1961-07-04

SITTING SUSPENDED

Mr. Speaker:: Order. I do not know whether the house leader would like to propose a temporary adjournment or suspension in view of the difficulty with the lighting.


Mr. Churchill:: Yes, Mr. Speaker, if it is only for a short interval. Have you any suggestion as to when the lights may be on?


Mr. Speaker:: My information is that the interruption will be reasonably short. Perhaps the lights will be on before we could remove the canvas from the windows.


Gordon Minto Churchill: I therefore move the temporary adjournment of the house, Mr. Speaker, to resume at the call of the Chair.


Some hon. Members:: Carry on.


Mr. Speaker:: It is suggested by the house leader that the house suspend its sitting to reconvene at the call of the Chair. I shall have to call the yeas and nays. Those in favour of suspension please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it. This sitting stands suspended to reconvene at the call of the Chair, to be signified by the ringing of the bell.
At 11.20 a.m. the sitting was suspended.



SITTING RESUMED

[Stage Direction]
The house resumed at 11.50 a.m.

[Stage Direction]
On the orders of the day:
Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, last evening in a speech in Toronto the Prime Minister referred to the seriousness of the international situation. I believe he said it was more serious now than it has been since 1945. I wonder whether the Prime Minister would care to comment on this prediction.
90205-6-472J


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I referred among other things to a statement made by Lord Home only a few days ago to that effect, namely that these next six months are going to be one of the most difficult and dangerous periods through which we have passed since the last war. I referred to the refusal on the part of the U.S.S.R. to enter into an agreement outlawing the testing of nuclear weapons, to the apparent endeavour of Mr. Khrushchev to emasculate if not destroy the United Nations, and to the threatening if not bellicose statements he has made in recent months.
Coupled with his statement that in the absence of agreement with the west the U.S.S.R. would sign a separate treaty with East Germany and turn over to East Germany control of the access routes to West Berlin, these circumstances taken together reveal the gravity of the situation. Since 1945, there has not been, in the opinion of the leaders of the various free world nations, a situation more serious to contemplate. There is always, of course, the fact that the U.S.S.R. must be deterred from taking precipitate action by the overwhelming fear of nuclear war.
I said further that I felt that the unity of the western alliance, as the Leader of the Opposition has said on more than one occasion, must be strengthened and that, in so far as the nations joined together for freedom are concerned, I hoped they would arrive at a basis of agreement among themselves so that a united stand would be taken and negotiations could continue and be pressed forward, but that negotiation could not be acceptable to the western world if it were to include the acceptance of Soviet abrogation of or unilateral interference with allied rights in West Berlin or the sacrifice of the freedom of the people of that city.


Lester Bowles Pearson: Mr. Speaker, in expressing appreciation for the Prime Minister's sober but realistic statement, and especially his views that this is the time for the west to stand firm without, of course, provocation, may I ask the Prime Minister whether Canada is being kept informed of these developments from day to day.


John George Diefenbaker: Mr. Speaker, as the hon. gentleman, with his great experience in external affairs, knows, there is continuing consultation. I am hopeful that as a result
7472	HOUSE OF
Inquiries of the Ministry of consultation not only the nations particularly affected by the treaty agreements in West Berlin but all the NATO nations will be able to arrive at an agreed position which will not deny negotiation, which will not be rigid and unbending, but which at the same time will not sacrifice the freedom of the people of West Berlin who rely upon NATO to ensure and maintain those things without which freedom everywhere in the world would be challenged.


Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask a supplementary question. In view of what the Prime Minister has just said may I ask whether he sees any prospect for a meeting of the heads of government of those countries in the North Atlantic Treaty Organization.


John George Diefenbaker: No direct consideration has yet been given to that matter.



CANADIAN ARCTIC


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Secretary of State for External Affairs. My question is based on an article in the Washington Post of June 30 which suggests that a recently developed atomic powered weather station is to be shortly installed in the Arctic. Has the Canadian government authorized the installation by the United States of an atomic powered weather station in the Canadian Arctic?


Hon. Howard C. Green (Secretary of Stale for External Affairs):: Mr. Speaker, I will have to take this question as notice.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, may I ask the Prime Minister whether he has received a telegram from the citizens' committee of Springhill, Nova Scotia, pointing out that 40 per cent of the work force of that community is unemployed and requesting that provisions similar to the program for Cape Breton island be applied to that community for immediate works projects. If so, has the Prime Minister made any decision on this request, and could he advise the house accordingly?


John George Diefenbaker: Mr. Speaker, I had a telegram on my desk this morning from the source mentioned by the Leader of the Opposition.


Naturally there has not yet been time to give consideration to the request or its purport.



PROVISION OF EMERGENCY LIGHTING SYSTEM

[Stage Direction]
On the orders of the day:
Mr. E. J. Broome (Vancouver South):: Mr. Speaker, I have a question for the Minister of Public Works. Will the minister take under consideration the study of a plan for an emergency lighting system for the House of Commons, so the house can carry on without undue interruption when there is a power failure?


Hon. D. J. Walker (Minister of Public Works):: I have already done so, Mr. Speaker.



CAPE BRETON


[Stage Direction]
On the orders of the day:
Hon. J. W„ Pickersgill (Bonavista-Twillin-gate): Mr. Speaker, I wonder whether the Prime Minister or the Minister of Mines and Technical Surveys is in a position now to answer the question I asked yesterday, which the Prime Minister took as notice.
John George Diefenbaker: Mr. Speaker, I had expected to be able to answer that question this morning. I will do so tomorrow morning, if that is satisfactory to the hon. gentleman.


Mr. Pickersgill:: Yes.



INDUSTRY


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I ask a question of the Minister of Finance. Would the minister care to comment on a Toronto report that automobile prices are inching higher in that community despite the rebate dealers are receiving in respect to the abolition of the 7J per cent excise tax? This appeared in a story on page 20 of this morning's Globe and Mail.


Hon. Donald M. Fleming (Minister of Finance):: I have not seen the article, Mr. Speaker. I have no information which would confirm the purport of the article as related to the house by the hon. gentleman. I made it very clear in the budget speech that we expected the benefits of the excise tax removal would be passed on by manufacturers and dealers to the consumer. In the representations

which they made to us previously the Canadian automobile chamber of commerce always gave the government the assurance that the benefit of any tax reduction or removal would be passed on to the consumer.
We have taken steps also to assist the dealers in this regard so they would not have cars on their floors on which the tax has been paid without having any opportunity of recovering the tax. That problem does not exist, and I can see no justification whatsoever for any failure to pass on to the consumer the full benefit of the removal of the excise tax.



AUTOMOBILES


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Yesterday the hon. member for Burnaby-Coquitlam asked me a question and I said I did not then have the complete answer. The question had to do with an allegation that there was a growing practice of automobile factories in Canada sending motors to the United States to be repaired.
The Canadian automobile chamber of commerce has informed the government that the six companies manufacturing automobiles in Canada do not send motors to the United States for repairs. This work is done in Canada. I mentioned Volkswagen yesterday, and I may have been in error in what I said then. Volkswagen have installed facilities in Canada for reconditioning motors for their cars.



FINANCE


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: I should like to ask a question of the hon. member for York North, the chairman of the banking and commerce committee. Can the hon. member say, now that the printed transcript of the evidence given at the meeting of June 22 is available, when the steering committee of that committee will meet to decide whether or not to recommend that the governor of the Bank of Canada be called before the committee?


Mr. C. A. Calhers (York North):: The committee will be called when this house has referred this matter to the committee.


Paul Joseph James Martin: A supplementary question. Does the hon. gentleman not recall having made a commitment to call the steering committee to consider that question? May
Inquiries of the Ministry I have an answer to that question in view of the discussion which will take place later today?


Cecil A. (Tiny) Cathers: That is quite correct. We decided to have a meeting of the steering committee on that matter, and we will give that consideration.
(Translation):



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolielle-L'Assomplion-Monlcalm):: Mr. Speaker, I wish to direct a question to the Minister of Transport. Does the minister intend to make rolling baskets available to travellers at the Montreal international air terminal?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, it gives me pleasure to tell my hon. friend that rolling baskets such as are used in super-markets have been ordered and will be made available to travellers within a few days.
(Text):



COLUMBIA RIVER-INQUIRY AS TO MEETING WITH PREMIER BENNETT

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: wish to direct a question to the Minister of Finance. Can the minister inform the house whether he has arranged a meeting with Premier Bennett during his stay in Ottawa while attending the national Social Credit convention?


Donald Methuen Fleming: No, Mr. Speaker; no such meeting has been arranged. I gather that the premier is in Ottawa for other purposes than discussions with the federal government on matters of mutual interest, and I thought it best not to interrupt his program while he is here in the city on other business.



NATIONAL REVENUE


[Stage Direction]
On the orders of the day:
Mr. J. P. Deschatelets (Maisonneuve-Rose-mont):: Mr. Speaker, I should like to direct a question to the Acting Minister of National Revenue. On two occasions the minister has said that the inspectors who visited the Jean Talon hospital were concerned with routine

Governor of Bank of Canada proceedings. I should like to know it those routine proceedings are now completed.


Hon. J. W. Monteiih (Acting Minister of National Revenue):: Mr. Speaker, I said on two or three occasions in the house that it has not been public policy to make public any of the secret matters concerning an income taxpayer's file. I have said that an income tax inspector visited this hospital, but I do not feel I can go any further than that.


Jean-Paul Deschatelets: A supplementary question. Would the minister say whether the report of those routine proceedings was referred to the Department of Justice?


Jay Waldo Monteith: No, I will not go any further than I have gone, Mr. Speaker.


Jean-Paul Deschatelets: Mr. Speaker-


Mr. Speaker:: The hon. member for Renfrew North.



BRIDGES


[Stage Direction]
On the orders of the day:
Mr. J. M. Forgie (Renfrew North):: May I
ask the Minister of Public Works whether he has decided to have Conservative lights on the interprovincial bridge between Rolphton and Des Joachims?


David James Walker: No, but does the hon. member think it would be a good idea?


James Moffat Forgie: Yes, I do, provided they would continue to be lighted.



EXCISE TAX ACT

[Stage Direction]
Hon.	Donald	M.	Fleming	(Minister	of
Finance) moved the third reading of Bill No. C-118, to amend the Excise Tax Act.
Motion agreed to and bill read the third time and passed.

[Stage Direction]
Hon.	Donald	M.	Fleming	(Minister	of
Finance) moved the third reading of Bill No. C-116, to amend the Customs Tariff.
Motion agreed to and bill read the third time and passed.


[Stage Direction]
The house resumed, from Monday, June 26, consideration of the motion of Mr. Fleming (Eglinton) for the second reading of Bill No. C-114, respecting the Bank of Canada and the amendment thereto of Mr. Pearson.
Mr. M. J. A. Lambert (Parliamentary Secretary to the Minister of National Revenue):: Mr. Speaker, a week ago when speaking at the hour of adjournment I had made reference to a document almost six pages long, a letter dated June 26, 1961, appearing over the signature of the governor of the Bank of Canada. At that time I called it a contemptible document deserving only the greatest scorn and condemnation. Those were words of the moment, giving my reaction in the first instance to the spirit and intent of this remarkable letter.
A week's reflection, Mr. Speaker, makes me wonder at the moderation of my language at that time. If he be the true author of this letter, then Governor Coyne has literally taken leave of his senses. He has lost all sense of proportion as between himself as governor of the Bank of Canada, the government and parliament. I will return to this letter later.
Previously I had said that the governor was responsible for the turn of events. He is the one who on June 13 issued a statement to the press when the board of directors was actually considering the matter of his resignation or continuation in office as governor of the bank. This statement which he published had been well prepared in advance, ready for distribution. At that moment Governor Coyne repudiated the responsibility and duty of his office. He was challenging the government; he was entering into the political arena.
This statement was followed by other letters, each progressively worse, not to mention the press conference in the middle of the night. If all this was not cause enough to have the governor sacked, then the letter of June 26 really stripped James Coyne of any vestige of any claim whatsoever to remain at his post. I need not emphasize his breaches of a clear duty when he published confidential memoranda and letters addressed to him or by him as governor of the Bank of Canada.
What has been the public reaction to Mr. Coyne's course of conduct? It has emphasized that the responsibility and supremacy of the elected government in a democracy require that its public servants be seen but not heard on matters of policy except on specific request of the government. The higher the position of the public servant, the more important it is that he should not cross this boundary and transgress on the prerogatives of the elected government which employs him. Perhaps the governor has felt that his position, if one measures it by salary and pension benefits, puts him far above the government. After all, there is a vast difference between his salary and pension and that of a minister of the crown, and indeed even more if compared with the salary and pension

of a member of this house. If Governor Coyne has any such ideas, then indeed he is living in a world of his own far removed from reality.
Now, we know that Governor Coyne did transgress. In months past he has made a number of speeches and pronouncements on Canadian economic difficulties and on economic policy which overstepped the bounds of his office. We have had no evidence at any time, either from himself or from others, that he was ever requested to make such speeches on behalf of the government. In fact ever since May 30, when his resignation was asked for, Mr. Coyne has gone even further in refusing to resign unless forced to do so by an act of parliament.
At this point one may pause and ask why has the governor set himself up against the government? Why has he entered the political arena? Why in fact has he arrogated to himself the functions and duties of a leader of the opposition? His criticisms have been in the same vein and tenor. As a matter of fact there are one or two significant points or questions which arise, and I think we should explore them a little.
First of all, who advised the governor to step over the line and defy the government, yea, even more, parliament, to fire him by an act of parliament? That was a political step which could be motivated, I suggest, sir, only by political considerations. Second, on June 26 there appeared that notorious letter, written in a language and style far removed from that usual with the governor, even those letters of June 9, June 13 and June 16; much more violent, with a good deal of personal invective.
Concurrently, let us recall the debates of June 26 and particularly the speeches by certain members of the official opposition. First of all, the Leader of the Opposition made the request for the appearance of Governor Coyne before the banking and commerce committee. I will not mention the rest of his speech; it was a lot of back room stuff, much of which we have heard in the past in one form or another.
Then we heard from the hon. member for Essex East in his own inimitable style of thunderous indignation, which at times sounds as hollow as are some of his arguments, in which he preached the same message. He was not quite as courteous as the Leader of the Opposition; and we all know, of course, that the hon. member for Essex East feels that he can get as rough as he likes in his posturing and in the booming, sonorous phrases and so on that accompany his speeches on such occasions.
But, Mr. Speaker, we then come to the speech of the hon. member for Bonavista-Twillingate, to which I have made reference
Governor of Bank of Canada in another debate. I leave aside any aspect of personal motives because, after all, the rules of conduct in this house preclude me from attributing any malice to the hon. member, and I would not do so; but for pure, unadulterated invective against the Minister of Finance and the Prime Minister the hon. member for Bonavista-Twillingate put on quite a performance. In doing so he may have unwittingly drawn back the curtain at least part way on who has been guiding and advising Mr. Coyne.
The hon. member for Bonavista-Twillingate is not known for plagiarizing the ideas or statements of others. His mind is quite agile enough both in quality and in quantity to provide him with sufficient ideas for those few times, so he says, when he is on his feet in this house. Let us compare the letter of June 26 and the hon. member's speech of the same day, a speech delivered a strikingly short time after the letter was made public. Let us see what a remarkable parallel of ideas there is between the speech and the letter. Oh, we heard a great deal of talk that there was not going to be any budget, that there was going to be a snap election. We heard about that from the hon. member; we also read about it in the letter.
We heard from the hon. member about the use of a printing press to finance the government's program. We also read about that in the letter. We also heard something, and in this instance I thought the hon. member was treading on dangerous ground, about the quality of the appointments of directors of the Bank of Canada. We also heard read comments about what had happened to the present directors. Unless the hon. member for Bonavista-Twillingate drew his inspiration from the letter-and I might inquire when he got his first copy of it-then he certainly was most familiar with the thinking of the governor.
I am prepared to go as far as to say that certain members of the official opposition have been consulting with and advising Mr. Coyne in this deplorable affair. We know from his own admissions that the hon. member for Bonavista-Twillingate discussed this matter with the governor in the interval between June 13 and June 26, but I should like to know about the period between May 30 and June 13. Was there consultation? If I have been unfair, and if hon. gentlemen opposite have not been actively advising or consulting with the governor, then certainly it is someone in the hierarchy of the Liberal party, and the pipe line to hon. members opposite is short and direct.
This whole affair, Mr. Speaker, has been a politically inspired move; but would it
7476	HOUSE OF
Governor of Bank of Canada not be ironic because we know there are many in the Liberal camp who blamed Mr. Coyne for wrongfully advising Mr. Harris in 1957, and who say that as a result of that advice the Liberal party was voted out of office. They had a great love for office, and I am just wondering how far they have been prepared to go to even the score. They could not do anything about it up to now. Oh, some hon. members opposite have done some sniping at the governor, but what a wonderful opportunity was presented after May 30, after a plan that Machiavelli might have admired.


Mr. Hellyer:: Do you mean the Prime Minister?


Lester Bowles Pearson: Are you having fun?


Marcel Joseph Aimé Lambert: What about the question of advising Mr. Coyne to take this action? It was obvious to all that Mr. Coyne would have to go, but could they not use the position taken by the governor to berate the Minister of Finance. We know just how much certain members of the opposition love the Minister of Finance, but in order to achieve this end Mr. Coyne would have to go through a political guillotine. But why worry? They had already had too much to do with him. He had harmed the Liberals in 1957, and while retribution might be a little delayed, how certain it was this time. Perhaps Mr. Coyne will wonder whether his head is in a sack because he has been made a dupe for political purposes.
A good deal has been said about the pension matter, which was first raised publicly by Mr. Coyne and was seized upon by the press because of its very nature. The emphasis on this matter is that of Mr. Coyne and his alone. He is the one who upgraded it. The Minister of Finance, who as spokesman for the government has been a welcome contrast to the governor in his restraint in dealing with this matter, has made his personal position clear. Notwithstanding this, the opposition have attacked the Minister of Finance because of Mr. Bryden's resignation. This hue and cry was taken up by Mr. Coyne on June 26, and there again I wonder about the parallel in thinking.
However, Mr. Bryden has made his position quite clear. In a statement on June 28, which has been made public, he has quite clearly set forth just where he stood. He has refuted that canard that he resigned for reasons of disagreement with the Minister of Finance.
I should like to refer to this document and put some of it on the record. Mr. Bryden says that he was first appointed a director of the Bank of Canada on March 1, 1958 for a three-year term. However, in October, 1960 he advised the executive committee that because he was taking an appointment with


the Canadian life insurance officers association in May, 1961, he would have to give up his executive directorship in the bank. He indicated to the Minister of Finance at that time that in the light of this fact it might be desirable to replace him as a director of the Bank of Canada. On the other hand, he was prepared to stay as a director of the Bank of Canada if this might prove possible.


Paul Joseph James Martin: May I ask the
hon. member a question? Is he now quoting from the letter of resignation or from the published statement?


Marcel Joseph Aimé Lambert: I have referred to the public statement. As of March 1, 1961 Mr. Bryden was reappointed to the board and on March 20 he was re-elected executive director. However, on March 29, 1961, after consultation with his doctor, Mr. Bryden felt it was necessary to retire from the board. The reasons given were included in his letter of resignation which went forward on April 4. The substance of this letter was reported to the house by the Minister of Finance on May 30 in reply to a question by the Leader of the Opposition. Then Mr. Bryden says:
There was some suggestion at that time that these were not the real reasons. I confirmed your statement then and do so again now.
Further down on the same page he says:
Reference has been made by Mr. Coyne in a recent letter to you-
That is June 26.
-that X told you about a possible change in these provisions six months before the directors acted in February 1960. The letter I addressed to you on April 7, 1961 gives in chronological sequence the meetings and discussions relating to both salaries and pensions which led up to the approval by the board of amendments to the pension fund by law. I continue to regard this letter as a confidential communication. At Mr. Coyne's request I subsequently sent a copy of this letter to him in his capacity as governor of the bank, since I was still technically a director of the bank at the date the letter was written.
Here again we have a breach of confidence, Mr. Speaker. Then Mr. Bryden says:
I had two conversations with you with respect to pensions. The first was in August 1959, when in a very casual conversation I said that a subcommittee of the board was giving consideration to the bank's pension fund and to salaries. No reference was made to the special provisions dealing with the pensions of the governor and deputy governor and in fact no details at all were mentioned because, at that time, the board's subcommittee had barely started to work.
The second conversation with you was on March 21, 1961, when X mentioned in another connection, the action taken by the board on February 15, 1960, with regard to the special pension provisions for the governor and deputy governor. You were surprised to learn of this and I was also surprised that you did not know of it.
Now, Mr. Speaker, I think that will put in a clear light the information that was

made available to the Minister of Finance with regard to this minor affair of the pension of the governor of the Bank of Canada.
The amendment before the house is that this matter be referred to the banking and commerce committee. What is the purpose of this amendment? It is not to afford the governor an opportunity to put forward his point of view; that is not the true purpose of it. Certain groups in the opposition will be there to make statements. We know how they behave in certain committees; I might even use the term "bully boys" of the house committees. We know how they lean on chairmen, and how the rules are not written for them except when they are advantageous to them. This is the true purpose of this amendment, so these members can get their views on the record, not the views of the governor.
Lastly, Mr. Speaker, I would revert to an argument I used the other night. Since when has a public servant a right to demand of parliament that he be heard before a committee before parliament can arrive at a decision as to his tenure of office?


Paul Joseph James Martin: Since the foundation of British justice.


Marcel Joseph Aimé Lambert: If this procedure applies to the governor of the Bank of Canada in his exalted position, in the eyes of some people, then why not to the lowliest civil servant?


Lester Bowles Pearson: They have the opportunity to be heard now.


Marcel Joseph Aimé Lambert: They have not the right to demand a hearing before a parliamentary committee. There is nobody here who is denying the governor of the Bank of Canada a public hearing. He has all these advocates opposite, and he certainly has availed himself of the facilities of the Bank of Canada in order to put forward his story.


Lester Bowles Pearson: Read the bill of rights.


Marcel Joseph Aimé Lambert: I know it is not possible, Mr. Speaker, to quote editorials in connection with matters of this kind. However, as an indication of the public attitude I would refer hon. members to an editorial that appeared in the Edmonton Journal of June 17. Having referred to the conduct of the governor of the Bank of Canada, the editorial indicates that the governor has a clear duty to resign when requested to do so by the Minister of Finance on behalf of the government. The editorial concludes with these words:
No tears need be shed over his dismissal.


Mr. Walter Pitman (Peterborough):: Once again we find ourselves discussing the affairs of Mr. Coyne. It is rather interesting to note that there has been such a delay in bringing
Governor oj Bank of Canada this bill forward. The Minister of Finance when introducing this measure stated, as reported at page 7040 of Hansard:
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.
We were led to believe that this bill would be brought before the house in due course, that is in a day or so. However, the debate on this measure has not been continued since June 26. We wonder why. Could it be that the government was reluctant to bring this measure forward before the first anniversary of the bill of rights which they so proudly brought into effect last July 1? One might very well wonder.
There was a time in this country when the government of Canada governed. We may be at odds with our friends to the left as to how they governed, but certainly there was an interest in governing. There was some quiet measure of efficiency as a government tried to run this country. The problem today is that this government does not wish to govern. It would far rather carry on the country's affairs in a semihysterical state of electioneering. I recall hearing a commentator on the C.B.C. say that the Prime Minister enjoys electioneering. They enjoyed it in 1957, and there was another election in 1958. There would have been another one in 1959 and 1960 if they had not thought the electors of this nation would feel they were being rather ridiculous.
It is rather fantastic that with a huge majority, this government cannot sit down and start governing this country in something resembling a normal fashion. We stagger drunkenly from crisis to crisis.


Mr. Speaker:: Order. Perhaps I should remind the hon. member that the matter under debate is the second reading of Bill No. C-114, an act respecting the Bank of Canada, and the amendment thereto to refer the subject matter to the standing committee on banking and commerce.


Walter George Pitman: Thank you, Mr. Speaker; I appreciate you bringing this to my attention, and I shall continue immediately in that vein.
We in this group want to see Mr. Coyne given a fair opportunity to come before the elected representatives of the people. I think this government, perhaps more than previous governments, has brought before this house the importance of committees. Committees are the only place where one can really find out what has been happening. After being told how important committees are we are

Governor of Bank of Canada denied, for the second time in two days, the right to bring before a committee something of the utmost importance to the people of this nation.
I should think the people on the right of Mr. Speaker would be even more concerned, because it is a well known fact that those supporting the government are somewhat circumscribed in their opportunities to participate in debate or ask questions to secure information in this house. I have discovered, in the few months I have been here, that it is only in committee that you can make a real, definitive exploration of those things which need to be explored before any bill can rightly be put through this parliament. We talk about Mr. Coyne and the method by which he has made his views known. This is simply because he has no other sounding board. Give him a sounding board; then he will not need to send out his missives from the Bank of Canada.
I find it rather humorous that members on the other side of the house have been complaining about the cost of Mr. Coyne's letters going forth from the Bank of Canada offices. May I use the computation of a colleague of the Minister of Finance that it costs $20,000 a day to run this house. Because of the bungling and ineptness of this government we have already gone through two days on this question and may go on to three, so I would say there was $40,000 to $60,000 of this country's money wasted. The Minister of Finance is far ahead of the governor of the Bank of Canada in the cost to this nation.


Donald Methuen Fleming: Mr. Speaker, I made no such statement.


Walter George Pitman: Mr. Speaker, I did not say the Minister of Finance made any such statement. I said the Minister of Public Works made a statement in regard to the cost of running this house.


Donald Methuen Fleming: The hon. member said the Minister of Finance.


Walter George Pitman: Even Mr. Coyne's critics have been appalled by the minister's action. We do not need to read what they said on the day the Minister of Finance made his statement. One of the critics has even suggested that this bill would not stand up in a court of law, that it is indeed void of legality to say nothing of not containing any element of mercy. What good behaviour has been transgressed by the governor of the Bank of Canada? No judge sitting on the bench across this nation has any reason to feel that his position is secure if a bill can be brought before this parliament removing a man who has been put in on the basis of good behaviour, with no explanation being given to


members of the house and no opportunity for that man to be heard. There is an outraged sense of justice on the part of the people of this nation at what happened in this house over the last week.
I should like to bring before this house one or two reports from the press. The Ottawa Journal, in an editorial which largely supported this government, had this to say:
And yet might it not be the wise thing-the best course politically-for the government to give Mr. Coyne his "day in court", to bring him before a committee and have him state his case and then be cross-examined by competent cross-examiners not only on his course over the past two years but about the several statements he has been making over the past few weeks.
And further:
The government we say again has not handled this case impressively-
That is an understatement.
-it waited too long to act and then acted to fumble-certainly to fumble and show little sensitivity when it dragged in the irrelevance of Mr. Coyne's pension as one reason, even if only (as Mr. Fleming says) the fifth one for Mr. Coyne's dismissal.
May I read an excerpt from the editorial page of the Peterborough Examiner.


Some hon. Members:: Order.


Walter George Pitman: I am sorry, but I did not hear the remarks of the hon. member for Oxford.
In his latest open letter to the Minister of Finance, Donald Fleming, the governor of the Bank of Canada makes a number of inferences which cannot pass unnoticed and which must be investigated before the dispute between these two men is disposed of summarily. We refer to Mr. Coyne's inferences that Mr. Fleming and-


Mr. Speaker:: Order. I think the hon.
member is now transgressing the rules. It seems to me that the editorial is commenting on the Minister of Finance and his conduct in parliament and not on the public issue.


Walter George Pitman: I should be very glad to state definitely that here is another indication that the people across this nation are concerned about the action of this parliament and the way in which Mr. Coyne is being treated.
We have heard a great deal of the fact that Mr. Coyne's speeches have been a cause of great embarrassment to this government, and that the Minister of Finance has told Mr. Coyne to stop making speeches. Yet when one reads the speeches of the governor of the Bank of Canada and the speeches of the Minister of Finance, one finds a considerable area of agreement. For example, a speech which the minister himself gave to the Economic club in Chicago could have been written by Mr. Coyne. The minister took it upon himself to lecture his American cohorts about the fact that Canada had a large deficit with

the United States which translated into American terms would be $10 billion to $20 billion. On that occasion the Minister of Finance said:
I suspect that if you had a deficit of this magnitude, instead of the present 3 billion figure, it would be treated as a matter of really serious concern, even if the deficit were matched, as is the case in Canada, by a corresponding inflow of external capital.
A month later Mr. Coyne was addressing the Economic club of New York, and he stated as follows:
Without your surplus with Canada . .. your deficit on current account during this period would have been 13 billion instead of one billion dollars.
Mr. Fleming in the same speech stated:
Too much foreign investment in Canada in certain forms or too much borrowing abroad by various Canadian entities can have unfavourable consequences to the economy. That is one reason why many Canadians have been giving searching thought to the whole subject of external investment in Canada.
A full year ago Mr. Coyne stated:
In other words we are incurring foreign debt to pay for both a level of capital spending and a standard of comfort which were higher than would be justified by our own earning capacity.
The Minister of Finance speaks of the opposition talking out of both sides of our mouths. He told the Economic club of Chicago in the same speech:
But I emphasize as strongly as I can that this increase in the withholding tax on certain types of investment-
This was after the baby budget.
-hitherto exempt is not an Indication of any desire on Canada's part to interfere with the creative investment of American or other outside capital in Canadian industry and commerce. Nor do I believe it will have this effect.
That is certainly not the indication we received last December when the baby budget was brought down and this withholding tax was given some consideration by this government. Of course the key word here is "creative" in the phrase "creative investment". However, I suspect this government would not be able to recognize creative investment if it saw it.
To go on, may I say this. Just four months ago the Minister of Finance was saying in the same speech:
I should mention, however, that there are a few facts associated with external investment which do give us concern. The first arises from the implications of external ownership in some of our industries.
Five months previously Mr. Coyne was saying this. He spelled it out:
By the end of 1957, foreign companies and other foreign investors had a controlling interest in 56 per cent of all manufacturing industry in Canada-
Governor of Bank of Canada
And he went on to show the extent to which United States concerns control our economy. This is a sidelight, and a very interesting one. One of the first speeches Mr. Coyne made quoted the Minister of Finance in a very interesting way. I will bet no attempt was made to close off this speech. Here I am quoting Mr. Coyne who is quoting the Minister of Finance:
I should like to remind you of some recent remarks by the Hon. Donald Fleming, Minister of Finance. In a speech at Shawinigan, Quebec, on November 4, 1959-
I remind the house that this was some time after the governor had angrily rejected any attempts on the part of the government to ease up the money policy of the Bank of Canada.
-the minister said, "No government, excepting one possessing complete totalitarian powers can compel free men to lend it money."
In comment one might suggest that some sense of direction, some sense of urgency, some extent of confidence might have encouraged people to lend this government money. The quotation continues:
"The interest rates which governments in a free society must pay depend upon the interplay of forces of supply and demand".
These are the words he is quoting of the Minister of Finance, and the demand of the government is for some $700 million at the moment. Then he tells us that interest rates are coming down.
He-
That is the Minister of Finance.
-pointed out that-
And here is a very interesting comment which Mr. Coyne was relating.
-"There is no short cut for any government to lower interest rates on its borrowings".
That is a rather interesting comment after the remarks that have been made in this house over the last few weeks.
He also noted that "Prevailing high interest rates have not interfered with the process of economic growth either in Canada or elsewhere."
This was Mr. Coyne quoting the Minister of Finance in 1959. I can say that speech was no doubt applauded by the Minister of Finance. When did the change come? When did the speeches of the governor of the Bank of Canada begin to embarrass this government? The change came when the governor of the Bank of Canada said that full employment was possible if the government was ready to take the initiative, was ready to use fiscal policy, if it was ready to accept its responsibilities as the government of this nation. That is when this government became very, very embarrassed. This government has made a fetish of giving every reason on earth why

Governor of Bank of Canada it has not solved the problem of unemployment, and finally it came up with the slogan of socialism versus free enterprise. It blames its complete ineptitude on the problems in the United States, on the problem in Europe and on larger families. Then Mr. Coyne came along and said it could be done, and when he said that Mr. Coyne had to shut up or go.


An hon. Member:: Do you agree with his suggestions?


Walter George Pitman: No, I do not agree with his suggestions, but in the words of Voltaire I agree with his right to make them.


Some hon. Members:: Hear, hear.


Walter George Pitman: This government put through a bill of rights. In my travels around various parts of Canada I have seen this bill of rights hanging on the walls of schools and in auditoriums, indicating this government's concern for the rights of the individual. If this amendment is not passed I hope all those Canadian people who have sent for the bill of rights on parchment and on sheepskin will turn that bill of rights against the wall until this administration is put out of office.
We want to see Mr. Coyne. We have a number of questions we would like to ask him. The only way those questions can be answered is by having Mr. Coyne appear before the banking and commerce committee. This government was very concerned about closure, but this is worse than closure. Closure relates to the right to debate a matter in this house. This government is determined not to allow even information to be obtained so a debate can be carried on in this house. I should like to have some questions answered, and they are not going to be answered in this house unless we have Mr. Coyne before a committee. What has been the relationship of the bank-


Mr. Graffiey:: Would the hon. member permit a question?


Walter George Pitman: I certainly will.


William Heward Grafftey: Getting down to specifics, could he inform the house what questions he would ask Mr. Coyne-


Walter George Pitman: I would be very glad to inform the house of the specifics.


William Heward Grafftey: Specifically, what questions could you ask that have not already been asked and answered?


Walter George Pitman: I will be very glad to inform the house of the specific questions. Did the governor of the Bank of Canada turn down a formal proposal, or was this just some


crackpot scheme, in 1957-58 when he was asked to ease the money supply? That is what I would ask.


William Heward Grafftey: You can ask that in the house.


Walter George Pitman: I would like to know what has been the co-operation of the governor of the Bank of Canada with the government in the last four years. The whole record of this government over the last four years is one of growing ineptitude. Let us find out why. We certainly have not yet found out in this house. We are dependent entirely upon the statements of the Minister of Finance. What has been the relationship of the bank and this Minister of Finance? We have not found out yet. We have only found out what the Minister of Finance says has been the relationship. What have been the conversations between the minister and the governor of the Bank of Canada?
I would like to bring some of the bankers of this country before the banking and commerce committee. Let us ask them what they think of the policies of the governor of the Bank of Canada. Let us bring some of the directors of the Bank of Canada before the committee. On one side we have it said that the government put pressure on those directors to have the governor resign. On the other side it is said that these governors all want to get rid of Mr. Coyne. That has not been resolved in this house. Are those enough questions for the hon. member for Brome-Missisquoi?


An hon. Member:: It is too much for him.


Walter George Pitman: I would like to bring the assistant to the deputy minister of finance before this committee and ask him, did he not feel it was proper to report such an important change in the pension of the governor to the Minister of Finance or his deputy.


An hon. Member:: The minister said he made that report.


Walter George Pitman: Well, let us not get into the problem of what the minister has said in this house. It is rather interesting; there is almost a dramatic quality about this whole affair. The governor of the Bank of Canada was at Stratford the night the Minister of Finance was carrying on his perorations in this house. He might well have remembered those lines from Hamlet about the "insolence of office", because here we have Hamlet himself delaying and delaying for four years. Now in conclusion I might say he has picked up the poison-tipped sword, but this sword has two edges. He can use the power of parliament, without giving it information, to destroy the governor of the Bank of Canada; but this sword can also destroy this government.

It can destroy this government, because there is one thing about the people of Canada on which I think we must all agree; that they have a sense of fair play. It has perhaps come from the feudal system-


Some hon. Members:: Hear, hear.


Walter George Pitman: -the teachings of chivalry; it has perhaps come from the playing fields of England; but it has become ingrained in the Canadian character. It is this sense of fair play that has apparently been violently outraged by this government.


Hon. J. M. Macdonnell (Greenwood):: Mr. Speaker, I propose to vote against this amendment, and I would like to take the time of the house just for a moment or two to explain why. To me the matter is simple. I have listened to the discussion, including the somewhat impassioned rhetoric of the hon. gentleman who has just spoken. I believe that I am just as concerned about British justice as any of them.


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: I am familiar with the old quotation from Voltaire and indeed have often used it myself. But to me, Mr. Speaker, this matter is being blown up out of all recognition. Judging from what I have heard about the committee, nothing would be foreign to the committee; it would survey the whole area of political and economic life. However, that is by the way.
Why do I say it is simple? I hear all these well remembered phrases about fair play, a day in court, and so on and so on. I say, what is the argument? Usually when we talk about a man having his day in court and getting fair play it is because there is some question affecting him; we are afraid something is going to be done which will be an injustice to him. What is going to be done here? The governor of the Bank of Canada is going to be relieved of his post.
I have not heard anyone in this house say that this should not be done. However, I shall content myself with quoting what the Leader of the Opposition said the other day on that point. I will read from page 7050 of Hansard. The Leader of the Opposition said this:
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:
This, by the way, was in the television broadcast:
"Do you think he should resign now?"
My answer was this:
"X say his usefulness is over as governor."
Governor of Bank of Canada
Then the Leader of the Opposition continued:
Of course that is true, Mr. Speaker. His usefulness has been destroyed by the government.


Lester Bowles Pearson: Read on.


James MacKerras Macdonnell: I will, if the Leader of the Opposition wishes. He then said:
Then I went on:
"But Mr. Coyne apparently is determined to defend himself against certain charges which he believes reflect on his integrity."
Does the Leader of the Opposition wish me to read further?


Lester Bowles Pearson: And he was therefore entitled to appear before a committee.


James MacKerras Macdonnell: The Leader of the Opposition continued in the television broadcast:
"And that is why surely Mr. Coyne should have his day in court-"


Some hon. Members:: Hear, hear.


James MacKerras Macdonnell: I do not want the Leader of the Opposition to feel that I was not going to deal with that question. I was, and I am. The quotation continues:
"-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."
There might be two reasons why he should appear before a committee. One would be, if it was sought to contend that the governor of the bank should not be relieved of his duties. I have disposed of that to my satisfaction. Second, that the governor should be allowed to defend aspersions on his character. That is covered by the words of the Leader of the Opposition which I have just read. On that my answer is this. I consider that the Minister of Finance, in most difficult circumstances, conducted himself with great restraint; that his criticisms of Mr. Coyne were not criticisms of character but were criticisms of judgment. He criticized certain things which Mr. Coyne has done, things which I too would criticize. But as to Mr. Coyne's character, as to his truthfulness, as to his honour in business affairs, as to any other quality which we usually consider as entering into the element of character, the Minister of Finance has studiously refrained from making any criticism.
I maintain there is no substantial difference between us on the issue of whether or not Mr. Coyne should be removed. The Leader of the Opposition has left us in no doubt about that, and it has not been advanced as one of the reasons why the house should support this

Division
amendment. As to Mr. Coyne appearing before the committee to defend his character, I have answered that point to the best of my capacity.
Furthermore, it seems to me that this country has had enough of Mr. Coyne. We have had statement piled upon statement, press interview piled upon press interview, on and on and on. If any man ever had his case placed before the public I would say it is Mr. Coyne. For these two reasons I shall vote against the amendment.


Mr. Speaker:: I declare the amendment lost. The question is on the main motion.


Some hon. Members:: One o'clock.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Lionel Chevrier: Mr. Speaker, the issue which is now before the house is a simple one. We are being asked to remove from office one of the half dozen or so public servants in this country who previous parliaments decided should hold office for a term of years during good behaviour. In other words these public servants were not to be removable by the government but only by parliament, and only after misbehaviour had been proven. On June 14, at page 6334 of Hansard, the Leader of the Opposition, recognizing this point, is reported as saying:
The issue before us, Mr. Speaker, is very important but a very simple one. If the government ask parliament to remove the governor of the Bank of Canada because the governor has in fact prevented them from implementing their monetary and financial policies, and if that can be established through a parliamentary inquiry, then, of course,

we on this side would support his removal. That has been the relationship we have put forward all along and we would support it now. That has been the relationship, that has been the doctrine which has been opposed by the government.
The Leader of the Opposition repeated this position when he spoke on second reading of the bill. I should like to put on the record his words which are to be found at page 7054 of Hansard for June 26 of this year. They are as follows:
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.
This, sir, is exactly the position which was taken by a distinguished parliamentarian in this house on August 11, 1956. I should like to put his words on Hansard. They are to be found at page 7458 of Hansard of that date, and I quote:
This parliament, surely, is a court of appeal with respect to any matter, any problem, that lies within the whole scope of federal jurisdiction in this country. Any problem that arises surely ought to be able to find its way for discussion at some time or another on to the floor of the House of Commons. And for my part, Mr. Chairman, I reject completely the doctrine that the Prime Minister enunciated yesterday that parliament has no right to sit as a court of appeal when objection is taken to the exercise by the Bank of Canada of its powers in any particular way. If Canadians feel that those powers have been exercised in any way that they disapprove of, then, surely, this parliament is the forum before which they ought to be able to bring their complaints.
The distinguished parliamentarian who uttered those words was none other than the hon. member for Eglinton, now the Minister of Finance. Far from recognizing that parliament is a court of appeal, as he said it was in 1956, the minister now refuses any information to parliament except that which he gives himself.
In what the minister has told us he has given no evidence whatever of misbehaviour in the legal sense of the term. Surely there is an obligation, there is an onus which lies on the government and on the minister to disprove the statements that have been made. There is an onus on the government to establish misbehaviour. The minister has not stated one single instance, with the possible exception of some unexplained incident in 1957, when the governor of the Bank has failed to perform the duties entrusted to him by parliament, or when he has thwarted government policy.
Governor of Bank of Canada
The minister has indicated that he did not like some of the speeches which were made by Mr. Coyne. None the less he defended Mr. Coyne's right to make those speeches as late as February of this year. What is more, once he spoke to Mr. Coyne about the speeches, Mr. Coyne ceased immediately to make them.
Then the minister said, in a statement that the house has heard, that Mr. Coyne did not possess the confidence of financial institutions by and large. Apparently, he meant the chartered banks of this country. Perhaps the minister thinks the government is responsible to the chartered banks, but we think the minister is responsible to parliament. This parliament has the right to know whether the minister was yielding to pressure from the chartered banks.
These are the questions that parliament, as the court of appeal to which the Minister of Finance referred in 1956, should be allowed to decide after hearing all the evidence. But the minister, who is the accuser, makes himself the court of appeal, and parliament is left to be the executioner.
What is a court of appeal? A court of appeal is one that has all of the evidence before it, the evidence on both sides. A court of appeal is one that hears all the arguments through counsel. A court of appeal is one that has the benefit of the parties appearing before it. If parliament is to be a court of appeal, then parliament is lacking those ingredients which make it a court of appeal. The minister said also that parliament was to be a forum. Where is the forum in this case? Where are the parties who are entitled to be heard? We have heard from but one of these parties.
Then sir, as has already been said but bears repetition, what of the bill of rights? What of the bill of rights that was passed by this government and about which so much has been said concerning the recognition and protection of human rights and fundamental freedoms? Section 2 of that bill reads in part as follows:
-no law of Canada shall be construed or applied so as to .. .
(e) 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;
I read that section for a purpose. Why did I read it? I read it because under the Bank of Canada Act Mr. Coyne has the right to remain as governor of the bank for a period of seven years unless the government can establish misbehaviour before this high court of parliament, which the minister called a court of appeal, a forum in which all persons have a right to be heard. Mr. Coyne, in the words of the bill of rights, has asked parliament for a fair hearing in accordance with the

Governor of Bank of Canada principles of fundamental justice for the determination of his rights and obligations. The government headed by the Prime Minister, who is the author of the bill of rights, is asking parliament now to deny him that hearing, and in defiance of the bill of rights to condemn him unheard.
(Translation):


Hon. Noel Dorion (Secretary of State):: Mr. Speaker, the problem now before the house, stripped of all rhetoric of which, it seems to me, there has been an abundant use, amounts to nothing much after all. It is by reverting to its basic principle that one can determine specifically and objectively what should be the stand taken by the house.
The purpose of the act we are called upon to pass is simply to provide that the office of the governor of the Bank of Canada shall be deemed to have become vacant.
What are the inherent responsibilities of that office and, consequently, what were the duties of the incumbent up to now?
I feel that the first question that should come to our mind is the following: Is the government justified or not in demanding that the monetary policy be subordinate to its economic and fiscal policy?
In my opinion, that is beyond all question. First of all, for a reason of principle that, I think, should be the basis of all discussion and on which everybody seems to agree, namely the sovereignty of parliament.
The government is formed by the parliamentary majority which, in its turn, is elected by the people it represents. Contrary to what has been said, the governor of the Bank of Canada, on the other hand, is an official. Section 7 states:
-is the chief executive officer.
The governor of the Bank of Canada is elected by the directors who are appointed by the governor in council for a term of three years. The election of the governor, whose term of office is seven years, must also be approved by the governor in council. The deputy minister of finance is ex officio a member of the executive committee and of the board of directors but he does not have the right to vote.
The governor of the bank has the power to veto any decision taken by the executive committee or the board of directors but his veto can be disallowed by the governor in council.
What inference should be drawn from the facts recalled and which are the very spirit of this act called the Bank of Canada Act. The inference is, contrary to what we have heard during this debate, that the gover-


nor of the Bank of Canada, as far as his appointment is concerned, as far as his actions and the decisions he is called upon to make within the two boards he presides are concerned, is responsible to the governor in council for all activities within the limits of the powers invested in him.
The fact that the government appoints the directors and, through them, the governor, who is an official, the fact that the deputy minister of finance is a full member of the executive committee as well as of the board of directors, the fact that the governor's veto is subordinate to the approval of the governor in council, all those are legal factors which show that the government has authority over the Bank of Canada and its governor.
This authority should not only be a word; it implies that the government has the duty to define its fiscal and economic policy and that the monetary policy for which the governor is responsible is a consequence of the first and should be subordinate to it.
This is the basic principle neglected by Mr. Coyne, the one he discarded two or three years ago, and this is why of his own free will he has put himself in the position of an outlaw. Finally this is the basic reason why this bill, simple as it is-though full of consequence-should be adopted by the house without hesitation.
Besides, this is in my opinion the principle behind the establishment of that institution, and here I refer to the report of the royal commission following which the Bank of Canada was created, and also to the views expressed by the representatives of the three groups in the House of Commons at that time, in 1934.
First of all, the commission, in its report of 1933, page 63, stipulated as follows:
It Is rather easy to expect too much or too little from the operation of a central bank, which is both an instrument and a force.
As an instrument, it enables the government, with whom supreme authority with regard to money matters necessarily rests, to follow a national policy.
As an authority, the central bank has certain powers which it may use to attain the aims of a national policy.
In other words, the monetary policy of the Bank of Canada must be subordinate to the national policy for which the government is responsible both to parliament and to the people.


Some hon. Members:: Hear, hear.


Noël Dorion: If my learned friends in the opposition understand what I just said, and what the report provides for, I should congratulate them, trusting that they will immediately vote for the bill introduced by the Minister of Finance.

I continue reading from the report:
Of course, the bank should work in close co-operation with the government in all matters concerning the external value of this country's currency, and with regard to the administration of a national policy in this field, the bank should have the government's backing for its foreign exchange operations.
And what were the reactions of hon. members who examined the bank's plan?
(Text):


Mr. Benidickson:: Now we are coming to something.
(Translation):


Noël Dorion: Mr. Speaker, I shall give only a few quotations in order to prove beyond doubt that all parties in the house at that time expressed the unanimous opinion that the purpose of that legislation was to subordinate the monetary policy of the Bank of Canada to the economic and fiscal policies of the government itself.
First of all, let us consider the views of Mr. Woodsworth who has here a certain number of spiritual sons who have made lengthy and, in my opinion, amazing statements on this problem. As reported in Hansard of March 9, 1934 Mr. Woodsworth stated the following:
It would be an Impossible situation if the authority of the governor of the bank were to be superior to that of the government of this country.


Paul Joseph James Martin: Hear, hear.


Noël Dorion: And Mr. Woodsworth went on to say:
We in this corner-and I hope we shall be joined by at least some members of the Liberal party-
I wonder whether he was a prophet, in view of the situation developing today and indicating that the Liberal party will join the C.C.F. party.
-would like to provide that when there is a clash, the government must have the last word because in the long rim the government is responsible to the people. It may very well be that sometimes democracy may make mistakes in its decisions-
And Mr. Woodsworth added:
-but that is the only way in which higher levels can be attained.
What is the view expressed by Mr. Mackenzie King on June 21, 1934? This is what he said then:
You will almost certainly, sooner or later, have a conflict between financial and fiscal policies, the former in the control of private interests, the latter in the control of the government. If there is a conflict anywhere, my feeling is that the view that ought to prevail is the view of the administration of the day, not the view of any institution privately owned and controlled.
In other words, Mackenzie King recognized the supremacy of government and parliament
Governor of Bank of Canada over the decisions of the governor of the Bank of Canada-


Some hon. Members:: Hear, hear.
(Text):


William Moore Benidickson: And the present Minister of Finance has said the opposite for four years.
(Translation):


Noël Dorion: Now, Mr. Speaker, this basic principle is essential to the efficiency of a healthy democracy. Mr. Coyne has scoffed at it with an impudence which borders on insubordination and which can only lead to anarchy.
Consequently, in view of the principles on which the Bank of Canada has been founded, of the spirit which inspired the adoption of that act, of the statements made by all party leaders, the government has no alternative today, in the face of such antagonism between Mr. Coyne's monetary policy and the government's economic and fiscal policy, but to cause the removal of Mr. Coyne from his present office.


Paul Joseph James Martin: You are perfectly right, that has always been our attitude.


Noël Dorion: Then what is the purpose of this debate? If that is what you want, why should we waste hours debating this question? What is your position? Do you accept the principles we have just set forth and which are the very principles of this bill we are asking you to approve today?


Paul Joseph James Martin: That is not the
stand taken by the Minister of Finance.


William Heward Grafftey: They blow hot and cold at the same time.


Noël Dorion: Mr. Speaker, the hon. member says that it is not the stand taken by the Minister of Finance. It was most interesting to read over-it is always pleasant to hear the hon. member for Essex East (Mr. Martin) -the remarks he and his leader made in the house last March. They both agreed that there was a discrepancy between the Minister of Finance's policy and Mr. Coyne's monetary policy. I have here statements which were made in that connection.
First of all, the representative of the C.C.F. party, the hon. member for Skeena (Mr. Howard) made the following statement which I find on page 3246 of Hansard of March 22, 1961:
However, we do know that ever since this government took office there has been a growing conflict between the governor of the Bank of Canada, the Minister of Finance and government policy generally.
A little further, he went on as follows:
We know there is conflict between the governor of the Bank of Canada and the Minister of Finance

Governor of Bank of Canada about what should be done, one taking a course of action that is in reality critical of the government in office and the other, namely the Minister of Finance, sitting idly by-
Well, that such a disagreement exists has been recognized by both opposition parties. Yet today they would like to have maintained in his position a man who, on their own admission, constitutes an obstacle to the expansionist policy of the government, an obstacle to measures passed by this parliament, which are likely to be opposed by Mr. Coyne's opinion, attitude and philosophy.
Is there not but one possible solution-to have Mr. Coyne replaced by a person prepared to obey the law, to respect the spirit of the law; a person who would understand that his duty is to act according to policy and not make policy, because policy belongs to the people and to their representatives. It is up to them to define and defend policy in this house and to ensure that it is implemented.
Let us see what the Leader of the Opposition had to say on March 22, 1961.
It will be no surprise to the committee, Mr. Chairman, when I say that we feel that in this field of monetary policy there has been a shocking lack of co-ordination between the government and the Bank of Canada, the bank which is responsible for action in the monetary field, though in our view the government itself must remain responsible ultimately for the policies within which action is taken.
And he added:
Of course, Mr. Chairman, the minister is correct in saying that their policies should be parallel and harmonious; and surely it is the responsibility of any government to take steps to ensure, by accepting responsibility for policy, that these policies are parallel and harmonious.
Well, what are we doing now? Opposition members do admit that there is a difference, a basic difference. On their own admission, it is up to the government to see to it that fiscal and monetary policies are parallel and harmonious. And, while we want to push aside the obstacle standing in the way, while we want to clear the road to allow for this co-operation requested by the opposition, at that very moment hon. gentlemen opposite say: No. Stop it. You cannot do that. On the one hand, you are duty bound to make sure that the way is clear and on the other hand we shall prevent your blocking our own policies.
Such is the kind of consistency we find.
We have been asked: "But why not let Mr. Coyne be heard?"
IMr. Dorion.l
Who has not heard him in the last two years? Not only have we heard him, not only has he indulged his volubility, not only has he made his views known-had he been content with expressing his views on matters pertaining to his duties or to monetary policy, perhaps he should not be criticized-but, according to the well known expression, he laid down the law for the king, he placed himself above the king. He is above parliament. In his speeches, he kept making statements on matters of fiscal and financial policies which are the sole responsibility of parliament and the government. A person of the type of Mr. Coyne should not be substituted for them until such day as we are ready to accept the financial dictatorship of the Bank of Canada. And that day is far away, thank God.
He was heard particularly in the other place. We have their report from which I will now quote the following excerpt:
(Text):
With regard to the role of monetary and fiscal policy, attention must be directed to an important weakness which has developed in this country. There has been a serious lack of co-ordination between those two powerful instruments of economic policy. This lack of co-ordination has made it much more difficult, if not impossible, to influence the movement of interest rates, exchange rates, money supply and capital flows in the directions which help to maintain high levels of employment and production and the resultant impact on the economy are hard to reconcile with an effective use of integrated monetary and fiscal policies. There have been needless divergencies and uncertainties. The idea that monetary and fiscal policies are differently determined and can be independently pursued is incompatible with the realities of a highly complex money and exchange economy in which the operations of government play so large a role.
(Translation):
In other words, here is an admission-not an admission but rather a report made after that witness, whose evidence was requested here, had appeared there and expressed his views.
What was the result? The conclusion was drawn that there was profound disagreement. Who is responsible for that disagreement? Who should dictate Canada's policy? Who are those who have been elected by the people to define this country's policy? Is it Mr. Coyne or the government now at the head of this country? If there was disagreement and if such disagreement had to disappear, well, it was up to that official, who stood in the way of any reconciliation of the policies, to leave of his own will, without waiting until we had to resort to this legislation, which is the only logical, reasonable and unavoidable remedy at this government's disposal.

Besides, Mr. Coyne said so himself before the committee on banking and commerce, in 1956, and his evidence is quoted in the Globe and Mail of June 28, 1961:
(Text):
If the government of the day were sufficiently displeased with the bank or the management of the bank they could put in motion steps which would bring about a change in management. At some stage in that process, if the government were so determined as to make a real issue of it, a public issue presumably, the governor would have to resign.
(Translation):
Those were his own words. He saw at that time where his duty lay, what were the duties of his office. He knew he should not assume responsibilities beyond his own jurisdiction and he said: "The government could put in motion steps which would bring about a change in management if management opposes the government's policies." More than that, he admitted that, under such circumstances, the governor should resign.
Why does he not resign? Why?
These are strange coincidences, and I would give as an example that letter of Mr. Coyne dated June 26, 1961, released at the very moment an amendment was moved here to have Mr. Coyne heard by a parliamentary committee, when all the factors required for a judgment had already been gathered, when my hon. friends opposite had made the pronouncement that there was disharmony. They had pronounced judgment as far back as last March and they wanted afterwards to argue the case. Such was the ridiculous and inconsistent position in which they put themselves.
At the very moment that amendment was moved, the same day, practically at the same time, Mr. Coyne was writing a letter, which showed his state of mind and which by another strange coincidence came to the same conclusions as the amendment moved by the Leader of the Opposition. A strange coincidence indeed.


An hon. Member:: Shame.


Noël Dorion: I am not used to judging things on coincidences only. But we might be about to prove that perhaps there was more than just a coincidence there.
In any case, what did that letter say? I quote the last paragraph of the first page. (Text):
The point which I am concerned to bring before public opinion-
(Translation):
You will see what kind of an inquiry was intended, whether it was an inquiry to further the business of government or of parliament, or whether it was a forum to be put at the disposal of Mr. Coyne, who far from being the accused, as some contended, far from
Governor of Bank of Canada relying on the bill of rights, would have become the accuser against the Minister of Finance (Mr. Fleming) and parliament itself.
(Text):
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 the 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-
(Translation):
Which is in direct contradiction with what my hon. friends opposite had to say in their remarks.
(Text):
-without the government stating its monetary policy in parliament or elsewhere, and without the government accepting responsibility for monetary policy.
(Translation):
And further on:
(Text):
The fact that the government has not yet accepted its proper responsibility but has sought and is still seeking merely to dominate the governor, both the present governor and, by implication, and precedent, all future governors, too,-
(Translation):
That gentleman is rich in virtuality. He stands, not only for the present governor but also for the past and the future governors until the end of time. He bears the cross of all those people. What a martyr.
(Text):
-makes it important that there be a searching inquiry into the facts underlying the present situation and the true motives of you, Mr. Fleming, and the government.
(Translation):
Since when does one have the right to question the motives underlying government policy? Yet, that is the opportunity our friends opposite wished to give him, that is to question the government.
Is that monetary policy? Is that the machinery he gave that institution? Is that working and talking within the limits of his administrative capacity as set out and defined by the act?
Well, to accuse the Minister of Finance, they would use the bill of rights, not for the protection of the accused but in favour of the accuser. That is the meaning of what was said.
(Text) :
The sudden and unexplained demand for my resignation on May 30, the appearance of haste and urgency, and the blackmailing tactics used-

Governor of Bank of Canada (Translation) :
What fine language for a public servant.
(Text):
-suggested that the present government had a plan-
(Translation):
And a public servant prepared to cooperate at that.
(Text):
-to call a snap election, without a budget, or perhaps immediately after the budget speech was made, and subvert the Bank of Canada under a new governor of their own choosing to assist them in financing expenditures and programs not authorized by parliament.
(Translation):
Countless and groundless charges, without verbal or written evidence, and without proofs by witnesses.
(Text):
I was warned about this danger by a man- (Translation):
Here is something interesting.
(Text):
-whose opinions I value and who said in such circumstances the governor of the bank would have a duty not to resign.
(Translation) :
Since when may the governor of the Bank of Canada, whose powers, responsibilities and rights are defined by statute, since when may an executive officer, as he is defined in the act, who is bound by his oath and is surrounded by a board of directors and an executive committee, who moreover is bound to some extent to the Minister of Finance since the deputy minister has deliberative voice with both the board of directors and the executive committee, since when may this gentleman wave aside the advisers given to him by the law, the people the government has regularly appointed and who, under the act, have legal powers of consultation and direction? Since when does he have the right to turn away from them to go and consult a very dear friend, who, by the way, did him a great disservice by suggesting to him the policy he has followed?
Moreover those advisers provided by the act, those directors, are appointed for three years and, incidentally, I read in one of Mr. Coyne's speeches or letters that he got exercised over the fact that new directors had been appointed by this government.
What was wrong with replacing their predecessors when their term of office expired? It is the law. It is authorized by the act and because we implemented the act, because, pursuant to that act, we appointed directors we had the right to appoint, here is a man who protests because we caused him to lose his friends, the former directors who surrounded him and who cultivated that spirit

of dictatorship and tyranny which characterizes his letters and his attitudes.
Now, those directors, who are empowered to act, who sit on the board of directors, who have duties to perform, have also told him: "Sir, you must resign".
What does he do? He remains there. He clings to a course of action that constitutes an obstacle to the pursuit of government policy. What is more, he is sowing distrust; by his action, by the stand he is taking, he is sowing the seeds of distrust, he is setting up around the Bank of Canada a wall of distrust which, if this situation is allowed to drag on indefinitely, might be seriously detrimental to that institution.
That is how this man is setting personal interest above public interest. And yet he is relatively well paid to look after public interest.
So, Mr. Speaker, this is the situation in which we find ourselves today. Before closing my remarks, I should simply like to quote an opinion which I think sums up all the others. I should like to refer to an article which appeared three or four days ago in Le Devoir, over the signature of its editor, Mr. Filion, who said in substance: "In the face of the situation in which he finds himself, the only course open to Mr. Coyne is to resign."
For, after all, Mr. Coyne should remember that later on he will not be the one who will have to justify his stand before the people, and to answer for the policies of this government; that will be a responsibility of this government. He has absolutely no responsibility before the people, and yet he would have liked to be heard, yes, and to what purpose? Not to defend himself, as you can see, but to make charges and then attempt to justify these charges. Such is not, thank goodness, the purport of the bill of rights. It is just the reverse, and that is why we could not accept the suggestion put forward by hon. members opposite.
Mr. Speaker, in closing, I say we have here the case of an administrative officer who, for two years, has been advocating fiscal policy, economic policy, financial policy, to the point where one of the documents which he forwarded to us was described even by opposition members, as "the Coyne budget". Can there be any more palpable or concrete evidence of the fact that we are dealing with a man who, constantly overstepping the duties and limitations ascribed to him by law, has endeavoured to lecture the government, to oppose its policies and, in the exercise of his monetary policy, to impede the development programs and the economic and fiscal policy of this government.

Mr. Speaker, is parliament to be denied its own rights and prerogatives which, by the way, are always so eloquently set forth by the hon. member for Essex East (Mr. Martin) -incidentally, let me say here that I always enjoy listening to him, and he is at his best when reciting the great principles which are the basis of that democracy in which we all share. Well then, I say to him that it is precisely because of those principles, because of the supremacy that the government must enjoy, and of the fact that it will have to give an account of its stewardship to the people of Canada, that a public servant must not exceed his duties, must remain at his assigned station in the hierarchy of administrative functions, and that as soon as he oversteps those bounds and ventures into the field of politics, not only does he violate the obligations he has assumed by reason of his oath, but he acts counter to those fundamental principles that were so eloquently expounded by the hon. member.
That is the reason why this bill is before us. It has been introduced because we want order restored in the household, because we want everybody in his proper place, and because we want no obstacle to stand in the way of the policy for which the government is accountable and which the government wants to translate into action not only through its legislation but by the practical application of that legislation. This is something that requires the unreserved assistance of the country's monetary policy. That is why I feel that the house should, of common accord, support the legislation that is now before us.


Some hon. Members:: Hear, hear.
(Text):


Herbert Wilfred Herridge: Mr. Speaker, I used to be told by my father that it was a good thing always to make a noise in the woods if you wanted to keep up your courage. When I was listening to the very interesting and eloquent address delivered by the Secretary of State-


An hon. Member:: You lost your courage.


Herbert Wilfred Herridge: -my mind started to drift back to years ago. I remember very well indeed listening to the late Premier Maurice Duplessis in the other place at the dominion-provincial conference of 1945. While I was sitting here listening to the minister I thought, how similar is the voice, how alike is the manner. I think I must congratulate him. His fervour was equal. His style, logic and form of debate were identical.
Other members of our group have placed our position fully before the house with respect to this bill and all the circumstances surrounding it, but the curtain of silence is soon to be lowered on this unprecedented
Governor of Bank of Canada parliamentary drama. I say "drama", Mr. Speaker, because wherever you get a clash of personalities such as we have between the Minister of Finance and the governor of the Bank of Canada, where you have a clash with respect to a conception of principles that exists between the government and the opposition, you have all the ingredients and setting for a drama. That is why I say this has been an unprecedented parliamentary drama.
I wish to briefly explain and review the position of this party in view of the vote that will be taken, I presume, in a few minutes. First of all I must say that we in this group sincerely regret this unseemly development in the public life of Canada which may damage future relations among parliaments and governments and government agencies. This is an unprecedented situation, and I am sure that any fair person who has read the newspapers, who has received correspondence from the type of individual who is concerned about this kind of development, will realize that it has caused serious and obvious concern to the country and may cause damage to our institutions in the future.
Second, we believe that principles have been violated and that the house, as has been stated so well by the Leader of the Opposition, the hon. member for Laurier and other speakers, should have had the opportunity to know all the facts before being called upon to make a decision by voting on this legislation. That opportunity has been denied by the government.


Mr. Brunsden:: Oh, fiddlesticks.


Herbert Wilfred Herridge: That opportunity has been denied by the government because it has refused to refer this bill to the banking and commerce committee and give that committee the opportunity of hearing Mr. Coyne and any other witnesses it might wish to call before it. We in this group believe it is impossible to know all the facts and circumstances surrounding this unfortunate development without hearing all sides of the question.


Edwin William Brunsden: Where have you been for the last two weeks?


Herbert Wilfred Herridge: The refusal of the government to allow this bill to be sent to the banking and commerce committee is without precedent.


Mr. Speaker:: Order. I think the hon. member will agree with me that the house disposed of the question of sending the subject matter of the bill to the banking and commerce committee, and I would hope that the hon. member would not refer to that specific proposal again.


Herbert Wilfred Herridge: Mr. Speaker, I have just disposed of it also. Third, we believe that the

Governor of Bank of Canada principles of justice and fair play were violated by the government's action and that the government's action to some extent has undermined the very foundations of the bill of human rights and fundamental freedoms, by its denial to a Canadian of a hearing before he is sentenced by the passage of this legislation. We think that is fundamental.
While this group does not agree with all of Mr. Coyne's views, we have a high respect for Mr. Coyne as a public servant of apparently strong convictions and considerable strength of character who has been willing to sacrifice his personal interests to advance views that he regards as being in the interests of the country. Mr. Coyne has taken the hard path instead of the easy path. The easy path would have been for Mr. Coyne to agree with the government, to have been putty in the hands of the Minister of Finance, and thus avoided this unfortunate incident.
Because of the circumstances surrounding this situation, because of the violation of the principles I have mentioned, and to indicate our belief in and support for those principles which have been violated by the introduction of this bill and the procedure on the part of the government respecting it, we in this group intend to vote against the measure.


Paul Joseph James Martin: Mr. Speaker, I agree with the Secretary of State that there can be no doubt about the final jurisdiction of this parliament in all matters that come within its authority under section 91 of the British North America Act. That is not the issue before us.
The governor of the Bank of Canada has been the object of considerable criticism from a number of us in the Liberal party during the course of the last two years. No one has been more critical of some of his policies and some of his attitudes than the Leader of the Opposition. As the Minister of Finance recalled the other day, the governor of the Bank of Canada went to him and complained about the way I had dealt with him in the industrial relations committee when I questioned his conduct regarding the operations of the investment committee of the unemployment insurance commission. It will be recalled that in the month of March, at a time when the Minister of Finance did not take issue, I criticized the governor of the Bank of Canada for making public declarations outside of the monetary policy field in a manner that suggested that there were differences between the government and the governor of the Bank of Canada. There was never any suggestion by the Minister of Finance that there was any difference between the governor of the Bank of Canada and the government of Canada
[Mr. Herridge.l
along the lines I had suggested. As a matter of fact, on February 21, with regard to speeches made by the governor of the Bank of Canada in fields outside of monetary policy, the Minister of Finance said, as reported at page 2258 of Hansard for 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. I read these speeches afterwards as does the Leader of the Opposition. It is sometimes forgotten by hon. members opposite that this is a free country.
I ask, by way of parenthesis, whether or not this government has forgotten that this is a free country. The Minister of Finance then went on to say:
I trust that I am not to be held responsible for what may be said by the governor of the Bank of Canada when he exercises his right as a citizen to make speeches.
We took issue with that position. We quarrelled with that position, and said that there could not be two sovereignties in this country. Yet the Minister of Finance, up until a few weeks ago only, at no time remonstrated against the right of the governor of the bank publicly to take issue on matters of government policy in areas where this parliament has not given him primary and exclusive authority. We do not stand as protagonists of the governor of the Bank of Canada.


Some hon. Members:: Oh, no?


Paul Joseph James Martin: We would like to find out the reasons for some of these speeches. We would like to find out also what went on between the Minister of Finance and the governor of the Bank of Canada regarding other matters not touched upon or disclosed in those speeches. We would like to find out what relationship has prevailed in latter days between the directors of the bank and the Minister of Finance. We would like to have from him, in committee where we can crossexamine him as is our right, a statement concerning the propriety of intervening in matters relating to the bank through the intervention of government appointed directors, amongst whom is a former Conservative candidate. These are the things we would like to examine in regard to this matter.
Our attitude toward this bill of attainder- and that is all it is, this bill that recognizes the very opposite that is implicit in the rule of law, in the due process concept in the bill of rights-is that it is a bill we shall vote against for the reasons I am going to explain. The usefulness of the governor of the Bank of Canada has been destroyed by the acts of this government. This is clear. The issue now before us is not whether the governor shall continue in office; that has been established

clearly. The issue is whether he is to be denied the opportunity of acquainting this parliament, through one of its proper instruments, a committee, with his side of the dispute. The issue is whether this parliament is to be denied the opportunity of sifting the facts in a matter so vital to Canada's financial integrity.
It is because in this bill before us, Mr. Speaker, we have a violation of the spirit and letter of the bill of rights that we shall vote against this bill and not because we do not recognize the fact that the Minister of Finance and his colleagues in the government of this country have destroyed the usefulness of the governor of the bank. I would ask the Prime Minister who was not here during the full discussion of this bill, to recall his words last July 1 when the bill of rights was introduced into this house. He said, among other things, that no one shall be denied the right of a fair hearing in accordance with the principles of justice. I ask this house not to forget the words of Professor Scott who, before the bill of rights committee, said that the right to be heard is a principle of natural justice. The right not to be judged by someone who is biased in this case is a principle of natural justice.
We do not deny the right of the Minister of Finance to put forward his side of the case, but we do deny to the Minister of Finance the right to put forward not only his side of the case but that of the man he is accusing, the governor of the Bank of Canada. We want to examine the governor of the Bank of Canada, the Minister of Finance and the directors of the bank so we can find out the particulars of the pension arrangements made for the governor, made by a board of directors the majority of whom are appointees of this government and supporters of this government. We want to know the circumstances because we have grave doubts about certain aspects of that pension and we have not had from the Minister of Finance anything that would satisfy our curiosity in this regard. We are to be denied that right, however, because this Minister of Finance, supporting a government that proposed the bill of rights, says the way justice is to be meted out is by listening to the case of the prosecutor, listening to the prosecutor give the evidence for the accused, and then for the same prosecutor to give final judgement. I would remind the Minister of Finance that justice must not only be done but it also must appear to be done.


Mr. Nugent:: Would the hon. member permit a question?


Paul Joseph James Martin: There are certain aspects of this problem that we must now examine in connection with this whole matter.
Governor of Bank of Canada


Terence James (Terry) Nugent: Would the hon. member permit a question?


Paul Joseph James Martin: We have not yet been given one serious reason why the Minister of Finance took the unprecedented step of asking the governor of the bank to resign on May 30. As I pointed out a moment ago, we were told on February 21 that the minister strongly supported the declared position of the governor of the Bank of Canada in those areas outside of the monetary field. There was therefore, no issue between February 21 last and May 30 of this year. We do know that there was no difference in monetary policy between the governor and the Minister of Finance for the simple reason that the Minister of Finance said this government took the position that under no circumstances could it in any way be held responsible for monetary policy. This field had been given exclusively to the governor of the Bank of Canada under the Bank of Canada Act.
However, today we have had an amazing display of cabinet solidarity. We heard the Secretary of State speaking on behalf of the government. I compliment him for the way in which he spoke, not for his arguments but for the form in which he expressed them. He expressed a doctrine with regard to the relationship of the government to the Bank of Canada in the monetary policy field for which we have been contending here all along. This was the position of former ministers of finance, Mr. Harris, Mr. Abbott, Mr. Dunning, Mr. Rhodes, of the former governor, Graham Towers, and the present governor of the Bank of Canada. I tell the Secretary of State that when he comes to read his speech he will find how he differs from the spokesman for the government, the Minister of Finance.
On February 1, 1960, the hon. member for Assiniboia (Mr. Argue) made these remarks on this very point as reported on page 550 of Hansard for that date:
On this very point, would the minister not agree that the position taken by the governor of the Bank of Canada is diametrically opposed to the minister's own position?
The Minister of Finance said:
That observation is, of course, just plain nonsense.
Mr. Speaker, I compare what the Secretary of State (Mr. Dorion) said this afternoon regarding bank monetary policy and the relation of that policy to the government with this declaration and with the repeated stand taken by the Minister of Finance.
On March 18 the minister met with the governor and, according to his own account, he met with him only to tell him that some of his cabinet colleagues did not like some of his speeches.


Donald Methuen Fleming: That is not true.

Governor of Bank of Canada


Mr. Marlin (Essex Easl):: Not the Minister of Finance but some of his colleagues: the Prime Minister, I presume and I suppose the Minister of National Health and Welfare and maybe the Solicitor General.


Donald Methuen Fleming: The hon. member is not telling the truth.


Murdo William Martin: Then the governor undertook not to make any more speeches in areas outside of monetary policy. When he went before the manpower committee of the Senate, and was asked for details about some of the proposals he had made in at least five speeches outside Ottawa, the governor refused to give them. We have since learned that the reason for that refusal was that he had indicated to the Minister of Finance, who asked him for the first time, that he would agree not to make speeches in these areas.
We are entitled also to inquire about the relations between the governor and the board of directors. According to the governor on March 20 last, two days after he had seen the Minister of Finance, he sought their advice. He sought to inquire whether or not he should resign as a result of the discussion he had had a few days previously with the Minister of Finance. On March 20 the directors unanimously said that his conduct was in harmony with their views and that he should not take any steps involving resignation.
Then we have this further evidence from Mr. Bryden, the close friend of the Minister of Finance, one of his political supporters, and of course a man of the greatest integrity-


Some hon. Members:: Oh, oh.


Murdo William Martin: -who said in a statement to the press on June 15 that all during the time at least that he was a director the governor had his support and the confidence of the board. That was a statement made by Mr. Bryden on June 15. So according to the evidence we have before us with regard to this bill of attainder, the totalitar-rian technique, which denies an accused the right at least to be heard, we find that between April 4 and May 30 there was nothing to disturb the happy relationship that apparently existed between the governor and the board of directors of the Bank of Canada.


Donald Methuen Fleming: That is not what the governor said.


Murdo William Martin: Then suddenly on May 30, without any warning, everything changed. The Minister of Finance by-passed the board of directors and resorted to the unprecedented step of calling in the governor and asking him to resign immediately and quietly. What authority did the Minister of Finance have for taking a step like that?


What is there in the Bank of Canada Act that gives the Minister of Finance the right to impair the important position of managerial objectivity that the Bank of Canada must have in relation to matters that come within its authority?
We are certainly entitled to ask: Why did this happen? But the minister would have us believe that the one reason why this happened was that the minister was going to bring down the budget and that he would adopt policies which the governor would not accept, although we know that there are in that budget many things which along with the document of February 15 of this year shows clearly the influence of the governor of the Bank of Canada on the budget. We know that there was a huge deficit and that there were huge borrowing requirements. We know that in 1958 and in 1959 the governor of the Bank of Canada supported the Minister of Finance and did not register any strong opinion against these deficits. What reason was there for suspecting that the governor of the Bank of Canada would take a different position in 1961? As a matter of fact, we know that in 1960 the governor of the Bank of Canada increased the money supply by 16 per cent during the period of a few months. We know that he made every effort to support the bond conversion scheme of the Minister of Finance which is at the root of so much of the problem that has provoked this difference between the governor and the minister.
There is one vital mysterious element in this whole episode that we must examine. On May 15 the Minister of Finance met here in Ottawa with the presidents of the commercial banks or their representatives. This was almost two weeks before the minister asked the governor to resign. I ask the Minister of Finance-and this is the kind of question I should like to ask in detail in a committee-what went on at that meeting of May 15 in the minister's office. In order to understand what might have gone on, one should not forget the incidents in the fall of 1960 when the minister returned from England and then met his colleagues who had been working on their estimates. The minister found that his colleagues were embarking upon an expansionist program, that they had inflated their departmental estimates,-


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: -and that they were embarking upon a spending program which did not meet the considered views of the Minister of Finance. What did the Minister of Finance do?


Mr. Bell (Carlelon):: This is so ridiculous.


Paul Joseph James Martin: The parliamentary secretary says "This is so ridiculous". I am glad to know that he is a member of the cabinet and knows about all of these things. Not only did the minister find that his colleagues were embarking upon a spending program, but he found that the Prime Minister was in support of this spending program of his colleagues. The Minister of Finance then "laid it on the line."


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: He threatened to resign.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: That is a well known fact. It is known in Ottawa, Toronto and all over this country. The Minister of Finance said, "I will not go for this spending program; and if this is going to be the policy of the government you had better get another minister of finance".


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: Mr. Speaker, there is not a word of truth in that statement.


William Moore Benidickson: But he stayed on, although overruled.


Mr. Speaker:: Order.


Murdo William Martin: And so, this being the case, the bankers of Canada-and one could name them-came to Ottawa and saw the Prime Minister. They had heard about this dispute between the Minister of Finance and some of his colleagues. They were opposed to a spending program and they wanted the Prime Minister to know that they proposed to take strong issue with any effort that would go contrary to the wishes and point of view of the Minister of Finance.


John George Diefenbaker: Mr. Speaker, I have listened-


Murdo William Martin: Is this a question?


John George Diefenbaker: I am rising on a question of privilege at this moment simply to say that the hon. gentleman must have secured his information from the informant of Mr. Coyne, who is wrong in every particular.


Murdo William Martin: The Prime Minister, of course, may make all the denials he wishes to make. I am stating these things. He can take the appropriate opportunity to deny them. I say that the bankers, friends of the Tory party, came down and asked the Prime Minister to support the position taken by the Minister of Finance. So when the Minister of Finance met these bankers on May 15 in his office in Ottawa, he was speaking to a group of men who had reason to place 90205-6-473
Governor of Bank of Canada their confidence in the Minister of Finance, if not in the other members of the government of our country. Why did the Minister of Finance call these bankers together on May 15? They were called together so that the Minister of Finance could do this; and this is rumour and the Minister of Finance knows this is the case. This is not now only rumour, this is established fact.


Donald Methuen Fleming: If so, it is not
stated in the last ten minutes.


Murdo William Martin: The minister asked the banks to reduce their prime rate of interest. That was the first request made by the Minister of Finance to the bankers. Such a request amounted to asking the banks to reduce or to cut down their revenues. The bank presidents argued that they could not do this unless there was an expansion in the money supply. There could be no expansion of the money supply without the concurrence of the Bank of Canada. The minister left the bankers, the men with whom he has been consorting. He then took steps to bring about the opportunity for an increase in the money supply, by seeing to it that the wishes of the Prime Minister and others would be met in removing the present governor from the office of governor of the Bank of Canada. That, I say, is the real story behind this situation.


Donald Methuen Fleming: The hon. member is off his rocker.


Murdo William Martin: My hon. friend may take issue with that but if he is so sure of his position let us go before the committee; let us find out.


Some hon. Members:: Hear, hear.


Murdo William Martin: I suggest that we-


Mr. Speaker:: Order. Is the hon. member rising on a point of order?


Mr. More:: Yes, Mr. Speaker. The hon. gentleman who is speaking continually refers to a committee of the house. That matter has been settled and the hon. member is violating the rules of the house in referring to it now.


Murdo William Martin: I am not going to talk about a committee. I am going to talk about something else that concerns my hon. friend.


William Moore Benidickson: The Secretary of State referred to it.


Mr. Speaker:: Order. I have followed the hon. member's argument with a good deal of care, as I did the speeches of the other hon. members, having regard to the decision

Governor of Bank of Canada taken by the house. In my opinion unless a speech advocates a reference of this matter to the banking and commerce committee it does not clash with the decision already taken on the amendment.


Paul Joseph James Martin: I have said that the minister indicated to the bankers that it was necessary, in order to get a reduction in the prime rate of interest, that there be an expansion in the money supply. It was clear that the course he was about to take was the way in which that could most effectively be done.
It is not without significance that on May 30 the Minister of Finance decided to move on two fronts. On that day in this house he used these words which will be found at page 5571 of Hansard:
-I think it is by now a matter of knowledge on the part of hon. members that the various chartered banks of the country are reducing the prime rate of interest on loans as of June 1 to 51 per cent.
If my hon. friend does not at once recognize the relevancy of that announcement in regard to the argument I have made and the sequence of events of that day, then of course he is resorting to a subterfuge in not answering the implications of what I am saying is the case. It was not very long after that very announcement that the Minister of Finance told the governor of the Bank of Canada that he had to go. The price for the friendship of the bankers was the dismissal of the governor of the Bank of Canada.


Donald Methuen Fleming: That is a complete falsehood.


Paul Joseph James Martin: My hon. friend will have his opportunity to deny it, and the most effective way in which he could deny it would be to confront the governor of the bank and the board of directors and let the true facts of this situation be exposed. That is what the minister should do instead of putting forward the reasons we get from him in this bill.
What reasons do we get from this Minister of Finance for the course this government is taking? We recognize that this situation is inevitable now because of his acts, because of the intransigency of the policies this government has pursued. What are the real reasons for this action? Five reasons have been given to us by the Minister of Finance. Let us examine those five reasons and see how hollow they are. Who does he think is going to accept these reasons in face of the background of the situation which he described the other day, beginning with his conversation with the governor of the Bank of Canada in November of 1957?
The first reason the minister puts forward is the public speeches made by the governor.

The public speeches made by the governor could not be a serious issue on May 30 because Mr. Coyne, on March 18, had agreed to remain silent. Of course, the speeches that Mr. Coyne had been making were not the reason. He remained silent, as I have indicated, from March 18 onwards. As we know from what I have already quoted, the Minister of Finance took the position throughout that the governor had the right to make these speeches; that he was a free citizen, notwithstanding the contentions which I and other hon. members made with regard to the impropriety of the governor of the Bank of Canada speaking in these areas apparently contrary to declared government policy.
I say to the minister that the answer to the second reason put forward by the government is that on February 21, 1961 the minister had accused the opposition, not the governor, of having brought the Bank of Canada into the centre of controversy. When we discussed the impropriety of the governor of the Bank of Canada making these speeches the minister said we were bringing the Bank of Canada into political controversy. He now acknowledges the impropriety of the governor's speeches. I say to him that if he felt as he said he did only the other day-this was something that he denied all through the piece, however-he should have taken the decisive step in November, 1957-


William Moore Benidickson: Quietly.


Paul Joseph James Martin: -to remove the governor from office quietly, without offence to the governor's family, so there could be no divergence between the government's position and that of the governor of the Bank of Canada.
The answer to the third reason of the minister is that it is quite clear, after having seen the budget, that there was in fact no incompatibility between Mr. Coyne and the budget and that on May 30 the government was not, to use the minister's words, about to embark upon a far-reaching program which would be opposed by the governor. I say this because some of the proposals of Mr. Coyne as revealed to the country-and I say improperly so-in his memorandum of February 15 show a remarkable similarity to some of the minister's views as revealed in the budget.


Donald Methuen Fleming: If you think they are similar you have gone astray.


Paul Joseph James Martin: And we now know, as a result of the discussion in this house last evening, it was the views of the governor of the Bank of Canada which influenced the

minister in the formulation of the amendments now before the house regarding the industrial development bank.


Donald Methuen Fleming: There is no truth in that, either.


Paul Joseph James Martin: The minister says, "There is no truth in that, either". Let us have a committee to determine whether there is truth in that statement.


Donald Methuen Fleming: You are just
making false charges; that is all you are doing.


Paul Joseph James Martin: A further reason the minister gives is the failure of the governor to disclose to the minister his pension arrangements. I do not in any way support those pension arrangements, but I wish to know all the facts in relation to them.


Lester Bowles Pearson: A Tory pension.


Paul Joseph James Martin: Yes, a Tory
pension. Let not the Prime Minister forget and let not hon. gentlemen opposite forget that this pension was provided not by a Liberal government, not by a board of directors of the Bank of Canada appointed by a Liberal government, but for the most part by men appointed by the right hon. gentleman. They were the ones who formulated the pension arrangements. The one who took the initiative was the close friend of the Minister of Finance, Mr. Bryden. The Minister of Finance now wishes us to believe that he did not know of this pension until a short time ago. It is true that Mr. Bryden made a statement the other day and said that he did not write to the Minister of Finance-


An hon. Member:: Coyne said he did.


Paul Joseph James Martin: -within six
months, as was indicated by Mr. Coyne. He may not have written but I ask the Minister of Finance to come before a committee of this house. Let us examine him and Mr. Bryden to determine whether or not there was some discussion between the Minister of Finance and Mr. Bryden.


Donald Methuen Fleming: On a point of order, Mr. Speaker-


Mr. Speaker:: Order.


Donald Methuen Fleming: On a point of order-


Mr. Speaker:: Will the hon. member for Essex East resume his seat?


Donald Methuen Fleming: Mr. Speaker, this matter has been raised before in the house. I made a statement, which the hon. member is now calling into question in breach of the rules of the house, and said that I knew 90205-6-473J
Governor of Bank of Canada nothing of this pension until the spring of 1961. The hon. member is now circumventing that and in an indirect way is seeking to call into question the word of an hon. member of the house.


Mr. Hees:: Hear, hear.


An hon. Member:: Withdraw.


Paul Joseph James Martin: Mr. Speaker, I have no desire to in any way violate the rules of this house.


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: If the hon. member thinks I am, I say to him let us call Mr. Bryden; let us call the Minister of Finance; let us call two other directors and let us ascertain whether or not the Minister of Finance knew about these pension arrangements within ten days of their first being proposed by Mr. Bryden at the meeting of the board of directors.


Donald Methuen Fleming: This is a repetition of what has been attempted before by the hon. member seeking to circumvent the rules of this house. This was the subject of a ruling in this house some days ago and subsequently there was withdrawal. This is not the first time this matter has arisen. It has been ruled that the hon. member must accept a statement made by another member of this house as to a matter within his knowledge. That statement is that I knew nothing of this pension until the spring of 1961.


Paul Joseph James Martin: To save time, if the hon. gentleman wishes me to withdraw that I shall do so because that is the practice under our rules. But I say to the minister this: his assistant deputy minister was at that meeting and it is inconceivable that that able public official did not advise the deputy minister and the Minister of Finance of what took place at that meeting. In any event, let us go to the committee and find out whether that is the case.


Mr. Speaker:: Order. I think the hon. member is paying only lip service to the rule of the house when he repeats his statement in that form. The simple proposition is that the house has always accepted that an hon. member making a statement in his place on a matter within his own knowledge should have his statement accepted by other hon. members. This does not prevent other hon. members from drawing the attention of the house to inconsistencies, but it does prevent them from challenging directly such a statement made by an hon. member on facts -within his knowledge.

Governor of Bank of Canada


Paul Joseph James Martin: Mr. Speaker, I accept your suggestion without any reservations so as to save time.
The final reason which the minister gave for the dismissal of the governor was this, and I quote the hon. gentleman's word as reported at pages 7043 and 7044:
He did not possess the confidence of Canadian financial institutions with which the Bank of Canada must work.
That reason is clear, and the facts which I have recited with regard to the meeting of May 16 confirm my interpretation. It also is confirmed by the incident involved in the representations made by the bankers of Canada to the Prime Minister of this country in the dispute which the Minister of Finance had with his colleagues when he threatened to resign unless they embarked upon his restrictive program in the late fall of 1960.


Donald Methuen Fleming: Mr. Speaker, I rise on a point of order. The hon. member has said that there was a dispute and that I have threatened to resign in that dispute. I have already said today that there is no truth in that statement, and here again the hon. member is violating the rules of this house in making up statements which are denied by those who should have knowledge of them. I say that the statement he has made is untrue, and I suppose I should know as well as anyone whether it is true or not.


Mr. Speaker:: The hon. member is rising to make an explanation. He is entitled to do so at the conclusion of the hon. member's speech, but during the speech only by permission of the hon. member who has the floor.


Paul Joseph James Martin: It seems to me that the situation before us is this: the minister takes one position, the governor of the bank takes another. Some of us find that some of the facts in this situation are not clear. Some of us have views as to what actually took place. The directors of the bank have a responsibility in this matter, as have the deputy minister of finance and the assistant deputy minister of finance. These men have not been heard. Their point of view has been expressed through a prejudiced party or through a party whose point of view is partisan, the Minister of Finance. We cannot resolve this matter, a matter which touches the vitals of our financial integrity, merely on the say so of a government with a big majority behind it. That is no way to resolve this problem, and no one stated this in principle better than the Prime Minister when he said, as reported at page 5643 of Hansard of July 1, 1960:
-I rise for the purpose of speaking on a subject on which X have spoken through the years,

which has to do with the maintenance and preservation of freedom against governments, however powerful they may be;
That is what is in issue now. This is a powerful government. It has a tremendous majority. Why, then, should it be afraid to test its expression of opinion against those who take issue with it? What has the government to be afraid of?
I have before me the Canadian Bill of Rights, distributed all over this country at the instance of an imaginative organizing body in Bracken house and printed by the Queen's printer. This bill of rights sets out various articles to guarantee that all are given a fair hearing, that there is to be a presumption of innocence, long recognized under our common law. We have at the bottom a statement signed by the Prime Minister. I close what I have to say by repeating what the Prime Minister said, and I ask him to remember these words and to recognize their bearing on the issue now before us:
I am a Canadian, a free Canadian, free to speak without fear, free to worship God in my own way, free to stand for what I think right, free to oppose what I believe wrong, free to choose those who shall govern my country-


Some hon. Members:: Hear, hear.


Paul Joseph James Martin: I hope hon. gentlemen will support this, too:
This heritage of freedom I pledge to uphold for myself and mankind.


Mr. Richard A. Bell (Parliamentary Secretary to the Minister of Finance):: After the magnificent and eloquent speech of the hon. Secretary of State it is difficult for anyone to say anything original at this stage of the debate. But all this spurious indignation, the furious and verbose play acting of the hon. gentleman who represents Essex East requires someone to place the issues before the house in perspective, and that I propose to do in a deliberate and, I hope, orderly way. If I succeed, it will certainly be in striking contrast to the contribution made by the hon. member for Essex East, for I say that never in the history of parliament has this House of Commons heard so much fiction uttered in the course of 40 minutes.
The hon. gentleman put up one man of straw after the other, only to knock them down. The greater the falsity of the assertion, the closer the hon. gentleman clasped it to his bosom. The hon. gentleman said the Minister of Finance had threatened to resign. I have been closely associated with the Minister of Finance and I know something of the situation, and I can only say that on the part of the hon. member for Essex East this is but a question of the wish being father to the thought. The hon. gentleman closed his play

acting oration with a quotation from the bill of rights. Oh, I find it touching, this conversion of the hon. gentleman, because I sat in the gallery of the House of Commons in former days when the hon. member for Lake Centre, later the hon. member for Moose Jaw-Lake Centre, and still later the private hon. member for Prince Albert raised this issue on the floor of the house from his seat opposite. The hon. gentleman who is now leader of this government when a private member representing at various times the constituencies referred to raised the question of a Canadian bill of rights, and received from the four horsemen who now sit opposite nothing but scorn. That same hon. gentleman is now the right hon. Prime Minister, the man who a year ago on July 1 triumphed over the scorn of those hon. gentlemen opposite and who placed that great statute upon the statute books of this country. Yes, the hon. member from Essex East would have us believe this afternoon that he has been converted. Well, I do not think the conversion is quite what it was of another Paul on the road to Damascus, but if there be such a conversion in this instance I certainly know there will be some backsliding and probably before the day is out.
Sir, the real issue before this house is a simple and direct one and is capable of only one answer. All the tortuous and incoherent reasoning of the hon. gentleman from Essex East cannot conceal the simple issue. Can a governor, any governor, of the Bank of Canada be continued in office after he has lost the confidence of his board of directors-


Paul Joseph James Martin: That is not the
issue.


Richard Albert Bell: -and lost the confidence of the government, after he has lost the confidence of the business and financial community with which he must be most intimately associated?


William Moore Benidickson: When did he lose that confidence?


Richard Albert Bell: This afternoon the hon. member for Essex East indicated, as he has done on previous occasions, that there cannot be two sovereignties. Of course not. I could not agree more. In fact it is almost the only thing the hon. gentleman said with which I do agree. But what is happening in this House of Commons this afternoon?


Donald Methuen Fleming: And he quoted that.


Richard Albert Bell: What is happening is that this sovereign parliament, the elected representatives of the people, the only sovereign authority, the court of appeal if you
Governor of Bank of Canada like, to use the phrase that the hon. gentleman from Laurier quoted from the Minister of Finance, is being asked to exercise its sovereignty. If the hon. gentleman from Essex East and his colleagues practise what they preach, let them vote for this bill. If they believe that there cannot be two sovereignties, that is the only course they can take. I suggest to them that they desist from the support of a man who with an impropriety never before known in Canadian history uses the full resources of a great national institution, the Bank of Canada, to wage war against the elected representatives, the elected government of the people. Sir, to paraphrase Lord Durham, I say you cannot have two governments warring within the bosom of a single state.
Let hon. gentlemen opposite then support our system of responsible government, not a bureaucratic revolution, for such is the continuing Coyne artillery barrage from his Wellington street bastion. Even Mr. Coyne himself says in the letter which he released on June 26 to the press at least an hour before it was received by its intended recipient, the Minister of Finance:
... an honest difference of opinion proved to be unbridgeable, then it would be the duty of the governor to resign . ..
Can any reasonable man believe that the differences disclosed in this debate are capable of being bridged?


Paul Joseph James Martin: Who suggested that?


Richard Albert Bell: Surely, after what has transpired, it would be the height of folly to suggest that this government, or indeed any government, and Mr. Coyne could ever work together again. If that be true, sir, then either Mr. Coyne or this government must go. And, sir, it is not our system of government that one bureaucrat can bring down a government. Governments in our nation do not go at the behest of a financier. Only this House of Commons or the people can accomplish the defeat of a responsible government. Can there then be any answer but that Mr. Coyne shall go? In due course this government will submit its record to the people. By that record we on this side are proud to stand and I believe we will survive.
My hon. friends opposite say Mr. Coyne is entitled to be heard. Superficially, sir, the argument perhaps is an appealing one; but it is not one which will stand the test of analysis. Our system of government, as I have said, is responsible government. This means simply that a ministry takes a decision and submits that decision to the will of the elected representatives of the people. By the will

Governor of Bank of Canada of those elected representatives a government lives or dies. And, sir, when the vote comes this government will live.
A confrontation of the government and a public servant, warring within a single camp -such a proposal is totally foreign to our concept of responsible government.
Exalted though Mr. Coyne's position may be, I say that he is entitled to no higher right than any other public servant and no higher right than hon. gentlemen opposite accorded, shall we say, to General McNaugh-ton when they took away his command, or to General Stuart or to Bob Pitt, whose only offence was that he offended the hon. gentleman from Bonavista-Twillingate. This government, sir, believes in one law for all, one law for the exalted and for the humble, not a special situation for Mr. Coyne.
Under our system of government, I repeat, the government takes a stand. It places that stand before the House of Commons. It explains it to the House of Commons, which is its master, and by the decision of that house, and ultimately of the people, a government lives or dies.
But, oh, say my hon. friends opposite, poor Mr. Coyne has had no forum. Well, what do they call the news headlines that this gentleman has created during these past three weeks? Has any Canadian public servant in all of our history ever had the opportunity that Mr. Coyne has had of presenting his side of the case to the public? Is there anything in the world that he could say that he has not said? After all, he has used the complete public relations resources of the Bank of Canada to further his case. How many thousands of dollars of the people's money have been used to further the insurrection of one man who has no backing from his own staff, and who has had the active opposition of his board of directors? These resources have been used to further his insurrection against the elected representatives of the people. Sir, he has not lacked a hearing. He has had every opportunity to be heard up and down and across the land. But my hon. friends say that he stands accused. We have here a situation where they say, "-the bill of rights shall be his protector." I have already indicated what I think of the sudden interest of hon. gentlemen opposite in the bill of rights. It really fascinates me. You would think now when they talk about it today that they had invented it instead of being, when they were in power, members of a government that over the years tried to prevent a bill of rights from being enacted. The bill of rights, sir, was never intended to and does not invade our system of responsible government. This argument about the bill of rights is the

phoniest smokescreen of any that has been raised in this whole debate. I say let us be done with this nonsensical argument.
The only accusations of which I am aware are those which are being hurled constantly from his Wellington street bastion by Mr. Coyne directed at the Minister of Finance. The latest blast which was released on June 26 is so false, so false to my personal knowledge, so biased, so biased to my personal knowledge, so devoid of all principle and common sense that it is unbelieveable that a man in his position could have ever written it.
Mr. Coyne has had many days in which to court the headlines of this country in pursuit of his one objective, namely that of destroying the elected government of Canada. Today that government takes its case to the high court of parliament and it lays its case on the line. Does this House of Commons want Mr. Coyne or does it want this government? Sir, it is as simple as that. No government, Liberal or Progressive Conservative, or any other government that might be elected in Canada, could tolerate any type of insurrection no matter how exalted maj be the insurrectionist.
The unhappiest fact of all is that hon. gentlemen opposite are seeking to exploit this incident for purely political purposes. They seek to exploit the defiance of government policy by the governor of the Bank of Canada, his equal defiance of his own board of directors, his defiance of leading Canadian businessmen on the board of directors drawn from every province of Canada and from every walk of life. I say to this house with great seriousness that hon. gentlemen opposite have shown a very scant regard for the future, for the integrity, the independence of a great national institution, the Bank of Canada.
To me, sir, the most deeply regretted situation of all this whole Coyne controversy has been the willingness of the governor to make a political football out of the institution to which he has devoted most of his mature life, or perhaps I should say his adult life, and of which he has been the directing head for 6J years. I include in that regret the present utter impropriety in using the great resources and public relations facilities of the central bank to foster a political dispute.
It has been the governor who has shown a reckless disregard of the consequences to an important national institution. It has been the Minister of Finance and the government who have demonstrated patience, consideration, dignity and statesmanship. In true Louis XIV style the governor has adopted the attitude, "La banque, c'est moi". He has

shown a determination that if down he goes, as down now he must go, he will pull down with him the institution that gave him his opportunity and which is of such vital importance to Canada.
What has happened to his judgment is something that I simply cannot understand. Hon. gentlemen opposite need no words of mine to convince them of the intransigence of James E. Coyne. Members on the front bench opposite are not unaware of the fact that the present Minister of Finance is not the first minister of finance to find Mr. Coyne difficult, brooding and unco-operative. But, sir, what is most important is the fact that all except the most purely formal relations between the governor of the Bank of Canada and the financial community had come to an end. There has been almost a total breach between Mr. Coyne and the banking and other financial institutions of this country. Is everyone out of step except Mr. Coyne?
The hon. member for Essex East tried this afternoon to suggest that in some way there had been a conspiracy. He tried to arouse suspicion. I say to him that this is not worthy, that that is not in fact the situation. What has happened has not been a case of bogeymen of evil financiers who have been attacking Mr. Coyne. What has existed has been a total incompatibility of personal relations, a brooding, moody, ivory-tower attitude on the part of the governor, one man lonely in his majesty, one man against all the economists of government and financial institutions and, as we saw last autumn, against practically all the economists of the universities.
As this situation became increasingly apparent, as the governor more and more recklessly involved the Bank of Canada in political controversy, as increasing evidence mounted that our economy was suffering from the stubborn refusal of the governor to adopt flexible policies needed to give the economy a renewed stimulus, what was the government to do? It could have stood back until December 31 and merely let the whole sorry Coyne era disappear into an unlamented and unmourned past. It could have exercised a further restraint. It could have exercised a patience already severely taxed. Certainly that would have been the easy way. What it did was to act honourably. What it did was to tell Mr. Coyne that his term would not be renewed, that there were only 6J months to run and that he stood in the way of the implementation of a comprehensive, sound and responsible economic program designed to raise levels of employment and production in Canada. This is what Mr. Coyne sought to prejudge and to prejudice in the public mind by a blast in which he
Governor of Bank of Canada described it as "mysterious and alarming". We may test what he has to say by this comment. Do any other Canadians consider the budget "mysterious and alarming"?
Mr. Coyne decided, as I have said, that he was greater than the government, that his personal future was more important than that of the Bank of Canada, and he declared war on the government and sought to bring it down. Not for a moment, sir, do I deny Mr. Coyne's right as a citizen to resign and to campaign to the limit against the government but I do dispute most vigorously the right of any servant of the crown to remain in office and to declare war on Her Majesty's ministers who have the confidence of this House of Commons, and to use the full resources of a great crown agency to fight his personal battle. I say that in all the history of parliamentary government I know of no counterpart of the utter impropriety of Mr. Coyne's actions, of his total disregard of the principles upon which responsible government is based. Let him step aside and use his own not inconsiderable resources and not the Bank of Canada's resources to fight his personal battle.
In my view what is now the most important aspect of this whole issue is to have appointed a new governor as soon as possible whose high qualities will command the confidence of the public and the business community alike.
From the recital of events given to the house last week by the Minister of Finance, it is abundantly clear that the Minister of Finance and the government have been running interference for Mr. Coyne for at least three years, endeavouring to protect him from the consequences of his own folly and, as it now appears, from the advice he was receiving from the hon. member for Bonavista-Twillingate. They were protecting him despite the fact that he was persisting in public utterances at variance with, indeed almost in defiance of, government policy, that his utterances were entirely outside the field of monetary policy and were entrenching entirely upon matters within the exclusive prerogatives of the government, that he was embroiling the Bank of Canada in political controversy, that he was becoming increasingly at loggerheads, as I have said, with the whole financial community with whom the national interest required that he work on a day to day basis of mutual trust and confidence. Small thanks indeed have the Minister of Finance and the government received from Mr. Coyne and his political commissar opposite, the hon. member for Bona-vista-Twillingate, for the protection accorded to him sometimes in acutely embarrassing situations.

Governor of Bank of Canada
The last letter addressed by the governor of the Bank of Canada to the Minister of Finance, dated June 26 but, it is to be noted, released on that day by every Bank of Canada office in every part of Canada, is the most outrageous and unprincipled document I have ever read. The recklessness of his charges, the baselessness of his conjectures and diatribes, the lurid, hysterical language, were described by one newspaper as equalling a paper-back mystery thriller. I doubt the comparison for I have never read such a thriller which so completely departed from reality.
He states categorically that "the budget was rewritten after my statement". From personal knowledge I know that not to be the case. Yes, of course, editorial changes are always made in a budget up to perhaps 48 hours before its delivery but as to the main principles of this last budget they had been fully settled before Mr. Coyne was asked to resign and remained unchanged thereafter.
Words like "blackmail", "subversion", "ulterior", "political puppets", "degraded" abound in this letter which is as atrocious in its bad taste as it is in its utter falsity. He says in this letter that he was warned of a certain danger "by a man whose opinions I value". Hon. members who have sat in the House of Commons with him do not quite share Mr. Coyne's evaluation of the opinions of the hon. member for Bonavista-Twillin-gate.
It is the role of the government and of parliament to govern. Majority rule in this House of Commons must not be frustrated, I say, by opposition infiltration into sensitive public service areas, seeking to set at nought government policy. I say, let the elected representatives govern, not some invisible and irresponsible group headed by the grey eminence from Bonavista-Twillingate.
Quite a bit has been said about the pension aspects of this whole matter. This is but an incident, the fifth and last matter mentioned by the Minister of Finance in his discussion on May 30. Yet, so sensitive was Mr. Coyne that he tried to boil it into the principal issue. Sensitive-yes, but methinks the laddie doth protest too much.
In so far as my farmers and civil servants in Carleton are concerned, $25,000 a year is a lot of pension for a man of 50. However, I suppose it is nice if you can get it. This needs to be said, sir: Mr. Coyne at age 50 wants more for not working-for not working, mark you-than we pay the puisne judges of the Supreme Court of Canada for working until age 75. We pay the judges of that court $22,500 for working to age 75 and yet Mr. Coyne wants $2,500 more for not

working at age 50. The governor of the Bank of Canada is a very important officer, but the people of this country have a high appreciation of our Supreme Court of Canada. We pay the deputy minister of finance, a most important official, $23,000 for working until 65, but Mr. Coyne wants $2,000 more for not working at age 50. There must be some sense of proportion, some relativity, and it is immaterial to me what the directors approved. I say only that I am ready to face my electors of Carleton at any time on my view in respect of this particular matter.


Lionel Chevrier: Would the hon. member permit a question?


Richard Albert Bell: I did not interrupt the hon. gentleman.


Lester Bowles Pearson: Just who gave him the pension?


Richard Albert Bell: I did not interrupt the hon. member when he was speaking.
Of all the aspects of the speeches that have been made by hon. members from the other side of the house, hon. gentlemen opposite have indulged in more fence straddling over the Coyne memorandum of February 16 than any other aspect. I make no further comment upon the utter impropriety of the release of this rather fantastic document, except to say that this direct and deliberate breach of confidence and privilege is a measure of the reliance which ought to be placed in Mr. Coyne. At times-


Lester Bowles Pearson: Hidden report.


Richard Albert Bell: I hear the Leader of the Opposition say "hidden report". The hon. gentleman certainly never at any time when he was a minister of the crown saw to it that there was a release of any report from the governor of the Bank of Canada to any of the ministers of finance with whom he served in the government.
At times, hon. gentlemen opposite seem to want to get into bed with Mr. Coyne and then they want to be divorced rapidly. They are unable to make up their minds. I put this question to the hon. gentlemen who may speak. Do they adopt the Coyne memorandum or do they not? If it had been presented to them, what would they have adopted of its proposals? What would they have done with this memorandum? Let the Leader of the Opposition, great internationalist that he is, say if he would impose at once a 10 per cent surtariff on all goods whether free or dutiable alike. I think his Sifton allies would be interested in the hon. gentleman's comment.


Lester Bowles Pearson: The hon. gentleman asked me a question, and the answer is no, I would not.


Thomas Miller Bell: So, the hon. gentleman says no. He is now in the clear with his Sifton friends. In order to adopt this particular proposal, we would not only have to denounce GATT but we would have to denounce every trade treaty that this country has entered into under a Liberal government or a Progressive Conservative government. Should we denounce our treaties with the United Kingdom, with the United States, with Australia, and stand alone in the world? Mr. Coyne would have us in a position of magnificent isolation. Not only would we have to denounce our trade treaties, but Mr. Coyne would have us denounce all our tax conventions, terminate all agreements in respect of non-resident withholding taxes and raise the rate to 30 per cent. My hon. friend says, "and without a hearing".
Canada has never had the reputation of being a treaty breaker. I doubt if the country will go along with Mr. Coyne or any of his Liberal allies opposite and give them the opportunity to blacken our international name. Hon. gentlemen opposite, in the budget debate and since, have asserted that tax reductions are a desirable stimulus in times of economic slowdown. What does their erstwhile comrade in arms, Mr. Coyne, say? He advocates an immediate 3 per cent increase in the corporate and income tax. Do my hon. friends adopt that policy? Once you submit the whole of Mr. Coyne's memorandum to critical analysis of this type, you find that obviously it is not all bad and equally obviously it has many features which are totally impractical, some actually mischievous, some so harebrained that it is almost impossible to believe the memorandum was composed by a man who has spent a large part of his life in the field of economics.


Donald Methuen Fleming: I guess "Pick" wrote that too.


Richard Albert Bell: Yes, perhaps it was the ex-clerk of the privy council who played a large part in its composition.
I am afraid, sir, that those who read this memorandum carefully and reflect upon its proposals will have portrayed more vividly than any words of mine the problems endured by the Minister of Finance in endeavouring to deal with this governor. By his own words he has depicted his true competence, his prejudice and his recklessness with regard to the consequences of the measures he advocates. He wants higher levels of taxation and, to use his own words, "without apology". The full extent of the increases are difficult to deduce from the memorandum, but it is clear that they are massive. These increases would be particularly substantial in respect of the oil industry and the mining industry. Depletion 90205-6-474
Governor of Bank of Canada allowances would be reduced, if not done away with. Regrettable and damaging, sir, would be the consequences to many communities in various parts of Canada.
Mr. Coyne's memorandum displays what I might describe as his morbid dislike, almost hatred, of foreigners. This has permeated all his advice to the government. His recklessness in this respect would lead Canada to the brink of disaster. One might go on examining this fantastic memorandum. I only repeat that out of his own mouth is he condemned. The quality of the advice which he is capable of tendering to any government is here exposed for all to see.
Hon. gentlemen opposite naturally seek to defeat this government. That is their right, indeed that is their obligation and that is the democratic way. What I am totally unable to comprehend, however, is how they can give their support to an attempted coup, a coup d'etat, whereby one public servant, violating every principle and ideal of the public service, seeks to bring down the government and usurp the role of this House of Commons. This is not the Canadian way.


Paul Joseph James Martin: That is not what we are trying to do, and you know it.


Richard Albert Bell: That is precisely what hon. gentlemen are trying to do.


Paul Joseph James Martin: We are trying to get the facts.


Richard Albert Bell: If the reports from the grapevine be true, hon. gentlemen opposite will seek to go behind the backs of the elected representatives and seek to have a few old men in another place serve their particular purpose.


Some hon. Members:: Oh, oh.


Richard Albert Bell: Well, sir, if there is one principle that matters, in my view it is the maintenance and preservation of the integrity of the Bank of Canada in the image which Graham Towers gave it. With an utter disregard for consequences, Mr. Coyne suggested that a new governor would be subverted and his ghostwriter in this house apparently said the new governor would be a "stooge". I say, sir, that words like that work a grave national disservice. Let us all remember that Canada is much greater than any one of us; that all of us will pass from this scene but hope we will leave Canada stronger and more united.
This I know: No man will be appointed to the role of governor of the Bank of Canada by this government who is not a strong, vigorous and experienced person capable of giving to the Bank of Canada real and effective leadership, leadership of the type which

Governor of Bank of Canada has been denied to it in these last years. This government believes in the significant role of the Bank of Canada, and as soon as this parliament disposes of Mr. Coyne, that bank will be placed in the soundest position in which it has been since the days of Graham Towers. To that end, I suggest we direct all our efforts.


Paul Theodore Hellyer: Mr. Speaker, the parliamentary secretary rose, he said, to set the issues in perspective. If that was his purpose, he has failed miserably. He sought to erect a straw man out of tangential issues and has completely ignored the two overriding ones. They are first, fundamental justice, the right of the accused to be heard; and second, government responsibility. The parliamentary secretary said our system is responsible government. May I say that there is nothing responsible about this government. In this case it might be more accurate to say a government lack of responsibility, a government which has never been big enough to take responsibility for the unpleasant. Of course, when things go well, it is thanks to government intervention, but when things go badly, it is the fault of someone else.


Some hon. Members:: Oh, oh.


Paul Theodore Hellyer: This has been true from the very outset.


An hon. Member:: Look at the gallery.


Lester Bowles Pearson: All you care about is the gallery.


Paul Theodore Hellyer: I have great sympathy with the gallery. They have had to listen to the limit of their physical endurance to hon. gentlemen opposite.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order.


Paul Theodore Hellyer: First after the government was elected the scapegoat was the Liberals; it was the legacy they were left. Then it was external influences beyond their control, they said, which kept them from running the Canadian economy properly. Now at last it is the governor of the Bank of Canada. Again the government refuses to accept its responsibility and has looked for a scapegoat. It is this insistence on always finding a scapegoat which is so objectionable, Mr. Speaker. This attitude of the government reminds me of a quotation from Morrow:
Any party which takes credit for the rain must not be surprised if its opponents blame it for the drought.
The truth is, Mr. Speaker, that the government has got itself into a box and has chosen a cheap and, as it hopes, an easy way

to lay this blame on the shoulders of someone else. The government has been in constant trouble. The evidence is everywhere. There have been many reports. Here is just a sample. This appeared in the Toronto Daily Star of January 6, 1961 in an article by Mr. Jack McArthur, the financial editor.
I quote it in part:
Painted into a Corner
Here's where it gets funny.
Mr. Fleming, although he apparently would like to reduce interest rates, has painted himself into
a corner.
He has said often and loudly that money policy is a responsibility of the Bank of Canada-and that the federal government has no control over the bank.
He has not even been willing to comment on the central bank's money supply and interest policies.
How can he possibly now try to persuade the Bank of Canada to listen to him? So he and. the government must try to run their own private interest rate policy and pretend the Bank of Canada isn't there.
If that isn't good for a real laugh-and a few tears-then nothing is.
Having been painted into a corner, what is the government to do? The depth of the desperation is shown very clearly by simply comparing the statements of the Minister of Finance in this year's budget with those of last year. This year he proposes as visionary that which last year he said was impossible. One example which has been stated in this house is that of manipulation of the foreign exchange fund. Whereas a year ago he said that it was a speculation with no assurance of success, this year he says rather than by direct government controls, subsidies, quotas or tariffs he would undertake a manipulation which would bring down the exchange rate by indirect methods. Precisely, however, a year ago he said this type of thing would likely lead to direct controls. Now he has made a right angle turn.
This raises a very fundamental question. I was interested in listening to the hon. member for Greenwood (Mr. Macdonnell) this morning. He also seems to be a recent convert. At noon I was reading in Hansard a statement of his where a new policy was being embarked on, and he insisted that the governor of the Bank of Canada be brought to a committee to discuss the issue, that this was in all fairness the only way in which it could be dealt with. Today he takes an entirely different attitude. I remember also, in that same committee at the time the bank act was revised, the hon. gentleman's insisting that some limitation be put on the power of the Bank of Canada to increase the money supply. He it was who feared an irresponsible government. He it was who feared the possibility of some future government starting the printing presses and going into a wild inflation of the Canadian currency. What has happened

in the intervening years to change his mind? Was he more visionary then than now? Or was it simply that he could foresee at that time a government of the calibre and lack of responsibility of the present government?


James MacKerras Macdonnell: Will the hon. member permit a question?


Paul Theodore Hellyer: Certainly.


James MacKerras Macdonnell: What he has said about me at that time is quite true. But will he remember also that at that time I think it was clearly brought out beyond peradventure by the words of the minister of finance and the governor of the bank that if and when a difference of opinion occurred between them it was the duty of the governor of the bank to resign?


Paul Theodore Hellyer: That is quite true. But the government of the day accepted its responsibility and did so promptly. It never tried to hide behind some outside body. I will deal later with what the government could do if it wished to have a machinery which would permit this without the very deplorable situation which has now occurred.
The hon. member for Greenwood of that day would have had grave and serious reservations about the possibilities underlined by the budget of this year. He would want to know what is behind this move. He would want to know the nature and the extent of the alleged obstruction which must be steamrollered out of the way with unseemly haste.
The other fundamental question, Mr. Speaker, is that of fundamental justice. The governor of the bank has been accused of obstructing government policy. The supporting evidence has not been produced. How can this procedure be squared with the bill of rights? I recall July 1, 1960, bill of rights day. The Prime Minister was at his best. The Prime Minister was most eloquent. How our hearts beat with pride and with joy on this great date of bringing in a new era of rights and freedoms for the average Canadian citizen.


William Moore Benidickson: Each individual.


Paul Theodore Hellyer: For an instant he had me convinced that the bill of rights, which I believed in the depth of my heart to be a farce, might in reality be a substantive bill. But where is the bill of rights today? Where are the champions of fundamental rights and human freedoms today?


An hon. Member:: In the government.


Paul Theodore Hellyer: To their shame they now
applaud tyranny. The parliamentary secretary to the Minister of National Revenue cited
90205-6-474J
Governor of Bank of Canada a strange doctrine today. If we gave the governor of the Bank of Canada a chance to be heard, he said we would then have to give the same right to every other government employee, to every clerk. What a red herring that is, Mr. Speaker. Civil servants are employees of the government and they have a right of appeal. The governor of the bank, on the other hand, is responsible to the parliament of Canada. If the government wishes to introduce an amendment to the Bank of Canada Act in order to change the relationship between the governor and the government, it has the right to do so. Not only that, Mr. Speaker, but if it believes it should be done, it has the responsibility to do so. Many people have made this suggestion. Indeed, perhaps that is the type of bill which should be before the house now instead of the one we have at present. In the meantime, the rule of law must apply. The law states that the governor shall hold office for seven years during good behaviour.


Mr. Woolliams:: He has not behaved well.


Paul Theodore Hellyer: The Minister of Finance has not made any categorical accusation of misbehaviour. The accusations are by innuendo; the charges are by inference. If parliament passes this law without hearing the evidence it will be flouting two of its own laws. It will by inference have accused a man of misbehaviour and found him guilty without giving him the benefit of trial. It will also flagrantly disregard the bill of rights, which explicitly denies a statute taking away rights and freedoms which had existed long before the fair weather champions opposite chose to espouse them.
The Secretary of State has stated in his loudest voice that the issue before us today is the issue of the supremacy of parliament. That is not the real issue, Mr. Speaker. There is no question about the supremacy of parliament. The real issue-and it is the same issue embodied in the bill of rights-is the duty and responsibility of parliament not to pass laws taking away from the individual the fundamental right to a fair hearing.
I must oppose this procedure, Mr. Speaker, because I must stand on the principle of the right of a free man to be heard before the court that condemns him.


Some hon. Members:: Question.


Mr. Deputy Speaker:: Is the house ready for the question?


Some hon. Members:: Question.


Mr. Speaker:: It being five o'clock, the house will now proceed to the consideration of public and private bills, the latter having priority.


Herbert Wilfred Herridge: In view of the particular circumstances, I wonder whether we could get unanimous agreement to proceed with order No. 3 on today's order paper under private bills?


John Whitney Pickersgill: I am sorry; Bill No. S-2 has been on the order paper for a very long time. There seems no good reason why it should not be proceeded with. I am afraid there is not unanimous consent.



PRIVATE BILLS


[Stage Direction]
The house resumed from Tuesday, May 30, consideration in committee of Bill No. S-2, to incorporate Aurora Pipe Line Company- Mr Woolliams-Mr. Flynn in the chair.
On clause 1-Incorporation.
Herbert Wilfred Herridge: Mr. Chairman, before proceeding with this, I think the hon. gentleman who replied when I suggested that we get unanimous agreement to proceed with order No. 3 misunderstood our approach. There is a particular reason for getting this bill respecting the Canadian Legion through today. We are not in any way trying to delay the passage of other bills, but owing to particular circumstances I was asked to ask whether unanimous consent could not be given. Unanimous consent has not

been given, therefore, I would move, seconded by the hon. member for Vancouver East:
That the house do now revert to item No. 3 as listed under private bills on today's order paper.


John Whitney Pickersgill: Perhaps I might say a word. I beg your pardon, Mr. Chairman.


Jacques Flynn: I was going to rule on the motion. I cannot accept it because the house has decided to go into committee of the whole on the first item, which has to do with the Aurora Pipe Line Company. The hon. member will understand, therefore, that the decision which he suggests now is one for the house to make and not the committee.


John Whitney Pickersgill: Since I took exception to giving unanimous consent to proceed with the third item on the order paper, perhaps I may be permitted to say a word. It did seem to me that there had been a tendency far too often to pass over some of those contentious measures instead of disposing of them, as in my belief the house should. But if, as the hon. member for Kootenay West says, there is some particular reason for disposing of item No. 3 first, and if it would be understood that the whole hour was not going to be consumed in doing so, I would then be very happy indeed to withdraw any objection I took. If there was no objection in any other quarter of the committee I would be willing to move that we rise, report progress and ask leave to sit again on this bill so that we could carry out the suggestion made by the hon. member.


Some hon. Members:: No.


Eldon Mattison Woolliams: As sponsor of the bill-


Jacques Flynn: Is the hon. member formally moving his motion?


John Whitney Pickersgill: No. I think we ought to hear the hon. member who sponsors the bill before we do that.


Eldon Mattison Woolliams: Perhaps I may say this, Mr. Chairman, and I think I can be brief. The export of the substance in reference to the pipe line itself has been approved by the Alberta conservation board and by the Alberta government and, as it means so much to the economy of Alberta, I do sincerely hope that we can proceed with this matter and complete it today.


Jacques Flynn: Shall clause 1 carry?


Mr. Regier:: No. I move:
That we rise, report progress and ask leave to sit again later this day or at the next sitting of the house.
Motion (Mr. Regier) negatived: Yeas, 7; nays, 135.
Private Bills


Jacques Flynn: I declare the motion lost. Shall clause 1 carry?


Mr. Howard:: Mr. Chairman, the hon. member for Bow River, who is the sponsor of the bill, made some comments during an earlier stage about a motion just dealt with and we have read in the newspapers about the subject matter with respect to which the hon. member for Bow River was talking. Would he be kind enough to give the committee in a formal way at this stage the information which I am sure he has at his fingertips regarding the Alberta gas and oil conservation board?


Terence James (Terry) Nugent: Would you listen to it if he gave you any information?


Frank Howard: I would tell the hon. member that I would have more pleasure listening to the hon. member for Bow River than I would to my friend who just made that interjection. I wonder whether the hon. member for Bow River would give the committee in formation in a formal way about the decision which I am led to believe by the newspapers was made recently by the Alberta gas and oil conservation board and also by the Alberta government?


Eldon Mattison Woolliams: Very briefly, Mr. Chairman, I can say in a few sentences that the application to export condensate and the byproducts of gas was approved by the Alberta conservation board which has jurisdiction in that regard in the province of Alberta. The application of the Hudson Bay Oil and Gas Company was approved and the decision of that board has been approved by the provincial cabinet of Alberta. It is just that simple.


Mr. Peters:: Mr. Chairman, I am still concerned about this matter. I realize that the Alberta government is interested in the matter and the people of Alberta obviously have an interest. In the national sense we in the federal parliament also have an interest in the problem. We are also aware, of course, that the national energy board will have to make some decision on the matter of export of gas in the same way as the Alberta gas and oil conservation board did. I should have liked to have a little more information on what the results of this decision will mean to us.
Although the Alberta board may have made a decision on this matter, I would point out that our opposition to the bill originally was twofold. First, we believe that Canadians wherever possible-and certainly in setting up a new company it should be possible- should have control of the company. Second, we believe that industries arising out of the

Private Bills
development and processing of the condensate should be established in Canada to encourage the development of secondary industry.
I understand that there has been a change in the plans of the company. Originally it contemplated sending the condensate to Chicago where markets had been arranged on a tentative basis. I understand it is now proposed to serve different markets with these condensates. I should like to know from the sponsor whether this means that the development of secondary industry based on the condensate will be in Canada or just where these industries are going to be located. I presume that the Alberta board was interested in this problem and made a decision on that matter.


Jacques Flynn: Shall clause 1 carry?


Frank Howard: Mr. Chairman, I do not want to supplant the hon. member for Timiskaming but I had hoped that the hon. member for Bow River would be able to answer this particularly important question. At the initial stages some months ago argument for the passage of the bill was based upon certain markets being in existence. Is it a fact that these markets are not now in existence? Have the markets changed or altered somewhat? Will the products to be shipped by Hudson Bay Oil and Gas Company and by Aurora Pipe Line Company as is contemplated be sent to markets somewhere else? Has there been an alteration? I think these are very important questions especially in view of the desire of everyone in the house to promote the development of industry in Canada.


Eldon Mattison Woolliams: I certainly want to co-operate in every way and I can only say that when my good friend from Macleod had another bill with reference to a railway line before the house he pointed out that the same by-products were being exported to the United States. Condensate, of course, is a high form of crude petroleum. As I pointed out, it is a surplus commodity in the province of Alberta and it is a case of exporting it. The fact is that we have a surplus in the province of Alberta. The hon. member for Skeena will appreciate that those are the points that will come before the national energy board and will be ironed out at that time on the basis of proper evidence. There is no doubt that if this pipe line is allowed to proceed export will be to a different part of the United States from that mentioned earlier. This is a surplus commodity. It is a by-product of natural gas. As I pointed out on a previous occasion, we have a reserve in the province of Alberta of some 23 trillion cubic feet and the demand in Canada, even

projecting, would amount to about only 10 billion cubic feet per year. It is a surplus commodity as are beef from the foothills of the Rockies and wheat as I have said on previous occasions. It is a commodity to be exported by a pipe line. As I pointed out on previous occasions, in order to export it across an interprovincial or international border it is necessary to form a special company. That was why Hudson Bay Oil and Gas came here to parliament. As a matter of law, we had to come to parliament to ask for incorporation.


Mr. Winch:: May I ask one question of the sponsor? Is the sponsor of this bill in a position to give any guarantee to the committee that the majority of the directors of the subsidiary of Hudson Bay will be Canadian citizens?


Eldon Mattison Woolliams: I am very happy to answer that question. I can give that undertaking. The directors of Hudson Bay and the directors of Hudson Bay Oil and Gas have given an undertaking, which I am certainly willing to give today to this committee. I appreciate that fair question put to me by the hon. member.


Ernest James Broome: I am pleased with the announcement the hon. member has just made. However, I am still opposed to this bill and I shall vote against it. I hope it does come to a vote. I particularly resent the management of the company stating how Canadian they are in their outlook when they offer $28 million-plus of bonds to the Canadian people and suggest this is the proper way for the Canadian public to participate in their operations, and yet they are content to have something like less than 3 per cent equity stock ownership in Canada. I hope we never have another company come to this parliament with that philosophy behind them, because if they do they will run into hot water.


Mr. Kindi:: I wish to speak for only one minute. The last time this bill was before the committee, I rose in my place and tried to present to this committee the importance of this measure in respect of the industrial development of western Canada. There is today a new Shell Oil plant under construction some 14 miles south of Pincher Creek. This plant is drawing from a number of gas wells in that area. When that gas is processed some of the by-products will be ethane, methane, propane, butane and hydrogen sulphide. Certain of these by-products are a drug on the market. We have such an abundance of them that we must export them. The only alternative is to touch a match to the gas and have it flaring out of a pipe

extended into the air. I would rather have these by-products exported than see the gas burnt and wasted.
I wish to close by saying that now that the directors are to be Canadian, as announced by the hon. member tor Bow River, I shall support this bill right down the line.


[Stage Direction]
Clause agreed to.
On clause 2-Provisional directors.
Frank Howard: In looking at the way this clause is worded and comparing it with other private bills, and after talking to members of the legal profession, it seems to me that there is a difference between the words "first" as used here in relation to the persons named as directors, and the word "provisional" as used in other bills. The members of the legal profession tell me that the word "first" does not make much sense in law and that the word "provisional" is the proper word to use. I see you shaking your head, Mr. Chairman, and I do not know whether you are agreeing or disagreeing with what I am saying or whether you are indicating I am not in order.


Jacques Flynn: The hon. member is in order.


Frank Howard: Since the word "provisional" is used in the marginal notes, I would think that the word "provisional" would be more properly used in the clause itself. I just put that thought forward, and perhaps the hon. member for Bow River or others would desire to say something about it. Perhaps the word "provisional" would be better understood than the word "first" if a problem ever arose. I may have been misinformed as to the use of these two words.


Eldon Mattison Woolliams: I am happy to answer that question, I think it is a fair one. When you are incorporating companies that do not have to come to parliament, you always have provisional directors. They are the original promoters or organizers of the company. They are called provisional directors. Actually, these terms are synonymous. The term "first directors" is used as I understand it from legal counsel who drafted the bill for the company, and this is the form that was used on other occasions. I think I am right on that point. However, I believe the terms are synonymous. The point is well taken. I think the legal advice the hon. member for Skeena has received was probably correct. Provisional directors exist in all companies where the company is to be a provincial company or where you get leave of the Secretary of State to form a company. In this case, the first directors are the provisional directors of the company. These first directors are the
Private Bills
directors who take over and organize the company if it is granted incorporation by parliament.


Frank Howard: I do not wish to belabour the point, Mr. Chairman, but I would point out with respect to Bill No. S-16, sponsored by the hon. member for Davenport, which is one that parliament dealt with a short time ago, the word "provisional" is used in clause 2. The clause states that the persons named in section 1 shall be the provisional directors. I only mention this because I would not wish to see any great difficulties caused in the future as a result of the use of this word. If, in fact, "first" means "provisional" and the gentlemen mentioned in clause 1 of the bill are only the provisional officers engaged in the mechanical operation of forming the company and the shareholders will then elect their own directors, then that is quite acceptable.
In so far as the directors of the company subsequent to the first or provisional ones are concerned, I am assuming that they will be Canadian citizens as a result of the reply of the sponsor of the bill to a question by the hon. member for Vancouver East. In my opinion, this should not be left to chance, as it were. If we are concerned about this sort of thing, perhaps we should take a more direct approach to it rather than, as I say, leaving it up in the air. I am not, however, doubting the word of the hon. member for Bow River. If we are establishing Canadian companies in Canada, with this concept of Canadian control, I wonder if the hon. member for Bow River has any suggestions for approaching that problem more directly than is done in clause 2?


Eldon Mattison Woolliams: All I can say by way of reply is that this is the form used in previous bills incorporating pipe lines. It is a point to consider. The original or first directors are set out in the clause and they, as I have said, are the first directors of the company. I have given one of the hon. member's colleagues an undertaking that the company will be manned by Canadian directors.


William Arnold Peters: I have appreciated the remarks of the hon. member for Bow River so far. He is being more co-operative and not at all like his previous self. I am pleased also with the remarks he has made in respect of these directors. This answers some of the problems we have had in mind in reconciling the sale of these refinery products in the export market. It seems that this is part of the problem connected with the lack of secondary industries in Canada. If the directors of this company are Canadians, then this probably would eliminate many of the

Private Bills
doubts we have as to whether or not these vital natural resources are going to be used to the advantage of the Canadian economy. With that thought in mind I should like to move the following amendment:
That clause 2 be amended by adding thereto the following subclause to be numbered 2:
"All of the directors of the company shall at all times be Canadian citizens ordinarily resident in Canada."
Amendment agreed to: Yeas, 55; nays, nil.


Jacques Flynn: I declare the amendment carried.
Clause as amended agreed to.
Clauses 3 to 11 inclusive agreed to.


[Stage Direction]
Preamble agreed to.
On the title.
Erhart Regier: I wish to assure the committee that I intend to take only half a minute. However, I feel that it is a bit of a contempt of parliament for the Alberta energy board to have taken the measures it has taken and also for the cabinet of the government of Alberta to have taken the measures it has taken in this regard before allowing the parliament of Canada to reach a decision. They have given all the rights to the parent company even though, I will admit, they have not dealt with the Aurora Pipe Line Company as such. However, they were completely aware of the implications of their actions. They were also aware of the fact that this matter was before the House of Commons at the time they made their decision. I do not know whether there is any proper procedure but I would say that the Alberta energy board and the Alberta government are guilty of being in contempt of this House of Commons because they took action which completely nullified any decision that we may make either one way or the other.


Frank Howard: I should like to follow along with that line of reasoning very briefly, Mr. Chairman. You will recall that, at previous stages of discussion of this bill, numerous arguments were made that what parliament should do is merely to pass the bill without question or discussion because we have a national energy board, because it was established by parliament because it had certain functions and responsibilities and so on. It was argued that we should therefore entirely give up the right to make a determination of these matters to a board which has been established by parliament.
As you will know, Mr. Chairman, we objected to that line of reasoning as not being valid. What the hon. member for Burnaby-Coquitlam has just said, in my opinion, has even more force than our argument previously

because the board that made the decision in this regard is not a board that has any responsibility to the parliament of Canada. It is one established by the legislative assembly of the province of Alberta and the provincial government is involved in that particular decision.
It is true, of course, that the government of Alberta cannot grant licences for or deal with exportation to another country or to another province. Here the national energy board comes into the picture. However, I think the Alberta gas and oil conservation board is perhaps not entirely to blame in this regard, but rather that Hudson Bay Oil and Gas Company has acted a bit contemptuously also, knowing full well that as the promoter or parent company of Aurora Pipe Line Company, it had applied or petitioned for a private bill to establish this company. Hudson Bay Oil and Gas Company also knew full well that the matter had not been dealt with by parliament. Yet at the same time as this legislative action was not completed it proceeded, as I say in a contemptuous way for the feelings of parliament, to make applications and to process those applications before the Alberta conservation board, without having any statutory approval of the particular company which it was fostering and promoting.
It is a bit contemptuous of and a bit of an affront to parliament for a private company so to petition, to plead and to argue for the establishment or the incorporation of a certain company to do certain things and then, without regard to what decision parliament might make, to proceed on its own hook to get authority from other sources to do some of the things with which Aurora Pipe Line Company will be connected.
It would seem to me that parliament should concern itself more with the activities of private companies, especially those controlled in the United States, as is Hudson Bay Oil and Gas Company and as this company will be. Parliament should concern itself with the activities of those companies especially when they are handled in this particular manner, especially when a petition is made to incorporate a particular company because the law requires it-that is to say, the National Energy Board Act requires it-and then by the back door they go somewhere else and proceed just as if parliament had endorsed and authorized the establishment of this particular company.
On that basis alone I would be inclined to object to the passage of the bill and to vote against it regardless of the merits that exist for voting against it in the field of international control. I think it should not go unnoticed that Hudson Bay Oil and Gas

Company have acted in this way, as is probably typical of companies of this type controlled by what the Prime Minister referred to, generously or ungenerously, as Texas buccaneers. I think that this is an indication of the manner in which they are wont to operate and I do not think that parliament should let it go unnoticed.


[Stage Direction]
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the bill be read the third time?


Some hon. Members:: Now.


Mr. Speaker:: By leave, now?


Some hon. Members:: Now.


Eldon Mattison Woolliams: the third reading of the bill.


Frank Howard: Mr. Speaker, just before the motion is put to the house, may I say this. I have no intention of dragging the house through the formal procedure of a division, but I merely wish to place on record that I intend to vote against the incorporation of this particular company for the variety of reasons we have given in the past and particularly because of the contempt with which Hudson Bay Oil and Gas Company seems to treat the people and natural resources of this nation.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Question.


Mr. Speaker:: Those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: Those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.


Frank Howard: On division.


Mr. Speaker:: Carried on division.
Motion (Mr. Woolliams) agreed to and bill read the third time and passed on division.


Mr. W. G. Beech (York South):: Mr. Speaker, I wonder if we could proceed with item No. 3 on the agenda, the bill respecting the Canadian Legion?


Frank Howard: It seems very strange to me that the hon. member should now ask to proceed with this item when he voted against proceeding with it a while ago.
Private Bills


William Arnold Peters: He voted against proceeding with it.


Mr. Speaker:: The hon. member for York South suggests that we take item No. 3 before item No. 2. Is it agreed?


Some hon. Members:: Agreed.



THE CANADIAN LEGION

[Stage Direction]
The house in committee on Bill No. S-23, respecting the Canadian Legion-Mr. Beech -Mr. Flynn in the chair.
Clauses 1 and 2 agreed to.
On the preamble.
Herbert Wilfred Herridge: If we have the time, Mr. Chairman, I just wish to say that this amendment is intended to recognize 35 years of service on the part of the Canadian Legion to veterans, their dependents and communities across Canada. This work has been carried on through their branches and their councils in dominion and provincial commands. The results are seen in the veterans charter, amendments thereto and the multitude of community projects undertaken by the Canadian Legion. Their good work has been supported by numerous ladies' auxiliaries. I might say on behalf of this group that we are very pleased to see this amending bill pass this afternoon.


William Moore Benidickson: I simply wish to say with respect to this bill, Mr. Chairman, that it is true it could have come before the committee last week. In the hour devoted to legislation of this type I took up some time of the house to emphasize the importance of the legislation with which we were then dealing.
Some hon. members of the committee have wondered why I did not take a stand on the original motion during private members' hour today consistent with the majority of the members of my party. First of all I would say we are dealing with private legislation and no responsibility exists, as far as I know, for party solidarity. Second, I wanted further information with respect to the decision of the energy board of the province of Alberta on the other bill. However, I wish to say that last week I had no intention whatsoever of delaying the progress of this bill relating to the Canadian Legion. On the contrary, in the veterans affairs committee I have given evidence of my interest in advancing the activities of this association.


Harold Edward Winch: Don't talk it out.


William Moore Benidickson: In view of what I have heard behind the scenes concerning my remarks last week on another bill of consequence I might say I felt obliged to vote as I
7510	HOUSE OF
Governor of Bank of Canada did. If I may say so, I did this with the full indulgence of my leader. We are anxious to expedite the passing of the Canadian Legion bill.	[DOT]


[Stage Direction]
Preamble agreed to.
Title agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
On the order:
House in committee on Bill No. S-19, respecting The Cumberland Railway and Coal Company and the Sydney and Louisburg Railway Company (Without amendment)-Mr. Maclnnis.
Gordon Minto Churchill: Mr. Speaker, I wonder
whether the house would consider going on with Bill No. S-19, or is it contentious?


Some hon. Members:: Agreed.


Some hon. Members:: Six o'clock.


William Moore Benidickson: Will this bill take only a few minutes?


Some hon. Members:: Six o'clock.


Mr. Speaker:: It is not quite six o'clock. I think the motion should not be put in the absence of unanimous consent.


Gordon Minto Churchill: Was unanimous consent not given?


Mr. Speaker:: I think not. There was objection on my left.


Mr. Crouse:: Would you please tell us who was objecting, Mr. Speaker?


Frank Howard: Mr. Speaker, the sponsor of the bill is not here. I think it requires more examination than could be given to it in a minute. The Minister of Veterans Affairs (Mr. Churchill) wants the rules adhered to.


William Moore Benidickson: There was not unanimous consent.


Mr. Speaker:: Order. The hour for consideration of private and public bills having expired, the house will revert to the order of business which was interrupted at five o'clock.



BANK OF CANADA


Gordon Minto Churchill: that the house go into committee to consider Bill No. C-114, respecting the Bank of Canada.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.


Jacques Flynn: Order. House in committee of the whole on Bill No. C-114, respecting the Bank of Canada. Shall clause 1 carry?


Some hon. Members:: Carried.


William Moore Benidickson: Mr. Chairman, may we call it six o'clock?
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 7.30 p.m.
On clause 1-Office of governor deemed vacant.
Lester Bowles Pearson: We are now in committee stage on this short but very important bill which deals with the office of the governor of the Bank of Canada and which states that it shall be deemed to have become vacant "immediately upon the coming into force of this act". That is all, but that is a lot.
In the first place, I should like to point out, in contradiction to some of the things which were said about this office of governor this afternoon, that the governor of the Bank of Canada is not a civil servant. A lot of the argument which was based on that this afternoon has, of course, no validity at all. I should also like to point out that this bill, in a sense, though in a very wrong sense, does represent an acceptance by the government of some responsibility, if not for monetary policy, then at least for the governor of the Bank of Canada. This afternoon we heard an extraordinary statement from the Secretary of State-extraordinary in relation to the statements we have heard from the Minister of Finance-that the government does, indeed, have responsibility for monetary policy and, in that sense, for the governor of the Bank of Canada whose office is to be vacated as a result of this bill. I say this was a most extraordinary statement because it has been denied vehemently and repeatedly by the Minister of Finance. Perhaps those two ministers might get together in the interest of cabinet solidarity and decide what is the position of the government in this vital matter.
In committee we can ask some questions. I know this is a procedure which is deprecated by the hon. member for Edmonton West who objected to having this matter sent to a committee-not, of course, to the committee of the whole, but to a committee-because it would mean that "the bully boys of the Liberal party," which I think was the expression he used, would ask questions. To him it was a terrible thing that the masses

of Tories in committee were going to be overridden by the bully boys in the Liberal party, so little confidence has he, apparently, in the ability of the majority to take care of itself.
We are in committee now. I can assure the hon. member for Edmonton West we have no Machiavellian purpose in the questioning we intend to put to the minister. As a matter of fact, the hon. member carried Machiavellianism to absurd lengths this afternoon when he said this whole business which is now before us, this bill in committee, was nothing less than a subtle plot on the part of the Liberals to get rid of Mr. Coyne. That is a new interpretation of this issue. Mr. Coyne offended us, presumably, in the elections of 1957 and 1958 so we are getting rid of Mr. Coyne by luring him into this situation. That, Mr. Chairman, is something very new indeed, and in its absurdity it is only equalled by some of the statements the hon. member for Carleton made this afternoon.
On March 21, 1957, the hon. member for Eglinton-he was not then minister of finance -had this to say as reported in Hansard at page 2557:
-the Minister of Finance, so far as we are concerned-
He is speaking of the minister of finance of that day. The hon. member was talking about the Bank of Canada matters.
-is not going to hide behind the policy of the Bank of Canada. He is going to bear his own responsibility.
Well, the present Minister of Finance is going to bear his own responsibility in this matter today and we intend to examine him on this very short bill in a way which I hope will elicit or bring to light some of the issues in this matter which have not been brought to light so far, so that we may be enlightened with regard to some matters about which we have only had partial, subjective and prejudiced evidence. We are, of course, within our rights in cross-examining the minister on all aspects of this bill which is designed to vacate the office of the governor of the Bank of Canada. It would, of course, have been much easier, much more effective in every way, besides being fairer to the government and to the governor of the Bank of Canada if this matter could have been submitted to the kind of committee where all those concerned might have been questioned. That is not possible, but we have at least the opportunity in committee of the whole to question the minister himself. The minister will not, of course, object to that, because he himself invited it, and in order to anticipate any difficulty which might conceivably arise in the hours ahead I should like to put on record the
Governor of Bank of Canada words of the minister on this point as reported at page 7096 of Hansard of June 26. The hon. member for Timmins was speaking, and had this to say:
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.
Then the minister replied:
Yes; you will have the committee of the whole after second reading-
For cross-examination, and that, of course, Mr. Chairman, is what we propose to do.


William Moore Benidickson: That is our present position.


Donald Methuen Fleming: The hon. member is adding some words; he should not be attributing all the words to me.


Lester Bowles Pearson: I am quoting exactly what the minister said at page 7096 of Hansard: Yes; you will have the committee of the whole after second reading.


Donald Methuen Fleming: The hon. member added the words "for cross-examination".


Lester Bowles Pearson: Well, the hon. member for Timmins said:
We are not allowed even to get the minister before a committee where he can be cross-examined.
The Minister of Finance said:
Yes; you will have the committee of the whole after second reading.
For what purpose did the Minister of Finance think we were going to have the committee of the whole after second reading except that of the cross-examination referred to by the hon. member for Timmins.


William Moore Benidickson: Just one-sided.


Lester Bowles Pearson: It is, of course, a one-sided examination but we shall do the best we can with it in the absence of other witnesses who might be able to throw some light on these matters.
Now, Mr. Chairman, this matter was first brought into the House of Commons on June 14 as found at page 6326 of Hansard. The Minister of Justice intervened at that time and had this to say:
Legislation to amend the Bank of Canada Act itself will be introduced shortly.
That was a plain and categorical statement but like so many statements which come from hon. members on the treasury benches, it had no foundation whatever in fact because this is not legislation to amend the Bank of Canada Act which the Minister of Justice said would be introduced shortly. It
7512	HOUSE OF
Governor of Bank of Canada is not even legislation which had been introduced shortly. If the government had been anxious to clear up this matter quickly they would have introduced this legislation at once; they would have allowed it to go before a committee. It could have been dealt with in committee; it could have been brought up and dealt with on third reading and the matter would have been cleared up one way or the other. That was not done. It has been allowed to drag on. On June 14 the Minister of Justice said that legislation to amend the Bank of Canada Act itself would be introduced shortly. We have not got that, and apparently there was never an attempt to do that. That was just an argument made by the Minister of Justice. The legislation we have is merely this:
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 repeat "shall be deemed to have become vacant". This is an office not of a civil servant but of a high public official appointed not at pleasure but for good conduct, which office will be deemed to have become vacant by an act of parliament, if it is passed by parliament.
There are lawyers who have already said that an office which has been vacated in this way by an act of parliament can be filled only by an act of parliament. I leave the lawyers to argue that and perhaps we shall have some argument on it before the evening is over. But I ask the government and the minister why the Bank of Canada Act itself was not amended to deal with this matter, as the Minister of Justice said it would be? Why was it done in this way? If this crisis had to arise-and it did not have to arise but the government assured that it did arise-if this situation had to be dealt with by legislation -and the government again assured that it had to be dealt with by legislation-why was not advantage taken of this unhappy opportunity to amend the Bank of Canada Act so that a situation of this kind could not arise in the future? That was not done. The government preferred to operate in this other way.
Why was our Bank of Canada Act not brought into conformity with the bank of England act under which a situation of this kind could not arise? There the minister of finance, or the chancellor of the exchequer, who is responsible in this area of policy, may, in a dispute with the governor of the bank of England, impose his views on the government of the day on monetary policy in writing, and if the governor of the bank of England disagrees and there is no way of resolving that disagreement, he resigns in 

writing and his resignation can become the subject of public and parliamentary information and discussion.
In this situation the responsibility for monetary policy is firmly fixed on the government, as the Secretary of State said this afternoon it should be fixed on the government, and as the Minister of Finance said yesterday it was not fixed on the government. The governor of the Bank of Canada who is being thrown out of his jobs by this bill without a hearing before the parliament which is throwing him out of his job has written, "the bank"-that is, the Bank of Canada- "must take into consideration any views on monetary policy expressed by the government and in the event of a sufficiently serious difference of opinion on a matter of an important point of policy it would be the duty of the governor to resign". That, of course, is a doctrine we accepted long before the present government paid even lip service to it, but in this case, Mr. Chairman, the governor of the Bank of Canada denied that there is the kind of dispute that justifies this type of legislation. He asks for evidence to refute the statements he has made. He asks for a hearing before this kind of legislation is passed.
The idea expressed by the governor of the Bank of Canada, which is the idea we have expressed in this house, is a sound one and embodying this idea-and this might have been done at this time to avoid this kind of unhappy crisis in the future-the bank of England act reads, and I quote section 4(1):
The treasury may from time to time give such directions to the bank as, after consultation with the governor of the bank, they think necessary in the public interest.
Does the minister accept that as the responsibility of the government? He does not; the Secretary of State does.
Section 4(2) reads:
Subject to any such directions, the affairs of the bank shall be managed by the board of directors in accordance with such provisions (if any) in that behalf as may be continued in any charter of the bank for the time being in force and any bylaws made thereunder.
Instead of that kind of approach to this situation, when the government by its policy and by its tactics made such a situation inevitable, the government preferred to bring in the kind of bill we have before us. They preferred to declare this office vacant, by this bill and to discharge a high public official who holds office not at pleasure. I heard the hon. member for Carleton this afternoon try to assimilate the position of the governor of the Bank of Canada with a military officer who might be discharged in wartime. Of all the fantastic comparisons that probably is

the most ridiculous that has been made in this house for many years. No doubt he brought that particular military officer into his argument because that officer ran once as a Liberal candidate. But the idea that a public official such as the governor of the Bank of Canada holding his office on good behaviour should be assimilated to a military officer who should be discharged if he defaults in his duty in wartime, not by parliament but by the army or by the Department of National Defence, is just as ridiculous as the idea that a civil servant who has a protection, who has an appeal against injustice on dismissal should be assimilated with an official such as the governor of the Bank of Canada who holds his office on good behaviour, just as a judge holds his office on good behaviour and not as a deputy minister who holds his office at pleasure.
If you are to discharge by act of parliament as we are doing in this bill an official like the governor who holds his office on good behaviour, surely, Mr. Chairman, there must be evidence of misconduct to justify this kind of parliamentary action and the man who is charged with misconduct must surely be given a chance to defend himself before a committee of the parliament which is being asked to throw him out of his job. That is simple, elementary justice, and that is the issue in this bill. That justice has been denied to the governor whose office is being vacated by this bill and it is being denied without evidence having been brought forward to support the government's contention that there has been a fundamental difference of opinion between the governor and the government over all these years, a fundamental difference of policy discovered in the last month or two by the Minister of Finance who over the years before had been defending this governor against criticism from this side.
The Minister of Finance said in this house on February 21, as found at page 2266 of Hansard:
Since this government came into office there has never been the slightest interference with the bank's monetary policy.
This afternoon we heard the hon. member for Carleton say that over all these years the governor of the bank has been frustrating the economic, fiscal and other policies of the government, including monetary policies, and in spite of all that the Minister of Finance says, "Since this government came into office there has never been the slightest interference with the bank's monetary policy". Why this sudden interference on May 30 to the extent of asking the governor of the bank to resign without an opportunity to appear before a committee of the House of
Governor of Bank of Canada Commons which is being asked by legislation to throw him out of his job?
On February 21, 1961, the minister said in the same debate, as found at page 2257 of Hansard, that the government's position regarding the Bank of Canada is comparable to that with regard to the Canadian Broadcasting Corporation and that the government must keep its hands off the latter. That was the minister's doctrine of non-interference until May 30, 1961. What happened then? We hope during this committee hearing to have some light thrown on what happened then. We were told again this afternoon that it was a question of irreconcilability in regard to questions of fiscal and monetary policies. We did not hear anything about this until the last two or three weeks, and in the charges which have been levelled by the minister in the last two or three weeks against the governor of the Bank of Canada, charges which we asked to be brought before a committee of this house so that all parties could deal with them, and some of which were mentioned this afternoon, there is one major and specific charge levelled by the minister against the governor of the bank which might, if it could be substantiated, justify the government in asking for the governor's resignation. Here is the charge that was made by the Minister of Finance the other day:
That request-
This was the request made in 1957-58.
-which was designed by the government to ease tight money-
This is an important charge, an important accusation.
-was rejected by the governor firmly and angrily.
Let the minister, before this committee hearing is over, give us some evidence to support those words because we have no evidence. He has given us no evidence yet. On the contrary, on February 14, 1958, this was denied by the minister. I put these words on Hansard the other day and they bear repeating in respect of this one concrete, serious charge that the governor of the Bank of Canada rejected firmly and angrily a request from the government designed to ease tight money. On that point the Minister of Finance had this to say on February 14, 1958:
Money Is more plentiful, credit is somewhat easier and interest rates have been reduced to a remarkable extent in recent months.
Let the minister reconcile that statement with his charges levelled against the governor of the Bank of Canada, the main charge in his indictment which asks the House of Commons, because of that major charge, to pass an act of parliament, without referring
7514	HOUSE OF
Governor of Bank of Canada it to a committee, to throw the governor of the Bank of Canada out of his job.
Then there is the general charge which the minister repeated so often, and I quote it from page 6314 of Hansard, that the governor had "a rigid attitude on the maintenance of high interest rates". The minister has spent a lot of time in this house defending the governor and defending the government against our charge that there were high interest rates and trying to prove as recently as last February that those interest rates were lower than comparable rates in the United States and in the United Kingdom. Now he accuses the governor of the Bank of Canada of a rigid attitude on the maintenance of high interest rates.
Then, of course, we come to another clause in the indictment which has brought this bill before us, that the governor made speeches. That has been dealt with pretty effectively this afternoon. I will come back to the speeches a little later.
As far as interest rates are concerned, the minister said in February of this year, as found at page 2267 of Hansard, in an effort to exonerate the government and, indeed, to exonerate the governor from this charge of high interest rates:
Interest rates are determined... in this free economy in the light of thousands of transactions. It is a matter of the operation of the forces of supply and demand within quite limited statutory restrictions.
When the minister was specifically asked by the hon. member for Welland a couple of weeks ago, as found at page 6812 of Hansard, whether he had ever asked the governor to increase the money supply or to reduce interest rates he refused to reply. He said that was confidential information. We must not be told anything about that. Perhaps he will say something about that tonight.
We have also not only the minister's silence on this matter, not only the minister's contradiction of himself on this matter, but we have this sweeping denial of these charges by the governor in his statement of June 15 in which he said:
I repeat again that at no time has the Minister of Finance criticized or expressed a difference of opinion with the monetary policy being pursued by the Bank of Canada which, the bank and its board of directors were entitled to assume, carried the tacit approval of the government.
Over all these years the governor of the bank and the directors of the bank carried on and the only criticism the bank received on its monetary policy was from this side. The minister defended the bank and the bank had every right to assume that its policy was in consonance with the policy of the government. Then suddenly on May 30 the governor has to resign.


If the Minister of Finance now states that Mr. Coyne would not follow expansionist money policies, that he would not follow the expansionist money policies of this recent budget which provided for $65 million of tax reduction for expansion, how does he explain his statement on February 21 as found at page 2265 of Hansard? These are all questions which I expect the minister to deal with in the course of this committee discussion. How does he explain his statement on that date about the increase of the money supply in 1960 over 1959? How does he explain this statement, as recorded at page 2266 of Hansard for February 21, 1961:
The figure at December 31, 1960, is by far the largest on record and it is 5.5 per cent higher than the corresponding figure at the end of 1959.
Was the minister sincere? Was he telling the truth when he made that statement? If so, that means there was no disagreement between the governor and the government on the level of the money supply at least until February 21, 1961. What happened after that time? When the minister, according to his remarks reported at page 2267 of Hansard, defended the adequacy of interest rates and said that they were lower in Canada than in the United Kingdom and close to those of the United States, was he sincere? Was he telling the truth? If so, Mr. Chairman, there was no disagreement between the government and the governor on interest rates until after February 21, 1961.
When the minister, at page 2268, denied that the Bank of Canada had subordinated monetary policy to the interest of debt management, and when he defended the debt management policy of the government, including the conversion loan, was he sincere then? Was he telling the truth? If the answer is yes, then there was no disagreement between the government and the governor on the relations between debt management and monetary policy or on debt management policy itself. All of these things were fine in February of this year when we debated this matter. What has happened since that time to make the minister so drastically change his mind in regard to the policy of the governor of the bank that he had to throw him out of his job by an act of parliament without giving the governor a chance to be heard by a committee of this house?
When the Minister of Finance said a little earlier last year, on March 31, 1960, as reported at page 2673 of Hansard, that to contain inflationary pressures the government had reduced its borrowings and held a firm check on the expansion of government expenditures, was that in opposition to Mr. JULY 4, 1961
Coyne's views? Did the government disapprove of the fact that the bank increased the money supply between April and October, 1958 to help the conversion loan?
Then, Mr. Chairman, leaving the minister for a moment, to expose the hollow hypocrisy of this present attack on the governor, let us look at the Prime Minister's remarks on the "Nation's Business" on October 8, 1959, at a time when hon. gentlemen opposite tell us now the difference between the governor and the government had become irreconcilable. Having stated at that time that the economic climate had changed from one of recession to one of dynamic recovery, phenomenal economic recovery, the Prime Minister went on to say that this made money harder and more costly than heretofore; that interest rates had materially increased because the commercial banks had restricted their lending operations. Did he blame this on the governor of the bank or Bank of Canada? He blamed it then on the commercial banks.
Then, the Prime Minister went on to say:
In the first year after the government took office, there was a significant increase in the money supply in Canada. We were fighting recession.
This was the very year, that first year after he took office, that the Minister of Finance now tries to tell us he asked the governor of the Bank of Canada to increase the money supply and was firmly and angrily rejected by the governor of the bank. This is the main clause in his indictment against this governor whom he would now throw out of office without a chance of being heard before the banking and commerce committee of this house so that the governor could give his version of some of these statements.
The Prime Minister went on, in boasting about what the government had done to fight the recession by increasing the money supply, to say that it is the Bank of Canada, not the government that controls the money supply in Canada. From the end of June, 1957 until October 1, 1959, the Prime Minister and the Minister of Finance boasted that the money supply in chartered bank accounts had gone up from $11.5 billion to $13 billion and that in the past year the money supply had remained comparatively stable as a bulwark against inflation. Does that look as though the government were opposed to the policy of the Bank of Canada? The whole thing, Mr. Chairman, is arrant hypocrisy got together these last few weeks to buttress a case levelled against the governor of the Bank of Canada for some other reason, and to conceal the government's own confusion and their own ineptitude in the face of economic problems that were mounting.
There is no misconduct that can be levelled against the governor of the Bank of Canada
Governor of Bank of Canada who can be removed only for misconduct in monetary policy. Has there been any misconduct in what he has been saying in the last few years? If so would that justify his removal from office? Well, there was a meeting between the governor and the minister on March 18. We have heard quite a bit about that. At that meeting I believe the deputy minister of finance was present. I should like to ask the minister

and no doubt he will give us the information when he comes to reply to these questions-what were the subjects discussed during this meeting, other than the public speeches made by the governor? We know that the public speeches made by the governor were discussed. I ask the minister, did he personally object at that time to these speeches or did he make representations on behalf of his colleagues? What were those representations, and was this the first occasion, in March, 1961, that the Minister of Finance, either on his own behalf or on behalf of his colleagues, took exception to the speeches made by the governor of the Bank of Canada?
At page 6352 of Hansard for June 14, the minister is reported as saying:
I have been told by certain members of the board of directors of the Bank of Canada, to whom the governor is in a certain sense responsible, that some of them had given him warnings about these speeches.
I wonder if the minister would mind elaborating on that a little bit? He had been told by some directors that they had been warning the governor about his speeches. In March, then, he told the governor to make no more speeches of this kind, after the governor had been speaking for some years on these subjects and certainly since 1959 and at a time when those speeches were questioned in this House of Commons by the opposition and not a word of criticism came from the government. There was nothing but a defence of the right of this man to make these speeches. Now, the minister has the effrontery to put this forward as one of the reasons why the governor should be thrown out of his job without a chance to be heard in his own defence before a committee of this house.
When the minister defended the right of the governor to make public speeches, as he did in February of this year, on the ground that Mr. Coyne was a citizen of a free country and the minister had no right of censorship, was the minister sincere at that time? Was he telling us the truth? If he was, Mr. Chairman, that means that until February 21, 1961 at least, the governor's speeches were not an issue. Why did they become an issue after February 21? Since on February 21, 1961 the minister had told the house he had
7516	HOUSE OF
Governor of Bank of Canada no right of censorship over the speeches of the governor of the Bank of Canada, when and why did he change his mind about this right of censorship which he repudiated a few short months ago? Since the minister now claims he had been for a long time of the opinion that these speeches were putting the government in an embarrassing position and that the bank was becoming a centre of political controversy, why did the minister wait until March, 1961 to raise the issue with the governor?
Having raised the issue on March 18, did the governor agree to remain silent and not make any more speeches? When the governor acepted the minister's request on March 18, could the minister expect from the governor any more than that? Did he not feel that the issue had been satisfactorily settled? If so, why did he drag it up on May 30 along with the pension? There are a good many other things we want to bring up in this committee discussion, Mr. Chairman. One is the relationship of the directors, not only to the governor over this issue but the relationship of the directors to the minister, and the contact that they had with the minister. It is quite clear that all contacts, and all communications, effective consultation and communication between the governor of the Bank of Canada and the minister, had disappeared over the years. I admit that it was an impossible arrangement. However, I believe that the minister had more to do with that responsibility and with that negative relationship, than had the governor himself.
But while that relationship did not exist between the governor and the minister, apparently a very close relationship existed between some of the directors of the board and the minister and perhaps the minister will explain that kind of relationship. But that kind of relationship was not close enough, so we are told now by the minister, to inform the minister that this Tory board of directors voted an increased pension to the governor of the Bank of Canada in February, 1960.
Under a pension committee headed by Mr. Bryden who had been working on this subject for a long time or for some months, this Tory subcommittee and this Tory board voted this increased pension to the governor of the Bank of Canada in February, 1960. Yet the minister now tells us he heard nothing about it until the spring of 1961. That is a shocking state of affairs. The assistant deputy minister was at the meeting of the board when the pensions were increased by this Tory board of directors. The deputy minister was at the next meeting when the minutes of the previous meeting were read out. The assistant deputy minister knew about it. The deputy


minister knew about it. But the minister tells us he did not know about it.


William Moore Benidickson: The minister was not
reading the minutes.


Lester Bowles Pearson: Not knowing about it until the spring of 1961, on May 30, he raised this matter as one of the reasons why the governor of the Bank of Canada should immediately resign. And so the story goes, Mr. Chairman. There are a great many points we hope to raise during this committee discussion.


Mr. Drysdale:: What about the oath of secrecy?


Lester Bowles Pearson: Someone says "What about the oath of secrecy?" The minister has referred to many of these discussions in the House of Commons. This is the House of Commons. This House of Commons is being asked to take action by legislation to throw a man out of his job; I refer to the governor of the Bank of Canada. We have a right to find out what is behind this action and to get all the information. The minister himself says the House of Commons is a court of appeal. We have not only a right but a duty to get this information. We should have been very glad indeed if this matter could have been sent to a committee where it could have been gone into in great detail, where the witnesses could have been called. In the light of the report of that committee the House of Commons could then have been asked to take action. That committee, that evidence and that investigation are as much the right of the government as the governor of the Bank of Canada. Why is it that the government has flatly refused to allow this kind of investigation? What has it to hide? What has it to conceal?


Some hon. Members:: Oh, Oh.


William Moore Benidickson: The minister is vulnerable.


Lester Bowles Pearson: We are now in committee of the whole. In this committee of the whole the minister has invited cross-examination. May I say, Mr. Chairman, that he is going to get it.


Erhart Regier: Before the minister replies to the Leader of the Opposition I should like to ask him to include in his reply an answer to what appears to me to be a rather important matter. From the budget papers or the budget we have learned that the minister this year will have to apply to the money market of Canada for an amount in excess of $2 billion. This is to cover his ordinary operating loss as a result, as I have indicated previously, of poor housekeeping

in an amount of, as he put it, between $600 million and $700 million. This amount includes also hundreds of millions of dollars or almost a billion dollars in advances to the industrial development bank, the Central Mortgage and Housing Corporation, the unemployment insurance commission, the Canadian National Railways and the like. In addition, I understand there is about $1 billion of indebtedness of the government that is falling due within the current fiscal year.


William Moore Benidickson: What about the exchange?


Erhart Regier: In other words, as I add it up, the minister will have to appeal on the money market for an amount that equals roughly-


Gordon Minto Churchill: The hon. member is out of order.


Erhart Regier: -a third of the budget of the minister, a little over $2 billion.


Richard Albert Bell: The hon. member is inaccurate and out of order.


Erhart Regier: No; I am not inaccurate. I am only quoting back the actual statistics supplied to the house by the minister-


William Moore Benidickson: Just think of the gamble on the exchange fund.


Erhart Regier: -in his papers and in the speech he made. The parliamentary secretary will not deny that the minister admitted he was going to have an operating deficit of between $600 million and $700 million. The reports indicate that he will need $1 billion in order to meet the obligations of this government that are falling due in this fiscal year.


Gordon Minto Churchill: I rise on a point of order, Mr. Chairman. The hon. member is dealing with matters which are not pertinent at all to the bill before the committee.


Erhart Regier: Speaking on the point of order, may I say this. I have now asserted that the minister will have these needs for the current fiscal year. What I should like to know is this. Have these needs been discussed with the governor of the Bank of Canada, the man most involved in meeting these needs of the government of the day? Is it possible that the governor of the Bank of Canada opposed the measures recommended by the government in order to meet this horrible obligation we are now facing in our national financial affairs?


William Moore Benidickson: The government did not dare present this bill to him.


Erhart Regier: I should like to know what advice the governor of the Bank of Canada gave to the government as to how to get
Governor of Bank of Canada itself out of this horrible mess. Is this maybe not the basic reason why the governor's head must now roll?
The minister has carefully avoided informing the Canadian people how he is intending to meet this unusual and unprecedented need of his. This need has not been exceeded by either the emergency of wartime or even the emergency caused by the bond conversion. This is a most exceptional need that the government has brought us to. Has this need been discussed with the governor of the Bank of Canada and is this at the root of the clash? Am I right in assuming that the governor of the Bank of Canada advised the government and the minister that the only way out of this predicament is a vast expansion of the economic life of the Canadian nation, and that this was the only possible way of either raising the money by means of borrowing without increasing interest rates or of avoiding inflation by adding to the amount of money in circulation? If I look over the releases-


Edwin William Brunsden: I rise on a point of order, Mr. Chairman.


An hon. Member:: Sit down.


Edwin William Brunsden: The hon. member is asking a great many questions and giving no answers. Would he care to give some of the answers?


Erhart Regier: I am unable to give any of the answers-


Edwin William Brunsden: Of course you are not able to give them.


Erhart Regier: -because this House of Commons has been denied the answers to some of these very basic and fundamental questions. We are being asked to dismiss an official, as we have been often told, of this parliament of Canada and yet we have not been given any evidence as to why that official of ours ought to be dismissed other than the bland assertions of the minister. We know the minister is a politician. We know he is doing his utmost to defend the mismanagement of the government as we have found it over the past four years. He has now come to the end of the line. I would like to know what consultations have been held with the governor of the Bank of Canada as to meeting the needs of the government in the current fiscal year in the field of borrowings or in the field of inflation.
I would also like to ask the minister to explain why, in replying to questions on orders of the day, he said he thought Mr. Rasminsky might have discussed the potential devaluation of the Canadian dollar with

Governor of Bank of Canada officials of the international monetary fund on the day we were presented with the budget.
Did the minister in fact reveal to Mr. Rasminsky, a deputy governor of the Bank of Canada, the contents of the budget? If he did not, how could he say that he did not know; maybe Mr. Rasminsky discussed on that day with officials of the international monetary fund the implications of his proposals to devaluate the Canadian dollar. To me that was a very clear indication that Mr. Rasminsky was advised of the contents of the budget, and yet the minister has continually insisted that the governor of the bank was not consulted with regard to the contents of the budget.
There is something here that calls for an explanation. In my opinion the minister has no right to consult with a deputy governor of the Bank of Canada upon the contents of a proposed budget without having consulted with the governor of the Bank of Canada in the first place.
I would also like to have confirmation-[DOT]


William Moore Benidickson: Maybe there was a conspiracy here.


Erhart Regier: -of what I understood to be the claim made by the minister some time ago, that he has already presented a number of budgets to this house without holding prior consultation as to the contents and the effects of such budgets with a man most responsible for the implementation of government policy, namely the governor of the Bank of Canada.
I would also like the minister to say whether or not he believes that a tie in and the closest co-ordination between monetary and fiscal policies are essential. If the minister will admit that they are essential, that the two cannot be divorced, why then is he suddenly so excited about the governor of the Bank of Canada taking an interest in the fiscal policy of the government?
It appears to me, as it did to hon. members of the other place as revealed in their report on manpower, and it has been advocated by many leading Canadians, that we must recognize the need for the closest tie in between monetary and fiscal policy. Hitherto the minister has always informed us that there is no relationship between the two; the government is responsible for fiscal policy, the governor of the Bank of Canada is responsible for monetary policy, and never the twain shall meet. It is now very obvious that they never have met. The governor of the Bank of Canada has at least realized the need for some correlation in this respect and he has advocated many measures of major consequence, with many of which, as we have

often indicated, we do not agree; but at least he has acted as a responsible Canadian ought to have acted in the circumstances. The Minister of Finance has yet to prove himself to be a responsible Canadian in this regard.


Lionel Chevrier: Mr. Chairman, the Leader of the Opposition has pointed out during the course of his remarks the contradictions which were revealed this afternoon between some of the statements made by the Secretary of State and the minister, and also between statements made by the hon. member for Carleton and the minister. I should like to take a few moments to dwell on this feature of the discussion which took place this afternoon.
The Secretary of State in his speech made a number of statements which in my opinion are in complete contradiction with the minister and are in entire disagreement with him. For instance, at one stage he stated that the question was very simple: has the government the right to insist that monetary policy should be a function of the economic and fiscal policy of the government? He said, "This appears to me to be incontestable". A little later on he stated, "Monetary policy must be subordinated to national policy, for which the government alone is responsible".
I should like to refer the committee to some of the statements made by the Minister of Finance on Tuesday, February 21 of this year. As reported at page 2258 of Hansard, the minister said:
I say that the responsibility owed by the Bank of Canada is to parliament. It is not an ultimate responsibility. It is a direct responsibility.
Further, at page 2260 of Hansard of the same day the minister stated:
Can the government change the management of the bank? It cannot.. . The government has no power whatsoever, once appointments are made, to change them; only parliament can do that.


An hon. Member:: That is right.
Another hon. Member: That is what we are doing now.


William Moore Benidickson: Parliament includes the opposition.


Lionel Chevrier: Then again, at page 2262 of Hansard the minister stated:
That will point very clearly to the fact that the government as such has no power to exercise over the Bank of Canada. It rests with parliament. Parliament can always alter the legislation. But short of that, the bank in these matters has the responsibility.
Still further, at page 2265 of Hansard the minister said:
The government has not been given by parliament any power or authority over the bank or its senior officials or directors in that situation.

A little further down the page this statement appears:
The government has no voice whatever in this matter of money supply. Consequently, in whatever the Leader of the Opposition had to say yesterday by way of criticism in relation to money supply, those are matters over which the government has no control and whether or not the hon. gentleman realizes it-I think he must realize it-his criticisms were directed at the Bank of Canada and not at the government. The government has no power to add to or subtract from or change this money supply or currency that the Bank of Canada is given the sole power to create.


Paul Theodore Hellyer: That is not what he said when interest rates were coming down.


Lionel Chevrier: That is so. Neither is that what the Secretary of State said this afternoon. I should like to ask the Minister of Finance if he agrees with this statement made by the Secretary of State this afternoon, which I took down:
(Translation) :
I feel that the first question that should come to our mind is the following: Is the government justified or not in demanding that the monetary policy be subordinate to its economic and fiscal policy?
In my opinion, that is beyond all question. (Text):
Does the Minister of Finance accept that opinion expressed by his colleague the Secretary of State?
I turn to the next statement made by the Secretary of State.
(Translation):
In other words, the Bank of Canada's monetary policy must be subordinate to the national policy for which the government is responsible, both before parliament and the people.
(Text):
Again, I ask the question: does the Minister of Finance agree with or accept this opinion expressed by his colleague the Secretary of State? Before I proceed further I think we should obtain from the Minister of Finance a reply to those two questions.


Donald Methuen Fleming: We have had this evening a continuation of this afternoon's debate carried on, as far as hon. members opposite are concerned, just as though the bill had never been given second reading. The house, by its vote at five o'clock this afternoon, approved the principle of the bill, and the principle of the bill is, I take it, that the office of the governor of the Bank of Canada shall be deemed to become vacant on the coming into force of this act.
I can appreciate the problem of the Leader of the Opposition. He had already spoken in the debate on second reading and he could not making another speech this afternoon. He has taken advantage of the sitting of the committee this evening not for the purpose of
Governor of Bank of Canada seeking to make use of the committee procedure for the reasons for which this procedure was designed, but disregarding completely the effect of second reading this afternoon-


Lester Bowles Pearson: I rise on a point of order. I take it, Mr. Chairman, that you do not need assistance from the Minister of Finance ir deciding whether or not we are in order.


Donald Methuen Fleming: Continuing my observations, Mr. Chairman, I say that most of what the Leader of the Opposition had to say in committee this evening was altogether out of order.


Lester Bowles Pearson: On a point of order. That is a reflection on the Chair. I spoke, Mr. Chairman, and you did not interrupt me or call me to order. The Minister of Finance now says I was out of order. That is a reflection on yourself and I hope you will call the Minister of Finance to order.


Jacques Flynn: I cannot agree with the Leader of the Opposition that the statement made by the minister was a reflection on the Chair, because it seems the general practice in this house to discuss whether some hon. members adhere to the rules or not. I did not take the remarks of the minister as raising a formal point of order and I shall therefore not go further. If a point of order should formally be raised I will deal with it.


Donald Methuen Fleming: I had assumed that the Leader of the Opposition would tonight have brought forward his series of questions, and I am ready this evening to endeavour to the satisfaction of the committee, if I can, to answer any questions which are relevant to the clause of the bill, but I would observe that in this committee, at this committee stage, we are examining this particular clause, which happens to be the only clause in the bill, and that the house has already recorded its approval of the principle of this measure.
I was asked in the first place by the Leader of the Opposition why this bill had not been brought forward as an amendment to the Bank of Canada Act. I should have thought the reason was obvious. This is a bill brought forward for a particular purpose. It is not continuing legislation. It is not the kind of legislation which purports to have continuing effects in the future. Therefore it was deemed appropriate, in the light of the best legislative counsel available, to bring forward this measure as a separate bill, having regard to the fact that it has an immediate purpose.
As to the questions concerning such a situation in the future or other situations to which the present circumstances may give rise, I have already on another occasion

Governor of Bank of Canada announced that the government will shortly be appointing a royal commission to study all questions relating to banking, including the Bank of Canada, credit, money and other questions in this country, and it will be within the purview of that royal commission to examine all questions in relation to the operation of the Bank of Canada which bear upon the need for any legislative change in the terms of that act.
Some of the questions asked tonight are obviously questions which I am precluded from answering in the way in which some of them were asked without divulging communications which are of a confidential nature. We have already faced this question with regard to several of the motions put forward by hon. members opposite for production of papers of interest at various stages of this subject. The house has reaffirmed the principle in relation to those motions that where communications are of a confidential nature, as are communications passing between the Minister of Finance on the one hand and the governor of the Bank of Canada on the other, that confidence must be preserved. I must respect the decision of the house in that regard. It would be very tempting indeed to follow the governor of the Bank of Canada in the course he has taken. He has felt himself at liberty to forget and ignore the confidential nature of some of the communications, which he has, without any leave whatever and in a very improper manner, made public.
I do not intend to follow that improper and irresponsible course. Communications which are confidential must have their confidential nature respected. The governor has chosen to make public certain things in those communications which he considers, evidently, might be of advantage to him. Perhaps there are communications which have passed between us which, for equal reasons, I might find it to my advantage and to the advantage of the government to make public in that way. But there is a principle involved here which must be respected not only for its intrinsic merit in this situation but for the sake of all future relationships between confidential advisers of the government and ministers of the crown.
Let me turn briefly in this regard to the question put by the hon. member for Burn-aby-Coquitlam, because here is an example. That hon. member asked me specifically to disclose the advice given by Mr. Coyne to the government in relation to certain questions of debt management with respect to the money-raising program for the present year. It would be highly improper on my part to disclose advice given to me or to the government by the adviser in this respect,


which is the Bank of Canada. I have to say that in this field of debt management the government takes its responsibility. I made that very clear when I spoke in this house on June 26. In the field of debt management, the Bank of Canada acts as adviser to the government. The government will take its responsibility for whatever advice it takes from its adviser and acts upon, or whatever advice it does not take and does not act upon. This is the responsibility of the government and that responsibility will be discharged. It would be very unfair either to the adviser in this particular case or the advisers of the government in other cases if ministers were to disclose in the house advice of a very confidential nature given to them in this regard.


Lester Bowles Pearson: Hidden.


Donald Methuen Fleming: Mr. Chairman, the Leader of the Opposition in one of his most senseless and unthinking interruptions says "hidden". Yes, Mr. Chairman, confidential advice to the government remains hidden and it remains hidden for very good reasons of public policy. It has always been so under our system of government.


Lester Bowles Pearson: Until the Prime Minister disclosed it in 1958.


Donald Methuen Fleming: Advice given to ministers by confidential advisers, Mr. Chairman, is of such a nature that that confidence must be respected; otherwise our system of government would break down. These are questions of public policy and it is the intention of the government to respect constitutional usage in this regard.
I was asked by the Leader of the Opposition some further questions in regard to the relationship of the government's program, this program which was announced in the budget, to the reasons given to the governor of the bank on May 30 for asking for his resignation. Hon. members by this time have had full opportunity to examine the program and to realize that this is a program of such a nature that two things stand out in it. First, that this program can not be implemented unless there is effective co-operation between the authorities in the fiscal and the monetary fields in Canada. I have made that very clear. I am asked tonight if I do not think it is proper that there should be co-operation. I certainly do think that co-operation is desirable. I certainly do think, Mr. Chairman, that we will not have, as the report of the Senate committee on employment said not long ago, and that we cannot have the effective use of those means that have been created for

dealing, broadly speaking, in the governmental sphere with our economic problems unless there is effective co-ordination of policy in the fiscal field with policy in the monetary field.


Lionel Chevrier: When was there not that coordination?


William Moore Benidickson: That has always been the situation.


Donald Methuen Fleming: That has not been the situation.


William Moore Benidickson: Since when?


Donald Methuen Fleming: For some considerable time.


William Moore Benidickson: What date?


Donald Methuen Fleming: As I have already said and say again-


William Moore Benidickson: What date?


Lester Bowles Pearson: Swallow your own words.


Donald Methuen Fleming: I thought the hon. members had asked me questions which I was to answer.


Paul Joseph James Martin: Since 1957?


Donald Methuen Fleming: When I try to answer questions the agitated gentlemen are not interested in the answers at all. They are not interested in answers; they are not interested in information.


Paul Theodore Hellyer: The minister is not giving information.


Donald Methuen Fleming: I do not think they were ever interested in obtaining information on this subject. They do not seem very interested in it now.


An hon. Member:: They have closed minds.


Donald Methuen Fleming: I have said there were two reasons which stand out in the relationship between the government's program and the reasons given on May 30 to the governor for asking for his resignation. I have mentioned one, Mr. Chairman, the necessity for co-ordination and co-operation between those responsible in the monetary field and those responsible in the field of fiscal policy, and that, Mr. Chairman, means effective co-operation between the government, principally the Department of Finance, on the one hand, and the Bank of Canada on the other.
The other reason, Mr. Chairman, has been quite obvious to hon. members and that is that the kind of program we put forward, the comprehensive program that was put before the house in the budget speech, was quite
Governor of Bank of Canada at odds with the kind of approach the governor of the Bank of Canada had been declaring on his own behalf in his speeches on fiscal policy over a period of some 18 months, in the course of which he made public speeches numbering I believe, 13 altogether.
We have been over this subject before, Mr. Chairman, and I have had occasion to point out in detail to those who needed it- and I think it was very obvious without this detailed pointing up-it was obvious to all hon. members who were interested in approaching the question, what these fundamental differences were. I can take hon. members opposite back to the budget speech. After making the speech I concluded with a review of those fundamental difference, Mr. Chairman-I say fundamental differences -between the approach contained in the budget speech on the one hand and the approach to fiscal questions which the governor of the Bank of Canada has declared in this long series of public utterances on his part.
Mr. Chairman, those were the fundamental differences. It was quite clear that it would be quite out of keeping with respect for the sincerity with which the governor held these views that he declared to ask him then to put aside his views and to co-operate fully in the implementation of a program in which obviously he could not be expected to believe. Now, there was the situation. Back of this was a long history of the activities of the governor which had the effect of bringing the Bank of Canada into the realm of political controversy, not without assistance from the opposition in this house. Every time the governor of the bank made a speech outside the house which obviously was not in accord with government policy-


Paul Joseph James Martin: Why did you not
say so?


Donald Methuen Fleming: -hon. members opposite were not slow to bring the question on to the floor of the house.


Murdo William Martin: Hear, hear.


Donald Methuen Fleming: We had in 1960 and we had again in 1961 major debates in this house on supply motions in relation to fiscal and monetary policy, and in each case what gave rise to those debates, precipitated by amendments introduced by the opposition, were speeches made by the governor of the Bank of Canada which hon. members opposite sought to exploit to the embarrassment of the government, knowing full well that the governor spoke for himself and that he was declaring policy in the fiscal field, a field that belongs not to the Bank of Canada, but to the government, a very controversial field in our

Governor of Bank of Canada political system and a field into which the governor ought not to have strayed, and because they knew-


William Moore Benidickson: But you said you would not reprimand him.


Donald Methuen Fleming: -full well, Mr. Chairman, that the views declared by the governor of the Bank of Canada were at odds with the views of the government they brought them to the floor of this house. There would have been no point citing what the governor of the bank had to say outside if he were saying things that were in his proper sphere or saying things in accord with government policy. There would not have been any occasion for hon. members opposite to engage in this form of political exploitation of the excesses and of the errors of the governor of the Bank of Canada, but hon. members opposite, of course, were looking for every opportunity and so they involved this very important national institution, the Bank of Canada, in political controversy. Although they knew perfectly well that the governor spoke for himself and not for the government, they sought to embarrass the government in this way, and this went on and on. How the governor of the Bank of Canada could remain oblivious to this I will never understand. Anybody whose office is just across the road on Wellington street must surely have some passing familiarity with the contents of Hansard.


Paul Joseph James Martin: He was encouraged by your defence of him.


Donald Methuen Fleming: I did not defend the governor of the Bank of Canada, Mr. Chairman. I did not. I was not defending what the governor of the Bank of Canada said. There is the point, Mr. Chairman. I did not defend what the governor of the Bank of Canada said. Hon. members opposite were doing their best to pin on the government and principally through the Minister of Finance some association with or responsibility for what the governor of the Bank of Canada was saying. They knew perfectly well that I was not responsible for what he said.


Paul Joseph James Martin: That is not what you said on February 21.


Donald Methuen Fleming: When they talk about my defending the governor of the Bank of Canada, I have not defended what the governor of the Bank of Canada said. I made it very clear that I took no responsibility for what he said because I was never consulted about what he did say or about his acceptance of engagements to deliver public addresses. Never was I consulted. Never did I know when the next speech was 
coming. I did not know at any time. Consequently, Mr. Chairman, I have taken no responsibility at any time for any of these speeches made by the governor of the Bank of Canada, and in doing so I have kept the record straight and I have invited the house to have regard for the proper areas of responsibility in the system created by parliament.


William Moore Benidickson: Mr. Chairman I rise, on a question of privilege. The Minister of Finance is a person for whom we have a right to hold a great deal of respect and certainly we would hope that what he says in one part of the session is going to be consistent with what he says-


Some hon. Members:: Order.


William Moore Benidickson: -in another part of the session.


Jacques Flynn: Order.


William Moore Benidickson: My question of privilege-


Jacques Flynn: Order. I fail to see any
question of privilege in trying to compare speeches made by the Minister of Finance. This is a matter for argument and the hon. member will have his turn in due course.


William Moore Benidickson: No, Mr. Chairman. At this point I suggest to you-


Some hon. Members:: Order.


William Moore Benidickson: I am speaking on a question of privilege.


Donald Methuen Fleming: Mr. Chairman, I think I have the floor and I am not yielding the floor to the hon. member for the purpose of questions because there are some questions ahead of his which I am trying to answer, and hon. members opposite will not prevent me from answering them.


Jacques Flynn: Order.


William Moore Benidickson: I know you want to be fair, Mr. Chairman, and I want to be brief.


Jacques Flynn: Order. Will the hon. member please resume his seat? I have indicated to the hon. member that if he wants to compare statements made by the Minister of Finance that would not be a question of privilege. If the hon. member is rising on something else I will hear him but I trust that if his purpose is the one I suspect it is he will not insist.


William Moore Benidickson: Mr. Chairman, my point was to refer you, sir-


Donald Methuen Fleming: Mr. Chairman, your ruling is being defied.


William Moore Benidickson: My point was to refer you, sir, to page 2258 of Hansard of February

21, 1961 so that you may see whether or not the privileges of this house are being abused by what the Minister of Finance is now saying.


Donald Methuen Fleming: Mr. Chairman, if I may continue to answer the questions which were asked earlier, I have made comments on this matter of the speeches which the governor made and which did embroil the Bank of Canada in political controversy. Let there be no doubt about its having been a political controversy because it was brought on the floor of the house by the opposition for the purpose of trying to embarrass the government. I do not think any person who is aware of what goes on in the country could possibly question that, least of all the opposition who are responsible for bringing these questions on the floor of the house.


Paul Joseph James Martin: Why not?


John Whitney Pickersgill: What is an opposition for?


Donald Methuen Fleming: All right, they say they were entitled to bring them here but they are not entitled to have brought them here and then to say that the governor's statements have not involved the Bank of Canada in a political controversy. So, Mr. Chairman, I think it is not good conduct on the part of a public servant who is an officer of the Bank of Canada to embroil the institution of which he is the head in a political controversy. The Leader of the Opposition asked questions about what is good behaviour. I say it is not good behaviour for the governor of the Bank of Canada to embroil the Bank of Canada in a political controversy.
Before I leave this subject of the speeches, Mr. Chairman, let me make it very clear that both when I talked to the governor on March 18 and when I talked to him on May 30 the governor made it very clear that he took back nothing of what he had said in those speeches. He did tell me on one occasion that he was sorry they had caused the government embarrassment, but he made it very clear by the plainest assertion that he took back nothing of what he had said in those speeches.
The Leader of the Opposition asks the house to conclude that the offences were completely expiated because after March 18 the governor did not indulge in any more public speeches. I gave the house the reasons when I spoke in the house on June 26. He told me that he did not have any more public speaking engagements. This was at the same time as he was telling me that he took back nothing that he had said.


Paul Joseph James Martin: You allowed this to go on for three years.
Governor of Bank of Canada


Donald Methuen Fleming: Mr. Chairman, I will repeat what I have said on two previous occasions since the 13th of June and which I regret having to repeat again. I repeat it only because these questions tonight are repetitious. They are simply going over ground that has already been fully covered on more than one occasion. In relation to this matter of these speeches, I did not know at any time when more speeches were coming. The reason that I had some talk with the members of the board of the bank was that I felt they were the proper persons to take this matter in hand, and I did find that these directors were themselves becoming increasingly concerned over the way in which the governor in the course of his speeches was involved and was involving the bank in this whole realm of political controversy in the fiscal field.
I was asked to deal with the question of monetary policy and I would be pleased to deal with it because hon. members opposite have striven so hard to make it appear that there have been changes of view in this situation or that there have been differences of views on the part of government spokesmen. They are overlooking some of the essential facts which must be taken into account in this regard by anyone who makes any attempt at arriving at a fair judgment in these matters.
I went over this situation in my report to the house on June 26. I pointed out what happened in the winter of 1957-58. I had entertained the opinion when in opposition, and had so expressed myself in debate, that there was a responsibility on the part of the government in the field of monetary policy. Hon. members opposite have quoted what I said in this respect in a debate in the house in 1956. That was an opinion which I certainly held at that time. It was an opinion which I held when the Prime Minister invited me to become Minister of Finance in the new government. That was an opinion which I held when in that 1957-58 fall and winter I had my talk with the governor in this respect, and I have told the house about the discussion which we had. Reference was made tonight to page 7040 of Hansard where I said:
In the winter of 1957-58 I conveyed to him a request-
This was not my idea; this was a request of the government which I conveyed to the governor.
-for an easing of the requirements respecting the liquidity reserves of the chartered banks.
Here was one of the basic elements in the tight money policy which we had attacked

Governor of Bank of Canada when we were in opposition. Then I proceeded, Mr. Chairman, as reported at page 7040 of Hansard for June 26, 1961:
That request, which was designed by the government to ease tight money, was rejected by the governor firmly and angrily.
The Leader of the Opposition tonight has asked me to comment further on that subject. Well, Mr. Chairman, without going into the realm of communications between us, let me say that this meeting took place in my office on this floor in this building. There were several others from the Bank of Canada there besides the governor, and there was also the deputy minister of finance. I conveyed to the governor this request from the government. I told him it was from the government, Mr. Chairman. I have to tell you again that that request of the government was rejected firmly, yes, and angrily. It was made very clear, Mr. Chairman, and what has happened since in relation to monetary policy and what I have said since in this house in relation to monetary policy, has to be seen in that setting. It was made very clear to me in that meeting that the governor of the Bank of Canada felt quite free to reject requests of the government in relation to monetary measures. This was made very clear to me.
As I said speaking in the house on June 26, this brought me up pretty short, to be told firmly, flatly and angrily that this request from the government was rejected.


Paul Theodore Hellyer: When was that?


Donald Methuen Fleming: I said it was in the
1957-1958 period, in that range.


Paul Theodore Hellyer: It took you four years to do anything about it, almost until the next general election.


Donald Methuen Fleming: If the hon. member wishes to give the answers, Mr. Chairman, let him proceed. If he has the answers then I do not know why the Leader of the Opposition asked me for them. I am trying to answer the questions asked by the Leader of the Opposition. If the hon. member for Trinity has the answers that he thinks the Leader of the Opposition needs, why does he not take the Leader of the Opposition aside and give him all this information which the hon. member thinks he has?


Jacques Flynn: I am sorry to interrupt the minister, but I must inform him that his time has expired.


Lester Bowles Pearson: We have had a most extraordinary performance from the minister, and I will deal with one point at this moment. I will try to deal with some of the other points a little later. The minister, in these last five or ten minutes, got very vehement in order


to vindicate himself of the charge that this angry rejection by the governor of the Bank of Canada of his request on behalf of the government for an easing of monetary matters was a false charge. He has said that he, on behalf of the government, asked the governor to do this and the governor angrily and firmly rejected this request.
A few moments ago I quoted from the Canadian Press story a statement by the minister, but perhaps it would be even more impressive if I quoted from Hansard of that period to show how, to use the ministers' favourite word, absurd and nonsensical his argument is. On January 25, 1958, as reported at page 3804 of Hansard a question was asked of the minister by the hon. member for Okanagan Boundary. The question reads:
I should like to ask a question of the Minister of Finance. In view of the necessity for easing further the tight money policy, has the government given consideration to the need for easier credit and a reduction in the prevailing bank interest rates?
That is the kind of policy in which the minister now says he asked the governor of the Bank of Canada to co-operate and which was firmly and angrily rejected. I continue reading the question:
I might add, Mr. Speaker, that I have added the word "further" after the word "easing" in the copy of the question which I sent to the minister as notice.
This was the reply of the Minister of Finance:
I thank the hon. gentleman for sending me notice of his question. I did notice that the word "further" was very properly added to his question. The answer to his question is yes, the government has taken steps toward easing the former policy, easing credit and lowering interest rates in Canada during the last six months, and hopes to see this beneficial trend continue.
This was the policy for which the minister now claims the Bank of Canada was responsible, not the government.


Donald Methuen Fleming: The hon. member is again mistaken.


Lester Bowles Pearson: This is monetary policy. The governor having taken the action which the minister on this occasion boasted about, the minister now four years or three and a half years later says that the request was angrily and firmly rejected.
What did the minister say during the budget speech of that year referring to monetary events of the preceding year? What did he have to say about this matter in his speech on June 17, 1958, which he now says was so angrily and firmly rejected by the governor of the Bank of Canada? This is what the minister had to say as recorded at page 1234

of Hansard of that date in his review of monetary policy while presenting the budget:
Monetary policy also changed in the latter part of 1957. The money supply was expanded rapidly after mid-August, and partly for this reason and partly because of a reduction of demand in certain credit fields, monetary conditions in Canada generally became easier and interest rates declined substantially. Banks have now for some time been in a position to meet all creditworthy demands for commercial and personal loans. Market rates of interest in almost all categories of borrowing have declined substantially.
Presumably, it is for that action, Mr. Chairman, in 1957 and 1958 that the governor of the Bank of Canada is to be fired without a trial in 1961.


Donald Methuen Fleming: I should like to resume what I was saying by way of answer to the questions of the Leader of the Opposition, and I am indebted to him now for his intervention and for these references because they point out what I was in the process of saying. So far as the effect on the conditions to which he referred, such as interest rates, is concerned, there are elements in monetary policy and there are elements in fiscal policy that have a bearing on this area of our economic life. The results which we are seeking to achieve now in the program of easing interest rates in Canada, I pointed out, require co-operative action in both fields. What I was referring to in the first answer that the Leader of the Opposition ascribed to me tonight was what the government had done in the field of fiscal policy.


John Whitney Pickersgill: Monetary policy.


Donald Methuen Fleming: No, fiscal policy, Mr. Chairman; so far as monetary policy is concerned, from the time the governor made it clear to me that he took no direction, dictation or indeed requests from the government in relation to monetary policy, I gave the house information from time to time about money supply and questions of that kind. However, it was not for me, having regard to that situation, to take responsibility for the monetary policy. I took responsibility for fiscal policy, and what was done in that field, and that was our responsibility. I will defend what we did in the field of fiscal policy, but I am not going to have hon. members opposite ascribing to me things that have happened in a field in which I had no authority.
Let me take you back now, Mr. Chairman-


Paul Theodore Hellyer: Will the minister permit a question?


Donald Methuen Fleming: Mr. Chairman, first I wish to answer the Leader of the Opposition. No, I will not accept a question now. I will be glad to accept questions later, but 90205-6-475
Governor of Bank of Canada if I may I should like to complete my answers to the earlier questions of the Leader of the Opposition.
I referred to this experience we had in the 1957-58 period and I have said on June 26 that that sent me scurrying to the statutes to examine them to see where authority lay.


William Moore Benidickson: Did you speak in the campaign of 1957 without looking at the statutes?


Donald Methuen Fleming: I had to come to the conclusion, after an exhaustive study of the statute, that parliament had not given to the government authority over the Bank of Canada in relation to the question of money supply. I have drawn attention in this house during various debates to the terms of the Bank of Canada Act which give to the Bank of Canada and to the Bank of Canada alone the power to create money in Canada. Questions of money supply, therefore, are under the Bank of Canada.
Here was the situation from that point on. As I pointed out in speaking in this House of Commons on June 26, from that point on the governor of the Bank of Canada and other authorities in the bank were always ready to discuss monetary policy. They were always prepared to explain it and to defend it. But, Mr. Chairman, the stage had been set at the very beginning in this meeting of 1957-58. I have told the house frankly that in this situation we had to consider whether we would try to force the issue at that time, and we decided that we would try to live with this situation until December 31, 1961. I pointed out that we had co-operation from the bank authorities in the field of debt management, the servicing of the public debt and these other matters on which the bank acts as adviser. But, Mr. Chairman, in relation to monetary policy the relationship was established in that meeting in 1957-58 or towards the end of 1957 and that is the way in which the matter rested.
If we had been able to look into some crystal ball and had seen that we would be faced in the spring and early summer of 1961 with the situation which has now arisen, obviously we would not have waited. If we were going to have an issue like this raised in parliament, it would have been better had it been raised earlier. However, we thought this situation could be lived with and we were concerned, above all other things, that no harm should be done to the Bank of Canada because of its importance as a national institution.


William Moore Benidickson: Regardless of the economic growth and the unemployed.


Donald Methuen Fleming: I just wish, Mr. Chairman, that some hon. members opposite

Governor of Bank of Canada had had some of the same concern for the effectiveness of and the public respect for the Bank of Canada as an institution.
There is perhaps one other matter on which I have not yet touched. I think it was raised by the hon. member for Burnaby-Coquitlam in relation to the discussions between Mr. Rasminsky, deputy governor of the Bank of Canada and Canada's representative on the executive board of the international monetary fund at the time of the budget. This question was asked of me by the hon. member for Kenora-Rainy River on two occasions. I gave him an answer. He asked me to look into some further detailed aspects. I have obtained the information. I have brought it into the house each day now for a week but he has not asked me for it. Perhaps he will not mind if I give the information now-


William Moore Benidickson: I thought the minister would give it in due course.


Donald Methuen Fleming: -in reply to the question raised by the hon. member for Burnaby-Coquitlam. The hon. member for Burnaby-Coquitlam said that there was no right to discuss budget questions with Mr. Rasminsky without the approval of the governor of the Bank of Canada. I agree. Mr. Rasminsky has been completely loyal to the institution that he serves. Mr. Rasminsky is the manager of the exchange fund which is a government fund. The government takes full responsibility for management of the exchange fund but the manager of it is Mr. Rasminsky.
Mr. Rasminsky was going to Washington at the time of the budget and I authorized him to acquaint Mr. Per Jacobsson, managing director of the international monetary fund, with the nature of the proposals in the budget in regard to the external value of the Canadian currency. In justice to Mr. Rasminsky I wish to make it very clear that he was not consulted about the budget as such. He was acquainted with the contents of two chapters in the budget in relation to the proposals in the budget in regard to the external value of the dollar so that he might discuss these with Mr. Per Jacobsson.
He had a confidential meeting with Mr. Jacobsson late in the afternoon of Tuesday, June 20. On Wednesday, June 21 there was a meeting of the executive board of the international monetary fund where Mr. Rasminsky, the budget then having been made public, was in a position to review with his fellow executive directors of the fund exactly what was proposed in the program announced in the budget speech in this regard.
That is the whole matter. When I was asked in the house questions or rather was not

asked questions but was faced with an assertion by the hon. member for Bonavista-Twil-lingate later, based on a news report out of Washington on the basis of which he made an assertion that we were in trouble with the international monetary fund, I then made a firm denial and I repeat that denial now.
I think I have dealt with the questions that have been asked thus far, Mr. Chairman, I shall now be glad to answer any further questions hon. members may wish to ask. I think the hon. member for Trinity should probably have the first opportunity.


Lester Bowles Pearson: Before the minister sits down, would he confirm-1 think I have him right- that the exchange provisions of the budget were told the director of the international monetary fund, an international organization, before the budget was made public?


Donald Methuen Fleming: Mr. Chairman, in confidence the general nature of the proposals were made known to Mr. Jacobsson late in the afternoon of Tuesday, June 20.


William Moore Benidickson: That is why I asked the question.


Donald Methuen Fleming: Are you not a
bright boy?


Some hon. Members:: Oh, oh.


Lionel Chevrier: From what the minister has said in reply to questions put from this side of the chamber, it is quite clear that he has not only backwatered considerably during the course of this discussion,-


Donald Methuen Fleming: Oh, no.


Lionel Chevrier: -that he has not only reversed himself but that he has also swallowed himself.


Donald Methuen Fleming: Oh, no.


Lionel Chevrier: In the light of what the minister has just said, I would ask him to explain these statements which appear in answer to questions he was asked in the house. On November 13, 1957, he was asked this question by the then hon. member for Coast-Capilano:
Mr. Speaker, I wish to direct a question to the Minister of Finance. Actually it is a repetition of a question he was asked last Monday in Oakville, which he refused to answer on the ground that he could not answer it outside the House of Commons. Since he is now inside the House of Commons I should like to ask him, has there been a clash of opinions between the Bank of Canada and the government on economic policy?


Donald Methuen Fleming: I am not aware of anything that could be called a clash.
During the whole period that he has answered our questions he has left the impression that the comprehensive program of the

government, on the one hand, was not receiving co-operation and collaboration from the Bank of Canada, on the other.
On November 21. 1957 the then hon. member for Coast-Capilano asked this question:
Mr. Speaker, may I direct a question to the Minister of Justice. Yesterday, in his absence, I put a question to the Minister of Finance about a C.B.C. report of a speech made by the Minister of Justice at the University of British Columbia. The Minister of Finance pleaded ignorance of what was in the mind of the Minister of Justice-


Donald Methuen Fleming: No, he did not.


Mr. Sinclair:: Now I should like to ask the Minister of Justice what are these definite steps which have been taken by a Conservative government to relax monetary restrictions of the Bank of Canada.


Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, I have not seen the dispatch on which the C.B.C. news story is based, but I understand it was a report of a speech which I made at the University of British Columbia on Tuesday. In the course of that speech I said the government had been moving in the matter of monetary policy and credit restrictions ever since we took office. I outlined the various measures we have taken, including the provision of $150 million of new credit for housing loans. I also pointed out that there had been continuous review of monetary policies and discussions with the Bank of Canada with regard to credit restrictions and monetary policy generally.
I emphasized that the results of these discussions, and of the policies followed by this government since taking office, were now becoming evident in the reductions in interest rates which have been reported recently and which should do much to create an economic climate in which the restrictive trends initiated by the previous government would be reversed, and the Canadian economy could move forward again on that sound program of expansion which is the goal of this government.
How does the minister explain away that statement, together with the earlier answer which he himself gave? I come back to the two questions which I put to the minister earlier and which he did not answer. The questions were as to whether he agreed with two of the statements made by his colleague, the Secretary of State, which in my opinion, were clearly in complete contradiction to what the minister had said. I am now asking the minister, in the light of the two questions which I put on Hansard, whether he accepts the opinion of the Secretary of State in this respect.


Donald Methuen Fleming: Mr. Chairman, let me begin with the matters raised by the hon. member regarding the 1957-58 period. The answer which the hon. member has quoted draws attention to some of the fiscal steps that were taken in that period which had the effect of easing conditions and relieving some of the rigours of the tight money policy.


Some hon. Members:: Hear, hear.


Donald Methuen Fleming: It was in August, 1957 that we moved first to provide $150 million under the provisions of the National Housing Act to assist in providing credit by 90205-6-475J
Governor of Bank of Canada way of mortgage loans for the construction of houses in Canada. The answer also refers to other measures that we had either taken or were in the course of taking in the fiscal field. Reference is made in one of the answers to what was being done in the monetary field. But here, Mr. Chairman, we are back again on the same question. It is true that the Bank of Canada was doing certain things in the monetary field. I have never said they were not. It is true that some of the things they did were parallel to what the government was doing in the fiscal field. But the government was not given control over monetary policy. It was not given authority over monetary policy. That is the point, and that point has not registered with hon. members opposite.
The hon. member for Laurier also asks me to make comment on the views expressed this afternoon by my colleague, the Secretary of State, in one of the most effective, forceful, eloquent and convincing speeches heard in the house for a long time. One of the things I enjoyed about that speech was the way it completely flattened out hon. members opposite.


Lester Bowles Pearson: It flattened out the Minister of Finance too.


Donald Methuen Fleming: Not at all. I am asked to make comment on this question. It brings one back to the question of responsibility in relation to monetary policy. I am sorry that the hon. member for Laurier thinks I did not deal with his question earlier. I thought I was dealing with it when I made comment on this matter of authority in this field.
The fact is-and here I am coming back to what I said in my report to the house on June 26-that if you have under the existing system, under the existing act, someone at the bank directing the affairs of the bank who is co-operative, then I suppose you can have, under the existing system and under the existing statute, the same kind of effective cooperation that you had when Mr. Graham Towers was governor of the bank.
These questions about the relative areas of responsibility, fiscal on the one hand and monetary on the other, did not arise in the days of Mr. Graham Towers' governorship except in an academic sense. He came to the banking and commerce committee on one occasion. My esteemed friend, the hon. member for Greenwood, asked him questions on this subject, but everyone knew that these were academic questions because there had been no situation in which the friction had arisen; in which there was lack of co-operation between the authorities in the fiscal field and the authorities in the monetary field.

Governor of Bank of Canada
It is only when you have a situation such as we have, to my very great regret, under the existing governor that you are thrown back on the provisions that parliament has written in the statute. The fact is that where you do not get co-operation; where you do not get people working together; where you do not get the effective meshing together of fiscal policy and monetary policy, then the Bank of Canada Act in its terms today does not give the government authority in this field. It gives the government power to appoint the governor, but not to remove him. It gives the government power to appoint directors, but not to remove them. I pointed this out in the debate in this house on February 22 last.
Hon. members opposite were told these things very plainly and the Leader of the Opposition and I had a debate on this subject. But there is the situation. If we are to be governed by the terms of the statute, then there is the situation where the government has no authority to impose, under the present system, its will on the Bank of Canada in relation to monetary policy.


Paul Joseph James Martin: That is not what the Secretary of State said.


Donald Methuen Fleming: That is not, hon. members opposite seem to agree, a desirable situation. It could only arise under the present statute where you have the chief authority at the bank going his own way. Here is where the division has come. We had to recognize these limitations on the authority of the government and hope that in due time there would be an opportunity to effect an improvement in that regard. I am quite sure that an improvement will be coming if parliament sees fit to adopt this present measure.


William Moore Benidickson: It has taken you four years to change the law.


Donald Methuen Fleming: So far as needed improvements in the language of the statute are concerned, we will have the benefit of a detailed study by a royal commission of this and other questions in the banking field. So far as what is needed under the present system and under the present statute is concerned, that is an effective co-operation in the monetary and fiscal fields, I think we can look forward to that once this bill is adopted.


Erhart Regier: Mr. Chairman, I believe most of us will agree that we have been playing the game of round and round and round we go, especially when listening to the minister. However, as we play the game we occasionally make a slip. I do not wish to quote the minister inaccurately but I believe he told us a little while ago that on the afternoon of the day on which he presented the contents

of the budget-which of course was brought down in the evening-Mr. Jacobsson, the head of the international monetary fund-who is not a Canadian but a foreigner-had been informed of the main tenor of a certain portion of the budget.


An hon. Member:: That is right.


Erhart Regier: If I am wrong I hope the minister will immediately interrupt me. However, if I heard the minister correctly, I think in the light of all our parliamentary institutions and history the minister now owes his resignation as minister to the people of the country.


William Moore Benidickson: He has been wrong all along.


Erhart Regier: The minister can perhaps argue that he had reasons, and perhaps very good reasons in his opinion, for not revealing the contents of the budget to the governor of the Bank of Canada. He may advance reasons why he had every rightful cause to reveal certain portions of the budget to Mr. Rasminsky-


Jacques Flynn: Order.


Erhart Regier: -but he has no excuse-


Some hon. Members:: Order.


Jacques Flynn: Order. I do not see how the hon. member can relate these remarks to the bill. It may be he can relate some of his remarks to this bill, but certainly not the subject he is pursuing at the moment. I say this because we are not concerned with the conduct of the minister. We are concerned with a very simple bill that has to do only with Mr. Coyne and not with the budget.


Lionel Chevrier: On the point of order, Mr. Chairman, the hon. gentleman, I submit to you with respect, has the right to do exactly what he is doing. He is replying to a statement made by the Minister of Finance who said that Mr. Jacobsson, as he calls him, had had certain discussions with Mr. Rasminsky in Washington concerning the monetary fund, and surely if the Minister of Finance had the right to give the details of those conversations in the committee, the hon. member who is speaking now has the right to deal with the same subject matter.


Jacques Flynn: The hon. member replied to the remarks made by the minister. But now he is discussing whether this would bring about the resignation of the Minister of Finance. We are certainly not going to discuss this matter, which has no connection whatsoever with the bill which is before the committee. I will add this: up to now, practically everything has been allowed, but if

hon. members take advantage of the leniency of the Chair the Chair will have to be stricter in applying the rules.


Paul Joseph James Martin: On the point of order, Mr. Chairman, may I respectfully suggest to you that the ruling which you seemed to have in mind was one which, I am sure, one would have had to contest. The Minister of Finance has said there is certain information which because of its very nature he cannot give to this committee. The minister referred to certain information which he would regard as privileged, information which would be of concern only to an official of the government of Canada and himself or other members of the government. Yet we have had now, as the hon. member for Burnaby-Coquit-lam has pointed out, a revelation from the Minister of Finance that he gave information to the director of a foreign corporation, a corporation not having anything to do directly with the government of Canada. The hon. member for Burnaby-Coquitlam said that was a ground for asking for the resignation of the Minister of Finance. Then you made the observation, Mr. Chairman, that we were not concerned in this committee with the conduct of the Minister of Finance. I suggest, with great respect, that not only is this a matter which comes within our purview, but that the conduct of the Minister of Finance is very germane to this discussion. How can we discuss the conduct of the governor of the Bank of Canada, how can we discuss whether the government's contentions regarding that official are sound, unless we can examine the conduct of the Minister of Finance and of the government as a whole? If you, Mr. Chairman, were to take the position that the conduct of the Minister of Finance is not an issue, hon. gentlemen may not agree with what is said about that conduct, but if you take the position that we cannot discuss the conduct of the Minister of Finance, then not only are we being denied the right of a committee, but we are denied the right of free discussion in this committee of the whole.


Donald Methuen Fleming: It is about time somebody made a comment on this make-believe exhibition on the part of the hon. member for Essex East. It is about time some limit was put on the humbug he has been offering the committee. The committee is being asked to believe now that there was disclosure of some budget secret in some improper way.


An hon. Member:: You said it.


Donald Methuen Fleming: The hon. member for Essex East, the Leader of the Opposition and the hon. member for Laurier-I leave
Governor of Bank of Canada out the hon. member for Bonavista-Twillin-gate-those three members were members of the previous government when it decided to make a change in the value of the dollar on two occasions-


Erhart Regier: Mr. Chairman, on a point of order-


Some hon. Members:: Order.


Jacques Flynn: The hon. member for Burnaby-Coquitlam rises on a point of order.


An hon. Member:: The minister has the floor.


Jacques Flynn: The hon. member for Essex East was discussing a point of order and I presumed the hon. minister was, too. Apparently it is very difficult to distinguish a speech from the discussion of a point of order. I understood that the minister was speaking to the point of order. If he is not, then of course, the hon. member for Burnaby-Coquitlam may continue his remarks, but in that case, before he does so, I think I should point out both to the hon. minister and to the hon. member for Essex East that if we were justified in discussing any extraneous matter which might come into the debate, forgetting completely the purpose for which we are now in committee, it would certainly not be a good rule to follow. I am not saying the hon. member for Burnaby-Coquitlam may not raise the question somewhere else or on some other occasion, but he may certainly not do so at this time, because anything that might happen would distract us from the purpose for which we are here.


Donald Methuen Fleming: I was about to conclude what I was saying-


Some hon. Members:: Sit down.


Donald Methuen Fleming: -with respect to what the hon. member for Essex East said in raising his point of order. I am not saying whether or not it was a valid point of order. I am saying that it left an impression which needs to be corrected, and I do so with regard to the fact that on two occasions when hon. members opposite were in office the value of the Canadian dollar was changed, and it was changed in consultation with the international monetary fund before this information was made public in Canada- while it was still highly secret in Canada.


Erhart Regier: I hardly know whether to continue debating the point of order, whether to continue my original remarks or whether to speak to a question of privilege. However, this is a matter of the most serious consequence. It has been admitted by the minister in this debate that a non-Canadian has been informed of certain contents of the budget

Governor of Bank of Canada before the Canadian parliament was informed of them. I feel this is a matter of such great significance that members of this parliament ought to consider this in the quieter moments of the night and that the house ought to deal with this tomorrow.
Therefore, I move:
That the committee rise, report progress and ask leave to deal with this question at the next sitting of the house.


Donald Methuen Fleming: More obstruction.


Mr. Siarr:: Closure by the C.C.F.
Amendment (Mr. Regier) negatived: Yeas, 6; nays, 132.


Donald Methuen Fleming: Before you announce the result of the vote, Mr. Chairman, I draw to your attention the fact that the hon. member for Ottawa West and the hon. member for Hull were in the house and did not vote. I would ask, therefore, that their votes be recorded in the negative.


Lionel Chevrier: Mr. Chairman-


Jacques Flynn: Order. The hon. member for Hull is rising.


Mr. Caron:: It was decided in 1926 when Mr. Bourassa remained in the house and refused to vote that an hon. member has the right to remain in the house and not vote. The minister has no right to raise this question at the present time.


Lionel Chevrier: Mr. Chairman, before beginning what I have to say I wish to tell the Minister of Finance at once that I resent the statement he made with reference to two hon. members on this side of the house.


Donald Methuen Fleming: It is true.


Lionel Chevrier: My hon. friend says "it is true". Well, it is also true that the Prime Minister is not in his seat. This is a debate during which he should be present.


Donald Methuen Fleming: In this instance it is not a case of his being in the house and not voting.


Lionel Chevrier: I come back to the two questions I asked the Minister of Finance earlier and which I submit he has not answered. I ask the minister whether he subscribes to the statement made by the Secretary of State in this part of his speech where he said: (Translation):
I feel that the first question that should come to our mind is the following: Is the government justified or not in demanding that the monetary policy be subordinate to its economic and fiscal policy?
In my opinion, that is beyond all question.
(Text):
Does the minister subscribe to that opinion?


Donald Methuen Fleming: I have dealt with that subject twice already; but I will be glad to do it a third time in deference to the


hon. gentleman. What my colleague was saying in effect this afternoon was that monetary policy cannot be divorced and isolated from fiscal policy and the other ingredients that we embrace broadly in speaking on economic policy. I think that is right and I think that is one of the elements that we recognize as being necessary, that is, to say, effective cooperation in regard to the program which was announced in the budget speech.
The hon. member himself was good enough to quote some remarks I made in this house on June 21 and on other occasions in emphasizing that the responsibility and the authority rested in parliament and when parliament had not given to the government effective authority under the present legislation over monetary policy, or over the Bank of Canada in relation to monetary policy, then obviously if a situation like the present one should arise, there is only one thing the government can do and that is to come to parliament; and that is why the government has come to parliament.


Lionel Chevrier: Mr. Chairman, that is
certainly not an answer and it is certainly a complete contradiction of what the minister said himself.


Donald Methuen Fleming: Not at all.


Lionel Chevrier: Not on June 21, as he stated, but on February 21, 1961 when he said as reported at page 2258 of Hansard-


Donald Methuen Fleming: I was speaking of February 21.


Lionel Chevrier: The minister said June 21.


Donald Methuen Fleming: I am sorry; I meant to say February. I was referring to the debate we had on the supply motion in relation to economic policy.


Lionel Chevrier: Well, then, the statement made by the Minister of Finance on that oc-asion, and many statements made by him, were in complete contradiction of what was said here. I put this-


Donald Methuen Fleming: The hon. member has not understood.


Lionel Chevrier: I certainly understand there has been a contradiction between what the hon. member has said tonight and what he said on February 21.


Donald Methuen Fleming: No.


Lionel Chevrier: And what he said in the month of June.


Donald Methuen Fleming: No, not a bit; relax.


Lionel Chevrier: I cite what the minister is reported to have said at page 2258 of Hansard:
I say that the responsibility owed by the Bank of Canada is to parliament. It is not an ultimate responsibility. It is a direct responsibility.

And then again:
The government has no power whatsoever, once appointments are made, to change them; only parliament can do that.
And still further;-


Donald Methuen Fleming: That is exactly what I said tonight.


Lionel Chevrier: This is certainly in complete contradiction of what the Secretary of State has said.


Donald Methuen Fleming: No.


Lionel Chevrier: It is.


Donald Methuen Fleming: It is not.


Lionel Chevrier: Then I again ask the minister this question: Does he subscribe to this additional statement made by the Secretary of State?
(Translation):
In other words, the Bank of Canada's monetary policy must he subordinate to the national policy for which the government is responsible, both before parliament and the people.
(Text):


Donald Methuen Fleming: Mr. Chairman, it is because of that fact that we are here asking parliament to take action in the situation.


Paul Joseph James Martin: Mr. Chairman, it think the two questions which the hon. member for Laurier has asked, based upon excerpts from the speech this afternoon of the Secretary of State, touch one of the vital points in the matter before the house, and to which the Minister of Finance has addressed himself in such an unsatisfactory manner; for the fact is that the Minister of Finance today has reiterated his views as to the responsibility of the government in the field of monetary policy in a manner different from that of any other previous minister of finance.


Donald Methuen Fleming: No.


Paul Joseph James Martin: Different from Mr. Harris; different from Mr. Abbott; different from Mr. Ilsley; different from Mr. Dunning; different from Mr. Rhodes; different from Lord Cobbald; different from Mr. Towers; and different from the statement made in the banking and commerce committee in 1956 by the present governor of the bank.


Donald Methuen Fleming: No.


Murdo William Martin: As the hon. member for Laurier has just pointed out, we have taken issue with the view which the Minister of Finance has stated as to the ultimate responsibility of government in our country regarding all policies taken by all agencies, including the Bank of Canada. We had a correct statement of the true constitutional position this afternoon by the Secretary of State. The hon. member for Laurier has quoted some statements from that speech in
Governor of Bank of Canada support of the position taken by the Secretary of State in this regard but we have a most amazing situation now. The Minister of Finance has persisted in his narrow, archaic view of the responsibility of the government, and he has that position directly challenged by the Secretary of State.
Under our constitutional practice that kind of division in the cabinet cannot go unnoticed and cannot be allowed, constitutionally, to be perpetuated. Under our constitution either the Secretary of State resigns or the Minister of Finance resigns. So there can be no doubt about the position of the Minister of Finance, the hon. member for Laurier has quoted from one observation made at page 2258 of Hansard of February 21 with regard to the minister's view of this matter, and I now quote another one which will be found at page 2256. I will then contrast it with some of the excerpts of the speech of the Secretary of State and if we are not then impressed with the disagreement between these two ministers I shall be very surprised.


An hon. Member:: You will be surprised.


Paul Joseph James Martin: An hon. gentleman says that I will be surprised. Hon. gentlemen are in such a following mood that no matter what the Minister of Finance does they will follow blindly, whether or not it is in the interests of the country. Here is what the Minister of Finance said-


John Andrew W. Drysdale: On a point of order, Mr. Chairman-


Jacques Flynn: Order.


John Andrew W. Drysdale: I should like to raise a point of order. I understood that we were on the committee aspect of this particular bill, and I should like to read from May's Parliamentary Practice, 16th edition, which has this to say:
The function of a committee on a bill is to go through the text of the bill-


John Whitney Pickersgill: What page?


John Andrew W. Drysdale: Page 538;
The function of a committee on a bill is to go through the text of the bill clause by clause and, if necessary, word by word, with a view to making such amendments in it as may seem likely to render it more generally acceptable. The rules as to the admissibility of amendments are explained in detail... below, but the general powers of a committee and the limitations by which it is bound should be clearly borne in mind.
1. A committee is bound by the decision of the house, given on second reading, in favour of the principle of the bill, and should not, therefore, amend the bill in a manner destructive of this principle.
It is my contention, Mr. Chairman, and I should like your ruling on this particular point, that we have gone over the principle
7532	HOUSE OF
Governor of Bank of Canada of the bill ad nauseam on second reading and the opposition are now assuming the guise of asking what they contend are questions. I have heard hardly any questions dealing with the bill. I think they know the principle and I would suggest that they are entitled to speak only to this particular clause of the bill. I suggest that the hon. member for Essex East is out of order in the way he is discussing this particular clause.


Paul Joseph James Martin: Mr. Chairman, I am sure that you did not take this point of order seriously. I would simply point out that if the hon. gentleman's contention were to be accepted it would be a denial of what the Minister of Finance said would be afforded the members of the committee. First of all, we have been denied the right to go to a standing committee of this house and now that that has been decided the government through some of its spokesmen, and we have heard just one, is trying to restrict our right in the committee of the whole.


John Andrew W. Drysdale: I am just seeking to enforce the rules.


Paul Joseph James Martin: I am not saying that is the position you are supporting, Mr. Chairman, I am simply indicating by the intervention that has been made what is the obvious intent of the administration with regard to this debate. Not only are we going to be denied the right to examine the governor and the board of directors in a standing committee of this house-


John Andrew W. Drysdale: You never attend committees.


Paul Joseph James Martin: -but if members of the Conservative party in this house have their way we are going to be denied the right to pursue a line of interrogation of our own intent with the Minister of Finance.


Donald Methuen Fleming: More play acting.


Paul Joseph James Martin: I for one do not
propose to have that kind of closure applied to me.


Donald Methuen Fleming: Mock heroics.


Jacques Flynn: Order. I thought the hon. member was speaking to the point of order.
I certainly should like him to speak to the point which was raised by the hon. member for Burnaby-Richmond.


John Andrew W. Drysdale: There is no answer.


Jacques Flynn: I have indicated before my view that this is a very important question and I certainly should like the committee to give its views on this matter of the discussion in committee on clause 1 of a bill. Evidently this bill presents a special problem because there is only one clause, but since


the point has been raised I would ask the hon. member for Essex East to discuss the merits or demerits of the point of order.


Paul Joseph James Martin: Since you invite me, I do so. I had thought the point of order possessed so little merit that it did not require comment but since you have asked me I shall be very glad to do so. It will be recalled that this afternoon the Secretary of State made a speech in which he took a different position as to the responsibility of the government in the field of monetary policy-


John Andrew W. Drysdale: On second reading.


Paul Joseph James Martin: -in supporting the bill. In endeavouring to determine whether or not this bill should pass, the hon. member for Laurier has been trying to indicate a difference in point of view between the Minister of Finance and the Secretary of State. What I am now doing is pursuing that point by examining further other statements of the Secretary of State and relating them to the stated policy of the government in the monetary field as stated by the Minister of Finance.


John Andrew W. Drysdale: Discuss the point of order.


Paul Joseph James Martin: We have before us a bill of one clause and it is our practice on the first clause there is permitted the most general kind of discussion. On that point alone, of course, I would contend with confidence that there can be no doubt about the propriety of the kind of act in which I am now engaged-


Donald Methuen Fleming: "Act" is right.


Paul Joseph James Martin: -and which the Leader of the Opposition and the member for Laurier pursued earlier today. To take any other view, Mr. Chairman, and I am sure this would be very much in Your Honour's mind, would mean that the assurances given the house by the Minister of Finance before the bill was projected in its present form are now to be reneged on by the government giving support to the raising of a point of order that has all the elements, I say, of intended closure.


John Andrew W. Drysdale: Have you anything on the point of order?


Donald Methuen Fleming: More bunk.


Paul Joseph James Martin: These lovers of freedom cannot stand by and listen to someone else. That is the reason they will not let Mr. Coyne go to the committee and be examined. We are called bully-boys but I think it is clear who are the bully-boys of the House of Commons tonight.


Some hon. Members:: Hear, hear.


Some hon. Members:: You are.


Paul Joseph James Martin: First of all, the practice is that on the first clause the most general kind of discussion is permitted.


John Andrew W. Drysdale: Cite some authority.


John Whitney Pickersgill: Howard Green.


Murdo William Martin: In answer to repeated requests for a committee of the house to go into this whole matter, we were told by the government before the bill was brought forward that the committee of the whole house was the place where this question would be aired, this place referred to as the final court of appeal by the Minister of Finance on another occasion. Now, because I am endeavouring first of all to show what the Minister of Finance's view of the responsibility of the government in the field of monetary policy is, because I am endeavouring to establish that that is not the view of his colleague, the Secretary of State, and because that difference is of very great relevance to the whole issue involved in the bill, it cannot seriously be argued that this line of pursuit and this form of interrogation and commentary are not within our rules. That is my submission.
I would have thought, Mr. Chairman, that the point was so obvious that no one would dare raise it or that no one would cause us to dwell on it.


John Andrew W. Drysdale: Mr. Chairman, if you will forgive me, I should like to raise the very obvious point that no one would dare raise. I refer again to May 16th edition, page 551 where reference is made to proceedings in committee of the whole house, in these words:
Proceedings on a bill begin by the chairman calling the first clause. The calling of a clause by the chairman brings it under the consideration of the committee, but does not entitle a member to speak generally upon the clause, as there is no question before the committee until an amendment has been moved, or the question proposed "that the clause stand part of the bill".
The hon. member has referred to the Secretary of State speaking this afternoon on second reading of the bill and he seeks to use the minister's statements on second reading to enforce his right to speak now when we are examining the bill clause by clause. I would suggest there has been a great deal of latitude for hon. members to make every observation which they should have made on second reading and I think the time has now come when we should get down to the examination of the clause, whether we have to do it word by word or by whatever other method is necessary.


Mr. Denis:: There is nothing at all in the clause.


John Andrew W. Drysdale: Well, pass it.
90205-6-476
Governor of Bank of Canada


Jacques Flynn: Order. There is one point
that remains doubtful in my mind, the assertion by the hon. member for Essex East that the Minister of Finance indicated that such a discussion would be pertinent. I would not wish to dismiss this without hearing what the Minister of Finance has to say on this particular point. If, of course, there is some agreement of some kind, I think it would be the duty of the Chair to accept it. Before I deal with the problem, perhaps the Minister of Finance would assist the Chair.


Donald Methuen Fleming: There is no agreement of any kind, as is quite obvious, between the opposition and the government in this house. There is anything but agreement these days. In this regard, of course, the situation is that the house, by a decisive vote at five o'clock this afternoon, recorded its approval of the principle of the bill. The principle of the bill is, therefore, no longer in issue and remarks that relate to the principle of the bill are quite out of order in this committee.
Now, that leaves us on the clause, and the question then simply concerns the extent of the discussion on the clause of a bill. Even if there is, which I am not prepared to concede in the way in which the hon. member is arguing it, some latitude allowed on the first clause of a bill, the fact is that that latitude never has been regarded as extending to the reopening of the debate on the principle of the bill. This is what hon. members opposite are doing. They are quite within their rights, Mr. Chairman, in discussing matters related to the clause. They are quite at liberty to ask questions relating to the clause. As I said earlier, I will be happy to answer such questions as are relevant to the clause to the best of my ability.


Lester Bowles Pearson: This clause about which the minister talks, and about which he is allowing us to ask him some questions, declares that the office of the Bank of Canada shall be deemed to have become vacant. This is the clause which discharges the governor of the Bank of Canada. We have the right in committee to try to ascertain the reasons for taking this action. We have already stated, Mr. Chairman, that if the government had seen fit to submit this matter to a committee of the house where witnesses could be called and evidence taken, that would be the best way to get the truth in connection with this matter. The government would not do that. The government now, by an act, and without a hearing, is going to discharge the governor.
The main reason the minister has given is that the government cannot co-operate with the governor in the field of monetary policy, among other things. This afternoon the Secretary of State said the government had

Governor of Bank of Canada responsibility for monetary policy. The minister has said dozens of times that the government has no responsibility for monetary policy. Until we can find out whether the governor is, in fact, being thrown out of his job because he would not co-operate in regard to monetary policy, are we not right in trying to reconcile these differences of opinion between two members of the same government? Until we try to do that, how can we get to the heart of this charge that the governor of the bank would not co-operate with the government of the country in the field of monetary policy?


Jacques Flynn: Is this still on the point of order?


Donald Methuen Fleming: Yes, Mr. Chairman. I just wish to express, very respectfully, the hope that you would not entirely rule out of order what the hon. member for Essex East was saying a while ago-I mean within the last ten or 15 minutes- because he was so wrong I was hoping I would have the opportunity to put him right. He has misinterpreted what has been said in the past both by myself and other ministers of finance, including the minister of finance and prime minister in the recent Liberal administration.


Paul Joseph James Martin: Do I understand now that I am saved by my classmate who takes issue with one of the backbenchers who sought to deny me the right to speak? Am I to be allowed to continue?


Jacques Flynn: I do not believe the Minister of Finance intended to indicate a ruling. Again, if there is agreement, I am willing to follow it. We are still on the point of order, and I understand the hon. member for Laurier wishes to speak to the point of order.


Lionel Chevrier: I do have something to say in speaking to the point of order. However, the point of order has been made far easier by the statement which has been made by the Minister of Finance. The Minister of Finance has made a statement in which he has indicated clearly he is inviting the hon. member for Essex East to continue his argument. Therefore, by implication, he declares that that argument is in order.
However, I did not rise, sir, for the purpose of saying that. I rose to put on Hansard, in answer to what was said by the hon. member for Burnaby-Richmond, a statement which can be found in May's 16th edition, page 539, the first part of which the hon. member omitted to read. This citation reads, in part:
It will be seen, however, that In spite of these limitations a committee has, in practice, considerable power over a bill. John Moore, a member of

the Long Parliament states in his unpublished diary that "No committee can destroy a bill, but they may lay it down." Thus, while a bill cannot be withdrawn in committee, for this requires the leave of the house, a committee of the whole house can indirectly achieve this object by reporting progress, without asking leave to sit again, and so putting an end to its existence. This course is equivalent to refusing to proceed with the bill. Again, notwithstanding the rule which forbids the moving of an amendment which is destructive of the principle of the bill, there is nothing to prevent a committee of the whole house from negativing a clause or clauses, the omission of which may nullify or destroy the bill, and reporting the bill, as amended, to the house. In a standing committee, a motion may be moved "That the committee do not proceed further with the consideration of the bill", or an essential clause may be negatived. A standing committee has, in fact, disagreed to all the clauses of a bill and made a special report to the house.


An hon. Member:: Read on.


Lionel Chevrier: The hon. member did not read what he should have read when he raised the point of order.


An hon. Member:: There is another important paragraph.


Lionel Chevrier: The author comes to the conclusion that, in spite of the limitations to which the hon. member has referred, the committee still has considerable power over a bill. As has been stated already, this is a bill of an extraordinary nature. It is a bill with far-reaching effects. It is a bill which seeks to discharge, not an ordinary servant but a public servant of the crown and the greatest latitude I submit, with deference, should be allowed in the discussion of this matter. We should be allowed to put the questions which we intend to put and which we have now just begun to put so that we may get answers from the minister. With all respect, sir, I say that the hon. member for Essex East was in order in the discussion he was pursuing.


Jacques Flynn: As I said before, this is a very difficult point of order. I have been thinking of the procedure which is followed generally without any formal objections being raised. I must say that I would have preferred the point to be raised on a bill other than this one. However, there is no doubt but that, the purpose of the committee is to examine the clauses of the bill one by one and the details of the bill are to be considered. I refer hon. members to standing order 78.
The problem raised is one of relevancy and not of procedure, as the hon. member for Laurier has suggested by citing this paragraph from May, page 539, the paragraph coming after the one which was quoted by the hon. member for Burnaby-Richmond. Standing order 59, paragraph 2 states that speeches in committee of the whole

must be strictly relevant to the item or clause under consideration. These are the two general rules that we find in our standing orders. There is, of course, the other general rule to the effect that we cannot revive or discuss a problem which has been disposed of by the house. The house has made a decision on the second reading of this bill or has reached a decision. It is therefore difficult to take it that in committee of the whole the same wide scope of debate should be allowed as is allowed on second reading when we are discussing the principle.
I will not say what is the exact scope of debate at this time. However, I should give some indication as to where I would think hon. members would be out of bounds, subject to clarification if necessary. For instance, I would say that many of the remarks made tonight have had to do with the principle of the bill which has been disposed of. I would think that these remarks would not be in order. I would say that reviving the debate on second reading in some points only for the purpose of trying to reconcile or to oppose views would not be in order. I would also say that reviewing the whole monetary or fiscal policy would be out of order unless these matters were related to the difference of opinion between the Minister of Finance and the governor of the Bank of Canada.
It has been pointed out that the most general kind of discussion is generally allowed on clause 1 of the bill. I will not subscribe to this rather sweeping statement. I have checked on Hansard in previous years. I note that general debate, not unlimited debate has been allowed on clause 1. No decision has been made as to the exact scope. I do not wish to go further than that for the time being. I suggest that a problem is presented here. If there is co-operation on all sides in an effort to be practical and not to revive the debate on second reading, I suggest that we can get along without making a formal ruling and without deciding that this practice has not been in accordance with the standing orders. I do not wish to say whether we should follow it now or whether a view should be expressed by the house that we should abandon it. For the time being I simply give this indication in asking the co-operation of all hon. members in order that the discussion may not extend too far afield.


Paul Joseph James Martin: Mr. Chairman, I am speaking in opposition to this bill. The argument I am going to make is in opposition to the sole clause in this bill. As I had been indicating, the Minister of Finance, as found at page 2256 of Hansard for Tuesday, February 21, stated the following which 90205-6-476J
Governor of Bank of Canada I think is the most comprehensive statement he has made on this business of responsibility for monetary policy which, of course, goes to the very essence of the bill before us. This is the speech of the Minister of Finance:
Mr. Speaker, I think that these are words that will help to put this subject into its proper focus and perspective. However, Mr. Speaker, the issue that the Liberal opposition has chosen to raise in this debate is an issue as to where responsibility lies with respect to monetary policy in Canada. The Leader of the Opposition has certainly striven to the utmost to create maximum confusion on this subject and then exploit it. Let me leave no doubt in the mind of any hon. member in this house, Mr. Speaker, the government is always prepared to assume its responsibility. It will always measure up to that responsibility and will hold itself accountable to parliament at all times. We have given abundant evidence of that respectful relationship. And, sir, so far as I am personally concerned in this relationship that the minister of finance has with the Bank of Canada, I also give the house full assurance that any matters on which the minister of finance has responsibility, has any duty cast upon him, so long as I have the honour to hold this office that responsibility will be accepted. There will be no attempt to deny or reduce it. But, Mr. Speaker, I am not going to pretend before this house that I have the power in certain areas that I do not, as minister of finance, possess. I do not think it is proper on an issue of this kind for the Leader of the Opposition to pretend that the power or authority which exists is held by the government or the minister of finance when in fact parliament has legislated otherwise. The government is not omnipotent; parliament is, within the terms of the British North America Act and federal jurisdiction. The government's power in all matters financial is derived from parliament; it depends upon enactments.
Mr. Speaker, the Leader of the Opposition sought yesterday to create or present an issue as though it lay between the government and the Bank of Canada. I shall have something to say on this subject. I say, Mr. Speaker, and this is the keynote of what I am about to submit, that in the field of monetary policy parliament has given the essential authority to the Bank of Canada and not to the government or to the minister of finance. When we look for the place where power resides with respect to money supply in Canada we find that parliament has given no power to the government. Therefore, Mr. Speaker, when the Leader of the Opposition criticized monetary policy yesterday he was not, as he tried to represent, criticizing the government. He was criticizing the Bank of Canada.


Donald Methuen Fleming: Go on; read the next sentence.


Paul Joseph James Martin: All right. I shall read the next sentence. It has no relevancy; but if it will please my hon. friend to quote his further words I shall be glad to do so.


Donald Methuen Fleming: Read on.


Paul Joseph James Martin: Very well. I shall do so.
The Leader of the Opposition added the pretence, for his own partisan purpose, that the government has responsibility.
That is precisely our position, namely that the government has ultimate responsibility.

Governor of Bank of Canada We are supported in that position by the Secretary of State who said this afternoon as follows:
(Translation):
The minister is right, of course, when he says that their policies should be parallel and harmonious, but it is surely the duty of the government to take steps in order to ensure, while accepting responsibility for policies, that they are parallel and harmonious.
(Text):
Then the Secretary of State continued as follows, and I ask the Secretary of State to listen to this.


Donald Methuen Fleming: It was a very good speech.


Paul Joseph James Martin: The Secretary of State continued:
(Translation):
-I will give only a few quotations to prove clearly that all the parties represented in the House of Commons at that time expressed the unanimous opinion that the principle of that act was to subordinate the Bank of Canada's monetary policy to the economic and fiscal policy of the government itself.
(Text):
That statement is in direct contradiction to the statement of the Minister of Finance on February 21.


Donald Methuen Fleming: Don't be so absurd.


Murdo William Martin: My hon. friend says, "Don't be absurd". I saw what happened today. I saw the Prime Minister and the Minister of Finance when the Secretary of State was speaking. The Minister of Finance looked over at the Secretary of State and he seemed to be saying to the Prime Minister, "Unbelievable".


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: If it was not that, at any rate the Minister of Finance was so greatly embarrassed by that expression of disagreement by his colleague-


Donald Methuen Fleming: Mr. Chairman, I rise on a question of order or privilege. The hon. member is asking the committee to believe that this afternoon I used the expression "Unbelievable". The expression that I conveyed by my looks and by my words this afternoon, so far as the speech of my colleague the Secretary of State was concerned, was "Admirable", "Magnificent".


An hon. Member:: And contradictory.


Murdo William Martin: Of course, Mr. Chairman, you will recognize at once how improper this point of order was. In view of the character of this debate I express the hope that when a minister of the crown or any one of us takes issue with anything or raises points of order which are fictitious, the Chair

will be vigilant in seeing that synthetic points of order like that one are not permitted to be pursued. What really happened, I think, was this and I perhaps did my hon. friend an injustice.


Donald Methuen Fleming: You certainly did.


Murdo William Martin: The minister did not say "Unbelievable". When he heard the Secretary of State correctly state the relationship of the government in the field of monetary policy-


Donald Methuen Fleming: No, you have not understood.


Murdo William Martin: -what he said to the Prime Minister was "Rubbish". I say in this instance the Secretary of State was not guilty of speaking rubbish. He was-


Donald Methuen Fleming: You are though.


Murdo William Martin: -stating the correct position, a position that has been taken by every one of my hon. friend's predecessors. He is the only man occupying the post of minister of finance who has abdicated the responsibilities of government such as the one that concerns the Bank of Canada primarily and ultimately, as it should in this case, the government of Canada.


Donald Methuen Fleming: Will the hon. member give me the floor for two minutes-


Some hon. Members:: No.


Donald Methuen Fleming: -to expose the hon. gentleman in the statement he has just made?


Murdo William Martin: Will my hon. friend give me the opportunity to reply to further observations he has made in this regard? He can have the floor afterwards.


Donald Methuen Fleming: You are making statements that are just not true.


Murdo William Martin: Mr. Chairman, I am going to ask the Minister of Finance to contain himself. It is true his conduct is now being examined, but he should show the calm that is expected of one who by manner can prove he is not guilty.


Mr. Speakman:: On a point of order, Mr. Chairman-


Jacques Flynn: Order. The hon. member for Wetaskiwin is rising on a point of order.


James Stanley Speakman: May I call to the attention of the hon. member for Essex East and the committee that standing order 59(2) says that the debate shall be relevant. May I quote from the bill. The explanatory note says:
The purpose of this bill is to provide that a vacancy-

And so on. I believe the hon. member for Essex East has departed very far from the purport of the bill.


Donald Methuen Fleming: And farther still from the facts.


Paul Joseph James Martin: Mr. Chairman, may I finish my argument and see whether I have departed very far from the bill.


Jacques Flynn: Order. Before the hon. member continues may I just say this to him. I indicated some time ago that I did not consider relevant a discussion of the speeches made this afternoon with regard to certain points in order to ascertain whether or not they could be reconciled. I do not wish to lay down too strict a line. I am simply warning the hon. member that it seems to me he has not taken this view into consideration.


Murdo William Martin: Mr. Chairman, I am sure Your Honour will not take exception to what I am about to say. But I wish to say this, because this debate is by no means over. We intend in this house-


Donald Methuen Fleming: In this house?


Murdo William Martin: -in this party to resort to every legitimate method open to us to ensure that we will not be denied the right of fully examining this matter in this committee of the whole to every possible extent.


An hon. Member:: Sabotaging the government.


Murdo William Martin: Let that be regarded as a statement of our intention in this debate, no matter what the consequences are.


William Heward Grafftey: Filibuster.


Jay Waldo Monteith: You are taking over, eh, Paul?


Murdo William Martin: The minister says what we have said now has no relevancy. Let us examine how futile this argument is.


George Harris Hees: Oh, oh, a new leader.


Murdo William Martin: Hon. gentlemen opposite, including the Minister of Transport-


George Harris Hees: Trade and commerce, Paul.


Murdo William Martin: -should be listening and trying to learn something.


Lionel Chevrier: He has been demoted. He is now the Minister of Trade and Commerce.


Murdo William Martin: This bill says:
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 am opposed to this bill-
Governor of Bank of Canada


Some hon. Members:: Oh, oh.


Murdo William Martin: Mr. Chairman, there are many ways of imposing closure and hon. gentlemen tonight-


Donald Methuen Fleming: You know them all. You applied every one of them in 1956.


Jacques Flynn: Order.


Murdo William Martin: -and hon. gentlemen tonight-


Some hon. Members:: Order.


William Moore Benidickson: Run for the flag.


Murdo William Martin: Mr. Chairman, I know that you are going to take every precaution to see that we are given every opportunity of expressing our views. One way of imposing closure is by an overwhelming majority-


William Heward Grafftey: It is by filibustering.


Murdo William Martin: -of the government of Canada to prevent hon. members from expressing themselves. I want to serve notice on the Conservative party that none of us in the Liberal party is going to be denied the right of exposing this government in this matter to the public.


Some hon. Members:: Hear, hear.


Mr. Ricard:: It doesn't seem to have any effect on you.


Some hon. Members:: Bravo.


George Harris Hees: Leader Paul.


Murdo William Martin: So that-


Jacques Flynn: Order. The hon. member for Essex East has the floor.


Murdo William Martin: -our intentions in this regard will not come as a surprise, let me say we can stay here for weeks-


Some hon. Members:: So can we.


J.-H.-Théogène Ricard: What do you think we are doing?


Some hon. Members:: Hear, hear.


Paul Joseph James Martin: -in order to entangle-


John Andrew W. Drysdale: You are entangled already.


Murdo William Martin: -in order to disentangle and dissect, to demonstrate to the people of Canada the real truth behind this act; that the government is taking this way of getting rid of the governor of the Bank of Canada by way of a bill of attainder.


William Heward Grafftey: Threatened filibuster.

Governor of Bank of Canada


William Moore Benidickson: It was exchange operations; that was the reason for it.


Donald Methuen Fleming: Mr. Chairman, may I ask the hon. member by what method he proposes, as he just said, to dissect the people of Canada?


Paul Joseph James Martin: The removal of the governor from office can be requested on several grounds-


Some hon. Members:: Ten thirty.


Paul Joseph James Martin: It can be requested on the ground that he has pursued a monetary policy that is contrary to the policy of the government.


John Andrew W. Drysdale: And violation of the oath of secrecy.


Paul Joseph James Martin: What we are seeking to establish here is that this could not possibly arise in this instance because the Minister of Finance has said that this government under no condition is in any way responsible for monetary policy.


Some hon. Members:: Ten thirty.


Paul Joseph James Martin: That being the case, how can it be argued that the governor of the Bank of Canada should be removed because he has taken issue with the government in the field of monetary policy? That is the reason why the hon. member for Laurier has been contrasting the statement of the Secretary of State with the declared policy of the Minister of Finance. It is because
these two statements are different and these two ministers differ that under our constitutional practice there is no doubA as to what should happen. That is that tne Secretary of State or the Minister of Finance should resign. That is the clear, constitutional responsibility.


An hon. Member:: Or the whole government.


Jay Waldo Monteith: Don't hold your breath waiting for that to happen.


Paul Joseph James Martin: I have no doubt that will not happen, because if there was ever a government that failed to have regard for its constitutional responsibility, it is this government that tonight seeks to impose its will upon the rest of us.	%


William Moore Benidickson: It was exchange operations.


Jay Waldo Monteith: Paul, are you Wayne and Shuster?
Progress reported.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Mr. Speaker, the business for tomorrow will be a continuation of the debate on Bill No. C-114, followed by the other legislative items that I announced last evening.


Donald Methuen Fleming: I would not call that a debate.
At 10.30 p.m. the house adjourned, without question put, pursuant to special order.



ANSWER TO QUESTION

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

Mr. Morris: 1.	Does the Canadian National Railways pay grants to the city of Halifax in lieu of taxation on Canadian National Railways property?
2.	If so, what is the formula used in the payment of such grants, and is the formula related to the so-called commercial tax rate or to the residential tax rate applied by the city of Halifax to taxpayers?
3.	What was the total grant paid by the Canadian National Railways to the city of Halifax in lieu of taxation on Canadian National Railways properties in (a) 1956 (b) 1957 (c) 1958 (d) 1959 (e) 1960?
4.	What was the total accepted value of Canadian National Railways properties on which the 1960 grant to the city of Halifax was based, what portion represented land, and what portion represented buildings?
Answer by: Hon. Leon Balcer (Minister of
Transport):
The management of Canadian National Railways advise as follows:
1.	Yes.
Question
2.	Valuation: Railway roadway, according to average value of adjoining lands. Land, other than roadway, at actual value. Buildings, stations, freight sheds, offices, warehouses, elevators, hotels, roundhouses and machine repair and other shops at actual value.
Rate: 50 per cent of the merged average rate of taxation for the five year period immediately preceding the commencement year of the agreement. "Merged rate"-means the effective rate if the residential and commercial rates were not operative.
Note: Land and buildings thereon, under lease are excluded from the grant. Valuations are revised annually to allow for changes in holdings and leaseholds.
3.	Railway:	1956,	$75,000.00;	1957,
$75,348.53; 1958, $75,615.81; 1959, $82,305.00; 1960, $84,884.37.
Hotels: 1956, $21,168.13; 1957, $21,278.58; 1958,	$63,500.00;	1959,	$63,500.00;	1960,

House: 1956, $583.50; 1957, $729.25; 1958, $652.75; 1959, $727.35; 1960, $849.75.
Office Building:	1956,	$9,013.93;	1957,
$10,003.26; 1958, $10,003.26; 1959, $10,003.26; 1960, $10,217.86.
4.	Grant:	Land, $3,765,200; buildings.
$1,727,560; Total, $5,492,760.

Wednesday, July 5, 1961