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

Mr. GAUTHIER:: 1.	How many immigrants have entered Canada each month since March 31, 1934?
2.	Were they all natives of the country from which they migrated to Canada?
3.	If not, how long were they naturalized citizens of such country?
4.	What was the country of origin of each such person?


Mr. CRERAR:: 1. April, 1934	
May	x>308
June	1,280
July	h236
August	1,157
September	 1,288
October	 1,113
November	 9(57
December	 668
January, 1935	 568
February	 559
March	 789
April	 964
May	 1,020
June	 1,061
July	1,050
August	1,324
September	 1,160
October	1,160
November	 916
December	 706
January, 1936	 499

2. and 3. While it is known that all immigrants were not natives of the countries from which they came to Canada, statistics are not available.
4. The racial origin of immigrants arriving in Canada between April, 1934, and January, 1936, is shown in the following statement; the racial origin in most cases indicates both the country of origin and nationality.
Immigration to Canada, by racial origin, from April 1, 1934, to January 31, 1936.
Albanian	 4
Arabian	 3
Armenian	 10
Belgian	 146
Bohemian	 15
British-
English	6,195
Irish	1,818
Scotch	2,270
Welsh	 187
Bulgarian	 26
Croatian	 287
Czech	 177
Dutch	 304
East Indian	 53
Esthonian	 4
Finnish	 135
French	 1,625
German	1,561
Greek	 116
Hebrew	1,390
Italian	 708
Japanese	 148
Jugo-Slav	 222
Lettish	 3
Lithuanian	 60
Magyar	 662
Mexican	 1
Negro	  44
North American Indian	 8
Polish	 823
Portuguese	 9
Roumanian	 89
Russian	 172
Ruthenian	 962
Scandinavian-
Danish	 99
Icelandic	 24
Norwegian	 238
Swedish	 199
Serbian	 54
Slovak	 977
Spanish	 23
Swiss	  90
Syrian	 54
Turkish	 1
Total	21,996

Privilege-Mr. Church


ATLANTIC COAST FISHERIES
Mr. POTTIER:: What was the production of fish on the Canadian Atlantic coast for the years 1930, 1931, 1932, 1933, 1934 and 1935, by (a) deep sea fishermen; (b) shore fishermen; (c) beam trawlers ?


Mr. MICHAUD:: Total	Offshore
production production cwt.	cwt.
1930	
4,794,231	1,169,1971931	
4.262,484	828,9711932	
4,053,923	692,3161933	
4,519,814	850,2341934	
4,947,766	885.1171935	
*4,649,784	894,502Inshore Trawler production production cwt.	cwt.1930	
3,625,034	313,6541931	
3,433,513	232.1971932	
3,361.607	230,0661933	
3,669,580	187,4551934	
4,062,649	179,7221935	
*3,755,282	198,843
*Unre vised
Note: The above figures include shellfish.


QUESTION PASSED AS ORDER FOR RETURN
Mr. TREMBLAY:: 1.	Do any members of the House of Commons receive, or has any member of the House of Commons received a pension for war service?
2.	If so, who are such members and what is the amount of the pension each has received or is receiving?
3.	On what dates were such pensions granted?
4.	By what body was each of such pensions granted?



PRIVILEGE-MR. CHURCH

Mr. T. L. CHURCH (Broadview):: Mr. Speaker, on a question of privilege, we look upon your honour as the protector and custodian of the rights and privileges of members of parliament. These rights and privileges cannot be taken away from an hon. member either by you or by your deputy, by the government or by anybody else. As a private member I wish to direct the attention of your honour to a very undignified incident which occurred in this chamber yesterday afternoon while your honour was present. I had not intended to take part in the debate in committee of ways and
means, but at five minutes to six I rose in my place when the hon. member for North Huron (Mr. Deachman) had concluded. I had spoken for about three minutes when the Minister of Finance (Mr. Dunning), who is supposed to show hon. members on this side of the house some courtesy-


Some hon. MEMBERS:: Order.


Thomas Langton Church: A member of parliament
is here as the free representative of the people and he has rights, prerogatives and privileges which cannot be taken away from him by the government of the day, even though they may have a majority of one or two hundred. The chairman pro tempore was presiding over the committee, but I do not know how he got in the chair. I do not think he had any right to be there, under the rules as I see them, and I have some authorities on this matter. While I was on my feet speaking the Minister of Finance before six o'clock rose in his place and moved that the committee rise, report progress and ask leave to sit again. The minister may have been able to get away with things like that in the Saskatchewan legislature, but he is not going to get away with them here. I ask your honour to protect the rights, privileges and prerogatives which I have as a private member of this house. I was elected by the constituents of Broadview' and I want to assert the rights, the privileges, the functions and the prerogatives which every private member has here under the British constitution. We are supposed to have free parliamentary institutions in Canada but it has not been so, and they have been curtailed during the past few years; this principle has been departed from with the result that there is no longer any freedom in the press, in the legislatures, in the pulpits or in the universities. I wish to protest, as strongly as I can, against it. No wonder we have seen, in the past few years, the decay and decline of the House of Commons in Canada.


Sir EUGENE FISET (Rimouski):: Mr. Speaker, I should like to call your attention to the fact that when I was presiding in the committee of ways and means yesterday afternoon I made a sign to the hon. gentleman who has just spoken (Mr. Church) that a motion was before the chair that the committee rise, report progress and ask leave to sit again. Unfortunately the hon. gentleman suffers from deafness and did not understand what I said or see the sign that I made to him. I submit that I was perfectly in order in taking the action that I did.
Unemployment

Hon. CHARLES A. DUNNING (Minister of Finance): Mr. Speaker, if it will help to ease matters at all, may I apologize most sincerely to the hon. member for Broadview (Mr. Church) if any action on my part hurt his feelings in any way. Certainly such was not my intention. I thought and I still think that I was within the rules of the house when at a few minutes to six o'clock I moved that the committee rise, report progress and ask leave to sit again in order that such report could be made to Your Honour before you left the chair at six o'clock, which I think is the correct procedure. I had no intention whatever of taking away any privilege from my hon. friend. If I did succeed in taking away three minutes of his speech I will undertake to try to help him get it back on some future occasion. I might say however that I doubt whether the hon. member really has much complaint. As a rule, because of his little infirmity, it is quite difficult to appeal to Your Honour on a point of order when the hon. member has the floor, and in that regard he receives, I think, considerable latitude from his opponents. I think therefore he might forgive me just this once if I have hurt his feelings.


Mr. SPEAKER:: I do not think that the privileges of the hon. member who has raised the question have been greatly encroached upon. I shall see that he receives all the courtesies of the house.



UNEMPLOYMENT


[Stage Direction]
Hon. NORMAN McL. ROGERS (Minister of Labour) moved that the house go into committee at the next sitting to consider the following proposed resolution:
That it is expedient to bring in a measure respecting relief for unemployment and assistance for agricultural settlement and rehabilitation and development of natural and other resources, and to provide for such payments out of the consolidated revenue fund as may be necessary for all or any of the purposes of the proposed legislation.
He said: His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to.

Right Hon. W. L. MACKENZIE KING (Prime Minister):: In the absence of the
Minister of Pensions (Mr. Power), and on

his behalf, I move that the house go into committee to-morrow to consider the following proposed resolution standing in his name:
That it is expedient to bring in a measure to provide under the War Veterans' Allowance Act for special consideration for certain veterans not having attained the age of sixty, but having attained the age of fifty-five, who by reason of disability, pre-ageing and general unfitness, are incapable of maintaining themselves; to provide for continuation of part of the allowance to dependents of certain veterans admitted for treatment to departmental institutions; to substitute a war veterans' allowance board for a war veterans' allowance committee and to provide for the continuance in office of the members of the committee as members of the board and for their salaries, superannuation and pension, and to provide a more complete definition of the board's powers.
His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.


[Stage Direction]
Motion agreed to.

William Lyon Mackenzie King: In the absence of the
Minister of Pensions (Mr. Power) and on his behalf I move that the house go into committee to-morrow to consider the following proposed resolution standing in his name:
That it is expedient to bring in a measure providing for the establishment of a commission, to be known as the Veterans' Assistance Commission, to investigate, report and make recommendations as to the facilities and as to certain projects to provide employment for veterans, and also to make use of such facilities and carry out such projects, and for other purposes related thereto; and to provide for the remuneration and expenses of the commission.
His Excellency the Governor General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.


[Stage Direction]
Motion agreed to.


Hon. C. D. HOWE (Minister of Marine) moved:: That a special committee comsisting of: Messrs. Beaubien, Beaubier, Bertrand (Laurier), Bouchard, Campbell, Cardin, Cochrane, Dupuds, Edwards, Grant, Hanson, Howard, Howe, Johnston (Bow River), MacKenzie (Neepawa), Mackenzie (Vancouver Centre), McIntosh, Martin, Massey, Plunkett, Ryan, Slaght, Woods-worth, be appointed to inquire into the operations of the Canadian radio commission and its

Canada-U. S. Trade Agreement
administration of the Canadian Radio Broadcasting Act of 1932 and Amendments, and the regulations made under authority thereof; to advise what, if any, changes shall be effected in the existing system of radio broadcasting; and whether the said statutes and regulations should be amended in whole or in part, and what, if any additions should be made thereto; also to inquire into the extent to which there has been any abuse of broadcasting privileges, either for political or advertising purposes, and to advise as to what principles should govern the regulations or control thereof; that rule 65 be suspended in relation thereto; that the said committee be empowered to send for persons, papers and records, to examine witnesses for evidence, to print such papers and evidence from day to day, as may be ordered by the committee for the use of the committee and members of the house, and' to report from time to time.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day;
Thomas Langton Church: I wish
to ask the Minister of Justice (Mr. Lapointe) a question. On to-day's order paper there is a notice of motion respecting proposed changes in the British North America Act to add greatly to the powers of provincial authority. The municipalities, particularly the larger ones, may be very seriously interfered with by this proposed resolution to give the provinces the right to raise revenues not only by direct taxation within the province but also in regard to indirect taxation. I especially refer to the sales tax. Will the Minister of Justice be kind enough to give the larger municipalities an opportunity of being heard first as to the way in which a measure such as this is likely to affect the taxpayers and municipal institutions in the provinces and interfere with their present powers of taxation?


Hon. ERNEST LAPOINTE (Minister of Justice):: I do not think that the revenues
of the municipalities would be in any way affected by any scheme which might evolve from the change embodied in the address. However, it is not the intention to proceed with the matter in the next few days, and any representation which my hon. friend would like to make he will have an opportunity of submitting.



WAYS AND MEANS


[Stage Direction]
The house in committee of ways and means, Mr. Donnelly in the chair.
United States tariff-1604. Agricultural implements: Ploughs, tooth or disc harrows, headers, harvesters, reapers, combination
harvesting and' threshing machines, agricultural drills and planters, mowers, horse-rakes, and cultivators, whether in whole or in parts, including repair parts, free.
Thomas Langton Church: Mr. Chairman, I will not
detain the committee this afternoon for longer than five or ten minutes. This item concerns implements going out of Canada. I wish to say a few words on behalf of workers in the city of Toronto and elsewhere who are engaged in the Massey-Harris, Cockshutt Plow, International Harvester and other factories producing implements. This industry was built up under a protective tariff, and these agricultural implements may go into the United States free of duty. We have always had some kind of protective duty; it is now down to about 12J per cent, which is practically no duty at all when you figure out the taxes which the industry has to pay. The lot of these workers was referred to by me the other night on the motion of the hon. member for St. Mary (Mr. Deslauriers), and I repeat that these industries have practically no protection at all.
I want to say a few words on behalf of the great mass of the intelligent electorate who are not concerned with the game of the ins and the outs as the party politicians play it to-day, but who wish to reassert the supremacy of the national over the party interest. It is the duty of a member of parliament when the question of tariff on agricultural implements arises to assert the supremacy of parliament and the right of the private member to function along the lines of our constitutional government in order to help rebuild the structure of our social and economic order. As I see it, the country is sick and tired of the way we play this game of politics in the committee of ways and means. We want a new set of rules for this game when we see that one member of the government can go down to Washington over the heads of parliament and sign, seal and deliver a treaty between the two high contracting parties, the President of the United States and the Prime Minister of this country, parliament and this committee are just going around in a circle.
The Massey industry to which I refer has done a great deal to build up the city of Toronto. Owing to the depression and to the loss of export markets in Great Britain, Australia, and many other places, and economic nationalism, the implement industry now in Canada is very much under a cloud. I am not here to plead the cause of the agricultural implement manufacturers; they have never been any particular friends of mine. I am here as a member of parliament to protect the home market and save it for our workers.

Canada-U. S. Trade Agreement
We in this small corner of the house are called Conservatives. What we wish to conserve is the interest of the workers who are engaged in this industry in the home market which has provided them with a certain amount of employment all these years. According to statistics there were fifteen thousand of them engaged, in good times, in the agricultural implement industry when I last addressed the house on May 5, 1924, for protection on their behalf.
The people of the prairie provinces have more to fear from the grain exchange and the grain combine and the transportation combine and the elevator combine west of the great lakes than from the manufacturers east of the great lakes. As regards this particular reciprocity pact, as I see it, a 12J per cent duty has cut down protection so far that you might as well let it wither away altogether. I do not know what is going to become of these implement workers.


Mr. SPENCE:: Mr. Chairman, we cannot hear the hon. member, there is so much noise.


The CHAIRMAN (Mr. Donnelly):: Order.


Thomas Langton Church: Some of them have gone to the United States. Others have had their mortgages foreclosed, and others have left the city, with the result that some of them have lost their homes which were located in the riding of the hon. member for Parkdale (Mr. Spence) and others in the northwest that I used to represent now represented by the hon. member for Davenport (Mr. MacNicol).
The International Harvester Company has been referred to by the hon. member for Hamilton West (Mr. Wilton). As I see it this company might as well close up its factory in Hamilton, manufacture in Chicago, and ship its agricultural implements into Canada, so avoiding the high taxation put on by this parliament and by provincial and municipal authorities. It might as well close its Hamilton plant and manufacture in Chicago' under sweated labour conditions and child labour. The free trade and semi-free trade policies here will sooner or later see the end of these industries in Canada. In examining this item let us not forget the lessons of history. In the early eighties the city of Chicago, then the headquarters of the harvester industry, was known as the third largest Canadian city in the world; our industrial workers driven out of Canada by unemployment such as now exists, found employment there. As the result of the change of policy of the Conservatives these American factories had to establish plants in Canada. Industrial workers in our cities and towns benefited accordingly; so did the farmers.

I may say that I advocate in connection with the agricultural industry a policy of protection, beneficial to the farmer and to these industrial corporations, such as the International Harvester, which produce agricultural implements. The policy of protection I proposed in this house in 1924 is a national policy, protecting the farmer from exorbitant prices for his farm implements. Surely a national policy will not allow a Canadian farmer or any other consumer to be charged high prices for his farm implements. A truly national policy will provide an excise duty that will put into the national treasury every cent charged on agricultural implements, automobiles or any other product manufactured under protection at a price that represents fair wages to the workmen and fair profits to the manufacturers. I know that this proposal will be laughed at by the hon. member for North Huron (Mr. Deachman) and others as paternalism, but I would rather have paternalism along these lines of protecting the farmer against a high price for his implements than the paternalism of the Winnipeg grain exchange and the carryover people. Paternalism like that would be far better than the grain exchanges abuses we have. The only chance the Canadian manufacturer ever had to show what he can do in the way of mass production of ploughs and articles of that kind was during the war. He has never had a chance since. I am not pleading for protection merely for the manufacturer's sake but for Canada's sake, because I believe that protection should protect the consumer against unjustly high prices just as much as the manufacturer from unjust and unfair competition.
We have seen imports flowing into Canada for many years past and they now amount to a large sum of money. We have seen high duties and low duties. The more I consider this particular problem the more I believe that this industry needs adequate protection, because after all is said and done, it is one of Canada's oldest industries and it has flourished under protection. I suggest that the adoption of the excise plan which I proposed in this house in 1924 would protect the consumer from a recurrence of the high prices which were then charged by some manufacturers.


[Stage Direction]
Item agreed to.
United States tariff-1616. Asbestos, unmanufactured, asbestos crudes, fibres, stucco, and sand and refuse containing not more than 15 .per centum of foreign matter, free.
Item agreed to.
United States tariff-1641. Calcium: cyanamid or lime nitrogen, free.
Item agreed to.

Canada-U. S. Trade Agreement
United States tariff-1652.	Cobalt and
cobalt ore, free.
Item agreed to.
United States tariff-1667. Sodium cyanide, free.
Item agreed to.
United States tariff-1672. Crude artificial abrasives, not specially provided for, free.
Sir GEORGE PERLEY:: Would the minister please give us the figures in regard to this item and say whether we exported very much of these abrasives to the United States?


Mr. EULER:: The exports from Canada to the United States in 1930 amounted to 1,449,204 hundredweight with a value of S3,454,453. In 1935 the exports were 1,186,028 hundredweight with a value of $2,970,756.


[Stage Direction]
Item agreed to.
United States tariff-1681.	Furs and fur
skins, not specially provided for, undressed: mink, beaver, muskrat and wolf, free.
Item agreed to.
United States tariff-1716.	Wood pulp:
mechanically ground and soda, unbleached or bleached'; and sulphite, bleached, free.
Mr. CAHAN:: All these items marked free are free at the present time, I understand.


William Daum Euler: Oh, yes. I might say that while these were free before there was always some possibility that a tariff might be imposed on them. The chief virtue of having them included in this agreement is that now the items are bound and there can be no tariff placed against them for three years, the period of the agreement.


[Stage Direction]
Item agreed to.
United States tariff-1734.	Nickel ore,
nickel matte, and nickel oxide, free.
George Halsey Perley: I should like to ask the minister to give us some particulars as to the value of these exports to the United States, and at the same time I should like to know how much refined nickel we export and what the duty is on that refined nickel.


William Daum Euler: The exports of nickel in the ore, or in the form of matte, or nickel oxide, for 1930 were valued at $2,888,169. In 1935 they were valued at $1,693,286.


Mr. MacNICOL:: Do we export any finished articles at all?


William Daum Euler: Yes, I think we do. The manufactured products of nickel, the alloys in which nickel is the chief component material, in pigs or ingots, shot, cubes, grains,
cathodes or similar forms carry a duty of 3 cents per pound. In bars, rods, plates, sheets, strips, strands, castings, wire, tubes, tubing, anodes, or electrodes the duty is 25 per cent ad valorem. In addition, on all the foregoing if cold rolled, cold drawn, or cold worked there is a duty of 10 per cent ad valorem.


John Ritchie MacNicol: What I wanted was the quantity or value of the manufactured articles we exported.


William Daum Euler: I will try to give the hon. gentleman the value. In 1934 our exports of refined nickel to the United States were valued at $10,702,000, and in 1935 they were about the same.


John Ritchie MacNicol: I had reference to nickel plated articles such as we import from the United States. I believe last year we imported about $600,000 worth of finished nickel goods. Do we export any of those goods to the United States?


William Daum Euler: I am sorry to say not very much goes out. We have no information with regard to the value.


George Halsey Perley: I am not going to criticize this item, Mr. Chairman, because we are very glad to have free trade in all matters of this kind if it is reciprocal, but I would direct the minister's attention to the fact that the United States must have our nickel in any case. It would not matter if there was a duty on it; they would have to pay our manufacturers just as much as they do now and they would have to pay the duty in addition, because they need that commodity. They put a duty on the refined article in order to provide work for their own workmen. I do not find any fault with them for that, from their point of view, but this is simply another instance in which we might provide more work for our workmen if there were no duty on the refined article going into the United States.


William Daum Euler: I assume my right hon. friend is not suggesting that we should put an export duty on nickel?


George Halsey Perley: Certainly not; I am directing the minister's attention to the fact that this item is not of any very great value to us because I think they would buy our nickel in any case.


Mr. EDWARDS:: Could the minister tell us what percentage of the nickel ore produced in Canada is completed as far as the matte and what goes out as raw nickel?
Canada-U. S. Trade Agreement


William Daum Euler: I am sorry to tell my colleague from Waterloo that we have not that information.


[Stage Direction]
Item agreed to.
United States tariff

1743.	Plaster rock
(including anhydrite) and gypsum, crude, free.
Note.-The existing customs classification treatment of gypsum which has been broken merely for the purpose of facilitating its shipment to the United States, as "crude" in accordance with the decision of the United States court of customs and patent appeals, published as treasury decisions 45725	(61
Treasury Decisions 1215), shall be continued during the effective period of this agreement.
Mr. SENN:: Will the minister kindly explain the note in connection with this item? How far can this plaster or gypsum be [DOT] manufactured before it is refused entry under this agreement?


William Daum Euler: I am informed that if it is broken up it still goes in free. I do not know whether my hon. friend meant what stage of manufacture might be reached before the tariff would apply.


Mark Cecil Senn: That was what I had reference to.


William Daum Euler: If it is merely broken down it is still interpreted as being crude gypsum. If it is processed any further than that, it becomes subject to duty at $1.40 per ton.


Mark Cecil Senn: Then will the minister give the committee the United States duty on the finished products of various kinds that are manufactured from this article?


William Daum Euler: Plaster rock or gypsum,
ground or calcined, carries a duty of $1.40 a ton. Then there are products manufactured from that; it is rather a lengthy list, but I can give it to my hon. friend.


Mark Cecil Senn: The reason I ask is that I believe there is a variation between the duties on the products manufactured from this commodity going into the United States and the duties on the same goods coming to Canada. I should like to get a comparison between the two, if possible.


William Daum Euler: Possibly this may throw some light on it. This item provides that the existing customs classification whereby the gypsum exported from Nova Scotia and broken up for the purpose of facilitating transportation is classified free of duty, as crude, shall be continued. I said that before. This is very important to the shippers of Nova Scotia, since it prevents the ruling which was given by the United States customs court from being upset during the period of the trade agreement. Does that answer my hon. friend's question?


Mark Cecil Senn: No, not entirely. There are quite a number of different classes of manufactured goods made from gypsum. I would like to have the comparative rates going into the United States and coming into Canada on that class of goods.


William Daum Euler: This, I take it, is not pure gypsum, but gypsum is the chief component part. The United States duties are:	On
Roman, Portland and other hydraulic cement or cement clinker, 6 cents per one hundred pounds, including weight of container. On white, non-staining Portland cement, 8 cents per one hundred pounds, including the weight of the container. On Keene's cement, and other cement of which gypsum is the component material of chief value, valued at $14 a ton or less, $3.50 a ton; valued above $14 but not above $20 a ton, $5 a ton; valued above $20 and not above $40 a ton, $10 a ton; valued above $40 a ton, $14 a ton. On the other cement not specially provided for, 20 per cent ad valorem. On statues, statuettes and bas reliefs, wholly or in chief value of plaster of paris, not specially provided for, 60 per cent ad valorem. On manufactures of which plaster of paris is the component material of chief value, not specially provided for, 35 per cent ad valorem.


Mark Cecil Senn: Those are the United States duties on those classes of goods. Can the minister give the corresponding duties coming into Canada?


William Daum Euler: We have not precisely the same classification, but I will give them as nearly as possible. Our rate on crude is free, the same as theirs to us. On calcined, under the British preference it is free, and 11 cents under the intermediate. On ground only, it is 12J per cent, and on statues and statuettes, 27J per cent.


Mr. RYAN:: Could the minister give the exports under this item?


William Daum Euler: The exports of crude gypsum were:
Year	Tons Value
1930	 855,000 $1,048,130
1935	 315,000	371,745


Mr. STEWART:: Could the minister give the exports in 1931, after the Hawley-Smoot tariff? He seems to stick to 1930.


William Daum Euler: It was free then.


[Stage Direction]
Item agreed to.
United States tariff-1756. Sea herring and smelts, fresh or frozen, whether or not packed in ice, and whether or not whole, free.
Item agreed to.

Canada-U. S. Trade Agreement
United States tariff-1760. Shingles of wood, free.
Provided, that the United States reserves the right to limit the total quantity of red cedar shingles which may be entered, or withdrawn from warehouse, for consumption, during any given half of any calendar year to a quantity not exceeding 25 per centum of the combined total of the shipments of red cedar shingles by producers in the United States and the imports of such shingles during the preceding half year.
Mr. BARBER:: Can the minister give some information as to the quota as it applied la3t
year?


William Daum Euler: There was no quota last year.


Harry James Barber: On the basis of last year. There is a quota now.


William Daum Euler: There is no quota now.


Harry James Barber: What does this note mean?


William Daum Euler: They reserve the right to impose it if they find it necessary to protect their own people, but there is no actual quota included in the agreement.


Mark Cecil Senn: There may be to-morrow.


William Daum Euler: They reserve the right,
that is true.


Harry James Barber: That would be twentyfive per cent of the consumption?


William Daum Euler: Twenty-five per cent of the domestic consumption of the United States.


Harry James Barber: In six months?


William Daum Euler: Yes.


Hugh Alexander Stewart: Can the minister give
any figures on which that twenty-five per cent would be based?


William Daum Euler: The consumption in the
United States is from 6 to 8 million squares per annum.


Harry James Barber: What is the export on
that? I notice in the white paper, page 33, it mentions thousands of squares.


William Daum Euler: Exports in 1935, 1,388.288
squares.


Hugh Alexander Stewart: I notice that the quota
is to be based upon the quantity of shingles during a period of half a year. That seems rather a short period. I assume there are periods of six months in which the production would be very much less than in the following six months; it must be more or less seasonal in character.


William Daum Euler: It might work both ways.


Hugh Alexander Stewart: If they wanted to put
on a quota they might base it on the period of lowest figures.


Mr. NEILL:: Did I understand the minister to say there is no present quota of twenty-five per cent?


William Daum Euler: There is no quota at all.


Alan Webster Neill: I was very much under the
impression that there was.


William Daum Euler: The United States have the right under the agreement to set one. There is none now.


Alan Webster Neill: That is contrary to what we believe in British Columbia. I was reading last night of the operations of one of these marketing boards, and I think it applied to this item. It described the method adopted of operating under this twenty-five per cent restriction. The American producers notify the British Columbia people of their estimated production and they allot them twenty-five per cent on that. The report went on to state that this year the amount had been overestimated, with the result that along in November the British Columbia exporters had already exceeded their twenty-five per cent for the year. I may have misunderstood it, but it certainly conveyed that impression.


William Daum Euler: There is a marketing board in British Columbia, and the members voluntarily regulate their export, but at the moment there is no quota imposed by the United States, although they reserve the right to impose a quota on the basis of twenty-five per cent of the consumption in the United States.


Alan Webster Neill: It may be a gentleman's agreement, but certainly we do limit our exports.


William Daum Euler: Yes, the marketing board
does that voluntarily.


Alan Webster Neill: It must be the same thing
as a quota, under the threat of a quota.


William Daum Euler: It is self-imposed.


Mr. DUNNING:: I think I can clarify
that a little. The British Columbia producers I believe are anxious not to provoke the imposition of a quota and are endeavouring to cooperate with the United States industry rather than fight them. That is the information I have. It should be mentioned that if a quota is imposed it would be a proportion of the total consumption during the preceding half year, inasmuch as it is

Canada-U. S. Trade Agreement
to be based on the combined production in and imports of shingles into the United States. It must be based on the previous half year's experience.


[Stage Direction]
Item agreed to.
United States tariff-1761. Lobsters, fresh or frozen (whether or not packed in ice), or prepared or preserved in any manner (including pastes and sauces), and not specially provided for, free.
Vincent-Joseph Pottier: I would like to correct
an impression that apparently prevails as stated by the hon. member for Royal (Mr. Brooks) in Hansard at page 821:
It is well known that we in the maritime provinces and Newfoundland produce practically all the lobsters in the world. We have the finest lobsters that are found anywhere. The only lobster, I believe, that is found' outside of Canada is one called the spiny lobster, which in reality is not a lobster at all.
As a matter of fact the United States produce as many lobsters as we export to them. Their production in recent years was as follows:
1919	 10,000,000
1928		 11,000,000
1929		 11,000,000
1930		 13,000,000
1931		 12,000,000
1932		 11,000,000
1933		 9,811,000
The year 1933 was the last year for which I could get the figures. The total exports of lobsters to the United States in 1934, the last year for which I could obtain the figures, amounted to 9,744,000 pounds. So that the statement made by the hon. member for Royal that lobsters were found only in the waters off the Canadian coast, to say t/he least is not according to the record. One-third of the exports of lobsters from Canada comes from a district in my constituency extending forty-five miles in length, and in 1934 the exports totalled 3,623,000 pounds. The treaty ensured the continuance of the free item and means a great deal to the people of my constituency.


Charles Hazlitt Cahan: What proportion of your supply goes to Europe, as compared with the part going to the United States?


Vincent-Joseph Pottier: Generally speaking we
ship to the United States. In 1934 our total Canadian production was 36,000,000 pounds. Of that amount 9,744,000 pounds went to the United States.


Charles Hazlitt Cahan: What quantity did you ship to Europe?


Vincent-Joseph Pottier: Our exports to the United Kingdom are of the canned product, and we
used to have a considerable trade with Australia.


Charles Hazlitt Cahan: And with France?


Vincent-Joseph Pottier: The difference between the amount shipped to the United States and the total of 36,000,000 pounds is the amount exported to the various countries.


William Daum Euler: Half the exports of canned lobster go to the United Kingdom.


Mr. BROOKS:: May I thank the hon. member for correcting me. I realize that when I said Canada had the total lobster production of the world I made a mistake. What I meant to say was that the maritime provinces of Canada produced practically all the lobsters produced in Canada. I know that lobsters are produced in the New England states-and I do not mean the kind of lobster about which the hon. members opposite are laughing. The remarks of the hon. member for Shelburne-Yarmouth-Clare bear out the statement I made the other day, that the people of the United States want our lobsters. They do not produce enough for their own consumption, and when they want a particular commodity they are willing and anxious to allow it to come in free. On the other hand if they have an industry they wish to protect they will not allow the product of that industry to enter without the payment of a big duty.


[Stage Direction]
Item agreed to.
United States tariff-1761. Clams, quahaugs, oysters (except seed oysters), and crabs, fresh or frozen (whether or not packed in ice), and not specially provided for, free.
Item agreed to.
United States tariff-1761. Scallops, fresh but not frozen (whether or not packed in ice), free.
Item agreed to.
United States tariff-1772. Standard newsprint paper, free.
William Daum Euler: In 1930 the exports amounted to 43,053,000 hundredweight valued at $126,288,591; in 1935 they were 39,068,000 hundredweight valued at $68,106,166.


Hugh Alexander Stewart: Has there ever been a duty against newsprint going from Canada to the United States?


William Daum Euler: I think not.


Charles Avery Dunning: There has been a strong agitation for one recently.

Canada-U. S. Trade


Hugh Alexander Stewart: Yes, but I believe the
agitation by the press of the United States against a duty on newsprint would be the strongest influence over there.


William Daum Euler: This obviates any possible
danger of a duty against our newsprint.


James Houston Spence: There never was a danger
and never will be.


William Daum Euler: That is a matter of opinion. There certainly has been an agitation.


Charles Avery Dunning: We may take the hon.
member's expert information on nursery stock, but not on newsprint.


James Houston Spence: So long as they can buy
newsprint cheaply they will never put a duty on it.


[Stage Direction]
Item agreed to.
^ United States tariff-1803(1). Timber hewn, sided, or squared, otherwise than by sawing, and round timber used for spars or in building wharves; sawed lumber and timber, not further manufactured than planed, and tongued and grooved; all the foregoing, if not of balsa or teak, and not specially provided for. [See also 601 (c) (6)], free.
George Halsey Perley: Under item 491, which I believe is similar, there is provision for 50 cents per thousand feet. Under the present item there is the stipulation that classes "not specially provided for" shall be free. Can the minister give figures of the quantities under items 401 and 1803 (1)?


William Daum Euler: Item 401 applies to fir,
spruce, pine, hemlock and larch. Cedar and other soft woods and all hardwoods are included under the other item.


George Halsey Perley: I should like to have the respective export figures for the last year under items 401 and 1803(1).


William Daum Euler: Although I believe this information was given a few days ago, I shall give it again. In 1930 the exports of Douglas fir planks and boards and Douglas fir squared timber amounted to 418,410,000 board feet, valued at nearly $8,000,000. These are the figures under item 401. Hemlock, pine and spruce, planks and boards, and white pine squared timber amounted in 1930 to 897 million board feet, valued at a little over $25,000,000.


George Halsey Perley: That is also
under 401 ?


William Daum Euler: Yes, other softwood and hardwood. In 1930 the figures were 121 million board feet, roughly, of a value of $5,754,000. That is under item 1803.
Agreement


George Halsey Perley: The duty on
ordinary sawn lumber has been $1 per thousand feet with S3 of a tax. I asked the Minister of Finance about this the other night and he said that the duty had been reduced to 50 cents per thousand feet with a $1.50 tax. I cannot find where there is a provision that the tax shall be cut to SI.50.


Charles Avery Dunning: It will be found on the next page.


[Stage Direction]
Item agreed to.
United States tariff-1803(2). Logs; timber, round, unmanufactured; pulp woods; firewood, handle bolts, shingle bolts; and laths; all the foregoing, not cabinet woods, and not specially provided for, free.
Item agreed to.
United States tariff-1804. Posts, railroad ties, and telephone, trolley, electric-light, and telegraph poles of cedar or other woods, free.
Hugh Alexander Stewart: Has the minister the exports under this item?


William Daum Euler: Fence posts, poles, telegraph and telephone poles and railroad ties, in 1930 valued at $4,655,000 and in 1935, $808,000.


[Stage Direction]
Item agreed to.
United States tariff-1805. Pickets, palings, hoops, and staves of wood of all kinds, free.
Item agreed to.
United States Revenue Act-601(c)	(6).
Lumber, rough, or planed or dressed on one or more sides, except flooring made of maple (except Japanese maple), birch, and beech, *1.50 per thousand feet, board measure.
Provided, that from and after the time when tile aggregate quantity of sawed Douglas fir and western hemlock timber and lumber entered, or withdrawn from warehouse, for consumption, in any calendar year after 1935 exceeds 250,000,000 feet, board measure (determined in the manner described in paragraph 401. Tariff Act of 1930), the foregoing provision shall not be in effect in respect of sawed' timber and lumber of Douglas fir and western hemlock during the remainder of such year.
Provided further, that no article described in paragraph 401. Tariff Act of 1930, of a kind which is being classified under section 601(c)
(6), Revenue Act of 1932, on the day of the signature of this agreement but is thereafter-excluded from such classification pursuant to a final judicial decision in which the treasury department acquiesces, shall be subject to the provisions of Article IV of this agreement or any provision of this schedule; but the total duties, taxes, and other exactions hereafter imposed on or in connection with the importation of any such article shall not exceed' the total which would have accrued if such article had not been excluded from such classification.
George Halsey Perley: Could the minister explain these provisos? As I understand it, the first proviso permits only a certain amount of Douglas fir and western hemlock

Canada-U. S. Trade Agreement
to go into tile United States under this item.
I take it that anything over this quota will have to pay the higher rate.


William Daum Euler: The tariff quota on Douglas fir and western hemlock and the other tariff quotas provided for in the agreement are administered by the United States treasury department. They keep a record of all imports at the reduced rates of duty in which there are tariff quotas, and shortly before the quotas are filled instructions are sent to the collectors of customs to suspend the liquidation of entries until it can be determined what entries are entitled to importation at the lower rates of duty and what should be subject to the ordinary rates provided for in the Tariff Act of 1930 upon the completion of the tariff quotas entering in any one calendar year.


George Halsey Perley: The minister told us that the quota with reference to shingles was not enforced but that the United States reserved the right to put it in force.


William Daum Euler: Yes.


George Halsey Perley: This quota with reference to lumber is in force now?


William Daum Euler: Yes, on Douglas fir and western hemlock there is a quota of 250 million feet.


George Halsey Perley: That is actually in force to-day?


William Daum Euler: 
Charles Hazlitt Cahan: Item 401 and item 1803 (1) are mutually exclusive. Fir, spruce, pine, hemlock and larch would not come under item 1803 (1). These items are rather complicated and for the information of the Canadian people I think a clear statement should be prepared. It would take a Philadelphia lawyer to work out what are included in each item and what is excluded from each.


William Daum Euler: We admit that they are difficult. My hon. friend's understanding is correct when he says they are mutually exclusive.


Mr. HANSON:: A quota of 250 million feet is being placed against western hemlock and Douglas fir, and other woods such as spruce, pine, and so on are not faced with a quota. This is quite clear, at least to a lumberman.


George Halsey Perley: I should like an explanation of the second proviso.


William Daum Euler: I am quite free to admit that this is very difficult. I am not a lumber-
[Sir George Perley.)
man, but the hon. member for Skeena (Mr. Hanson) seems to understand it quite easily.


George Halsey Perley: The second proviso has nothing to do with lumber, has it?


William Daum Euler: It relates to lumber as covered by item 401. The second proviso of the reduction in the S3 excise tax provided for by section 601 (c) (6) of the Revenue Act of 1932 relates to a decision with respect to the application of the tax on timber six inches by six inches or larger in cross section. The provisions of this section of the Revenue Act of 1932 relate only to lumber and not to timber. It has been held by the United States customs court that timber refers to wood six inches by six inches or larger in cross section and lumber refers to wood sawn into boards, planks, et cetera, and of smaller dimensions. The treasury department is appealing this decision, but if it should be ruled that the revenue tax does not apply to timber six inches by six inches or larger, the second proviso referred to will have the effect of removing this class of lumber from the concessions granted in respect to paragraph 401 of the Tariff Act of 1930. In other words, the duty on this class of lumber shall not be less than SI per thousand feet board measure, but the second part of the proviso provides also that the duty shall not be at any time greater than S2 per thousand feet board measure, or the same duty as would have applied if this lumber were not excluded from the revenue tax by a decision of the United States customs court.


Charles Hazlitt Cahan: They are going to make an impost of duty no matter which way the decision goes.


Charles Avery Dunning: That clause is a lawyer's paradise.


Charles Hazlitt Cahan: I do not know what the hon. gentleman means, as I have never been in paradise.


[Stage Direction]
Item agreed to.
On article IV:
Articles the growth, produce or manufacture of Canada, enumerated and described in schedule II annexed to this agreement, shall, on their importation into the United States of America, be exempt from ordinary customs duties in excess of those set forth and provided for in the said schedule. The said articles shall also be exempt from all other duties, taxes, fees, charges, or exactions, imposed on or in connection with importation, in excess of those imposed on the day of the signature of this agreement or required to be imposed thereafter under laws of the United States of America in force on the day of the signature of this agreement.

Canada-TJ£. Trade Agreement
Schedule II and the notes included therein shall have full force and effect as integral parts of this agreement.
Mr. HOWARD (Translation):: Mr. Chairman, at this first session of the eighteenth parliament, I wish to follow the custom which I have adhered to ever since I have been a member of parliament, that is, when addressing the house for the first time at each session, to make use of the French language, the language spoken by eighty per cent of my constituents whom I desire to honour by so doing, and to whom I desire to express publicly my appreciation for the courtesy they have shown to me in electing me as their representative. Their commendable example should1 be followed in every province.
Nowhere else in Canada is there to be found a more loyal, more honest and' more industrious population, nor more broadminded or generous people than in the county of Sherbrooke. I feel and shall always feel in duty bound to uphold their ideals with my advice, my influence, my energy and my efforts, and I shall endeavour to prove to them, through my loyalty and my deeds, how highly I appreciate the support and trust with which they have honoured me.
(Text) Before article IV passes I want to say just two or three words about this treaty in an effort to counteract some of the remarks made yesterday, especially by the hon. member for London (Mr. Betts). Referring to cream, the hon. member said that it would not make any difference or provide any benefit because the present United States duty of 35 cents on cream is too high. Let me give you the actual figures to show what has already happened under this treaty. Prior to 1930 the eastern townships of Quebec, the dairy sections, had been shipping gallons and gallons of cream to the United States, but that traffic was cut off by the action of the United States government in placing a duty of 56| cents against that commodity. Under this new arrangement made by the present government that duty has been reduced to 35 cents. The hon. member for London said that it would not benefit the farmers. I have figures secured by the hon. member for Stanstead, representing one of the eastern townships, and as he is not in the house I will quote them. The first shipment from the eastern townships, from the counties of Sherbrooke, Compton and Stanstead, under the new agreement, went to the United States on February 17 of this year, after a period of five years in which not a gallon had been sent to that market. What is the situation to-day? The present duty of 35 cents a gallon, representing a consider-12739-80
able reduction from the duty that had prevailed before, has meant to the farmers of Dixville, Bamston and Paquetteville from 26 to 29 cents per pound butter fat net, which is about 2 cents in excess of the Canadian price at the present time. If the American price should rise, shipments of cream will naturally increase. But the agreement has another most important bearing on our trade relations, especially in its effect on the dairy sections of Canada. Had it not been for the price which was being paid for American cream and our shipments to the United States -it is only in the last five weeks that we have started shipping again-the Canadian price would probably have dropped one or two cents per pound lower for butter fat, though it is bad enough as it is. This new shipment of cream to the United States has resulted in a better price to our Canadian farmers.
Everyone in the house knows my business, and as a manufacturer and lumberman I say that everything that this government can do to increase the purchasing power of the primary producers in Canada will benefit our manufacturers; indeed, that is the only salvation of the manufacturers. I believe that the supporters of the policy followed by the last administration during the past five years will admit to-day the serious consequences of their effort, for the first time in the history of Canada, to maintain extreme protection. The consequence was that employment diminished and there were few manufacturers who could make profits, so that conditions were worse than we had ever before experienced. If we can increase the purchasing power of our farmers and lumbermen, our miners and fishermen, it will be easy enough to double the flow of Canadian manufactured products to the consumers. As a manufacturer, I say that we would rather have less profits proportionately; we would rather have more business at a lower rate of profit.
I was quite surprised to hear the criticisms especially on items that had been reduced, going into the United States. Have we ever stopped to think that this trade with the United States is the best that we could have, considering the fact that the President of the United States was not authorized to concede more than a fifty per cent reduction? Speaking of cream, if this treaty had gone into effect, as it should have done, in 1911, cream would have been on the free list to-day. But we turned down the reciprocity agreement in 1911; and speaking from the standpoint of the farmers in the eastern townships of

Quebec, I can assure you that we are mighty glad to get the reduction to 35 cents, and I hope that this agreement in its present form will serve as a basis for future negotiations which will restore a greater volume of trade to us and be of benefit not only to the farmers but to all the people of Canada. It is for that reason that I support it.


George Halsey Perley: Is the hon.
gentleman perfectly satisfied with a rate of 35 cents on cream going into the United States?


Charles Benjamin Howard: I think I have already
answered that question. I am not satisfied with 35 cents, but it is a whole lot better than 56^ cents; and I would remind my right hon. friend that during the past five years not a single gallon of cream was shipped into the United States. On February 17, 1936, as a result of this agreement and for no other reason we started shipping cream again to the United States.


George Halsey Perley: Why did the
government not get this rate cut in two? The president had power to do that.


William Lyon Mackenzie King: Why did not
my right hon. friend's government get any agreement?


Mr. BETTS:: The hon. member for Sherbrooke was kind enough to mention my name in connection with the item. I hope he is right in what he has said; I hope that from his riding they will ship a good deal of cream to the United States.


Charles Benjamin Howard: Not "will"; they are
doing so.


Frederick Cronyn Betts: We have not heard how
much they are shipping. One strange thing about this discussion on cream is that although, as I fancy, the Minister of Trade and Commerce is very anxious to show that this item has been useful, he has not been able to give any figures indicating how much has gone into the United States, nor has the member for Sherbrooke favoured us with that information. Where I come from we cannot ship cream although we are only 120 miles from the border.


Charles Benjamin Howard: This is the situation.
Not a gallon of cream was shipped during the past five years and, as I have already said, the first shipment was on February 17 of this year. That was a shipment of ten cans, and it has increased every single week since. More than that, it will be increasing daily as long as the present situation exists.


Frederick Cronyn Betts: Ten gallons?


Charles Benjamin Howard: Ten cans.


Mr. WILTON:: Perhaps the United States is getting the cream of this treaty.


Hugh Alexander Stewart: I am very much interested in these dairy products, and if there is any part of the dominion that will reap advantage from the concession on cream and milk it is that part of the province of Quebec about which the hon. gentleman speaks, because of its proximity to the market. He has overlooked however the fact that there is a quota, and the amount of cream that can possibly go into the United States under this quota, compared with the consumption of cream there, is very small indeed. I am sure it is much worse than the quota in respect of cattle, which is one in a hundred.


Charles Benjamin Howard: It is better than none.


Hugh Alexander Stewart: I admit it, if we can get in there. But my hon. friend again is overlooking the fact that it is the American gallon that will determine the measure of the cream, which will reduce the number of Canadian gallons from 1,500,000, I think somebody said here the other night, to about 1,300,000, and will also increase the rate of duty from 35 cents a gallon on the Canadian gallon. That is all I wish to point out. I am glad indeed if the farmers of the eastern townships can get any cream in, and I should be glad if the farmers of the eastern part of Ontario could do the same. We used to export cream there, but it was cut out. The danger as I see it is that these dairy farmers will equip themselves to produce cream, and ship it in, and they will just get their shipments nicely started when one morning they will be notified that no more cream can go into the United States because we have reached our quota. The result will be tremendous confusion, and probably there will not be a fair distribution of the quantity as between the different producers.
I want to point out to my hon. friend a slight inaccuracy in one of his statements. He said that if the reciprocity agreement of 1911 had been put through we should have had free cream. Let me tell him that we had free cream without it. We had it under the Underwood tariff of 1913, and we got a lot of other concessions that were mentioned in that reciprocity agreement. We got them by voluntary action on the part of the United States. The very substantial reductions of duty by the United States, which were put on Hansard the other day, were made by that country because they found it to their advantage; and in a very substantial measure, in my opinion, the benefits to Canada that were

Canada-US. Trade Agreement
provided for in that reciprocity agreement of 1911 followed as a result of voluntary action on the part of the United States in reducing their duties.


William Lyon Mackenzie King: May I say to my hon>. friend that I wish he would choose between the inconsistencies of his position. He tells us at one time that the duty is such that no cream will be shipped in. A little later on he says the day is rapidly approaching when the full quota will be sent in and there will be a howl because more cannot be shipped. May I say to the hon. member that this is pretty much the line of argument we have heard from the other side all through the debate, under no possible circumstances can the agreement be advantageous to Canada.


Hugh Alexander Stewart: I do not think the Prime Minister is quite fair to me, because I began by stating frankly that I thought that part of the province of Quebec, the eastern townships, would get some benefit, and I hoped they would, but I doubted whether the dairymen of eastern Ontario, of London, for instance, represented by the hon. member for that city (Mr. Betts)-would be able to ship any. But I said that if they did make their arrangements and began to ship they would wake up some morning and find a quota against them.


William Daum Euler: They sell it at home, anyway.


James Houston Spence: What was the duty on
cream before the Hawley-Smoot tariff of 1930?


Charles Avery Dunning: Thirty cents. While we are on that subject, we have been asked a great many questions on schedule II of the agreement with respect to the rates of duty in effect at various periods of time on Canadian goods going into the United States. It might be interesting to note that, out of a total of 88 items in schedule II, only fourteen are higher in rate under the agreement than they were under the Fordney-McCumber tariff, which preceded the Hawley-Smoot tariff; forty items are lower than the Fordney-McCumber tariff was. That is to say, we have on forty items of the United States tariff a lower rate of duty against Canadian goods under this agreement than we had prior to 1930. And thirty-four items are exactly the same as they were under the Fordney-McCumber tariff which preceded 1930.


George Halsey Perley: But is the minister quite fair in putting the number of articles?


Charles Avery Dunning: Items, I said.
12739-80i


George Halsey Perley: The number of items. The items which are higher than the Fordney-McCumber tariff are the ones which are of great importance to us.


Charles Avery Dunning: Oh, no.


George Halsey Perley: I submit that if the minister is going to make a comparison of that kind he ought to give us the value of those various exports to the United States, in order to show what proportion of our shipments to that country are now subject to a better duty than the Fordney-McCumber tariff gave us.


Charles Avery Dunning: I am glad my hon. friend asks that question. On the bill I will undertake to have the information computed along the lines of the measuring stick he now sets up, because it was on that basis we reached the conclusion that this treaty was advantageous to the people of Canada.


Charles Benjamin Howard: The hon. member for London (Mr. Betts) indicated he thought that the shipments of cream to the United States amounted only to a small quantity. But let me remind him that big things have small beginnings. I have in mind one silk industry in Sherbrooke which eleven years ago did not exist and to-day is the largest exclusive producer of full fashioned silk hose in the British empire. When he asks about figures, I would point out that only twenty-nine herds have passed inspection out of hundreds of herds in the townships; more are being inspected every day, and as fast as the inspections are completed, the shipments will increase.
The hon. member for Leeds (Mr. Stewart) has referred to the difference in the size of the gallon. These are the computations: Duty on eight gallon can, ten American gallons, $3.50; transportation to Boston, 85 cents; entry fee on the shipment, 5 cents.


Hugh Alexander Stewart: Is that on the ten?


Charles Benjamin Howard: This is on your ten
American gallons, yes. The total expense per can is S4.40. Eight gallons of cream weigh 82 pounds; 42 per cent of butterfat represents 34-44 pounds of butterfat; at 42 cents a pound, which was the market at that date, it amounts to $14-4648, less the expense of $4.40, giving a net return, for 34-44 pounds of butterfat, of $10.06, or an amount paid to the farmers of 29-22 cents per pound of butterfat.


Alexander McKay Edwards: The hon. member for Sherbrooke (Mr. Howard) brought up the matter of silk production in his town. I would like to ask him how the production
Canada-UjS. Trade Agreement

of silk has been in the mills of Sherbrooke for the past five years under the previous government, principally due, may I say, to the empire trade agreements.


Charles Benjamin Howard: Oh, no.


William Lyon Mackenzie King: Let us keep to this agreement.


Charles Benjamin Howard: I will answer that later.


Hugh Alexander Stewart: After you get through with Japan you will be able to answer that.


Charles Hazlitt Cahan: We may have a commission to inquire into the profits of the hon. gentleman.


Charles Benjamin Howard: There are no stockings coming in from Japan.


An hon. MEMBER:: Just socks, that is all.


Charles Hazlitt Cahan: But there are enormous
profits coming in to the hon. gentleman from silk stockings.


Hugh Alexander Stewart: The figures given by the Minister of Finance are very interesting. If he has the fourteen higher items I should like to have them.


Charles Avery Dunning: I have sent for them. They are not here at the moment.


Hugh Alexander Stewart: We shall get them a little later?


Charles Avery Dunning: Yes.


Hugh Alexander Stewart: Possibly the minister
could put them on Hansard.


Charles Avery Dunning: I will try to do that. The computations-


Hugh Alexander Stewart: I am not asking for the computations; I mean just the items. Has the minister the fourteen higher items?


Charles Avery Dunning: No. We will have a complete list prepared. The figures I gave, I think, will turn out to be accurate. There may be a variation of one.


Charles Hazlitt Cahan: I suggest to the Minister of Finance that he have his brief printed. I think we would find it very interesting.


Charles Avery Dunning: I have no brief on the matter.


Charles Hazlitt Cahan: I think there is a brief prepared on each of these items; I have seen it in the hands of the minister's advisers.


Charles Avery Dunning: No, there is not.


Charles Hazlitt Cahan: I think there is a complete statement prepared by the experts on each of these items.


William Lyon Mackenzie King: I wish my hon. friend would give me one. I have been looking for one right along.


Charles Hazlitt Cahan: That was quite evident during the right hon. gentleman's discussion of the matter, but his colleagues have been furnished with briefs.


Charles Avery Dunning: Perhaps I might explain that, Mr. Chairman. In connection with every item a mass of figures is prepared and set out on a loose leaf sheet which is available to the minister piloting the measure. I think everyone knows that is the custom, and a very proper custom. But to describe the mass of somewhat confused information which I have had before me at times as a brief is scarcely correct, and I am afraid that to print those would be imposing altogether too much on Hansard. We try to estimate as nearly as we can the kind of figures that will be required, for certain years and so forth, and we set them out. But very frequently we are asked for just the year, just the quantity or just the classification we do not have, and that information has to be looked up by the experts who sit with us from the actual records which we have packed in four suitcases which are underneath the desk.


[Stage Direction]
Article agreed to.
On Article V:: The provisions of Articles III and IV of this agreement shall not prevent the government of either country from imposing on the importation of any product a charge equivalent to an internal tax imposed on a like domestic product or on a commodity from which the imported product has been manufactured or produced in whole or in part.


[Stage Direction]
Article agreed to.
On Article VI:: 
Charles Hazlitt Cahan: Do the words "most favoured nation" mean most favoured foreign nation treatment?


Charles Avery Dunning: In every case where they are used that is the meaning attached to those words.


Alexander McKay Edwards: This clause includes the arbitrary values, does it not?


Charles Avery Dunning: There is no reference in this article to arbitrary valuations.


[Stage Direction]
Article agreed to.
On Article VII:: No prohibitions, import or customs quotas, import licences, or any other form of quantitative regulation, whether or not operated in connection with any agency of centralized control, shall be imposed by Canada on the importation or sale of any article the growth, produce or manufacture of the United States of America enumerated and described in schedule I, nor by the TJn'ted States of America on the importation or sale of any article the growth, produce or manufacture of Canada enumerated and described in schedule II, except as specifically provided' for in the said schedules.
The foregoing provision shall not apply to quantitative restrictions in whatever form imposed by either country on the importation or sale of any article the growth, produce or manufacture of the country in conjunction with governmental measures operating to regulate or control the production, market supply, or prices of like domestic articles, or tending to increase the labour costs of production of such articles. Whenever the government of either country proposes to establish or change any restriction authorized by this paragraph, it shall give notice thereof in writing to the other government and shall afford such other government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action; and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the government which proposes to take such action shall be free to do so at any time thereafter, and the other government shall be free within fifteen days after such action is taken to terminate this agreement in its entirety on thirty days' written notice.


Charles Hazlitt Cahan: It strikes me, Mr. Chairman, that the terms of thirty days and fifteen days are too short to enable either government reasonably to conduct negotiations with respect to objections of this kind as they arise.


Charles Avery Dunning: Of course there is thirty days before the fifteen days; it is thirty days plus fifteen days, in actual practice.


Charles Hazlitt Cahan: Yes, but in negotiations between the United States and Canada even forty-five days is a very short term within which to conduct such negotiations which go to the root and vitality of this agreement.


Charles Avery Dunning: I am afraid I made a mistake in saying forty-five days, Mr. Chairman; as a matter of fact it is thirty days plus thirty days before the fifteen days' notice is given, so in reality the period allowed for negotiations is sixty days, two periods of thirty days each, and following the expiration of the second thirty day period the government aggrieved has fifteen days in addition within which to terminate the treaty. I misread the paragraph myself.


Charles Hazlitt Cahan: It is not quite what the hon. gentleman says. The article provides:
Whenever the government of either country proposes to establish or change any restriction authorized by this paragraph-
That is, there are certain authorized restrictions under this agreement as it stands, and should the government of Canada propose to change any of those restrictions it shall give notice thereof in writing to the government of the United States and shall afford that government an opportunity, within thirty days of the receipt of that notice, to consult with it in respect of the proposed action. It allows only thirty days for the United States government to come in and negotiate after the receipt of such notice,-
* .. and if an agreement with respect thereto is not reached within thirty days following receipt of the aforesaid notice, the government which proposes to take such action shall be free to do so at any time thereafter....
And it shall give at least fifteen days' notice of such action to terminate this agreement. In other words there are only thirty days for negotiation.


Charles Avery Dunning: But the last few words, which my hon. friend has not read, are important.


Charles Hazlitt Cahan: Those words are:
... and if an agreement with respect thereto is not reached within thirty days...
That is, there are only thirty days allowed for negotiation.
... following receipt of the aforesaid notice, the government which proposes to take such action shall be free to do so at any time thereafter, and the other government shall be free within fifteen days after such action is taken to terminate this agreement in its entirety on thirty days' written notice.


Charles Avery Dunning: That is the second thirty days.


Charles Hazlitt Cahan: Yes, but if I understand it
correctly there is a period of only thirty days for negotiations.


Charles Avery Dunning: Yes.
Canada-U.S. Trade Agreement


Charles Hazlitt Cahan: Then if an agreement is
not reached within that period of thirty days the government which proposes to take action for rescission of the entire agreement shall be free to do so at any time thereafter.


Charles Avery Dunning: Yes; but the other government has only fifteen days in which to decide to rescind.


Charles Hazlitt Cahan: (Reading):
... the government which proposes to take such action shall be free to do so at any time thereafter, and the other government-
The United States government in the case I was suggesting.
-shall be free within fifteen days after such action is taken to terminate this agreement-
In other words, as I understand it, this allows thirty days for negotiations.


Charles Avery Dunning: That is right.


Charles Hazlitt Cahan: And then thirty days' notice of termination. Well, that is short enough, when you consider the volume of traffic across the border. A period of thirty days for negotiations between governments is a very short term indeed.


William Lyon Mackenzie King: I am sorry
that I have not any brief, and I may not be able to make myself as clear as my hon. friend-


Charles Hazlitt Cahan: I had to discuss it without
a brief; I am in the same position.


William Lyon Mackenzie King: I am glad to
know we are both without briefs. Unfortunately also I have not the privilege of being a trained counsel and may not express myself on all occasions as forcibly as my hon. friend.


Charles Hazlitt Cahan: The right hon. gentleman
might omit his sarcastic remarks.


William Lyon Mackenzie King: Perhaps my
hon. friend will leave out his offensive remarks.


Charles Hazlitt Cahan: I did not intend any
offensive remark; all I said was suggesting high commendation of the right hon. gentleman that during the whole of this discussion from first to last I have not seen him being briefed from time to time regarding items. Naturally it was his colleagues who had prepared themselves by briefs, and it was to their briefs that I referred. I certainly did not intend any suggestion uncomplimentary to the Prime Minister.


William Lyon Mackenzie King: May I say to my hon. friend that I think the purpose of this section is really to impose some restrio-

tion on forces in the United States which may be clamouring for quotas and quantitative restrictions. It does not follow that if it is to the interest of the parties to continue negotiations beyond thirty days they are not free to do so. The government has the right to take action after thirty days, but may not necessarily do so; in all probability unless the reason were a very strong one, the government would wish to continue negotiation for a longer period. The period of thirty days is, as I said, fixed, I believe, to preclude unnecessary pressure being brought upon an administration in an embarrassing way.


George Halsey Perley: The right hon.
gentleman is quite correct in that; the two parties, if they see fit, can go on negotiating for more than thirty days, but this can only be done by mutual consent.


William Lyon Mackenzie King: Certainly.


Frederick Cronyn Betts: Might I suggest to the Prime Minister that if the legislation directed against certain Canadian liquor exporters, to which the hon. member for St. Lawrence-St. George (Mr. Cahan) referred yesterday, becomes effective in the United States it will constitute a breach of article I of this agreement. Has the Prime Minister anything to say as to that? Am I correct?


William Lyon Mackenzie King: There was a rather full discussion of that matter yesterday, and as the whole question is at the moment the subject of very careful consideration by both governments I think it would be inadvisable at the present time to add anything to what was then said.


Hugh Alexander Stewart: 
William Lyon Mackenzie King: The hon. member finds himself once again in a dilemma. He and his party have spent the last two weeks denouncing the agreement, item by item. They have pointed out what they have termed its limitations and its defects, and have stated that it tended in the wrong direction, and so forth. After condemning it in this way the hon. member rises in his place and states that the worst feature of the agreement is that it can be terminated at any time.


Hugh Alexander Stewart: Yes.


William Lyon Mackenzie King: And he still says "yes." No matter how bad it is, apparently he believes it should continue for at least three years. That is the argument offered by the hon. member.


Hugh Alexander Stewart: Yes.


William Lyon Mackenzie King: And he says "yes" to that. I am afraid he has reached
Canada-U\S. Trade Agreement

the point where he is prepared to raise any kind of objection, whether it be relevant or otherwise. Certainly nothing could better illustrate the position taken by the opposition towards the agreement than what has been said by the hon. member. Along with other hon. members in his party, he has stressed over and over again that the agreement is likely to be injurious to Canada. In the next breath he objects because there is a means of terminating its provisions inside of three years. I cannot understand why in the administration of the agreement the hon. member should not impute as fair and honourable motives to the government of the United States as he does to the government of Canada. He speaks as though the people of the United States were a sharp bargaining lot, and leaves the suggestion that they are going to do something which would give them an unfair advantage in the agreement as time goes on. In the same breath he opposes a clause in the agreement which would give Canada the opportunity to terminate it, in the event of anything of the kind happening. These clauses have been included not for the benefit of the United States government or for that of the Canadian government, but for the benefit of both, to see that what is fair and proper is done on each side. If there is anything at all in the hon. member's suggestion that the people of the United States are going to be so sharp, or that they are going to do this and that which is unfair, then I think we have the strongest of all reasons for having in the agreement a clause which will enable the government of Canada to terminate it should such circumstance arise. I am sure that when the hon. member reads what he has said he will find that from beginning to end his argument is contradictory.


Hugh Alexander Stewart: If the Prime Minister thinks I am in a dilemma, then I say to him that he is in one also, because he has been contending vigorously that the agreement is for the benefit of Canada. I say that if it is for our benefit it ought to be made permanent, and there ought not to be provisions which make termination so easy. I suggest he is the one who is in the real dilemma. At no time have I questioned the good faith of the President of the United States or the people of that country. At no stage in the debate have I said anything which would justify the Prime Minister in stating that I base my objection upon any sharp practices or bargaining proclivities of the people of the United States. He knows as well as I

do, however, that the United States farmer is a high protectionist, and that probably there will be a change of government in the United States.


Charles Avery Dunning: I do not know that.


Hugh Alexander Stewart: I say that probably there will be. The minister knows it is possible; I shall put it in that way. If it is not probable, then it is possible. He knows that in the United States, as there has been in Canada, there will be reaction against the provisions of the treaty. No doubt his correspondence has disclosed reaction against it in Canada.


William Lyon Mackenzie King: Not at all.


Hugh Alexander Stewart: I have received copies of letters which have been sent to the Minister of Finance and to others, and it seems to me that they indicate a definite reaction.


William Lyon Mackenzie King: Oh, no.


Hugh Alexander Stewart: I say that there will be political and financial reaction in the United States, and without any questioning as to integrity or honesty we must admit that interested parties have a right to agitate against the agreement, or to contend that it is not to the advantage of the people of that country, and particularly the agricultural interests. If that takes place-and I am pretty sure it will-then I say that the opportunities for the termination of the agreement are so many and the procedure is so exactly laid down that termination would be easy.


Charles Hazlitt Cahan: I have been reading Articles VII, X and XIV, and I believe each provides a term of only thirty days for negotiation. After that a notice is given, and then when the notice is given the agreement will be terminated in another thirty days. I do not suggest anything uncomplimentary of the Prime Minister when I say that I do not believe those three articles were so drawn and inserted in the agreement on his initiative. I could not conceive of that being done. Without casting any reflection at all upon the United States government, my inference is that the terms of these articles, and the short times provided therein, were due to the insistence of the United States negotiators. That is my own inference and belief. I do not wish to discuss it any further as I am not in any dilemma whatsoever. I think thirty days for negotiations between governments with regard to an agreement such as this, whether it is good or bad, is too short a time. There are many provisions in these schedules with which I agree; I think advan-

Canada-UjS. Trade Agreement
tage will come to Canada from certain items in these various schedules. I differ with the right hon. gentleman only as to where the balance of advantage and convenience lies. As my hon. friend has just stated, to terminate an agreement like this on thirty days' notice, when new channels of trade have been opened, would probably lead to very great embarrassment indeed. I know it cannot now be amended and that the suggestions which we have made as to the possibility of its termination on thirty days' notice, while being perhaps relevant, are not important at this time. I have failed to convince myself that these clauses were inserted on the initiative of the right hon. gentleman or those associated with him in the negotiation of this agreement.


William Lyon Mackenzie King: If I understood my hon. friend aright he used the phrase "will be terminated" in referring to the parties being free to terminate the agreement at the end of thirty days. I do not think that necessarily follows from the wording of the clause. After thirty days the parties will be free to terminate the agreement, but if they wish so to do they may carry on their negotiations for a longer period of time.


Charles Hazlitt Cahan: Possibly not, unless there
is a new agreement to extend that term of thirty days for negotiations.


William Lyon Mackenzie King: They shall be free to terminate the agreement, but that does not mean that the agreement will be terminated. The negotiations may be carried on for a further period of time if the parties so desire. On the other hand, if one of the parties wishes to be arbitrary in the matter the negotiations can be terminated at that time.


Charles Hazlitt Cahan: If any party is of that disposition, perhaps it would be better to terminate.


William Lyon Mackenzie King: I should think so.


Charles Hazlitt Cahan: But I still think the time
is too short.


William Lyon Mackenzie King: As my hon.
friend knows, when the present administration in the United States came into office it indicated as its policy the desire to enter into reciprocal agreements with different countries. If Canada had been the first country to take advantage of what might be termed the offer on the part of the United States to all countries to enter into reciprocal agreements, probably the negotiators of this agreement would have had a freer hand in drafting some of its articles. Prior to entering into this agreement with Canada the United States had entered into agreements with several other countries. Certain of the phraseology of some of the articles is common to all the agreements concluded by the United States.


Charles Hazlitt Cahan: That is what I infer.


William Lyon Mackenzie King: My hon. friend is quite right when he says that the language used here is language which will be found in all the agreements which the United States has made with other countries. I can only say that, if the government of which he was a member had negotiated a reciprocal agreement with the United States, as I think it might have done, and he had been one of the negotiators, no doubt the language of some of its provisions would be different. We were as respects phraseology, handicapped to a certain extent, if it may be so termed, in negotiating this agreement, for the reasons I have given. If what my hon. friends say about the likelihood of the United States doing this and doing that, or going to do this or going to do that, is true, they ought to be *thankful that there are articles in this agreement by which it may be terminated in as short a period as thirty days.


Charles Hazlitt Cahan: The period of thirty days
is too short.


William Lyon Mackenzie King: I will venture to hazard the statement that there will be no termination of this agreement inside of thirty days or inside of any period less than three years.


[Stage Direction]
Article agreed to.
On article VIII:
In the event that Canada or the United States of America establishes or maintains a monopoly for the importation, production or sale of a particular commodity or grants exclusive privileges, formally or in effect, to one or more agencies to import, produce or sell a particular commodity, the government of the country establishing or maintaining such monopoly, or granting such monopoly privileges, agrees that in respect of the foreign purchases of such monopoly or agency the commerce of the other country shall receive fair and equitable treatment. To this end it is agreed that in making its foreign purchases of any product such monopoly or. agency will be influenced solely by those considerations, such as price, quality, marketability, and terms of sale, which would ordinarily be taken into account by a private commercial enterprise interested solely in purchasing such product on the most favourable terms.
Charles Hazlitt Cahan: I suppose this article is
the standard clause in the other agreements. It has no particular reference to Canada as we grant no exclusive monopolies with regard
Canada-U4S. Trade Agreement

to the importation or exportation of goods. From the language of the clause I infer that it is one which is standard in nearly all the agreements which have been negotiated by the United States. There are distinct differences in the language used by Englishmen, Canadians and Americans, and it is quite possible to take almost any legal document and discern whether its draftsman is an American, a Canadian or an Englishman. I do not think this clause has any applicability to conditions as they exist in Canada today.


William Lyon Mackenzie King: My hon. friend is quite right in regarding this as an article which appears in other agreements.


John Ritchie MacNicol: I am not so sure that
I understand the purport of what the Prime Minister has just said. This country produces ninety per cent of the total world production of nickel, and also the same world percentage of asbestos. The United States purchases fifty-eight per cent of the total production of asbestos and fifty-three per cent of the total nickel production. We have never attempted to make monopolies of these commodities, nor do I suggest our doing so, but I was just wondering what was in the minds of the United States negotiators when they drafted this clause.


Charles Avery Dunning: So far as we know
there was nothing specifically in the minds of either the Canadian or the American negotiators as to the possible establishment of what might be described as state monopolies in either country. This is just a provision in case either government, in these uncertain and moving times, might embark upon anything of this kind. It has been found necessary by the United States to insert this provision in the agreements they have negotiated with certain other countries.


Charles Hazlitt Cahan: Where cartels exist.


Charles Avery Dunning: Where cartels have flourished. The hon. member for Davenport (Mr. MacNicol) knows that the tentacles of certain cartels have reached out so far as to include portions of certain industries in Canada, but this has not a direct bearing upon this provision as it has to do particularly with state monopolies.


George Halsey Perley: Not state
monopolies alone.


Charles Avery Dunning: Particularly so, yes.


[Stage Direction]
Article agreed to.

On article IX:
The tariff advantages and other benefits provided for in this agreement are granted' by Canada and the United States of America to each other subject to the condition that if the government of either country shall establish or maintain, directly or indirectly, any form of control of foreign exchange, it shall administer such control so as to insure that the nationals and commerce of the other country will be granted a fair and equitable share in the allotment of exchange.
With respect to the exchange made available for commercial transactions, it is agreed that the government of each country shall be guided in the administration of any form of control of foreign exchange by the principle that, as nearly as may be determined, the share of the total available exchange which is allotted to the other country shall not be less than the share employed in a previous representative period prior to the establishment of any exchange control for the settlement of commercial obligations to the nationals of such other country.	_
The government of each country shall give sympathetic consideration to any representations which the other government may make in respect of the application of the provisions of this article.
Charles Hazlitt Cahan: One may make only one comment upon this, and that is that the share of total available exchange which is employed in the previous representative period, prior to the establishment of the exchange control, may not be fair, because the necessities for exchange may have decreased in one period or increased in another. The exchange between this country and the United States arising out of a trade agreement should depend upon the relative quantities and values of the products exchanged which create credit and exchange. This paragraph certainly was not drafted with a view to the exchange conditions which now prevail or which have prevailed or which are likely to prevail between Canada and the United States. I think it is one of those standard paragraphs adopted from some prior treaty of the United States with some European power.


Charles Avery Dunning: It also has to do with the possibilities of exchange relations between either of these countries and some third party, some other country.


Charles Hazlitt Cahan: Quite so.


[Stage Direction]
Article agreed to.
On article X.
In the event that a wide variation occurs in the rate of exchange between the currencies of Canada and the United States of America, the government of either country, if it considers the variation so substantial as to prejudice the industries or commerce of the country, shall be free to propose negotiations for the modification of this agreement; and if

Canada-UjS. Trade Agreement
an agreement with respect thereto is not reached within thirty days following receipt of such proposal, the government making such proposal shall be free to terminate this agreement in its entirety on thirty days' written notice.
Charles Hazlitt Cahan: The principle embodied is very commendable indeed, and I think that probably within the next three years the Minister of Finance will have to give a great deal of prayerful attention to this subject. Again, however, thirty days is, I think, a short term for negotiations.


Charles Avery Dunning: My hon. friend would not risk a prediction as to which way the worries of the Minister of Finance would lie?


Charles Hazlitt Cahan: They might lie either way and be equally onerous.


Charles Avery Dunning: I agree entirely.


Mr. HEAPS:: This article is very wide indeed and it appears to affect only half of the trade between the two countries. Either government has the right to cancel the whole agreement. If the United States thought they were at a disadvantage in some particular respect owing to exchange conditions, they could terminate the whole agreement in thirty days. It is true that there must be certain negotiations in the meantime; nevertheless it seems to me that there should have been something more definite in an article of this sort defining the meaning of the word "wide" in the term "wide variation" in the first line. It depends on how that word is defined, and I do not know whether it could be defined; our definition might be different from theirs. During the past fifteen years the exchange rate has always been against Canada but in favour of Canadian exporters; sometimes the rate has been as high as ten per cent against us. If the American exchange is higher than ours it naturally helps the exporters of Canadian goods, and in such an event the United States has power to nullify the whole agreement.


Charles Avery Dunning: It is of course difficult to define "wide variation," but it is qualified by the words which follow:

if it considers the variation so substantial as to prejudice the industries or commerce of the country-
Not a particular industry or a particular article, but generally. Negotiations can then be instituted. The spirit of the agreement is everything. If the parties are desirous of maintaining the agreement in force, either party should be willing to consider a condition of this sort which arises and which seriously prejudices the interests of the other and thereby impairs the spirit of the agreement.
I think this is one of those situations that must rest upon the fundamental consideration of good will and good faith on the part of the parties. Indeed, no agreement is really of any use, however carefully written it is, if it does not rest upon that good will and good faith between the parties, and I think we must leave it at that.


[Stage Direction]
Article agreed to.
On article XI:
In the event that the government of either country adopts any measure which, even though it does not conflict with the terms of this agreement, is considered by the government of the other country to have the effect of nullifying or impairing any object of the agreement, the government which has adopted' any such measure shall consider such representations and proposals as the other government may make with a view to effecting a mutually satisfactory adjustment of the matter.
The government of each country will accord sympathetic consideration to, and when requested will afford adequate opportunity for consultation regarding, such representations as the other government may make with respect to the operation of customs regulations, quantitative restrictions or the administration thereof, the observance of customs formalities, and the application of sanitary laws and regulations for the protection of human, animal, or plant life.
In the event that the government of either country makes representations to the government of the other country in respect of the application of any sanitary law or regulation for the protection of human, animal, or plant life, and if there is disagreement with respect thereto, a committee of technical experts on which each government will be represented shall, on the request of either government, be established to consider the matter and to submit recommendations to the two governments.
George Halsey Perley: Yesterday my hon. friend from St. Lawrence-St. George (Mr. Cahan) explained carefully the difficulty with regard to the legislation now pending in the United States congress with respect to the distillers of this country, under which they might be forced to give up the benefits of this agreement unless they could put up a vast sum of money as security for costs in the cases which the United States government is threatening to bring against them for damages. That I consider one of the most serious things discussed in this house with respect to the agreement, because undoubtedly the provision for the reduction in the duty on Canadian whiskey and spirits going into the United States is one that may be of great benefit to Canada. I asked the Prime Minister yesterday whether there was any clause in this agreement which would enable us to terminate the agreement if the
Canada-U\S. Trade Agreement

United States should pass that legislation and in that way prevent our distillers from exporting spirits to the United States under the agreement. He told me he thought it could be done under the escape clause. I have been looking this over carefully and I thought it might be done under article XI, if the government of either country-
-adopts any measure which, even though it does not conflict with the terms of this agreement, is considered by the government of the other country to have the effect of nullifying or impairing any object of the agreement.
That is certainly what the legislation in question would do. The only right given Canada under this article XI would be in that event to make representations and proposals to the other government with a view to effecting a mutually satisfactory adjustment of the matter. These various clauses which allow the denunciation of the treaty on comparatively short notice for various minor reasons do not seem to give a similar power with regard to this very important matter. That is, if they pass legislation in the United States which in effect nullifies the agreement, what are Canada's rights in the matter? And if the negotiations with the United States do not bring about such a change in their policy as would be reasonable and satisfactory to us, have we any power to put an end to this agreement if our reasonable representations are not effective?


William Lyon Mackenzie King: I think that my right hon. friend is mistaken in saying that I made reference yesterday to the escape clauses and that no reference was made to this article. As a matter of fact it was this article that I quoted, and not the escape clauses. In reply to my hon. friend's remarks at the moment I shall read what I said yesterday:
Perhaps I might point out to my hon. friend that there is an article in the agreement, Article. XI, which is intended to meet the sort of contingency that he and possibly others may have in mind. Article XI reads:
Then I read just what has been read by my hon. friend. I went on to say:
That provision has been inserted to avoid the possibility of occurrences of the kind my hon. friend has mentioned. Of course, as the minister has just said, it is not within the province of one country to interfere in the domestic affairs of another country, and it is not for the government of Canada to tell either the house of representatives or the senate of the United States what they should or should not do. Nothing of that kind could appear in any agreement; it would not be permitted to appear. But I can assure my hon. friend that with respect to this matter, as far
	.
as it affects Canadian interests, the position and the interests of Canada have been most fully represented at Washington, I have every reason to believe that such representations are being sympathetically considered, though what final action may be taken by any legislative body in the United States it is, of course, impassible to say.


George Halsey Perley: My right hon. friend will find that a little further on he spoke again.


William Lyon Mackenzie King: Yes. I said:
If any essential feature of the agreement were impaired by some action of the United States, I should feel that, under the escape clauses there would be opportunity for the dominion to go the length, if need be, of rescinding the agreement after having made the proper representations.
I beg my right hon. friend's pardon. I had not recalled that I had anywhere mentioned the escape clauses.


George Halsey Perley: I should like the right hon. gentleman to show under which clause of this agreement we could put an end to the treaty if our reasonable and proper representations were not met by the United States government in such a way as to straighten out any difficulty that there might be on this point.


William Lyon Mackenzie King: I do not wish to say what might be done with respect to any matter pending at the moment in the United States. I think it would be quite improper for me to do anything of the kind, that to do so would be regarded in the United States as a threat on the part of the government of Canada which might prejudice the very situation it is hoped may be satisfactorily met. I think my right hon. friend might well feel that, at all events at the moment, it is advisable to allow the question that is being considered to receive as much in the way of careful consideration at Washington as may be possible. If difficulties arise later on with respect to any feature of the agreement, they can be dealt with at the time.


George Halsey Perley: I certainly do
not wish to embarrass the government in any way with regard to this treaty or any of the arrangements with the United States. I entirely agree with my right hon. friend that we accept this agreement with the feeling that the United States is prepared to carry it out in good faith, just as Canada is. I was just wondering, though, if there was any place, any clause in this agreement under which, if legislation should be passed by the United States which in effect nullified the provision of the agreement with regard to the export

Canada-U.S. Trade Agreement
from this country of spirits, and that could not be straightened out by negotiation, we would have the right to go any further if we so desired.


Charles Hazlitt Cahan: I think article VII might
well receive serious consideration under those circumstances.


William Lyon Mackenzie King: I do not think I can very well say more than I have said without prejudicing an existing situation through it appearing that I was using a threat, which is the last thing that any government in this country would wish to do towards the government of another country.


[Stage Direction]
Article agreed to.
On article XII:
Nothing in this agreement shall be construed to prevent the adoption of measures prohibiting or restricting the exportation or importation of gold or silver, or to prevent the adoption of such measures as either government may see fit with respect to the control of the export or sale for export of arms, ammunition, or implements of war, and, in exceptional circumstances, all other military supplies.
Subject to the requirement that there shall be no arbitrary discrimination by either country against the other country in favour of any third country where similar conditions prevail, the provisions of this agreement shall not extend to prohibitions or restrictions (1) imposed on moral or humanitarian ground; (2) designed to protect human, animal or plant life; (3) relating to prison-made goods; (4) relating to the enforcement of police or revenue laws; (5) directed against mis-branding, adulteration, and other fraudulent practices, such as are provided for in the pure food and drug laws of either country; and (6) directed against unfair practices in import trade.
John Ritchie MacNicol: I was in Washington
recently and had a conversation there with a prominent man who was thoroughly posted on gold, but who is not associated in any way with the government. He happened to remark that in his opinion the United States might re-value gold-inflate, I assume he meant- to $42.34 an ounce. I just wondered what article would protect our products against inflation of gold on the other side, in relation to duties one against the other. I am not saying that they are going to do it, because this man had no authority to predict anything like that.


Mr. SLAGHT:: I think if that should
happen we would find that our own gold would increase in value relatively, so that my hon. friend need not have apprehensions.


Charles Avery Dunning: Supplementing what the hon. member for Parry Sound (Mr. Slaght) has said, an increase such as postulated by the hon. member for Davenport (Mr. Mac-
Nicol) would of course produce that effect. If what he had in mind was a decrease, and its effects and possible relationship to tariffs, which is what I gathered the question to be


John Ritchie MacNicol: Yes.


Charles Avery Dunning: -of course article X does provide the machinery for either country to deal with certain difficulties that may occur. If his question relates to the value of gold as a commodity-


John Ritchie MacNicol: My question related to
what the minister has just said about article X.


Charles Avery Dunning: I believe article X would cover it.


[Stage Direction]
Article agreed to.
On article XIII:
Except as otherwise provided in the second paragraph of this article, the provisions of this agreement relating to the treatment to be accorded by Canada and the United States of America, respectively, to the commerce of the other country, shall not apply to the Philippine Islands, the Virgin Islands, American Samoa, the Island of Guam or to the Panama Canal Zone.
The provisions of this agreement regarding most-favoured-nation treatment shall apply to articles the growth, produce or manufacture of any territory under the sovereignty or authority of Canada or the United States of America, imported from or exported to any territory under the sovereignty or authority of the other country. It is understood, however, that the provisions of this paragraph do not apply to the Panama Canal Zone.
The advantages now accorded or which may hereafter be accorded by the United States of America, its territories and possessions and the Panama Canal Zone exclusively to one another or the Republic of Cuba shall be excepted from the operation of this agreement. The provisions of this paragraph shall continue to apply in respect of any advantages now or hereafter accorded by the United States of America, its territories or possessions or the Panama Canal Zone to the Philippine Islands irrespective of any change in the political status of the Philippine Islands.
The advantages now accorded or which may hereafter be accorded by Canada exclusively to other territories under the sovereignty of His Majesty the King of Great Britain, Ireland, and the British dominions beyond the Seas, Emperor of India, or under His Majesty's suzerainty or protection, shall be excepted from the operation of this agreement.
Article agreed to.
On Article XIV:: The government of each country reserves the right to withdraw or to modify the concession granted' on any article undeT this agreement, or to impose quantitative restrictions on any such article if, as a result of the extension of such concession to third countries, such countries obtain the major benefit of such concession and in consequence thereof an unduly

Canada-U-S. Trade Agreement
large increase in importations of such article takes place: Provided, that before the government of either country shall avail itself of the foregoing reservation, it shall give notice in writing to the other government of its intention to do so, and shall afford such other government an opportunity within thirty days after receipt of such notice to consult with it in respect of the proposed action and in respect of such compensatory modifications of the terms of the present agreement as may be appropriate; and if an agreement with respect thereto is not reached within thirty days following the receipt of the aforesaid notice, the government which proposes to take such action shall be free to do so at any time thereafter, and the other government shall be free within fifteen days after such action is taken to terminate this agreement in its entirety on thirty days' written notice.


[Stage Direction]
Article agreed to.
On Article XV:: The present agreement shall be ratified by His Majesty the King of Great Britain, Ireland and the British dominions beyond the Seas, Emperor of India, in respect of the Dominion of Canada and shall be proclaimed by the President of the United States of America.
The provisions of Article I and of Articles III and IV, respectively, shall, subject to the reservations and exceptions elsewhere provided for in this agreement, be applied by Canada and the United States of America, on and after January 1. 1936, pending ratification of the agreement in respect of Canada as provided in the first paragraph of this article.
The entire agreement shall come into force on the day of the exchange of the proclamation and ratification at Ottawa. The agreement shall remain in force until December 31, 1938, subject to the provisions of Article VII, Article X and Article XIV.
Unless at least six months before December 31, 1938, the government of either country shall have given to the other government notice of intention to terminate the agreement on that date, the agreement shall remain in force thereafter, subject to the provisions of Article VII, Article X and Article XIV, until six months from such time as the government of either country shall have given notice to the other government.


John Ritchie MacNicol: If the agreement remains in force after the expiration of the three year term does it remain in force for another three years or from year to year?


Charles Avery Dunning: Indefinitely, it is continuous.


John Ritchie MacNicol: Until six months'
notice is given?


Charles Avery Dunning: Yes.


[Stage Direction]
Article agreed to.
George Halsey Perley: I should like to ask a question before the resolutions are reported. The other day a note signed by Mr. H. H. Wrong, dated November 15, was
	.
referred to, and it was stated that certain legislation would be required. That legislation has not been brought down as yet, has it?


Charles Avery Dunning: Yes; it is on the order paper now, an amendment to the Customs Act.


George Halsey Perley: Is that Bill No. 11?


Mr. ILSLEY:: Yes, item No. 12 on the
order paper.


George Halsey Perley: I have Bill No.
11 before me. Does it contain all the necessary provisions to implement the contents of Mr. Wrong's note of November 15?


James Lorimer Ilsley: Not all. With respect to
the $100 exemption an amendment to the customs tariff will be necessary, but most of the provisions will be carried out by amendments to the Customs Act, which are contained in Bill No. 11.


George Halsey Perley: All the matters
referred to in that note are in Bill No. 11 except this exemption of $100 on goods brought from the United States?


James Lorimer Ilsley: Yes. Not all of them
require legislation; some merely require cancellation of ministerial orders, and those have been cancelled.


Hugh Alexander Stewart: I ran through the bill
hurriedly, and I should like to ask if it contains anything in amendment to section 43 under which the valuations for duty are made.


James Lorimer Ilsley: Yes.
Resolutions reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce Bill No. 13, respecting a certain trade agreement between Canada and the United States of America.
Motion agreed to and bill read the first time.


EMPLOYMENT COMMISSION
[Stage Direction]
Hon. NORMAN McL. ROGERS (Minister of Labour) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to bring in a measure to provide for the establishment of a commission, to be known ais the national employment commission, to supervise or administer the expenditure of funds voted by parliament for unemployment relief and for providing employ-

Employment Commission
ment, and for other purposes related thereto; and to provide for fees or compensation and for the travelling and living expenses of the commissioners, for the salaries of the secretary and other employees of the commission, and also for the travelling and living expenses of the members of a national advisory committee.
Sir GEORGE PERLEY; Is the minister going to make a statement before we go into committee?
Charles Avery Dunning: In committee.


George Halsey Perley: When does he
intend to make his complete statement?


Mr. ROGERS:: I shall be very glad to
make a statement when the house is in committee.
Motion agreed to and the house went into committee, Sir Eugene Fiset in the chair.


Norman McLeod Rogers: As the resolution indicates, the purpose of the legislation which is to follow is to create an agency which will facilitate cooperation between the federal government, provincial governments, municipalities, industrial corporations, labour organizations and social welfare agencies in dealing constructively with the problem of unemployment and relief. It is recognized that unemployment is a matter of national concern and calls for an organized national effort. It is the opinion of the government that such effort can be most effectively made through the advice and assistance of a national commission. Provision will also be made for the appointment of a national advisory committee, including representatives of industrial, occupational and social welfare organizations. It may also be appropriate to observe that at the dominion-provincial conference held last December the proposal to establish a national commission on unemployment and relief received the unanimous approval of the provincial delegation. The hon. member for Argenteuil (Sir George Perley) suggested that an extended explanation of the bill might be given at this time. I believe it is not customary to make such an explanation at this stage. There will be ample opportunity for full discussion when the bill is introduced, and I think hon. members would wish to have the provisions of the bill before them prior to such discussion. So far as the government is concerned, we are most anxious to expedite this legislation, and are therefore of the opinion that the resolution itself should be proceeded with as quickly as possible in order that the bill to follow may be introduced.


Mr. WOODSWORTH:: May I ask whether it is proposed to place any funds at the disposal of this commission?


Norman McLeod Rogers: When the bill itself is
before the house it will be apparent from its provisions that the government considers that the commission should have supervisory functions and possibly administrative functions in relation to unemployment and relief. But again I suggest that the bill will speak for itself and that such points may be readily discussed when it is before the house.


George Halsey Perley: I think the inquiry of the hon. member for Winnipeg North Centre (Mr. Woodsworth) is entirely in order. I know that the bill itself is not discussed when the resolution is brought before the committee, but time and again the general outlines of proposals contained in a bill are given when the resolution is moved. I have no desire to delay the legislation, but I think the hon. member for Winnipeg North Centre is justified in asking the minister to give, not the details, but the general principles which he proposes to embody in the bill.


Norman McLeod Rogers: The resolution itself refers to the fact that the national employment commission shall have among its functions supervision or administration of the expenditure of funds voted by parliament for unemployment relief and for providing employment. As to the further point raised by the hon. member for Argenteuil I felt that in following the course I have followed I was adopting a precedent which would commend itself to him. In the legislation introduced last year by the present leader of the opposition (Mr. Bennett) providing for social and unemployment insurance he made this statement during the discussion of the resolution:
The resolution contemplates a bill being submitted to the chamber dealing with the matters that are mentioned in the resolution itself. Sometimes the custom has been followed of discussing upon the resolution the details of a measure founded thereupon. Such I believe is unsound practice.
The leader of the opposition then went on to make a statement very much in the terms of mine this afternoon, and anticipating the legislation to be introduced.


George Halsey Perley: That is quite
satisfactory as far as details are concerned, but I notice that this resolution gives no definite statement regarding what the functions of the national employment commission are to be. It says, "to supervise or administer." To me those are two vitally different things. Does the bill say which they are to do, or is it to be left to the government to decide afterwards? As far as a commission which is to consider and assist the government in
Employment Commission

this matter, is concerned, that is one thing, but if they are to administer the funds I am absolutely against this, and I think it would be unfortunate if a bill of that kind should be brought into this house. "To supervise or administer"; apparently there is no decision as to which they are to do. I think a vital point of that sort ought to be explained by the minister before the resolution is carried.


William Lyon Mackenzie King: My right hon. friend knows that the resolutions have relation to the financial clauses of bills, and are a necessary procedure where a bill contemplates public expenditure. When it comes to such details as to the functions of the commission these, I submit, may more appropriately be considered after the bill has been introduced, as they are set forth in the bill. There is no real objection to making a statement in detail now as to the functions, except that I doubt if they could be properly understood without viewing the provisions of the bill as a whole. Any attempt to discuss them at the moment without disclosing the provisions of the bill in their entirety might only lead to confusion and possible misconception. I say that having a knowledge of the contents of the bill itself.


George Halsey Perley: Is there any reason why it should not be stated now whether the commission is to be given authority to supervise or to administer funds voted by parliament?


William Lyon Mackenzie King: The resolution itself says that the commission is-

to supervise or administer the expenditure of funds voted by parliament for unemployment relief and for providing employment, and for other purposes related thereto.
The extent to which the commission will have supervisory powers, and the extent to which it may have administrative powers, will appear in the bill. I do not think this could be stated by the minister at the moment without quoting the clauses of the bill, and I think it is preferable in every way that hon. members should have the bill before them before an attempt is made to indicate where the one function ends and the other begins.


George Halsey Perley: I believe I shall be right when I state that both courses have been followed in this house at times. Resolutions have been passed and explanations given on the bills. At other times lengthy observations have been made as to the main points in a proposed bill. I shall not say anything more on the subject. If the government has decided that it does not wish to make an

explanation at this stage, we shall have to wait until the bill is introduced.


Mr. BAKER:: When may we have the bill before us?


William Lyon Mackenzie King: That is the reason the minister wishes to have the resolution adopted. He wants to introduce the bill this afternoon so that hon. members may have it before them for a few days before a discussion takes place thereon. The government's desire has been to get this legislation before the house and the country at the earliest possible moment. Up to the present time we have had opportunity to consider only one government measure of importance, namely that respecting the trade agreement. The agreement has, as hon. members know, been in committee for some considerable time. We did not wish to wait to complete the discussion on the trade agreement before presenting to the house the important measure now under discussion.


Richard Langton Baker: When shall we have the bill?


William Lyon Mackenzie King: This afternoon, if the committee will permit it.


Abraham Albert Heaps: This is not a commission on unemployment; it is a commission on employment, and is quite different from anything we have had before us previously. May I state that there appears to be a desire to create a commission to provide employment for a large number of people who are out of work and are particularly in need of employment. Of course it is impossible under the circumstances for any hon. member intelligently to discuss the resolution until he knows what is in the bill. I realize that in the past we have discussed resolutions at great length, but I do not believe any previous resolution which has been discussed at length has had the scope of the present one. For that reason, so as to facilitate matters I believe we would do well to have the bill before us as soon as possible, so that we may understand what it contains. For these reasons I am prepared to allow the resolution to carry.


John Ritchie MacNicol: I am not going to oppose the passage of the resolution, because I am just as anxious as is any other hon. member, to have work speedily provided for the unemployed. I am wondering, however, why the Department of Labour could not do this work. At the present time we have about fifty commissions of one kind or another in the dominion and the provinces. It seems to me that parliament is getting rid of duties

Salary Deduction Act
which members and ministers are supposed to carry out, namely, the duties connected with the conduct of the business of the country. If the minister is not able, or the departmental organization over which he presides not capable of carrying on the work to be undertaken by the commission, then I would be in accord with placing the responsibility upon a commission, so long as we get somewhere. However it seems to me, as I said a minute ago, that we are being commissioned to death. We have commissions for this, and commissions for that, and commissions for the other thing. The time will come when the public will wonder for what purpose members of parliament are elected, and ministers are appointed.


William Lyon Mackenzie King: May I say to the hon. member that the late government tried to deal with unemployment in the manner he has described, namely, through the agency of the Department of Labour and the minister at its head. In each of five consecutive years they found that they could not by that means obtain satisfactory results. Obviously it cannot be done, because the Department of Labour like other government departments is formed to carry on the business of normal times, not to deal with such abnormal and exceptional conditions as the unemployment problem in Canada has presented. If this method of dealing with an extraordinary condition had been followed five years ago there might not have been the necessity for this legislation.


Some hon. MEMBERS:: Question.


Hugh Alexander Stewart: The information given by the minister is good, so far as it goes, but at best it is but meagre. If there is consent for the passage of the resolution and the introduction of the bill it must be upon the distinct understanding that there is no committal to the principle of the resolution or the bill.


Ernest Lapointe: Of course.


Charles Avery Dunning: There is to the resolution.


Hugh Alexander Stewart: Are we committed to the principle of the commission? I believe there ought to be a reservation, until we see the bill, of all rights to object to the commission, or to any other provision in the bill.


Ernest Lapointe: Absolutely.


Charles Avery Dunning: Your rights to object are forever preserved.
Resolution reported, read the second time and concurred in. Mr. Rogers thereupon 12739-81 moved for leave to introduce Bill No. 14, respecting the establishment of a national employment commission.
Motion agreed to and bill read the first time.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



SALARY DEDUCTION ACT

[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to bring in a measure to authorize a deduction of five per cent from the amount of certain salaries or other compensations or indemnities payable by the government of Canada during the fiscal year ending the 31st March, 1937.
Motion agreed to and the house went into committee, Sir Eugene Fiset in the chair.
Charles Avery Dunning: Perhaps I should say
by way of explanation that this resolution does not involve any change in procedure from what has been adopted during the last few years in connection with this matter. The only changes in the bill which will be based upon this resolution are those which make it applicable to the new fiscal year as distinct from the old one and the deletion of the S3,000,000 appropriation which will not be required.


James Shaver Woodsworth: Are there any
changes whatever in the clauses?


Charles Avery Dunning: No changes whatever.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 15, to provide for the deduction from compensation in the public service.
Motion agreed to and bill read the first time.


Charles Avery Dunning: While there may be no
particular reason to expedite this bill, hon. members of the house are all familiar with it. If, by unanimous consent, I were permitted to move the second reading, the bill could be distributed before the committee stage.


George Halsey Perley: As far as I am concerned, that is quite agreeable. I have not the previous act before me, but I should like to know what the $3,000,000 appropriation was for.

Income War Tax Act


Charles Avery Dunning: In former years the setup of the estimates made it necessary to provide a $3,000,000 appropriation in the bill This is not required this year because of the present setup. I move that the bill be now read the second time.
Motion agreed to and bill read the second time.



INCOME WAR TAX ACT


[Stage Direction]
Hon. CHARLES A. DUNNING (Minister of Finance) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to provide that the members of the judiciary, and the members of the military, naval and air forces of Canada, and of the Royal Canadian Mounted Police, other than enlisted men, shall be liable to pay a special income tax of five per cent upon their salaries received during the fiscal year 1936-37, in addition to any other tax payable under the act.
Motion agreed to and the house went into committee, Sir Eugene Fiset in the chair.
Charles Avery Dunning: The object of the bill to be based upon this resolution will be to place those in the service of the state mentioned therein on the same basis as the civil servants dealt with in the bill just given second reading.


James Shaver Woodsworth: Why the exemption of enlisted men?


Charles Avery Dunning: The enlisted men correspond in regard to remuneration with those classes of civil servants who are exempt under the provisions of the other bill. The bill which has just been given second reading provides that the five per cent deduction applies only to those whose salaries exceed $1,200 per year.


James Shaver Woodsworth: It is the same basis?


Charles Avery Dunning: It is the same general principle.


George Halsey Perley: It is exactly the same as last year?


Charles Avery Dunning: Exactly the same as previous years.


Hugh Alexander Stewart: Will the bill be in exactly the same form?


Charles Avery Dunning: Yes. So far as I know there has been no change whatever. There are no explanations of amendments or anything like that.
'{Sir George Perley.l


Hugh Alexander Stewart: The only way in which effect can be given to this tax is by special amendment?


Charles Avery Dunning: Yes.
Resolution reported, read the second time and concurred in. Mr. Dunning thereupon moved for leave to introduce Bill No. 16, to amend the Income War Tax Act (special tax).
Motion agreed to and bill read the first time.


Charles Avery Dunning: With the consent of the house, as was given in connection with the companion bill, I move that the bill be now read the second time.
Motion agreed to and bill read the second time.



TORONTO HARBOUR COMMISSIONERS

[Stage Direction]
Hon. C. D. HOWE (Minister of Marine) moved the second reading of Bill No. 12, respecting the Toronto harbour commissioners.
George Halsey Perley: I think the minister should give some explanation of this bill.


Clarence Decatur Howe: This is purely a formal bill, its purpose being to clarify section 20 of the Toronto Harbour Commissioners Act in order to make it quite clear that the harbour commission have power to refund their bonded indebtedness. Section 20 of the act makes it clear that they have power to borrow for capital purposes, but some doubt has been raised as to whether they have the right to refund obligations that they originally incurred. I do not think there is any doubt as to the real intent, but this bill is to make it clear.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Sir Eugene Fiset in the chair.
Sections 1 and 2 agreed to.
On the title.
Hugh Alexander Stewart: Has the minister any
information as to the extent of these obligations which it is proposed to refund?


Clarence Decatur Howe: No refunding is involved in
this particular bill. I understand that some negotiations are in progress with regard to refunding all or part of the securities. This bill, I may say, is introduced at the request of the Toronto harbour commissioners, and both the solicitors for the commissioners and our own Department of Justice are agreed that this is desirable.

Income War Tax Act


Mr. STIRLING:: Can the minister tell us
whether the commissioners have embarked upon a scheme of refunding and have run into difficulties, hence this bill?


Clarence Decatur Howe: My information is that
negotiations are under way towards refunding and that before they can be brought to a conclusion this part of the act must be clarified.


John Ritchie MacNicol: Does the harbour commission require the consent of the city council before it can request the passing of a bill like this, or have the commissioners the authority to ask for it, as the minister has intimated?


Clarence Decatur Howe: They have the authority, but the solicitor for the city came to Ottawa with the solicitor for the commissioners.


Herbert Earl Wilton: Is this a special privilege
not extended to any other harbour commission?


Clarence Decatur Howe: It is entirely an amendment
to the Toronto Harbour Commissioners Act.


Herbert Earl Wilton: It does not apply to any
other?


Clarence Decatur Howe: No.


Herbert Earl Wilton: Are there any others that
have not this privilege?


Clarence Decatur Howe: I think they all have it.
The Toronto harbour commissioners have it, but we want to make this clear to the satisfaction of the people with whom they are dealing. There is no change in the intent of the act.


Hugh Alexander Stewart: I notice on the order
paper, in the name of the minister who has charge of this bill, a resolution in the following terms:
That it is expedient to bring in a measure to provide for the constitution of a board to be known as the national harbours board, with jurisdiction to administer and control public harbours in Canada, and to provide for the salaries of the members of the board and of the officers, clerks and employees of the board, for the creation of a national harbours trust account and for the expenditure of moneys therefrom, and for advances for the purposes of the proposed legislation.
It occurs to me that possibly what is authorized in the bill before us might in some way conflict with the plan or scheme which is outlined in this resolution and that the minister might find himself hampered or restricted in some of the operations which he would like to undertake in connection with this legislation. Has he given consideration to that possibility in connection with this bill?
12739-81}


Eugène Fiset: This discussion is completely out of order.


Hugh Alexander Stewart: I do not think so.


Eugène Fiset: It
is anticipating debate on a resolution on the order paper.


Hugh Alexander Stewart: The two matters are
related.


Eugène Fiset: The hon. member may proceed with unanimous consent.


Hugh Alexander Stewart: With the greatest respect, Mr. Chairman, I submit that when there is on the order paper a resolution dealing with all the harbours of Canada-


Eugène Fiset: Yes, but they have to be called before the hon. member can discuss them.


Hugh Alexander Stewart: I am not discussing that resolution; I am discussing this bill; I am asking the minister whether the passing of this bill will not in some way conflict with the resolution that is on the order paper. I am confining my remarks to the bill under consideration and am pointing out that the minister proposes legislation which seems to me to be in conflict with the bill.


Clarence Decatur Howe: There is no relation whatever between this bill and the resolution to which the hon. gentleman has referred, nor will there be any conflict. We shall take up the other resolution in a moment and I will then make the point clear.


Hugh Alexander Stewart: I admit that on the face of it there is no direct conflict, and if the minister assures me that there is nothing that interferes with what is proposed in the other legislation, very well.


Clarence Decatur Howe: I can assure the hon. gentleman of that.


Grote Stirling: Can the minister assure us that if it is necessary to change the wording of this act it will not be necessary to do exactly the same with respect to all the other harbour commissioners?


Clarence Decatur Howe: I do not think the wording in the acts with respect to the other harbours is identical with this. This covers a special class of harbour in which the dominion government has no financial interest. I do not think there is any relation.


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


[Stage Direction]
Hon. C. D. HOWE (Minister of Marine) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to bring in a measure to provide for the constitution of a board to be known as the national harbours board, with jurisdiction to administer and control public harbours in Canada, and to provide for the salaries of the members of the board and of the officers, clerks and employees of the board, for the creation of a national harbours trust account and for the expenditure of moneys therefrom, and for advances for the purposes of the proposed legislation.
Motion agreed to, and the house went into committee, Sir Eugene Fiset in the chair.
George Halsey Perley: The minister might explain what this is all about.


Clarence Decatur Howe: The measure proposed by this resolution has to do with the management and financial control of the national harbours of Halifax, Saint John, Quebec, Chicoutimi, Three Rivers, Montreal and Vancouver. Until recently these ports were administered by separate harbour commissioners, each commission composed of three men chosen from the immediate locality. It was found in practice that this form of control was inefficient and exceedingly costly to the federal government. During 1931 a survey of the national ports of Canada was conducted by Sir Alexander Gibb who, after a close study of the operations of each harbour, recommended that local commissions be abolished and that the control be centralized in Ottawa. His report was made in January, 1932, but no action was taken on it, and the administrative weaknesses and undesirable practices to which he called attention have continued in increasing measure during the years that have followed.
Shortly after this government took office the local board were replaced by a central board located at Ottawa, this board being appointed the harbour commissioners for each of the seven ports. To this extent control of the harbours has already been centralized in Ottawa, but satisfactory results can be obtained only when new legislation is provided that will make possible proper accounting and adequate control of the finances of each port, and the necessary expert direction of the businesses conducted by the various port managements. The importance of the bill will be appreciated from the fact that the property assets of the seven ports brought within the jurisdiction of the proposed commission represent to-day a capital

investment of $176,000,000. Their annual revenues have varied from $7,000,000 to $9,000,000, and their annual expenditures from $10,000,000 to $23,000,000 per annum over the past six or seven years.
The proposed bill will provide for the creation of a national harbours board with headquarters at Ottawa, which, under a minister of the crown, will be responsible for the administration, maintenance and control of the seven ports already referred to as well as any other harbour property which the governor in council may transfer to the board for administration. It is intended that each of the three members constituting the central harbours board shall be an expert in some branch of port activity, and that engineering works which have heretofore been under the direction of small local staffs will in future be carried out with the best engineering skill available in the government services. Local management will devolve upon competent port managers with the proper background of experience, whose duty it will be to develop the same local contacts that were formerly maintained by the separate harbour boards.
The financial control of each port will be under the direction of the comptroller of the treasury and subject to audit by the auditor general of Canada. The accounting for each port will, however, be carried out at the port, and funds earned at one port will not be diverted for use elsewhere.
This bill will provide for the amalgamation of the seven harbour corporations, and the change is intended to ensure a substantial saving in operating costs, a budgeted control of expenditure, and a coordinated and greatly improved direction of port administration and engineering practice.


George Halsey Perley: I certainly do
not object at all to the doing away with the various harbour commissions. I have had experience enough in dealing with these matters to know that local pressure is so great on these harbour boards that they very often are not able to give unprejudiced consideration to the many questions that come up and to the demands that are made upon them. I am therefore not going to object at all to this resolution passing, that is the main part of it, but I should like to ask the minister whether he has not already in practice this public harbour board of which he speaks.


Clarence Decatur Howe: I may say that we have
gone as far as we can, but we have by no means achieved a proper set-up. What we have done is to take advantage of the fact

National Harbours Board
that the seven harbour acts now in operation have no geographical limitations on the appointment of the commissioners. We have chosen three men high in the civil service of Canada, and have appointed these men as commissioners for each of the seven harbours.


George Halsey Perley: The same three men for the seven harbours?


Clarence Decatur Howe: That is correct, yes. But we have not been able to bring accounting under the proper control. That is covered in each case by the harbour act of the particular harbour. There are seven different corporations that we are managing, and there is no uniformity in accounting and no uniformity in the bylaws of the various ports, so that it is really necessary to advance this a step further before we can get the results that we hope to achieve through doing this.


George Halsey Perley: Well, will the minister not have to continue having the accounting done at the various ports?


Clarence Decatur Howe: Yes; but we can, after we get the administration unified, have proper control accounting in Ottawa, and to do that it is necessary to have uniform accounting at the various ports. We find that the present harbour board acts and bylaws provide for various systems of accounting. Some set up depreciation; some do not, and they differ very widely in a great many respects. It is absolutely necessary in my opinion to bring them under uniform legislation and regulation before we can-


George Halsey Perley: That I do understand, but I cannot understand why these three men who in practice now constitute the national harbours board under the minister should not continue to act in that capacity under the minister. He is proposing to set up a national harbours board which will be under the same department, I take it, under which they are now, under the present minister. What I cannot understand is why it is necessary to create another entity-


Charles Avery Dunning: It is not. This is a substitute.


George Halsey Perley: -instead of having these harbours administered by this present staff, and that under the control of the minister.


Clarence Decatur Howe: There is no intention to change the present form of administration, but I might say to my right hon. friend that we are now operating under some twenty acts of parliament. We intend to repeal all those
acts and to provide one act to take the place of all of them. The harbours will still be administered by a board under the minister as they are at present, but with a very much simplified structure to work under.


Charles Hazlitt Cahan: Will the acts constituting each harbour as an entity, and each commission as an entity, be entirely repealed?


Clarence Decatur Howe: That is correct.


John Ritchie MacNicol: May I ask the minister if the new structure will cut down the cost of administration of the national harbours?


Clarence Decatur Howe: A very substantial saving has been made already, and we hope that will be very materially extended.


John Ritchie MacNicol: Good legislation.


Hugh Alexander Stewart: The minister said that the bill would provide for the auditing of the harbour accounts by the auditor general. Is not that authority now in force?


Clarence Decatur Howe: No. No harbour account is under the control of the auditor general.


Hugh Alexander Stewart: He has no right to go in and audit on the direction of the government?


Clarence Decatur Howe: No right whatever.


Hugh Alexander Stewart: Well, I would consider, whether he has or not, it would be quite easy for him to do so, when they come asking for money.


Charles Hazlitt Cahan: Their accounts are audited by a special board created for that purpose, I understand.


Clarence Decatur Howe: The audit is entirely private, and the accounts are never brought before the auditor general of Canada, and never have been to my knowledge.


Charles Hazlitt Cahan: I cannot refer to the special statute, but there is created by statute another board which under the authority of the governor in council may enter upon an investigation and audit of the accounts of each of these ports, is there not?


William Lyon Mackenzie King: There was. I cannot say whether there is.


Charles Avery Dunning: My hon. friend is thinking of the old audit board, I take it?


Charles Hazlitt Cahan: Yes.


Charles Avery Dunning: I am afraid that it has no existence now.


Charles Hazlitt Cahan: Well, it had existence down to a very recent date. I am simply trusting to memory, as the Prime Minister is, but I think the statute creating the board has never been repealed.

National Harbours Board


Mr. WHITE:: My recollection is that the audit of the harbour accounts is by a private firm of auditors-


Charles Avery Dunning: That is correct.


Richard Smeaton White: -and that a change in the firm was made some three or four years ago. It was formerly Riddell Stead Graham & Hutchison and is now Clarkson Gordon, or P. S. Ross & Sons. But it was a private firm of accountants in Montreal.


Charles Avery Dunning: Yes. H I may suggest, the discussion we are now entering upon could be much better undertaken when the members have the bill before them, because the sections of the bill-it is a somewhat important measure-will themselves give rise to questions of this kind which can be much more expeditiously dealt with when the bill is in committee stage and before the members in that form.


Hugh Alexander Stewart: I think we have been pretty expeditious during the past couple of hours, and I want to ask the minister just one question with regard to the character of the board. Will it be like the railway commission, we will say, or like the tariff board, or will it be under the control of the minister?


Clarence Decatur Howe: It will be under the minister.


Mr. GREEN:: With all due respect to the Minister of Finance I should like to ask the Minister of Railways and Canals whether he has considered the advisability of appointing local advisory boards, to serve without remuneration, for each of these harbours. That question is particularly worthy of consideration in the case of Vancouver, where many of our problems are far different from those of the eastern ports. Ottawa being so far away from the Pacific coast, questions may come up from time to time which will not be properly or efficiently dealt with by a board serving from Ottawa.


Mr. TAYLOR (Nanaimo):: That same consideration would apply to Nanaimo also.


Clarence Decatur Howe: Fortunately Nanaimo is not a national port. In answer to the hon. member for Vancouver South I must say that my hon. friend seems to be taking me a very great way into the provisions of the bill, and I think these matters could be discussed much better after we see it. Would my hon. friend mind deferring discussion on that point until the bill has been given second reading?


Howard Charles Green: Very well. Our port is of vital importance to us.


Mr. DOUGLAS:: It will perhaps clarify the situation for those of us who are new members if the minister will tell us who is now responsible for the administration and control of these ports.


Clarence Decatur Howe: They are administered by seven local harbour commissions, appointed from the respective localities. These boards administer the assets of the ports.


Thomas Clement (Tommy) Douglas: Responsible to a minister of the crown?


Clarence Decatur Howe: To a very limited extent.


George Halsey Perley: Does the minister think that answers the question of the hon. member? The minister said that there are seven different boards. There were seven different boards.


Charles Avery Dunning: There are now, but they are the same individuals.


George Halsey Perley: There were seven different boards; at the present time there is one board of three men that acts for all seven ports. I think the hon. gentleman expected to be told who these three men are.


Charles Avery Dunning: Really the position is that there are still seven boards, but now they consist of the same individuals.


Hugh Alexander Stewart: In connection with this proposition, there is just one feature which suggests itself, and which I think ought to be mentioned at this stage. In the past we have had seven boards, local in character, charged with the protection of local interests and the development of these harbours. I assume that in the past they have been more or less non-political in their character.


Clarence Decatur Howe: Is the hon. member sure of that?


Hugh Alexander Stewart: If this resolution carries and this bill passes, perhaps they will not be quite as non-political in character as they have been, even in the past.


William Lyon Mackenzie King: May I say
to my hon. friend that I believe the effect will be exactly the opposite. One of the complaints against these various harbour boards was the extent to which they carried patronage. The fact was that there was no control over them on the part of a responsible minister. Now, a minister of the crown will be responsible. There will be much less opportunity than under any other method for what one might describe as unwarranted patronage.

Supply-National Revenue


George Halsey Perley: Will the minister Hon. J. L. ILSLEY (Minister of National then administer the patronage of the ports? Revenue):	No, not that I know of.


William Lyon Mackenzie King: It will be
done cautiously I can assure my right hon. friend.
Resolution reported, read the second time and concurred in. Mr. Howe thereupon moved for leave to introduce Bill No. 17, respecting the national harbours board.
Motion agreed to and bill read the first time.



DEPARTMENT OF NATIONAL REVENUE

[Stage Direction]
The house in committee of supply, Sir Eugene Eiset in the chair.
Salaries and contingent expenses of the several ports of the dominion, including pay for overtime of officers, notwithstanding anything in the Civil Service Act, and temporary buildings and rentals. $6,465,000.
Salaries and travelling expenses of officers of the inspection, investigation, audit, and the preventive service undervaluation services, $1,025,000.
Miscellaneous, including printing and stationery; subscriptions to commercial papers; flags; dating stamps; locks; instruments; express charges on samples; premiums on guarantee bonds; uniforms for customs-excise officers; laboratory equipment and supplies, etc., $600,000.
Amount to be paid to the Department of Justice to be disbursed by and accounted for to it for customs-excise secret investigation service, $15,000.
To provide for the administration of the Income War Tax Act, 1917, and amendments thereto, and authority for this purpose to create positions and make appointments notwithstanding anything contained in the Civil Service Act and the said positions and staff so appointed are hereby wholly excluded from the operation of the said act, and salary of $9,000 (less statutory deduction) for the commissioner of income tax, $2,135,000.
Amount to be paid to the Department of Justice to be disbursed by and accounted for to it for the income tax secret investigation service, $10,000.
Mr. POULIOT:: I thank the hon. gentleman for his explanation, and I also congratulate him upon the fact that in his department there is no one who is seconded from another department. This example should be followed by all other departments, because it is all wrong to loan a man from one department to another; it is a very bad policy. A man has two legs, but he cannot put his feet so far apart as to work usefully in two different departments. The greatest compliment we can pay to a man is to say that he is "all there," but those who are seconded from one department to another are not "all there" in either department. There are on record in the official papers of this house statements of ministers to the effect that the practice has been followed during the Tory administration. We expect an immediate change in that respect. I praise the minister of National Revenue (Mr. Ilsley) for not tolerating such a state of affairs in his department. His example should be not only commended but followed. May I cite some abominable instances that have occurred, because the good example of the Minister of National Revenue has not been followed in some other cases. Take two cases; there are more-


Hugh Alexander Stewart: I do not want to interrupt my hon. friend, but I would like to ask whether this discussion as to something that has not taken place in this department is in order.


Eugène Fiset: I
think the point is well taken. The seconding of officers from a department can apply to one department only, that is the Department of National Defence, for it is a military term that cannot possibly be used in regard to any other department of the crown. I think the discussion is not in order.


Jean-François Pouliot: The five per cent cut will be applied to all these salaries. I have nothing in particular to criticize with regard to these items, but on the other hand we must remember that the five per cent cut is drastically applied to all civil servants whose salaries are covered by this item. At the same time there are gentlemen who receive very fat salaries, especially those who have been seconded by the Department of National Defence to other departments. May I ask the minister whether any employee of the Department of National Defence has been seconded and is actually working for the Department of National Revenue? That is the first question.


Jean-François Pouliot: Well, sir, I am very much embarrassed, not so much on account of your ruling as because the ex-Minister of Public Works (Mr. Stewart) asks me a question and you tell me that I shall be out of order to answer him.


Hugh Alexander Stewart: No; the hon. member
misunderstands. I asked the chairman.


Jean-François Pouliot: Well, as the chairman has given his ruling on that point we must proceed to consider the whole matter from another angle. Since the session commenced an answer has been given by the government to the effect that the actual and future superannuation of certain privileged civil servants
Supply-National Revenue

is not paid from the five per cent cut affecting the salaries of all of them. May I tell you, sir, that although at first sight it seems strange, it is a vicious circle. You will have to admit that I am perfectly in order in this discussion. Suppose the salary of any one of those gentlemen is $100 a month. If the five per cent cut applied it means that each salaried man in the Department of National Revenue is deprived of the sum of $5. It means that the consolidated revenue fund will pay him $100 less $5 which remains in the consolidated fund. It is a kind of melting pot.


Charles Avery Dunning: It melts away.


Jean-François Pouliot: But some icicles are not
put into the pot for melting, and one of the icicles is the five per cent cut. The man receives so much less. Well, in that there must be an element of fairness, which means that if the small salaried man, the under-dog, has to make the sacrifice of that $5, another man should not receive privileged treatment. The answer of the government was a half truth. It is impossible to pay the salary of another man from a sum of money which is not actually paid, but with all the savings that are made by cutting the salaries of these small salaried men big sums are accumulated, and those plums are given to privileged fellows who can dip into the melting pot with a very big ladle. Now, when hon. members understand how the matter is worked everyone will be scandalized. I shall explain it in detail in order that no one may miss the point. I want to make myself very clear, for there is nothing more difficult to prove or establish than elementary truths and elementary facts. How can we prove that the sun shines in the daytime? You say, Look at the sun. But to prove this, is a very hard proposition. It does not take a very subtle man to understand this; all I ask from anyone is just a few moments of attention, and the less I am called to order the sooner will the explanation be complete.
Well, take this small fellow; he is entitled to $100. The axe comes, the resolution of this house to cut the salaries, and $5 comes off his $100. He does not receive it. That employee in the Department of National Revenue, or in any government department, is the man who is deprived of the five dollar bill which he might require to send his boy to school, to buy a suit of clothes for his small child, to buy some kindling wood, to buy food or for other purposes. The state says to him, "Well, sir, you have to contribute five per cent on account of the expenses incurred, and in order that there may be a balanced budget."

I say that to restore confidence in Canada- and you must admit, sir, that I am strictly in order-we must teach the humble man that he will find his best protection in the state, and in turn the state must be fair enough to give him the justice to which he is entitled. When a man can rely on the state, not lean on it, and when he realizes that while working for his country he receives fair consideration, although his remuneration may be small, he will give his best service. He is entitled to the same consideration as the man who has more pull, or who can pull more strings.
One of the great mistakes of the late government was that it followed the example of the late government of Ontario which made drastic salary cuts. That action was taken by the Henry administration, and was denounced by the humble member for Temiscouata and other hon. members, when we sat in opposition. I believe I am as much justified in preaching the same doctrine when the Liberal party is in power as when it was in opposition. I stand by what I said when we were in opposition, when I was criticizing the mistakes, blunders and errors of the late government. The condition does not change because we have changed our seats in this chamber. What was bad then is bad now. The mistake by the late and buried Henry government-


An hon. MEMBER:: Taschereau.


Jean-François Pouliot: Exactly. The mistake made by the late and buried Henry government was followed by the late and buried Bennett government, and I do not see why a change should not be made. There should be a change right away. Why? Because confidence would be restored; the humble man would have the same opportunities as the one who has climbed to the top of the ladder and has afterwards kicked it away so that no other person may come up. The first move towards retoring confidence among the lower salaried people is to show them that they are entitled to justice. How can we speak about minimum wage laws? Hon. members know who first advocated minimum wage laws in this chamber. They were advocated long before the so-called labour members discussed the question. However I shall not insist upon that point.
The first factor in connection with social legislation and social justice is to teach the poor fellow, the under-dog, the man on the street, that he is entitled to the same degree of justice as is the big bug. When a man in the Department of National Revenue or in any other government department has to sacrifice ten per cent of his salary for his

Supply-National Revenue
country he says, "I am ready to make that sacrifice. I need the five dollar bill, but if everyone is treated in the same way I will gladly give it. However, if there are others who receive more than they need I do not see why I should be deprived of what I need properly to bring up my children."
Every hon. member realizes that I am quite in order in my discussion. The idea in every home that a man is safe in his own home; that he can rely upon the protection of the state, and that he will receive fairness and social justice is what prevents civil war and revolution in Canada. In the present instance, however, there is no fairness and no social justice, and I defy any hon. member to discuss the matter at a joint meeting in any city, town, suburb or township of Canada. Some people have said that the farmers favour a decrease in salaries, and that they would be pleased by such decrease. Well, sir, the farmers are pleased to see purchasing power which will buy their goods. If the workingman has less money the farmer will sell fewer goods. And when the employee of this or any other department suffers a salary cut, is it not the old farmer down on the old homestead who has to send the five dollars for compensation? How many bags of potatoes must the old fellow sell in order to send a five dollar bill to his son?
If confidence is to be restored let the federal government give a good example. All eyes of the Canadian people are turned towards parliament hill in Ottawa to see what is going on. We set the example. When a mistake was made by the late Tory government in Ontario it had a bad effect in that province, but it was worse when the same procedure was followed by this House of Commons. We hear that these are better times. It is time for action, and I hope the Minister of Finance, who is an able business man, will realize this fact before he goes further with his resolution for a salary cut.


Charles Avery Dunning: The resolution is adopted.


Mr. BOULANGER:: And the bill is passed.


Jean-François Pouliot: Let him withdraw it; do not send it to the senate.


Charles Avery Dunning: No; the bill is not passed.


Jean-François Pouliot: If it is not, there is time for salvation.


Charles Avery Dunning: I think the speech of the hon. member is one which probably he intended to make and possibly could have made with greater freedom on the resolution which passed the house earlier this evening, and which had relation to what is described
as the five per cent cut. I must point out to the hon. member that making his speech at this time will, I am afraid, estop him from making the same speech or perhaps a better one at a later time.


James Houston Spence: He can do it again.


Charles Avery Dunning: On the second reading of the bill, which is down for the next sitting of the house. I want to save the hon. member from any embarrassment, because it would pain me to have to call the attention of the chair to the fact that he was repeating a speech he had already made.


Jean-François Pouliot: Oh, no. The Minister of Finance is a young man. May I tell him that I am strictly within the rules of the house. Not only that, but the same thing could be said about each item in the budget which relates to salaries. I am referring to the hardships suffered by employees receiving low wages, by those who have to struggle for a living.
How is it that there are two weights and two scales? On the one hand, we have the poor man who has to pay and, on the other, there is the big fellow who receives everything. Such conditions are not fair. I do not say this in an acrimonious way; I say it because I know it to be true. It is what I said two years ago, three years ago and four years ago. I am sincere and I am not putting this forth as political propaganda. I took the trouble to study the whole matter and I came to _ the conclusion that what was needed was an increased purchasing power by the lower paid workers. If that is brought about it will be much better for this country. All this is not a question of procedure, a matter of saying that you must say this here or that there; the truth should be broadcast. When anything is said in the public interest it should be listened to. Social justice is not simply a matter of discussion; it is a matter of realization. We should try to understand the importance of that.
The saving made in the melting pot, the saving brought about by cutting the salary of Tom, of Tim, of Jim, of Peter and of Jack is considerable, but what is done with that saving? That is where the unfairness comes in. We come now to the man who is receiving more than he is worth, the big fur-capped gentleman. I am referring to General Mc-Naughton. This gentleman is entitled to a superannuation of $4,600 because he paid for it. Savings have been made by not paying in full those employees in the different departments who earn low salaries so that this fellow McNaughton and the other fellow

Supply-National Revenue
Steel may receive much more than they are entitled to. This is a shame. During the last elections the case of McNaughton was argued fully throughout Ottawa and the population of Ottawa and of this country is familiar with it, as well as with the case of Steel. Immediate action should be taken in order to restore the confidence of the people and to show them that in Canada there are not two weights and two scales. If McNaughton and Steel are not brought back to the Department of National Defence and superannuated at the lowest rate, I shall take advantage of other opportunities that will present themselves to remind the government that for the sake of the country they should be fair; that they should bring these men back and then send them home at once.


Mr. PLUNKETT:: I understand that the department has done away with the female examiner at Victoria. I am told that the former incumbent of this position was very efficient. I have received a letter of protest from a women's organization in Victoria. It seems peculiar to me why the services of a lady examiner should be done away with at this port. There must be some good and valid reason and I ask the minister to give me one. I should like to know also if another appointment is to be made.


James Lorimer Ilsley: The report of the inspector is that the necessity for this work is not as great as it was a few years ago. The inspector also reports adversely on the woman in question.


D'Arcy Britton Plunkett: I should like to read two paragraphs of the letter which I received. They are:
In protesting the abolition of this position we feel confident that we are only voicing the opinion of the majority of our sex, especially the thousands of women travellers who have good reason to be thankful that we have a lady customs examiner here.
The present incumbent of this position has received many letters of appreciation of services rendered-particularly from those who are not thoroughly conversant with the English language, as Miss Donogh speaks several foreign languages fluently and acts as interpreter when necessary.
I merely wanted to place these facts before the minister.


Richard Langton Baker: This is a bulk item totalling $10,250,000, of which $6,465,000 is for salaries and contingent expenses of the several ports of the dominion. There might be something to go on if there were placed on Hansard or distributed to the members a list of the ports with the salaries paid and expenses incurred. Are there in Canada

any ports now operating where the revenues do not warrant their being kept open? Perhaps if some ports were closed the total revenue collected would still be the same and we could cut down this large item of over six million dollars.


James Lorimer Ilsley: I am informed that it has
never been the practice in presenting National Revenue estimates to give a list of the ports, as this list would be very long. The hon. member has touched upon a subject of which I know something, that is the closing of ports. I think it is true to say that a large number of ports could be closed advantageously from the point of view of the administration of the department. Many ports have been closed during the past few years. In 1926 a parliamentary committee investigated the administration of the customs and reported in favour of closing a large number of ports. A royal commission sat in 1926 and 1927 and came to the same conclusion. Following that there was an investigation by a firm of auditors and chartered accountants who went into the same question and made a full and detailed report on the closing of ports in the dominion. Canada has a greater number of ports according to population than has the United States and the disparity in a comparison with England is equally marked. From the time I took office on October 23, 1935, until March 1, 1936, the government has closed sixteen ports, and since the latter date about half a dozen more have been closed.
While it may not be entirely relevant to the hon. gentleman's inquiry, I would point out to the committee that it is a somewhat difficult matter to close ports. The particular community affected almost invariably protests. The citizens take pride in their customs house and their member of parliament and others in the community make very strong representations to the minister and to the government against closing that particular port. I do not say that we should close hundreds of ports, but I do think that from time to time an effort should be made to reduce the number in Canada. I certainly cannot be accused of not having done my share in that work.


Richard Langton Baker: Keep up the good work;
it will be a big saving.


Mr. CASSELMAN:: I understood the
minister to say that since he took office he has closed twenty-three ports.


James Lorimer Ilsley: I said sixteen, to the first of March.

Supply-National Revenue


Arza Clair Casselman: That is not a very large list. I wonder if the minister would give the names of these ports, indicating the counties in which they are located, and also the revenue for the last fiscal year.


James Lorimer Ilsley: I do not believe I can give the constituencies in every case from memory.


Arza Clair Casselman: I shall recognize two of them.


James Lorimer Ilsley: I think the hon. gentleman will. Anyox, British Columbia, outport and warehousing port, closed November 1, 1935. Did the hon. gentleman ask for the revenue?


Arza Clair Casselman: Yes.


James Lorimer Ilsley: I am afraid I have not that information here. Aultsville, Ontario, was closed February 15, 1936; that is in the constituency of Stormont. Ayr, Ontario, was closed February 1, 1936; that is in the constituency of South Waterloo. Cardinal, Ontario, is to be closed May 1, 1936.


Arza Clair Casselman: There is nothing personal in my asking for the names of the constituencies, but when I heard that there had been only sixteen closed I thought it strange that, with 245 constituencies in the dominion, of those sixteen two should happen to be in my constituency.


James Lorimer Ilsley: The hon. member can set his suspicions at rest; there is no attempt to make any selection on any personal or political ground-


Arza Clair Casselman: I realize that.


James Lorimer Ilsley: -if that is what he thinks. Chandler, Quebec, was closed the first of January, 1936; that is in the constituency of Gaspe. Grimsby, Ontario, was closed February 15, 1936; that is in the constituency of Lincoln. Sandy Point, Nova Scotia, was closed February 15, 1936; that is in the constituency of Shelburne - Yarmouth - Clare. Sandwich, Ontario, in the constituency of West Essex, was closed February 1, 1936. Seaforth, Ontario, in the constituency of Huron-Perth, was closed December 1, 1935. Streetsville, Ontario, in the constituency of Peel, was closed February 1, 1936. Sturgeon Falls, Ontario, in the constituency of Nipissing, was closed February 15, 1936. Walkerton, Ontario, in the constituency of Grey-Bruee, was closed March 1, 1936. Whitby, Ontario, in the constituency of Ontario, was closed January 1, 1936. Windsor Mills, Quebec, in the constituency of Richmond, was closed February 15, 1936. Wingham, Ontario, in the constituency of North Huron, was closed January 1, 1936. Macleod, Alberta, in the constituency of Macleod, was closed February 1,
1936. Since that time there have been several more, but these are all that I can remember at the moment. Several more have been closed or are being closed; one is in my own constituency.


Arza Clair Casselman: There are two ports in which I am particularly interested, one of them being Cardinal, which I understand produces a very large revenue. That port is located in the town, which has a population of approximately 1,500. There is a large factory there. It is a factory town and a large number of boats call and discharge cargo for the factory. I understand that it is very inconvenient for the people carrying on that business to have to wait for an officer to come a distance of nine or ten miles. The other port is Iroquois, which also has a large factory and does a considerable amount of business. There are considerable imports. I do not think the case of Iroquois is as serious as that of Cardinal, but it is singular to me that a port which produces so much revenue should be closed.


James Lorimer Ilsley: If the town is only nine or ten miles from a customs office, it is much better served than are most places in Canada at the present time.


Arza Clair Casselman: Will the minister give me the revenue later.


James Lorimer Ilsley: I have it before me. The import duty for the last complete year, 193435, is S36,042.97; excise taxes amounted to $262,512.03, making a total of $298,555. I would point out that excise taxes should not be taken into account at all because they can be paid at a distance just as well as nearby. The only one of these figures that counts is the import duty, and there the important matter to look at is the number of entries. There were only 579 import entries in
1934-35, which means that the officer there was entering less than two per day, on an average. The hon. gentleman will understand that when a customs collector has only two entries to make a day, this gives the public the idea that a government job does not mean anything but is a pure sinecure. It is a shame to have these positions in existence if they can possibly be wiped out. If we are in earnest in trying to economize and to operate the government on a business basis-and we are-it is desirable to get rid of these sinecure positions, where men are paid for doing practically nothing, as is the case in a port of this kind. If the town can be served by a customs house within ten miles, certainly the customs house in the town should be closed in the public interest.
Supply-National Revenue


Arza Clair Casselman: What is the cost of upkeep of that office?


James Lorimer Ilsley: The cost consists almost entirely of salary, which is $1,740.


Mr. ELLIOTT (Middlesex):: I do not object particularly to any of these little places having their customs houses closed, but I do object seriously to a large place like Parkhill in my constituency being closed.


James J. Donnelly: I have before me the estimates for last year and this year, and breaking up the item I find that the amount voted last year in the first part of the item was $6,150,000, but in the estimates this year I find that the amount spent was $6,538,000, or $388,000 more. I notice in the second item that the amount voted was $971,708, whereas according to the estimates this year the amount spent was $1,063,708, or $92,000 more. The next item shows an expenditure of $25,000 in excess of the amount voted last year, and the last item shows $96,665 more spent than was voted last year. How does the minister explain these differences?


James Lorimer Ilsley: There were supplementary estimates; the department kept within the main and supplementary estimates combined.


Mr. LENNARD:: With reference to the closing of the port of Cardinal, the minister said that an attempt was being made to economize. Was the employee at that port discharged or removed to another port?


James Lorimer Ilsley: The employee at that port was retired on account of age, and the position abolished.


Abraham Albert Heaps: A few days ago I had a question on the order paper with reference to seizures by customs officials and what became of the articles seized. I asked for a return showing the amount of goods that were seized, and what became of them after seizure. It was evident from the reply that the minister gave at the time that no record is kept in the departmental headquarters at Ottawa of the total amount of seizures made by the customs officials or of what becomes of the goods so seized. I think it would be simple for the department to have some kind of centralized control of all these articles that are seized, and apart altogether from what becomes of them I believe something should be done in the department to see that the central body here has some control over goods once they are seized at the customs ports. When that has been dealt with, I want to take up with the minister and before the committee what becomes of

these goods, and I should like to know why it is not possible for the department at Ottawa to have a complete record of them.


Ernest Lapointe: They
would find your cigars then.


James Lorimer Ilsley: It would be quite possible to have such a record, but it would not serve any useful purpose that I can think of. The record exists, but the amounts are not totalled; the aggregate is not given in any one place. That is all I can say in answer to the first question.
With regard to the second question, or statement, of the hon. member, a careful check is kept upon everything that is seized The regulations are very strict in this regard. I think the other night when my estimates were up I explained that in cases where goods were not sold for the purpose of realizing the duty they were destroyed in the presence of an inspector.


Abraham Albert Heaps: Has the minister with him the total value of the goods that were sold last year?


James Lorimer Ilsley: No.


Abraham Albert Heaps: Is any such record kept?


James Lorimer Ilsley: Yes; a record is kept, but it is not all in one place. I should have to go through several thousand files in order to get the information for the hon. member.


Abraham Albert Heaps: I do not want it to be made up. But I think it would be a simple matter of bookkeeping to have these records centralized, to know exactly what is being done with these articles. As regards seizures, I still think it is a wrong policy for this or any other government to take the goods that are seized and destroy them. To my mind this is sabbotage in its worst form. I gather that some of my friends here think it is a crime to pour liquor into the river St. Lawrence. I agree that many uses could be made of it, even though I do not myself drink. Where seizures are made and the articles are forfeited to the government some use should be made of them, whether the goods are liquor or tobacco or candies or anything else. I should like to know why there could not be arranged in the localities in which those goods are seized, some form of distribution whereby the goods could be handed over to charitable institutions in which I know they would be appreciated. They could go, for instance, to hospitals, or old folks' homes, or children's homes. That would be far better than to throw goods into the river or to bum them, as I understand is being done at the present time.

Supply-National Revenue


James Lorimer Ilsley: I will take the matter up
with the officials of the department; but I am informed that it is an old question; it is not being raised now for the first time. Many years ago the department tried giving away some of these seized goods to charitable institutions and the like as the hon. member has suggested should be done, but it was found that abuses crept in; that the goodis were finding their way on to the market and were being sold at lower than prevailing prices. This caused a great deal of trouble, and the practice was discontinued.
With regard to liquor, it would not do to give it away, because the department would have to assume responsibility for the quality and the age.


Abraham Albert Heaps: If I may pursue the question a moment; if abuses have crept in during the past-and it is quite possible that they have-that is no reason for discontinuing the practice. The point is to see that those abuses do not occur again, by insisting at least that when goods are given away the recipients shall be responsible for their proper use. I should like to see if the minister, with the cooperation of the officials of his department, could not find ways and means of disposing of these goods usefully instead of destroying them. I ask the minister, a new minister with new ideas in a new government, to see if it is not possible to put this suggestion into effect. I do not want to pursue the matter any further. No doubt some of the officials have had experience with this in the past, but when I am told, by those who have seen, of these goods going into furnaces in some of the government departments in this city, I think it is almost criminal to dispose of them in that way when there is so much want in the country. I ask the minister to take this matter under serious advisement and see if a way cannot be found so to dispose of these goods that at least some deserving persons will get the benefit of them.


Mr. MAYBANK:: The minister has been
speaking of the closing of a certain number of ports, and it has been suggested that a considerable number more may be closed. I wonder whether he could tell us, for purposes of comparison, how many there are altogether in the United States and in Canada.


James Lorimer Ilsley: The figures approximately
are as follows: In the United States, 269; in Canada, 433; in Great Britain, 80.


Herbert Earl Wilton: Has any consideration been given, in connection with the disposal of seized goods, to handling them the same as railway companies do? Railway companies have a large accumulation of unclaimed
articles, and each year they have auction sales. Has any consideration been given to the disposal along those lines of goods seized at customs ports? It seems to me that that would be a better plan than to destroy them. It would bring back at least some revenue to the country.


James Lorimer Ilsley: The department has sales.
The regulation is this:
A sale of uncustomed unclaimed and seized goods is to be held at the end of every six months, .preferably April 15 and October 15, and should include goods which have remained unclaimed for not less than two months. Vouchers are required to be furnished for all expenditures and expenses incurred. Advertisements of the sale are to be inserted in authorized papers only and accounts for advertising are to be forwarded to the department for approval of the king's printer before payment.
Of course that does not apply to all goods. Liquor and tobacco are destroyed, and perhaps also goods where the possibility of realizing the duty is remote; in that case the goods would not be sold.


Mr. PELLETIER:: What is the value
realized at the sales that have been held in the last two years?


James Lorimer Ilsley: I have not the information. It could, however, be compiled.


René-Antoine Pelletier: May I suggest another way in which this possibly could be handled? No doubt the department knows of a great many institutions in Canada that are absolutely worthy, and possess very good reputations. I would suggest that these confiscated goods should be given them, if they could make use of such goods. I would suggest, however, that this be done on the condition that they undertake to write the minister themselves with regard to the disposition of the goods they receive. We know that if these things are given to institutions of good repute they certainly will make good use of them. I think in that way some of the abuses that have been referred to might be done away with, because personally I see no reason for destroying goods which could be given away in that manner and which would be very useful to many people.


Mr. REID:: I should like to speak for
a moment with regard to conditions affecting employees of this department in the port of New Westminster, and perhaps what I have to say will be applicable also to other ports in Canada. I have particular reference to the matter of overtime. During the busy months men are asked to work seven days per week. I think in these times of stress when a man has worked five and a half or six days a week that is long enough. If the

Supply-National Revenue
men are not receiving salaries sufficient!}' large perhaps that should be looked into, but personally I am against men working overtime and I do not think the government should countenance men working seven days a week. If one looks over the accounts one finds men receiving S200, $300 and $400 extra for overtime, and then it is realized how serious this matter has become. I quite realize that once a man gets the extra money for overtime he may say that he cannot do without it, but in these days when we are trying to find employment for men I think the government should clear its own decks and clean up its own house first. I do not think it would cost the department any more money to put on one or two extra men in order to allow for relief work. This has been going on for years, and I have made this same appeal for the past three sessions. I am making it again to the new minister and the new government; I hope the minister will look into this matter seriously to see if it is not possible to eliminate this heavy overtime, particularly by way of men working seven days a week.


James Lorimer Ilsley: I shall be glad to look
into the matter.


Thomas Clement (Tommy) Douglas: The minister said that
some goods were sold and some were destroyed. What goods, other than alcohol and tobacco, are destroyed?


James Lorimer Ilsley: Goods that would not
bring the duty if sold.


Richard Smeaton White: I am glad to approve the
policy that has been adopted by the present Minister of National Revenue of closing the smaller and relatively expensive ports of Canada. We have just been told that the number of customs ports in the United States is very little more than half the number in Canada, notwithstanding the enormously greater business of the neighbouring country. There is also this fact to remember, that in the United States the customs ports are frontier ports, whereas in Canada we have a large number of inland ports.
Neither party can escape responsibility for the condition that has grown up in this country. Local pressure upon members has led to the creation of a large number of small ports throughout Canada. That we know to be a matter of fact. The purpose has been a play to local pride, in a measure, and also to provide positions for political friends as collectors or subcollectors at such small ports, but the expenditure in the aggregate is large. When we are

asked to turn to the revenue side it must be remembered that when you close up a port you do not lose any public revenue; that revenue is collected at some other port. From the standpoint of administration it is obvious that administration of customs laws, the tariff and the regulations will be much more uniform and effectual if the administration is in the hands of trained and experienced officials such as are to be found in the larger ports, and such as, in the very nature of things one cannot have in the smaller ones.
I approve the policy of closing, as speedily as conditions permit, the smaller ports. The revenue will not suffer, nor, I venture to say, will any great inconvenience be occasioned to merchants or, for that matter, to manufacturers in such small towns in which ports may be closed. In the United States they manage to get along very well, apparently, with frontier ports only. In passing goods through the customs apparently there would be no difficulty in having agents in large ports like Vancouver, Winnipeg, Toronto, Montreal and so on, to conduct the business expeditiously and satisfactorily for the consignees.


Richard Langton Baker: I am very glad that I opened this discussion, because this matter has troubled me for a great many years. I sincerely believe that a very large sum of money can be saved by the department by reducing the number of ports, and I am glad to have been so ably supported by the hon. member for St. Antoine-Westmount, who understands the question thoroughly. There is not only this item of nearly $6,500,000 for salaries and contingent expenses in these customs ports; there is another item of $1,025,000 for salaries and travelling expenses of officers of the inspection, investigation, audit, and the preventive service undervaluation services. I suggest to the minister that there could be a big saving in that item as well. Of this total of more than $7,500,000 I think it is safe to say that the country could save $2,000,000 annually, and at the same time better service could be given.


Mr. DEACHMAN:: I do not rise to suggest that these ports should not be closed; as a matter of fact one was closed in my own constituency, and I offered no objection. Possibly we might go through this list and eliminate nearly two hundred of these ports such as Parkhill, but I should like to suggest to the minister that the method of closing these ports could be improved. In my own constituency the closing was done simply by a peremptory order; the office seemed to be closed in a day or two, before anyone knew

Supply-National Revenue
anything about the matter. If the argument that has been presented this evening by the hon. member for St. Antoine-Westmount, for example, could be presented in almost any constituency the people would appreciate the fact that the port ought to be closed and would agree to such action. Then there would be less criticism of the government and the member would have a far easier time than he has under the present system, when ports are closed without taking into consideration the thoughts and feelings of the people.
If the facts are placed before the people of any constituency; if they know, as hon. members of this house know, the shocking fact that we have eighty-four more ports than the United States and the United Kingdom combined, and probably more than France and Germany as well, and that the cost of collection at these ports is very, very high, they would understand. My own figures that I used when I was discussing this question with the electors in my constituency showed that the average cost of collection of customs revenue in Canada is about three per cent, while in the port which the minister closed in my own community-and I am sure this applies to the other one mentioned-the cost of collection was in the neighbourhood of forty per cent. If these facts were placed before them no business men in a community would want to retain their port. But in closing a port the government should see that all the data is communicated to the mayor and local officials, and to the papers, showing the revenue and relative cost of collection in that port as compared with other sections of the community; then I think any hon. member on either side, regardless of politics, would defend the action, because it would be clear that it results in a material saving to the people, which in these days is worth while. Closing one hundred ports would probably save a couple of hundred thousand dollars, yes more than that, for there is one circumstance that has escaped notice, namely, that in some of these towns where the customs port was closed the post office is in the same building, and it may be that the post office business is expanding or will do so in the next few years and the part now used by the custom house could be used as a section of the post office. So not only is the immediate cost of operation saved but there is a material saving of future capital cost. These matters could be explained by some public relations official associated with the government, and the closing of the port would then be much easier to deal with, and the house would be saved this constant menace of local pressure, if we took our story to the
people and explained it with frankness and freedom.


John Ritchie MacNicol: I am glad to find myself for once in agreement with the hon. member for Huron North (Mr. Deachman). When he talks free trade, of course as I said the other day, we are as far apart as the poles, but when he talks thrift I can endorse what he says. For some days I have been carefully scanning the 1935 report of the auditor general trying to inform myself so that I can discuss not only these but other estimates, but I find it very difficult to obtain the required information. Here we have a vote of over $10,000,000 in which a reduction has been made of a little less than four-fifths of one per cent under the expenditure of last year. Every business man knows that practically every business in the land has had to reduce expenditures and to try to get within its income.
I am not making any criticism; the present minister has just followed what other ministers before him have done, but I would like to suggest that in preparing his estimates for next year, estimates to which 245 members are expected to give some intelligent consideration, he should place alongside each group of items the credit number and the part letter and number, so that one may easily refer back to the auditor general's report for the previous year and check what has been done with the money. I notice over and over again in the different pages that pertain to this department such items as salaries, contingent expenses, which probably include a thousand and one different things, overtime, temporary buildings, rentals, printing, stationery, subscriptions to commercial papers, stamps, locks, instruments-many different items. It does seem to me that a very insignificant reduction has been made in the totals submitted this session. I know of course the minister cannot reduce a statutory item, but surely a large reduction could have been made, as the hon. member for Eglinton (Mr. Baker) and the hon. member for Huron North have said, not only in these estimates but in those of other departments. We have to cut our expenditures down where possible because later in the session we shall have to vote many millions of dollars to balance the accounts of this country. I would like something to be done to facilitate rapid checking of items against the auditor general's report. Unfortunately all we can deal with is the report for the previous year, but if what I suggest were done, it would guide us and give us a more definite conception of what is done with the money.
Supply-National Revenue


Mr. GRAYDON:: Like the hon. member for Davenport (Mr. MacNicol) I find myself in agreement with some of the remarks of the hon. member for Huron North. In my constituency of Peel one of the customs houses was closed, that at Streetsville, as was mentioned a few moments ago. One of the questions that local communities are most concerned about is to know why governments do certain things which concern their locality. I was glad to hear the hon. member for Huron North state so clearly his view in connection with such matters as happened at Wingham and Streetsville. There are few people who are not in agreement with the general idea of cutting government expenditure in times like these, but the people should be taken into the confidence of the department so that they may know how they fit into the general scheme of economic practices over the dominion. And while I rise in protest against the Streetsville port being closed, perhaps I should suggest to you, Mr. Chairman, and to the Minister of National Revenue that in view of the fact that the minister is making a sincere and, I hope, an extensive attempt to cut down the expenditure of this department, my protest is tempered by virtue of the fact that he has brought the situation to our attention in such a candid way to-night and that he actually intends through a country-wide policy to do something to save some money to the taxpayers of this dominion. So I say to him, as Minister of National Revenue, that in future I think he might very well be guided by the remarks of the hon. member for Huron North, and might see to it that when anything is done in connection with cutting down expenditures, or when local communities think that perhaps they have been discriminated against, the minister might prevent all this trouble by assuring these people that they are not being discriminated against but that, by virtue of giving up their customs port, they may be actually contributing to the good and welfare of the people of Canada.


Harry James Barber: I think hon. members approve the policy outlined by the minister of cutting down the number of ports. I understand of course that the department is not interfering in what are known as frontier ports. It might be interesting to know what percentage of ports in Canada is in that class. I have in mind those along the boundary line of British Columbia, and I might say that there is a possibility of new outports being required on international highways. I understand it is the policy of the government to go as far as possible in estab-

fishing outports on these highways. Could the minister give the percentage of ports which might be classed as frontier ports?


James Lorimer Ilsley: There are 115 out of a total of 433 classed as land frontier ports, between Canada and the United States. In case the hon. member is interested may I tell him that there are sixty lake and St. Lawrence river ports and 133 interior customs offices. There is one land frontier port between Canada and Alaska. Then there are 105 ocean ports on the Atlantic seaboard, including the gulf of St. Lawrence, and nineteen ocean ports on the Pacific seaboard.


Harry James Barber: Including the ports along the international boundary line?


James Lorimer Ilsley: There are 115 of those.


Richard Langton Baker: In the event of closing one of these ports I do not suppose the department would discharge an employee who had given faithful and long service, without giving him a pension.


James Lorimer Ilsley: We have gone to considerable trouble to take the human factor into consideration. I myself was quite concerned about the matter, because, I realized that if a customs officer in a small town were peremptorily removed to a city one hundred miles away he might suffer some hardship. He may own a house which he cannot sell, or something of the kind. We make inquiries about them; frequently they are willing to move and in some instances there are difficulties. For the most part, however, they are provided for in some way if they have not reached the retirement age. For that reason the closing of ports must go forward gradually.


Thomas Clement (Tommy) Douglas: Is the closing of ports the only explanation for the cut of 873,000 in salaries?


James Lorimer Ilsley: No; the closing of ports does not account for all of that. We have tried to reduce the staff as much as possible, and to keep down expenses in every way. Perhaps I should say that one saving is brought about by the retirement of men who have reached high salary ranges and the substitution for them of men at the lower end of the salary scale.


James J. Donnelly: Will the minister answer my question now?


James Lorimer Ilsley: The estimated salaries for inspection service in 1936-37 amount to $186,995; for investigation service, values, $86,225; for investigation service, drawbacks, 8140,610; for audit service, $420,690; for undervaluation

Supply-National Revenue
services, $72,945, making a total of $907,465. The contingencies stand at $162,251. Those figures will not amount to exactly $1,025,000, but will be very close to it.


James J. Donnelly: Are the people doing the investigation in the Dominion of Canada, or are some of them outside the dominion?


James Lorimer Ilsley: Some of them are outside.


James J. Donnelly: How many?


James Lorimer Ilsley: Four in Great Britain and on the continent and eight in the United States.


James J. Donnelly: To what does the item of undervaluation services refer?


James Lorimer Ilsley: This service has to do with the entry of goods by importers at less than the proper valuation for duty purposes in accordance with the provisions of the Customs Act and the customs tariff.


James J. Donnelly: Are these men employed in Canada, or in other countries, and how many are there?


James Lorimer Ilsley: Those engaged in the undervaluation services are all in the Dominion of Canada.


James J. Donnelly: Do these men investigate prices of goods in other countries?


James Lorimer Ilsley: Those in other countries are called investigators of value, and those in the undervaluation services are in the Dominion of Canada. It is their business in any way possible to check up on importers to see that their invoices do not contain undervaluations.


James J. Donnelly: Are the men who are in other countries investigating values sent from the Dominion of Canada, and are they selected by the civil service commission?


James Lorimer Ilsley: They are sent from the Dominion of Canada and are appointed under the National Revenue Act. They are not appointed by the civil service commission.


Robert John Deachman: Could the minister
tell us the extent to which these men are efficient? I should like to know how much they have increased the value of goods coming into Canada. They have been appointed to prevent under-valuation and I should like to know the extent to which they have increased the prices of goods shipped into Canada.


James Lorimer Ilsley: It is impossible to give
even an approximate answer to that question. The duties of these investigators of values are to check costs of production in foreign countries and, principally, to check the fair home market value in the country of origin.


Mr. GLEN:: Could the minister explain
just what are the duties of these men and how they get information with regard to goods shipped into this country? Have these officers the right to go to an exporter in Great Britain and tell him that the value he has placed upon his goods is lower than it should be? Have they the right to increase the price of goods exported to Canada?


James Lorimer Ilsley: They would go to the
office of an exporter and inquire as to the home market value or the cost of production, as the case may be. As to their legal right to insist upon the production of books and so forth, I suppose it does not exist.


James Allison Glen: Would the minister say that
these undervaluators do not suggest to exporters that prices of their goods are lower than they should be as compared with prices of other goods coming into Canada?


James Lorimer Ilsley: The use of the word
"should" implies some sort of right. That is not their business at all; their business is to find out the fair home market value or the cost of production.


James Allison Glen: It is within the knowledge
of the department that these men suggest to exporters that the amount shown on a bill of lading is less than what should be charged for the goods being exported to Canada?


James Lorimer Ilsley: I have no knowledge of
their having made any such suggestion and I do not think it is their business to do so.


James Allison Glen: What is their business?


James Lorimer Ilsley: Since 1904 or 1907, I forget the exact year, we have had in our customs tariff a clause which is popularly known as the dumping clause. This was introduced when Mr. Fielding was Minister of Finance. The principle of the clause is that if exporters in foreign countries sell goods to persons in Canada at less than the home market value in the country of origin, the importer in this country is charged in addition to the regular duty, what is known as a special or dumping duty. That makes it necessary for the department and for our collectors to ascertain these facts. Whether or not they have the right to do that is not for our department to say; the function of our department is merely to administer the law as we find it. We have to find out by the best means at our command whether goods are being invoiced to this country at prices less than the home market value. We have to find out what is the home market value. That is not as simple as it might appear to be. It is sometimes very difficult to ascertain the fair home market value in the country of origin under conditions

Supply-National Revenue

similar to those under which the sale is made to the importer in Canada. For this reason we have to have investigators of values in foreign countries. That is the first part of their duties.
As I indicated a moment ago, there is another part to check co9ts of production abroad. This becomes necessary because of a provision in our Customs Act, not the customs tariff, which says that the value for duty purposes shall not be less than the cost of production in the country of origin plus a reasonable advance for selling costs and profit. Therefore, we have a very difficult duty to perform in attempting to ascertain in some way costs of production in foreign countries. It is very difficult even to find out costs of production in our own country as they vary from firm to firm, from place to place and from time to time. Nevertheless we have to do our best to get these costs of production in foreign countries so long as that law remains on our statute books. This is a second part of the duties of these investigators of values in foreign countries.


James Allison Glen: I appreciate the explanation
of the minister, but I am informed that when the cost of production plus a profit is given in a bill of lading as the price of goods being shipped to Canada, some of these undervaluation officers have gone to a manufacturer or an exporter and suggested an increased price over and above the cost of production and the other items already mentioned.


James Lorimer Ilsley: That might very well be
true, but I do not know.


James Allison Glen: It means that when an exporter in the old land is shipping goods to this country at a price made up of his cost of production plu3 a reasonable profit our officers will go to him and say, "You are charging too little; you ought to put more on to the cost of your goods going to Canada." I realize what a dumping duty means, but here are manufacturers who are producing goods and selling them at a price calculated to give them a profit plus their costs of production being asked to invoice at a price more than they were proposing to charge in the first instance. These statements have gone abroad and they are very unfavourable.


James Lorimer Ilsley: I would be very much
surprised if any investigator had made such a suggestion under those circumstances. If the exporter being investigated can show a fair home market value or a cost of produe-

tion plus a reasonable profit I do not think any investigator in the employ of the department would suggest that he charge more money. He certainly should not do so and if the hon. gentleman has any definite information that it has been done, I wish he would bring it to our attention.


Abraham Albert Heaps: I had a case brought to my attention a couple of years ago where a manufacturer of soft drinks was purchasing syrup in the United States and paying S4 or $5 per gallon. The Department of National Revenue insisted upon SI per gallon more being charged by the manufacturer in the United States. I took up this case with the department and I might say that this almost put the manufacturer out of business. The case brought to the attention of the committee by the hon. member for Marquette (Mr. Glen) may be typical of many others. If a	man is purchasing goods	at afixed price in	another country	and	that	price
is fair, I do not think the Department of National Revenue should insist upon the importer in this country having to pay more for the goods or paying a higher price by way of duty than what he is actually paying in the foreign country.


James Lorimer Ilsley: I am glad to know that
the incident mentioned by my hon. friend occurred two	years ago.


Abraham Albert Heaps: Do I understand from the
minister that	these incidents	are	not	happening to-day?


James Lorimer Ilsley: I do not think so.


James Allison Glen: How many of these undervaluation officers are located in the old country?


James Lorimer Ilsley: Four.


James Allison Glen: Where are they located and
what salaries do they receive?


James Lorimer Ilsley: I will give the staff: D. L. Bell, stenographer, grade 2, London, England, salary, SI,185; R. A. Burdette, London, England, investigator of values, salary, $3,240, living allowance, $1,800; A. R. Hind, Hamburg, Germany, assistant investigator of values,. salary, $2,400, living allowance, $1,500; G. M. L. Jarchow, Hamburg, Germany, stenographer, grade 2, salary $1,320; P. M. Roy, Hamburg, Germany, investigator of values,, salary, $3,240, living allowance, $1,800; C. H. Rumple, London, England, assistant investigator of values, salary, $2,160, living allowance, $1,500.


Ralph Maybank: How do these men
manage to get the information from, shall

Supply-National Revenue
we say, McIntosh Limited, which is a fictitious name here but one which I am sure will be found in Scotland? How do they get from McIntosh Limited the information which it is deemed necessary to have? Suppose the firm does not wish to cooperate with the investigator and will not open its books. What sanctions are there that can be imposed upon McIntosh for not opening his books to the Canadian investigator?


James Lorimer Ilsley: For the most part the
foreign manufacturers cooperate. If they do not there is authority for increasing the invoiced value, but I have never had occasion to exercise that authority.


Herbert Earl Wilton: Is there a system that requires a daily or weekly or monthly report from the foreign representatives to the department, giving the history of cases investigated and the results?


James Lorimer Ilsley: The department is in receipt of correspondence from them by practically every mail. When complaints are made they are forwarded to the investigators, who report continuously until the matter is disposed of.


Herbert Earl Wilton: Does the minister not get reports? Suppose one of his investigators in England or the United States finds that there is undervaluation in an invoice and in consequence of his investigation the price is raised. Does he not submit a report in detail in connection with that case?


James Lorimer Ilsley: Yes.


John Ritchie MacNicol: Did I understand the minister, in reply to the hon. member for Wood Mountain, to say that the figures in the estimates before us for 1935-36 included the supplementary estimates of last year?


James Lorimer Ilsley: Yes.


John Ritchie MacNicol: And that the figures now submitted for 1936-37 do not include supplementary estimates?


James Lorimer Ilsley: That is correct.


John Ritchie MacNicol: Then, in error a few
minutes ago I gave the department credit for reducing the estimates four-fifths of one per cent as compared with last year because if the information now given is authentic the department's estimates this year are about five and a half per cent over those of last year. As a matter of fact, there has been no reduction but rather an increase.


Robert John Deachman: I suggest to the minister that this little item for undervaluation services should be dropped. After all, as I understand the situation, the total sum expended is $72,000 for the purpose of investigating the values of imports which last year amounted to $522,000,000. If it serves the purpose of increasing the price of goods shipped to Canada I think it is a service with which we could dispense. If it is intended to be an efficient service it will have to be vastly increased above the present paltry expenditure. I therefore suggest that it is-either a joke or a racket, and in either case it should be discontinued.
I should like to find out where these investigators get their information with regard to these supposed undervaluations. For instance, there are two or three men now in the United Kingdom and there are thousands of manufacturing firms all shipping goods into Canada. If a manufacturer refused to give information he would be quite within his rights, and while there are some sanctions, as my hon. friend has suggested, they are never applied, so that they must be more or less a bluff. The item in itself can serve no purpose except to increase the price of goods we buy. I would ask whether any cabinet minister employs men to secure evidence that someone is selling goods to them at too low a price. Does any corporation do that? Why should the dominion government try to get exporters of commodities to Canada to raise their prices so that we may pay a higher price for the goods we receive? No one in the house at this late date will attempt to deny that imports are payments which we receive for exports, and the proposal here is that we in the parliament of Canada in 1936 should pass an estimate providing that the Canadian people shall receive a smaller total volume of goods in exchange for the products they send out. This is so ridiculous that I think it is hardly worthy of further discussion. I suggest that the minister ought to withdraw the item and let us at least be free from that anachronism in this late era of the world.


Mr. KINLEY:: I think the hon. gentleman who has just spoken has taken a wrong attitude. There is such a thing as competition- in business; we have auditors in all kinds of business, and this is only an audit so as to have uniformity in value for the imports of the country. One merchant is honest; another merchant is not so honest. In fairness to the man who is honest and has proper invoices you must check the man who has wrong invoices, and that is what this is for. But there is in the Department of National Revenue a condition which I think should be changed, and that 'is the fixing of arbitrary valuations by the department because of the cost of production in our own country. That
Supply-National Revenue

has been done during the last four or five years. For instance, you want to import something, and they say, "Oh, that is manufactured in Canada, and it costs so much to manufacture in Canada, and that is the price we must put on the invoice for duty purposes." I think that is a practice which was not contemplated by the Customs Act, something not contemplated by the import or export trade, and I hope that the department is adopting a different attitude with regard to that restriction of business.


James Lorimer Ilsley: We have cancelled most of
the arbitrary valuations under section 43.


James J. Donnelly: We have here two
classes of people. There are the investigators. These investigators go into the outside world to see that Canadians are not getting any bargains, to see that they are paying enough for what they buy. If they are paying too little, the investigators say, "You are getting a bargain; you are not paying enough; you must pay more; you must pay a dump duty when the article comes into this country." Then there is a class of people who are what the minister calls undervaluators. I do not know whether these people are going through this country or not to see that we do not get a bargain in Canada. Is the consuming public to have people going into other countries to see that we do not get bargains there, and people in this country to see that we do not get a bargain in Canada as well? The whole proposition looks absurd to me. I want to know what they do. Are they to see that we pay enough when we buy goods in other countries, to see that we do not get a bargain?


James Lorimer Ilsley: I do not think I can explain the matter much more fully than I did for the benefit of the hon. member for Marquette (Mr. Glen). I went into it fully then. To begin with, it is important that invoices are not fraudulent. I think the hon. gentleman will understand that. In the second place, whether the policy agrees with the policy of this legislature or not, we have to administer the dumping clause so called which has been part of the statute law of this country for thirty years, and the position taken by the hon. gentleman and also by the hon. member for Huron North (Mr. Deachman) challenges the whole principle of the dumping clause. That is a very large question, and I am not prepared to debate it to-night. But important considerations enter into any proposal to abandon the dumping clause.


James J. Donnelly: How long have these
people been employed in this investigation business?
IMr. Kinley.]


James Lorimer Ilsley: I cannot give the hon.
gentleman that information, but it is more than ten years, at any rate.


Mr. YOUNG:: Are all these investigators
of values permanent officials of the department, or are some of them employed temporarily?


James Lorimer Ilsley: All permanent.


Alexander MacGillivray Young: It has been represented to me on more than one occasion by importers into Canada that they have actually been charged a dumping duty on goods which they bought in another country, at the fair market value in that other country, fair market value being judged in this way, that the goods were being sold in the country of origin at the same price at which these importers purchased the goods. In spite of that, some one said that that was not the fair value, and therefore it was arbitrarily increased and a dumping duty was then charged to the importer. If that practice is actually in vogue I would ask the minister to take the matter into serious consideration and, if possible, see that it is eliminated entirely, because that is not, in my judgment, what is intended as a dumping duty.


Hugh Alexander Stewart: I note there is an increase under the miscellaneous item. Would the minister explain the reasons for that increase?


James Lorimer Ilsley: The increase of $15,000 in miscellaneous expenses is due mainly to an increase in the item for printing, which last year was $110,000, as compared with $125,000, the estimated expenditure for the ensuing year. For several years we have not replenished our stock of forms and returns, and this year it will be necessary to do so. In addition, we expect to issue during the year a consolidation of the customs tariff act and regulations issued in connection therewith.


Mr. WALSH:: What is the percentage cost of collecting income tax in Canada?


James Lorimer Ilsley: The percentage cost of collection of the income tax for the fiscal year
1934-	35 was 2-95 per cent, and for the year
1935-	36 it will be approximately 2-2 per cent.


William Allen Walsh: There is an increase in that item. Has any part of that increase been brought about because of an understanding between the present government and one of our provincial governments to collect income tax for that province?


James Lorimer Ilsley: Yes; it is expected that it will be necessary for an increased appropria-

Supply-National Revenue
tion to be made on that account. This may necessitate an item in the supplementary estimates.


William Allen Walsh: How many provinces are involved in the collection of their income tax by the dominion?


James Lorimer Ilsley: Only one.


William Allen Walsh: And does the hon. minister think it is fair and reasonable that the whole Dominion of Canada should be taxed, even to a small extent, for the purpose of collecting a tax for one particular province?


James Lorimer Ilsley: No. The agreement with Ontario will have to provide for that province paying its share. That is understood.


George Halsey Perley: I notice an item in this appropriation giving authority "to create positions and make appointments notwithstanding anything contained in the Civil Service Act." I thought these officials were already under that rule; that these men are appointed by the minister without going through the civil service commission. Has this not been so with regard to income tax officials?


James Lorimer Ilsley: The employees of the income tax division are appointed by order in council. The employees of the customs and excise divisions are appointed by the civil service commission.


George Halsey Perley: Then why is
it necessary to insert that provision in the estimates again this year, if that is the way in which the appointments have been made previously? Is it inserted every year?


James Lorimer Ilsley: Yes; it has always been
there.


Hugh Alexander Stewart: Would the minister be
good enough to outline the arrangement with the province referred to for the collection of the income tax imposed by that province, and to explain in a general way how the department at Ottawa proposes to work out the matter? As I understand it, when we remit our federal income tax we must also pay the tax imposed by the province in question; that remittance must accompany the return which is made in connection with our dominion income tax, to the credit of and on account of Ontario. I think it would be interesting to the committee if the minister would outline in detail the arrangements that have been made with the province in that connection.


James Lorimer Ilsley: I have before me a brief
memorandum on the arrangement with
Ontario. That arrangement has not been finally completed, but I anticipate that there will be no difficulty in coming to an agreement since the principles are all settled. The Ontario Income Tax Act imposes a tax on all persons resident in Ontario and individuals carrying on business in Ontario-For this purpose the Ontario act has followed as closely as may be the dominion law. The Ontario law imposes rates that are equal to one-half of the general schedule of rates contained in the dominion act. The personal exemptions and allowances for dependents are the same for both acts. The income subject to tax under the dominion law is also subject to tax under the Ontario law, with two variations:
1.	An addition of the tax free 1937 dominion bond interest income. That is taxable in Ontario; we do not tax it, but they do.
2.	The dominion tax payable is a deduction from the Ontario income, before determining the amount of income subject to the Ontario tax. That is a very important consideration.
It might be well to mention that the Ontario act does not impose any of the other taxes contained in the dominion act, such as the surtax on investment income, the five per cent additional tax on incomes in excess of $5,000, the gift tax or the corporation tax. I think hon. members understand that the Ontario law is an individual income tax law, not a corporation income tax law. We get approximately half our income tax revenue from corporations throughout Canada.
The administration of the Ontario act is substantially in the control of the dominion commissioner of income tax in the same manner and to the same extent that that officer administers the dominion act. The' return of income made by the individual for both dominion and Ontario purposes is on one form. The forms supplying information covering salaries or wages of employees, dividendrS, ownership certificates, beneficiaries-of estates, interest paid to fully registered bondholders and other information, are used both for dominion and Ontario purposes, thereby eliminating the necessity of the persons required to make such returns having to do the same thing twice, once for dontinion purposes and again for Ontario purposes.
Without detailing the numerous different forms it may be said that these have been redrafted to show clearly dominion and Ontario assessments, together with collections, separately on the same form, thus saving time, material, space and equipment. The receipt forms have been redrafted so that
1280	COMMONS
Supply-National Revenue
the amounts paid by the taxpayer for dominion purposes or Ontario purposes can be clearly designated on the receipt and therefore one receipt is adaptable for either purpose. The notice of assessment has been redrafted so that the taxpayer knows precisely the amount of his indebtedness and the exact standing of his account for both dominion and Ontario purposes.
The province will be required to pay its share of the supplies, added equipment, travelling expenses incurred and salaries occasioned by possible additions to the staff. There are seven dominion district offices in Ontario and approximately 85,000 individual taxpayers, for whom separate accounts must be opened and further general ledger records maintained. The added cost is not as yet capable of determination. It has to be developed as the work develops, but whatever it may be it is to be taken care of by Ontario.


Herbert Earl Wilton: In making his return and in estimating the amount of income tax payable to the province and to the dominion, would it be necessary for a taxpayer to make out two separate cheques or would one cheque cover both payments?


James Lorimer Ilsley: The answer is no.


George Halsey Perley: What does the minister mean by no?


James Lorimer Ilsley: The question, as I heard it, was whether it would be necessary for a taxpayer to send in two cheques, and the answer is no.


Mr. LEADER:: The minister stated that the Ontario government was taxing the so-called victory bonds. I should like to know what amount of these bonds come due in 1937. Could the minister give us that information?


James Lorimer Ilsley: I am sorry that I have not the information available. At any rate I could not tell the hon. member how many of these bonds are held in Ontario, nor do I know where I could get such information.


George Halsey Perley: I understood the minister to say that Ontario will allow the taxpayer to deduct the amount of his dominion tax. Now that Ontario is collecting an income tax, should not our law be changed so that the dominion will not collect a tax on the amount we pay to the province by way of income tax?


James Lorimer Ilsley: We do not think so.


Hugh Alexander Stewart: I think if we are to
have two income taxes the right course has been adopted in endeavouring to make a

substantial saving in the collection of these taxes, but the point still remains as to whether we should have two income taxes. The question raised by the hon. member for Argenteuil is not new. In Ontario, as the minister undoubtedly knows, formerly the municipalities had the right to tax incomes, and in the ordinary town or city the tax on income was levied at the same rate as the tax on real property, with certain limited exemptions. I think the point raised by the hon. member for Argenteuil is sound; I think, in making our dominion income tax return, we should get credit for the amount of tax paid to Ontario.
In looking over the form the other day I noticed that we were directed to remit to the income tax branch of the Department of National Revenue the amount of the provincial tax, marked to the credit of the treasurer of Ontario. That is on the form.
I do not see how you can do that without writing a letter explaining that part of your cheque is for dominion purposes and part for provincial purposes. In addition, as I read the act, the provincial treasurer has the right to confirm or increase the assessment; as I understand the matter the treasurer sends you your assessment.


James Lorimer Ilsley: No; I think the hon. gentleman is mistaken; we have the whole thing.


Hugh Alexander Stewart: It comes from the department at Ottawa on behalf of the treasurer of Ontario?


James Lorimer Ilsley: Yes.


Hugh Alexander Stewart: Then, that may be all right. Those were the two points I have particularly in mind. One other is this: The Ontario act provides for an exemption; the dominion act provides for an exemption; have we two exemptions?


James Lorimer Ilsley: No, only one exemption.


Hugh Alexander Stewart: I do not think it is the same amount.


James Lorimer Ilsley: Yes, exactly the same.


Hugh Alexander Stewart: I am sorry that I cannot get any encouragement or help for a reduction of income tax.


William Allen Walsh: Are similar arrangements with any other provinces contemplated?


James Lorimer Ilsley: None are concluded. It may be under consideration by the provinces, but we have made no arrangement with any other province. There are income tax laws in five other provinces, Prince Edward Island, Manitoba, Saskatchewan, Alberta and British Columbia.

Privileges and Elections
12S1


George Halsey Perley: Have any of them approached the minister on the subject?


James Lorimer Ilsley: A preliminary conversation was held with one, but it has come to nothing as yet.


William Allen Walsh: This arrangement with
Ontario then establishes a precedent in connection with collections by the dominion government for other governing bodies?


James Lorimer Ilsley: That is correct. We shall have to do the same thing for these other provinces if they comply with the same conditions.


William Allen Walsh: Has the government given consideration to the precedent established and what it might lead to, not only in the field of income tax, but in other fields by virtue of the fact that similar privileges might be asked by others who are not collecting income taxes, for the dominion government to collect other kinds of taxes?


James Lorimer Ilsley: Yes, a great deal.


William Allen Walsh: In my estimation it is a dangerous precedent, if I may be permitted to say so; I do not like the complications that may be involved.


[Stage Direction]
Item agreed to.
John Ritchie MacNicol: I wanted to ask the minister a question, not particularly in connection with this last item. A former revenue officer of the department, came to see me, a
man who was employed by the department at the time of the Mont Blanc explosion in Halifax harbour, I believe in 1915. While on duty he was blown into the water; several of his family were killed; his house was blown away-he lived on the shore near where the ship blew up; he now Lives in Toronto-and ever since that time he has been trying to get some redress from the department. The doctor ordered him to move away because his wife could not bear to live in the vicinity where members of the family were killed. I have been wondering why the department will not place him in the revenue service again. I will give the minister particulars, and he can let me have information about the matter at his convenience.


James Lorimer Ilsley: Was he an employee of the Department of National Revenue?


John Ritchie MacNicol: Yes; he had a splendid Tecord in the department, but after the explosion was ordered away on account of his wife's health.


James Lorimer Ilsley: If the hon. member will write to me giving particulars I will have the matter looked into.
Progress reported.
On motion of Mr. Lapointe (Quebec East) the house adjourned at 10.50 pm.
Friday, March 20, 1936