[Stage Direction]
A message from His Excellency the Governor General transmitting further supplementary estimates for the fiscal year ending March 31, 1932, was presented by Hon. E. N. Rhodes (Minister of Finance), Tead by Mr. Speaker to the house and referred to the committee of supply.
A message from His Excellency the Governor General transmitting further supplementary estimates for the fiscal year ending March 31, 1932, with respect to the Canadian National Steamships and the Maritime Freight Rates Act, was presented by Hon. E. N. Rhodes (Minister of Finance) read by Mr. Speaker to the house and referred to the com-mitte on railways and shipping.


[Stage Direction]
Bill No 31, respecting certain patents of Autographic Register Systems, Limited.-Mr. Anderson (Toronto-High Park).
Bill No. 32, respecting the Ottawa and New York Railway Company.-Mr. Shaver.

[Stage Direction]
(Questions to be answered orally are indicated by an asterisk.)
Questions

Mr. MUNN:: 1.	What amount to date has the Vancouver harbour commissioners paid or approved for payment to Messrs. Sydney E. Junkins and W. J. Swan, in connection with the proposed deep sea pier, referred to in minute of Privy Council under date May 16, 1930?
2.	What amount to date has the Vancouver harbour commissioners paid or approved for payment to Mr. W. J. Swan, for engineering services in connection with the fish dock recently constructed?


Mr. DURANLEAU:: The following information has been furnished by the Vancouver harbour commissioners.
1.	Under a contract entered into by the Vancouver harbour commissioners with Messrs. Sydney E. Junkins and W. G. Swan, dated the 7th July, 1930, and based on the provisions of an order in council dated the 16th May, 1930, the latter were paid $20,000 on account of the fees provided for in the said contract for the preparation of complete plans, specifications and estimates and the necessary preliminaries for securing tenders for the construction of a deep sea pier in Vancouver harbour. More recently Messrs. Junkins and Swan were paid a further sum of $125,000 in full settlement of any and all claims they might have under the above named contract.
2.	The Vancouver harbour commissioners have paid to W. G. Swan, consulting engineer of Vancouver, the sum of $20,315.10 in payment for his engineering services in connection with the fish dock recently constructed in Vancouver harbour.



ST. DAVID, QUE., MAIL CONTRACT

Mr. POWER:: 1.	Who was the mail contractor of rural route No. 1, St. David, county of Levis, during the year 1930-31?
2.	Was the contract cancelled, and if so at what date and for what reason?
3.	Were new tenders called for?
4.	What were the names of the said tenderers and the prices submitted in each case?
5.	Has a new contract been awarded?
6.	If not, who is carrying on the work and under what terms and conditions?


Mr. SAUVE:: 1.	Alberic Martineau.
2.	On the 13th November, 1931, the department issued instructions to give the contractor three months' notice of the cancellation of his contract in the public interest.
3.	Yes.
4.	Alberic Martineau, 3480; Edmond Carrier, $500; Joseph Odesse, $600; Donat Halle, $700.
5.	Yes.
6.	The service is being operated by Donat Halle at the rate of $500 per annum.



UNEMPLOYMENT RELIEF-EXPENDITURES

Mr. DENIS:: 1.	What amount, out of the undetermined sum of money voted last session to help the unemployed, was expended to relieve the unemployed?
2.	What amount was allotted to each province?
3.	What amount was allotted to the city of Montreal ?
4.	What amount rvas paid to the city of Montreal out of said allotted fund?
5.	What works were recommended to be executed, out of said amounts, in the city of Montreal ?
6.	Are all said works under way?
7.	If not, what of said works have been started ?


Mr. GORDON:: 1.	Answered by the report of the Dominion
Director	of	Unemployment	Relief,	tabled
March 9.
2.	Answered by the report of the Dominion
Director	of	Unemployment	Relief,	tabled
March 9.
3.	Answered by the report of the Dominion
Director	of	Unemployment	Relief,	tabled
March 9.
4.	No accounts for the city of Montreal have been received at this date.
5.	Answered by the report of the Dominion
Director	of	Unemployment	Relief,	tabled
March 9.
6.	No complete information.
7.	Answered by No. 6.



PUBLIC WORKS EMPLOYEES-NOTICES OF DISMISSAL

Mr. FOURNIER:: 1.	How many letters were sent to temporary employees of the Department of Public Works advising them that their services would be no more required after the last of March, 1932?
2.	How many of said employees are native born?
3.	How many of said employees are French speaking ?


Mr. STEWART (Leeds):: 1. 102.
2. 88.
3.	46.



CANAL TONNAGE

Mr. DESLAURIERS:: 1.	How many tons of freight passed through our canals during the years 1925, 1926, 1927, 1928, 1929, 1930 and 1931, respectively?
2.	How many tons of freight were transported by the railways, in Canada, during the years 1925, 1926, 1927, 1928, 1929, 1930 and 1931, respectively?
3.	How many tons of Canadian grain passed through our canals during each respective year from 1925 to 1931, inclusive?

Questions
4.	How many tons of American grain passed through our canals during each respective year from 1925 to 1931, inclusive?
5.	How many tons of Canadian grain were transported by our railways during each respective year from 1925 to 1931, inclusive?
6.	How many tons of Canadian grain were transported by American railways during each respective year from 1925 to 1931, inclusive?


Mr. STEVENS:: 1. Years		Tons
1925			.. .. 14,130,667
1926			.. .. 13,477,663
1927			.. .. 17,488,311
1928			.. .. 18,720,441
1929 			.. .. 13,699,647
1930			.. .. 14,803,334
1931			.. .. 16,189,074
2. Years		Tons of
		revenue freight
1925			.. .. 94,624,599
1926			.. .. 105,221,906
1927			.. .. 106,011,355
1928 			.. .. 118,652,969
1929			.. .. 115,187,028
1930			.. .. 96,194,017
1931			.. .. *73,837,245
..Preliminary figures subject to revision.		
3. Year		Tons
1925			.. .. 5,885,276
1926			.. .. 5,515,566
1927			.. .. 6,803,393
1928			.. .. 8,529,434
1929			.. .. 4,314,585
1930			.. .. 5,483,049
1931			.. .. 6,061,941
4. Year		Tons
1925			.. .. 1,972,134
1926			.. .. 1,603,506
1927			.. .. 3,751,075
1928			.. .. 2,675,660
1929			.. .. 1,255,567
1930			.... 908,806
1931			.. .. 777,112
5. Grain loaded	on railway cars in Canada.	
Years		Tons
1925			.. .. *16,751,878
1926			.. .. *16,807,439
1927			.. .. 15,689,500
1928			.. .. 22,408,427
1929			.. .. 12,617,486
1930			.. .. 11,474,703
1931			.. .. 11,089,926
* Includes some	United States grain loaded	
at Georgian bay ports.		Except for this, practically all grain loaded		was Canadian grain.
There is a duplication of grain reshipped from elevators, particularly from Georgian bay port elevators.
6. Accurate data not available.



ST. OMER, QUE.-WHARF

Mr. MARCIL:: 1.	Did the municipality of St. Omer, county of Bonaventure, Quebec, refuse the grant for the construction of the protection along Perron boulevard from the wharf to the property of Nicholas Arsenault?
2.	Was there a grant made for this work, if so, what was the amount and on whose request was it made?


Mr. GORDON:: 1.	No information.
2.	Under the Unemployment and Farm
Relief Act, 1931, the province of Quebec requested approval of a grant for the parish of St. Omer, Bonaventure county, for works consisting of (a) breakwater to protect road; (b) road improvements and widening. The total cost of which amounted to $3,000, the Dominion government paying forty per cent, or $1,200. This was approved February 2, 1932.	*


Mr. MARCIL:: 1.	Has the freight shed at the wharf at St.
Omer, county of Bonaventure, been transferred from the main land to the outer end of the wharf?	.
2.	Who did the work, and what did it cost:
Mr. STEWART (Leeds:
1.	Yes.
2.	(a) Department of Public Works by day labour; vb) $282.70 for moving and repairs.



GRANTS FOR VENEREAL DISEASE CONTROL

Mr. SPENCER:: 1.	What provinces have sent requests asking for the reinsertion of the grant for venereal disease control, in the supplementary estimates?
2.	What is the disposition of the government in regard to these requests?


Mr. MACLAREN:: 1.	Ontario, Quebec, Nova Scotia, New Brunswick, Manitoba, British Columbia, Prince Edward Island, Alberta, Saskatchewan.
2.	Information is not available.



NEW INDUSTRIES

Mr. SULLIVAN:: 1.	How many new industries have been introduced into Canada since August 24, 1930, to date?
2.	How many new- factories have been opened since the same date?


Mr. STEVENS:: 1.	There are 142 manufacturing concerns on the list of new industries introduced into
Questions

Canada since August, 1930, to date. Of these, 131 are from the United States, 10 from Great Britain and one from France.
2.	No complete information available on this subject.



ST. JOSEPH D'ALMA, QUE., POSTMASTER

Mr. CASGRAIN:: 1.	Has Mr. Yves Gagne, postmaster at St. Joseph d'Alina, county of Roberval, been dismissed ?
2.	If so, were complaints lodged against him. and by whom?
3.	What was the nature of said complaints?
4.	Was an inquiry held before his dismissal?
5.	What is the name of the commissioner who held the inquiry?
6.	What is the name of the person who replaced Mr. Gagne?
7.	By whom was he recommended?
8.	Did said person pass the required civil service examination?


Mr. SAUVE:: 1.	Yes.
2.	Yes-directors of the Conservative committee of St. Joseph d'Alma and Dr. L. Duguay, M.P.
3.	Political partisanship.
4.	Yes.
5.	Robert Cote, Quebec.
6.	Louis Philippe Simard.
7.	Dr. L. Duguay, M.P.
8.	Permanent selection not yet made. The usual procedure required by the Civil Service Commission will be followed in rating candidates for the vacancy.



HON. LXJCIEN CANNON-SECRETARIES

Mr. POULIOT:: 1.	How many private secretaries, joint private secretaries, assistant private secretaries and secretary clerks were working for the Hon. Lucien_Cannon while he was Solicitor General?
2.	What is the name of each one and when was each one of them appointed?


Mr. GUTHRIE:: 1 and 2. P. Brunet, private secretaiy, September 25, 1926.



DISARMAMENT CONFERENCE

Mr. POULIOT:: What was the cost of communications exchanged between the Canadian delegates at the Disarmament conference and any member or official of the government:	(a) by cable;
(b) by wireless; (c) by wireless telephone, since the Canadian delegates left this country?


Mr. BENNETT:: Cost of communications sent from Canadian delegates at Disarmament conference to any member or official of the government since the Canadian delegates left this country (a) by cable, (b) by wireless, (c) by wireless telephone. No information yet received.

Cost of communications addressed to Canadian delegates at Disarmament conference by Secretary of State for External Affairs (a) by cable, (b) by wireless, $93.94; (c) by wireless telephone. No cost.


Mr. POULIOT:: 1.	Was any sum of money advanced to the Canadian delegates at the Disarmament conference for their travelling expenditure?
2.	If so, how much?
3.	Are they accompanied by a secretarial staff?
4.	If so: (a) who are the members of that staff; (b) what is their salary; (c) what amount has been advanced to them for their travelling expenses?
Mr. BENNETT;
1.	Yes.
2.	$9,133.18.
3.	No. They were accompanied by two technical advisers, Major General A. G. L. McNaughton, Department of National Defence, and Mr. L. B. Pearson, Department of External Affairs. The secretarial work is 'being done by the staff of the Canadian advisory officer in Geneva.
4.	Answered by No. 3.



IMPERIAL CONFERENCE-EXPENDITURES OF SOLICITOR GENERAL

Mr. POULIOT:: 1.	What was the total amount of the travelling expenditure of the Solicitor General from the date he left this country to attend the Imperial conference of 1930 until his return?
2.	What was the total amount of the travelling expenditure of his staff during the same period ?


Richard Bedford Bennett: 1. Total expenses, including travel, incurred by the Hon. Maurice Dupre land secretary attending the Imperial conference of 1930, $5,036.40.
2. Amount included in above statement.
minister's OFFICE AT QUEBEC


Jean-François Pouliot: How many days did each one of all ministers use the minister's office in the post office building at Quebec since August, 1930: (a) before the appointment of J. L. A. Tanguay as clerk; (b) after his appointment as such?


Hugh Guthrie: No record has been-kept.



FLEURANT, QUE., POSTAL SERVICE

[Stage Direction]
Mr. MARCIL;
1.	Who recommended the change in the postal
service directly from Fleurant, Quebec, to the Canadian National Railways station at Escum-inac, Quebec ?	*
2.	Who made the request to that effect?

Questions
Mr. SAUVE:: 1.	Hon. Dr. E. Paquet.
2.	J. T. Little, merchant at Escuminac.



MONTREAL POSTAL TERMINAL

Mr. RINFRET:: 1.	Has the Department of Public Works completed, or does it expect to complete soon, the purchase of the necessary property for the erection of a postal terminal in Montreal?
2.	If so, when is it expected that the work of construction will be started?


Mr. STEWART (Leeds):: 1.	This property has been expropriated, and the compensation has been fixed by the exchequer court. The time for filing an appeal has not yet lapsed.
2.	No decision has been made as to when compensation for the property will be paid or work of construction commenced.



INCOME TAX BRANCH-MONTREAL EMPLOYEES

Mr. RINFRET:: 1.	How many clerks were employed in the income tax branch of the Montreal office on the 28th July, 1930?
2.	How many clerks are employed at the same office this date?


Mr. RYCKMAN:: 1. 228.
2. 246.



DISARMAMENT CONFERENCE-OBSERVERS AND TECHNICAL ADVISERS

Mr. WOODSWORTH:: ' Who are the observers and technical advisers of the Canadian government at the conference for the Reduction and Limitation of Armaments now being held in Geneva?


Richard Bedford Bennett: Technical advisers of the Canadian government: Dr. W. A. Riddell, Canadian advisory officer, League of Nations; Maj.-Gen. A. G. L. MacNaughton, Department of National Defence; Mr. L. B. Pearson, Department of External Affairs.



APPLICATIONS FOR FARM LOANS

Mr. SPENCER:: 1.	How many applications were made up to December 31, 1931, for loans under the Federal Farm Loan Act, in each of the provinces?
2.	How many loans have been granted up to that date in each of the provinces?
3.	What was the total sum loaned to December 31, 1931?
4.	What was the total cost of administration to same date?


Mr. RHODES:: Furnished by Canadian
farm loan board:
1.
British Columbia	 1,613
Alberta	 4>403
Manitoba	 790
Quebec	 5,997
New Brunswick	 1,110
Nova Scotia	 510
Total	 14,423
2.
British Columbia	 440
Alberta	 1,647
Manitoba	 294
Quebec	 1,206
New Brunswick	 371
Nova Scotia	 161
Total	 4,119*
* Figures do not include loans granted but dropped prior to distribution.
3.	$7,568,064.20.
4.	$338,788.09-from January 1, 1929, to December 31, 1931.



WORLDS GRAIN CONGRESS EXPENDITURE

Mr. McMILLAN (Huron):: 1.	Did the government in the expenditure of $100,000 during the fiscal year ending March 31, 1931, for the expenses of the executive committee of the World's Grain Congress ascertain how many members are on the executive committee?
2.	If so, what are the names of the said members, the positions they hold, the remuneration received by each, and the term of their service during the fiscal years ending March 31, 1931, and 1932?


Mr. WEIR (Melfort):: 1.	Yes.
2.	Year ending March 31, 1931: Hon. W. C. Buckle, Minister of Agriculture, Saskatchewan; Hon. A. Prefontaine, Minister of Agriculture, Manitoba; Hon. G. Hoadley, Minister of Agriculture, Alberta; Dr. J. H. Grisdale, Deputy Minister of Agriculture, Ottawa; J. H. Evans, Deputy Minister of Agriculture, Manitoba; F. H. Auld, Deputy Minister of Agriculture, Saskatchewan; H. A. Craig, Deputy Minister of Agriculture, Alberta; C. M. Hamilton, Board of Grain Commissioners; A. E. Whitmore, Regina; L. H. Newman, Dominion Cerealist; E. B. Gass, Board of Trade, Regina; G. W. Robertson, Regina Exhibition Association; D. T. Elderkin, Regina Exhibition Association; James Balfour, Mayor of Regina; W. G. Yule, Supervisor, Royal Bank, Regina; H. S. Fry, Saskatchewan Wheat
Questions

Pool; W. A. Wilson, Agricultural Produce Marketing Agent, London, Eng. (All above served full fiscal year).
G.	A. Ewart, Commissioner, Board of Trade, Regina; G. C. Rooke, Auditor General, Regina. (Above appointed June, 1930.)
Hon. Dr. W. R. Motherwell, M.P.; T. J. Harrison, Board of Grain Commissioners; Justice W. M. Martin. (Above appointed August, 1930.)
F.	W. Turnbull, M.P. (Appointed January, 1931.)
Year ending March 31, 1932: Constitution .f executive committee same as previous year vith following exceptions: Col. James McAra, Mayor of Regina replaced by Mr. James 3alfour; H. E. Drope (appointed July, 1931). No salaries are paid members of the executive committee.



UNEMPLOYMENT RELIEF-EMPLOYEES IN MANITOBA

Mr. BEAUBIEN:: 1.	What officials have been appointed by the Dominion government in Manitoba under the Unemployment and Farm Relief Act, 1931?
2.	What are their names, when were they appointed and what remuneration are they receiving ?
3.	Have any inspectors been appointed in Manitoba to supervise or otherwise superintend or watch the unemployment works or direct relief being carried on or administered in that province?
4.	If so, what are their names, when were they appointed and what remuneration is each receiving?
5.	Has one Elliot Kay been appointed inspector in connection with Unemployment Relief works being carried on at The Pas and vicinity, if so, what are his duties?


Mr. GORDON:: 1, 2, 3 and 4. Major G. W. Northwood, M.C., general representative of the unemployment relief branch in Manitoba, appointed October 10, 1931, no remuneration.
Lt. Col. G. C. MacLean, assistant to Dominion director, appointed October 10, 1931, at a salary of $225 per month.
Miss R. I. Straith, stenographer, appointed October 15, 1931, at a salary of $90 per month.
Miss D. L. Wethey, stenographer, appointed October 19, 1931, at a salary of $60 per month.
In addition the assistant to the director has authority to employ temporary inspectors at a rate of $4 per day. These men are not continuously employed. A list of these temporary inspectors with the number of days they have worked to March 1st is attached hereto.
5.	The name of Elliot Cay appears on the list of temporary inspectors referred to in

answer to 4 as having been employed for 59 days. His duties are as set forth in the attached memorandum for field representatives.
General Instructions
Staff:	1. No appointments can be made
except by order in council.
Supplies: 2. Requisition for supplies needed should be forwarded to this office.
Rent of premises:	3. No premises may be
rented except on authorization from this office.
Provincial reports: 4. Statistics and expenditure reports are received at Ottawa from province. Specimens of forms used will be furnished to you. Assistant to director will be called upon to secure any special reports from provincial authorities when necessary.
Cost of administration: 5. No portion of provincial or municipal administration charges may be paid (see general regulations P.C. 2043, clause 13).
Expenses:	6. All expenses for travelling
must be approved by Assistant to director for province and all expenditures over $2 covered by voucher. In the case of hotel expenses the statement of account issued by hotel to be attached.
Weekly report of localities visited:	7. A
weekly report is required showing projects visited.
Correspondence: 8. Correspondence should be brief as possible.
Deductions: 9. Deductions from wages of workers are not allowed for any reasan whatever, except in the case where the worker is engaged in camps at a specific rate of pay and a certain deduction is to be made for board. No amounts for taxes may be deducted from the workers' pay. Municipal authorities must pay the workers, in full, amount of wages due them for their work.
Memorandum for Field Representatives of Dominion unemployment relief branch
Cooperation with provincial authorities: 1. Officials of the Dominion unemployment relief branch will cooperate with the provincial authorities, to the end that the need of the unemployed is relieved.
Technical detail covering projects: 2. Technical details of construction of projects are under the control of provincial and municipal authorities, or, in the case of Federal projects, the appropriate department of the Dominion government.
Employment selection: 3. Duties should include protecting Federal interests along the lines of seeing that those in need are given employment regardless of race, religion or political affiliation.

Questions
Employment service of Canada:	4. The
employment service of Canada should be used where ever possible as medium for hiring labour.
Returned soldiers: 5. At least 10 per cent of men employed should be returned soldiers if available.
Married men:	6. It is preferable that
married men or single men with dependents be given preference on work where they reside.
Elimination of case not in need:	7. On
investigation if it is found that men not in need are employed, or men are not properly employed according to regulations, such cases should be followed up with proper authorities with a view to correcting conditions.
Hours: 8. The maximum day is eight hours, unless otherwise previously approved by the Minister of Labour.
Wages: 9. See that the wages as set forth and authorized by the province or municipality are being paid and that clause 8 of general regulations, P:C. 2043, is respected.
Deductions for board: 10. See that deductions for board (or medical treatment in relief camps) is according to provincial regulations.
Transportation: 11.-A memorandum is being sent you setting forth the arrangements for reduced transportation charges for workers going to relief work.
Percentage of labour to total cost of works: 12. Note clause 14 of dominion-province agreement, "of the amounts expended pursuant to provisions of clauses 6, 8, 9 and 10 hereof not lees than forty per centum thereof shall be expended for labour unless a modification of this requirement is previously agreed to by the Minister of Labour."
Press comments: 13. Any articles appearing in the local press adversely criticizing the administration of the unemployment relief should be investigated when practical with a view to establishing the accuracy, or otherwise, of such statements, and steps should be taken to rectify any failure to comply with regulations.
Complaints: 14. In taking action on complaints referred to you, effect an adjustment if possible.
Relief camp conditions: 15. If relief camps are not properly organized as to housing, board, sanitary conditions, etc., direct the attention of the proper authorities to the matter.
Correspondence: 16. Forward to this office copies of all communications addressed by you to provincial or municipal authorities.
Address communications to "Dominion Director of Unemployment Relief, Department of Labour, Ottawa."
Direct relief: 17. See that only such relief be given as is specified in general regulations P.C. 2043 when said relief is being contributed to from federal funds.
Lists of approved works: 18. Lists of works approved under the agreement with province will be furnished to you. If you find any works being carried on to which it is proposed that the federal government should contribute, other than those appearing on the lists sent you, advise the Dominion unemployment relief branch, Department of Labour, Ottawa.
Days
Inspector	Employed
G. W. Andrews	 21
J.	E. Bailey	
9K.	C. Bedson	
23W. H. Bryans	
16M. J. Burke	
30E.	Cay	
59J. Easton	
41F.	Eastwood	
12H.	Foster	
12J. Gault	
22W. H. Hamilton	
59J. W. Hawker	
18W. H. Hastings	
4G.	Kidd	
42H.	Moore	
43W. Moir	
16T. Markovitch	
15J. Marion	
5W. J. Moffat	
9W. Owens	
23E. Parkinson	
20R.	D. Patterson	
34A. E. Shewfelt	
41L.	G. Shortreed	
52D.	Sutherland	
1C. C. Wansborough	
16S.	M. Webb	
27G.	Wells	
96E.	G. Waller	
21W. H. Whitehead	
30J. Walmsley	
17A. Marcoux	
17W. Wilson	
18S.	Smith	
f>H.	Rutledge	
6A. Sneesby	
12J. T. McLean	
18T.	Schultz	
6A. Sinclair	
10P. Geller	
3Total	9331070	COMMONS
Unopposed Motions for Papers



UNEMPLOYMENT RELIEF-SASKATCHEWAN COMMISSION SUPERVISOR

Mr. BOTHWELL:: 1.	Who are the three expert farmers appointed by the Minister of Agriculture to supervise the relief commission in Saskatchewan ?
2.	By whom were they recommended?
3.	What are their duties and when did their employment commence?
4.	What salary and expenses or other remuneration have each of them been paid since their appointment ?


Mr. GORDON:: 1.	John Strain, Clive Burke, T. J. Graham.
2.	Minister of Agriculture.
3.	Employment commenced October 1, 1931, as temporary federal supervisors in the province of Saskatchewan in connection with relief disbursed by the Saskatchewan relief commission under the Unemployment and Farm Relief Act, 1931.
4.	Salary $160 per month each. Travelling expenses since appointment, John Strain $557.65, Clive Burke $1,468.10 and T. J. Graham $1,099.65.



UNOPPOSED MOTIONS FOR PAPERS


Mr. FONTAINE:: For a copy of all correspondence, telegrams, letters and all other documents, exchanged between the Minister of Labour, all members of the cabinet or officials of any federal department and the city of St. Hyacinthe or other persons, in connection with the work to relieve unemployment and the help granted to unemployed, and especially as regards the construction of a tunnel under the Canadian National Railways, at St. Hyacinthe, since January 1. 1931.



UNEMPLOYMENT RELIEF-STE. ANNE DE LA POCA-TIERE

Mr. BOUCHARD:: For a return showing the various projects and programs, including paysheets, if any, carried on under the federal unemployment relief work, at Ste-Anne-de-la-Pocatiere, Kamouraska county, Quebec, during the calendar year 1931.



NEW WESTMINSTER HARBOUR COMMISSION LOAN

Mr. REID:: For a copy of all correspondence, letters, telegrams and other documents in connection with the loan of $300,000 passed last session for the New Westminster harbour commissioners, with a copy of all accounts rendered and the total amount of moneys granted to the New Westminster harbour commissioners since the passing of the Loan Act of 1931, up to the present time.



VERCIIERES, QUE., WHARF

[Stage Direction]
Mr. DESLAUR1ERS:
For a copy of all correspondence, telegrams, letters and other documents, in connection with certain works and repairs of the Yercheres wharf, Quebec, executed during 1931, including a copy of paysheets and statements of money expended for material or other articles; also the name of the superintendent of works.

Mr. FAFARD (for Mr. Bouchard):: For a copy of all correspondence, telegrams, reports and other documents relating to the dismissal of Amedee Richard, postmaster at Riviere-Ouelle, Kamouraska county, Quebec; also a copy of all correspondence, reports or other documents in connection with an inquiry with reference to the charges brought against the said Amedee Richard, including the proof and evidence given by all the witnesses heard at said inquiry and the decision arrived at.



RIVIERE OUELLE-ST. JUST AND POINTE AUX ORIGNAUX MAIL SERVICE

Joseph-Fernand Fafard: For a copy of all correspondence, reports or other documents relating to the establishment of rural route mail service at Riviere-Ouelle between St. Just and Pointe-aux-Orignaux.



SANDFORD, ONT., WHARF

Mr. RALSTON:: For a copy of all paysheets, stock bills and correspondence in connection with the commission of $3,000 to Howard W. Rose, on the wharf at Sandford, in the fall of 1931.



ST. QUENTIN, N.B., POSTMASTERSHIP

Mr. VENIOT:: For a copy of the evidence and the report of the commissioner in connection with the investigation of the charges made against postmaster Francois Levesque, at St. Quentin, Restigouche county, New Brunswick. Also a copy of all correspondence, reports of the Civil Service Commission, applications and other documents relating to the appointment of A. H. Landry as postmaster at St. Quentin.



POINTE AU PIC, CHARLEVOIX, QUE., WHARF

James Layton Ralston: For a copy of all correspondence, reports and all other documents in connection with the dismissal of Captain Henry Gagnon, keeper of the wharf at Pointe-au-Pic, in the county of Charlevoix; also a copy of all correspondence, reports and other documents, relating to an inquiry held in 1931, in connection with charges made against said Henry Gagnon, including the proof^ and evidence of all witnesses heard in said inquiry, and the conclusion arrived at by the commissioner who held the inquiry.

Unopposed, Motions for Papers



ST. JOSEPH D'ALMA, QUE., POSTMASTERSHIP

James Layton Ralston: For a copy of all correspondence, reports and all other documents in connection with the dismissal of Mr. Yves Gagne, postmaster of St. Joseph d'Alma, county of Roberval; also copy of all correspondence, reports and other documents relating to an inquiry held in 1931, in connection with charges made against said Yves Gagne, including the proof and evidence of all witnesses heard in said inquiry, and the conclusion arrived at by the commissioner who held the inquiry.



CAP CHAT, GASPE, POSTMASTERSHIP

Mr. BRASSET:: For a copy of all correspondence, telegrams, inquiries in connection with the dismissal of J. Edmond Boivin, postmaster of Cap Chat, county of Gaspe, and the appointment of his successor.



GRONDINES, QUE., MAIL CARRIER

Mr. DESROCHERS:: For a copy of all correspondence, telegrams, reports and all other documents in connection with the dismissal of Mr. Arthur Perron, mail carrier at Grondines, in the county of Portneuf, and the appointment of his successor.



LAKE ST. JOHN METEOROLOGIST

Mr. RHEAUME:: For a copy of all orders in council, correspondence, complaints, letters and all other documents exchanged between the department and the Minister of Marine, relating to meteorologist, J. E. Morin, at Dolbeau, Lake St. John, from September 1, 1930, to March 1, 1932.



JOLIETTE, QUE., PUBLIC BUILDING

Joseph-Fernand Fafard: For a copy of all correspondence, reports, telegrams, ratings and other communications to or from the Minister of Public Works and any other minister, officials of the government or any member or official of the Civil Service Commission, or other person or persons; in any way relating to the appointment of a caretaker for Joliette public building, since August 20, 1930, and the dismissal of Cuthbert Fiset as caretaker of that building; also a copy of all correspondence, reports and other documents, relating to an inquiry held in 1931, in connection with charges made against Cuthbert Fiset including the proof and evidence of all witnesses heard in the inquiry, and the conclusion arrived at by the commissioner who held the inquiry.



UNEMPLOYMENT AND FARM RELIEF

Mr. DUFF:: For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on repairs to wharf at Mulgrave, Nova Scotia; also a copy of payroll showing the amount expended in labour; also
copy of accounts showing prices paid for iron, logs, ballast, ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on extension to breakwater at Seal Harbour, Nova Scotia; also a copy of the payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on wharf at Sonora, Nova Scotia; also a copy of the payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on a new breakwater at Battery Point, Lunenburg, Nova Scotia; also a copy of the payroll showing the amount expended in labour; also copy of accounts showing the prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on repairs to wharf at Malignant Gove, Nova Scotia; also a copy of the payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia,	regarding	the	expenditure	of publicmoney under the Unemployment and Farm Relief Act of 1931, on a new wharf at Whitehead, Nova Scotia; also copy of payroll showing the amount expended in labour; also copy of accounts showing	prices paid for	iron, logs,
ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia,	regarding	the	expenditure	of publicmoney under the Unemployment and Farm Relief Act of 1931, on repairs to wharf at Ballantyne's Cove, Nova Scotia; also a copy of payroll	showing	the	amount expended in
labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents
Motions jor Papers

exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on repairs to breakwater at Larry's River, Nova Scotia; also a copy of payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on repairs to wharf, at Western Shore, Lunenburg county, Nova Scotia; also a copy of payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.
For a copy of all letters, telegrams, memorandums, reports and other documents exchanged between the Department of Public Works and any person or persons in Nova Scotia, regarding the expenditure of public money under the Unemployment and Farm Relief Act of 1931, on repairs to breakwater at Northwest Cove, Tancook, Lunenburg county, Nova Scotia; also a copy of the payroll showing the amount expended in labour; also copy of accounts showing prices paid for iron, logs, ballast and ballast poles, timber and plank, and from whom purchased.



ADMISSION OF IMMIGRANTS

Mr. LAFLECHE:: For a copy of all correspondence, telegrams and other documents respecting the admission into Canada of the following immigrants in 1927:	Angelo Gambino, Guiseppe Bruno,
Cbristoforo Siracusa, Carmelo Zacearia, Giovanni Gentile, Luigi Saputi, Celestino Bonomo, Arcuigelo Tedeschi, Olindo Cianeiullo, Domenico Ziccordi, Nicola M. Mastondrea, Leonardo Franza, Guiseppe Cinotti, Alfreds Sole, Crintina A. Fotia, Paolina Sole, Noeolina Sole, Guiseppe Paduli, Antonio Paduli.



MOTIONS FOR PAPERS


James Layton Ralston: For a copy of the correspondence, documents, accounts and vouchers respecting the expenditure authorized in the province of Nova Scotia for federal public works to be paid for under the authority of the Unemployment Relief Act of last session, showing:	(a) the amount authorized; (b) the amount expended.
He said:	Mr. Speaker, in view of the information contained in the report of the director of unemployment, I am willing that this motion should be dropped for the present. If I desire to make a motion later on for particulars with regard to any special work, I will do so.
Motion dropped.


James Layton Ralston: For a copy of the correspondence, documents, accounts and vouchers respecting the expenditure for contribution to works being constructed or contributed to by the provincial or municipal authorities in the province of Nova Scotia under the authority of the Unemployment Relief Act of last session, showing:	(a) the amount
authorized; (b) the amount expended.
For a copy of the correspondence, documents, accounts and vouchers respecting the expenditure for direct relief in the province of Nova Scotia under the authority of the Unemployment Relief Act of last session, showing: (a) the amount authorized; (b) the amount expended.
He said:	Mr. Speaker, if the Minister of
Public Works (Mr. Stewart) is agreeable-I assume this is his department-I am willing that the information to be given in connection with these motions should be the details of the various items in connection with which assistance was given to the provincial and municipal authorities in Nova Scotia and in respect of which direct relief was afforded, the amounts authorized and the amounts expended, leaving out the requisition for vouchers and documents.


Mr. STEWART (Leeds):: This matter
would come under the Department of Labour.


George Gordon: The hon. member will find that the major portion of the information requested is contained in the report of the director. If he is content to allow the motions to be dropped for the present, I will endeavour to supply him with any further information he may require with respect to these matters.


James Layton Ralston: I have allowed these
matters to stand for some time. I have examined the report of the director of unemployment and the only thing I can find is the amount expended. The information as to what commitments have been made, either on account of municipal or provincial expenditures, is not contained in the report, and it is as to the various items which go to make up these commitments that I desire information. I am willing to allow my motion to be altered to cover these points only.
Motions as amended agreed to.



PEACE RIVER OUTLET


Mr. D. M. KENNEDY (Peace River) moved:: That in the opinion of this house, in the best interests of Canada, it is desirable that the construction of the Peace River outlet should be commenced at the earliest possible date.

Peace River Outlet-Mr. Kennedy
He said: The subject matter of this motion has been before the house on a good many occasions. I realize that in bringing it forward again at this session I may be told that the times are not so good for the consideration of a motion such as this. I believe, however, that it is a matter of sufficient importance to warrant discussion, and that we should try to deal with it. The question was discussed at the last session and the outstanding problem then before the house was the fact that various reports had been made by different bodies of engineers and that there was some dispute as to what route ought to be followed in the construction of the Peace river outlet. The Minister of Railways (Mr. Manion) is reported at page 4021 of Hansard, 1931, as having said:
We should not undertake in this country the construction of very costly lines of railway which will duplicate the mistakes of the past, without a proper investigation into the whole situation and an endeavour to avoid any such condition. After all, it is far better to have the two railways agreed upon one specific route and to have the government cooperating with them.
The subject was again referred to a body of engineers, and it is quite plain from the letter that was written by the Minister of Railways to the engineers that this was the point he had in mind. Paragraph 2 of his letter reads:
Information in connection with this subject matter has already been obtained under investigations covered by two reports leading to different conclusions, and it is desired that with the information so submitted (if sufficient), the committee examine the subject matter further, first from the viewpoint of serving adequately the local territory and, second, from the viewpoint of serving the Dominion of Canada as a whole.
The engineers were J. M. Fairbairn of the Canadian Pacific Railway, C. S. Gzowski, of the Canadian National Railways and C. R. Crysdale, consulting engineer, a gentleman who previously had been engaged by the Alberta government on the Northern Alberta Railways. The engineers' report deals with almost everything except that one problem. We have at least five reports in connection with the Peace River outlet. I have copies of four of them, and the Canadian Pacific Railway has a report of its own which has never been tabled in the house. The report with which I am dealing does not deal with that problem at all. Going through either the report of 1925 or the subsequent reports of 1926 and 1929, as well as the report of last year, one cannot fail to be impressed with this certainty, that the engineers are in no way enthusiastic about the project. They state in the first paragraph of this report that 41761-08
they are dealing with the matter from the standpoint of railway economics. They also state, however, that there are other matters to be considered, that these are:
. . . .certain other potential, intangible, or prospective possibilities, which to-day are impossible to give a definite railway weight to, but which in themselves are more important than the tangible prospective traffic which can, with reasonable assurance, be forecast to-day. In such a case, from our premises we would select the former.
That is railway economics. The engineers are looking at the question purely from the standpoint of whether or not the railways by building this road might be able to make some additional money, make a few more dollars. They do not deal, with it at all from the standpoint of the Dominion of Canada as a whole nor in relation to other matters such as unemployment or how the development of that country through the building of the Peace River outlet would improve business generally in this dominion. They consider no other factor than whether the railways would be able to make some additional money by building this road. It is purely a question of what the railways can gain out of it. Let me say at once that there are certain economic interests of the settlers of the Peace River country that are antagonistic to the interests of the railways. I am not blaming anyone for that, because it just happens to be that way. To-day everything that goes into or comes out of the Peace River country goes over a longer haul at a higher rate than the railways could expect to get under ordinary rate-fixing conditions if a Pacific coast outlet were built to Vancouver, Prince Rupert or Stewart. Depending on the points that are taken in the Peace River country, the mileage that would be out off by a route constructed to Vancouver, for instance, would be somewhere between two and three hundred miles; to Prince Rupert, between two and four hundred miles, and to Stewart, possibly six hundred miles. Under present conditions, with joint ownership of the Northern Alberta Railways, the railways have, of course, a complete monopoly of all that traffic, and the rates on grain between the Peace River country to-day and Vancouver or Prince Rupert run from five to ten cents higher than from Edmonton. But if an outlet were built to the Pacific coast we could expect at least a rate only from three to five or six cents above Edmonton. There is no question about it, looking at it from the standpoint of railway economics, that without any additional investment at all the railways are getting a higher rate to-day than they would get if a

1074	COMMONS
Peace River Outlet-Mr. Kennedy
Peaee River outlet were built, and that is the standpoint I think from which the railway engineers have been looking at this question. I do not think, 'however, that they have approached the subject in the fairest possible manner. Take, for instance, the third paragraph of the 1925 report, as referred to in sessional paper No. 125:
The 1925 report, in referring to the Peace River district, selected and defined an area and for that area theoretically provided for the so-called "maximum traffic" sufficient railway mileage to serve it. The Canadian Pacific Railway report selected an area for the Peace River district about three times that of the 1925 report, but their investigations were not extended sufficiently to figure on railroading the whole of it, but confined their railway costs substantially to the same area as the 1925 report.
Yet throughout this whole report which I have before me the engineers take the theoretically defined area of 1925, ignoring altogether the 25,000,000 acres as against the
8.000.	000 acres. They wipe out in their consideration of the matter two-thirds of what they know to-day to be the Peace River area for possible settlement and development. If that is the way our railways approach the question of railway economics in this country, by ignoring two-thirds of the available facts, it is not much wonder that we have a commission to-day trying to unscramble the railway situation in the Dominion of Canada.
In section four of the report there is a peculiar statement regarding the Canadian Pacific Railway report. I believe that the Canadian Pacific Railway spent about $290,000 in 1930 surveying the various passes between the Yellowhead and the Alaska boundary. They also made some investigation regarding [DOT]lands. This report says:
In fact, at least for a considerable part of the larger area-
That is the 25,000,000 acres:

the definite information depends upon the personal observations of their own engineers on the ground.
I do not know how else they could get knowledge of the land in the Peace River country except by engineers going over the ground. They refer later to detailed information secured by Mr. Crysdale in connection with the land in British Columbia, about
16.000. 000 acres, I think. I am quite sure that in an investigation extending, I think a little over twelve months, he did not plough or prospect the 16,000,000 acres, but simply went over the ground the same as the Canadian Pacific Railway engineers, and I think it is a fair statement to make that the
25.000.	000 acres of Peace River lands avail-

able for development ought reasonably to be considered in connection with a study of the proposed location of an outlet to the Pacific coast. They ought to have considered the
25,000,000 acres instead of the 8,000,000 acres that were defined in connection with the report of 1925.
Just a word on the question of freight rates. As I have already said, we have had four or five reports. I have here a copy of the 1925 report.


Mr. STEVENS:: Is that the Sullivan report?


Donald MacBeth Kennedy: It is
signed by Sullivan, Gzowski, Fairbairn, James and Hill. There are a great many tables worked out in this report to show that hauling grain out of the Peace River country would never pay, and the whole report led up to this conclusion:
There is no hope, even with the existing freight rate of about 39 cents per 100 pounds, for the line to pay even operating expenses on the immediate traffic or on a traffic many times the present traffic.
There seems little hope of the line ever being self-supporting at rates even 50 per cent higher than the present ton-mile freight rate on grain to Fort William for similar distance.
That, approximately, was the rate in existence at the time this report was prepared. In the year 1926 however rates were reduced from 39 cents to about 29 cents on grain moving to Vancouver. During the next two years, with those reduced rates, the Alberta government had charge of the Northern Alberta railways, the railway system serving the Peace River country, and in spite of the fact that in the year 1925 our engineers told us that a railway in that country could never pay, and that an outlet could never pay, in spite of the fact that there were developed less than 1,000,000 acres of land out of a possible 8,500,000 acres, under the management of Mr. Callaghan, the Deputy Minister of Railways in the province of Alberta, the railway company I have mentioned improved its position in those two years to the extent of a million dollars.
At page 497 of the Canadian Annual Review for the year 1928-29 we have the following statement:
The sale of the Northern Alberta Railways to the Canadian Pacific and the Canadian National Railways was ratified by the legislature during the session of 1929. In moving the second reading of the bill for this purpose on February 18. Hon. V. W. Smith. Minister of Railways, reviewed the history of these lines. He stated that in the first full year of government operation, that of 1927, there had been a net operating surplus for all the northern railways of $303,786.63, as against an operating defict of $188,655.34 in the previous year. In

Peace River Outlet-Mr. Kennedy
1928, the operating surplus was $810,209.41. Mr. Smith stated that faith in the abounding vitality and increasing growth of the province of Alberta and the Peace River region, were the reasons that influenced the government's course in refusing the joint offers submitted for the purchase of these railways early in 1928.
The annual report of the department of Railways for the calendar year 1928, gave operating statements for the four northern railways for that year. The operating revenues of the Edmonton-Dunvegan and British Columbia railway were $1,782,160.43 and operating expenses $871,971.03. After allowing for some other revenue and other expenses the net corporate income of the railway was $88,090.27 after interest on funded and unfunded debt.
Therefore the position in 1928 is that the Edmonton-Dunvegan and British Columbia Railway, and the Central Canada Railway were actually on a paying basis and were revenue producers to the Alberta government, when less than 1,000,000 acres had been developed and when five engineers had stated three years previously that there was no hope for the success of the railway. Of course an additional investment of possibly 315,000,000 would be necessary for the construction of an outlet, but without any further extension of railway mileage there is a possible increase of 2,000,000 or 3,000,000 acres. Yet with less than 1,000,000 acres in use we find the railway was a revenue producer for the Alberta government.
Here is another fact:	The Edmonton-
Dunvegan and British Columbia Railway and the Central Canada Railway were in those days merely branch lines of the Canadian National Railways system. Every carload of grain leaving the Peace River country and every carload of machinery brought in was hauled two or three times as far on the Canadian National railways as it was on the Alberta railways, and I think we may draw the inference quite fairly that whatever may have been the revenues to the Alberta government from the two railways I have mentioned, there was an additional profit to the Canadian National Railways, because in some cases the freight was hauled two or three times as far on the Canadian National system as on the Alberta railways.
In the face of facts such as these, the talk about ton-miles, and the comparison of ton-miles of grain moving over the Canadian National railways and other commodities moving over other railways in North America is not very convincing. It seems to me that the statement of revenue accruing in Alberta in the year 1928 as a result of the operation of these railways is far stronger than any statement of engineers to the effect that this road cannot be expected to pay, 41761-68J
or that we cannot expect any development in the Peace River district which will justify construction of the outlet for years to come.
In the last five years the population of the Peace River country has almost doubled-in fact, I think it has nearly doubled in the last four years. In all railway reports there have been references to the need for additional branch mileage.


Mr. MANION:: Could my hon. friend
give me an idea of the population?


Donald MacBeth Kennedy: About five years ago it
was about 20,000; to-day it is about 40,000. There is a steady stream of new settlers moving in from the dried out areas; some of them are moving back and homesteading eighty or ninety miles from the railway. As a result of dry years a good many of them were in financial difficulties when they left the south country. Very few of them have capital with which to go ahead and develop a new country. They are not situated as happily as were the settlers who moved to that district about twenty years ago; they have taken land more difficult to develop. Many of them have been asking for relief, not as a result of their experience in the Peace River district but resulting from their experience in the districts from which they came. Many of them are directly on the route of any outlet which would be built westward. To my mind it would be more sensible to spend money constructing a work such as that suggested in the resolution, thereby providing a chance for those people to earn money while they are developing their farms, than to pay out direct relief to them. Certainly there is great credit coming to those people who, instead of throwing up their hands, joining the ranks of the unemployed and drifting to some of the cities, struck out for themselves and tried to effect reestablishment in a new country. I know assistance is being given to them partly by the federal and partly by the Alberta governments. I think they would be better pleased however, and Canada would profit more in the long run, if the development of this outlet were begun, so that they might be provided with opportunities equal to those enjoyed by so many of the early settlers on the prairies. During a certain period of the year they could earn money apart from their farms, and during the remainder of the year their efforts could be directed towards the development of their lands.
One fact brought out in the evidence before the railway committee in the year 1927 was that under a proposal such as outlined by the
1076	COMMONS
Peace River Outlet-Mr. Kennedy
engineers for the construction of an outlet there would be over 6,000 acres of economic land per mile of line in the Peace River country, as compared with an average of 5,000 acres in the other prairie provinces. Undoubtedly that is one reason why we had such favourable results in railway operation in the Peace River during the years that I have mentioned. Our yields per acre have been running from four to six bushels higher than the average in the prairie provinces. If the three prairie provinces were worth railroading, it seems to me that with the higher yields per acre in the Peace River and with about twenty per cent greater acreage per mile of line, we have a pretty good case for the economics of the proposal. I know the railways have taken the position that there ought to be enough traffic in sight to justify the expenditure right from the start. I do not think there is any possibility that we can meet such a condition. If that is the basis on which the railway is to be built, then I do not think we are likely to have the proposed outlet for a good many years to come. But how many of our railways would have been built, and how much development would we have had in western Canada, if some twenty, thirty or forty years ago that condition had been laid down?
Having demonstrated the fertility of the soil, and the investigation having established the fact that there is sufficient arable land to justify the railway mileage, it seems to me that we have made out a good case for the construction of the outlet. I know the argument will be advanced that these are hard times. Well, the curves of hard times and good times in Canada have been followed up and down very largely by extensive programs of public works and railway construction. If one cares to look at the record of railway mileage built since 1901 it is quite plain that in the good years we have constructed a greater railway mileage. But, after all, is there not a fairly good case for spreading out the construction of public works and railways? I do not know whether it is safe to argue that the construction of these public works and railways was a cause or an effect of the prosperity that we enjoyed. I think it is partly one and partly the other. But I feel quite sure that by closing down on railway construction and reducing our expenditure on public works to the minimum we are contributing to the continuance of the depression, and I think it is fair to ask that the government take the initiative in trying to break the depression. Various proposals have been made to this end. Some of those proposals have been waived aside, but undoubtedly here

is a project, that must be built, if promises made in past elections are to be fulfilled- and I think they will be some time. The route has been surveyed, the proposed undertaking has been thoroughly investigated, and I think it is pretty well known where the outlet is going to be. Surely it is a sound policy to view the proposition over a five or ten year period and say we ought to take it in hand now. Undoubtedly if we undertake it at the present time it would help a very large number of people to establish themselves who otherwise would be dependent on straight relief. I think in the Willison report, prepared for the province of Ontario away back in 1913, it was said that governments ought to look ahead and plan public works for the future. Well, here is one of the best-planned public works we have ever had in the dominion. I think the Minister of Railways himself believes in a plan, because he mentioned a five-year plan for the national railways within which time they would get back on their feet and become self-supporting. I think we know exactly where the outlet ought to be, we know pretty well how much it will cost, and I think we know also that it is going to be built in the near future anyway. Undoubtedly its construction will contribute to the welfare of the people in the Peace River country, some of whom, as I have already said, will otherwise have to depend on direct relief; and as its construction will help towards breaking the depression- it will be in the interests of the whole dominion to proceed with the project in the near future.


Robert James Manion: I should like, Mr. Speaker, to congratulate my hon. friend from Peace River (Mr. Kennedy) on the moderate and fair tone of his speech, and on his persistence-rightly so from his standpoint-in advocating the construction of this outlet for the Peace' River country. The hon. gentleman has been a consistent supporter of the proposal during the regime of the late government as well as during the time that the present administration has been in office. I have no exception to take to any of his statements but one, in which he contrasted the larger area of 25,000,000 acres with the smaller area which at an earlier stage was thoroughly investigated by the Canadian National and the Canadian Pacific railways. I have been advised, and I think correctly, that the larger area of which he speaks, while without doubt containing very promising agricultural land, has not been surveyed to anything like the same extent as was the smaller area upon which the report

Peace River Outlet-Mr. Manion
was made in 1925 and 1926 recommending the Aggie-Obed route. I merely mention this to preserve the accuracy of the record.
As I said last session, I sympathize with the hon. gentleman in his desire to have the people in his section well-served with railways. I come from a section which, particularly in my younger days, was very desirous of railways, and recalling those early pioneer days of nearly forty years ago, I can easily sympathize with my hon. friend's desire to have the railway facilities to which he refers given to his people in the Peace River country. Last year I hoped most sincerely to visit that great section of our country, but unfortunately due to the pressure of other matters I did not have the opportunity to do so. Perhaps it might not have made any remarkable change in the situation at all, but I should have liked very much to have known that section of the country at first hand.
Before going further >may I say that I am not opposing the hon. gentleman's attitude; I am simply discussing it and pointing out the difficulties in the way. I should like to review the situation very briefly. My information of course is not first hand, because I have not inspected the different routes, and while my hon. friend comes from that part of the country probably he has not visited them all either, but at any rate there are four routes which have been suggested as outlets for the Peace River area. There is the Aggie-Obed route, which was suggested in the report of one of the commissions; there is the Monk-man pass route, the Pine pass route and finally the Peace pass route, any one of which would provide an outlet from that territory such as my hon. friend desires, though I take it he is not satisfied with the Aggie-Obed route. I believe the production in that area in the last year for which we have complete figures was in the neighbourhood of 20,000,000 bushels, while my hon. friend tells me there are some 40,000 people living in that district.
Having those points in mind I should like to point out that there have been various examinations made of the whole question, as my hon. friend stated. I think he mentioned five different reports. I recall only four, though there may be another, since this question has been looked into very thoroughly. The first report of which I have knowledge was the joint report of the Canadian Pacific Railwaj' and the Canadian National Railways, made in 1925. The second report of which I have heard, though I have never had the opportunity of reading it, is the one of 192930, made in cooperation with the railways by the province of British Columbia itself. This report never has been supplied to me or,
I think, to any member of this house. Some of the British Columbia members may have seen it, but I have not.	t


Mr. MACKENZIE (Vancouver):: No, no
one has seen it, but I may say that it was tabled in the provincial house just the other day.


Robert James Manion: Then there was the 1931 report of the Canadian Pacific Railway, which has not been tabled in this house because, while I have a copy in my office, I was never given permission by the company, who made the examination at their own expense, to lay it on the table of the house. After thar report came out, since it differed materially from the original report which recommended the Aggie-Obed route, I stated in the house last year that I would endeavour to have the two railways get together and, if possible, agree upon a joint report. Later on I had Sir Henry Thornton and Mr. Beatty in my office, as I promised, and they discussed the whole matter, but neither railway was interested in building an outlet by itself; in fact both gentlemen took the position that if this route should be opened up, the government must pay the bill. At the same time, however, they agreed that a further joint investigation might be made by their engineers and a third engineer to be appointed, and as a result this 1932 report, which was tabled a short time ago, was made. At my request an investigation was made by a Canadian Pacific railway engineer, a Canadian National railways engineer, and a third engineer, Mr. Crysdale. Those are the four reports that have been placed before me, or of which I have knowledge, and I mean to deal with them very briefly.
The joint report of 1925 favoured the Aggie-Obed route, and I should like to place on record a brief resume of the report. The engineers estimated that there were about 8,500,000 acres of land in the Peace River district suitable for settlement, and that when it was- developed this land would produce about 1,860,000 tons of outgoing traffic, or a total of about 1,953,000 tons of all traffic. They recommended the Aggie-Obed outlet and I will give some of the details of their estimate of the cost of development. The minimum immediate outlay they estimated at 813,336,000, and the cost for the maximum tonnage, including branch lines, they estimated at about $80,000,000. In their conclusions they make the following statement:
It would be more economical to handle the business, regardless of the rate received, over the existing lines, until the traffic was many times the present.
1078	Tj	COMMONS
Peace River Outlet-Mr. Manion
From the figures in their report it appears that when traffic amounts to 1,080,000 tons it will be economical to build the Aggie-Obed outlet. That was the report of 1925. The British Columbia report of 1929-30 I have not seen, so I shall not discuss it. The 1931 report wThich was made by the engineers of the Candian Pacific Railway at a cost to the railway of something like 8250,000, favoured the Peace pass outlet. There is no harm in my making that statement, since it is referred to in the report now under discussion. I did not make that statement last year, though I had that knowledge at the time, because I had not the permission of the railway to disclose any of the details, but since that statement has been made in the report now before the house I see no harm in repeating it.
Then we have the report which is really under discussion at the moment, in which nothing new is brought out. The report contains a letter which I sent to the engineers, because they wanted some instructions. While I gave them instructions in a general way, I stated that we hoped they would not have to go to any great expense, though we did not strictly limit them, and had they so chosen they could have asked for money with which to carry on any investigation they desired. However, we were not asked for any further appropriation of any kind for that purpose.


Ian Alistair Mackenzie: Does the minister know if the engineers went to the Peace River area last year?


Robert James Manion: I am sorry I cannot say,
but all three engineers have been there a good deal. As my hon. friend knows, Mr. Gzowski, Mr. Fairbairn and Mr. Crysdale have all made reports of their own on the same question, and they have investigated, probably as far as anyone in Canada has investigated, the possibilities of that area. I will not read the whole report, though it is rather brief, but I wish to read the concluding paragraphs because they sum up the whole matter:
At the time the 1925 report was made, local interests were mainly concerned in obtaining a western outlet to cheapen their freight cost to the Pacific, and supply further railway mileage in the district. Since that time, a reduction of freight rates has been accorded them, now substantially equalling rates which would obtain if a western outlet were in use; and also since that time, about 130 miles of new branch lines have been put into operation. Thus, if not all, have the main requirements of the local interest been met. As the development of the district is from time to time pushed beyond reasonable road haulage distance from the existing lines of railways, local interest will demand further railway mileage. In our opinion this can be,

as and when necessary, readily met by further branch line construction.
In view of the above, our conclusions are:
1.	No western outlet is justified for the present, as the existing railway furnishes the most economical route. It will take many times the present traffic to justify another railway outlet.
2.	The Obed route for a western outlet is the most favourable from a railway economic standpoint, considering the present phase of the railway situation.
3.	We recommend that the matter of a final route be decided when the question is a practical one, believing that by the time the volume of traffic has reached a point where a western outlet is justified, general and possible local conditions may have materially- changed. When the decision is imperative, the whole situation should be reviewed, in order to appraise all the contributing factors, including the potential traffic which may accrue from the lands beyond the definite areas included in this report.
This is signed by the three engineers, Mr. J. M. R. Fairbairn, chief engineer of the Canadian Pacific Railway; C. S. Gzowski, chief engineer of construction of the Canadian National Railways, and C. R. Crysdale, consulting engineer. I mention the personnel of the commission because there has been some question raised-not by my hon. friend who has just taken his seat, but by others-as to the suitability of these gentlemen. It seemed to me to be eminently fair to choose the chief engineer of the Canadian Pacific Railway and the chief engineer of the Canadian National Railways both of whom had been dealing with this matter. The third appointee was Mr. Crysdale who was known to the people of British Columbia. No objection was made to this appointment, and in fact I can go further and say that this choice was approved.


Ian Alistair Mackenzie: By the
government of British Columbia?


Robert James Manion: I do not know that I wish at the moment to state that positively, but I can assure my hon. friend that no objection was raised by the government of British Columbia. I have had some correspondence of a private nature with the government but I doubt if I have the right to put it on Hansard. There was no opposition and I do not know, and I am sure my hon. friend does not know, of any reason why there should have been opposition. Only a short time before, if I remember rightly, Mr. Crysdale was asked by the government of British Columbia to make a thorough investigation of the lands surrounding the Pacific Great Eastern Railway, and apparently that report was considered to be satisfactory. I think my hon. friend will agree with me that Mr. Crysdale was an eminently suitable choice.

Peace River Outlet-Mr. Manion


Ian Alistair Mackenzie: The
reason I interjected was because the Premier of British Columbia, referring to the press reports, repudiated any obligation as far as the Crysdale appointment was concerned.


Robert James Manion: 
Mr. HANSON (Skeena):: Would the rate
to Prince Rupert be the same?


Robert James Manion: I have not that information before me but it seems to me that it is reasonable to suppose that the rates would be similar. In view of all these facts, I ask my hon. friend if these rates are not fairly reasonable in view of the distances?


Donald MacBeth Kennedy: They may be considering the distances, but the distance might be cut in two.


Robert James Manion: The distance to Fort
William would not be changed; the distance to Vancouver would be decreased but it would not be cut in half.


Donald MacBeth Kennedy: It would
be to Stewart.


Robert James Manion: I do not know whether
or not the construction of this outlet would bring about a material lowering in the rates. I do not profess to be any more than an amateur in dealing with freight rates, and I am afraid that is true of most hon. members.
The hon. member has placed this matter fairly and squarely before the house and the government will have to decide whether or not this construction can be carried on as an unemployment relief scheme. Apparently neither railway is satisfied to carry this work through without the government paying the bills. I presume that either of them would be glad to see it done if someone else would pay the bills, but neither of the railways is prepared to pay them. So that having fairly placed his case before the government, the hon. member, I suggest, should be satisfied and should withdraw his motion, leaving it to the government to decide whether the matter should be regarded as an unemployment relief measure, as he proposed in his closing remarks, or one for general development purposes. I suggest that he should leave it to the government to say whether it can see its way clear to spend this rather large 
amount of money at the present time under present somewhat stringent financial conditions, in order to provide a shorter outlet from the Peace River district. I submit that in all fairness to my hon. friend, with whom I am in sympathy, and I can assure him that at any rate the subject will be given fair consideration by the government. At the moment, however, I cannot state what the policy of the government ultimately will be.


Ian Alistair Mackenzie: Mr. Speaker, I think the hon.
member for Peace River (Mr. Kennedy) is entitled to the congratulations of all other members of this house, and particularly, if I may say so, of the members from western Canada, upon the very fair-minded and comprehensive way in which he has submitted this resolution to the consideration of parliament. I think also that the Minister of Railways (Mr. Manion) ^ has made a very fair presentation of the attitude of the government towards this most important scheme of railway development.
It is very much to be regretted-and this applies to both political parties-that the attitude of caution, and of considered caution, which was adopted this afternoon by the Minister of Railways, was not adopted by the spokesmen of the various political parties during the different campaigns from 1926 to 1930 inclusive. Those of us who have knowledge of the Peace River situation and who have taken the trouble to look up the records of parliament will recall that ever since 1922, during every session of parliament, this question has been adduced for the consideration of the members of this house. I recall that my hon. friend who sponsors this resolution to-day brought the matter to the attention of the house in 1922 when, as a result of his representations, a vote of $50,000 was passed by the house for the undertaking of a reconnaissance survey of the district, a vote which was amplified by a further contribution of $75,000 in the subsequent year, 1923. In 1924, as was intimated last year by the hon. member for Bow River (Mr. Garland), who made a substantial and exhaustive contribution to the debate upon the history of the Peace River development, a meeting was held in the office of the Minister of Railways, at that time the Right Hon. George P. Graham, at which there were present the following gentlemen: Sir Henry Thornton, president of the Canadian National Railways; Mr. E. W. Beatty, K.C., president of the Canadian Pacific Railway; Hon. Mr. Greenfield, Premier of Alberta; Hon. Verner Smith, Minister of Railways of Alberta;

Peace River Outlet-Mr. Mackenzie
Mr. W. F. Maclean, member of parliament, Toronto; the sponsor of the present resolution (Mr. Kennedy), and the Hon. John Oliver, the rugged old, white-haired Premier of British Columbia. At that conference it was agreed that the two railways should get together and undertake a thorough examination into the various routes of the Peace River district, and the report brought in on that occasion is the one which has been referred to this afternoon-the 1925 report actually tabled in this house early in 1926. That report was signed by five engineers and it did actually recommend the Obed route for the consideration of parliament.
I think there are two considerations to be weighed by the house this afternoon. There is an obligation of honour in regard to the development of the Peace River area, and that obligation rests emphatically upon the Conservative . and Liberal parties in this House. I am going to read now what my right hon. leader (!Mr. Mackenzie King) said, because I am going to pin down both political parties to their previous declarations and the representations they made with respect to the development of that area. Speaking at Edmonton, 1924, my right hon. leader said:
I pledge myself that as soon as it is humanly possible the great Peace River country will be given that measure of railway relief that will bring to the pioneers of that country the outlet they have been so long denied, and will open up the country for prospective settlers.
I wish also to quote what the present leader of the upper house said, speaking in the same city on October 1, 1924. The Right Hon. Arthur Meighen, on that occasion, made this statement:
1 have always urged that the north country should have railway relief. I cannot be accused of making futile promises, such as the Hon. Mackenzie King promised in the speech from the throne, at the opening of the last session of parliament, when he stated he was going to give railway relief to the north country, but nothing has been done.
Then again, in 1927, when the present member for Peace River (Mr. Kennedy) moved a further resolution in this House, the question was submitted to the committee on railways and canals. The hon. member read to the house this afternoon some of the submissions and recommendations of that committee, a certain recommendation having been made with regard to a general survey and reconnaissance of the whole district. Last year the hon. member for Peace River read to the house, submissions and recommendations made by Mr. Murray Hill of the Canadian National Railways, and I shall not repeat them this
afternoon. The hon. member for Peace River referred this afternoon to the fact that the Edmonton-Dunvegan and British Columbia Railway, which was sold to the Canadian Pacific Railway for 126,000,000, has, since the tabling of the 1926 report, been placed upon a ^paying basis; and so far as I am concerned, despite the letters which my hon. friend the Minister of Railways has read to the House to-day, despite the letter from Sir Henry Thornton which endorses in toto the report of these three engineers; despite the letter, to my mind much preferable, from Mr. E. W. Beatty, K.C., who favours the development of the Peace pass route as the final solution of the Peace River transportation outlet problem; I submit, with all deference to the hon. gentlemen who were signatories of the report, that the fullest investigation has not been made. The Minister of Railways was good enough last year, as a result of representations made to him, to promise that within a month of the termination of that session he would send the engineers to make a thorough report upon the entire transportation system, but I fear that these three engineers, who have subscribed their names to the report, have not been in the Peace River territory, or at least have not had an opportunity of making a final and exhaustive examination of the Peace pass, the Pine pass, the Monkman pass and the Aggie-Obed route recommended here.
I submit to my hon. friend that he take into consideration the representations made by his own leader-because I am pinning down both the Conservative and Liberal parties- in the famous pledge number five of the Winnipeg speech made during the general election of 1930. Most of the 40,000 settlers referred to by the hon. member for Peace River this afternoon went into that area under distinct promises made to them. Some of these promises for a transportation outlet were made by the various governments of my own province of British Columbia; some of the representations were made by the Alberta government, and many of them were made by the leaders of the two major political parties in Canada. The promise given by the right hon. gentleman opposite, to which I have just referred, is this:
We pledge ourselves to the improvement of the whole scheme of Canadian transportation northward by the completion of the Hudson Bay route, and the construction of such branches as may be necessary to render it most readily available to every part of Canada; to the Pacific slope by a Peace River outlet, and east and west by the development of the St. Lawrence waterways,, and we pledge ourselves to aid existing traffic channels and to increase port facilities.
1082	COMMONS
Pbj.ce River Outlet

Mr. Mackenzie
So we have three leaders, the right hon. gentleman at present Prime Minister (Mr. Bennett) and two former prime ministers, in office before him, all of whom distinctly pledged themselves to the settlers of the Peace River empire., that they would definitely build an outlet from that area to the sea. I have no hesitation, even at the risk of wounding the susceptibilities of my prairie friends, in submitting to the Minister of Railways that, so far as a national asset is concerned, so far as the upbuilding and development of the dominion is concerned, the development of that Peace River empire is of far greater value, a far greater and more abiding asset to the dominion, than the Hudson Bay terminal. I want to remind my hon. friend that last year I made a very constructive suggestion to the administration. I suggested that they might divert in considerable proportion of the moneys available under the Unemployment Relief Act, used in building useless highways in the province of British Columbia, towards the construction, in cooperation with the government of that province, of an outlet from the Peace River territory to the sea. Subsequent to the termination of last session I believe that the provincial government of British Columbia made overtures to the federal administration, and I believe that the very same Mr. Crysdale who is a signatory to this report prepared a report which was tabled in the provincial assembly of British Columbia the other day in which he stated that you could build a line up to Finlay Forks at the prevailing prices of labour and material for a total sum of $6,000,000. That would bring the railway to the very edge of a marvellous territory, tremendously rich in resources, with a fertile soil capable of producing in a way which would delight the mixed farmer and the grain farmer. Such a soil I believe is not known in any other portion of this dominion, and had my hon. friend the Minister of Railways and Canals (Mr. Manion) adopted my suggestion of last year, then instead of the unfortunate consequences with which the administration is confronted in the maladministration of our unemployment funds in the province of British Columbia, instead of the tremendous wastage we have had there in the futile attempt to build useless and hopeless roads, and my hon. friends opposite know this as well as I, if the extension of the Pacific Great Eastern railway had been embarked upon, fulfilling the obligations made to that railway to attach it to the old Grand Trunk system, to-day you would have something concrete, something constructive, something real to show to the people of British 
Columbia and to the Dominion of Canada as a whole. I am appealing, Mr. Speaker, to the minister even at this session to proceed with the construction of that outlet, if not on a national basis, and it is abundantly justified on a national basis-just as much as the St. Lawrence seaway or the Hudson Bay terminal, then on the ground that it is the last great undeveloped portion of this dominion, that splendid northland in the northern part of British Columbia, Alberta and Saskatchewan, with the development of which territory with its magnificent resources is closely linked the future of Canada. I appeal to the administration to proceed this year with the construction and early completion of an outlet from the Peace river to the sea both on the ground of doing something constructive to help the thousands of unemployed in British Columbia and the prairie provinces and to develop for this dominion what is in very essence and very truth a valuable and a veritable empire in itself.


Mr. J. A. FRASER (Cariboo):: I should
like to offer a few remarks on the resolution before the house. I must first with other hon. gentlemen congratulate the hon. member for Peace River (Mr. Kennedy) on the very fair and reasonable presentation he has made of this subject. I have listened on several occasions to the hon. gentleman making a similar presentation on behalf of the people in the Peace River and the opening up of that district, and on each and every occasion he has always been very fair and very reasonable in his presentation.
Before I proceed I wish to take strong exception to one remark that was made just a few minutes ago by the hon. member for Vancouver Centre (Mr. Mackenzie), when he said that it would have been better if this government had assisted the government of British Columbia in constructing a railway line from Vancouver to Finlay Forks instead of proceeding with a lot of the hopeless and useless roads which they had under way in the province. I take strong exception to that statement. The British Columbia government has undertaken no roads that are either hopeless or useless. I would ask the hon. gentleman what he has to say about the construction of the trans-Canada highway in British Columbia? Is that a useless and hopeless piece of road? What about the road which I suppose my hon. friend himself as well as the rest of us has advocated from Hope to Penticton? Does he call that a hopeless and useless piece of road? What about the road up the North Thompson? Does he call that a useless and hopeless piece of road? What

Peace River Outlet-Mr. Fraser
about the road from Prince Rupert to Tete Jaune? Is that a hopeless and useless piece of road? These are the main roads, Mr. Speaker, which have been laid out in the government's program for unemployment relief in the province of British Columbia, and when my hon. friend from Vancouver Centre states that these are hopeless and useless roads I take very strong exception to his statement. They are all highly necessary roads and the construction work is proceeding in a very fair and reasonable manner on each and every one of these projects.
With regard to the situation in the Peace River country, the report which we have before us practically confirms the report of 1925. It goes back and says that the Obed route is the most preferable or the best w.estern outlet from the Peace River country. I cannot understand, Mr. Speaker, how engineers who take into consideration the situation there is in that country can come to any such conclusion. I am not a railroad engineer and do not pretend to criticize the report from that standpoint, but from the standpoint of British Columbia I do say that there is no justification in the world for the Obed route, and if the Obed route should be constructed it will hold back the development of the Peace River portion of British Columbia for generations and put Peace River off the map entirely. It will be generations before it will be possible to get a railway to serve that area.
Some reference was made here this afternoon to a report which was made for the British Columbia government in conjunction with the Canadian government and the railways and tabled a few days ago in the provincial assembly.


Ian Alistair Mackenzie: In conjunction with the two railways, but not the Dominion government.


John Anderson Fraser: In conjunction
with the two railways and the province. I have not had an opportunity to read that report which was tabled only a few days ago, but I have seen a review of it in one of the local papers in British Columbia, from which for the information of hon. gentlemen I should like to quote. While this report which has just been tabled makes reference to lands which are entirely within the province of British Columbia, they are not all in what we call the Peace River area, but if the Peace River route is followed they would all be tributary to a railway connecting up Peace River with Vancouver. I am going to quote from the review which appeared in the Kamloops Sentinel of a few days ago. This is
what it says in reviewing the report which was made for the British Columbia government m regard to the Pacific Great Eastern lands in British Columbia, part of which are in the Peace River block
The general public had almost forgotten that the railways and provincial government had carried out a survey of the resources of Pacific Great Eastern Railway lands during 1929-1930. This has proved to have been most exhaustive. Linder the supervision of Major J. R. Crysdale, the investigation is described as one of the most comprehensive ever undertaken in the dominion, which means much.
In a nutshell the resources are listed thus:
Coal-good quality, easily mined to the extent of 600,000,000 tons.
That is in the Peace River area. It goes on:
Timber-more than 18,000,000,000 board feet, with nearly all of it classed as accessible.
Petroleum and natural gas-620 square miles of favourable structure areas.
A total area of nearly 20,000,000 acres of which only 893,000 have been alienated, 2,230,000 are cultivable, 11,000,000 suitable for grazing lands and 6,000,000 unproductive.
Water-power-over 150,000 horse-power in Peace River block and a minimum of 50,000 horse-power in the three southern blocks.
Geologists report 3,630 square miles with lode mineral possibilities and 9,400 square miles of favourable area for placer gold. Other nonmetallic minerals are reported "potentially important."
This report will reconcile British Columbians somewhat to this historic railway which has been described as a line which starts nowhere and arrives nowhere. Posterity may see in it a project that had one salient fault, it was built long before its time. But that the general route had merit will be conceded, in the light of the resources that are now revealed. It is to be hoped that the survey will have an important bearing in the event of a sale, a consummation devoutly to be wished during these times.
That, Mr. Speaker, gives an idea of the resources tributary to the proposed western outlet of the Peace River country. All the resources I have outlined are tributary to and can be made accessible to that line. The development of these natural resources would surely to some extent lend itself to giving employment to quite a number of people in the province of British Columbia. I fail to understand why, having all these facts before them, the engineers came to the conclusion that the Obed route is the proper western outlet for the Peace River country. I am very loath to accept it.
A statement was made in the first part of the report that the report is based on railway economics. From a review of the situation and from my personal knowledge of the country, may I say that if railway economics are reflected in that report, I am not very favourably impressed with them. I would say

Peace River Outlet-Mr. Fraser
that the report submitted is nothing but economic tomfoolery. Certainly it does not appeal to me as sensible or reasonable, and I suggest to the Minister of Railways and Canals that the matter now before us should be considered from a standpoint other than the one of railway economics, if the report to which I have referred is the result of a railway economic survey.
What will happen to the northern part of British Columbia and all these resources I have outlined? May I add that I have touched only upon the possibilities of that section of Canada. One could travel up the Finlay river and treble the mineral area, if one desired. Further may I point out that the Finlay area is not included in this report. What will happen is simply this, that the Obed route will be of no potential value to the province of British Columbia. Not only that, but it will do very little service to the province of Alberta. That province is already served by a railway. The construction of the Obed route would do nothing for the province of Alberta, and for at least a time it would put the Peace River section of the province of British Columbia entirely off the map. That part of Canada lying north of the Peace River district will be placed in a position whereby, in order to get produce to the natural market of Vancouver, it will have to be hauled about 1,600 or 1,700 miles, instead of along the Peace River route of only 800 or 900 miles. As my hon. Mend from Peace River (Mr. Kennedy) has pointed out, that distance will be very materially reduced, if the outlet is taken to Stewart.
For the consideration of the minister and the government I can think of no other project in the whole of the Dominion of Canada which will lend itself so readily and be of such lasting benefit to all the people as the construction of a western outlet from the Peace River district. As the hon. member for Vancouver Centre (Mr. Mackenzie) has stated, the building of the outlet has been promised by both the political parties. There could be only one excuse for the government not proceeding with the construction of the route, and that would be the financial position of this as well as other countries. Whether or not that is sufficient reason to postpone construction, I admit it is a very substantial reason why the undertaking should be considered only after very careful observations and inquiries. I submit the construction of the Peace River outlet would be one of the most readily accessible projects in the Dominion of Canada for the relief of unemployment.

I suggest consideration of the matter to the government, and trust they will give it their very best thought. I would hope that after inquiry they may find themselves in a position to provide the sum of $15,000,000 towards the completion of the outlet and connection with that northern country.


Thomas Reid: 
Robert James Manion: I hope my hon. friend does not blame the government for the report. We did not make it.


Thomas Reid: No; but I hope the hon. minister will not take the report very seriously when it says that no westerly route is justified for the present.


Robert James Manion: Will my hon. friend allow me to state this: I believe firmly that the Peace River outlet will have to be built ultimately.


Thomas Reid: I am glad to hear that. I submit that this report should not be con-

Peace River Outlet-Mr. Munn
sidered as final. Personally I am glad to hear the hon. Minister of Railways say that he is not in accord with the last clause in which the engineers say that no western route is justified.


Robert James Manion: I think it is only a matter of when the work should be done. That is the only dispute.


Thomas Reid: I am glad to hear the hon. minister so express himself. I simply rose, Mr. Speaker, to endorse the resolution.


Mr. A. E. MUNN (Vancouver North):: Mr. Speaker, I also wish to support this resolution, so ably presented by the hon. member for Peace River (Mr. Kennedy). The dominion is under an obligation to the Peace River country, for, as has been pointed out, the right hon. leader of the opposition (Mr. Mackenzie King) when in power, definitely promised that within a reasonable time a start would be made to construct an outlet from the Peace River to the Pacific coast, and later, the present right hon. Prime Minister (Mr. Bennett) made practically the same promise. During the special session in 1930 I pointed out that those promises had been made, and that the government could not spend money to better advantage than by completing the Pacific Great Eastern end in British Columbia. I think my advice was sound, although the government did not accept it. At the present time road-building camps are scattered all over British Columbia. Some of the roads under construction may be necessary, but undoubtedly others are not needed at all. As a matter of fact there is not much actual roadbuilding going on, the men are simply living at the camps and doing very little work. If the government are going to carry on public works in British Columbia to relieve unemployment, I would advise that they reorganize the whole system and bend their energies towards completing the Pacific Great Eastern from Vancouver to the Canadian National railway. That work could be undertaken to provide unemployment relief, and it would be a considerable step towards opening up the Peace River country.
My hon. friend from New Westminster (Mr. Reid) took exception to the report. I will not even discuss it. I am somewhat familiar with the country, and in my opinion the mere mention of the Aggie-Obed route condemns the whole report. There are four possible routes, and anyone familiar with the country who hears the Obed route recommended would condemn the whole report as a matter of common sense.

I am not going into the resources of the Peace River country; that question has been discussed for years. There are wonderful resources in that country, with millions of acres of the best wheat land in North America not taken up. We hope that in the near future this outlet will be supplied, but in the meantime I think this government, instead of spending relief money in the building of patches of road here and there, some of which may be needed but many of which are quite unnecessary, should spend the money in completing the Pacific Great Eastern railway, and in doing so they will go a long way towards opening up the Peace river area.


Mr. A. U. G. BURY (East Edmonton):: Mr. Speaker, on previous occasions when this matter was brought up in the house by the hon. member for Peace River (Mr. Kennedy) I took no part in the debate, although I am very much interested in the matter. I think the last time I had occasion to refer to the Peace River question was during the session of 1926, but I should not like this debate to pass without saying something with regard to this matter.
We have been referred to the reports of the railway engineers with regard to the relative merits of the different routes. I have no intention of going into those reports or the arguments based upon them; I suppose the route will be settled, broadly speaking, on two considerations: first, the engineering features and secondly-and I think this is the main point to be considered-the amount and richness of the territory which will be served.
As far as the city of Edmonton is concerned, in my opinion and in the opinion of a great many people in that city, the construction of a Peace River outlet will bring us no immediate advantage; rather it will work to our disadvantage. At present that great country is really a sort of cul-de-sac; anyone entering it must go through Edmonton, and anyone leaving it must come out the same way. All traffic to and from that district, whether passenger or freight, passes through my city. But while we recognize that the immediate result of a Peace River outlet may not be particularly advantageous to our city, at the same time we all recognize that the development of the Peace River country ultimately will be of advantage to the city; we recognize that we cannot introduce a policy which will have a beneficial effect in the development of one part of the province of Alberta without every other part of the province reaping resultant benefits. Therefore, with no immediately selfish motive, I rise to support the plea of the hon. member for Peace River.
10S7

Peace River Outlet-Mr. Bury
I endorse that plea on behalf of the settlers who have gone into that country. It has been stated already that many people took up -homesteads in the Peace River district on the strength of a promise or understanding that railway facilities would be afforded. That may or may not be true with regard to the first settlers; as to that I cannot say, but certainly it is true with regard to the settlers who -have gone in during comparatively recent years. They were promised an outlet from the Peace River district to the coast; the people who went in after those promises, representations and undertakings -were made and given went in on the strength of them. They have been holding on to their farms under the greatest difficulties, unable to do more than merely support themselves, with freight rates which make it impossible to market their grain with any hope of profit. They have been holding on in the hope that the promises made -by 'both -parties will be implemented.
Some hon. gentlemen opposite are very quick to refer to the promise or undertaking given by the leader of the Conservative party in 1926. May I remind them that the language of the right hon. gentleman on that and other occasions was not nearly so definite or clear in its immediate prospect of fulfilment as the promise and pledge given by the then leader of the Liberal party. The present right hon. leader of the opposition (Mr. Mackenzie King), when in power, gave the pledge that this would be done forthwith. The construction of an outlet from the Peace River district to the Pacific coast was to be the spearhead of the Liberal policy, but apparently the spearhead was rather blunt. It made no apparent impression on the policy of the government, so that to-day we are just where we were in 1925 and 1926.
I know these settlers; they are of a peculiarly high type and character. They are men who have gone to that area not for the purpose of making fortunes or for the purpose of -turning their farms into grain mines; they have gone there to make homes and root themselves in that part of Alberta with the idea of becoming permanent settlers, in that area. They are coming into the Peace River district in increasing numbers; the calamity of the drought which fell upon the southern part of Alberta and Saskatchewan, and conditions in -the United States, have had the effect of driving hundreds and thousands of settlers to that great north country. During the last year and a half they have poured in, and -because they went there with the assurance that both great political parties were pledged to construct a Peace River outlet,
they have a right -to demand the fulfilment of that promise.
We on -this side of the house appreciate to the full the difficulties presented by the financial condition of the -country; we recognize the imperative nature of the demand made upon the treasury, and the necessity (that resources should be husbanded and absolutely no unnecessary expenditures made. For that and for other reasons it has -been suggested that the proper policy is -to wait until the country has become so populated that a railway will pay. That is a wrong policy; i-n any case it is a policy which cannot fairly be pursued in relation to the great Peace River district. After all, -the best way to populate the country is to give it railway facilities. The argument has been raised that more than a Peace River outlet the country needs branch lines running in-to the more thickly populated districts, touching the best farm lands and uniting them with the main line. But the branch lines referred to will be built and put upon a paying basis much quicker if the Peace River outlet is provided; because with better railway facilities and cheaper freight rates there is no doubt in the world that there would be an increased influx of settlers into that north country.
The settlers in the Peace River district have watched -the progress of political action and have -compared promise with performance. They have seen great undertakings carried out by past governments while that which was pledged to them was forgotten. They have seen the great expenditures -made on the Hudson Bay railway; and I remember that in 1926 I was one of -the very few who protested against the construction of that road. I pleaded with -the government of the day that before an}' more money was spent on the Hudson Bay railway, the Peace river outlet should be constructed. I suppose possibly $50,000,000, perhaps $60,000,000 will be spent on -the Hudson Bay railway to obtain a very problematical advantage in the future, whereas there is in the Peace River district a great agricultural empire which at the present time is merely a cul-de-sac at the end of a railway. This road, although greatly improved during the past few years, is not of -the best and heavy freight rates prevail.
I need not remind this house of the evidence of the wealth and the great agricultural possibilities of the Peace River country. I recall -the fact that the blue ribbon in the grain world for wheat and oats has been won again and again by a farmer who resides and has resided for many years in that district. For these reasons I support with my whole heart
1088	COMMONS
Peace River Outlet-Mr. Hanson
the plea of the hon. member for Peace River and urge upon the government that if this outlet cannot be constructed in any other way, it should be undertaken either as a direct policy of the government or as a measure of unemployment rdlief. This is an obligation which rests upon both parties and which has, I think, the endorsation of all sections of this house.


Olof Hanson: Mr. Speaker, I rise to associate myself with the resolution moved by the hon. member for Peace River (Mr. Kennedy). I congratulate the mover upon the able manner in which he has presented his case. The Peace River outlet to the Pacific coast is necessary in order to devdlqp the resources of that part of our dominion. As has been said Iby previous speakers, our commerce has been developed eastward to the Atlantic ocean but in later years new markets have been discovered for our products and accommodation must be provided ito handle this new movement. I should like to read a resolution passed by the Stewart 'board of trade, which reads as follows:
Whereas thousands of people have been migrating to the Peace river during the past two years, swelling the population of that country to a total of some 40,000;
And whereas in addition to vast agricultural development it has been demonstrated that northwestern Canada is rich in mineral deposits;
And whereas a tide water outlet has for some years been promised to the Peace River country;
And whereas a charter was granted for a line of railway from Stewart to the Finlay Forks some three years ago and certain preliminary surveys have been made of the route from Stewart to the point named, as a result of which the people of this community and the Peace River country have been lead to anticipate stimulated development;
Be it therefore resolved that this board of trade ask Mr. Olof Hanson, member of parliament for this federal riding, to collaborate with other members of the federal parliament from Cariboo and Peace River with a view to putting questions on the order paper during the present session of the said parliament, that will have the effect of bringing out any and all information on this question of prime importance to the people of northwest Canada;
Be it further resolved that the questions so asked be so phrased as to bring out and make clear the intention of the government and/or the railways, if, when, and as soon as financial conditions permit of commitments for new undertakings.
Upon receiving a copy of this resolution, I took the matter up with the Minister of Railways and Canals (Mr. Manion) who advised me that the best way to bring the matter before the house would be when the Peace River outlet was under discussion. That

is my reason for now placing this resolution upon Hansard. I have received similar resolutions from other public bodies in British Columbia. The chamber of commerce of Prince Rupert has passed a similar resolution on several occasions during the past five or six years, but as some of these are already on record it will not be necessary for me to read them.
Other speakers have gone into full detail in discussing this question, and it will not be necessary for me to repeat the figures given. I was pleased to hear the hon. Minister of Railways and Canals say that the government realizes that this outlet will have to be built sooner or later, but I submit that an early commencement of the work would be of great assistance in solving the unemployment problem, probably the greatest problem facing the government at the present time. As the iast speaker has said, perhaps the government will consider this matter as a means of helping to relieve the unemployment situation.
I do not intend to discuss this matter any further, except to say that I am fully in accord with the resolution.


Hon. CHARLES STEWART (West Edmonton) :: Mr. Speaker, the Peace River
outlet has been a much discussed question for a number of years. In 1912, when I joined the provincial government of Alberta, a survey was projected through from White Court via Grande Prairie and the Peace River pass to the coast. That survey resulted in bringing a great number of people into the country, particularly into the Grande Prairie district. In 1913 I was delegated by the provincial government to pay a visit to that country to look into its potentialities and to see whether or not it was advisable for the government to embark upon railway construction into that territory. After an extended trip through the country by buckboard I came back to Edmonton and reported to the government of the Hon. Mr. Sifton that in my opinion a railroad should be projected at on'ce into that country, with the ultimate object of its completion through to the coast. That road was built and served a useful purpose for a number of years. The hon. member for East Edmonton (Mr. Bury) has intimated that this was rather an indifferent road, but at all events it enabled the people to get in and out of the country from Edmonton westward. The road was not projected through to the coast, and that is the only possible solution of the difficulties which face the people in that part of the province. But it must be borne in mind, as pointed out by several speakers this afternoon, that very considerable concessions in the way

Peace River Outlet-Mr. Stewart
of freight rates, were obtained in order to meet the difficulties of the settlers in that territory. Some hon. gentlemen have mentioned the fact that for a good many years the government of the right hon. the leader of the opposition (Mr. Mackenzie King) had the matter under consideration and nothing was done. May I say for their information that if they will look back over the pages of history they will see that that railway was owned by the provincial government, and they will recall that an effort was made, without success, to secure it for the Canadian National system. That it was not accomplished was not the fault of the King government. In my opinion, so far as the outlet to the coast was concerned, a stumbling block was placed in the way when both railways acquired the northern lines. That presented a difficulty which was not easily overcome.
I never was in favour of the projected outlet by way of Obed. I never could understand why the people in that country should have to submit to a back haul from the territory west of Grande Prairie and the Pouce Coupe country, or why the settlers north of the Peace should have to come by way of St. John or back to Peace River, crossing to McLennan, and making that roundabout journey in order to get out to Obed. With that rich territory, and with a thinly peopled country west of Peace River outlet, that was the logical course for any railway to take to get out of that district. Then they could go direct to Stewart or else to Prince George and connect with the existing lines, thus serving all parts of that territory much more acceptably.
I know that engineers have pointed out the difficulties in the way, but after all, they are not insurmountable; and, after reading a good many of the reports, I have come to the conclusion that even if it meant a little added cost, that cost would be warranted when the construction took place. One can realize the difficulties with which the government is faced at the present time with regard to financing, but I agree most sincerely with the suggestion that this outlet might very well have been undertaken prior to the opening up of the northern route to Churchill, and the opening of a port which at best will not be useful except for four months of the year.


Robert James Manion: That was started in 1911 or 1912.


Charles A. Stewart: I quite agree. I have never changed my mind about the Churchill route. And with respect to Churchill, may I say that we had a splendid 41761-69
service through eastern Canada by water and rail which of course added somewhat to the cost of transportation to the settlers in northern Saskatchewan, but which after all was nothing in comparison to the cost which the settlers in northern Alberta will have to bear until they have an outlet through to British Columbia.
I notice that the government at present is interested in the construction or the improvement of the waterways system. In the light of the situation as it affects the two railway systems to-day, in the light of their earnings and the reduction in their business, it seems to me that while the waterway project must be gone on with some time, it could well be delayed for a short period, at least until this outlet is provided from Peace River to the coast. After that is completed we can take up the waterways question.
I do hope that if this government remain in office one of the first things they will undertake as a great public undertaking is the construction of a railway to give the facilities for which the people of Peace River have waited so long.


Donald MacBeth Kennedy: In closing the debate, I do not feel like saying very much because my throat is not in good condition; but there is one point mentioned by the Minister of Railways (Mr. Manion) which, I think, calls for an answer. If I understood him correctlj' he intimated that the presidents of the two railways are of the opinion that we shall be entitled to an outlet when we have ten times the present traffic. With all due respect, I should like to remind the president of the Canadian National Railways, through the Minister of Railways, that some years ago he said that the outlet would be justified when we had an export of
10,000,000 bushels of grain or its equivalent in tonnage for three years. Well, we have had the equivalent tonnage for five or six years, and if he keeps running away as fast as that, then the nearer we get to the goal the further away he will be from it. I do not think the railways can justify that position, because the province of Alberta made that road pay in 1927, with the volume of traffic then available, and the outlet would not represent more than double the investment.
I am not insensible to the financial difficulties with which we are faced to-day, but I do not think that in these times, with all our difficulties, we ought to be talking confidence in Canada and acting panic. Unemployment is here and we have to deal with it, and we also have to face a reasonable development of this country. I therefore urge

1090	COMMONS
Insurance Companies-Mr. Luchkovich
upon the government the consideration of action in this matter and in regard to branch lines as well, because we have a good many settlers seventy to eighty miles away from the railway.


Robert James Manion: I have promised that consideration.


Donald MacBeth Kennedy: Well, in view of the discussion we have had and of the position taken by the minister, I will ask that the motion be withdrawn.
Motion withdrawn.



INSURANCE COMPANIES


Mr. MICHAEL LUCHKOVICH (Vegre-ville) moved:: Whereas there have appeared in the 1932 January and February issues of the Journal of Commerce, published in Toronto, certain allegations of swindling and questionable dealings in respect of the North American Life Assurance Company, and the Sun Life Assurance Company, and
Whereas these charges have created a state of uncertainty in the public mind, and a lack of confidence in the stability of such institutions in this country, and
Whereas these charges can most effectively be met, and public confidence best be restored by a thorough and impartial investigation of these various allegations;
Therefore be it resolved, that in the opinion of this house, the select standing committee on Banking and Commerce be instructed to conduct a strict investigation into the business transactions of the North American and Sun Life Assurance Companies, especially in relation to their investments in common stocks, and the allegations as to the swindling of policyholders by directors of said companies.
He said: Mr. Speaker, one of the most serious dangers with which we are confronted in this country at the present time is the ever-growing distrust of the public in those financial institutions which, having regard to the nature of their business, should, like Caesar's wife, stand above suspicion. I refer to the numerous attacks which have been made upon our insurance companies and upon the very questionable manner in which their affairs are said to be administered. As these charges must be either false or true, and as the insurance companies must be either innocent or guilty, I think it is incumbent upon the parliament of Canada as the constitutional protector and custodian of the rights of the people to make some definite inquiry into the allegations made and follow them up with any necessary action and legislation, not only in order to eradicate any evils which may

exist, but also adequately to safeguard the interests of the policyholders.
Life insurance funds have always been regarded as the most sacred of trust funds, and life insurance companies have always been looked upon as the most responsible of trustees. The investment of their funds therefore should be based upon considerations of safety and security. Elements of speculation should be eliminated; reasonable economy should be exercised in management, and lives should be selected with a view to the death rate and a minimum of mortality. These, sir, are the fundamentals with which the public of 'Canada has been wont to invest our insurance companies, but owing to numerous rumours as well as printed matter the public has been led to believe that these fundamentals have been very flagrantly ignored. There is consequently a wide prevalence of alarm on the part of the policyholders with regard to the security of their policies, and there has grown up a general feeling of suspicion that the insurance companies of Canada are rapidly becoming insolvent. If such is the case, the public of Canada should be informed accordingly; if it is not, then the authors of such publications should be asked either to prove their charges or forever hold their peace. Further, if the charges are not true the insurance companies themselves should be the first to welcome gladly an investigation; for the reticence or reluctance with which they have met the charges has left the public no alternative than to accept" them at their face value.
What the people of Canada are asking themselves at the present time is, why did the insurance companies not take immediate action against the Journal of Commerce for libel? As three monthly issues of the Journal of Commerce have already appeared giving wide publicity to the business transactions of the North American Life Assurance Company and the Sun Life Assurance Company, and as no legal suit has in the meantime been instituted against this publication with a view to punishing the authors of the charges, the people of Canada are gradually evolving from a mere suspicious frame of mind in regard to Canadian insurance companies into one of firmer assurance. In other words, people are no longer suspicious; they are becoming assured. I think, therefore, Mr. Speaker, that what is needed is a very strict investigation into these allegations.
A few weeks ago the following letter was sent to the editor of the Financial Post:
A copy of the January issue of the Journal of Commerce printed in Edmonton, Alberta, has

Insurance Companies-Mr. Luchkovich
come to this office. In this journal serious charges of misappropriation are made against T. B. Macaulay, president of the Sun Life Assurance Company, and against Mr. Gundy in connection with the North American Life.
I and many of my friends here who have insurance in both these companies are greatly worried. We would like to know the facts and if we should continue to keep our life insurance with these companies or let the policies lapse. Insurance has been the only hope of the salaried men to save a few dollars for a rainy day and it now looks as if we were to be deprived of the full benefits of insurance.
Needless to say, the Financial Post is one hundred per cent with the insurance companies, but the Journal of Commerce spares no words in its condemnation of their methods of carrying on business. As stated in the resolution these charges have created a state of uncertainty in the public mind, and a lack of confidence in the stability of such institutions in this country. It states further that these charges can most effectively be met and public confidence best be restored by a thorough and impartial investigation.
The question might very well be asked whether a discussion of this matter in parliament would not aggravate the situation rather than remedy it. I think, Mr. Speaker, that there is no worse way of aggravating a situation that by leaving it strictly alone, especially in the face of the numerous rumours and the published articles which have been circulating throughout the country. Just before I left for Ottawa a business man in Alberta accosted me and asked whether I had heard about the Sun Life Assurance Company going broke. He had evidently been reading the Journal of Commerce, or else had heard something from some casual traveller in his home town. On another occasion a doctor friend of mine vociferously proclaimed his intention of discontinuing his policy on the ground that it would be throwing money away to send his annual premium to insurance companies that were so near the verge of bankruptcy. Instances such as those two could no doubt be cited by the hundred, but I think they will suffice to impress upon hon. members the danger involved. Usually false rumours die of their own stench, but when they originate from well-founded apprehension there is just cause for the investigation that I am asking for in this resolution.
Before examining the charges of the Journal of Commerce it might be just as well to know what the policyholders of this country have to say about the situation. In 1907 the methods and practices that were severely criticized by the Royal Insurance Commission were described as follows:
Insurance companies tend to become powerful aggregations of money with financial rather than insurance aims. The commission attributes to this feature of the insurance practice of the present day most of the evils under which the insuring public suffer. The deferred dividend system was devised to facilitate the accumulation and retention of policyholders' money. Speculative instead of investment fields are eagerly sought. Directors aim at the furthering of their own schemes. Underwriting and syndicates, the select machinery of finance, are operated with insurance funds.
The same methods and practices formed the subject matter of the accusation of the Policyholders' Association even so late as 1929:
1.	That the management of the Sun Life did at various times and in various ways use the funds of their policyholders to inflate the securities of pulp and paper companies to the detriment of that industry and at the risk of heavy losses to the policyholders.
2.	That the management of the Sun Life did at various times and in varied ways transfer from the funds of the company large amounts and place them to the credit of the shareholders.
3.	That the unsettled death claims of Sun Life as compared with that of other life insurance companies were exceptionally and unreasonably large and this fact would seem to be responsible for the many unjustified attempts which the Sun Life has made to compel beneficiaries to accept smaller amounts than their policies called for.
4.	That as compared with other companies the death rate, lapse rate, surrender rate, and cost of doing business was too high, due evidently to a desire for a large premium income irrespective of cost.
5.	That an unreasonable amount of policyholders' funds were being put into head office and branch office buildings which were unprofitable and could not be justified on sound life insurance principles.
6.	That the book value of the assets of the Sun Life were from time to time written up in a manner calculated to mislead policyholders and ' misrepresent the true state of affairs.
7.	That the management of the Sun Life did without the consent of its policyholders and in its contracts alter its methods of distributing surpluses by deferring the payment of a portion of such surplus until after the death of the insured.
Mr. Speaker, if matters are as they have been presented in this accusation made by the policyholders, they constitute a strong argument against stock insurance companies and a good case for the mutualization of our insurance companies, or, what is still better, state control of insurance. In the United States the great majority of insurance companies are now mutualized. As the president of one of those companies put it:
"Public opinion is now educated to the point of believing that life insurance is a trust; that no set of stockholders have a right to exploit that business for their own profit; and that money saved out of the earnings of men for the protection of widows and orphans should not go into the pockets of stockholders."


Charles A. Stewart: What is the hon. gentleman quoting from now?


Michael Luchkovich: I am basing my
remarks upon the Journal and a letter sent to me to-day by the Policyholders' Association. Every member has received a copy, and therefore I think I am qu-ite justified in using it. Of the preferred stocks held by all life companies, these two companies hold over 74 per cent. The small percentage of stocks held by the other companies are mostly of banks and trust and loan companies that show little, if any, depreciation in value.
A fair example of the class of securities in which the Sun Life has invested the funds of its policyholders is illustrated in a $9,000,000 loss on the securities of the Canada Power and Paper Corporation-a Holt-and-Wood-Gundy promotion; an $8,500,000 loss on the securities of the Abitibi Power and Paper Company; and an $8,300,000 loss on the St. Regis Power Company. Of the $31,500,000 of policyholders' funds which the directors and their friends took in exchange for the worthless securities of these three companies alone, over $25,800,000 has already been lost according to the Journal of Commerce. In fact it says that the whole investment may be considered to be gone already, since there is practically no market for these securities, and
1094	COMMONS
Insurance Companies-Mr. Luchkovich
if any attempts were made to sell, the price received would not be any more than the value of the printed stock certificates.
An examination of the financial statement for 1931 will reveal a strange method of computing the liabilities of the Sun Life. Since 1928 the total receipts of the company show substantial increases each year, but the amounts put by each year as government reserves or actuarial liabilities have been
rapidly growing less, as will be seen by the
following table:
Year
Total receipts
1928.	.	.	$139,442,610	321929.	.	.	173,090,107	161930.	.	.	186,913,572	991931.	.	.	197,840,344	84
Amount put in government reserves $68,624,857 58 56,736,512 10 51,081,561 95 44,561,437 78
These figures would make the aforementioned deficit still larger.
The royal commission of 1907 severely condemned the methods by which the management of the Sun Life transferred in the books of the company the policyholders' funds to the credit of the shareholders, yet we find in the report which the Sun Life has filed with the government that the following sums were transferred in the same way during 1931:
Interest earned on capital.. .$ 183,191 30 Transferred from participating
fund	 1,425,082 74
From surplus in non-par. fund. 1,269,164 99
Total

This amount which was transferred during 1931, raised the total balance now standing to the credit of the shareholders to the sum of $17,962,989.87. As suggested by the Journal of Commerce, out of this a dividend of 50 per cent on the capital stock was declared at the annual meeting of the company held in Montreal eight weeks ago, and the Montreal Gazette of a few days ago carried an announcement that the dividend would be paid on the first of the month. On page 4 of the letter issued by the Policyholders' Association I find this statement:
According to the Sun Life's statements filed with the government, the total revenue of the company in 1931 was $56,397,374.52 greater than in 1928. But the disbursements in 1931 were $61,849,809.30 greater than in 1928. That is, the management spent all the increase and $5,452,434.78 besides. Is this the reason why the company borrowed $5,650,000 a few days before the end of December, 1931-so as to avoid having to report a heavy bank overdraft? No mention is made of this item in the statement handed out at the annual meeting; but it appears in the statement filed with the government.

As the Journal of Commerce suggests:
No wonder the amount put by in the reserves was less in 1931 than in any previous year since 1928. The expenses are increasing more rapidly than the income. Will the overdraft at the bank be increased by the 50 per cent dividend to the stockholders?
This ends my resume of the case against the Sun Life, and I shall now discuss the North American Life Assurance Company.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Michael Luchkovich: Mr. Speaker, I shall have to condense the remainder of my remarks because of the short time remaining at my disposal.
At six o'clock I was about to give a short resume of the allegations made against the North American Life Assurance Company. The charge made by the Journal of Commerce against this company is that $1,275,000 belonging or waiting apportionment to the policyholders thereof has been withdrawn under the guise of making the company a mutual, and that the manner in which said withdrawal has been done has all the earmarks of a swindle. When the North American Life Assurance Company was incorporated by an act of parliament in 1879 it was to have no stock; but provision was made for a guarantee fund which could be retired upon the establishment of the company, and which was to be liable for the payment of losses. It is to the holders of this guarantee fund that the aforementioned $1,275,000 recently was paid, and it is in this connection that the Journal raises so great a commotion, even to the extent of charging Mr. Gundy and his associates with having swindled the policyholders. The Journal says that steps should be taken, first, to compel the directors of the North American Life Assurance Company to put back to the credit of that company the sum of $1,275,000, and second, to compel the holders of the guarantee fund to make good the loss which the funds of the North American Life Assurance Company have suffered since the guarantee fund passed to the control of J. H. Gundy and his associates.
The terms and conditions of this deal are set forth in a letter which D. E. Kilgour, general manager of the North American Life Assurance Company, addressed to the holders of one original share or unit of the guarantee fund. I have not the time at my disposal to read this letter, but it may be found om page 8 of the March issue of the Journal. The con-

Insurance Companies-Mr. Bennett
elusion which one draws from it, according to the Journal, is that without the payment of a single cent the man to whom the aforementioned letter was addressed received $127.50 plus $215 plus 35 cents plus $10, in all $352.85 for his one original share for which he had paid the sum of $20. His net profit on this share amounted to $332.85.
The charter of this life assurance company, as amended in 1897 by 60-61 Victoria, chapter 79, distinctly specifies the class of securities in which the funds of the company may be invested. During the time the company was under the control of Messrs. Gundy, Bradshaw and others, many investments were made in unauthorized securities. The company still has $9,810,667.94 invested in these unauthorized securities, which show a loss oi over $2,000,000. As the charter of the company distinctly states that the holders of the guarantee fund are responsible for losses, the Journal claims that both the directors and holders of the guarantee fund-including J.
H.	Gundy, who sold most of these securities to the company-are responsible for these losses and that no time should be lost in determining the amount of these losses and in making an attempt to recover them for the policyholders.
Briefly put, this is the sum and substance of the allegations against the Sun Life and the North American companies.
As I have said already, my reason for placing this resolution on the order paper was to ascertain the truth or falsity of the charges made by the Journal of Commerce. In the attainment of this objective I thought that nothing less would suffice than a strict investigation into the business transactions of these two companies. The great alarm created by the allegations made by the journal, the intense worry of many people over the insecurity of their holdings and the general state of uncertainty and lack of confidence in the stability of our insurance institutions, are, in my opinion, valid reasons for bringing this matter up for the serious consideration of hon. members and the urgent attention of the government. There are individuals who will disclaim any justifiable grounds for alarm, but if the allegations alluded to are true, then in all seriousness I ask hon. members:
First, is there not good ground for alarm in regard to the investment of policyholders' funds in highly speculative and worthless propositions?
Second, is there not good ground for alarm when hundreds of millions of dollars belonging to hundreds of thousands of policyholders are misused to benefit a few individuals?
Third, is there not good ground for alarm when profits are appropriated in an arbitrary manner without regard to equity or to the rights of the policyholders?
Fourth, is there not good ground for alarm when princely dividends are paid to shareholders which are not justified by the income of the companies?
If the allegations are true, there is something radically wrong in the way the funds of these companies are being administered and in the manner in which their affairs are being managed. The business of life insurance needs investigating, and the most expeditious method of doing this is by means of a committee of the house. The parliament of Canada is the protector and custodian of the rights of the people, and these rights should not be jeopardized by a few greedy individuals.


Mr. SPEAKER:: The hon. member has
spoken for forty minutes.


Richard Bedford Bennett: Mr. Speaker, the business of life insurance is one of the largest in Canada. It affects not only our own country but other countries where Canadian enterprises are carrying on their operations. The privy council has held that the business of insurance belongs solely to the provinces. There are limitations upon that statement which are questioned, but in the broad and general sense the business of life insurance has been declared to be under the control of the provincial legislatures. The dominion parliament has placed upon the statute book an act dealing with insurance- life, fire, accident, and other forms-and one of the provisions of that act is that an annual statement shall be made by the companies licensed to transact life or other forms of insurance in this dominion. The validity of those enactments has been questioned. It is contended by the proprietors of the Journal of Commerce, from which the hon. gentleman who has just taken his seat (Mr. Luchkovich) has read, that parliament has no jurisdiction and that these matters are solely to be determined and dealt with by the provinces through their legislatures and various departments set up by statutory enactment.
It is not my purpose to traverse that ground this evening, but to point out that the life companies of the country have for many years been making these returns to our superintendent of insurance, and these returns are from time to time published and the reports are laid upon the table of this house. Particularly it may be said that the Canadian life insurance companies have undergone the

Insurance Companies-Mr. Bennett
Let me go a step farther. I say to hon. members, sir, that I am not in accordance with the investment policy as defined by the statute at the moment. I have long held, as those who were in the house when I stated my views will recall, that a more stringent restriction of investments by life insurance companies is desirable. That is my view, and I assured hon. members I would endeavour, within the scope of our power-and I put in that qualification, particularly after the judgment of October last-to place those restrictions upon the statute books. Remember this, though, sir. In England they have no statutes with respect to investments, none whatever. They rely upon the wisdom, the discretion and the vision of those who control the enterprises to see that the investments are sound, as it is seldom that life insurance companies meet disaster in Great Britain, or for that matter in any country, for the reasons I have indicated in the earlier part of my observations.
I think I will leave the Sun Life there except to make this further observation. As to the wisdom of some of the investments to which reference has been made I entertain no doubt; they are not investments that I would make. But they were investments which the law permitted to be made, and being legal-not illegal as has been suggested, and being within the law-not without the law as has been suggested, the making of those investments can at best be said to be an error of judgment. Well, Mr. Speaker, I wonder how many members in this house have made slight errors of judgment in their investments? Ah! I wonder if you have allowed for the human equation in dealing with this problem; if you have allowed for the fact that the best judgments in the world have made investment mistakes in the past five years? Would you have thought it possible that securities of the United States of America would depreciate as they have? Would you have thought the securities of our own country would have fluctuated as they have? Would you have thought that the securities of Great Britain would have fluctuated as they have? Would you have thought that one security I happened to hear of to-day in consequence of an event that occurred yesterday could have fallen to less than $2? These are events which I ask this house to bear in mind. They happen under the very best circumstances and to the wisest investors in the world. As I have said, there are some of these investments that I would prefer to see not made; but the law says they were legally made; and after making the valuations on the basis I have mentioned this company shows a very substantial surplus.
fMr. Bennett.]
Now, I think this house will agree with me that the banking and commerce committee is not the committee at the moment to deal with a matter of that kind. It may well be that it is desirable that in the future, when conditions have steadied and the fluctuations are less marked, when the curve is not so well-defined, a calm, dispassionate investigation of the whole business of insurance in Canada should be held. I am hopeful that some of our provinces, uniting with the dominion, will agree that it is to the public interest that there should be a central control of insurance rather than control by every province in this confederation. In the United States the forty-eight supervisions of insurance have not always been found to work satisfactorily, for their laws are not uniform, and while the state of New York, in which is domiciled the greatest aggregation of insurance companies in the world, has laws that are admirable and do not permit many of the investments that we permit to be made by insurance companies, yet there are other states in which the laws are entirely different and the difficulties to which I allude have not been overcome.
I leave the Sun Life for the moment and I turn to the North American Life. With respect to that company, I have a very accurate and complete knowledge. It was brought to my attention last year that the company was about to be mutualized. The history of the North American Life I am aware is known at least to my old friend from South Huron (Mr. McMillan) because the great Blake family had much to do with its establishment. It provided in its articles of incorporation that it might be mutualized. Funds were set up for the purpose, with limitations upon dividends and matters of that kind. It is true that the control of the company passed out of the hands of the former shareholders to Mr. Gundy and, I think, to Mr. Bradshaw and to one or two others. The capital stock was increased by calling up the uncalled capital. Then Mr. Bradshaw

who many of you know was treasurer of the city of Toronto for several years, and who, I believe, enjoys a reputation for probity, for honour and for integrity second to that of no man in this country-conceived the idea that it was desirable to mutualize the North American Life. Out of the funds which had been collected for that purpose Mr. Bradshaw proposed to pay to the owners of the shares the price which they had fixed as the value of their holdings, and thereby to mutualize the company. He sent out the notice to which the hon. member who has just taken his seat. (Mr. MARCH 14, 1932
Insurance Companies-Mr. Bennett
Luchkovich) has referred. That notice in my judgment at the time was not as full and ample as I wished to see it. At the instance of the superintendent of insurance I asked Mr. Bradshaw to come to Ottawa. He came, accompanied by his solicitor, and together we revised that notice and made it so complete that he who ran could read and ascertain exactly what was meant. I asked Mr. Bradshaw, and Mr. Bradshaw at once agreed, that that revised notice should be sent to every policyholder of the North American Life-not to every shareholder, but to every policyholder,-indicating that the company to be mutualized no longer would have any shareholders except the policyholders, fixing the date, the hour and the place at which the meeting was to be held, and giving notice as to the terms under which the mutualization was to be effected. My information subsequent to that meeting-and I inquired again to-night since recess to verify it from the superintendent of insurance-was that those resolutions passed unanimously; not a single policyholder raised any question or offered any objection. Where then was your Policyholders' Association? What were they doing? Why are they here now in this house talking about these conditions when they were afforded an opportunity to make objections, if they had any, against the mutualization of their enterprise? And the Department of Insurance, which at the moment was under the direction of the then Minister of Finance, saw to it that complete information was given to every policyholder. Is it right or fitting that in this house this Canadian enterprise should be thus referred to when the policyholders themselves without a single objection accepted its mutualization?
The annual statement of the North American Life does not indicate what was said this afternoon; the entire holdings of common stocks held by the North American Life do not amount to five per cent of its assets. Of course, Mr. Bradshaw has been naturally concerned about all 'this. His company has assets of $46,000000. He has the pride that a man has in his enterprise, and he deprecates these statements which are not warranted, because Mr. Gundy no longer controls the company, Mr. Bradshaw no longer controls the company; it belongs to the policyholders, it is a mutual company, accomplished under the circumstances to which I have referred.
Now, sir, if I suggest to this house that we have a grave and great responsibility, I think I am not suggesting aught but what is apparent to us all. If I say that during the weeks that intervened since August, 1930, up to the
time at least that I ceased to be Minister of Finance this whole matter has given me much concern, I think perhaps there is no member of this house will disagree with me. But I have asked myself, and I have re-asked myself:	What purpose has been served by
reading upon the record of Hansard this story from the Journal of Commerce? If it were something new I could understand it, but it is not. Shall we give the sanction of the authority of parliament to something that will cause distrust and bring disaffection to thousands of men and women whom we do not know and have not seen, who are aliens living under strange flags in various parts of the world? Shall we discredit our own institutions? For I say to you, my fellow members in this house, that as far as it is possible for one to satisfy himself, having no interest as a policyholder or otherwise in this enterprise, I am satisfied that these enterprises are solvent. I say that to you, Mr. Speaker, and I say it to the public of Canada. That is my profound conviction, my fixed and certain conviction, and I believe that nothing but injury can be done by any endeavour to send to the committee on banking and commerce an investigation of the character suggested. Mistakes have been made and will be made;
I suppose almost everyone of us will admit that, but so long as solvency is maintained I am content. My concern is with the solvency of these enterprises, not only for Canadians but, as I have said, for people in every part of the world where these vast enterprises carry on their great operations.
Might I just make one further observation and I have concluded. It is amazing how many people rejoice in the success of others but how quickly they condemn them if, by the accident of circumstances, success becomes failure. Only a few short years ago, when enormous dividends were being paid to policyholders because of the enormous appreciation in values and returns of the investments which, so far as the Sun Life Company was concerned, were made as part of a fixed policy; everyone was speaking of the magnificent profits and returns that were being made. There has been no sale of those shares, mark you, because the policy of the enterprise was not to make money by buying and selling; the president announced that the policy was to buy and hold. If they had bought and sold the fortune of the enterprise would have been enormous, but they bought and held until, as I say, we asked them to reduce their holdings, of course without taking losses that would be incommensurate with the situation. As I have

Insurance Companies*-Mr. Bennett
said, now they are down to 47 per cent as compared with 51 per cent a little over a year ago.
Now we condemn. Who could have foreseen, and who did foresee? As I have said, I have talked to some of the wisest of our investors and some of the shrewdest of our people, and there are very few of those with whom I talked who have not found themselves in difficulties. Some of you, I doubt not, saw the directions given the other day in the will of one of the foremost men of the United States as to the investment of his fortune by his representatives. He indicated that a certain percentage should be invested in various forms of shares and stocks, preferred and common; in bonds, in railway securities, in the securities of various countries of the world, including Canada, and so on. All this indicates the desirability in the minds of many prominent men of the diversification of investments. That principle at least governed in the investments made by the enterprise to which we have referred, and I should like to feel that we would not consciously, in a period of world depression, do an injury to two great Canadian enterprises; I hope that we will not bring distrust and suspicion upon two great enterprises that hold in trust the collective savings of millions of people. For that reason-and I say it to this house with great diffidence-I trust that we will not engage in a discussion of the merits or demerits of the investment or other policies of these enterprises, when their investments have been made within the provisions of the law for which we, as members of parliament must accept the responsibility. I trust that we will dispose of this resolution quietly and expeditiously, and decline to refer it to any committee at this time so that no injury may be done either to the enterprises, to the policyholders-the men, women and children in every part of the world-or to the credit of our country.


Mr. M. F. HEPBURN (West Elgin):: Mr. Speaker, I shall not take up very much of the time of the house to-night in discussing the resolution now before us, as I should like to see this matter settled in some way or other in order to end the uncertainty that seems to permeate the minds of the people throughout the province of Ontario and, I believe, throughout the dominion as a whole.
I listened with a great deal of interest to the very excellent presentation of the case by the hon. member for Vegreville (Mr. Luchko-vich), and I listened with equal interest to the excellent discourse on insurance by the

right hon. Prime Minister. I want to assure him that he made a profound impression upon those of us who sit on this side of the house. We fully appreciate the tremendous responsibility that is his at this time in trying to maintain the financial stability of our great institutions. I agree in part with all that was said by the Prime Minister; and, I agree wholly with what he said with reference to the North American Life Assurance Company.
In dealing with this resolution I believe we should- differentiate and draw a sharp line of demarcation between the two companies which have been charged. I believe the North American Life is solvent, but on the other hand I believe the Sun Life is insolvent. In order to bear out my statement that the North American Life is quite solvent I have only to refer to the balance sheet of the company itself, as presented to the policyholders on December 31, 1931. As the Prime Minister has said, only a very small amount of the investment of the company is in common stock; the depreciation which this company would take in liquidation would be very small indeed, so I do not think there should be any question at all as to the solvency of the North American Life Assurance Company. With reference to Mr. Bradshaw, the president of the concern, I believe he is an honourable, capable gentleman, and I think he showed his unselfish spirit when he mutualized the company for the benefit of the policyholders. Charges have been made that in that mutualization process some of the directors and other shareholders of the company benefited, and it is quite true that on the face of things only $200,000 was paid into the treasury of the company while something like $1,275,000 was taken out. But I might point out that this increased amount taken out was largely made up of profits from non-participating policies which, in effect, belonged to the shareholders of the company.
While I have the floor I wish to make another statement, and that is with regard to the charges which have been made against the premier of this province. I want entirely to dissociate myself from those charges. It has been said that Premier Henry paid in something like $1,660 and drew out of the company something over $10,000, making a profit for himself of about $8,900. On the floor of the provincial house Mr. Henry has denied these charges, and as a parliamentarian I fully accept his denial. I believe he -is an honest gentleman, and I think the charges against him were wholly unwarranted. The only criticism I might make, in all kindness, not only with regard to Premier Henry but with

regard to Premier Taschereau as well, has to do with a matter of principle. I think it is wrong for either of these gentlemen to occupy the position of director upon the board of the North American Life Assurance Company, and I believe the right hon. Prime Minister will agree with me in that. I know he does not parctise that policy himself; we all appreciate the fact that when he accepted the leadership of the Conservative party he resigned from the directorates of the many companies with which he was then connected. As the Prime Minister said, however, according to the decision of the privy council the supervision of insurance companies ultimately will fall to the lot of the provinces, and I think it would be much better if the premier of Ontario and the premier of Quebec were to detach themselves from the directorate of not only this company but of the Sun Life company as well.
That is all I have to say with regard to the North American Life, and I hope the standing of that company has not been impaired in any way by the charges which have been made.
It is a different matter entirely in the case of the Sun Life Company, and I shall ask the indulgence of hon. members opposite while in my humble way I explain to them my view of the situation in respect to that company. I hold no brief for Mr. Harpell and I do not intend even to take cognizance of the statements which have appeared in his publication known as the Journal of Commerce. On the other hand, I am not going to criticize Mr. Harpell. I believe he is an honourable gentleman, certainly he is possessed of indomitable courage when he will attack publicly one of the greatest financial concerns in the Dominion of *Canada. It is well known that Mr. Harpell never has been friendly to the government which I supported when I sat on the other side, so I hold no brief in any way for him, and anything I have to say with regard to the management of the Sun Life Assurance Company has not been derived from any of his statements.
I should like to read from the evidence taken in connection with the investigation made by the royal commission into the affairs of the Sun Life company. I might state that the same management was in charge of the company at that time as is in charge to-day; I refer particularly to Mr. T. B. Macaulay, the president.


Richard Bedford Bennett: His father was president at that time.


Mitchell Frederick Hepburn: In referring to the Sun Life company the report states:
14, 1932	1103
Insurance Companies-Mr. Hepburn
The theory of this company has always been that the capital stock was entitled to interest besides its ascertained share of profits.
And again:
In many respects the methods of bookkeeping adopted by this company are not only defective but likely to mislead a.nd deceive.
Assets and securities in respect of which there has been depreciation, anticipated loss or loss in fact, have been treated as made good out of profits shown upon the credit side of this account.	,	,	.	, , ,
Expenses which ought to have been included in the expense account and returned as expenses in the government returns, have been similarly wiped out and concealed by them being taken out of profits.
Balances due from agents, which were not entitled to be treated in assets have been made good out of the same source.
It is to be observed that the management of this company have had differences with the department as to their investments, and as to the classification of accounts and with other matters. The company has consistently adhered to its own view without regard to the view of the department.


Richard Bedford Bennett: I hope my hon. friend will not mind if I point out that that was in 1910, twenty-two years ago. The insurance act has been revised since that day and is the statute under which we now operate.


Mitchell Frederick Hepburn: I stated that the same
management was in control then as is in control to-day-I refer to Mr. T. B. Macaulay.
I am pointing out that this company was charged as far back as 1910 with certain crimes or .misdemeanours with respect to its conduct. The report continues:
It is plain to your commissioners that the large interest of the Sun Life Assurance Company in these various enterprises is greatly in excess of the limits of reasonable investment.
The report concludes by stating:
The accumulation of so large a contingent fund, earned by the speculative use of the moneys of the company, including for the most part policyholders' money-especially without giving the present policyholders the benefit thereof-is, in the opinion of your commissioners improper.
Summed up the charges made in 1910 by the Royal Commission on Insurance against the Sun Life company were:
1.	Improper transfer of funds.
2.	Defective methods of bookkeeping.
3.	Dangerous investments.
4.	Total disregard of the supervision of the Department of Insurance.
I have every confidence in Mr. Finlayson, and it is to be regretted that any company operating under a dominion charter should wholly disregard the supervision of the executive head of the department of insurance.
This has some bearing on the first relationship I had with the company when it appeared
1104	COMMONS
Insurance Companies-Mr. Hepburn
before this house in 1927 and asked for an increase in capital from $2,000,000 to $4,000,000. Any fairminded hon. member of this house wild realize that in 1927 there was no need for an increase in capital. There was an ulterior motive and that motive was apparent ito all. The shares of the company had been issued at par-I will not go into the financial set-up of the company-and then stood on the open market at about $4,000 per share. The company had had transferred to the shareholders' account the sum of $12,000,000, and it was the intention of the company to issue to (the old shareholders two thousand additional shares at par. These shares would have a highly speculative value in view of the fact that the company wrongfully had transferred a huge sum of money from policyholders' to shareholders' account. Had these shares been authorized they would have had a speculative value of about $2,500 each. In other words, the $2,000,000 issue would have a marketable value of something like $50,000,000; Mr. Macaulay and his associates would have benefited to the extent of $48,000,000 while the policyholders from then on would have had to pay the interest in order to ensure that high market valuation of the new issue.


Richard Bedford Bennett: I hope my hon. friend
knows that what he is saying is inaccurate. The provisions of the statute cover all these matters, and I am sorry he should make the statements he is making.


Mitchell Frederick Hepburn: As a member of the banking and commerce committee I remember hearing Mr. Macaulay say that the reason for the application for increased capital was that Americans were secretly getting control of the capital stock of the company. We made an investigation, and Mr. Finlayson's evidence was to the effect that the president of the Sun Life Assurance Company, Mr. Macaulay, transferred to New York 780 shares of his own stock in order deliberately to misrepresent the situation before the banking and commerce committee. I ask hon. members what they think of the head of a great financial institution who would deliberately transfer his own shares in trust to the United States and then come back and misrepresent the whole transaction to a committee of this house in order to obtain an increase of capital. As I said before, this increase of capital would have had a marketable value of about $50,000,000, and the old shareholders would have benefited to the extent of about $48,000,000.
After that time this company indulged in a wild orgy of speculation, and I do not think even the right hon, the Prime Minister will 
deny -that assertion. Like all other speculative concerns, they came to grief. What was the action on the part of Mr. Macaulay? When he saw the -thing heading for a crash he began to get out from under, and this same gentleman who a short time before had something like 2,500 shares, gradually reduced his holdings until he has something like 25 shares to-day, just sufficient to qualify him to sit as a director of the company. As the hon. member for Vegrevilte (Mr. Ludhkovich) said, he deliberately plunged the company into a wild orgy of speculation, -and now he is out from under after having, so to speak, scuttled the ship.


Mr. ERNST:: I wonder where my hon. friend heard those words before?


Mitchell Frederick Hepburn: In order to bear out the statement that the Sun Life Assurance Company to-day is insolvent, all I have to do is to take the financial statement of the company as presented in its annual report of December 31, 1931. May I say that the values given here are inflated (because of the action taken by the righ-t hon. the Prime Minister and his cabinet under the provisions of the farm relief act when in effect, by an order in council dated December 31, they gave to the company the right to value their speculative common stocks as at June 1, 1931. The action of the Prime Minister can be taken only in one way; the company was insolvent; he resorted to the powers given him by parliament to save the situation, and so the statement was presented in its present form. I am dealing with this statement of the company and not with anything said by Mr. Harpell. It will be found that the company has invested in preferred and common stocks $326,000,000; in other words, over one-half of the company's assets are tied up in highly speculative stocks.


Richard Bedford Bennett: That is not correct.


Mitchell Frederick Hepburn: I do not propose to go into details regarding the nature of these stocks. The Prime Minister has made the statement that they were of a class which he would consider for his own personal investments.


Richard Bedford Bennett: I stated some of them were.


Mitchell Frederick Hepburn: Well, that is right in part, anyway; I give the right hon. gentleman credit for that. There has been, as nearly as I can estimate, a depreciation of $160,000,000 in the stocks held by the Sun Life Assurance Company. I doubt whether to-day they could liquidate with a depreciation of but S160,000,-000. On bonds and real estate mortgages there is another $136,000,000, which would show or-

Insurance Companies-Mr. Hepburn
dinarily a depreciation of 820,000,000; and they have their own real estate which is inflated to twice its value, as nearly as I can figure, which would show a depreciation of
813,000,000. In other words, the Sun Life Assurance Company, according to its own statement, not Mr. Harpell's, would show a depreciation of approximately $200,000,000 of its assets, which total S624,000,000. So that the company's assets are impaired to the extent of between 35 and 40 per cent.
We can sympathize with this company in some respects; it probably had more faith in the future of these stocks than more conservative investors had. But this is the point to which I object-and if the Prime Minister will assure the house that he will have the matter corrected, I think we shall agree to his suggestion that there be little or no further discussion of this subject. The shareholders of the company, as the royal commission pointed out, have had more interest in making profits for themselves than in operating the company for the benefit of insurance, and I agree with everything the Prime Minister has said with respect to protecting the rights of widows and orphans and of children unborn, especially when you look at the kind of advertising they put out, "Human lives at stake," and so forth. When you think of this, it behooves us all to take cognizance of what has been taking place with respect to the company since it became insolvent a year ago. If the shareholders were sincere in their desire to repair some of the damage done as a result of that wild orgy of speculation, they would not have tampered with the reserves of the company. But in 1931, after this impairment, the company transferred to the credit of the shareholders three sums of money, one supposed to be interest on capital amounting to 8183,000, another transferred from nonparticipating policyholders amounting to $1,425,000, and a surplus from non-participating policyholders amounting to $1,269,000. In other words, they added to the shareholders' reserve the sum of $2,877,000.


William Gordon Ernst: According to Harpell's circular?


Mitchell Frederick Hepburn: These are facts.


Richard Bedford Bennett: I suppose the hon. gentleman knows that the statute provides that the profits from non-participating policies belong to the shareholders, as well as a portion of the profits earned by participating policies and on the capital itself. Our law, unfortunately, I think, provides that up to ten per cent of the profits may be appropriated to the shareholders.
They never have appropriated ten per cent, nor half, of such profits; no company in Canada has. Some of them paid 100 per cent dividend the year before last just on that basis, because the profits on non-participating policies are very substantial, owing to length of life of the insured and other considerations of that sort, and that money has gone to the shareholders.


Mitchell Frederick Hepburn: Let me say this to the Prime Minister. He is a lawyer and I am a layman, but I realize that no law has been framed through which a team of horses and a wagon could not be driven. I am not speaking of the legal, but of the moral aspect of the matter. The shareholders have added to their own reserve, with an original capital to the extent of $2,000,000, of which only $300,000 cash has been paid up, further sums totaling $17,962,000; and on top of that, with the assets of the company impaired as they were in the year 1931, the company paid a dividend of 75 per cent to the shareholders-[DOT] a further raid on the policyholders' fund. Anyone would realize that with this depreciation of common stocks, no profit was earned by the company, and this 75 per cent dividend, or a million and a half dollars, was obviously taken from the profits of the policyholders or taken out of capital account, further weakening the position of the company.


Mr. CAHAN:: That is absolutely untrue.


Mitchell Frederick Hepburn: I verified that from the
vice-president of the company this morning. I understood that they had divided stock bonus and dividend to the extent of 75 per cent last year; and this year, according to the Canada Gazette, there is notice of a further dividend to be disbursed among the shareholders of the company. We are spending a good deal of time arguing this question back and forth. Let me ask this question: Why is this company not permitted to do business in the state of New York?


Richard Bedford Bennett: It has never registered
there.


Mitchell Frederick Hepburn: It is because of the
methods employed by the company.


Richard Bedford Bennett: Our law permits the
holding of common shares, and no Canadian company that does so is permitted to carry on business in that state. The laws of the state do not permit it. In fact, they compelled companies in New York to sell bank stocks, because they are not allowed to hold them under the laws of New York.

Insurance Companies-Mr. Cahan


Mitchell Frederick Hepburn: That is the point I am
trying to make. The laws of New York do not allow this company to do business there because of the methods it employs. Now, as I understand it, this company has been forced to deposit in other countries, in order to do business there, larger securities than are demanded by the Department of Insurance in this country; and if the assets of this company continue to be impaired, the residue we shall have left will be little, particularly if we let the company go on declaring dividends and transferring out of capital account -because they cannot transfer out of profits when there are no profits-huge sums to the credit of the shareholders. The only thing to be done by the company is to mutualize. There is no way of satisfying public sentiment without taking action in that direction. I hesitate to bring this to the notice of the parliament of Canada-


William Gordon Ernst: Are you a policyholder?


Mitchell Frederick Hepburn: The hon. gentleman
asked me that question four years ago. I am one of 250,000 policyholders in Canada, but to satisfy him I may say that I am cashing in my policy in the Sun Life because I sincerely believe that the assets of the company are seriously impaired, and I do not like the management.


William Gordon Ernst: I am keeping mine.


Mitchell Frederick Hepburn: Well, that is the difference between us. I do not think the people of this country will be satisfied until some more definite action is taken by this parliament.


Charles Hazlitt Cahan: In the year 1927 I introduced the bill regarding the Sun Life company. I attended every meeting of the committee which had that bill under consideration. I listened throughout to every word of the evidence given in that case, and I must say that the statements made by the hon. member for West Elgin (Mr. Hepburn) as to what took place, and the reasons which were urged why the capital stock of the company should be increased, are not in accordance with the facts. Furthermore, before introducing that bill, although not interested in the Sun Life in any way except that I have a policy of $2,000 or something like that, paid up, I went into its returns and examined into the facts; and I am thoroughly convinced that never up to that time-I do not know about last year, but never up to that time-had one dollar of money which had accrued for the benefit of policyholders been diverted from those policyholders by that

company. On the floor of this house or in the committee, I do not remember which, because I discussed it in both places, I pointed out to hon. gentlemen that one reason why I urged that the capital stock of the company should be increased was that in my opinion, under the charter as it then existed, the company had the right to issue stock up to $4,000,000. It is true that some other hon. gentlemen took a different view.


Mitchell Frederick Hepburn: What view did the Department of Insurance take?


Charles Hazlitt Cahan: The privy council has determined that the Department of Insurance and hon. gentlemen who took the opposite view were entirely in error, and has decided that, under the charter as it existed at the time I introduced the bill, the company had the right to issue stock up to $4,000,000. Further -and my memory is clear-I drew the attention of that committee to this fact, that in England a judge of the High Court, after considering the matter, had stated that in view of the volume of business carried on by this company, its capital stock should be increased. That was the main ground upon which I urged that the bill should be adopted, giving the opinion of the English court to that effect. So that up until 1927 when that debate took place, I am personally absolutely sure that there had been no diversion of the funds of that company from the policyholders' account to the shareholders' account, and I do not believe, in view of what I know of the gentleman in charge of the operations of that company, of the character of the board of directors and of the gentlemen who are managing the company, that any such diversion has since taken place. I think it most inopportune in view of present conditions in this country that an attempt should be made to destroy a great financial institution such as that doing business throughout the entire world, upon allegations which have no basis in truth and which - cannot be substantiated. That is the view which I take.
Of course, there has been depreciation in stocks and in bonds as well, but remember this, that under the law this company, with its head office in Canada, is bound to maintain a large investment in the United Kingdom, is bound to maintain a large investment in Australia and in other dominions, and in colonies of Great Britain. When the pound sterling on the 21st of September last went off the gold basis the values of those securities shrunk nearly one-third by reason of the value of the pound sterling shrinking. Their accounts in Canada are kept upon the dollar basis. I do not mean to say that that shrink-

Insurance Companies-Mr. Spencer
age represented a loss to the company, because the company has outstanding thousands of policyholders in Great Britain to whom its liabilities are paid, not in the Canadian dollar, but in sterling currency, so that the ultimate liability of the company in Great Britain, due to the depreciation of the value of the pound sterling, was reduced in proportion as the assets of the company were reduced from the same cause, if the liabilities and the assets are to be determined on any particular date in 1931. But the liabilities of that company were not payable in 1931. The liabilities of that company are payable in five, ten, twenty, thirty and forty years, and the solvency of the company must be determined, not by a sudden reduction in its stock or bond values by reason of a depreciation in currency in Great Britain or Australia or any of the other dominions or colonies of the empire, but by the prospective condition of the company in the years to come when those labilities will accrue and become payable. My firm opinion is that that company is as solvent as any other insurance company that is doing business on the American continent. Of that I am confident. I believe that that company is as solvent as any of the great American companies, and any person who attempts without a thorough knowledge and personal investigation of the facts to paint any other picture than that, a picture of disaster, a picture of insolvency, a picture of bankruptcy before the whole world, is doing the greatest possible injury to Canadian credit and to the credit of Canadian financial institutions.


Mitchell Frederick Hepburn: May I ask the hon. gentleman this question? He states that the financial standing of the company is not impaired. May I ask what would have been the effect had the government of Canada not passed an order in council allowing the company to value their stocks as of date June 1, 1931?


Charles Hazlitt Cahan: All I can say is that the company would have shown a surplus, and when the 'Canadian government took that attitude it made the same regulation as was made by the American government and the state of New York in regard to its own companies.


Mitchell Frederick Hepburn: That does not answer the question.


Charles Hazlitt Cahan: The regulation was applicable to all companies, and when the Canadian government took that position it adopted exactly the standard of measurement by which the American companies are measured as to their
solvency at the present time. My hon. friend from Quebec South (Mr. Power) shakes his head. I am stating what I know to be a fact, and the shaking of his head does not impair my confidence in the fact.


Mr. POWER:: I am shaking my head in sorrow that that argument should come from hon. gentlemen opposite, that they should seek inspiration for their legislation in the United States of America.


Charles Hazlitt Cahan: I think the reply to that is that one does not seek inspiration, but at least one may judge of insolvency or bankruptcy or stability by the same standards as are in vogue in the United States and in Great Britain itself for establishing the solvency of great financial institutions in those countries.


Mr. H. E. SPENCER (Battle River):: I rise to say a few words in support of the resolution placed before this house by the hon. member for Vegreville (Mr. Luchkovich). I was not at all surprised to hear the hon. Secretary of State (Mr. Cahan) taking the opposite side to the hon. member for West Elgin (Mr. Hepburn). The hon. 'Secretary of State referred to what took place when the Sun Life bill was before this house some years ago, I think in the years 1927, 1928 and 1929. I well remember what took place at that time, and in support of the hon. member for West Elgin I would refer the hon. Secretary of State to those discussions. I am not at all surprised that the hon. Secretary of State opposes this resolution; for I well remember that he had the honour, if honour it was, of introducing the Sun Life bill in this house in one of those years. What interested me at that time was that each year the Sun Life would have a different sponsor for their bill, and they tried both sides of the house in introducing it. The hon. Secretary of State was rather pleased to say that eventually, by a decision of the privy council, the Sun Life was given power to increase its capital by two million dollars and, from that he argued that those who opposed the bill at that time were wrong. If we were wrong, we were supported for three years by the House of Commons of Canada, supported also by the exchequer court and the highest court of Canada, and supported also, I am very glad to say, by the superintendent of insurance, Mr. Finlayson, who was praised to the skies to-night by the Prime Minister (Mr. Bennett) and also by the finance minister of that day.
I was much interested in the excellent discourse of the Prime Minister. I made a few notes while he was speaking, to which I should

Insurance Companies-Mr. Spencer
like now to refer. He started off by saying that the privy council had decided that the provinces had the right of control of life insurance in Canada. I thought that he was going to take cover behind that and say that therefore we had no right to send this resolution to a parliamentary committee. If he had said that, I would have said that there was some reason for it, but when he did not take that cover but said that it would not be in the interests of this country or of parliament to send this resolution to a committee,
I could not agree with him. If the condition of that company is absolutely solvent, as we have been told from the government side of the house, what is there to fear from sending the resolution to the committee? As far as advertising is concerned, the company will get far more advertising on the floor of this house than if the resolution was sent to a committee, and I think that members on this side of the house would be prepared to let it go to the committee with very little discussion indeed if consent to that course were given.
We were tbld (that the company's books stood the closest scrutiny of the actuaries, and yet later on we were told the companies had invested in certain ventures in which he, the Prime Minister, would not have cared to speculate. We have been told and are fully aware that the Sun Life is the largest life insurance company in Canada. Therefore as the largest life insurance company in our country surely it should be more careful in its investments, and should take care to avoid conditions such as those laid bare by the hon. member for Vegreville. We are told by the Prime Minister that we have no authentic information, and yet he, in his discourse, admitted that the matter of insurance, particularly with regard to these two companies, gave him considerable worry during his term as Minister of Finance. For the Prime Minister to use the words "malignant attack" was certainly not at all fair.
I well remember that in the year 1917 information was brought to the Department of Finance concerning the serious conditions in the Home Bank of Canada. At that time the Minister of Finance of the day thought it would be in the best interests of Canada to cover up the matter for the time being, and to help a more or less lame duck to get along. The result was that the hank continued operations for a further eight or nine years, and eventually had to dose its doors. Millions of dollars were lost by the people of Canada, who through their taxation had to pay out money to the depositors who lost through the failure of that bank. Even then

some of the depositors lost money because the country helped out only the smaller depositors.
We have before us another instance where public men think it is in the best interests of Canada that conditions in this company as described by hon. members on this side of the house should be rectified. The government in its wisdom seems to believe the best thing to do is to close down the lid, say that everything is perfectly all right, tell this house that the companies named are perfectly solvent and that everything will be well. I sincerely hope they are right. If in a few years however we have a repetition of the Home bank disaster I hope we will not be uncharitable enough to say, "We told you so." A repetition of that disaster of course would be most regrettable.
I understood the Prime Minister to say that the Sun Life Assurance Company holds Canadian government bonds valued at $23,000,000. I believe that investment was made only within the last year, and no doubt under pressure from the Department of Finance. I was rather amused, however, when we were told by the Prime Minister that the head of this life insurance company had been the heaviest loser from investments in common stocks. If that is the case-and I have no doubt it is so-he is the last man who ought to be at the head of the largest life insurance company in Canada. If he cannot handle his own affairs better than that, certainly he ought not to have charge of valuable trust funds.
I was rather amused when the Prime Minister said it was not fair for any hon. member to quote from newspapers, and that we should not base our judgments on newspaper articles. If that were the case matters such as the one now before us might not reach a committee of the house. I should like to remind hon. members that only a few weeks ago a special committee of this house was formed at the expense of the public to investigate charges made by certain public newspapers. The conditions complained of at that time were not nearly as important as those now before us.
I am pleased to support the resolution for a further reason. When several years ago the Sun Life bill was before 'the house very extensive lobbying was carried on. In that instance the lobbying was carried to the greatest extent. I have always felt that a bill heavily lobbied should be very seriously questioned. Good legislation of real value to the public needs no lobbying.
The field so far as figures and particulars are concerned has been so well covered by

Insurance Companies-Mr. Ralston
the hon. member who introduced the resolution that I am not going to take up further time of the house. I repeat, however, that if, as we have been told from the other side of the house, 'these companies have nothing to fear, they should welcome investigation, and the very fact that they do not want an investigation makes one suspicious. I understand there have been gentlemen around this House of Commons doing their level best to oppose the motion now before us. If they do not want it to go to a committee of investigation it would seem that they have something to hide.


James Layton Ralston: Mr. Speaker, I agree fully with the remarks of the mover of the resolution (Mr. Luehkovich) with regard to the importance of a subject which affects hundreds of thousands, perhaps millions, of beneficiaries under insurance policies. I happen to be a policyholder in the Sun Life Assurance Company; about one-third of all the insurance I hold for the benefit of my family happens to be in that company. Due to the circumstances to which the Prime Minister (Mr. Bennett) has delicately referred, namely the events of the last two or three years when everybody has come to realize that investments can go down, my investment in those policies is rather important, from a personal point of view.
I rise to express the conviction that having examined this matter with care I do not feel either myself or my family have anything to fear with regard to the policies I hold in that company. I make that statement after a good deal of deliberation and thought. What has been said to-night was reminiscent of what we heard two or three years ago in this house. There was a good deal of old straw threshed. The royal commission of 1910 is a long time ago.


Richard Bedford Bennett: Hear, hear.


James Layton Ralston: And the legislative fight which took place in this house three or four years ago with regard to the capitalization of the Sun Life Assurance Company is past history. I should be the first to want to examine with the greatest care the standing of any company holding, as it does, the happiness and the future of many citizens not only in this country but, as the Prime Minister has said, in other countries, in the hollow of its hand. My reasons for coming to the conclusion I have reached will be manifest when I refer to a few matters some of which have already been touched by the Prime Minister.
In the first place, with regard to what has been said about the diversion of the policyholders' money, I went down to my constituency in January, and at that time the statement which has been referred to by my hon. friend who moved the resolution had been circulated there. A number of my constituents came to see me about it, and on my return here I made it my business without loss of time to go to the company to find out just what their story was with regard to it. I need not assure the house that I have no professional interest in the matter whatsoever, but in view of my position as a policyholder and in the interests of my constituents I did feel it was worth while to look into the matter. As I understand it-and hon. gentlemen will correct me if I am wrong-of the profits made by insurance companies in connection with their investments, to which the right hon. Prime Minister has referred, and which are not needed for the purposes of administration or paying claims or setting up reserves, ninety-five per cent is put into an account to be applied in reduction of premiums on policies for the benefit of the policyholders, and the remaining five per. cent is set aside for payment to the shareholders. Now, as I understand it, that is all that has been done by the Sun Life. Out of the five per cent which has accumulated I am advised that dividends have been paid to the shareholders. I am not very much concerned with regard to those dividends so long as my policy participates in the profits and my premiums are being reduced. Only a day or two ago I had the opportunity to devote my parliamentary cheque to paying the premium on one of my Sun Life policies, and I found that although the dividend to the policyholders is somewhat less, the dividend to the shareholders is less as well. That, is the situation so far as I can find with regard to the alleged diversion of policyholders' money for the purpose of paying the shareholders. Apparently there has been no such diversion and any money paid to the shareholders has been paid out of the five per cent set aside for the purpose.
That brings me to what has been mentioned to-night, that two or three sums had been transferred to the shareholders' account. Those, as I understand it, are sums which properly go to the shareholders' account, and, as the Prime Minister has said, represent the profits on non-participating policies and the five per cent profits on participating policies-


Richard Bedford Bennett: And the interest on the capital.
1110	COMMONS
Insurance Companies-Mr. Ralston


James Layton Ralston: -and in addition the interest on the capital. By law that portion of the profits is apportionable to the shareholders.
With regard to the other matters mentioned, I am not concerned to-night. There has been considerable discussion about the business administration of this company and about its head. I think I have met the president only once. I know nothing about him except that apparently a marvellous Canadian financial institution has been built up under his presidency and that of his predecessor, and under the aegis of the board of directors. I do not know who were the board of directors in 1920, and I am not going to take up the time of the house to put on Hansard the directorate for 1932, but I think if hon. gentlemen will take occasion to read the list of directors they will not have much trouble in coming to the conclusion that those are not the sort of gentlemen who would divert the policyholders' money for the benefit of the shareholders or do anything which is at all wrong in connection with the administration of the institution with which they are connected.
With regard to the valuations which have been mentioned, may I say to the right hon. Prime Minister that I do not agree he should have used the Unemployment and Farm Relief Act for the purpose of making a valuation of those stocks. I do agree he had the power to do so. I do believe, if he had to value the stocks at all-I am not sure he had to do so in view of the privy council's decision, -that it was perfectly proper to assess them at the value at which they were assessed, for the reason I shall give in a moment. In the first place, let us remember that the valuation was not applicable to the Sun Life Assurance Company and the North American Life Assurance Company only, it was applicable to every insurance company in Canada, fire, life and accident; every company which had stocks had them valued on exactly the same basis.
Considerable use has been made of the words "solvent" and "insolvent."^ A company, like an individual, is solvent if it can pay its debts as they fall due. That is the test. The test is not whether to-morrow a man has to sell out on the auction block every security he holds in order to pay off his liabilities. The test is if the company has liabilities falling due over a period of months or years is it in the normal course of business going to be able to liquidate those liabilities. On that basis I think there is no question as to the solvency of the Sun Life or any other insurance company in Canada. That is the reason of

course why the actual market value as of midnight December 31, 1931, is not the proper basis on which to value stocks held by insurance companies, because all the policies are not going to fall due on midnight of that date. Those policies will fall due at any time within the next thirty years. The policies may fall due in one, two, three, four, five, ten, fifteen, twenty-five, thirty years hence, and the test of the value of the investments which have been made is, what is the average value taken over a reasonable period of time which those securities or properties would realize if liquidated under normal conditions? That i3 the test Which has been applied in this case, and that is the valuation which has been put on the securities not only of these two companies, but of all other insurance companies as well.
The right hon. Prime Minister mentioned United States bonds-probably the premier security in the world. Those bonds on August 31 last were at par. A company which had bought those bonds at that date and 'had to liquidate them in the middle of October would have been insolvent by the test which some hon. members would apply, because those bonds had fallen to eighty-nine in that short time. The same is true of the Canadian conversion loan. In May the bonds were worth 104, in December they had dropped to 87.75. On that basis a company could have been perfectly solvent when it bought these bonds in May but eight short months later it might have been insolvent. It is almost unthinkable tihat that could be the real test of a company's standing.
Why else do I say that I have come to the conclusion that as a policyholder my investments in premiums in the Sun Life over a number of years and the benefits which I expect to accrue to my family are safe and secure? For this reason: These charges, as the right hon. Prime Minister has said, are not new; they began in 1927 or 1928; they were made in 1929 before a committee of this house and were thoroughly discussed at the time. If hon. gentlemen will take the trouble to read the records of that committee they will find that most of the points dealt with tonight were then brought out. Not only so, but in 1929 the officers of the company tell me the gentleman who now makes these charges through members of this house was at the meeting of the shareholders and policyholders. There these things were threshed out; there a full opportunity was given him for discussion, so full indeed that I understood one policyholder finally moved that he had been given his fair share of the time, after he had

Insurance Companies-Mr. Ralston
spoken for quite some time. After all that the annual report of the company was passed unanimously except for the single dissenting vote of that gentleman. In 1930 he advertised and asked everyone to come to the meeting of shareholders and policyholders. He did not attend himself, and the shareholders and policyholders passed the annual statement notwithstanding the fact that those charges had been published. They seemed very well satisfied with the management to say the least.
Let me pause here to remind the house that not only shareholders attend these meetings, but that every holder of a policy for $2,000 or over is entitled to attend. I think hon. gentlemen will find, if they happen to have policies in that particular company, that as a matter of fact every policyholder gets notice of the annual meeting. In 1931 the same thing happened; another meeting was held and no one at all appeared to bring up these charges, although they had appeared in the press. Then we come to January, 1932, when the charges were made once more; they had been made during the previous December, I believe, but at any rate they appeared again in January of this year. The meeting was held in February, and would you believe, Mr. Speaker, that no one appeared there to make a single objection to the way the management of the company had been carried on? I understand there were about four hundred policyholders and shareholders present, but the. annual report was passed unanimously after those statements had been broadcast all over this country. It seems to me, Mr. Speaker, that that was a good forum where these matters could have been brought up; that is where I would have gone had I been interested and had I felt these charges worthy of investigation. I do not think I would have come to this house to air them until at least I had brought them before the people who were germanely interested, namely the policyholders and shareholders. So that there has been ample and full opportunity to substantiate these charges in the proper place if there was anything vital to the interests of the policyholders.
But that is not all. It has been well said by the right hon. Prime Minister that we have, with all due respect, about as rigorous an administration in our insurance department as exists at least on the North American continent. The gentleman who is in charge there happens to be a native of my own province. Everyone knows his ability; it is equally recognized by those who are supporting this resolution and by those who are opposing it. I think the policyholders can feel
fairly safe with the inspection, the investigation and the supervision which is constantly exercised by that department.


Henry Elvins Spencer: Is the hon. gentleman
aware that the gentleman about whom he is speaking was for many years the greatest critic of Sun Life activities?


James Layton Ralston: That is all the more
reason, if he has been the greatest critic of the Sun Life, why I should not worry. If he has given these valuations, and has reported that the Sun Life is solvent, I would think that would be sufficient evidence for me to believe that my position was sound.


Mitchell Frederick Hepburn: The valuations were
given by order in council.


James Layton Ralston: Certainly; I dealt with
the valuations, and I pointed out the circumstances under which they were given and the principles under which they were made. Now I say that the fact that year after year this company has undergone the supervision of the superintendent of insurance and of his investigatons must mean something. I understand it takes something like two months to make an investigation of any particular company; the men go directly to the head office, where they examine and actually handle the securities and check over every payment and every voucher. Under those circumstances, Mr. Speaker, it seems to me that we can feel fairly easy in our minds that we are not doing any very great injustice to the policyholders if we see fit to have them take the benefit of the supervision which is afforded by the superintendent of insurance.
May I further remind you, sir, that investigations are made by insurance supervisors from other countries. I am told that not very long ago no less than twenty-two insurance examiners came from across the line, representing something like thirty-eight states in which the Sun Life company does business. They went through the administration of that company from stem to stern, in the light of the charges which had been made and which have been repeated here to-day and they gave the company a clean bill of health.
Under those circumstances, it would seem to me that this matter has been fairly well looked into, and ali I want to add is this: As a policyholder of the Sun Life company I feel that notwithstanding what I know are the conscientious motives of my friend who moved this resolution, my interests and the interests of policyholders generally would be a great deal better protected if my hon. friend would desist from spreading upon Hansard the sort

Insurance Companies-Mr. Ralston
of propaganda which has been read to-night, and would permit us to accept the supervision which has been given, the principles which have been adopted in the administration of life insurance companies and the benefit of the business capacity and the experience of the men who we know are at the head of these institutions. I think he might permit us policyholders, if we do desire to air our grievances, to air them in the proper place, and that is at the annual meeting of the company where we have the officers of the company before us.
Something was said about the courts this evening by my hon. friend who introduced this resolution. As a policyholder I am not concerned with going to the courts, but if there is any policyholder who feels that his interests are not being looked after, who thinks any swindling is taking place, or any stealing, or anything like that going on, I would think that he is the one to go to the courts rather than that the management and directors should be expected to adopt the very unsatisfactory courses of bringing libel action against anybody who sees fit to say anything derogatory to their administration. The courts are wide open to any policyholder or any policyholders' association to take advantage of judicial investigation if they desire so to do.
That just reminds me of another point. This Policyholders' Association which has been referred to is rather a nebulous sort of institution. We do not know who are the members of the association. Back in 1929 they tell me that the same gentleman appeared before the committee, saying he represented the Policyholders' Association. He admitted that it consisted of 138 members, most of whom were his own employees. When asked how many of them were Sun Life policyholders he replied that probably there were half a dozen. I do not know whether the Policyholders' Association has increased in size since that time, but I want to say that as a substantial policyholder in the Sun Life I have heard nothing about it and have not been invited to join. Speaking of lobbying and propaganda and all that sort of business, I have had what every member has had, a great deal of literature sent to me through the mails, but I want to assure you, Mr. Speaker, that it has not caused me to lose any sleep.
The most specious argument of all was presented by my hon. friend who just sat down. He said, "If there is nothing wrong, why not have an investigation?" Well, Mr. Speaker, are we to take the time of the committee of this House because someone makes

a charge and gets an hon. member to bring it into this house? Is this house to invest itself with judicial robes and try that charge just because someone says, "Let them prove themselves innocent?" That sort of thing would have no end. It just is not done, that is all. Generally you must have some foundation for charges of this kind. I know my hon. friend who moved this resolution would not for an instant himself pledge the truth of the charges he has made; he is simply repeating something which has been told him. As I have stated, plenty of opportunities have been afforded for trying out these charges but they have not been taken advantage of. In the second place I think fhat a meeting of policyholders and shareholders is the proper place to try out charges of this kind.


Miss MACPHAIL:: Would the hon. member mind telling us where the policyholders' annual meeting is held?


James Layton Ralston: The annual meeting of the policyholders is held with the meeting of shareholders at the head office of the Sun Life company.


Agnes Campbell Macphail: In Montreal?


James Layton Ralston: In Montreal.


Agnes Campbell Macphail: Does the hon. member know how many policyholders can afford to go to Montreal to attend the annual meeting?


James Layton Ralston: I have not the faintest
idea, but I understand there were about 400 present at the last meeting. That is a fairly representative group, and I should have thought if they had felt that their rights were being infringed upon, some policyholder would have taken up the matter and would have reviewed the facts which have been presented to-night.


Richard Bedford Bennett: The largest policyholders reside in Montreal.


James Layton Ralston: Thirdly, as a policyholder I submit that it is not exactly in the interests of the passengers for someone to rock the boat during a storm. Do you think it is a good time to put an institution on the spot when there is a depression, when we have to face so many difficulties, and when confidence is the first essential if we are to come through successfully?
With all due deference to the views of those who have spoken, and with every appreciation of the motive which has prompted the bringing up of this matter, I say that as a policyholder-and I believe most policyholders

Insurance Companies-Mr. Lawson
throughout Canada will agree-I am satisfied to have this parliament keep its hands off the matter referred to in the resolution and leave it to the proper authorities to be dealt with should any necessity for action exist. I think the right hon. the Prime Minister (Mr. Bennett) has made a clear, concise, mature, considered and reassuring statement. While I do not agree with him in many things, I do agree with the point of view which he has expressed, and I think that point of view meets with the approval not only of this house but of the people of Canada generally.


Mr. J. EARL LAWSON (WTest York):: Mr. Speaker, the fear that some of the extravagant statements made by the hon. member for Vegreville (Mr. Luehkovic-h) and the hon. member for West Elgin (Mr. Hepburn) may be given too much credence by policyholders in the Sun Life Assurance Company or by potential risks among the public, compels me to take up a few minutes of the time of the house in a brief discussion of this subject.
Like the hon. member who has just preceded me (Mr. Ralston), I am a participating policyholder in this company, but I think I have at stake a proportionately larger risk than he has, because two-thirds of my total insurance is in the hands of the Sun Life. I am one of those who have not been lobbied or approached in connection with this matter. In fact, being a policyholder and having an interest in the matter, on behalf of myself and some of my friends I made a personal investigation into the situation some time ago. When I saw the resolution of the hon. member for Vegreville on the order paper I wrote voluntarily to the company, advising them that I was much concerned and stating that from my previous personal inquiries I did not believe an investigation by a committee of this house would be beneficial either to the policyholders or to the public. Other than a formal acknowledgment of my letter and the assurance that the officials of the company would be glad to give me any information desired, they did not even take the trouble to lobby one whom they must have known was predisposed or favourably inclined to their cause.
Extravagant statements which are not backed up by evidence sometimes cause serious damage. I will give one or two illustrations. The hon. member for West Elgin (Mr. Hepburn) stated that half the company's assets were tied up in highly speculative stocks, thereby leading the policyholders and the public to believe that their security was being jeopardized. The hon. member neglected to state that the stocks which have
been invested in by this company are specified by the provisions of the Insurance Act to be common stocks which have had a record of seven continuous years of dividends or preferred stocks which have had a record of five consecutive years of dividends. Surely such stocks cannot be considered as highly speculative, promotion stocks. When I recall the speeches which have been delivered from the far corner of the house condemning any government for driving capital out of industry into bonds and so forth, I am amused to find some of these hon. gentlemen now condemning the Sun Life company because in its judgment it invested in dividend-paying securities and common stocks of industrial and railway corporations at a time when those stocks were paying good dividends and had had a continuously favourable record.
The allegation was made that funds had been transferred wrongfully from policyholders' account to shareholders' account. Suppose they have, why bring that matter to this chamber? It would seem obvious that the course any policyholder should follow who held that view would be to bring action in the courts and have the question determined. If there is any truth in the statements made, then I ask:	Why has not this supposed
Policyholders' Association, which has such a vital interest in the policyholders of the company, taken such action? I regret I have not before me the circular which I received from this organization. My hon. friend lias handed me a copy. It will be noticed that the president of the association is Mr. J. J. Harpell, the same gentleman who apparently edits and publishes this Journal of Commerce which has been making the allegations and charges read to the house this afternoon by the hon. member for Vegreville. If this association was formed for the protection of policyholders, I am surprised that the hon. member for Shelburne-Yarmouth (Mr. Ralston), who is a policyholder, and I have not received a request that we join the association or even a notice that such an association was being formed for our protection.
Much has been said about the increasing of the capital stock of this company. I ask hon. gentlemen whether the policyholders would have suffered from that increase in capital stock, even if the stock had been issued to the then shareholders at the par value instead of at the higher market value? The only result of such an issue would be to put more cash assets into the treasury of the company. The policyholders would of necessity have priority over the shareholders in respect to any additional cash assets should the company

Insurance Companies-Mr. Stewart
at any time be faced with insolvency. I ask hon. gentlemen to consider who suffers or who gains by investments of the Sun Life Assurance Company. Surely only two classes of persons can gain and only two classes of persons can suffer, namely, the policyholders and the shareholders. And, I would ask, who of either of these classes is now coming forward and asking parliament to interest itself, through its banking and commerce committee, in an investigation of this kind?
As a participating policyholder I was highly delighted with the policy of the Sun Life company in its investments in common stock, because I received such substantial dividends on my participating policies that my premiums were greatly reduced. And surely it little behooves me now, because, by a turn of the wheel and a change of time, the market value of these stocks has depreciated, to come forward and howtl about a policy of which I so heartily approved, and the dividends resulting from which I so readily and gladly received.
What is causing this agitation? I think it has been fairly well demonstrated that it comes very largely from one source-from Mr. J. J. Harpell and this Journal of Commerce. I have no personal knowledge of the gentleman or of the Journal of Commerce, but if I can accept the record published in the Financial Post of January 30, 1932, in reply to a letter from a policyholder in the Sun Life Company, this journal seems to be one which is published intermittently and which is apparently not supported either by the public or by the business community, to the extent of having advertising in its columns, or a published and sworn subscription list of paid subscriptions. It seems to me that before this parliament or any committee of it is asked to take upon itself the onerous task of making such an investigation we should at least have complaint from a substantial number of persons interested, and we should at least have the hon. member who sponsors such a resolution come forward and establish in this chamber a prima facie case. But, as against that, what have we? Instead of having presented to us a prima facie case in favour of an investigation we have the record of the actuarial investigation of all jurisdictions under which this company does business. Their report is: They are solvent. We have the report of our own superintendent of insurance, of whose qualifications much has been said this evening, and his report is: They are solvent. And last but not least we have the word of the Prime Minister of this country (Mr. Bennett), a gentleman whose

qualifications and knowledge of business in general and of insurance in particular, I am confident, will be conceded by all members on both sides of the house irrespective of their political views, and he says that, after investigating the matter thoroughly, he is of the opinion that this company is solvent.
To my mind, Mr. Speaker, to pass this resolution in view of the evidence before the house and in view of the records we have available, would be highly detrimental to the interests of the only people who stand to suffer by the insolvency of the company, if it ever became insolvent, namely, the policyholders.


Charles A. Stewart: I, too, have a vital interest in the resolution before the house, because I happen to be a policyholder in the North American Life Assurance Company. I fail to see, after what has been said this evening, why that company should have been brought into the resolution at all. I have not very much to say with respect to the position which the North American company occupies, after what has been so well said by the Prime Minister (Mr. Bennett), but I notice in the pamphlet issued by the so-called Policyholders' Association a statement that Mr. Bradshaw and Mr. Gundy held 1,415 shares of North American Life stock and that evidently it was held in trust by one Mr. Martin. That should be cleared up. We who are policyholders happen to know all about this transaction, and the Mr. Martin who held these shares in trust for the gentleman mentioned was Mr. Martin of the Imperial bank. When they were able to pay him, the shares were transferred. May I say further, with respect to these very shares, and others held by these two gentlemen, that the average cost was S127. That was the price they received for the shares when the company was mutualized. I can hardly conceive that hon. gentlemen in that comer of the house would have any objection to the mutualization of the North American Life Assurance Company. I felt it was in the interests of the policyholders, and as an interested party I was very glad to see it accomplished.
There is one other matter with respect to this company's standing, and that is the statement made by the Prime Minister that only five per cent of the securities of the company were held in ordinary stocks. One-half of one per cent only is invested in common stocks, so I think, after all that has been said about this company, there can be no question about its solvency and standing in the community.

Insurance Companies-Mr. McIntosh
Mr. CAMERON R. McINTOSH (North Battleford): May I make a few observations on the resolution before the house; and in the beginning of my remarks may I also touch upon the presentation of the subject by the hon. member for Vegreville (Mr. Luchkovich) this afternoon. I thought he should have separated the two companies which he included in his remarks to the house; and I thought he should have done so for the simple reason that thereby he could have been fairer to each company. I do not believe in that method of debate. I care not whether it .is carried on in this chamber or elsewhere, by which one throws half a dozen things together and treats them all alike. Each should stand on its merits, and I believe that the North American Life Assurance Company can readily do this-meet this test. Consequently, it would have been better, perhaps, to separate the two companies and discussed them individually.
The hon. member for Vegreville stated, and I think rightly, that there has been a great deal of apprehension abroad with regard to the affairs of life insurance in general, and some hon. members regarded this as perhaps a great danger. I do not think so. I am one of those who believe that if you cannot have a dispassionate discussion of public questions, if you cannot confer about them and discuss and debate them, there must be something which you are holding back; and I do not believe that is an asset to any democracy, whether in the realm of insurance, finance or industry. Therefore I am not greatly perturbed about the apprehension which prevails in connection with the question of life insurance throughout Canada, because I believe that just as in the physical realm, there is to every action an equal and opposite reaction, so also is there an equal and opposite reaction to every action in the realm of finance and economics. Although many of these securities have gone down, I like to have faith in Canada and I am inclined to think there will be a comeback, and that the comeback will be one of equality. If it is not, I can only hope that- it will be. If that should be the case we are greatly disturbed about perhaps nothing very serious after all.
The Prime Minister this evening emphasized two or three very important points. He touched upon the question of jurisdiction. I would like to see the day come when the great business of life insurance would be wholly under federal jurisdiction. I do not believe that insurance jurisdiction should be divided between the provinces and the dominion. The question is big enough and has within it
possibilities great enough to make it advisable that jurisdiction should be centred at Ottawa, and in reorganizing our insurance department and amending our insurance law and in opposing the provinces with a view to getting federal control of insurance I believe that we are on the right track. As far as I am concerned,
I hope the day will come and come quickly when insurance jurisdiction is centred in the capital city of Canada.
The Prime Minister also said that no doubt in the future greater restrictions would be placed upon insurance companies in the matter of investment of insurance funds. I think that is only right. I believe that the people of Canada generally, as was said by members on both sides of -the house, are anxious to see greater restrictions placed upon the investment of insurance funds, because greater restrictions will bring greater security to the policyholders.
The Prime Minister also stated that in his opinion -the Sun Life Assurance Company was solvent. He also stated that in his opinion the North American Life Assurance Company was solvent. On the other hand, we have members on this side of the house, the hon. member for West Elgin (Mr. Hepburn), for example, who is firmly convinced in his own mind that one of these companies is not solvent. We have other hon. members who take the stand that both companies are solvent. We have a division of opinion in that respect, and I believe that there is a division of opinion on that question throughout Canada. That being the case, I think that the time should not be far distant when without militating against either company or other -companies the government should take action. I do not say that there should be an investigation held by the banking and commerce committee, but as far as su-ch an investigation is concerned I believe that we have men competent enough to look after it. I will never take the stand in this house, I hope, that we have not within our ranks the necessary ability to conduct such an investigation if we want to do it, but the government is responsible, and it is for them to determine what action it is best to take. The Prime Minister intimated this evening that action would be taken in this respect in the near future, in order to assure the people of Canada just where each insurance company as a matter of fact stood. I believe that is sound action to take.
Life insurance, Mr. Speaker, is a very, very important thing. It is the only investment that the ordinary man ever makes, and when the average man invests in life insurance he wants -the investment to be absolutely sound, one hundred per cent gilt-edged. In the United
1116	COMMONS
Insurance Companies-Mr. McIntosh
States 87i per cent of the estates consists of life insurance. When one realizes that in a country of one hundred and twenty millions of people 87i per cent of the estates is made up of life insurance, one comes to a full appreciation of the importance of life insurance to the average home. The money invested in life insurance will look after the widows and orphans, and will assure the aged a pension in their declining years. More than that, we are told by competent authorities that life insurance has reduced pauperism by 33J per cent in thirty-five years. That is a very important statement and I believe it is true. It gives us an idea of the sound value in the average man's having an investment in life insurance. It puts homes on a sound financial basis, and that is very important when we consider the number of homes in Canada today that are practically bankrupt and the number of unemployed throughout this dominion.
Again, life insurance acts as an economic flywheel in times of depression. By that I mean that it is an important factor in stabilizing economic conditions. In a time of depression a man can borrow money on his life insurance policy when he cannot borrow from the bank. He can get cash and credit on his insurance policy, and that cash and credit help to keep business moving, and aid in the stabilization of conditions. If life insurance is that important, I would say that we ought to do our utmost to safeguard the good name of life insurance in Canada. There should be no gambling with the assets of the company because they are trust funds and they should be protected for the benefit of the widows and the orphans and the homes of the nation. That is why we planned our Insurance Act and made it what it is. The Insurance Act restricts insurance companies in the investments they may make and tries to safeguard every one of them. At the present time according to our Dominion Insurance Act, I understand the only investments in common stocks which a Canadian insurance company may make are in those companies which have paid dividends of five per cent for at least seven consecutive years, and in preferred stocks only in those companies which have paid five per cent for five consecutive years. I would go this far. I would limit the investments of insurance companies in common stocks, not to a maximum of 15 to 20 or 25 per cent of their assets, but to a maximum of 5 per cent of their assets.
I have a statement of the investments of the North American Life Assurance Company here, and it shows that their total investments in common and preferred stocks do not

amount to five per cent of their assets. In common stocks they have an investment of 4-29 per cent of their assets, and in preferred stocks an investment of -47 of their assets, or a total combined investment in common and preferred stocks of 4-76 per cent, or less than five per cent of their total assets. I believe that the North American Life Assurance Company, so far as their investments in common stocks are concerned, is on solid ground, and I believe that the people of Canada ought to know what the record of the company is in that respect. Experts in every civilized country have been telling us for the last quarter of a century that too much of the policyholders' money is being invested in common stocks and that to follow such a policy was to tread on dangerous ground. In times of depression that dangerous ground will become more and more apparent.
I would state further that every insurance company should be operated not for the benefit of the shareholders but for the policyholders, and once a company gets on its feet there should not be allowed any large increases in stock investments or stock bonuses. The quicker a company is mutualized the better for those concerned and for the people of Canada generally. In this connection may I say the North American Life Assurance Company was mutualized over a year ago, and I believe it ought to be commended for taking such action at that time and thereby putting itself into its present satisfactory condition.
As a policyholder in the North American Life I have not the slightest doubt about the future of that company, and had I half a dozen policies in it I should continue to feel that its future is safe. So far as the Gundy charges are concerned, may I say I have looked into the record of the company and find no profit was made on the transaction to which reference has been made. True, he along with Mr. Bradshaw had control of the company during the years 1928, 1929 and 1930. Although the company was in their control for that period of time I do not believe investments were in any way affected or influenced because Mr. Gundy and Mr. Bradshaw controlled 51 per cent of the stock. I believe full .care was given to every investment and no investments were made until passed upon by the finance committee of the company and later sanctioned by the board as a whole.
I believe Mr. Bradshaw ought to be commended for taking a lead in the mutualization of that company. He considered from the first that it ought to become a mutual com-

Insurance Companies-Mr. McIntosh
pamy. It was not to his private benefit that the company should be mutualized, but looking to its future, as a man who had studied life insurance from his early years he .took the stand that the quicker the company was mutualized the better. I believe hon. gentlemen will admit to-day that he took the proper stand. The history of the North American Life demonstrates the importance of having a man in control who can see into the future as well as appreciate the past, and know what is best to do.
Having studied the investments of the North American Life Assurance Company throughout the last year I have come to the conclusion the company is financially sound, that its financial standing is rated high. The following statement shows the distribution of the company's assets as at December 31, 1931:
Government and municipal	Amount	Per centbonds	; First mortgages on real	$13,167,786	28-10estate	12,995,457	27-74Policy loans	7,768,927	16-58Corporation bonds	
Bank, trust. loan and	5,747,255	12-27consumers gas stocks.. .	2,418,735	5-16Preferred stocks	
Outstanding and preferred premiums (reserve there-	2,010,746	4-29for in liabilities)	1,004,541	2-14Real estate	574,450	1-23Accrued interest	496.623	1-06Cash, etc	270,014	0-58Common stocks	220,513	0-47Interest due	180,066	0-38$46,855,113	100
In closing may I say I have absolute faith in all the insurance companies in which I have policies. I hold a policy in the North American Life, and I am not a bit afraid of it. I have two policies in the Mutual Life of Canada, and I am not the slightest bit concerned about them; I believe that company is absolutely sound. I have a policy in the Confederation Life, and I think that company is sound. I have another policy, in the Great West Life, and I believe that company is sound. The fact that these particular companies would seem to be in good condition is no argument that every insurance company in Canada is in the same happy position. I believe there is some apprehension about that fact, and I am of opinion that the quicker the government can give consideration to this very important matter, the better for the insurance companies, the better for the investors in them and the better for the financial life of the country.
I wish to direct a few remarks to the Journal of Commerce. May I say that I did not see
published in any other paper of Canada the charges which appeared in that journal. I did not see them published in the leading metropolitan dailies of Canada, or in our leading magazines. They did not appear in the leading weekly newspapers of the country, the combined circulation of which is very high. True, charges were published in the Journal of Commerce, and since they appeared therein the matter is placed before the whole country and cannot be thrust aside. The charges must be met, and the confidence in our insurance companies must be upheld. It has occurred to me that confidence in mutual companies-all companies in fact-would be greatly enhanced if they did not confine their annual meetings, in the main, to the cities of Toronto and Montreal. In my view the mutual life insurance companies, with policyholders from one ocean to the other, should hold their annual meetings at different points in the dominion, both west and east. In that way all the policyholders throughout the country would have an opportunity at one time or another to attend these annual meetings, hear the problems of the company discussed and the financial conditions generally reviewed. Such procedure would help to develop greater confidence in our insurance companies and increase business, thereby benefiting the companies concerned as well as the whole nation.
I believe the publicity policy of our life insurance companies is not the best. I am not finding fault with publicity in the daily newspapers, but I believe that since there are so many rural policyholders no daily newspaper can reach them all. I am of the opinion that the annual statement and monthly appeals for insurance of life insurance companies should not be confined to any one class of publication, but ought to be spread throughout all publications of the country. In that way the information from the company headquarters would be brought into practically every home where there is insurance, and as a consequence there would be built up sounder insurance companies throughout the dominion.


Mr. MacMILLAN (Saskatoon):: Would the hon. member allow me a question?


Mr. McINTOSH:: No, sit down; there is
no use wasting time with you. Concluding my remarks, Mr. Speaker, may I anticipate the day about which the Prime Minister spoke this afternoon, namely, the time when the national authorities will give adequate attention to the problem of life insurance. When the government will do this, will take steps to investigate the entire problem of life insur-
Ills

Insurance Companies-Mr: Pouliot
ance in Canada, I am satisfied that the apprehension which is abroad to-day will to a verjf large extent cease.
Mr. JEAN-FRANQQIS POULIOT (Temis-couata): I wish to congratulate the right hon. Prime Minister (Mr. Bennett) on his very able and comprehensive speech. I do not know how far the sponsor of this resolution would like to go, but from what we have heard it is evident that a gentleman with whom this house is very familiar, Sir Herbert Holt, is rather a reckless driver, and because he was one of the three gentlemen in charge of the investments of the Sun Life Assurance Company I think it is a good thing that this house should give warning to him and to others of his kind that in future it will be well for them to apply the brakes when they are in charge of such investments. I desire to assure the government that any step they may take in that direction will have my full support. I do not attack any man because he is rich and is interested in many companies, but in my opinion Sir Herbert Holt has been largely responsible for the unfortunate investments which have been made by the Sun Life. It was refreshing to me to hear the words of the Prime Minister and of my hon. friend from West Elgin (Mr. Hepburn), the leader of the Liberal party in Ontario.


An hon. MEMBER:: Has he inside information?


Jean-François Pouliot: He has some inside information which would be good for my friend across the way. As a policyholder of the North American Life I feel reassured after listening to what has been said. Nevertheless people throughout the country are very anxious to hear something definite about the real business which has been done by these two companies. The fact that the president of the Sun Life has transferred a very large part of his interest in the company is pretty hard to explain. All I ask the government to do is to keep a very careful watch over the manner in which the directors of these insurance companies discharge their trust to the policyholders, for by so doing the government will render a real service to the country.


Mr. G. B. NICHOLSON (East Algoma):: Mr. Speaker, I happen to be a policyholder in the Sun Life Assurance Company. Many of my constituents have appealed to me during the last six or seven months to obtain for them some assurance as to the actual position of the company. I have exercised such ability as I possess in analyzing its balance sheet and have satisfied myself completely that my

policy is perectly safe, as it has sample assets behind it, particularly in the way of cash reserves.
The hon. member for Southeast Grey (Miss Macphail) raised the question as to the possibility of policyholders being represented at the annual meetings. Subsection 3 of section 93 of the insurance act provides that not less than one third of the directors of an insurance company shall be elected by the policyholders and represent the policyholders at the annual meeting.
It has been freely stated that the Sun Life is insolvent. The hon. member for Shelburne-Yarmouth (Mr. Ralston) dealt with that statement, supplementing very fully what the Prime Minister had said with regard to it.
Statements have been made, particularly by the hon. member for West Elgin (Mr. Hepburn), with regard to amounts improperly withdrawn from the earnings of the company during the past year. I am not going into the balance sheet in detail, because it is a rather involved document setting forth all of the assets, securities and liabilities of the company, but I would point out that of the total liabilities of $624,000,000 no less than $512,000,000 is represented by cash reserves held against the policies of the company itself. In other words, the policyholders are guaranteed to this extent.
Perhaps 1931 was one of the most difficult years that business 'has ever passed through in this country. We find that the total income of the Sun Life last year was $197,000,000. Out of that sum was paid to policyholders direct on their policies at maturity, or to their beneficiaries in case of death, a total of $93,235,849.08, and $27,000,000 odd of that was paid directly in the form of dividends to the policyholders-not the stockholders-or credited to them on their policy premiums. Going through the schedule I find that reductions on. premiums from the application of dividends amounted to $3,798,000; dividends and other accounts and deposits withdrawn $4,000,000 odd; interest on the capital of the company credited to policies $1,128,625. The total sum either credited to or paid to the stockholders of the company out of that total income of $197,000,000 was $1,000,000. In other words, all the sums that were alleged to have been-improperly withdrawn from the earnings or reserves or assets of the company during 1931 boiled down to $1,000,000 while the policyholders received all told $99,000,000 odd by way of matured policies, dividends, annuities or sums paid direct to the beneficiaries.
It has been stated also that more than one half of the total assets of the Sun Life were

Insurance Companies-Mr. Nicholson
held in common stocks. I have before me some of the investments of the company earning dividends against these policies: government, municipal, rural, gas, electric and other bonds, $119,233,348.11; stocks, preferred and guaranteed, $32,374,985.04; loans and real estate, first mortgage, $30,836,684.80. It is true that during this trying period these loans and mortgages may not be liquid, but that applies all over Canada. I happen to be a policyholders' director of an insurance company in Canada, and I know what are the investments of that company. They have very substantial investments in mortgages; that particular company invests practically all its funds in mortgages or in bonds, federal, provincial or municipal.


Mr. GARDINER:: What is the amount of loans on collateral?


George Brecken Nicholson: The amount of loans on collateral securities is $7,011.82. Loan on company's policies, that is, loans against their own policies, amounts to $87,174,773.14, and those are the policies which are protected by the cash reserve of about $512,000,000, so there is not much danger of loss on those loans. Follow it down through the list, and you will find that the Sun Life Assurance Company has some $200,000,000 in stocks, but like the hon. member who spoke a few moments ago, I was one of those who were very proud of the dividends they received during 1923, 1924, 1925, 1926 and succeeding years, either by way of cash dividends or by way of reduction of premium.


Mr. MITCHELL:: But you would not call that sound insurance practice, would you?


George Brecken Nicholson: Well, all I have to say is that the parliament of Canada has set it down as sound insurance practice.


Humphrey Mitchell: That does not make a bit of difference; it is not sound.


George Brecken Nicholson: The law provides, as has been clearly stated, that the stocks purchased by an insurance company must have a continuous dividend record of seven years before the company may buy them, and then they can buy only a fixed percentage of such stocks. However, that is not the point; the company has been acting strictly within the letter of the law. The judgment of the management may have been at fault; it may not have been infallible with regard to the stocks, but I repeat what has been said many times: A man who could determine to what extent any stock or any investment of any kind, mortgage, bond or anything else, was going to appreciate or depreciate the period through which we have passed since 1929, certainly would be infallible. Ten years ago, eight years ago, five years ago or even four years ago, it was thought that no better investment could be found anywhere for an insurance company, a mortgage company or any company whose funds were trust funds, as insurance funds are, than mortgages in Alberta, Saskatchewan and Manitoba, but if any individual or company was called upon to liquidate to-day and realize on mortgages held on western lands, what would be the result? They would be insolvent overnight, certainly, because they could not secure the return from these mortgages, but that does not mean that western Canada is insolvent. When conditions right themselves, as we hope they will within a short time, these mortgages again will become good investments.
With what the Prime Minister said as to the desirability of parliament considering the whole question of life insurance, if parliament had the authority to consider it, I quite agree. I for one am sorry that we have not that power, because I think if there is one subject in this country that should be brought under the aegis of the parliament of Canada in the interests of all the people, in exactly the same degree as banking is under our control, it is life insurance.


Henry Elvins Spencer: You do not hold with the decision of the privy council, then?


George Brecken Nicholson: I understand the privy council has ruled that insurance comes under the jurisdiction of the provinces, but let us hope that in time we may get away from such decisions of the privy council in relation to matters of this kind. If we have an organization such as the Sun Life Assurance Company, or any other large insurance company, doing business all over the world, surely it is essential that there should be some one body in Canada having control and direction of the law under which these companies operate. That seems to me reasonable common sense from a business standpoint, and I repeat that I am looking forward to the time when the provinces will get together with the dominion and work out a reasonable plan by which this may be done.
Let me say just once more, Mr. Speaker, that as one of those who found it absolutely necessary not only personally to investigate these things but to have the bank controlling his business also investigate them, I am perfectly satisfied to have the policy I hold remain with the Sun Life Assurance Company.


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