[Stage Direction]
First report of the joint standing committee of both houses on the printing of parliament.-Mr. McLure.

[Stage Direction]
Hon. HUGH GUTHRIE (Minister of Justice) moved for leave to introduce a bill to amend the Dominion Elections Act, 1934.
Some hon. MEMBERS:: Explain.


Mr. GUTHRIE:: Mr. Speaker, this bill proposes to make four amendments to the Dominion Elections Act. The first and the most important is to introduce by way of experiment the system of the alternative vote in the province of Saskatchewan, a system which has been commended in many quarters of this house on former occasions, as I shall be able to demonstrate I hope at a later stage of the discussion.
The second amendment is to keep the advance polls open on the Thursday and Friday preceding the election from seven in the evening until ten o'clock in the evening, and on Saturdays from two in the afternoon until ten o'clock in the evening. This amendment is made at the suggestion of the Trades and Labour Congress.
The next amendment is to waive the necessity of printing lists under the present Dominion Elections Act which is cast upon the chief electoral officer in respect of byelections which are not to be held until the nineteenth of August. That is a matter of saving expense.
Then there are some provisions for some changes in the forms.


Mr. LAPOINTE:: It is a painful death.


Right Hon. W. L. MACKENZIE KING (Leader of the Opposition):: Mr. Speaker, I wish to protest at once against any proposal to introduce amendments to the elections act, to introduce what is practically a sectional election act at this time more than five years after the dissolution of the last parliament and immediately before a general election takes place. I do not think the minister should be permitted to introduce such a bill at this time.


Mr. GEARY:: I was paired with the hon. member for Laurier-Outremont (Mr. Mercier). Had I voted, I would have voted for the motion.


Mr. SENN:: I was paired with the hon. member for South Perth (Mr. Sanderson). Had I voted I would have voted for the motion.


Mr. TOTZKE:: I regret very much I was paired with the hon. member for Fraser Valley (Mr. Barber). Had I voted, I would have been delighted to vote against the motion.


Mr. BOUCHARD:: I was paired with the hon. member for Welland (Mr. Pettit). Had I voted, I would have voted against the motion.
Mr. MioINTOSH: I was paired with the hon.
member for Winnipeg South Centre (Mr. Kennedy). Had I voted, I would have voted against this undemocratic and disgraceful motion.


Mr. COWAN:: I was paired with the ho-n. meimbeT for Hants-Kings (Mr. Ilsley). Had I voted, I would have voted for the motion.


Mr. MULOCK:: I was paired with the hon. member for Toronto-High Park (Mr. Anderson). Had I voted, I would have voted against, the motion.


Mr. MacMILLAN (Mackenzie):: I was
paired with the hon. member for North Huron (Mr. Spotton). Had I voted, I would have voted against the motion.
Mr. ST. PERE: I was paired with the hon. member for South Hastings (Mr. Tummon). Had I voted, I would have voted against the motion.


Mr. ELLIOTT:: I was paired with the hon. member for South Waterloo (Mr. Edwards). Had I voted, I would have voted against the motion.
M,r. MERCIER (St. Henri): I was paired with the hon. member for West Hamilton (Mr. Bell). Had I voted, I would hlave voted against the motion.


Mr. GERSHAW:: I was paired with the hon. member for London (Mr. White). Had I voted, I would have voted against the motion.


Mr. ANDERSON (Halton):: I was paired with the hiOn. member for Toronto Wedt Centre (Mr. Factor). Had I voted, I would have voted for the motion.


Mr. CHARTERS:: I was paired with the hon. member for North Welljngjton (Mr. Blair). Had I voted, I would have voted for the motion.


Mr. STEWART (Edlmonton):: I was paired Mr. SIMPSON: I was paired with the hon. with the Minister of the Interior (Mr.	member for Gharlevoix-Sauguenay (Mr. Cas-
Murphy). Had I voted., I would have cheer- grain). Had I voted, I would have voted for fully voted against the motion.	the motion.


Mr. HARRIS:: I was paired with the hon. Mr. SPENCE: I was paired with the hon. member for Cartier (Mr. Jacobs). Had I member for Temiscouata (Mr. Pouliot). Had voted, I would have voted for -the motion. I voted, I would have voted for the motion. 92582-231

Dominion Elections Act


Mr. JOHNSTON:: I was paired with the hon. member for Willow Bunch (Mr. Donnelly). Had I voted, I would (have voted for the motion.
Mr. M,acDONALD (Cape Breton South): I was paired with the hon. member for Colchester (Mr. Urquhart). Had I voted, I would have voted for the motion.


Mr. BURNS:: I was paired with the hon. member for Last Mountain (Mr. Butcher). Had I voted, I would have voted for the motion.
Mr. MeDADE: I was paired with the hon. member for Laprairie-Napierville (Mr. Dupuis). Had I voted, I would have voted for the motion.


Mr. MITCHELL:: I wias paired with the hon. member for Parry Sound (Mr. Arthurs). Had I voted, I would have voted for the motion.


Mr. EAFARD (Translation):: I was paired with the hon. member for Levis (Mr. Fortin). Had I voted, I would have voted against the motion.


Mr. MARCIL (Translation):: I was paired with the hon. member for Argenteuil (Sir George Perley). Had I voted, I would have voted against the motion.


Sir EUGENE FISET (Translation):: I was paired with the hon. Minister of Labour (Mr. Gordon). Had I voted, I would have voted against the motion.
Motion agreed on the following division:
++YEAS
Messrs:
Arsenault
Barrette
Beaubier
Belee
Bell (St. John-Alibert)
Bennett
Bowen
Bury
Caban
Cantley
Carmichael
Chaplin
Church
Coote
Cotnam
Cowan
Davies
Dickie
Dupre
Duranleau
Embury
Ernst
Esling
Fraser (Cariboo) Gagnon
Gardiner	_
Garland (Bow River)
Goibeil
Guthrie
Hay
Heaps
Irvine
Kennedy (Peace River)
Lucas
Luchkovich
MacDonald (Kings)
Maelnnis
Macphail, Miss
McDade
McGillis
McLure
Maloney
Morand
Mullins
Myers
Peck
Perley (Qu'Appelle)
Plunkett
Porteous
Price
Quinn
Robinson
Sauve
Shaver
Short _
Simpson (Simcoe North
Smith (Victoria-Carleton)
Smith (Cumberland1)
Speakman
Spencer
Sproule
Stanley
Stewart (Lethbridge)
Stirling
Stitt (Nelson)
Stitt (Selkirk)
Sullivan
Sutherland
Swanston
Turnbull
Weese
Weir (Melfort) White (Mount Royal) Willis Wright-75.
++NAYS


Mr. FONTAINE (Translation):: I was paired with the hon. member for Jacques-Cartier (Mr. Laurin). Had I voted, I would have voted against the motion.


Mr. GIROUARD (Translation):: I was paired with the hon. member for Richmond-Wolfe (Mr. iLafleche). Had I voted, I would have voted against the motion.


Mr. DUMAINE (Translation):: I was paired with the hon. member for Lake St. John (Mr. Dugua-y). Had I voted, I would have voted against the motion.


Mr. THAUVETTE (Translation):: I was paired with the hon. member for Matane (Mr. Larue). Had I voted, I would have voted against the motion.
Messrs:
Ahaarn	Hurtubise
Botbwell	Ilsley
Boulanger	Jean
Bourassa	King, Mackenzie
Bradette	Lapointe
Br asset	McKenzie (Aseiniboia)
Brown	MePhee
Campbell	Motherwell
Cardin	Munn
Deerochers	Neill
Dubois	Parent
Duff	Perras
Dupuis	Reid
Ferland	Rheiaume
Fournier	Rinfret
Golding	Seguin
Hambury	Weir (Macdonald)
Hanson (Skeena)	Young-37.
Howden	PAIRS


Mr. DUBUC (Translation):: I was paired with the hon. member for Chateauguay-Hunt-ingdon (Mr. Moore). Had I voted, I would have voted against the motion.
Mr. GUTHRIE moved the first reading of Bill No. 105, to amend the Dominion Elections Act, 1934.

(The list of pairs is furnished by the chief whips.)
Messrs:
Baker	Bertrand
Anderson	Mulock
(Toronto-High Park)
Anderson (Halton)	Factor
Barber	Totzke
Baribeau	Beaubien
: r * rr i
a [DOT]	. 2

Dominion Elections Act
Bell (Hamilton)
Bell (St. Antoine)
Beynon
Bourgeois
Boyes
Burns
Casselman
Charters
Cowan
Dorion
Duguay
Edwards
Fortin
Garland (Carleton)
Geary
Gordon
Gott
Hanson
(York-S anbury) Harris Johnston Jones
Kennedy (Winnipeg) Lafleche Larue Laurin Lawson MacDonald (Cape Breton) McMillan (Saskatoon) MacNicol MoDade McGibbon M anion Matthews
Moore (Chateauguay-Humtingdon) Murphy
Periey, Sir George
Pettit
Pickel
Rhodes
Ross
Rowe
Ryerson
Senn
Simpson (Algorna)
Smoke
Stevens
Stewart (Leeds)
Stinson
Tuimimon
White (London)
Spotton
Spence
Ganong
Wilson
Mercier (St. Henri)
Raymond
Euler
Desiauriers
Mills
Butcher
Howard
Blair
Illsley
Verville
Duimaine
Elliott
Fafard
Goulet
Mercier (Laurier-Ouitremont)
Fiset, Sir Eugene
Rutherford
Veniot
Jacobs
Donnelly
MacLean
McIntosh
Girouard
Thauvette
Fontaine
Gray
Urquhart
Mackenzie (Vancouver)
Rennie
Dupuis
Power
Chevrier
Moore (Ontario)
Dufouie
Stewart (Edmonton)
Marcil
Bouchard
Boucher
Ralston
Roberge
Lacroix
Taylor
Sanderson
Casgrain
Pouliot
Malcolm
McKinnon
Hall
St-Pere
Gershaw
MacMillan (Mackenzie) Fraser Michaud V alliance
(Mackenzie):	I was
Mr. M a c MILL A N paired with the hon. member for North Huron (Mr. Spotton). Had I voted, I would have voted against the motion.


William Pate Mulock: I was paired with the hon. member for Toronto-High Park (Mr. Anderson). Had 1 voted, I would have voted against the motion.


Mr. MACKENZIE (Vancouver):: I was
paired with the hon. member for Saskatoon (Mr. MacMillan). Had I voted, I would have voted against this iniquitous experiment.


Mr. McINTOSH:: I was paired with the hon. member for Winnipeg South Centre
(Mr. Kennedy). Had I voted, I would have voted against this experiment of fear on the part of our friends opposite.


Humphrey Mitchell: I was paired with the hon. member for Parry Sound (Mr. Arthurs). Had I voted, I would have voted for the first reading of the bill.


Charles Marcil: I was paired with the hon. member for Argenteuil (Sir George Periey). Had I voted, I would have voted against the motion.
Mr. ST.-PERE: I was paired with the hon. member for South Hastings (Mr. Tum-mon). Had I voted, I would have voted against the motion.


Mr. SPENCE:: I was paired with the hon. member for Northumberland (Mr. Fraser). Had I voted, I would have supported the motion.


George Reginald Geary: 'I was paired with the hon. member for Laurier-Outremont (Mr. Mercier). Had I voted, I would have voted for the motion.


Mr. RAYMOND (Translation):: I was
paired with the hon. member for St. Antoine (Mr. Bell). Had I voted, I would have voted against the first reading of this bill.


Julien-Édouard-Alfred Dubuc: I was paired with the hon. member for Chateauguay-Hunt-ingdon (Mr. Moore). Had I voted, I would have voted against the first reading of this bill.


Eugène Fiset: I was paired with the hon. minister of Labour (Mr. Gordon). Had I voted, I would have voted against the first reading of this bill.
Mr.	BERTRAND	(Translation):	I	was
paired with the hon. member for Toronto North East (Mr. Baker). Had I voted, I would 'have voted against the first reading of this bill.
Mr.	FONTAINE	(Translation):	I	was
paired with the hon. member for Jacques-Cartier (Mr. Laurin). Had I voted, I would have voted against the first reading of this bill.


Cyrille Dumaine: I was paired with the hon. member for Lake St. John (Mr. Duguay). Had I voted, I would have voted against the first reading of this bill.
Mr.	BOUCHARD	(Translation):	I	was
paired with the hon. member for Welland (Mr. Pettit). Had I voted, I would have voted against the first reading of this bill.
B.C. Relief Camps


Wilfrid Girouard: I was paired with the hon. member for Richmond-Wolfe (Mr. Lafleche). Had I voted, I would have voted against t'he first reading of this bill.


Joseph Thauvette: I was paired with the hon. member for Matane (Mr. Larue). Had I voted, I would have voted against the first reading of this bill.
MONTREAL HARBOUR On the orders of the day:


Hon. FERNAND RINFRET (St. James):: May I ask the Minister of Marine whether he has received representations from public bodies in Montreal concerning the low depth of water in the harbour of Montreal and, if so, what action his department contemplates.


Hon. ALFRED DURANLEAU (Minister of Marine):: This morning I had a telephone call from Montreal-I think it was from the chamber of commerce-asking whether a delegation would be received some day next week by the Minister of Marine with respect to this very question, and I answered that I should be pleased to receive them at any time.
THE BORSTAL SYSTEM On the orders of the day:


Ernest Lapointe: Prior to the five week adjournment of this house, the Minister of Justice announced that the superintendent of penitentiaries would proceed to Great Britain in order to secure information regarding the working of the Borstal system, with the idea of establishing it in this country. As this was part of the famous social reform program, the house would be interested to know before prorogation what has been done in this matter.


Hugh Guthrie: I hope to have the report of the
superintendent some day next week. It will not be necessary for the house to take action in the matter if it is decided to instal the system, but I hope to be in a position some day next week to make an announcement in regard to the matter.



B.C. RELIEF CAMP STRIKERS MOVEMENT OF SOLDIERS INTO CALGARY TO PROTECT GOVERNMENT PROPERTY

[Stage Direction]
On the orders of the day:
Mr. E. J. GARLAND (Bow River):: Yesterday I asked a question of the govern-
ment regarding the movement of soldiers from the Sarcee camp into Calgary. I wonder whether the Minister of National Defence has a reply to that now?


Hon. GROTE STIRLING (Minister of National Defence):: My attention was drawn to the question the hon. member had asked in my absence, and I find that because of information from the government of Alberta, one-hal-f of the squadron of Lord Strathcona's Horse which had been at Sarcee camp carrying out a musketry course, was by order of the district officer commanding, brought back to its quarters in Calgary and held in readiness with the rest of the squadron to protect government property should that be required; otherwise, the only movements of militia which have taken place and are in process are those to and from central camps for training purposes. Those are proceeding strictly in accordance with schedules arranged some time ago.


Edward Joseph Garland: Was this
movement of troops for the protection of property requested by the provincial government of Alberta?


Grote Stirling: I take it that it was
based upon information which had been given by the provincial government to the district officer commanding.


Edward Joseph Garland: I understand that information was given to the district officer commanding, but was the request for the movement of the troops made by the provincial government?


Grote Stirling: That I am not able to
answer.


Edward Joseph Garland: May	I
have an answer to-morrow?


Grote Stirling: Not to-morrow.


Edward Joseph Garland: Monday.



CANADIAN GRAIN BOARD


[Stage Direction]
The house resumed from Thursday, June 13, consideration of the motion of Right Hon. R. B. Bennett (Prime Minister) for the second reading of Bill No. 98, to provide for the constitution and powers of the Canadian grain board.

Grain Board-Mr. Bennett
Right Hon. R. B. BENNETT (Prime Minister):: Mr. Speaker, I desire to congratulate the right hon. gentleman opposite upon the discipline of his troops, and I think perhaps this is one of the few occasions which I can recall that a speech has changed the policy of the opposition. If I adopt the policy of the hon. member for Shelburne-Yarmouth (Mr. Ralston), and add sufficient "ifs", I will say: If I am properly informed, the party opposite concluded to fight this legislation, to oppose it, but after they became aware of the circumstances as disclosed by the observations that were made, they hastily convened another caucus, and those who are familiar with Mr. Facing-bobh-ways in the Pilgrim's Progress will have no difficulty in understanding the result.


William Lyon Mackenzie King: May I say to my right hon. friend that he is entirely wrong; he is making statements which are wholly unfounded.


Richard Bedford Bennett: I am doing exactly what was done by the hon. member for Shelburne-Yarmouth in saying "if I am correctly informed."


William Lyon Mackenzie King: My right hon. friend is not.


Richard Bedford Bennett: I am glad to know in
this instance I am not. The speeches that proceeded upon this measure were based upon a clear statement of an intention to support the legislation: "I will vote for this legislation"; "I am opposed to this legislation, but I think there are more votes in it for me if I vote for it than if I vote against it, so I will hearken to the views of my constituents and say that I am in support of it." That is the position that has been taken in this house. Again, it is very interesting to observe the discipline with which hon. gentlemen who are not well informed accept the brief that is tendered to them and then make a speech in the House of Commons. The leading member who spoke for the opposition is a distinguished lawyer; he did not desire to make that speech; he has made his statements and they are well known, but he was told to speak, so he took the brief and made the statement. From whom did he get his facts that he referred to with their "ifs"? Who supplied them to him? Who gave him his brief and what does it represent on the back of it? That is the question.


Mr. YOUNG:: Why does the right hon.
gentleman not give us the facts?


Richard Bedford Bennett: I have already done so.
That is the question to ask-


William Lyon Mackenzie King: I must say
that the right hon. gentleman is saying either too much or too little. He has reflected upon an hon. member in his absence.


Richard Bedford Bennett: I have no right to be
interrupted.


William Lyon Mackenzie King: I will not sit here and see a colleague misrepresented by anybody and especially by the Prime Minister. I wish to say that the hon. member of whom he has spoken is an honourable member and not open to the kind of reflections that have been made.


Richard Bedford Bennett: I have no right to be
interrupted by the anger of the leader of the opposition.


William Lyon Mackenzie King: There is no
anger, but the right hon. gentleman talked about treating this matter in a non-partisan way.


Richard Bedford Bennett: I think I have the floor.
I was observing that the hon. member for Shelburne-Yarmouth was very careful in the statements he made to say: "If they are correct;" "If I am correctly informed." 1 say that no solicitor in a police court would make a statement like that to a justice; no counsel with his brief would make a statement of that kind, because he either knows or he does not know, and what right has he to cast reflections upon honourable citizens of this country and wreck their reputations so far as he can by innuendos based upon "if I am correctly informed;" "if the facts are as I am told"? He dare not place his name and reputation behind them, but he hedged with the qualifications "if," "if," "if," and that is the basis upon which this bill has been met. Read Hansard; read the statements that were made as to the operations of Mr. McFarland, - and in every case the hon. member indicated that he had with respect to those operations a knowledge which came to him from some source, and which certainly I do not possess. Then in order to save himself with his brief, he says: "If I am correctly informed." Is that parliamentary discussion? Is that the amenities of debate, when you attack and1 then say "if I am," more especially when the circumstances in this case are that the man against whom the statements have been made is lying on his back and cannot leave his bed?


Mr. VALLANCE:: Poppycock!
Grain Board-Mr. Bennett

Mr. BENNETT. The hon. gentleman knows those are the facts. Let us go a step further in respect to this.


John Vallance: The right hon. gentleman has gone far enough.


Richard Bedford Bennett: Let us go a step further in reply to the observations that were made. It was said that there was no record of what had transpired during the years from 1930 to 1935. I hold in my hand the Journals of the House of Commons, No. 72, of 1934 and I commence with t'he select standing committee on banking and commerce. Turning first to the index, I find all the orders in council affecting the operations of this selling agency are printed in full and were before the banking and commerce committee and brought out in testimony. Second, as I shall presently indicate, Mr. McFarland was before that committee, and what is more, before he commenced his statement at all, a motion was presented at the opening of that committee's meetings by Mr. Power, seconded by Mr. Vallance, that certain information should be made available to the committee, the house and the country. Among these matters hon. gentlemen will find this resolution:	At Page 17 Mr. Power,
seconded by Mr. Vallance, moved the following-I leave out the others, take this one, No. 4:
Relations of the chartered banks to the wheat pools, and the extent to which the guarantees by the dominion government to the banks, of the said pools' grain market account was utilized for the purpose of speculating in wheat on the Winnipeg or Chicago grain pits.
That was the language with which the resolution was clothed. Winnipeg or Chicago grain pits, and speculation.
When the committee met, the Minister of Finance (Mr. Rhodes), speaking for the government on the 13th of March, stated to the committee that so far as the government were concerned they had no objection to the motion passing. The motion in fact did pass, and what is more the order of conduct of that committee was arranged and settled by the committee itself, and Mr. McFarland was called as a witness for the purpose of giving the evidence required. In addition to that Mr. Roberts was called and produced the orders in council which as a matter of fact had been available long before that. So that upon the records there is at the moment a complete statement of the investigation carried on by a committee of the House of Commons last year in which questions were asked by the hon. member for Swift Current (Mr. Bothwell) who examined the witness,

by the hon. member for Willow Bunch (Mr. Donnelly) who spoke last evening, by the hon. member for Antigonish-Guysborough (Mr. Duff) who spoke the other day-not in respect to this matter-a long tedious examination going into all the details of these transactions. And when the question came up as to the number of bushels of grain that were then being carried a number of members raised the question, and the Minister of Finance said he had no objection so far as the government was concerned to this information being given if it was considered to be in the public interest, and the committee by a vote of thirty-three to nine concluded that it was not desirable that the evidence should be given. The committee voted, with eastern Canada Liberals forming the minority, not to have Mr. McFarland give that information. This is from the morning Citizen of March 23, 1934. The following Liberals voted to disclose the figures:
Hurtubise, Nipissing; Raymond, Beauharnois; Lapointe, Quebec East; Power, Quebec South; Mackenzie, Vancouver Centre; Ralston, Shelburne-Yarmouth; Howard, Sherbrooke; Donnelly, Willow Bunch; Duff, Antigonish-Guysborough. Conservatives, Progressives and the remaining Liberals on the committee opposed the publication.
The committee was composed of fifty members, nineteen of whom were Liberals, Messrs. Bothwell, Casgrain, Donnelly, Duff, Euler, Fraser, Howard, Hurtubise, Jacobs, Lapointe, Mackenzie, McPhee, Mercier, Michaud, Power, Ralston, Raymond, Sanderson, Vallance.
So that so far as this government is concerned it did not in any sense interpose to prevent the fullest information being given. What is more, Mr. Rhodes, the Minister of Finance on the opening of the committee's session of March 22 said this:
Mr. Chairman, apropos of the discussion this morning as to the method of our procedure, it will be recalled, in connection with the motion of Mr. Power, that, on the 13th of March, I made a statement to the committee on behalf of the government, which reads as follows:-
Speaking for the government I wish to say that it is our desire that there should be no suggestion of narrowing the inquiry. With respect to those topics which are within the purview of governmental activity, the government especially welcomes the most thorough investigation.
That was a restatement of the circumstances under which Mr. McFarland assumed the obligations and responsibilities he did, and the manner in which he discharged them. It has been suggested in this house that instead of endeavouring to deal with the matter as he should he was speculating.

Grain Board-Mr. Bennett
There is his answer, and I am bound to say that among those who know him Mr. John McFarland's reputation stands as high as that of any hon. member of this house. That is that.
Now let us proceed to the next point, which I regard as being of some importance; that is the meaning that has been attached to the words "option" and "futures." Mr. McFarland, realizing how great was the lack of appreciation of the technical use of those words, at page 212 said:
The use of the wprd "options" has caused much misunderstanding. Cash wheat purchased by elevator companies is, of necessity, sold for future delivery because it cannot be delivered until it has been transferred to the place where delivery of it can be made to the purchaser. The result is that forward sales, which are called "options" or "futures are constantly made. Every bushel of wheat that has been purchased by the Canadian Cooperative Wheat Producers Limited can be taken delivery of at the dates fixed for delivery, upon payment of the purchase price.
That was a restatement of what had been said by the Minister of Finance on March 13. So that so far as this house is concerned, through its appropriate committee in the year 1934 there was a full investigation of these matters as I shall presently indicate, the questions asked and the answer5, given, and when hon. members stand up in this house and talk about secrecy and lack of information and failure of the government to provide them with facilities for securing that information, I say that Mr. Rhodes, the Minister of Finance, speaking to that committee fully indicated the policy and purpose of the government that there should be no limitation place* upon any information that might be sought except so far as the committee itself might determine the advisability or otherwise of it being given
That is the position up to that point. Mr. McFarland was called as a witness. He gave evidence commencing at page 211 of that report. After reviewing the circumstances under which he came into office he proceeded in this manner:
I will now read you my reply to the notice of the proceedings of this committee:
"I notice that the proceedings of this committee, before which I have been asked to appear, refer to speculation in Winnipeg and Chicago wheat. I wish to state most emphatically that we have not speculated in a single bushel of wheat in the operations which I have directed for the Canadian Cooperative Wheat Producers Limited since November, 1930. Moreover, we have neither bought nor sold a single bushel of wheat or any other grain in Chicago. All our dealings have been in Winnipeg only. 'Speculation' as I understand it. means buying and selling stocks or
goods in the hope of profiting by changes in the market value. Our operations were governed by no such considerations. Our only object since undertaking the operations which I have directed has been to assist the farmer in marketing his wheat, that is, transferring it from his farm to the ultimate consumer. Under normal economic conditions, when there %vas a fair equilibrium between supply and demand, the operations of the market so adjusted themselves that there had never been any difficulty in maintaining a reasonable price to the farmer in the transfer of his product to the consumer. Conditions in the past few years in the Canadian market have been such that the normal play of forces has disappeared, and some machinery had to be provided to take their place unless the wheat was to remain on the farms of the country. A wheat board was the usual suggested alternative. The method that has been pursued since November, 1930, has been an application of the principle of a wheat board although Canada has not been directly interested in the transactions which have been made through the Canadian Cooperative Wheat Producers Limited, of which I was appointed by the directors, the manager, and which position I still retain. By the adoption of the method which we have followed, it was hoped to prevent the dislocation of the machinery of distribution built up over the la9t forty years."
That was the statement made at that moment, and which on cross examination by eminent counsel and by laymen as well was not challenged. Therefore when it is said that no opportunity has been afforded to enable this house to have a clear appreciation of the magnitude of the problems with which we have to deal I at once turn to what took place before that committee and ask this house whether in the light of those statements it can be said that opportunity has been denied. There are the facts. The committee went through the problems in connection with wheat from one end to the other. They dealt with the question whether or not he bought wheat that had been sold, the price at which it had been sold, the effort to operate on the market to prevent it falling below fifty cents, then falling to thirty-eight and a half, a statement of the world carryover, a statement of the world production, all those statements were made and the fullest possible information given to the committee. Oan it be said therefore that it was fair, that it was right, or even decent for hon. members to stand in their places and say, " If I am informed correctly" so and so is the case? Can a man base an argument upon such a contingency? Would he be listened to in any court of justice if he did? Would any court or parliament that had regard to the rules permit any member to make allegations such as were made the other day with respect to the operation of this pool, and then qualify and surround them with such ex-
Grain Board-Mr. Bennett

pressions as "If I am correctly informed," "If my knowledge is correct"? Never willing to assume responsibility for a definite statement, but always willing to predicate it on "if," and "if," and "if." That, sir, is my position.
I rely upon the statements contained in this journal of the house, to which the people of this country have had access through newspaper reports of what took place, in order to realize and ascertain just what is behind the attack that is being made here against Mr. McFarland, and just what it means. I ask this house to remember that they were not denied information, that they were not denied access to the orders in council, all of which are printed here right down to the end of the year 1033, and covering the operations of 1934, all the details of which were called for. It is true that with respect to the number of bushels the information was not furnished, but the hon. member for South Battleford (Mr. Vallance) said it was well known that there were 200.000,000 bushels, that it was common property, as has been said in this house by other hon. members. The hon. member himself stated it in the committee last year, yet they have the hardihood to stand up and say-


John Vallance: I know the Prime Minister wants to be fair. Would he give the remainder of the statement I made at that time? That is only half of it.


Richard Bedford Bennett: I will finish it. The hon. gentleman desired that the witness should give a statement on it, and what happened was that by a vote, which I have just mentioned, that statement was not given though Mr. McFarland said he was ready to give it.


John Vallance: Would the Prime Minister permit me to state what I really did say?


Richard Bedford Bennett: No. I have the record here and if necessary I will read it.


Ian Alistair Mackenzie: What page?


Richard Bedford Bennett: I will come to that presently, as I go along. That is the position. Yesterday the hon. gentleman had the fullest opportunity to make a statement, and I am going to show how inaccurate were the statements he made at that time, whether or not intentionally I cannot say, because in the one instance it is quite clear that he knew what he was talking about, and in the next instance he left out the information that would indicate that he did know. Now let us proceed further with respect to what was

said by the hon. member for Shelburne-Yar-mouth in dealing with this problem. I am not going to deal with the remarks of the hon. member at any great length, but for the moment I would like to deal with one problem which was dealt with by the hon. gentleman. At page 3595, column 2, he said:
Let me give the house the Canadian exports for the first ten months of this crop year as they appear in the Montreal Star of last night. For the ten months, ending I presume with April, 1935

That would be only nine months.
-the exports from Canada were 113,802,184 bushels. For the corresponding ten months of 1934 they were 140,709*966, or a decrease this year of some 27,000,000 bushels.
The hon. member complained that I did not give those figures, which made it necessary for him to give them. As a matter of fact I gave the correct figures, which will be found in Hansard at page 3564, in the second column, showing that at the end of May the exports were 146,387,083 bushels. The amount exported for the corresponding period a year ago was 159,553,797 bushels, an excess over this year of only slightly more than
13.000.	000 bushels. Again at page 3594 of Thursday's Hansard the hon. member for S'helburne-Yarmouth referred to the carryover to-day as between 220,000,000 and
225.000.	000 bushels. There can be no such use of the word carryover until the end of the crop year. There is no carryover until then, and I was at great pains the other day to explain the factors that make up a carryover, because I realized that many members were not familiar with them. Apparently, however, the brief was silent in that particular; the friends of t'Hfe grain exchange had not given adequate explanation as to what constitutes the carryover. So instead of it being a carryover, properly used, the word should have been our surplus. The surplus of wheat, that is the quantity on hand at the present moment, is nearly 225,000,000 bushels. I said it was somewhere between 220,000,000 and 225,000,000 bushels, because sales are taking place every day and I did not know what might have been sold during the twenty-four hours prior to my speaking. So I said the surplus was between 220,000,000 and 225,000,000 bushels. For the sake of argument I will take the larger figure, 225,000,000 bushels, and in order that there may be no misunderstanding on that point I desire to point out further what was said by the hon. member for Macdonald (Mr. Weir) later yesterday, as well as what was said by the hon. member for Shelburne-Yarmouth who, when referring to our carryover, spoke of it as between
220.000.	000 and 225,000,000 bushels.

Grain Board-Mr. Bennett
The hon. member for Macdonald, who had had considerable experience in conection with these matters concerning wheat and grain, and some knowledge of them, because of his desire to support the orderly, cooperative marketing of wheat on the one hand and at the same time to retain the goodwill of what is called the trade on the other hand, as indicated by his looking two ways yesterday, said, "I estimate that the carryover this year will be from 170,000,000 to 185,000,000 bushels." When this government came into power there was a carryover of 127,000,000 bushels, so that in five years, with the third largest crop in the history of the country, with the bonusing that has been going on in all the countries of the world in the manner I have indicated and with the depreciated currencies in the buying countries to which reference was made yesterday, all this violent attack takes place, if the estimate of the hon. member for Macdonald is correct, with respect to the difference between 127,000,000 bushels and 170.000,000 or
185.000.	000 bushels. If the figure be 170,000,000 bushels the increase will be 43,000,000 bushels; if it be 185,000,000 bushels of course the increase will be 57,000,000 bushels.
There are the facts. I merely take the figures used by the hon. member for Macdonald, speaking with knowledge of the operation of these matters in Manitoba, and those were the figures he gave last night. There is his statement, which you will find at page 3631 of Hansard, in which he estimated the carryover at 170,000,000 to 185,000,000 bushels. In that regard I think it very desirable that I should immediately point out to the house that the carryover of 225,000,000 bushels-* which is not the carryover as the word was used by the hon. member for Shelburne-Yar-mouth, but I am using that word in order that there may be no misunderstanding-that quantity, that surplus at this moment of
225.000.	000 bushels of wheat, is 25,000,000 bushels more than the estimated visible supply of wheat in Canada. I wonder if the true significance of that fact has dawned on the members of this house. The hon. member for Rosetown (Mr. Loucks) had it in his mind last evening when he was speaking. This is what it means: If the farmers and millers have 10,000,000 bushels that means that the visible supply must be reduced by that amount, leaving 190,000,000 bushels of wheat, and there are 225,000,000 bushels held by Mr. McFarland in the form of cash wheat and futures. In other words somebody is
35.000.	000 bushels short on the Winnipeg market. That is what it means.
WThat happened last fall? I am going to recite my own experience. At three o'clock in the morning I was gotten out of bed in my
hotel in London because on the day previous there had been thrown upon the market at Winnipeg, from what source no man knows because it came into the wire houses, millions of bushels of wheat, just before the exchange closed. Someone sold one, two, three, four five million bushels of wheat short; somebody who had no wheat was offering wheat for sale, That is what was happening. What were we to do? The limit mentioned by Mr. McFarland, in his evidence before the committee, as to the amount of bushels for which he might become responsible under his credits, had been exhausted. My colleagues desired my view. I picked up the Daily Herald of London that day and read what I expected to see from the moment I received that cable, namely, that a raid had been contemplated by international dealers in this commodity, and for what purpose? Do I have to indicate the purpose when I indicate to you the present shortage? Before my message which was dispatched and which reached Ottawa at nine o'clock in cipher could be deciphered and telephoned through and the banks communicated with, there was thrown upon the market an additional quantity of wheat amounting to millions of 'bushels and the price fell six cents. Let us take the facts, Mr. Speaker. Let us realize clearly the gravity of the problem with which we are dealing. I said then what I sa.y now, that I do not propose so long as I can help it that the Dominion of Canada wheat producers shall become the play and sport of international speculators.
Let me proceed a step further. What wrecked the Bank of England; what drove the Bank of England off the gold standard?
Mr. MACKENZIE (Vancouver); It did not wreck the Bank of England.


Richard Bedford Bennett: It wrecked it so far as its ability to provide gold for its obligations was concerned because they had to pass a new statute to deal with the situation.


Ian Alistair Mackenzie: That is not wrecking it.


Richard Bedford Bennett: It is, unfortunately. What happened? A gang of internationalists were operating. What happened the other day in France to their franc? Why did they have to deal with that situation? What did they try to do in this country with respect to our wheat? Now who holds that short interest? It is no wonder that the hon. member for Macdonald said that the carryover would be the figure he mentioned. I had not thought that it was perhaps wise to make a statement of this kind the other day but I am compelled
Grain Board-Mr. Bennett

to make it in view of tihe misrepresentations and misstatements that 'have been made in this house.
There you have your visible supply, known to all people, published to the world, 200 million bushels. There you have this wheat organization holding in cash wheat and futures as Mr. McFarland has indicated, 225 million bushels, and entitled to receive wheat for payment; the farmers, millers and other interests are estimated to have 10 million bushels or thereabouts. That would mean a shortage of 35 million bushels, or if you disregard the 10 million bushels, a shortage of 25 million bushels. Is it any wonder that they are looking with joy to see if we are going to dump Canadian wheat on the market? Is it any wonder that they are getting joy from that editorial in the Free Press in which it says:
Any sensible business would say that the right course now is to remove the controls and see what can be done, in the way of speeding up trade and getting back lost markets by free selling.
Is it any wonder that this journal of the Siftons says that?


Mr. BOTH  WELL@: May I ask a question?


Some hon. MEMBERS:: Sit down.


Richard Bedford Bennett: Sit down. If, when I have concluded, the hon. gentleman desires to ask a question I shall endeavour to answer it, but I am dealing now with an argument. There is the statement made by the Free Press on the day this bill was introduced when they thought the Liberal party was going to oppose the legislation. That is the position known to everybody, known to people on the streets of Ottawa. This is the contingency the hon. member for Shelburne-Yarmouth was no doubt alluding to.
I ask this house whether or not they are prepared to dump Canadian wheat on the market to satisfy the greed of the exploiter and the international speculator. That is the problem; that is the explanation. Who is trying to drive down the price of wheat below 80 cents? Who sold short upon the exchange last fall? Who endeavoured to sell vast millions of bushels they did not own? Who were they? All we can ascertain is that over the wires there came the orders to Winnipeg brokers to sell. Have you ever seen a wheat pit operate? Do you know what it means to have, in the closing minutes, sellers rush in to the exchange and offer wheat at any price-five cents below the market, seven cents, ten cents. Then the market closes. It opens in the morning, and to make the debacle complete, more selling orders pour in and the price goes down still further.


Edward James Young: Why was not that matter
investigated when Mr. McFarland asked for it?


Richard Bedford Bennett: Your friends the grain
exchange can give the explanation. That is the reason.


Edward James Young: It is up to the government to explain it.


Richard Bedford Bennett: Sir, I put this to the
house. As Canadians I ask you whether you are prepared to hand over to the speculators from abroad, the internationalists, the wheat business of Canada. That is the question. Now, if the hon. member for Swift Current (Mr. Bothwell) desires to ask his question-


Mr. BOTHWELL:: I understood from the right hon. gentleman's speech the other day that Mr. McFarland was in the market for the purpose of buying hedges because there were no speculators in the market. If he was only buying hedges, how was it possible to buy 35 million bushels of wheat that was not there?


Richard Bedford Bennett: My hon. friend was one of those who examined Mr. McFarland last year, and one of the very questions he asked Mr. McFarland was why he was buying wheat, and Mr. McFarland said he was buying wheat to protect the market. If speculators threw it on the market, he either had to buy it or see the market destroyed and chaos result. That is the very point. Somebody went on that exchange and sold 35 million bushels of wheat they did not own, and Mr. McFarland to protect the honest Canadian producer from ruin bought their wheat, and now they are trying to destroy the market and have a fire sale so that they can buy the wheat back and escape a loss. I want to make clear to this house and to this country what I had not intended originally to state with respect to this situation but which I regard it now as my duty to do in view of what has been said, in order that there may be no misunderstanding with respect to it.
Let us proceed a step further, and see what was said by the hon. member for South Battle-ford. He, with a great show of fairness, said that he was going to read figures that he obtained from the bureau of statistics. That is true. They are set out at page 3607 of Hansard, but Mr. Speaker, I cannot think that the hon. gentleman is so lacking in knowledge of the wheat business as to talk about the sale of 229 million bushels of wheat to Great Britain in the year 1929, for Great Britain's entire importation in any one year from all quarters does not exceed 200 million bushels.

Grain Board-Mr. Bennett


John Vallance: You want to be fair;
did you read the letter?


Richard Bedford Bennett: I know the letter. The
figures are set out at page 3607 of Hansard. They are the figures for the fiscal years ending M-arch 31 of each year. They are the customs figures from this country, showing the clearances of wheat to the United Kingdom. Keep that in mind. They are the clearances from Canada to the United Kingdom of wheat. They include all the wheat that is re-shipped from Great Britain to the different countries of Europe.


John Vallance: That is an entirely different argument.


Richard Bedford Bennett: And one of these years,
1929, gives 229 million bushels, while the next year, according to the hon. member's figures, gives 113 million bushels, and upon that he built an argument. Now, Mr. Speaker, why cannot we, even though partisans, be fairly frank with one another? The fiscal year ended on March 31, 1929, and for that year there cleared from Canada to British ports 229 million bushels of wheat-cleared for British ports. For the year ending March 31, 1930, there cleared 113 million bushels, a falling off of 116 million bushels, and the hon. gentleman says that the falling off indicates what had happened under this government.


John Vallance: Oh no, read it all.


Richard Bedford Bennett: Hold on, just wait till I
read it. The hon. gentleman said:
In spite of all that has been said about the British market having been lost before the present government came into power, in
1929	we exported 229 million bushels of wheat. Through the policies inaugurated by the late government we increased our exports of wheat to Great Britain from 29 million bushels in 1921 to 229 million bushels in 1929, an increase of 200 million bushels. It must be remembered that these are not my figures; they come from the bureau of statistics. Let us see what happened from 1929 on. The elections were in July, 1930, and in that year our exports dropped to 113 million bushels.
That was for the year ended March 31,
1930	which was several months before the government came into power, and the hon. gentleman desires to make it appear otherwise.


John Vallance: Follow what I said. I said that the elections were in July. Do not pick pieces out of what I said, read it all.


Richard Bedford Bennett: The hon. gentleman perhaps will recall the words of scripture: Paul, thou art beside thyself; much learning doth make thee mad.


John Vallance: I could apply a few quotations to my right hon. friend which are not in scripture but the rules will not permit me.


Richard Bedford Bennett: The hon. gentleman said that the elections were in July, 1930, and in that year our exports dropped to 113 million bushels. Now, as a matter of fact, it was for the year ended March 31, 1930.


John Vallance: I said that.


Richard Bedford Bennett: The hon. member did not say so. At least he blamed on this government the falling off in exports and now when he is confronted with his own statement-


John Vallance: They are not my figures.


Richard Bedford Bennett: I had thought he would have offered an apology for misleading us.


John Vallance: I need not apologize for anything I said.


Richard Bedford Bennett: The hon. gentleman
apologizes. Let me proceed a step further. I took the trouble to secure the British figures because since the preference was granted the British have made very accurate reports to their statistical department. These figures which are supplied by the Board of Trade are checked very carefully.


Ian Alistair Mackenzie: Our
figures are equally good.


John Vallance: At least they should
be.


Richard Bedford Bennett: Our figures cover the exports prior to 1932.


Ian Alistair Mackenzie: Going to the British market for export.


Richard Bedford Bennett: These Board of Trade figures are as follows:
ImDorts of Wheat into the United Kingdom from Canada, Argentina and Australia and all countries by crop years, 1930-31 to 1933-34 with the 9-month figures Alienist tn Anril 1934-35
1930-	31.
1931-	32.
1932-	33.
1933-	34.
1934-	35*
Canada
52.957.000
58.930.000 102,882,268
68,691,205
48,103,612
Argentina	Australia
(bushels)
30.594.000
47.060.000 33,178,430 53,803,683 47,474,791
33.199.000
50.590.000 50.433,050 41,838,369 28,165,900
Totals
207.621.000
227.615.000 204,375,807 200,105,532 136,844,667
*Nine month period.
Grain Board-Mr. Bennett

As I pointed out the other day and as I desire again to direct to the attention of this house, Canada up to the end of May had provided the world with 32 per cent of all the breadstuff's bought by the world. For the reasons which I trust I gave with some clarity, this figure is constantly increasing. The hon. member for Shelburne-Yarmouth said that percentage is not the correct way in which to measure but I think that percentages of the quantities of grain imported into a country from several countries is the proper way to gauge. One hundred per cent is the total percentage shipped by Canada, Argentine and Australia and the number of bushels sold has no relation to the ultimate in determining the question of the amount supplied by each. As I said, the figures I have given were supplied by the British Board of Trade.
There is another question to which I think some little attention possibly might be given; that is, the circumstance of this legislation being introduced into the house. Before the house adjourned at Easter there was placed on the order paper a notice in my name that a motion would be made to establish a wheat board. It has been said that I did not treat this matter as being of any more importance than other matters. Mr. McFarland stated clearly before the committee last year that a wheat board was the usual alternative but he would endeavour to maintain the existing machinery and have the benefits of a wheat board without establishing such a board. In view of that statement I thought that there would be no difficulty on the part of the house in understanding just what was the situation. I think the hon. member for Melville (Mr. Motherwell) has misunderstood the purport of my observations. I said that at the present moment it was no longer posisble to contemplate relying upon Mr. McFarland1 to carry on his present operations. I did not know that Mr. McFarland was going to be ill when I placed the resolution on the order paper.
I do not think even my warmest supporters on the other side would credit me with having that information.
May I proceed a step further? Has anyone suggested that the standing committee on agriculture should discuss this matter this year? Mr. McFarland has been here several times and has any hon. member asked that the committee convene? Has any one desired that there should be an investigation before the committee on banking and commerce or the committee on agriculture? I have been away and it may have been that some of 
the members of that committee asked that it should be convened but I have not been so informed. I have asked my colleagues and they tell me that to the best of their knowledge no such request has been made. We have a medium of communication between the people and their members through a parliamentary committee which has the right to examine witnesses; all this machinery has been there if it was desired to be used but no one has asked to use it. Is it fair to say that the government has endeavoured to prevent information being given?


William Lyon Mackenzie King: With reference to what my right hon. friend has just said may I say that from the time the notice with respect to this bill was on the order paper in his name, the opposition refrained from saying anything with regard to it during the time he was ill. That was the attitude of the opposition. We felt it was a measure with which my right hon. friend would wish to deal himself. Although we would have liked to have had information earlier we waited until the right hon. gentleman was in position to deal with the matter himself.


Richard Bedford Bennett: Since I came back to
the house no question has been asked as to when we were going to proceed with it. No one has suggested that the committee should meet. As far as my being able to deal with it before the committee is concerned, my knowledge would be just second hand. The witnesses who would be called before the committee would not be those who sit in Ottawa and receive reports, they would be those who have first hand knowledge. Last year Mr. McFarland said that he had not brought his papers in detail but could send for them if they were desired. Let us look at it frankly and see whether ot not there has been any effort by any hon. member to secure any information with respect to this matter. Would it not be more fair to say that in view of a pending appeal to the people it has been thought desirable to endeavour to discredit Mr. John I. McFarland?


William Lyon Mackenzie King: I hope my right hon. friend will permit me to reply to that. He referred a little earlier to Mr. McFarland being on his back. May I say that the attitude of the opposition toward Mr. McFarland has been just as chivalrous as it has been towards himself. Since Mr. McFarland has been on his back we have been particularly careful to say nothing whatever which could reflect upon him in any way. May I

Grain Board-Mr. Bennett
say that when my right hon. friend was on his back, and when he was absent overseas, we were just as chivalrous with him as any opposition could possibly be with any leader of a government.


Richard Bedford Bennett: 1 thank hon. members for the consideration extended but I shall have something to say about the chivalry shown in my absence. There are one or two matters to which I have not referred and what applies to myself applies with equal force to Mr. McFarland. Since I came home Mr. McFarland was in the city but no one suggested that the committee should meet. He was ready and available. But let us proceed to the second point which has been made. There is the evidence, a whole volume of it. It does not all deal with this; but at great length, with all the astuteness and the skill with which eminent counsel could ask questions, those questions were asked and answered; and at the end Mr. McFarland thanked the committee and told them what he was endeavouring to do and why. And the committee seemed to be in a generous mood, so far as their attitude of mind was concerned. The matter rested there.
Now it is said that this bill in an emergency should be temporary in its character. Well, there are some arguments which, if adduced by eminent men, are always listened to with that care which the authority of the source would demand. But there is not a member of this house who does not know that all legislation is subject to the right of repeal at the next session of parliament; and when hon. gentlemen in this house talk about a temporary measure it seems to me they are rather insulting the intelligence of the house when they do not point out that any government may proceed at the next session or even at that session to repeal an act that has been passed either during the current session or the session before. The power of parliament is untrammeled. The power of parliament to deal with matters of this kind may involve vested interests and they may be disregarded. There is no limit to the power of parliament in that regard. What is meant by anyone who stands in his place and suggests that the measure should be temporary? And hon. gentlemen in the next breath say that they will occupy the treasury benches in a few months. Well then, it will be their privilege to repeal this legislation.


William Lyon Mackenzie King: Would the other house not have to assent also to action taken by this house before the measure could be repealed?


Richard Bedford Bennett: Of course, I take it that the right hon. gentleman will give me credit for knowing that parliament consists of the Senate, the House of Commons and the Governor General. But he cannot rely upon an assumption when he deals with a matter of that kind; he must face the fact that if, as he says, he proposes to occupy the treasury benches in a few short months it will be his privilege to repeal the legislation. That will be his privilege if he is thus situated; and when anyone suggests that the legislation should be temporary he is merely stating what is a commonplace to every student of the constitution, indeed every casual reader of it, namely, the right of parliament to repeal legislation which it has passed at a previous session.
Now I will deal with another matter. It has been said in this house that we should not have compulsory marketing of grain. I will not take the trouble to do more than state what Mr. McFarland mentioned last year, that by the operations that have been carried on by this organization the farmers of western Canada have profited to an extent variously estimated. The question was asked as to how much and he said that different figures had been mentioned, but he suggested that it was probably not less than $100,000,000, though some have said not less than $200,000,000. However, let us leave that for the moment. It is sufficient to bear in mind that I gave the average price received this year as 81 cents as against 64 the year before. I mention that because it has a direct bearing on what has been said. Now I put this to the house. With 225,000,000 bushels at the present time, with a carryover estimated by the hon. member for Macdonald at 170,000,000 bushels, and with a crop that promises at the moment to be some 400,000,000 bushels, as stated by one hon. gentleman yesterday, you must decide one of two things: Shall you have the orderly marketing of that grain, or shall you gratify the exploitation ambitions of certain gentlemen and have a fire sale, throwing it on the market? If you throw on the market the carryover you have, it at once affects your new crop. How are you going to fix the price of the new crop? Must it not be on the basis of making an initial payment, so that the value of the new crop may ultimately be determined by what can be secured for it? And must not all be treated alike, except with respect to sales that may be made domestically at the mills and matters of that sort? Does it not sound reasonable to say that cooperation in this instance means that all must unite together for the common good,
Grain Board-Mr. Bennett

bill. I am therefore quite willing that hon. gentlemen who accede to the second reading of this bill should do so without sacrifice of their rights. If they desire on the third reading to vote against this measure, I shall certainly be glad to afford them an opportunity to do so. I can only add that while the bill can go to a committee, I believe it is said, if once more I might emulate the example of the hon. member for Shelbume-Yarmouth, that the suggestion came from the ex-crown prince of Saskatchewan. But be that as it may, the suggestion is not unworthy of consideration, and when the bill has passed as a matter of form its second reading, I shall move that it go to a select committee of nine members.
I have trespassed somewhat longer than I should on the time of this house in reply, but I want to make clear to all the world the fact that notwithstanding all the discussion that has taken place here during the last few days, so far as this government is concerned, whether its life be long or short, it will not permit bargain sales of Canadian wheat to be made to gratify the ambitions and exploitation tendencies of speculators in any part of the world.


William Lyon Mackenzie King: With regard to one remark that the Prime Minister made at the close, I do not wish there to be any misunderstanding. I did not quite understand the significance of his reference to some suggestion made by the ex-crown prince, but may I say to him that when the resolution first appeared upon the order paper which was early in March last the position that the Liberal opposition took with respect to it or was going to ask the house to take-and that is three months ago-is the position we have asked it to take in the last few days, namely that of having the bill referred to a committee.
Motion agreed to and bill read the second time.


Richard Bedford Bennett: I move that the bill be referred to a select committee of nine members, composed as follows:
Messrs. Bennett, Alberta; Perley, Saskatchewan; Willis, Manitoba; Porteous, Ontario; Gobeil, Quebec;-
I think that makes five as far as we are concerned, and:
-Ralston; Stewart (Edmonton); Vallance and Lucas.


[Stage Direction]
Motion agreed to.

[Stage Direction]
Hon. C. H. CAHAN (Secretary of State) moved the second reading of Bill No. 85, to amend the Companies Act, 1934.
He said: The revision of the Companies Act was commenced about September, 1933, preparatory to the submission of the draft of a new act to the interprovincial conference, which assembled at Ottawa on January 17, 1934.
The printed draft of a new bill, as then prepared, was presented to the representatives of the provincial governments who attended that conference from January 17 to 19 inclusive, and, at the request of the attorneys-general of the provinces, the further consideration of this draft bill was postponed till March 1, 1934. During that period the provincial governments were to prepare and forward any suggested amendments to the bill as first prepared.
Between January 19, 1934, and April 26, 1934, when the new bill was introduced to this house, printed copies of the proposed bill were widely circulated throughout Canada to economists, accountants, lawyers, universities, companies and corporations; and, after due consideration of all relevant suggestions and their incorporation into the draft bill, a bill intituled An Act Respecting Dominion Companies was introduced to this house on April 26, 1934. This bill was enacted as The Companies Act, 1934 on June 28, 1934. Three months were then allowed to all companies to re-adjust their accounting systems to conform with the requirements of the new act, which came into force by proclamation on October 1, 1934.
In the meantime, on February 2, 1934, a select special committee of the House of Commons was appointed by resolution of the house to enquire into and report upon certain matters. By order of His Excellency the Governor General in council, dated July 7, 1934, the eleven members of said select special committee were appointed as a royal commission to continue, complete and report on the enquiry ordered by the House of Commons on February 2, 1934. It is clear, I think, that the resolution of the House of Commons of February 2, 1934, appointing the select special committee, did not authorize the committee to report upon the dominion companies acts, which were then under the consideration of the representatives of the provincial governments, who had participated in the interprovincial conference of January 17 to January 19 inclusive. It is also clear, I think, that neither the order in council, P.C. 1461 of July 7, 1934, appointing the royal commission,

Companies Act-Mr. Cahan
nor the terms of the royal commission which issued upon said order, conferred any specific authority to investigate, consider or report upon proposed amendments to the Companies Act, 1934.
So far as I, as Secretary of State having supervision of the administration of the dominion companies acts, was concerned, I had no knowledge or notice that an enquiry into the terms of those acts or into the administration of those acts was proceeding. So far as the evidence submitted with the report of that royal commission discloses, no general enquiry was made by the original committee of this house, nor by the royal commission, which succeeded to the work of the house committee. I was surprised, therefore, when the report was submitted to the Minister of Trade and Commerce and laid on the table of this house, to find incorporated therein a long list of proposed amendments to The Companies Act, 1934, of the Dominion of Canada.
I am very confident that if it had been known that the committee had undertaken such a work of revision even without express authority, many representatives of Canadian companies would have sought leave to appear before the commission for the purpose of making representations on their behalf, which would not be entirely consistent with the recommendations of the commission.
In order that these recommendations may be considered fully by this house, this bill has been prepared and is now moved for second reading. But I am authorized to state on behalf of the government that each and every member on this side of the house is free to approve or to oppose each and every section of this bill and to move any amendments thereto which may be deemed advisable or expedient. The bill is placed before the house and it is wide open for consideration by all members.
I propose, therefore, to consider in sequence the recommendations of the royal commission on price spreads as shown in the summary to the report of the commission and to direct attention to the corresponding provisions of this bill in order that the house may have before it a clear statement of each and every recommendation made and a statement. by reference to the bill, of the extent to which these recommendations have been embodied in the terms of the bill.
The first recommendation for an amendment to the Dominion 'Companies Act was the abolition of shares of no par value or, in the alternative, a requirement that the full consideration received for no par value shares be credited to the capital account. In con-92582-232
sidering the proposal to abolish no par value shares it was ascertained that measures to make that recommendation effective would compel the reorganization of the capital structures of a large number of dominion companies at present engaged1 in industrial and commercial pursuits. If the house or any member so desires I will lay on the table Of the house later the names of some hundreds of these companies that are actively operating from day to day and whose interests are vitally concerned with the summary abolition of no par value shares.
Mr. ILSLEY:: Do I understand that there are some hundreds of dominion companies that have distributable surpluses?
Mr. OABAiN: But please let me get down to the question of distributable surpluses. My hon. friend will have ample opportunity to discuss every phase of the matter. The alternative that is required is that the full consideration received fo.r no par value shares should be credited to capital account, and I shall deal with that in a moment.
Evils may arise, and evils do arise, in connection with all forms of corporate ventures. In my personal experience in the Department of the Secretary of State it would appear that no par value shares, under a strict system of accounting, such as was devised by expert accountants all over Canada and incorporated in the Companies Act, 1934, to which I fear careful attention has not been given either by the commission or the committee, are in fact as clean and as little deceptive as any class of shares issued to the public in this or any other country.
This bill, however, contains provisions in partial compliance with the alternative proposal. Subsection 7 of section 12 of the existing act will be repealed by section 4 of this bill, and hereafter no part of the consideration received by a company in respect of the issue of no par value shares may be so set aside, except it be provided in the original contract for subscription for such shares that a part thereof not exceeding twenty-five per cent may be set aside as distributable surplus. Then subsection 9 of section 12 of the existing act, which permitted directors at any time, with the sanction of a vote of two-thirds of the shareholders, to set aside as distributable surplus a part of the consideration received for the issue of no par value shares, is repealed by section 5 of this bill. Nevertheless it should be noticed that the repealed subsection only permitted such setting aside of such consideration as distributable surplus by the issue of supplementary letters patent, when the

Companies Act-Mr. Cahan

Secretary of State was satisfied as to the expediency and bona fide character of the proposal, and that the rights and interests of creditors were duly protected. I can assure hon. gentlemen that since I assumed the administration of the Companies Act no distributable surplus has been set aside under the section it is now proposed to repeal where the interest of any creditor was affected in the slightest degree, except when the consent in writing of that creditor was given to the setting aside; nor has such setting aside been allowed in respect of any fixed assets nor in any case in which there were not available cash or liquid assets for the purpose of being set aside. Iu that connection I am glad to note that of all the companies to which the report refers not a single exception or criticism is taken with respect to any company incorporated since August, 1930. I have not known, therefore, of any supplementary letters patent issued since August, 1930, giving rise to any injustice or any complaint. Nevertheless this bill, if enacted, will repeal subsection 9 of section 12 of the act, and it will be a matter for the consideration of the house whether, in view of the very severe and stringent restrictions which by the revision of 1934 have been placed upon the setting aside under subsection 9 of section 12 of the present act, the proposed repeal of subsection 9 should be carried into effect.
The second recommendation of the report is that all premiums from the sale of par stock should be placed in the capital or nondistributable account. The consideration, to the extent of 100 cents on the dollar, received from the issue of shares of capital stock having par value, is capital. I do not know, and I have examined the evidence to find out but I have been unable to ascertain, just what evil in fact the committee had in view in making that recommendation, because in my experience I have known of no evils resulting from the issue of such shares at a premium. In fact under the law as it prevails in Canada, and as it has been administered by companies under my personal advice and counsel, the premium on an issue of new shares represents money that is actually due to existing shareholders. It represents a premium upon a new participation in the assets of the company and therefore, in justice to existing shareholders and in accordance with English law, which I think our courts follow, if such shares are really valued at a premium they should first be offered to existing shareholders, to whom such premium belongs, inasmuch as in equity it represents an accretion in value of the

existing assets which are the property of the existing shareholders. No effect is given in this bill to this second recommendation.
The third recommendation is as follows:
3.	All increases in surplus or reserves which result from an increase in asset values (as a consequence of write-ups, appraisals, etc) should be regarded as capital surplus; that is, incapable of having dividends charged against them.
I should certainly advise a client of mine that such is the law at present as embodied in the Companies Act, 1934, and the English common law which applies to the administration of that act, but nevertheless in order to carry out this recommendation of the report this bill proposes to enact two amendments as follows:
Section 12 of this bill, to which I shall later refer in another connection; and section 17 of this bill, which amends section 112, subsection (2), clause (g), and subsection (3) clause (c), both of which relate to the preparation of the balance sheet of the company which is submitted to the shareholders.
The fourth recommendation is as follows:
4.	Companies should be incorporated only for activities Which they intend seriously to pursue at the time of incorporation. They should be prevented from engaging in activities not directly related to those for which they were incorporated, unless they have previously secured,-
(a)	approval of the shareholders, and
(b)	supplementary letters patent.
I think that that recommendation is carefully considered and carried into effect in respect to the administration of the present act. In a complicated code such as company law you must leave some discretion to the administration in dealing with exceptional cases which arise, but in order to give effect to this fourth recommendation we have proposed in this bill section 2 and 3, which read as follows:
2, Section five of the said act is amended by adding thereto the following subsections: -
"(4) Nothing in this part shall be construed' to authorize the incorporation of any company for any purposes or objects other than those which it is intended the company shall actively pursue as set forth in the letters patent of the company.
(5) If any company in the opinion of the Secretary of State-
(a)	carries on any business which is not within the scope or the purposes or objects set forth in the letters patent or supplementary letters patent, or
(b)	exercises or professes to exercise any powers which are not truly ancillary or necessarily incidental to the purposes or objects set forth in the letters patent or supplementary letters patent, or
(c)	exercises or professes to exercise any powers expressly excluded by the letters patent or supplementary letters patent,

Companies Act-Mr. Cahan
such company shall be liable to be wound up under the provisions of the Winding-Up Act as if it had become insolvent, and the Attorney General of Canada may, upon receipt of a certificate of the Secretary of State setting forth his opinion as in this section provided, apply to a court of competent jurisdiction for an order that the company be wound up."
I think that that, with section 3 of the bill, gives very complete control. Section 3 reads:
3. Paragraph (b) of subsection one of section seven of the said act is repealed and the following is substituted therefor:-
"(b) The purposes for which incorporation is sought which shall be limited to the purposes and objects which it is intended that the company shall actively pursue."
So with respect to the application for letters patent and with regard to the granting of letters patent this recommendation is carried into very full effect. But I would remind the house that the dominion parliament is not the only legislative body in Canada which controls the incorporation of companies. It has been decided by the privy council that the grant of letters patent by the crown in the province of Quebec gives to the company the power to carry on every and any activitiy which is within the legislative competence of the province of Quebec, the same as if the company were a private person or individual, and other provincial legislatures have taken advantage of this decision of the privy council to the effect that the crown in the right of the province in Quebec is authorized to grant such charters. Other provincial legislatures by their own legislation have conferred upon their companies distinctly and expressly the same right as an individual would possess.
The fifth recommendation is as follows:
5.	A company's annual statement, together with the auditor's report should be required to be published in the daily press and in The Canada Gazette, in such a way as to ensure the widest publicity.
This recommendation I have not felt free to incorporate in the bill now before the house. Under the present law every shareholder and every bondholder is entitled to receive an annual statement, and some amendment has been suggested to section 16 of the eixsting act for widening its scope. But there are approximately ten thousand dominion companies in active operation and we estimate, although we have not the particulars with regard to provincial companies, that there are about thirty thousand companies in active operation throughout the Dominion of Canada even in these days of depression, of which approximately one-third are dominion companies. The advertising of the annual statement of each of these companies in statutory form in the Canada Gazette would' require at least one page of the Gazette for one company, and at the lowest rates at which the King's Printer can economically operate the Gazette, the charge would be $50 per page. The Canada Gazette now consists of approximately 2,500 pages per year, and it is becoming so extensive that I dioubt if anybody ever reads it. But this recommendation would require the publication of ten thousand extra pages of the Gazette each year, and for an English version alone we would have to charge the companies all told $500,000, and if you insist upon publication in both the English Gazette and the French Gazette we would have to double that amount, but I am assuming that if this recommendation were put into effect parliament might be content with one publication either in French or in English.
To publish that same statement in the daily press would cost each company at the very least $150 for each such publication. At the rates charged by the daily press in many cases it would run up to $200 or $250 for each publication. Assuming an average of $150 the publication in the daily press would impose an annual burden upon these companies of SI,500.000. I can see no reason why, in these times of stress and strain, when dominion companies are subject to federal, provincial and municipal taxation, we should compel them to expend $2,000,000 per year upon such publicity, when any person who is really interested in. the affairs of the company can obtain all the information in printed form at the cost of an envelope, a piece of writing paper and a three cent stamp.
The sixth and seventh recommendations are carried into effect, in part, by section 19 of the bill which provides that a copy of every balance sheet shall be filed with the Secretary of State, where it is available to everyone.
The eighth recommendation is that annual statements should be given in more detail than at present and should include information under the following headings:
(a)	Fixed and intangible assets to be given m more detail than at present;
(b)	Investments and securities-nature, and market value;
(c)	Inventories-so as to show raw materials in process of manufacture;
(d)	Accounts and notes receivable-in such a form as to make a distinction between current and overdue and doubtful accounts;
(e)	Executive salaries and bonuses-so as to show the number of executives and' the total amount paid;
(f)	The amount, if any, by which fixed assets
(including goodwill and other intangibles), have been written up.	.
Companies Act-Mr. Cahan

I am doubtful if the author of these recommendations has considered carefully the express terms of the Companies Act, 1934, which requires more detailed accounting than any companies act of which I have knowledge. Nevertheless, in section 17 of the bill we have proposed certain amendments to the existing act. Section 17 reads:
Subsections two and three of section one hundred and twelve of the said act are repealed and the following are substituted therefor:-
"(2) Every balance sheet shall be drawn up so as to distinguish severally at least the following classes of assets and liabilities, namely:-*
(a)	cash;
(b)	debts owing to the company from its directors, officers or shareholders respectively;
This is a re-enactment of the present provision.
(c)	other debts owing by the company-
That should be " to the company."
[DOT]-including accounts and bills receivable in such form as to distinguish between current and non-current accounts in all cases in which the estimated loss is not provided for;
I can see no reason why the shareholders would desire to go into individual accounts so long as the statement distinguishes between current and non-current accounts. This section of the bill has been taken from the corresponding section of the Bank Act of Canada which is very precise and definite. The section continues:
(d)	inventory, if any, stating the basis of valuation adopted and the manner in which such value has been determined in respect of various subdivisions of such inventory;
The words " in respect of various subdivisions of such inventory " are new. I continue:
(e)	investments and securities, if any, stating the nature and the market value thereof in case such market value is readily ascertainable.
I do not think it is possible to carry out the recommendation more completely because many companies own securities of other companies, operating industrially in connection with their own, with respect to which there is no way of determining the market value. If it is a subsidiary company the present act provides that the consolidated balance sheet must show with great precision and clarity the financial standing of the subsidiary companies. If its shares are on the stock exchange the market value can be ascertained, but in other cases it cannot be readily ascertained. I quote:
(f)	expenditure made on account of future business, if any;
(g)	lands, buildings and plant, stating the basis of valuation, whether cost or otherwise,

and, if valued on the basis of appraisal, the date of appraisal and the name of the appraiser and the amount, if any, by which the value of such assets has been written up;
We have added the words, "and the amount, if any, by which the value of such assets has been written up." I have incorporated this recommendation but I do not think it can be carried into practical effect. During the revision of 1934 this suggestion was definitely brought before us and accounting firms and associations said that it would be impossible to carry it into effect unless it were limited to a term of years. Many of these companies have been in operation for twenty, thirty and forty years and during that period their fixed assets have been accumulated by the acquisition of property, the construction of new buildings, the restoration of old buildings, investments in new machinery and replacements of old machinery. From year to year these companies have set aside a certain portion of their incomes to cover depreciation. The accountants advise that in the case of a company which has been operating over a term of years it would be absolutely impossible to ascertain the amounts by which the value of such assets had been written up, that is, by which they have been appreciated. In many cases they are properly appreciated by the purchase of new fixed assets or the replacements of old fixed assets which are worn out. The accounts which have been kept hitherto under the provisions of the Dominion Companies Act do not permit of a satisfactory investigation. The accountants protested very strongly against the incorporation of such a provision in the 1934 revision as they claim that no conscientious auditor could give a certificate of that kind. I have incorporated in this bill the full recommendation, but I suggest that hon. members should consider whether it should not be limited to writings up within a term of three or four years, which would be ascertainable. In fact under the present amendment we are compelling such a system of accounting as will give very clearly and definitely either in the prospectus or the balance sheet the full particulars required here. I should like hon. members to consider in committee as to whether or not this should not be restricted to a term of three or four years. Clause (c) of subsection 3 of section 112 provides:
(c)	If it is shown as a separate item in or is otherwise ascertainable from the books of the company, or from any contract for the sale or purchase of any property, the amount of the goodwill, franchises, patents, copyrights, trade marks, leases, contracts and licences as so shown or ascertained-*

Companies Act-Mr. Cahan
We have added the words:
-and the amount, if any, by which the value of any such assets has been written up.
I still think with regard to that item that there should foe fixed a term of years, because companies which have been operating for twenty-five, thirty or forty years, with writings-up from year to year, by acquisition of new patents, franchises, trade marks, leases and contracts, which such companies are writing off to a certain extent from year to year when the returns are good, would require such a complicated system of accounting as to render this clause impracticable. Therefore, if it is desired to give effect to a recommendation of that extent, I still think the house should consider whether it should not be restricted to a term of years.
We have not given effect to the clause (c) of the recommendations "so as to show raw materials in process of manufacture." Large industrial companies operating in several different localities allege that they would require to cease operations for several weeks in order to make accurate statements in compliance with this recommendation. Moreover, wo. see no good reason why such companies should be compelled to disclose at any time to wholesale vendors of the raw materials, which any particular industry consumes, whether its stocks of any raw material are heavy or low, as such information could only prove valuable to the speculators in the wholesale trade in such materials, and we all know that there is a speculative market in all the basic raw materials which enter into the manufacturing industry.
As to the recommendation in clause (e) for the disclosure of executive salaries and bonuses, we have, I think, made full provision in section 18 of the bill, which reads:
18. Subsections one and two of section one hundred and' thirteen of the said act are repealed and the following are substituted therefor: -
"113.	(1) The statement of income and
expenditure to be submitted at the annual meeting shall, subject to the provisions of this section, show as a separate item the total of the amount paid to the directors as remuneration for their services as such directors, inclusive of all fees, percentages, or other emoluments, paid to or receivable by them or from the company or by or from any subsidiary company, exclusive of the amounts paid to a managing director, if any, or any other director who holds any salaried employment or office in the company and who devotes substantially the whole of his time^ to the business of the company or its subsidiaries.
That clause provides for the disclosure of everything paid to the directors qua directors, and the second clause provides for the disclosure of executive salaries:
(2)	The said statement of income and expenditure shall also show separately the total of the amount paid as salaries, bonuses, fees or other remuneration to the counsel, solicitors, or other legal advisers of the company, and also to the executive officers of the company including the managing director, if any, of the company, and any other director who holds any salaried employment or office of the company and who devotes substantially the whole of his time to the business of the company or its subsidiaries."
That is as full and effective a compliance with the recommendations as could possibly be made, but I have received protests against it because this new provision applies to private companies as well as to public companies. My own opinion is that the house should favourably consider some amendment which would make this apply solely to public companies. Where you have private companies, or three or four persons in a town or village operating as a private company under this act, where each knows the other and all are directors as well as shareholders, a provision such as this should not, I think, be made to apply. But expressing the terms of the recommendation, in the bill, we have attempted a full compliance with the recommendations made.


Charles Edward Bothwell: Could not that be
limited to public companies?


Mr. CAHAN:: I was going to suggest that in committee. I wish the hon. gentleman would consider it, because it certainly should not apply to private companies which have a few thousands dollars capital, operating in country towns and villages, which are prevented from seeking any subscriptions for stock from the public and prevented from selling their stock except to those who are shareholders with them m the same company.
The ninth, tenth and eleventh recommendations are as follows:
9.	The prospectus provisions of the present act should be altered to place upon a company and its directors the responsibility for representations made on any offering for general public subscription, whether made on behalf of the company or not. If this change cannot be made through the Companies Act, it should be made a criminal offence to offer for public subscription, securities of a company with federal incorporation, if those securities have not been subjected^ to the prospectus obligations of the Dominion Companies Act.
10.	Every prospectus should be required to state in clear detail all commissions, fees, and other remuneration received by promoters, underwriters or middlemen.
11.	Whenever shares are allocated otherwise than through an offer to the public, a statement in lieu of prospectus should, as formerly, be filed. It should also be published in the press and in the Canada Gazette in such a way as to ensure the widest publicity.
Companies Act-Mr. Cahan

At present an "underwriter" is any person who acts as agent of the company in procuring subscriptions for its securities when offered, by or on behalf of the company, to the public for subscription; and "subscription" includes a purchase or other acquisition of such securities, except by way of security only, on any sale or other disposal thereof made by or on behalf of the company. "Prospectus," under the existing act, is any document issued by or on behalf of a company, which invites persons to subscribe for securities of the company. In general, it may be said that any holder of securities who has purchased them outright, in whom the absolute title thereto is vested, is now deemed to be the "owner" of the securities and not an "underwriter" of the securities.
The underwriter of securities, who acquires and becomes vested with absolute title to the securities, is not, under the existing act in respect of his subsequent dealings in such securities, deemed to act as underwriter, but as owner. It has hitherto been accepted by the legal profession that any sales, made by an owner of securities to any other persons who become purchasers thereof, are subject to the exclusive legislative jurisdiction of the provinces; and that the power of the dominion to legislate with respect to the incorporation of companies does not include the right to legislate with respect to subsequent sales of a company's securities after the company has issued, sold and delivered the same to the purchasers thereof who have fully paid for the same. I have a clear and decided opinion that to give full effect to the ninth recommendation would require the enactment of legislation which is not within the legislative jurisdiction of this parliament, and that to attempt to filch the provincial jurisdiction over property and civil rights by the creation of new and unprecedented crimes would, in the end, be equally ineffective.
In drafting section 73 of The Companies Act, 1934, I gave very careful consideration to this issue, and I concluded that clauses (a) and (b) went as far as was within the competency of parliament. These 'Clauses, which appear on page 14, lines 12 to 22 of the new bill, are as follows:
"underwriter" includes (a) any person who to the knowledge of the company, proposes to subscribe for securities of the company with a view to the resale to the public of those securities or a part thereof, and (b) any person to whom a commission is proposed or intended to be paid by the company in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, or in consideration of his procuring or agreeing to procure subscriptions, whether absolute 
or conditional, for any securities of the company to be offered to the public for subscription.
That is the present law which is reexpressed in this bill on page 14. The opinion then expressed to me by eminent counsel;, in which I concurred, was to the effect that whenever the title to such securities became unconditionally vested in the subscriber or purchaser, then the subsequent dealings of such purchaser fell under the provincial jurisdiction and beyond the legislative jurisdiction of parliament. However, in order to bring before the house this issue and the full implications of the report, I have gone beyond my own professional opinion by proposing in this bill in amendment to section 73 of the existing act a new and unprecedented term to the definition of the word "underwriter" and to include, on page 5 of the bill, line 43 et seq., an additional paragraph (c), as follows, and this is new in any legislation of which I have knowledge:
"Underwriter" includes (c) any person who, in respect of any securities issued or to be issued by the company, has purchased or acquired or agreed to purchase or acquire such securities from the company, or has acquired from the company any option or right of disposal of such securities, with a view to effecting the first distribution of such securities or any of them to the public by advertisement or circular or in the course of successive transactions of a like character; and it shall, unless the contrary be proved, be evidence that such person purchased or acquired or agreed to purchase or acquire such securities or any option or right of disposal aforesaid, with a view to effecting the first distribution to the public of such securities, if it is shown that such person effected or attempted to effect such distribution within six months after such purchase or acquisition or the making of such agreement or that at the date when such distribution is made the whole consideration to be received by the company in respect of such securities has not been so received.
This will require litigation to determine the validity of it, but certainly it gives full effect to the recommendation of the 'Commission. Then, in order to complete 'that recommendation and to tie it in a double grip, I have also included on page 7 of the bill certain proposed amendments to section 75 of the act, new subsections (4) and (6), which read as follows, and these provisions are new in any legislation:
(4) The company shall not allot or issue any of its securities to or on the direction of any person whose principal business, to the knowledge of the company, is offering, buying, selling or otherwise dealing or trading in shares, debentures or other securities, unless the company shall have first obtained an agreement in writing from such person to comply with the provisions of subsection two of this section;-

Companies Act-Mr. Cahan
That is the previous one which I have read.
-and if and whenever, to the knowledge of the company, any offer to the public of its securities has been or is about to be made without due compliance with the requirements of subsection two of this section by such person, the company shall forthwith cause notice of the particulars of such non-compliance to be given to the Secretary of State by registered mail.
Then follows the penalty in subsection 6:
(6) Any underwriter who offers any securities of a company for public subscription before the provisions of subsection one of this section have been complied with by the company or without causing the provisions of subsection two of this section to be complied with shall be guilty of an offence and liable upon summary conviction to a fine not exceeding one thousand dollars or to imprisonment for a term not exceeding six months or to both fine and imprisonment.
I think we have there utilized to the widest possible extent the criminal law of the country to carry into effect the recommendations made. I still think, if the commission had invited hearings from those interested and had heard the other side of the case, the recommendations might not have been so extreme and severe.
The tenth recommendation as to the disclosure of commission fees, etc., is quite fully provided for in section 77, clauses (j), (k) and (1), of the Companies Act of 1934.
The eleventh recommendation for the revival of the old form of statement in lieu of prospectus, which was abolished by the Companies Act, 1934, should not, in my opinion, be complied with. The statement in lieu of prospectus served to conceal many irregularities. It was deliberately abolished in framing the Companies Act, 1934, because under the present act every public company, that is, every company, except a private company, must issue and file a prospectus if it issues and allots any shares whatsoever to others than the original subscribers to the memorandum of agreement which appears as form 2 to the act. Having exacted a prospectus from all companies when shares are issued to the public, as is now the case, we see no sound reason for recurring to the old practice of requiring the statement in lieu of prospectus, which was so often used to contra-vent the provision of the act dealing with prospectuses.
The twelfth recommendation, that hereafter all shares issued to the public should be limited to common and preferred shares without any subdivisions, would prevent a company, after issuing preferred shares at the company's inception, when its prospects were doubtful, from thereafter, in times of proven
financial success, issuing preferred shares yielding a lesser rate of dividend. We have not carried that into full effect. I do not wish to discuss the affairs of a particular company, but I know within the last few months one industrial company which has a large bond issue outstanding, chiefly held in the English market, received offers to substitute for the debentures outstanding, its capital indebtedness, an issue of its preferred shares. It was of the utmost importance to the company that in times of stress and strain such as these, its debenture indebtedness should be reduced by several million dollars and its capital assets increased by a corresponding amount. When they took the matter into consideration their existing preferred shares bore a dividend rate of eight per cent, if I remember correctly, and they had power under the letters patent to issue other preferred shares ranking with the first issue. But so cheap had money become, and so successful had been the operations of the company, that they were able to procure contracts for the purchase of the new issue of preferred shares yielding a rate of dividend two or three per cent less than the rate on the outstanding preferred shares. If you prevent companies from issuing preferred shares of more than one division or class you prevent absolutely such successful operations as those to which I have referred, which are entirely legitimate and worthy of commendation.
The thirteenth recommendation, that all shares offered, both common and preferred, should bear equal voting rights, is carried into effect in section 16 of this bill, which reads as follows:
The said act is amended by inserting immediately after section ninety-eight thereof the following section:

"98a. Subject to the provisions of any bylaw of the company duly enacted under the provisions of this act, each share of the capital stock of any company issued and allotted, shall, subject to the provisions of this part, carry voting rights and entitle the shareholders to one vote for each such share owned by him."
Well, sir, the object of that recommendation is obviously meritorious, or would seem so to the mind that conceived it. But, can you see any sound reason why the holder of a common share of $5 par value, for which five dollars has been paid, should necessarily have the same voting rights as a holder of a preferred share of $100 in the same company? That is a suggestion which I should like hon. gentlemen to take into consideration when they enter upon the discussion of the several clauses of this bill.
Companies Act-Mr. Cahan

The fourteenth recommendation, is to the effect that management shares should be prohibited. This recommendation is carried into effect by section 5 of the bill, which enacts a new subsection 10 to section 12 of the act, reading as follows:
(10) In no case shall shares of the company of any class, or any subdivision of any class, whether with or without par value, be issued and allotted to which shall attach any exclusive right to control the management of the business or affairs of the company by the election or removal of the board of directors thereof or otherwise.
As I drafted that section I thought it might be opportune for me to go back again to practice of the legal profession, because I am sure I could find half a dozen ways to get around it. But it is the best effort to carry completely into effect the recommendations of the committee that I could conceive of.
The fifteenth recommendation, that a meeting of the shareholders should be called by the directors in case of serious impairment of the capital of the company, is carried into effect, so far as practicable by section 14 of this bill, which reads as follows:
The said act is amended by inserting immediately after section ninety-four thereof the following section:-
"94a. Whenever the officers of a company, or any of them shall have become aware of any impairment of the capital of the company, they shall forthwith inform the directors of the nature and extent of such impairment; and thereupon, if in the opinion of the directors such impairment of its capital renders the company insolvent, it shall be the duty of the directors immediately to call a special general meeting of the shareholders of the company for the purpose of making to the shareholders full disclosure of the nature and extent of such impairment of the capital of the company."
You must remember that any impairment whether of the company's capital should not be sufficient cause to place the whole assets of the company in jeopardy, as you would do in calling such a meeting; therefore it should be only such an impairment as affects the solvency of the company. I have known in my experience a company to drop $3,000,000 in twenty-four hours. If you called the shareholders together you would cause a panic. But by giving careful attention to the matter, inasmuch as the loss itself did not impair the solvency of the company, the directors were able to take effective measures to place the company on a sound basis for successful operation. I suggest that I have carried into effect as far as possible and practicable the recommendations of the commission.

The sixteenth recommendation, that the first permanent directors of a company should be held responsible for all business transacted by the provisional directors, is carried into effect by section 18 of this bill, as follows :
The said act is amended by adding to section eighty-eight the following subsection:-
"(2) The directors of the company elected by the shareholders at the first general meeting of the company shall be responsible for all business transacted as a board of directors by the first directors of the company."
The seventeenth recommendation is that:
Directors should be prohibited from speculating in the shares of their companies. They should be required to disclose annually to their shareholders the extent to which they have directly or indirectly purchased or sold their company's shares during the year.
1 have known of speculation by directors in the shares of their company for the purpose of maintaining the company's reputation and preventing outside speculators from depreciating the value of its shares in the market in such a way as to ruin shareholders who were widely separated and unable to protect themselves. Speculation in the market may be evil or it may be of real advantage to the other shareholders of the company. But in view of this recommendation section 15 is inserted in the bill, reading as follows:
The said act is amended by inserting immediately after section ninety-six thereof the two following sections;.-
"9'6a. (1) Every director shall furnish annually to the secretary, for the information of the shareholders of the company at the annual general meeting thereof, a statement setting forth in detail all shares or other securities of the company bought or sold by him, for his personal account, directly or indirectly, during the twelve months immediately preceding such annual meeting.
(2)	No director of a company shall speculate. for his personal account, directly or indirectly, in the shares or other securities of the company of which he is a director.
(3)	"Speculate" as used in this section means trading in securities in the course of successive and continuous acts; selling a security where the director does not own the security sold, or, if owning the security, does not deliver it against such sale within twenty days thereafter, or does not deliver the same within five days after such sale by depositing it in the mails or other usual channels of transportation; or selling securities not previously held by such director for at least three months, unless such securities were acquired in good faith in connection with a debt, obligation or liability of some other person previously contracted; or unless the director proves that such sale was made bona fide for reasons other than to affect the market price of such securities or the making of a profit by such sale.
Other hon. members of the house may be able to agree on a more exact definition of

Portage la Prairie Mutual Insurance
the term "speculation", but it is beyond me. The fourth clause imposes a penalty:
(4)	Every director who neglects or fails to make a true and accurate statement of such transactions as required by subsection one of this section, shall be guilty of an offence and liable on summary conviction to a fine not exceeding one thousand dollars or to six months imprisonment or to both fine and imprisonment.
(5)	Every director, who shall speculate, for his personal account, directly or indirectly, in the shares or other securities of the company of which he is a director in contravention of subsection two of this section, shall be guilty of an offence and liable'on summary conviction to a fine not exceeding one thousand' dollars or to six months imprisonment or to both fine and imprisonment.
After drafting this clause I began to meditate as to why any person should be so foolish as to undertake the office of director of a commercial or industrial company and render himself liable to such penalties as these.
With reference to the recommendation of provisions to prevent stock watering, so called, section 15 of this bill contains a proposed amendment to the act by inserting a new subsection 96b.


Charles A. Stewart: Would the minister mind reading the new section? I am very much interested in that.
M-r. CAHAN: The section reads:
"96b. (1) It shall not be lawful for the directors or promoters of a company to authorize the issue and allotment of any shares of the capital stock of the company as fully paid up unless the company receives, or is to receive what may justly be deemed, in all the circumstances of the case, adequate consideration therefor in cash, property or services.
(2)	Subject as hereinafter provided, every director or promoter of a company who is a party to authorizing the issue and allotment of any shares of the capital stock of the company as fully paid up shall be liable, jointly and' severally with his codirectors, at the suit of any director, shareholder or creditor of the company, to make good to the company the amount by which the consideration actually received by the company for any shares so issued and allotted as aforesaid, is found by the court, after full inquiry into the circumstances of the transaction, to be less than the amount of the consideration which the company ought to have received for such shares, if it is proved, as to any such first mentioned director, that such director
(a)	had knowledge of the inadequacy of the consideration so received by the company; or
(b)	failed to take reasonable steps to ascertain whether the consideration so received by the company was in fact adequate consideration.
(3)	No suit shall be commenced against the directors of a company or any of them under the authority of subsection two of this section by any director or shareholder of the company without the consent in writing of the Secretary of State; and no such suit shall he commenced by any creditor of the company until an execution at the suit of such creditor against the company has been returned unsatisfied in whole or in part.
The next subsection' provides an exception, which was recommended by the commission.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock. PRIVATE BILLS



PORTAGE LA PRAIRIE MUTUAL INSURANCE COMPANY

[Stage Direction]
The house in committee on Bill No. 97, respecting the Portage la Prairie Mutual Insurance Company-Mr. Willis-Mr. Morand in the chair.
On section 1-Incorporation.
Mr. McPHEE:: I have just seen this bill for the first time this afternoon and there appears to be a very considerable change in its meaning and purport. For instance, section 2 of the old act reads;
Any policyholder who holds a policy or policies to the amount of at least one thousand dollars who is not in default in respect of any premium or any assessment on his deposit or premium note and who has paid in cash all liabilities incurred by him to the company shall be eligible to be elected as a director, but he shall cease to be such director if the amount of his insurance as aforesaid becomes reduced below the sum of one thousand dollars.
The new section changes the whole tenor of the act. It reads:
Any policyholder on the mutual system or cash system who holds a policy or policies to the amount of at least one thousand dollars who is not in default in respect of any assessment on his deposit or premium note and who has paid in cash all liabilities incurred by him to the company shall be eligible to be elected as a director, but he shall cease to be such director if the amount of his insurance as aforesaid becomes reduced below the sum of one thousand dollars.
The sponsor of the bill can no doubt throw some light on the matter. I think the committee is entitled to a full explanation as to the reason for this change and as to what is meant by the mutual o-r cash system inserted in this new bill. I would ask the sponsor to give a full explanation not only of the changes but of the reason for the changes and all the circumstances surrounding the matter.


Mr. WILLIS:: The purpose of the bill is to place the control of the company in the hands of the premium note policyholders. The company operates under two different systems of policies. That is to say, a man
Wapiti Insurance Company

who desires insurance in this company may pay a cash premium for which he will get a policy, and in that connection there will be no contingent liability. He has paid his cash premium and he gets the (benefits indicated in his policy. On the other hand, if he proceeds on the premium note plan he signs a premium note and subsequently he is assessed for the amount of the losses of the company as apportioned among the policyholders. It will therefore be seen that the premium note policyholder has a contingent liability. He may be assessed up to the full amount of the note; in other words, he is liable for his proportionate share of the losses of the company during that year, but the cash policyholder has no contingent liability. He has paid for something for which he receives a policy which indicates the benefits to which he is entitled.
The purpose of the amendments is to place control of the company in the hands of the mutual policyholders who are on the premium note plan in view of the fact that they have a contingent liability and have to pay the losses. The bill itself merely indicates two things. It indicates first that those who hold cash premium policies may be elected as directors. Secondly it indicates that only those who are under the other plan, the premium note plan, may vote and elect such directors.
I may say that the bill was considered by the senate committee, where it was approved by Mr. Finlayson, the superintendent of insurance who attended there, and also by the banking and commerce committee of this house where again Mr. Finlayson attended. The bill now before the house is similar to one which was passed here last year respecting the Wawanesa Mutual Insurance Company. There is little more I can say in connection with the bill except to point out that the Portage la Prairie Mutual Insurance Company is one of the oldest mutual insurance companies in Canada. It was incorporated in 1884, received dominion incorporation in 1930, operates in all the provinces of Canada except the maritimes, and has some S65.000.000 of insurance in force. The present bill has received the approval of the superintendent of insurance, the approval of the senate committee and the approval of the banking and commerce committee of this house, and I think it should go through this house without any difficulty.


[Stage Direction]
Section agreed to.
Sections 2 to 4 inclusive agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 87, respecting the Wapiti Insurance Company- Mr. Weir (Macdonald)

Mr. Morand in the chair.
On section 1-Extension of time.
Mr. DUFF:: May we have an explanation of this bill?


Mr. WEIR (Macdonald):: The explanation of this bill is contained in the explanatory notes attached to it. Its purpose is to restore in force the act incorporating the Wapiti Insurance Company, chapter eighty-four of the statutes -of Canada, 1929, which expired on May 1, 1933, under the provisions of the Insurance Act, and an act respecting the Wapiti Insurance Company, chapter seventy-four of the statutes of Canada, 1931, section 2, and in this way permit the Department of Insurance to issue its dominion licence to a Canadian rather than a provincial company.
This company has had a provincial charter for some time. In 1929 it applied for a dominion charter. It was unable to take out its dominion licence at that time, and in fact was unable to do so at the expiry date two years later. An extension of time was granted by act of parliament in 1931 but owing to the continuance of the depression the company was still unable to make the necessary arrangement to go ahead under dominion charter. It contemplated continuing as a provincial company and operating with a dominion licence only. On taking the matter up with the superintendent of insurance at Ottawa it was suggested that they, should apply for a renewal -of their dominion charter rather than continue as a provincial company. This was done. The reason for the delay in having the bill introduced in the House of Commons was that the proposal for a renewal of their dominion charter had to be approved at an annual meeting of the company, which could not be held until some time in February. The bill has already been before the committee of the senate and received its approval, also the approval of the banking and commerce committee of this house, and the approval of the superintendent of insurance. I understand that the company is now in a position to go ahead and reorganize, and this is merely to reinstate the company under a dominion charter and under the jurisdiction of the Dominion Department of Insurance.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
Bill reported, read the third time and passed.

Foreign Insurance Companies

[Stage Direction]
Tlhe house resumed from Tuesday, May 28, consideration in committee of Bill No. 14, to amend the Foreign Insurance Companies Act, 1932-Mr. Coote-Mr. Morand in the chair.
On section 1-surrender of policy.
Mr. COOTE:: Mr. Chairman, when we were considering this bill or the companion bill last week the Prime Minister (Mr. Bennett) made a statement to the effect that the insurance *companies had expressed a willingness to file with the superintendent of insurance an agreement that the rate of interest on policy loans would not exceed six per cent. Since that -statement was made I have been in consultation with the superintendent of insurance and I understand that the offer of the insurance companies was that if the amendment moved by the hon. member for Mount Royal (Mr. White) was passed, rather than have this bill placed upon the statute book they would give a guarantee that they would not charge any rate of interest in excess of six per cent. At that time I did not know whether any correspondence had been placed in the hands of the Prime Minister other than the letter to which I have just referred, but it was intimated to me to-day that another letter had been written to him. I have not been made acquainted with the contents of that letter and I do not know whether it is in the same terms as the previous one.
This bill, which received a good majority vote in the banking committee, asks for a maximum rate of five per cent. I find myself in a difficult position in deciding whether I should accept the suggestion of the Prime Minister and withdraw the bill in order to secure the concession which the insurance companies have offered. I realize that to those indebted to the companies under a loan which was automatically advanced there would be a very distinct concession -made in that regard. The policyholders who have borrowed under that method would be offered a considerable saving tout at tj?e same time I feel that as the bill has gone so far an opportunity dhould be given to hon. members to indicate their opinion in committee of the whole before it is withdrawn. I should like to have any hon. members who have decided opinions on this matter indicate whether they think the amendment of the hon. member for Mount Royal should be accepted. If possible I should like to see this bill discussed for at least a portion of the hour devoted to private and public bills.
I read very carefully the statement which the Prime Minister made last week and I cannot see that the 'bill as introduced1 interferes with any contract. Mr. Rowell suggested to the committee that in the case of loans made under the automatic advance provisions cf a .policy, the policy itself would be the contract between the borrower and the insurance company. But this bill exempts that type of loan from its operations and I think I am safe in saying that the bill now before us does not interfere with any contract. I believe in most policies the paragraph relating to the rate of interest at which loans may be made is generally worded to the effect that the rate of interest shall not exceed a certain per cent. There is no fixed rate mentioned in the contract, and speaking as a layman I cannot see how this bill could be regarded as interfering in any way with any contract.
I believe the rate of interest now being charged by the companies is so high as to be unfair to the borrower because in effect he is only borrowing his own money. Such a loan is not very much different from a loan made to a savings bank depositor. Such a man may have $5,000 in his savings account which he does not want to touch. He may go to the bank and ask to borrow $1,000 and tell the bank that they can earmark that amount in his savings account and hold it as guarantee for the loan. It may seem strange to hon. members but I know that suoh loans are made by banks to men who have savings accounts which for certain reasons they do not want to draw against. It seems to me that a loan under a policy is very much of that nature, and it does seem that at this time, with the low interest rates prevailing, we should not be doing the insurance companies any injustice if we enacted that the maximum rate they could charge should foe five per cent. I would rather secure the concession which the insurance companies have offered than have nothing at all, but before going so far as to ask the leave of the house to withdraw the bill-I realize that it would call for unanimous consent-I should be glad if any members of the committee who have any opinion to express with regard to the matter would state their views, and if necessary at a later stage I would move that the committee rise and report progress or if it weTe preferred-indeed it would meet my wishes-the committee might take a vote on the amendment of the hon. member for Mount Royal. So far as I am personally concerned, I should then have a much clearer view of the course I ought to pursue.


William Duff: This bill as amended is not in the hands of members of the committee and consequently should not be proceeded with. I submit that there should be a copy in the hands of every member.
Foreign Insurance Companies


George Gibson Coote: I am quite sure there are
printed copies available.


The CHAIRMAN:: I am advised that there are only fifty copies.


Mr. POULIOT:: Is the bill translated into French? If not, I object to going on.


Raymond Ducharme Morand: There are copies in
French.


William Duff: Let it stand.


Mr. SPENCER:: I understand that not
only has i/t been printed in French but copies have been distributed to members. A copy is on my file.


Raymond Ducharme Morand: I am advised that
there were fifty copies printed and they have been distributed.


William Duff: I think it should stand.


Henry Elvins Spencer: I sincerely support the
bill sponsored by the hon. member. The feeling in the committee when the bill came before us was distinctly in favour of lower rates of interest.


William Duff: I submit that we should not proceed with the bill until we have copies of it as amended in our hands.


Henry Elvins Spencer: Could we not have the
bill distributed so that we might go ahead with it?


Raymond Ducharme Morand: There are no further
copies in the distribution office at the present time. Shall the bill stand?


William Duff: Stands.


Henry Elvins Spencer: We had a week for the
bills to be distributed, and any member interested enough in it could have got a copy.


Jean-François Pouliot: We cannot run after bills; they must be distributed in the ordinary way.


Raymond Ducharme Morand: I am in the hands of the committee.


Henry Elvins Spencer: As the hon. member who is responsible for the bill has pointed out, in the committee and since on the floor of the house, the money that is being borrowed by policyholders is nothing more or less than their own money. The insurance companies are taking no risk at all, and the investments of the companies are not bringing in nearly as much as is being charged by them to their borrowers. I think there are very good reasons why we should stipulate a definite amount of interest, and that five per cent and no more shall be paid by borrowers. Moreover, the higher the rate the poorer the risk, and the policy is then not of as great a

value to the company; and that is distinctly true also as regards the owner of the policy, because the greater the amount of interest to be paid the less possibility there is of the borrower being able to keep the policy in shape. I do think that the hon. member for Macleod has done a great service in bringing this matter to the house and asking that the interest rate on loans made by insurance companies to policyholders should be cut down in line with the rates that are being charged to-day for borrowed money.


George Gibson Coote: May I ask the Prime Minister whether. a written proposal has been placed in his hands by the Life Insurance Underwriters' Association in addition to the letter sent to the Minister of Finance.


Richard Bedford Bennett: I explained the situation
the other evening when I indicated why the government was of the opinion that a bill such as this should not be passed, and I also intimated that the representatives of the insurance companies had filed with the Minister of Finance an undertaking to the effect indicated just now by the hon. member for Macleod. The representatives of the insurance companies stated that they would file a formal agreement in tenms to be satisfactory to the Department of Finance and the Superintendent of Insurance, and an undertaking to that effect has been given. If the bill were withdrawn the reasons that apply to its not being proceeded with, as stated by me the other evening, apply with equal force to the amendment of the hon. member for Mount Royal (Mr. White). It is the principle of imposing an obligation upon either the company or the policyholder at variance with the contract entered into between them which I was speaking of the other evening. That is what I was discussing, and the effect upon the credit of the country generally. And especially is that so with respect to companies carrying on business in Canada, registered under the provisions of the statute. I am indebted to the chairman for a copy of the amended proposal, which reads:	#
(1) No company shall charge, stipulate for, or recover as interest in respect of any loan made to any person on a policy of insurance issued or effected upon the life of any person resident in Canada at the time the policy was issued or effected, any amount in excess of five per centum per annum, compounded annually, on the balance of the loan from time to time unpaid by the borrower.
That covers all expenses.
(3) This section shall not apply to any loan or unpaid balance thereof made under an agreement executed, or advanced automatically under any policy issued, before the first day of January, 1936.

Companies Act-Mr. Cahan
So that its provisions do not become retroactive except from the first day of January, affecting no agreement that might be outstanding, carrying any rate of interest, and would automatically reduce the rate to five per cent. Apart from the question of jurisdiction, which is a delicate matter that has been discussed so often in this house and in the privy council, the other question still remains an integral part of the proposal, namely:
This section shall not apply to any loan or unpaid balance thereof made under an agreement executed, or advanced automatically under any policy issued, before the first day of January, 1936.
It still has that effect on contracts that might be outstanding with respect to it. I think, however, I should say this to the hon. gentleman, from what was stated to .me, that the companies would be .prepared to execute with the Minister of Finance or the Superintendent of Insurance, whoever is the appropriate person, an agreement in the terms suggested, which he himself inspected at the office of the Superintendent of Insurance, reserving an interest rate not exceeding six per cent. May I say to the hon. gentleman that I think if he accepts the proposal, undoubtedly the agitation will be such that the companies will probably reduce the rate to five per cent in another year. Personally I think the companies should charge not more than five per cent; I am wholly in accord with that view. That is one matter. Another is how to effect this. Having regard to the conditions that exist, I cannot endeavour to impose the will of parliament upon parties who .make the rates.
I do not intend to traverse the ground I covered the other evening,, but I believe as a result of what, the hon. gentleman has done, if he accepts the agreement and does not limit it as to time, the agitation that will be carried on will be sufficient to make the rate not exceeding five per cent rather than not exceeding six. That is my personal view about the matter. If it is not possible for the hon. gentleman to accept the proposal suggested, I would make a motion that the committee rise. If the committee did rise, that would be a short way of ending the difficulty.


George Gibson Coote: I wanted to make sure that I was not labouring under a wrong impression as to the attitude of the companies, and all that I had seen was the letter which was sent from them to the Minister of Finance, but I inferred from what I heard to-day that maybe a further letter was in the .hands of the Prime Minister, and that is the .reason I asked the question. If I am in order, Mr. Chairman, and so that I may have a chance of again discussing .the matter with the superintendent of insurance and possibly also with the Prime Minister, I would move that the committee rise, report progress and ask leave to sit again. If that .motion is accepted, that will leave the matter open.
Progress reported.



COMPANIES ACT, 1934, AMENDMENT CONTINUATION OF DEBATE ON THE MOTION OF MR. CAHAN FOR SECOND READING

[Stage Direction]
The house resumed consideration of the motion of Mr. Cahan for the second1 reading of Bill No. 85, to amend the Companies Act, 1934.
Charles Hazlitt Cahan: When the house rose, I was discussing a recommendation with respect to the prevention of stock watering. This is carried out in section 15 of the bill which contains a proposed amendment to the act by inserting a new section 96B. As I stated, section 96B in terms applies to private as well as public companies. When the bill comes before a committee of the whole house, I will suggest to the committee that this section might be amended by inserting the word "public" before company, 'because I do not conceive that the 'Commission intended that this should apply to small and insignificant private companies.
There is also in section 96B, subsection 4, a provision to carry out the recommendation of the commission that this section shall not apply to any .mining company. I thought it necessary however to attempt a definition of "mining company" in order that there might be no misapprehension as to the application and meaning of those words. Therefore in subsection 4 I have defined "mining company" .as:
Any company whose principal objects are the exploration, development or operation of mining properties and' which, if it has commenced actual operations, is carrying out such objects as its principal business.
I have defined " mining properties " as follows:
"Mining properties" includes mines, minin" deposits, mining rights, metalliferous lands, mining claims or any interest therein including any option or licence in connection therewith.
I have attempted to give as precise a definition of "mining companies" and "mining properties" as I could under the circumstances, and I think the definition is quite clear. Personally I have sometimes found it difficult to understand the qualification in the report which states that mining companies are
Companies Act-Mr. Cahan

highly speculative. My experience is that most commercial and industrial companies are equally as speculative as are mining companies. If one could at the outset foresee the success of one of those other companies, it would be quite possible to accumulate a fortune in a short time. My own ventures have not been so successful, and I have often found that those companies, which I have regarded as most reliable and as having sure prospects of success, have been those which under adverse circumstances such as have existed during the past four or five years, have proved in fact highly speculative. There is no sure venture in either finance, industry, commerce or trade.
The final recommendation is this, that the whole trend of law should be toward putting the managers and directors in a trustee capacity with respect to all of the security holders. I think the English law which prevails in this country places the directors in the position of trustees, and I have not sought to give in this bill expression to that recommendation.
Certain suggestions have come to me since this bill was published. A number of the larger companies have already arranged to hold their annual meetings and have prepared at great expense, on the basis of the accounting provisions of the existing act, their accounts for the present year, ending many of them on July 1. Therefore they feel somewhat apprehensive that this bill may be brought into force immediately they think there should be a lapse of time of thirty days; indeed some of them would like a lapse of sixty days after the bill is enacted before it comes into force, and I shall ask the house in committee to consider whether such a section should not be added bringing the whole or parts of this bill into effect by proclamation.
All I can add is that we have endeavoured as best we can to bring before the house the recommendations of this commission in such form as may be easily understandable, with such correct definitions as we were able to devise. Therefore we leave it entirely to the judgment of the house on second reading and in committee, when the several sections of the bill may be more carefully considered.


Charles Edward Bothwell: While I intend to support the second reading of this bill, there are a few observations I should like to make before it goes to the committee. The Secretary of State (Mr. Cahan) in moving the second reading stated that he was somewhat in doubt as to the right of the price spreads commission to make the recommendations that they did.

The scope of the inquiry of that commission was a pretty broad one, and in the inquiries they made 1 have no doubt they came to the conclusion that many of the evils from which we are suffering are attributable to faulty legislation under our Dominion Companies Act. Therefore in endeavouring to carry out the duty imposed upon them by the order setting up the commission they investigated as far as they could what had been reported or what appeared to them to be wrong with the company legislation, and as a result of that inquiry made certain recommendations. Not only has it appeared to the members of that commission that there is something wrong with our company legislation; it has appeared so to many others throughout the country. In fact before the report of the price spreads commission was brought down, the Prime Minister (Mr. Bennett), in one of his radio addresses, I think the fourth, used these words:
Our Dominion Companies Act wall, therefore, have to be strengthened. There must be drastic simplification of capital structure so that the investor will be able to understand the nature of the stock or security he is purchasing. At the next session of parliament, the Companies Act will be amended so as to abolish the right to issue shares of no par value.
The price spreads commission-


Richard Bedford Bennett: Took a different view7.


Charles Edward Bothwell: -at page 39 of their report, after reciting certain difficulties that they believed existed, and also referring to constitutional questions that might arise, used these words:
But whatever may be the solution of this constitutional problem, it is clear that growing public resentment necessitates further social control of the financial operations of companies. Accordingly, it is urged here that, within its legal competence, the dominion should to the very limit give leadership with a strict act. We feel that the prestige of a dominion incorporation. is such that the provinces will follow such a lead.
The Secretary of State, apparently taking that as the basis of the situation w7as quite prepared to consider favourably the recommendations that they made, and although he has stated that many of these recommendations do not meet with his ideas, he nevertheless has brought them to the house for consideration. In doing that, although it may be an extraordinary proceeding, he has given us an opportunity of discussing the various recommendations.
At page 40 of their report the price spreads commission, in dealing with suggested amendments, say:

Companies Act-Mr. Bothwell
Therefore, in an effort to remedy some of the abuses discussed in the previous sections of this chapter, and pending some satisfactory solution of the problem of uniformity, we recommend certain changes to the Dominion Companies Act, irrespective of what the provinces may do.
These changes are based on -the assumption that limited liability company legislation involves three sets of obligations, as follows:
a. upon the company to create a non-withdrawable fund of capital, which would operate as security for bondholders, for creditors and shareholders.
And a little further down on the same page:
To strengthen and make more effective the first obligation, we recommend either the abolition of shares of no par value, or the requirement that the full consideration received for no par value shares would be credited to the capital account.
And further on:
The alternative proposal to complete prohibition, namely, the abolition of the right to allocate any part of the consideration received for an issue of no par shares to distributable surplus, would achieve the same objective.
In the amendments that have been brought down it appears to me

and I have gone through them carefully-that those recommendations hav-e not been carried out. The no par value share is still permitted, and- the distributable surplus is still permitted. Under section 4 of the bill provision is made in these words:
In the absence of other provisions in that behalf in the letters patent, supplementary letters patent or by-laws of the company, the issue and allotment of shares without nominal or par value may be made from time to time for such consideration as may be fixed by the board of directors of the company; and in fixing the. amount of such consideration, the board, subject to the provisions of this part, may provide in the contract of subscription for such shares that the consideration received therefor shall be deemed to be capital, excepting a part, if any, not exceeding twenty-five per centum thereof, which shall be set aside as distributable surplus;
In regard to this question of distributable surplus it strikes me that that provision of the bill now before us will permit a company, immediately after it is incorporated, before it has been able to earn- anything out of which to pay dividends, to use twenty-five per cent of its capital set-up for the purpose of paying dividends. That is the effect of it. To that extent the company starts out by paying part of its capital back to bondholders or shareholders or whoever shares in these dividends-in other words, starts out depleting its capital. Surely there can be no excuse for that. I heard the comment of the Secretary of State on the point this afternoon, but it does seem to me, as it does to many writers on the subject, that here is
no excuse for such a proceeding. There may be an argument in favour of no par shares; it seems to be a debatable question, but it would seem that the power to issue no par shares gives to promoters of a certain class just the opportunity they are looking for in order to pour water into the company. A no par value share is an elastic sort of thing. It is something like a rubber ruler. This was discussed last year when the bill was before the house; a full description was given of what can be done by a -company with no par value shares, and I do not intend to repeat the arguments that were used at that time. The minister has had them put to him, and- he is still opposed to amending the act to do away with no par value shares.
The next suggestion to which I should like to refer is found at page 42 of the report of the commission:
It is well known that a company customarily sells its shares, not to the public either direct or through agencies, but outright to an investment house. The investment dealer, in retailing the securities to the public, is not acting on behalf of the company, but is selling its own property and is not, therefore, subject to the new prospectus clauses. This, to a great extent, nullifies their value and should be altered.
The amendment made to section 73 of the act seems to provide for that; I think the minister has endeavoured to carry out fully the recommendation- of the committee in that respect. Then- on the same page I find this statement:
Furthermore, we believe that every prospectus should st-ate in clear detail all commissions, fees and other remuneration received by the promoters, underwriters or middlemen. The net consideration received or to be received by the company should be clear to the investor.
So far as I can find out that recommendation has not been implemented in any way.
Mr. -OAHAN; If the hon. gentleman- will allow me, I do not intend to discuss these clauses at length, but those matters are dealt within the balance sheet, and the balance sheet must be incorporated in the prospectus, so that whoever made that suggestion had not carefully read the -provisions of the 1934 act. I assure the hon. gentleman that now they must appear in the prospectus which is issued. If he looks into the -matter I am sure he will agree with me.
Mr. BOTHWE-LL: I am glad to have that explanation from the minister, and as we go through the bill in detail in committee n-o doubt other matters that may not be clear to us at the moment will be explained. The
Companies Act-Mr. Bothwell

next recommendation, to which I wish to refer is at the bottom of page 42:
We recommend also that steps should be taken to simplify the capital structure of corporations, by limiting the classes of shares that may be henceforth offered to the public, to common and preferred-without any of the numerous subdivisions that now so often confuse and' mislead the investor, and facilitate the concentration of control in the hands of entrepreneurial groups. Allied to this provision would be a stipulation that every share offered, both common and preferred, should bear equal voting rights. Management shares should be prohibited.
Some of the recommendations contained in that paragraph have been carried out. It is recommended that management shares should be prohibited; that has been provided for. Equal voting rights as between common and preferred shares is also provided for, but I am opposed both to the recommendation of the committee and to the amendment as it now exists.


Ian Alistair Mackenzie: So is the minister.


Charles Edward Bothwell: Yes, I believe the minister also said he was opposed to that. Equal voting rights are given the shares no matter what may be their denomination. It does seem to me that voting rights should be based in some way on the value represented by the share, and not on the share itself. In the first part of that recommendation the commission have asked that the classes of shares be limited. So far as I have been able to read these amendments, the only class of share that is eliminated is the deferred share.


Charles Hazlitt Cahan: There are only two other classes, common and preferred.


Charles Edward Bothwell: We have the common and preferred shares and we have all the classes that we had under the old act.


Charles Hazlitt Cahan: We have only the common and preferred1 now.


Charles Edward Bothwell: Yes, but there are
various classes of preferred shares.


Charles Hazlitt Cahan: Would it not be better to discuss these matters as we reach the various sections in committee?


Charles Edward Bothwell: Possibly it would be, and we will discuss them as we come to them, but I am mentioning these points now because they may clear up some matters in my mind before we give the bill second reading, and it may save time in committee. Then I read from page 43:
The duty of investigating and determining the adequacy of such consideration, where such
[Mr. Bothwell.j
adequacy is involved in any litigation, should be placed squarely on the courts.
That has reference to section 9GB, to which the minister has referred so often, and that can be dealt with in committee. Then I read from the middle of page 44:
Moreover, creditorship securities are now occasionally issued with such designations that they convey the impression that they constitute a lien or charge on property when in fact they are merely unsecured obligations ranking with other similar unsecured debts of the company. The proposed board should prohibit this practice.
No board has been set up; under the amendments apparently the Secretary of State takes the place of the board that was suggested by the price spreads commission. Then at page 45 they say:
We therefore recommend legislation making appraisal companies liable in damages to any one suffering loss through the purchase of stock, to which purchase any such appraisal has contributed, if it can be shown that such appraisal was untrue in any material part, and that it was issued or published by the appraisal company (a) without honest belief in its accuracy, or (b) without such company having first taken all reasonable means_ to verify the accuracy of the facts or opinions contained in the appraisal.


Charles Hazlitt Cahan: Is that not the law now?


Charles Edward Bothwell: Pursuant to that recommendation an amendment has been drawn up providing that actions for damages are permitted, but such actions can be taken only after securing the consent of the Secretary of State.


Charles Hazlitt Cahan: I do not like to interrupt, but that section does not apply to actions for damages against an appraisal company. This Companies Act does not deal with appraisals. Under the common law as it prevails in this dominion, if an appraisal company wrongfully puts out an erroneous statement it is liable to all who suffer damages by reason of that statement.


Charles Edward Bothwell: Reading the report of the price spreads commission one gets the impression that the members of that commission became convinced of the fact that appraisal companies were materially assisting in-I do not think this is too strong a word- fleecing the public, by not having regard to the ordinary ethics of business in making their appraisals. So it does seem to me that if this difficulty has crept into our business practice these appraisal companies should be bonded or very severe penalties should be provided for false appraisals or false reports on appraisals made by the company. [DOT]

Companies Act-Mr. Bothwell
I should like to say just a few more words particularly in connection with sections 5, 15, 16 and 20. In section 5 I find these words:
In no case shall any shares, whether common or preferred, or whether with or without nominal or par value, be issued and allotted as fully or partly paid up for less than what may justly be deemed in all the circumstances of the case adequate consideration-
I hardly know what you can take out of those words, "what may justly be deemed in all the circumstances of the case adequate consideration," or how wide be their scope. It seems to me that a simpler expression could be used in dealing with the consideration for shares that- are being allotted. Surely the time has come in the history of this country when if men are able to form corporations and go out and sell their stock to the public, the public have a right to expect that either dollars or dollars' worth are going into the company, and not simply "what may justly be deemed in all the circumstances of the case adequate consideration." We know of cases of incorporations-they will be found in any book of company law-where assets properly purchased for a few hundred or a few thousand dollars were then sold to the company at greatly enhanced prices and yet they were called "adequate considerations."


Charles Hazlitt Cahan: But I used the very words of the report.


Charles Edward Bothwell: I am not staying with the report in that connection. I believe that the making of the report would be a matter of compromise between the various parties to it, and while it makes suggestions this house is in a position to improve on those suggestions if it is possible for it to do so.


Charles Hazlitt Cahan: Certainly.


Charles Edward Bothwell: Those words "deemed in all the circumstances of the case adequate consideration" may not mean dollars at all, but that is what the Shareholders of tlft company will expect is going into the company- dollars or dollars' worth. I think that the Secretary of State will know that in the past the courts have refused to go back of what the directors have said was adequate consideration. If they the directors say that a lot bought for a thousand dollars and turned in to the company at ten thousand dollars, was at an adequate consideration the court then says the directors having decided that, we will not interfere.


Charles Hazlitt Cahan: I have read fairly well the decisions of the courts in Canada for pretty nearly fifty years, and I have never met such a case. I would like to be shown it.


Charles Edward Bothwell: I do not think we shall have any difficulty in doing that before we are through. If the minister would like to see these cases I will refer him to them. I have notes of them here.
Then in section 15 of the act, 96B, we have these words again, dealing with adequate consideration for fully paid shares: "or is to receive what may justly be deemed, in all the circumstances of the case, adequate consideration therefor in cash, property or services." It does seem to me that the shareholders of the company and the public itself that is reading its reports and helping to pay for the stock in order to earn dividends for the company are entitled to know that that company is operating on a sound basis and not on watered stock. Where you see words like that I can readily anticipate what arguments will be advanced in the courts of this country, and I am very doubtful if a judge will be able, to say that dollars or dollars' worth are there.
Then it appears to me that section 16 of the bill is very weak. It says:
Subject to the provisions of any by-law of the company duly enacted under the provisions of this act, eiieh share of the capital stock of any company issued' and allotted shall, subject to the provisions of this part, carry voting rights and entitle the shareholder to one vote for each such share owned by him.
I have referred before to voting on the value of the share instead of on each share, but here it says "subject to the provisions of any by-law of the company duly enacted under the provisions of this act." Surely it is possible there for the company to do anything they like in connection with these voting rights. Then of course there is the other objection to which I have referred. Section 20 provides that certain provisions of the act-
-"shall not apply to any company to which part one of the principal act is made applicable .. . nor to any company incorporated under the principal act prior to the coming into force of this act, and every such company shall continue to be subject to the provisions of the principal act which shall, as regards such companies, be and1 be deemed to be in full force and effect in the same manner as if the foregoing sections of this act had not been enacted.
Now what the price spreads commission found was that certain abuses had crept into business through our Companies Act, and they made recommendations which they thought would tend to abolish those abuses. But some of the most effective sections of this bill are going to apply not to the companies that have been sinning in the past but only to companies incorporated after the coming into force of the act. Surely these provisions ought to be made to apply to acts

Privilege-Mr. Ralston

committed by existing companies after the coming into force of this act instead of exempting them altogether.
I am throwing out these suggestions on the second reading, before we get into committee of the whole on the bill, because personally I am very much in sympathy with the move made by the price spreads commission, although I am not in agreement with everything they said. Most of their recommendations that are of value in controlling a certain type of predatory incorporation were recommended to the minister last year when the main act was being put through. I am only expressing at this time the hope that they will be embodied in the bill and that we shall endeavour to cure the abuses which the price spreads commission found to exist.



PRIVILEGE-MR. RALSTON

Hon. J. L. RALSTON (Shelburne-Yarmouth) :: Mr. Speaker, I rise to a question of privilege. This afternoon when I was not in the house I understood that the Prime Minister (Mr. Bennett) delivered an address in which he intimated that I had accepted a brief and that something was represented on the back of that brief, which only means one thing in legal parlance. The custom is among lawyers, particularly in the old country, for a solicitor to furnish a brief to counsel and on the back of that brief to endorse an amount indicating the fee. The imputation which my right hon. friend has made is absolutely unfair, unjust and wholly false, and I submit that it is unworthy of any member of the house, and particularly of the Prime Minister, who is a distinguished member of the bar. I can only think that it was done perhaps in the heat of debate. But I myself have endeavoured to observe the amenities of debate in the past. I have not hit below the belt as my right hon. friend did this afternoon. I call on him to withdraw any imputation whatever that I have been engaged in this matter professionally in any way, or that I have ever accepted or received or expected to receive or am to receive any remuneration or any consideration of any kind which would be represented by an endorsement on the back of a brief.


Richard Bedford Bennett: Mr. Speaker, I did not make the statements that the hon. gentleman has mentioned. If he had read what I said he would have read it exactly as I said it, and that is what he should have done. I made no such imputation. I did take occasion to refer to the observations he made to conditions 
with respect to my friend, and I said that they were unworthy of this house.
The imputations, if he calls them such, were not made. There were no imputations. Just what I said I said. What he said about my friend he said, and he brought about exactly the observations I made as to a distinguished member of the legal profession residing in Montreal, speaking of details with respect to matters transacted1 on the Winnipeg'grain exchange that could come to him in only one way, from information furnished either by the exchange or members thereof, by the brief that they gave him. I called it a brief because that is the term which would be used by professional men. That is what I said, if my memory serves me aright. The hon. member has the paper in front of him and he can see the exact words. I said that I should like to see what was marked on the back of it. I think that is what I said. If that is any different from what was said by him yesterday with reference to Mr. John McFarland, I want to know about it.


Mr. HANBURY:: Two wrongs do not make a right.


James Layton Ralston: I am going to read the
extract as it appears in Hansard.


Richard Bedford Bennett: As to what should have been done.


James Layton Ralston: It is not necessary to
read it on the question of having a withdrawal. This is what the right hon. gentleman said:
That is the position that has been taken in this house. Again, it is very interesting to observe the discipline with which hon. gentlemen who are not well informed, accept the brief that is tendered to them and then make a speech in the House of Commons. The leading member who spoke for the opposition is a distinguished lawyer; he did not desire to make that speech; he has made his statements jmd they are well known, but he was told to speak, so he took the brief and made the statement. From whom did he get his facts that he referred to as "ifs"? Who supplied' them to him? Who gave him his brief and what does it represent on the back of it? That is the question.
My right hon. friend knows perfectly well that that means only one thing, that there is a direct endorsement on the back of the brief to the effect that the person who receives it is entitled to receive a fee. I am surprised that my right hon. friend has not referred to that at all in the lame explanation which he made. He knows perfectly well what a brief is and he knows as a counsel that what is represented on the back of a brief is the amount of the fee. I say to my right hon.

Privilege-Mr. Ralston
friend that that is the imputation which was made immediately apparent to every lawyer in tnis house and throughout the country and I ask him to withdraw it.


Richard Bedford Bennett: I repeat that after having heard it read it is little different from what I thought it was. What does it represent on the back of it, I said. Let me say what it represents on the back.


James Layton Ralston: What did you mean?


Richard Bedford Bennett: Just exactly what it
says.


James Layton Ralston: What is that?


Richard Bedford Bennett: There is no imputation
of any kind.


John Campbell Elliott: Why was it said?


James Layton Ralston: I ask my right hon.
friend what he means by "what does it represent on the back of it"?


Richard Bedford Bennett: From whom the brief
was received.


James Layton Ralston: My right hon. friend as
a leading member of the bar, as a former president of the Canadian Bar Association, as a gentleman who has the keeping of the discipline and the good name of this House of Commons in his hands


Richard Bedford Bennett: Mr. Speaker, a question
of privilege does not involve the opportunity to cross-examine. The hon. member has made his statement and I have made mine.
M:r. RALSTON:	Does my right hon.
friend think I am going to let it pass with the slipshod explanation he has made? I say that, my right hon. friend has made an imputation which will be regarded as an imputation by every lawyer in the country, and he knows it.


Ian Alistair Mackenzie: Withdraw.


James Layton Ralston: I ask him to withdraw
that imputation.


Richard Bedford Bennett: I said that I made no such imputation.


James Layton Ralston: Would my right hon. friend permit that statement from any other hon. member of this house and say that he made no imputation?


Richard Bedford Bennett: I say that I made no imputation such as the hon. member has suggested.


Wilfred Hanbury: Withdraw it.
92582-233 i


Richard Bedford Bennett: I am not withdrawing anything.


James Layton Ralston: I ask the Prime Minister to explain what he meant by the words, "what does it represent on the back of it" if it was not an imputation?


Richard Bedford Bennett: Just what the words say.


Mr. SPEAKER:: With regard to the question raised by the hon. member for Shelburne-Yarmouth (Mr. Ralston), I must say that I was in the house this afternoon when the Prime Minister (Mr. Bennett) made his statement and as a lawyer of some years standing at the bar I must confess frankly that I certainly did not take the imputation from the remarks of the Prime Minister which the hon. member for Shelburne-Yarmouth has. If I had taken any such imputation I certainly would have requested the Prime Minister to withdraw. The Prime Minister has stated that he made no imputation in the matter and naturally I must accept his statement. He has stated emphatically on more than one occasion since the question of privilege has been raised that he made no such imputation and that is the statement I am bound to accept.


James Layton Ralston: I do ask if the words mean anything at all. If they do not contain an imputation why were they used? Those words were immediately followed by the words, "That is the question." What do the words mean if they do not mean to impute what I have just suggested? Can your honour as a distinguished lawyer conceive of any other meaning than the imputation to which I have just referred?


Pierre Édouard Blondin: I must confess frankly that I do not take the imputation from the words that the hon. member has taken. I am sure he will agree with me that had I taken any such imputation it would have been my duty as Speaker to ask the Prime Minister to withdraw it. But I took no such imputation.


James Layton Ralston: W'hat do they mean, then?


Pierre Édouard Blondin: The Prime Minister has stated emphatically that he made no such imputation with respect to the matter, and I must accept his statement.


James Layton Ralston: I ask. then, that the words be struck out of the record, if they do not mean anything. I am asking that your honour direct that.
Privilege-Mr. Ralston


Richard Bedford Bennett: They are in my record.


James Layton Ralston: With all due deference to the ruling of Your Honour, I submit that every lawyer in Canada except your honour and the Prime Minister will take the meaning from those words which I have suggested.


Richard Bedford Bennett: The Minister of Justice (Mr. Guthrie) sits beside me and he does not.


James Layton Ralston: If the Minister of Justice can tell me what they mean, if they do not mean that, I would appreciate it.


Hugh Guthrie: I certainly did not think that the words contained any such imputation as my hon. friend seeks to find in them. I have had considerable experience in the province of Ontario in the giving and taking of briefs and I have never seen the fee marked on the back of a brief. 1 know in England it is the custom and practice to mark the brief with the fee.


James Lorimer Ilsley: Every lawyer knows that, and that is why he would take the imputation.


Hugh Guthrie: I do not believe that is the practice in any part of Canada. I heard the statement made and no hon. member in the house placed the interpretation upon it which my hon. friend does.


Ian Alistair Mackenzie: The
right hon. leader of the opposition (Mr. Mackenzie King) objected immediately afterwards.


James Lorimer Ilsley: Every lawyer on this side
took that imputation.


Hugh Guthrie: The reference as to what was endorsed on the brief was an interrogation as to where the brief had come from, nothing more than that. It was an inquiry as to whether it represented this or that interest. I think my right hon. friend is putting the matter entirely beyond reason when he suggests that the Prime Minister made any such imputation.


James Layton Ralston: I am only taking the
Prime Minister's words, 'based on his knowledge of the practice of solicitors and barristers.


Hugh Guthrie: I am satisfied that no
such imputation existed in the minds of hon. members of this house.


Ian Alistair Mackenzie: The
Minister of Justice said that no one put that interpretation upon the words of the Prime fMr. Ralston.]
Minister but immediately after they were uttered the right hon. leader of the opposition (Mr. Mackenzie King) got up and said:
I must say that the right hon. gentleman is saying either too much or too little. He has reflected upon an hon. member in his absence.
Mr. Bennett: I have no right to be interrupted.
Mr. Mackenzie King: I will not sit here and see a colleague misrepresented by anybody and especially by the Prime Minister. I wish to say that the hon. member of whom he has spoken is an hon. member and not open to the kind of reflections that have been made.
The observations of the Minister of Justice fall very flat indeed.


Jean-François Pouliot: Mr. Speaker, on the point of order-


Pierre Édouard Blondin: I have already ruled on
the question of privilege.


Jean-François Pouliot: I am speaking to the question of privilege and I have a precedent to quote to your honour.


Pierre Édouard Blondin: I have already given my
ruling in connection with the matter and I see no reason to change it. The matter has been dealt with quite fully. The Prime Minister has made an emphatic and clear statement that he did not attribute to the words he uttered the meaning suggested by the hon. member for Shelbume-Yarmouth. I am bound to accept the Prime Minister's denial of the meaning which has been taken from the words.


Jean-François Pouliot: Even if that is your honour's ruling-[DOT]


Some hon. MEMBERS:: Order.


Jean-François Pouliot: I am rising to a different
point of order. My point of order-


Some hon. MEMBERS:: Order.


Ian Alistair Mackenzie: That is
quite in order.


Jean-François Pouliot: The fact that the Prime
Minister-


Pierre Édouard Blondin: Has the point of order
in connection with which the hon. member proposes to address the chair any relation to the incident we have been discussing?


Jean-François Pouliot: I will tell your honour


Pierre Édouard Blondin: Will the hon. member
either answer my question or be seated?


Jean-François Pouliot: It is from a different angle, sir, and with regard to the decision-


Pierre Édouard Blondin: My decision having been. given, the matter is settled.

Privilege-Mr. Ralston


Ian Alistair Mackenzie: With all due respect to Your Honour-


Some hon. MEMBERS:: Order.


Ian Alistair Mackenzie: I beg
your pardon; I can rise any time I like to a point of order. I know the rules as well as any hon. member of this house. I am rising to a point of order directly concerning a question of privilege, and I submit that, as well as with respect to a question of privilege, any hon. member may rise to a point of order with respect to any incident in the course of debate.


Pierre Édouard Blondin: The decision having been once given, the matter is closed.


Jean-François Pouliot: I did not rise to discuss your decision at all, Mr. Speaker; I rose to a point of order with respect to the discussion that has taken place, and as a matter of privilege affecting all members. The point is this, with- relation to the ruling you gave regarding what had been said by the Minister of Railways about a journalist of the west- your decision thereon. I abide by what Your Honour stated. The question of privilege is this. Two years ago-


Pierre Édouard Blondin: Order. Will the hon. member be good enough to state the point of order to which he is now rising.


Jean-François Pouliot: I cannot state it if I am not allowed to speak. I will be as brief as possible.


Pierre Édouard Blondin: I must ask the hon. gentleman either to retain his seat or to advise the chair as to the question he is now bringing up for discussion on a point of order. He must not discuss precedents of two years ago.


Jean-François Pouliot: I hold Your Honour in high regard and I will abide by the ruling of the chair; and I may say that since Your Honour assumed the chair I have never challenged your rulings. Two years ago-


Pierre Édouard Blondin: Will the hon. member please state the question he wishes to discuss on the point of order.


Jean-François Pouliot: Yes, Mr. Speaker; but I cannot state the point of order by merely opening my mouth. I have to say something.


An hon. MEMBER:: Next sitting of the house.


Pierre Édouard Blondin: If the hon. gentleman wishes to address the chair on a point of order he: must direct his remarks to the point of order and not to something that happened two years ago.


Jean-François Pouliot: Yes, sir. The only thing I wish to bring to Your Honour's attention is this fact, that at the request of the Prime Minister himself two years ago-


Pierre Édouard Blondin: The hon. member must state the question on which he is rising to a point of order.


Jean-François Pouliot: On account of the disturbance I did not hear Your Honour.


Pierre Édouard Blondin: I must request the hon. member to refrain from carrying the matter further.


Jean-François Pouliot: It is a matter of privilege.


Some hon. MEMBERS:: Order.


Richard Bedford Bennett: If the hon. member for Shelburne-Yarmouth inferred, from the observation made by me this afternoon, that I imputed to him financial benefits from the speech he made in this house, I desire to assure him that I made no such implication.


Wilfred Hanbury: Just a little belated.


Jean-François Pouliot: But, sir-


Some hon. MEMBERS:: Order.


James Layton Ralston: Tlhe language was, a professional engagement of some kind by the acceptance of a brief. If my right hon. friend withdraws that-


Richard Bedford Bennett: I cannot do that, nor do I propose to do it, for the simple .and obvious reason that had he not been a solicitor he would not have been entrusted with the defence.


James Layton Ralston: I said, "a professional engagement."


Richard Bedford Bennett: I did not say anything about professional engagement.


James Layton Ralston: I said that and1 the right hon. gentleman said he could not withdraw it.


Richard Bedford Bennett: I .made no reference to professional engagement.


James Layton Ralston: The reference is to the acceptance of a brief and what the right hon. gentleman says in effect is that the words to which I have referred, and to which I have taken objection, mean what they say and nothing more, and there is no imputation. Therefore it simply means that they are meaningless, like a good many of the remarks of my right hon. friend.


Richard Bedford Bennett: Clearly, if that is the state of mind of the hon. gentleman-


James Layton Ralston: I have a right to be in such a state of mind and to feel resentment.
Privilege-Mr. Ralston


Richard Bedford Bennett: Not nearly so much as I have. What was said, if I recollect, was, "I should like to see what is represented on the brief." Just look at it.


James Layton Ralston: "What does it represent on the 'back of the brief?"-on the back of it.


Richard Bedford Bennett: Now if from that the hon. gentleman concludes that I inferred that he is receiving financial reward for what he said, I made no such inference at all. I was referring to the fact that an eminent counsel practising law in Montreal was making a defence, which was the defence of the particulars of transactions 'that were not known to him and could only be known from one source.


James Layton Ralston: That is only adding insult to injury. I spoke in this house, not as a member of the bar, not as a member of the Montreal bar, but as a .member of this house, without any thought or intention or idea or motive from a brief or the acceptance of a brief or from any professional qualification or special interest whatever. I say that to you, Mr. Speaker, to this house and to my right hon. friend the Prime Minister. And when he suggests that I accept a brief as a Montreal counsel undertaking a defence, he states what is absolutely false and I throw it in his teeth, and I tell him so.


Jean-François Pouliot: Mr. Speaker-


Pierre Édouard Blondin: I think there has been sufficient argument on the question of privilege, and the debate anight very well continue.


Jean-François Pouliot: Rising to a question of privilege and a point of order, what I have to say is this-and I will be very brief ini stating the point. The point is this, that two years ago, at the request-


Pierre Édouard Blondin: While I admire the hon. gentleman's persistence, I must ask him mot to proceed further with the point .of order along the line he has been following, proposing as he does to discuss something that took place two years ago.


Jean-François Pouliot: It is not with regard-


Pierre Édouard Blondin: I have ruled on the matter and I must ask the hon. gentleman not to persist. Is the house read(y for the question?


James Layton Ralston: I call your honour's attention to the fact that my right hon. friend imputed that I was defending someone as a Montreal lawyer, or otherwise, and I say again that I was defending no one whatever, but was endeavouring to defend the people of

Canada against the machinations of this government. I ask him to withdraw the suggestion that I was engaged in the defence of anyone. I am asking my right hon. friend to withdraw that imputation.


Richard Bedford Bennett: He has said all that he proposes to say.


John Campbell Elliott: I regret that the Prime Minister does not see his way dear to withdraw the remarks he made.
Some hon MEMBERS: Oh, oh.


John Campbell Elliott: Let my hon. friends contain themselves a moment. I was present just as the Minister of Justice was present when those remarks were made this afternoon and I am surprised to hear you say, Mr. Speaker, that you could not infer from them that there was an imputation of something that was intended to be derogatory to the hon. member for Shelburne-Yarmouth. Why were those remarks made? What object is there in them, what could it be, if there was no suggestion that there had been something marked on the back of that brief? It is in keeping with the dignity of the house that those words should be withdrawn.


Pierre Édouard Blondin: I do not know whether the hon. member who has just taken his seat was in the house during all the argument.


John Campbell Elliott: I heard it all.


Pierre Édouard Blondin: He will remember that the Prime Minister did withdraw any imputation such as the hon. member for Shelburne-Yarmouth has suggested, that the hon. member had been paid fees for representing certain interests in the house. I think the statement of the Prime Minister closes that matter.


James Layton Ralston: My point was that he was suggesting that I was acting professionally in handling a brief in defence of certain interests, whether I was receiving a fee or not. I asked the Prime Minister to withdraw that suggestion. I thought he would, but apparently he has not done so. I am waiting for him to do so.


Some hon. MEMBERS:: Question.


James Layton Ralston: I think I have a right to ask the Prime Minister to withdraw that. It is a direct imputation.


Pierre Édouard Blondin: The hon. member certainly has a right to ask the Prime Minister to withdraw it, but the Prime Minister has a right to withdraw it or not as he sees fit.

Privilege-Mr. Ralston


James Layton Ralston: I ask you, sir, to request the Prime Minister to withdraw the statement that I as a professional man held a brief in this house in the defence of certain interests, whether for fees or otherwise.


Pierre Édouard Blondin: I certainly did not take any such meaning from the remarks of the Prime Minister as made this afternoon. I state that again as I did so previously. Apparently the other lawyers held the same opinion as I did, because there was not a lawyer who got up and raised a point of order at the time.


James Layton Ralston: I am speaking about what the Prime Minister said just a few minutes ago when he said that he withdrew the imputation that I was receiving any fees of any kind, but he renewed the imputation that I as a Montreal lawyer had taken a brief in the defence of certain interests.


Hugh Guthrie: That is quite legitimate.


James Layton Ralston: Does the Prime Minister say it is quite legitimate to suggest that a member of the house is, as a professional man, even though he gets no money, taking a brief in the defence of certain interests.


Richard Bedford Bennett: It is perfectly obvious for an hon. member to make that statement just as it was for the hon. member himself to say " if I am correctly advised;" " if I am correctly informed."


James Layton Ralston: I am not talking about " if I am informed." I am talking about what the Prime Minister said to-night-


Richard Bedford Bennett: I have nothing to withdraw as regards what I said to-night.


James Layton Ralston: -and the imputation that I was speaking otherwise than as a member of the house and quite apart from any professional association of any kind. I have no professional association either for fees or otherwise in connection with the interests to which he refers. I ask the Speaker to direct the Prime Minister to withdraw that imputation.


Pierre Édouard Blondin: I have already stated my position in connection with the matter again and again, and while there is apparently a difference of opinion, I am sure the hon. member for Shelburne-Yarmouth has expressed his honest views in connection with this matter. I have taken a different meaning from the words of the Prime Minister; I think the house took a different meaning from that taken by the hon. member, and I am not in a position nor do I feel called upon to ask the Prime Minister to withdraw his remarks, particularly in view of the statement which he has made on more than one occasion.


James Layton Ralston: I think we are talking about two different things. I have heard what the Prime Minister has said and what you, sir, have said in connection with what he said this afternoon. I am referring to the other reference the Prime Minister made this evening in which he not only insinuated but imputed that I as a professional man from Montreal had taken a brief for the defence of certain interests without any hope of reward, fee or gain or anything of that kind. That is an imputation that I as a member of the house was speaking as a professional man rather than as a member of the House of Commons in the interests of the people I represent. I ask the Prime Minister to withdraw that statement and I request you, sir, so to rule.


Pierre Édouard Blondin: I have ruled on the matter more than once on other questions which arose out of this argument. I think the matter has been fully discussed and I do not think anything will be gained by further discussion.


James Layton Ralston: I have the greatest respect for the chair and for you, sir, but you evidently did not hear what my right hon. friend said when you suggest that the incident is closed by what he said previously with regard to making no imputation. I ask you, Mr. Speaker, as a professional man to consider the imputation which is contained in the suggestion made by the Prime Minister that I as a professional man had taken a brief in the defence of certain interests, even though he withdrew the statement that I had any fee or hope of reward of any kind. That in itself is an imputation on the integrity of a member of the house, on his fairness and open mindedness, and should be withdrawn. I have already denied it and I deny it again.


Pierre Édouard Blondin: I think the hon. member has covered the point on more than one occasion. I see no reason for coming to a different conclusion from that which I have stated more than once on both points which have been raised by my hon. friend. So far as I took the meaning of the words of the Prime Minister, during the address which he made this afternoon, he cast no imputation upon the motives of the hon. member for Shelbume-Y armouth.


James Layton Ralston: It is not the address
which he made this afternoon; it is what he stated to-night.


Pierre Édouard Blondin: And I will add to that,
to-night.


James Layton Ralston: Before the incident is
closed and with great respect to you, sir, I feel that the matter is most serious and I respectfully appeal from your ruling.
Privilege-Mr. Ralston


Pierre Édouard Blondin: Will the hon. member
reduce the question to writing?


Richard Bedford Bennett: I think there is no
appeal from a ruling on a question of privilege.


Ian Alistair Mackenzie: Where
does the Prime Minister get that?


Jean-François Pouliot: On a question of privilege, the Prime Minister is following along the lines of the hon. member for Winnipeg North Centre. When I rose to a point of order-


Some hon. MEMBERS:: Order.


Jean-François Pouliot: Are we not to enjoy parliamentary rights in this chamber? Here we have Stalin preventing us from defending our rights in parliament.


Ian Alistair Mackenzie: Mr. Speaker, you directed the hon. member for Shel'burne-Yarmouth to set out his reasons in writing. That is not in accordance with the rules of the house. The question was that the statement made by the Prime Minister was an imputation of improper motives to another member of the house. The member concerned, exercising his privilege as a member of the house, requested your honour to direct the Prime Minister to withdraw those remarks. Your honour refused to do so and we appeal from your ruling.


Pierre Édouard Blondin: Quite frankly, I am not
certain whether, because I refused to accede to the request of the hon. member for Shel-burne-Yarmouth to ask the Prime Minister to withdraw certain remarks, there is any appeal from a decision of that kind.


Ian Alistair Mackenzie: I think
the remarks in themselves reflect upon a member of the house. I ask that they be expunged from the record.


Pierre Édouard Blondin: Quite naturally I am in
the judgment of the house, but I do not know whether the appeal will lie. It is apparently a question of interpretation of words that may or may not have been used.


Wilfred Hanbury: Nobody's interpretation
except the Prime Minister's.


Jean-François Pouliot: And he himself cannot understand himself.


Pierre Édouard Blondin: I must ask the hon. member for Shelbume-Yarmouth if he will kindly give me his opinion whether or not there is an appeal on the matter under discussion. I am under the impression at the moment that there is not.


James Layton Ralston: Mr. Speaker, I am not as well versed in the rules of the house as either your honour or the Prime Minister or the 
leader of the opposition. What I was going to do, should you rule that there is no appeal, is to appeal from that ruling, from which there is no doubt there is an appeal.


Pierre Édouard Blondin: It seems to be a rather ridiculous situation.


James Layton Ralston: It is not ridiculous.


Pierre Édouard Blondin: I am not referring to the merits of the matter; I mean it seems to be a rather ridiculous position for the house to be in, when the Speaker rules that there is'no appeal, to say, "I appeal from that decision."


James Layton Ralston: That has been done before.


Pierre Édouard Blondin: I accept the suggestion of the hon. member for Shelbume-Yarmouth. The reason I asked that the matter be put in writing was that I myself am in doubt of the exact words of which the hon. member complains.


Wilfred Hanbury: Then why did you rule?


Pierre Édouard Blondin: What are the exact words of which the hon. member for Shelburne-Yar-mouth complains?


James Layton Ralston: I have already stated it three or four or five times I think, but in deference to your honour I will endeavour to state again the effect of what my right hon. friend said, because of course we have not the record before us of what was said to-night. I understood my right hon. friend to say that I, as a professional man from Montreal, had accepted a brief in defence of certain interests. He withdrew the imputation that there had been any fee or remuneration or consideration of any kind attached, but the other part is what I objected to and what I ask Your Honour to request the Prime Minister to withdraw.


Pierre Édouard Blondin: I say again I have no right to ask the hon. member to withdraw the remarks when I do not impute to them the meaning which the hon. member has placed upon them.


James Layton Ralston: If it is said that a member is speaking as a professional man and not as a member of this house, surely that is a reflection.


William Lyon Mackenzie King: Surely when an hon. member on this side gives his word with regard to any land of reflection or imputation, which is either directly or indirectly an imputation of motive, it is for the hon. gentleman to accept the word of the hon. member. The Prime Minister should set an example in that respect.

Privilege-Mr. Ralston


Cameron Ross McIntosh: That is what we have had to do here all along.


Pierre Édouard Blondin: I do not know whether the suggestion I am about to make will meet with the approval of the house. I think the house will agree that I want to do what is right.


Some hon. MEMBERS:: Hear, hear.


Pierre Édouard Blondin: Would it be possible that the matter be allowed to stand until I see Hansard and see just what was said?


Wilfred Hanbury: The Prime Minister does not deny it.


Pierre Édouard Blondin: Before the leader of the opposition (Mr. Mackenzie King) came in we had a discussion which lasted some time, and there have been arguments pro and con, and I cannot recall the exact words which were used by the Prime Minister. The Prime Minister states that he did not impute any improper motive to the hon. member for Shelburne-Yar-mouth, and the hon. member for Shelburne-Yarmouth states that he did. Whether or not the suggestion I make is acceptable-


James Layton Ralston: I am going to make a
suggestion, that is that the Prime Minister himself repeat what he said before. Then your honour will have exactly the words to which I refer.


An hon. MEMBER:: No, let Hansard give it.


James Houston Spence: Why worry so much if your conscience is clear?


James Layton Ralston: I have heard the hon.
gentleman on the other side; I want to say that my reputation is just as precious to me as is his to him, and I have not been used to this sort of thing, particularly from the right hon. the Prime Minister.


Mr. REID:: And they will repeat it, too.


Some hon. MEMBERS:: Question.


Some hon. MEMBERS:: Withdraw.


Some hon. MEMBERS:: Why withdraw?


William Lyon Mackenzie King: In a matter of this kind the rights and privileges of every hon. member are at stake. Surely the Prime Minister, who is custodian of the honour of the house, ought to be prepared to set the example that is necessary in a matter of this kind.


Hugh Guthrie: Had my right hon. friend the leader of the opposition been present during the earlier part of the discussion-


William Lyon Mackenzie King: I know what took place.


Hugh Guthrie: -I think he would agree that a full withdrawal of any improper imputation against the hon. member for Shel-burne-Yarmouth was made.


James Layton Ralston: There cannot be anything but an improper imputation.


Hugh Guthrie: Now the new suggestion comes from the hon. member for Shelburne-Yarmouth-


James Layton Ralston: No, from the Prime Minister.


Hugh Guthrie: -that it is a breach of the privileges of this house to say that an hon. member has received a brief on a discussion. I have never heard of that being taken as a breach of privilege on any occasion. The imputation that he has accepted a fee I grant is improper; that has been fully withdrawn. In my judgment the matter ought to be dropped.


William Lyon Mackenzie King: Surely an hon. member cannot at one and the same time act as an independent member of parliament and one who supports a brief which he has received.


Hugh Guthrie: Can my hon. friend cite any case where that has been called a breach of privilege?


James Layton Ralston: No one has ever been
accused of it.


Some hon. MEMBERS:: Question.


James Layton Ralston: I have made an emphatic denial of the statement made by my right hon. friend, and I submit that under the rules of this house my right hon. friend must accept my statement. Does my right hon. friendspeaking to my right hon. friend through you, Mr. Speaker-does he decline to accept my statement as a member of this house?
Some hon. MEMBERS : Answer.


Charles Hazlitt Cahan: There are two sides to this. The Prime Minister stated that he withdrew any imputation upon the honour of the hon. gentleman. The hon. gentleman is bound to accept that. But he does not accept it; he is now striving to find some other statement to which he can take exception. If he accepts the statement of the Prime Minister, then this debate should certainly close.


James Layton Ralston: Apparently my hon. friend has not heard the debate.


Ian Alistair Mackenzie: He has
been asleep.
Privilege-Mr. Ralston


James Layton Ralston: I am not talking about
the imputation which the Prime Minister withdrew or stated! he did not make. I am referring to another imputation altogether. I say my right bon. friend has no right to insinuate in this house or suggest that any hon. member is speaking other than as a member of this house, or that he is speaking in a professional capacity. I denied that I was speaking other than as a member of this house and denied that I accepted any brief. I ask my right hon. friend! to accept my statement.


Richard Bedford Bennett: Question.
Some hon. MEMBERS':	Question.


James Layton Ralston: I submit, Mr. Speaker,
you should ask my right hon. friend to accept my statement.


Pierre Édouard Blondin: I do not think we are
getting any further with the matter beyond the point at which we had arrived some time ago. I can quite understand the matter from the point of view of the hon. member who raised the question of privilege, but I have already stated, and I state again, that the Prime Minister emphatically stated that there was no such meaning in the words which were quoted by the hon. member for Shelburne-Yarmouth as he gives to them. As to what subsequently happened, the exact words used by the Prime Minister I do not know. That is on the second point.


James Layton Ralston: But, Mt. Speaker, you
ruled on them.


Pierre Édouard Blondin: I ruled there was no
imputation.


James Layton Ralston: If you did not get the
words how could you make that ruling?


Pierre Édouard Blondin: I took it from the statement which the hon. member for Shelburne-Yarmouth made.


James Layton Ralston: With the greatest possible deference I must appeal from your ruling, Mr. Speaker, because I submit if that is permitted in this house any imputation can be made at any time that hon. members are not speaking in good faith.


Pierre Édouard Blondin: The hon. member for Shelburne-Yarmouth (Mr. Ralston) on a question of privilege has stated that certain improper imputations have been directed to him by the right hon. Prime Minister (Mr. Bennett). I have ruled that there were no improper imputations that were not withdrawn1. From that ruling the hon. member for Shelburne-Yarmouth desires to appeal. Have I stated the question correctly?


Mr. MacINNIS:: On a point of order-


William Lyon Mackenzie King: As I understand it, the hon. member for Shelburne-Yarmouth (Mr. Ralston) has stated on his word as a member of this house that such and such of his own knowledge is a fact, and he has asked the Prime Minister to accept that statement Surely it is the duty of the Prime Minister to accept a statement of that kind by an1 hon. member, and of your honour to rule that he should so accept it.


Pierre Édouard Blondin: With the greatest deference, there has been no denial by the Prime Minister. The gist of the complaint of the hon. member for Shelburne-Yarmouth, as I understand it, is that the Prime Minister has imputed to him improper conduct. I have ruled that no improper conduct has been imputed to the hon. member, and from that ruling the hon. gentleman has appealed.
Referring to paragraph 282 of Beauchesne I see that the procedure in a matter of this kind usually is to direct the clerk to take down the unparliamentary words to which objection has been taken. That has mot been done in this case and I shall endeavour to state the complaint of the hon. member for Shelburne-Yarmouth as fairly as possible. The hon. member for Shelburne-Yarmouth has complained that certain words used by the Prime Minister this evening imputed to him improper conduct as a member of parliament. I have ruled that the words so used did mot impute to the hon. member improper conduct, and from that ruling the hon. member desires to appeal.
The house divided om the question: Shall the ruling of the chair be sustained? And the ruling was sustained on the following division:
++YEAS
Messrs:
Arsenault
Belec
Bury
Chaplin
Davies
Dickie
Duranleau
Esling
Fraser (Cariboo)
Gardiner
Gobeil
Hay
Irvine
Kennedy (Peace River)
Luchkovieh
Macdonald (Kings)
McGillis
McLure
Maloney
Mitchell
Myers
Peck
Plunkett
Price
Quinn
Shaver
Short
Smith
(Viotoria-Carleton)
Spencer
Sproule
Stewart (Lethbridge) Stitt (Nelson)
Stitt (Selkirk) Southerland Turnbull Weir (Melfort) Wright-37.

Privilege-Mr. Ralston
NAYS	
Messrs:	
Golding	Motherwell
Hanbury	Neill
M.aclnnis	Reid
McKinnon	Weir (Macdonald)
McPhee	Young-10.
PAIRS	
(The list of pairs	is furnished by the chief
whips.)	
Messrs:	
Anderson (Toronto-	Mulock
High Park)	
Anderson (Hailton	Factor
Baker	Bertrand
Barber	Totzke
Baribeau	B e alibi en
Barrette	Rheaume
Bell (Hamilton West)	Mercier (St. Henri)
Bell (St. Antoine)	Raymond
Bell (St. John)	Dubois
Bennett	King
Bey non	Euler _
Bowen	McKenzie (Assiniboia)
Boyes	Mills
Burns	Butcher
Cahan	Rinfret
Cantley	Cardin
Caseeliman	Howard
Charters	Blair
Cotmam	Hurtuibise
Cowan	Ilsley
Dorion	V erville
Duguay	Dumaine
Dupre	Ferland
Edwards	Elliott
Embury	Bothweld
Ernst	Rradette
Fortin	Fafard
Gagnon	Boulanger
Ganong	Michaud
Garland (Carleton)	Gouilet
Geary	Mercier (Laurier-Outremont)
Gordon	Fiset, Sir Eugene
Gott _	Rutherford
Guthrie	Lapointe
Hackett	Perras
Hanson	Veniot
(York-S unbury)	
Harris	Jacobs
Johnstone	Donnelly
Jones	MacLean
Kennedy (Winnipeg)	McIntosh
Larue	Thauvette
Lafleche	Girouard
Laurin	Fontaine
Lawson	Gray
MacDonald	Urquhart
(Cape Breton)	
MacMillan (Saskatoon) Mackenzie (Vancouver) MacNicol	Rennie
McDade
MeGibbon
Manion
Matthews
Moore (Chateauguay-Huntingdon) Morand Mullins Murphy
Perley (Qu'Aippelle) Perley, Sir George
Dupuis Power Ohevrier Moore (Ontario) Dubue
Parent
Howden
Stewart (Edmonton)
Munn
Maxell

Pettit	Bouchard
Pickel	Boucher
Porteous	Maopbail, Miss
Rhodes	Ralston
Robinson	Desrochers
Ross	Roberge
Rowe	Lacroix
Ryerson	Taylor
Sauve	Seguin
Senn	Sanderson
Simpson (Simcoe)	Jean
Simpson (Algoma)	Casgrain Duff
Smith (Cumberland)	
Smoke	Poulio-t
Sipence	Fraser (Northumberland)
Spotton	MacMillan (Mackenzie)
Stewiart (Leeds)	Fournier
Stinson	Hall
Stirling	Hanson (Skeena)
Sullivan	Br asset
Tuimmom	St-Pere
Weese	Campbell
White (Loudon)	Gershaw
Willis	Brown
Wilson	Variance


John Campbell Elliott: I was paired with the hon. member for South Waterloo (Mr. Edwards). Had I voted I would have voted against the Speaker's ruling.


Ian Alistair Mackenzie: I was
paired with the hon. member for Saskatoon (Mr. MacMillan). Had I voted I would have voted against the Speaker's ruling.


Frederick William Gershaw: I was paired with the hon. member for London (Mr. White). Had I voted I would have voted against the Speaker's ruling. *


Charles Edward Bothwell: I was paired with the hon. member for Hastings-Peterborough (Mr. Embury). Had I voted I would have voted against the Speaker's ruling.


James Houston Spence: I was paired with the hon. member for Northumberland, Ont. (Mr. Fraser). Had I voted I would have voted to sustain the Speaker's ruling.


Jean-François Pouliot: I was paired with the hon. member for Brant (Mr. Smoke). Had I voted I would have voted against the Speaker's ruling.


Mr. PERLEY (Qu'Appelle):: I was paired with the hon. member for Vancouver North (Mr. Munn). Had I voted I would have voted to sustain the Speaker's ruling.


James Lorimer Ilsley: I was paired with the hon. member for Port Arthur-Thunder Bay (Mr. Cowan). Had I voted I would have voted against the Speaker's ruling.


Mr. BEYNON:: I was paired with the hon. member for North Waterloo (Mr. Euler): Had I voted I would have voted to sustain the Speaker's ruling.
Privilege-Mr. Ralston


Mr. BEAUBIER:: I was paired with the junior member for Ottawa (Mr. Ahearn). Had I voted I would have voted to sustain the Speaker's ruling.


Robert King Anderson: I was paired with the hon. member for Toronto West Centre (Mr. Factor). Had I voted I would have voted to sustain the Speaker's ruling.


Mr. GORDON:: I was paired with the hon. member for Rimouski (Sir Eugene Fiset). Had I voted I would have voted to sustain the Speaker's ruling.


Mr. ROBINSON:: I was paired with the hon. member for Portneuf (Mr. Desrochers). Had I voted I would have voted to sustain the Speaker's ruling.


Errick French Willis: I was paired with the hon. member for Lisgar (Mr. Brown). Had I voted I would have voted to sustain the Speaker's ruling.


Joseph Henry Harris: I was paired with the hon. member for Cartier (Mr. Jacobs). Had I voted I would have voted to sustain the Speaker's ruling.


Mark Cecil Senn: I was paired with the hon. member for South Perth (Mr. Sanderson). Had I voted I would have voted to sustain the Speaker's ruling.


Mr. McKENZIE (Assiniboia):: I was paired with the hon. member for Durham (Mr. Bowen). Had I voted I would have voted against the Speaker's ruling.


James Layton Ralston: I was paired with the hon. Minister of Finance (Mr. Rhodes). Had I voted I would have voted against the Speaker's ruling.


Charles Hazlitt Cahan: I was paired with the hon. member for St. James (Mr. Rinfret). Had I voted I would have voted to sustain the Speaker's ruling as I was present during the debate this afternoon and evening and I did not understand the Prime Minister to make any such imputation as that of which the hon. member (Mr. Ralston) complains.


Mr. MANION:: I was paired with the
senior member for Ottawa (Mr. Chevrier). Had I voted I would have voted to sustain the Speaker's ruling.


Mr. MUNN:: I was paired with the hon.
member for Qu'Appelle (Mr. Perley). Had I voted I would have voted against the Speaker's ruling.


William Lyon Mackenzie King: I was paired
with the right hon. the Prime Minister (Mr. Bennett). Had I voted I would have voted against the Speaker's ruling.

Mr. MeINTOSH:	I was paired with the
hon. member for Winnipeg South Centre (Mr. Kennedy). Had I voted I would have voted against the Speaker's ruling.


Mr. SIMPSON (Algoma):: I was paired
with the hon. member for Charlevoix-Saguenay (Mr. Casgrain). Had I voted I would have voted to sustain the Speaker's ruling.


Mr. BEAUBIEN:: I was paired with the
hon. member for Champlain (Mr. Baribeau). Had I voted I would have voted against the Speaker's ruling.
Mr. SAiUVE (Translation): Mr. Speaker, had I not been paired with the hon. member for L'Assomption-Montcalm, I would have voted to sustain your ruling.


Mr. DUPRE (Translation):: I was paired with the hon. member for Joliette (Mr. Fer-land). Had I voted, I would have voted to sustain, the Speaker's ruling.


Joseph Georges Bouchard: I was paired with the hon. member for Wellamd (Mr. Pettit). Had I voted, I would have voted against the Speaker's ruling.


Mr. PERRAS (Translation):: I was paired with the hon. member for Stanstead (Mr. Hackett). Had I voted, I would have voted against the Speaker's ruling.


Mr. BRADETTE (Translation.):: I was paired with the hon. member for Queens-Lunenburg (Mr. Ernst). Had I voted, I would have voted against the Speaker's ruling.


Mr. DUPUIS (Translation):: I was paired with the hon. member for Northumberland (N.B.) (Mr. McDade). Had I voted, I would have voted against the Speaker's ruling.



CONTINUATION OF DEBATE ON MOTION FOR SECOND READING

['Mr. Speaker, I had expected that this bill would come up in the house, and it is my desire to oppose it on second reading. Therefore I move the adjournment of the debate.\nMotion agreed1 to and debate adjourned.']
James Lorimer Ilsley: Mr. Speaker, I realize that the atmosphere of the house is such that it is difficult to make a speech on such a subject as the Companies Act at this hour of the evening, but there are a few observations that I would like to make on the bill. I want to congratulate the Secretary of State (Mr. Cahan) on the very full explanation that he gave of the bill on the second reading this afternoon and tonight. He took the recommendations of the price spreads commission one by one, stated the reasons why he disapproved or approved of them, as the case might be-he did not approve of very many-and explained the-bill very fully.

Companies Act-Mr. Ilsley
I do not intend at this stage to deal section by section with the bill that is before us, but I think the time is opportune to review the history of this companies legislation. About a year ago the Secretary of .State introduced a bill Which he regarded as the last word in a companies act, a bill upon which he put a great deal of time and a great deal of work, which embodied the suggestions he was able to get from the profession, and which he considered1 was as good a piece of work as could be done by this parliament on company legislation. Members from this side of the house offered certain suggestions. One of those suggestions was that no-par shares should be prohibited. Several amendments were proposed, notably by the hon. member for L'ast Mountain (Mr. Butcher) who had made a particular study of company legislation, but very few if any of those amendments were accepted by the Secretary of State. That was the first chapter in the attempts of the government to put the Companies Act in shape.
The second was the radio speech of the right hon. the Prime Minister (Mr. Bennett) in the early part of January. In the reform speeches, so called, which went out over the radio in the early part of January the Prime Minister made a great point of the defects in the Companies Act. By implication he attacked the work of his colleague the previous spring. I have his words hero, and so that there may be no mistake about it I want to put them on Hansard. Speaking of the Prime Minister the report in the Ottawa Citizen says:
Turning then to what he termed "the social and economic evil commonly called 'stock watering.' " Mr. Bennett said this constituted a definite impairment of the economic system.
"Notwithstanding the legislation of recent years, the protection of the investor must be improved," the Prime Minister declared. "It is still inadequate. There must be stricter government regulation of finance in this field so that improper practices may be detected in time and effectively dealt with. The ravages of the promoter who operated in the period of 1922 to 1930 cannot now be repaired'. But we can at least see to it that he does not again operate in the same way.
Our Dominion Companies Act will, therefore, have to be strengthened. There must he drastic simplification of capital structure so that the investor will be able to understand the nature of the stock or security he is purchasing. At the next session of parliament, the Companies Act will be amended so as to abolish the right to issue shares of no par value. The searchlight of publicity must be focussed on every issue of securities offered to the public. Adequate machinery must be set up to inquire into and report on corporate developments which tend towards consolidation
and concentration. In other words, the door must be locked before, not after the horse is stolen.
Between 1922 and 1930 a great many of our people were the victims of practices against which the law provided no adequate safeguards. From time to time, attempts have been made to cure these persistent and recurring evils. None have been wholly effective. The many victims of stock promotion, in the years before the crash, are the certain proof of that. The problem bristles with difficulties. But the government will enact legislation at the next session of parliament which it confidently expects will, with the wholehearted cooperation of the citizens of Canada, stamp out this evil in corporations operating under dominion authority.
Those are the resounding words which the Prime Minister uttered in January last. That is the second chapter in the government's activities in the reform of company law.


Ian Alistair Mackenzie: Cabinet solidarity.


James Lorimer Ilsley: I should like to refer to the two points stressed by the Prime Minister. The first point was the abolition of shares of no par value, and the second point was the drastic simplification of capital structure so that the investor might be able to understand the nature of the stock or security he might purchase. I have no doubt that the Prime Minister then had in mind the abolition of the right to issue class A, class B and other classes of shares. Those were the two specific reforms the government was going to introduce in the Companies Act. The Prime Minister made an attack by implication upon the work of his colleague the Secretary of State. In the previous spring after the consolidation of the act had been completed the Secretary of State said that that was as good a job as could be done by any parliament.
We come now to the third chapter, the price spreads committee which later became the price spreads commission. This body heard certain evidence, not very much, in connection with the operation of dominion companies. The opinion of the commissioners was that the concentration of business in Canada in the hands of the great corporations was one of the most notable phenomena of the present day. The commissioners then went on to consider what evils might be corrected by amending the Companies Act, and they made certain recommendations. The Secretary of State stood up this afternoon and, if I understood his argument correctly, argued that according to the reference they had no power to consider amendments to the Companies Act. Upon a literal interpretation of the terms of the reference no doubt that would be correct, but broadly speaking they certainly

Companies Act-Mr. Ilsley
had the power because that is the legislation of which individuals avail themselves when they form themselves into companies. It was impossible to consider intelligently the problems before the commission without giving some consideration to the Companies Act. The Secretary of State said that many other witnesses should 'have been brought before the commission, that he should have been consulted and that we should have gone about our work in a different way. There may 'be quite a bit of force in the suggestion that the Secretary of State should have been consulted to a greater extent, but I would remind the house that w-e sat for fourteen months, with the exception of four months in 'the summer, and dealt with a wide range of subjects. It was impossible to get as much evidence as we would have liked to get about the matters before us, but after a great deal of discussion the commissioners decided to make certain recommendations, and it is the implementation of those recommendations which is now before the house.
This afternoon the Secretary of State went over this bill, section by section, and subjected it to the most masterly analytic and' devastating criticism. I listened attentively to his remarks, and in recent years I have never heard a more able attack upon a piece of legislation than that made upon this bill by the hon. gentleman this afternoon and evening. What- is the meaning of this? The hon. gentleman directed his attack to two points. The first was the suggestion that we should abolish no-par shares, and the other was the suggest tion that we should abolish classes of stocks. These were the two specific reforms which the Prime Minister advocated over the radio last January, but they were destroyed by the Secretary of State this afternoon in the devastating rebuttal to which he subjected them. Talk about cabinet solidarity, talk about unity of effort, talk about the strong position taken by the government; was anything like this ever heard of before in the Dominion of Canada? Why does the Secretary of State sponsor this bill when he does not believe in it? Why does he sponsor a bill the principle of which he disapproves? I commend to hon. members and to the country generally a comparison of the speech made by the Prime Minister last January and that made by the Secretary of State this afternoon and this evening. I think such a comparison will show how much unity and solidarity there is in the government of the Dominion of Canada at the present time. I can only speculate, but I suppose the government decided in cabinet council that

they must make some sort of pretence at carrying out the recommendations of the price spreads commission, otherwise the hon. member for East Kootenay (Mr. Stevens) would raise such a row throughout the country that there would be no government; there would be no Conservative party left. I cannot imagine there being any other motive for the exhibition before the house this afternoon.
I felt a little sensitive this afternoon as I listened to the Secretary of State attacking with his masteriy ability this price spreads commission report and the legislation based upon it. I realize that there were certain weaknesses in the constitution of the commission and the committee. I do not think I am guilty of violating any confidences when I say that I think we should have had at least one corporation lawyer to advise us. Unfortunately, there is a feeling that most corporation lawyers have a single line of approach. It is believed that their business is to act for persons incorporating companies, for promoters, for investment houses and the like, to see that they do not get into trouble, no matter who else may. It may have been that the judgment of my colleagues was sound when they felt that we should take the line we did and go ahead without the assistance of a highly experienced corporation lawyer.
I have no doubt that there is considerable force in much of the criticism to which the Secretary of State gave utterance this afternoon, but I would point out that there must also be considerable force in some of the criticism which the price spreads commission uttered against the existing Companies Act. The Secretary of State admits this when he introduces this important bill, which amends the legislation which he said last spring was the last word. I should like to refer to some of the recommendations of the commission. Recommendation No. 9 contained in the summary of recommendations reads:
The prospectus provisions of the present act should be altered to place upon a company and its directors the responsibility for representations made on any offering for general public subscription, whether made on behalf of the company or not. If this change cannot be made through the Companies Act, it should be made a criminal offence to offer for public subscription securities of a company, with federal incorporation if those securities have not been subjected to the prospectus obligations of the Dominion Companies Act.
The Secretary of State has exhibited a great deal of ability in the way he has drafted the sections of this bill to carry out those recommendations. But he has stated that this bill impinges upon the field of property and civil rights, and he states also that he has never

Companies Act-Mr. Ilsley
been in favour of a dominion parliament filching under the guise of criminal legislation jurisdiction which belongs to the provinces. He sponsors' the bill, but he went on to damn practically every section and almost pleaded with the house for leave to withdraw certain parts and to amend others which would destroy to a great extent the effect of the bill. Is this government- legislation or is it not? Is this one of the great reforms? I go back to the Prime Minister, who said:
In other words, the door must he locked before, not after the horse is stolen.
And further he said:
The ravages of the promoter who operated in the period of 1922 to 1930 cannot now be repaired. But we can at least see to it that he does not operate again in the same way.
And this is the bill that does it. This is the reform promised us over the radio-the reform of the Companies Act of this dominion. The second recommendation is:
All shares offered, both common and preferred, should bear equal voting rights.
That recommendation must be taken with a grain of common sense, and that grain of common sense is that shares having the same par value or issue price, representing the same amount of investment, must have equal voting rights. The Secretary of State spent a good deal of time attacking the recommendation and the bill-because the bill carries out the recommendation-on the ground that it would never do to give a five dollar no par value share the same voting right as a one hundred dollar preferred share. It does not require an elaborate argument to establish that fact, and if the wording of the commissioners who brought in the report is ambiguous in any respect it is the business of the draftsman advising the government to set right such a detail. The next section is:
Management shares should be prohibited.
The minister accepts that recommendation without change. The next recommendation is:
When the management of a company have become aware of the serious impairment of the capital of that company, they should be required forthwith to inform the directors of that fact, who shall be under obligation immediately to call a meeting of shareholders and put the above situation before them.
The Secretary of State spent some time this afternoon pointing out that this was wrongly worded. He said there might be cases of serious impairment when the shareholders should not be told about it. He remembers a case where the capital of a company with which he was acquainted was impaired to the extent of
$3,000,000, and if the fact had not been kept from them there would have been a panic. And so he drafts the section, properly, in such a way as to define serious impairment. But the whole matter was done in such a way as to give the impression that those who were on the commission or who made the recommendation had no understanding, or at any rate only a primitive understanding of what they were talking about.


Mr. HANSON (York-Sunbury):: That is true, isn't it?


James Lorimer Ilsley: I imagine we could get a lot of assistance from the hon. gentleman who made that remark. The next recommendation is:
Directors should be prohibited from speculating in the shares of their companies. They should be required to disclose annually to their shareholders the extent to which they have directly or indirectly purchased or sold their company's shares during the year.
That recommendation the Secretary of State criticized very severely but adopted, and I congratulate him upon the skill with which he defined the word " speculating." He did that very well. Then there is this recommendation :
The first permanent directors of a company should be held responsible for all business transacted by the provisional directors.
That is accepted, but in such a way that a coach and four can be driven through it at any time; and from what I could gather from the minister's remarks, that is true of a good many sections. In connection with one section he said, " I can think of six or seven ways to get around that section." I do not know, therefore, what to say about this legislation; I do not know whether it is worth accepting or not. I think there are some good features about these recommendations and some good features about the legislation, and I am inclined to think the legislation is a little better than the minister would lead us to believe. His strictures upon his product are a little too severe; this is a sort of baby left on his doorstep by the hon. member for East Kootenay, and he is very much concerned about what to do with the child-


Ian Alistair Mackenzie: The unwanted child.


James Lorimer Ilsley: Yes, the unwanted child. I would remind him, however, that there are a good many people in this country in whose ears there still resounds that radio speech by the Prime Minister wherein he said, "No longer will there be stock watering in this country; no longer will the horrible conditions that existed between 1922 and 1930 prevail"-
Companies Act-Mr. Ilsley

not between 1030 and 1935 but between 1922 and 1930. We were told that radical amendments would be made to the Companies Act.
I have two or three criticisms of this bill. I do not believe that the government has tackled the problem of stock watering in an effective way. I do not believe that the Prime Minister, when he delivered his radio speech last January, had in mind any idea as to how to tackle it. If he had anything in mind then, why does he not embody it in legislation, instead of sending the Secretary of State into this house with a measure which he damns, not with faint praise but with positive censure in every sentence of his speech? How will they stop stock watering? We offered two or three suggestions, one of which was that there should be set up a securities control board. The Secretary of State did not say anything about that this afternoon. It is to be through the dominion trade and industry commission, but it is not to sit and function on issues except when directed to do so by the Secretary of State. If we are to have an effective means of stopping stock watering, why did he not state this afternoon what he had in mind? There are certain sections of the bill through which a coach and four can be driven or around which anyone can get if he only exercises enough ingenuity.
When we come to the different provisions of the bill I may have a suggestion or two to make to improve some of the sections. In the meantime I make these general observations on this whole absurd situation. I have never seen or heard anything like it, and I have been in this house since 1926. Possibly I am speaking with a little more heat on this subject than I otherwise would had it not been for the occurrence earlier in the evening, but I want to make any constructive suggestions that can be offered. What can we expect, however, of legislation launched in this pessimistic, deprecating spirit?


Ian Alistair Mackenzie: Insincere.


James Lorimer Ilsley: What can we expect of legis-.ation launched in a spirit which makes it impossible for the legislation to do anything much-under the administration of this government at least-no matter what is said. I do not know whether it is intended to go into committee to-night on the clauses of the bill, but I would suggest that we go into it at a time when more than three members of the price spreads commission are present. It is not for my friend from Swift Current (Mr. Bothwell) and myself to defend the legislation against the Secretary of State; it is not for us to give him permission to withdraw it, as he seemed to think this afternoon, when he

looked at us and said, "I do hope that hon. members will consider the withdrawal of that section or that amendment so as to make it different from the way I drafted it." The price spreads commission made certain recommendations and he proceeds to tear them to pieces because they are in conflict with his own bill of last spring. And then he says, " I embody them in this legislation but I hope the house will allow me to withdraw parts of the legislation because I think they will do a whole lot of harm."


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Morand in the chair.
On clause 1-Short title.
['What can we expect of legis-.ation launched in a spirit which makes it impossible for the legislation to do anything much-under the administration of this government at least-no matter what is said. I do not know whether it is intended to go into committee to-night on the clauses of the bill, but I would suggest that we go into it at a time when more than three members of the price spreads commission are present. It is not for my friend from Swift Current (Mr. Bothwell) and myself to defend the legislation against the Secretary of State; it is not for us to give him permission to withdraw it, as he seemed to think this afternoon, when he\n\nlooked at us and said, "I do hope that hon. members will consider the withdrawal of that section or that amendment so as to make it different from the way I drafted it." The price spreads commission made certain recommendations and he proceeds to tear them to pieces because they are in conflict with his own bill of last spring. And then he says, " I embody them in this legislation but I hope the house will allow me to withdraw parts of the legislation because I think they will do a whole lot of harm."']
Charles Hazlitt Cahan: I move that the committee rise, report progress and ask leave to sit again.
Progress reported.



[Stage Direction]
The house in committee of supply, Mr. Morand in the chair.
Tokyo-
Representation, including salaries and allowances for minister plenipotentiary, secretaries and staff, notwithstanding anything to the contrary in the Civil Service Act or any of its amendments, $68,800.
Thomas Reid: When this item' was up on
a previous occasion, I asked some questions regarding this appropriation and it was allowed to stand for the time being until the Prime Minister's return.


Richard Bedford Bennett: I have a note of the questions. The
hon. member for New Westminster (Mr. Reid) asked1 why the government itself did not advance the money and make the payment for the building at the time. Mr., now Sir Herbert, Marler came here on his leave and he expounded to us the very great necessity of a building. Money was then costing us approximately five per cent, and we told him that the pressure of economic conditions was such that we did not feel we could provide the money until there was an improvement in revenue. He said that if we would permit him, he would construct the building and he himself would arrange a 'oan with the bank at five per cent; which would include charges of all kinds. The last money we borrowed at that time was costing in that vicinity. This year, at the earliest moment we felt we could do so, it will be

Supply-External Affairs
remembered we placed an item in the estimates of the Public Works department to pay that.
The next question was as to the number of employees in the office. There are twelve employees in all. The other question was as to how many rooms there were in the building. There are thirty-six. I am told by those who have visited Tokyo that the building is excellent, and its cost was within $549 of the estimate given, by Sir Herbert Marler. It was felt that while under the circumstances it was a departure from the ordinary rule, nevertheless as we had a very, shall I say inconvenient building at the time, it was desirable, as a site was available, to construct the building that was erected.


Thomas Reid: There is a good deal of
doubt, especially in British Columbia, whether title to land in Japan is given to foreigners.


Richard Bedford Bennett: So far as ordinary
tenure to individuals is concerned, I cannot say, but so far as the Dominion of Canada is concerned, I can say that we have title to the land on the same terms as has the British embassy.


Jean-François Pouliot: May I put on record a
return given in connection with the Tokyo building? It is dated April 9, 1935, and is as follows:
1.	What percentage of interest has the Canadian government paid and still pays for the amount spent for the building of a Canadian legation in Tokyo?
The Canadian government has paid interest at the rate of 5 per cent on the cost to the government of the Canadian legation in Tokyo and will continue to pay interest at that rate until the principal is paid, which is provided for in estimates 1935-36, vote 96-Public Works, chargeable to capital.
2.	What was [DOT] the percentage of interest of the last issue of dominion bonds?
The last issue of dominion bonds previous to the agreement entered into by the government for the purcha'se of certain lands in Tokyo, Japan, and the erection thereon of buildings suitable for legation, purposes yielded, on the two maturities, 5-17 per cent and 5-13 per cent.
The interest yield on the last issue of dominion bonds in October, 1934, was as follows:
2 year	bonds,	to	yield	2-57	per	cent.5 year	bonds,	to	yield	2-90	per	cent.8 year	bonds,	to	yield	3-43	per	cent.15 year	bonds,	to	yield	3-81	per	cent.
This is a return, sessional paper No. 326 of this year. What is most extraordinary is that the government for a time was ready to pay five per cent interest on the expenditure for the building when' it could borrow money at a much cheaper rate. This was not a sound
business proposal, and it was only after the opposition drew the attention of the government to the matter that it decided to pay the capital sum and inserted in the estimates an item of $200,000 in order that no more interest might be paid. This is one more occasion when a constructive suggestion from the opposition is accepted by the government. If it accepted all the suggestions that come from this side of the house, it would be in much better shape now and so would the country.


Richard Bedford Bennett: I am afraid that statement cannot be allowed to go uncontradicted. The fact is that long before the return was moved for, the anticipated discussion had taken place in council and provision been made for payment to Mr. Marler for the money advanced.


Jean-François Pouliot: What the Prime Minister has said just confirms what I said before.


[Stage Direction]
Item agreed to.
Canada's portion of expenditure of the imperial economic committee and imperial shipping committee and the executive council of the imperial agricultural bureau for 1935, $18,690.
Richard Bedford Bennett: I suppose it is within the knowledge of Lon. members that after the empire marketing board ceased to function, a conference was held at London of representatives of the United Kingdom and the various dominions and colonies, and it was arranged that instead of Great Britain paying the entire, sum payments should be made by all dominions and by Great Britain. Great Britain made the largest unit payment, Canada the next, then Australia, then South Africa, then New Zealand, and finally one unit was paid by Newfoundland. That committee looks after our imperial shipping interests in' connection with insurance matters for instance in Hudson bay and matters of that sort as well as the other items that are mentioned in the appropriation.


Jean-François Pouliot: First of all there was a political union among the different parts of the empire and then it 'became economic. While in London some years ago the Prime Minister said that it was not so much an economic empire that we had, but we had to look for spiritual values and wider hopes- It was not a material thing. This item proves that our union with the British empire rests on an economic basis. When the Prime Minister speaks about spiritual values and wider hopes, this is for the future, but for the present we must rest upon economic matters. This

Supply-External Affairs

vote shows that he was quite wrong when he was speaking only about spiritual values and wider hopes. We have enough of these hopes for the future. We must look to the present.


[Stage Direction]
Item agreed to.
Expenses in connection with the negotiation of treaties, $9,000.
Jean-François Pouliot: This has to do with treaties. Some years ago the Minister of Finance said they had appointed Mr. Breadner to a privileged position because he was an expert in drafting treaties. When he had that job he did not draft a treaty. Now he is out, and we have treaties with different countries. May I ask the Prime Minister who is drafting treaties now that the expert Mr. Breadner is out of his job and on superannuation?


Richard Bedford Bennett: The government is getting along with the aid of such assistance as it has in the various departments.	.


Jean-François Pouliot: That is all right, but either Mr. Breadner was an expert or he was not. We had the word of the Minister of Finance that he was an expert, and he was appointed to that new job made for himself because he was an expert to draft treaties, but he drafted none. It goes like that. They have no one at their disposal to draft treaties in the proper way, and that is why Canadian trade is going to the dogs.


William Lyon Mackenzie King: Is it out of this appropriation that expenses are being met in connection with negotiations with the United States for a trade agreement?


Richard Bedford Bennett: There are no expenses in particular at the moment. The gathering of material and matters of that sort have been done by the permanent staff. When they have to leave Ottawa their living and travelling expenses are paid largely out of this vote. Last year this vote was not wholly expended, and I apprehend it will not be this year.


Jean-François Pouliot: 
Some hon. MEMBERS:: Carried.


Jean-François Pouliot: No, it is not carried like
that. I have it here. Sir, we have been told that the Ottawa agreements were a success. How is it the Prime Minister spoke on different lines at Bristol when he unveiled a monument to Lord Durham? He is here listening to me. What did he say? He asked for anonymous postcards, asked the people to send anonymous postcards lodging their complaints with him in regard to the business of Canada. Canada, the weekly published in London, mentioned the fact that he was the first Prime Minister who ever asked for anonymous postcards complaining about his own country. In England no one complains about Canada, but they complain about the way Canada is governed under his leadership. Is it not most ridiculous to think that the leader of the government of this country published an advertisement in the London papers asking the English people to send him anonymous postcards telling him their grievances about Canada? This, sir, is most absurd, it is inconceivable, but it was published in that paper. Was the right hon. gentleman sick at that time? I presume he was because a man of sane mind would never have done it.


Raymond Ducharme Morand: I must ask the hon.
member to withdraw that.


Jean-François Pouliot: It is not an assertion, sir, it is a presumption. If it is against the rules of the house I withdraw it. But I find it absolutely absurd. This is a vote with regard to treaties; let us go further with it. What happened with regard to our trade with

Supply-External Affairs
36S5
the United Kingdom? How much was lost each year since this government came into power compared with the last twelve months that the Mackenzie King government was in power? These figures	come	from	officialrecords and no one on the other side from the Prime Minister down can contradict them. The first year he was in power our trade with the United Kingdom was 8155,143,483	less.	The	second	year	it	was$247,341,815	less.	The	third	year	it	was$226,594,446	less.	The	fourth	year	it	was
$114,375,846 less. Yet they say: We are doing better than the Liberals did when they were in power. The total loss for the four years this government was in power up to August 31, 1934, was $743,455,590. This appears on page 2237 of Hansard. This is how we have lost our trade since this government have been in power on account of the wrong way in which treaties have been drafted since 1930.
Sir, it is very difficult to draft a treaty. It takes experts. You remember that when President Wilson went to Versailles to attend on the drafting of that famous treaty, some provisions of which have been before us in this house this year, he was surrounded by a legion of experts, including the chef of the Waldorf-Astoria. He was surrounded by geographical experts, economic experts and experts in this and that. Who were the experts who accompanied the right hon. gentleman on his numerous trips abroad? They were just freshmen and sophomores without the least bit of experience in regard to the changes that might be made in the drafting of one item in one treaty. Does not the Prime Minister and each of his colleagues realize the importance of the least change in a treaty? Sir, how were the tariff items changed from 1930 to 1933, when for the first time a tariff board was appointed by this government? They were changed at the request of some shortsighted people, the privileged few who were friends of this government and who came here asking for favours. Properly they should have asked for rights, not for favours, because they were asking the Prime Minister and his colleagues to kill the goose that laid the golden egg. During the special session of 1930 the corridors of this house were infested with those birds of prey who made so much money during the war, those well known profiteers who were so close to the government as to be subscribers to Tory party funds. They came here asking for a ransom, and they got it, in the stupid tariff of the special session of 1930. Was that drafted with the care with which a treaty would be drafted? It was not.
During the last campaign we heard a great deal about the treaties with New Zealand and Australia, which were condemned throughout this country. The Prime Minister and his colleagues said everywhere, "We will draft treaties that will fight for you." They drafted policies that fought against the Canadian people. The London conference of 1930, at which all the mistakes could have been mended, was a complete failure because of the attitude of the Prime Minister. It was a fiasco. There the right hon. gentleman met the representatives of the other British dominions, but probably he was not on speaking terms with them. Therefore, there was no agreement with Australia and New Zealand, with whom we had been trading all the time. There was an instance in which the Prime Minister showed that he was not an expert in drafting treaties and coming to agreements with other parts of the British Empire. Afterwards what did we see? We saw the then Minister of Trade and Commerce go to Honolulu to meet the representatives from the antipodes, with whom he arrived at agreements after the Prime Minister and his colleagues, in different parts of Canada, and especially in the eastern townships, had condemned the previous government for importing butter from New Zealand1 and Australia.
During the three months preceding the election of 1930, huge quantities of butter were imported into this country. In the records of this house will be found a question by the hon. member for Temiscouata, asking who were those who imported such quantities of butter during that period. The Prime Minister rose in his place and said it was not the policy of the government to divulge that information. Is it not true that this butter was imported mainly with the funds of the Tory party in order to lower the price of butter as propaganda against the Liberal party? It was most absurd to import butter at that time, July, June and May, because those are the months during which the production of butter in the antipodes is the smallest. That shows clearly that this butter was imported only for political purposes, and probably that is why the government refused to answer that proper question.
What about those treaties, sir? Is it not right to ask the Prime Minister and his colleagues about their treaties with Australia and New Zealand? During the special session of 1930 they raised the tariff, but a year later
Franchise Act-Mr. Cahan

they lowered it when the then Minister of Trade and Commerce met the representatives of these countries at Honolulu.
Progress reported.


Mr. J. S. STEWART (Lethbridge) moved:: That pursuant to special order of the house made on the 6th instant the following bill be now read a first and second time and referred to the select committee on miscellaneous private bills, namely Bill letter S-2 of the senate,^ intituled an act respecting the Cornwall Bridge Company.


Mr. F. T. SHAVER (Stormont):: Mr. Speaker, I had expected that this bill would come up in the house, and it is my desire to oppose it on second reading. Therefore I move the adjournment of the debate.
Motion agreed1 to and debate adjourned.


[Stage Direction]
At eleven o'clock the house adjourned without question put, pursuant to standing order.
Monday, June 17, 1935