[Stage Direction]
Mr. J. EARL LAWSON (West York) presented the first report of the special committee on the Civil Service Act and moved that the report be concurred in.
Motion agreed to.

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

Mr. URQUHART:: 1.	What are the names of the parties who tendered for the mail contract for Scotsburn No. 3 rural mail route, Pictou county, when the last contract was awarded?
2.	What was the amount of each tender?
3.	To whom was the contract awarded and at what price?


Mr. DUPRE:: 1 and 2. Kenneth Matheson, $600 (minor) ; Hugh McL. Munro, $780; Daniel M. McKay, $786; Albert Gordon Blackie, $790.
3.	Hugh McL. Munro at $780 per annum.



NEW ZEALAND BUTTER

Mr. McPHEE:: 1.	How many pounds of New Zealand butter came to Canada in the calendar year 1933?
2.	How many pounds of New Zealand butter are at present on consignment in Canada?
3.	How many pounds of New Zealand butter have been released for sale in Canada since January 1, 1934?


Mr. MATTHEWS:: 1.	Imports of New Zealand butter entered for consumption in Canada, calendar year 1933, 1,321.208 pounds.
2.	New Zealand butter in customs custody February 28, 1934, 320,146 pounds.
3.	Imports of New Zealand butter entered for consumption in Canada since January 1, 1934, as recorded from entries received in Ottawa to February 28, 1934, 376,992 pounds.



CANADA SHIPPING ACT DRAFTING

Mr. CHEVRIER:: 1.	Did the government, Marine department, or any other department, procure any assistance outside the public service of Canada to draft, edit or otherwise prepare for printing the text of the Canada Shipping Act which was introduced in the Senate as Bill J, on March 8, 1933?
2.	If so, who is the person or who are the
persons who have been required for such assistance, stating their names, professions and addresses?	_
3.	What amount, remuneration or gratuity, if any, was paid to any such person for that assistance, as well as for any travelling expenses, living allowance or extra costs, if any?
4.	What was the cost of printing the English and French versions of said bill?
5.	Has the government, the Marine department or any other department, procured any assistance outside the public service of Canada to have the said' bill corrected or otherwise redrafted for introduction during the present session?


Mr. OAHAN:: 1.	Yes.
2.	Martin Griffin, K.C., barrister, of Vancouver, B.C.
3.	Fees, $4,250 (January 13 to March 7, 1933); travelling expenses, $327.70; living allowance, $564; extra costs, $52.56, Total $5,194.26.
4.	English version (603 copies), $1,494.20; French version (200 copies), $2,168.93.
5.	No.



CANADIAN LEGATION BUILDING, TOKYO

Mr. CASGRAIN:: 1.	On what date was the order in council adopted in connection with the erection of a public building for the Canadian legation at Tokyo?
2.	Was the said order in council made public ?
3.	If so, when?


Mr. BENNETT:: 1.	August 31, 1932.	_
2.	No; but the substance was included in a statement given to the press by the Acting Prime Minister on August 31, 1933.
3.	Answered by No. 2.



PROVINCIAL SUBSIDIES

Mr. MICHAUD:: 1. Will there be an increase in the subsidies to the provinces, and particularly to the province of New Brunswick, during the present fiscal year?
Business of the House

2. If so, by what additional amount and on
what ground?


Mr. BENNETT:: I think upon reflection
the hon. gentleman will realize that this question, asking the government what its purposes are, is an improper form of question.



QUESTION PASSED AS ORDER FOR RETURN


Mr. WOODSWORTH:: What amounts were paid for the carrying of mails, by way of subsidies, contracts, grants or otherwise to:	(a) the Canadian Pacific
Railway; (b) the Canadian National Railways; (c) the Canadian Pacific Steamships; (d) the Canadian National Steamships, during the last calendar year?


Mr. CAHAN:: Return tabled herewith. BUSINESS OF THE HOUSE



PRECEDENCE FOR GOVERNMENT BUSINESS AFTER MONDAY, MARCH 5

Richard Bedford Bennett: That on Monday the 5th of March, 1934, and every Monday thereafter until the end of the session, government notices of motions and government orders shall have precedence over all other business except questions by members and notices of motions for the production of papers.
He said:	This means that Monday last
was* the last Monday for private members. I think that perhaps we have gone longer than on some other occasions before taking Monday as a government day. This will still leave Wednesdays for private members, together with the usual provisions for private bills. I do not know that I can usefully add anything to what the motion itself indicates.


James Shaver Woodsworth: Mr. Speaker, there is still on the
order paper a number of notices of motions, and I wonder if the government could allow one other Monday before taking Mondays for government business.


Richard Bedford Bennett: Mr. Speaker, the government extended the period one Monday beyond the usual Monday. We did not ask that last Monday should be taken. There has been an opportunity I think to discuss every motion that has been on the order paper. They were called, but the hon. members in whose names they stood were not prepared to go on. Wednesday will still be available for private members, and I see no reason why there should be another Monday taken, but

if later on it should develop that that is desirable we shall try to make arrangements accordingly.


James Shaver Woodsworth: May I point out
to the Prime Minister that the government, contrary to its usual custom, took up several Thursdays in connection with the debate on the address. I would also point out that there are some motions on the order paper which have not yet been reached.


Richard Bedford Bennett: I only desire to point out that taking the course we did was a distinct advantage to private members, for the order that gives precedence to the address involves that every Thursday that is a private member's day shall be taken up with the debate on the address. But in this instance that was not the case, and there were Thursdays when hon. members were afforded an opportunity for the discussion of private members' resolutions.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Mr. J. L. ILSLEY (Hants-Kings):: I would direct a question to the Minister of Labour, based upon a passage in the speech from the throne in the province of New Brunswick, reading:
My government intends with the assistance of the Dominion government to commence during the present year the laying of some hard surface roads.
Has this government agreed with the New Brunswick government to assist in the laying of hard surface roads, and if so, upon what terms? Has it refused similar assistance to the province of Nova Scotia?


Hon. W. A. GORDON (Minister of Labour):: I have not before me the agreement with the province of New Brunswick, and details of the extent to which this sort of work is being carried on are not presently within my knowledge. I shall look into the matter and give an answer to-morrow or Monday.



THE POTATO MOTH

[Stage Direction]
On the orders of the day:
Mr. THOMAS REID (New Westminster):: I should like to direct a question to the hon. Minister of Agriculture (Mr. Weir), based on a telegram I have received from the Hon. K. C. MacDonald, Minister of Agriculture in the province of British Columbia, in which he states that in a shipment of potatoes from

Bank Act-Mr. Rhodes
Bermuda landed in Vancouver there has been discovered the potato moth, which is destructive alike to tobacco and potatoes. In view of the fact that local entomologists and growers view with alarm the prospect of this moth entering Canada, I would ask if the minister would take steps to have this shipment held up with a view to ascertaining just how serious the situation is.


Hon. ROBERT WEIR (Minister of Agriculture) :: Every precaution will be taken, if
such is the case, to prevent the shipment being landed. I understand that the dominion entomologists have the matter in hand.



UNEMPLOYMENT RELIEF

[Stage Direction]
On the orders of the day:
Mr. J. L. DUGUAY (Lake St. John):: Mr. Speaker, I should like to ask the Minister of Labour (Mr. Gordon) if the statement contained in a telegram which I received is correct. This telegram is in French, the translation being:
Has Ottawa authorized Quebec to reduce allocation for wood of seventy-five cents per week. Answer immediately.


Wesley Ashton Gordon: The administration of relief is entirely in the hands of the provincial government, and the answer to the hon. gentleman's question is, no.



DISTRIBUTION OF MILK

[Stage Direction]
On the orders of the day:
Mr. HUMPHREY MITCHELL (East Hamilton):: Mr. Speaker, I should like to
inquire of the Minister of Agriculture (Mr. Weir) whether his attention has been drawn to the milk situation in the city of Hamilton. At present, serious conflict exists in the distribution of milk between the Borden Company and a cooperative organization. Will the minister look into this situation with a view to protecting the interests of the producers and the consumers?


Robert Weir: The answer is, yes.



RAILWAY SERVICES

[Stage Direction]
On the orders of the day:
Mr. J. E. MICHAUD (Restigouche-Mada-waska):: Mr. Speaker, I should like to inquire of the Minister of Railways (Mr. Manion) if his attention has been directed to the fact that the business of the Canadian National Railways and the Canadian Pacific
Railway in the city of Fredericton is being amalgamated with the idea of closing the station of the Canadian National Railways?


Hon. R. J. MANION (Minister of Railways) :: This matter has not been drawn to
my attention. I might mention that no station can be closed or any action taken as to united operations or the closing of branch lines without first being submitted to the Board of Railway Commissioners. Such action is open to appeal by interested parties.



BANK ACT AMENDMENT


[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved the second reading of Bill No. 18, respecting banks and banking.
He said: Mr. Speaker, it was originally the intention to proceed to-day with the second reading of this bill and, if time permitted, with the second reading of Bill No. 19, to incorporate the Bank of Canada. However, in deference to the views expressed last evening by the hon. member for Quebec East (Mr. Lapointe), it is not proposed that we shall proceed with the latter bill. There is nothing that I care to add to the observations I made on the introduction of this bill. My purpose in rising to-day is to express the hope that the second reading of this bill may be expedited in order that it may be sooner available for the consideration of the committee on banking and commerce.
Hon. J. L. RALSTON (Shelburne-Yar-mouth):: Mr. Speaker, I am entirely in agreement with the wishes of the hon. Minister of Finance (Mr. Rhodes) with regard to the expediting of the second reading of this bill and I assure him that as far as we on this side are concerned there is no desire to delay it at all. We are anxious to get down to what might be regarded as the work of the session.
As I understand it, this bill arises not only out of the fact that the Bank Act provides for a decennial renewal of bank charters but also because certain recommendations have been made in the report of the Macmillan commission, referred to the other evening by the minister. As I understand it, the terms of reference to this commission did not specifically charge it with the obligation of recommending amendments to the Bank Act, but there is a provision in the reference, quoted by the chairman in the introductory portion of the report, which reads:
.... to study the entire monetary system of Canada, particularly in relation to commodity
Bank Act-Mr. Ralston

prj*<? movements and international exchange fluctuations, to consider whether the monetary system of Canada may be so modified and developed as to facilitate intra-imperial and international cooperation in policies designed to promote the revival of trade, the increase and stability of employment and the raising of the level of commodity prices, and generally to make such recommendations as we may deem proper for revising or supplementing existing legislation or for the adoption of other measures calculated to promote the economic and financial welfare of Canada.
In other words, the reference provides for what I regard as a complete overhaul of the machinery of our monetary system. It is a matter of some regret that the commission did not, during the course of its review of conditions in Canada, find it possible to deal with matters which are to some extent outside the 'banking situation. In this connection, the chairman says:
We have taken a more moderate view of the duty entrusted to us and have considered it rather to be our task to enter upon the field of these large topics only in so far as they affect and are affected by the more specific subject of our study, namely, the banking and currency systems of Canada.
The result has been that the only concrete recommendation made by this commission is for the establishment of a central bank along with certain suggestions as to the constitution of that bank and other recommendations with regard to amendments to the Bank Act. These latter recommendations are included in the chapter of the report which gives the general review of the banking situation in Canada. Another recommendation is made that the government should apply itself to an investigation of the subject of rural credits, which indicates that at that time the commission did not feel itself to be in a position to deal with this important matter.
I am not one of those who consider that our examination of the monetary system of Canada has been completely exhausted by the examination of our banking legislation or by the proposal to create a central bank. I feel that the monetary system is probably the most important bit of machinery in our economic life. There were other matters which this commission could have dealt with and discussed in an effort to improve conditions in Canada. I am not complaining in the slightest. I appreciate the fact that the commission was charged with a very heavy task and that the services of the chairman and of Sir Charles Addis were given at a time most inconvenient to themselves, but given with a desire to benefit this country if at all possible. I am sure that the services of the other members also were devoted to the task in the same spirit. Nevertheless it

seems to me that the fact that the recommendation is confined to banking legislation, both with regard to private banks and with regard to the central bank, indicates how important they consider these institutions are in the light of conditions in this dominion.
When we speak of the monetary system of Canada we mean of course the system whereby cash and credit are provided by those who deal in cash and credit for the use of 'those who may want to purchase goods or services but who find themselves in the position that those Who have such goods and services to sell do not want to take goods and services in exchange. Obviously a matter which is so vital to our economic situation and the problems that confront us must call for the most careful attention and the most thoughtful study of this house.
I felt that the commission might have explored some suggestions which were put forward by the Macmillan committee in 'England. That committee suggested that the existing banking system and the financial institutions in operation there did not cater as effectively as they might to a certain class of enterprise which was most useful in the life of the community and which at the same time was too small to be able to provide its capital by public issues. It was suggested in the report of that committee that it might be possible to establish some sort of central body which would have to do with the financing of enterprises of that kind. It seemed to me also that there might have been some study with regard to the provision of capital, under proper circumstances, for those engaged in the primary industries who have to make outlays for capital purposes, and who therefore may not be able to obtain from the existing financial institutions the facilities they desire, but who might be able to come to some central body of the kind suggested by Lord Macmillan's committee. There was a suggestion there as well for a board of national investment which might exercise these functions, which might be in a position in proper cases to provide capital for small enterprises or industries, primary or secondary, and which at the same time might be in a position to go even so far as to regulate issues on the stock exchange, so that not only might the person who wanted capital be protected, but the investor as well.
These matters are not dealt with in the report. It is a matter of regret that something of that kind was not studied, but we quite understand the circumstances under which the report was made. I feel therefore, Mr. Speaker, with respect to this bill, that it

Bank Act-Mr. Coote
is most important, as I suggested at the outset, that this house should at the earliest possible moment grapple with the problems presented in the amendments which are already indicated in the bill, and also with the general problem as to whether any further improvement or even possible replacement can be effected in our existing financial machinery for the good of production industry and commerce in this dominion.
May I assure the Minister of Finance that he will have the fullest cooperation in the study of this measure, because from the report I regard it as a major question for the consideration of this house. The private banking system of Canada touches directly the people of the country. A central bank is one step removed from them, but in a banking system equipped to meet the needs of our Canadian people, and particularly of our export trade, we shall find the greatest measure of success in the things we are trying to do in this country.
I yield to no one in my admiration for the way in which our banking system has stood up under the strain, and I also join with many in the view that this does not necessarily prove that the system as perfect at the present time. I take it therefore to be one of our major tasks at this session to give our wholehearted attention to this bill in an endeavour to improve the banking system in every way possible.
I know that the minister will quite readily appreciate the intimation that we are accepting this as a second reading of the bill to renew the bank charters; further than that we do not go at this stage. We do not commit ourselves in connection with the details of the amendments proposed nor with respect to the provisions which are in the act at the present time. We wish to have full scope in the banking and commerce committee to examine the banking situation from stem to stern, if I may use that expression, and to overhaul the financial machinery which plays such an important part in the business of the country. With those reservations I think I can say that those on this side of the house will readily accept the motion.


Mr. G. G. COOTE (Maoleod):: I do not wish to delay the passage of this measure, which in my opinion is the most important that has been before parliament in the last ten years. I say that because the bulk of the money used in this country is created by the chartered banks. Under the British North America Act, banking, currency, credit and the issuing of paper money are under the jurisdiction of the federal authority. Under 74726-67
the monetary system which has been set up by legislation in the past there have been up to the present time two money-issuing authorities in Canada-the Department of Finance and the banks incorporated under this act. While the Department of Finance does issue dominion notes and coins, none of these is paid out by them, so far as I am aware, except to the chartered banks. On September 30, 1933, the amount of dominion notes outstanding was $173,147,000, odd, and gold and specie amounted to $49,000,000. Any money reaohing the public for circulation or for the transaction of business must be put out by the banks, and in addition to the small amount of dominion notes and coins I have mentioned this money is either bank notes or credit. As the total of bank deposits on September 30, 1933, was S2,260,000,000 odd, it will be readily seen that the banks are the chief issuing bodies; and inasmuch as money is the most important factor in the whole economic system-it is sometimes referred to as the hub of the wheel -it cannot be doubted that this should be considered the most important bill that has been before parliament in the last ten years.
I know that there are many people, including even prominent bankers, who do not admit 'that the banks create credit money in addition to issuing bank notes. In this regard I should like to quote from a speech delivered by the Secretary of State (Mr. Cahan) in Toronto on November 13, before the Canadian Club. I do so because I think that the hon. gentleman has covered the situation admirably, and perhaps in fewer words than I might use myself. In speaking of this practice of the banks in creating their own deposits, he said:
The result is that, in modern practice, 70 to 80 per cent of the aggregate of all deposits, shown in the Canadian bank returns, represents in reality the amount of loans made by the banks and then outstanding. In consequence bank deposits consist largely of credit money which has been created by the banks. When a loan is repaid by the customer to the bank which made the loan, the deposit created by the loan is wiped out, and the aggregate of all bank deposits is thereby reduced by the sum so paid.
I think it will make it clear if I give the figures as presented by the Secretary of State on that occasion:
September 30, 1933 Deposits by the public in Canadian chartered banks payable on demand in Canada	$ 491,000,000
Deposits payable after notice or
on a fixed day in Canada.. .. 1,372,000,000 Deposits elsewhere than in Canada. 296,000,000 Balances due provincial and
dominion governments	 99,000,000

/iank Act-Mr. Coote

Or a total, in round figures, of $2,260,000,000 in the chartered banks of Canada. This aggregate amount on deposit on September 30 last, he points out, was $436,000,000 less than the average amount of deposits during the year 1929. Then he goes on to show that the balance on deposit in customers' accounts "represents a sum of money which the customer owns, but nevertheless this money does not exist except in the accounts of the customer's bank." He continues:
What is paid out of one bank account is paid into another bank account by entries in books of account. A relatively small quantity of metallic coins or paper currency suffices for owners who require cash for their petty expenses.
Then he says:
The cheque system, which has been developed, enables the banks to create money without the issue of their printed notes. On September 30 last, all the Canadian banks had $141,000,000 of their own notes in circulation, while the aggregate of bank deposits was $2,200,000,000.
He says later:
But the cheque system, which now prevails, enables the banks, as I have stated, to create credit money at will for many hundreds of millions of dollars in excess of their note issues. $1,428,000,000 of such credit money was issued and outstanding on September 30 last. In comparison with this bank credit money, the amount of all other money in circulation is quite insignificant.
To be quite fair to the Secretary of State I want to say that in the following paragraph he states that of course the power to create credit by the banks is not unlimited. I think it would be clear from his words that the importance of the act which is now before us might be underestimated by members of the house and people in the country who have not been giving to the monetary system as much study as has been given by the Secretary of State.
The next point I should like to deal with is that under our banking system we have built up what amounts to a monopoly of credit in Canada and a control exercised over our whole economic life through this control of credit. There have been general bank acts passed in this house in the years 1867, 1870, 1880, 1890, 1900, 1913 and 1923 and I think it would be fair to say that practically on every occasion the act was pretty much as the bankers wanted. Prior to 1900 there was no provision in the Bank Act for the purchase of the assets of one bank by any other, and in that year the change was made providing for this. Also in 1900 the Canadian Bankers' Association was incorporated by act of parliament, chapter 93 of the statutes of

that year. In the Bank Act of 1900, sections 24 to 29 inclusive, provided that the Canadian Bankers' Association should appoint a curator for any bank that suspended payment in specie of any of its liabilities, gave the association power to make by-laws, rules and regulations respecting all matters relating to the curator and making of bank notes, and this in addition to the provision which I have already mentioned, under which one bank was allowed to purchase the assets of another, subject to the approval of the governor in council through the recommendation of the Minister of Finance.
In this way there was built up a fine machine for centralizing control in a few hands and bank mergers began that year. I shall not take time to read a list of those bank mergers; they are to be found by anyone who is interested, on page 19 of the recent banking commission's report. The following table shows how the number of banks in
Canada was reduced:
Number
Year	of banks
1900	 36
1910	 28
1923	 17
1933	 10
In that time	the	following banks absorbed:
Number of banks
Name of bank	absorbed
Royal Bank	 8
Bank of	Montreal	
6Bank of	Commerce	
8Bank of	Nova Scotia	
4Altogether thirty-five banks were purchased by other banks during that period and as a result of the mergers which have been going on for the past thirty-three years, we now have a situation	where one bank	controlsapproximately 28	per	cent	of the	bankingassets of Canada and three banks together, sometimes called	the	"big	three,"	controlapproximately 70	per	cent	of the	banking
business. The policy of those three banks may be said to set the pace for the smaller banks and I think it is not stretching the case too much to say that ten banks have what amounts to a monopoly of credit in Canada. Not only do the large banks practically control the banking business of the country, but their directors control trust companies, mortgage and loan companies, bond and investment houses, insurance companies, railways, public utilities, flour mills, bakeries, packing plants, steel mills, textile plants, tobacco factories, agricultural implement factories, pulp and paper plants, and so forth, in fact, almost everything that would seem to be worth controlling.

Bank Act-Mr. Coote
I have in my hand a statement showing some of the corporations controlled by directors of the three largest banks and the great number of directorships held by individual directors. The list is necessarily incomplete; it is not easy to secure the complete information. The list has been taken mainly from the Canadian Annual Financial Review and many corporations are not shown there. A few have been added from Who's Who and other sources. I should like to place this list on Hansard, but under the rules I suppose 1 shall be compelled to read it. It is as follows:
Abitibi Power & Paper Co.
(a) Provincial Paper Ltd.
Algoma Consolidated Corp.
(a) Lake Superior Corp. which controls Algoma Steel and others.
Aluminium Ltd.
Amalgamated Electric Corp.
Andian National Corp.
Asbestos Corp.
Acadia Sugar Ref. Co.
Barcelona, T. L. & Power Co.
Beauharnois Power Corp.
Belding-Corticelli Ltd.
Bell Telephone Co.
Blue Diamond Coal Co.
Blue Ribbon Corp. (control McIntyre) Bordens Ltd. (control 18 co's) Brandram-Henderson.
Brazilian Traction, Light & Power Co. and six subsidiaries.
British American Assurance Co.
British American Oil Co.
British Columbia Power Corp.
British Columbia Pulp & Paper Co.
Building Products Ltd.
Burns & Co. Ltd.
F. N. Burt Co.
Calgary & Edmonton Corp.
Canada Cement Co.
Canadian Foundaries & Forgings Ltd.
Canada Life Assurance Co.
Canada North-West Co.
Canada Packers.
Canada Permanent Mortgage Co.
Canada Permanent Trust Co.
Canada Steamship Lines.
Canada Airways Ltd.
Canadian Bakeries Ltd.
Canadian Bronze Co.
Canadian Canners Ltd.
Canadian Car & Foundary Co.
Canadian Cottons Ltd.
Canadian Dredge & Dock Co.
Canadian Fairbanks Morse Co.
Canadian Foreign Investment Co.	1
Canadian General Electric Co.
Canadian General Investments Ltd.
Canadian Industrial Alcohol Co.
Canadian Industries Ltd.
Canadian International Investment Trust. Canadian Locomotive Co. Ltd.
Canadian Marconi Co.
C.P.R. Co.
Canadian Vickers Ltd.
Canadian Westinghouse Co. Ltd.
Central Canada Loan & Savings Co.
Citadel Brick Ltd.
Cockshutt Plow Co. Ltd.
Confederation Life Assurance.
Consolidated Bakeries.
Consolidated Investment Corp.
Consolidated Mining & Smelting Co. Consolidated Oka Sand and Gravel Co. Consolidated Paper Corp. Ltd.
Consumer's Gas Co. of Toronto.
Consumers Imperial Mills Ltd.
Crown Trust Co.
Dominion Agricultural Credit Co.
Dominion Bridge Co. Ltd.
Dominion Engineering Work.
Dominion Glass Co.
Dominion Life Assurance Company.
Dominion Rubber Co.
Dominion Steel & Coal Corp.
Dominion Stores Ltd.
Dominion Tar & Chemical Co.
Dominion Textile Co.	J
Dominion Woolens Co.
Donnacona Paper Co. Ltd.	\
Duke-Price Power Co. Ltd.
Eastern Canada Saving & Loan Co,
Eastern Trust Co.
Economic Investment Trust Ltd.
Foundation Co. of Canada.
Fraser Companies Ltd.
General Steel Wares Ltd.
Goodyear Tire & Rubber Co. of Canada. Goulds Pumps Inc.
Great West Life Assurance Co.
The Guarantee Company of North America. Gypsum, Lime & Alabastine, Canada, Ltd. Hamilton Bridge Co.
Hamilton Cotton Co.
Hamilton United Theatres Ltd.
Hillerest Colleries Ltd.
Holt, Renfrew & Co. Ltd.
Home Investment & Savings Association. Home Oil Company.
Howard Smith Paper Mills.
Hudson's Bay Company.
Huron & Erie Mortgage Corp.
Hydro-Electric Bond & Share Corp.
Imperial Life Assurance Co. of Canada. Intercolonial Coal Co.
International Coal & Coke Co.
International Nickel Co. of Canada. International Paints (Canada) Ltd. International Hydro Electric System.
The Canadian Hydro & Subsidiary Companies Controlling Gatineau Power Co.
St. John River Power Co.
Gatineau Electric Light Co.
International Power Co. Ltd., and six controlled companies.
Investment Bond & Share Co.
Ivelvinator of Canada, Ltd.
Lake of the Woods Milling Company.
Landed Banking & Loan Co.
Inter City Western Bakeries.
London Canadian Investment Co.
Lowry Petroleum Ltd.
Maritime Trust Co.
Massey Harris Co.
McIntyre Porcupine Mines Ltd.
Mexico Tramways Co.
Mexico Light Heat & Power Co., and two others.
Minneapolis, St. Paul, Sault St. Marie RailWay Co.
Moirs Ltd. (Halifax).	,
Monarch Knitting Co. Ltd.
Bank Act-Mr. Coote

stocks and bonds, and so forth. This was given by the Bank of Commerce about a year ago, and published in their monthly letter, and I think the practice is recommended in the report of the Macmillan committee in England. The banks should also give the number of their branches and where they are located; also the names, addresses and occupations of all the directors, and a list of the firms and corporations of which they are directors or partners.
I should also like to see them asked to make a classification of deposits in various groups according to the amount of the deposit. I notice that in the United States less than one per cent of the depositors own sixty per cent of bank deposits. A classification has been made showing the deposits in different classes. I think the same should be required of our banks in Canada for the information of the government, to give them a better idea of the economic condition of the people.
Loans by banks to stockbrokers against the collateral of stocks and bonds I think should be practically prohibited. Legislation dealing with that matter has been passed by the United States congress recently, and I think that similar legislation should be passed in Canada.
Section 138 of the present Bank Act should be struck out. That is the section which prohibits anyone except the banks issuing money or anything that might be considered as a substitute for money. Some municipalities in Canada have issued scrip for a part of their annual tax levy, and some of them in western Canada have been taken into court and sued for the penalty of $400. I do not see that there is any reason why a municipality should not be allowed to exercise that right.
I also think that our banks should be compelled to confine their operations to Canada. The bank statement for May, 1933, shows that one of our banks had thirty-six per cent of its loans outside of Canada. With a paid-up capital of $35,000,000, it had outside loans of $144,000,000. From the standpoint of the safety of depositors' funds this is dangerous. A collapse of sugar prices, or a foreign revolution such as took place recently in Cuba, and which might take place in any South American country, might conceivably place some of our banks in a very bad position. What I suggest is that if the banks want to carry on a foreign business, they should form a separate corporation to transact that foreign business so that the money of the Canadian depositors will not be endangered by what may take place abroad.
'Mr. Coote.]
There are other matters which I think ought to be discussed, and which certainly will be discussed in the committee, but as my time is up those are all the suggestions I can make to the minister and the house today. I do hope that some of the matters, which I have brought to the attention of the house to-day will be given careful consideration by the minister and by the committee.


Mr. WILLIAM IRVINE (Wetaskiwin):: Mr. Speaker, it is scarcely necessary to emphasize the importance of the Bank Act to the national life of Canada at this time. At the last revision of the act I think it was necessary to emphasize it, and there seemed to be difficulty in getting a great many people to believe that it had any such importance. Since that time, however, something has happened in the world, and the information that people have to-day on banking and credit and currency and similar subjects is very much greater than it was ten years ago.
Perhaps it is true to say that the general public to-day fully realize that the national life of Canada is practically in the hands of bankers. The general public know to-day that those who control currency and credit, control the industrial life of the nation, and the depression through which we have been passing, and through which we have not yet passed, has been one great means of education, particularly on the question of money.
There is perhaps no advantage in dealing with detailed amendments on the second reading of a bill which covers a tremendous field of detailed legislation. The previous speaker referred to certain amendments, and I have no doubt that they will be put forward by him at the proper time. I am glad to notice from the speech of the Minister of Finance (Mr. Rhodes) that some of the amendments proposed are those proposed and advocated by this corner of the house some ten years ago. For instance take the amendment to fix the rate of interest. Not only did we move such an amendment in committee at the last revision-I think it was moved six or eight times, beginning with three per cent and moving up one-half per cent until we reached eight per cent-but we also introduced a bill several years ago providing for the fixing of the rate of interest at the rate now proposed. We are glad that these amendments are being brought forward even at this late date. But these are Very insignificant things. Other fundamental amendments which we proposed have not been included in this bill and we shall endeavour to bring these forward, as we did when the last revision was made, in the

Bank Act-Mr. Irvine
hope that with the new conviction which has become general among the public as to the importance of banks and their direct effect upon the industrial life of the people, we may perhaps make a little more headway this time than we did previously.
Although the amendments to this act have an importance in relation to policy, they are not the most important thing. The important thing about the Bank Act is the monetary policy which it embodies. So far as I know, the monetary policy of this country has not been altered materially by this bill. It is true that the central bank proposal will affect the Bank Act somewhat since a good deal of power which was exercised at one time by the chartered banks or not exercised by anyone will now be entrusted to it. No doubt the general monetary policy of the nation can be more appropriately discussed when we take up the Bank of Canada Act. I think in this legislation it should be made clear and unmistakable to the chartered banks what is to be the policy to be followed by them in the handling of our internal credit. This bill ought to tell us whether these banks will have to trim down their handling of currency and credit during the next ten years to a preconceived, antiquated and unscientific stupidity known as the gold basis, or whether they are to be allowed to let out the credit of the country upon the basis of the aggregate wealth producing capacity of the nation. To my mind this is a very important feature of the Bank Act. So far as I am concerned I intend to press for these matters both on this bill and on the central bank proposal.
I desire to follow the example of the hon. member for Macleod (Mr. Coote) and place on Hansard certain data to indicate the actual forces which control the financial life, the industrial life and the government of Canada. I do not think it can be said too often that the power that controls our monetary policy, controls the national policy of the state. I desire to put on Hansard certain data to make this fact a little more clear. If we cannot secure any alteration in our financial policy, at least we can place before the people of Canada some of the facts concerning the institutions in question. I intend to make a general survey of the relationship which exists between the Canadian banking system and the business of the country, and in doing this I have followed the example of the previous speaker and have taken three of the larger banks as examples. I hope it will not be taken that we in this comer have any particular hatred or malice against the
banks we are mentioning, because this is not so. It is impossible to deal with all of them and we take these three as an example of what all banks are doing.
The Bank of Montreal, the Bank of Commerce and the Royal Bank with their allied trust companies, the Royal Trust, the National Trust and the Montreal Trust have 832 directorships in most of the principal business concerns in Canada. One hundred and eighty-three companies have their presidents or chairmen of the board acting as directors on the board of one of the big three. All the banks and trust companies are interlocked to a greater or lesser degree, although the Bank of Montreal appears to show a somewhat greater inclination to maintain its own individuality. The Bank of Montreal has one director on the board of the Montreal Trust Company, which is practically the Royal Bank. The Royal Bank has eleven directors on the board of the Montreal Trust Company, three in the National Trust Company, which is controlled by the Canadian Bank of Commerce, and two in the Eastern Trust Company, under the control of the Bank of Nova Scotia. The Bank of Commerce has ten directors in the National Trust and two in the Toronto General Trusts. This latter trust company, with assets of $226,000,000 seems to afford a meeting place for the Ontario system, for it has on its board two directors of the Bank of Commerce, two of the Bank of Nova Scotia, two of the Bank of Toronto, three of the Dominion Bank and two of the Imperial Bank. The Bank of Nova Scotia has three directors in the National Trust Company, three in the Toronto General Trusts and three in the Eastern Trust. The National Trust Company has nine Bank of Commerce directors, two Bank of Nova Scotia and three Royal Bank. None of the banks are represented directly on their boards by directors of other banks but the relationship through their trust companies is close and effective. Through the Montreal Trust, the National Trust, the Eastern Trust and the Toronto General Trusts, the Royal Bank, the Bank of Commerce, the Bank of Nova Scotia, the Imperial Bank, the Bank of Toronto and the Dominion Bank are closely interconnected. There is one exception; with a lone director on the board of the Montreal Trust, the Bank of Montreal stands practically alone.
The following information which was obtained from the Directory of Directors for 1933 and the Annual Financial Review for 1932 has to do with the Bank of Montreal and the Royal Trust Company. These two
Bank Act-Mr. Irvine

companies should be considered as one, there being fourteen directors common to both, including the president, Sir Charles Blair Gordon. The capital and reserve of the Bank of Montreal is $76,000,000 and of the Royal Trust Company, $5,750,000. The combined assets of the two organizations total $1,324,000,000. The combined boards total forty-five members' who hold 217 directorships in 135 other companies. In forty-six companies the president is on the board of either the Bank of Montreal or the Royal Trust Company. There are also twelve vicei-presidents. Sir Charles Blair Gordon is also a governor of McGill university and of the Royal Victoria hospital. Of the 135 companies represented, 69 are commercial, 16 insurance, 19 finance companies-investment and trust-11 power and paper companies, 4 mining and smelting, 8 companies dealing in food products, 2 universities and 2 hospitals. On the boards of the aforementioned 69 companies, the Bank of Montreal, including the Royal Trust Company, is the only bank represented in the directorship of 45 companies, while in 24 companies there are directors of other banks in addition. The Canadian Pacific Railway, for instance, has 14 bank directors, representing 6 banks and trust companies;
the Dominion Bridge Company has 11 bank directors, and the Canadian General Electric, 8.
The list of insurance companies shows that there is a large representation of the banks, especially in regard to the large companies. The Mutual Life has 7 bank directors, divided among 7 banks and trust companies; the Sun Life has 11 bank directors; the Canada Life, 7, and the Imperial Life, 10. The banks seem to have agreed to divide up the insurance 'companies fairly evenly, with the exception of the Liverpool, London & Globe, which controls the Globe Indemnity Company, the Central Insurance Company, the Liverpool, Manitoba Assurance Company, and the National Liverpool Insurance Company; the Bank of Montreal and Royal Trust Company having 10 directors, no other bank being represented.
An examination of the data in this regard will show clearly the manner in which the various banks are interlocked on the boards of the more important business concerns of the country. Now I propose to put on Hansard the actual details in that regard. The following data will show the relation between principal banks and trust companies:
Relation between principal Banks and Trust Companies
Bank directors on boards of Trust Companies
Bank of Montreal Royal Bank.. ..
Bank of Commerce.. Bank of Nova Scotia
Imperial Bank.. Dominion Bank. Bank of Toronto
Royal Trust Co	
Montreal Trust	
Montreal Trust	
National Trust	
Eastern Trust	
National Trust	
Toronto General Trusts.. .. National Trust Co. (Com.).. Toronto General Trusts.. ..
Eastern Trust Co	
Toronto General Trusts.. .. Toronto General Trusts.. .. Toronto General Trusts.. ..
Directors
1
3
10
3
4 2 3 2
Trust Company directors on boards of banks
Royal Trust Co	Bank of Montreal.. ..
Montreal Trust Co	Royal Bank	
Bank of Montreal.. ..
National Trust Co	Bank of Commerce..
Bank of Nova Scotia.. Royal Bank	
Eastern Trust Co	Bank of Nova Scotia..
Royal Bank	
Toronto General Trusts	Imperial Bank	
Dominion Bank	
Bank of Toronto. . .. Bank of Nova Scotia.. Bank of Commerce. ..
12
9
3
4 2 2 3 2 2 2
[Mr. Irvine.l

Bank Act-Mr. Irvine
I turn next to the commercial companies in their relationship to the banks. The followcompany :
Company
Paton Manufacturing Co.
Steel Co. of Canada.
Bell Telephone Co.
Northern Electric.
Dominion Bridge Co.
i the boards of more than	one bank	or trustBanks and Trust Companies	Directors	TotalBank of Montreal	3	Royal Bank	1	4Bank of Montreal	1	Royal Bank	2	3Bank of Montreal	3	Bank of Commerce	1	National Trust (Commerce),	. 1	6Bank of Montreal	1	Montreal Trust (Royal Bk.)	. 1	2Bank of Montreal	1	Royal Bank	1	2Bank of Montreal	6	Bank of Commerce	2	Montreal Trust (Royal Bk.),	. 2	Bank of Nova Scotia	1	Imperial Bank	1	Royal Bank	2	14Bank of Montreal	2	Royal Bank	2	4Bank of Montreal	2	Roval Bank	2	Bank of Commerce	2	6Bank of Montreal	1	Royal Bank	2	3Bank of Montreal	1	Royal Bank	2	3Bank of Montreal	2	Royal Bank	4	Bank of Commerce	3	9Bank of Montreal	2	Royal Bank	3	Bank of Commerce	1	Montreal Trust	1	7Bank of Montreal	4	Royal Bank	1	Montreal Trust	1	Royal Trust	1	7Bank of Montreal	1	Montreal Trust	1	2Bank of Montreal	2	Montreal Trust	1	3Bank of Montreal	2	Royal Bank	3	Royal Trust	1	6Bank of Montreal	3	Royal Bank	6	Bank of Commerce	1	Royal Trust	1	11Bank of Montreal	2	Montreal Trust	. 1	3Bank of Montreal	1	Royal Bank	1	2Bank of Montreal	1	Roval Bank	2	Montreal Trust	3	6Bank of Montreal	1	Bank of Commerce	2	3Royal Bank	1	Bank of Nova Scotia	1	2Bank of Commerce	1	Royal Bank	1	2
Bank Act-Mr. Inline

Company	Banks and Trust Companies	Directors	Total
Massey Harris Co			3	
	National Trust		. 1	4
Moore Corporation			1	
	Toronto General Trusts.. ..	1	2
American Sales Book Co			, 1	
	Toronto General Trusts.. ..	1	
	Bank of Nova Scotia . . ..	. 1	3
Canada Cement Co			, 5	
	Royal Bank		. 1	6
Consumers Gas Co. (Toronto)			. 3	
	Imperial Bank		1	
	Toronto General Trusts.. ..	. 1	5
National Breweries			. 2	
	Royal Trust		. 1	3
Maple Leaf Gardens			. 1	
	National Trust		, 1	2
Keystone Transports			1	
	Montreal Trust		1	2
Canadian General Electric Co			. 5	
	Bank of Nova Scotia . . ..	. 1	
	Bank of Commerce		. 2	8
Dominion Engineering Works			. 7	
	Montreal Trust		, 1	8
Canadian Marconi Co			1	
	Bank of Commerce		. 1	
Montreal Trust	. 1	3Canadian Benedict Stone Co	Royal Bank	1	Montreal Trust	. 1	2Imperial Oil Co	. 1	Toronto General Trusts.. ..	. 1	2International Petroleum Co	. 1	Toronto Genera] Trusts.. ..	. 1	2I turn now to the financial companies	to indicate how they are	interlocked.	Thefollowing investment, holding and trust companies are represented on the boards of	morethan one bank or trust company:	Company	Banks and Trust Companies	Directors	TotalNational City Co. (controlled by National	City Bank of New York)	Bank of Montreal	2	Royal Bank	1	Bank of Commerce	1	4Title Guarantee and Trust	Bank of Montreal	1	Royal Bank	3	Royal Trust (B. of M.) ..	1	National Trust	2	Montreal Trust	1	8Montreal City & District Savings Bank	Bank of Montreal	1	Koval Bank	1	Montreal Trust (Royal Bk.)	1	3Canadian International Investment Trust.. ..	Bank of Montreal	1	Royal Bank	1	2Holt Renfrew and Co	Bank of Montreal	1	Royal Bank	3	4Montreal Trust Co	Bank of Montreal	1	Royal Bank	11	12Central Canada Savings and Loan Co	Bank of Commerce	3	National Trust	1	Toronto General Trusts.. ..	1	5
[Mr. Irvine.}

Bank Act-Mr. Irvine
Company	Banks and Trust Companies	Directors	Total
Toronto Savings and Loan Co			4	
	National Trust		2	
	Bank of Nova Scotia .. . .	1	
	Toronto General Trusts.. ..	1	8
Economic Investments Trusts			2	
	National Trust		1	3
Canadian General Investment Trust.. ..		1	
	Toronto General Trusts.. ..	1	2
Aldred and Co			1	
Montreal Trust (Royal Bk.)	1	2Hydro Electric Bond and Share Co. ..	.. .. Roval Bank	1	Montreal Trust Co	1	2Anglo Canadian Securities Ltd	1	Montreal Trust	1	2United Bond and Share Co	1	National Trust Co	1	2United Securities Ltd	1	Montreal Trust	1	2Scottish Trust Co	1	Montreal Trust	1	24th Canadian Investment Trust	1	Bank of Nova Scotia.. ..	1	2Then I turn to the insurance companies. The following insurance companies are	represented on the boards of more than one	bank or trust company;	Insurance Companies	Banks and Trust Companies	Directors	TotalRoyal Exchange Assurance Co	.. .. Bank of Montreal	2	Bank of Commerce	1	3Bank of Montreal	1	Bank of Commerce	1	Royal Bank	1	Bank of Nova Scotia.. ..	1	Royal Trust (B. of M.) ..	1	National Trust (Com.) . . . .	1	Toronto General Trusts. . . .	1	Imperial Bank	1	8Liverpool, London and Globe Insurance Co. (controlling the Globe Indemnity Co.; Central Insurance Co.; Liverpool Manitoba Assurance Co.; National Liverpool Insurance Co.)	Sun Assurance Co	
Sun Life Assurance Co.
Canada Life Assurance Co.
Imperial Life Assurance Co.
Canada Indemnity Co., Western Assurance Co
Rank of Montreal	 7
Royal Trust Co	 3	10
Bank of Montreal	 1
Bank of Commerce	 1	2
Bank of Montreal	 3
Royal Bank	 3
Bank of Nova Scotia	 2
Montreal Trust (R. Bk.) ..	2
National Trust (Com.).. ..	1	11
Bank of Montreal	 1
Bank of Commerce	 2
Bank of Nova Scotia....	2
National Trust (Com.)....	2	7
Bank of Montreal	 1
Royal Bank	 1
Bank of Commerce	 4
Bank of Nova Scotia....	1
National Trust (Com.)....	2
Toronto General Trust.. ..	1	10
Royal Bank	 1
Imperial Bank	 1	2
Bank of Commerce	 5
Royal Bank	 2	7
Bank Act-Mr. Irvine

Insurance Companies	Banks and Trust Companies	Directors	Total
British America Assurance Co			4	
	Royal Bank		1	5
Confederation Life Assurance Co			1	
	Imperial Bank		3	4
Great West Life Assurance Co			3	
	Royal Bank		1	
	Toronto General Trusts.. ..	1	5
Fire Insurance Co. of Canada			2	
	Royal Bank		2	
	Montreal Trust		1	5
Turning to the power and paper companies, we find the following are represented on the boards of more than one bank or trust company:
Power and Paper Companies St. Lawrence Corporation	
West Kootenay Power and Light Co	
Abitibi Power and Paper Co	
Consolidated Paper Corporation	
Montreal L. H. and P. Cons	
Brazilian Traction L. and P. Co	
Canadian International Paper Corporation..
Shawinigan Water and Power Co	
Montreal Island Power	
International Power Corporation	
Canada Light and Power Co	
Provincial L. H. and P. Co	
Cedar Rapids Mfg and Power Co	
Banks and Trust Companies	Directors	Totals
Bank of Montreal		i	
Bank of Commerce		i	2
Bank of Montreal		i	
Bank of Commerce		i	2
Bank of Montreal		i	
Royal Bank		i	2
Bank of Montreal		i	
Royal Trust		i	
Royal Bank		i	3
Bank of Montreal		i	
Royal Bank		2	
Montreal Trust		1	4
Bank of Montreal		1	
Bank of Commerce		5	e
Bank of Commerce		3	
Montreal Trust		2	5
Royal Bank		2	
Montreal Trust		2	4
Royal Bank		1	
Montreal Trust		2	3
Royal Bank		2	
Bank of Nova Scotia		1	3
Royal Bank		I	
Montreal Trust		I	2
Royal Bank		1	
Montreal Trust		1	2
Royal Bank		1	
Montreal Trust		1	2
The following food companies are represented on the boards of more than one bank or trust company:
Food Companies
Ogilvie Flour Mills	
Borden's Ltd. and 18 subsidiary companies..
Northern Bakeries Ltd	
Burns and Co	
Lake of the Woods Milling Co	
Canadian Canners	
IMr. Irvine.1
Banks and Trust Companies Directors
Bank of Montreal	 3
Royal Bank	 1
Bank of	Commerce	
1..Bank of	Montreal	
3Bank of	Commerce	
1Bank of	Nova Scotia	
1Royal Trust	
1Bank of Montreal	1Royal Bank	
1Bank of Montreal	
1Royal Bank	
1Bank of Commerce	
3Imperial Bank	
1National Trust	
1Bank of Commerce	1Imperial Bank	
1
Totals
6
2
2

Bank Act-Mr. Irvine
The following mining and smelting companies are represented on the boards of more
than one bank or trust company:
Mining and Smelting Companies International Mining Corporation (N.Y.)
Consolidated Mining and Smelting Co..
International Nickel Corporation	
This, of course, is not complete. These are only samples of the interlocking directorates. I turn now to deal with a survey of bank presidents and directors in their personal relations with other companies, and I shall continue as long as my forty minutes last. I begin with the bank of Montreal, its president, vice presidents, directors and so forth, and show that they have similar positions on the boards of other important companies in Canada. This information was obtained from the Annual Financial Review of July, 1932, and the Directory of Directors, of 1933. I may say that the capital and reserve of the bank of Montreal amount to $76,900,000 and the assets, to $748,000,000. The list is as follows :
Sir Charles Blair Gordon, G.B.E.
President
also
Chairman of the Board of Dominion Textiles Co. Ltd.; Penman's Ltd.
President of Hillcrest Collieries Ltd.; Dominion Glass Co. Ltd.; Montreal Cottons, Ltd.; Royal Trust Co.; Ritz-Carlton Hotel Co.
Chairman, Montreal Advisory Committee; National City Co.
Chairman, Canadian Board; Royal Exchange Assurance Co.
Member, Executive Committee; Canadian Pacific Railway Co.
Governor of McGill University; Royal Victoria Hospital.
Director of Canadian Industries, Ltd.; Ogilvie Flour Mills Ltd.; Canadian Bronze Co. Ltd.; Brinton-Peterborough Carpet Co. Ltd.; Dominion Rubber Co. Ltd.; Tuckett Tobacco Co. Ltd.; Standard Life Assurance Co.; Title Guarantee and Trust Corp. of Canada; Montreal Locomotive Works, Ltd.; St. Lawrence Paper Co. Ltd.; Paton Mfg. Co. Ltd.; Borden's Ltd.; Dominion Steel and Coal Corp.; Montreal Light Heat and Power Consolidated; Canadian Airways Co.; Bank of Montreal (France) : United States Rubber Co.; International Mining Co. (N.Y.).
Major General the Hon. S. C. Mewburn, K.C.
Vice-President
also
Vice-President, The Huron and Erie Mortgage Corporation.
2nd Vice-President, Steel Co. of Canada; The Mutual Life Assurance Co.
Director of Bell Telephone Co. of Canada; Canadian Bridge and Dock Co.; Hamilton
Banks and Trust Companies Directors Totals
Bank of Montreal	 1
Royal Bank	 l	2
Bank of Montreal	 2
Royal Bank	 2	4
Bank of Montreal	 2
Bank of Commerce	 2
Royal Trust (B. of M.)....	I	5
Bridge Co.; Canadian Northern Power Corporation; Tuckett Tobacco Co.; Dominion Glass Co.; Royal Trust Co.
Sir Frederick Williams-Taylor Vice-President also
Honorary President, Canadian Bankers' Association.
Director of Liverpool London and Globe Insurance Co.; Montreal Co. of New York, Inc.; Standard Life Assurance Co.; Dominion Textile Co.; Liverpool Manitoba Assurance Co.; Montreal, London and General Investors Ltd.; Bank of Montreal (France); Royal Trust Realty Co.; Royal Trust Co.
Lt.-Col. Herbert Molson Director also
President, Molsons Brewery; Montreal General Hospital; Standard Clay Products, Ltd.
Vice-President, Canadian Foreign Investment Corporation Ltd.
Director of Bell Telephone Co. of Canada; Canadian Industries Ltd.; Dominion Rubber Co.; Montreal City and District Savings Bank; Liverpool London and Globe Assurance Co.; National City Co.; St. Lawrence Corporation; Liverpool Manitoba Assurance Co.; Royal Trust Co.
Huntly R. Drummond Vice President also
President of Canada Sugar Refining Co.
Vice President of Royal Trust Co.
Director of Canadian Bag Co.; Simmons Co.
Col. the Hon. Henry Cockshutt Director also
President of Cockshutt Plow Co.; Frost and Wood Co.
Chairman of the Board of National Sewer Pipe Co.
Director of Bell Telephone Co.; Canadian International Investment Trust; Canadian Pacific Railway Co.; Gypsum, Lime and Alabastine, Ltd.; Niagara Wire Weaving Co. Ltd.; Lake Erie and Northern Railway; International Nickel Co. of Canada; Royal Trust Co.
Canadian Advisory Board of Sun Assurance Co.
Forbes D. Angus Director also
President of Guardian Assurance Co.
Chairman of the Board of Standard Life Assurance Co.
Director of Intercolonial Coal Co.; Royal Trust Co.
Bank Act-Mr. Irvine


Mr. H. E. SPENCER (Battle River):: Before this bill receives second reading I would like in a few words to indicate something of its importance. The two previous speakers have outlined very clearly to the house the tremendous hold on our whole financial machinery of a small group of men through interlocking directorates. I think from the information already given to the house one can readily see that, when all is said and done, unless the government is very strong indeed and is prepared to take a very definite stand in the interests of the public it will in all probability play second fiddle in comparison with the enormous power of organized finance. The issue of money in Canada is a government prerogative, but we must recognize at present our money, although comprising coin and currency is to the extent of 96 per cent simply a matter of bookkeeping; and that the control of this credit has practically been turned over to the banking fraternity, which can create money in large volume by making loans and can take money out of existence in large volume through the cancellation of loans. Therefore we can see the power they have in increasing or decreasing prices and to that extent affecting the entire economic life of the country. Under the Bank Act the banks have certain definite privileges given them. They have for instance the privilege of making money to the extent of issuing in the form of notes an amount equal to their paid up capital. Also for six months in the year they can issue an additional amount equal to 15 per cent of their paid up capital and reserve. They have also the privilege under the Finance Act of taking a variety of securities to the treasury board depositing them as collateral, and getting dominion notes for a certain charge. These dominion notes can either be put into circulation or they can be kept in the bank's safes as most of them are, in the shape of large legals to be used in settling balances between themselves. Or if they wish, they can take these dominion notes and deposit them in the central gold reserve in lieu of gold and issue their own notes or promises to pay against them. These are the definite privileges given to the banks as far as putting 74726-68
money into circulation is concerned, but there is nothing said in the Bank Act, as far as I can find, with regard to putting money into circulation other than by those three methods. We know, however, that a great deal more of so-called money is put into circulation, largely by the extension of credit by the banks, secured on the assets of their clients, which means new money written into existence. I have in my hand a statement showing the total amount of all money, that is notes and subsidiary coin, in Canada on December 31, 1933. It amounts to $349,594,078. At the same time there was on deposit in the banks of Canada, $2,242,222,079. Deducting the total cash from the total deposits leaves a difference of $1,892,628,001. Now if any one is caught increasing the amount of money in existence by counterfeit note or turning out fictitious coin, he is severely punished. But at the same time we find that banks are allowed by the issue of credit against collateral to increase the amount of money, up to nine or ten times the amount of the actual ordinary money in existence. I can find nothing in the Bank Act that gives them this privilege. They have just taken it and been allowed to carry it on.
But although in most cases the money thus written into existence is only bookkeeping entries, at the same time interest is charged to the clients of the bank for it just as if the bank had lent actual money belonging to the bank. The credit that is extended really belongs to the individual or the community but borrowers have to pay interest on it just as if it were money belonging to someone else. The banks really are credit agencies, and the sooner we recognize that fact the easier it will be to understand our financial system. I have before me a brief statement by a very eminent banker who is often quoted in this house, in support of the statement I just made. Right Hon. Reginald McKenna said:
The amount of financial credit in circulation in any country depends entirely upon the actions of its bankers in creating and issuing it and in retiring and destroying it.
Mr. McKenna is one of the great bankers of the world, and he speaks very freely indeed with regard to what is done and what can be done in regard to our monetary system.
Section 75 of the Bank Act, which allows banks to put notes into circulation, makes no reference at all to the development of the credit structure. It is easy to see, therefore, that with the power the banks have of increasing the amount of money in circulation at any time or in other ways bringing on

Bank Act-Mr. Spencer

boom times or inflation, or at another time withdrawing money from circulation, they play an extremely important part in regard to credit and therefore prices. The hon. member for Macleod (Mr. Coote) quoted some figures that were given by the Secretary of State (Mr. Cahan) in Toronto some months ago; he said that between September, 1929, and September, 1933, the banks made a reduction in the total money in circulation in Canada amounting to some $932,000,000. I did not think it was quite that much, but I will accept the figures given by such an eminent witness. It is easy to see, therefore, that the banks, with the power they have, can increase or decrease business much more than can be done by a government. They can make business or they can break business. They can bring on inflation or they can intensify a slump. I bring to my support another eminent banker; I delight to bring men who are prominent in the banking world to support my statements on some of these occasions. This time I am going to quote from Sir Basil Blackett's interesting book Planned Money, in which he says:
Is twentieth century Britain content to make continued use of a monetary system which has so conspicuously failed her in the past and is admittedly liable in the future to present her again and again with the disastrous sequence of boom, slump, boom, slump?
It is with the idea of trying to get away from this sequence of boom, slump, boom, slump, that to-day we are advocating that greater care be taken in revising this Bank Act so that it will be made impossible in future for Canada to be put through the difficulties that she has been put through in the past. When all is said and done the banking business, being a private business, naturally has as its first aim the making of profits for shareholders. The second interest probably would be the encouraging of the business of their interlocking directorates, many of which have been mentioned in the house to-day. I was quite interested the other day to hear the Minister of Finance (Mr. Rhodes) support this statement as to the natural aim of the banking fraternities. At page 826 of Hansard the minister said:
No purely profit making institution operating in a competitive system can afford to place social interests before its own in regard to credit policy. This, I think, is obvious. Nor can the management of such a body be expected to regard the maintenance of the monetary standard, for example, as a duty prior to its obligations to its stockholders.
It seems to me that puts the whole thing in a nutshell. How can we expect the banking fraternities, built up entirely as private
(Mr. Spencer.]
corporations with the incentive of profit for their shareholders, to take a real interest in the public welfare as a first consideration? To show that we are supported in these contentions by people other than farmers I should like to place before the house some statements sent me the other day by a very eminent man who for many years was employed in a bank. Here is what he says:
1.	There is no law restricting the amount which may be loaned to directors.
2.	There is no minimum amount fixed which may be loaned to any one customer.
3.	There is no distinction made between shareholders' funds, commercial deposits and the savings of the thrifty.
4.	There is no legal requirement as to the amount of cash reserves a bank shall carry.
5.	There is no law to prevent any bank from wrecking itself by over-expansion or by permitting the bank's funds to be used in the speculations of a favoured clique.
Such statements as these, coming from a man who was inside of a bank for many years, should be worthy of consideration, and these matters should be and I hope will be taken up when this bill is considered by the banking and commerce committee.
We often hear the bankers tell us that they have to be so very careful indeed with regard to their investments and loans because all the money that is placed with them, largely by widows and orphans, is held in trust. This amuses me, because when all is said and done these poor widows and orphans certainly do not receive first consideration when a bank goes into liquidation. This is what happens in such a case:	The first call on the assets
of the bank is the private notes of that bank, or in other words their " promises to pay," that may be outstanding in the hands of the public. The second call is the balance due the Dominion government. The third call is advances under the Finance Act. The fourth call is the balance due to provincial governments. Fifth call is the deposits by the public payable on demand, and those are not usually the deposits of widows and orphans. The sixth call, under which the money deposited by widows and orphans would come, is the deposits of the public payable after notice. There are various other calls coming after that, but I just want to point out that the statement that the deposits are so well looked after because in many cases they belong to widows and orphans does not seem to be borne out by the facts, since those deposits must take sixth place with regard to the assets of the banks in case of liquidation.
I notice, Mr. Speaker, that under the proposed legislation having to do with the central bank, five per cent of the deposits of

Bank Act-Mr. Spencer
the chartered banks must be kept with the Bank of Canada, and the Dominion government guarantee these deposits of the banks in case the central bank is closed. After reading it I have wondered why the banks themselves have opposed so strenuously the guaranteeing of the deposits placed with them. It seems to me, however, that deposits, savings deposits particularly, are not of great interest to the banking fraternity. At least they are a liability, and I can never understand why the banks advertise for deposits from one dollar and upwards. It seems to me that they must use it as a smoke screen to cover up their greater activities, because far the greater part of the banks' business is distinctly writing money into existence through loans; in other words, a bookkeeping business, and just so long as the people can be led to continue to think that the money the banks lend is the money that was left with them by depositors, just so long can the banks get away with that sort of thing.
I should like to say a word with regard to the relationship between agriculture and the banking system. Whether we like it or not, agriculture is our most important basic industry. For many years, probably ever since Canada has been a country, agriculture has had no easy row to hoe, and it has been made a great deal harder because, unlike many other businesses, it has not been able to make use of credit through our banking system to the extent it would have had we really been in earnest about the development of agriculture. Anyone who has taken any interest at all in agriculture for the last twenty yearn knows full well that even when farmers could get loans from the banks they were very unsatisfactory. For instance, it has been a crying shame for years past that the banks have charged the farmers such a very high rate of interest. We were told in 1923 that the average rate which the banks were charging farmers at that time was eight per cent. That was one per cent more than the legal rate, and the bankers were getting away with it because there was no penalty clause in the Bank Act to penalize them if they charged more than seven per cent.
I hold in my hand a copy of a note due to the Imperial Bank of Canada for the sum of $270.10, payable by a man named Hutt, and it calls for interest at the rate of nine per cent both before and after maturity until paid. The man who wrote to me from a lawyer's office,says:
The Imperial Bank did their utmost to secure a renewal of this said note at the same 74720-68J
rate of interest. Failing this they brought suit for the amount at seven per cent interest, no doubt knowing full well by virtue of the privy council decision that they could only collect interest at the rate of five per cent.
I notice that during the last year it has been general throughout Canada for banks to cut down the interest rate to farmers to seven per cent. The reason for this, I take it, is quite simple. The government took action a year ago, and I congratulate them upon what they did, in cutting down the interest on post office savings half of one per cent with the idea of making money cheaper throughout Canada and encouraging the banks to lower their rate of interest. The banks followed suit by reducing the interest rate on their deposits by half of one per cent, and passing that reduction on to some of the people to whom they made loans. This meant that where they had been charging eight per cent the rate became seven and a half per cent. As sufficient interest was being taken throughout Canada in the matter to encourage the government to appoint a royal commission to investigate our whole banking system, and to travel from one end of the country to the other to inquire into all phases of banking, the banks apparently reasoned along this line:
Here we have cut down the interest rate to seven and a -half per cent. The legal rate is seven per cent. So we are only losing half of one per cent for the time being if we cut the rate down to seven per cent, to come within the law.
So just before the commission started travelling through the country it was given out by the banks that so far as agricultural loans were concerned only seven per cent would be charged. I feel perfectly sure that had the government not taken action, in the first place, cutting down interest on post office savings deposits half of one per cent, and encouraging the banks to do the same, and secondly, by appointing the royal commission to travel throughout the country investigating the whole system of banking, our farmers would still be paying eight and probably nine per cent interest as they had done in the past.
Anyone who understands the history of agriculture in this country knows very well that even seven per cent is far too high a rate for agricultural loans. Not only that, but the terms are too short. The farmer needs three sorts of credit-short term, intermediate and long term credits. It may be taken for granted that we do not expect banking business to take care of long term credits, but at least they could take care of short term and intermediate credits. They have to a certain
Bank Act-Mr. Spencer

extent taken care of short term credits, but at too high a rate of interest, and there has always been great uncertainty in the farmer's mind as to whether he would get his note renewed. A three months' note might be absolutely useless to the farmer, but if it was renewed twice he would probably be all right. If, however, he is not sure that it is going to be renewed and takes the risk of getting a loan for a short term and then gets it cancelled at the end of the three months, his whole business is thrown into chaos and he had far better never have gone to the bank at all. Because interest rates have been too high in the past and because the terms of the loans have been too short, agriculture has been handicapped, and in addition there has been the uncertainty as to renewals, all of which has brought about a relationship between banking business in Canada and agriculture which certainly is not in the best interests of this country.
I am very glad indeed that the government has seen fit to bring down legislation to set up a central bank, and at another time I hope to congratulate them on doing so. I do hope that the central bank will be given authority over our present banking institutions, which in turn will see that every sort of industry in this country gets fair consideration in the matter of the use of credit. If the bank fails in that, it will fail indeed.
In the new Bank Act as presented to us I notice that section 91 has been amended and imposes a very severe penalty on the banks if they charge more than the legal rate of interest. I would like to remind the house that this suggestion was brought forward in 1923 but was turned down by the house by a majority of 91. A bill along the same lines was introduced by myself in 1931 and again in 1932, and in both cases the bill was refused. I congratulate the government of the day and those responsible for bringing in this amendment to the Bank Act which does exactly what we asked for, first of all, eleven years ago.
In expressing the hope that a very careful study will be given to this Bank Act, I would like to point out that we should recognize the proper function of money. If the money system is going to do its work properly, there must be enough at all times to enable goods and services to be transferred from producer to consumer. Just to the extent that we are short at any time or that we have too much at any time, just to the extent that we have to reduce prices or increase prices unnecessarily, to that extent we fail in our banking legislation.
	i
Mr. J. 8. WOODSWORTH (Winnipeg North Centre): Mr. Speaker, nothing less than the tremendous importance of this subject would warrant my attempting to add anything to what has been said already by my colleagues in this corner. One of the most difficult things which a member of this house can do is to attempt to bring before the house and the country his conviction with regard to matters of this kind. I notice that there are about thirty hon. members present in the house at this moment; there are two newspaper reporters in the gallery and a few odd visitors. Under such circumstances one might be inclined to say: What is the use? The government has a majority and has made up its mind with regard to this matter; all that a private member can do is to talk, and it would not seem as if our talk had much prospect of reaching a wide public. But notwithstanding all this, I do not think we should be performing our duty as representatives of the people unless we did our utmost to call attention to what we believe to be the real facts of the situation.
As I understand this bill, it is an attempt to maintain the status quo of the banks. There may be some slight modification of the existing legislation, but the whole purpose of the bill is to give to the banks for another ten years the powers which they now enjoy. Ten years is a long period in the history of a nation, and I should like to warn the government that as far as some of us are concerned, if we are given an opportunity we will refuse to continue these privileges for another ten years. We will take advantage of the first opportunity to curtail those privileges which have been given unwarrantedly to the banking fraternity. While I have frequent occasion to attack the banking institutions, I have no animus against the men who are engaged in that business. There are some who rather imagine that if the C.C .F. ever had the powers of government we would take all bank managers and string them up to lamp posts or something of that kind. I can assure my banking friends that we have no such ideas. If we ever succeed, as I think we shall some day, in establishing a national banking system, we will need a great many of the present 'bank managers to conduct that system. I think I can go further and say that under a national banking system the bank clerks will receive a little more remuneration than they do at the present time from the private institutions.


Mr. GARLAND (Bow River):: And the right of free association.

Bank Act-Mr. Woodsworth


James Shaver Woodsworth: As the hon. member for Bow River (Mr. Garland) says, we shall be glad to give them the right of association. We fought for this at the last revision of the 'Bank Act, and I hope it will be granted at this revision.
It seems to me that we are making a last desperate stand for the maintenance of what remains of democracy. Most of us have been taught, and perhaps are accustomed to think, that we in British countries have gradually attained a very large measure of self-government. We have been told that the absolute right of kingship was curtailed at the time of the magna charta. We were told that later on responsible government was secured. Many of us in our innocence have had the idea that to-day we are living in a democracy. Unfortunately we may have the form of a democracy, but to a large extent we are losing all that which makes a democracy worth while. It is a curious thing but as one studies the development of social institutions one cannot but note that the form persists long after life has fled. For example, at the beginning of our sessions we have what is known as the king'3 speech, or, in Canada, the governor general's speech. In the old days the king was a very powerful individual. Richard Cceur de Lion was a great warrior who rode at the head of his hosts. In those days when a king called his parliament together he told them how he intended to tax them. That was the king's speech which has been perpetuated in the governor general's speech. But we all know that the king himself, or in the case of Canada, the governor general, does not decide the policy of the country. He has his advisers and we recognize, as we put it so often, that the speech is put into his mouth. The man responsible for the speech is the prime minister. We keep up the old form but we all know that there has been a shifting of power away from the king or his representative to the prime minister and his cabinet who are theoretically responsible to the house.
I submit that there has been another shifting of power. In recent years there has grown up behind the political power, a financial and economic power. To-day the financial power is much stronger than the political. We in this house decide on certain political matters, but they amount to very little in view of the real power resident in the banks and the large transportation and industrial offices of this country. It is quite true that parliament must still register legislation, that parliament must still formally grant charters, that parliament must still formally confer privileges, but we are becoming mere automatic registers of these
things. Theoretically the banks would have-no power unless they came to this house to-obtain that power but we all know perfectly well that in practice they simply come here and demand it. We give it to them and legalize what is actually already in effect. For one, I do not propose to have the position of the banks legalized without my making a protest.
I believe that gradually throughout the country the realization is growing that we are not in reality a democracy but are controlled by a very small oligarchy. Any one who listened to the reading of the long lists of interlocking directorates given by the hon. member for Macleod (Mr. Coote) and the hon. member for Wetaskiwin (Mr. Irvine) must realize that the small group of men who control our banks-there are only ten banks in this country-also control correlated financial institutions. They also control the main industrial and commercial concerns of this country. A great many of these selfsame men are on our leading educational institutions, our universities; they control our press, and so on. So that a situation has developed in which a comparatively small clique of people practically control the industrial, commercial and educational life of the country. Further than that, in my judgment-and I think that anyone who has sat here for a number of years will reach this conclusion by watching the legislation- these same men to a very large degree control the policies of this house. We have therefore what is coming to be an impossible situation. We in this house go through the forms of granting power already held, and the banks will go on feeling quite sure in their position of deciding the destinies of this country.
It was only the other day that members of the C.C.F. were accused of being materialistic in their point of view. Well, I recall in that connection some words of the late Sir Edmund Walker uttered, if I remember rightilry, at the time of the last revision of the Bank Act. He said:
The chief duty of the executive officers of a hank is to make dividends for the shareholders. All industrial efforts of men are-based on self-interest, and not on any recognized or intended plan of cooperation. In discussing the relations of banking to other industries, I recognize selfishness as the basis of those relations.
It is very well I think to remember that this is the basis on which to-day our oligarchy runs the affairs of this country. But while undoubtedly the banks have -made a good deal of money out of the country, I would not allow this opportunity to pass without calling attention to the fact that they have
Bank Act-Mr. Woodsworth

suffered enormous losses as well, which losses could be covered up only by their enormous profits. The main consideration however is not so much the money actually made for the shareholders of the banks; it is rather the power of control that is vested in the directors. Take the question of loans made to the directors. I have in my hand a newspaper clipping which I shall quote, and I fancy the situation is practically the same as it was on October 31 of last year. The bank returns at that time showed:
Under the heading: "Aggregate amount of loans to directors and firms of which they are partners, and loans for which they are guarantors," appear the following amounts credited to or charged against the banks cited. The figures are given in the ascending order:
Banque Canadienne Nationale..$ 331,803 Imperial Bank of Canada.. ..	414,255
Banque Provineiale du Canada. 642,416
Bank of Toronto	 805,965
Dominion Bank	 1,158,830
Bank of Montreal		1,302,949
Bo.val Bank of Canada	 2,458,215
Bank of Nova Scotia	 3,017,986
Canadian Bank of Commerce.. 4,615,328
Total	$14,747,607
The only bank reporting no such loans is Barclay's Bank, a British institution. The average amount of such loans per bank is $1,638,623, and the average paid-up capital is $16,000,000, so that approximately 10 per cent of the average capital has been loaned to directors, and firms to which they are partners and upon the strength of their guarantees.
It is not much wonder therefore that the article is headed "It is good to be a Bank Director." Perhaps it will be said that it is only a few disgruntled people who have any quarrel with the present banking system. I would point out that the difficulty is to have the majority of the people present their point of view in any way that would make it effective. At the last revision of the Bank Act, it will be remembered, the bankers' association spent no less than $100,000 in lobbying. That fact came out at the time of the failure of the Home bank, and those of us who were on the banking and commerce committee will recall that a number of the very best lawyers in Canada were there day after day, week after week, acting in any way that might seem of service to their clients. While they were not permitted to participate in the actual discussions, they were there to advise. I am not suggesting that there was anything that might be called illegitimate in the work they carried on, but I point out that it is difficult for the people, unrepresented by counsel, the great mass of the producers and consumers of the country, to face a lobby of that sort. But even had we

succeeded in getting anything worth while embodied in the bill, the bill had to go to the Senate and there it would have received I am afraid rather rough handling. I remember meeting one of the bank lobbyists just after the bill had passed the Commons and I said, "I thought you had gone home." He replied laughingly, "Oh no; we have gone to the Senate now." There is the situation as it exists in practice-a group of people, many of whom are directors on these various institutions, in a position to veto whatever is done by the elected representatives of the people.
Under these circumstances it is no use closing our eyes to the fact that it is difficult to get enacted any legislation that would be of service to the great masses of the people. In the various investigations held either at the time of the Bank Act revision or in the next year or two my eyes were opened to the fact that very few people were free to come out in criticism of the banks. Again and again business men, some of them of fairly high standing, would come to me and represent the situation in whieh they found themselves with regard to the securing of credit from the banks. I said to them, "Will you come and tell that to the committee?" The reply would be, "Not on your life; the banks would immediately cut off our credit." I am not prepared to say whether that statement is correct or not, but I do say that these business men felt that to be the situation; and in those circumstances, to put it frankly, they dared not imperil their business by coming forward and giving evidence before the committee. So that it is extremely difficult to get the point of view of the great majority of the people adequately placed before this house, or placed in such a way as to receive any great consideration.
Moreover, we must remember that our banking system operates frankly in the interests of the commercial classes, and of certain of the commercial classes at that. Mention has already been made to-day of the fact that there is not adequate provision for the granting of credit to farmers. In fact, the present commission, after it had discussed the need of a central bank, contented itself by saying that it would be a good thing for another commission to be appointed to look into the question of agricultural credits. That is as far as we have got. So far as the great mass of the labour people of the country are concerned there is no hope of their getting consideration from the banks. If a labour man or a small business man wishes to build a house there is no chance of his getting anything from a bank. Under our system we have

Bank Act-Mr. Woodsworth
no other provision by which a building loan may be advanced. If a poor man wants even to buy a little furniture and has not the ready cash, he has now to resort to one of the small loan companies which charge him an exorbitant rate of interest. I did not speak at length on the bill that was before us the other day in regard to a small loan company which was trying to secure a charter, but may I say now that when we are asked to give a charter to such a company, it is an indication how inadequate present arrangements are for helping out the small people who so much need assistance at the present time.
If the policies for which the banks are so very largely responsible had actually resulted in prosperity in this country, I suppose the great majority of the people would be comparatively content. But the present depression in Canada, as, of course, in other countries, is to no small extent the result of the wrong, the fatal policies of the banks, and so an increasing number of people are coming to believe that the only possible way of getting out of this depression and keeping out of another is through the people themselves in some form or another taking over the control of currency and credit.
This brings us to the whole question of money, and here again I think most of us are confused, because years ago we were accustomed to thinking in terms of metallic money. Nearly all of us have come to think in terms of either metallic money or bank notes; few of us have realized the importance of the new types of money which have been used so extensively in more recent years. There is a great deal of talk about the gold standard, and many of us still think currency is based on gold. Surely some of the statements that have been made by the Prime Minister (Mr. Bennett) and the Minister of Finance (Mr. Rhodes) in recent months have convinced most Canadians that currency is not directly related to gold. Still the old ideas keep reasserting themselves and give rise to a dangerous fallacy. Our present currency is not directly related to gold. For years the total issue of currency has not been related to gold because we have the Finance Act under which currency has been issued quite independently of gold reserves. Further, we think in terms of bank notes and we seem to believe credit can be given only as there is a big supply either of gold or of bank notes. Again that is a misrepresentation of the real position. The Prime Minister himself is very fond of talking about the banks as being "custodians of the deposits of the people";
that is one of his pet phrases, and he has left the impression that the banks lend out only the depositors' money. Although that matter has been touched upon once or twice this afternoon, it is worth while emphasizing that that is not the case. Hon members opposite have ridiculed us because very often we quote such authorities as the Right Hon. Reginald McKenna. I shall not quote him again, although I have under my hand a volume of his writings. But I should like to quote a paper from my own city, the Winnipeg Free Press, which sometimes has criticized me and my colleagues very severely for having woolly ideas about money. This is what the Free Press itself said on March 7, 1933:
The little preachment of the bankers, with which the world is so familiar, that they can only lend the money that is given them to take care of, and therefore they must be very, very careful, no longer fits the facts in any country. ... The outstanding development of modern banking has been the enlargement of the functions of the banks from being curators of money to creators of it, through the granting of credits which take the form in the banking books of deposits indistinguishable from deposits made in real money, but which are in fact merely the documentary record of a speculation upon which the bank has embarked.
This is such an important matter that I should like to read once more from that very interesting statement made a few weeks ago by the Secretary of State (Mr. Cahan) in his address before the Canadian Club of Toronto. I shall not say that there is anything new in what he said, but it is rather extraordinary that this should come from a gentleman on the government benches. I am going to take the liberty of reading again a few paragraphs from his excellent address and to comment upon them as I go along. He said:
The prevalent conception that bank deposits may only be created by actual deposits of specie, or its equivalent in dominion notes or foreign exchange, is quite erroneous.
But that has been precisely the impression left by many a speech of the Prime Minister. The Secretary of State points out that that is an entirely erroneous impression and he goes on to give his reasons for so saying:
The bank returns for September 30 last disclose that the banks held only $49,000,000 in specie and $127,200,000 in dominion notes, or a total of approximately $176,000,000 in specie and notes, while their current loans and discounts were $1,428,000,000-
If that is all they held, how could they give out so much more? I recall that one of the witnesses before the banking and oom-mefee committee ten years ago, dealing with this point, said:	"It is a very good thing
10S0
Bank Act-Mr. Woodsworth

that a 'little money goes into the banks, or people would wonder how so much comes out". The Secretary of State continues:
-which was a reduction of $932,000,000 in the amount of current loans and discounts on September 30, 1929. Such a large reduction in outstanding current credits would seem to indicate that the industrial and commercial activities of Canada have been reduced or restricted by nearly 40 per cent since September, 1929.
The reduction of those activities is indissolubly bound up with the financial policy of the banks and over that financial policy this government has no control and will have less under the legislation proposed with regard to the central bank. I go on to quote what I think was quoted by the hon. member for Macleod (Mr. Coote):
The aggregate of these loans, by which the bulk of all deposits are created, largely represents advances of credit made by the banks to their customers. .
Again:
The credit extended by the Canadian banks is secured in less than one-fourth part by the capital and surplus of the banks, but largely by the good faith, property, administrative efficiency and business capacity of the customers to whom such loans are made.
Many of us, if we have occasion to go into a bank to borrow money, have the idea that there must be a great deal of gold in the vaults and a large stack of bank notes in the tills, or else we would never be able to get any money out. As a matter of fact if a farmer goes to borrow money from a bank the first question asked him is: What is your security, what is your collateral? And the farmer has to deposit certain security. Then he is handed a pass book and given a line of credit, and he may write cheques to the extent of the line of credit granted to him by the bank. Every time he signs a cheque for $10 he thereby creates $10 of new money; not the bank's money but money that the bank permits him to create. In practice it may be necessary for the bank to have a little till money to cash odd cheques that come in, but if we chid our business wholly by the cheque system-and it was said in the banking and commerce committee eleven years ago that ninety-six per cent of the business of this country is done by the cheque system-if we did it all in that way I submit that that transaction of the fanner borrowing money from the bank could be done in an empty room; there need be no deposit of gold or bills. The bank does perform a valuable function, that of making investigation into the standing of the farmer and the possibility of his repaying the loan.


Mr. NIOHOLSON:: Why should he repay it at all?


James Shaver Woodsworth: I will go on with
my argument. The bank performs a valuable function in assessing his customer's ability and in underwriting him; there is no doubt of that. But my point is that the money is not necessarily money deposited in the bank by someone; it is credit based on securities. I want to say very clearly that I am not suggesting that the banks can carry on that prooess to an unlimited extent; I know they cannot or they would court failure. But I say that such transactions are commonly misunderstood, even by members of this house. Hence let me read the cleancut statement of the Secretary of State.
The creation and issue of money was in former times the prerogative of the sovereign. In a more primitive society money consisted exclusively of metallic coins. Later governments began the issue of paper notes, redeemable in metallic currency, and these notes were declared' by decree or by statute law to be legal tender in payment of all liabilities.
In more modern times the invention and adoption of the cheque system has effected a radical revolution in monetary policy. The cheque has now largely usurped the function of metallic coins and government notes as currency.
Under the modern banking practice a bank customer, instead of withdrawing his loan in bank notes and metallic currency, receives a credit entry in the books of the bank for the amount of the bank's loan, as if it were a deposit made by him in his account with the bank.
I call attention to that phrase. He receives a loan and he is credited with that amount as if it were a deposit. The bank regards it as such, publishes it as such; but in reality it is a loan.
Against this credit in the bank's books of account the customer draws his cheques. The customer's cheque, which is an order on the bank for the payment of money to the payee of the cheque, merely results in the transference of the credit, which has previously been granted by the bank, from this customer's name to the name of another customer in the same or another bank's books of account. [DOT] In case the payee of the cheque so drawn keeps his banking account in another bank, the two banks, in the larger cities and towns, daily adjust their balances through the clearing house.
The result is that, in modern practice, 70 to 80 per cent of the aggregate of all deposits, shown in the Canadian bank returns-
Note that.
-renresent in reality the amount of loans made by the banks and then outstanding.

Bank Act-Mr. Woodsworth
A few deposits are cash deposits made with the bank, but seventy or eighty per cent of the so-called deposits consist in reality of loans.
Then there follow these figures, already given by my friend the hon. member for Macleod'
On September 30 last the Canadian chartered banks held deposits by the public, payable on demand in Canada.. .. -I 491,783,798 Deposits payable after notice or on a fixed day in Canada.. . .	1,372,184,120
Deposits elsewhere than in
Canada	 290,878,318
Balances due dominion and
provincial governments	 99,506,094
Total deposits in the chartered
banks of Canada	$ 2,260,352,330
This aggregate of deposits on September 30 last was $436,500,000 less than the average amount of deposits during the year 1929.
Since the cheque system has been adopted, the difference between the amount of cheques paid into a customer's account at his bank and the cheques drawn by the customer and paid out by the bank, represents a sum of money which the customer owns, but nevertheless this money does not exist except in the accounts of the customer's bank.
Let me repeat that-it is well put:
. . . this money does not exist except in the accounts of the customer's bank.
Then a little further on he continues:
The cheque system, which has been developed, enables the banks to create money without the issue of their printed notes. On September 30 last all the Canadian banks had $141,000,000 of their own notes in circulation, while the aggregate of bank deposits was $2,260,000,000.
I wonder how long in this house we will have to endure having prominent members of the house talk to us as if we were fools enough still to believe that the banks lend ' out only what are called deposits.
One other quotation:
But the cheque system, which now prevails, enables the banks, as I have stated, to create credit money at will for many hundreds of millions of dollars in excess of their note issues. $1,428,000,000 of such credit money was issued and outstanding on September 30 last. In comparison with this bank credit money, the amount of all other money in circulation is quite insignificant.
My point is this; that being the situation, the banks have a tremendous power in their hands. They can practically create money, give that money to their directors or to their friends, and withhold it from their competitors; they can lend it where it may bring the largest return to the shareholders of the bank, and withhold it when it is asked for undertakings that are of most advantage to the public.
The control of credit ought not to be allowed to remain any longer in the hands of private corporations, but rather should be regarded as a public utility.
There is one other and perhaps even more serious aspect of the situation. According to all economists the amount of money in circulation has a very real relationship to the price level. I will not say that the price level is wholly dependent on the amount of money in circulation and its velocity of circulation, but I do say there is a very close connection. My contention in that regard is borne out by the report of the Canadian Macmillan commission, which I need not take time to read. It is not merely a question of the amount of gold we have, or of the amount of bank notes in circulation; much more is it a question of the amount of these so-called deposits or loans which are in existence, because these three put together practically determine the sum total of money in circulation. It is true that directly or indirectly the government has control over the issue of bank notes, but the government has no control whatever of the extension or the restriction of credits, and it is credits that constitute the most important factor in this question.
Perhaps one may say: What does the price level mean? It means in practice the measure by which we determine the value of everything. May I use an illustration? Our ordinary yardstick is very carefully preserved at Greenwich, so that it may not shrink or expand by the smallest fraction of an inch; it is an unvarying standard. Our financial yardstick is the dollar, but as someone has said, that yardstick is a rubber dollar. It may expand or it may contract, and to a very large extent it is the amount of money in circulation that leads to its expansion or its contraction.


Edward Joseph Garland: In relation to the quantity of goods.


James Shaver Woodsworth: Yes; my hon. friend from Bow River (Mr. Garland) puts in what I took for granted. It is the relation of the amount of money to the task the money has to perform that determines the value of money. But other things being equal, as the text book people say, supposing the amount of work to be done remains constant, it is the amount of money of all kinds in circulation that to a very large extent determines the purchasing power of the dollar. I submit-


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


James Shaver Woodsworth: I will conclude. I
submit that the power of largely determining
2	COMMONS
Bank Act-Mr. Garland (Bow River)
the buying power of the dollar and of practically determining the price level is too important a function in our economy to 'be entrusted to the hands of private individuals. We all can see what a tremendous influence that has on our life especially when we remember that our debts have to be paid in terms of a rubber dollar. This may mean that the debts are doubled or that the debts are halved, without any statutory change but simply because of the changing value of the dollar or of the price level, over which the government has no control but which is entirely in the hands of the banks.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Edward Joseph Garland: Mr. Speaker, before the bill receives second reading I desire to make a suggestion to the Minister of Finance (Mr. Rhodes), and I am sure he will welcome it because I propose to show him a method by which he can acquire for his government something in the neighbourhood of three millions of dollars. In the present condition of the finances of Canada and the still very sluggish state of the revenues, I am quite satisfied that even the Minister of Finance in a Conservative government will welcome from one in this corner the suggestion of a method by which he may acquire three million dollars.


Robert James Manion: That is something new.


Edward Joseph Garland: And by the way he might use it for railway construction in Peace River country or some other good work.
If the Minister of Finance will turn to section 114 of the Bank Act he will find that it provides:
The bank shall, within thirty days after the dose of each calendar year, transmit or deliver to the minister a return as at the end of such calendar year
(a)	of all dividends which have remained unpaid for more than five years; and
(b)	of all amounts or balances in respect of which no transactions have taken place, or upon which no interest has been paid, during the five years prior to the date of such return:
Provided that, in the case of moneys deposited for a fixed period, the said term of five years shall be reckoned from the date of the termination of such fixed period.
Then section 115 provides:
(1) If, in the event of the winding-up of the business of the bank in insolvency, or under any general winding-up act, or otherwise, any
	1
moneys payable by the liquidator, either to shareholders or depositors, remain unclaimed,
(a)	for the period of three years from the date of suspension of payment by the bank;
(b)	for a like period from the commencement of the winding-up of such business; or
(c)	until the final winding-up of such business, if the business is finally wound up before the expiration of the said three years,
such moneys and all interest thereon shall, notwithstanding any statute of limitations or other act relating to prescription, be paid to the minister, to be held by him subject to all rightful claims on behalf of any person other than the bank.
I happened to look up the figures recently in respect of unclaimed bank balances, and I find that they run something over three and a quarter million dollars. The annual calls made on these unclaimed balances do not amount to more than twenty per cent of the totail amount at any time, I am informed; in fact, in recent years it has not approximated twenty per cent. It would therefore be quite safe for the government to make provision for an amendment to the act by which it could either tax the eighty per cent of the unpaid balances into the treasury or expropriate them by an amendment to the act taking, of course, full responsibility for meeting any such claims if and when they arise. The thing has been running for so many years now that there is no danger of any risk or loss in connection with the matter, and if the government desired to do so it could permit the banks to retain the twenty per cent to meet possible claims and also to carry on a full accounting of the other unpaid balances. There would doubtless have to be a service fee paid to the banks for services of that nature, but I do in all seriousness submit that it is possible to acquire a healthy fund of very useful credit or currency in this fashion.
There is another point to which the attention of the government might be directed. So far as I can ascertain, at the end of the five year period, five years after the owner of an unpaid balance in the bank has failed to make application for it, the interest does not appear to be computed. In other words, in the returns made to the government I find no indication that the interest on the unpaid balance is maintained and reported upon once the five year period has expired. Frankly I do not think that is quite proper, and the government would be entitled in my opinion on taking over these balances to the full amount of the accrued interest. The sum doubtless would be a very substantial one. I make that suggestion in the hope that it may

Bank Act-Mr. Garland (Bow River)
help the government slightly, and in the way of constructive proposals in respect of amendments that might be made to the act. I do so because frankly I think it is going to be impossible for hon. members of this house who have drastic but realistic views with regard to banking, to have brought into effect in the present constitution of this parliament what they regard as best in the general interests of the Dominion of Canada. I must, however, before the passage of the second reading of this bill state my position in connection therewith.
First of all, I am definitely opposed to a continuation of the concentration of power in the hands of fewer and fewer persons in this country-a concentration of power that to-day has reached an amazing state. This house listened this afternoon to statement after statement by hon. members in this comer, notably those contributed by the hon. member for Macleod (Mr. Coote) and the member for Wetaskiwin (Mr. Irvine), with regard to interlocking directorates. I now submit to the house a statement of the holdings of three of these directors.
Sir Herbert Holt influences as director or managing director, and sometimes as president, the following:
General Canadian companies	..	$1,136,400,000
Insurance companies.... 688,700,000
Royal bank (president). 825,700,000
Canadian Pacific Railway.	. .	..	1,380,900,000
Canadian companies operating
abroad	 505,600,000


Mr. BOURASSA:: What about the Montreal Tramways?


Edward Joseph Garland: I have not given all of them. He is president of the Montreal Trust, in connection with which I cannot secure accurate information as to its capital assets, but it involves a large number of interlocking investment and banking houses and corporations.
I take next Sir Charles Gordon:
General holdings	$ 454,000,000
Bank of Montreal (President) .	794,000,000
Canadian Pacific Railway. .	. .	1,380,900,000

Sir Charles Gordon, apart altogether from the Royal Trust, of which, like the Montreal Trust, the capital assets are difficult to discover, holds $2,628,900,000, and by the way that is quite conservative.
I bake next W. A. Black:
General holdings	$ 345,000,000
Bank of Montreal	 794,000,000
Canadian Pacific Railway	 1,380,900,000
These three sums make a total of $9,686,100,000. It would, however, be quite unfair to leave that figure in its present form because it includes three times the figure for the Canadian Pacific Railway Company and twice the figure for other institutions. So I now deduct all duplications, and I find that the net capital assets controlled by these three men amount to $5,835,300,000 in the hands of three men-three men only in this dominion. That sum represents approximately one-fifth of the total estimated wealth of the dominion at this moment. I wonder if hon. gentlemen realize the implication of that, the extent of power vested in the hands of these men.


Richard Bedford Bennett: May I point out to my hon. friend that his statement is wholly incorrect? These three men are three of many. These three men do not control that amount of money as stated. Surely the hon. gentleman does not want to make a statement such as that to this house.


Edward Joseph Garland: The right hon. gentleman is quite right. They do not absolutely control outright, but my right hon. friend knows as well as I do the tremendous and powerful dominating force of these three men on boards of directors of every one of these corporations.


Richard Bedford Bennett: I know the opposite. I know that they very rarely attend the meetings, except in two or three cases-the Bank of Montreal and one or two others. Take, for instance, two of these men. They do dominate because they are presidents and control the institutions, but in the case of the other institutions they rarely attend the meetings. It is well to be fair about these things. To create prejudice is one thing; to be fair is another.


Edward Joseph Garland: I propose to be fair without creating prejudice. The tremendous .power to dominate possessed by these men involves a form of economic dictatorship which the right hon. gentleman is well aware of. I should like to know of specific instances of the real plans or desires of men like Sir Herbert Holt having been thwarted even by the government.


Richard Bedford Bennett: The hon. member should read the Bank of Canada bill.


Edward Joseph Garland: The Bank of Canada bill is a matter with which we are not dealing at the present time; we are dealing with the commercial banks. May I observe at this stage that while the Bank of Canada bill does provide for some control over the volume of credit within the country, it does not purport to control the allocation

Bank Act-Mr. COMMONS
Garland (Bow River)
or direction of that volume. This tremendous and powerful weapon is still left in the hands of men like these to whom I am referring.
For about seven thousand years our forefathers secured from the earth what sustenance they could by means of their own muscular energy and with the aid of domesticated animals. During that period the tempo of human production hardly changed at all. The only machines in existence were very primitive in nature. Here and there waterwheels supplied a little "direct" power, but that was all. Then man discovered steam, almost accidentally, and instantly the divine spark that is in him burst into flame. Scientific devices increased by multitudes. Great Britain was the first of all nations to adapt her production to mechanized processes. It is only a little over eighty years ago that this great change reached its first harvest. A great many people, and even some hon. members in this chamber, are still unaware of the economic impact of the changes brought about, even in their own short period of life, by the modern process of production of human requirements. By 1851 England's industrial output had reached such a stage that in spite of the fact she was then at the very height of her colonial glory, with vast markets to exploit, under the system then existing and which still exists she was unable to consume within her own borders the vast production of her machines. In order partly to meet this difficulty the first world exhibition was held in London. The world came to England's shore and the world placed orders for goods. England's greatness as a creditor and trading nation grew by leaps and bounds. But the world did something else. It undertook to study England's method and it placed orders, not only for " consumption " goods but for what the economists call " capital " goods, that is, plant, equipment and machinery. I venture to suggest that the year 1851 might well go down in history as the year which saw the transformation of the method of production of the needs of the human race from a non-mechanical to an almost purely mechanical process. From then on it was simply a race between nations to improve the technique of production and we have now reached the stage where such orthodox economists as Sir Arthur Salter and Sir Basil Blackett state that there is no ,'eason why any man, woman or child should suffer a single moment of anxiety regarding food, clothing and housing, and indeed many comforts as well. There axe sufficient energy resources to provide the entire population with the adequate necessities and indeed, in 
many cases, with many of the comforts. I commend to this parliament the consideration of improvement in economic conditions, so that the spiritual and the cultural may advance. Until we do that we shall never get rid of the degrading conditions in which we find such a large and increasing mass of our people to-day.
Many hon. members around me are manufacturers, and they have had greater opportunities than I to examine the modern technique of production. However, during my various trips throughout this country I have taken the opportunity to visit every factory in any town I might be in. I have seen them weaving woven wire fencing; I have seen them putting heads on nails, something I had wondered about before; I have seen them making chocolates; I have seen them making underwear and spinning cotton on the great looms of Sir Charles Cordon's plant. So on all through the gamut of modem production. Since the introduction of the new form of power known as electricity, of which we know very little other than that we can use it, modern mechanization has been again revolutionized. I have heard of one steel mill which was rebuilt in the spring of 1930. The old mill used to employ some 600 men, but the new mill, which is equipped throughout with semi-automatic electrical machinery, can produce more of a better product and yet gives employment to only six men. Mr. John Davis, formerly Secretary of Labour of the United States of America, pointed out in a pamphlet issued not long ago that the shoe plants of the United States, if working at capacity, could produce the requirements of the country for a whole year in seventeen and a half days. In Canada, we need to realize the potential output of our steel mills in Sydney, in Hamilton and in Sault Ste. Marie. These mills have not for long worked to anything like capacity. The machines of Canada have never been worked to full capacity. The war was the nearest approach to full time use.
The increase of technologic production has been so great that even if the production activity of 1929 were restored, people are estimating future reemployment on the basis of one-half the present unemployed; that is the most that industry can absorb even under the most favourable conditions. I believe that to be a sound contention. I believe that, to-day we could produce as much as, if not more than in 1929 and yet absorb only half of those who are now out of work. In addition we have the growing number of young men and women who are leaving our

Bank Act-Mr. Garland (Bow River)
schools and colleges every year and for whom there is neither hope nor work under present conditions. There is nothing ahead of them but despair and disaster. Canada can be happy in the fact that materially no nation is more satisfactorily situated. We have the vast resources which hon. gentlemen are very proud to discuss during elections and even at other times. We have a vast heritage of artificial energy which is almost untouched. Tn addition we have a population who have to their credit the desire to produce the services and goods required by the nation. The charge against the Canadian people of general idleness cannot be sustained by anyone in the world. As a matter of fact, there are only two indolent classes to-day. there is one per cent at the top who do not have to provide any services and less than one-half per cent at the very bottom who are for pathological reasons unwilling to render services.
I have not the time to paint a complete picture of the possibilities of this country. I have mentioned mechanization but hon. gentlemen know as much about that as I do. Mechanization would never have come into being nor could it continue without the extension and progressive development of artificial energy. We can almost forget steam it is now being superseded by electrical power. A new form of energy infinitely more important, more powerful, more easily concentrated, immensely cheaper and terrifically more efficient. A few years ago I read an estimate by Lord Rothermere, I think in the Daily Mail. He stated that at that time the United States was using some 29,000,000 horsepower of electrical energy in industry. It was estimated that this meant the equivalent of 290,000,000 human workers represented by this one form of energy. I hope hon. gentlemen get the import of that fact. A population of 126,000000 men, women and children have in electrical power the equivalent of 290,000,000 human workers. This is on the engineering basis of one horse-power equalling ten adult human work units.
I was so much interested in that estimate that I asked our own Dominion Statistician, Mr. Coats, than whom there is no better, to tell me what had happened in Canada and in the world in general along these lines. The last year for which world figures could be obtained was 1931, and by that year the use of electrical energy in the world had increased to a point where it equalled 1,500,000,000 men. The total population of the world is estimated at roughly 2,000,000,000. Among vast and varied resources, Canada is the happy
possessor of what I think is the second greatest essential in modern commercial life. The first essential is purchasing power and the second is this form of power known as hydro-electric energy. We have so far but scratched the surface of the possibilities of power development in Canada. We stand in the row of nations second in the potential production of electricity; for at this day we have approximately 7,330,000 horse power developed and ready for production or, and hon. gentlemen will note this, the equivalent of 73,000,000 human workers. And this in a population of less than 11,000,000. Every man, woman and child in Canada, under a decently ordered state of society, might have as an electrical ally the equivalent of the power of 7 men, ready to do their work and their bidding for them, tirelessly, ceaselessly, day after day, night after night, at the pressing of a button or the pulling of a lever. And this is not something that can be exhausted; it is not something like a gold mine or any other sort of mine; nor can it be depleted like the fertility of the soil. It is as permanent as the lakes and rivers in our land. It is the most valuable of all the resources we have at the present time, and we have it to a superabundant degree.
I need not dwell on the introduction of the third chief form of artificial power, the internal combustion engine; but hon. gentlemen who come from the west no doubt know the tremendous effect it 'has in extending the area of cultivation and in increasing the capacity of the individual farmer not only to handle a far greater acreage than before but to produce far greater quantities of all field crops.
We have in Canada everything necessary for human life, almost everything necessary for our comforts; we have these vast resources in ithe form of electrical and other artificial power; we have a splendid population, ' people anxious to do any work required; yet we have misery and hunger, approaching absolute destitution, despair, creeping old age of penury, relying on a form of state charity. I do not think that this sort of thing can be called Christian. A system that condemns the people, in the midst of plenty, to a condition of penury and utteT poverty is not a Christian system, and no one dare make that argument for it. And here we are engaged in the gentle and delightful practice of committing what I am bound to term sacrilege; for after the bountifulness of the Almighty has blessed the nation with an abundance of all the things that people need, the only answer of our statesman to Him is to throw His bounty back in His face by destroy-
'	COMMONS
Bank Act-Mr. Garland (Bow River)
ing it-that appears to be the only method by which the nations to-day propose to get rid of the problem facing them, the problem of distributing the enormous production of industry. That is the supreme problem of all. But instead of applying themselves to experimental economics with courage and vision, we find leaders everywhere shrinking back from the task, or flying to the fossil room of the British Museum, having for their object apparently the discovery of the quickest and easiest method by which they may destroy the wealth that has been produced by man in cooperation with the Almighty. There were people in the old days who would have said that we should deserve to be visited by a famine. It may be true still; we still deserve it, for the stupidity of the actions and the attitude of statesmen and leaders throughout the world justifies the punishment. If the people have confidence in such leaders, and countenance the continuance of policies of this sort, then the people will deserve what their leaders already deserve.
And so we find this strange comment in a newspaper in the United States. The Cleveland Press carried the following item:
The most striking evidence that has come to our attention of a popular realization of a change in the old order is the following item, which appeared in this newspaper's columns of church news:
"Prayer for more bountiful crops for the farmer, usual to Episcopal services on Rogation Sunday, was _ modified throughout the Ohio diocese. Officials felt the appeal would' not be in accord with the government policy of limiting crop production. So prayer was offered instead for improved means of produce distribution."
That last at least was intelligent. Commenting on this dispatch, the Cleveland Press observed editorially:
Are we going to see the time when the President of the United States-
Or, for that matter, the Prime Minister of Canada.
-will call on us to give thanks the last Thursday in November because the harvests were not so bountiful as usual?
As a matter of fact, I did hear some whispering about the sigh of relief that went up when a news dispatch to London intimated the fact that the grasshopper menace was an exceedingly serious matter in western Canada and that the crop was not likely to be as large as had been anticipated. On top of that, turn to other parts of the world and what do you see? You find Egypt, by law, trying to limit the cotton crop in 1926-why? Was it because the people of Egypt and the 
people of the world at large had then enough cotton? Not at all. It was because, under the present system of overcapitalization, it was impossible for them to sell their products at a profit, and unless they were sold at a profit production would not continue. In the state of Texas an attempt was also made to limit production-an attempt which the authorities sought to enforce with the aid of the state militia, and which failed. And why was that attempt made there, to limit production? Was it because the people in that state had a sufficiency of cotton goods? No. Is industry concerned with the supplying of goods? Is that the motive anywhere? That is not the motive under the present system. Ask any manufacturer what his motive is and you will find that the sole question is as to what can be made out of production; it is not a question of supplying human needs.
Again, turn to Brazil, and the classical example given the world a year ago when they destroyed a million sacks of coffee. Was it because there was enough coffee in the world? Ask the farmers of western Canada; ask the unemployed throughout this dominion and the United States, who at that time numbered some twelve or thirteen millions. The world had not then enough coffee; yet one million sacks of coffee was destroyed. And the same is true of sugar and of rubber. Indeed, we find some of the natives being sent out to chop down the rubber plantations which a few years ago they had laboriously cultivated. Imagine the insanity of the system. On top of this coffee destruction that occurred a year ago the world conference received a recommendation from France with regard to the limitation of the production of certain commodities. That world conference was sitting in what I am told is the fossil room of the British Museum -whoever decided that that should be the place for the world conference had a fine sense of humour-and it was the day following the dispatch, on the 16th of June last, with regard to the destruction of coffee in Brazil that a recommendation was made by France for the artificial limitation of the production of a long list of basic commodities. Was not that an intelligent contribution to the problem?
And now for the following dispatch from Sao Paulo, Brazil, through the Associated Press:
The Sao Paulo State Coffee Institute urged the government Thursday to sanction the burning quickly of nearly six million sacks of retained coffee-

Bank Act

Mr. Garland (Bow River)
What for? Was it because people had more coffee than they could possibly consume? No, but-

to provide space in warehouses for the new crop in July. A 20,000,000 sack crop is expected.
And so you have throughout the entire world to-day this condition of vast potential abundance on the one hand, machines and equipment, artificial power, the energy of ambitious, virile people, more highly educated than those of any previous generation, all ready to produce everything needed, and on the other hand vast hordes of unemployed, with destitution and broken hearts, people crying to heaven for justice and for at least some reasonable solution of the problem. It is only a few years ago that Arthur Kitson, manufacturer and authority on financial questions, president of the British Banking Reform League, directed the attention of the British people to the machine problem, when referring to England's position-and, remember, we are not behind her in our tremendous per capita capacity for production. Arthur Kitson at that time said:
It is quite certain that the need for labour must become less and less with the growth of inventions and the increase in industrial efficiency. Indeed the real problem we have to solve is not so much that of finding constant employment for our people as our supplying them with life's necessities and comforts out of the abundance of goods created. Even to-day the labour of less than 10 per cent of the population will readily suffice to maintain the entire inhabitants of this country in a high state of comfort. Suppose discoveries and inventions during the next half century result in the displacement of all manual labour by machinery, must the bulk of the world's inhabitants then perish?
Yet under the present system that would be their lot-either to perish or to be forced to a low degree of degradation under state charity. Why, Mr. Speaker a man has not even the "right" under our present peculiar social order to a job, and without a decent job he cannot maintain his family and his home. Yet I say our fellow citizens may not demand, as a right, a job. Let a man try to get one even if he does demand it! Even Mr. Roosevelt, for whose courage, whose willingness to experiment and whose intelligence in surrounding himself with experts I offer my sincere admiration, when dealing with the same problem, fell into the same trap into which others fell. One of his first acts was to arrange for the ploughing under of nearly 11,000,000 acres already sown to cotton. Hon. members will recollect that towards the close of last summer or in the early fall arrangements were made for the killing and burning of several
thousands of hogs. Why? Because the people of the United States had enough pork or bacon or hams or the people of the world had enough? No. There were at that time in the United States about 10,000,000 or 11,000,000 unemployed, who with their dependents made a vast army in that country who, I venture to say, had no opportunity to eat a pork chop or had a chance to get nearer one than the passing smell of it.
We have reached this stage of the vast production of which we are potentially capable. There is not an hon. gentleman in the house who can refute that statement. We have the capacity within Canada to supply our people with most of their needs and with many comforts. Out of the vast resources we have in artificial and human power, we can do this. What are we going to do about the matter? The first great essential of modern commercial life is the medium of exchange, and that is why I venture to discuss this problem on the Bank Act. Yet we have continued through years of operation and bitter lessons to delegate to an inferior authority the right and power to determine not only the quantity of credit within limits, but the allocation of the credit of this country. As long as you leave to private individuals the power to determine both the volume and the allocation of credit-and the two go together and are most important in that relationship-you place in their hands a power, greater than that of the government itself, a power to determine whether men shall be employed, whether industry shall operate, whether commerce shall continue, whether production shall be in a buoyant or in a depressed condition. That power is vested in a group of men growing fewer in number every decade. It is a power which supersedes that of the state, which determines the economic lives of the inhabitants of a country, and I say to the house that we shall be recreant in our duty as trustees of the rights of the people of Canada if we return once more to those private interests this vast power. I would gladly socialize the financial institutions, but I am afraid the house would not go that far.


An hon. MEMBER:: Hear, hear.


Edward Joseph Garland: Even my hon. friends the Liberals say: "hear, hear."


Mr. JACOBS:: Not all.


Edward Joseph Garland: I thank the hon. member; not all, says one of them. What the committee should do, if they are not willing to undertake the socialization of the currency and credit of the country, is to
1088	COMMONS
Bank Act-Air. Garland (Bow River)
make the necessary amendments to the act so that the state may be able to determine the allocation of the credit as it is now proposed through a central bank to determine the volume.
That this is important is readily recognized if any hon. member will follow the records of the last few years. From 1926 to 1929 the banks in	Canada	went	on a splurge,with all their	wisdom, with	all the	soundintelligence and common sense they Were supposed to	possess,	they	inflated;	theyinflated with	their eyes wide open;	they
increased the volume of call loans abroad and at home, of domestic loans, of bank notes, and they were assisted in doing so by the Department of Finance through the Finance Act. They deliberately assisted a speculative market to a greater degree than any other enterprise in the country. Then they became frightened at the balloon they had sent up, instead of letting a little of the inflation out of it and allowing it to come back to earth in decent fashion, they plunged the knife of deflationary despair into the balloon, bringing the whole economic structure in collapse around us. If that is not an accurate picture of what happened, I shall ask any hon. member to describe it better than that. One of our best economists, Professor Curtis, in his pamphlet entitled Credit Control in Canada, had this to say at page 107:
Such a condition was precisely what developed in 1929, with the result that Canada, extralegally but effectively, abandoned the gold standard.
Further on he deals with inflation of currency and credit, but I have not time to give that to the house. I may be called upon to justify further my contention, if that is really necessary with intelligent men, that this vast power to dominate the very life of the community should again be taken by the sovereign power of the state itself. I do not wish to go into too elaborate details in that connection. I am willing to take my common sense and experience in life with the reading I have done for many years, but I am enormously supported and encouraged in my view when I read the following:
In the first place, then, it is patent that in our days not alone is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few, and that those few are frequently not the owners, but only the trustees and directors of invested funds, who administer them at their good pleasure.
I pause there because the next passage is even more important to this particular question :

This pawer becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying so to speak, the life blood to the entire economic body, and grasping, as it were, in the hands the very soul of production, so that no one dare breathe against their will.
That is the position to-day, not only in Canada but ini every so-called modern civilized nation on earth, yes, in every nation; those who control the credit and its allotment hold us in the hollow of their hand.


Mr. MACKENZIE (Vancouver):: What is the quotation from?


Edward Joseph Garland: The encyclical letter of His Holiness Pope Pius XI, entitled Social Justice and Charity. I continue :
This accumulation of power, the characteristic note of the modern economic order, is a natural result of limitless free competition which permits the survival of those only who are the strongest, which often means those who fight most relentlessly, who pay least heed to the dictates of conscience.
I pause just to make this comment on that passage. I doubt if it is really right to refer to the strongest. If the reference had 'been to the slickest, the cleverest, the greediest, the most unconscionable, I would agree with it, because to-day it is not the creator, the constructor or things, the builder in the nation, that is of this rank; it is the man who sits around the mahogany table and plots, plans and schemes the best and quickest methods of skinning the public. Those are the men to-day who are the dominant force in the community. I continue the quotation:


Pierre Édouard Blondin: The hon. member has spoken for forty minutes.


Some hon. MEMBERS:: Go on.


Edward Joseph Garland: With the permission of the house I continue the quotation :
Unbridled ambition for domination has succeeded the desire for gain; the whole economic life has become hard, cruel and relentless in a ghastly measure.
We in this corner hold views that differ from those of other hon. members. I now conclude with this point; we urge in connection with this matter that the first and prime essential of a just social condition is state control and operation of the social credit of the state. This is our firm belief, and it its strongly supported by this remark found at page 33 of the same encyclical:
For it is rightly contended that certain forms of property must be reserved to the state, since

Mounted Police-Mr. Guthrie
they carry with them an opportunity of domination too great to be left to private individuals without injury to the community at large.
I submit that the private control of credit gives opportunity bf domination too great to be left to .private individuals, anld' that it haa been exercised to the detriment of tlhe community at large.
Motion (Mr. Rhodes) agreed to; bill .read the second time and referred to the select standing committee on banking and commerce.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved that the house go into committee to consider the following proposed resolution:
Resolved,-that, it is expedient to amend the Royal Canadian Mounted Police Act to provide for the appointment of detective inspectors, sub-inspectors and assistant veterinary surgeons, and the personnel of the marine section, and to provide for pensions to widows and allowances to children of officers and constables who may be killed while in the performance of duty, and to make further provisions respecting the counting of service of officers and constables with any provincial police force for purposes of pension, and in regard to the duties and offences of the members of the force.
Motion agreed to and the house went into committee, Mr. Smith (Cumberland) in the chair.
Mr. GUTHRIE:: Perhaps I had better offer a word of explanation upon this resolution. This resolution and the bill founded upon it relate to the interior organization and discipline of the Royal Canadian Mounted Police. Let me say at the outset thait there is little or no increase in the annual expenditure involved. There is some rearrangement, and I should add that in respect to the last clause of the resolution there may be a slight expenditure involved, and for that retason the resolution was duly submitted to His Excellency.
In the first place it is proposed to create a new classification to be known as detective inspectors. There is a detective force in connection with the police, and men who have served in it for a considerable time think they are entitled to a step in rank; they will be called detective inspectors. Then there is another .oHass, subinspeotors, and another, assistant veterinary surgeons. When the act was drawn, through an oversight the rank of 74726-69
assistant veterinary surgeon was omitted. There are only two assistant veterinary surgeons in Canada, one in Regina and one in Ottawa, and they desire to have their rank recognized-.
Next is a provision in regard to the marine section. That section is of considerable importance in the Royal Canadian Mounted Police. There are in the marine section now, of officers, 34, and of other ratings, 169. Some 30 vessels are operated and 77 power boats. These are scattered in the Arctic, east and west, in police work and on the Atlantic and Pacific seaboards, chiefly in the preventive service of the customs. There has not heretofore been an establishment laid down for the marine section.
The next provision is in regard to payment to the dependents of officers and constables who may be killed while in the performance of duty in the force. Heretofore it has been customary when such misfortunes have occurred to vote a sum in the estimates and carry it on for subsequent years. The proposal in the resolution is that where an officer or constable is killed on active service his widow or dependents will be entitled to one half the sum he would have been entitled to by way of pension, instead of the annual vote which we have heretofore made in the House of Commons.


Mr. HOWDEN:: How long will that continue?


Hugh Guthrie: It will continue during the lifetime of his widow and until his children reach the age of, I think, sixteen-I am not sure of the age.
The last clause is to cover the case of a few men who at one time served in the various provincial police forces. If my memory serves me aright there are only seven, or perhaps it is eleven, involved. When agreements were made between the various provinces and the Royal Canadian Mounted Police under which the policing of the provinces was taken over by the Royal Canadian Mounted Police, it was arranged that members of provincial forces who were taken in, should for the purposes of pension come under the Royal Canadian Mounted Police Pension system. But there Was a small number of men who had been taken in before the amalgamation, who had served previously in provincial police forces; the last clause makes provision to include that small number of men in the pension scheme of the Royal Canadian Mounted Police. In that respect there will be a little increase in expense, but it is very slight in-



Mounted Police-Mr. Guthrie
deed. These matters are all elaborated in the bill which I propose to introduce if the resolution is carried.


Ian Alistair Mackenzie: In regard to the marine section, is this the first time that that section has been included in the estimates of the Royal Canadian Mounted Police? If so what are the proportions on the Atlantic and Pacific coast respectively?


Hugh Guthrie: It is not the first time; they have always been included in the vote. There is no change in the vote under this resolution, but the personnel will now be entitled to be classified, whether as ships' officers or other ratings, in the marine section. There is skipper, assistant skipper, mate, and then the various ratings of the marine section. I cannot say just how the marine service is at present divided, but the larger portion is in northern waters in the east and west Arctic; and those in British Columbia and Atlantic coast waters are engaged very largely in the preventive service work, while in northern waters it is police work.


Mr. CASGRAIN:: Is there anyone specially charged with the administration of the section in the province of Quebec?


Hugh Guthrie: The whole service is under the administration of Major General Mae-Brien, commissioner of the force.


Joseph Philippe Baby Casgrain: But as regards the province of Quebec and that marine service, is there any special officer in charge, a deputy, or whatever is his title?


Hugh Guthrie: I do not believe I can tell his title, but when the bill is introduced I will have that information.


Ian Alistair Mackenzie: How
many provinces are directly policed by the Royal Canadian Mounted Police?


Hugh Guthrie: All the provinces except British Columbia, Ontario and Quebec.


Ian Alistair Mackenzie: Are any negotiations now in progress in regard to any of these three provinces?


Hugh Guthrie: There was some informal discussion with members of the government of British Columbia when they were here at the recent conference, but nothing developed. I think the British Columbia government may have the matter under consideration but I have not heard from them since.


Samuel William Jacobs: Could the minister tell us
the strength of the force throughout the country?
/Mr. Guthrie.]


Hugh Guthrie: In all branches, 2,517, of
whom 350 are in the preventive service.


Samuel William Jacobs: And is it considered necessary to have only two veterinary inspectors?


Hugh Guthrie: There are a number of
veterinary surgeons, but the rank of assistant veterinary surgeon was never recognized in the act. There are two assistants, one at Regina and the other here at Ottawa. We have horses at only one or two points; I think the total number of horses is only 293 now, though it is still called the Royal Canadian Mounted Police. We have more motor care for police work than horses, but at these two points there are assistants veterinary surgeons whose rank never has been recognized under the act.


Ian Alistair Mackenzie: Would
the minister tell us how the personnel has increased in number for the last three years? What was the strength three years ago?


Hugh Guthrie: Three years ago we did
not have the preventive service. I think the force would number about 1,600 or 1,700. I can get the exact figures when the bill is in committee.


Joseph Philippe Baby Casgrain: Could the minister tell
us how many of these vessels are in service in the province of Quebec?


Hugh Guthrie: No, I cannot.


Mr. HEENAN:: Did I understand the minister to say that the provision for pensions to widows and dependents would be fifty per cent, of the salary?


Hugh Guthrie: No, fifty per cent of the
retiring allowance to which a man would be entitled if he retired from the force. If a. man is killed in the performance of his duties half the amount of his pension would go to-his dependents. I may say that the former system of voting the amounts annually in this house was a little inconvenient in some cases. A constable was killed in northern Saskatchewan last year; two hold-up men. shot him. He was killed in the performance of his duty and the widow was left entirely without means. She continued without means until the money was voted by parliament, and was dependent upon her friends for her support for six or seven months. If this amendment be passed, should a case of that kind arise again the widow would probably receive assistance within two or three weeks..


Peter Heenan: I quite agree with the
minister in what he proposes to do, but I was wondering if fifty per cent of the retiring.

Mounted Police-Mr. Guthrie
allowance would be an equitable way of dealing with the matter. Can the minister tell us if this allowance will average anywhere near what a widow receives under the Workmen's Compensation Act in Ontario?


Hugh Guthrie: I do not know what the
Ontario act would provide, but I know this principle has been recognized in the permanent force and in the mounted police for a very long period of time. In the bill it is stated that the amount payable in respect of each child is SCO a year, I think, and the widow would get probably $400 or $500 in addition.


Ian Alistair Mackenzie: Apart
from the possibility of taking over police work in other provinces is it contemplated that any other functions will be taken over in addition to the preventive service?


Hugh Guthrie: Not at the present
moment. Some suggestions have been made in regard to the police in attendance in this house, for instance; they are not under the mounted police, but that matter has not been seriously considered.


Mr. SANDERSON:: I should like to ask
the minister if the strength of the Royal Canadian Mounted Police is being kept up by recruits and, if so, how many recruits were taken on last year.


Hugh Guthrie: I 'believe fifty were taken on last autumn, but none have been taken on since, and the commissioner informs me that he will not 'be able to take on any more recruits before June or July. There is a natural wastage in the force, as there is in all forces of the kind, and the commissioner happened to tell me to-day that it would be June or July before he could take on any more recruits.


John Power Howden: With respect to these
pensions, could the minister tell us what the average retiring allowance of a constable would be?


Hugh Guthrie: Somewhere around $800
or $900 after twenty years of service.


Peter Heenan: I hope that before the
minister drafts his bill he will give consideration to this matter, because from the answer he has just given this seems hardly a fair or equitable distribution. Under the Workmen's Compensation Act in Ontario the widow of a man killed receives $40 a month as long as she lives, while for children up to sixteen years of age there is an additional allowance 74726-691
of $120 a year. The minister said the allowance under this act was $60 a year for children.


Hugh Guthrie: I think it is $60 under
this act.


Peter Heenan: I think if an officer or
constable is killed in the discharge of his duty his dependents should be cared for as well as the dependents of those killed ini industry.


Hugh Guthrie: This pension fund was
formed on an actuarial basis, and the men contribute to the cost of keeping it up. The provision in favour of the widow and children is fixed on the basis of the contribution to the fund. When a man joins the force he knows what he will have to contribute to the fund and the pension he will get after he serves twenty years. If this amendment passes he will also know what his widow and children will get if unfortunately he meets with death during service.


Peter Heenan: I am not quarrelling with the system that has obtained up to now. Evidently we have not paid very much attention to these matters, since we have just voted the money each year, but now that we are going to pass an act the very fact that the constables and officers contribute to this fund surely is another reason why their widows and dependents should receive as much as the widows and dependents of men killed in industry.


Hugh Guthrie: I think the widow will
get as much as $40 a month.


Mr. EULER:: When the preventive force
was absorbed by the mounted police I think the salaries of the members of that force were very substantially reduced. I should like to ask the minister whether the pensions of these men are based on their pay as members of the mounted police or on the amount they were receiving under the old organization, or both, with the former higher salary being taken into consideration in the granting of pension?
Mr. 'GUTHRIE:	I will have to ask the
commissioner when the bill is brought in. My impression is that some consideration is given to the former higher salaries and that an average is taken, but I am not positive of that. I will give the information definitely.


Joseph Philippe Baby Casgrain: If we are to understand that these pensions are paid out of the money contributed by the officers and constables, I presume the widow will be entitled to that amount for the rest of heT life.
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Resolution reported, read the second time and concurred in. Mr. Guthrie thereupon moved for leave to introduce Bill No. 22, to amend the Royal Canadian Mounted Police Act.
Motion agreed to and bill read the first time.



DEPARTMENT OP NATIONAL REVENUE

[Stage Direction]
The house in committee of supply, Mr. Smith (Cumberland) in the chair.
Salaries and contingent expenses of the several ports of the dominion, including pay for overtime of officers, notwithstanding anything in the Civil Service Act and temporary buildings and rentals, $6,113,000.
Salaries and travelling expenses of officers of the inspection, investigation, audit, and the preventive service undervaluation services, $916,698.
Miscellaneous, including printing and stationery; subscriptions to commercial papers; flags; dating stamps; locks; instruments; express charges on samples; legal forms; legal expenses; premiums on guarantee bonds; uniforms for customs-excise officers; laboratory equipment and supplies, etc., $500,000.
Amount to be paid to the Department of Justice to be disbursed by and accounted for to it for Customs-Excise Secret Investigation Service, $15,000.
To provide for the administration of the Income War Tax Act 1917 and amendments thereof, and authority for this purpose to create positions and make appointments notwithstanding anything contained in the Civil Service Act and the said positions and staff so appointed are hereby wholly excluded from the operation of the said act, and salary of $8,000 (less statutory deduction of ten per cent) for the Commissioner of Income Tax, $2,000,000.
Amount to be paid to the Department of Justice, to be disbursed by and accounted for to it for the Income Tax Secret Investigation Service, $15,000-Total, $9,559,698.
William Daum Euler: This appropriation, of course, is for the maintenance of ports throughout the country. I would ask the minister whether any substantial number of ports has been closed during the present year, and if it is the policy of the government to continue with the dlosing of ports as it may be found advisable.
Hon. R. C. MATTHEWS (Minister of National Revenue); While my officials are looking up the exact number of ports that have been closed, I may say that it is the policy of the government to close ports where conditions demand it.


William Daum Euler: Does that mean that any
substantial number will be closed? I have reference to the report of the Royal Commis-

sion on Customs and Excise which some years ago recommended that a very considerable number of the ports be closed. That policy was followed to a considerable extent under the former government, and I am curious to know whether a similar policy is being carried out now. It would be interesting to know how many ports are still open throughout the country.


Mr. MATTHEWS:: I shall be glad to get the information for my hon. friend. As I have already said, it is the policy of the government to close ports as conditions demand it.


Ian Alistair Mackenzie: Are any
salary reductions involved in this vote?


Robert Charles Matthews: Yes. The ten per cent cut amounts approximately to $600,000.


Ian Alistair Mackenzie: Is that
for the inside or the outside staff?


Robert Charles Matthews: The outside.


Peter Heenan: The other night when the railway estimates were under consideration, after the Minister of Finance had given us some hope-I say hope-that later the government might bring in a measure to restore the ten. per cent cut, or a portion of it, we agreed to let the items for the outside service go through and the Minister of Railways promised that if later the ten per cent or any portion of it was restored, the employees of his department would have their salaries restored notwithstanding that we might have passed items covering their services and involving the ten per cent cut. I suppose the Minister of National Revenue will give a similar undertaking as to his department.


Mr. RHODES:: If I might be permitted by my colleague, the same answer which I gave the other evening obtains with respect to this vote as well. My hon. friend from Kenora-Rainy River (Mr. Heenan) puts his own interpretation upon my remarks the other evening; in fact, he went so far as to make a deduction from the appearance of my countenance. I may say to my hon, friends that if it suits the purposes of the opposition to permit these votes outside of civil government to pass, it is distinctly understood that the statement I made the other evening holds good with respect to this and other items of a similar character.


Peter Heenan: I notice from the minister's face that there is still more hope.


Samuel William Jacobs: He knows a poker face when he sees it.

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Peter Heenan: This item provides for the payment of overtime to certain officers. Are these officers on the eight hour day and is the overtime for time worked beyond the eight hours?


Robert Charles Matthews: Yes, it is.


William Daum Euler: I take it that the only branch of what was formerly the preventive service now remaining with the Department of Nationaf Revenue is that which has to do with the investigation of undervaluations. How large a staff has the minister concerned with that work, and where are the men located, if it is possible to give that information?


Robert Charles Matthews: The staff numbers about thirty in all, located at Montreal, Ottawa, Toronto, Winnipeg and Vancouver.


Mr. BOTHWELL:: May I ask how many ports of entry have been closed in the last three years?


Robert Charles Matthews: I have not that information with me but I shall be very glad to get it for my hon. friend.


Charles Edward Bothwell: Where ports of entry have been closed on highways running from the United States into Canada-I am speaking particularly of the prairies-would it not be possible to put up signs on the main highways directing people to the nearest port of entry? Many complaints have been made by people that they cannot find a place to report, and there are claims, I understand, now before the department.


Robert Charles Matthews: My officials inform me that we have signs directing people to the ports of entry.


Thomas Reid: I notice that this item provides for overtime of officers. Looking over the Auditor General's report I find that overtime amounts in some cases to as much ag $675 a year extra. I also understand that last year many of the temporary men were let go on the Pacific coast, and that the overtime was given to men who were working seven days a week. I think in these times of stress it is about time that overtime amounting to as much as $675 a year be looked into. If a man is getting a salary the year round it should pretty well take care of him especially when there is not work enough to keep all employed. I wonder if the minister would mind looking into that question.


Robert Charles Matthews: All right.


Mr. HEAPS:: There is a little matter I should like to draw to the attention of the
committee and the minister in connection with the administration of the income tax. I have had this matter up with the minister but I do not regard as satisfactory the replies I have received. Deductions in income tax returns are allowed to those who donate to charity. It has been brought to my attention that members of certain unions have been giving part of their earnings towards relief of the unemployed membership of their organizations. I know of instances where members of a union have given as much as $454 towards relief of their unemployed membership. This matter was brought to the attention of the income tax officials, but these men who had been giving a fairly considerable part of their earnings each year to the relief of the unemployed were taxed for that portion which they had voluntarily donated. If these men had not voluntarily assessed themselves to the extent of fifteen or twenty per cent of their earnings in order to maintain their own unemployed membership, those unemployed individuals would have become a charge upon the state. It is unfair that these men should be assessed on these donations for income tax purposes. Perhaps a strict interpretation of the law as it exists leaves open to the officials no other course than to assess such donations. If the law is inflexible I should like to know whether the minister will give an undertaking to bring down an amendment to the act to provide that when a member of a union or any other person donates part of his salary or wages to the maintenance of unemployed, that donation shall be treated in exactly the same way as gifts to churches, the Y.M.C.A. or similar organizations.	j


Robert Charles Matthews: This department simply carries out the laws and statutes enacted by parliament. What he is suggesting is something which should be referred to parliament or to the Minister of Finance (Mr. Rhodes). This department is simply administrative.


James Layton Ralston: Following that up I should like to ask the minister if his department has carried out the law with regard to the decision given by the tariff board in the jute twine case?


Robert Charles Matthews: I would say that we have carried out the law. An appeal has been entered, and until it is decided, this department is not in a position to act.


James Layton Ralston: Does the minister suggest that there has been an appeal from the decision of the tariff board?


Robert Charles Matthews: We are advised that there is an appeal.
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James Layton Ralston: Why has it not been proceeded with?


Robert Charles Matthews: That is not within the jurisdiction of this department; we are merely administrative.


James Layton Ralston: Did the department launch the appeal?


Robert Charles Matthews: No.


James Layton Ralston: Who did?


Robert Charles Matthews: The appeal was launched by interested parties, not by the department.


James Layton Ralston: Who were the interested parties?


Robert Charles Matthews: The interested parties were Doon Twines Limited, I think of Kitchener. The hon. member for North Waterloo (Mr. Euler) could tell the committee where they are situated.


William Daum Euler: I believe that Doon Twines Limited were the first firm to appeal against the decision of the tariff board. I fancy my hon. friend refers to an appeal on the part of the department against the decision of the tariff board. Was there an appeal by the department?


Robert Charles Matthews: There was no appeal on the part of the department.


William Daum Euler: There is one question I should like to ask, not only with regard to this particular concern but with regard to other companies. These companies felt that dumping duty should not be applied on their importations from Great Britain. The law passed last session stated that the dumping duty provision should not apply under the empire agreements. I should like to know whether the department is accepting the ruling of the tariff board with regard to these matters and, if so, whether it has made refunds in accordance with that ruling.


Robert Charles Matthews: It is quite evident that that cannot be done until the appeal is heard.


William Daum Euler: Then the department is making the appeal?


Joseph Philippe Baby Casgrain: Who is making the appeal?


Robert Charles Matthews: The department is not making an appeal.


William Daum Euler: The tariff board has made a decision. If the department accepts that decision, refunds will have to be made. If the department is not making those refunds, then it must be appealing against the decision of the tariff board. I should like to know
.Mr. Matthews.]
whether any such appeal has been made by the department and, if not, whether the department intends to make refunds according to the decision.


Joseph Philippe Baby Casgrain: Call for Mr. Breadner.


Robert Charles Matthews: I can only repeat that no appeal has been made by this department against the decision of the tariff board.


William Daum Euler: I have no desire to embarrass the minister, as I realize he has not been very long in his present position.


Ian Alistair Mackenzie: Ask the 'Minister of Finance.


William Daum Euler: I think we should know whether the department is accepting the decision of the tariff board. If it is, then of necessity it must make a refund of the duty improperly collected.


Robert Charles Matthews: Not while the case is sub judice; not while an appeal is pending.


William Daum Euler: What appeal?


Joseph Philippe Baby Casgrain: In what court has it been launched?


Robert Charles Matthews: It is an appeal by Doon Twines Limited.


William Daum Euler: A decision has been given by the tariff board in the case of Doon Twines Limited.


Hugh Guthrie: That is correct, and an appeal was launched by that company to the president of the privy council. The appeal has not yet been heard. My recollection is that section 58 of the Customs Act provides that until an appeal is disposed of, a decision does not become operative.


William Daum Euler: And there is no refund until that time?


Hugh Guthrie: I do not know whether there is a refund, but I know that is the provision of the section.


Mr. STEWART (Edmonton):: Did Doon Twines Limited succeed before the tariff board and obtain a reduction of duty?


Hugh Guthrie: They did not succeed; the decision was against them and they appealed. The act provides that any party interested may appeal and they appealed as an interested party.


James Layton Ralston: What entry was it that was carried before the tariff board? Who was the importer?


Robert Charles Matthews: It was made on the entry of an importer in Montreal.

Supply-National Revenue


James Layton Ralston: Who?


Robert Charles Matthews: I think there were two entries; one by Thomas Bonar and Company.


James Layton Ralston: I should like to know. We will be some time on this item and I should like to know if the Thomas Bonar case was the first jute twine case.


Robert Charles Matthews: Yes, it is known as the Bonar case. That was the first case.


James Layton Ralston: The department assessed
these importers the full dumping duty, claiming that a fixed valuation for duty purposes, which had been made by the minister, was applicable to that particular importation. Is that correct?


Robert Charles Matthews: Yes, I think that is
correct.


James Layton Ralston: What was the date of
the entry?


Robert Charles Matthews: It was long before my time and I am not as familiar with the matter as I might othewise be, but I think it was some time last summer.


James Layton Ralston: Was that entry based on
a ministerial order which had increased the original order that the minister had made fixing the value for duty purposes?


Robert Charles Matthews: I am informed that it was based on a value fixed by the then minister under the authority of an order in council.


James Layton Ralston: Was it the second order
which had been made by the minister? There were two orders. He made an order in the first place fixing the value for duty purposes, soon after the order in council was passed authorizing the minister to make an order of that kind; and later, I understand, the minister made another order which in effect increased the value for duty purposes.


Robert Charles Matthews: That was long before
my time; I have not the papers.


James Layton Ralston: I do not expect the minister to -have personal knowledge of it at all.


Robert Charles Matthews: I am afraid I cannot
answer the question.


James Layton Ralston: Could the minister get
the information from the officers?


Robert Charles Matthews: Yes; I shall be glad
to.


James Layton Ralston: Can the minister get it
to-night for us, on the floor?


Robert Charles Matthews: I am afraid I cannot
get it to-night.


William Daum Euler: What is the total number of appeals made against the imposition of the dumping duty in that connection?


Robert Charles Matthews: I am informed that
that does not come under our department.


James Layton Ralston: In order that the minister may understand what I have in mind,-probably he has been in the department long enough to know the general setting of the case-may I give an outline of it? As I understand, in 1931 an order in council was passed, P.C. 2874, which authorized the minister-not this minister but his predecessor-to fix a value for duty purposes of jute twine under section 43, and I understand that following that, on November 30, 1931, an order was made by the -minister fixing the value for duty purposes of jute twine. So that it may be on the record, I will read that order:
Section 43, Customs Act Jute Twine
Order in Council (P.C. 2874)
30th November, 1931 Minimum Value for Duty
Under authority granted by order in council (P.C. 2874) dated 30th November, 1931, I hereby fix the minimum value for duty of Jute Twine as follows:-

Sterling currency per lb. per lb.
Twines made from 1 lea yarns sometimes known as No. 48 yarns from coarser yarns yarns such as -J lea (72 lb.)
or i lea (96 lb.)	 4-ld	7-0c
Twines made from 2 lea
(24 lb.) yarns	
5-3d	9-0cTwines made from 3 lea (16 lb.) or 4 lea yarns (12 lb.) or finer	yarns..	7d	ll-8e
F.O.B. factory.
The above values not to apply to importations bona fide purchased on or before date of issuance of the bulletin and imported and entered at Customs within one month thereafter.
Dated at Ottawa, this 3rd day of December, 1931.
Sgd. E. B. Ryckrnan,
Minister of National Revenue.
Following that order there appeared appraiser's bulletin, No. 3783, which was sent to me by Mr. Blair, the assistant commissioner, recently. That bulletin contained the values for duty purposes set out in the minister's order of November 30, 1931. Now here is the point. That order which was made in 1931 applied to all importations of jute twine. On November 25, 1932, this house passed an act which amended section 43 and provided in effect that that section should not apply
Supply-National Revenue

to goods entitled to come in under the British preferential tariff. As I say, that was in November, 1982. My information is that notwithstanding that that new act had been passed, the minister in 1933 issued a further order altering the price upwards for duty purposes of jute twine. This was done after the previous act had been repealed and a new act had been passed which did not permit the fixing of value for duty purposes of goods coming under the British preferential tariff. In spite of that new act the minister issued a new order purporting to be under section 43 of the Customs Act. Although section 43 of the Customs Act contained no provision permitting the fixing of value for duty purposes of goods coming under the British preferential tariff, this new order was issued by the minister increasing prices, and so that it may be on the record I will read it:
Department of National Revenue, Canada
Ottawa, 20th May, 1933.
File No. 176762
Supplement to be attached to Appraisers' Bulletin No. 3783.
Note that it is a supplement to the appraiser's bulletin issued in- 1931 under the old act, although the old act h-ad been repealed and a new act had been passed, providing that the fixing of value for duty purposes was not to apply to British preference goods.
Jute Twines
It having become apparent that certain importers are circumventing the spirit and intention of Appraisers' Bulletin No. 3783, the Minister of National Revenue, under the authority of section 43 of the Customs Act and Order in Council P.C. 2874, dated the 30th day of November, 1931, has fixed the following minimum values for duty:


Robert Charles Matthews: Yes.


James Layton Ralston: When was that appeal
made?


Robert Charles Matthews: It was made shortly
after the decision and well within the statutory limit of the time for an appeal.


James Layton Ralston: Why has that appeal not been heard?


Robert Charles Matthews: I cannot answer that.


James Layton Ralston: Can the minister not give me an idea how long it has been before the privy council or how long the appeal has been launched?


Robert Charles Matthews: I cannot give the date, but it is not long ago; it is some weeks ago.


James Layton Ralston: Perhaps the Minister of
Justice could tell us.

Supply-National Revenue


Hugh Guthrie: The appeal was put in
some time in November. The way in which it came to my knowledge was that it was asked whether the Canadian Manufacturers' Association were parties interested under the section and had a right to appeal, and it was decided that they had not. I think it was at that time the twine company itself appealed; it would be in November.


James Layton Ralston: Can the Minister of
Justice tell us why it has not been heard?


Hugh Guthrie: I do not know.


James Layton Ralston: Can he tell us whether
his department has advised that under the statute there is no appeal in the case?


Hugh Guthrie: There is no argument on
that; I do not think we have advised anybody on the question.


James Layton Ralston: Has the department been
asked to advise anybody?


Hugh Guthrie: We would not advise a
private applicant. As I understand the matter, the Department of Justice is there for advising the various departments of the government and not individuals.


James Layton Ralston: Has the minister advised the Department of National Revenue?


Hugh Guthrie: No; I have not been
asked to do so.


James Layton Ralston: Does the minister mean
to tell me that because a private individual has simply filed a notice of appeal under a section which, to say the least, is questionable -and I do not think the minister for a single instant will as a lawyer suggest here that there is an appeal-the Department of National Revenue have not made the refund although it was awarded by the tariff board, and have kept on charging the duty, notwithstanding the fact that there is no appeal and the Department of National Revenue have not even asked the Department of Justice for a ruling? Will the Minister of National Revenue tell me whether his department have ever asked the Department of Justice whether the appeal to the privy council is worth the paper it is written on?


Robert Charles Matthews: We have not asked the Department of Justice.


Charles Hazlitt Cahan: The appeal is lodged and
it is for the privy council to decide.


James Layton Ralston: I would think the Department of National Revenue, which has been given an order by the tariff board which, we
were told last year, was an extremely august body, would pay some attention to a decision of that board and would not permit a frivolous appeal of an individual to prevent it from doing its duty in obeying the order of that board.


Robert Charles Matthews: I certainly did not
understand that it was a frivolous appeal. I would ask the hon. member for North Waterloo whether he regards it as a frivolous appeal.


James Layton Ralston: Did my hon. friend take
any action in connection with the appeal? Did lie send out any notices or give any instructions having regard to the fact that the tariff board had given a decision and ordered a refund? He must have told somebody not to make the refund.


Robert Charles Matthews: We were advised that, an appeal having been made to the privy council-


James Layton Ralston: By whom was the minister advised?


Robert Charles Matthews: I think the appeal
was made before I took office.


James Layton Ralston: I know that, but the minister can find out from his officers. My hon. friend tells me he knew the appeal was made. He must have known in some official way or he would surely have followed the plain order of the tariff board on an appeal made from a decision of his officers, overruling that decision. He certainly would have obeyed that order unless he had some official notice of an appeal and some advice that the appeal was substantial.


Robert Charles Matthews: All I can say at the
moment to the hon. member is that when I came into the department I was advised that there was an appeal. It was known in the department, but just who advised me or how I was advised, I cannot recall.


James Layton Ralston: What instructions did the minister give with regard to the ruling that had been made by the tariff board ordering a refund to those importers?


Robert Charles Matthews: I cannot say what the former minister did in the matter.


James Layton Ralston: Then I will deal with the case which I think the minister himself was dealing with. I have before me section 54 of the act under which this appeal is supposed to have been launched:
Whenever any difference arises or whenever any doubt exists as to whether any or what rate of duty is payable on any class of goods,-
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Not what value for duty purposes.
-and there is no previous decision upon the question by any competent tribunal, binding throughout Canada, the board of customs-
Which is now the tariff board.
[DOT]-may declare the rate of duty payable on the class of goods in question, or that such goods are exempt from duty, subject in each case to an appeal within sixty days from date of such declaration, by any person interested, to the governor in council; and any such declaration of the board of customs when approved by the minister after the expiration of sixty days from the date thereof, or any such declaration when made by any order in council upon appeal, shall have force and effect as if the same had been sanctioned by statute.
I presume the minister has looked at the section by this time. I ask him quite frankly, and not as a lawyer: has he the slightest idea that there is an appeal to the privy council from the decision of the tariff board in this Bonar case?


Robert Charles Matthews: I am informed that there is an appeal.
_ Mr. RALSTON: I mean that in law there is ground for appeal.


Robert Charles Matthews: I am not a lawyer.


James Layton Ralston: Is my hon. friend informed that there is? If so will he tell me who informs him? What law officer of his or of the government informs him that that appeal which is alleged to have been launched by Doon Twines is any good?


Robert Charles Matthews: I cannot answer as to whether the appeal is any good.


James Layton Ralston: I am asking if any lav/ officers have advised him that any appeal lies from the tariff board in that case.


Charles Hazlitt Cahan: Mr. Chairman, it seems to me that the hon. member is assuming a very equivocal position. If an appeal is launched to the privy council then it certainly is not for the department to determine whether or not that appeal is valid. It is a question for the privy council to decide, whether on the advice of the law officers of the crown or of itself, as to whether that appeal is valid. If an appeal is made, and that appeal is valid, then sixty days must elapse in which that refund could not legally be made. It is for the privy council to decide the question whether it has jurisdiction or not.


James Layton Ralston: Does my hon. friend
reaiy argue seriously that an appeal court is to decide whether there is an appeal to it?


Charles Hazlitt Cahan: Certainly. I know of no
appeal court that has not to decide time and time again whether an appeal to it is properly launched.


James Layton Ralston: Suppose some decision
were made by the tariff board or some other body and an appeal were launched to the privy council as to whether or not they had jurisdiction under the statute, so tong as notice is given to the privy council then everyone would have to stand still until privy council decide?


Joseph Philippe Baby Casgrain: Stalling for years.


James Layton Ralston: Surely my hon. friend
does not mean it.


Charles Hazlitt Cahan: If an appeal has been asserted, I certainly do. Any suggestion to the contrary seems to me to be frivolous.


James Layton Ralston: I am not going to argue with my hon. friend, who is a mulch more experienced lawyer than I am. But I put it as a simple proposition that if someone takes a notion to give notice of the launching of an appeal to the privy council on something which is not within the statute at all-


Charles Hazlitt Cahan: Who is to say? Are we to take the opinion of the hon. gentleman?


James Layton Ralston: No, I suggest a method.
Mr. CAHAN; The hon. gentleman is basing bis whole argument on his individual opinion as to whether or not the appeal is within the statute.


James Layton Ralston: I am basing my argument on the fact that this government seems to have taken particular care not to ask the law officers of the crown. I would think that would be the source to which they would go, and the fact that they have not done so plainly shows they know perfectly well that there is no appeal.


Charles Hazlitt Cahan: When the appeal comes up they probably will.


James Layton Ralston: I assure my hon. friend
that the appeal will never come up. I will come to the next case to show that. It is simply a case of bluffing and stalling.


Charles Hazlitt Cahan: My hon. friend is carried
away by his own imagination.


James Layton Ralston: That will not get me off the track. I am talking about one simple situation; I want to know why the department stood stock still because Doon Twines wrote a letter to the privy council and said: "We want to appeal from that decision".

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although he himself never even took the trouble to find out whether an appeal lay or whether that letter was worth the paper it was written on. Will my hon. friend tell me that?


Charles Hazlitt Cahan: That is an absolutely unfair question.


Samuel William Jacobs: Mr. Chairman, I do not
wish to rush in where angels fear to tread, but it seems to me there is a misconception here. When the hon. member for S'helbume-Yarmoubh (Mr. Ralston) refers to the privy council I understand he is referring to the governor general in council, in other words the cabinet, not to the judicial committee of the privy council. So the question is, has an appeal been taken t-o' the cabinet?


Charles Hazlitt Cahan: It has, yes.


Samuel William Jacobs: Then it is for the cabinet
to decide whether they have jurisdiction or not; that is another matter for the authorities to deal with when they come to it.


Charles Hazlitt Cahan: Yes, that decision is pending.


Samuel William Jacobs: The difference is between
the judicial committee of the privy council, for which I have the greatest respect, and the governor general in council, for whom I also have some respect. But there is a difference. The question then is, can Doon Twines appeal to the cabinet or can they not. I suppose there will be a decision one way or the other by the cabinet. My hon. friend the Minister of National Revenue is a member of that body. So that Doon Twines will be appealing to the governor in council from the decision of the tariff board, that is all there is to it; and it is for the government to say whether they will grant that appeal or not. I think I know pretty well by now what the decision is going to be.


Hugh Guthrie: The question will then
be decided whether there is an appeal. It is not such an easy question to decide. The wording of the clause cited by my hon. friend, on which he says there is no appeal in this case, is: "as to whether any or what rate of duty is payable." Dumping duty is defined in the interpretation clause as a rate of duty. It is not just as clear as my hon. friend would have us believe, that there is no appeal. I do not say it is clear either way; it is a very doubtful matter, but when the matter does come before the privy council the question whether or not there is an appeal will certainly be decided. If there is an
appeal the matter will be heard on its merits. If there is no appeal, that is the end of it.


James Layton Ralston: Does my hon. friend suggest that the customs appraisers are going to keep on fixing value for duty purposes in accordance with the minister's order until the privy council-


Hugh Guthrie: Yes, and I do not think there will be any unreasonable delay. Sixty days are allowed and there have been about ninety.


James Layton Ralston: Sixty days allowed for
notice.


Hugh Guthrie: Yes, for the notice alone, and there have been about ninety.


James Layton Ralston: But the notice does not
hold things up. I do not see the section my hon. friend refers to which prevents the Minister of National Revenue from acting.


Hugh Guthrie: I do not think the minister could act until that appeal is decided.


James Layton Ralston: Is it so that notwithstanding the fact that the tariff board has given a decision the minister will not act on it until some doubtful appeal to the privy council is decided?


Hugh Guthrie: If blame is to be attached to anyone, I think the privy council might have acted a little sooner; I grant that, but the facts are as I have stated.


James Layton Ralston: Well, Mr. Chairman, that is one case. We have it that up to the moment the department has not asked any legal adviser as to whether the Doon Twines appeal is good or not.


Samuel William Jacobs: They have asked the tariff
board.


James Layton Ralston: What is the use of the
tariff board? Apparently the department are still imposing and insisting upon that fixed value for duty purposes on jute twine.
That was followed by another case, that of the Commercial Twine Company, I think they were the importers. That was brought before the tariff board and heard on January 9, 1934. "Will the hon. minister tell me if he had any communication with the tariff board in regard to that case?


Robert Charles Matthews: We had advice of their decision, and the same point was involved.


James Layton Ralston: Then I ask the minister if he had any communication with the tariff board with regard to that case before the decision was made.
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Robert Charles Matthews: No.


James Layton Ralston: Was he represented?


Hugh Guthrie: Perhaps I can answer that question. There was a communication arising, I think, through certain statements reported to have been made by Judge Sedgewick complaining that no one had appeared before him on behalf of the department, and that he had not had the advice of the few officers of the crown. This was reported in the newspapers as a complaint, and I asked my deputy minister to communicate with Judge Sedgewick and ascertain just what his language implied, because I did not know that I was to be considered the adviser of an independent body such as the tariff board. My deputy minister did communicate with Judge Sedgewick and he said he had made no reference whatever to the law officers of the crown; the newspapers had published that statement but there was no authority for it. But Judge Sedgewick did say that he had not had the benefit' of the view of counsel on behalf of the Department of National Revenue, and it was suggested, I think by my deputy minister, that if the Department of National Revenue desired to be represented we would place at their disposal Mr. Varcoe of the Department of Justice, and I think Mr. Varcoe subsequently did appear to represent the Department of National Revenue upon some of these applications.


James Layton Ralston: Then I take it that what the Minister of Justice has just said applies to this case of the Commercial Twine Company, that Mr. Varcoe did appear as representing the Department of National Revenue. Is that correct?


Hugh Guthrie: He did appear in one case subsequent to that intimation from Judge Sedgewick, but I cannot recall the particular case.


James Layton Ralston: I want to be clear about this, because I thought the minister did have somebody representing him in the Commercial Twine Company case.


Robert Charles Matthews: I am advised not.


James Layton Ralston: 
Robert Charles Matthews: I am informed that we filed a brief in the ordinary way in connection with this case.


James Layton Ralston: Would the minister bring dawn the brief?


Robert Charles Matthews: I shall be very glad to get it for my hon. friend.


James Layton Ralston: Would the minister tell me whether or not the brief referred to the appeal having been launched?


Robert Charles Matthews: I am informed that it dealt with the appraisal.


James Layton Ralston: And the minister does not know whether or not it dealt with the appeal?


Robert Charles Matthews: I am informed not.


James Layton Ralston: By whom was the brief prepared?


Robert Charles Matthews: The brief was prepared by departmental officers.


James Layton Ralston: Can the minister tell me by whom? I want to know whether or not it was one of the law officers.


Robert Charles Matthews: I am informed that it was by an appraiser, not a law officer.


James Layton Ralston: Then the fact is that the minister had a decision given against him by the tariff board and an appeal was launched by somebody else, but the minister allowed another case to go before the tariff board without having anyone appear in his behalf and without taking any advice as to whether or not the appeal was valid; he just had somebody send down a memorandum to the tariff board. That was the only respect, courtesy or attention paid by the department to the decision by the tariff board. Is that so?


Robert Charles Matthews: Pending the decision of the privy council the department felt that it could not move in the matter.


James Layton Ralston: Then I will ask the minister this: Was he advised by any law officer that there was anything to prevent him from moving in the matter and making the refund which had been, ordered?


Robert Charles Matthews: I do not recall being advised in that regard.


James Layton Ralston: Does the minister recall asking for advice?


Robert Charles Matthews: No.


Charles Hazlitt Cahan: Evidently the hon. gentleman thinks he is indulging in a little police court practice, with some witness before him of whom he can ask petty and frivolous questions. The minister has already explained the situation; he had nothing to do with the second case being brought before the tariff board. It was not brought before the board at his instance, but, the tariff board having again decided as in the first case, that later decision certainly was not to be acted upon when a similar decision had been appealed from and was then pending before the privy council. It is within the jurisdiction of the privy council to decide whether the appeal was properly lodged or, if properly lodged, as to what decision should be given thereon. It seems to me altogether unfair, when the minister is not a lawyer and makes no pretensions to professional experience, that he should be asked these frivolous questions when all the papers can be brought down at a later date.


James Layton Ralston: I expected that somebody would come to the rescue, not of the minister, but of the department and the government in this connection, but I did not expect that I should receive the sort of abuse I have received from the Secretary of State, because he is not accustomed to doing that sort of thing.


Charles Hazlitt Cahan: I am not, but the hon. gentleman provokes it with these frivolous questions.


James Layton Ralston: My hon. friend is provoked by the absolute stupidity which has been displayed by the department, and I think he is just about as much ashamed of it as any man in Canada, who knows the circumstances. I do not think there ever has been a case of more gross flouting of a body which has been set up by this government, and which we were told last year was going to be the finest tribunal that one could possibly imagine. There has been no respect of any kind shown towards the tariff board. Instead, flouting has been done that could only be done to try to bring the board into disrepute because the high tariff policies of some members of the government have been affected by some of the decisions of the board.


Charles Hazlitt Cahan: Will the hon. gentleman allow me one moment?
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James Layton Ralston: Certainly.


Charles Hazlitt Cahan: The hon. gentleman knows that the jurisdiction which the tariff board exercises in this case is the jurisdiction, or is alleged to be the jurisdiction,, Which the old customs board exercised, and it is an entirely different jurisdiction from that which the tariff board usually exercises under the statute constituting it. If it is a case of rates, and if it came within the jurisdiction of the old board, then the decision of the tariff board is in fact the decision of the customs board, or rather it is the decision of the tariff board acting as a -customs board, from which an appeal lies. Therefore, if my hon. friend will look at the circumstances under which this appeal was lodged, and if he will refer to the questions raised in the hearing now pending before the privy council, he will notice that this is an entirely different jurisdiction, from the jurisdiction usually exercised by the tariff board as a tariff board. That case led to a decision by the tariff board with regard to its own jurisdiction which may be right or may be wrong. But this appeal having been lodged to the privy council, the minister as the head of his department certainly had no jurisdiction while that appeal is outstanding to order any return of the excess duty alleged to have 'been collected. If my hon. friend wishes to direct his criticisms to the proper place, certainly let him direct 'them to the privy council, and not to the minister who "only within the last few weeks has entered into a new office presenting very many complicated details with which no man could familiarize himself in the short time during which these matters have been committed to his care.


James Layton Ralston: I am sure that my hon. friend's tone in his last remarks was quite different from the tone in which he previously addressed this house. I sat down because he asked me to allow him one moment, and I listened to him courteously. I do not think there is any difference between the Secretary of State and those of us on this side of the house who are dealing with this matter so far as consideration for the Minister of National Revenue is concerned. The minister knows perfectly well that there is no desire to take advantage of him because he happens to be new in his department. The desire simply is to endeavour to get this information from, the minister who is in charge of the department, assuming that he will get it from his officers, and I can assure him that we do not think he needs the assistance of the hon. Secretary of State.
.'Mr. Cahan.]


Ian Alistair Mackenzie: Better without it.


James Layton Ralston: I just want to deal with what the Secretary of State said. I do not quite see the relevancy of his remarks as to. the different jurisdiction of the tariff board. The jurisdiction of the tariff board is the jurisdiction exercised by the board of customs, and as I have pointed out it did not seem as if there was any appeal from the board of customs in connection with an appraisement, under a ministerial order fixing the value for duty purposes.


Charles Hazlitt Cahan: As to whether the value, fixed for duty is a rate or not, that is a very nice question.


James Layton Ralston: All I am saying is that the evidence that there is not a scintilla of a nice, question in this case is the fact that this government have studiously refrained from asking any of the responsible law officers about it. The Minister of Justice has not yet offered his opinion in regard to it. There is the appeal outstanding. I take issue very respectfully and very deferentially with the Secretary of State because of his great legal knowledge and capacity and experience, but ,1 do take issue with him nevertheless when he suggests that the appeal in any way binds the department from acting on the decision which ha,s been made by the tariff board making the appraisement after that time illegal.


Charles Hazlitt Cahan: My hon. friend will admit
that nobody will be prejudiced by waiting.


James Layton Ralston: Nobody except the importers and the people in this country who will be charged just that- much higher duty in the meantime, and will find it just that much more difficult to get a refund. It means that the jute twine industry will be enjoying its protection just that much longer. The only people who are being hurt by waiting are the consumers on the one side; and on the other hand, the manufacturers in Canada are benefiting from the protection because of the delay. Outside of that the appeal might just as well stand for years. Why hear the appeal at all? Why not go on assessing the higher duties if it is perfectly all right, on the ground that the appeal is there and that some day we may come to it? My hon. friend knows, or we will guess, that that appeal will never be heard.


Charles Hazlitt Cahan: Will the hon. gentleman
allow me a moment? I took an interest in the matter because for many months during the very serious illness of the late Minister of

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National Revenue I was acting minister, and although none of these matters are matters of decision by me I know of the question which the hon. gentleman is discussing. I have heard it discussed in the department and I have considered it myself. I think there is a very nice legal question involved.


Ian Alistair Mackenzie: Police
court question.


Charles Hazlitt Cahan: It is a question so very substantial under the circumstances that ordinary police court discussion is out of place. I think it is only fair to allow tire new minister ample time to have access to the documents and ascertain the facts which are not necessarily within his knowledge because of the veTy recent date on which he assumed office.


James Layton Ralston: Surely the hon. Secretary
of State did not expect the estimates of the National Revenue department to go through, after all there has been in the newspapers and all that everybody has known about this case, without the matter coming up.


Charles Hazlitt Cahan: No, but the hon. gentleman might give the minister time to look into the matter.


James Layton Ralston: Certainly. The only time we asked the minister for documents he said that he would get them later, and that is perfectly satisfactory to me. It is his colleagues who have put him into estimates tonight. I have no doubt that he is personally glad that this matter has come up so that he can get all the documents and familiarize himself with them as much as he can in the time at his disposal. It was for that purpose that I got up in -the first place, to outline the case as I saw it, so that the -minister might have the opportunity, as I told him at the time, -of getting his documents together and checking up the statements I was making so as to be able to give to the committee whatever explanation he thought he could give.
Now I want to refer to the third case. The third case is a case, not of jute twine, but of felt hats, which was just decided yesterday, I understand. Here again I shall have to ask the minister for information. Probably he has not got it now, but he can get it later. As I understand it, a ministerial order was made under section 43 fixing the value for duty purposes. Does the minister know whether that ministerial order was made after the act had been repealed?


Robert Charles Matthews: I am informed it was made before.


James Layton Ralston: Was there any amendment to that order?


Robert Charles Matthews: I think not.


James Layton Ralston: As I understand it, an order was made by the governor in council authorizing the minister to fix values for duty purposes. The minister fixed values for duty purposes before the act was repealed, and the customs officer continued to follow that order and to fix values after the repeal of the act which was the foundation for the minister's order. Is that the correct situation?


Robert Charles Matthews: I am informed that that is substantially correct.


James Layton Ralston: I understand that an appeal was launched. Was that launched by an importer, by a manufacturer of by the department?


Robert Charles Matthews: It was launched by an importer.


James Layton Ralston: I think the minister is wrong about that.


Charles Hazlitt Cahan: There was an appeal to the tariff board by an importer.


James Layton Ralston: A decision was made originally by the customs appraiser. Then someone must have gone to the tariff board; who was that, an importer?


Robert Charles Matthews: An importer.


James Layton Ralston: He claiming that, since
these goods were imported from Great Britain, the ministerial order did not apply under section 43 as amended in November, 1932; was that it?


Robert Charles Matthews: Yes.


James Layton Ralston: I notice in the Montreal Gazette of this morning that the tariff board has decided for the third time that the department was not justified in appraising British goods on the basis of the ministerial order fixing values for duty purposes. I understand that is the effect of the decision.


Robert Charles Matthews: I have not seen an official copy of the decision of the tariff board.


James Layton Ralston: I take the minister's statement just as he makes it. I have not seen the official decision; it is simply a report in the Montreal Gazette. Can the minister tell me if an appeal has been launched in the second case, that of the Commercial Twine Company, decided on January 20?


Robert Charles Matthews: I do not know whether any appeal has been launched, but the same point is involved.
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James Layton Ralston: No appeal has been taken to the privy council?


Robert Charles Matthews: Not that I am aware of.


James Layton Ralston: The department has not taken an appeal, and so far as the minister knows, no producer has taken an appeal. Could the minister tell me upon how many articles coming in from Great Britain this fixing of values for duty purposes applies? To how many articles does section 43 as amended in November, 1932, apply?


Robert Charles Matthews: I think to about ten or
twelve.


James Layton Ralston: Could the minister tell us what they are? If he has not that information at the present time, could he bring it down when his estimates are again under consideration?


Robert Charles Matthews: Yes.


James Layton Ralston: I understand that notwithstanding the decision of the tariff board in the jute twine case given in November last and again in January, the department is still fixing values for duty purposes on goods coming from Great Britain at the rate authorized by the ministerial order issued before the amendment to the act.


Robert Charles Matthews: Yes, pending the decision referred to.


James Layton Ralston: That refers to only one thing, jute twine.


Robert Charles Matthews: I believe the same point is involved.


James Layton Ralston: Notwithstanding that the same point is involved and that the department has three decisions of the government's own tariff board against it, it is still imposing that duty on fourteen different articles. I should like to refer to tinplate. As I understand it, the question in this case was whether the goods imported were goods of a class or kind made in Canada; is that correct?


Robert Charles Matthews: Yes.


James Layton Ralston: Notwithstanding the fact that the plant at Ojibway had been closed, the appraisers gave a decision that this tinplate was of a class or kind made in Canada and therefore the dumping duty and an extra five per cent was imposed.


Robert Charles Matthews: There were still unsold stocks on hand.


James Layton Ralston: Stocks unsold?


Robert Charles Matthews: Yes.


James Layton Ralston: Where were they? We desire these particulars, but perhaps I should not ask the minister at this time.


Robert Charles Matthews: I cannot give that information.


James Layton Ralston: Will the minister bring
down the records of his department with regard to stocks on hand in Canada?


Robert Charles Matthews: Yes.


James Layton Ralston: Has the minister received any advice to the effect that stocks on hand in Canada qualify under the tariff item as goods of a class or kind made in Canada?


Charles Hazlitt Cahan: I should like to ask a question of the hon. gentleman. If a factory has been manufacturing a particular class of commodity and closes down temporarily with a large stock on hand, would not that be a case in which there were goods for sale of a class or kind made in Canada?


James Layton Ralston: I refer my hon. friend to the decision of the tariff board which I understand has finally been reluctantly accepted by the government, that they are not goods of a class or kind made in Canada. I ask the minister if he will give us whatever information he has in support of the decision of the appraisers that these goods were of a class or kind made in Canada and therefore the dumping duty and the extra five per cent should be imposed?


Robert Charles Matthews: I will do that.


James Layton Ralston: Has the minister before him any reports in connection with the plant at Sarnia which was supposed to be manufacturing tinplate? I should like to know the number of employees and the production, say for October and November, 1933.


Robert Charles Matthews: We have been getting information but it is not complete.


James Layton Ralston: Can the minister give me the information upon which his appraisers arrived at the decision that these goods were of a class or kind made in Canada? I understand these goods were imported in June.


Robert Charles Matthews: I was not the head of the department in June.


James Layton Ralston: The minister has been long enough in this house to know that a minister does not answer things personally, I am asking him for the information his appraisers had with regard to the activities of any plant then producing in Canada.


Robert Charles Matthews: I am sorry but I have not the data.

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James Layton Ralston: The minister will furnish it?


Robert Charles Matthews: I shall be very glad to get any information I can for the hon. member.


James Layton Ralston: Since he has been in the department has the minister made any investigation himself as to the activities and the amount of production of the plant now alleged to be operating in Sarnia in the manufacture of tinplate?


Robert Charles Matthews: That matter is now under investigation.


James Layton Ralston: But has the minister
any information about it? There must be tinplate coming in now.


Robert Charles Matthews: The investigation is not complete.


James Layton Ralston: But in the meantime what ruling has been made by the department? Is it ruled that tinplate is of a class or kind of goods made in Canada?


Robert Charles Matthews: I understand it is ruled that tinplate is of a class or kind made in Canada.


James Layton Ralston: And what information has the minister regarding the Samia plant-the number of employees and the amount produced?


Robert Charles Matthews: I am sorry I have not that information.


James Layton Ralston: Could the minister give me an idea, through his officers, of the amount of tinplate that has been imported from, let us say, June until December?


Robert Charles Matthews: No, I have not the information.


James Layton Ralston: I understand it is a very large amount; I won't talk about tons myself. I submit to the minister, very respectfully and kindly, that in connection with the importation of a product which affects as many primary producers as does tinplate, we might be entitled to a little more information than he has given us with regard to the inquiries made, since he has been in office, touching this important commodity. I understand that a newspaper sent up a reporter there and it was found that no one could get into the Sarnia plant; guards were posted and no one was allowed to get in to see how little they were producing and to what extent they were in the preliminary stage. Did the minister see that report?


Robert Charles Matthews: No, I did not.


James Layton Ralston: And he cannot tell us whether there are ten or fifty men there?


Robert Charles Matthews: We have no information.


James Layton Ralston: Will the minister try to get the information for us, starting with the letter from the Ojibway Company intimating the cessation of operations in Canada?


Robert Charles Matthews: Could the hon. member give me an idea of the date of the letter?


James Layton Ralston: I understand that a letter was produced at the tariff board hearing.


Robert Charles Matthews: I will look it up.


James Layton Ralston: If the minister would bring down the whole file with regard to the Mundet Cork and Insulation Company of Toronto, it would assist us.


Frederick George Sanderson: This discussion has almost confirmed the rumour that has been abroad for several months that there has not been the utmost harmony between the Department of National Revenue and the new tariff board. I have here a report of some remarks made by the Prime Minister in the city of Toronto on the night of February 21. The news item is headed:
Denies friction with tariff body.
It reads:
Toronto, Feb. 21.-The attitude of the government toward the Tariff Board has been to offer every assistance and co-operation possible, and he has never received a complaint that it had been otherwise, Prime Minister R. B. Bennett declared in the course of the debate on empire preferences, held at Hart House by students of the University of Toronto, here to-night.
Air. Bennett was replying to the remarks of S. F. Rae, one of the undergraduates opposing the resolution that " Canada retain her present preferred position in empire markets."
Mr. Rae had said there had been " constant friction " between the Tariff Board-" child of the empire agreements," and the British government. He charged that Canada had not been living up to the agreement with respect to the Tariff Board, had not stopped the practice of fixing values for duty purposes, and had disregarded the orders of the board with respect to duty values on jute twine.
The young debater referred to press reports of remarks attributed to former Justice George Sedgewiclc, chairman of the board, and the board was entitled to assistance from the law officers of the crown and was not getting it.
"We believe it to be an excellent board and it is entirely wrong to say that we are in variance," Air. Bennett declared. " A question was raised but it was purely a point of law. I do not believe Mr. Justice Sedgewick ever made those observations attributed to him. Certainly he has never communicated them to

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me nor suggested we bad not done anything we should have done. The British authorities are entirely satisfied with the board."
The Minister of Justice said to-night, about half an hour ago, that there had not been any friction, if I too may use that word, between the law officers of the crown and the new tariff board, and that what Mr. Justice Sedge-wick is reported in the press to have said was not what he did say. I have read the report and so have many hon. gentlemen in this house and most of the people of Canada; we have all read the remarks attributed to that gentleman, as reported in the next day's press, and I have never seen any correction. Certainly there is a feeling abroad that there has been friction with the tariff board, which was Bet up by this government last year as a tariff board that was to be different in every way from, and superior to, any other tariff body we have ever had in this country. There is a rumour, and this discussion to-night has confirmed it, judging by the remarks of the Secretary of State and the Minister of Justice. I am not criticizing at all the Minister of National Revenue, because I quite appreciate the fact that he has not been very long in the department, and many of the things criticized to-night happened before he assumed the administration of the department. But as minister of the department he must now bear the responsibility. Now, the tariff board set up under the chairmanship of Mr. Justice Sedgewiek should not be interfered with by the law officers of the crown or by the Department of National Revenue or any officer of that department. We were told by the Prime Minister last year, and by other members of the government as well, that this board would be above reproach, and I believe that the setup of the board in its chairman was good-I will not go further than that. He should have a free hand to administer the affairs of the board and Should not be interfered with. If there is to be friction between the Department of National Revenue or the law officers of the crown and the tariff board, then the board will be useless in functioning for the benefit of the people of this country, and the sooner this question is cleared up the better.


Robert Charles Matthews: I hope my hon. friend will allow me to say that there has been no friction whatever at any time between the tariff board and the Department of National Revenue. I wish to emphasize that and to make it clear to the house that since I assumed office there has been no friction whatever between the Department of National Revenue and the tariff board. I consider Mr. 
Justice Sedgewiek one of my best personal friends and our relations have been most harmonious in every respect.


Frederick George Sanderson: When the minister says that to his knowledge there has been no friction between the Department of National Revenue and the tariff board, is he speaking altogether of the time since he became minister of that department? Is he confining his remarks to that time?


Robert Charles Matthews: How could I speak of the time before I took office?


Frederick George Sanderson: Surely the incoming minister has to assume the responsibilities of the office as it was left to him by the former minister. Is there nothing on record of any friction, if we want' to continue to use that word, with the tariff board?


Robert Charles Matthews: There is nothing on record, and so far as I know, my statement of my relations with the chairman of the tariff board and the board itself applies to my predecessor as well.


Frederick George Sanderson: It has been suggested by one of my colleagues that perhaps "disagreement" is better than "friction", and perhaps it is. Has there been any disagreement?


Robert Charles Matthews: None whatever.


Frederick George Sanderson: I want to ask the minister another question. In his opinion, as the new Minister of National Revenue, are all the newspaper reports and rumours as to disagreement between the department and the tariff board absolutely incorrect?


Robert Charles Matthews: The impression given by the statements in the press to which my hon. friend has alluded is entirely wrong.


Frederick George Sanderson: And absolutely without foundation?


Robert Charles Matthews: Without foundation. On one occasion I tried to correct that in the press; I said something that I thought would create the proper impression, but certainly there has been no friction at all between the tariff board and the department.


Mr. VALLANCE:: There is a condition that I would like to draw to the attention of the minister. First of all let me ask him a question: How long a time is an importer allowed from the date of importation of goods, to ask for a rebate of duty, for instance, if the goods are spoiled? Let me give a case. I have in my constituency a nursery which at the present time is importing bulbs from Holland.

Supply-National Revenue


Robert Charles Matthews: Three months.


John Vallance: I have in my office a file in which there are two letters from an official of the department giving the time as three days. This is an importation of bulbs from Holland. The nearest customs office is in the city of Moose Jaw; the goods are destined for the town of Luseland and it is impossible for any firm in that community, importing goods of a perishable nature such as bulbs, to inspect them and get word back to the customs office in that length of time. The importer to whom I refer has asked the department for a refund of duty and so far he has been denied it. I got the file just the other day and I intend taking the matter up with the department. If the time limit is three days, as suggested by one of the officials of the department, it should be extended a little longer to give such importers an opportunity to have their customs duty refunded.


Robert Charles Matthews: When I said "three months", I was referring to goods returned as not being according to order. If my hon. friend will come to my department, I shall give the matter personal attention.


John Vallance: I appreciate that, but I want to draw the attention of the committee to the fact that in my opinion and, I believe, in that of the house, a period of three days is not long enough to allow an importer to make an appeal.


Robert Charles Matthews: That is a matter on
which I cannot give an opinion at present, but if the hon. member will come to my department, he will receive courteous and prompt attention.
Mr. VAiLLANlGE:	I appreciate what the
minister says, but the regulation states three days." If I go to the department with a case in point indicating that a period of three days is not long enough for lodging an appeal, will the regulation be changed to give importers six or ten days instead of three?


Robert Charles Matthews: When my hon. friend
comes to the department, he will receive the same generous treatment that is accorded to anyone who comes.
Mr. GER8HAW:	I would like to draw to
the attention of the minister a situation which obtains in southern Alberta and perhaps in other places. Close to the international boundary line there are a number of farmers, small ranchers and so forth in rather poor circumstances. It just happens 14726-701
that there are no stores close to them on the Canadian side and naturally they deal with nearby stores on the United States side. It also happens that the roads are bad and the customs offices are often twelve or fifteen miles apart. That means a long trip for those people in order to report any of their purchases. Occasionally an inspector will come along, march into their homes, inspect their pantries, go down into their cellars and hunt around their premises. Perhaps he may find a tin can or something bearing a United States label, and in that case the unfortunate homesteader is in real trouble and up against a great deal of expense. I understand it is an offence to issue a false invoice, and I have wondered whether the department would in such cases allow a farmer to mail the invoice to the customs office and pay his duty in that way. If he did not have the invoice and smuggled extra goods, of course he would be liable. But is there no regulation by which that man can pay his customs duty by mail by forwarding an invoice, or is there any way by which he can avoid making long trips to report to the customs office?


Robert Charles Matthews: I think not.


Mr. BOTH WELL:: A little while ago,
before all this discussion on jute twine began,
I asked the minister certain questions about signs at the boundary line; I am speaking particularly of the prairies. Following the remarks made by the last speaker, I think it might be well to bring this matter to the minister's attention. The main highway out there, one of the graded highways running out of Saskatchewan and going south right through into the United States, in fact one of the best highways we have, is No. 4 highway, Saskatchewan. A gentleman in that district went across the line on business and came back with certain goods. He looked and inquired for a customs office, but he could not find out where it was, and he saw no signs on the road. He went out of the country not knowing he had to report; he reported at the United States customs office just across the line and inquired there on his way back where he would find a customs office on the Canadian side. He could not find out there, and he came into Canada again. In his letter he tells me that in addition to having to pay duty, sales tax and so forth on the goods he had purchased, he was also assessed $50 as a penalty for not reporting going both ways, although he informs me there is not a sign anywhere that he could see directing this to be done or
Supply-National Revenue

indicating where to do it. What I want to bring to the attention of the minister is that on those well travelled main highways at least there should be signs indicating where there is an office at which a man can report.


Robert Charles Matthews: If my hon. friend will give me the particulars of this case I shall be veiy glad to investigate.


Charles Edward Bothwell: I know there are many districts there without a sign at all. In places there are distances of sixty miles between customs houses, with well travelled roads crossing the border and no sign anywhere to indicate where there is a customs house.


Mr. GOTT:: The hon. member surely does not believe in signs.


Charles Edward Bothwell: It is not I, but this
government, although the signs are plain as to what will happen.


Joseph Philippe Baby Casgrain: It was written on the wall long, long ago.


Eccles James Gott: You will never live long enough to see it happen.


Joseph Philippe Baby Casgrain: You will see it, and very quickly.


Robert Charles Matthews: In spite of my hon.
friend's last remark I shall be glad to look into the matter, and get a report from the inspector.


James Layton Ralston: I want to ask the minister in regard to a complaint I have received from those interested in the butter business in Nova Scotia as to the release of some 8,000 boxes of New Zealand butter on February 22. The complaint was that the dairymen's association and the men in the creamery business down there were not consulted, but word seemed to have gotten out in some way to the packing houses that this butter was to be released, with the result that on the twentieth the packing houses began to sell and consequently cut the price from one to two cents. I have here a copy of the newspaper of February 23 announcing it; I presume the order was made on February 22. The Nova Scotia creameries have lost one to two cents a pound on butter on account of the drop in price, due, they feel, to some leak whereby the release of this New Zealand butter got to the ears of the packers. Was the minister concerned in that himself?


Robert Charles Matthews: Not primarily concerned, but I happen to know something about it. But in the period the hon, member speaks of, when it was known that this butter was in Halifax, the price did not drop; it advanced from 26i cents to 30 cents in Montreal.


James Layton Ralston: I am speaking about Nova Scotia.


Robert Charles Matthews: I think there was a
general advance in price. If the suggestion is that notice was released to any individual or large importer before others, that is not so; there is nothing in that.


James Layton Ralston: I assure my hon. friend
-I need not say it, he knows it,-that I do not suggest for an instant that the release could have taken place with his knowledge. But I have received a letter to-night from a responsible creamery operator in Nova Scotia, expressing very keen feeling about the situation which developed there. I understand the Nova Scotia Dairymen's Association wired the minister protesting against the release of the butter for at least four or six weeks. Similar wires sent by farmers' organizations. Notwithstanding these protests I understand the butter was released on February 22, and there was a fall in the price of butter that week of two cents a pound. Those are the facts given to me.


Robert Charles Matthews: If the hon. member
will allow me to suggest it, I should like to go into thatt with him privately. I cannot see how any loss has taken place, for we have information that from the time this butter was landed in Halifax until to-day or yesterday there has been a continual advance in the price of butter both in Toronto and Montreal, and I presume in the maritimes.


James Layton Ralston: I shall be very glad
indeed to go into it with the minister.


Robert Charles Matthews: I think I can assure
the hon. member that the matteT was so handled that; there was no flooding of the market and no fall in price.


James Layton Ralston: Let me read one expression from the letter:
As a result of this release and the apparent advance information Nova Scotia creameries have lost two cents per pound on butter sold v 1Si w,ee'c- The buyer is now using New Zealand butter as an argument to buy at still lower prices.
It is quite obvious that the dairy industry was not considered in this matter. No doubt this industry as a whole will protest the action at this time.
They did protest. I have no doubt the minister has had wires from them.


Robert Charles Matthews: Yes, I have had wires. Just what do they protest against.

Supply-National Revenue


James Layton Ralston: Against the release of
the butter for from four to six weeks.


Robert Charles Matthews: The market was advancing all the time when the butter was released. Certainly I cannot see any disadvantage to the butter market through the small amount that came.


James Layton Ralston: I merely point it out to
the minister. I suppose he will agree that neither he nor I would understand the situation in regard to the market as well as the dairymen's association and the farmers' associations.


Robert Charles Matthews: Well, I think my hon. friend and I are both capable of reading the quotations in the press and seeing what the price is.


James Layton Ralston: I am pointing out that
there must be some mistake, because this is a responsible gentleman and he says the creameries have lost two cents a pound on butter sold this week. I am quite willing to accept my hon. friend's invitation and discuss the matter with him privately, and I do not mind showing him the letter.


Robert Charles Matthews: I think Nova Scotia
produces perhaps one third of the butter it uses?


James Layton Ralston: I would think so.


Eccles James Gott: Will the hon. member for
New Westminster (Mr. Reid), the jumping jack of the house-


Some hon. MEMBERS:: Order.


Eccles James Gott: -repeat the remark he made a while ago?


The CHAIRMAN (Mr. Smith, Cumberland) :: Order.


Eccles James Gott: He made a remark and then
ran to cover.


Thomas Reid: I think the hon. member made a very insulting remark to me, and I have always been able to take care of myself.


Eccles James Gott: I made no remark to the hon. member whatsoever.


Thomas Reid: Then if I made any remark
I am glad to withdraw it.
The case I wish to discuss is in connection with a fishing boat registered part time in the United States, and then coming into Canada. Taking it up after complaint had been made to me, customs officials in Vancouver said
the boat could come in at any time without duty being paid. It had paid duty a number of years ago, but for the past few years it has been coming in without paying any duty. One of the owners, who lives in the United States, is registered as a United States citizen; the other owner is a Canadian, though I understand that both owners were born in Canada.
I should like to ask the minister, and perhaps his officers can give me the information, whether a ship going back and forth is allowed to do so without paying the customs dues. One officer claims that a ship registered in Canada which leaves its port and becomes registered in a foreign country ceases to be of Canadian registry, and that on reentering for fishing purposes it must pay the dues over again. This has been going on for a number of years.


Robert Charles Matthews: It must be quite
obvious to the hon. member that I would not have the information as to a certain ship on the Pacific, but if he will be good enough to give me full particulars I shall be glad to go into the matter for him.


James Layton Ralston: I think this is the answer to what my hon. friend the minister said with regard to butter prices, and he can have this information to aid him when he is looking into the matter. All last year butter fat prices averaged only about 21 cents. Only during the last couple of months have fat prices reached a point where the farmers can break even. Last month's cream price was 25 cents, while this month the price has been 28 cents. They were hoping to maintain prices at from 28 cents to 30 cents until the grass season started. Summing that up, I take it that what happened was that when prices started to advance to where the farmer could break even he found the New Zealand butter coming in on him. That is the complaint.


Robert Charles Matthews: That may be so, but after the fact became known that the New Zealand butter was coming in the price went up in Montreal from 26J cents to 30 cents. The price was not depressed.


Richard Bedford Bennett: It is 29 cents now.


James Layton Ralston: They say it did depress the price.


Ernest D'Israeli Smith: Shall the item carry?


Joseph Philippe Baby Casgrain: I think the information that has been requested by the hon. member
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for Shelbume-Yarmouth and the other hon. members on this side should be furnished before this item passes. This is the big item for the whole department, and I think that information should be supplied before it is passed.


Robert Charles Matthews: I have still another item.


Joseph Philippe Baby Casgrain: But this is a large item of over $9,000,000, and I do not think it should pass in this way.
Item stands.
Progress reported.
On motion of Mr. Bennett the house adjourned at 10.57 p.m.



END OF VOLUME I.