statement I made the other night. He has quoted only one part of the statement and has drawn his conclusions from that part. I am now asking him to complete the quotation.


Mr. Speaker:: That is a matter of explanation which the Leader of the Opposition will have an opportunity to present himself.


Donald Methuen Fleming: The Leader of the Opposition knows perfectly well that I read in full two questions and his answers to those questions, and any attempt to pretend otherwise just does not agree with the facts. The Leader of the Opposition may repent now of the answers he gave, but his answers are there and they were recorded at the time. They are very plain and categorical on the point.


John Whitney Pickersgill: You don't dare to read the next paragraph.


Donald Methuen Fleming: Mr. Speaker-


John Whitney Pickersgill: You don't dare to read it; you don't dare to.


Mr. Speaker:: Order. Hon. members cannot prescribe the way in which another member presents his speech, provided it is in accordance with the facts.


John Whitney Pickersgill: A deliberate attempt to mislead the house.


Donald Methuen Fleming: The hon. member for Bonavista-Twillingate has been acting this way lately, Mr. Speaker; he has been going into hysterics almost every day in the house. It is evident that it is time to administer some kind of sedation to him. He is quite unable to control himself.
I say in conclusion that in the public interest the present regime in the Bank of Canada must give way to one in which the good relations which previously existed between the bank and the government and between

Governor of Bank of Canada the bank and the public will be restored and co-operation in fiscal and monetary policies will prevail.
Sir, the present governor of the bank was appointed to his high office by order in council. That order in council is P.C. 1954/ 1789. It is dated November 18, 1954, and it purported to appoint the present governor as governor at a salary of $50,000 per annum, the appointment to take effect as from January 1, 1955. Under section 6, subsection 2, paragraph 3 of the act, his appointment is for a term of seven years during good behaviour. In an office so exalted the standard of good behaviour, Mr. Speaker, I think you will agree, should be of the very highest. It is known to all that the governor has lost the confidence of the board of directors of the bank; he has lost the confidence of the government, and he does not possess the confidence of a good many sections of the public with which the Bank of Canada is expected to work.
Enough has been said, I believe, Mr. Speaker, to demonstrate that the governor has not fulfilled the terms of his appointment in November, 1954; that the public interest is suffering from his continuance in office; that the government itself has no power to remove him from office; and that in the face of his open defiance of requests from the government and from the board of directors of the bank for his resignation, only parliament can remove him. By the present bill parliament is asked to take that action, Mr. Speaker.


Lester Bowles Pearson: Would the minister permit a question before he sits down? I should like to ask him just one question arising out of his statement. In view of the statements he has made, which have been contradicted by others, including the governor and directors of the bank, and in view of the desirability of clearing up these contradictions without delay, will the minister give the house the assurance now that immediately on the second reading of this bill it will be referred to the committee on banking and commerce where evidence can be taken and witnesses heard?


Donald Methuen Fleming: Mr. Speaker, you will notice that the Leader of the Opposition has chosen to couch statements within the framework of what purported to be a question. I take issue at once with the statements he has made, which are not statements of fact or truth at all. When he says that the statements I have made have been contradicted by the governor and by members of the board of directors of the Bank of Canada he is not telling the truth. The answer to his question is no.
[Mr. Fleming (Eglinton) .1


Paul Joseph James Martin: Shame.


Lester Bowles Pearson: Mr. Speaker, this is a very short bill, but that does not mean that it is not a very important one. Some of the most important legislation in democratic history has been very short, and some of the most important attacks on freedom and democracy have been in very short bills; therefore the significance of this bill is not to be determined by its length. It reads:
The office of governor of the Bank of Canada shall be deemed to have become vacant immediately upon the coming into force of this act.
I leave aside certain doubts about the constitutional validity of a bill of this kind. It does not, of course, amend the Bank of Canada Act. We have been told in the house that that would be required to bring about this result. Indeed, you might find a case for argument whether parliament, if it passes this bill declaring this position vacant, is the only body that can fill it. According to this possible argument it remains vacant until parliament takes action to fill it.
I leave aside these legal points-they may be brought up later-to speak for some time, because the minister spoke for some time, on the substance of the bill and what is involved in it. And I hope, Mr. Speaker, I may be permitted to speak without those chattering interruptions to my left.


Mr. Jones:: The hon. member interrupted frequently.


Lester Bowles Pearson: The minister told us that he was going to speak with restraint. In the light of his remarks, especially at the end of his long statement, I leave the house to judge how much restraint he showed in his personal attack on the governor of the Bank of Canada, and indeed in quoting not from a record but from his own memory of a statement purported to have been made by the governor of the Bank of Canada a long time ago.
At this time I do not intend to deal with many of the points the minister raised, but they will be dealt with; because the minister may have considered that he spoke with restraint, but we consider he spoke in a manner which requires to be answered, and he will be answered point by point. But I cannot forbear to mention two points in the minister's statement, one of which relates directly to me. He quoted from my television interview the other night, and I stand by what I said in that broadcast. But, as is his custom, he did not continue the quotation. I said, of course, that if there is a dispute between the governor of the Bank of Canada and the government, the governor should resign. I said

that in the House of Commons at a time when the minister was defending the governor against that kind of action. Then the next question was:
Do you think he should resign now?
My answer was this:
I say his usefulness is over as governor.
Of course that is true, Mr. Speaker. His usefulness has been destroyed by the government. Then I went on:
But Mr. Coyne apparently is determined to defend himself against certain charges which he believes reflect on his integrity. And that is why surely Mr. Coyne should have his day in court, and by in court I don't mean issuing statements which he feels are necessary because he isn't permitted to appear before a committee-and he states in one of his statements that he hasn't been allowed to appear before the banking and commerce committee to discuss the Bank of Canada report for four years.


Mr. Montgomery:: That was a lie at the time. That has been denied.


Lester Bowles Pearson: I hear an hon. member saying "That is a lie". I take it he will withdraw that observation.


Mr. Speaker:: I am sure the hon. member spoke in haste and will be quick to make amends for something that has universally been held to be contrary to parliamentary practice.


Gage Workman Montgomery: I withdraw the first part. I said that had been denied.


John Whitney Pickersgill: A lot of things have been denied.


Mr. Harkness:: Wrong again, Mike.


Lester Bowles Pearson: It certainly sounded like "a lie" here. In any event, that is what I said, that the minister did not quote; that before this dispute is settled in favour of the government the man who has been attacked should be given a chance to appear before a committee and defend himself.


Mr. Chambers:: Will the Leader of the Opposition permit a question?


Lester Bowles Pearson: I will answer questions, like the minister did, at the end if my statement. There is something else the minister said which should be replied to immediately. The minister made a great play in building up his case for this dispute between the bank and the government which has extended now over four years, on the fact that in 1958 the governor of the bank refused to take the action which the government asked the bank to take with regard to tight money and lower interest rates. He had some strong things to say about the governor angrily refusing to take certain action. It is surprising that the minister, having made that statement,
Governor of Bank of Canada did not take this opportunity to tell us the evidence on which it is based; because on June 21 we asked him a question on this very point. The hon. member for Welland put the question.


Donald Methuen Fleming: Page?


Lester Bowles Pearson: Page 6812. The question reads as follows:
1.	Did the Minister of Finance ask the governor of the Bank of Canada to increase the money supply on any occasions since June 21. 1957?
2.	If so, on what occasions?
3.	Did the governor refuse to accede to any such request?
4.	If so, which ones?
What did the minister say on that occasion? Compare this with what he has tried to say this afternoon.
Mr. Speaker, the communications between the governor of the Bank of Canada and the Minister of Finance have always been regarded as privileged.
Then the hon. member for Welland put this question:
1.	Did the Minister of Finance ask the governor of the Bank of Canada to take steps to reduce interest rates on any occasion since June 21, 1957?
2.	If so, on what occasions?
3.	Did the governor refuse to accede to any such requests?
4.	If so, which ones?
This was the answer of the Minister of Finance:
Mr. Speaker, the answer to this question is the same as that given to the previous one.
The minister, however, purported to give an answer this afternoon, and the answer he gave this afternoon is contradicted by his own statement at the time. On February 14, 1958, according to a Canadian Press story the minister had this to say, and I quote from this report which has never been denied:
Whatever may have been said for the tight money policy in 1955 and 1956, it is evident that it does not fit the needs of 1958.
Then he went on to say this:
Money is more plentiful, credit is somewhat easier and interest rates have been reduced to a remarkable extent in recent months.
Does that look as if the Bank of Canada was not co-operating with the Department of Finance in these matters?


John Whitney Pickersgill: He just said that for the electorate, of course, during an election campaign.


Lester Bowles Pearson: Of course, Mr. Speaker, that was an election speech, and as the Minister of National Revenue, whose absence from the house and especially the reason for it we all lament, said on one famous occasion, "Election promises really do not mean very much".
This short bill which we have before us, Mr. Speaker, is the result that was made necessary by the difficulty, if you like by the

Governor of Bank of Canada mess, that the government has got itself into through its mishandling of this matter, through its customary ineptness and procrastination, this time extending over four years, in dealing with a problem through its customary procedure, its customary practice of allowing a problem to deteriorate until it becomes a crisis and then taking sudden and panic action to deal with it. This situation in which the government finds itself, this controversy between the government and the governor of the Bank of Canada, has already-the minister himself has said this- done harm to Canada's prestige and Canada's position, and I agree-


An hon. Member:: Good.


Lester Bowles Pearson: -with the minister and with all members of this house, I hope, that this matter should be cleaned up with a minimum of delay. But it should be done in the right and proper way. Justice cannot be subordinated to speed, desirable as speed is in this case. I agree and I have just repeated that the governor's usefulness has ended as long as this government is in charge of finance.


An hon. Member:: Are you going to hire him back?


Lester Bowles Pearson: But the governor's usefulness has been destroyed by this controversy precipitated by the government, and I will go into that in some detail later. Because of that the governor has become a scapegoat, and he is becoming a scapegoat without an opportunity for an inquiry and without parliament being given an opportunity to inquire into all the facts, into the charges-and more have been made this afternoon-and the countercharges.
The bill makes no such provision before dismissal, provision for the right of inquiry, the right of every public servant to have an inquiry, whatever his position, before dismissal if he does not hold his position at pleasure, and the governor of the bank does not. Incidentally, the minister referred to the governor of the bank as a public official, which is correct. The Prime Minister referred to him incorrectly over the air the other night as a civil servant.
The governor of the Bank of Canada does not hold his position at pleasure. He holds it during good behaviour. When a man in his position is being forced out of office as he is by this legislation, then irrespective of the merits of the case he should be given an opportunity to state his case before a parliamentary committee because it is parliament, the high court of the land, which is being asked to take action. If parliament is being asked to take this kind of action, surely in simple justice the man concerned should be


given the opportunity to appear before a parliamentary committee. That is why, Mr. Speaker, I asked the minister once again after his statement this afternoon whether he would not ensure that the bill would be referred at once to a committee where evidence could be taken and witnesses could be heard. If he had said yes, and he should have said yes, that would have ended second reading as far as we are concerned.


Paul Joseph James Martin: Instead of hanging a man on the prejudiced statement of the Minister of Finance.


Lester Bowles Pearson: And, Mr. Speaker, this action, this denial of justice, this denial of the right to appear before a committee of the House of Commons which is asked to discharge this man, is being taken by a government which boasts so often about the bill of rights it asked this parliament to pass, one part of which includes words to the effect that no such act-Canadian act of parliament-order, rule, regulation or law shall be construed or applied so as to "deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations".
Perhaps the Minister of Justice will tell us whether he has examined this bill in the light of the bill of rights and whether this bill, in the form in which it is presented to us and in the light of the refusal of the government to permit the hearing we have asked, is consistent with the letter or at least the spirit of the bill of rights.
The issue in this bill is not, as the minister tried to tell us this morning, who governs this country. There is no doubt about that. Parliament and the people govern this country. The issue is not who governs this country; the issue is how this country should be governed. The issue in this bill is not Mr. Coyne or his financial and monetary views. We on this side have criticized his views when the Minister of Finance defended him. The minister brought forward some evidence a few moments ago, and I am not quite sure whether he was in favour of Mr. Coyne or against him. He brought forward the statement which he said he remembered Mr. Coyne made, that it was outrageous the way we criticized Mr. Coyne in committee.


Donald Methuen Fleming: It was the hon. member for Essex East in that committee to whom he referred.


Lester Bowles Pearson: The minister quoted the governor's statement which he remembered so well, which was not in writing, that the questioning of the hon. member for Essex East, who was speaking as a Liberal member of parliament, was outrageous.


Mr. Browne (Vancouver-Kingsway):: It was.


Lester Bowles Pearson: Therefore the financial and monetary views of Mr. Coyne, we not having been given the opportunity to question them, have been sometimes criticized on this side of the house at a time when they were defended by the government, when the government refused to allow the governor of the bank to appear before a committee of the house for further questioning.
That is not the issue in the terms in which the minister put it before us. The issue is an historical issue of responsible government; of the control of the elected representatives of the people over the executive and the right of parliament to scrutinize every act of the executive, including any act which forces out the governor of the Bank of Canada.
By this bill the executive is seeking to make the elected representatives of the people rubber stamps, because they are being asked to take action without information, with the exception of that information which they receive from the minister who has put the bill forward. We are being told with respect to a matter of vital importance, the consequence of which may be with us for a long time, only what the Minister of Finance wishes us to hear, and on the minister's say so we are being asked to give a blank cheque to the government to control the bank without any parliamentary scrutiny. That is what we are being asked to do today, Mr. Speaker.
What excuse does the minister give us? On "The Nation's Business" broadcast the Prime Minister said:
Public servants are not the masters of the elected representatives of the people.
Mr. Speaker, that is perfectly true, of course. But here we have two chief public servants-the Prime Minister, who is a public servant, and the Minister of Finance, who is also a public servant-forgetting that they are public servants and telling the elected representatives of the people that we must declare the office of the governor of the Bank of Canada vacant and-this is the heart of the matter-without any reasons being given in this bill.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: There is no provision in this bill for scrutiny by a committee of the house. We are being asked to do this because one public servant, the Minister of Finance, has given us highly partisan and prejudiced accounts of his relations with the governor of the Bank of Canada.


Mr. Bell (Carleion):: How ridiculous can the hon. gentleman be?
90205-6-446
Governor of Bank of Canada


Lester Bowles Pearson: It certainly is ridiculous; there never has been such a ridiculous procedure put before this House of Commons.


John Whitney Pickersgill: Nor such arrogance.


Lester Bowles Pearson: I agree with the parliamentary secretary to the Minister of Finance in his effort to come to the defence of his minister.
The Bank of Canada is not a part of the executive; it is not under the control of the executive branch of government. Why is it not? The Bank of Canada is not a part of the executive because parliament decided that final control over the policies governing money supply should not be entrusted to the government in secret, but to parliament in the open. History demonstrates that control by the executive over money supply is one of the shortest roads to a dictatorship. That is why every free country has taken the most elaborate precautions to prevent the control of the supply of money falling into the hands of an arbitrary executive, free of any effective parliamentary scrutiny or control. What is the use of having parliamentary control of the right to tax if we are going to give the executive a blank cheque to start the printing presses rolling to pay their huge deficits?
Mr. Speaker, the Bank of Canada Act was carefully designed to prevent this from happening, and that is why it provided for a representative board of directors who were to be independent of the government. That is why the board and not the government was given the power to appoint the governor and deputy governor, which is something the minister carefully avoided referring to when he was talking about the appointments this afternoon, although approval of these appointments by the government is also required to ensure, it is hoped and has, indeed, been the case, the necessary harmony between the governor and the government. That is why the governor was appointed for a fixed term, subject to good behaviour, not subject to pleasure. Parliament intended the bank to be independent Of control in that sense and to act independently of government control within its own sphere, but not, of course, to act in a fashion that would frustrate the policies of a government. There is no difference between us on that score.
In other words there was to be harmony and co-operation between the government and the governor, because without that harmony and co-operation one can understand the difficulties that would ensue. If that harmony and co-operation could not be maintained, and if the governor did not resign voluntarily, a responsible government under our system has a clear duty to bring this

Governor of Bank of Canada situation at once to the attention of parliament, the source of all authority and control, and to propose suitable action which parliament could take, but only after due and proper parliamentary inquiry in accord with simple decency and justice.
The minister told us two weeks ago, and repeated with vigour this morning and this afternoon, that the necessary harmony has been lacking for four years between himself and the governor of the bank. However, until two weeks ago he kept that disharmony in secret from parliament, and denied every suggestion of the opposition that any lack of harmony existed. I will have something to say about that latter. There is plenty of evidence that can be produced in respect to the question of lack of harmony which so recently has been discovered and which now, four years after, the minister complains about very bitterly.


Paul Joseph James Martin: Information which came to us then for the first time.


Lester Bowles Pearson: As the hon. member for Essex East says, the information came to us for the first time in the last two weeks. This concealment by the minister from parliament is a self-confessed breach of the minister's duty to parliament. When this disharmony arose, as we are now told it arose years ago, surely then if the minister could not do anything about it the Prime Minister, the head of the government, should have stepped in and restored the position, if that was possible.
We do not even know whether the Minister of Finance told the Prime Minister about this disharmony over the years. We do know he is very sensitive himself about being told anything in respect to the administration of the bank and financing and all that sort of thing. We know from his words again this afternoon that although he had his assistant deputy minister at a meeting which dealt with pensions, when the minutes of the previous meeting were read, yet in spite of this kind of representation he himself did not know what was going on at that meeting of the board of directors. We do not even know what information the Prime Minister had about this fundamental disharmony. Surely if it exists-and it has existed for four years, we are told-the Prime Minister might have stepped in at any time, as any prime minister with a sense of responsibility would have done, and done his best to clear it up without the damage to the country and its prestige that has occurred by the events of the last two or three weeks. The trouble with this government is that it is too busy running a campaign to run a government.


Donald Methuen Fleming: Where have you been lately?


Lester Bowles Pearson: If the government were convinced that the governor of the bank was really obstructing government policies-and they claim to be convinced now; it is a kind of ex post facto conversion or conviction- parliament, as I have said, should have been fully informed, but it was not informed, and the governor of the Bank of Canada as head of an institution responsible to parliament, should have been given a full opportunity to explain his position and defend it. If he could not or would not explain his position and defend it satisfactorily, then and only then parliament should act. Instead of doing that-and that was the right course to follow-the Minister of Finance let the situation drift for nearly four years until his patience became exhausted or something else happened. He prevented the appearance of the governor before a committee of this house. Although he denied it this afternoon, the fact is that the governor of the bank did not appear before a commons committee during those four years. If there was this fundamental disharmony which we hear about now for the first time, why would it not have been the first desire of the minister to see that the governor of the Bank of Canada went to a committee of the house and explained his policies so that the government could explain to the committee where this disharmony lay and so that action could have been taken?


Donald Methuen Fleming: What action?


Lester Bowles Pearson: 
Donald Methuen Fleming: That is unfair.


Lester Bowles Pearson: That is the main issue in this bill.


Donald Methuen Fleming: That is very unfair.


Lester Bowles Pearson: Are we going to suppress the right of inquiry, which is essential to the ultimate control of the Bank of Canada by the elected representatives of the people, or are we to hand that control over to be exercised in secret by a government with the record this government has had of lopping off the heads of able public servants?
If this bill is passed in this form, without any recourse to a parliamentary committee where witnesses can be heard and evidence can be taken, what will be the effect of this action on the prestige and morale of the public service? Let me repeat what I have already said. The governor holds his position during good behaviour, not at pleasure. In addition to the judges, there are only a very few public servants who are appointed during good behaviour. What does that phrase mean? It means that such public servants can be removed only for cause and not because they happen to displease the executive in the discharge of their duties.
What the minister is doing in demanding Mr. Coyne's resignation, or what he was doing on May 30 when he demanded Mr. Coyne's resignation, was the equivalent of calling in the chief electoral officer and saying this to him: "We are going to change the electoral law in a way we believe you will not approve, so please resign quietly and thereby maintain the dignity of the office and let us appoint someone who will do the government's will".


Donald Methuen Fleming: Nonsense.


Lester Bowles Pearson: That is exactly what happened in the case of the governor of the Bank of Canada.


Donald Methuen Fleming: Ridiculous.


Lester Bowles Pearson: It was the equivalent of calling in the president of the C.B.C. and telling him this: "We have a new broadcasting policy that you will not like. It is too secret to reveal to you, it is true, but please get out quietly and make way for one of our friends". Mr. Speaker, the procedure followed in this bill is no better than that. It is true parliament has the opportunity to vote. Theoretically the bill could be defeated. But before the House of Commons is asked to vote we are being

Governor of Bank of Canada refused the right of inquiry into the nature of Mr. Coyne's alleged misbehaviour. We get that only from the minister himself, who will not I am sure complain when I call him, in this matter at least, not an impartial witness. This merely turns parliament into a rubber stamp for the executive.
If there are grounds for Mr. Coyne's removal, there is a proper way to do it. I have put it on the record and I repeat it because it is the heart of the matter. The proper way is that we have a full parliamentary inquiry at which Mr. Coyne as well as the minister, and members of the board, if you like, could fully and freely present their differences, if any, and be cross-examined. If that inquiry, which could be concluded very quickly-it need not take long-showed that there are legitimate causes for removal on the ground of misbehaviour, then parliament could and should take appropriate action to that end.
That action, I suggest, should not take the form of this kind of bill. That action, I suggest, would require two stages. First an amendment to the Bank of Canada Act, an amendment which we were told by the Minister of Justice (Mr. Fulton) not long ago would be required in this situation, to provide a procedure for removing the governor similar to that contained in the Judges Act, so we could not have this kind of situation in the future. Then a joint address of both houses with the full particulars which justify the removal of the governor.
That would be due process of law and it would help to preserve the necessary independence of the office of the governor of the bank and the assurance that the government was not tampering with the money supply for partisan or other improper purposes. It would also confirm, beyond the reach of contradiction, parliamentary control in such unhappy disputes. We have not that in this bill. What we have here is a return to the processes of despotism. This bill before us is in essence a bill of attainder, a procedure outlawed by the bill of rights in the United States constitution and not used in England since 1798.
This bill is introduced into this house by the governor's accuser, the Minister of Finance, and the accuser alone is allowed to give evidence before parliament. He alone passes judgment and to parliament is given the dignified and appealing role of executioner. This, Mr. Speaker, takes us right back to Tudor days.
It was not always thus in this house so far as hon. members opposite are concerned. Listen to the Prime Minister (Mr. Diefen-baker) in earlier days when he was in the opposition; listen to what he said on June 9, 1955, as reported at page 4563 of Hansard:

I ask the Prime Minister now: Do you have to circumvent the rule of law in order to achieve power under this legislation? Nothing of the kind! Have the powers, but in order to assure that no individual shall be discriminated against and denied equality before the law, to assure that the individual shall not be a puppet in the hands of the minister, give to the individual who is able to establish that he has been discriminated against a right of review by the courts of the land. Surely, we have not arrived-*
Said the present Prime Minister:
-at a state of mind in this country when parliament is asked to abdicate the rights of the courts for an indefinite time in the future in order to satisfy the desire for power of any minister or of any government.
Then again, in the same debate, as reported at page 4566 of Hansard, the Prime Minister had this to say:
With respect to constitutional power, read Burke. What did he say? What were his words? The tyranny of the majority is a multiple tyranny. No better answer can be given today than that. It is no excuse-
Said the present Prime Minister:
-that you have a big majority.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Now, Mr. Speaker, let me look at some of the issues behind this procedure which we attack. This is the basic problem; it is basically the procedure which we attack. Let us look at some of the issues behind this legislation and what the minister said today justified the action he is asking the House of Commons to take. Let us look at the record. Apart from the procedure being followed, which is to be condemned, has the government made its case that the governor should resign? Has he in fact been non-cooperative in working with the government? Has he obstructed government policy? Is that the basic cause of the dispute?
If that is true-and the minister has stated it is true-it has been denied by the governor and it has not been proven at any inquiry. It has only been stated by the minister. The public evidence available to us-not that which we have secured from the minister alone-indicates that Mr. Coyne on May 30 and subsequently has been put up by the government both as a scapegoat and a target. After all, Mr. Speaker, there is nothing like publicly knocking down a bank president to take one's mind off massive unemployment.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: There is nothing like this kind of smokescreen and confusion to conceal the inefficiency of the government, its fumbling and bumbling in economic and other matters. The charge made and repeated this afternoon is that the governor of the bank was a proponent of restrictionist policies, tight money, high interest rates and all that.


An hon. Member:: That is what he said.


Lester Bowles Pearson: Indeed the Minister of
Finance said specifically in the house on Tuesday last, I think it was, and again over the air the same night, that this was the main difference between him and the governor. I will quote his words again; he confirmed them this afternoon. He said:
Mr. Coyne's rigid attitude on the maintenance of high interest rates-
That caused all the trouble, and that is what he had to fight. "That is why we were incompatible", said the minister. I suggest that from the Minister of Finance this is hypocritical nonsense, and "nonsense" is one of his favourite words.


Paul Joseph James Martin: One of his virtues.


Lester Bowles Pearson: When the opposition in this house pointed out time and time again the dangers to the economy, at a time of recession, of tight money and high interest rates, the minister argued vehemently that our charge was false and absurd, that in fact interest rates were down, rather than up. If hon. members read Hansard for March 31, 1960, page 2671, they will find that was the minister's argument in this respect. In the debate on monetary policy last February to which the minister has already referred, the minister insisted that monetary policy and the question of money supply was a matter for the bank alone, not for the government. He threw aside all governmental responsibility.
The minister, therefore, could at that time have thrown the whole responsibility for any tight money, for restrictionist policies, onto the bank. He could in that debate have told parliament about the differences which he says now have existed for a long time. He could at that time have met head on the issue which he says now has existed for so long. Well, did he? If hon. members read the debate, they will find he did not do so. In direct contradiction to what he said in his budget speech of last Tuesday, he argued last February that bank policy had been such that the money supply as of December 31, 1960 was larger than it had ever been in Canada. He then praised the governor, he praised Mr. Coyne, and I note that as reported at page 2266 he added complacently:
V;ht"'c never has been the slightest interference by the government with bank monetary policy.
There never had been the slightest interference in the monetary policy of the bank. Presumably, this was because things were going all right. There was no reference to disagreement, no reference to fundamental disharmony. There never had been the
Governor of Bank of Canada slightest interference with monetary policy. Well, if that policy at that time and for years earlier had not been satisfactory, why did the government not intervene, at least to the extent of drawing its views to the attention of parliament? The government never interfere. Well, they are interfering now, though a few months ago the minister said that in the matter of interest rates the bank could not be criticized because the rates were not excessive compared with rates in countries such as the United Kingdom and the United States. Hon. members will find that statement reported at page 2207 of Hansard. Yet the minister said exactly the opposite when he made his budget speech last week. We are entitled to ask him: what kind of double talk is this?


John Whitney Pickersgill: Which time do you believe him?


Lester Bowles Pearson: We on this side expressed worry over the bank rate and over the monetary and fiscal policies of the government. We did the worrying and we did the criticizing and the Minister of Finance defended both the government and the governor. Indeed, he attacked me in February last, as will be seen at page 2688 of Hansard, for bringing the Bank of Canada into a centre of controversy by raising these question in the House of Commons, claiming I was unfairly attacking the bank and its governor which he was defending. This was in February, 1961; then on May 30, 1961 he asked the governor to resign. In view of this, could anything be more hypocritical than the minister's recent statements and his statement today about relations between the bank and the government? Could anything be more phony than this pretence of patient long suffering in the face of the governor's policy, which he was defending as recently as February?
What is behind all this? Well, the minister has suddenly become the champion of expansion. The governor, he says, is restrictionist. Perhaps that gives us a clue to the greatest conversion since the conversion loan of 1959. But the minister cannot get away from the record, and the record shows that it has been the opposition which has been pleading in this house for expansionist policies during the last four years and the government which has been opposing our expansionist proposals. Even with massive unemployment in a static economy, the minister was still possessed with the fear of expansionist proposals becoming a danger to the stability of the currency, leading to inflation. That was the burden of his sermons in those days. Inflation was the great villain,

Governor of Bank of Canada the great threat. And this was a view he shared at that time with the governor of the Bank of Canada.
On Tuesday last, however, at a time when expansion is in full flow according to the Prime Minister with a consequent increase of inflationary pressures, we no longer get a sermon from the minister on "work and save" or on the necessity of preventing inflation at all costs. We are to be spared these pedantic little homilies on financial responsibility. The text is now to be expansion. The minister has become complacent about the dangers of which he warned us earlier. There is not, he says, and I quote from his budget speech of the other night:
-any serious danger of inflation in present circumstances with so much unused capacity in our economy.
That is another conversion. He did not talk like this previously when there was even more unused capacity in our economy than there is today. Oh, no.
To conceal this about-face, to obscure the real issue, there had to be the smokescreen of a scapegoat. This was provided, without any consideration for decency or fair play, even to the extent of refusing to give the scapegoat the right to be heard and to defend himself against his accusers before a parliamentary committee. The elementary procedures guaranteed by the bill of rights were ignored, as were the procedures which give to the most junior civil servant the right to defend himself against charges before dismissal. The scapegoat was the head of a bank and bankers, of course, can be treated in this way without votes being lost. So goes the cynical reasoning.
So now we have what is called the Coyne affair to cover up this evidence of government misamanagement and ineptness and we are faced also with a refusal to allow any inquiry into this matter in a manner which would enable witnesses to be called and all the facts to be brought to light. This is all we are asking for on this side, but apparently it is not at all to the government's liking; that would not suit the government at all. The minister calls in the governor of the bank and says: get out at once; resign quietly, or else. This is the minister who a few months before had argued that he had nothing to do with monetary policy let alone the administration of the bank. Now he says: resign, or else.


Donald Methuen Fleming: There was no "or
else".


John Whitney Pickersgill: We can see the "or else". It is here.


Lester Bowles Pearson: The alternative was perfectly clear: resign quietly or we shall throw you out by act of parliament without there being a chance to appear before parliamentary committee. All we are asking is that this man and his accusers be invited by parliament, which is asked to take action, to appear before a committee of the commons where the facts can be ascertained.
Listen to what the minister said on February 21 on this point:
The government has no authority over the bank.
I particularly call the attention of the house to these observations by the minister which are to be found at pages 2256, 2257 and 2258 of Hansard:
The government must keep its hands off the bank just as it keeps its hands off the C.B.C.
That should have made us suspicious. Perhaps we were derelict in our duty by not attaching the proper significance to that observation by the minister.
Then the minister went on to say this as reported at page 2260. He asked himself the question:
Can the government change the management of the bank?
Then he answered it himself:
It cannot. The government has no power whatever, once appointments are made, to change them.
But it can bring the most extreme pressure on the governor to resign. Surely that is trying to change the management, and it is mere sophistry to argue otherwise. Therefore, the minister went to the governor without warning on May 30. He must have known it would provoke a crisis and he must have known, also, that there were only six months or so before the end of the governor's term of office. Knowing this, and knowing also that a committee of the board of directors of the bank was already working on finding a successor, the minister, in effect, says to the governor: resign at once, before the budget, which we have not discussed with you at all, but which we know you will not like even though we have not shown it to you. So resign at once.
The shabby insincerity of this attitude has been shown, particularly, by a question and answer in the house on February 21 as reported at page 2264 in the course of a discussion which is turning out to have been an important debate. The minister was speaking, and he was interrupted as occasionally happens by my friend the hon. member for Essex East (Mr. Martin) who said:
Does the minister agree with Mr. Ilsley's statement in 1941 that, in the event of a disagreement between the Bank of Canada and the government, it would be necessary for the governor to resign?

To which the minister replied:
No, no. Not in those terms-not at all.
Whereupon I intervened to say: "We do". That is, we Liberals. Then the minister made the following statement. I want to quote everything he said, not just a part; he quoted me in part but I shall quote him in full. He went on to say:
Unless, in the event of disagreement, the governor ... chose to resign.
Then he went on:
There is nothing that the government is in a position to do in that situation except to ask parliament to change the legislation, or wait for the expiry of his term.
This bill does not change the legislation; it does not alter the Bank of Canada, and the minister did not wait for the expiry of the governor's term.


Donald Methuen Fleming: That is sophistry now.


John Whitney Pickersgill: A bill of attainder.


Lester Bowles Pearson: Let me turn to another matter. Need this crisis-and it is a crisis and a most unhappy one-ever have arisen? Of course the answer is certainly not, if it had been properly handled much earlier, and if there had been close and continuous contact between the governor and the minister. There was no such contact. The minister himself will not deny that. In the loss of such contact and in the face of this disharmony, as I have said previously in this debate, then it is for the Prime Minister to step in. If only the government had accepted its proper responsibility for monetary policy and exercised it at a time when, according to the minister now, Mr. Coyne was first proposing ideas and policies and making speeches of which the government did not approve. He was making speeches which included things we did not approve and we brought this up in the House of Commons. The minister, however, had nothing to say about the speeches in the house. But in 1961, I think it was in February or March, the minister did at last tell the governor to stop making speeches of this kind-


Mr. Benidickson:: In March.


Lester Bowles Pearson: -and the governor did. If the minister felt this way about the governor and his speeches and his policy, why did he wait until March, 1961? My own speech in this house on February 20, 1961 gave the Liberal view on both responsibility and policy. I emphasized in that debate the necessity for sound but easier money and for easier credit policy. I mentioned certain criticisms of the governor, of his alleged restrictionist ideas on these matters. In that debate I begged the
Governor of Bank of Canada government to tell us what were their views on those matters, to clear up the confusion and resolve any conflict, if there was one, not only between the government and the governor but between ministers inside the government. I begged them to tell us on this side and to tell the House of Commons who was responsible for what. My own view was clear. The minister has put it on the record and I am glad to repeat it:
It the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
But after an inquiry into the accusation made against him, and only then.


Donald Methuen Fleming: The Leader of the Opposition did not say that on February 21.


Lester Bowles Pearson: That is simple elementary justice; it may be strange to some of my hon. friends opposite who talk so much about parliamentary justice and rights. I went on to say that if the governor operated in the field of monetary policy without any indication of government disapproval, the governor then has surely the right to assume that the government supports the policy he is putting forward. The evidence of the minister's statements-and I have quoted some of them- shows that they did support that policy even though they attack it so bitterly now. Look at the speech made in Toronto on January 11, 1960, by the new crusader for expansionist finance, when he talked about the difficult decisions that had to be made in 1959, and I quote; "in the cause of steady rather than explosive and inflationary progress". He added, as found at page 2 of the text of his speech:
Our concern today is not whether we will continue to grow but what kind of growth we wish and will have.
Was that Coyne or Fleming speaking? Well, it was both. The minister went on:
Too often we have been tempted to pursue too rapid a rate of growth with too little regard for the inevitable consequences.
Was that the governor or the minister speaking? Listen to this. It will be found in the same speech:
It was not yet a time-
This was 1959.
-for a severe application of fiscal restraint, but the situation did require a reduction in the stimulus which government fiscal policies had injected into the economic stream.
And so he went on. He said we must avoid:
expenditures not strictly necessary now and bring government revenue and expenditures into better balance.
This was the minister, the restrictionist. What about the banks? What did he have

Governor of Bank of Canada to say about the banks in those days? Well, in his speech in Toronto he indicated that he was pleased because:
The restraints imposed by the chartered banks on the growth of over-all bank credit and their more selective policy of lending appears to have brought about a more orderly situation within the banking system.
Part of the same speech reads as follows:
Credit restrictions continue to impose difficulties for certain sections of the economy although there is no evidence that from the over-all viewpoint they are interfering with the process of growth.
Was this the governor of the Bank of Canada? No, this was the Minister of Finance speaking in January, 1960.


John Whitney Pickersgill: The expansionist.


Lester Bowles Pearson: I will quote more from his restrictionist speeches. He said in the same speech in 1960:
We are seeking deliberately to bring our revenues and expenditures into closer balance in order that we may not find it necessary to make new borrowings.
In the same speech in Toronto he concluded as follows:
Those who practice thrift are entitled to the reward of the protection of their savings against the ravages of inflation. X shall continue to do all that lies within my power as Minister of Finance to encourage and protect the savings of the people, however small.
If Canadians can hold production costs in line and demonstrate renewed efficiency as producers and salesmen, and if they are prepared to take the self-denying measures needed to resist the lurking dangers of inflation, the present period of expansion could carry the Canadian economy far beyond the high water marks heretofore attained.
Then, a year later at Brantford, in January, 1961, in words that could have come from the governor himself, in words that make a mockery of the present attempt to pin on the governor, the blame for tight money and restrictionist policies the minister had this to say about the money supply:
The chartered banks are in a strong and improved position compared with a year ago. Their total assets increased during 1960 by approximately $750 million, or 6 per cent. Over the same 12-month period the total money supply increased by $687 million, or a little more than 5 per cent. During the year the general loans of the chartered banks increased by $275 million, or 6 per cent, and the ramainder of the increase in their total assets was reflected in the rise of more than $475 million (or 12 per cent) in their liquid and quickly marketable assets. This included, in addition to a rise in their cash, day to day loans and treasury bills, an increase of $260 million in their holdings of government bonds, and their net foreign assets have risen by $100 million.-
The minister who now condemns the governor of the Bank of Canada because he was a restrictionist in those days, went on to say:
In other words, the Canadian banking system has increased its loans during 1960 without strain on its liquid position; in fact it has added to its

liquidity and is in a position to meet all reasonable borrowing requirements of credit-worthy businesses and institutions.
The minister used those words, but Mr. Coyne certainly could have used them at that time. That was the policy in 1960, and its virtues were sung-


William Moore Benidickson: Just a few months ago.


Lester Bowles Pearson: The speech was made in 1961. The virtues of the policy were sung repeatedly by both the minister and the governor in other speeches.
In following these principles of that day the minister had a goal which he reaches, he thought, in last year's budget, which has now been repudiated by him though apparently it has not been repudiated by the governor of the Bank of Canada with whom he shared the desire to reach it last year. And yet now the minister complains that the governor and the government have become incompatible. "The government's policy" the minister says "is expansionist-the policies advocated by Mr. Coyne are restrictionist". Well, of course, some of the governor's policies are, but so are many of the things advocated by the minister in his earlier budgets. His 1960 budget, he admitted himself, was a stand-pat one. His baby budget of last December was hardly better. It was certainly not one to which the governor of the Bank of Canada could object. Expansionism, apart from some proposals in the 1958 budget as bait for the 1958 election, has been conspicuous by its absence in government policy during a time of recession when it was most needed. Yet we are now told that this was the basis of the government's difference with the governor of the Bank of Canada, a difference which is very hard to detect in the budget of this year. Mr. Bruce Macdonald, writing in the Globe and Mail of June 20, had this to say:
So far as the outsider could tell, the government had come to accept the monetary approach laid down by Mr. Coyne, and the finance minister, the soul of orthodoxy, came to be regarded as his guardian angel.
I think that is quite enough, Mr. Speaker, though I could quote a lot of other things to demonstrate the hollow mockery of the ex post facto case that the governor of the Bank of Canada over all these years had been restrictionist while the government was expansionist and that finally they came to a parting of the ways and on May 30 the minister said: "We can go along no longer; you resign at once, or else".
In the face of this statement of the minister the governor says, in effect, that there is no question affecting bank policy or cooperation at issue between us and that the

bank has in fact always co-operated fully with respect to government policies and measures. He said this too:
At no time has the government expressed disagreement with the operations of the Bank of Canada under my management nor has there been any occasion on which the Bank of Canada has failed to co-operate... in support of government policy. I have never opposed government policy and do not wish to do so.
There is a statement from the minister which I have quoted and there is a statement from the governor which I have quoted and in the face of both these statements contradicting each other, in the face of a statement by a member of the board of directors contradicting what the minister has said today-


Donald Methuen Fleming: That is not true.


Lester Bowles Pearson: -in the face of that situation the minister has the effrontery to stand up and say that he will not allow this matter to go before a committee of the House of Commons where the facts can be found and the truth ascertained. That is all we are asking. We are not supporting the governor. We are not supporting the governor's tactics.


An hon. Member:: What are you doing?


Mr. Churchill:: You are on both sides of the fence as usual.


Lester Bowles Pearson: That is not the issue before us.


Mr. Cathers:: All over the map.


Lester Bowles Pearson: We are the only party in this house that has criticized some of the things that the governor has put forward. Some of the things he has said and done have been good. Some of the things he has said and done have, according to our thinking, not been good for Canada. That is not the issue. The issue is simple decency and justice. The issue is whether a man in the high and responsible office of this man can be thrown out of his office by an act of parliament-


Mr. Hodgson:: He threw himself out.


Lester Bowles Pearson: -which does not give him the opportunity to face his accusers in a parliamentary committee. The high court of parliament, the House of Commons, is being asked to take action in this matter. We are asked to take as important a decision as the House of Commons can take, to discharge the governor of the Bank of Canada. We are being asked to do this without access to the facts except in so far as members of the government give us those facts. We are asked to do this before the man accused is given an opportunity to face those accusing him in a committee of the house which is being asked to take action. This is an intolerable position, and I suggest that even now the government will surely fall back on its own
Governor of Bank of Canada bill of rights-I should like to read it back to hon. members of the government again- and give this man the opportunity to be heard within the spirit of the bill of rights about which they boast so much. Therefore, Mr. Speaker, I move, seconded by the hon. member for Laurier (Mr. Chevrier), the following amendment:
That all the words after "that" be struck out and the following substituted therefor:
"this bill (C-114) be not now read a second time but that the subject matter thereof be referred to the standing committee on banking and commerce."


Mr. Erhart Regier (Burnaby-Coquitlam):: Mr. Speaker, I regret that, unlike the minister who introduced the bill and the Leader of the Opposition (Mr. Pearson), I have only a limited time. I had eight hours of material ready for this debate and the minister in introducing the bill supplied me with an additional eight hours of material. I should like to congratulate the Leader of the Opposition immediately on the excellence of his performance and the excellence of his arguments. I want to say at once that I have never heard him in better form. It is obvious that he read the headlines this morning in the Globe and Mail, as we all did, I am sure, and is doing his utmost to make a bid for the leadership of the new party which the Ontario young Liberals would like to see him do.
After looking at the bill before us and hearing the explanation of the minister I can only say in all sincerity, what arrogance and what a horrible insult to the intelligence of the Canadian voter his recitation was. When he sees fit to accuse the governor of the Bank of Canada, as he said, out of the tabloids of his memory, all I can ask in response to that is: Does this mean that his head is indeed made of stone because tabloids are inscribed on stone?


Donald Methuen Fleming: Tablets, not tabloids.


Erhart Regier: If the minister had not taken so long he would not have wound up with his neck stretched out nearly as far as it is for the opposition to hack off. The longer he talked, the longer his neck became. He even went to the extreme of attempting to take credit for the representations made to him a number of months ago in this regard by learned people in the university field. He forgets completely that they complained not of the attitudes of the governor of the Bank of Canada but rather they complained basically, as we also have complained, of the lack of co-operation that obviously has existed in this regard.

Governor of Bank of Canada I believe that the minister exposed his small stature and also the smallness of the government when, in a vain and desperate attempt to heap additional criticism by way of attack on the activities of the governor of the Bank of Canada, he complained about the use of paper belonging to the taxpayers and the use of a postage meter to which the governor of the bank had resorted in an attempt to defend the integrity of the office of governor and, indeed, the role of the Bank of Canada itself. I believe this was really hitting below the belt. We thought that the complaint about the pension plan was hitting way below the belt, but this complaint about the use of the postage meter is even lower than that.
I hope the Minister of Finance will remember that until royal assent has been given to the bill now before us-and in light of the number of trained seals that abound in this house I have no doubt that royal assent will eventually be given

the governor of the Bank of Canada is yet the governor of the Bank of Canada and is completely entitled to use whatever facilities are available to him to defend, as he sees fit, the integrity of the occupant of that office as well as the integrity of the institution itself.
I think the minister can fairly be accused of literally heaping piles of abuse on the governor of the bank while at the same time denying his right to reply before a committee of this house. The Minister of Finance was most vindictive in the whole of his speech and it is obvious that in this whole matter the government as usual has been playing it by ear and has proven itself to be quite deaf at that.
I find it very difficult to understand the minister's claim that he has defended the prestige of the Bank of Canada. I feel that it is very difficult at this stage to decide who is the more adequate defender of the prestige of the Bank of Canada, whether it is indeed the governor of the Bank of Canada or the Minister of Finance. I should like to call the minister's attention to a statement he made, and this is in line with a number of complaints he has had made recently, and again this morning, as recorded at page 2258 of Hansard of February 21, 1961:
Mr. Speaker, may I say that I have no right of censorship over the speeches of the governor of the Bank of Canada. He does not refer them to me. Why should he do so? This is a free country. He makes his own speeches and chooses his own themes.
The minister complains now that the governor of the Bank of Canada in fact did not consult him but made his own speeches on his own particular theme.
Before I go much further I should like to make our position perfectly clear. We believe that the Bank of Canada belongs to 

the people of Canada. We recognize that all of the shares are owned by the Minister of Finance on behalf of the people of Canada. We reiterate the basic position taken by the former governor, Mr. Towers, as well as by a former minister of finance, Mr. Ilsley and other former ministers of finance, Mr. Abbott, and Mr. Dunning-and these expressions are all on record-that if there is a basic conflict of interest, or difference between the policies of the government and the head of the Bank of Canada, then the will of the owners of the bank, as expressed through the government of the day, must prevail.
We in this group appreciate at once that if the Conservative government is going to remain in office for any considerable length of time the continuation of Mr. Coyne in the office of governor is completely untenable. This has been admitted by Mr. Coyne himself in a number of releases which he has made since this issue has arisen. However, we also believe that to ask the parliament of Canada to approve of this bill without hearing before a committee of this parliament the accused man presenting his own case is an insult to the House of Commons itself. We in this group, therefore, intend to support with all the vigour at our command the amendment which has been put forward by the leader of the official opposition.
This is a battle in essence between the government and the governor of the Bank of Canada; the Minister of Finance versus Coyne. Which side of the coin is he on, or is he simply opposed? We have heard the minister speaking about devaluation of the coin of the realm. Is this a sign that the value of the coin of the realm is to prevail or is Mr. Coyne less dear?
We have also assumed that the basic philosophies in respect to monetary policies of the minister and of the governor were identical. We have always been led to believe so and, even at this late date, still think there is no fundamental difference between the basic approach of the Minister of Finance and the governor of the Bank of Canada. However, we now realize, after reading submissions made a number of months ago by the governor of the Bank of Canada to the Minister of Finance, that we have now arrived at a stage of socialism plus Tory policies rather than socialism versus free enterprise upon which ground the Prime Minister announced the next election campaign would be fought.
During the budget speech the Minister of Finance presented a number of projects recommended to him by the governor of the Bank of Canada, such as the vast expansion

of the industrial development bank. The governor of the Bank of Canada also encouraged, as the minister has so often done, an increase in savings by Canadian people, and he advocated a specific arrangement for a national development corporation. He also advocated the establishment of a local government finance corporation. I suggest we now have socialism plus private enterprise, and I should like to ask a question in all sincerity. Did Mr. Coyne indeed have a point of difference with the Minister of Finance when he pointed to the continuation of repeated attacks upon crown corporations, or does the government intend to pursue a policy of selling these crown corporations, thereby pursuing a policy of private profit versus a continuation of the very profitable crown corporations that we now have in Canada?
The governor of the Bank of Canada has repeatedly offered his co-operation. He claims, along with many other leading Canadians, that massive action on the part of the government is needed. I want to at least say this for him; although we may disagree with many of the measures he advocates, he has assumed responsibility for the welfare of Canada and Canadians, and has recommended to the government a program of massive action in order to meet the recession that we are now experiencing.
I should like to ask the minister, in light of the statements which he has made in regard to the governor of the Bank of Canada, where the basic difference lies. Despite the length of the minister's speech today he has not yet identified the real area of basic difference between himself and his policies and the governor of the Bank of Canada and his policies.
I realize the impracticality of the measures advocated by the governor of the Bank of Canada in the field of tariffs. I much prefer an honest proposal such as that made by the governor of the Bank of Canada in this field -even though I am very much opposed to it -to the back door method of raising tariffs that this government continually insists on pursuing.
The governor has called attention to the need for co-operation in the field of monetary and fiscal policy. This need was underlined by the standing committee on manpower of the other place. This need is becoming more obvious to many Canadians who have given any thought to the matter. I believe even the minister, in his announcement that a royal commission is to be appointed to examine the role of the Bank of Canada, is now admitting that there must be a tie-in between monetary and fiscal policies and that the minister is now admitting he was in error when he insisted that fiscal policies are the exclusive
Governor of Bank of Canada responsibility of government and monetary policies are the exclusive responsibility of the Bank of Canada and never need the twain necessarily meet. I think the minister is now definitely on the defensive on this score.
I should like to recall to the house what the governor of the Bank of Canada had to say in his submission to the government dated February 15 last:
Monetary policy undoubtedly has a part to play in any anti-recession economic program and also in fostering long term economic growth. Unfortunately very exaggerated views appear to be held in some quarters as to the degree to which monetary policy by itself can be effective for these purposes. There are several reasons why general monetary expansion, particularly if not tied in with government measures directly increasing production and employment, may not serve any useful purpose and may even have perverse effects opposite to those desired.
He added a little bit later:
-unless steps are taken in other fields of economic policy to ensure that increased spending by Canadians will direct itself to the purchase of goods and services produced in Canada, and thereby promote increased employment in Canada.
The governor of the bank also had this submission to make at page 3 of the same report:
The whole range of economic policy must be focused on the goals of promoting full employment and a satisfactory rate of economic growth without inflation, and restoration of equilibrium in the balance of payments.
He went on to say this:
It is urgently to be desired that a strong new initiative be undertaken, aimed directly at achieving increased production and employment in Canada.
This does not sound like the voice of a restrictionist. It sounds like the voice of an expansionist. Before the budget was brought down the minister asserted that he was the expansionist and that the governor of the Bank of Canada was the restrictionist. After listening to the budget it now appears that the minister is the restrictionist because in the budget there is hardly anything to substantiate his claim to being an expansionist; and it now appears that the governor of the Bank of Canada would not have opposed a deficit, even one of this size, if it was aimed at an expansionist policy. However, as I said before, we all know that the deficit is only because of some very poor housekeeping on the part of the government.
In his recommendations the governor of the Bank of Canada advocates the removal of the excise tax on automobiles; I refer to the excise tax of 7i per cent. The minister announces it in his budget. I see no basic conflict there. The governor goes a bit beyond the minister's announcement. He calls for measures to handle such difficulties as the lack of regional development. He advocates a national highways program much beyond

Governor of Bank of Canada that which is in existence today. The governor of the Bank of Canada especially underlines the need to develop effective demand on the part of Canadian consumers and he makes many recommendations whereby effective demand in the hands of consumers might be enhanced. He is much more expansionist in this regard than are the policies that have been recommended to this house by the Minister of Finance.
The governor of the Bank of Canada on February 15 last recommended the establishment of a secondary mortgage market. We have since heard that this idea has now been adopted by the government. He recommends that our dollar on the international market be regulated. The only conflict I can see is that the policies of the Minister of Finance leave the potential value of the Canadian dollar very much in doubt. We do not know whether it is going to be discounted at 5 per cent next week, at 15 per cent or at any percentage. The recommendation of the governor of the Bank of Canada was that it be given a definite and fixed rate of exchange and that it be maintained at par with the United States dollar. We therefore fail to see very much of a basic conflict between the policies that have been adopted by the government and the policies that have been advocated by the governor of the Bank of Canada.
This morning we heard a long harangue. First of all, we had the crocodile tears shed on behalf of the personal welfare of Mr. Coyne. I believe that in the long run of things the Minister of Finance ought to be worried more about his own potential welfare in the years to come than about the welfare of the governor of the Bank of Canada. He said there is no personal element involved. Yet in all the releases I have read from the governor of the Bank of Canada there has been a lack of involvement of personalities. That is something that we certainly could not say for the speech of the minister of this morning. It was merely a diatribe attacking the integrity of the governor of the Bank of Canada. He complains of the attack of the governor on himself.
I believe that all the minister and the government are really worried about is that, after the governor of the Bank of Canada was made completely aware of the intentions of this government, he outmanoeuvred them, he outsmarted them at every turn, that he is now ending up on the top of the heap and the government finds itself on the short end of the stick and they are regretting it; and therefore, as the only way out in a desperate move, they are attempting to attack the integrity of the governor himself. How else can we explain the government's suddenly

waking up to the fact after 16 long months have elapsed, that an increase has been allowed to the pension of the governor, despite the fact that the minister had the assistant deputy minister in attendance at this meeting 16 long months ago? The Canadian people will regard this only as a smokescreen.
The minister complains that confidential documents have now suddenly been released to the public. Did the minister expect that a responsible officer, the leading officer of the Bank of Canada, was going to allow his office to be dragged through the political mud from the Atlantic to the Pacific and that he would remain bound by that promise that all exchanges would1 remain confidential? Certainly in what the minister told us this morning he revealed many of the confidential discussions that had taken place. I contend the only complaint is that hon. gentlemen opposite are smarting under the ability of the governor of the Bank of Canada to outmanoeuvre them. This was something they had not expected. As I said before, they were so inflated with their arrogance that they did not think a civil servant would have the guts to fight back and defend his rights, much as I disagree and much as my group disagrees with many of the ideas that have been submitted over the past number of years by the governor.
There is another matter I wish to mention. The minister was asked the other day whether the international monetary fund people had been consulted on the proposal to tamper with the value of the Canadian dollar. The minister replied, in effect, that he could not be sure; Mr. Rasminsky, who is a deputy governor of the Bank of Canada, had been in New York on the day the budget was presented and he may have had discussions with the officials of the international monetary fund.
Mr. Speaker, we must consider this in the light of the minister's claim that the governor of the bank himself has not been consulted about the contents of the budget. The minister was very firm in making that claim. The minister inadvertently admitted that he has been consulting, regarding the contents of the budget before its release in this house, whom, if you please, but the deputy governor of the Bank of Canada; but he did not deem it advisable to consult with the governor of the Bank of Canada himself. I say this because unless Mr. Rasminsky had knowledge of the proposals contained in the budget, he would have been in no position to discuss these proposals on Tuesday last with officials of the international monetary fund. The minister really opened his flanks on that score, and it is one more clear indication that the minister over the past number of years, as it

now becomes obvious, has made very little, if any, effort to work in harness with the governor of the Bank of Canada.
The minister claims that he gave the governor every opportunity to go with dignity. What a farce this claim becomes when the minister himself admits that one of the five things he discussed with the governor when he asked him to resign was the issue of his pension arrangements, which had been settled by unanimous decision of the board of directors of the Bank of Canada as far back as 16 months previously.
How do you claim that you are asking a man to go with dignity when 16 months after the event, and after the minister's officials knew of this event, you raise this as a matter for discussion? The minister admits that the governor of the Bank of Canada asked for an hour to think it over. I want to compliment the governor of the Bank of Canada. He did not immediately rise in wrath, as the minister so often does in this House of Commons. He considered that his basic integrity had been attacked, but he at least asked for an hour to cool off, to think it over and to come back with a suitable reply. I think this is a procedure the minister himself might adopt on many occasions in this House of Commons and not be so perfectly ready to interject with "utter nonsense" and words of that kind.
The minister complains that the governor of the bank released confidential information to the Canadian public on June 13 last. The governor on that day knew and had already been informed that the arms of the directors of the Bank of Canada had been twisted and that very same evening they would be asking for the governor's resignation. All I can say is that the government have raised a phony issue here and their basic resentment is that they were outmanoeuvred by the governor of the Bank of Canada.
The minister says that parliament must decide who governs this country. I contend that parliament must also decide whether or not we get all the facts, and up till now it is obvious that we have not received the facts. To say that parliament must decide, in the light of the lack of the facts, is merely to say, "we will use our rubber stamp majority in order to enforce our will in this regard". The minister says:
We will not accept responsibility for the governor and his actions when we have lost all confidence in him.
I would like to ask the minister how this happens to square with all his indications over the years that he has complete confidence in the Bank of Canada to determine monetary policy. The minister complains that the governor of the Bank of Canada had been requested to ease the tight money policy in
Governor of Bank of Canada the winter of 1957-58. I would like to ask the minister, how does this square with his continuous pledge to the House of Commons that he dare not interfere in the determination of monetary policy? Now today, at long last, he admits to us that he attempted indeed to interfere in the activities of the Bank of Canada as far back as 1957 and 1958.
I believe that the only complaint against the governor, as recited by the minister, in 1958 was the governor's action in releasing the annual report of the bank at the normal time because it was politically embarrassing to the government. This, in the eyes of the minister, was most reprehensible. Apparently he expected the governor of the Bank of Canada to consider the political fortunes of a political party over and beyond his responsibilities and his duty as governor of the Bank of Canada.
I feel this admission on the part of the government was most regrettable. They complain about that matter although the governor performed his functions in a proper manner. It happened to be unfortunate, I will grant, for the government of the day to have the annual report of the Bank of Canada released at that time. However the unpardonable sin of the governor of the Bank of Canada was that he performed his responsibility and released the annual report of 1957 in 1958, at the time this report is normally released. It happened to be embarrassing for the government, and therefore Mr. Coyne's head must roll.
The minister admitted that perhaps the government should have asked for the resignation of Mr. Coyne a long time ago. We agree with this wholeheartedly. If we are to believe the statements the minister has made in the last week or two, the government has shown itself to be utterly derelict in its responsibility to the people of Canada in not asking for the resignation of the governor. However if we are to believe the statement made by the minister over the years in regard to the activities of the governor of the Bank of Canada, the only conclusion we can come to regarding why now the government suddenly claim he is the evil influence on Canadian prosperity that they contend is that an election may be drawing nigh and they have to attempt to blame somebody else for their own lack of action over the past four years.
The minister agrees that it is up to the House of Commons to decide when the governor has to go. The governor himself has admitted that he ought to go if and when there is a basic conflict of attitude between the governor of the bank and the government of the day. But the minister today has not
7066	HOUSE OF
Governor of Bank of Canada produced any evidence that such a basic conflict exists. I recommend that hon. members read the statement of the governor of the bank submitted on February 15 last. In the main his prescription to end unemployfnent in Canada is not very far removed from many of the statements made recently by the Minister of Finance himself. The minister says this question should be left for the house to decide. I want to warn this government that though the matter might well be left to this house-and I have no doubt the house will likely go along with the government in reaching a decision-there is an even higher court than this parliament, namely, the court of the people. This smokescreen about the release of confidential documents, which is of more recent origin, is not going to work. The Canadian electorate today has gone beyond grades 1, 2 and 3. I believe the Canadian electorate will realize that this is nothing but a smokescreen. There is such a thing as character assassination. We contend that there has been nothing else, in essence, but character assassination in this issue. In no circumstances do we endorse a pension of $25,000 a year for any man in Canada. But let us not forget that this is not the responsibility of the governor of the bank. This was done by the unanimous decision of a Tory appointed board of directors of the Bank of Canada. If the minister is now able to twist the arms of the directors in order to persuade them to get rid of Mr. Coyne, how much easier would it have been for him 16 months ago when this pension issue arose to have twisted their arms and prevented this increase in pension being provided for a man who is supposed to be the retiring governor of the Bank of Canada.
The minister himself admits there is a need for the integration of fiscal and financial policies, but he has had to confess there was no consultation with the governor of the bank on the basically valuable submissions-I say this though I am not in agreement with them -made in the field of economic policy by the governor of the bank to the government on February 15 last.
I think the government imagined they could get away with it by going to the voters and carrying on an appeal against the bankers and those terrible people who increase their own pensions from $12,000 to $25,000 a year.
I take the view that the Canadian people support fair play and believe that every man should be heard in court. Therefore we take great pleasure in endorsing the amendment which was moved by the leader of the official opposition.


Mr. R. S. MacLellan (Inverness-Richmond):: I watched the Leader of the Opposition (Mr. Pearson) taking part the other night in a conference on television. My impression from what he said was that he intended to drop Mr. Coyne like a hot potato. I think the hon. gentleman's speech here this afternoon has borne out that impression. He has dropped the governor of the Bank of Canada like a hot potato. Not one logical argument did he put forward why Mr. Coyne should not be fired by act of parliament. Not one argument did he bring forward why we should not proceed with this bill. I noticed no one questions whether or not Mr. Coyne should go. It is obvious to all that there has been a disagreement between the government and the governor of the bank, and in that situation the Leader of the Opposition and everyone else in this house agrees that the government should stay and not Mr. Coyne. The Leader of the Opposition went on to say that before Mr. Coyne leaves his post-before he leaves his barricades in the Bank of Canada -we should have a committee of the House of Commons inquire into the situation. The hon. gentleman says that under the bill of rights Mr. Coyne has the right to appear before a committee of parliament to state his case. He says that the bill of rights which was established to provide for the liberty of the subject, should keep Mr. Coyne from taking his liberty at the earliest possible date.
The question of Mr. Coyne's pension has been introduced. That is not germane to the particular question at issue. That is not the reason he was asked to resign, but certainly it is worthy of consideration by this house that the governor of the Bank of Canada in preparing for the conclusion of his term in office in December of this year should have made arrangements for a pension equivalent to that paid to former presidents of the United States, a pension which is some $22,000 greater than that received by the last prime minister of Canada. Of course, that is not the reason why Mr. Coyne was asked to take his leave, but it does indicate something of the nature of Mr. Coyne, something of his arrogance, something about what he himself, at any rate, thinks he is worth to this nation.
Why should there be an inquiry into this request that Mr. Coyne submit his resignation? The issue is a simple one. In the case of a disagreement between the Minister of Finance who speaks on matters of finance for the people of Canada, and Mr. Coyne, it is the governor who goes and not the minister of finance. That is in accordance with our parliamentary system. The only question before the house today is whether there has been a disagreement, whether the minister feels he

can no longer work with Mr. Coyne. If that question is answered in the affirmative, the bill should be passed without a dissenting vote.
Both the Leader of the Opposition and the hon. member who has just taken his seat agree that Mr. Coyne has no right to remain in office after being asked to resign, but they say he does have the right to appear before a parliamentary committee to state his case. It seems to me that the reasons are very clear why Mr. Coyne has to go. His statements were on many occasions contradictory to those of the Minister of Finance. It was obvious for all to see that Mr. Coyne did not agree with the fiscal policies of this government which he criticized from time to time. It is obvious there was sufficient difference there to justify the Minister of Finance in coming before this house and asking for a replacement.
Mr. Coyne is a man who stands for high tariffs, isolationism, ultra-protectionism. He seems to find in these policies the answer to Canadian employment and economic difficulties. He attacks deficit budgets, both federal and provincial, which would release more money to provide more purchasing power for our people and, above all, give us the opportunity which has been taken by the Minister of Finance in the budget, to stimulate those areas of the economy which need stimulating. Mr. Coyne's way is to increase taxes. Mr. Coyne's way is to disregard our international agreements, to raise tariffs and shut out goods of other nations. His way is to ride roughshod across agreements we have made with other countries of the world and to interfere with the movement of goods across international boundaries. The policy of this government has been entirely the opposite of that. It may well be that Mr. Coyne has the same purpose in mind as the present government but his proposed methods are entirely different.
This government has been working for four years to stimulate the economy of Canada. Policies have been brought forward to encourage the use of Canadian money in Canada, to encourage investment of Canadian funds in Canada. During the past winter we saw a trade conference called by the Minister of Trade and Commerce to try to speed up the sales of Canadian goods throughout the world. We have seen the vocational training legislation brought forward so that the young people of Canada who badly need new skills, mav obtain the ability to run the machines of our modern community. The government's desire is to give them that training. We have seen the special effort to sell
Governor of Bank of Canada agricultural products and we have noted particularly the tremendous success of the Minister of Agriculture in placing large orders with the republic of China. We have seen the development of our forestry industry. All of these moves have been purposed to stimulate the Canadian economy. All in this parliament, I am sure, like this government, want to stimulate the Canadian economy but not by ultraprotectionism, not by the inflexibility of interest rates, not by isolationism and anti-Americanism.
It is obvious to all of us that the conflict between the Minister of Finance and the governor of the Bank of Canada had to do with fiscal policy. Indeed, it has been asked what authority or what business the governor of the Bank of Canada had in going across the nation to weaken the work of a government which has been attempting to stimulate the economy of Canada. His position has been that if it will not be done my way it will not be done at all. This is the reason parliament is being asked today to declare a vacancy in the governorship in the Bank of Canada.
Every effort has been made in this budget to stimulate and aid the automobile industry by reducing the 7-J per cent sales tax. The whole economy will be helped by the decision to lower the rate of exchange on the Canadian dollar as against the United States dollar. This is a decision which would have been opposed by Mr. Coyne.
The Minister of Finance put up with Mr. Coyne as long as he could. He did everything he could to try to avoid a public quarrel with the governor of the Bank of Canada, to try to keep from open conflict which he knew would occur if he asked the governor of the Bank of Canada to resign. However, when this budget was to be introduced with its special accent on the development of the Canadian economy, the minister knew that Mr. Coyne could very well step back on the hustings, as he has been doing in the last few years, to attack the budget and the policies of the government.
In his very small argument on behalf of the governor of the Bank of Canada the Leader of the Opposition raised very few points. First he said there should be an inquiry. An inquiry into what? To illustrate the thing that is most obvious to all Canadians, namely that Mr. Coyne differed very widely from the Minister of Finance? He said the bill should not be brought forward and should not be passed by this house because no reasons are given in the bill for asking that the governorship be made vacant. Well, sufficient reasons have been supplied even
7068	HOUSE OF
Governor of Bank of Canada up to this time in this debate to show the Leader of the Opposition why this bill should be passed.
Then there is the very weak argument that Mr. Coyne after all is being charged as a criminal and should have the right to come before the courts to defend himself. No one is taking anything from Mr. Coyne that infringes upon his liberty. No one is discriminating against him because of his colour or his creed. How can the bill of rights apply in the matter of a public servant who finds that he cannot agree with the government of the day and who in his arrogance refuses to resign at the request of the representative of the people of Canada?
Another argument the Leader of the Opposition made was that if Mr. Coyne should be fired he should have been fired long ago. Many hon. members might agree that Mr. Coyne should have disappeared from the public scene long ago; that he has done harm to Canada in the speeches he made, in the policies he advocated, particularly when he spoke from a position which would lead the people to think that he spoke for the government of Canada. But the reason put forward by the Minister of Finance I am sure will indicate to every hon. member that he made every attempt possible to prevent a public quarrel with Mr. Coyne, and indeed only asked for his resignation as a last resort, because his removal is necessary to the measures proposed by the budget.
Last Friday, I believe it was, the hon. member for Leeds (Mr. Matheson), in speaking in the budget debate, raised questions with regard to the dismissal of Mr. Coyne, or the request for his resignation. Then he gave the house a list of the names of people who for one reason or another had resigned or retired from the public service and he attempted to argue that these people were fired from their positions; that the government was persecuting people in the public service. He suggested that the men whose names he listed were people who had been ousted from their jobs on government demand. He mentioned Mr. Hector McKinnon, chairman of the tariff board. Mr. McKinnon retired some three years ago at age 70. He certainly retired of his own volition; there was no question of his being asked to leave his post. I might say also that since then Mr. McKinnon has been working for the government and at the moment he is chief negotiator at Geneva where the GATT agreement is under negotiation.
Mention was also made of Mr. Clarence Shepard, the former chief commissioner of the board of transport commissioners. Mr. Shepard also left of his own volition to take up an occupation which he felt would be


much more profitable. He is now vice president of British American Oil of Toronto.
The hon. member also referred to Mr. George Mclvor, chief commissioner of the Canadian wheat board. Mr. Mclvor retired from the wheat board because of age and for no other reason. He certainly retired of his own volition.
Reference was made to Mr. Davidson Dunton, formerly chairman of the board of governors of the C.B.C. It was well known to every member of this house that Mr. Dunton retired from the chairmanship of the board of the C.B.C. only because he much preferred a post he was offered as president of Carleton university.
The hon. member also referred to Mr. Ernest Bushnell, general manager of the C.B.C. who retired some time ago. I am sure that every hon. member, except the hon. member for Leeds, knows full well that Mr. Bushnell left the C.B.C. to set up the private T.V. station CJOH, Ottawa, which is certainly a much more profitable occupation than continuing in his work with the C.B.C.
Mr. L. H. Nicholson, formerly commissioner of the R.C.M.P. was mentioned. He retired from the R.C.M.P. after a difference with the Minister of Justice, as he ought to have done. This was a question on which the commissioner and the minister could not agree. Mr. Nicholson retired because he could not agree with the minister and his department, but he did not attempt to challenge the authority of the minister, the department and of the public of Canada as Mr. Coyne seeks to do.
Mr. Mitchell Sharp, former deputy minister of the Department of Trade and Commerce, also left of his own volition. Mr. William Buchanan of the tariff board left that board to establish himself in Ottawa as a tariff consultant and I am sure he would very much prefer to continue in that work than in his former post. Mr. Alan H. Jarvis, director of the national art gallery, left for reasons quite clear to everyone in the House of Commons. Mr. Charles Gavsie, of the St. Lawrence seaway, left the St. Lawrence seaway to become a partner in a Montreal law firm. Mr. Jean Lessard, of the St. Lawrence seaway, left that post to become chairman of the Quebec hydro.
In all of these cases, which are routine cases, men who were in the public service and who had received valuable training in the public service left to take up work which was more lucrative or which gave them a wider field for their abilities. It is the type of thing that always goes on in the public

service and none of these situations are tantamount to the request that was made to Mr. Coyne for his resignation.
As a matter of fact, far from the charge of the member for Leeds that the government is persecuting senior civil servants and public servants, everyone in the house is quite aware of the work that the government has done to restore civil servants to their proper position in the nation. The new Civil Service Act, which will shortly be before the house, is the first legislation in 43 years to improve the position of the civil service and the civil servants of Canada. It sets up negotiation procedures, grievance procedures, appeal procedures and so on which have been requested by the civil service for many a year. Needless to say, their words fell upon deaf ears for many years before 1957.
The Leader of the Opposition said there should be an inquiry. It is rumoured around the house today that this Bank of Canada debate could well take four or five days. Who is this proud man who refuses to accept the invitation of the Minister of Finance to resign? Who is this man who says he will not accept the will of the elected representatives of the people and says he will take his case over our heads to the people of Canada? Who is this prima donna of the Bank of Canada who would tie up this house for four or five days and then ask that in addition an inquiry should be conducted before a standing committee to go into a matter which is already obvious and clear to the Canadian people?
I am sure that there has been no more arrogant man upon the Canadian scene in many years than this man who refuses to resign and insists upon asking parliament to take up its time, when we have so much legislation before us necessary for the stimulation of the Canadian economy, to deal with his case alone. If this debate lasts four days or if it lasts 24 days, I venture to say there will be no member of the House of Commons who will get up and say that he is sorry to see Mr. Coyne go. I venture to say there will be no member of the House of Commons who will arise to say that Mr. Coyne should not have resigned when asked to do by the Minister of Finance.


Mr. Peters:: Yes, there will be. There is one right here.


An hon. Member:: And lots more.


Robert Simpson MacLellan: I am glad to hear that Mr. Coyne has one friend in the House of Commons because up to now there has been very little argument put forward to support him.


Miss LaMarsh:: That is not the issue.
Governor of Bank of Canada


Robert Simpson MacLellan: Certainly as far as I am concerned I am prepared to support the bill and I am sure that most members of parliament will be glad to see this post in the Bank of Canada become vacant and a successor to Mr. Coyne appointed. The work of the nation must go on. Who is this man who will hold it up because he refuses to do what any other man would do in the same situation and yield to the constitutional privileges of the Minister of Finance and of the parliament of Canada?
Indeed, it has certainly come as a surprise to me to see so many members of the C.C.F. party rallying to the support of Mr. Coyne, although such support will not go so far, I am sure, as to say that this man should succeed and the people of Canada should fail. It is startling to hear that members of the C.C.F. party, who always pose as the champions of justice in the house, feel that Mr. Coyne after 6j years in office is entitled to a pension of the type he has provided for himself. It is startling to hear that they are supporting a man whose policy, uttered many times across the nation, is against deficit financing at a time when more work could thereby be provided for people who are unemployed in the nation. It is interesting to hear members of the C.C.F. party rising to support a man who champions high interest rates and inflexibility in exchange rates.
It will be interesting to hear members of the Liberal party, who have always pretended to assume a position against high tariffs, rise to support this man who is the proponent of arbitrary high tariffs. I doubt very much, as I have said, if anyone will be sincerely sorry to see Mr. Coyne go. Indeed, I know that all members of the house agree that when a conflict arises between the government of this nation and the governor of the Bank of Canada, no matter how majestic the governor has made himself he should retire before the will of the people.


Paul Joseph James Martin: Mr. Speaker, the principle involved in the discussion before us is not complicated. No one, I think, will deny its importance. Therefore I am a little surprised that the Minister of Finance (Mr. Fleming) should not have been supported today by some of his ministerial colleagues, particularly by the Prime Minister (Mr. Diefenbaker).


Donald Methuen Fleming: Give him time.


Paul Joseph James Martin: I can only suspect that the Prime Minister has not taken part in the debate and has not been in the house this afternoon because of preoccupations involving the Prime Minister of Japan. But it

Governor of Bank of Canada is inconceivable that in a matter of this importance the ministerial benches should not have been filled and that evidence should not have been given by the ministry and by the Conservative party as a whole of a deep interest in this matter. Instead, we have had a statement by the Minister of Finance and now one by the hon. member for Inverness-Richmond (Mr. MacLellan).
I must say I am amazed that a young member of parliament of the quality of the hon. member for Inverness-Richmond should have been guilty of some of the statements he made in the course of his speech this afternoon, particularly some of the questions that he put to the Leader of the Opposition (Mr. Pearson). Among those questions were: Why should the Leader of the Opposition plead for the right of the governor of the Bank of Canada to be heard? Why should the Leader of the Opposition urge this house to give to someone who opposed the Minister of Finance the opportunity of replying in another forum to arguments put forward today by the Minister of Finance in the exercise of what the hon. member said were the constitutional prerogatives of the Minister of Finance, whatever they may be?
I say to the hon. member for Inverness-Richmond that he cannot have followed clearly what the Leader of the Opposition said. I can only say that the hon. member has not fully understood the meaning of the phrase, rule of law. He has not fully understood what we mean by due process of law. He has not understood the implications in the mischievous bills of attainder of the Tudor period. He has not understood how Hitler dispensed justice by totalitarian methods without giving opportunity of reply to the accused. He has not understood the meaning of the energies and the exploits of Patrick Henry.
The hon. gentleman said, why should this house be put to the inconvenience of a five-day inquiry?


Lester Bowles Pearson: Terrible.


Paul Joseph James Martin: Has the hon. gentleman not understood that justice is something that cannot be confronted with the argument of inconvenience? Would the hon. member not be the first to rise in his place and defend the right of any accused, notwithstanding the inconvenience to which it might put any individual member of the house, whether it be a member of the government, whether it be a member supporting the government or a member in the opposition groups to make a defence of his position? If there is a violation of justice of any kind under our system of law and our form of government no man should be denied the opportunity of having his full day in


court. That is the gist of the plea made today by the Leader of the Opposition.
Does the hon. member for Invemess-Rich-mond not recall the words of the bill of rights which he so strongly supported last year, that bill of rights which provides in section 2, as the Leader of the Opposition reminded us, that no law of Canada shall be construed or applied so as to deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations?
If the bill of rights is now to guarantee to one charged with a violation of the Criminal Code the right to a fair hearing in accordance with the principles of justice, is the governor of the Bank of Canada, who has not violated our criminal law but who has simply disagreed with the policies of this government, to have less than that which is provided in that guarantee of the bill of rights for one who violates the Criminal Code?
The bill of rights also provides that no law of Canada shall be so construed or applied so as to deprive a person charged with an offence of the right to be presumed innocent until proven guilty according to law. The hon. gentleman I am sure in his studies is aware of the common law right of the citizen to be presumed innocent until found guilty, a presumption which, not without some effort, we in the Liberal party last year were able to have incorporated in the bill of rights.
Is this presumption of innocence to be accorded to a criminal, yet denied an important servant of the government of Canada? That is the issue in this particular situation, and it is one to which we have not had the Minister of Finance address himself.
The Minister of Finance comes in with a meagre bill asking this house to declare vacant a post which comes into existence as a result of a decision taken by the directors of the Bank of Canada, subject to the governor in council. These directors act under the authority given them in the Bank of Canada Act, yet we are now asked to declare this post vacant and to accept in substantiation of that plea of the Minister of Finance not the written evidence of the accused as well as the submissions of the prosecutor, but ex parte statements of the Minister of Finance made in the absence of the governor of the Bank of Canada, without giving him the opportunity of putting his side of the case before this house.


Mr. Graffley:: Oh, oh.


Paul Joseph James Martin: The hon. member for Brome-Missisquoi (Mr. Grafftey) now seems to express some disagreement with me. I should remind that hon. gentleman, one of the younger members of this house, of his proud boast that one of the reasons he came into this chamber was because he could add his voice to the defence of freedom and our concept of the rule of law. Here is the opportunity for that hon. gentleman, with his whole future before him, to say to the government, I do not agree with what the governor of the Bank of Canada has done, nor with his policies, because I do not believe there can be two sovereignties in our country-


Donald Methuen Fleming: Hear, hear.


Paul Joseph James Martin: -but where a man is charged by one side and not given the opportunity to put his case forward then I must say, on the basis of an appreciation of what is often called ordinary British justice, I am going to fight for the right of that man at least to have his day in court. We are not getting that kind of support from the hon. gentleman. The two hon. gentlemen I have singled out are two young members of the Conservative party, and they should be among the first to join with the Leader of the Opposition in the plea that he has made today.
When I said a moment ago there could not be two sovereignties in this country the Minister of Finance applauded that statement. I should like the minister to know that this is not the first time I have made that statement in this house. I made that statement-


Donald Methuen Fleming: On March 22.


Murdo William Martin: I made that statement on March 22 and I repeat it today. I have always taken the position, as has the Leader of the Opposition, that there is no room in this country for two sovereignties and that where there is a difference between a leading official in the public service and the government of the day there can be no public disagreement unless that disagreement is concurred in by the administration. We in this party have always stood for that principle. We have complained about the position taken publicly by the governor of the Bank of Canada, and no one has taken a stronger position in that regard than I have myself, and I am not afraid to defend that position. That is not what confronts us now.
When we argued that the governor of the Bank of Canada had publicly taken a position different from the government of the day in matters of fiscal policy in areas outside the monetary field, the Minister of Finance at no time indicated in this house, as the Leader
Governor of Bank of Canada of the Opposition pointed out, until very recently, that there was any disagreement between the governor of the Bank of Canada and himself. We were told this morning for the first time of a situation that eventuated in 1957-58. The Minister of Finance as a result of that admission today stands indicted by his own words. If that was the situation three and a half years ago the government of this country, and particularly the Minister of Finance should have taken the step, but taken it in circumstances that would not have destroyed or weakened the confidence which the Canadian people and people outside in other countries should have in our financial institutions, including the Bank of Canada. That is the situation that confronts us now.
We have asked repeatedly in this house for the right to examine the governor of the Bank of Canada on these statements in areas outside the field of monetary policy, a field in which, under the Bank of Canada Act, he is given the power of formulation and direction. That does not mean, of course, as we have heard repeatedly argued, that the government has not a responsibility in that field as well. We have taken the position, and we reiterate this position, that the government of Canada is responsible for policies laid down by any agency of government in our country. No government, unless it wants to abdicate its functions and abdicate its responsibility, could take any other position. In the field of monetary policy, this has always been done as was pointed out by the hon. member for Burnaby-Coquitlam (Mr. Regier) a few moments ago in respect of the position of the Minister of Finance of Canada. That was the position taken by Mr. Charles Dunning when he said:
A long continuance of a policy that conflicts with the government view becomes impossible.
That was the position taken by Mr. Ilsley when he said:
The monetary policy which the bank carries out from time to time must be the government's monetary policy.
That was the policy of Mr. Abbott when he said:
The ultimate responsibility must fall upon the government.
That was the policy of Mr. Harris when he said:
The government is satisfied ... that... it was desirable to moderate the rate of monetary expansion.
The Minister of Finance is the only minister of finance who takes a different view. I compare what the minister has said now with what Mr. Rhodes said, in 1934 when the Bank of Canada Act was introduced in this house by the Conservative government, that

Governor of Bank of Canada the government has no authority in the field of monetary policy, because he has forgotten that, as a private member of this house in the banking and commerce committee, the member for Eglinton of that day, now the Minister of Finance, said the minister of finance had a very direct responsibility.


Donald Methuen Fleming: That was before 1957-58.


Paul Joseph James Martin: There can be no doubt as to the position of the government in relation to the Bank of Canada in the field of monetary policy. If the governor of the Bank of Canada had at any time formulated a monetary policy which was in disagreement with the views of the government, the course was clear. It was clear it was the duty of the government, in such circumstances, to make that position clear to the governor. From what the present governor has said and from what the former governor has said we know that in such circumstances there would be no alternative but for the governor of the Bank of Canada to resign. But there is no question of such disagreement here in this particular situation between the governor of the Bank of Canada and the government on monetary policy. That is not the issue before us.
We learned only a few days ago from the Minister of Finance that it was only on May 30 that the Minister of Finance and the governor of the Bank of Canada profoundly disagreed in those areas outside of the governor's specific legislative authority, namely, in fiscal and financial matters and that there was a disagreement between the governor and himself. He says today that there was disagreement away back in 1957-58. I repeat that was the time for the Minister of Finance to act in accordance with what are erroneously called the constitutional prerogatives of the Minister of Finance.
This question of the responsibility of the government in the matter of monetary policy is important in this discussion. We have had circulated today two letters, one dated June 9 and one dated June 26, signed by the present governor of the Bank of Canada and addressed to the Minister of Finance. I want to comment on these two letters in supporting the position taken by the Leader of the Opposition today, that this whole matter can be satisfactorily disposed of only by full opportunity being given for the full disclosure of all the facts. The Minister of Finance cannot, in all fairness, take the position that he alone is in a position fully, fairly and objectively, to disclose the facts.
We have here before us the letter of the governor of the Bank of Canada of June 9.

I think it is important that some excerpts from this letter be placed on Hansard at this time. In the second paragraph of this letter the governor of the Bank of Canada states:
On this last point I have expressed the view frequently, and I have no doubt this has been reported to you, that the relationship of the bank to the government should be clarified and the overriding responsibility for monetary policy declared to rest on the government (as it always has done in fact) by appropriate provision in the statute. Lord Cobbold, the governor of the Bank of England, on his last visit here told me, and perhaps you also, that the provisions to that effect in the Bank of England act carried his complete support and did not in his view derogate from the operating independence of the Bank of England or from its status as an entity separate from the government and with a responsibility of its own, although in certain circumstances the governor of the bank might find himself in such fundamental disagreement with government policy as communicated to him that (unlike a civil servant) he would find it necessary to resign, no doubt giving reasons for his resignation and allowing those reasons to become the subject of public information and discussion.
We were not told anything about this by the Minister of Finance. We were not told that the governor had explained to him, as he explains in this letter of June 9, what his position was with regard to resignations in the matter of a disagreement in the context as visualized by Lord Cobbold and by the governor of the bank himself in this letter.


Donald Methuen Fleming: That letter I said was received on June 12.


Paul Joseph James Martin: My friend said there was a letter but he did not tell us what was in that letter.


John Whitney Pickersgill: He concealed it from parliament.


Paul Joseph James Martin: He did not tell us that, any more than he told us what was in the letter of Mr. Bryden about which I am going to have something to say. We have not heard anything of this story yet. If the Minister of Finance wishes to create in the minds of the people of this country the confidence that he should promote as Minister of Finance, he should be the first to assist us in the fullest exposition of all of the dirty circumstances involved in this matter.
I stand here and I fully except the charge made by the Minister of Finance that in the industrial relations committee I had taken issue with the governor of the Bank of Canada and, I learn now for the first time, in such a manner as to warrant the latter's seeking the intervention of the Minister of Finance by way of protection against me.


Donald Methuen Fleming: No; I did not say that.


Murdo William Martin: I took issue with the governor of the Bank of Canada; I took serious issue. However, I tell my hon. friend that I took my issue with him in an open manner. I was not afraid to tell the governor of the Bank of Canada what I thought about the policies of the investment committee of the unemployment insurance commission. I therefore stand today with the Leader of the Opposition, not as a protagonist for all that the governor of the Bank of Canada has done. I believe in the desired stability of the Bank of Canada and because I believe in fair play and British justice, I say that the only way in which satisfactorily to conclude this matter is to give the governor of the Bank of Canada an opportunity to answer the Minister of Finance before a responsible committee of this house.
Here is another letter from the governor of the Bank of Canada dated June 26, in which he states this:
What is at issue here is the right of Canadians to know why I refused to meet the demand of the government.
If it is the right of Canadians to know this, it is also the right of their representatives in parliament; and that is why we want a committee. The governor goes on to state this:
The terms of Bill 114 make it clear that you, Mr. Fleming, and the government are still not prepared to accept a broad and ultimate responsibility for monetary policy, but merely want to have the power to change the governor at a time when it suits your political purposes to do so.
That is a serious charge. Is it true? That is a charge made by the governor. Let us confront him and find out whether that is the fact.


Donald Methuen Fleming: It is not true.


Paul Joseph James Martin: If it is not true, then let us determine that fact in a committee. On that committee will be a majority of members of the Conservative party. They can listen to this charge and they can determine, in their objective manner, whether or not it is true, that the government has acted only for political purposes.
Then the governor goes on to say this:
The point which I am concerned to bring before public opinion-and which you, Mr. Fleming, and the government are trying to prevent me from bringing before a parliamentary committee-is that the position of governor of Canada's central bank will be destroyed, and the whole institution will become merely an arm of a political machine, if the governor is to be terrorized into resigning whenever the government of the day wants him to, without any issue of policy being raised, without the government stating its monetary policy in parliament or elsewhere, and without the government accepting responsibility for monetary policy.
Governor of Bank of Canada
Those are serious charges. In the face of the bill of rights, in the face of the attack made by the Prime Minister on any violation of the rule of law, are we in this house going to take the position now, in the face of these serious charges, that this house must make its mind up on the mere say-so of a prejudiced Minister of Finance?
Then on page 3 of his letter of June 26 the governor goes on to state this-


Mr. Henderson:: Mr. Speaker, may I ask a question?


Murdo William Martin: At the end of my
speech I shall be glad to answer any questions.


Mr. Deputy Speaker:: Order. The hon. member for Essex East has the floor.


Murdo William Martin: In his letter of June 26 the governor goes on to state this:
On March 20th after telling them of my talk with you, Mr. Fleming, (of March 18) I asked them in open meeting whether any of them felt I should resign. Every one of them said, "No".
I say to the Minister of Finance now that it was a result of his intervention that action was taken by the directors, not in accordance with the terms of section 5 of the Bank of Canada Act but in spite of those terms, that the directors expressed their regret in asking for the resignation of the governor of the Bank of Canada. I say that the Minister of Finance had no right to do that. I charge him now, first of all with improper relations with the directors of the bank.


Some hon. Members:: Oh, oh.


Murdo William Martin: I charge him with exercising unfair duress on the directors of the bank. Hon. gentlemen may laugh, but the people of Canada will not laugh when the facts of this matter are properly exposed. Then I ask hon. gentlemen to laugh at this. The governor goes on to point out at page 4:
You, Mr. Fleming, were told by Mr. Bryden about a possible change in these provisions six months before the directors acted in February, 1960 and you have a letter from Mr. Bryden to prove it, which you persist in concealing.


Some hon. Members:: Oh, oh.


Murdo William Martin: The governor goes on:
The deputy minister of finance was told by Mr. Bryden about the actual proposed action a week before the directors' meeting at which action was taken and he said he thought the proposed change was reasonable.
I would like to examine the governor on the matter of pension. I would like to examine the board of directors on all the circumstances of this pension. I am told that Mr. Bryden is a close friend of the Minister of Finance. I

Governor of Bank of Canada am told that he was a supporter of the Minister of Finance and a worker in the minister's electoral interests. I am told that Mr. Bryden, after taking the initiative in the meeting of the board of directors, discussed this matter within ten days of that meeting with the Minister of Finance-


Donald Methuen Fleming: That is not true.


Paul Joseph James Martin: -and yet the
Minister of Finance told us the other day that he did not know of this except in the month of February last.


Donald Methuen Fleming: I did not say that.


Paul Joseph James Martin: Yes, you did.


Donald Methuen Fleming: I said I first heard of it in the spring of 1961.


Murdo William Martin: I challenge the minister to deny that he was told by Mr. Bryden long before that, not only of the fact but the reasons which prompted him to take the initiative that he did take with regard to this pension about which, as one member of this house, I would like in turn to question the governor and the directors of the bank, to ascertain what are all the facts.


Donald Methuen Fleming: Mr. Speaker, is the hon. member challenging my statement and saying that I heard about this action taken by the board on February 15, 1960-


Murdo William Martin: I have made my statement.


Donald Methuen Fleming: -within ten days of that meeting, or some time before-


Murdo William Martin: I say, within ten days.


Donald Methuen Fleming: I say that statement is utterly false, Mr. Speaker. I repeat what I said earlier, that I first learned of the action taken by the board of directors on February 15, 1960 in the spring of 1961.


John Whitney Pickersgill: Where is your flag?


Murdo William Martin: Let me read further what the governor said:
I believe the public are entitled to have these charges and the true facts reviewed by a parliamentary committee-before I am wrongfully removed from office-and to have all aspects of the matter brought out and considered. I demand that they be reviewed by a parliamentary committee where I can be given a fair opportunity to be heard, and where they can be submitted to the judgment of public opinion. The use of smear tactics, and the attempt to intimidate public servants with the idea that smear tactics will be used against them in public if they do not bow to improper suggestions from the government, should not be allowed to go on.


Donald Methuen Fleming: Here is where the smear lies; you are spreading it.


Paul Joseph James Martin: My hon. friend means the Bryden matter?


Donald Methuen Fleming: I am referring to what you just read.


Paul Joseph James Martin: Let me read it again:
You, Mr. Fleming, were told by Mr. Bryden about a possible change in these provisions six months before the directors acted in February, 1960 and you have a letter from Mr. Bryden to prove it, which you persist in concealing.
There is the statement made by the governor. I am not saying it is true; I am not saying it is untrue; but I am saying it is not at all what the Minister of Finance said.


An hon. Member:: You are not saying anything at all.


Paul Joseph James Martin: It is contrary to what the Minister of Finance said, and we are entitled, surely, to ascertain in a matter of such fundamental importance which of the two witnesses, the Minister of Finance or the governor of the Bank of Canada, has made a statement in accordance with the facts. Are we now to be denied again, by one of the partisan witnesses, the Minister of Finance, the opportunity of contesting his statement or having a contrary view put forward by someone who does contest it? That is the issue, pure and simple.
This government has a large majority behind it. Hon. members opposite can pass this bill without any difficulty, if they want to. Tyranny of the majority is something that this government has exercised on other occasions before this particular one-


Some hon. Members:: No, no.


Paul Joseph James Martin: -but that will not settle this matter in the minds of hon. members of this house or in the public mind, because whatever views there may exist in Canada at the present time regarding this regrettable matter, there is one view that one hears all over, and that is that the government has ineptly handled this whole situation and the only way to restore confidence is for the governor of the Bank of Canada to be given an opportunity of saying exactly what he believes the situation to be.


Donald Methuen Fleming: You are saying it for him now.


Paul Joseph James Martin: In the final page of this letter we have this statement by the governor of the Bank of Canada. Here is the governor saying, "Give me my day in court. Put me under the provisions of the bill of rights. Let the rule of law apply to me. Let me not be denied justice. If you give me that

right, then I make this statement to you"- and here it is; and what more fair statement could one find? The governor writes:
If in the end, following such discussion, an honest difference of opinion proved to be unbridgeable, then it would be the duty of the governor to resign and to give the people of Canada a full explanation of the reasons for his resignation.
What could be more reasonable than that? Under the Bank of Canada Act the governor holds office for a period of seven years during good behaviour. The Minister of Finance has not alleged today that any of the circumstances which are put forward in an ex parte manner by him constitute a violation of the meaning of the phrase "good behaviour". Therefore the only way in which the governor can in law be compelled to resign is where there is a difference in policy; where first of all, let us say, in the field of monetary policy the government does not agree with the policy pursued by the governor of the bank.
That situation is not before us. The Minister of Finance says that is clearly not the situation, because under no circumstances does this government in any way accept responsibility for monetary policy, notwithstanding what may have been the position of preceding ministers of finance. Then in the field of public debt, in the field of financial policy, in fiscal matters, the governor has not up until very recently, we were told, expressed any views that embarrass the government or are not in accord with the government of today.
We learned there was disaccord only as a result of the revelations by the Minister of Finance this morning. It was only in the middle of May that there was a conflict in this regard. The minister need not look at me seriously as though he did not understand; he has repeatedly taken the position in this house that there was no dispute between the governor of the Bank of Canada and himself until a few days before we learned that he had asked for the resignation of the governor of the Bank of Canada, thereby-


Donald Methuen Fleming: It is your imagination there.


Paul Joseph James Martin: -leaving open to public conjecture the inevitable suggestion that there were political reasons for the course the government took on May 30. It is significant that on May 29 four by-elections were held in this country and in those four byelections-


Gordon Minto Churchill: You got licked in three of them.


Paul Joseph James Martin: -the total vote was overwhelmingly against this government.
Governor of Bank of Canada The government had to look for a scapegoat, and what better scapegoat than the governor of the Bank of Canada?


Donald Methuen Fleming: We always had you.


Paul Joseph James Martin: That is the disgraceful position in which we have been placed. I say this to the Minister of Finance. For this kind of situation to have eventuated on the eve of the presentation of a budget represents, I suggest to him, a most irresponsible course of action. I am not alone in this thinking, because I find that the governor of the Bank of Canada says at page 2 of this letter:
In the absence of any other real explanation of the government's action it may yet be proved that political intentions were the real purpose of the move to get rid of me.
Is that true? Is that the true situation? Are we not to be given the opportunity of finding out whether there is any basis of fact for this statement which appears in today's letter of the governor of the Bank of Canada?
This matter has concerned the people of Canada. I am sure we are all aware of the public interest in this discussion. We have not had in many months as deep an interest in our affairs as we have had since the presentation of the budget in this situation known as the Coyne-Fleming affair. The result is, whether or not hon. gentlemen agree, all over the country there is disquietude. There is the feeling that this government, composed of men who have had no great business experience, have allowed themselves to get into a position where our financial structure stands in danger and where there is uncertainty whether it may be further endangered as a result of the dispute which has arisen between the head of the central bank and the government of this country. This has never happened before. This has never happened in any country where there is a central bank. It has never happened in the United States; it has never happened in the United Kingdom; it has never happened in any of the Scandinavian countries.


Gordon Minto Churchill: There is only one Coyne, that is why.


John Whitney Pickersgill: There is only one Fleming.


Paul Joseph James Martin: The reason this has happened in this country is that we have a government which is prepared to prostitute the interests of the nation in furthering its own political advancement. If that statement is found to be too strong, then the Minister of Finance, the Minister of Veterans Affairs (Mr. Churchill), the Minister of Justice (Mr. Fulton), the Minister of National Health and Welfare (Mr. Monteith) and the other ministers

Governor of Bank of Canada who are here have the opportunity to live up to the terms of the bill of rights which they have put on sheepskin, which they have distributed all over this country as a symbol of fundamental freedoms and liberties in Canada. Let us have as a first manifestation of the integrity of that expressed faith an acceptance of the proposal that in a matter of this importance where no protagonistic position is taken by the Liberal opposition, for or against, we should give to the accused an opportunity of stating his side of the case.
The Minister of Finance need not sit there in great smugness. He may be able to show that certain banking institutions and others in this country feel that this matter has, finally, to be resolved. As the Leader of the Opposition has said, undoubtedly this regrettable situation has reached the point where the usefulness of the governor has been impaired. But that position has been brought about by the way in which this matter has been handled by the government and in particular, I regret to say, by the Minister of Finance. I cannot believe that the Minister of Finance having taken the position throughout all these months that there was no disagreement between himself and the governor could have agreed in the dying days of the month of May to take the course he did without the greatest pressure being put on him by his colleagues and perhaps by the Prime Minister. We do know that we had been seeking for weeks to ascertain from the Minister of Finance when he was going to bring down his budget, a budget that had been delayed as no other budget in our history had been delayed. Undoubtedly, there were special reasons. We now perhaps have found what some of those circumstances are in the letter of June 26 circulated today by the governor of the Bank of Canada when apparently in the mind of the minister was a budget of an altogether different type from the one put forward the other day.


Donald Methuen Fleming: That is a false statement.


Mr. Deputy Speaker:: I am sorry to interrupt the hon. member, but his time has expired.


Egan Chambers: It is always most interesting to listen to the hon. member for Essex East. I have found it fascinating from time to time to follow his grandiloquent rhetoric, his rolling inconsistencies, and I have often wondered where he picked up that particular style. I have wondered where, in the background, was his mentor. I came across it the other day in a book which gives an account of a speech by

the Hon. A. E. Windheaver some years ago. I should like to quote briefly from this speech in order to show the similarity of style:
Literary movements grow, fashions change, and people leave the country. But geology is founded upon a rock. The great Liberal party, which I have the honour to represent and which is not responsible for these roads, may some day pass away. But when that day comes, and I say it advisedly, when that day comes, the price of wheat will be down to 20 cents, f.o.b. Fort William, the fodder crops will rot in the fields, and these here roads will be the home of the rearing cactus and the gopher. The Liberal party has always fought against that type of thing. But when that day comes, I want to say that geology will still be geology. We've got the whole north country unexplored and undeveloped. Think of it! Over four million square miles of solid rock. And we are going to use that money to put the agriculture of Saskatchewan on a solid footing.
It is sometimes a useful trick.
May I call it six o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 7.30 p.m.
Egan Chambers: Mr. Speaker,-


Paul Joseph James Martin: All the young members of the Tory party.


Egan Chambers: I trust the Hansard reporter caught that remark of the hon. member for Essex East, because it is exactly those young members of the Conservative party who are most concerned with the issue facing us tonight.


Paul Joseph James Martin: They should be concerned with human freedom.


Egan Chambers: The issue is one of responsible government. The question before this parliament today is how we should be governed, whether our policy should be made by those who have been elected by the people of Canada or by officials.
The young members of the Conservative party to whom the hon. member made reference take their stand quite squarely in favour of responsible government, in favour of having the conduct of our affairs in the hands of those who have been chosen by the people of Canada. Under our system, when any issue arises between those who have been elected and chosen by the people to conduct their affairs, and those who have been appointed as officials, then the elected government must prevail.


Paul Joseph James Martin: No doubt about that.


Egan Chambers: We are really not concerned with what the policy differences are between the Minister of Finance and the Bank of Canada; what concerns us is the fact that the disagreement exists and, as has now been demonstrated by the public utterances of the governor, those differences are certainly on his side, irreconcilable. We have evidence now in the public press, in the frequent publicity hand-outs of the governor-


Mr. Brunsden:: Twenty five pages.


Egan Chambers: -of the type of difficulty that the Minister of Finance has been faced with over the last four years. The only comment I can make on that is one of amazement at the extraordinary patience of the Minister of Finance in the face of such an attitude.
This afternoon the hon. member for Essex East made much of the bill of rights. The bill of rights is a most important enactment. The right we are concerned with here is that of the people to be governed and to have their policies formulated by people of their own choice.
Let us consider for a moment what the Leader of the Opposition would do were he faced with a similar situation, and we have some evidence in that regard because at a press conference on television the other day he was asked a question and his reply was as follows:
It never need have arisen-
He was referring to the controversy. He went on:
-and when it did arise between the Minister of Finance and the governor of the Bank of Canada, surely that is where and when the Prime Minister of this country should have stepped in, taken his responsibility and settled this matter.
He was then asked this question:
And ask for Mr. Coyne's resignation?
This is his answer:
And settled this matter in a way which would not have resulted in public controversy and it could have been done, I am sure.
Today this same hon. gentleman rises in this house and says that this whole matter should be debated before a committee of the house. Here surely is a way to avoid public controversy; here surely is a way to maintain the integrity and dignity of the Bank of Canada, which are so important to our reputation both nationally and internationally. In effect, what the Leader of the Opposition has said is that the government should have tried to arrange for the governor of the Bank of Canada to go quietly. This is exactly what the Minister of Finance did, Mr. Speaker.
90205-6-447
Governor of Bank of Canada
Over the years the Minister of Finance withstood the embarrassment that was created for him by the public utterances of the governor.


John Whitney Pickersgill: For him, yes.


Egan Chambers: The minister defended him in the house. He has tried in every way to reach an understanding whereby the governor of the Bank of Canada would see his duty. When the time came that it became evident beyond all question that it was impossible to instruct the governor in his duties, he then tried to give the governor a way of gracefully withdrawing without any public controversy, as the Leader of the Opposition has recommended. The governor would then have had the choice of keeping his peace or as a citizen making whatever statements he felt should be made on the public platform because every citizen has that right except those whose duty it is to co-operate with the government in the fulfilling of the policies that the government lays down.
Instead of accepting the offer that the Minister of Finance made, what has happened? The governor embarked on an open attack on the Minister of Finance and the government. Using all the resources of political publicity, using all the resources of the bank, which were not designed for such a purpose, he attempted to muster public opinion behind his views and to cast discredit on the views of the Minister of Finance and the government.
Hon. members in the opposition say that the governor must be heard. Be heard. We have heard nothing else in the last few weeks. The noise of the governor is deafening. How has he been heard? He has been heard in a political attack on the government of the day on questions many of which are not in the realm of the responsibilities of the Bank of Canada. This is political action, Mr. Speaker, and I for one would welcome the governor of the bank on the political battlefield when he so arranges his affairs that he is eligible to take up that position. So far he has not. He even goes so far in his latest communique as to speak of elections.
Everyone in Canada has the right to discuss politics and elections but in the case of a public official he must first resign. This is the long tradition that has been observed in this country and in those other countries whose traditions we share. Many times a public servant has found himself in such disagreement with the government that he feels he can no longer carry on. The honourable course has been known for years. He must first resign and then make his views known. This was the course that the governor rejected.

Governor of Bank of Canada
It is suggested, according to the amendment, that we should place this whole matter before a committee of the house, and it is interesting, it seems to me, to speculate on why members of the opposition would like to follow this course. They would like to follow it because they want to see before that committee a debate on policy between the Minister of Finance and the governor of the Bank of Canada. They themselves have not the desire or the courages-or whatever it may be-to espouse the policies of the governor but they think the enuciation of these policies before a committee might damage the Minister of Finance, and that is what they want. The fact that it would also damage the Bank of Canada, damage our public credit at home and abroad, means nothing to them. Not at all. Let us have the circus. Never mind what happens to Canada's position in the world. Let us have the circus. Let us see if we can damage the Minister of Finance. This kind of thing would be unprecedented.
It has been forecast that there will be a royal commission that will investigate this whole area of our public affairs. It is not possible to forecast what witnesses such a commission would call but it is perfectly conceivable that the governor of the Bank of Canada, having resigned and having recaptured his right to public comment, could ask to appear before that commission. Our concern, Mr. Speaker, is to get over this unfortunate matter with the least damage to the Bank of Canada and to the credit of Canada as a whole.
The forum for debate of fiscal and monetary policies is here in this house and the people who are chosen by the electors of Canada to conduct that debate are here in this house. For our side they are the Minister of Finance, his colleagues and those who sit behind him, and for the side of the opposition similarly it is those who have been elected for that purpose. Here is where the debate should take place between those who represent varying degrees of opinion in the country, not in a debate between elected representatives and public officials.
I mentioned a few moments ago that the governor had taken a most extraordinary course. Instead of resigning, as tradition demanded, and then making his views known, instead of accepting the offer of the Minister of Finance to let him conform to our traditions with dignity and resign, he chose the one way that is forbidden to public officials. He chose political action. I must say that he has been a keen student of political action, and I wonder whether possibly some member who sits across the floor has found himself in a position to advise him on tactics.


Some hon. Members:: Oh, oh.


Gordon Minto Churchill: It sounds like it.


William Moore Benidickson: Let us have a committee and find that out too.


Egan Chambers: No doubt as opportunity arises those hon. gentlemen who are friendly with the governor will be in a position to deny this. But certainly he showed great tactical skill in the release of the letters at a time when the minister was in the house and had no opportunity to prepare a reply, the release today of a letter dated June 26 which was delivered, I understand, to the office of the Minister of Finance over in the Confederation building when he was here, but somehow was also-


Donald Methuen Fleming: One hour after it was given to the press.


Egan Chambers: One hour after it was given to the press, and not only here but somehow also at about the same time it was delivered to newspaper offices at least in Montreal and I suspect in the rest of the country.


Donald Methuen Fleming: Through local Bank of Canada offices.


Egan Chambers: I was able to get a copy of this letter by telephoning the public relations department of the Bank of Canada. They informed me that copies were available.


William Moore Benidickson: The minister had it just as fast as we had it in the house.


Donald Methuen Fleming: I got it one hour after it was released to the press. Did you get that?


George James McIlraith: He is just copying the minister's technique.


Mr. Speaker:: Order.


Egan Chambers: There has been some question whether in fact a sufficient degree of disagreement existed between the governor of the Bank of Canada and the government that he should resign. There is another factor which, as far as I know, has not been considered. I refer to section 16 of the Bank of Canada Act which reads as follows:
Every director, officer, clerk and employee of the banks shall before entering upon his duties take before a justice of the peace or a commissioner for taking affidavits, an oath of fidelity and secrecy in the form prescribed in schedule A.
The first part of schedule A can be summarized by saying that it is the oath to faithfully fulfil the duties, but the second part I should like to quote as follows:
I further solemnly swear that I will not communicate or allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the bank, nor will I allow any such person to inspect or have access to any

books or documents belonging to or in the possession of the bank and relating to the business of the bank.
Mr. Speaker, apart from whatever else may be said, it is my contention that the governor of the Bank of Canada is in violation of that oath. Such being the case, this is not the time for prolonging a controversy, as the Leader of the Opposition has suggested, and I agree with him. This is not the time for dragging out things which will do further damage to the bank and the country. This governor should stand not upon the order of his going, but go at once.


Edwin William Brunsden: Mr. Speaker, will the hon. member permit a question?


John Whitney Pickersgill: No.


Edwin William Brunsden: I am directing a question to you.


John Whitney Pickersgill: Oh, 1 beg your pardon.


Edwin William Brunsden: I should like to ask the hon. member whether or not the very voluminous documents that have come from Mr. Coyne's office, not only to us but to all parts of Canada, have been paid for by himself or by the government of Canada?


Egan Chambers: Mr. Speaker, I am afraid I cannot go any further than to say the documents I have obtained today were obtained from the public relations department of the Bank of Canada.


John Whitney Pickersgill: Mr. Speaker, there was one observation made by my friend the hon. member for Essex East (Mr. Martin) with which I profoundly agree and which goes to the very basis of this debate today. My hon. friend said that there could not be two sovereignties in this country. He was absolutely right. It is perfectly obvious, sir, that-


William Moore Benidickson: Heads will roll.


John Whitney Pickersgill: It is perfectly obvious, sir, that there is only one sovereignty in this country and that is this parliament. There has not been one jot or tittle of evidence produced by the Minister of Finance (Mr. Fleming) or by either of the two hon. gentlemen who have spoken for him to suggest that the governor of the Bank of Canada in anything that he did at any time sought to usurp the power of the government.


Mr. Drysdale:: Where have you been, Jack?


John Whitney Pickersgill: I have paid as much attention to this matter as anyone has. There is abundant evidence that this government, which is the servant of this house, has usurped the rights of parliament. The minister beat his breast over and over again disclaiming 90205-6-4474
Governor of Bank of Canada the responsibility which was his and which Mr. Coyne has urged him to assume.


Donald Methuen Fleming: No, he did not.


John Whitney Pickersgill: As my friend the hon. member for Essex East pointed out this afternoon, the minister has dodged and shirked his responsibility and when he got in a jam he got orders from the east block-from the Prime Minister (Mr. Diefenbaker)-to get rid of Coyne. The minister then went behind the back of this parliament-he sneaked behind the back of this parliament-in an attempt to get the governor to leave, as he says, with dignity and as quietly as possible.
The minister himself has told us that the governor was responsible to parliament, not to the government, yet the minister seeks to undermine parliament by taking away the rights of parliament, assuming them for himself, in seeking to make a secret deal, conniving to make a deal with Mr. Coyne about which, if Mr. Coyne had complied, this parliament would never have known of. That is the kind of thing that has been happening. If Mr. Coyne had been as gutless as the Minister of Finance showed himself to be by his speech this afternoon when he talked about not having had the courage to take this step for four years, he might have succeeded and Mr. Coyne would then have supinely gone his way. He did not because, whatever else you can say about Mr. Coyne, you cannot say that he has not got courage.


An hon. Member:: He certainly has got gall.


John Whitney Pickersgill: No one can say that he has not got a high sense of his responsibility to this parliament. I say that the Minister of Finance confessed the other day that he tried to usurp the rights of parliament by putting himself in the place of parliament. That is what he tried to do. This is all the more extraordinary when one recalls some of the things that have been said by the Minister of Finance in the past. I intend to recall only one of them, because it is very relevant. The Minister of Finance in 1955-


Mr. Campbell (Stormont):: Mr. Speaker, I should like to rise on a question of privilege.


John Whitney Pickersgill: In 1955 the Minister of Finance-


Mr. Speaker:: Order. The hon. member for Stormont is rising on a question of privilege.


Grant Campbell: Mr. Speaker, the hon. member has endeavoured to mislead the house in that he said there was not one jot or tittle of evidence that Mr. Coyne endeavoured to usurp the prerogatives of this

Governor of Bank of Canada house. I contend that he has usurped the prerogatives of this house because, as the Leader of the Opposition stated-


Mr. Speaker:: Order, order. Will the hon. member please resume his seat. The hon. member, as he has indicated himself, is presenting a contention, not raising a question of privilege.


John Whitney Pickersgill: Mr. Speaker, I was about to recall to this house, and perhaps to the hon. members who have been more recently elected, one of many statements in respect to the rights of parliament made by the present Minister of Finance in the year 1955 when that hon. member professed to have some concern for the rights of parliament, which he has certainly not demonstrated since the day he took his seat on the treasury benches. Not even excepting his leader, no other member on the treasury benches has shown uniformly the contempt for parliament and for the members of parliament, or for the opposition, that the hon. gentleman has shown throughout his term there. In those days when he was over here showing contempt for the Speaker and the Chair, which was his main line when he was over here-


Mr. Bell (Carleton):: That is more foolishness.


John Whitney Pickersgill: Well, you just don't like it.


Richard Albert Bell: That is just more foolishness.


John Whitney Pickersgill: You do not want to hear what the minister said as a private member, but I think it ought to be on the record. The minister quoted these words:
"Parliament is the grand inquest which has the right to inquire into anything and everything."
Those were the words of a man who spent a great deal of his life holding ministerial power in Canada; those were words uttered in 1861 by Sir John A. Macdonald. In those days parliament was a grand inquest with the right to inquire into everything and anything, but it is not today, when we see secrecy imposed by the government, and hon. members of this house in the discharge of their solemn obligations to the constituents who elected them denied information they ought to have.
If ever any minister was convicted out of his own mouth, the minister convicts himself in respect to this bill by those words which he uttered in this house some years ago, because he denied on a pretext of secrecy the answers to questions asked by the hon. member for Welland (Mr. McMillan). He denied Mr. Bryden's letter in getting these-well, sir, I will not go into that. We have not got Mr. Bryden's letter but we now know what was contained in it and why it was denied to this house.
His leader, the Prime Minister, had the effrontery, on the very day he asked his


followers to vote to suppress that information here in this house, to go on the air and say that the case of the governor of the Bank of Canada was now out in the open where it could be thoroughly discussed and assessed in the light of the facts. That is what the Prime Minister told the people of Canada on television. That statement is patently false. The Prime Minister made it false that very day in this house by denying the information to us. He has joined or indeed led his government into suppressing this information which parliament is entitled to have if it is the grand inquest the minister said it was and which it ought to be. This is the most extraordinary procedure. Of course, it is characteristic of that careless use of language found in every reference the Prime Minister made to Mr. Coyne, including describing him as a civil servant. If the Prime Minister does not know better, he ought to do so. If he does know better, he was trying to mislead the people. Hon. gentlemen can have it either way. It does not seem to me to make much difference which view you take of it, it is not very creditable to the Prime Minister of this country. Nor is it very creditable to the Prime Minister of this country who allowed, according to the Minister of Finance, this situation to persist for four years while doing nothing about it, and who apparently made not the slightest effort to compose this difference, and who then seeks to exacerbate it by going on the air and making statements that are not in accord with the facts which were established in this house on the very same day.
As hon. members know, I have had some association in the past with real prime ministers who attended to the administration of the country and did not merely conduct a constant political campaign. We have had a continuous election campaign in this country since the spring of 1957, and the Prime Minister has never had time, in the midst of this election campaign, to give any attention to the government of this country. That is one of the principal reasons this country is in the shocking mess it is in.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: When hon. gentlemen
realized that in 1961 the public at last had twigged to the fact that they were responsible for the mess, after they had blamed the Liberals in 1958, they had blamed the Americans in 1959, and then in 1960 they had a recovery; and we know what happened to that recovery. We remember the minister's boast about a balanced budget and the unemployment going with the snow. That is a fair indication of the kind of leadership we have had from this

minister. When he found himself so hopelessly wrong in 1961 he says, "I have got to have a victim; I have got to take attention away from myself". Maybe he said it or maybe it was the Prime Minister who ordered him to do it. I suspect the latter. It is an extraordinary thing, as the Leader of the Opposition pointed out earlier today, that there seems to have been an amazing consonance of view, not dissonance, between the governor of the bank and the Minister of Finance right up to a date as late as the minister's speech in January, 1961, in Brantford and which the governor might equally well have made. This sudden conversion, this turning of Saul into Paul that happened some time in the spring,-


Donald Methuen Fleming: No, no.


John Whitney Pickersgill: -this great light that suddenly came upon this former pagan, this conversion to expansion, the expansion that only a few months ago he was decrying, was worrying about, as I say, was an extraordinary change indeed. But, oh, no; the governor must go and he must go quietly in order to preserve the dignity of the Bank of Canada and to conceal the facts from the people of Canada and the parliament of Canada. What instrument do they use to do it when the governor refuses to resign? Do they come here in parliament and make their case? Do they allow us to perform our functions as an opposition? Do they allow this parliament to be sovereign? No, Mr. Speaker. They say, "We have a huge and servile majority; we will put a bill through this house to take away the rights of this man without letting him be heard".


Thomas Miller Bell: Nonsense.


John Whitney Pickersgill: That is what you are doing. It is precisely what you are doing.


Thomas Miller Bell: He is in the headlines every day.


John Whitney Pickersgill: As a matter of fact, the hon. member for Carleton who, I believe, is a member of the bar, is now suggesting to us that if a man makes a statement in public outside the courts, he is to be denied his right to access to the courts. If that is the new doctrine of the bill of rights, it is not a doctrine that any Liberal could espouse, but it is perhaps what one would expect from the hon. gentleman opposite.


Thomas Miller Bell: Will the hon. member permit a question?


John Whitney Pickersgill: Certainly.


Thomas Miller Bell: Would the hon. gentleman indicate to the house whether he has been in communication with Mr. Coyne since the first of June?
Governor of Bank of Canada


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: I am making a speech. I realize, of course, how effective the interruption will be.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order.


Thomas Miller Bell: The hon. gentleman allowed me to ask the question; apparently he does not wish to answer it.


Mr. Speaker:: If there is an answer, I would be unable to hear it.


John Whitney Pickersgill: It is a very well known fact that I have known Mr. Coyne for 30 years and that he is one of my personal friends. I live in a free country and of course I have not denied myself communication with my friends, even under this Tory despotism.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: If hon. gentlemen maintain a gestapo so far as public servants are concerned in this country, they can boast about it in this company.


Donald Methuen Fleming: The bubble is pricked now; now we know.


William Moore Benidickson: Any member of parliament can phone him. I have not done so, but I have known him equally long.


Mr. Speaker:: Order.


John Whitney Pickersgill: I am going to say something I had not intended to say in this house. It is also known, I think, to a few hon. members that I had a brother who was beaten to death by the nazis in a concentration camp at Buchenwald; and no one will ever make me vote for legislation to condemn a man without a hearing.


Henry Frank Jones: Why did you not say that when you threw Bob Pitt out of a job without a hearing? I refer to Bob Pitt of Winnipeg and Saskatoon. What hypocrisy it is to make such a statement now.


Mr. Speaker:: Order. The hon. member for Saskatoon forgets that the floor is now held by the hon. member for Bonavista-Twillin-gate. Those who wish to speak will have an opportunity of doing so only if they allow one member to continue at a time.


John Whitney Pickersgill: I said that this was a bill of attainder. I said that this was a procedure which was now unknown to our practice, and which is forbidden by the constitution of the United States, as the Leader of the Opposition pointed out this afternoon. I should like to read to you, Mr. Speaker, because it is so apt, the description of a bill of attainder found in the encyclopedia Britannica, the

Governor of Bank of Canada 1959 edition. I hope hon. members opposite will listen very carefully to the language of it. It is as follows:
First passed in 1459, such bills were employed, more particularly during the reigns of the Tudor kings, as a species of extrajudicial procedure, for the direct punishment of political offences. Dispensing with the ordinary judicial forms and precedents, they took away from the accused whatever advantages he might have gained in the courts of law; such evidence only was admitted as might be necessary to secure conviction; indeed, in many cases bills of attainder were passed without any evidence being produced at all.
As is the case here.
In the reign of Henry VIII they were much used, through a subservient parliament, to punish those who had incurred the king's displeasure; many distinguished victims who could not have been charged with any offence under the existing laws being by this means disposed of.
That, sir, is very simply what the government is asking us to do in this case.


Some hon. Members:: Nonsense.


Donald Methuen Fleming: Rot.


John Whitney Pickersgill: That is the reason why the Leader of the Opposition made the amendment he did to provide an opportunity to Mr. Coyne, who needs no defence from anyone else, who is perfectly capable of defending himself if this parliament will allow him to do so. If there is enough freedom left in this house to allow him to do so, if there is enough sense of justice in this house left to allow him to do so, he will need no defence from any of us nor should he get any. He should be allowed to defend himself and to explain himself. Why? Because he is one of that very limited group of persons who, under the statutes of this parliament, apart from the judges, are appointed during good behaviour. What does that historic phrase mean? It seems that many hon. gentlemen opposite have lost the sense of it. It means the government, the executive, must not in any way seek to remove those people except by showing cause, and doing so openly in this parliament, not secretly behind closed doors. That is what it means.
What the minister did on May 30 in his office was done behind closed doors, when he asked Mr. Coyne to go quietly so that his family would not suffer and so that the dignity of his office would not suffer, and so the government would not be embarrassed.


Donald Methuen Fleming: Mr. Speaker, I said nothing about the family at any time. That is a red herring that has been brought into this matter by the hon. member. Never was a word said about the family.


John Whitney Pickersgill: Well, it was certainly behind closed doors; it was certainly done in secret and parliament was not intended to


know anything about it except the fact that Mr. Coyne had quietly resigned and gone away, so parliament would never know what design the government had after they got rid of him.
As my hon. friend the Leader of the Opposition pointed out this morning, it is exactly equivalent to asking us to pass a bill to remove the chairman of the civil service commission because, say, the Minister of Finance does not like the colour of his eyes, to put someone else there who will give the jobs to the hon. gentleman's friends. That is exactly the same thing.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: Of course it is.


An hon. Member:: Nonsense.


John Whitney Pickersgill: The chairman of the civil service commission is appointed during good behaviour. It is fortunate that statute contains an additional provision that there must be an address of both houses. The Bank of Canada Act does not, but there is no doubt the intention was the same in both. The same is true about the president of the C.B.C. This government tried to have him appointed during pleasure and we did our best to have an amendment passed in this house to include good behaviour. Our amendment was refused.
However, hon. ladies and gentlemen in the other place, having more respect than was shown by the majority here for the rights of the people and for the non-partisan character that the broadcasting service must necessarily have, amended that legislation. This government reluctantly accepted that amendment in 1958 in order to give a measure of independence of partisan control to broadcasting.
Parliament decided that civil servants should be above partisan control, and parliament decided that the electoral system should be above partisan control, and parliament decided that the Auditor General should be above partisan control. There is no difference between this bill and bringing in a bill to remove the Auditor General and declare his office vacant without any cause given. Perhaps if that were done hon. gentlemen could appoint someone who would not look into the hospital grants, for example, and who would be more complacent with regard to some of the activities that some hon. gentlemen opposite seem to find so interesting in these times.
I say that the provision that these offices that parliament said were to be held during good behaviour, whose incumbents were to be removed only for cause, cause shown in open assembly and in open court and with the right of discussion, was made for a reason.

That was done to prevent what the Prime Minister spoke about on June 4, 1955, in the days when the Prime Minister was still interested in these things; those days seem to have vanished:
... there has been no suggestion on the part of the government that it intends to deviate one whit from the trend that apparently is to be followed, of establishing for ministers of the crown and this government an absolutism.
That is what they are seeking to do by this bill so tar as the Bank of Canada is concerned. If they can get rid of Mr. Coyne without giving any reasons; if they can use the tyranny of a majority to clear him out, to get that block out of the way, as the Prime Minister so felicitously put it-


Richard Albert Bell: When did the majority become a tyranny? Is that a new thesis in this country?


John Whitney Pickersgill: I commend to the hon. gentleman the pipe line debate. He seems to have forgotten that we heard a lot about the rights of the minority from some hon. gentlemen opposite in those days. That has all been forgotten now.


Mr. Fulton:: Not at all: you are still speaking, we were not allowed to speak then.


John Whitney Pickersgill: They have not quite dared to expel the opposition from this house. This is a man that a previous parliament decided could only be removed by cause, whom they do not allow to say a word in his own defence in the only place where he could be cross-examined. This is just one more step in that direction.
Why did previous parliaments decide that the governor and the deputy governor of the Bank of Canada should be appointed during good behaviour and should be removable only for cause? The answer is very obvious. It was given by the Leader of the Opposition this afternoon. It is because in no free country, with a constitutional government, would a partisan executive be given the uncontrolled right to start the printing presses. The most ancient of all our rights is the right of the elected representatives of the people to decide what the taxes will be. There is no taxation that is so unfair, so insidious or so inexorable as inflation and there is no doubt whatsoever that this block that Mr. Coyne was, according to the Prime Minister, was a block to that uncontrolled right. First they got a collection of Tory hacks as members of the board of directors. They did not dare to act against Mr. Coyne-


Donald Methuen Fleming: Shame on you.


John Whitney Pickersgill: I am not a bit ashamed.


Donald Methuen Fleming: You should be.
Governor of Bank of Canada


John Whitney Pickersgill: One of them was a defeated Tory candidate and has been running around here ever since.


Richard Albert Bell: That is what the hon. gentleman will be after the next election.


John Whitney Pickersgill: They had to get them first, and they had to wait for four years. After waiting four years, these men yielded to the crack of the minister's whip and did what they were told to do; they passed the resolution he dictated to them-


Paul Joseph James Martin: Improperly.


John Whitney Pickersgill: improperly-


Donald Methuen Fleming: That is untrue.


John Whitney Pickersgill: that was dictated by the Minister of Finance behind the back of parliament.


Donald Methuen Fleming: That is utterly untrue. That is a false statement.


John Whitney Pickersgill: Of course, you will not let us go to a committee where we can find out whether or not it is true.


William Moore Benidickson: You are the accused now.


John Whitney Pickersgill: Let us see these directors and ask them questions.


Paul Joseph James Martin: Hear, hear.


John Whitney Pickersgill: The only person who has any voice in this parliament is the accuser.


Lester Bowles Pearson: Keep them out of Ottawa.


Edmund Davie Fulton: You could telephone one of them. You telephoned Mr. Coyne.


Richard Albert Bell: Telephone Jim again.


John Whitney Pickersgill: What is this alleged dispute about? What is this supposed adequate reason on the minister's say-so, without any evidence, without any supporting documents, without any chance for us, the representatives of the people, the sovereign people, to examine Mr. Coyne or to examine the directors? We have to take the word of this omnipotent little minister, this omnipotent little creature of parliament who sets himself up above parliament and says, "You must do what we say". If they get away with this-
Mr. Pallet!: The hon. member sounds like eviscerated poultry right now.


John Whitney Pickersgill: If they get away with this in the case of Mr. Coyne, it does not matter who they appoint; it does not matter how eminent he is; the new governor is going to know they have done it once-and that, of course, is the way of dictators; you do it once and then it is a lot easier to do it the next time-and he is going to hesitate a long time before he fails to do whatever he is

Governor of Bank of Canada ordered to do by the Minister of Finance or the successor of the Minister of Finance.
I suggest, Mr. Speaker, as I said the other evening, that the Minister of Finance himself is not going to survive this debate very long. He has made a mess of this business and the Prime Minister will not forget it.


An hon. Member:: We will see.


John Whitney Pickersgill: I say-


William Moore Benidickson: If he does not resign, he will be fired.


John Whitney Pickersgill: I say that the fundamental reason why this matter is so important is not Mr. Coyne at all; it is the office of governor; it is the necessary independence in that office to protect the value of our money. I predict that if this government gets away with this measure; if they can appoint their stooge as governor-


Donald Methuen Fleming: Shame on you.


John Whitney Pickersgill: -that within six months the Canadian dollar will look like that, and in a year it will look like that.


Thomas Miller Bell: That is a mischievous, false statement.


John Whitney Pickersgill: What these ministers are confronted with is an impossible deficit. They have not got the courage to deal with it in a proper fashion and they want some subservient person in that office to start the printing presses. That is what they want. That is the real danger to the people of this country. That is why parliament provided that the governor could only be removed for cause given in open court, and that is why it is the duty of the governor even if he has only a suspicion of the motives of the government, to do what Mr. Coyne has done.
I would like to quote in this connection some of the evidence given by Mr. Graham Towers before the committee on banking and commerce in 1954 as reported in the proceedings of the committee for that year. I think it was on March 16. This is very relevant to what we are discussing, and nothing could be more important to the people, than this question of the money supply in this country and effective parliamentary control over it. Mr. Towers said:
The situation is that parliament has placed squarely on the shoulders of the directors and management of the Bank of Canada the responsibility for monetary policy. It would be of no use for us to come before a committee of this kind and say in respect to certain actions which were criticized, we did not like that, but the government wanted us to do it. The proper question would be: in what act has parliament said that you should do something in the field of monetary policy in which you do not believe? Therefore, we must and do take full responsibility for everything which we have done. Now, I think myself that the 
Bank of Canada Act is in this respect a very good act, and better than most, because it is clear. There is no alibi possible for the central bank.
This is the really important part, and it is something the minister does not seem ever to have understood:
On the other hand, there is no alibi possible for the government, because if government said: well, we disagreed with what the central bank did, but parliament has placed the responsibility on them, so what could we do? The answer obviously is that the administration of the day, supported by a majority in parliament, can always alter the legislation.
But not decapitate the governor-alter the legislation. Mr. Towers went on to say:
In fact, I doubt whether a disagreement would ever necessitate such a thing, because there are various ways and means by which directors and management can be got rid of.
Mr. Towers spoke, perhaps, better than he knew.
I am sure that in the case of a serious disagreement that is what would take place. There is a long history behind this thing in central banking- and I assure you I won't take up much more of the committee's time-but in the days when kings and princes ruled the roost, they had rather a nasty habit of debasing the coinage when they got into a fix, and even later on parliamentary governments sometimes did the same thing, in the modern sense of inflation. Therefore, it is interesting to notice that in all the many countries of the world-I think it is 60 or more which have central banks-they have always been set up not as a department of government but as separate institutions. In many cases, they have been nationalized, but they have been left as separate structures with the idea that then there are certain checks in respect to the possibility of doing that insidious thing which not one person in a million understands, debasing the currency. In some cases, of course, the independence, while intended to be encouraging to the public, is a pure fagade. Obviously that is so in a totalitarian state. But even in some other places in recent years there have been governments-we have had them in sister countries of the commonwealth-which felt that they could not bear the thought that even for a day someone should frustrate or delay the policy of the administration of the day. So on top of the fagade which, so far as the public is concerned was supposed to convey an idea of check and balance and independence, they would write in a clause saying the policy of the central bank shall be that dictated by the Minister of Finance from time to time. Myself, I think that that is a sort of mongrel arrangement, and the central bank should be either a pure department of government and known to the public as such, or it should have independent responsibility.
I am not sure Mr. Towers would say that today. We do know that Mr. Coyne does not say that. We do know that Mr. Coyne says the Bank of Canada should be in the same position as the Bank of England; that the Minister of Finance may in writing impose the views of the government, and if he does that and the governor disagrees and they cannot reconcile their differences, then the governor should resign. That is what Mr. Coyne has said. That is right. That is proper.

Governor of Bank of Canada But Mr. Coyne should not resign, and no governor should be expected to resign, merely because the minister does not like the colour of his hair or the amount of his pension or even some speech he has made. If Mr. Coyne had persisted in making speeches after the minister had said he should not make them that would have been another matter. The minister would have had a real cause and he could have come into the house and made his case, but he never protested at all. Instead, he came here and beat his breast and talked about freedom of speech and asked: would you deny freedom of speech to the governor of the Bank of Canada? That is what he said very recently. I could look it up if I had a little more time; it is familiar to all of us.
The plain fact of the matter is that there has not been the slightest evidence produced that the governor of the Bank of Canada by any act, as opposed, perhaps, to some words which the minister did not like, has been in conflict with the present administration. The minister may not have liked some of those words because they were embarrassing to the government inasmuch as they indicated that the government should be doing certain things which they were not doing. Apart from that, there is nothing, except for some mysterious thing in 1957. Either that incident in 1957 was important or it was not. If it was important, an issue should have been made of it then in parliament and Mr. Coyne should have been removed then. If it was not, does anybody in parliament, knowing the Minister of Finance as we all know him, think that if there was any incident more recent than that of 1957 he would have had to go back to 1957?
The plain fact is that any policy the bank has been asked to carry out, it has carried out. We know that, because we know that otherwise we would have heard a howl from the minister long ago. That is why the hon. gentleman would not answer the questions of my hon. friend from Welland. It is because he would have had to say "no" to both of those questions, and his whole case for the dismissal of the governor would have fallen completely to the ground if he had given a truthful answer to those questions. That is why the minister hid behind a pretence of secrecy.
As to this business of secrecy, it is perfectly true that in the ordinary operation there should be secrecy. The governor of the bank respected that to the letter until the minister fired him, or tried to. He then felt he had a duty to this parliament and to the people of Canada whose servant he was-not the servant of the government, not the servant of 90205-6-448
the minister, but the servant of parliament and the people of Canada. He felt it was his duty whatever happened to him to tell us that something was wrong and to give us a chance to find out. That is the issue. If there is something wrong with the governor, surely the government would be delighted to produce the evidence, delighted to give him a hearing and show he is wrong. Why is the government so scared? Why is the government so frightened?
Why do they not want this inquiry? The fact of the matter is that there is nothing substantial to inquire into. As a matter of fact they want a scapegoat for the past and-what I suspect is a great deal more serious-they want a compliant tool in the office of the governor of the Bank of Canada to deal with their deficits for the future.
Hon. D. J. Walker (Minister of Public
Works): First, I wish to express the views of most of the members of this house in offering heartfelt congratulations to the Minister of Finance for the magnificent manner in which he has handled this whole Coyne affair. How he could have exercised the patience he has displayed, how he has had the wisdom that he has displayed, how he could have kept his dignity and decorum in the face of such constant insults and slights over a long period is beyond the understanding of most of the members of this house. Certainly he is a long suffering man and a man of very great mercy. If sympathy and kindness did not dominate his nature we could not have had a situation where a person who had become almost an anarchist would have been treated with such sympathy and understanding.
The hon. member for Bonavista-Twillingate is tonight in a semi-hysterical state of mind, and I do not blame him for that. He has been under great strain and stress. We did not realize it; for not only is he conducting the business of the house, taking the place in parliament of the Leader of the Opposition, but at the same time he has been the confidential adviser of the governor of the Bank of Canada.


John Whitney Pickersgill: Mr. Speaker, I think I have a question of privilege here. I would simply say that that libel answers itself.


David James Walker: The hon. member for Bonavista-Twillingate has admitted that he has been in constant touch with the governor, Mr. Speaker. I ask him to deny it; if he has not been in touch with the governor of the Bank of Canada. I will withdraw my remarks if he has not. Has he, or has he not?


John Whitney Pickersgill: I said I had been in touch with him as a friend.

Governor of Bank of Canada


David James Walker: Well, out of his own mouth-


John Whitney Pickersgill: Perhaps the hon. gentleman would at least allow me to finish. I said I had been in touch with him as a friend of many, many years. I saw no reason, simply because of this action, to alter that friendship in any way whatsoever, nor do I think it is necessary to do so in a free country.


David James Walker: May I ask another question of the hon. member, since he is so willing to rise and answer these questions. These letters, reams of which I have been reading today, have a strange familiarity. I ask the hon. member for Bonavista-Twillingate this question. Did he not assist the governor of the Bank of Canada in the drafting of them, including the one of today?


John Whitney Pickersgill: The answer to that question is no.


David James Walker: The answer is no; all right, I have to accept the hon. member's answer in that regard.
The fact is that on the admission of the hon. member for Bonavista-Twillingate we have a governor who has been aloof from political turmoil and the member for Bonavista-Twillingate has been in touch with him. I can only assume that the governor of the Bank of Canada has been accepting the advice of the hon. member for Bonavista-Twillingate.


Some hon. Members:: Order. Shame.


David James Walker: I think it is a shame also; it is a crying shame that all these actions are not the actions of the person who we thought was a quiet, dignified banker but are the actions of the semi-hysterical member for Bonavista-Twillingate. Therefore, for the first time in this whole debate I have a certain sympathy for the governor of the bank who no doubt has been tremendously misguided.
May I ask this question. Is it not a fact that over the week end Her Majesty's loyal opposition have been in touch with the governor of the Bank of Canada-


Erhart Regier: Shame.


David James Walker: -in an effort to have him resign now so that they will not have to vote on second reading of this bill? Is it not a fact that as late as last night the governor of the bank refused to resign?


Erhart Regier: I never knew how low one could sink.


David James Walker: Just a moment; out of the mouth of babes and sucklings, and the hon. member for-


Erhart Regier: I have been here longer than the minister and I will be here longer as well.


David James Walker: The hon. member has almost reached the summit of his career here and it will soon be over. When the vote is called -and I undersand the opposition is going to keep up this interminable delay for four days -I suggest that the official opposition to a man and to a woman will vote in favour of the governor of the Bank of Canada being discharged. There is no doubt about it; I challenge them to deny it.
We have a suggestion made by the Leader of the Opposition today, the only one of which I have to take cognizance, that the governor of the Bank of Canada should have another "go" at this thing in a parliamentary committee. Here is a man who has explained his position in reams of well-written letters in the Pickersgillian style. Here is a man who has called press conferences at midnight, at any other hour of the day or night, either in Quebec or Ottawa, under some expert political coaching. He has given fabulous interviews. Here is a man who, as time creeps inevitably onward to bring to an end his meteoric career, kicks out in all directions. Here is a man who has appeared before a Senate committee to be cross-examined by members of the other place who have no interest in being re-elected, to be cross-examined by members of the political faith of the hon. member for Bonavista-Twillingate. After cross-examining him on all the speeches he has made up and down the country for a couple of years, what did they discover? They found out that he has no solution, no panacea, no facts, nothing to settle the problems which he himself has brought on. And yet, after that Senate committee hearing, it is now suggested by the Leader of the Opposition that this man, who is acting more like an anarchist than a governor of a bank, should be called before a committee of the House of Commons. Would I not like to have the opportunity of acting as counsel in that committee, of cross-examining him.
But why exacerbate the self-inflicted wounds of that poor man? I feel sorry for him for the first time because I know he has been misguided. But to bring him before a parliamentary committee at this time would be to create greater shame and greater degradation than have already taken place. And to what avail? What is there that can be brought out that was not brought out in the Senate committee? What is there that can be brought out now that we have the confidential letters which were put in the hands of the press before they reached parliament? What is there that can be said in this whole shameful story that has not been said already over and over again?
I think it is to the eternal credit of the Minister of Finance, who could have really

seen himself vindicated in a superlative degree by having this man appear before a parliamentary committee, that he has not seen fit to agree that this be done. Under all the circumstances it is a great pity that a man who held the rank of the governor of the Bank of Canada, whom we liked as a person and as a personality, should have been so badly advised by the hon. member for Bonavista-Twillingate and others that he has set himself up on Mount Olympus superior to the government of Canada, and because this government represents an overwhelming majority of the people of Canada, in conflict with the people of Canada themselves.
I am not going to say very much about the increase in the pension from $12,000 to $25,000. Whether the increase was negotiated with the advice of the hon. member for Bonavista-Twillingate, I do not know. But I can say this. From the time the governor of the Bank of Canada believed that even though he retired at the end of his term in December of this year he could feel secure with a pension of $25,000 a year with the hope of living another 30 years at a cost to the taxpayers of this country of three quarters of a million dollars, it is a fact, whether or not he was advised by the hon. member for Bonavista-Twillingate in this connection, that from the time he got that increased pension he became bolder and bolder and bolder. He took issue from the Atlantic to the Pacific with whatever the government of Canada was doing, whether it was in the domain of banking or whether it was not. He invited, he urged that he should be fired. He urged that a year ago by his statements, and if I had been the minister of finance-and it is a good thing I was not-he would have been fired long ago and not on such terms as have happened under all the circumstances.


Some hon. Members:: Oh, oh.


David James Walker: I say to the hon. member for Bonavista-Twillingate, whom I like personally but who is overwrought, distracted and somewhat hysterical, that when he comes back to his normal thinking ways after the summer holidays he will be very much ashamed of the scene he made in the house tonight. He will be terribly ashamed. The hon. member for Essex East (Mr. Martin) at least had a reasoned speech but the hon. member for Bonavista-Twillingate has just dealt in emotional pleas and in almost personal, bitter and degrading attacks on the Minister of Finance. I say to you, why do you keep saying that this is a little man? Why do you say that one of the greatest of Canada's finance ministers is little?
90205-6-4484
Governor of Bank of Canada


Some hon. Members:: Oh, oh.


David James Walker: I have heard this said over and over again and I think they must be referring to his physical size.


Mr. Speaker:: Order. May I call the minister's attention to the fact that it is customary to address the Chair.


David James Walker: That is quite so. Thank you, Mr. Speaker, and I think we should continue to do that. Let us have an end of this whole thing. Let us get over this unfortunate incident which we all regret, which has now reached the realm of personalities and, believe me, I am not immune to that sort of thing. I admit that, but let us be done with it all. Let us bring down the curtain on this sad and unfortunate incident.


John Whitney Pickersgill: You would certainly like to.


David James Walker: The only explanation I can give is that this man, who has descended from the heights of Olympus to get into a political brawl and has conducted himself not like the gentleman I always thought he was, has now almost reached the stage of being an anarchist in his latest letter. I say, let us pity him. No doubt his nerves are also taut but under all the circumstances his advice has been abominable and for that advice we can only blame hon. members of the opposition led by the person who would be the leader of the opposition, the hon. member for Bonavista-Twillingate.
(Translation):


Mr. Yvon Dupuis (St. Jean-Iberville-Napierville):: Mr. Speaker, my first words tonight will be to commend the Leader of the Opposition (Mr. Pearson) for his masterful statement to the house this afternoon, on what will be labelled in the future "the exciting Coyne affair".
Mr. Speaker, the Leader of the Opposition proved himself a consistent, bold and particularly honest man. He was the first in this house to differ with the present governor of the Bank of Canada. The Leader of the Opposition is the one who for years had been asking the present Minister of Finance (Mr. Fleming) whether he shared the views of Mr. Coyne, and in every case the minister endorsed the views of the governor of the Bank of Canada. It was only after four years that things took a new turn.
I say that the Leader of the Opposition has been bold and honest, because while he has been dissenting with the views of the governor of the Bank of Canada for the past four years, he nevertheless rose in his place today to

Governor of Bank of Canada ask the house to give this official a fair hearing before Canadian public opinion.
Mr. Speaker, I and all those who are in the galleries and in the house have just heard the man who is called the Minister of Public Works (Mr. Walker). At the outset of his remarks, he took great care to tell the house that it was very hard to maintain one's dignity in the house in the face of the insults and abuse of the opposition.
Well, Mr. Speaker, after hearing the rest of the minister's speech, it is obvious that if there has been abuse, if there has been nonsense, it came from the mouth of the Minister of Public Works, who having warned the house that he would take no abuse, added in the same breath that the hon. member for Bonavista-Twillingate (Mr. Pickersgill) was hysterical.
Mr. Speaker, we have heard-


David James Walker: Mr. Speaker, could the hon. member speak more slowly because it is impossible to follow him?


Yvon Dupuis: Mr. Speaker, there is simultaneous translation; the minister should use it and listen, because I have many other things to tell him.
Mr. Speaker, I have no intention of following in the footsteps of the Minister of Public Works, but I want to tell him very slowly, so that he will understand, that his plea was very insignificant tonight. Because, Mr. Speaker, when somebody rises in the House of Commons to speak about an issue of the greatest significance to all citizens in this country, it should be done in a more serious vein than the minister's attempts if one wants to discuss the matter fairly.
We, on this side of the house, in no way shared the ideas of the governor of the Bank of Canada, but we can say with some pride that, under Liberal rule, no man in Canada was ever deprived of the right to defend himself especially when he was accused publicly.
Mr. Speaker, I am proud tonight to belong to the opposition team and to sit, on the Liberal side, behind such a sincere great and worthy man as the Hon. Lester B. Pearson.
Mr. Speaker, the Minister of Public Works spoke for 15 minutes. Did he refute any one of the arguments brought forward with such consistency by the Leader of the Opposition? Not at all. Did he refute a single, serious, valid and well considered point made this afternoon by the hon. member for Essex East (Mr. Martin)? Not in the least. For 15 or

20 minutes, the Minister of Public Works just tried to attack, to insult and abuse the hon. member for Bonavista-Twillingate. Well, Mr. Speaker, I shall say this: this evening I propose, as all members of the opposition, to speak on the Coyne-Fleming issue in an objective way. I intend to prove-and it is easy to do so-that this Conservative government, which felt so great, and so extraordinarily consistent and just when introducing the bill of rights in parliament, did not wait very long to violate the legislation, which it had so much boasted of having produced.
Mr. Speaker, I shall ask my friends some questions, for instance how it could happen that, in so little time, the government's attitude changed so much, as its members are always boasting to be the great defenders of the rights of parliament and of the people. Let us look into their attitude and see how they reacted to the bill of rights.
Mr. Speaker, we maintain that the governor of the Bank of Canada is being denied the right to appear before a parliamentary committee in order to justify his position, a right that any free citizen is entitled to expect. We say that by violating this principle, the Conservative government openly disregards the bill of rights.
Allow me, Mr. Speaker to read from the record a few statements made by the hon. members opposite on July 5, 1960. A year ago, on July 5, the Minister of Public Works said this when the bill of rights was under discussion:
One of the purposes of this bill has been to ensure that fundamental freedoms and human rights cannot be secretly or clandestinely done away with.
And the Minister of Public Works went on to say:
It does not make any difference what stupid government might in another 20 years follow this government. No matter what it does there will always be the bill of rights to ensure that even though an act may have been passed clandestinely or surreptitiously, or people may have missed the meaning of it, there is nevertheless superimposed upon that particular piece of legislation the protective terms of the bill of rights.
Well, Mr. Speaker, I say to the minister that we did not have to wait 20 years to have the kind of stupid government which would deprive someone of his rights. We have it in office, that stupid government which violates human rights.
It would be interesting to know how many copies of the statements made this afternoon

Governor of Bank of Canada by the Minister of Finance, the Minister of Public Works will send to his constituents. If I say that, it is because on July 5, 1960, the Minister of Public Works stated:
As far as I am concerned, I am going to frame a copy of the bill of rights for every school in my riding, and I am going to distribute 40,000 copies to my constituents.
Mr. Speaker, I would suggest to the Minister of Public Works that when he distributes those framed copies of the bill of rights, he should write at the bottom of each copy: Here lie the rights of the governor of the Bank of Canada which we violated in the Canadian parliament, under a Conservative regime, in 1961, barely one year after we adopted the bill of rights.
This afternoon, we asked the government why they refused to let a parliamentary committee examine and cross-examine the governor of the Bank of Canada, on the one hand, and the Minister of Finance, on the other.
Every citizen is entitled to a defence. Every citizen has the right to make himself heard, the right to a fair trial in democracy. Well, Mr. Speaker, the governor of the Bank of Canada is now being refused the right to come and state his views before a committee of the house and to tell his side of the case.
The Minister of Finance stated that there cannot be two authorities. It is correct. The opposition admits as much. There is no place for two generals in an army. There is place for only one. But if a private shoots his general in the back or commits an error, he is not immediately convicted; he is not shot on the spot. Even a private is given the right to be tried by court-martial before judgment is passed.
Mr. Speaker, the same right is given the ordinary worker in this country as in all democratic countries. Plumbers, since the minister likes plumbers, are entitled to a hearing before a grievances committee when they are accused or when they are injustly treated. Lawyers are entitled to have their claims heard and to put their case before the bar association whenever an attack is launched against them or they are charged with some offence or mistake.
Indeed, Mr. Speaker, when an accusation is made against a person before a board of inquiry, whether it be a senator or somebody
else, that person is allowed a hearing before the board, and is not charged unjustly without benefit of trial.
Well, Mr. Speaker, I say tonight that the people of Canada are disgusted with the outrageous attitude, the inconsistent attitude of the Minister of Finance.
Mr. Speaker, we had to wait until the 24th parliament to see such a breach of our liberties and it had to be just a year after that the bill of rights was adopted.
I say, Mr. Speaker, that we have never seen here in Ottawa a government show such an utter contempt for the rights of a citizen, particularly when that citizen is the governor of the Bank of Canada.
Hon. members opposite claim that we are coming to the defence of the governor of the Bank of Canada. Not at all. We are coming to the defence of civil rights, to the defence of a man who has been indicted and has been denied the privilege of coming before a committee of the House of Commons to give evidence.
There is certainly someone who is not telling the truth. The statements of the Minister of Finance and those of the governor of the Bank of Canada are at odds. In letters read this afternoon by the hon. member for Essex East (Mr. Martin) charges are made against the Minister of Finance by the governor of the Bank of Canada.
Now, Mr. Speaker, if the Minister of Finance does not want to give evidence before a committee of the House of Commons, he should at least let us use the lie detector on him; we would then know who is telling the truth.
Mr. Speaker, we on this side have no intention of extending this debate.


Mr. Deputy Speaker:: Order. I wish to apologize for interrupting the hon. member.
(Text):


Edwin William Brunsden: Mr. Speaker, on a point of order.


Mr. Deputy Speaker:: Order.


Edwin William Brunsden: Mr. Speaker, on a point of order. A few moments ago I asked one of the page boys to bring my mail to me. I have here a letter dated June 26-


Some hon. Members:: Order.


Edwin William Brunsden: -addressed to the Minister of Finance-


Some hon. Members:: Order.


Mr. Deputy Speaker:: Order. I think I should have the opportunity of hearing what the point of order is.

Governor of Bank of Canada


An hon. Member:: He wants to read his mail in the house.


Mr. Deputy Speaker:: I should like to indicate that I cannot rule on the point of order because I have not heard it as yet.


Edwin William Brunsden: Mr. Speaker, the point of order is simply that the hon. member is accusing the government of not hearing Mr. Coyne, but Mr. Coyne is making himself heard by-


Some hon. Members:: Order.


Mr. Deputy Speaker:: Order. I suggest that is an argument, not a point of order.
(Translation):


Yvon Dupuis: Mr. Speaker, I do not propose to make a long speech, but I regret to see my hon. friend suffering so much when we talk of giving justice to the governor of the Bank of Canada.
That injustice is glaring and I have no intention of repeating all the arguments so properly made this afternoon by the hon. Leader of the Opposition. Mr. Speaker, I should like, however, like all members of this house and all citizens of Canada, to hear the Minister of Justice (Mr. Fulton) give us his opinion, his views about this bill we are called upon to adopt, a bill of merely two and a quarter lines:
The office of governor of the Bank of Canada shall be deemed to have become vacant Immediately upon the coming into force of this act.
For four years, the Minister of Finance has told us that the governor shared his views. For four years, while we were putting questions to him, the Minister of Finance said he agreed with the governor of the Bank of Canada. For four years, while the governor of the Bank of Canada was making speeches all across the country, we were asking the Minister of Finance whether he authorized the governor of the Bank of Canada to make statements all over the country, and the minister used to answer: "But who would dare refrain the governor of the Bank of Canada from exercising his democratic right to express his views?"
Well, Mr. Speaker, after four years, that is on May 30 last, the Minister of Finance, clear out of the blue, publicly states that the governor of the Bank of Canada, with whom he was in such harmony and whose views he shared, should tender his resignation.
Mr. Speaker, this Bill C-114 reminds me of the arbitrary and dictatorial legislation that was enacted during 15 years in the Quebec legislature under the Duplessis administration. It is exactly like the legislation in effect

at that time, when laws unfair to some individuals were enacted without giving the latter a chance to defend themselves.
Mr. Speaker, all of us would like to hear the Minister of Justice express his opinion on the constitutional merits of Bill C-114 with regard to the Canadian Bill of Rights.
If the Conservatives want to make political capital out of the Coyne-Fleming affair, they will find out that it will not be to their advantage, because no Canadian would admit that the government deny to a man as competent as the governor of the Bank of Canada the right to explain his views before a parliamentary committee.
Mr. Speaker, I should like to end my remarks by saying that if the Minister of Finance refuses to answer the specific accusations which were levelled against him, it is because they are true. If he is afraid of appearing before a parliamentary committee, it is because he fears that the truth will come out.
Mr. Speaker, I notice that the Secretary of State (Mr. Dorion) is in his seat. Why does he not take the floor to defend human rights as he did on July 5, 1960, when he quoted Pius XII, as saying that the purpose of the bill of rights was to-
__calm the agitation and bitterness of all those
who feel threatened or injured in their existence or deprived of the free exercise of their activity.
Mr. Speaker, I say that the governor of the Bank of Canada feels threatened and injured in his existence and in the free exercise of his activity, and that the attitude of this government is contrary to the bill of rights, the doctrine of Pius XII and also to the opinion expressed by the Secretary of State and all those who, last year, made long-winded speeches on freedom and spoke for hours and hours on the deep convictions of the Prime Minister (Mr. Diefenbaker) with regard to parliamentary rights.
Let us talk about parliamentary rights. We in the opposition merely ask the government to call a meeting of the committee on banking and commerce to give the governor a hearing. However, the opposition is refused the right to discharge its responsibility.
Mr. Speaker, we heard the parliamentary secretary to the Minister of National Defence (Mr. Chambers) tell us of the regulations of the Bank of Canada and say that no one has the right to divulge letters or other documents dealing with the business of the bank. His remarks have convinced me that the

Minister of Finance, for his part has no right to lay unsubstantiated charges against the governor of the Bank of Canada, particularly if he lacks the courage to set up a committee so that the house may investigate the matter.
Mr. Speaker, would you like me to quote another gem?
We heard the member for St. Lawrence-St. George say he was glad to point out to the house that the regulations of the Bank of Canada were binding on the governor as well as on anyone else. Let me quote from a statement made by the hon. member on July 5, 1960:
The world today is divided between those who believe that the only things of importance to mankind are the material things and those who believe that the spirit of man and his dignity as an individual are of first importance. It is time that the people of this country through their parliament should declare before the world to which of these camps they belong.
Well, Mr. Speaker, I say that we, from the Liberal party, belong to the second group, comprising those who respect the spirit of man and his dignity, while the Conservatives are part of the first group, that is the group of those who busy themselves with material things, trying to save a minister who has just brought down his fifth deficit and is attempting to mislead the electors. They feel that their position is threatened, that they have deceived the people to whom they had made so many promises.
Mr. Speaker, I conclude with the following:
If we really want to revive parliamentary freedom and democratic freedom in our country, we must vote against Bill C-114, and I am addressing myself here to all the government members who profess a high regard for human rights, asking them to indicate by their vote that they disapprove the attitude of the Minister of Finance and that they wish to allow the governor of the Bank of Canada, as a free citizen in a free democracy, to come and state his views, instead of seeing, as we do now, the Minister of Finance make statements and launch specific accusations and finally submit a bill as insignificant as this one, which has only two lines and one tenth and reads as follows:
The office of governor of the Bank of Canada shall be deemed to have become vacant immediately upon the coming into force of this act.
Mr. Speaker, if the bill is passed, there will be only one alternative, that the Canadian people avenge Mr. Coyne, because he was unfairly treated. At the next general elec-
Governor of Bank of Canada tion, the Canadian people must say this: The post of Minister of Finance has now become vacant because the Minister of Finance is no more a member of parliament and the Liberals are back in power to restore freedom in this country and see to it that the bill of rights which a Conservative government enacted and violated is observed by a Liberal government.
(Text):


Eldon Mattison Woolliams: Mr. Speaker, I am indeed happy to take part in this debate tonight. I think it is fitting that I do so, as part of the constituency which I have the honour to represent used to be part of the constituency of the late R. B. Bennett, the man who led the government which brought in the Bank of Canada Act which for the first time made the question of monetary policy or monetary affairs independent of the government. As part of the constituency of Bow River used to be represented by the late R. B. Bennett, a former prime minister, I thought it was most fitting that I should take part in this debate.
I am also happy at having the opportunity to participate in this discussion in order to answer some of the arguments that have been presented by my good friends in the Liberal party. I was rather amazed that the hon. gentleman who represents the constituency of Bonavista-Twillingate, with his experience and his scholastic achievement, out of the 30 minutes, would spend the time he took in his argument not on the bill itself but his usual old song-I know it almost as well as "Down by the Old Mill Stream"-smearing the name of the present Prime Minister (Mr. Diefenbaker). If that is the only goods the hon. member for Bonavista-Twillingate has to offer I am sure that, when parliament is dissolved and the government goes to the people, the people will have an answer for this kind of mud slinging. It seems to me, as a backbencher, that it is about time this debate got on the rails. There seems to be three main issues in relation to this short bill; first, should Coyne go; second, is there enough evidence for this court, the highest court in the land, to substantiate the type of vote in reference to the question before this court; third, is this a court at all?
Let me take these three issues and deal with them. First of all, as to the question, should Mr. Coyne go, may I say this. I say without any reservation whatsoever that this is the highest court in the land. I think that is one thing the Liberals have forgotten. They have been talking about people being taken before the court without the right to give evidence. If there is any court in the land
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Governor of Bank of Canada which believes in democracy at all, it is this, the highest court. I have had the honour and the opportunity, as a young Canadian, to appear in every court in the country including magistrate's court; district court; the supreme court, trial division; the court of appeal of the province and the Supreme Court of Canada. But the highest court in which I have ever appeared is the court in which I speak tonight. X think that is the main thing that is overlooked.
I should like to call as my first witness before this court a statement of the Leader of the Opposition who spoke in this house on February 20, 1961. What kind of evidence did he put before the court? This is what he said. Surely if you analyse what he said we need go no further because I do not think there is any hon. member in this house tonight who does not feel there is a difference between the governor of the Bank of Canada and the government. That seems to be fairly obvious, because there is a volume of evidence coming from the governor and we have heard the statement of the Minister of Finance and other members of the government. So there seems to be a big difference.
If there is a difference, is that substantial evidence to bring in; is that the kind of evidence we need for considering the kind of bill that is before the highest court of Canada? This is what the Leader of the Opposition said, and he is the leader of the Liberal party, the spokesman for that party:
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
Let me repeat that. This is what he said on February 20, 1961:
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
There is no question tonight but that there is certainly a difference between the governor and the government and I am going to show that in evidence which I will produce in my speech.


George James McIlraith: Mr. Speaker, would the hon. member permit a question?


Eldon Mattison Woolliams: I should like to finish my speech first and then I will answer any questions hon. gentlemen have.


George James McIlraith: Read the next sentence.


Eldon Mattison Woolliams: I will read the whole paragraph and I would ask the hon. member to listen and bear with me. I will read the whole quotation because I do not intend to leave out half of it, which is the policy and 

practice of some hon. members of the opposition. I wish to read this again:
If the governor cannot agree with the general policy which the government desires him to implement, then the governor has no alternative, of course, but to resign.
My good friend wanted me to read on:
If the governor carries out the general policy in the monetary field without any indication of government disapproval, and as the government is responsible ultimately for monetary policy, I think the governor has a right, as we have, to assume that the government of the day is not opposed to the policy he has put forward.
There are two propositions. No. 1 is- and I repeat it-there is no question that there is a difference between the governor of the Bank of Canada and the government on policy. The Leader of the Opposition has said, if that exists, he should resign. Here we have a man who says, "I will not resign", so his trial takes place tonight, and probably tomorrow, in the highest court of the land, which is parliament. If we had gone along with and endorsed the policies of Coyne, the Leader of the Opposition said, it would be assumed that we were approving everything Coyne said and did.
I am going to show that there are two kinds of budget. There is the budget of the government and there is the Coyne budget, one that rolls along on its end. Surely this is the issue the Minister of Finance put forward; it is the government serving the people's interest and serving the people with responsibility plus the fact that those responsible for the Bank of Canada, exercising their responsibility, said that Coyne should go.
What is the evidence as far as Mr. Coyne is concerned? Mr. Coyne has certain functions. Those functions, as governor of the Bank of Canada, are in reference to the monetary affairs of the country. Does he stay within the realm and the jurisdiction of those functions? I suggest he does not. I suggest, Mr. Speaker, that there has been the situation mentioned in one of the statements of Disraeli. Disraeli said:
He who controls the exchequer controls the world.
It seems to me I could rest my case immediately on this fact, that Mr. Coyne deliberately set out knowing that if he controlled the monetary policy of this country without any interference, and the fiscal policy of this country without any interference, he would become the dictator of this country and we members of parliament and members of the government would be merely children in a playpen dancing to the tune of Mr. Coyne, the governor of the Bank of Canada.
I am quite certain that this is as far as he wanted to go. He wanted to be the dictator in every regard as far as this country was

concerned. What is the evidence before parliament, the highest court in the land, in reference to Mr. Coyne? On June 19 this year, just at budget time, Mr. Coyne put out a new budget. Is this a budget that would be palatable to the Canadian people and palatable to the Canadian economy? Is this the kind of budget the government would endorse? If it is not, then there is a difference between the policies of the governor of the Bank of Canada on the one hand and those of the government on the other. If that difference exists, the Leader of the Opposition says Mr. Coyne should resign. If he does not resign, I repeat that this is the court in which this matter is properly raised and in which such a bill should be introduced so that he will vacate his position if parliament votes to that effect.
Let us look at Mr. Coyne's budget and see how it differs from the expansive budget that was brought forward this month by the present government. I am referring to an article in the Calgary Herald. Mr. Coyne gave several press conferences. This is what he said, and this is No. 1, the first thing he would do:
A temporary tariff surcharge of 10 per cent on most imports to reduce import buying and stimulate Canadian production;-
In other words, he believes that we should have an immediate 10 per cent tariff on goods coming in from the United States and other countries. What would this mean? What would it mean to the producers of this country? What would it mean to the farmers in this country? What would it mean in terms of those things we buy?What would it mean to industry? What would it mean to the employees who work in industry in this country? It would mean that the cost to the consumer would go up; the cost of production would go up and this country would be placed, I submit, in a recession. Then he says:
Augment incomes of unemployed by a 25 per cent boost in unemployment insurance benefits until the unemployment rate falls below 4 per cent-
I think everyone is sympathetic with the unemployed and everyone appreciates that when they are truly unemployed the unemployment insurance benefits they receive are probably not quite adequate. But Mr. Coyne does not say who is going to pay this 25 per cent increase. Is that going to be an extra charge on the employer, or will it mean less take home pay for the employee? There, too, are some of the ingredients that might increase the cost of production. Then Mr. Coyne says:
A three year temporary increase in personal and corporation income tax-
Governor of Bank of Canada
Surely that would mean less take home pay for the employee. That would leave management and corporations with less capital with which to expand their business in order to bring about full employment in this country. Then Mr. Coyne advocates:
Higher taxes on luxuries including liquor and tobacco.
This would mean higher costs to the consumers and employees of this country because many of them use tobacco and alcohol. Then Mr. Coyne says:
Repeal the tariff-free treatment now given on imported automobile parts up to 40 per cent of the value of Canadian-made cars,-
This would mean the price of all automobile parts coming in from the United States would be increased by that percentage. This would increase the cost to the consumer and the cost of production to those people who use automobiles in their industries. Then he says:
Levy sales tax on foreign goods brought back by Canadian tourists and remove for two years the tariff exemption now allowed on such goods.
I have said that the tourist trade is most important to this country, bringing with it needed money from other countries. Compare that budget, which in brief recommends an increase in taxes for everybody in Canada and advocates a high protectionist policy, with the expansionist policy of the government. Then I ask this question. Is there a difference between the policy advocated by the governor of the Bank of Canada and that advocated by the Minister of Finance and the government? I am confident, as I stand in my place tonight, that if ever there was an occasion in this parliament-we have heard a great deal about the large Conservative majority in this house -when the backbenchers of the Conservative party were 100 per cent behind the Minister of Finance and the government that occasion is now here. We support the decision that Coyne must go, and go now by an act of parliament.


Frank Howard: You do what you are told.


Eldon Mattison Woolliams: Well, that is a matter of opinion. I have not seen that small group in the corner divide up their votes. All I can say about you is that you want to amalgamate with the Liberals to save your skins and the Liberals want to amalgamate with you to save tneir skins and time will tell where you sit. Probably your corner will get smaller and smaller until you evaporate out of this chamber altogether.


William Moore Benidickson: The price of bread has already begun to rise.


Eldon Mattison Woolliams: I will deal with that later. I thought the hon. member said bread prices

Governor of Bank of Canada had started to rise. I remember Jimmy Gardiner saying the farmers of this country had to take less to put bread on the table so the people of this country could eat it. The farmers have not forgotten that, and that is why you have not got a farm representative in this House of Commons.
Before I digress in answer to these questions I want to refer for a few moments to an article in the United States News and World Report. The issue is dated July 3, 1960-it is a little ahead of its time. I want to refer to an article written by an American describing the way the Americans see the policy of the government at the present time. This is what they say about it:
Recently a change began. Canada's dollar began to fall in value in relation to the American dollar. On June 21, the blow fell. The dollar of Canada that had been worth $1.05 a year earlier fell to 97 cents. There were predictions that days ahead might see it drop as low as 90 cents.
The meaning? Canada had decided to force down the value of its money as one means of beating a severe recession.
Americans going to Canada today can get a premium for their dollar. The tourist who buys woollens or chinaware, or other Canadian goods, finds that the $10 bill that he offers will bring $10.30, not the $9.50 that it brought a year ago. If some forecasts are right, before long the U.S. $10 bill will buy $11 in Canadian goods or services.
This is the important part. This is where the expansionist policy of the Conservative government differs from the Coyne budget which was not delivered in this house but which was delivered to the press.
All Canada's producers of raw materials-aluminum, uranium, nickel, iron, oil-can expect to benefit from the lower value of the Canadian dollar, just as the paper producers see a gain.
Wheat farmers also stand to benefit. The export price of wheat, controlled by the government, was increased to compensate for the drop in the Canadian dollar. Foreign buyers of wheat, however, will pay no more because of the lower value cf Canadian currency.
Even if we do not export more goods we will see more purchasing power in the pockets of the producers. Compare that type of budget with the Coyne budget and see how palatable our budget is to the Canadian people as compared with Coyne's. Then, to come back to my original argument, it is obvious that there is a difference between the policy of the Bank of Canada and the policy of the government. This being the highest court of the land, we are here to judge and weigh that evidence and vote as we see fit. I am confident when the vote is called the government will certainly get the support of every backbencher.
It may seem a small matter to mention but it does seem that here is a man, the governor of the Bank of Canada, preaching austerity, asking Canadians in all walks of life to tighten their belts. That is the kind of


austerity he wants. And at the same time, while he was going from coast to coast, as the member for St. Lawrence-St. George (Mr. Chambers) said, peddling austerity, he called in the group of directors to increase his own income when he retired, or got fired, from $12,000 to $25,000. In other words, he said to the Canadian people: you tighten your belts, and if my austerity program lowers the prices of the goods that I may buy I shall have more money in my pocket so I can buy them. I ask these simple questions: what does the farmer think of the governor's budget? What does the coal miner think of it? What does the contractor think of it? What does the average worker think of it? What does industry think? I am confident that industry would reject higher taxes. I am confident that the western farmer would reject high tariffs.
I listened today to the hon. member for Essex East (Mr. Martin) saying this was a matter of politics. May I suggest that the politics are being played the other way. The only criticism of the federal government which I would make is that they have been too tolerant, too lenient, too statesmanlike with the eggheads who use their knowledge and research not to serve the country but to endeavour to perpetuate Liberal rule during a period of smashing Liberal defeat. I think we have been too tolerant in this respect because, surely, some of these eggheads have been using their knowledge and research since they were placed in their present position by the former administration to perpetuate Liberal rule even in defeat, and Coyne may be no exception.
What do the newspapers have to say? Let us go back for a few moments. I think that the erosion of the idea governing the Bank of Canada started with Mr. Harris. We all remember that in 1956 and 1957 there was a real recession in this country and real unemployment-


Some hon. Members:: Oh, oh.


Eldon Mattison Woolliams: I do not know what it was like in your province, but all building in Calgary had been brought to a standstill by the tight money policy under Liberal rule. Now was this Coyne policy or was it the Liberal policy? At any rate, Harris endorsed it. He was made the victim, and Coyne carried on. Let us go back and read some of the statements that were made. I wish to quote from the Financial Post. These statements were made by various ministers of finance of our time. The first is by Charles Dunning, a Liberal, who held office from 1935 to 1939. I do not think the present Minister of Finance would quarrel with this statement, but if hon. members will bear with me they will see how

these statements change, and how they changed the mind of Coyne until he thought he was the economic dictator of this country. Dunning said between 1935 and 1939:
A long continuance of a policy that conflicts with the government view becomes impossible.
Surely Coyne's policy is impossible to endorse in the face of the present budget. So, Coyne must go. What did Mr. Ilsley say? He held office from 1940 to 1946, and he said in 1941:
The monetary policy which the bank carries out from time to time must be the government's monetary policy.
Surely, that speaks for itself. What did Mr. Abbott say? Mr. Abbott said, during the time he held office from 1946 to 1954:
The ultimate responsibility must fall upon the government.
By the way, that statement was quoted with approval by the present Leader of the Opposition.
Then we had a change, and this change is revealed in a statement made by Mr. Walter Harris who was finance minister from 1954 to 1957:
This action is the action of the governor of the bank and his responsibility alone.
When Harris made that statement, as set out in the Financial Post, may I suggest that that statement was understood only by the present governor of the Bank of Canada, because this action is the action of the governor of the bank and his responsibility alone. It was then that we got the tight money policy in Canada. I think that was one of the main issues in the past elections. I have heard many people talk about various issues, but one of the main issues was the tight money policy of the former government.
I shall say this in conclusion: I repeat, I do not know a time when there has been more unity in the party on any matter which has been brought into this house since I was elected in 1958. The backbenchers are behind the Minister of Finance. They have confidence in him. They know that if he is going to implement the kind of policy set out in the budget brought down by the government in June it can only be implemented if Coyne goes. I believe that the debate the Liberals are now carrying on-I do not know much about eastern Canada, but I know western Canada-is going to put them in this position. If they had any votes left before the debate started this morning they will have few left tomorrow morning if they keep on supporting Coyne and his tight money policy.


Louis-Joseph-Lucien Cardin: I wonder whether the hon. member for Bow River would permit a question?
Governor of Bank of Canada


Eldon Mattison Woolliams: Certainly.


Louis-Joseph-Lucien Cardin: In his speech, which I think missed the main point of debate, the hon. member stated that he had the privilege of appearing in all the courts of the land, including the highest court, which is of course this parliament. Can the hon. member tell the house whether he has ever pleaded in any court of the land where the accused was not present and indeed was not allowed to appear in his own defence, as is the case in this instance?


Eldon Mattison Woolliams: Mr. Speaker, my answer to that is exactly what I quoted from the Leader of the Opposition. Where there is a difference the governor must go. There is plenty of evidence, in fact there is reams of mail and that mail, those statements, in a criminal court, if they are used, can become evidence under certain circumstances. There is no rule governing that here. We have the evidence. All we need say to the Liberals is there is a difference, a difference between the policy of the governor of the Bank of Canada and the government. If anyone in the Liberal ranks can stand up now and say there is not a difference I wish to see that person stand in his place.


Murdo William Martin: Mr. Speaker, if there was any doubt in our minds about the importance of this debate I think it has been dispelled by the fact that the government in its desperation to bull this thing through at any cost has called on its two best known hatchet men within the ranks. I am referring, of course, to the Minister of Public Works and the hon. member for Bow River. Both of these gentlemen have built up quite a reputation in the courts of this country as being outstanding lawyers. But I must say, Mr. Speaker, that if their performance across the country is as weak as it was tonight I wonder where they built up the reputation.
First of all, we had the Minister of Public Works who assumed that Mr. Coyne has been operating solely on the advice of the hon. member for Bonavista-Twillingate. Well, I would say this is completely in keeping with the whole government case, because it is an assumption from first to last.
The hon. member for Bonavista-Twillingate listed some of the alibis that this government has used in the four years that it has been in office. Of course, he did not realize that his list would be out of date almost by the time he completed it. In 1958, the situation was all the fault of the Liberals. In 1959 it was the Americans; and in 1960 prosperity was around the corner. In 1961 it is Coyne and
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Governor of Bank of Canada now, according to the Minister of Public Works, they even blame the Coyne affair on Pickersgill.
As far as the hon. member for Bow River is concerned, he first of all proceeded to establish the fact that this is the highest court in the land. There can be no question that he believes it is the highest court in the land. He referred to it many times. Then before this highest court whom or what did he call? He called a statement, a statement of the Leader of the Opposition. Well, unfortunately, as was pointed out by the hon. member for Richelieu-Vercheres this highest court in the land must operate on a statement and under no condition can we have witnesses appear before it. I also should like to know what other court in the land operates on this principle?
I personally would prefer to endorse the analysis of this problem as expounded by the Leader of the Opposition. I believe he put his finger right on the problem, which is, can any man in this country, let alone a key public servant, be condemned without a proper hearing?
Much to the surprise, and obviously much to the chagrin of the present government and in particular the Minister of Finance, Coyne did not do as he was supposed to do. He did not fold his tent and steal away in the middle of the night like an Arab. He was a man with enough courage to fight back.
One noticeable thing about the statements issued by Mr. Coyne is that they have been consistent throughout. He has never changed his story; it is the same today as it was when this case first broke.
I recall that the parliamentary secretary to the Minister of National Defence said he was quite surprised at the tactics, the timing and so on of the statements that we read in our newspapers. It should be no surprise to the parliamentary secretary or to any other hon. member because Mr. Coyne was a very high officer working for a government which has governed by headlines in the last four years and he should be quite adept at headlines by this time.
There is one thing that we should emphasize, and it should be emphasized throughout this debate, namely that the governor of the Bank of Canada is almost within six months,
I believe, of completing his seven years which is the full term of his appointment. Four of those seven years have been served under this present government.
In contrast with the consistency of the arguments put forward by the governor of the Bank of Canada there has been complete and utter confusion on the part of the government, the Minister of Finance and other 

spokesmen of the government throughout this debate. They complained about the governor going to the press. At the time they complained about him they refused to allow him to appear before parliament to which he is responsible. No matter what efforts the opposition has made over the last four years to call the governor of the Bank of Canada before a parliamentary committee the request has always been refused by the government. If they will not permit the governor of the Bank of Canada to appear before parliament to which he is responsible what objection can they take to this gentleman doing the only thing that is left for him to do, namely to turn to the press to see whether his story can be told?
The Minister of Finance said that parliament must decide, but we must decide in the dark; we must decide blindly; we must decide just on the statement of the minister. We are not allowed even to get the minister before a committee where he can be cross-examined.


Donald Methuen Fleming: Yes; you will have the committee of the whole after second reading.


Murdo William Martin: I believe that in his remarks today the minister gave the whole show away, the whole underlying causes that have culminated in the debate we have before us today, when he told us that the governor of the Bank of Canada had committed the unpardonable sin of issuing an annual report at the normal time, at the same time it is issued every year, but it just happened to be during the election campaign of 1958. These statements always come out in March but because the government for political expediency decided to call an election then the governor of the Bank of Canada, supposed to be free and independent of the cabinet, had the nerve to issue his annual statement at the normal time and it embarrassed the government. I think that was when Mr. Coyne signed his own death warrant.
Then we saw how on May 30 the minister wanted the governor to resign because of some future disagreement they might have. Yet on June 26 he wants him to resign because of past disagreements. It is obvious to me and to many others, Mr. Speaker, that there has been a struggle going on within the government but the struggle has not been between the Minister of Finance and Mr. Coyne because both of them have been on the same side for the last four years. The struggle was between the old Tory orthodox financial policy of Coyne and the Minister of Finance on the one hand and

the political expediency of the Prime Minister (Mr. Diefenbaker) on the other. That has been the struggle that has gone on for four years.


William Heward Grafftey: You are looking under the bed again.


An hon. Member:: And the Minister of Trade and Commerce (Mr. Hees).


Murdo William Martin: And the Minister of Trade and Commerce as an hon. member says. Over the last four years the Minister of Finance has always won. He is a pretty tough little scrapper. It is also obvious to everyone that Mr. Coyne is a pretty fair scrapper and when the two of them teamed up apparently they were more than a match for the Prime Minister when he wanted to embark on some of the political expediencies that he thought might be advantageous to the Tory party at the moment.
But this time the other side won. Expediency won, and where did this leave the Minister of Finance? He had to do an about-face. He could not very well do it and save face at the same time, so the only thing he could do was to turn on the man with whom he apparently had no disagreement over a period of four years and make him the goat of the whole thing.
I think that the smallest thing of all has been the way an attempt was made to use the pension of Mr. Coyne as a lever to get him out without his story being told. First of all, I do not want anyone to get the idea that I approve of a $25,000 pension for a man with seven years' service, especially when our old age pensioners are trying to get along on $55 a month. But I want to make one thing very clear. The Tories are responsible for both. The $25,000 pension was approved by the Tory appointees on the board of governors of the Bank of Canada and the $55 pension for old age pensioners is also the responsibility of the present government. So they cannot evade the blame for either one.


Edwin William Brunsden: It used to be $40.


Donald Methuen Fleming: Under the Liberals $46. That was their limit.


Murdo William Martin: There we go back into ancient history again.


An hon. Member:: You started it.


Murdo William Martin: The Minister of Finance and the hon. member for Bow River (Mr. Woolliams) both made a great to-do about the 10 per cent boost in tariffs advocated by the governor of the Bank of Canada. Our position on tariffs is very well known in the house and I do not think it needs to be reiterated today.
Governor of Bank of Canada


Edwin William Brunsden: What is it? We don't know.


Murdo William Martin: I should like to know what the difference is between an honest proposal such as put forward by Mr. Coyne and which would be applicable to everyone in the country and the policy of the present government which is to place dictatorial power in the hands of one minister so that nobody will know what is going on and so they can reward their friends and punish their enemies through their tariffs.


Donald Methuen Fleming: You do not believe that yourself.


Murdo William Martin: I should like to know what the difference is between an honest proposal such as the governor of the bank made of a 10 per cent increase in tariffs and the method now being adopted by the Minister of Finance. If the Canadian dollar is devaluated, it seems to me that it would have exactly the same effect as if tariffs were increased. People will pay that much more for imports coming into the country. The governor of the bank had an honest way and apparently that is unacceptable to the government.
It is obvious that the governor of the Bank of Canada had to be the sacrificial lamb on the altar of Tory political expediency and that is why he is in the position he is today. We found that the present government was determined to push through the house a bill to make the tariff board a government toy. Now they want the Bank of Canada to be in the same position and because the governor of the bank will not go along with it his head must now come off.
However, Mr. Speaker, there is one thing about which the government is consistent and that is their slogan, do it now. I understand that the term of office of the governor of the Bank of Canada expires around the 1st of December of this year. But the government cannot wait for that. They must do it now and it is obvious why. If they wait for six months their greatest alibi will be gone.
There have been many rumours recently, and I am not sure they are finished, of a federal election in the very near future. That is why we see this attempt to lay the responsibility for all the ills, all the mistakes, all the blunders of four years of Conservative rule on the shoulders of the governor of the Bank of Canada. If the government and its spokesmen, and they have got some "dillies", can pull the wool over the eyes of the Canadian people, if they can make the Canadian people so furious about a $25,000 pension that they will forget that only two years ago the government scrapped an airplane that had
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Governor of Bank of Canada cost the Canadian taxpayers over $450 million, embarked on another program that cost another $300 million and have now turned around, I understand, and embarked on another program that is going to cost another $300 million to buy a plane inferior to the one they scrapped two years ago, it is no wonder that they want to fight the next election on the issue of a $25,000 pension.
Neither myself nor the other members of my party, Mr. Speaker, have ever agreed with Mr. Coyne or if we have it has been to a very limited extent. We have disagreed with him far more often than we have agreed with him in the past, but we maintain that even our enemies are entitled to a fair trial. If the day ever comes when I find myself saying or doing what the Minister of Finance and the government are asking the house to do today to try, condemn and execute a man without giving him any opportunity for defence, then I will say that I am no longer a democratic member of a democratc country.


Edwin William Brunsden: Will the hon. member permit a question?


Murdo William Martin: By all means.


Edwin William Brunsden: From his remarks I take it that he is in favour of increased tariffs. I take it he is in favour of raising present tariffs by 10 per cent? Is that correct?


Murdo William Martin: If the hon. member had attended the house often and had listened attentively, I do not think there would be any question in his mind where I and my party stand on tariffs.


Donald Methuen Fleming: You do not want to answer that question.
(Translation):


Mr. L. J. Pigeon (Joliette-l'Assomption-Montcalm):: Mr. Speaker, my first words are to congratulate the Minister of Finance (Mr. Fleming) for having introduced this bill.
Mr. Coyne, for a long time, has been making fools of our citizens in trying to sabotage the policy of this responsible government of ours.
The speeches he made across the country are a challenge. The annual report of the Bank of Canada was nothing but an election pamphlet. Under this government the governor of the Bank of Canada had become arrogant; he followed in the footsteps of the opposition like economist Lamontagne.
The Minister of Finance, with his usual wisdom and care has always been patient, not wanting to press on unduly, thinking that Coyne, the economist, would come to his senses and would actually discharge his


duties as governor of the Bank of Canada and stop being a political instrument in the hands of the opposition.
In Mr. Coyne's mind the economy of Canada was Mr. Coyne. His attitude is in glaring contradiction with the principles of responsible government. It was time that the Minister of Finance took action because I should not have been surprised if Mr. Coyne had substituted the Queen's picture for his own on our currency.
The people have passed judgment on him. I have visited my riding as all Conservative members do. My constituents told me that it was high time that the government got rid of Mr. Coyne once and for all, and that policy-making be handed back to the responsible government. It would be stupid and illogical to have that man appear before a committee of the house. He is condemned by the public course of action he has chosen. His conduct has been in utter opposition with the minister's.
Logically, he should have resigned without the government having to introduce a bill to that effect. He has instead stood up against a majority decision of the directors of the Bank of Canada. He urged Canadians to save and to tighten their belts while he was having a handsome pension voted for himself.
Here is another argument that condemns him, in my opinion, without any need for a parliamentary committee.
What is serious is that he made public his discussions with the minister. It is unfortunate and hard to understand that Mr. Coyne did not realize the terrible unscrupulousness he was committing.
A minister remains silent at all times about any discussions that take place in a council of ministers.
What is serious, is that out of revenge, Mr. Coyne published a confidential document, namely a memorandum sent by him to the Minister of Finance and containing his views about what should be included in the budget. In so doing the governor threatened the very basis of the whole structure of officialdom and destroyed the secrecy of relations between the cabinet and its advisors.
I must say that I was quite surprised -and interested-to hear the hon. member for St. Lawrence-St. George (Mr. Chambers) read the section of the act which forbids Mr. Coyne to violate his oath and to divulge secret matters. I think that was sufficient reason for Mr. Coyne to resign without being heard by a committee.
The Minister of Finance was right when he said:

The fact that the governor has chosen to violate the confidential nature of these communications is no reason for the government to do likewise and to make public facts which it has always been agreed are of a confidential character.
The opposition has chosen to ask for a vote to show its disapproval of the minister's conduct. In so doing, however, it went against a tradition which ought to be respected at any cost and which it had itself upheld on January 20, 1960 when the famous confidential report was made public.
I hope that the Senate will act wisely and will not oppose this bill.
Mr. Speaker, it can properly be said that Mr. Coyne has been the executioner of the Canadian economy in collusion with the opposition. I should not be surprised to see him run as a Liberal candidate in Manitoba in the next election.
Mr. Speaker, the point at issue here is whether the representative of the Canadian people is Mr. Coyne or the present government. The case in point is whether we should return to democratic principles and responsible government.
Mr. Speaker, the opposition is in hot water over this bill. They do not know what to do about it. If they confess to the people that they lacked judgment and good sense when they appointed Mr. Coyne as governor a few years ago, they will recognize their lack of responsibility and automatically repudiate the governor's monetary policy. If they vote against this bill, they will give up responsible government for dictatorship.
I will vote for this bill because I am in favour of responsible government.
(Text):


Mr. W. H. McMillan (Welland):: Mr. Speaker, I should like to refer to one particular aspect of this debate. Many times in the past I have warned the Minister of Finance (Mr. Fleming) about matters in his department having to do with debt, interest rates, fiscal policy and exchange rates. I might say that I have also warned him about matters pertinent to the troubles in which the government now finds itself and particularly the appointment of members of the board of directors of the Bank of Canada, which I feel is pertinent to the troubles which have arisen now between the government and the Bank of Canada.
I have some quotations from statements I placed on Hansard in the past concerning the appointments to the board of directors. In Hansard of March 18, 1959, over two years ago, at page 2037 I had the following to say:
In my opinion there is one fundamental weakness in the Bank of Canada Act. Members of the judiciary are appointed by the different parties when in power and I think they can be said to be above reproach. However, the members of the
Governor of Bank of Canada
board of directors of the Bank of Canada might not always be held to be as much above reproach as they should be. Just the other day, for instance, we heard about one director contributing large sums of money toward the election of different members ...


Mr. Fisher:: Conservative members.


William Hector McMillan: That is right.
And then I continued as follows:
I am not accusing any member of the board of directors of the Bank of Canada of not acting in the best interests of Canada but the implication is there that sometimes they may act in a certain way for political reasons. If a man is contributing $20,000 or $25,000 of his own money to a political party, what assurance do we have that the people of Canada will get the best action from him as a director of the Bank of Canada? Will he always have the good of Canada at heart?
Then I went on as follows:
If we look at the list of directors of the Bank of Canada we see that more than one is a recent political appointment.
When I said "more than one" at that time it was rather an understatement. Then I continued as follows:
Our fiscal policy at the present time is not good. We have the highest bank deposits we have ever had in our history. Yet the Minister of Finance cannot get the people to buy his bonds.


Donald Methuen Fleming: That is not true. The last issue was oversubscribed.
The minister was of course right because he used all kinds of tax gimmicks in respect to that particular issue and it was oversubscribed. Then I went on to say this:
He tells us that he requires money. If so, why are there so many bonds held by the banks? I call on the Minister of Finance and the government to have members on the board of directors of the Bank of Canada who have no political axe to grind and who will at all times give their best consideration to the people of Canada and not make decisions based on political reasons.
Then later, on April 14 I again spoke on this subject and called on the government not to make political appointments to the directorship of the Bank of Canada. I went back and read the debate in 1936. I thought I would see what Mr. Dunning, Mr. W. L. Mackenzie King and Mr. Bennett said at that time in connection with the board of directors. On June 1, 1936, as found at page 3257 of Hansard of that date, Hon. Charles A. Dunning, the then minister of finance, moved that the house go into committee to consider a resolution that it was expedient to bring in a measure to amend the Bank of Canada Act in order to provide, among other things, an increase in the capital stock of the bank; to enable the minister of finance to purchase certain shares of the Bank of Canada to assure ownership of a majority of the shares by the government; to increase the number of directors; and to provide for election and appointment of directors in such

Governor of Bank of Canada manner as to assure voting control of the board by directors appointed by the government.
I was struck by this whole debate and by the remarks of those who took part in it. I will quote just one sentence in connection with the election of the various officers of the bank. It is by Hon. Charles A. Dunning, the then minister of finance, and is be found at page 3263 of Hansard of June 1, 1936:
I am sure no member of the committee need have any fear that such appointments will be subject to political pressure or to partisan influences.
It is true that Mr. Dunning that time criticized the election of the first directors under Mr. Bennett, but he criticized them on one point only. He said at that time that the Canadian chamber of commerce, which was an organized business group, had intervened in the election, submitting a slate of nominees all of whom were elected. He also said that he was not criticizing the personnel of the board. In fact, he paid tribute to the various members of that board who had been appointed under Mr. Bennett, and said that they had done a great service for Canada. He was looking to the future. Of course, they were bringing more directors in at that time and he wanted to get away from the position in which one business organization might nominate directors and have elected all the directors whom they nominated. Even Mr. Bennett did not make any political appointments to the board in his time. This resolution resulted in a bill which passed through the house without any division except one, and that was in connection with the chairman's ruling.
In his speech in the house on that day, Mr. Dunning gave some quotations from the speech of the Right Hon. W. L. Mackenzie King when he was leader of the opposition, as found at page 4228 of Hansard of June 22, 1934:
I do think the directorate of the bank ought to be so formed that, whether the pressure is upon the bank from the government on the one side, or upon the government from the financial interests and through the bank on the other, there should be on the board of directors some one or more persons who will be quick to sense the situation, give the danger signal, and arouse the country to the pressure which is being brought to bear. There is the danger of a government bringing too much in the way of pressure to bear on a central bank.
It is interesting to note that in that debate Mr. King, Mr. Dunning, and Mr. Bennett, all three, agreed with that particular argument. This government is carrying on with all political appointments to the board and that is quite contrary to the thinking of our two former prime ministers, namely Mr. King and Mr. Bennett. I heard the hon. member for


Bow River (Mr. Woolliams) say tonight that he represented the constituency that Mr. Bennett represented at one time. He certainly did not put forward any of the arguments put forward by Mr. Bennett in that debate.


An hon. Member:: Part of the constituency.


William Hector McMillan: If hon. members will read that debate, I do not see how anybody can come to any other conclusion but that our two former prime ministers of this country would consider the present position intolerable in respect of the composition of the board of directors.
My question again to the members of this house is this, and I submitted it two years ago. Would such men, highly political appointees, have the good of Canada at heart or have they the good of the party at heart? Does a director of the Bank of Canada, whose qualification for that position seems to be that he contributed $20,000 to the party funds, have the good of the party at heart or does he have the good of the Canadian people at heart?
According to the reports, the directors of the Bank of Canada one day are on the side of Mr. Coyne; then after they hear from the Minister of Finance, without any change in government policy and without any change in bank policy, they are all against Mr. Coyne, except one. I say that this is irresponsible action on the part of the board of directors. The minister himself admitted that Mr. Coyne did not know what was in the budget. He therefore should not prejudge him. I am sure that Mr. Coyne did not vote- as a matter of fact, he had no vote-for an increase in his pension. If the minister is going to censure anybody in connection with voting that increase in the pension of the governor and the deputy governor, I think he should censure the members of the board of directors appointed by this government. I also think that the minister should have expected some report from the board of directors concerning this action they had taken. I think it is quite consistent with the minister's statements in this house that one or more of the board of directors consulted the minister beforehand and may in fact have received his permission for this increase in pension.
The minister then would be technically right in saying today that he did not know it had been passed if he had not read the minutes of the board of directors and if someone had not told him that the increase was there. He could easily avoid reading these minutes if he thought they contained any material that might be of use to him at some later date, when in trouble, as is the case now. It seems to me that if we as a

parliament discharge a high government officer, responsible only to us in this parliament, without giving him a hearing, even though he may be 100 per cent wrong we are going against all the concepts of justice in the bill of rights.
If the government have a case, as they say they have, I want to vote with the government. I heard one minister say we are contacting Mr. Coyne. I have only seen Mr. Coyne once, and that was at the time he appeared before the committee inquiring into the unemployment insurance fund. As I say, I do not think we can have two sovereignties in one country, but unless we get some information, unless we get the facts I do not see how anybody can vote with any intelligence. It seems to me that the rights of an individual are involved here. The government should not be afraid to have him come before a committee of parliament. They will have a majority there, as they will have a majority in the committee in this house.
If this government does not allow this, I would say that the bill of rights, framed and accompanied by the words of the Prime Minister (Mr. Diefenbaker) which were meant to immortalize the words of that bill of rights, should be turned face to the wall and never hung face out again unless it is edged in black and draped in mourning, because this is the first great infringement of the bill of rights in the parliament of Canada.


Mr. M. J. A. Lambert (Parliamentary Secretary to the Minister of National Revenue):: Mr. Speaker, a great deal has been said in connection with this very sad affair, but I must say it is not my desire to review in detail all that has been said by the opposition. This afternoon we had a long speech by the Leader of the Opposition (Mr. Pearson)-


Lionel Chevrier: That was this morning.


Marcel Joseph Aimé Lambert: -and frankly what he did was to proceed in a tortuous way to set up men of straw and then try to demolish them. He said the Minister of Finance (Mr. Fleming) was pedantic. We all know that the Leader of the Opposition was a former professor of history and in so far as pedantry is concerned no one can show him the way in this house.
However, I would draw particular attention to that most remarkable speech by the hon. member for Bonavista-Twillingate (Mr. Pickersgill). I would not want to be too unkind to him, but I would say he was almost psychopathic in his personal bitterness toward the Minister of Finance. He lost all reason; he lost all judgment. As a matter of fact, the hon. member is a man who, in attacking the minister and the government for denying, as he says, the rights of parliament,
Governor of Bank of Canada has conveniently forgotten his own actions and attitudes when he was a member of the previous administration.


William Moore Benidickson: But you were going to change all this.


Marcel Joseph Aimé Lambert: If we were to follow the example of the hon. member from Essex East (Mr. Martin), who delivered what I thought was a rather patronizing lecture to some of the younger members of this house, I might say to the hon. member for Bonavista-Twillingate that a man who lives in a glass house should not throw stones.
He is the master of innuendo. That is what we heard this afternoon-innuendo, smear, hypothetical cases concocted in his own mind. He then proceeded to try to place the blame on the minister and the government. He went to ridiculous lengths and thereby showed merely the paucity of his own thinking.
In so far as the hon. member for Essex East is concerned, we heard from him a great lecture on the bill of rights. He talked about the accused having the right to be heard. But, Mr. Speaker, I would ask the question, who is the accused in this case? Is it not the government that is being accused on all sides? Who first laid the charge but the governor? He is the man who ran out into public print and laid the charges of unfair treatment-


Frank Howard: He would not be silenced by that arrogant little character over there; that is the reason.


An hon. Member:: Communist.


Marcel Joseph Aimé Lambert: The comments we have just heard of course demonstrate the prejudice that exists in certain minds; the refusal to recognize the situation with a certain amount of objectivity to see what is the principle involved here. The hon. member for St. Jean-Iberville-Napierville (Mr. Dupuis) referred to the accused being denied the right to be heard. If-and I say "if" advisedly-the governor is the person who has been accused, then he has certainly been heard. He has had a whole series of advocates, and if we wish to use the simile of the hon. member for Bow River (Mr. Woolliams), in a court of appeal the accused does not appear; he is represented by his advocates. We have Mr. Coyne's advocates all across the other side of the chamber. He is not without voice and he is certainly not on his own.
We have been besieged by an almost schizophrenic frenzy of literature emanating from his headquarters in the Bank of Canada. I will not go into the question of the propriety of the governor using the facilities of the bank in putting forward his own personal

Governor of Bank of Canada case, not the case of the Bank of Canada, and utilizing the facilities of the bank, not only to send some copies of letters to members of parliament but to spread them across the country.


Edwin William Brunsden: Eight pages today.


Marcel Joseph Aimé Lambert: The hon. member for Essex East and the hon. member for Bonavista-Twillingate spoke about the fact that two sovereignties could not exist in one country; that they were incompatible. If they admit that, what purpose is being served by their argument? It is wholly sterile. The fact is that the governor has set himself up as a sovereignty and we have the governor of the Bank of Canada challenging the government. That is the clear issue before this house.
Who is responsible for this situation? It is obvious that it is the governor. The governor could have accepted the requested resignation; he could have resigned and governed himself accordingly. He could also have received the request, refused it, kept quiet and carried on his business; or he could have done what he should have done, that is, acceded to the request to resign. If he had a case-


William Moore Benidickson: And the Conservative government could start the printing presses.


Marcel Joseph Aimé Lambert: -to protest, he could have put his case forward. There was no difficulty. We have here a strange precedent that is being sought. The opposition are asking that where a public servant is in disagreement with the government he may demand the right to appear before a committee and that he can cross-examine a minister of the crown before that committee. From that time onward, every public servant would have that right. But, surely, it is completely illogical to consider that a public servant, such as a general in the army who, on disagreeing with a minister would be relieved of his command, could still stay effectively in command bawling his arguments at the top of his voice. That would not be permitted. It would be the same thing in the case of a high public servant, such as a deputy minister, who refused to resign.
The hon. member for Essex East (Mr. Martin) and others indicated that if there was disagreement between the minister and the governor in 1957 or 1958, this was the occasion to have dealt with the matter. Perhaps he and his friends, too, had prior occasion to disagree with the governor. They did not speak about that. What would have been done at that time, in such a case? What could have been done, except to ask for his resignation? If he had refused, it would only have been possible to have come before this house to
[Mr. Lambert.)

ask for his outright dismissal. The procedure would have been the same and we should have heard the same cries of persecution.
The position of the governor of the Bank of Canada is completely unsupportable. If there is any disagreement with the government he must resign. Opposition speakers did say that the minister was wrong in not disclosing that there had been differences of opinion or disputes earlier but, surely, it is an accepted fact that the first time you have a dispute you do not necessarily rush out to the public and shout from the rooftops that you disagree with this or that person. Certainly, there must be an attempt, and a serious, determined attempt, to overcome those differences and to try to work together. I think there is ample evidence that the minister determined to do just that.
We have heard a great deal about the accused having a chance to speak. But since when is it the accepted practice that the government, if charged, must be wrong unless it proves it is right? That is precisely the burden of the argument put up by the opposition. They are prepared to make all sorts of charges, reasonable or unreasonable, and then the government must prove itself to be right. I put it to hon. gentlemen opposite that he who makes charges must either come forward with the evidence or keep quiet. There is a very trite saying, a very popular saying, that you either put up or shut up. That is what I would say to those who make all these charges, fanciful and otherwise, that the government has misbehaved in this regard. Either they should come forward with facts or else they should keep quiet.
Why has this controversy arisen? It has arisen because the governor of the bank willed it so. He is the man who rushed to the press. As far as the minister is concerned, he did the proper thing in asking the governor for his resignation. The next thing we heard, some 12 days later, was that the governor had issued a statement to the press. Then followed a barrage of correspondence and statements, confidential documents which he spread far and wide; then, again, today, we got this document-a most contemptible document. I say this in all earnestness; it was a most contemptible document deserving nothing but the greatest amount of scorn. Charges of blackmail are made. I am questioning whether the governor of the Bank of Canada is the true author of this document though it is true his signature appears upon it. When we look at it, no man with the degree of responsibility which a governor of the Bank of Canada should possess could stoop to such a document unless he was motivated by reasons other than the proper conduct of his office.

There were on another occasion words used which I think are appropriate to this occasion, and I would apply these words to the governor of the Bank of Canada today. For God's sake, go.
May I call it 10.30?


Alexis Pierre Caron: May I call it 10.30, Mr. Speaker?


Mr. Speaker:: The hon. parliamentary secretary has already asked to call it 10.30, which I see it is.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I ask the leader of the house what is the business for tomorrow?


Gordon Minto Churchill: Tomorrow we shall resume the debate on the budget and if that is completed we have four items of legislation which
Business of the House are ready; item No. 1 on today's order paper, Bill No. S-28, an act to amend the Trust Companies Act, and item No. 2, Bill No. S-29, an act to amend the Loan Companies Act.
As the third item we would consider the bill to amend the Civil Service Act which has been reported back to the house, and there is a further item, the resolution in the name of the Minister of Finance with regard to the industrial development bank.


Lionel Chevrier: May I ask the leader of the house whether it is the intention to continue this debate tomorrow?


Gordon Minto Churchill: No. I said we would go on with the budget debate tomorrow.
At 10.30 p.m. the house adjourned, without question put, pursuant to special order.

Tuesday. June 27, 1961