Right Hon. W. L. MACKENZIE KING (Prime Minister) moved:: That, for the remainder of the session, all private bills, when reported upon by the standing committee on miscellaneous private bills, be placed immediately upon the orders of the day for consideration in committee of the whole.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister-for the Minister of Finance) moved the third reading of Bill No. 145, to assist the construction of houses.
Motion agreed to and bill read the third time and passed.


[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved the second reading of Bill 158, to amend the Seeds Act, 1937.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1

Control sample.
Mr. GARDINER:: I have an amendment which I shall ask the Minister of Labour (Mr. Rogers) to move.


Mr. ROGERS:: I move:
That in paragraph (e) of section 1 the words "plant products division district office" be deleted and the following words substituted therefor:
"District office of the plant products division, production service of the Department of Agriculture."


Mr. STIRLING:: What does that change
actually mean?


James Garfield Gardiner: It was thought wise by
the Department of Justice that the words "Department of Agriculture" should be added in order to make it definite that this branch is in that department.


Grote Stirling: And the words "production service?"


James Garfield Gardiner: That is just a change
in the name from the old legislation, made necessary by the reorganization.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
[Stage Direction]
C.N.R.-Guarantee of Securities
On section 2-Official sample.
James Garfield Gardiner: There is the same
amendment in connection with this section.


Norman McLeod Rogers: I move:
That in paragraph (k) of section 2 the words "plant products division district office" be deleted and the following words substituted therefor:
"District office of the plant products division, production service of the Department of Agriculture."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved the second reading of Bill No. 159, to amend the Dairy Industry Act.
Motion agreed to, bill read the second nme, and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1

Appeal from decision of grader.
Norman McLeod Rogers: I move:
That in the new section 24 after the words "marketing service" there be added the words "of the department of agriculture."


James Garfield Gardiner: The explanation is the same as in the case of the other bill.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue-for the Minister of Finance) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to issue securities not exceeding $17,574,233 in principal amount to provide the moneys necessary to meet expenditures made and indebtedness incurred by the companies or railways comprised in the National Railway system during the calendar year 1938; to authorize the governor in council to guarantee the principal, interest and sinking funds of such securities; and to authorize the making of temporary loans to the said company secured

by such securities and not exceeding $17,574,233 in principal amount to enable the said company to meet such expenditures and indebtedness.
Mr. BENNETT:: Would the minister explain just what is involved in this? It is only $17,000,000, and the loss is far greater than that already.


Mr. ILSLEY:: That is to provide for capital expenditures amounting to $17,574,233, made up as follows:
(a)	Retirement of maturing capital obligations, miscellaneous matured or unmatured notes and other obligations, secured or unsecured, and payment of sinking fund not exceeding $9,019,233; and
(b)	Additions and betterments, including coordinations and acquisition of real or personal property not exceeding $8,555,000, estimated as follows:
General additions and betterments, $12,321,392.
Less equipment retirements, $7,921,392.
That leaves a balance of $4,400,000 as the sum that is required for general additions and betterments,. The general additions and betterments for the year 1938 that will be paid for out of capital will be $4,400,000.
In addition, there are new equipment purchases, amounting to $3,455,000. This sum is only one-quarter of the new equipment purchases that will be made during the year 1938, but the railway company itself has power under legislation passed some years ago to purchase or issue notes for raising money for the payment of three-quarters of the sum required for new equipment purchases. This house has to vote the other quarter, which amounts to $3,455,000.
The remaining item is $700,000 for the acquisition of securities. Those are the securities of three companies, the shares of which are owned by the Canadian National Railway and other companies. The three companies are the Toronto Terminals Railway Company, the Northern Alberta Railway Company, the Chicago and Western Indiana Railroad Company.
The method used in supplying new equipment or in making capital expenditures on the properties of these companies is that securities are issued of which the Canadian National Railways purchases part. Their contribution, in other words, to the capital expenditures of these three railway systems for 1938 will be $700,000.


Richard Bedford Bennett: They are jointly owned.


James Lorimer Ilsley: They are jointly owned. That makes a total of $8,555,000 for general additions and betterments, new equipment pur-

Special War Revenue Act
chases and acquisition of these particular securities. That, added to the 89,019.233 that I mentioned first, which is for retirement of obligations maturing this calendar year, makes 817,574.233, the amount covered by this resolution.


Richard Bedford Bennett: Normally part of these retirements should be made out of operating income, but under present conditions that cannot be done. I think that is the fair way to put it.


James Lorimer Ilsley: The whole general additions and betterments amount to 812,321.392. and part of those should be and are being met out of operating income. That is the amount provided for by what are called the equipment retirements, $7,921,392.


Richard Bedford Bennett: I was speaking of the first item, the nine millions which normally had been met, in part at least, by income.


James Lorimer Ilsley: Well, I do not know about that.


Richard Bedford Bennett: If the minister will look at it I think he will see that it is so.


James Lorimer Ilsley: Possibly that is the case. I have a list here of the obligations that mature. It is quite a long list. I think it is normal and usual to meet it in this way. I have given the manner in which the $17,574,233 is made up. The bill it is proposed to introduce is simply to enable the railway company to issue its securities for this amount, to authorize the government to guarantee the payment of these securities, and to authorize the government to make temporary loans pending issue of the securities.
Resolution reported, read the second time and concurred in. Mr. Usley thereupon moved for leave to introduce Bill No. 174, to authorize the provision of moneys to meet certain expenditures made and indebtedness incurred by the Canadian National Railways system during the calendar year 1938, and to authorize the guarantee by his majesty of certain securities to be issued by the Canadian National Railway Company.
Motion agreed to and bill read the first time.



SPECIAL WAR REVENUE ACT


[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue) moved the second reading of Bill No. 163, to amend the Special War Revenue Act.
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Sale price.
Richard Bedford Bennett: I think this is a much more serious section.


James Lorimer Ilsley: I think it deserves some explanation. This - was not covered by the resolutions.


Richard Bedford Bennett: I noticed that.


James Lorimer Ilsley: It was not necessary to cover it by the resolutions.


Richard Bedford Bennett: It is merely an amendment to a statute.


James Lorimer Ilsley: The practice is to make these few miscellaneous amendments in the same bill as contains the budget resolutions. There are therefore in this bill a few additions to the budget resolutions.
The reason for this amendment is that there is an increasing tendency on the part of manufacturers to divide the total price of their goods into the price proper and charges for advertising, financing, servicing, and for warranty, and naturally they are able to minimize their sales tax to a considerable extent unless there is some check on it. This simply says that the price:
. . . shall include any charges for advertising, financing, servicing, warranty or any other charges of a similar nature contracted for at the time of sale whether these items be charged for separately or not.
That is the addition.


Richard Bedford Bennett: Paragraph (a) reads:
"Sale price" for the purpose of calculating the amount of the consumption or sales tax shall mean the price before any amount payable in respect of the consumption or sales tax is added thereto and shall include . . .
According to that, sale price means the price before anything is added thereto payable in respect to consumption or sales tax, and it shall include advertising. What about duties?


James Lorimer Ilsley: Customs duties are included. The sales tax is calculated on the duty paid value of imported goods, and there is nothing in the section or the amendment to interfere with that rule.


Richard Bedford Bennett: No, but we have provided that it does include certain things, and there is no provision in respect to anything else.


James Lorimer Ilsley: But there is a clear enactment somewhere-

Special War Revenue Act


Richard Bedford Bennett: I know-at the very beginning of the Sales Tax Act. Section 2 of this bill provides that certain things shall be included, and it names them. Might that not be taken to exclude others? That is the only point I am making.


James Lorimer Ilsley: I think there is an express enactment.


Richard Bedford Bennett: Of course there is, but this is an amendment.


James Lorimer Ilsley: The enactment is in section 86. It is very clear, and the effect of it could not be cut down by this legislation. The enactment is this:
. . . there shall be imposed, levied and collected a consumption or sales tax of eight per cent on the sale price of all goods . . . imported into Canada, payable by the importer or transferee who takes the goods out of bond for consumption, at the time when the goods are imported or taken out of warehouse for consumption ;


Richard Bedford Bennett: This very section deals with that. That is exactly the point. It says:
. . . and shall also include the amount of other excise duties when the goods are sold in bond.


James Lorimer Ilsley: The express provision I had in mind is in section 85, not section 86, as follows:
In this part, unless the context otherwise requires, the expression
(a) "sale price," for the purpose of calculating the amount of the consumption or sales tax, shall mean the price-
It is in the very section I am reading.


Richard Bedford Bennett: Yes, that is what I say,- the one that is being amended. Section 85 is being repealed and another substituted therefor.


James Lorimer Ilsley: But at the very end of the subsection under consideration it says:
... in the case of imported goods the sale price shall be deemed to be the duty paid value thereof.


Richard Bedford Bennett: Yes. What I had in mind was the three per cent excise duty, whether that is covered by it or not. I am told they do collect it, but I was looking for the authority for it.


James Lorimer Ilsley: Sales tax is not collected 5n the three per cent.


Richard Bedford Bennett: I was told that it was.


James Lorimer Ilsley: The sales tax applies on the same price as that on which the three per cent applies. The amount collected on imported goods is eleven per cent. It is eight per cent on the duty paid value and it is three per cent on the duty paid value.


[Stage Direction]
Section agreed to.
[Mr. Ileley.l
On section 3-Licensed wholesaler or jobber.
Richard Bedford Bennett: What is the reason for this?


James Lorimer Ilsley: The desire is not to extend but rather to limit the issuing of wholesale licences. The issue of licences to wholesalers is not an advantage to the crown, because it delays the payment of sales tax, sometimes for a long time. It is thought desirable for the future to limit the issue of wholesalers' licences to the wholesalers who make the greater part of their sales to licence holders, because in those cases they would have to apply for a refund anyway and you might as well give them a licence.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Additional penalties.
Richard Bedford Bennett: Subsection 3 declares a
principle which the senate did not adopt in the Lord's Day Act bill as to the liability of the directors of a company in connection with violations of the act. Whether this may not go too far I am in some doubt. It looks to me as though possibly it goes further than it should-this idea of condonation, and making them liable for acts that are done if the knowledge is brought home to them. That, it seems to me, is extremely difficult. The Lord's Day Act came back here from the senate because of their belief that we went too far and that there was no reason why we should depart from the general principles of the law with respect to other statutes. This is an endeavour by the use of words to cover everything, as is very often the case. This subsection declares that "every officer, director or agent of the company who directs, authorizes, condones or participates in the commission of the offence, shall be liable to the like penalties as such company and as if he had committed the like offence personally," That goes pretty far. It may be difficult of enforcement. I merely point it out because of the attitude taken in connection with the Lord's Day Act.


James Lorimer Ilsley: The reason for the enactment is that it was discovered that many concerns formerly partnerships have incorporated themselves for the sole purpose of evading payment of the sales tax and escaping personal punishment. There may be a difference between this and the other act.


Richard Bedford Bennett: Undoubtedly, but they
took a view that would be applicable to this.


[Stage Direction]
Section agreed to.

On section 6-Schedule II repealed.
Mr. BARBER:: Would discussion of
schedule I be in order under this section?


James Lorimer Ilsley: Yes.


Harry James Barber: There is a matter to which I should like to direct the attention of the committee at this time-I know that for the last two years the minister has been made acquainted with it-and it has to do with the excise tax known as the sugar tax. In Canada there is a primary industry, forming part of the great industry of agriculture, known as the fruit and vegetable industry. Of the products of this industry it is necessary to preserve a large quantity in cans in order that provision may be made for their consumption at other seasons of the year. The complaint is that this industry is subject to the sugar tax while imported fruits and vegetables in the same form are not so handicapped. The manufacturer of canned fruits and vegetables in Canada, also of jams, jellies and marmalades, pays a tax of one cent per pound on the sugar used as an ingredient in the finished product. The complete exemption from this tax accorded to imported canned fruits and vegetables and the freedom from the tax of substitute domestic products such as are listed here-honey, maple syrup, peanut butter, and so on, which are competitive with jams-places this industry, we believe, in an entirely different position from that of certain other industries in justifying the granting of relief from the tax. The tax collected from this industry in 1936 was $608,996, representing between 20 and 25 per cent of the value of the sugar used.
This tax is not applied by the government on the sugar content of imported processed fruits and vegetables, which means that the manufacturer abroad is placed at an advantage over the Canadian producer of identical lines to the extent of this sugar tax. The special war revenue excise tax, subsection 6 of section 80, provides that the sugar excise tax shall be imposed on the sugar content of imported goods, but as stated, this provision has not been invoked in respect to processed fruits and vegetables. It is the desire of the Canadian industry that they be placed on a parity in respect to exemption from the sugar excise tax with producers of like goods shipping their products into this country.
The production in Canada of processed fruits, with a sugar cost varying from 7i to 25 per cent of the material and labour cost in the case of fruits preserved in syrup, and to over 50 per cent of the material cost in the case of jam in the year 1936-the latest period for which figures are available-was $10,132,383.
51952-273J
Special War Revenue Act
Exports were $1,495,969, leaving $8,636,414 as the domestic consumption. All of the sales in Canada carried the excise tax.
During 1936 the importations of canned fruits, and so on, were $1,771,255. None of the foregoing imports paid the excise tax, and analysis of those imports shows that in 1936 they comprised 26,205,704 pounds of canned pineapple, chiefly from Singapore, and 5,119,740 pounds of peaches, pears, apricots, principally from Australia in 1936, and about 1,000,000 pounds of miscellaneous processed fruits from other sources.
While the Singapore pineapple is not directly competitive with an identical Canadian product, there can be no doubt that its cheapness-about 3 cents per pound as compared with 8 cents per pound for honey and 10 cents per pound for jam-owing to the conditions under which it is manufactured, and which cheapness is accentuated by freedom from excise tax on its sugar content, has greatly facilitated its sale in Canada, and that this has tended to displace to a considerable degree Canadian canned fruit. It might be mentioned incidentally that this imported canned pineapple enters free of duty.
In the case of jam, jellies and marmalade, in which by far the largest proportion of sugar is used in any of the branches of the industry, while they are not subject to the same extent as canned fruits to the competition of imports, they are in direct competition with other domestic products which are not subject to the excise tax and which have the still greater advantage of exemption from sales tax. Some of these commodities are peanut butter, tabfe syrup, and honey.
I have here a table giving the production of peanut butter and honey for the five year period 1932-36, but it is not necessary for me
to put it on Hansard. I may point out, however, that honey has a sugar content of approximately 75 per cent. As an illustration, the sugar tax represents, as an item of cost in the production of jam, from 7i per cent to 12J per cent, but when it is borne in mind that this item of cost also carries the sales tax, the above percentages would be increased. The effect of these taxes including the sales tax brings it up to 27 per cent of the total cost on jam, which is the poor man's product. The complaint is that the tax is applied to the goods sold on the domestic market and not applied to those imported.


James Lorimer Ilsley: No change is being made in the schedule. Two considerations are pointed out by the hon. member: first, that certain competing products, such as honey, are free of sales tax-	.
Special War Revenue Act


Harry James Barber: I did not deal particularly with the sales tax because I understand it does not come under this clause. I was dealing with the excise sugar tax.


James Lorimer Ilsley: Well, that was one of the reasons given by him and by the industry in making their representation, that their products are subject to sales tax while competing products are not.


Harry James Barber: I was dealing with the excise sugar tax, which is not applied to imported fruits but does apply to the domestic.


James Lorimer Ilsley: That is the second consideration. The difficulty about exempting sugar used by manufacturers of canned goods is that it would undoubtedly lead to other exemptions. It would be impossible-or it has always been so felt-to remove the one cent sugar tax from manufacturers without also removing it for housewives and people generally who use sugar for canning and preserving. I am afraid there would immediately be a great outcry about discrimination if we lifted the tax from the manufacturer and not from the ordinary user, the housewife who is using sugar for canning and preserving. It is true that the imported product has an advantage, provided there is not a corresponding sugar tax in the country from which the product comes. It must not be assumed that the competitors of our canners in other countries are themselves free of tax in their own countries. In fact they are not; there is high taxation in nearly every country in the world to-day. At the worst I would point out that this discrimination, if such it is, merely cuts down somewhat the protection which the fruit canner in Canada enjoys. He does enjoy protection. There are duties I think on practically all canned goods coming into the country. If he were relieved of the sugar tax he would have a little more protection, that is all.


Harry James Barber: It is not altogether a question of protection; it is a question of opportunity to sell our own products on the home market in competition with the imported article. It has been pointed out. in a brief which I believe has been presented to the minister, that the difficulty might be overcome by way of drawback. I realize that it would be impossible to exempt this particular industry from the one cent tax. but it could be done by drawback, thus giving the Canadian industry an opportunity to compete with the imported product. I know the difficulty this industry has run up against in connection with exports to Great Britain. If the exported fruit is processed with sugar, a sugar tax must be paid when it enters Great Britain, but if it is shipped in sulphur dioxide form there is
[Mr. Ilsluy.I
no tax. The result is that all our products of this kind exported to Great Britain are shipped in the latter form. But fruit coming here in competition with our own Canadian product has a distinct advantage.


[Stage Direction]
Section agreed to.
Section 7 agreed to.
Schedule I agreed to.
On schedule II.
Richard Bedford Bennett: There are no changes in the schedule. I understand, except those indicated in the legislation which we are passing to-day?


James Lorimer Ilsley: That is correct.
Schedule II agreed to.


James Lorimer Ilsley: There is an omission in the bill as printed. It is the usual clause with regard to the date of coming into force of the act, and so forth. It was in the resolution, if I remember rightly, but was left out in the printing of the bill.


Richard Bedford Bennett: That is because the bill contains a consolidation of so many other items, I suppose. It is a reprint of existing legislation.


James Lorimer Ilsley: I move that the following be added as section 8:
That this act shall be deemed to have come into force on the seventeenth day of June, 1938, and to have applied to all goods mentioned therein imported or taken out of warehouse for consumption on and after that date and to have applied to goods previously imported for which no entry for consumption was made before that date.


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


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved the second reading of Bill No. 137, to amend the criminal code.
Motion agreed to. bill read the second time and the house went into committee thereon, Mr. Sanderson in the chair.
On section 1-Feeble minded person.
Mr. LAPOINTE (Quebec East):: This is merely to change the word "and" to "or" in the definition of what is a feeble minded person.


[Stage Direction]
Section agreed to.

Criminal Code
On section 2-Alien, not to have firearms without permit.
Richard Bedford Bennett: As it stands now our
own people require permits, do they not?


Ernest Lapointe: Yes.


Richard Bedford Bennett: And this is merely to clarify the law to make it quite clear that it deals with aliens.


Ernest Lapointe: Yes.


[Stage Direction]
Section agreed to.
On section 3-Selling or lending.
Richard Bedford Bennett: Did I understand the
minister to say he was making it an offence also to erase or to remove the serial number from a pistol or revolver?


Ernest Lapointe: Yes. That is contained in another section.


Richard Bedford Bennett: It is important in the light of this section.


[Stage Direction]
Section agreed to.
On section 4-Altering serial number.
Ernest Lapointe: This is the section that makes it an offence to erase a number.


[Stage Direction]
Section agreed to.
On section 5-Other permits.
Ernest Lapointe: This requires two new forms for the use of a firearm by a minor, in order to make it more restrictive, and so that the supervision may be more effective.


[Stage Direction]
Section agreed to.
On section 6-Registration of revolvers and pistols.
Ernest Lapointe: I should like this section to stand. I am afraid that instead of making it more difficult this section will make it easier to evade the law. The drafting is not quite clear, and that is why I want it to stand.
Section stands.
On section 7-Having pistol or revolver while committing offence.


Ernest Lapointe: This is to add rifles and shotguns to the other arms that may be ooncealed upon the person. This is requested by the police.


Richard Bedford Bennett: It would deal with a
sawed-off shotgun.


Ernest Lapointe: Yes.


Mr. SLAGHT:: Would it not be desirable to add billies and blackjacks and the vicious hand weapons of the thug?


Richard Bedford Bennett: They are dealt with in
another section.


Ernest Lapointe: This applies only to firearms; there is another section dealing with those other weapons.


[Stage Direction]
Section agreed to.
On section 8-Search.
Ernest Lapointe: This is just the reversal of a number; there is no change.


[Stage Direction]
Section agreed to.
On section 9-Selling pistol or air-gun to minor.
Ernest Lapointe: This is to control firearms in the hands of minors under fourteen years of age. Previously it was twelve years. It will be an offence to sell or give any of these things to a boy unless he is fourteen years of age.


[Stage Direction]
Section agreed to.
On section 10-Full term to be served when retaken.	.
Ernest Lapointe: This is only a clarification.


[Stage Direction]
Section agreed to.
On section 11-Restriction on publication of reports of judicial proceedings.
Richard Bedford Bennett: This is a more difficult matter.


Mr LAPOINTE (Quebec East):: This is a reproduction of the English law with regard to the publication of details and reports of judicial proceedings which may be calculated to injure public morals.


[Stage Direction]
Section agreed to.
On section 12-Common gaming house defined.
Ernest Lapointe: There is an amendment to this section, by adding after the word "games" in line 37 the following:
but the provisions of this paragraph shall not apply to any house, room or place while occasionally being used by charitable or religious organizations for playing games therein for which a direct fee is charged to the players, if the proceeds are to be used for the benefit of any charitable or religious object.


Mr. MACKENZIE (Vancouver):: I move
accordingly.
Criminal Code


Richard Bedford Bennett: That conforms to the
provisions of the act in another section.


Ernest Lapointe: Yes.


[Stage Direction]
Amendment agreed to. [DOT]
Section as amended agreed to.
On section 13-Race meetings, pari-mutuel machines.
Richard Bedford Bennett: Why is the Department of Agriculture made responsible in connection with a matter of this kind? Would it not be better to have the mounted police or some other such body in control?


Ernest Lapointe: This amendment was asked for by the Department of Agriculture. I am rather at a loss to understand why the machines should be stopped at a point one-eighth of a mile from the post.


Arthur Graeme Slaght: It might be better if it was one-eighth of a mile after the finish.


Ernest Lapointe: Hon. members of the committee probably know more about racing than I. This amendment was asked for in order to make the section more effective.


Grote Stirling: Is there not a connection between this and the permission given for wheels of fortune and so on for use at agricultural fairs? Agricultural fairs are under the supervision of the Department of Agriculture and we permit them to use wheels of fortune.


Mr. POWER:: The justification for permitting the use of pari-mutuel machines or any other type of betting at horse races is based upon the assumption that horse racing encourages the breeding of horses in Canada.


[Stage Direction]
Section agreed to.
On section 14-Disorderly conduct.
Ernest Lapointe: This
amendment is made at the request of the Royal Canadian Mounted Police.


[Stage Direction]
Section agreed to.
On section 15-Liability of driver of car for failure to stop after accident happened.
Ernest Lapointe: The
penalty for failure to stop after an accident is increased. Formerly the fine was not exceeding $50; now it is not exceeding $500. Formerly the imprisonment was not exceeding thirty days; this has been raised to not exceeding six months. The failure to stop is- to be considered as prima facie evidence of intent to do wrong and the burden of proof
fMr. X. Mackenzie.]
will be upon the offender. The mere fact that a man causes an accident and goes on without stopping will compel him to give evidence that he is not guilty of the offence.


[Stage Direction]
Section agreed to.
On section 16-Reckless or dangerous driving.
Ernest Lapointe: There are two amendments to this section, which I shall ask my colleague to move.


Ian Alistair Mackenzie: I move:
That section 16 of Bill No. 137 be amended by striking out the word "sixteen" on page 7, line 19, and substituting therefor the word " fifteen."


[Stage Direction]
Amendment agreed to.
Ian Alistair Mackenzie: I move:
That section 16 of Bill No. 137 be amended by striking out the words "one month" in line 47, page 7, and substituting the words "six months," and striking out the word "fifty" in the same line and substituting therefor the words " five hundred."


Ernest Lapointe: This
amendment will increase the penalty for driving when a licence has been suspended or against an order prohibiting driving. One province has this provision in its motor legislation, and this amendment is to make our criminal code agree with the law of that province. It will also have the effect of increasing the penalties for driving when there is no right to do so.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 17-Plants, etc., growing in garden.
Ernest Lapointe: This
amendment increases the penalty for stealing any plant, root, fruit or vegetable production growing in any garden, orchard, and so on. There has been some criticism in the newspapers to the effect that this amendment is too severe, but it has been asked for by county councils and agricultural societies. It is intended for the protection of farmers.


Richard Bedford Bennett: As well as of public
parks, pleasure grounds, and places of that kind.


[Stage Direction]
Section agreed to.
On section 18-Cultivated plants, etc., growing elsewhere.
Ernest Lapointe: This is the same type of amendment.

Criminal Code


Richard Bedford Bennett: Not quite, although it is the same in principle.


[Stage Direction]
Section agreed to.
On section 19-Theft of automobiles.
Ernest Lapointe: This
is to make the wording of the section clearer. The theft of an automobile is being made a specific offence instead of saying, "everyone who is found guilty of stealing any automobile or motor car."


Richard Bedford Bennett: There is really no change in the law.


Ernest Lapointe: No.


[Stage Direction]
Section agreed to.
On section 20-Fraudulent use of naturalization certificates.
Ernest Lapointe: This
amendment makes it an offence for a person to lend his naturalization certificate to an alien to permit him to enter Canada illegally.


Richard Bedford Bennett: Would it not be well
to provide for the cancellation of the certificate? I suppose you could avail yourself of the provisions of the Naturalization Act.


Ernest Lapointe: Yes, both Immigration and the Secretary of State have powers.


Richard Bedford Bennett: Under the Naturalization Act there is power to appoint a commission to deal with it.


Ernest Lapointe: Yes.


[Stage Direction]
Section agreed to.
Section 21 agreed to.
On section 22-Holder of lease of gold or silver mine defrauding owner.
Ernest Lapointe: An amendment has been asked for by the government of Ontario, to add after the words "gold or silver mining" the words "platinum or other precious metals."


Ian Alistair Mackenzie: I move,
Mr. Chairman, that section 22 be amended as follows:
1.	Page 9, lines 35 and 36: Strike out the words "relating to gold or silver mining" and substitute therefor "relating to the mining of gold, silver, platinum or other precious metals";
2.	Page 9, line 39: After the word "silver" insert "platinum or other precious metals";
3.	Page 9, line 42: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals";
4.	Page 9, line 44: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals";
5. Page 9, line 47: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals";
6. Page 10, line 8: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals";
7.	Page 10, line 10: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals";
8.	Page 11, lines 11 and 12: Strike out the words "gold or silver" and substitute therefor "gold, silver, platinum or other precious metals."


[Stage Direction]
Amendment agreed to.
Richard Bedford Bennett: Is subsection 5 of section 22 clear enough? You place a limitation on proceedings unless or until an order has been passed by the governor in council declaring this section to be in force. Should it not include a provision that this section shall come into force only by proclamation? Otherwise the section will be in force as soon as the act is assented to, and them the provision would be inoperative.


Arthur Graeme Slaght: Should it not be made
effective at once in both respects? The provision is aimed at the practice of high-grading, which is a serious interference with the development of the mining industry. It seems to me we could afford to make it operative at the first moment possible.


Ernest Lapointe: There is no change from the old act so far as this subsection is concerned.


Richard Bedford Bennett: The closing section of
the bill says:
This act, with the exception of sections fifteen, sixteen and forty-five, shall come into force on the first day of August, 1938, and sections fifteen, sixteen and forty-five shall come into force on the passing of this act.
On the first day of August this section will come into force, but we have provided that proceedings shall not be taken until an order in council has been passed declaring this section to be in force. How do you reconcile the two?


Ernest Lapointe: There
is something in what my right hon. friend says, but the old act is already in force.


Richard Bedford Bennett: But as the member for Parry Sound (Mr. Slaght) points out, it has not been found ample, and Ontario wants certain changes made. The way it reads has been copied from the wording of the old act as it first appeared on the statute book. It is quite clear that if this measure comes into force on the first day of August, and one undertook a proceeding under section 22, he would be met at once with the fact that no order in council has been passed proclaiming
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this section to be in force, although it was in force by reason of having been assented to when the bill received royal assent. I do not think the subsection is properly worded.


Ernest Lapointe: I will let subsection 5 stand and look into it.
Section stands.
On section 23-Salting mines.


Ernest Lapointe: This is an amendment made at the suggestion of the attoriicy genera! of Quohpc making it an offence to salt a mine or a sample.


Richard Bedford Bennett: It would be very useful in one other province as well.


[Stage Direction]
Section agreed to.
On section 24-Burden of proof.
Richard Bedford Bennett: This clause reads, "the breaking out of a dwelling-house by night after having entered such dwelling-house." It would be difficult to break out of a house unless it had first been entered.


Ernest Lapointe: There might be legal entry.


Richard Bedford Bennett: It does not say that. It says "breaking out after having entered." It would be difficult to break out without being in, would it not?


Ernest Lapointe: Unfortunately it is the language of the past which is still responsible.


Richard Bedford Bennett: The minister should not be so conservative.


Ernest Lapointe: I like tradition.


Arthur Graeme Slaght: The language is " after having entered." He might have been carried in or have been in there perfectly legally.


Richard Bedford Bennett: If he breaks out by night he is going to commit a crime. It says " after having entered such dwelling-house." How in the name of heaven could he break out if he had not entered?


Arthur Graeme Slaght: Suppose he had been carried in?


Richard Bedford Bennett: He would be in anyway.


Arthur Graeme Slaght: But he would not have entered.


Richard Bedford Bennett: He would still be in the house. I think we should not let it go in this way. The present wording does seem almost ridiculous.


Ernest Lapointe: We do not need the words " after having entered such dwelling-house."


Richard Bedford Bennett: The whole section is loosely drawn. Look at it:
The breaking and entering of a dwelling-house by night-
That is clear:
-or the breaking out of a dwelling-house by night after having entered such dwelling-house, either by day or by night.


Ernest Lapointe: He may entered the house illegally during the day or during the night.


Richard Bedford Bennett: No, this is prima facie evidence of an intent to commit an indictable offence.


Mr. McGEER:: The only qualification there might be of that is the one suggested by the hon. member for Parry Sound, namely that a man might not have entered the place voluntarily; he might have been carried in.


Grote Stirling: He is doing a very wise thing to break out, then.


Richard Bedford Bennett: And if he found himself in the wrong place he might want to break out.


Gerald Grattan McGeer: It may be clumsy, but it does cover the case mentioned by the hon. member for Parry Sound. Where a man is in a place not as a result of having entered it by his own action, it covers that as well. A man who entered a house perfectly legally, perhaps as a guest, may have decided to conceal himself in the house in the afternoon to break out during the night. The section covers such a case.


Richard Bedford Bennett: This is either by day or by night.


Gerald Grattan McGeer: He could enter legally either by day or by night and break out illegally either by day or by night. This section is not as loosely drawn as it appears to be.


[Stage Direction]
Section agreed to.
Sections 25 and 26 agreed to.
On section 27

Using trade marks of others by trafficking in bottles.
Ernest Lapointe: It is to add the words " milk and by-products of milk." Apparently doubt has been expressed as to whether the word " beverages " covers or includes milk.


[Stage Direction]
Section agreed to.
Section 28 agreed to.

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On section 29-Offence, penalty. Fraudulently burning any chattel over $25 in value.
Ernest Lapointe: All the clauses from 29 to 33 inclusive are suggested or asked for by the fire marshals, both federal and provincial. It is to provide for uniform punishment and to see that the maximum terms are consistent with the punishments usually provided for the offences in question. There is no new crime; it is just that the penalties are made more uniform for the same kind of offence.


[Stage Direction]
Section agreed to.
Sections 30 to 32 inclusive agreed to.
On section 33-Threats to bum.
Mr. DOUGLAS (Weybum):: Does not three years seem a heavy penalty for having threatened to commit a crime? It becomes an indictable offence. After all it is only a threat to commit a crime.
' Mr. BENNETT: Yes, but it is a written threat.


Ernest Lapointe: It is a mitigation. It was ten years before. It is now three years.


Thomas Clement (Tommy) Douglas: Oh, I see. One should not write letters.


[Stage Direction]
Section agreed to.
Sections 34 and 35 agreed to.
On section 36-Defacing current coin.
Gerald Grattan McGeer: There is no gold coin any more. Could not that be struck out?


[Stage Direction]
Section agreed to.
Sections 37 and 38 agreed to.
Ernest Lapointe: I shall ask that the bill be amended by adding thereto as clause 38A the following:
38A. Paragraph (a) of section 750 of the said act is repealed and the following substituted therefor:
(a) if a conviction or order is made fourteen or more days before a sittings of the court to which an appeal is given, such appeal shall be made to that sittings, but if the conviction or order is made less than fourteen days before a sitting, the appeal shall be made to the second sittings next after such conviction or order;
Provided that in the province of Nova Scotia the appeal shall be to a sittings of the court in the county where the cause or information or complaint arose, in the one case to the sittings next after, and in the other to the second sittings after the conviction or order.
This is asked for by the attorneys general.


Ian Alistair Mackenzie: I move
accordingly.


Gerald Grattan McGeer: What is the reason for making it mandatory? Why is the wording not "may" instead of "shall"?


Arthur Graeme Slaght: An accused might be in custody. The section as worded would prevent the hearing of the appeal until the second sittings. It seems to me the word should be changed to "may."


Ernest Lapointe: This is the explanation which is given. The object of the amendment is to overcome an ambiguity which has arisen owing to a decision of the courts by which it was held that the expression "more than fourteen days" meant at least fifteen days, thus leaving one day upon which an appeal could not be taken. We do not change the law at all so far as the use of the word "may" or "shall" is concerned; we say "fourteen or more days." It is only those words that are being changed.


Arthur Graeme Slaght: That is true, but as I interpret it, the use of the word "shall" requires that you must wait until the second sitting; whereas, if you substituted the word "may" an alert appellant might have his appeal brought on at an earlier sitting and in that way be released earlier from custody.


Richard Bedford Bennett: The word always has
been "shall." It is purely practice, and the rule has not been changed in any sense.
If a conviction or order is made fourteen or more days before a sittings of the court to which an appeal is given, such appeal shall be made to that sittings.
It is intended that there shall be no delay and that it shall go to the next sittings. "Shall" is the word that has always been used.


Arthur Graeme Slaght: That is true, but it is in the second clause.


Gerald Grattan McGeer: For instance, if a man is convicted fourteen days before the sittings of a county court, which in the large centres sits monthly, he has a right to get his appeal on in fourteen days. But if he happens to be convicted thirteen days before that sitting he must wait thirteen days and one month.


Richard Bedford Bennett: Certainly.


Gerald Grattan McGeer: That is not altogether
against the prisoner. But very often in prosecutions-


Richard Bedford Bennett: It has been the law of this country.


Gerald Grattan McGeer: -the appeal is a trial de novo, and it means that the authorities must hold and keep these witnesses available for an extra month. There can be no harm in changing the word from "shall" to "may." If
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the crown is embarrassed by the trial of an appeal being heard too quickly, that of course is a matter which can be determined by the appeal court, and if it is necessary to get further time, in the interests either of the prosecution or of the defence, the court has that discretionary power. But here the wording used, which for some reason or other has long been in our statutes, is such that it actually delays the determination of criminal offences not merely one month but even for longer periods. I cannot see that anything is to be gained by continuing the word "shall" or that anything can be lost in the interest of justice by changing it to "may."


Ernest Lapointe: I would hesitate to recommend a change that has not been suggested at all.


Gerald Grattan McGeer: I will not press it.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 39-Summary trial in certain
cases.
Ernest Lapointe: This
merely adds the words "admitted to bail or" in line 29.	'


[Stage Direction]
Section agreed to.
On section 40-Absolute jurisdiction in certain cases.
Ernest Lapointe: This gives stipendiary magistrates in Ontario the same jurisdiction as in other provinces.


[Stage Direction]
Section agreed to.
On section 41-Cities of not less than 25,000 people.
Ernest Lapointe: This is consequential upon section 40.


[Stage Direction]
Section agreed to.
On section 42-Otherwise magistrate may proceed as upon a preliminary investigation.
Ernest Lapointe: This adds the word "summarily."


[Stage Direction]
Section agreed to.
On section 43-Bail if trial by judge.
Ernest Lapointe: This is to make the section conform with the amendment that has been made to 698.


[Stage Direction]
Section agreed to.
On section 44-Bail if trial by jury.
Ernest Lapointe: This is the same thing.


[Stage Direction]
Section agreed to.
[Mr. McGeer.l
On section 45-Manslaughter or reckless driving.
Ernest Lapointe: This is rather an important change. It is prodded that upon a charge of manslaughter arising out of the operation of a motor vehicle, if they are satisfied that the accused is guilty of an offence under subsection 6 of section 285, the jury may find him guilty of that offence and such conviction shall be a bar to further prosecution for any offence arising out of the same facts. This is in consequence of certain judgments in cases of this kind. I have an amendment which has been asked for by the deputy attorney general of Ontario, that section 45 be amended by inserting in line 13, after the word "accused," the words "is not guilty of manslaughter but."


Ian Alistair Mackenzie: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 46-Certain automatic machines to be deemed means or contrivance for playing game of chance.
Ernest Lapointe: I have an amendment, that the section be amended by inserting after the word "merchandise" in line 8 the words "or services"-"for vending merchandise or services," for instance, devices that indicate one's weight. They give some service.


Richard Bedford Bennett: Postage stamps.


Ernest Lapointe: Yes.


Richard Bedford Bennett: I do not know whether you would call that a service or not.


Ian Alistair Mackenzie: I move accordingly.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 47-Evidence of property in timber, et cetera.
Richard Bedford Bennett: This is limited in application to one province.


Ernest Lapointe: Yes,
British Columbia.


Richard Bedford Bennett: Why could they not provide adequate penalties within their own province for a breach of their own statute? Does it not really come within the decision of the reciprocal insurance case and constitute an invasion of provincial rights by

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endeavouring to make a criminal offence out of what is purely a matter of property and civil rights in the province?


Ernest Lapointe: This is already in the statute.


Richard Bedford Bennett: The law has been changed since the statute was passed.


[Stage Direction]
Section agreed to.
On section 48-Right of appeal against sentence.
Ernest Lapointe: This is to permit application for leave to appeal against a sentence not only to the judge but to the court itself.


[Stage Direction]
Section agreed to.
On section 49-Accused to remain in custody or on bail where attorney general appeals.
Ernest Lapointe: This will meet a situation that has arisen recently that shows the necessity for it.


[Stage Direction]
Section agreed to.
Sections 50 and 51 agreed to.
On section 52-When whipping to take place.
Thomas Clement (Tommy) Douglas: What is the reason for this amendment?


Ernest Lapointe: The explanatory note gives essentially the purpose of the change:
The object of this amendment is to insure that the whipping to which the prisoner is sentenced shall he inflicted. In the past some sentences have contained specific times at which the whipping is to take place and it has been found that through illness, the shortening of the term by good behaviour and other causes, it has been impracticable to carry out the sentence in this respect with the result that the prisoner has escaped this part of his punishment. The present subsection reads as follows:
"(3) Whenever practicable, every whipping shall take place not less than ten days before the expiration of any term in imprisonment to which the offender is sentenced for the offence."


Thomas Clement (Tommy) Douglas: This would apply only to a whipping prescribed in the sentence and not to whipping inflicted in the course of service of sentence in the penitentiary.


Ernest Lapointe: That is right.


Richard Bedford Bennett: I think it is doubtful
whether the words "notwithstanding anything to the contrary contained in the sentence" should be in the statute. The effect
of it is to set at naught the sentence of a trial judge or of a court, which is perhaps undesirable. Might it not be all right merely to say, "as may be determined by the officer in charge of the prison"? The adding of those words, "notwithstanding" so and so, invites attention to the fact that we have vested an official with discretion to set at naught the judgment of a court.


Ernest Lapointe: I have
no objection to striking out those words. I move that the words "notwithstanding anything to the contrary contained in the sentence" be struck out.


Richard Bedford Bennett: The proviso covers it
anyway.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 53 to 55 inclusive agreed to.
On section 56-Coming into force.
Richard Bedford Bennett: The word "granted" is
used elsewhere with respect to permit; might it not be well to make the wording uniform and say on pages 21 and 22, "permission is hereby granted"?


Ernest Lapointe: All right. The two words are used in other forms. Then there is an amendment to strike out the word "August" in section 56 and substitute therefor the word "September."


Ian Alistair Mackenzie: I move:
That clause 56 of bill 137 be amended by striking out the word "August" in the third line and substituting therefor the word " September."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Mr. GLADSTONE:: I should like to revert to page 3 and to inquire of the minister whether any consideration was given in committee to section 124, which does not appear in the draft proposals. If not I should like to bring to the attention of the committee the kind of advertising that is done on many of our news-stands in the way of display of cheap magazines, selling for five, ten and fifteen cents, depicting shooting scenes. Section 124 has to do with gun pointing, I believe. I hold in my hand covers taken from forty or fifty magazines of this type, printed in Canada, showing scenes in colours of one person pointing a gun at another or shooting another. Many people with whom I have discussed the matter are very strongly of the opinion that this seriously tends to educate growing boys to think that there is nothing
Criminal Code

wrong about pointing a gun at a person, and as a result we see boys playing at bandit and hold-ups; we see them behind trees pointing toy guns and air guns at one another and even at passers-by.
I would not propose interfering with the contents of these magazines, but I think it is entirely wrong and detrimental to the morals of the boys that they should be permitted as they do to observe and study on magazine counters scenes such as these that are constantly placed before them. These covers could very well carry other pictures in colours to make the magazines attractive, such as pictures of men finely developed physically, beautiful women, floral or pastoral scenes, or scenes showing the resources of our country or our industries. But we should not be constantly placing before our boys scenes tending to educate them to think that there is nothing wrong in one person pointing a gun at another.
Accordingly I should like the minister to accept an amendment to this section to meet this situation. It would be in this form:
Everyone is guilty of an offence and liable on summary conviction to a penalty not exceeding one hundred dollars or to imprisonment for auy term not exceeding thirty days, with or without hard labour, who prints, makes or publishes any book or magazine on the cover of which appears any picture or drawing depicting the pointing by one person of an offensive weapon at another person or persons or the shooting by one person of another person or persons with such weapon, if such picture or drawing is intended to or does illustrate or represent a hold-up, robbery, murder or other criminal act or intention.
I have omitted in this proposed amendment one provision that I had earlier under consideration, namely to make it an offence to sell or expose to public view for sale or to distribute or circulate such books or magazines. But it was pointed out that such a provision would make the legislation very difficult of enforcement; consequently I have eliminated it.
Mr. LAPOINTE (Quebec East); I appreciate the motive and purpose of my hon. friend's amendment, but I have been considering it, and I cannot feel that I could accept it. If the picture of a man pointing a gun was inside the cover it would be permitted, and I find it difficult to see that it should be made a crime to put such a picture on the outside of the cover when it is not illegal to put it inside. And then, since it can be put inside, it would not take the boys or other persons who like that sort of thing very long to learn that they could find these pictures by simply opening the book. The law now makes it a crime to point any firearm or air-gun at any person; that is punished 
by a severe penalty, but I really cannot see my way clear to accept an amendment making it a crime merely to put such a picture on the cover of a book.


The CHAIRMAN:: I should like to point out to the hon. member for Wellington South that in my opinion his amendment is out of order under standing order 48. I quote paragraph 399 of Beauchesne, at page 127:
After a decision has been given on an amendment to any part of a question, an earlier part cannot be amended. In like manner when an amendment of any part of a question has been proposed from the chair an earlier part cannot be amended unless the amendment so proposed be withdrawn.
Therefore I would rule the amendment out of order.
Progress reported.
At one o'clock the house took recess.
The house resumed at three o'clock.
The house having reverted to the order for presenting reports by standing and select committees:



REPORTS OF COMMITTEES

[Stage Direction]
Seventh and eighth reports of the standing committee on banking and commerce.-Mr. Moore.
Third and final report of the special committee appointed to inquire into the terms and operations of the Civil Service Superannuation Act.-Mr. McLean (Melfort).
Sixth report of the standing committee on miscellaneous private bills.-Mr. McPhee.


[Stage Direction]
The house resumed from Monday, June 27, consideration in committee of Bill No. 160, to amend the Bank of Canada Act-Mr. Dunning-Mr. Sanderson in the chair.
Sections 1 and 2 agreed to.
On section 3-Board of directors.
Gerald Grattan McGeer: There are one or two matters that arose during the debate last evening to which I should like to refer. The important part of this section is not the mere nationalization of the bank but the policy that will be carried out when the bank is brought under the complete control of the

Bank of Canada
government. I should like to know from the minister in charge just what changes in policy, if any, are contemplated. In what way will the establishment of complete ownership change the policy of controlling the issue of currency and credit so that the domestic and general needs of the country may be more efficiently served? If there is to be no change in policy, then the real purpose of ownership will not be achieved. After all, this is a fairly expensive experiment that we are carrying on, and I should like to hear from the minister on that point.


James Lorimer Ilsley: The purposes
for which the bank is set up are set out in the preamble to the act. The policy of the bank will be to carry out the objects set out in the preamble. I do not know that it is possible to be any more definite than that. The bank is now under the control of the government and the action of its board of directors will, of course, reflect the policy of the government from time to time. The hon. member for Vancouver-Burrard (Mr. Mc-Geer) must realize that it is not usual to announce a policy for any substantial period in advance. In fact, quite often in response to questions asked in this house it has been stated that the policy of the government will be made known as circumstances develop. I believe that answer is appropriate here, subject, of course, to the overruling consideration that the purposes of the bank, as set out in the preamble, must at all times be kept in mind.


Gerald Grattan McGeer: Our present law permits our banks to create bank deposits for the purpose of increasing currency and credit in circulation on a five per cent reserve basis. Last evening the minister seemed to condone the attitude of the bank that in banking practice that should be raised to ten per cent. If the banks can raise the reserve limit from five to ten per cent, there will be nothing to prevent their raising it to fifty per cent, if they so desire. There is a distinction between English and Canadian banks which was not sufficiently taken into account in the discussion last evening. Apparently we have all the machinery necessary for creating an abundance of credit currency which would be available to the national government for public development, but unfortunately while we have gone unorthodox in the creation of credit, we remain orthodox in the use of credit. In a word, we have created a twentieth century monetary system, but as far as policy is concerned we still remain on a nineteenth century theory basis.
There was another distinction that apparently was not clear to the minister, judging from his remarks last evening. Of the total cash available in Canada to meet public need, till money, out of pocket transactions, international exchange obligations and interbank balances, there is owned outright by the banks $247,000,000 of Bank of Canada bills of issue. We have $102,000,000 of Bank of Canada bills of issue and circulating to the banks in the hands of the public. In addition to that, according to the Bank of Canada report we have $100,000,000 of banking currency which functions for all the purposes of till money and for out of pocket transactions, making a total of $449,000,000. Now to service our bank deposits, $2,800,000,000, even on the 10 per cent reserve basis that the banks of England require, we would still have a surplus of cash circulating in Canada of $161,000,000, or sufficient for an increase of banking deposits in Canada, even on the 10 per cent reserve basis, of $1,600,000,000.
What I am pointing out now is this, that although we have, even on the bank's basis, $1,600,000,000 of unused bank deposits available, supposedly under the control of the country and the government, and we are now going to increase that control by paying a substantial profit to get those shares which were handed out as a concession in 1934 back into public ownership, the question still remains how are we going to get the currency and credit which is available into circulation for the benefit of the people of Canada? And that was the thing that this bank was created to establish.
I should like to make one reference to a statement that was made by the leader of the opposition. He saw fit to point out that bank deposits had to be represented by something, and that they could not increase beyond bank holdings of securities. But since 1934. when this concession was handed over to the private banks, bank deposits have increased by $479,000,000, while the holding of government interest-bearing bonds by the chartered banks has increased by $471,000,000. The point I should like to draw to the attention of the minister and of the government is that in so far as the use of that increase of credit is concerned during the period of four years that the Bank of Canada has been in operation, that increase of credit has apparently been available only for the purchase of government bonds by the chartered banks.


Mr. CAHAN:: Was it not available for all purposes, but that was one purpose which was possible under existing economic conditions?


Gerald Grattan McGeer: The hon. member for St. Lawrence-St. George states that it was avail-
Bank oj Canada

able for all purposes, and that is very true. But the reason why government control comes into being is that we believed that the banks were exercising a discretion as to whom they would advance money, and control was necessary to make the circulation effective to serve the needs of the country and the needs of progress.


Charles Hazlitt Cahan: I do not care to interrupt, but would my hon. friend allow a question?


Gerald Grattan McGeer: Certainly.


Charles Hazlitt Cahan: Is it not absolutely necessary that directors of the banks should have a discretion as to the persons or companies to whom they grant loans, in view of the fact that it is the directors alone who are responsible to the shareholders for the security of those loans? Can you possibly avoid conceding discretion, unless the government of Canada is going to guarantee repayment to the banks of all loans made, that is, in case you are going to restrict the discretion of the directors in making such loans?


Gerald Grattan McGeer: I quite concede that, and that is one reason why I believe that merchant banking should be left exclusively to the merchant bankers, subject only to the control of the Bank of Canada, which would avoid those disastrous inflations which come with commodity and security booms. But that is a very different thing from the thing I am talking about. What I am dealing with is the question of how government in Canada can have freer access, at less cost, to the national currency and credit of the country, which the banks to-day are using to purchase bonds by the manipulation or by the actual use of a bookkeeping system. There is a very great difference between private finance and public finance, and the sooner we come to recognize that one of the great duties of the Bank of Canada is to establish a control of public finance that will completely segregate public finance from private finance, and that the two shall be established as entirely different services in the state, the better.


Charles Hazlitt Cahan: I have listened frequently to the hon. member. Can he suggest how the aim which he has expressed can be accomplished more readily than under the present proposed system under which the government shall have complete control over the Bank of Canada and all its transactions?


Gerald Grattan McGeer: I am going to suggest that now. What I am going to commend to the government-and I do not expect anything to be done this session-is that in addition to having the machinery which the Bank of Canada now has, an investigation be launched

to ascertain whether or not it would be advisable for the Bank of Canada to become the actual bank of the Dominion of Canada, serving it with a deposit and cheque system in exactly the same way that the chartered banks are serving it to-day; and whether, in turn, as is the case in Australia, there should be a bank established in each of the provinces as a branch of the Bank of Canada which would serve provincial and municipal governments in the same way.


Charles Hazlitt Cahan: If the Bank of Canada is reorganized on the basis mentioned by the hon. gentleman, does not his proposal mean that those who have political influence will have the advantage of obtaining loans from the Bank of Canada and that those who have not political influence will not have the same facilities?


Gerald Grattan McGeer: No, not at all, because
what I said was that the Bank of Canada's activities should be confined exclusively to public credit, making no private loans whatever, and serving only the national and provincial and municipal governments.


Charles Hazlitt Cahan: I understood the hon. gentleman to say that the Bank of Canada was to make loans which were not restricted to municipal and provincial governments.


Gerald Grattan McGeer: No.


Charles Hazlitt Cahan: I understood him so.


Gerald Grattan McGeer: I thought I made that
clear when I suggested that merchant banking and private banking should be completely segregated from public banking and public finance, and that the two should be established as entirely distinct functions in the state.


Charles Hazlitt Cahan: I thought public banking was to be confined exclusively to banking for public bodies such as the government of Canada, provincial and municipal governments, and commissions established by them.


Gerald Grattan McGeer: Yes, what would be called purely public finance.


Charles Hazlitt Cahan: I should like to know just what my hon. friend means.


Gerald Grattan McGeer: There is no question about that in my mind. A public body such as a workmen's compensation board, a body administering an unemployment insurance fund, or a host of other activities which involve the carrying of large deposits and large reserve funds, would carry them in the public banking institution.
The other point to which I wished to refer was this, The statement was made last

Bank of Canada
night that a ten per cent reserve of cash was necessary to prevent the banks from going into bankruptcy from day to day. Nothing could be more out of line with the history of banking in Canada than any such statement as that.


Charles Hazlitt Cahan: If the hon. gentleman will allow me, that statement was not made. The statement which was made was that, the bank directors being responsible for loans and for making only such loans as were likely to be repaid because of the financial stability or security of the persons to whom they were made, a provision of even ten per cent was not sufficient tor all times and all circumstances. No bank can agree that the mere holding of ten per cent security, as the hon. gentleman states, will be sufficient to protect the bank in times of grave economic and financial stress and strain. The directors must be sure that they have the funds wherewith to meet all demands when made, and for that purpose at certain times it may be necessary to keep, instead of five or ten per cent, twenty-five or thirty or even forty per cent available. It was found in time of crisis in the United States that even forty per cent was not always sufficient to protect the shareholders and depositors of banks.


Gerald Grattan McGeer: Quite true. But the point I was dealing with was the point that came up last night, and it is to be found at page 4298 of Hansard, where the Minister of National Revenue said:
In other words, the banks are maintaining only the reserve ratio that is necessary in the light of experience, namely, approximately ten per cent.
The hon. member (Mr. Cahan) then said:
Sufficient to keep them from day to day from going into bankruptcy?


Mr CAHAN:: Yes.


Gerald Grattan McGeer: That is the point I was dealing with. If the hon. gentleman will remember, when he sat in this house there was a double shuffle of 835,000,000 that went out to the banks in and around 1933. That went out for a definite purpose, to meet the stress and strain which the depression had put upon the banks of Canada, and to put them in a position to meet their obligations among each other as much as anything else. There is the emergency reserve upon which the banks rely in times of emergency. It is a call upon the government to use the nation's money to protect institutions which have got into trouble because they have traded short in money and long in credit. Because that type of thing is done in the name of sound money, it goes
on as one of the most iniquitous things that any government has ever condoned. Now we go ahead and say that we are going to reduce the right of the banks of Canada to print money freely. In 1934 this house solemnly amended the Bank Act, to reduce what? The right of the banks of Canada to use a printing press to create money, so that it would come down ten per cent per annum until it was reduced to a twenty-five per cent quota of their paid-up capital.


Charles Hazlitt Cahan: Does the hon. member object to that provision?


Gerald Grattan McGeer: I'am just going to show you the kind of racket that that was when it was put over.


Charles Hazlitt Cahan: If the hon. member had been present and had understood the circumstances under which that was done, he would know that it was to meet a special emergency arising out of the bankruptcy of some three or four thousand banks in the United States.


Gerald Grattan McGeer: That is, the $35,000,000?


Charles Hazlitt Cahan: Yes, and to meet the stress and strain with which we in Canada were faced at the time. To use the expression "racket," and other terms which the hon. gentleman has used, merely implies that he is entirely ignorant of or has not understood the special emergency which was met on that occasion. We protected the commerce and industry of Canada to a large extent, and with better results than commerce and industry were protected in the United States or in Australia or in any other dominion of the commonwealth.


Gerald Grattan McGeer: It was a handy use of $35,000,000 of Canada's money to protect the Canadian banks which had been responsible for the development of the conditions in Canada that brought this nation into bankruptcy.


Charles Hazlitt Cahan: Well, it is-


Gerald Grattan McGeer: I have accepted the hon. gentleman's interruption, and I am going to take a Chance to reply, if he will permit me. What I want to point out is this. I have said before that this banking change in 1934 constituted, with all the inequities, the greatest concession that was ever handed out by a Canadian parliament since confederation. My hon. friend asks me whether I object to the banks losing their right to print money freely. No, I do not.


Charles Hazlitt Cahan: No, I did not ask the hon. gentleman that. His hearing is defective.
Bank of Canada


Gerald Grattan McGeer: I do not object to that, but there is something about that which I do object to. When I look at the records I find that while parliament has reduced by ten per cent the right of the banks to print money, the Bank of Canada has handed out more money freely to the chartered banks than the ten per cent reduction which parliament has ordered.


Charles Hazlitt Cahan: But they bought it and paid for it.


Gerald Grattan McGeer: Bought and paid for
nothing! My hon. friend speaks about my ignorance. May I suggest that he may not be as well informed about this thing as he thinks he is.


Charles Hazlitt Cahan: I was merely suggesting,
not that the hon. gentleman is personally ignorant, if he will allow me-


Gerald Grattan McGeer: No. I want to close this one point.


Charles Hazlitt Cahan: -but that he was ignorant concerning this one transaction and the conditions under which it was carried out.


Gerald Grattan McGeer: I will leave it at that. But this is what happened. Under the reduction of the right to print currency the cash holdings of the banks have fallen by $26,000,000, but the increase in free issue of Bank of Canada bills has been $37,000,000.


Charles Hazlitt Cahan: That is what it is created for.


Gerald Grattan McGeer: To give the banks money for nothing? The hon. gentleman had better ask the leader of the opposition.


Charles Hazlitt Cahan: They were willing to pay for Bank of Canada bills, which are legal tender. The banks and others can now buy legal tender from the Bank of Canada.


Gerald Grattan McGeer: Yes, but that is not what happened at all. What has happened is this. The Bank of Canada has issued money to the banks for certain securities, but in the meantime it has purchased and acquired millions of dollars' worth of public securities for which it has put money out for nothing. As the Minister of Finance pointed out, no matter from whom the bank buys securities, when it issues legal tender cash that cash is bound to come to the banks. When the Bank of Canada maintains a policy of issuing legal tender cash in exchange for securities, the result is that the banks are supplied with money at less cost than they formerly were put to when they were called upon to print money.


Richard Bedford Bennett: It is put in the banks by the depositors.


Gerald Grattan McGeer: Quite true, but the minute a depositor puts Bank of Canada bills in a bank on deposit, those Bank of Canada bills become the property of the bank.


Charles Hazlitt Cahan: Certainly.


Richard Bedford Bennett: Subject to cheque.


Gerald Grattan McGeer: Subject to cheque?


Richard Bedford Bennett: Yes. I draw a cheque in the Bank of Montreal and they hand me out Bank of Montreal notes.


Gerald Grattan McGeer: And what do you do with them? Put them back in the bank.


Richard Bedford Bennett: I certainly do not.


Gerald Grattan McGeer: That is what you do. Or you put them in some other bank. Under that system you have no control whatever over the credit policy of chartered banks. It does not matter what your rediscount rate is, it does not matter what your open market operations are. The only people who can say whether or not credit shall increase are the chartered banks. I believe that the machinery developed in Australia is more effective even than that developed in England. In the old country the government is largely dependent upon the cooperation of the banks as a whole, but in Australia, if I read the reports correctly, practically all the cash issued by the central bank is issued on loan to all the other banks.


Richard Bedford Bennett: No; they buy it like a commodity.


Gerald Grattan McGeer: They buy it under certain definite conditions.


Richard Bedford Bennett: No condition in the
world). They requisition the commonwealth bank for notes and buy them and take them.


Gerald Grattan McGeer: And they agree to pay
it back.


Richard Bedford Bennett: No.


Gerald Grattan McGeer: They must buy it at a discount.


Richard Bedford Bennett: 
Gerald Grattan McGeer: Yes; but these bonds are
paying interest to the central bank.


Richard Bedford Bennett: But they belong to the commonwealth bank.

Bank of Canada


Gerald Grattan McGeer: Yes. They are paying them back under interest obligation. The difference in our system is that the Bank of Canada issues the money free and our chartered banks have not a single dollar of Bank of Canada money on loan or a single dollar that they have purchased in that way. They have practically their entire holdings through open market operations.


Charles Hazlitt Cahan: If the hon. member would
sit beside a bank manager for a few days he would learn differently from that. One thing that the bank manager has to do is to see that he has sufficient Bank of Canada legal tender to meet the exigencies of all the demands of depositors, increasing as they do from day to day and in times of crisis increasing from week to week, to an extent which the hon. gentleman does not appreciate; and unless they have the legal tender to meet these demands the banks have to close their doors. If a bank fails on one single occasion it is bankrupt under our law.


Gerald Grattan McGeer: What I am pointing out is that in the Bank of Canada report in May, for instance, we find the cash issues given and there is no liability at all against them. The chartered1 bank cash-that is, owned by the chartered banks in their tills-amounts to 53-4 millions, and deposits in the Bank of Canada amount to 194-1 millions or a total of 247-5 millions. Issued and circulating in the hands of the public is an amount of 102 millions. In the Bank of Canada report there is a statement of the cash.


Charles Hazlitt Cahan: Certainly; but must not the bank under this system keep on deposit with the Bank of Canada a sum sufficient to provide itself with legal tender, to an amount sufficient to meet all the demands of its customers and its depositors?


Gerald Grattan McGeer: Not at all, because under the Bank of Canada Act any chartered bank needing cash can borrow it from the Bank of Canada on its note and on the securities which it has in its possession. There is no restriction upon the right of a chartered bank under the Bank of Canada Act in borrowing from the bank.


Charles Hazlitt Cahan: If it borrows on the security of Dominion of Canada bonds, for instance, the bonds are no longer in the possession of the bank; they are in the possession of the Bank of Canada.


Gerald Grattan McGeer: To-day the banks in Canada have 1,155 millions of securities which they own, in the possession of the chartered banks. That is security for the lending of Bank of Canada cash to a bank that needs it.


Charles Hazlitt Cahan: Only when the chartered
bank delivers up to and deposits with the Bank of Canada the bonds or other securities on which the advance is made by the Bank of Canada.


Gerald Grattan McGeer: Why then, with 1,155
millions of securities which are good for the borrowing of Bank of Canada bills in time of emergency is it necessary to carry 194 millions of Bank of Canada bills on deposit with the Bank of Canada? The point is this. Here we have a statement that to meet bank needs it requires 53 millions of Bank of Canada bills to take care of day to day transactions. That is all that the banks are using to support 2,800 millions of deposits. They have, in addition to that amount which they carry in their tills, on deposit, 194 millions.


Charles Hazlitt Cahan: Quite so.


Gerald Grattan McGeer: And, in addition to that,
dominion and provincial securities which are good for borrowings from the Bank of Canada in times of emergency amounting to 1,155 millions. Of course, they will have to give these up to the bank. But what I am pointing out is that this record shows quite clearly the need for this change, because it shows that the government and the Bank of Canada have no control whatever over the power of the banks to increase the volume of circulating credit currency in the service of the nation. I am pointing out that the mere acquisition of this 49 per cent of the stock of the Bank of Canada is not going to improve that situation.
I will not argue the question further, but I wish to quote from an address delivered last night in Halifax, which was broadcast all over Canada and which I do not think either this government or any one else in this house should ignore. I quote:
The Liberal party cannot lead the people.
For reaction leads it.
I suppose this is going to be the policy of the Conservative party to be enunciated at the coming convention.


Charles Hazlitt Cahan: I pray God it may not be.


Gerald Grattan McGeer: This is not what I am
saying, but what Mr. Herridge stated in Halifax last night. He said:
The Liberal party cannot lead the people. For reaction leads it.
This party was born in the economy of scarcity. There it still abides. The present fact of potential plenty has no place in its philosophy. Though in the beginning, mark you, the Liberal party nailed to its masthead, the doctrine of political and economic freedom. And scarcity, of course, is the denial of all freedom.

432S
Bank oj Canada

Reaction dominates the Liberal party. The Liberal hierarchy, the party's high command, its unawakened followers, are for the old order and against the new.
The Liberal machine is the hired man of the money power. For a time, all that the money power asked of Liberalism was to be left alone. The Liberal party left it alone. But to-day, in government, to do nothing is to do wrong. The fixation of Liberalism has been a firm base for reaction's operations against the people.
The money power is against free trade. The Liberal party is against freedom of trade: except in speeches.
Before the last election, the Liberal leader promised to do battle with the money power. There has been no battle.
The startling thing about this speech is that it is addressed to a Conservative convention in Halifax pleading that the Conservatives line up against the money power and throw the leader of the Liberal government out of office because he has not done battle with that power.


Richard Bedford Bennett: As promised.


Gerald Grattan McGeer: Members on the other
side have said that I have strange ideas and have advanced strange doctrines, but I never dreamed that as a Liberal I should ever live to read this great effusion as the expression of Conservatism on the Atlantic shores of Canada. But time goes on. The Conservative party has had its place in the Dominion of Canada and goes down with other institutions that have fallen into the limbo of the things that merely decorate the memories of the past and stand obsolete in the way of progress. But let me say that as the Conservative party goes out there is a danger of the Liberal party becoming and remaining the Conservative party of the past.


Miss MACPHAIL:: Becoming! It is.


Gerald Grattan McGeer: We have a hope, a great hope, that this reactionary spirit of which even the Conservatives now complain, and which bristles in the banking policy of 1934 will go, not only on this side of the house but on that. This problem of establishing a new order which can finance progress is above party politics. If partyism fails to meet the challenge, which I believe this party is honestly making the effort to meet to-day, as badly as the party opposite failed during the years following the change of monetary policy in 1934, then a new national organization will take hold of the issue. The thing that won the election in Saskatchewan more than anything else was the promise of the Prime Minister to nationalize the Bank of Canada, meaning that he was going to give
[Mr. McGeer.J
this dominion a national monetary policy. We believe and hope that during the coming winter, before the next session of parliament, this monetary problem will be grappled with in Canada as it has been in other nations, and that along with a publicly owned institution to make our national monetary policy a public utility service we shall have a developed policy under which the administration will make that public utility service real and effective.


Mr. HANSELL:: This discussion arose from the question asked of the acting minister concerning the control of the bank, and as to whether this section actually gave the government control of the Bank of Canada. We listened to the discussion with interest, and perhaps some valuable points were made. In the speeches made by the Minister of Finance (Mr. Dunning) on this measure, particularly at the resolution stage, he declared, more than once, that the purpose of this bill was not to control the policy of the Bank of Canada. I have analysed those speeches carefully, and the minister clearly pointed out that the reason for the bill was to silence political controversy over the constitution of the Bank of Canada. I find that the minister used the terms "political controversy" and "political discussion" fifteen times in the two speeches that he made. In the course of the minister's speech the hon. member for Winnipeg North Centre (Mr. Woodsworth) asked a question as to the political controversy that has taken place in the past few years being the reason for bringing down the bill. I quote from page 4055 of Hansard1 for June 20 last:
Mr. Woodsworth:	I have been listening to
what the minister has said, and I am in hearty sympathy with the purpose of the resolution, but I find it difficult to understand what has occurred in the last twelve months that has led this government to make this almost complete change in a policy which was adopted no doubt after careful deliberation. Can the minister give us further information on that point?
Mr. Dunning: I do not think I can go further than I have gone. It was quite evident to the government during the last two years that the constitution of the bank was becoming and would likely continue to be a matter of political controversy.
The hon. member for Vancouver-Burra-rd (Mr. McGeer) made a remark which was received with some enthusiasm, that the election in Saskatchewan was won largely because the Prime Minister had promised completely to nationalize the Bank of Canada. That may be so. I am not so much concerned about that, but I am concerned about the fact that the bill does seem to be a political move. Personally I feel confident

Bank of Canada
that this bill does not and is not necessarily designed to give to the government control of policy. If we could be assured that the policy of the bank was going to be changed so that the issue of currency and credit could be made in the interests of domestic commercial and industrial need, we would have more reason for voting for the bill. We are in favour in the bill, because we believe it is a step in the right direction, but if that step is only to put the entire directorate under the government we doubt very much whether it is such a very important step in the right direction.
As to the bill being a political bill, I am not saying this with any malice towards the government, because as the last speaker (Mr. McGeer) has said, the Liberals have a great hope. This group here would rejoice if the great hope that the hon. member had in mind were realized. The Liberal government will always find this group sympathetic to any forward move on behalf of democracy towards controlling the issuance of money in terms of public need. But to go back: it seems to me the bill is somewhat of a political bill. I have it in mind-the hon. member for Acadia (Mr. Quelch) mentioned it the other day-that two years ago the Prime Minister said very distinctly, when the bill for the purchase of fifty-one per cent of the stock of the Bank of Canada was before the house, that that bill was designed to fulfil the promise that he had made prior to the election. Then -I am recalling this as I have a point to make-the Minister of Agriculture (Mr. Gardiner) in Edmonton was reported as saying that the complete control of currency and credit would be in the hands of the government by 1945. When that report came out in the press I asked the Prime Minister on the floor of the house whether we could expect any legislation to be brought down that would in any way readjust the banking system of this country. I thought that a legitimate question to ask after what the Minister of Agriculture had said in Edmonton. I think I can say in all kindness that the Prime Minister's answer to my question was vague. He told us that the legislative program would not be complete until the close of the session. I wonder whether the Prime Minister had in mind then that the government would be bringing down this bill.


William Lyon Mackenzie King: Yes.


Ernest George Hansell: I am very glad to have the Prime Minister give that definite answer, but it is singular that the public announcement was not made until two or three days 51952-2741
before the Saskatchewan election. Then I should like to refer to the speech of the Minister of Finance on the resolution, quoting from page 4055 of Hansard:
If the central bank of a country is to serve the high purpose for which it is created, it must be manned by men who not only are expert in monetary, economic and financial matters, but also have a sufficient independence of judgment to be able at all times to talk on equal terms to the government of the day with respect to the matters which come under the jurisdiction of the bank in the ordinary course of business.
There may be some value in the government listening not only to those who may be appointed to the directorate but also to members of parliament who come here representing sections of this great democracy that are demanding results along the lines of economic reform. To be honest with the Minister of Finance in connection with the quotation I just read I should say that the minister did go on, at page 4059, to say:
The general broad policy of the bank of course must be in harmony with the desires of a majority of this parliament.
I am glad that statement was made, because I do feel that the policy of the Bank of Canada should be determined by the desires of the members of this house, who after all represent this great democracy.


Mr. PELLETIER:: The remarks of the hon. member for Vancouver-Burrard (Mr. McGeer) a moment ago began with a question addressed to the Minister of National Revenue, who is in charge of this bill. The hon. member wanted to know what the government's policy was going to be, and the minister replied that it was not usual to declare government policy in advance. I believe, however, that we should have a definite statement as to what is meant by government policy. It will be remembered by all hon. members of this house and by the people of this country that the Liberal party intended to take hold of the Bank of Canada and issue currency and credit in terms of public need. We are not asking for a statement of policy, but it does seem to me that we have a right to ask, and that we should insist upon knowing, what is meant by public need. What is meant by issuing credit and currency in terms of public need? If a satisfactory explanation is given in that regard it is not necessary to know what the policy will be.


William Lyon Mackenzie King: May I say to my hon. friend that " public need " is used as distinguished from " private gain," but public need does not mean private need as my hon. friend and those who sit around him have
Bank of Canada

frequently interpreted it. It means exactly what it says, in terms of public need as distinct from private gain; it is not synonymous, and could not possibly be, with individual private need.


René-Antoine Pelletier: Perhaps the Prime
Minister could make it clear by giving us an illustration. I am quite willing to admit that there is and must be a difference between public need and private gain, but just what is the meaning of public need and just how far does it go in the administration of affairs in this country? I do not want to know the difference between public need and private gain; I want to know the meaning of public need.


William Lyon Mackenzie King: I have tried to enlighten my hon. friend, but if from what I have said he cannot gather what it means I am afraid that no additional words of mine would help him further.


René-Antoine Pelletier: Perhaps the Prime Minister would give us an illustration to show what he means.


An hon. MEMBER:: There are schools for that purpose.


René-Antoine Pelletier: I do not believe that is a proper reply. We were told that currency and credit would be issued in terms of public need. The functions of the bank are alleged to be under the control of the government; but up to the present time, with the conditions that prevail in this country, I have failed to see any such thing as public need being considered. I want to know what is meant by public need, and I believe the people of the country are entitled to have a proper definition of that term.


Charles Hazlitt Cahan: Mr. Chairman-


René-Antoine Pelletier: I believe the Minister of National Revenue should answer my question.


James Lorimer Ilsley: I can only repeat what I said previously, that the policy of the bank is to carry out the objects which are set out in the preamble of the bill. When I said the policy of the government would not be announced until the proper time I had reference to specific steps that might be taken from time to time; I had no reference to the general policy as set out in the preamble. To make it perhaps a little more definite I might repeat wrhat the Minister of Finance said in his speech in this house on March 8 of this year:
There is little difficulty in defining the general objectives of the central bank and of the government which controls it. These objectives are the maximum possible sustained level of productivity and the minimum possible level of unemployment.


René-Antoine Pelletier: I was quite careful not to ask the Minister to define the policy. He did state in the beginning of his remarks that it was not usual for the government to indicate what might be the policy of any arm of government, and it is because of that very reason that I ask for a definition of what public need means; because if we are told what the government means by issuing credit and currency in terms of public need we do not desire to know, nor would it be necessary, what is to be the policy of the government. If we are given a definition of public need by the government it will be clear to all hon. members as to what the policy eventually will be. But I think those words "in terms of public need" demand explanation, and certainly they should be defined.


James Lorimer Ilsley: I am within the judgment of the committee as to whether or not I have answered that question:	"The maximum
possible sustained level of productivity and the minimum possible level of unemployment."


Ernest George Hansell: The term "public need" is not the only expression that has been used by the Prime Minister. He also used the words "domestic need," and if those words mean anything-


William Lyon Mackenzie King: Where did I use that term?


Ernest George Hansell: The reference is on page 95 of Hansard for this year:
A central bank is necessary to determine the supply of currency in relation to the domestic, social and industrial requirements of the Canadian people.


William Lyon Mackenzie King: Yes. The
domestic requirements of the Canadian people are something quite other than and distinguished from domestic need.


Ernest George Hansell: I would not ask the question, but I do believe that the domestic need of the people is that men and women who have homes and families should be able to obtain the money necessary in order that they may live.


William Lyon Mackenzie King: The domestic requirements of Canada are the need of the Canadian people as distinguished from those of other parts of the world.


Mr. QUELCH:: Surely the Prime Minister would not suggest that to-day the domestic and social requirements of the Canadian people are being adequately met. Would he suggest that the needs of the unemployed in Vancouver have been adequately met?

Bank of Canada


William Lyon Mackenzie King: I have never said they were. The purpose of the bank is to work towards that end. I do not believe it is possible for any need to be adequately met at this or at any time; as one need is met after another, there will always be increase in demand and desire. We shall at least strive toward more adequately meeting the situation. [DOT]


René-Antoine Pelletier: Will the Prime Minister say that the Bank of Canada is going to issue credit and currency in order to create employment? My understanding of public need is that if there are people unemployed in Canada who can be provided with employment, that employment should be created by any means possible. This Bank of Canada is now owned one hundred per cent by the government. Is it to issue large sums of currency in order to create employment? Is it to begin vast works of this kind? Is it to issue credit and currency to pay pensions to the blind? What is to be the purpose of the issue of credit and currency in terms of public need? Is it to supply money to end unemployment? If these requirements are not met, then it is not issuing currency and credit in terms of public need. If the government could give us an answer as to What they intend to do in this connection, there will be no further need to ask these questions.


Richard Bedford Bennett: I asked a question in connection with the number of directors.


James Lorimer Ilsley: The leader of the opposition asked a question as to why eleven had been fixed as the number of directors.


Richard Bedford Bennett: There are thirteen in all.


James Lorimer Ilsley: There is to be a board of thirteen members, eleven of whom are directors, one the governor and one the deputy governor. Then there is an additional member of the board, the deputy minister of finance, or his nominee, who has no voting power. I suppose technically it would be a board of fourteen, thirteen of whom had voting power.


Richard Bedford Bennett: I would read it the other way. The section reads:
The bank shall be under the management of a board of directors composed of a governor, a deputy governor and eleven directors appointed in accordance with the provisions of this act.
I wished to know the reason for fixing upon eleven as the number of directors.


James Lorimer Ilsley: I shall come to that in a minute. Subsection 2 of section 5 of the act reads:
In addition to the members of the board as constituted by subsection one of this section, the deputy minister of finance or, in case of his absence or incapacity at any time, such other officer of the Department of Finance as the minister may nominate for the time being, shall be, by virtue of his office or of such nomination, as the case may be, a member of the board, but shall not have the right to vote.
I think that section bears out what I said a moment ago.


Richard Bedford Bennett: While that subsection provides that the deputy minister shall be a member of the board, this amendment sets out the composition of the board. There is no provision for the deputy minister in this amendment. The two subsections are contradictory. This new subsection states definitely that the board shall b~ composed of, one, a governor; two, a deputy governor and, three, eleven directors. That act passed in 1934 provided that the deputy minister should be a member of the board and this amendment overlooks that provision, unless he is to be included in the eleven.


James Lorimer Ilsley: We are amending subsection 1 of section 5, but we are not changing subsection 2 which provides that the deputy minister shall be a member. He will be a member in addition to those provided for by subsection 1 of section 5.


Richard Bedford Bennett: The minister is an astute lawyer and he should read this amendment. It reads:
The bank shall be under the management of a board of directors composed of a governor, a deputy governor and eleven directors appointed in accordance with the provisions of this act.
Those are the governing and dominating words. They state that the board shall consist of thirteen members. Then follows the subsection which states that the deputy minister is to be a member of the board, but he cannot be a member when we set out who is to compose the board and he is not included, unless he is to be one of the eleven directors.


James Lorimer Ilsley: That has always been the construction of this section. It is just as it was before, except that now the board is composed of a governor, a deputy governor and eleven members. Subsection 2 has been left alone. The right hon. gentleman asked why the number eleven was chosen. It was desired to make some provision for territorial representation. While it may not be always true that there
Bank of Canada

will be on the board one director from each of the nine provinces, the fact remains that there are nine provinces. Then it was thought desirable to have two directors who would not be considered as coming from any particular section of Canada. They would be likely resident near Ottawa and it would be possible for them to attend the meetings of the executive committee. At the present time there are eleven directors who are being continued until the expiration of their respective terms of office.


Richard Bedford Bennett: It is intended to keep them until the expiration of their terms of office?


James Lorimer Ilsley: That is right.


Richard Bedford Bennett: The act contemplates March 1 as being the date on which appointments would be made. I had thought that the government intended to have the new board begin its functions as at March 1, 1939, but I gather from what the minister says that that is not the intention.


James Lorimer Ilsley: They do not technically go out of office until the end of their term. They would go out at the end of the February nearest the end of their term of office.


Richard Bedford Bennett: In view of the fact that the management of the bank is being entrusted to a board I thought that probably the government would have provided that the board should cease to hold office on the last day of February, 1939, and that the government would appoint the new board as of March 1, 1939. That is the language of section 9. I had thought that if you were going to take control, it would be better to do it in that way, that is, have the vacancies occur as of the last day of February next year and then fill them as of the first day of March next year. Apparently the government thinks the other way is best.


Charles Hazlitt Cahan: The hon. member for Van-couver-Burrard suggested that the chartered banks held unnecessarily $103,300,000 of Bank of Canada bills. He referred also to the computation, which he had given to the house last evening, that the chartered banks have in Bank of Canada bills a total of $247,500,000. He alleges that only five per cent of cash reserves was required to support the bank deposits at a certain date and he gave us the bank deposits at that date as $2,884.4(10,000. He computes five per cent of that sum to be $144,200,000. and then makes the fanciful assumption that no more than five per cent will be required for the safety of the bank. Therefore, he alleges that the banks hold in Bank
tMr. Hsley.l
of Canada bills $103,300,000 in excess of reserve requirements. If by reserve requirements the hon. gentleman meant the five per cent which is provided for by the statute, then he is correct. But he cannot possibly assume that that $103,000,000, as shown on a certain date as the statutory reserve of five per cent, will be sufficient to meet all exigencies of all the banks in time of crisis. The hon. member does not appreciate the fact that the economic security of Canada, its commercial and industrial security, depend upon the chartered banks having sufficient reserves available to meet all possible exigencies. No one can suggest that five per cent is sufficient. That is the lower limit. But these banks, in order to create public confidence in their stability, maintain a larger reserve than that, and they are bound to do so, if they wish to maintain the confidence not only of their own shareholders and depositors but of the banking and commercial communities with which they deal throughout the world.
The hon. member made one other statement. He suggested that the Hon. Mr. Her-ridge in his speech at Halifax was authoritatively pronouncing a policy for the Conservative party of Canada. Evidently he did not read the speech.


Gerald Grattan McGeer: Oh yes, he did.


Charles Hazlitt Cahan: Apparently he read only the headlines, because in the speech Mr. Herridge said:
Now it is not intended to replace the Liberal government by a Conservative government. Reaction knows that neither Liberalism nor Conservatism, flying the swastika of the money power, can win again.
It is clearly apparent from that speech that he has in view the establishment of a new national party organization, and it is quite clear from the address of the hon. member for Vancouver-Burrard that Mr. Herridge has already obtained one disciple for his new organization. Astute a man as Mr. Herridge is. having secured the unbounded confidence of the member for Vancouver-Burrard. it is now only necessary for him to secure the confidence of the social credit party, with which he seems to be more clearly allied than with any other party in Canada at the present time; and the social credit party, with Mr. Herridge as leader and the hon. member for Vancouver-Burrard as first lieutenant, have already begun the fight which thpy intend to carry on at the next federal election. As a matter of fact. 1 should be only too happy personally . if such a fight were inaugurated in Canada I lived through and took a keen

Bank of Canada
interest in the old silver money fight during a certain presidential election in the United States, and the answer of the conservative elements in the United States to that propaganda, the conservative elements in both national parties of that day, was such a complete overthrow of the propagandists for free coinage of silver that the propaganda has never been repeated since. Although Mr. Bryan lived for some years thereafter he never again advocated his free silver coinage policy.


Gerald Grattan McGeer: But Roosevelt put it into effect.


Charles Hazlitt Cahan: I do not think he has quite put it into effect yet.


Gerald Grattan McGeer: Oh yes he has, absolutely.


Charles Hazlitt Cahan: I do not think so, certainly not in the terms in which it was first announced ; and he has not put it into effect in such a way as to satisfy the propaganda which is being carried on by the hon. member and a few others associated with him. If we are to have an electoral test of that kind in Canada, let us have it and have a complete showdown. What I blame this government for is this, that although they had complete control of the Bank of Canada under the statute then existing, as complete control as they will have when this bill passes, yet, in deference to propaganda carried on in Saskatchewan and in some other quarters, they have introduced this bill in order to satisfy a political demand-a demand made by the hon. member for Vancouver-Burrard.


Gerald Grattan McGeer: In 1933.


Charles Hazlitt Cahan: A demand made subsequently by the social credit party, a demand made by all persons who wish to substitute the printing press and paper tokens for all purposes of mercantile exchange.


Mr. BLACKMORE:: Mr. Chairman. I object very strongly to that. The social credit party has never advocated the printing press.


Charles Hazlitt Cahan: It is a different name but it means the same thing.


John Horne Blackmore: That is not so at all.


Charles Hazlitt Cahan: I am willing to debate that matter at any other time, but just now I am attending to the hon. member for Vancouver-Burrard.


John Horne Blackmore: The hon. gentleman will get the surprise of his life when he does.


Charles Hazlitt Cahan: What I do say is this, that in this bill, with the terms of which I am in accord, except that it is introduced to satisfy
a certain political demand, the government are making concessions which will simply encourage those who are demanding this alleged reform to claim still further concessions. The next claim which will be made-it is clear from the speech of the hon. member for Vancouver-Burrard and those of other hon. members-will be the use of the printing press to supply Bank of Canada bills in payment for public services and to supply public needs, and to service and pay off the public debt of Canada. That is the trend of the discussion, and that agitation is encouraged by the concessions which the government are making in introducing this measure. I sincerely hope, however, that the courage of the government will be restored and that they will be stalwart and strong enough to withstand this agitation. I am thoroughly convinced that even if Mr. Herridge and the hon. member for Vancouver-Burrard and the social credit members and others unite with perhaps a few other Liberal members in this house, who are not quite as outspoken as the hon. member for Vancouver-Burrard, and the issue is fairly joined, the people of this country are so sane and so well informed as to the facts that they will resist the demand and defeat it by an overwhelming majority. If that combat is to come, I hope it will come before the years of my long life are altogether closed.


Gerald Grattan McGeer: I want to refer to just one point. The hon. gentleman has represented me as saying that I think the banks are wrong in holding $103,000,000, and he says I dc not appreciate that that $103,000,000, over and above their actual reserve requirements according to law, is necessary to maintain the stability and security of the banks up to the point where they can command the confidence not only of the people of Canada but of other nations; that I do appreciate that something in excess of legal reserves is a practical necessity; that I do not understand that that margin of security over legal reserves is essential to the general well being of the dominion. Let me point out to him that he is telling only half the story. He has overlooked the fact that, in addition to the $199,000,000 of Bank of Canada bills that the chartered banks have on deposit, they have also the security of the $80,000,000 odd of gold reserves held by the Bank of Canada, as well as the $90,000,000 odd of gold reserves that they are using to support the Bank of Canada bills in issue at the present time. In addition to that $199,000,000 of Bank of Canada bills on deposit with the Bank of Canada by the chartered banks, there is $339,000,000 of avail-
Bank of Canada

able Bank of Canada bills which can be issued to support the bank, and the gold reserves not in use by the Bank of Canada at the present time.


Charles Hazlitt Cahan: Quite so.


Gerald Grattan McGeer: To say, as he has said
this afternoon, that I do not appreciate the need of that 8103,000,000 of excess reserves would be to accuse me of not knowing that the Bank of Canada and not the chartered banks, and the gold reserves of the Bank of Canada and the government's administration of our gold reserve and the issue of our legal tender currency, are the security for our national position in international affairs. That I do appreciate. But that I do not think he understood in the argument he presented to the house this afternoon.
I want to go a little bit further. Let the hon. gentleman be not too sure that the fight of which he spoke will not come. But let him not discount the intelligence of the Canadian people, because they have been bamboozled too long by the kind of arguments which the hon. gentleman has presented today, and which tell only a small portion of the truth. There are, thank God, in Canada to-day men who are prepared to go forward, letting the people know the kind of thing that they have suffered under the administration of orthodox finance and under the monopoly which the private money system has wielded. The hon. gentleman sneered at the campaign of William Jennings Bryan and gloated over the fact that the republican party went back in 1896 and continued in power for a great many years-that the sound money men won. But if he will go back and quote from some of the men who saw the trend of affairs, he will have seen sound money and orthodox finance bring the great United States to her knees in bankruptcy and disaster and destitution in the appalling year 1933, when that type of republicanism and that old toryism for which he stands to-day disappeared from the United States, and disappeared forever. It has gone like other things that have failed to survive, because it brought disaster where it promised the blessings of progress. A new day is dawning, and the day will come when every man in Canada will know and understand the practical and understandable theories of the economic bloodstream of our social order, the medium of exchange which men must have in order to live even on the lowest standards of living, a circulation which must be ample and free if they are to enjoy the abundance which science has brought within the reach of humanity.

Do not be alarmed at the future. Other men have been more alarmed than is the hon. member-


Charles Hazlitt Cahan: I am not alarmed.


Gerald Grattan McGeer: -when they found progress sweeping on. But, I venture to say, even before the hon. gentleman passes on-which I hope will be many, many years hence-he will be standing shoulder to shoulder with us, fighting the battle of humanity, seeing a better day for toryism and for the people of Canada.


Charles Hazlitt Cahan: I will reply in only a few
words. I have lived through similar agitations in two other countries. I have seen the miseiy, the wretchedness, the poverty and the suicides, as well as death in other forms, which have been brought about through the adoption of unsound monetary policies. I am not scared by the eloquent suggestions of the hon. gentleman, because I have faith in Canada, faith in the sanity of our people, and I am persuaded that the progress we have made in the past under sound monetary policies is but a promise of the greater prosperity which awaits this country in the future.


René-Antoine Pelletier: The signs of the times point indeed to what may happen in this country in the future. We have had evidence, and it grows day by day, that there is a definite movement towards the formation of a union party in Canada. On one side may be aligned the forces of reaction, on the other the forces of progressive thought. Undoubtedly that day is coming, but because up to the present the situation has not been made clear it may serve a good purpose to clarify it on this occasion.
To-day there is no combined or effective opposition to the Liberal party. There are in Canada various schools of progressive thought, but none sufficiently large of itself to offer effective opposition to the present government. But I feel sure that, with the alignment of all progressive thought in Canada in order to accomplish greater abundance in this life for the common people, there will develop a definite forward movement against the forces of reaction. I merely wish to point this out because of the remarks of the hon. member for St. Lawrence-St. George, and to assure him, even though we have not his experience and have not arrived at his age in life, it is a principle of democracy that the will of democracy must eventually prevail. If the people of Canada desire progress, the only way in which they can achieve it is through the language of political action. I have no doubt that the hon. member for

Bank of Canada
St. Lawrence-St. George well understands what we mean by "the language of political action." When Saskatchewan was "threatened," as they said, by social credit forces, that was the language of political action. The Minister of Finance has definitely stated that he brought in this act for political reasons. Of course they were political reasons. Nevertheless that is how democracy works. It works through the medium of political expression, and we intend to continue to give such expression so that the forces of progress in this country may ever go forward. It does not make any difference to us whether progress comes through the Liberal party or through somebody else. If political action makes for progress, democracy is on the way to winning a battle which it must continue to fight.


Some hon. MEMBERS:: Carried.


René-Antoine Pelletier: It is not carried. It
will not be carried-for a while, I mean, Mr. Chairman. It seems to me that at this point there is something we should make quite clear. Misunderstandings have arisen between two progressive parties concerning this particular legislation. It was advanced in certain parts of Saskatchewan that the social credit members had opposed progressive legislation of the Cooperative Commonwealth Federation party. To-day I refer to that, not by way of criticism but because I believe it is too bad that -the forces of progress should be split by such technical details as these. It is too bad that misunderstandings arise from time to time. For that reason the stand we took on that occasion should be made, I believe, quite clear. I well recall the remarks I made in that connection, which are recorded in Hansard of February 26, 1936.	.


James Lorimer Ilsley: On a point of order, I do not wish to limit discussion, but I submit that what the hon. gentleman is about to say will obviously be out of order.


René-Antoine Pelletier: I agree that it is out
of order; nevertheless-


Frederick George Sanderson: The point of order
raised by the minister is well taken. This discussion for the last hour and a half or two hours has been out of order, because we are now on a definite clause, the section having to do with the directors of the bank. I will read it in order to refresh the memory of hon. members, because the discussion has strayed very far from it:
The bank shall be under the management of a board of directors composed of a governor, a deputy governor, and eleven directors
appointed in accordance with the provisions of this act. There may also be an assistant deputy governor who shall not as such be a member of the board.
From now on I will confine the discussion, as far as I can as chairman, to the clause at the moment before the committee, and I would ask the hon. gentleman, who has not yet concluded, to observe the ruling.


René-Antoine Pelletier: No member of this
committee knows better than I do the wisdom that you display, Mr. Chairman, in guiding the deliberations of the committee, and I accept your ruling. I would remark, however, that latitude has been allowed other members on this question. If they should have refrained from discussing the question it might have been good policy to prevent such discussion because it is not right to deprive us of the same latitude. Nevertheless I respect your decision and will confine myself to the clause under discussion.
The board of directors will reflect the policy which may be adopted by the majority of the members of the House of Commons, in other words by the government of the day, and it is therefore important when we are considering their appointment that we should know what the policy will be. I have asked the question time and again and have come to the conclusion that it is impossible for the government to determine what they mean by the issuing of credit and currency in terms of public need. They have refused to tell us whether they will use the Bank of Canada to create money in order to take care of unemployment. They have refused to give us some idea of what is meant by the issuance of credit and currency in terms of public need, and it is for that reason, and because we have waited so long for this legislation, that we are pressing this question now. We had faith in the beginning and we kept quiet concerning the Bank of Canada, but now the appointment of the directors is under consideration I submit the time is opportune for the government to give us a clear-cut definition of the issuance of credit and currency in terms of public need. The government evidently do not intend to answer the question; possibly they themselves do not know what they mean. I will, therefore, drop that question and ask another. Who prints the bills of the Bank of Canada?


James Lorimer Ilsley: There are two bank note companies in Ottawa who print these notes. Public tenders are called for and contracts awarded.
Bank of Canada


René-Antoine Pelletier: Are tenders asked for only from these two companies?


James Lorimer Ilsley: These are the only two in Canada.


René-Antoine Pelletier: Then there is some sort of monopoly. Why is it necessary for the Bank of Canada to have these bills printed by a private institution?


James Lorimer Ilsley: The government is not itself in the engraving business and has no facilities for printing notes.


Mr. LANDERYOU:: The Liberal party has said that usury once in control will wreck any nation.
Some lion. MEMBERS: Order.


John Charles Landeryou: I do not think that is oul of order. Usury once in control will wreck any nation. The Minister of Finance says that he is not going to issue money and credit debt-free but will continue to borrow. Can he explain how the Liberal financial policy will lower taxation and debt in Canada?


Frederick George Sanderson: The hon. member heard my ruling a few moments ago and I would ask him to confine his remarks to section 3, which has to do with the board of directors.


John Charles Landeryou: The directors are more or less experts and they should have some say in matters of policy. It should be the duty of the government in power at least to give thpm counsel and advice or to lay down a policy that will relieve Canada of the tremendous financial burden from which we are suffering. I should like the minister to mention any plan he has in mind which will reduce taxation having regard to the very considerable increase in this direction during the past year. I would give him even fifty years.


Frederick George Sanderson: Shall clause 3 carry?


John Charles Landeryou: I should like to have a statement on that question of debt and taxation.


James Lorimer Ilsley: The subject of debt and taxation has been discussed many times in this house, and certainly it is not my place as the sponsor of this bill to make a statement on that subject under this section of the bill.


John Charles Landeryou: The hon. member for St. Lawrence-St. George (Mr. Cahan) spoke very disparagingly of the efforts of monetary reformers in Canada, and so far as social credit is concerned we have advocated an increase ill purchasing power.
[Mr. Ilsley.l


Frederick George Sanderson: Order. Will the hon. member be good enough to resume his seat. He knows very well that he is out of order and I would ask him to confine his remarks to the clause under discussion. Beauchesne's Parliamentary Rules and Forms lays it down that speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.


John Charles Landeryou: I was referring to the remarks made by the hon. member on this very section.


Some hon. MEMBERS:: Order.


John Charles Landeryou: The hon. member for Peace River (Mr. Pelletier) brought to the attention of the minister this question of the issue of money and credit in terms of public need, and the statement was made that the idea was to maintain maximum production and maximum employment. Is it the intention of the government, then-


Some hon. MEMBERS:: Order.


Frederick George Sanderson: Order. I must ask the hon. member to resume his seat. Is he prepared to conform to the ruling of the chair? If so, he may be permitted to proceed, confining his remarks to the clause under discussion.


Mr. HEAPS:: It is very difficult, Mr. Chairman, to limit any speaker in that manner. In connection with this very section the question of the policy of the bank is necessarily under discussion. I do not want to prolong the debate, but in fairness to the hon. member I would point out that we are dealing with the appointment of directors. It is under these directors that the policy-


Some hon. MEMBERS:: Order.


Abraham Albert Heaps: Will hon. members kindly
be quiet when I am raising a point of order?


Frederick George Sanderson: The hon. member
must state his point of order as briefly as possible.


Abraham Albert Heaps: You cannot tell how brief I
have to be; I will determine that. I am stating that under this clause dealing with the appointment of directors any hon. member has a right to speak on the question of the policy that these directors are likely to adopt. The question whether they issue more currency or less, which I do not for the moment, want to discuss, is strictly within this clause and the succeeding one, and in spite of the fact that hon. members are anxious to get

Bank of Canada
through with this business as quickly as possible, when a member wants to discuss something which is strictly within the clause I do not think he should be told that he is not within his rights in so doing.


Richard Bedford Bennett: The difficulty arises from the fact that we have all been enjoying very wide latitude in the discussion under the section dealing with the title. Once that was adopted, I think the rule is clear that in committee we must be confined to the clause or section under consideration. The time when the hon. member could have spoken was on section 1, but once that passed he is, in my judgment, bound by the rules to make his observations relevant to the question at issue; that is, the substitution of a new section providing for the appointment by the government of eleven directors, for the section providing for the method heretofore employed.


Frederick George Sanderson: In addition to the
remarks of the right hon. leader of the opposition (Mr. Bennett), I would read citation 753 under standing order No. 75:
The second reading of a bill is that stage when it is proper to enter into a discussion and propose a motion relative to the principle of the measure.


René-Antoine Pelletier: We have been asking
questions, which I agree are rather lengthy; they demand some explanation-


Frederick George Sanderson: Order. I have already
given my ruling, and the hon. member is out of order when he discusses the matter.


John Charles Landeryou: I have no intention
of challenging the ruling of the chair. The only reference I wish to make to what has been said by other hon. members is to the statement made by the hon. member for St. Lawrence-St. George (Mr. Cahan), that we are simply out to turn the printing presses loose and flood the country with Bank of Canada bills. In answer to that I say that there is no intention on the part of the social credit group to turn the printing presses loose. All we suggest to the minister is that when there is idle labour and unused material in the country, the government should take steps to have our monetary system reflect our collective ability to produce goods and services, using that idle labour and unused material. Go just that far; issue money to make possible the development of Canada by the use of the idle labour and unused material. Is it the intention of the government so to use the Bank of Canada that the idle labour and unused material can be brought into production?


René-Antoine Pelletier: The section provides
that there may also be an assistant deputy governor who shall not as such be a member of the board. Why is this necessary?


James Lorimer Ilsley: This has been a provision of the act from the beginning. The only members of the board other than the directors are the governor and the deputy governor, and also the Deputy Minister of Finance, who has no vote.


Richard Bedford Bennett: He is the contact man between the government and the bank.


René-Antoine Pelletier: How was the number of directors arrived at? Why are there eleven rather than seven or fifteen?


James Lorimer Ilsley: I answered that question
rather fully just a few minutes ago in reply to a question by the leader of the opposition. Unless the hon. member insists, I should be sorry to repeat what I said.


René-Antoine Pelletier: I have no intention
of holding up the committee; I realize we are trying to make progress as fast as possible, and I shall observe the remarks of the minister in answer to the leader of the opposition.


[Stage Direction]
Section agreed to.
Section 4 agreed to.
On section 5-Directors.
Richard Bedford Bennett: I quite understand that the minister, who is very ably taking the place of the Minister of Finance, would hardly be prepared to make any alteration in the section, but I must point out that to leave this section as it now stands will, I think, be found extremely embarrassing to the government. I believe they will have to amend it next session. The minister will recall that in the section passed in 1936 we provided for the retirement of directors in 1940, 1941, and as late as 1942. It is obvious that as the section now before the committee reads these members of the present board will retire only on the last day of February in their respective years. I should say that the government would find it highly desirable to provide for their retirement at once, or at least at the end of February of next year, and then re-appoint them, if desired, because provision is made here for re-appointment; otherwise I think the government is going to be embarrassed. I say that frankly. We have continued these directors in office until the February preceding the expiration of their term of office. It Will be recalled that in the 1936 section-without going into it at length- we provided for two to retire at the annual
Bank of Canada

meeting in 1940, two in 1941, two in 1942 and so on. Now we repeal the section, and there is no longer any authority for their appointment; that has vanished. There are no annual meetings in the sense heretofore provided; therefore there can be no appointments at the annual meetings. But in the section now under consideration we also say that:
The minister with the approval of the governor in council shall as of the first day of March in each year appoint for terms of three years each a sufficient number of directors to provide that there shall be eleven directors: provided, however, that every director holding office at the date of the coming into force of this subsection shall continue as a director up to and including the last day of February in the year of the expiration of the term of office for which he was elected or appointed.
This, of course, means that whatever policy the government may desire to embark upon, there is no power to remove the directors unless you come back to parliament. The policy of the government is reflected by the board, and the government should be in a position to put in its board of directors at least by next February. This can be brought about in the manner I have indicated. I am not going to do more than direct attention to the matter, because I realize the position of the minister.


James Lorimer Ilsley: There is a majority of
government appointed directors on the board at the present time, and as far as I know there has been no criticism of the shareholder appointed directors, who are in the minority. Both are satisfactory.


Richard Bedford Bennett: But those appointed by the government are appointed with definite limitations, and they will continue in office for a considerable length of time. Whether or not they would reflect the policy of the government with a government owned institution as distinguished' from a government controlled institution is a matter which obviously the government is not going to discuss. I am content as long as I have directed attention to the fact that I think the government will want to come back later and change the section.


[Stage Direction]
Section agreed to.
On section 6-Selection of directors.
Richard Bedford Bennett: In Australia the age limit is seventy years instead of seventy-five with respect to bank directors, and it will be observed that in this legislation the territorial question is not dealt with; this provides only for occupational diversification. In the report made by the royal commission in 
Australia, after investigation they indicated that had been one of the difficulties, and recommended that there should be both capacity and diversity of occupation, as we have here. At the present moment, under the preceding section the board that came into being reflected in part at least the standpoint of geographical and other considerations that had nothing to do with the essential question of capacity.


[Stage Direction]
Section agreed to.
Sections 7 and 8 agreed to.
On section 9-Exchange of shares.
Richard Bedford Bennett: In connection with the fixing of the price I mentioned to the minister the other evening that the record indicated that no such price as $59.20 had been paid for board lots in Toronto. I have not the Montreal figures before me; but I suppose that is only a question of computation, and I take it that the officials have satisfied themselves that $59.20 is the average price on the two exchanges during the months in question.


James Lorimer Ilsley: The $5920 represents the average of every single sale made on the Toronto and Montreal exchanges for the period in question. The exact amount is $59.17.


Richard Bedford Bennett: That covers the months of January, February, March, April and May?


James Lorimer Ilsley: Beginning with January 1
and extending to the day the Prime Minister made the announcement that these shares would be taken over.


Abraham Albert Heaps: The minister mentioned
yesterday the method by which this computation was made. Personally I think $5920 is a little too much to pay for these shares which less than four years ago cost the public approximately $50 per share. To me it seems absurd, to use a very mild term, that we should issue shares at $50 and four years later buy them back at a premium of $920.


James Lorimer Ilsley: It is not the same public.


Abraham Albert Heaps: But they are the same shares. I am not worrying about the public;
I am worrying about the shares, and I am thinking of the treasury. This little transaction is costing the treasury of this country $920,000, and from a logical, sound, common sense basis I cannot see why we should issue $50 shares in 1934 and then buy them back at $5920 in 1938. They were a gilt-edged security paying 4i per cent all the way

Bank of Canada
through, and they went up in price only because it was practically certain that the interest would be paid during the term of the shares. I think if we bought them back at $50 per share plus accrued interest, that would be a proper price. We are not paying the value of the shares; we are paying the speculative price quoted.


James Lorimer Ilsley: No.


Abraham Albert Heaps: Yes. In my opinion that
price represents the speculative value placed upon them. If we had securities yielding five per cent, these shares would not have gone up so much; on the other hand, if government securities yielded only 2i per cent, these shares would have gone much higher. I do not think the government ought to buy back its own securities at such a high premium as this.


James Lorimer Ilsley: I would just ask the hon. member to put this question to himself. If he had taken some of his money or some of his children's money or some of his wife's money and bought some of these shares at $59.17 or $59.20 a few months ago, would he have been prepared to rise in his place and say he had been justly and fairly treated if the government came along and took those shares from him at $50 per share? That is the problem which confronted us; that is the question we had to ask ourselves.


Abraham Albert Heaps: That is a fair question. It so happens that I have a few of these shares, which cost me more than $59.20 per share. What is the method the government intends to adopt to finance the repurchase of these shares.


James Lorimer Ilsley: That is dealt with in subsection 3 of this section, which reads:
The minister shall as of the date of the coming into force of this subsection reimburse the bank the amount by which payments made by the bank to the holders of class "A" shares, excluding any amount paid by way of dividend, exceed the par value of such shares and such reimbursement shall be effected by surrendering to the bank for cancellation two thousand of the class "B" shares held by the minister having the aggregate par value of one hundred thousand dollars and by paying to the bank out of any unappropriated moneys in the consolidated revenue fund the sum of eight hundred and twenty thousand dollars.


Abraham Albert Heaps: I am wondering if the
Minister of Finance is going on the market to borrow money to finance the purchase of these shares.


James Lorimer Ilsley: That amount is payable out of the consolidated revenue fund.


Abraham Albert Heaps: As far as I can see from the condition of the consolidated revenue fund, it amounts to the same thing. Probably the government will go into the open market and borrow the money in order to purchase these shares. What is the difference between the government having more bonds outstanding to the public and having these shares outstanding? Personally I do not see that there is very much difference.


James Lorimer Ilsley: The rate of interest is considerably lower.


[Stage Direction]
Section agreed to.
Sections 10 and 11 agreed to.
On section 12-Bank may buy and sell dominion and provincial securities.
Richard Bedford Bennett: Will the bonds which we put up with the bank be returned to the treasury now that the bank is publicly owned?


James Lorimer Ilsley: No; I do not think there is any intention of having that done.


Richard Bedford Bennett: I think it should be.


James Lorimer Ilsley: Well, the bonds the government delivered to the bank were for value received. The Bank of Canada assumed the liability of the government on $150,000,000 of outstanding dominion notes, and therefore the bonds belong to the bank. I do not see anything in that transaction to effect a release of the government from its obligation to deliver those bonds to the bank.


Richard Bedford Bennett: Well, I shall merely state the case and leave it at that. 1. The Dominion of Canada delivered to the Bank of Canada bonds amounting to $150,000,000 carrying three per cent interest.


James Lorimer Ilsley: The right hon. gentleman may be right. I was thinking of the bonds in respect of the dominion notes alone.


Richard Bedford Bennett: I am coming to that. 2. The Bank of Canada assumed responsibility for the payment of dominion notes. 3. The bank has now become the property of the people of Canada. 4. I therefore contend that the Bank of Canada should hand back to the people of Canada the bonds thus delivered to it because it no longer has any responsibility, that responsibility having been taken over by the people of Canada.


James Lorimer Ilsley: The bank has a separate corporate entity and must be treated as any other corporate entity. It cannot make a great deal of difference in the final result because the amount paid for interest to the bank is paid to a bank owned by the government. Nevertheless, the bank has a separate
Bank of Canada

corporate existence. It is not a department of government; it is a corporation, a body politic. As I said before, I do not see anything in the circumstances to effect the release of the government's liability.


[Stage Direction]
Section agreed to.
On section 13-Reserves to be maintained by chartered banks.
Richard Bedford Bennett: Some of our Canadian banks are carrying on operations outside Canada. If they were to become insolvent because of acts committed outside Canada, it would affect Canadians. Therefore, the reserves maintained by the banks in Canada should be for their complete responsibilities, both in and out of the country. That is the position I take with respect to that.


James Lorimer Ilsley: I am informed that in respect to the liabilities to pay in other currencies, other reserves are required.


Richard Bedford Bennett: The countries in which they carry on business require that reserves be maintained. It will be recalled that we passed a statute which permitted some of our banks to issue paper money in the terms of the currencies of the communities in the West Indies in which they were carrying on their business. However, their head offices are in Canada; they are subject to our laws, and there should be no risk of the structure in Canada being impaired by anything that might take place out of the country. I have always contended it is not sufficient that the reserves should be only for the amounts payable in Canada.


James Lorimer Ilsley: There is a provision in the Bank Act which provides that Canadian banks which are liable to pay in foreign currencies must maintain separate reserves satisfactory to the Minister of Finance of this country, apart altogether from the laws of the countries in which they do business.


Richard Bedford Bennett: That provision was in mother statute for some time, and then I Delieve it was included in the Bank Act, although I speak subject to correction. I quite agree as to that, but what we are endeavouring to do is to deal with deposit liabilities payable in Canada itself. The structure here may be affected by untoward circumstances outside the geographical boundaries of this country and over which we could exercise no control except in the manner I have indicated. I simply direct this to the attention of the minister, and I do not intend wasting any time arguing.


[Stage Direction]
Section agreed to.

On section 14-Rest fund.
Richard Bedford Bennett: We are paying three per cent to this bank every year as interest on our bonds, and what we get back is that proportion of the money to which we are entitled. Why should we pay interest on bonds that were put up originally for a purpose which is now discharged by the country as a whole? Section 41, which deals with that phase of the matter, reads:
No statute relating to the insolvency or winding up of any corporation shall apply to the bank and in no case shall the affairs of the bank be wound up unless parliament so provides;
In other words, there is the recognition that this is an arm of government. It is no longer subject to the normal laws governing corporations that do business of this kind. We pay an interest rate of three per cent, which amounts to $4,500,000. We might just as well cut that payment right off.


James Lorimer Ilsley: It all comes back to us.


Richard Bedford Bennett: No, it does not. If it did, I would not be making this argument. It is to that very point that I am directing attention. Surely I could not put it any more clearly than I have in the proposition I put before the committee. We pay $4,500,000 because they are three per cent securities. This bank had a revenue of $4,500,000 because of its having assumed originally responsibility for dominion notes. But that responsibility is now a national one, borne by the people of this country. We have made it perfectly clear that we are not going to have any difficulties of that kind in connection with shareholders or anyone else. Who is responsible? The Dominion of Canada is now responsible. There is no getting away from that; that is the whole argument upon which this bill proceeds. Why should the Dominion of Canada, when its responsibility has been fixed and settled, hand over $4,500,000 per annum, which, when it comes back to us, is diminished, mark you, to the extent of one-half? Look at what we get -back. This is what is provided:
-and after deducting an amount equal to four and one-half per centum of the paid-up capital which may be utilized for the payment of cumulative dividends at a rate of four and one-half per centum per annum, payable half-yearly, the ascertained surplus available from the operations of the bank during each financial year shall be applied by the board as follows:
Then follow particulars as to the rest fund and so on. Paragraph (c) reads:
If the rest fund is not less than twice the paid-up capital, the whole of such surplus shall be paid to the receiver general and placed to the credit of the consolidated revenue fund.

Criminal Code
This is at great variance to what happened in Australia. I must say I find it difficult to accommodate my mind to thinking that the taxpayers of Canada have to pay $4,500,000 annually when the bank now belongs to them and is no longer mixed up with any question of profit or gain, to use the language that has been used in this chamber on more than one occasion. Nor has this bank any concern about the question of dividends. This is a public institution belonging to the people of Canada; it is an arm of government.


[Stage Direction]
Section agreed to.
Sections 15 to 21 inclusive agreed to.
Bill reported, read the third time and passed.


[Stage Direction]
The house again in committee on Bill No. 137, to amend the criminal code-Mr. Lapointe (Quebec East)-Mr. Johnston (Lake Centre) in the chair.
On section 6-Registration of revolvers and pistols.
Ernest Lapointe: I have an amendment
which I shall ask my colleague to move to this section.


Ian Alistair Mackenzie: Mr. Chairman, I move that clause 6 be struck out and the following be substituted therefor:
6. Section one hundred and twenty-one A of the said act as enacted by section three of chapter forty-seven of the statutes of 1934, is amended by adding thereto as subsection three the following:
(3) In addition to the registration provided for in subsection two of this section there shall be, similarly, a general registration of all revolvers and pistols during the period between the first day of March and the first day of July in 1939, and during the same period every five years thereafter.


Ernest Lapointe: Under
the law as it is at present every pistol and revolver has to be registered with the police; but it happens, of course, that these weapons often change hands, and so, to keep track of them, provision is being made for a general registration of all these arms every five years.


Richard Bedford Bennett: The only thought I had
this morning was whether a period of five years is not a rather long one in which to have no re-registration for the very reason
the minister has just mentioned, namely, the rapidity with which these weapons change hands.


Ernest Lapointe: It is the period suggested by the Royal Canadian Mounted Police.


Richard Bedford Bennett: They would have a
better idea than I would.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 22-Holder of lease of gold or silver mine defrauding owner.
Ernest Lapointe: Subsection 5 stood this morning because of an objection by the right hon. leader of the opposition.	Since then I have looked up the
Interpretation Act, section 20 of which reads:
Whenever any act or enactment is repealed, and other provisions are substituted by way of amendment, revision or consolidation,
(a) all regulations, orders, ordinances, rules and by-laws made under the repealed act or enactment shall continue good and valid, in so far as they are not inconsistent with the substituted act or enactment, until they are annulled and others made in their stead.
So the order in council would still be in force.


Richard Bedford Bennett: Yes, that would be unquestionably so. We had the same question up in the Bank of Canada bill to-day.


Ernest Lapointe: I think
this will be sufficient.


Richard Bedford Bennett: If the minister thinks
it is sufficient, I am content. I only thought it might be made a little clearer.


[Stage Direction]
Section agreed to.
Mr. WOODSWORTH:: Before you report the bill, Mr. Chairman, I have had objections raised to the wording of clause 14 dealing with disorderly conduct. It seems that this provision was requested by the Royal Canadian Mounted Police, who claim there has been some difficulty with regard to screaming. The new provision appears to be too broad. It reads:
(f) causes a disturbance in or near any street, road, highrvay or public place, by screaming, swearing or singing, or by being drunk, or by impeding or incommoding peaceable passengers, or in any other way.
The last phrase is very broad indeed and might prevent peaceful picketing, which has been commonly regarded as quite legal.


Ernest Lapointe: I have had some representations made to me with regard to this very matter, and in reply I
Criminal Code

have given the assurance and the Department of Justice has also given the opinion that this provision will in no way affect picketing, which is legal. This is merely to cover some illegal way of creating disorder. Picketing is not disorder.


James Shaver Woodsworth: No; but does not the last phrase, "or in any other way," leave it wide open?


Richard Bedford Bennett: Only unlawful ways.
Those words would not permit a lawful matter to be made unlawful. There is no question about that.


Abraham Albert Heaps: The whole question resolves itself into what the officer on duty regards as unlawful.


Ernest Lapointe: Oh, no; it is the law, and surely if the matter is ever raised, anybody can quote the opinion of the Minister of Justice in charge of this bill and the opinion of the leader of the opposition. What better answer can we give?


Richard Bedford Bennett: Unfortunately the courts have decided that you cannot lead from Hansard in support of your argument; but I have no doubt that the Minister of Justice will give a written opinion to the hon. member for Winnipeg North Centre (Mr. Woodsworth) and I should be glad to associate my name with that of my right hon. friend.


Ernest Lapointe: That will be fine. I have written a letter already.
Bill reported, read the third time and passed.



PENITENTIARIES


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to incorporate a commission with power under the Minister of Justice to administer, control and manage the penitentiaries; to provide for salaries of the commissioners and assistant commissioners and to amend and consolidate the Penitentiaries Act and amending acts and repeal the same.
Richard Bedford Bennett: Mr. Speaker, I will expedite business by agreeing to your honour leaving the chair without prejudice to the position which I propose to take with respect to this resolution. Perhaps it can be more readily

discussed in committee. I must say, however, that I have a very strong opinion against our proceeding with this matter at this time for
reasons that I shall presently give.


[Stage Direction]
Motion agreed to, and the house went into committee, Mr. Johnston (Lake Centre) in the chair.
Richard Bedford Bennett: I am hopeful that the Minister of Justice will not ask us to deal with this matter at this late date in the
session.
Here is a measure of first-rate importance. I use the word "first-rate" in the sense in which it was employed by an old parliamentary draftsman, as denoting a measure which profoundly affects the whole country and no one particular section of it.
A royal commission has made a report. That report was not laid on the table of this house until the fourteenth day of June. The evidence upon which the report was made should also be laid on the table, and I suppose that in due course it will be, but it is not yet available.
The report is a highly contentious document. I am receiving letters from many people complaining of the absolute unfairness, and more, the absolute untruthfulness of statements made in that report. In a public newspaper, for instance, Messrs. Morris of Kingston have published a letter in connection with the handling of coal. The coal was unloaded at a dock. They estimated they had unloaded 250 tons, but it was subject to being measured and weighed. It was weighed and it was found that there were only 217 tons. They sent up the balance of the coal, got receipts for it, and were paid for it; yet they were pilloried in that report. I might cite page after page.
I wonder whether the committee is aware of the fact that this is the first time in our history that as a parliament we are invited to remove a man from office upon the report of a commission which gave him practically no opportunity to be heard. I wonder whether hon. members realize just how the evidence was taken, whose evidence it was, and the conditions under which it was given.
I wish to tell the committee something as to the appointment of General Ormond. He was not appointed by the previous government. The civil service commission was asked to appoint someone to be superintendent of penitentiaries. Advertisements were published throughout this country. Among those who applied for the position was General Ormond, who at that time was district officer commanding at Calgary. He is a pronounced Liberal, as are the members of his family.

Penitentiaries Commission Act
When the applications were completed, the then Minister of Justice-I recall the fact vividly-was spoken to by the civil service commission, and informed that they had a number of applications. Thereupon the following were appointed to consider them: the late General MacBrien; Mr. 0. M. Biggar, K.C.; Mr. Edwards, K.C., Deputy Minister of Justice; representing the Department of Justice; Colonel Kemmis, representing the civil service commission; Mr. Dufresne, director of public safety, Montreal; and Doctor Porteous, head of the medical side of the institution for mental diseases, Verdun. Those gentlemen considered all the applications received by the commission, and upon the strength of the recommendation made by them the commission appointed General Ormond to that office. That is the story of his appointment.
He has been pilloried in the report. I have great confidence in the fairness of mind of the minister in a matter of this kind. I commenced what I have said by remarking that this is non-political. Having established that it is non-political, I then have great confidence in the fair-mindedness of the Minister of Justice. Is it quite right that one who had a distinguished record in the great war, who occupied a position of high importance in the permanent militia of this country and was well spoken of, who in the ordinary course would have gone from the Calgary command to one more important, should now be confronted with such action as is proposed upon the report of a commission which investigated and took evidence in many quarters from convicts and, after all this was done, brought him up, put him under oath and grilled him by examination and cross-examination? Did you ever hear of the governor of an English prison being treated in that way? Is that, Mr. Chairman, your conception of British fair play and justice?
Strange as it may sound, I barely know the gentleman. If I have seen him ten times, that would be the maximum. He came to Calgary when I was away as leader of the opposition; but I am familiar with the circumstances of his appointment, and I verified my recollection as to the board which recommended his appointment to the civil service commission. Should we not do something a little more decent than is now contemplated to a man of this type? Should we, in the closing days of the session, without the evidence having been laid on the table or our having an opportunity to study it, with the house meeting three times a day, with committees in session, with hon. members unable to examine this very important report, undertake to make ourselves parties to the 51952-275
condemnation of this man? Frankly, having endeavoured to think of the matter as fairly as one can think of anything, I cannot bring myself to believe that we are as unfair as that.
There is one other point. This is dealing with the administration of an extremely important branch of the social life of Canada. Penal institutions have existed for many centuries. The manner of their administration has many times been the subject of investigation and criticism. As a consequence, great improvements were wrought by Howard and those associated with him. Our penal institutions are being maintained for two purposes', one, the punishment of the offender; two, to endeavour so to improve his character that he might be a not unuseful member of society when he left prison. There has never been a time that I can remember in my reading when those who were the victims of their own wrong-doing and had been subjected to the results, by sentences of punishment and imprisonment, have not complained of those whom the law placed in authority to enforce the decrees of society. That is the reason why these people have complained of General Ormond. That is the explanation of this tittle-tattle. There is nothing new about it. It is as old as time itself, and I cannot think that we should set at naught the conditions under which this man came into our service without at least obeying the law itself.
I put this to the minister. Ormond is a civil servant, and he is subject to the provisions of the Civil Service Act. If he is incapable, he must have the allegations of his incapacity charged against him, and he must be given the fullest opportunity to make his defence. Did he have that opportunity? And since when, in this country, has it been possible for three men, without responsibility to this parliament, to arrogate to themselves the right to dismiss this man-for that is what it amounts to-without his having those safeguards with which the law surrounds him made effective in his behalf? I put that as number one. I find it very difficult to accommodate my mind to any other thought. How would we like to be placed in that position? Here is a man appointed under the circumstances that I have mentioned, who sought office in the public service, and who was filling a fine position. His credentials are passed upon by a dispassionate, impartial, nonpolitical tribunal. The civil service board makes the appointment, and then I contend he becomes subject to the Civil Service Act, and can be removed from office only in consequence of his having contravened the provisions of that statute. Has he done so?



Penitentiaries Commission Act
Who says so? And we, as a parliament, we the members of this house are the people that are concerned. We said to Ormond when he went into that service under the Civil Service Act, " There is what governs you, Mr. Ormond ; if you are guilty of political partisanship, you know what happens. If you contravene any of the sections of the act, out you go; but you do not go until you are heard."
I often recall in that regard what was done in the West Indies where a judge sitting on the bench made it impossible for his creditors to recover against him. He was finally dismissed from office, and properly so; but when the case went before the Judicial Committee of the Privy Council, they said, "The conduct of this man is indefensible, but you cannot remove a man who has the queen's commission unless he has had an opportunity to make his defence, even though you know he cannot make a successful defence." That, in my judgment, is the strongest reason why we should not proceed this session.
I go a step further. It will be recalled that the proposed bill provides for the appointment of commissioners to control and manage our penitentiaries. We have never embarked upon such an experiment in Canada. Since pre-confederation days this matter was the responsibility of government, and government accepted the full responsibility. Three men are now to deal with the matter. The experience of history, whatever it may be worth-and I always think it is worth a great deal-is that when you divide responsibility of that ldnd, which is administrative, among three men on a commission, you lessen efficiency and bring about the very condition which you endeavour to .prevent and for which administrative control exists. I ask any member of this committee to think back, consider this matter and say whether he has not found that precisely what I say is true. It is one man's direction that always makes for efficient administration in an administrative body. You appoint three, and you have inevitably a condition that is repugnant to your very notion of effectiveness. Every one knows that. When you are dealing with the civil service commission, of course, you want diversity; when you are dealing with the board of railway commissioners, that is not wholly administrative; but here is an administrative arm of government under the Minister of Justice. The Minister of Justice is going to be the responsible minister who reports to this house, and under him, instead of there being as heretofore one man who looks after matters, controls and directs, there 
will be three. They meet together and discuss; two think one thing and one thinks another, and you have all the resultant inefficiency that comes from three administrative heads with respect to a matter for which the Minister of Justice is carrying the responsibility.
Then follows that other recommendation which is involved in this, the question of the parole system, which it is proposed shall be administered by these three commissioners. In the first place the Minister of Justice will agree with me that there is at the threshold of the discussion the question of the prerogative. The prerogative is that of the sovereign, and until recent years the instructions that issued to His Excellency the Governor General carried with them the right on his part to exercise the high prerogative of mercy. Originally he did it without reference to his advisers; he had himself to administer that prerogative. Now the instructions of the governor general provide that the prerogative of mercy is exercised on the advice of the government. The Minister of Justice reports to council, and council adopts his recommendation, or otherwise, as the case may be. That is to be swept out. The prerogative of mercy is no longer the prerogative right of the sovereign; it is to be handled by a parole board.
I am not for a moment saying that there may not be merit in that contention, but I am saying that I have not had any opportunity to study it. I have not had the opportunity, which it is so essential that one should have, of studying the matter in order to be able to discuss it intelligently. What is more, I want to see the evidence.


Ernest Lapointe: I can
assure my right hon. friend that nothing in this bill will change anything in the parole system.


Richard Bedford Bennett: Then the minister assures me that this recommendation is not to be put into effect?


Ernest Lapointe: There are a good many of these recommendations that will have to be weighed and considered.


Richard Bedford Bennett: I think the one that
should be most carefully weighed is the one we are now considering. That disposes of the parole question; for the minister has said that it is not proposed in this measure to adopt the recommendation which gives to the commission the powers of a parole board. We can therefore leave that.
There are a number of other subsidiary questions; but I implore the minister, more

Penitentiaries Commission Act
than. 1 ever have with respect to any matter I can remember considering in this house, not to permit us to put ourselves on record, in the closing days of the session

we expect to close in the next three or four days at least-as changing the whole system of the administration of the penitentiaries of this country.
Dismissals are involved. It was a great mistake that one member of the commission should have accepted appointment; for he was the one who appeared as counsel when Inspector Dawson was charged before Judge Daly. He has now slated Dawson and held him up as the embodiment of, shall I say inefficiency. Now he signs that report.
I entreat the minister to think of a man who values highly his reputation, a man who has not communicated with me either directly or indirectly, a man whom I scarcely know, who is opposed to me politically, whose family all his life has been actively associated with the Liberal party, a man who faced death in many forms in the slime and dirt of France and Flanders, who came back and sought honourable employment under the crown, and who was given a position, and believed, as I did, that the Civil Service Act enacted by the parliament of Canada contained the terms and conditions of his employment. Now a body not responsible to us has treated him in a manner, I make bold to say, wholly unwarranted by any evidence that could be properly adduced before a judicial tribunal. I know, from the investigations and; inquiries which I set on foot and, from reading some of that evidence, that it would not stand for a moment before a judicial body. It is the evidence of men who have been placed away from society as menaces to society, men who, to use the language of my old preceptor in law, had to be removed from society because they were like mad dogs running wild. These men, not one or two but a long line of them, tell their stories about Ormond, who at last is brought in and made subject to crossexamination by these three commissioners. On the strength of that I am asked to give my assent to a bill which removes him from office and replaces him with a commission. Does any such commission exist in England, Australia, or New Zealand? It may in some American states, but never in British countries as far as I have been able to discover in the limited time I have had at my disposal. The time for consideration is not sufficient; therefore I speak entirely subject to correction.
I have been endeavouring to look into this whole question. I visited prisons in Australia; I visited Borstal institutes in New 51952-2751
Zealand, and I have made some study of prison conditions in Great Britain. I visited a penitentiary in Canada, which is more than some can say. I went through the institution at Kingston; I saw the cells. When I read of men daring to sign a report six years after the events in question, and expect me to accept it, placing odium and discredit and disgrace upon men who value their reputations as highly as they, and compare that report with that of men who based their findings upon their knowledge of conditions as they existed at the moment, not six years after, to me it almost seems that we are not in a British country at all. I read the other day a magazine article in connection with what had taken place in Russia and how men are induced to plead guilty there. The story was told at some length by one who had been a prosecutor in Russia. Then I thought of this report, of the long row of convicts marching in, giving evidence against Ormond-


Agnes Campbell Macphail: Are they in this direction? My right hon. friend always looks this way for the convicts.


Richard Bedford Bennett: I am sorry if the hon.
member's conscience bothers her. There they are, a long line of them coming into a room. How long had they been at Kingston? What took place there? Have hon. members heard? Has the minister heard? Has he investigated? Does he realize what took place? Who were there? There is the long line; they march in just as they did in Russia; they tell their story and march out. Where was Ormond? He was doing his job here in his office. And that is Canada! That is British justice! That is the sort of thing I am asked in the closing days of a session to agree to.
I entreat the minister to let this matter stand until another session, in order that we may make ourselves familiar with this report, understand it in detail. I was going to ask him if he would lay on the table the evidence upon which this commission acted-I know he will-to enable us to see to what extent the findings are warranted. Some of them the minister says he does not propose to act upon. Of course he does not; why should he? Would any reputable minister act upon some of them? All I can do is entreat that in the exercise of his great power at this moment he will see to it that an opportunity is given to every hon. member of the House of Commons and the Senate of Canada to consider not only the report in detail but the implications of it, the evidence upon which it is founded, and to determine for himself and herself whether or not there is
Penitentiaries Commission Act

justification for such a radical change in the whole administration of our penal institutions as this bill involves.
I said I visited the penitentiary at Kingston. I have seen others, but I visited the Kingston penitentiary without notice. I saw the kind of food they were serving. I went right in; the warden was not even there; I went through the institution, saw the cells, saw these so-called places of punishment, saw the paddles that they used in connection with punishment, and I say that without question, the- penitentiaries of this country, which were administered for nearly nine years, from 1921 to 1930, by the present Minister of Justice- I forget whether he was Minister of Justice all that time-


Ernest Lapointe: From
1923 to 1930.


Richard Bedford Bennett: and administered by another from 1930 to 1935, and then by the present minister from 1935 to 1938, are administered as well, if not better than, any other penitentiaries in the British Empire. They do not in any sense warrant what has been said against them in that report.
Finally I say this. How many members of this committee, on both sides of the house, have had an opportunity to study the report of the commission? I know some who have read until late at night; but they have had committees in the morning, the house in the afternoon and again until eleven o'clock in the evening, correspondence on Saturdays and so on. How many have read that report? How many have given it that consideration upon which they could find a fellow citizen guilty; for that is what it amounts to? We are asked to record a verdict of guilty against these men, and not only to record it but to make it effective. That is why I venture to ask the right hon. Minister of Justice, in the exercise of his great power and authority in the position which he occupies, to remember that within the next few months a commission could not effect any great changes; that the penal system of this country, which has been administered as well as that of any other country in the world during the last several years, is not going to suffer by being administered in the same way for the next few months, and that between now and the time parliament meets again the fullest opportunity will be afforded to enable us to consider not only the radical changes involved but everything concerning the effective, efficient and useful administration-and I use the word "useful" as affecting the nation as a whole-of the penal system of Canada.


Agnes Campbell Macphail: I have often said to many people that I think the right hon. leader of the opposition is the best informed man in the House of Commons on the greatest variety of subjects-I even went so far as to say on all subjects-but now I am afraid I must make one exception, and that is in regard to the penitentiaries of Canada. I am sure anyone who has made anything like a detailed study of the penitentiaries in different countries would not say that Canada has had as fine an administrative system as any other country in the world. That is going a very long way from the truth.
I do not want to make a lengthy speech at this time, but I do want to say that the one commissioner to whom the right hon. gentleman referred as having appeared before the Daly inquiry presumably would be Mr. McRuer, who was counsel at that inquiry. May I say that Mr. McRuer's services at that time were made available as a result of his interest in the subject. He never received a cent from anyone for what he did then. The penitentiary files that Mr. McRuer and I went over together at that time-and the right hon. leader of the opposition might be interested to know that they contain a detailed account about myself; for with his pointing to the convicts in this direction-


Richard Bedford Bennett: No; I was pointing to the door.


Agnes Campbell Macphail: If they have not my finger-prints and photograph, at least they have a detailed story about me in the penitentiary files of this country, together with all the editorials against me but none in favour of me. It was the things which Mr. McRuer and I saw in those files, and the things we heard before that Daly commission, that convinced him that there was something very wrong with our whole system; that it was filled with intrigue and vindictiveness, and that something ought to be done about it. Since he is not here to speak for himself, as he could so well, I want to make this statement. Mr. McRuer, as the right hon. leader of the opposition knows, is a great counsel. He need not have accepted appointment as a member of the commission to which he was later appointed, and certainly he did not undertake that work with any thought of gain for himself. He took it because he was convinced, through the Daly inquiry, of the need for a thorough and wholesale house-cleaning.

Central Finance Corporation
I do not want to talk about General Ormond; but anyone who read the rules and regulations, and the interpretations of those rules and regulations, issued by General Ormond himself, would know, without having been in a penitentiary at all, if he was a sensible human being-as I am sure all members of parliament are-before this commission was ever appointed that this man was not a person who should be in charge of the penitentiaries of Canada. Many a time he boasted to minor officials that there were four or five interpretations of one rule or regulation. That alone would condemn him in the mind of any right thinking person. The prisoner was always wrong; he could not possibly be right, because if he appeared likely to succeed under one interpretation they could give another interpretation of the same rule, under which the prisoner would be condemned.
It is true that the commission has taken two years to do its work, which is a long time. It was slow in getting started. Calamity befell one or two people appointed to it at first. It did -take a long time to get started, and it did take a long time to make this study, but I do not think anyone who has read even a part of the report could fail to agree that it made a careful study. The commission did investigate the Borstal system in England. General Ormond came back and told us he had inaugurated a Borstal system in Canada. Anyone even moderately well informed on penitentiaries knew then that he had not done any such thing. It is a pity that any one person has to be condemned when he is not here to defend himself, but I am not particularly concerned about any one person in this affair. What is going to happen if we do as the right hon. leader of the opposition wishes, and take no action? We shall not only leave in office a superintendent who has been condemned, but also leave senior officers here and there who have been condemned as well. We shall then have a penal system under which the prisoners will have no confidence in -their superiors or in the system itself. If we go home without doing anything, I think I know enough about penitentiaries to say that we may have a great deal of disquiet and a repetition of the riots and near riots which have occurred so often during the regime of General Ormond. We cannot leave the report as it is. Something must be done in one way or another.
At six o'clock the Speaker resumed the chair and the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. 8, respecting Central Finance Corporation and to change its name to Household Finance Corporation of Canada

Mr. Macdonald (Brantford City)-Mr. Sanderson in the chair.
On section 1-Change of name.
Mr. THORSON:: Mr. Chairman, the subject of this bill, and its bedfellow, Bill No. 7, was remitted to the committee on banking and commerce for study. This matter was studied during this session by that committee, as it was studied last session. After hearing witnesses and giving consideration to the reference to it, the committee presented a report to the house. That report was far from being unanimous; indeed there was sharp controversy in the committee with regard to the principles involved in the report. While the votes will show that the report of the committee was carried with only a small quorum present, there are some interesting facts to be disclosed from a study of the votes taken in the committee. I think it will be found that if all those who were opposed to the principles of the report had been in committee at the same time, the- vote might have been reversed. There was a sharp division of opinion with regard to the whole subject.
The report of the committee on banking and commerce respecting small loan companies carried with it a draft bill which is described as "An Act respecting Interest on Small Loans." This bill consists of a preamble, a number of definitions and two parts. Part II is said to apply to small loan companies incorporated by special acts of the parliament of Canada. In other words, this part is applicable only to those incorporations that are dominion in character. Part I is applicable to all money-lenders, as defined in the bill. 'Some important provisions are contained in section 2, which has to do with definitions, and also in section 3. I should like to direct attention to the definition of "cost," which is as follows:
(a) "Cost" of a loan means the whole of the cost of the loan to the borrower including interest or discount and expenses and charges for commission, brokerage, chattel mortgage and recording fees, inquiries, defaults, renewals, fines, penalties, or other similar costs, whether paid to or charged by the lender or paid to or charged by any other person, and whether
Central Finance Corporation

fixed and determined by the loan contract itself or in whole or in part by any other collateral contract or document by which the charges if any, imposed under the loan, contract or the terms of the repayment of the loan are effectively varied.
Therefore, "cost" is said to include two things which, in my opinion, ought to be differentiated. "Cost" is said to include, first, interest or discount and, second, the expenses and charges for commissions, brokerage, chattel mortgage and recording fees and the like. Roughly speaking, we can break up the definition of "cost" into two divisions, that portion which is purely interest and that portion which is not interest. For the purposes of this discussion we can describe that portion which is not interest as charges.
I am opposed to the principle of this bill for a number of reasons. Section 13 of the draft bill provides:
The Money-Lenders Act, chapter 135 of the
Revised Statutes of Canada, 1927, is repealed.
My reasons for opposing the principles involved in the draft bill and in the bill now before the committee are these. The draft bill and the bill before the committee fix an interest rate of two per cent per month. It may be said that my statement in that respect is not correct, in that it is the cost of the loan that is fixed at two per cent per month. But I would point this out to hon. members of the committee. It would be open to money-lenders under this legislation to fix a rate of two per cent per month and call it all interest, and in that way this draft bill and the bill now before the committee authorize an interest rate of two per cent per month, which works out at the rate of approximately 26J per cent per annum. Now let us see the situation in which this parliament would be placed if we passed this bill or the draft bill recommended by the committee. At the present time we have,-I think I am correct in stating,-three general statutes that deal with the subject of interest. We have the Interest Act, which does not specify any rate of interest. It provides in its essence that in a written document the rate of interest shall be stated, and that if the rate of interest is not stated then the maximum which may be collected in interest shall be the legal rate of 5 per cent per annum. The second statute that we have dealing with interest and the interest rate is the Bank Act, in which a maximum of 7 per cent per annum is provided for. Then we have a third statute, the MoneyLenders Act, which provides for a maximum rate of interest of 12 per cent per annum for an extremely limited class of transactions.

The general bill and the private bill that is now before the committee propose that this maximum rate of 12 per cent per annum shall be increased to a maximum rate of two per cent per month, or an annual maximum rate of 26J per cent. Now, Mr. Chairman, when we are seeking in every possible manner to bring down the rate of interest-when we are seeking that by refunding our national debt as widely as we can at a lower rate of interest; when we are making provision for loans to municipalities under certain circumstances at a very low rate of interest; when we are making provision for assisting in the construction of houses at a very low rate of interest-there are many of us who feel that it would be psychologically wrong on the part of this parliament to raise the maximum rate that we have now of 12 per cent per annum to 26J per cent per annum.
It may well be argued that it is desirable to exercise certain controls over these moneylending companies, and, of course, it is desirable that we should exercise some control over them. With that object in view I suggested an amendment when the motion to adopt the preamble of the report was made. My amendment was as follows:
That that portion of the "cost" of a loan, as defined in section (2) paragraph (a) of the draft bill, which is interest, be fixed at a rate not exceeding 12 per centum per annum and that the right of any provincial legislature to reduce the remainder of the cost be preserved.
I proposed that amendment to the motion to adopt the preamble of the report for the following reasons. I thought it desirable that we should not exceed the maximum rate of interest that is now provided by the MoneyLenders Act. I thought it desirable also that we should seek to impose a limit on the total cost of a loan, but that we should leave the provinces free to deal with that portion of the cost of the loan which is not interest, in such a way as to reduce that portion of the cost. In other words, the suggestion which I made to the committee, and which a number of other members made, was this. We likened the proposed bill to a dwelling consisting of two storeys. The first storey was the interest storey of the dwelling. The second storey would be the charges storey of the dwelling. In other words, we proposed to erect a ceiling beyond which the loan companies would not be permitted to go in charging for the cost of the loan; but it was my view that we should not as a dominion parliament occupy the whole of the second storey, but that provincial jurisdiction to bring down the ceiling should be maintained

Central Finance Corporation
That landed us in a very long and somewhat involved argument as to the jurisdiction of this parliament to deal with the whole matter.
We had the opinion of a representative of the Department of Justice, Mr. Varcoe; we had also before us throughout the whole of our deliberations Mr. Finlayson, superintendent of insurance. While I am on the subject,
I am sure I state the views of every member of the committee on banking and commerce when I say that we were greatly indebted to these two officers for the assistance they gave to us. Indeed, Mr. Chairman, I think we are exceedingly fortunate in this country in having the type of public servant that we have. I do not think we sufficiently recognize their value and their devotion to their various departments and their duties. Mr. Varcoe, representing the Department of Justice, took the position that it was quite within the jurisdiction of the dominion parliament to pass the draft bill which we were then considering. He pointed out that the dominion had exclusive jurisdiction to deal with the subject of interest, and that our jurisdiction in respect of that matter could not be challenged. He also expressed the view that we had jurisdiction to pass this measure on the ground that the dominion had exclusive jurisdiction over the subject of criminal law; that the prohibition or suppression of usury was within the ambit of criminal law, and that our jurisdiction in respect of the matter from the point of view of enacting sound, valid criminal law was unquestionable. He also suggested that we had jurisdiction to deal with this subject on the ground that under section 91 of the British North America Act the dominion parliament has jurisdiction over trade and commerce. There was some controversy as to whether this was a sound ground on which to defend the dominion jurisdiction with respect to the matter.
So far there was not much dispute in the committee on the field of jurisdiction. But when we began to consider the definition section which I read at the opening of my remarks, namely the definition of cost, as it appears in the draft bill, there was great controversy. Representatives of a number of the provinces took the view that the dominion had no jurisdiction to deal with that portion of the cost of a loan which is not interest; that the dominion should confine itself to dealing with interest, and that the provinces should deal with that other portion of the cost of a loan which is not interest. On this subject Mr. Varcoe took the view, and a great many of us agreed with him, that the dominion did have jurisdiction to deal with the subject of costs and charges where they
are ancillary or necessarily incidental to the subject of interest, in considering what the total cost of a loan should be. I agreed that we did have jurisdiction, and I pointed out that in a number of cases the dominion parliament has jurisdiction to invade what would otherwise be the provincial field of jurisdiction, when that invasion is in respect of matters that are ancillary or necessarily incidental to some subject which clearly comes within dominion jurisdiction. The purpose of my amendment, however, was that we should not exercise this jurisdiction to invade the provincial field; that we should be careful about invasions of the provincial field of jurisdiction. The attorney general of Ontario took exception to our intended invasion. Representatives from the province of Quebec took a similar objection; and the proposed measure was offensive to a number of other provinces. It was with that in mind that I proposed the amendment which I have just set forth.
We had a twofold objection to the measure. In the first place many of us felt that this parliament should not stamp its approval of an interest rate of 26i per cent per annum on this bill. We felt that this was wrong, that it was contrary to the whole trend of legislation. Then we felt that we ought not to invade in an arbitrary manner the provincial field of jurisdiction. We therefore devised the amendment which I read a few moments ago, that we should not go any further in respect of our jurisdiction over interest, purely as such, than we have gone already in the Money-Lenders Act, and that consequently we should fix that portion of the cost of a loan which is purely interest at a maximum of 12 per cent per annum. We also felt that it was desirable to limit the total cost of the loan, which we did in this bill by fixing the total cost at two per cent per month. But we felt that we ought not to invade the provincial field of jurisdiction exclusively in such a way as to bar the provinces from legislating on the subject of charges. If the amendment which I suggested had carried, we would have accomplished these two purposes. We would have fixed a limit to the total cost of the loan to the borrower, but we would not have given the stamp of approval to an interest rate of 26J per cent.
Objection was taken to the amendment on the ground that it was not within the jurisdiction of this parliament, but I must confess that I could not understand the grounds of this objection. Unquestionably this parliament has jurisdiction to deal with the subject of interest. There is no dispute on that

Central Finance Corporation
question. If we have jurisdiction to deal with other subjects connected with the cost of a loan, such as recording fees, investigation charges and the like, then our jurisdiction to deal with such matters is only on the ground that these matters are ancillary or incidental to the subject of interest. If we have that jurisdiction, then I can see no reason why we should not exercise our jurisdiction with regard to .the subject matter of interest and leave the maximum interest rate exactly where it is now in the Money-Lenders Act. Under our jurisdiction over charges as being ancillary or necessarily incidental to interest we could fix a limit to the total cost of a loan. But in exercising our jurisdiction in that respect we need not do so to the exclusion of the provinces. We could leave the provinces perfectly free to deal in any way with the subjeot of charges on those loans, other than interest, so that the total of the charges could be brought down below the maximum rate of two per cent per month. That would have brought about the object which I think everyone is desirous of accomplishing, without giving our seal of approval to a maximum interest rate of 26J per cent per annum.
My point is this, that if we have jurisdiction to deal with .the subject of charges at all, as being part of the cost of a loan, we have jurisdiction to deal with the subject matter of charges; and we can deal with the subject matter of charges in any way we like. We do not have to deal with the subject matter of charges along with interest, but we may deal with interest separately and with charges separately.
The provinces of Ontario and Quebec raised objection to our proposed action. Why should we arbitrarily assert a jurisdiction in respect of these matters when these two great provinces object to our exercising that jurisdiction? Furthermore, in the province of Manitoba we have an act providing for the regulation under certain circumstances of money-lending transactions. If the proposed general bill were passed or if this private bill were passed, then it would not be competent for our courts in Manitoba for example to enforce the provincial act, because the dominion would have exercised its jurisdiction to invade what would otherwise be the provincial field of jurisdiction, and its legislation in the matter would override the provincial legislation. That was the controversy which took place in the committee on the question of jurisdiction.
As I pointed out a moment ago, the proposed draft bill is in two parts. Part I might be declared ultra vires by the courts on the ground that the dominion does not possess the jurisdiction which a number of us thought 	,
it did. It is possible that the representative of the Department of Justice and the other lawyers who argued in support of the dominion jurisdiction are wrong and that the court would declare that part I of the proposed general bill was ultra vires. For that reason part II would have to be considered. Part II, it is true, applies only to dominion companies. Whatever doubt there may be as to the validity of part I and the jurisdiction of parliament to pass part I, there can be no doubt whatsoever as to the jurisdiction of this parliament to pass part II, because this parliament has complete power to incorporate companies with objects that are not provincial. The power of incorporation is dealt with in the British North America Act in section 92. There the provincial power of incorporation is described, and my recollection of that provincial power is to this effect, that the province may incorporate companies for purposes that are provincial. It therefore follows, as a natural consequence, that the power to incorporate companies for purposes which are not provincial must, of necessity, reside with the dominion parliament. Therefore it is quite within our jurisdiction to impose any restrictions we like upon dominion companies. We can vest them with any power we see fit to give them, and can subject them to any limitations that we consider desirable; and if any criticism could be made of the amendment which I proposed in committee in respect of part I of the bill, no similar criticism can be made with respect to part II.
I moved also with regard to part II of the bill that this part, dealing exclusively, it is true, with dominion companies, should be subject to the same principle that I enunciated with regard to the bill generally, namely, that that portion of the cost of the loan which is interest should be fixed at the maximum limit of 12 per cent per annum, the maximum now fixed by the Money-Lenders' Act, and that in respect of that portion of the cost of a loan which is not interest should be dealt with in such a manner as to impose a limit upon the total cost of a loan, but that we should leave the provinces free to reduce that portion of the cost.
I suggest that the principle enunciated in the amendment that I proposed would serve all the purposes which are desired. The amendment, if adopted, would provide for that regulation which the majority of the members of the committee thought was desirable. It would not sanction an interest rate higher than 12 per cent per annum, the maximum interest rate now permitted by the Money-Lenders' Act. In the third place it would not bar the province from the right of

Lord's Day Act Amendment
reducing that portion of the cost of the loan which is other than interest. What right have we to say to any province; "Since we have invaded your field of jurisdiction you may not now deal with any portion of the cost of the loan? It is true that before we passed this measure you had jurisdiction to deal with that portion which is other than interest, but we have now, by invading your field of jurisdiction, taken away from you the right to deal with charges."


Mr. DUFFUS:: What does the 12 per cent cover?


Joseph Thorarinn Thorson: The Money-Lenders
Act at present fixes a maximum rate of 12 per cent per annum for those engaged in the business of money-lending.


Frederick George Sanderson: I am sorry to interrupt the hon. member, but I must tell him his time has expired.


Mr. MALLETTE:: I move that this committee now rise and report progress.


Mr. VIEN:: No. I am sorry to say-


Frederick George Sanderson: Order. The motion
is not debatable.


Thomas Vien: I think my hon. friend will
correct his motion, simply to report progress, but not that the committee rise.


Joseph Léon Vital Mallette: I have no objection
to that change.
Progress reported.



CONSIDERED IN COMMITTEE-THIRD READINGS

[Stage Direction]
Bill No. 147, for the relief of Frank Roy Hedges.-Mr. Emmerson.
Bill No. 148, for the relief of Jessie Fields Chambers Henry.-Mr. Emmerson.
Bill No. 149, for the relief of Marguerite Oldham Jamieson Macdonald.-Mr. Emmerson.
Bill No. 150, for the relief of Ida Hillman Livermore Woodall.-Mr. Emmerson.
Bill	No.	151,	for	the	relief	of	Gabrielle
Rachel Cecile Pelissier de Kermeno de Gou-zillon.-Mr. Emmerson.
Bill	No.	152,	for	the	relief	of	Millicent
Barbeau Edmondson.-Mr. Emmerson.
Bill	No.	153,	for	the	relief	of	Theodore
Charles Grothe-Mr. Donnelly.
Bill No. 155, for the relief of Stella Maud Lash Dawes.-Mr. Lawson.
Bill	No.	156,	for	the	relief	of	Elizabeth
Dubnitsky, otherwise known as Elizabeth Dubney.-Mr. Lennard.
Bill No. 157, for the relief of Harry Roth. -Mr. Jacobs.
Bill No. 161, for the relief of Marjorie Ruth Nicholson Lowe.-Mr. Walsh.
Bill No. 162, for the relief of Anna Veresz-czak Finehuk.-Mr. Jacobs.
Bill No. 165, for the relief of Aldege Nault -Mr. Jacobs.
Bill No. 166, for the relief of Muriel Gladys Jones Roberts.-Mr. Jacobs.
Bill No. 167, for the relief of Virginia Amelia Loomis Wadsworth.-Mr. Walsh.
Bill No. 168, for the relief of Jennie Erdrieh Ettenberg.-Mr. Jacobs.
Bill No. 169, for the relief of Thomas Mc-Dade.-Mr. Plaxton.
Bill No. 170, for the relief of Isabel Bovill Clarke.-Mr. Jacobs.
Bill No. 171, for the relief of Bessie Goldberg Katz.-Mr. Factor.
Motion for third readings agreed to on division.


[Stage Direction]
On the order:
Consideration of a message from the senate insisting upon its amendment to Bill No. 13, to amend the Lord's Day Act.-Mr. Brunelle.
Mr. H. E. BRUNELLE (Champlain):: The bill relating to the Lord's Day Act, which passed this house a short time ago, was not recognizable upon its return from its journey to the senate; in fact there is nothing left of its original form or appearance except the number. It still bears number 13. I am not superstitious, but I am afraid my bill has been in bad company. I always thought an amendment meant the adding to or taking away from an original proposition of some sort. The senate has not amended my bill; it has simply substituted its own bill. To qualify properly the amendment of the senate, I wish to use the words of Senator Murdock: -I regard the amendment as merely a wooden gun with which to do some hunting. I think it is absolutely useless for the purpose of accomplishing what all honourable members of the committee desire, that is, to prevent unnecessary work on Sunday, which has prevailed in certain parts of the country.
I do not wish to be a party to such legislation. I refuse the amendment of the senate. It will serve no useful purpose. After all, if corporations, through their directors, violate the law, they should be punished; if they do not, I wonder why the senate is worrying so much about the possibility of gaol sentences.
Before resuming my seat I think it is my duty to thank this house for the support it gave my bill amending the Lord's Day Act.

Penitentiaries Commission Act



PENITENTIARIES


[Stage Direction]
The house resumed consideration in committee of the following resolution'-Mr. Lapointe (Quebec East)-Mr. Johnston (Lake Centre) in the chair:
That it is expedient to introduce a measure to incorporate a commission with power under the Minister of Justice to administer, control and manage the penitentiaries; to provide for salaries of the commissioners and assistant commissioners and to amend and consolidate the Penitentiaries Act and amending acts and repeal the same.
Agnes Campbell Macphail: When the committee rose at six o'clock, Mr. Chairman, I was pointing out the necessity for the bill which the Minister of Justice proposes to introduce, providing for the appointment at a very early date of a governing commission for the penitentiaries, to consist, I believe, of three members. I was saying that it would be inviting trouble if we did not take action on the report of the royal commission. Even our fellow human beings in the penitentiaries know something of what is going on, and I think they would take such a step to mean that the report was not to be taken seriously. I am sure the government does intend to take it seriously, so I am most anxious that the minister should be allowed to proceed at once to introduce the bill.
The speaker who preceded me spoke of the need of having only one person rather than a commission in charge of prisons. The royal commission to investigate the penal system of Canada dealt with that very point at page 342 of their report, where they said:
In our present system the problem of penal administration is too large in scope and too serious in results to be left in the hands of one man. It is noteworthy, as a matter of record, that Canada is practically the only country where the penal system is not administered by some kind of commission or board.
So, when we appoint a commission of three to take care of our penitentiaries, we are following what has been done in other countries rather than breaking new ground. The important thing, of course, is the personnel of the commission. I feel quite sure that the Minister of Justice, who was instrumental in having the royal commission appointed, will .take very great care in choosing the personnel of the governing commission. They should have a vision of what can be done.

I want to say here that I do not think all the prisoners in our penal institutions can be made good citizens. I was delighted to see it stated in the report, which we shall have an opportunity to read more leisurely later on, that the commissioners realize that there are in our prisons incorrigible and intractable men whom it will never be safe to let out into society. They suggest that such men should never be allowed to mingle with their fellows. However, there are in our penitentiaries large numbers of prisoners who can be made responsible and respectable citizens. The commissioners to be appointed should be men of vision. They should be men who have a respect for human nature, even though it has gone astray. They should be men of character, and they should possess the training and culture necessary for such a job. The Minister of Justice (Mr. Lapointe) is in the enviable position of being able to place in the hands of this commission the best text-book on penal matters, the report of the royal commission, that we have ever had in Canada. The report does not suggest that all the changes should be made hurriedly. In one place it states that the commissioners believe it will take at least five years to make all the suggested changes in the personnel of the penitentiaries which they consider are essential; and as a start, I do not think we can stress too much the importance of the personnel of the commission to be appointed.
Canadian penitentiaries are in great need of reform. In the report figures are quoted which must be familiar to all members of the house. It is stated that in the last eleven years there have been twenty disturbances in Canadian penal institutions, sixteen of these disturbances having taken place during the regime of the present superintendent, General Ormond. The report contains some interesting information in connection with recidivism. In 1935 there were per 100,000 of population, sixty recidivists having three or more convictions, and twenty-nine having two convictions. That rate is much higher than it has been in former years.
In the first pages of their report the commissioners point out that there are three great principles to be considered in penology. First, there is the prevention of crime through proper youth training and the providing of opportunities for youth. Second, there is the treatment of prisoners so that they will be fit to return to society. If it is found that they are not fit to be returned to society, then they should be kept in a special prison by themselves. Third, there is the rehabili-

Penitentiaries Commission Act
tion of the released prisoner. I do not want to take up too much time at this late period in the session, and there is no necessity to go into the many recommendations made by the commission. Some of these are extremely important. They believe in the Borstal system for the young offender. They believe in the classification of prisoners. They believe in the training of the officers who are to handle prisoners. They suggest that a training school should be set up and only officers who pass through that school should be put in charge of prisoners.
The royal commission was headed by Mr. Justice Joseph Archambault, the other members being Mr. R. W. Craig, K.C., at one time attorney general of Manitoba, and Mr. J. C. McRuer, K.C., of Toronto. That commission did a splendid work. I think Mr. Justice Joseph Archambault should be congratulated by every Canadian citizen upon the excellent work he did. He carried on his duties under a disadvantage. He suffered two serious injuries just before he commenced his work, and although his health was not too good during the time of the sittings of the commission, he performed his work in a most splendid way. I do not think anyone could appear before that commission without realizing the earnestness of Mr. Justice Joseph Archambault and the other two commissioners, They were not out gunning for anybody; they were out to find out all they could about the penitentiaries of Canada. Everyone had a chance to appear before them. The commission visited 113 institutions in nine countries and spent 108 days in seven Canadian penitentiaries taking the evidence of 1,084 inmates and 200 officers. Letters, briefs and manuscripts were received from 1,200 citizens, and in addition private and public hearings were held throughout Canada. Anyone who wanted to say anything about the penitentiaries of Canada had ample opportunity to do so.


Richard Bedford Bennett: Whether they knew anything about them or not.


Agnes Campbell Macphail: The right hon. leader of the opposition prides himself upon having seen a great deal when he went through the penitentiary at Kingston. He mentioned the food, but let me tell him that the grapevine system in our penitentiaries is so excellent that he would not be in Kingston two minutes before the kitchen would know it. I daresay the food they had that day was much better than anything they had had since the previous Christmas.


Harry James Barber: The inmates are probably better looked after than are the boys whc are roaming our streets to-day.


Agnes Campbell Macphail: I think that is true. I believe the inmates of our prisons are better looked after than those who have no employment or who are on relief. That is a splendid way to create crime. Some of these people have had to resort to crime in order to get food and shelter. I do not intend to say any more except to stress my appreciation of the action of the government and the attitude of the Minister of Justice. The minister does not take any criticism of the penal system to be a personal affront. He takes it for what it is, a criticism of the system, and sets out to remedy an institution which he believes is outmoded, which stresses the punitive rather than the reformative side. The government are to be congratulated upon the appointment of such a splendid commission and in having this report ready at least by the end of the session. They are about to introduce a bill to provide for a prison board of three. I do not expect that all the recommendations made in this report will be put into effect immediately-it may be that some of them will never be put into effect-but I think it provides a blueprint which the commission of three to be appointed can follow in building up a system which, I am sure, will be much, better than the one we have.


Mr. MITCHELL:: Mr. Chairman, I do
not claim to know very much about penitentiaries because I have never been a prisoner and1 have never made a special study of penology. However, as a member of this house and as a citizen of Canada I recognize the difficulty of the task that confronts the Minister of Justice (Mr. Lapointe) and the government. I realize the extent of the work accomplished by this commission. They had to decide either to whitewash one of our institutions or else be as thorough as it was possible to be and let the chips fall where they may. I think the commission should be congratulated upon their thoroughness. The fact that they spent 108 days in Canadian penal institutions is an indication of the manner in which they went at their task. The editorials in one newspaper published in this city have been quite critical of the report, and other newspapers, although not very many, have adopted the same attitude, so I was not surprised to hear the right hon. leader of the opposition (Mr. Bennett) say what he did this afternoon.
When I heard the leader of the opposition speak this afternoon of the prisons, the cells and the food, the paddles and so on, it made
Penitentiaries Commission Act

me think of the emphasis that we place on that man-made institution which we call the law. It. is an inanimate creature; but we emphasize it and miss the most important essential, the human values involved. I understand that the commission not only saw the prisons, the food and the cells, but that they spent time with the prisoners and saw discipline being administered to them. They recognized the human values that are involved in penology in this country as in any other.
We are too prone to emphasize the fact that these men are outcasts from society. That may be very true; but I happen to have in this country a very dear friend-and this is why I wanted to speak to-night very briefly -who through a mistake he made earlier in his life received a sentence of three years in one of our penitentiaries. He is now a respectable citizen and holds an excellent position, and from him I have learned a good deal of the truth of the material that is contained in the report of the Archambault commission. I wish to commend the idea of appointing a commission of three men to replace the present superintendency of the penitentiaries by one man. The responsibility is too great for any one man. Even a three-man commission may not be adequate to solve the root problems of human relationships that are there, but its appointment is a step in the direction which must be taken of removing the whole responsibility from one man. Suppose we conducted our penitentiaries from this angle: Is every lawbreaker in this country in gaol, or are the inmates criminals just because they happened to be caught? I sometimes think of reasons for gratitude that circumstances have been just a little different in my case from what they have been with some men that I know. It is very easy for any of us here to think of criminals as outcasts, that they have offended against society and so on, but we are not excused from giving them every care. I think the minister and the government and the commission are to be commended, and I congratulate the government upon the steps they are taking to implement the recommendations of the commission so far as they are able to implement them at this time.


Harry James Barber: Mr. Chairman, I have one protest to lodge, not in regard to the report of the commission itself, but in regard to implementing the report in legislation at this stage of the session. It has been impossible for members of the house, attending its daily sittings and committee work, to give to the report, which was received only a few days ago, the consideration it deserves, and I think the minister would be well advised to accept

the suggestion which the leader of the opposition made this afternoon and postpone this legislation until next session. During the recess we would have an opportunity of studying the report, and then when we come back here we would be in a position to deal with the matter as it should be dealt with.
I notice that the press throughout the country takes a similar view. The Kingston Whig-Standard, for example, says, in part:
We have no idea what the government at Ottawa is going to do with the Archambault report. We hope they give it very serious consideration before they start putting its suggestions into effect. Many of the recommendations are doubtless of value, but many others should be carefully investigated before they are adopted. We hope that the evidence of 1,840 convicts will not weigh too heavily with Right Hon. Mackenzie King. And again we doubt very much whether honest and conscientious prison officials should be dismissed without being given a chance to reply to charges made against them.
And from the Brantford Expositor:
There is one phase of the royal commission's report on penitentiaries that Canadians will follow with considerable interest, and that is the recommendation for more lenient discipline on the part of the authorities. There is no desire to see the inmates of these institutions treated harshly or vindictively, but if it is to be a ease as to whether officials or the prisoners are going to run the penitentiaries there should be only one answer.
The class of men who fill the penitentiaries to a very great extent are sent there for grievous crimes against society, and many of them are hardened criminals who have been convicted many times. It is not to be supposed that these men are to be treated like guests at some palatial hotel. They should be given every opportunity to increase their education if they so desire and to become proficient in some of the technical crafts. They are entitled to kindly and humane treatment, together with facilities for recreation, but their term of imprisonment would be worthless if it did not impress upon them the absolute necessity of obedience to properly constituted authority. They go there as enemies of society and they should be taught that the rule of individual force cannot supplant the laws of the state . . .
In view of all that has happened the Hon. Ernest Lapointe, Minister of Justice, who is responsible for the administration of the penitentiaries throughout the dominion, will do well not to be too strongly influenced by the element that is at all times so clamorously urging the "coddling" of prisoners.
I do not intend to discuss the legislation, but I wish to urge upon the minister once more its importance. There is no doubt that he realizes it, and that those of us who represent people in all the different sections of Canada should at least have an opportunity to study the report further before being called upon to deal with it in legislation. What

Penitentiaries Commission Act
difference would postponing the legislation for a few months make? We have carried on with the present administration of the penitentiaries under the present Minister of Justice for three years and have heard no complaint, and therefore I think there would be no great hardship in continuing with the present administration for a few months longer until legislation can be brought down in proper shape at the next session of parliament.


Mr. GAUTHIER (Translation):: I merely wish to ask a question of the right hon. Minister of Justice (Mr. Lapointe). Is it the government's intention to appoint a physician to the commission the institution of which is recommended in the royal commission's report? In my opinion, one of the members of this commission should be a physician specially versed in criminology.
I think the Minister will agree with me that penitentiary, administration is not simply a question of economy and discipline, but that the mental condition of the inmates must also be considered. The appointment to this commission of a physician who would make a special study of the general health and mentality of the prisoners seems to me indispensable. Many crimes can be attributed! to mental derangement. A physician versed in criminology could render useful service in penitentiary administration, not only as regards the physical health of the inmates but also their moral rehabilitation, so that at the expiration of their sentence they may return to normal life and contribute to the development of the country.


Mr. LACOMBE (Translation):: Mr. Chairman, I do not intend to speak at any great length. In view of the fact, however, that St. Vincent de Paul penitentiary is situated in my constituency, I deem it my duty to offer a few observations.
On April 15th, 1936, Lieut. Col. Piuze, a former warden of St. Vincent de Paul penitentiary, forwarded to the Superintendent of Penitentiaries at Ottawa a report on penitentiary administration, on the training of youthful prisoners and on the International Prison Congress. This report contains highly interesting suggestions and recommendations. May I refer hon. members to the ex-warden's findings on pages 22 and 23 and to his recommendations on pages 65 , 66, 67, 68 and 69, which I shall quote, in order that they may appear in Hansard-. On pages 22 and 23 of his report, Lieut. Col. Piuze states the following findings:
(Text) In the four countries I visited, I would have been anxious to take advantage of numerous offers I received to make a study of
other institutions specially destined to the confinement and reformation of young delinquents. It would have afforded me the opportunity to substantially increase the knowledge I have gained and would have permitted me to submit a much more thorough report. Unfortunately the limited time at my disposal prevented me from so doing.
In my humble opinion the Borstal system with certain modifications is the most adaptable for this country. However, it would not be possible for the time being at least to introduce it outright in view of the territorial conditions and also in consideration of the lack of adequate accommodation.
For the present I think that the best solution would be to hasten the construction of Laval buildings at St. Vincent de Paul, Quebec, and of Collins Bay, at Kingston, Ontario, where young delinquents could be accommodated. Laval buildings could take care of the youths of the province of Quebec and of the maritimes; Collins Bay could accommodate those of Ontario and of the western provinces.
To obtain satisfactory results, it is of the utmost importance that the lads be entirely separated from older prisoners, and that there be no contact whatsoever with the latter. Until such a time as the two institutions already mentioned are ready for occupation, a certain segregation could be made in our penitentiaries, but only as a temporary measure. Even then, there will always be the "atmosphere" and possibility of contact with others.
It is my opinion that the only thing that could be done, until an appropriate accommodation is available, would be to assemble those young delinquents in separate cell blocks, giving them physical training, outdoor work, school work, and lectures. Later on when new quarters are ready, a more appropriate program of training could be devised.
I am not in favour of dormitories for young convicts, as they exist in the majority of Borstal institutions. Individual cubicles are much more reeommendable.
I would not, either, recommend too many recreations, and a well balanced discipline should be maintained. I do not feel inclined to recommend, either, that young convicts be granted more privileges than are afforded honest average youths outside.
As previously stated, the principle of the English Borstal system is very good, but I could not recommend all that is being done in England. Besides, local conditions are not the same, and the class of young delinquents here is also quite different from the type of lads in England, where they have to deal with English boys only, whereas in Canada, we have to take care of a much more cosmopolitan population.
Also it would not be possible, for some time at least, to classify these lads the way it is done in England, and this, owing to our wide territories and the relatively small distribution by provinces. Most of the English system could be introduced in this country when proper accommodation is available, and this system could be arranged so as to meet with our requirements.
(Signed) P. A. Piuze,
Warden.

Penitentiaries Commission Act
(Translation) As to 'his recommendations, Mr. Chairman, they are to be found on pages 65, 66, 67, 68 and 69. They are as follows: Conclusions
(Text) The study tour of the different penal institutions visited has been most instructive and interesting to me, and I am most grateful to the authorities for having afforded me the opportunity of acquiring such an experience.
Observations
The few observations I intend to make, as a result of this study tour, will mostly apply to penitentiaries or convict prisons, this subject being more familiar to me.
The problems that penal administrators in Europe are confronted with are substantially different from ours. They are benefiting by a much longer and wider experience; territorial conditions are quite different.


Agnes Campbell Macphail: From what document is the hon. member quoting?


Liguori Lacombe: From the report of the former warden of St. Vincent de Paul penitentiary.
They are dealing with their own countrymen; and finally, the class of criminals is not at all the same.
In the old country, and specially in England, prisoners, generally speaking, are well classified, and there are separate institutions for each class of offenders. For instance, there are distinct institutions for the young and first offenders; for recidivists and hardened criminals. Also, in view of the proximity of the various institutions, transfers, when necessary, can easily be effected without incurring much expense.
Comparisons
Shops. In our Canadian penitentiaries, favourable comparison can be made with European institutions, with regard to industries and teaching of trades. Our different workshops are much more modernly equipped, and a convict who is willing to learn a trade has full opportunity to do it.
Library. Our school and library departments are well organized, and full facilities are given to convicts to gain an elementary instruction, if illiterates, and to improve their degree of instruction, if the latter has been restricted to the elements of reading and writing.
Discipline. Although working under more difficult conditions, our discipline is good and well observed.
Construction. New construction is done by convict labour, while in European countries, such construction is mostly done by public works departments.
Humanization. As far as humanization is concerned, we compare favourably with other countries.
Diet. The feeding of convicts in our penal institutions is much superior; as a matter of fact, we are perhaps doing too much in that respect. We lack uniformity in our different penitentiaries; in each country in Europe, a diet is established and applied to all institutions, without exception.
Privileges. In certain countries, privileges are very limited, and in this regard, it is con-
[Mr. Lacombe.l	*
sidered that the English system is the most adequate. Prisoners are graded, and privileges may be enjoyed when stages have been reached. In other words, to receive privileges, prisoners must earn them by their good conduct, industry and dispositions. Having in view the procedure adopted and followed in European countries, it would appear that, in this country, privileges are allowed too soon after admission, and may not, therefore, be appreciated at their just value. It would seem more appropriate if authorized privileges were given when convicts have reached certain stages, and it is recommended that, during the probation at least- that is to say, during the first six months of incarceration-no privileges whatsoever, with the exception of library books, should be granted to convicts.
Classification. With our present system, young and first offenders, recidivists and hardened criminals all receive the same treatment, upon admission in our penitentiaries. It is of the utmost importance that classification of convicts be commenced as soon as possible, when proper accommodation is made available.
Recidivists. With our present penal system, recidivists and hardened criminals seem to scoff at our penitentiaries. Penitentiary life to them is such that, as soon as liberated, they resume their criminal activities. If they can manage to foil justice, well and good; but if caught again, they return with a feeling of relief, if one considers that, in one institution at least, approximately one-half of the population is made up of this class of criminals.
Cells. Our cellular system, with barrier doors, is most unsatisfactory, in many respects. It renders supervision very difficult, and ill-disposed convicts are at liberty to exercise their pernicious influence over others during talking periods.
Conversations. Conversations carried on in cells, during authorized hours, are far from being edifying. Their main subjects are immoralities, besides convicts boasting of their criminal exploits and criticizing the rules and regulations and the authorities. Well-disposed convicts must necessarily stand such conversations, which are permitted when the prison is closed, and when only a limited number of officers are on duty. At such times, proper control and supervision are 'well nigh impossible, and naturally, full advantage of the situation is taken by ill-intentioned convicts. One cannot imagine all the harm these badly-disposed convicts exercise over others who, in too many cases, leave the institution, on liberation, worse off morally than at the time they came in. In European institutions, conversations between convicts are tolerated during working periods only, it being the view that such conversations should not be more and need not be less than the conversations which take place amongst work people in properly managed workshops, that is to say, such remarks as the work required may cause, but there is no idle talking on general subjects.
Recommendations.	.
Classification. As far as St. Vincent de Paul penitentiary is concerned, classification of various classes of convicts could be started, as soon as the construction of Laval buildings is sufficiently advanced to allow occupancy. In this connection it is strongly recommended that the necessary buildings be constructed as soon

Penitentiaries Commission Act
as possible, subject to be completed. The question of adequate and additional accommodation for the exceptionally large population of this institution has 'been a long-felt need, and presently St. Vincent de Paul penitentiary is overcrowded, particularly the work shops, where twice as many convicts are put to work as should normally be employed in those departments.
The following scheme which might also be applicable to other institutions in this country is recommended:-
That St. Vincent de Paul penitentiary be used exclusively for recidivists and hardened criminals. The following shops could be reserved for this class of convicts; stonecutting, stonecrushing, machine and blacksmithing and other works in connection with the administration of the institution;
That Laval buildings be made two distinct prisons, divided by a central wall;
That one part of these buildings be reserved for first offenders who would be taught the following trades: tailoring, shoemaking, bookbinding, laundering, farming, electricity and motor mechanics;
That the other half of the buildings be used for young convicts between sixteen and twenty-one years of age, who would be physically trained, provided with outdoor work (gardening and construction) and education, (school attendance and lectures).
This classification, under one direction, would be something similar to what the writer has witnessed in Les Prisons de Fresnes, in France, and which, in his opinion, would meet the situation very well. Each of these establishments would be subjected to a distinct regime; in each, young and first offenders, recidivists and hardened criminals, would be graded according to their crime, sentence, antecedents, capacity and merits, and wrould be entitled to appropriate privileges.
This system would assure constructive reformation work, and would protect the young and first offenders from contact with, and the bad influence of, recidivists and hardened criminals.
Special treatment for recidivists and hardened criminals would no doubt result in a sensible reduction in our penitentiaries of this class of convicts. At present, their percentage is out of all normal proportions, when compared with similar types, in European countries.
Cells. In the old country, all penal institutions have the "closed door" cell system, with cells on each side and a wide corridor in the centre, lighted by means of skylights in roofs.
It is strongly recommended that all cell blocks at Laval buildings, and other similar new construction, be made on the "closed door" principle. It would not be possible, for the present at least, and in view of the expense it would incur, to remodel our existing cell blocks as suggested above; but to remedy the situation, it is recommended that all wings be closed by means of concrete walls, instead of barriers, and that the floors of each range be extended to the wall, thus segregating each wing, and even each range. This could be done at comparatively low cost.
Silence rule. It is recommended that silence rules be restored in cell blocks, and this, in the best interests of administration, discipline and security.
Punishment cells. Our system of prisons of isolation, (punishment cells) could be very much improved upon, and we could advantageously adopt the same system as used, for instance, in English prisons, which is far superior to ours, and in the writer's opinion, the only adequate one.
Agitators and badly disposed convicts. It is a well known fact that certain convicts, with very bad character and dispositions, and known as trouble makers, are the leaders in riots and disturbances, and also that, in the majority of cases, are responsible, directly or indirectly, for damages caused to government property.
It is suggested that such class of convicts, from all penitentiaries, be congregated in a separate institution, where they would be subjected to special discipline and treatment; if eliminated from other institutions, they would not have the opportunity to exercise their pernicious influence over other convicts.
Superior officers. Wardens and deputy wardens are entitled to twenty-one days annual leave, and in that respect, do not receive any more consideration than a prison guard, notwithstanding their numerous and heavy responsibilities and standing. It is pointed out that, in England for instance, governors and deputy governors are entitled to six weeks annual leave, while the other members of the staffs receive three weeks of such leave.
It has been noticed, in the various institutions visited, that a difference exists in uniforms for officers of higher grades, distinguishing superior officers from other ranks. A similar distinction, in the Canadian institutions, is recommended for consideration.
Officers' quarters. In countries visited, all permanent officers are given free quarters. If this privilege could be afforded our penitentiary officers, the service would certainly benefit by it, in that sense that all the members of the personnel would reside at proximity of the institution, thus assuring better security, and furthermore, this would be an additional inducement for officers to hold on to their positions, and no doubt would result in better service and more devotion to duty. With such additional consideration, officers would certainly better appreciate their positions.
Training schools. It is recommended that a training school be established for penitentiary officers, as it exists in European countries.
The service generally would certainly benefit greatly by such an innovation, and candidates, when called for duty, would have received both theoretical and practical training.
Such a school could be established in one of our penitentiaries, and its functioning would entail very little expense.
The above suggestions and recommendations are respectfully submitted, having in view the betterment of the service, and the reforms suggested are considered to be in the best interest of the administration and management of penal institutions, and the treatment of convicts as a whole.
That is signed by E. A. Piuze, the then warden.
(Translation) In conclusion, I wish to quote the 12th recommendation on page 355 of the

Penitentiaries Commission Act
report of the Royal Commission on the Penal System of Canada, thus:
The pay of officers should he brought up to a reasonable standard, having regard to the type of service performed.
I also wish to take this opportunity to ask, not only that penitentiary guards and officers be paid a reasonable salary, but that they be paid fortnightly, as are other civil employees of Canada, instead of monthly.
The Minister of Justice will perhaps tell me that such a measure would require an army of accountants. Then, I would say to the minister: Open the doors wide particularly in my district, to the graduates of the School of Higher Commercial Studies. If seven or eight additional accountants are employed, that' would 'be just another way to relieve unemployment. We have really sad cases in St. Vincent de Paul where fathers of twelve, or thirteen children must wait for their salary till the end of the month in order to pay their grocery and other bills. I ask the minister to grant this very humane request. On the other hand, in the public interest and in the interest of our penal institutions, I think that military discipline on Sundays should be abolished in all our penitentiaries.
Mr. Chairman, the royal commission has severely criticized the former warden of St. Vincent de Paul penitentiary for having instituted military discipline in the penitentiary in mry constituency. That is the reason why I akk the Minister of Justice to abolish, not only in that penitentiary, but in all other such institutions of Canada, Sunday discipline which is absolutely unnecessary, may I add, because there is ample time, on week days, to give the inmates all the physical exercise they require.
Before I resume my seat, I want to say that the recommendations and findings of Lieut. Col. P. A. Piuze are generally in accord with those of the royal commission on the penal system of Canada, except as to the establishment of the Borstal system in this country. In fact, according to Lieut. Col. P. A. Piuze, that system cannot be fully applied in Canada. In view of his plausible arguments, I think his opinion should prevail.
As a matter of fact, Lieut. Col. Piuze has been warden of St. Vincent de Paul penitentiary for six years, and I wish to tell this house that he has adequately filled that position and that he possesses unequalled experience. Recognized authorities of this country have told me personally that he could not be easily replaced. I do not wish, Mr. Chairman, to make a case for Lieut Col. Piuze tonight. However, I am free to state to this

house that Lieut. Col. Piuze, in his report, has submitted to the Canadian government recommendations and suggestions of a highly practical nature, which would be very easy to apply, and I have no comparison to make with the report of the royal commission on penitentiaries.


James Shaver Woodsworth: At this very late
date in the session, Mr. Chairman, it is not my purpose to discuss the question of penal reform or to go in any detail into the report upon which this resolution is founded, but I should like to endorse the general position taken by the hon. member for Grey-Bruce (Miss Macphail) with regard to this question and to express my appreciation of the fact that although it is so late in the session the government apparently has considered it possible to bring forward legislation of this kind. The hon. member for Fraser Valley (Mr. Barber) quoted an editorial opposed to action along this line. I hold in my hand a whole sheaf of editorials from the leading newspapers of this country, all of them favourable to action along the line proposed.
I should like to protest against the position taken by the leader of the opposition (Mr. Bennett), first of all in regard to his attitude toward the prisoners. He asserted that they were the victims of their own wrong-doing. That is only partly true. I think it may be said that the larger number were the victims of the neglect of society. I do not want to go into that question at any length, but I think it is conceded that a very large number of our criminals would have gone straight if they had had half a chance. I remember when I was only a youth reading Jean Valjean, that immortal work of Victor Hugo, which no doubt many other hon. members also read. You will remember the way in which that great French writer interested us in the criminal, and I have never gotten away from his presentation of a man who, according to the category of the right hon. leader of the opposition, 1 suppose would be classed as a mad dog running wild. I object to that way of viewing the criminal. There may be some criminals who are mad dogs running wild, who have to be dealt with more or less, as we might deal with a dangerous animal, but the majority are not of that class.
Then I think of some who, in spite of the bad treatment we have given them, have reformed. I think of one man in my own city of Winnipeg whose family I know very well. He robbed a post office when he was a boy, was imprisoned and later released. To-day he occupies one of the most important

Penitentiaries Commission Act
positions in that city, and I suppose only a few old-timers remember that he once served a penitentiary sentence. I feel indignant when I think of him being classed as a mad dog running wild.
I do not think the leader of the opposition was quite fair to the commission when he spoke of them as listening to the tittle-tattle of convicts. If they were to get information, why should they not listen to the men who were incarcerated in the penitentiaries, even though they were branded as convicts? I should think it probable they could get a great deal more information from listening to those who were enduring the abuses than by listening to the officials who may be seeking to paint as rosy a picture as possible. However, I shall not go into this phase of the question to-night.
I want to protest against any further delay in dealing with this matter. Some of the older members of the house will recall that four years ago, on June 30, we considered this question of penitentiaries. This matter had been put off and off until what was hoped would be the last day of the session. The hon. member for Grey-Bruce made a strong appeal to the then Minister of Justice, Mr. Guthrie, to take action. The minister replied that it was too late in the session; that the Governor General was then on his way to prorogue parliament, it being then within a few minutes of twelve o'clock on Saturday night. We could not sit on Sunday, and Monday was a holiday. I do not know whether I should boast of it, but on that occasion I said that the estimate under discussion would not pass. I succeeded in holding up the house, and hon. members had to remain here on Sunday and Monday and sit again on Tuesday, when we considered this matter of penitentiary reform. I should like to quote one paragraph of what I said at that time:
I would point out that the prisoners are the most defenceless class in the community. They have been deprived of the ordinary rights of citizenship. They have no means of making their grievances known to this house. They have been deprived of the rights of normal ordinary human beings.
But on the other hand I am coming to believe that we must discount to a considerable extent the official statements, the official denials, because it seems to have been the policy more or less to whitewash under-officials.
Furthermore, we urge that the time has come when there should be general consideration _ of the whole question of prison administration and the treatment of criminals.
I then urged the setting up of a commission. That was on June 30, 1934. That commission was set up, and I regret as much as anyone that its report has been presented so late in 51952-276
the session. However, we are glad finally to get this report. It is four years since these evils were definitely brought to the attention of the house. It will be remembered that at that time riots had occurred in Kingston penitentiary, and there had been shooting into the cell of one of the prisoners. It was an outrageous situation. We have the report of this commission, and now the leader of the opposition tells us that we ought to postpone action until we have had time to study the report. I am sorry the right hon. gentleman is not in the chamber, but I am sure that he must have given a considerable amount of study to penitentiary reform. Even the man on the street knows that reforms such as proposed are long overdue.
I submit that parliament should not prorogue without passing the remedial legislation to be based upon this resolution. Without disparaging the Conservative convention which is to take place next week, may I say I am not so sure but that this matter which is so vital to the thousands of people in our penitentiaries is not of as great importance. In any case it ought to be dealt with at this session.
I shall not go into the question raised by the leader of the opposition as to whether this is the best manner of dealing with General Ormond. The authorities can deal with him as they please, but what we do need is legislation. The gentlemen who composed this commission spent a long time in the most painstaking investigation. They travelled across Canada, in the United States and abroad in order to study the situation from all angles. I think they were in a better position to make recommendations than even hon. members who may have casually read this report and who might possibly be inclined to consider it in some of its political aspects. I urge the Minister of Justice (Mr. Lapointe) to let nothing stand in the way of bringing about these reforms without any further delay.


Grote Stirling: Mr. Chairman, I find myself just as displeased with the action of the government as my hon. friend is pleased. They have brought down this report very late in the session and have expected us to deal with it. It is almost two and a half years ago that the government appointed this royal commission to examine into this matter and report. Three months ago the report came into the hands of the minister, and fourteen days ago it was laid on the table of the house. Hon. members have had thirteen days in which to endeavour to inform themselves of the contents of the 400 pages comprising this report. After sitting here for five months I believe that the mind of the ordinary member is somewhat weary. He sits on com-

Penitentiaries Commission Act

mittees; he sits in the house; he deals with his correspondence and carries on the other work of a member. I, for one, have not had time more than to glance cursorily through this most important report. I do not think it is reasonable to expect us to deal with this matter at this late stage of the session.
I cannot go into the principle of the bill, because the only vision we have had of it is what is contained in the resolution. It does not seem to me to be fair to a civil servant of Canada to accept the recommendation of a commission in this regard, as apparently the government has done. The commission state that they were dissatisfied with their examination of the superintendent, and they recommend his dismissal. This afternoon my right hon. leader (Mr. Bennett) pointed out how the superintendent was appointed. Many people may have thought that the superintendent was appointed on the recommendation of the previous administration and, that, therefore, there may have been some partisan politics mixed up with the appointment. However, I believe that belief will be dispelled when attention is drawn to the important positions held by the six members of the committee appointed by the civil service commission to choose the superintendent.
We have not had time to give due consideration to a report on so important a matter. To dismiss a civil servant in this cursory way is not good for the civil service, and consequently is not good for Canada. It matters not to me whether he be a civil servant in the higher or lower ranks of the civil service ; the fact of the matter is that the investigation carried on by the commission has not been of such a nature as to warrant the recommendation made. It is noticeable, for instance, in the pages which deal briefly with the recommendations, that in this country, of course, every penal institution was visited, and at those institutions nine convicts were heard for every one official. The commission paid a visit to the United States and there examined the penal institutions and listened to the views expressed by the officials. The commission also visited the United Kingdom where they did likewise. But we are not aware that on their travels abroad the commissioners listened to any views of the convicts in those institutions. It appears to me from the cursory study that I have been able to make of this report that the commission has given an overweight of interest to the evidence of convicts in the Canadian penal institutions, and perhaps not sufficient weight to some of the other evidence.
I am not acquainted with the superintendent of penitentiaries. So far as I am aware, the

only time I ever saw him was when he sat before the Minister of Justice in the late administration when he was dealing with the estimates of that department, but I know his record. I know that he was a district officer commanding in the west. I know that if he had not moved over to this civil service job, other rungs of the ladder in the service would have been open to him, but it is hardly likely that those rungs will still be open to the superintendent if he leaves the civil service with such a smirch on his name. I earnestly appeal to the minister that at this late stage of the session it might be well to wait just that number of months longer which would enable us to give further consideration to this weighty report.


Ernest Lapointe: Mr. Chairman, I do not minimize, the committee may be sure, the great importance of this resolution and the legislation which will follow it. As the hon. member for Winnipeg North Centre (Mr. Woodsworth) said, this question is one which has been before the country for many years. Rightly or wrongly there has been a feeling that all was not perhaps as well as it should be in the penal institutions of Canada, and I well remember well-meaning citizens imploring us to carry on an investigation. I was on the other side of the house at the time when that great social worker, my own fellow citizen and townsman, Archdeacon Scott, the padre, came to see me and besought me to plead with the then government for an investigation into the penitentiaries. A large body of public opinion was certainly aroused at the time, and when the campaign of 1935 took place the present leader of the government made a promise that there would be an investigation by royal commission into the administration of the penitentiaries.
We came into office in October, 1935, and the royal commission was appointed in February, 1936. The resolution before us is the result of the report of that commission. Whatever may be our opinion as to its findings and recommendations, I think everyone will agree that its report is a considerable and well-prepared work and that the commissioners have devoted their energies and abilities to doing the work as completely and even as perfectly as it could be done. This does not mean, of course, that we are to agree with everything they may suggest or recommend. I personally agree with a great many of the things they recommend. With some of them I do not agree, and as to many others I have doubts whether they should be carried into practice. But as far as one of the recommendations is concerned, and it is their main recommendation, the one which is embodied in

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this resolution and in the bill to follow, namely, the appointment of a commission or a prison board to replace the present administration, with that recommendation I am in agreement.
Most of the other suggestions and recommendations-and there is a multitude of them -will have to wait. Most of them can be carried out by regulations after the commission, the prison board, to be appointed will have satisfied themselves that they should be carried out; but the most important of them will have to be the subject of legislation, and parliament of course will have ample time to study the report and consider the advisability of making those changes. The commissioners in their report suggest that it is a work of five years to put into effect all the recommendations which they make, but this bill, I repeat, is merely for the purpose of creating a prison board.
I fully sympathize with the view expressed by my right hon. friend the leader of the opposition (Mr. Bennett), by my hon. friend the member for Fraser Valley (Mr. Barber), and by my hon. friend the member for Yale (Mr. Stirling), that the members of the house have not had sufficient time to read and consider this voluminous report; and if this legislation would have the effect of carrying out all the recommendations of the commission, I would certainly feel that their contention was even stronger than it is. But so far as merely creating a prison board is concerned, changing the present system in that respect, I do not see that it is so essential or necessary to have read all the arguments in favour of the numerous changes which are suggested. There may be some who think, as my right hon. friend does, that we should wait, but I am quite sure that there are a good many more who would strongly criticize the government for not doing anything this session after this report has been tabled.
I do not agree with the basis on which my right hon. friend lays his strongest objection. He says that we are asking the committee to render a verdict against General Ormond. We are doing nothing of the kind. It is not the person of the superintendent; it is the system against which a verdict is rendered. If there is a verdict it is a verdict against a system; it is a question not of changing a man and putting another man in his place, but of changing the system. My hon. friends who spoke of the dismissal of General Ormond did not state the position correctly. There is no question of dismissing the superintendent by the creation of a commission.


Grote Stirling: That is the recommendation.
51952-276J


Ernest Lapointe: True, his office would disappear. As this happens quite frequently in the civil service, he would be eligible for retirement allowance if he is entitled to any. The question of dismissing General Ormond has not been considered at all. Surely, if the policy of having a prison board in charge of the administration of the penitentiaries of Canada is the right policy, no single man should be an obstacle to putting that policy into effect. I repeat, the fact of giving effect to the recommendation of creating a prison board does not mean that anything is done against the superintendent who is in charge at the present time.
Of course I would be following the line of least resistance if I were to accept the view that it would be better to wait a few months. This will be a very difficult task. The appointment of the three men who will serve on this prison board will be a task of great magnitude. Some seem to believe that we should find supermen for that work. Unfortunately they do not exist any more in Canada and the other countries of the world. We have to find the best men possible. I am free to admit that at the present time I do not know what men will be appointed on that board. I have already received many requests, and I am afraid I shall disappoint some of the writers when I say that the choice which will be made will not be made from among those who have written. I may add that these will not be political appointments. If there is a work which will be most responsible and difficult, it will be this. It is a work which does not bring much satisfaction. There is no occupation more open to criticism than that of those in charge of penitentiaries, working all the time earnestly, satisfying nobody and being subject to criticism which is not always fair. I think I am right in saying this. But I am going to do my best, with the help of my colleagues, to find three men who will most adequately recommend themselves to our appreciation. I have a great deal of sympathy with the suggestion of the hon. member for Portneuf (Mr. Gauthier) that one of them should be a medical man. I believe that is recommended by the members of the royal commission. But as hon. members will see when the bill is introduced, it will come into force only on proclamation. Of course we have to consolidate the Penitentiaries Act by striking out in many places the words "minister" and "superintendent" and replacing them by "board" or "commissioners." But the bill in itself will mainly consist of this great change of creating a 'board to administer the penitentiaries.

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My right hon. friend has spoken of the parole system and of the change which is suggested by the commission. I must say, without enlarging upon it, that I am inclined to agree with him that the carrying out of the recommendation in that regard will be a difficult step to take. This, however, will be considered later, and parliament will have its say if this change is suggested in a practical way.
I do not think I have anything to add to this. When the bill is discussed after it has been introduced, I shall be prepared to give any further information.


Frederick George Sanderson: Shall the resolution
carry?


Richard Bedford Bennett: No, Mr. Chairman. The very moderate and fair statement of the minister commends itself, I think, to every member of the committee. But it does not meet what I conceive to be the real difficulty.
On the fourteenth day of June this report was filed. To-day is the twenty-eighth. The report is dated in April. Between April and June time was spent in printing it and, I take it, in translating it. We first saw it when it was tabled on June 14. That is only two weeks ago. I say frankly to the minister that although he deals with only one phase of the question, that affects the whole principle of prison administration in this country. If, for instance, one refers to matters in this report and points out that they are absolutely unwarranted in fact one draws the conclusion. I think properly, that little importance attaches to the whole. Take, for example, the attack against the firm of Morris, who sold coal. I mentioned that this afternoon, and I observed that in a letter written by John Morris to the newspaper he pointed out that the facts are exactly the opposite to those which are stated. With respect to Sowards it is quite clear that the same situation develops.
Take the Buck incident. I say to the minister that the reason why one approaches this matter with such a desire to read1 this report is that all you have to do is to consider the incident with respect to Buck. Wrho empowered these three men to sit as a court of appeal on Craig and the other commissioner who reported on the Buck incident at the time it happened? And what do these three men find? The minister knows what they found. They said that the reports which were made by the commissioners who investigated the matter at the request of the Minister of Justice arrived at conclusions that were wholly unwarranted. They refer to the fact that certain of these people were not experts in penology. But which one of the three royal

commissioners was? Was Craig? Was McRuer? Was Judge Archambault? These are not experts; yet they project themselves into this picture as experts; and now the government asks us to consent to changing the whole system of the administration of prisons in this country, although we have had this report before us for no more than two weeks. And the difficulty is that when the change is made it is not easy to undo it. The minister says he proposes that the bill will come into force on proclamation. I desire to point out to him that if this change is made, it will be possible to alter it only by act of parliament. Once we have committed ourselves to this scheme or plan, we shall have made it impossible to alter it except by statute.
Despite what the minister has said, the appointments will be political. I was pleased, indeed, to hear him say that he did1 not propose that they should be partisan political appointments, but the fact remains that they will be political appointments. It is contemplated that they should be. How did Ormond come into the picture? He came in through the civil service commission and through that board the names of which I gave this afternoon, who made the investigation they did and reported in his favour. The majority of the men who made that report were certainly not supporters of the administration by whom the appointment was made, and they took a great deal of time to consider the matter. Finally they recommended Ormond. They recommended his appointment because they believed that he was the best of the many applicants who offered. Men like Mr. Biggar, or Doctor Porteous, or Mr. Edwards, or Mr. Dufresne, or Colonel Kemmis, or the late Major-General Mac-Brien spent a great deal of time over the matter.
Now the government must make the appointments, and they are already confronted with a situation which I regard as intolerable. I agree with the minister in that respect. After to-day's debate he will be receiving letters from every part of this country, from men who think they have a claim, and there is not a member of this house supporting the administration who will not receive a communication in these terms, "Speak a good word to the Minister of Justice about my appointment." I went through such an experience in connection with the Bank of Canada, and the minister will now have the same experience. Before that, the civil service commission acted, and they regarded their duty as so serious that they appointed this committee, with the government, to choose General Ormond. I recalled this afternoon vividly

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how hard they had worked at it. They took a long time going over the applications, and it relieved us of much responsibility. The Minister of Justice of that day was able to say, "I had nothing to do with it." I was able to say, "I have nothing to do with it." The Minister of Justice will now be literally beseiged with applications for the position, and members supporting the administration will be in the same position. The appointments will therefore be political. I repeat, I am happy to hear the minister say that they will not be partisan political appointments, but they will be political appointments.
How does that compare with the civil service appointment? How does that compare with the recommendation made by the late Major-General MacBrien and those other gentlemen to whom I have referred? What about the pressure that will be brought to bear as compared with the situation where men make a recommendation after investigating thoroughly the records of the persons concerned? Perhaps the minister has overlooked the exact words of the report with respect to General Ormond:
Your commissioners are of the opinion that it is necessary to the good management of the penitentiary service that the superintendent should immediately be retired, and they recommend accordingly.	,
They had no power to do that; that was not the term of General Ormond's employment. He was not told that charges had been formulated against him, and he had no opportunity to be heard. Reading the report, one can see pretty well that it was not written by Judge Archambault, because there is nothing judicial about it. They take a sentence here and a question there, and the answer given by General Ormond. He was eight days before them although he had not a chance to meet these people who gave evidence against him. He was eight days being grilled by these three men, all three lawyers, he himself having been a soldier; and they pick out an answer he gave and then make a recommendation. And the recommendation is that he should be immediately retired. That is not fair. The minister says, "We are not going to retire him", but the minute you substitute this board for the superintendent, that minute he goes out of office. It is not fair that a royal commission should so recommend when a man is employed as General Ormond was. What happened? Without formulating charges against him, without saying what the charges against him were, in order that he might specifically meet them, he is dragged into a room and kept for eight days, not being
present when these people were making the case against him. And who were the men that made cases against him? Outcasts of society. One of my hon. friends says, "Oh, well, these poor fellows would not have been so bad if they had had a chance." But I was glad to hear the hon. member for Grey-Bruce (Miss Macphail) say to-night that there are in-corrigibles in penitentiaries. That is an improvement on what used to be said.


Agnes Campbell Macphail: They are not all in penitentiaries.


Richard Bedford Bennett: No. This afternoon my hon. friend suggested that the penitentiary authorities had their eyes on her, and I told her I thought there was no warrant for such a statement. I still think so. Take the Buck case. I wonder if the Minister of Justice thinks that is the sort of thing which should be hashed up to us, nearly five years after the event; and these three men have the hardihood to send to parliament a report in which they make this statement:
The shots were deliberately aimed at Buck's cell.
That is not Buck, but Buck's cell.
The shots were fired either with the deliberate intention of injuring Buck, or wilfully, reckless as to whether they did or not.
That statement is made five years afterwards. They continue:
When the superintendent-
This is our poor friend who came into the service in this way:
-had become acquainted with these circumstances he ought to have instigated an immediate and thorough investigation to determine the names of the men who had fired the shots, and this investigation should have been pursued with as much diligence as the investigation of any other crime.
The militia was outside, having been called in, and it was not apparent whether the shots had been fired by the prison warders or by the militia. He should have seen to it which man fired that shot! That is what these men report. I ask any hon. member what he thinks of that.
(5)	When Mr. Buckley's complaint was received, in August, 1933, the inspectors were instructed to conduct an investigation because there was no record of any appropriate investigation having taken place.
(6)	The investigation by Inspectors Craig and Dawson was not carried out with the efficiency the circumstances warranted.
And the commissioners made their report. They said that there he was, in D tier, the top, I went and saw it myself and saw the marks of the shots. They said that these men fired at such an angle as to endeavour to strike
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the ceiling, but, this being the top tier, some shots struck the top of the ceiling, did not go as high as the ceiling of the building but round about this cell. Anyone who knows anything would know that would probably be the result; and that was the finding. Listen to this:
(7)	In view of the evidence before them, Inspectors Craig and Dawson did not prepare an honest report for the minister,-
This is our royal commission, five years afterwards.
-hut rather sought to place the responsibility where it did not justly lie, on Buck, and this with a view to justifying the shooting, which they knew at the time to be unjustified.
I leave it >to the Minister of Justice whether he thinks that is a decent thing for any commission to say, in the light of the fact that Buck himself, when pressed for an answer, said that his speeches to the crowd would be calculated to instigate them to further effort. That is what he said; he was perfectly frank about it. Now we are told by this commission-and the reason is obvious-it all gets back to this poor unfortunate Dawson.
Let us go a step further:
(8)	The memorandum prepared by the superintendent for the Minister of Justice was prepared in an unwarranted effort to justify what had taken place, and the superintendent wrongfully omitted therein to report to the minister all the facts that were within his knowledge, or to give the minister an honest opinion in regard thereto.
I ask the right hon. Minister of Justice to-night as a fair man if he thinks that you can act on the recommendation of a commission which, five years after the event, makes a report like that with respect to these three men, Craig, Dawson and Ormond, under the circumstances mentioned. They charge them with being dishonest and deliberately making a dishonest report, and there are the marks of the shots. They are still there. They indicate the acute angle of fire. The reasons given at the hearing were clear and plain; and what is more, these men said that the effect of it was to do just what they wanted done, to quiet that riot. And listen to this: They say these men had no right to refer to what had taken place with respect to other cells where they had fired shots. But the answer was that the use of firearms had quieted the riot in the prison at cells E and F and that they used the same tactics with respect to the top tier D.
The issue is simple. Five years after the event, men who risked their lives, who were doing their duty as sworn officers of the law, are to be held up to ignominy; one of them, with a great record of offering his

life in the mud and muck of France and Flanders, is to be told that he is a dishonest man, without having an opportunity to defend himself except being called as I have stated, and questioned by three astute lawyers for eight days. Did he see the witnesses? Was he given an opportunity to see them? Did he hear them? He did not. The event took place in August, 1933, and now, in the summer of 1938, after five years, we have this announcement that Ormond made a dishonest report; that Craig and Dawson made a dishonest report.
Look at the report of Dawson. Dawson is the man that McRuer tried to crucify before Judge Daly and failed; now he has his chance and behind his back he puts it down in that record. That is the story, and on that we are asked to change the prison system of Canada. And it is so much the more intensified by the statement of the hon. member for Grey-Bruce this afternoon that he did not receive any pay. It was a vindictive act-


Agnes Campbell Macphail: It was a generous act.


Richard Bedford Bennett: -and we know what it was done for. Now he seizes the opportunity, paid by the people of this country, to make that report against the unfortunate Dawson whose only fault is that he did his duty.
Craig and Dawson signed a report on the Buck incident, and I must say it is a terrible thing to think that five years after we have this report being torn to pieces by these three men. Where were the witnesses? They were not concerned about them. Where were the militiamen? They were not concerned about them. Where were the guards? They were not concerned about them. It was condemnation. Listen to what Craig and Dawson did. These are the words:
1.	Close examination of the interior of cell 16-4-D, which is located on the fourth and top tier of D block, was made by the undersigned and it was found that there had been a bullet imbedded in the wall about six feet in height from the floor and two feet down from the ceiling, and approximately midway between the side walls, this mark (No. 1) was in the form of a round hole as deep as the forefinger. No. 2 bullet mark was in approximately the centre of the ceiling, a few inches to one side-this bullet had evidently ricochetted and had imbedded itself in the back wall, a little to one side of centre. No. 3, apparently, was the discharge of shotgun as ten marks as if made with shot, splattered on the back wall, were found around but mostly above No. 1 and No. 2 marks. No. 4 bullet mark was found on the iron bar of the *window directly in front of cell 16-4-D. These four bullet and shot marks were the only marks that could be found that would indicate firing on that part of the prison known as D block.

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Convict No. 2524, Timothy Buck, was confined in cell 16-4-D 'on October 20, 1932.


Mr. NEILL:: How many storeys?


Richard Bedford Bennett: There were four tiers.
3.	The marks above mentioned prove conclusively that shots were fired into D block, three of them landing in Buck's cell, and one directly in front of the bar of the window.
I am reading from the report of the two inspectors made at the time.
4.	The evidence indicates that all these shots were fired between the hours of 5 p.m. and 8 p.m. Buck states that the firing started at 8 o'clock, other convicts state at an earlier time, but it is considered that the earlier hour is mentioned in an endeavour to show that it was light enough for them to recognize who did the shooting;
5.	None of the evidence taken gives information as to who actually did the shooting. One convict mentioned three officers' names but one of them was home sick on that day and the other two denied that they shot into D block, although at the time they state they were in that vicinity.
Has it come to this, that because men decline to act upon the evidence of convicts and to believe them when they had directed attention to three officers as having fired the shots, one of whom was at h_.me sick and the other two denied that they did it, five years afterwards three men on the strength of that say, "Dishonest Craig, dishonest Dawson and dishonest Ormond"?
This is very important in the light of what has occurred to-night:
6.	At about five o'clock that evening, it was ascertained that convicts in F block were digging through the partitions of their cells in an endeavour to congregate in the chapel and to effect an escape.
7.	The cells of F block were examined by the undersigned and it was found that holes had been dug in several cells, large enough for a man to crawl through.
8.	To prevent further digging and an escape, numerous shots were fired into the air and into the ceiling of F block; great noise and damage was going on in E block and a number of shots were fired similar to those into F block. These shots had the desired effect.
9.	Buck admits, and other evidence shows, that he made numerous speeches to the convicts that afternoon and evening. The nature of the speeches early in the afternoon may have been to quiet them hut it is evident, towards evening especially when the firing commenced into the other blocks, that he succeeded in working the convicts up by having them shout in unison to the troops to coerce them and also in chorus voicing their demands.
10.	This shouting by Buck was undoubtedly done at the gate of his cell in a gesticulatory manner and would be seen by the officers and militia patrolling and on duty in the yard. His actions and shouts would indicate clearly that he was leading and inciting the convicts.
11.	It is considered that the opinion was then formed by those on duty in the yard that action had to be taken to suppress Buck and the tumult he was the instigator of.
12.	The same action as taken with E and F blocks, was then evidently taken in regard to D block, by firing four or five shots high up in D block. These shots were fired at a moderately sharp angle from the yard but instead of hitting the ceiling as in the other blocks, entered cell 16 on the fourth or top^ tier of D block. The evidence shows these shots had the desired effect.
It has not been challenged, mark you, that these shots were fired at this sharp angle intc the ceiling; but owing to the fact that they were fired from the yard outside they fell short of the ceiling, as indicated by the report I have already read. But they had the desired effect. Now see the fairness of this report at the time:
13.	Whether aim was taken at Buck's cell, the evidence does not show, but it is apparent that from the high location of the marks those who fired the shots endeavoured to scare the convicts only, which evidently they did and the agitation was suppressed.
That is not denied. That is not questioned. These men risked their lives to suppress this commotion and quiet this agitation; yet, as a result of these efforts, five years later a commission calls them dishonest, and on the report of this commission we are asked to change the prison system of Canada.
Let us go a step further:
14.	It is the opinion of the undersigned that the shots fired into D block were not aimed deliberately at Buck or any other convict and that D block was treated similar to the other two blocks into which firing occurred.
Yet these three commissioners state: "The idea of Craig and Dawson mentioning these other blocks! What relevancy had they"? And Craig and Dawson point out why they did so. They point out that these men were getting out; that they were tearing down the walls; that they had already planned an escape into the chapel, and thence to freedom. I continue:
16.	It is pointed out that in the opinion of the undersigned, firing was the only reasonable means possible to suppress what was taking place at this stage. It was impossible at this time to take Buck out of his cell without precipitating a worse riot and possibly the loss of lives.
17.	It is the opinion of the undersigned that the firing into D block on the evening of October 20. 1932, was done by a member or members of the staff of the penitentiary or of the permanent militia, both of which were on duty in the vicinity from which the shots evidently came at that time.
18.	The undersigned are further of the opinion that the man or men when firing the shots
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into D block considered that they were fully justified in taking that action in the circumstances that then existed.
Respectfully submitted,
W. H. Craig,
Inspector.
J. D. Dawson,
Inspector.
Remember, this occurred six years ago next October. These men were on the spot. They were taking the responsibility. Their lives were being offered as a sacrifice, not the lives of these three commissioners. Yet the latter go to Kingston and hearken to stories, and they make a report that Dawson and Craig are dishonest men. Listen to these words:
The findings in the above report are subject to the following comments:
The references, in paragraphs 6, 7 and 8, to the nature of the disturbance in F and E blocks are irrelevant to the matter under consideration. Buck was in no way connected with any disturbances that may have taken place in these other cell blocks.
Just imagine; here were men with this terrible, this awful responsibility, with these hundreds of men in this penal institution, with this evidence that they had been burrowing their way into the open! They brought about quietness only by discharging firearms; then they suddenly saw the same situation in D tier, and they refer to that as a warrant for using the same means to bring about quiet there. Yet our beautiful commission says that is wholly irrelevant, and asks what that has to do with the matter.
Then I come to the next comment:
The finding in paragraph 9, that, "toward evening, especially when the firing into the other blocks commenced, he succeeded in working the convicts up, by having them shout in unison to the troops to coerce them, and also in chorus voicing their demands," is absurd.
Yet Buck has admitted it. That is your commission which is going to change the penal system of Canada. There you had these men confronted with that situation, as guardians of the peace, risking their lives, with the militia called out; and we are told that because they did what they did, as reported in this document by them at that time, it was all absurd, and that these men who risked their lives to preserve safety in that penitentiary were dishonest men. The report continues:
The troops were located outside the walls of the cell block. The prisoners were all locked in their cells. It is difficult to conceive how any shouting by Buck could have had the effect of "coercing" the armed troops in the yard. Careful perusal of the evidence does not justify such a conclusion.
The inferences drawn in paragraph 10 are unsupported by the evidence. The inspectors undertake to surmise what Buck would have done and what the officers might have seen, and on 
this basis they make the statement: "His actions and shouts would indicate clearly that he was leading and inciting the convicts." There is no evidence of such actions or shouts, and Inspector Dawson, when examined before the commission, expressed quite a different view from the above. He stated:
"I asked him (Buck) if his action might be interpreted as inciting rather than trying to quieten them, and he said 'Yes.' That more or less satisfied me on that point. This may be poor language."
The evidence Buck gave was as follows:
"Q. Is it possible that anyone in the distance would have thought that you were inciting rather than remonstrating?
A. Yes, it is possible owing to the noise and general excitement."
That is Buck's statement; yet in the face of that we have a report made six years later by three men who did not examine a single witness who was present at the time or who had anything to do with it, and in their report they make this finding against these men, charging them with dishonesty. Two of these men have worn the king's uniform and risked their lives in France and Flanders, but they are charged with being dishonest men. And that is the report upon which we are asked to change the penal system of Canada.
There is a rule of law, "False in one, false in all." Translated into ordinary English it just means that we should have an opportunity to study the evidence which should accompany the report. I propose, so far as it is possible to do so, to try to vindicate the position I take that we have a right to study this report. We are being asked to change our penal system on the report of men who ventured to make a report such as this regarding three men whom they charge with dishonesty one of whom they grilled for eight long days after having examined scores of convicts who gave evidence against him without his being given an opportunity either to see or hear them. I cannot do it.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, June 29, 1938