Mr. SPEAKER:: I have the honour to
inform the house that I have received the following communication:
Ottawa, May 2, 1939.
Sir:-I have the honour to inform you that the Right Hon. Sir Lyman P. Duff, Chief Justice of Canada, acting as deputy of His Excellency the Governor General, will proceed to the Senate chamber on Tuesday, May 2, at 5 p.m., for the purpose of giving the royal assent to certain bills.
I have the honour to be,
Sir,
Your obedient servant,
F. L. C. Pereira, Assistant Secretary to the Governor General.



BANKING AND COMMERCE

[Stage Direction]
Fourth report of the standing committee on banking and commerce.-Mr. Moore.


[Stage Direction]
Bill No. 115, for the relief of Roberta Copeland Cool Roberts.-Mr. Ross (St. Paul's).
Bill No. 116, for the relief of Margaret Maud Turner Bell.-Mr. Walsh.
Bill No. 117, for the relief of Janni Kalmano-witz Rittner.-Mr. Factor.
Bill No. 118, for the relief of Ambrose Tib-bitts Aston.-Mr. Ross (Moose Jaw).
Bill No. 119, for the relief of Anne Ver Trees Hart Acena, O-Mr. Bercovitch.


Hon. W. D. EULER (Minister of Trade and Commerce):: Mr. Speaker, I move that

Prairie Farm Assistance

the consent of the house be given to the reprinting of Bill No. 63. Certain changes are proposed, but they do not alter the principle of the bill.


[Stage Direction]
Motion agreed to.


Hon. J. G. GARDINER (Minister of Agriculture) :: Mr. Speaker, I would move that
Bill No. 83 be reprinted. There is no change in the principle of the bill, but there is considerable change in the detail, and I think it would be much easier for the house to discuss the matter if the bill were reprinted before discussion takes place.


Hon. R. J. MANION (Leader of the Opposition) :: Could the minister give us some
idea as to what the proposed changes are?


William Daum Euler: That is one of the purposes of reprinting the bill.


Robert James Manion: But, Mr. Speaker, the
house has some rights. Yesterday the hon. member for Winnipeg North Centre (Mr. Woodsworth) used the word "railroading." I do not like to use that word, but it almost looks like it. Surely we have the right to know something about the legislation that is proposed. Changes are being made. Of course the government can insist upon refusing to give it to us. I appreciate they have the power, but as a matter of courtesy we should have this information.


Right Hon. ERNEST LAPOINTE (Minister of Justice):: Mr. Speaker, may I explain that these bills might proceed in their present forms, and the various amendments could be proposed when the sections are called for consideration. Of course, explanations on the sections of the bill are given only after second reading, and the explanations in connection with these bills will be given when second reading is moved. In order to facilitate the work of hon. members it is proposed to print now what will be moved as amendments during the consideration of the bill. The same thing was done in connection with the bill moved by the hon. member for St. Lawrence-St. George (Mr. Cahan) with regard to appeals to the privy council. The hon. member thought that that bill should be reprinted because of certain changes that were to be made, and no one was prejudiced thereby.


Hon. H. H. STEVENS (Kootenay East):: Mr. Speaker, I do not think I am overstating

it when I say that having reconsidered the matters proposed in these two bills the government has changed its position. I am making a guess, but in all probability the change in the bill that the Minister of Trade and Commerce (Mr. Euler) speaks of is a drastic change in principle.


William Daum Euler: Not in principle.


Henry Herbert Stevens: Not in the principle of granting certain sums; but it is being revised to conform with the demands made upon the government while the bill has been before the house. In connection with the bill of the Minister of Agriculture (Mr. Gardiner), in all probability there will be definite changes in order to enable the government to reflect more accurately the desires of the country. My opinion is that the two bills ought to be withdrawn and reintroduced.


James Garfield Gardiner: I understand that the motion with regard to the bill of the Minister of Trade and Commerce (Mr. Euler) was agreed to. I have in my hand the amendments which are to be proposed to the bill standing in my name. This bill is not being amended in principle at all, but we would have to go through the bill and change the references to amounts in the different sections. It is nothing more than that. In order to make it easier to discuss it when it comes down, the suggestion is that this information should be placed in the hands of hon. members of the house immediately instead of awaiting the committee stage and then changing the reference in each of the sections. We are simply asking for the privilege of putting all information in the hands of hon. members rather than waiting until we are in committee. The reprinted bill should be ready to-night or first thing in the morning.


Hon. C. H. CAHAN (St. Lawrence-St. George):: I had occasion to look into the practice of the house in connection with another bill and I found that the house may grant leave for the reprinting of a bill, after its introduction and before second reading, provided that the bill does not increase appropriations for expenditures by the treasury. If expenditures as authorized by the bill are increased, a further recommendation by the governor general has to be given. Do I make myself clear?


James Garfield Gardiner: The amendments to the particular bill of which we are now speaking decrease rather than increase expenditures.


Henry Herbert Stevens: What about the other one?


James Garfield Gardiner: The previous one was not mine.


[Stage Direction]
Motion agreed to.

Central Finance Corporation


Mr. W. R. MACDONALD (Brantford City):: I desire to make a motion in respect to Bill No. 20, respecting Central Finance Corporation. The standing orders .provide that where a company increases its capital, certain fees must be paid. Last year this company applied for an increase in capital, but for reasons which I shall not review at this time the application could not be proceeded with. My suggestion now is that the question of payment this year be referred to the committee on standing orders. I therefore move:
Whereas the proposed increase in capital stock referred to in section 2 of Bill No. 20, "an act respecting Central Finance Corporation and to change its name to Household Finance Corporation of Canada," calls for a levy, under standing order 93 (3), of $1,400;
And whereas in 1937 the sum of $1,400, being a levy for a proposed increase of capital stock, in connection with a similar bill which did not pass the house, was paid,
That the matter be referred to the standing committee on standing orders with instructions that they have power to make recommendations in respect of such levy.
Hon. CHARLES A. DUNNING (Minister of Finance):	I think consideration should
be given to what we are doing in connection with a matter of this kind. A corporation comes to this parliament and pays its fees in accordance with the rule. That does not carry with it the presumption that the legislation for which they are asking will necessarily pass this house. This house has devoted a great deal of time and attention in the last three years to the matter of small loans, and personally I think we are embarking upon a very doubtful precedent when we say to any corporation that if they pay fees to this house and a bill which they are proposing does not become law, they will be entitled either to a remission of the fees or to the application of those fees to some future bill of a similar character. It is on the matter of principle that I am objecting.


Henry Herbert Stevens: Another point in connection with the motion before the house is the fact that the motion refers the matter to the committee on standing orders "with instructions." The usual practice in matters of this kind is that after a bill has gone through the regular course, on certain occasions and for certain special reasons a motion has been entertained authorizing a rebate of fees which may have been
charged in excess of what parliament might consider to be fair. In my opinion this motion establishes a dangerous precedent, in that it asks that the committee on standing orders be instructed to do a certain thing or to give certain consideration to the matter. The same object could be attained by waiting until this bill has gone through its usual course and is before the committee on banking and commerce. Then a recommendation could be brought to the house and a motion made authorizing a rebate, if after due consideration it was felt that such rebate was justified. I am not now taking objection to a rebate, but I do say that this should be carefully considered before a precedent is established.


Mr. MACDONALD (Brantford):: This is not establishing a precedent. Probably the Minister of Finance and other hon. members of the house are under the impression that this company is asking for a rebate of all fees. I have not the exact amount before me, but the usual fees in connection with printing the bill, preparing the .petition and so forth, amounting to between $500 and $600, were paid last year. Under the rules, when a company increases its capitalization there is a certain fee payable over and above the usual fees for printing and so forth. It is not suggested that the fee for printing and so forth should be rebated. With regard to the suggestion made by the hon. member for Kootenay East (Mr. Stevens) probably the wording of the motion is not all that it might be. It does not instruct the committee on standing orders to make recommendations, but simply asks that they be empowered to make recommendations. There are precedents for waiving payment of the fees of a company which has had a bill before the house to increase its capital when through no fault of the company the bill was not .proceeeded with. But that is not the question I propose to discuss to-day. All that the motion suggests is that it be left to the committee on standing orders to make whatever recommendations they see fit to make in the matter.
I might say further that this company applied for power to increase its capital last year but the bill did not come before the house, for reasons which it is not necessary for me now to review. The banking and commerce committee had been considering the question of bringing in a general bill. The company's application was not considered last year because of the lateness of the session. I am quite willing to change the motion to read that the committee on standing orders
Central Finance Corporation

"consider" whether it is proper to make recommendations with regard to the payment of fees.


Ernest Lapointe: Is my hon. friend amending it to read "for the purpose of considering" instead of "with instructions to"?


John Alexander (1874-1948) Macdonald: Yes, Mr. Speaker, I shall be glad to amend the motion accordingly.


Mr. DUNNING:: I must point out that moneys once deposited in the consolidated revenue fund cannot be withdrawn by a motion such as this. There is only one way to get money out of the consolidated revenue fund, and that is by act of parliament duly passed and preceded by a message from his excellency. If the purpose is to remit the fees paid this year on account of something which happened in a previous year, that is a different question, but moneys could not be taken out of the consolidated revenue fund by means of a motion such as this, and therefore I submit, Mr. Speaker, that the motion is out of order.


Walter Edward Foster: Dropped.


John Alexander (1874-1948) Macdonald: I suggest-[DOT]


Some hon. MEMBERS:: Order.


Walter Edward Foster: Order.


John Alexander (1874-1948) Macdonald: I rise to a point of order.


Walter Edward Foster: I have declared the
motion out of order.


Some hon. MEMBERS:: Hear, hear.


John Alexander (1874-1948) Macdonald: I do not like to take exception to the Speaker's ruling, but I have acceded to the suggestion of the Minister of Justice (Mr. Lapointe) to make the motion read that the committee be asked merely to consider the matter. I agree entirely with the statement made by the Minister of Finance as to taking moneys out of the consolidated revenue fund. The motion, however, does not ask for a repayment of moneys already paid; but it asks that the committee consider whether or not the company should be required to pay the fees again this year.


Walter Edward Foster: I considered the point
raised by the Minister of Finance, and I was of opinion that the motion was out of order and could not be entertained, and so I called "dropped."


Charles Avery Dunning: I suggest, in the light of the discussion that has taken place-


Robert James Manion: And the applause.


Charles Avery Dunning: -that the mover of the motion consider the matter further. He has the opportunity to move anything he wishes in connection with the matter provided that what he moves is in order.


John Alexander (1874-1948) Macdonald: I suggest-


Walter Edward Foster: Order. The matter has
been dealt with.



TORONTO POST OFFICE BUILDING


[Stage Direction]
On the orders of the day:
Mr. H. G. CLARKE (Rosedale):: I should like to ask the Minister of Public Works (Mr. Cardin) whether his department intends letting contracts for the extension of the post office in Toronto in the near future. I have made similar inquiries on previous occasions but did not receive the answer I should have liked to receive. I ask, therefore, whether there is any possibility of contracts being let for this extension, which is of great importance to Toronto.


Hon. P. J. A. CARDIN (Minister of Public Works):: Mr. Speaker, some time ago a proposal for the extension of the postal terminal in Toronto was considered, with other proposals of a similar character from other parts of the country. Several public buildings of great importance have been under discussion, and it has been decided after consideration that for the moment at least the extension my hon. friend speaks of be not proceeded with but be given further consideration. We are at present giving the matter further consideration.



WAR MUNITIONS AND MATERIALS


[Stage Direction]
On the orders of the day:
Mr. T. C. DOUGLAS (Weyburn):: In view of the statement made in the British House of Commons with reference to the possibility of a ban on the export of nickel from empire countries to aggressor nations, does the government care to make any statement in regard to the attitude Canada will take on this question? .

Supply-Agriculture


Ernest Lapointe: Mr. Speaker, having foreseen this question I asked the Department of External Affairs to prepare a complete answer, which I shall be pleased to give to my hon. friend to-morrow.



FURTHER SUPPLEMENTART ESTIMATES FOR THE FISCAL YEAR ENDED MARCH 31, 1939

[Stage Direction]
The house in committee of supply, Sir Eugene Fiset in the chair.
Hon. CHARLES A. DUNNING (Minister of Finance):	Mr. Chairman, the object of
going into supply to-day is to enable the committee to deal with the supplementary estimates for the last fiscal year which have not yet passed the house. They were tabled quite a few weeks ago. It is necessary to deal with them now in order that a supply bill may be passed in connection therewith before May 15, to enable the necessary payments to be made on account of the last fiscal year.
DEPARTMENT OF AGRICULTURE Marketing services.
457.	Fruit and vegetable products-further amount required, $7,000.
Mr. LOCKHART:: May we have a little more detail as to this expenditure?


James Garfield Gardiner: 
[Stage Direction]
Item agreed to.
Special.
458.	To provide for outstanding claims in connection with material aid and agricultural assistance in the dried-out areas during the years 1936-37 and 1937-38, $225,056.43.
Mr. PERLEY:: Would the minister give us some information about this?


James Garfield Gardiner: This item is to provide for outstanding claims in connection with material aid and agricultural assistance in the dried-out areas during the years 1936-37 and 1937-38. These are amounts which were in dispute at the end of each of those seasons. The matter has been cleared up during the past year, and the necessary amounts to make these payments are now being voted. The first amount relates to a shipment of live stock, Saskatchewan, 1936-37, the balance due there is $1,581.26. Material aid in Saskatchewan for 1937-3S, expenditures under agreements in excess of amount made available at that time, $217,794.05. A shipment of live stock in Alberta, 1937-38-that is, the outward movement of live stock by large stock owners- approved for payment by treasury'' board February 14, 1939, $1,093.77. Direct relief, Alberta, 1937-38; expenditures incurred prior to April 1, 1938, but not submitted in time for payment, $4,587.35. That makes a total of $225,056.43.


[Stage Direction]
Item agreed to.
Special.
459.	To provide for feed and fodder relief in the province of Saskatchewan, purchased in 1937-38, but not distributed until after March 31, 1938, $790,350.77.
Thomas Clement (Tommy) Douglas: Is this feed purchased direct by the federal government or by the provincial government?


James Garfield Gardiner: All the feed and fodder was purchased by the provincial government, but payment was made by the federal government, in the relief areas of the west. This is to provide for feed and fodder relief in the province of Saskatchewan, purchased in 1937-38 but not distributed until after March 31, 1938. Therefore, under our agreement at that time we were not able to make that payment at that time, and the amount had to be voted during this past year in order to make the payment, and the agreement extended.


Mr. LENNARD:: Is this a revote?


James Garfield Gardiner: No.


[Stage Direction]
Item agreed to.
Supply-Finance

[Stage Direction]
J/GO. Departmental administration, further amount required, $5,000.
Mr. POULIOT:: Would the minister be
good enough to explain this?


Charles Avery Dunning: It was due, Mr. Chairman, to an unusual increase in the cost of movement of copper and silver coins during the year in question. The movement went much further than was provided for, due I believe to the imposition in some provinces of a form of taxation which involved the use of more copper coins.


Jean-François Pouliot: I thank the minister, I
assumed it was for that. But would he be kind enough to tell the committee where we can find any information about the sale of gold or bullion? I have perused the report of the Bank of Canada and found nothing in it, and found nothing also in the public accounts for the fiscal year ended March 31, 1938.


Charles Avery Dunning: The sale of gold? Of course the sale of gold does not arise under this item. I do not clearly understand my hon. friend's question as relating to the administration of the department. All gold produced in Canada is purchased by the royal mint, and is sold, and the proceeds, less mint charges and a charge for handling, are paid to the producers of the gold. I am not at all clear as to what, beyond that, my hon. friend wishes.


Mr. PELLETIER:: For various reasons
there are at times large movements of gold from European countries to the north American continent, particularly to the United States, and in certain cases to Canada, for the sake of safety or for other reasons which are not known to us. Undoubtedly such large movements of gold must entail expenditure for protection. When gold is brought here from some other country, is Canada put to any expense in protecting it, and if so what would be the expenditures in that connection?


Charles Avery Dunning: Gold which is shipped from other countries for safe keeping here carries on our part a charge more than adequate to reimburse us for any expense; in fact there is no expense. It is no more expensive to guard the gold of other people along with our own gold than it is to guard our own gold considered alone. The Bank of Canada receives a charge for safe keeping of such gold; and when the chartered banks of Canada receive it, as they do in some cases, I can only assume that they also make a charge for the purpose.


René-Antoine Pelletier: Naturally when there is a large shipment of gold extra protection would be required; possibly it is necessary to provide additional guards or to make special arrangements to carry the gold on special trains. I was wondering whether the expenses incurred in that respect are more than offset by the payments we receive for taking care of the gold.


Charles Avery Dunning: Oh, yes, definitely.


[Stage Direction]
Item agreed to.
1,61. Royal Canadian mint, including the Dominion of Canada Assay Office-further amount required, $16,629.21.
Jean-François Pouliot: Is the royal mint under the Minister of Finance, or under the Bank of Canada?


Charles Avery Dunning: The Minister of Finance.


Jean-François Pouliot: At what page of the public accounts of 1938 can we find anything about the royal mint or the movement of gold? In the first pages of the report signed by the deputy minister I see nothing about the royal mint or the movement of gold. I should like the minister to tell me if my sight is wrong or if there is something there. Perhaps I overlooked a part of the report concerning the movement of gold or the royal mint.


Charles Avery Dunning: I am quite satisfied, without having the public accounts before me, that the expenses of the royal mint are there in detail the same as those of any other agency of the government. I can quite conceive that the purchase and sale of gold may not be. I shall be glad to get a complete statement of the procedure with respect to the marketing of gold and bring it to the' committee when the main estimates of my department are under discussion, if that is a matter of interest. I do not have it before me now, and while I have a general knowledge of the manner in which these transactions are conducted, as I outlined a few moments ago, I should not like to go into details without having more information before me than I have at the present time. I cannot give my hon. friend the page, but I am quite certain that in the public accounts, account is rendered of the operations of the royal Canadian mint, exactly the same as with respect to any other department of government.


Jean-François Pouliot: That is all right, but here are the headings as given in the report of the department:
Classification of accounts, ordinary receipts and expenditures, special receipts and expenditures, government owned enterprises, capital expenditures, write-down of assets, the Canadian

Supply-Finance
National Railways Capital Revision Act, 1937, over-all deficit or increase in net debt, percentage distribution of revenues and expenditures, 1937-38, loans, Post Office savings bank, investments, sinking funds, advances to national harbours board, Canadian farm loan board, soldier and general land settlement, post-war housing loans, Dominion Housing Act, 1935 and National Housing Act, 1938; the Canadian Broadcasting Corporation, the Canadian National (West Indies)_ Steamships Limited, loans to provinces, Canadian National Railways, Canadian Pacific Railway Company, foreign governments, total decrease in active investments, how increase in net debt was financed-
And so on.
There is nothing with regard to the other matter. I hope the minister will look into the question, because it would be most interesting to follow the movement of gold in the country. Canada is a gold-producing country and the government has its hand on the whole production of gold. It is therefore important for us to know what quantity of gold is sold by the government outside Canada either to individuals or to companies. This is part of the national wealth and I am wondering why we sell our gold when every other country in the world is trying to get hold of as much gold as it possibly can.


An hon. MEMBER:: There is a market for it.


Jean-François Pouliot: Yes, surely we have a market for it; but there are things which it would be better for us to keep here. It would make no difference to my hon. friend's electors 'because the government would pay for it and we would have value for the money paid for the gold. My hon. friend knows that; he is too clever not to understand it. The matter being so important, I think that members of the House of Commons and parliament as a whole should be informed with respect to it. It -would be easy for the minister to give the information. All he has to do is to say the word to his deputy and we would have a complete instead of a half-baked report. I could say more about this matter but I shall have other opportunities.


[Stage Direction]
Item agreed to.
1,62. Old age pensions, including pensions to the blind-administration-further amount required, $1,500.
Mr. DOUGLAS (Weyburn); Will the minister explain this item?
Mr. DUNNING; It is the extra cost of examining applicants for blind pensions.
Item agreed to.
Subsidies and special grants to the provinces.
Special grants.
1,6S. Saskatchewan-further amount required,
Charles Hazlitt Cahan: Has this money or any
part of it already been expended under governor general's warrants?


Charles Avery Dunning: No; this is not a warrant.


Charles Hazlitt Cahan: Is this further amount of
$2,000,000 required for Saskatchewan included in the public accounts for the year ended March 31, 1939?


Charles Avery Dunning: It will be, if it is voted.


Charles Hazlitt Cahan: Will the accounts to March
31, 1939, when they are hereafter published, include this item of 82,000,000?


Charles Avery Dunning: Yes.


Mr.   CABMAN@: And will the minister have
to take into consideration this sum of $2,000,000 in his expenditures for the current fiscal year in regard to which he has already given estimates?


Charles Avery Dunning: The last fiscal year.


Charles Hazlitt Cahan: Then this $2,000,000 will
further increase the deficit for last year beyond what was estimated for the last year which ended March 31, 1939?


Charles Avery Dunning: No. All of the amounts included in these supplementary estimates were taken into account in arriving at the estimated deficit figure which I gave for the fiscal year. These supplementaries all relate to the last fiscal year and were taken into account.


Charles Hazlitt Cahan: That is what I wished to
ascertain.


Thomas Clement (Tommy) Douglas: It is not
very illuminating to say simply "Saskatchewan -further amount required." Will the minister tell us something about it?


Charles Avery Dunning: As the house will recall a similar sum was voted last year following an exhaustive examination of the affairs of Saskatchewan and the capacity of the people to pay having regard to the terrible conditions that prevailed. The house was convinced at that time that the $2,000,000 was a necessary grant. The same amount is now being proposed. I believe my hon. friend will be one of the first to admit that the conditions there as a result of the last crop have not improved the ability of the people to take care entirely of their own local and governmental expenditures.
Supply-Finance


Mr. COLD WELL:: I am sure we are all
glad to vote these amounts at the present time. There are districts, including some in my own constituency, where the people are unable to go on with their operations because they have not sufficient oil and seed, and I should like to have seen a larger measure of assistance given this year.


René-Antoine Pelletier: This item is undoubtedly based upon the report given by the Canadian Bank of Commerce, who investigated the finances of Saskatchewan at the request of that government and recommended to this government that some assistance should be given because the province could not meet its obligations. What was the recommendation of the Bank of Canada at that time? Was it to the effect that a certain grant should be given for that particular period or that the grant should be continuous?


Charles Avery Dunning: The bank outlined the
conditions prevailing at that time and made a recommendation.


René-Antoine Pelletier: What was the recommendation?


Charles Avery Dunning: The bank made the
recommendation to which my hon. friend referred, and it is not necessary to make a further examination but merely to follow up economic and financial developments in order to ensure that the conditions that prevailed at the time of the original recommendation still prevail. The government assures itself of that by means of continuous monthly reports from the province and constant examination of the financial condition. Nothing is watched more closely than this is.


René-Antoine Pelletier: I have no doubt that this amount is required and that the house should pass it. But the minister must know as well as I do that if it were not for the assistance which parliament is giving, the government of Saskatchewan would have defaulted on its obligations long ago. I believe that some kind of report was made in connection with the affairs of Alberta, and for some reason the Bank of Canada did not see fit to recommend that parliament should assist that province along the same lines as we are assisting Saskatchewan. That was one of the reasons why we felt there had been discrimination against Alberta. This $2,000,000 vote definitely proves that unless Saskatchewan had been assisted by appropriations made by this house they could not have carried on and met their obligations, and would have been compelled to default. The same thing was not done for the province of Alberta, which, for reasons

which we all know, was allowed to default on its obligations. Although we are glad to vote this amount, we must say that it is the greatest piece of discrimination against one province that could be enacted by this parliament. It is treating one province upon an absolutely different basis from another. Conditions faced in Alberta also were at times very hard, and the reasons given by the Bank of Canada why that province should not receive any assistance were very flimsy. The matter was discussed at the time and it is perhaps unnecessary to speak further about it now, except to point out that this certainly represents discrimination by this parliament.


Mr. SENN:: Does the federal authority specify the purposes for which or the manner in which this money can be expended?


Charles Avery Dunning: No.


Mark Cecil Senn: Do they require any accounting of it?


Charles Avery Dunning: It is an outright grant.


Leslie Gordon Bell: I should like the minister to reply to the hon. member for Peace River, who has stated that there has been discrimination in favour of Saskatchewan. The minister might briefly outline the conditions under which this grant was given to Saskatchewan, because I believe the conditions there were much more difficult than they were in Alberta.


Charles Avery Dunning: The best answer to the charge of discrimination is that the basis is the basis of need. I believe I am correct in saying that Alberta boasted a surplus in the last fiscal year; obviously therefore the need did not exist.


Mr. BLACKMORE:: Alberta did not boast a surplus in the year she defaulted.


Charles Hazlitt Cahan: From time to time I have had extracts sent to me from Saskatchewan papers, although I have not them before me at present-containing not only editorial references but synopses of addresses made by good Liberals in Saskatchewan-in which it is asserted definitely in one or more cases, and suggested in others, that the representatives of electoral districts in the eastern provinces had been opposed-vehemently opposed, in some cases-to the appropriation of federal funds for the alleviation of distress, in Saskatchewan particularly, arising out of the drought and shortage in the wheat crop and for relieving the misery and suffering that ensued therefrom. I wish to state here on my responsibility as a member of the house that I do not know of any such agitation in the east.

Supply-Finance
So far as I have been concerned, the sole question has been as to the need of those provinces of the middle west, and as to the careful supervision of the appropriations made for the purpose of alleviating that need and distress. I think the time has come when members of the house who know the real situation and who know that in the eastern provinces there is no hostility or enmity to the west, should make that fact clear, and also that the members representing the eastern electoral districts of Canada have never, so far as I can recall, taken a hostile position in this house. In my last election in the constituency of St. Lawrence-St. George the chief argument made against me by my political opponent was that I had voted in favour of fixing a price for wheat and in favour of assuming certain obligations for the purpose of relieving the needs and distress of the people of the western provinces. Now I say to my hon. friends that I have no such feeling of hostility to those provinces. I believe that in times of distress in the middle west it is the bounden duty of the east to come to the relief of that distress in so far as may be necessary. And when we do so with a full heart, and frankly assume the responsibility in this house of so doing, I think our colleagues from the western provinces should at least relieve us from the suspicion of having shown any enmity or hostility to the west when these appropriations were submitted to the house.


Charles Avery Dunning: I have previously given expression in the house to views similar to those expressed by the hon. member for St. Lawrence-St. George. It has been my duty now for four years to present to this house various measures calling for the expenditure of enormous sums of money occasioned by the dire situation of that part of our population living between the great lakes and the Rocky mountains. To my mind one of the best proofs that Canada is a nation and has a national outlook has been the manner in which the representatives of the people from all parts of Canada have received our proposals with regard to such matters from time to time. If a statement of that sort will be of any effect in getting rid of the idea that hon. members from the east, no matter to what party they belong, have been ungenerous in their attitude towards the needs of the west, then I take great pleasure in making it; because nothing gives one greater confidence in the future of this country than the unanimity with which this house meets the problems of dire adversity in whatever part of Canada they may occur.


Mr. MacNICOL:: I want to add a word in support of what the hon. member for St. Lawrence-St. George has said. I too have been rather meanly written up in certain western papers, in editorials and letters, because supposedly I was not in sympathy with the voting of money asked for the rehabilitation of the west. There is no basis for any statement that I am opposed to assisting the west to the limit. On the contrary I have supported every vote that has been asked for in this house for rehabilitating the west. As an eastern member I resent the editorials in certain western papers and the scurrilous letters that have appeared in them in reference to my right to ask any question I see fit in reference to any vote. But while exercising my right at all times to ask any question I see fit in reference to any vote, I have not on any occasion opposed any vote to the west. I should like the Minister of Finance to go further and ask the western papers to desist-


Mr. HOWE:: Ask them yourself.


John Ritchie MacNicol: They will not do it for me.


Charles Avery Dunning: I never ask a newspaper to desist from anything.


John Ritchie MacNicol: Someone should ask them to be a little bit courteous and not misrepresent us in regard to the support that the west has always received from the east.


Mr. COLDWELL:: I do not think western papers or western members have criticized eastern members of the house for the attitude [DOT] they have taken in regard to these matters. My observation has been that when the people of the east were appealed to, during the difficult times through which we passed, they responded splendidly to those appeals. But what we have criticized, both as members and as newspapers, is a fiscal policy which we believe favours the interests of the east and penalizes the people of the west. Because of that possibly the opinion has grown up that the western papers and members are sometimes critical of the attitude of eastern people towards these great problems. May I ask the committee to distinguish between those two things. If hon. members do that I think they will realize that western people have been grateful for the assistance given, but that we feel that the fiscal policies of parliament have favoured the east and penalized the west in days gone by, and made the west unable to withstand the terrific economic circumstances under which it laboured.


Mr. LANDERYOU:: Not only have the fiscal policies been inimical to the interests of western Canada, as the hon. member for

Supply-Finance

Rosetown-Biggar suggests, but trade, tariff and monetary policies and many other factors have entered into the matter. In that connection I should like to ask the minister a question. Was that grant to Saskatchewan to prevent default or to assist in agricultural distress?


Some hon. MEMBERS:: Carried.


John Charles Landeryou: I should like to have an answer.


Charles Avery Dunning: The grant to Saskatchewan is for governmental purposes. We do not earmark it for any purpose.


John Charles Landeryou: "Governmental purposes" naturally includes their obligations. Is this vote made with a view to assisting them in meeting their obligations, or just for agricultural-


Charles Avery Dunning: For the purpose of assisting them to meet their obligations of every kind, except maturities of provincial debt.


John Charles Landeryou: Then I would ask the minister another question: Did this not assist them to get into a financial position which would enable them to meet their obligations better than if the money had not been granted to them?


Some hon. MEMBERS:: Carried.


John Charles Landeryou: There has been a
question of discrimination. Alberta charges discrimination, and we charge discrimination. We say that Alberta has not been dealt with as fairly as other provinces of western Canada. We are not opposed to assistance being given to other provinces, but we are opposed to discrimination. We are opposed to members from eastern Canada rising in their places and saying that they are assisting western Canada, from the great lakes to the Rocky mountains; for they are giving very little assistance to Alberta. In fact the cost to that province of the trade, tariff and monetary policies of this government totals a good deal more than the assistance it is given. That does not hold true in respect of other provinces of western Canada.


[Stage Direction]
Item agreed to.
Charles Avery Dunning: I understand there is an arrangement to proceed with the budget debate, and I do not wish to get in the way of it. I would therefore move that the committee rise, report progress and ask leave to sit again. We should sit again as soon as possible.
Progress reported.



THE BUDGET


[Stage Direction]
The house resumed from Monday, May 1, consideration of the motion of Hon. Charles A. Dunning (Minister of Finance), that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
Mr. JOSEPH NEEDHAM (The Battlefords) :: Mr. Speaker, when the house rose
last night I was dealing with one item of expenditure in the budget, namely the cost of loan flotations. In last year's budget that item was a cost of 84,555,000. The estimate for this year is $4,975,000. In the discussion last night I showed that one loan floated in November last for $40,000,000 was bought at a discount of $1,100,000, and that the expenses in connection with it were 8808,367.98. The people of Canada received a credit from that loan of $38,900,000 out of a loan of $40,000,000, at three per cent for thirty years.
What I wish to impress upon hon. members is a comparison of the amount of money or credit we get from a loan flotation of this kind, and the amount of money required to redeem that loan. In other words there was created a credit to the people of Canada of $38,900,000, and we are expected to pay back $40,000,000 of principal and $36,000,000 of interest. It will be noticed that we received $38,900,000 but that we are expected to pay back a total of $76,000,000. Will someone tell me where that $37,100,000 is to come from?


Mr. GRANT:: Alberta.


An hon. MEMBER:: Another country heard from.


John Horne Blackmore: Another brilliant
interruption! My, but he is an honour to his constituency!


Joseph Needham: That is the problem I want parliament to consider, if at all possible. There is a matter of $37,100,000 more called for than was put into circulation. We can readily pay back the $38,900,000 lent to us for our use, but I do not know where the $37,100,000 is to come from. It was not created; it was not put into circulation; and yet the loan company is demanding that much back. But it is not there, and the taxpayers cannot create it in the specie that the loan company will accept. So I say that by this system the government is placing the tax-

The Budget-Hr. Needham
payers of to-day and those of future generations in an impossible position. Surely there is some way that that can be overcome. As I said last evening, the extra amount that is demanded of the people from loans which have accumulated since confederation is the amount of our debt at the present time. I have no hesitation in saying that ever since confederation the people of this country have met their obligations, whether by federal, provincial or municipal borrowings, as they came due, for the amount of money they have received. But the interest is impossible, it is not there. The taxpayer cannot create it, and yet he is expected to pay back in specie that which he never received.
I am going to suggest one way out, and I know of no other. If any hon. members know of a better way, I should like them to tell me. It will be necessary to provide in some way the $37,100,000 that this loan calls for in specie. It will be necessary for that amount of money to be put into the hands of the taxpayers without any debt being attached to it, or they will never meet their obligations in full. I think it is misleading to speak of refloating a loan when it becomes due. In reality we are floating a loan to pay an accumulation of interest; hence our ever-increasing debt. If this country is good for the issue of a $40,000,000 loan, surely it is good for the issue of $40,000,000 in currency. The difference between the bond and the bill, and the only difference I can see, is that the bond allows the money-brokers to collect twice as much, while the currency pays only those who contribute directly in some useful way. The people of this country constitute the credit of the country. If that credit is good, why cannot the people have the full benefit through receiving non-interest-bearing currency?
This system is vicious and wicked. Proof of it is to be found in this and any other country working under the system. It is manifest everywhere. There would be no advantage in changing the type of government. It would make no difference whether the government were Liberal, Conservative, Cooperative Commonwealth Federation, Social Credit or of some other type; under this system you would have the same results. If you can show me a country that is making progress in relieving distress and unemployment without having tackled the money system, I should like to know its name. I do not know of one anywhere. I say in all sincerity that the people everywhere are considering this matter as never before. Some countries and some governments are making 71492-2174
attempts to solve this problem, and they are meeting with a measure of success. I believe the day is coming when the problem will be solved.
The present government is guilty of, I was going to say, a serious crime in allowing this system to continue, especially having regard to the promises made to the electorate by the Prime Minister (Mr. Mackenzie King) during the last federal election. He promised the people that he meant to control it. As far as this present government is concerned, that makes the situation doubly serious. I fancy that when the people express their verdict they will say of the head of this government as was said to a ruler of long ago, " Thou art weighed in the balances, and art found wanting."
I should like to close by giving two quotations. The first is from the remarks of the Prime Minister in Saskatoon on September 21, 1935, as follows:
Canada is faced with a great battle between the money power and the power of the people, a battle which will be waged in the new parliament. I plead for a sweeping Liberal victory to carry out my policy of public control of currency and credit.
Until the control of currency and credit is restored to the government all talk of the sovereignty of parliament and democracy is idle and futile.
That shows that the Prime Minister knew the problem that was facing this country. We are now in the fourth session of this parliament and I leave the public to judge the results. The next quotation I wish to make is from A Prince of the Captivity, by our own governor general, Lord Tweedsmuir, published in 1935.


Walter Edward Foster: I do not think the hon. member has the right to bring into the debate the name of tl e representative of the king.


Joseph Needham: Can I not make the quotation?


Walter Edward Foster: I do not think the hon. member is within the rules of the house in quoting the representative of the king during the debate.


Joseph Needham: I shall say John Buchan, then.


Walter Edward Foster: The hon. gentleman is still out of order.


Joseph Needham: May I give the quotation?


Walter Edward Foster: No, it is against the rules of the house.
The Budget-Mr. Stevens


Henry Herbert Stevens: public finance. Undoubtedly there has been cheaper money in the last seven or eight years, and, without question, considerable savings have been made in connection with public financing. I do not intend to go into detail, but I want to point out that to the extent that the savings of the Canadian people have been diverted from private enterprise into government financing, expansion of activity from a private industrial standpoint has been impeded. Of the eight billion dollars of public debt, federal, provincial and municipal, $1,600,000,000 is held abroad and $6,400,000,000 is held in Canada. Until recent years a substantial proportion of that $6,400,000,000 was held abroad; and you cannot divert a large proportion of the savings of our people into public finance in the way of the purchase of government bonds, and take it away from private financial purposes, without doing injury to the expansion of industry. I am not going to discuss this point in detail, but it is one of the major factors operating against the revival or the extension of industrial activity in this country, and one of the things which ought to be taken into consideration.
I know that the statement is made, as it was made in the banking and commerce committee this morning and on other days, that the ownership in Canada of Canada's debt constitutes a valuable asset of the Canadian people. There is something to be said for that. But I question whether it has been in the interest of Canadian industrial expansion and of Canada as a whole, to have repatriated within recent years, as the minister pointed out the other day, some five or six hundred million dollars of Canadian loans. I question the advisability of that policy. The fact remains that, of the debt of Canada, $6,400,000,000 is held in Canada and only $1,600,000,000 outside of the country.
The minister referred to the housing scheme and other measures. He prophesied last year that they would result in-to use his own words-a "vigorous revival." We have had no vigorous revival. This year, unfortunately, the minister was forced to give a doleful budget. It has been referred to in the country as a sad document; it is looked upon as almost an apology for present conditions. Such a situation warrants our looking into the factors which have operated to bring it about. As a matter of fact the government's policy of the last four years has definitely failed. We have had trade increases, but little or no increase of employment. Some increase can be shown by juggling figures, but the fact remains that to-day over a million people are on relief. That is the answer to the government's

contention. We have cheap money, but the debt of the country has increased over $120,000,000 in the last three years. Not only is that so, but in the last three years the amount of taxes collected has been annually about $150,000,000 more than it was a few years ago. So that in spite of cheap money you have an increase of debt and an increase of taxation; in spite of increase of trade you still have a million people on relief; and in spite of your pitiful housing policy-well, I think the less said about that the better, because it is virtually a joke so far as it presumes to deal with the housing situation in Canada. Let me just point this out to some hon. members who smiled when I said that. The normal housing and construction expenditure of Canada is $300,000,000 a year.


Charles Avery Dunning: The whole of the construction-not housing alone.


Henry Herbert Stevens: I said, housing and construction; I discriminated between the two. In 1929 it was over $500,000,000. That was the peak. In the last few years it has been running along from $60,000,000 to $150,000,000. It is safe to say that it is at least fifty to sixty per cent below normal. Yet in four years we have this magnificent sum of $30,000,000, of which the government contributed a little over $6,000,000. I say that that is a trifling thing, it is not meeting the situation at all, and at the present ratio of contribution it never will meet the situation.
The minister called for an improvement or acceleration of leadership in private business. I agree with him. I had the temerity to say a few months ago that I thought there was a lack of leadership in industry, in finance and in politics. By "politics" I meant, of course, government politics, leadership in government; there was a lack of leadership. By that I do not wish to imply that our great industrialists, the leaders in industry, are not competent within their own fields-not at all. I could name some of our leading industrialists who are outstanding men of great merit. What I say, however, is that there is no coordination of effort within industry, there is no leadership within particular branches of industry. The Minister of Finance knows the tragic problem in the pulp and paper industry. I know what it is in the flour milling industiy and he knows as well. He knows of the lack of leadership within groups of industry, leadership that is needed in order that we may make some progress and a real impact upon the problems of the day. And there is lack of leadership in government. The government comes before parliament this session and through the mouth of the Minister of Finance

The Budget-Mr. Stevens
virtually confesses that it has failed to enlist leadership on the part of industry and finance in the country. That is the substance of the budget speech, and you cannot escape it. Not only in the words of the Minister of Finance has there been an appeal for cooperation on the part of private interests-an appeal he made last year also and the year before-but in the words of the Minister of Labour in every session since we have been here, in 1936, 1937, 1938 and again this year, reference has been made to the lack of cooperation from private interests. They have failed to secure that cooperation. I am not saying at the moment that it is their fault or that it is the fault of industry, but the fact is that there is no definite cooperation.
This condition is not peculiar to Canada, because I hold in my hand the monthly review of the Midland bank of Great Britain, one of the finest economic reviews of the kind published in the world. May I read a few extracts, not particularly for the purpose of making comparisons, but to show that the problem of enlisting the cooperation of private interests with government, or the linking of the two together, is of paramount importance in Great Britain as well as in this country. The words I am about to quote will show that the citing of disturbed conditions in Europe is no answer to this problem, this lack of cooperation between government and private interests, either in Canada or in the motherland.
The Midland bank in its leading article, Financial Policy and Business Confidence, says among other things:
There can be no doubt, however, on one point at least: that business in general is suffering from the effects of widespread hesitancy, especially in the field of private investment.
The minister will entirely endorse that. Now listen:
In conditions like these,-
Reviewing conditions in Great Britain just as the Minister of Finance did in Canada:
-some extraneous force is required to lift confidence sharply to a level at which it will give the needed impetus to new investment. We need not look to providence or to striking events -or absence of feared events-in international affairs to provide this quickening influence;


I pause there. We need not look to providence or, as an excuse, to the financial and political barbarism of Europe. We need not look there for an answer to the question why private interest has not confidence and is not pressing forward.
-indeed, one of the unfortunate results of the weakness of the market lies just here, in that far too much attention is paid to international
politics, with all its uncertainties, susceptibility to dramatic changes, and defiance of interpretation. To a large extent the strengthening influence is within the power of our own authorities-
That is the point I wish to emphasize. This is a statement of the Midland bank with regard to the situation in England, which is less inimical to the interests of the people than in this country-because there is a good deal of activity over there. It does apply here as well, however-


Mr. HARTIGAN:: You evidently think the banks are speaking in the interests of the people.


Walter Edward Foster: Order.


Henry Herbert Stevens: If the hon. member will address the chair he will be within the rules of the house. To continue:
To a large extent the strengthening influence is within the power of our own authorities to direct. ... In one important respect there is at present no ground for complaint. We have pointed out that the reduction in bank deposits in recent months does not signify deflation; indeed on the simple facts of bank cash and deposits there is scope for considerable reexpansion.
The hon. member for Vancouver-Burrard (Mr. McGeer) will find some support for his theories there, and while I do not go all the way with the hon-. member in this regard, I think he has got hold of what is lying at the root of our trouble, that is, the lack of a proper application of the credit machinery of the country to the needs of the people. The article goes on-and I want to read this part because it reflects questions that are in the minds of many hon. members:
. . . Why, then, do the banks not act in this manner,-
That is, in the matter of more credit.

with results so obviously to be desired from all points of view, including their own? Clearly, there is no reason to suspect them of being merely " cussed,"-
In other words, it is not cussed obstinacy on the part of the banks; and in this regard I do not believe that the Canadian banks are withholding credit to-day deliberately or stubbornly. I believe they are just as much puzzled over the situation as those who are critical of the banks. That, however, does not alter the fact that there is not being released to the people of Canada at this time that degree of credit which will enable an expansion of industrial activity to proceed in Canada. It is true that the banks say that those who will go with reasonable security can get all the advances they want; but the trouble is that growing out of the cataclysm of the last ten years thousands of people who in normal
The Budget-Mr. Stevens

times would be equipped with security find themselves to-day without that sufficiency that would warrant bank loans under present conditions. But again I say, that is no answer to the necessity for some action that will overcome the difficulty.
-for they are no more likely than other business undertakings to cut off their noses to spite their faces. The answer to our question lies in the shortage of bills.
I should like to translate that into Canadian terms, because they are referring there to the great bill market of London, which does not apply to Canada, except to the limited extent that the Bank of Canada and the commercial banks buy or sell treasury bills. The point does not apply to the same extent in Canada, but I would translate it in these terms: The answer to the question lies in the availability to the banks of good commercial paper which the banks may buy in order to extend the credit of the country. And that is the problem or one of the problems.
I find in the minister's statement one bright ray of sunshine, and I will give him credit for it. I refer to the income tax exemption on capital expenditures, provided capital expenditure is made during the coming year. While I give him some credit for that, at the same time I say, with all courtesy I hope, that I think it is a most amateurish suggestion, ill-considered and hasty and somewhat wild.


Charles Avery Dunning: But apart from that it is good!


Henry Herbert Stevens: Apart from that it is not too bad. The good part is that it does give some indication that the minister wants to do something to break this deadlock, and to that extent I congratulate him.


Ernest Lapointe: The ray of sunshine is rather obscured.


Henry Herbert Stevens: Instead of following this method, why not reduce the corporation income tax by one or two per cent, and distribute the reduction right across the country to all industries that are at present burdened with the income tax? Industry to-day is handicapped by two methods of taxation, the sales tax and the heavy corporation income tax. I am not referring to the sales tax in this instance as a burden on the consumer; that is another question. But there are many industries in Canada that are " in the red," or unable to earn profits or pay dividends, because of this heavy burden of taxation.


Charles Avery Dunning: Surely my hon. friend does not mean that.


Henry Herbert Stevens: I certainly do.


Charles Avery Dunning: The income tax applies only if they do make profits.


Henry Herbert Stevens: No, I say income tax and sales tax. I was referring in that particular statement to the sales tax, which, as the minister knows, is charged irrespective of whether they earn an income or not.


Charles Avery Dunning: And is invariably passed on.


Henry Herbert Stevens: It is not passed on on the invoice as it originally was; in practice generally speaking it is absorbed. Of course these taxes are passed on, just like rent or light or real estate taxes or any other overhead charge. But the point I am making is that the eight per cent sales tax against industry is definitely an obstacle in the way of the progress of industry in this country, a serious handicap, and that is added to by corporation income tax. Further, in my opinion the whole tax structure of this country is very much like Topsy- it "just growed." During the war years I remember very well the difficulty with which we were confronted in raising revenue, and we put on an income war tax, surplus profits tax, sales tax, luxury tax-we put on any kind of tax that could be imposed that we thought would bring in revenue. Some of these taxes have been abandoned, but most of them have been continued. Our present taxation structure has no scientific basis. One of the first things the minister should do is to review the whole tax structure of this dominion with a view to releasing industry from such handicaps so as to enable it to function in a normal way and stimulate its expansion.
Coming back to the more pressing domestic problems, and having particularly in mind unemployment, which is a matter of great concern to all of us, there is a false philosophy dominating our national economy-and of course the government of the day must be held responsible for it. That false philosophy is that the relief of unemployment is primarily the responsibility of the municipalities and the provinces, but primarily the municipalities. Now we know-I need not emphasize it-that municipalities get their revenue chiefly from real estate taxes-I suppose to the extent of seventy or eighty or ninety per cent; and it is financially impossible for municipalities to carry this burden. A few minutes ago we voted millions of dollars of supplementary estimates, to say nothing about the main or supplementary estimates for the coming year, giving these sums to the provinces without any control or direction or supervision. Why? Because the provinces and municipalities found themselves in such distress that they could not function as public bodies.

The Budget-Mr. Stevens
In my opinion unemployment is due to nation-wide, indeed one might say worldwide, causes. It is not due to causes within municipal or provincial control. Improved communication, mechanization, scientific discovery and invention are all contributory causes of present-day unemployment. As far as I know, neither the United States nor Canada-and I believe this is true of other countries, although perhaps not to the same extent as of these two-have definitely or seriously faced this problem.


Charles Avery Dunning: My hon. friend could gc even further and say that no country with a federal system has got down to it at all.


Henry Herbert Stevens: Well, I accept that statement; but we have not faced the fact that much of our unemployment is due to definite causes that are here to stay. And we are not looking these causes in the eye or seeking to correct them.
These things that I have mentioned'-improved communications, mechanization, invention, scientific discovery-are all good in themselves, but they are deadly in their effect. Indeed we are living in a new economic era, and unless we as a country, led by the government, this government or some other, face this condition and seek to adapt our machinery, our practices and customs, our taxation, our leadership, to the new economy, we are doomed to failure as sure as the sun will rise to-morrow. But the attitude of the government is stubbornly to refuse to take the responsibility for unemployment. The first step is frankly to admit that unemployment is a national problem. I am not of course including those indigents who are normally present in any community and for whom we are all very sorry. But I say that industrial unemployment or unemployment due to the causes which I have mentioned is a responsibility that should be assumed by the federal authority. Free trade, supply and demand, Gresham's law-these shibboleths will not help us. We have heard these things referred to as though they were a safe guide through troubled seas. They are all mere incidents. There is no such thing as the law of supply and demand operating in a normal sense to-day. Take your external trade-I have discussed this before, but it is well to keep it in mind- nearly every country in the world has erected arbitrary and artificial barriers to trade. They are there; we cannot influence them; there is no possibility of removing them, no matter what we do. So that to talk about the law of supply and demand or the free movement of trade is simply evading the issue.
We have heard a great deal about the expansion of external trade, but we shall never save this country, we shall never overcome unemployment in our industrial centres, simply by increasing the export of raw material. Analyse the list, whether under the treaty with the United States or the trade agreement with Great Britain, and we find wood pulp-yes there is newsprint-timber, zinc, lead, copper, nickel, gold in ingots-we are exporting our gold to-day just as we do pig lead or tin or zinc, just as a commodity; we are making no use of it, shall I say, as a great international medium. Our industrial difficulties in Canada will never be overcome merely by expanding the exports of raw materials while at the same time treating industrialists more or less as if they were criminals; because that is pretty nearly the attitude, as one discerns in listening to the debates, of those who sit behind the government at the present time. One would think it was a crime to have a prosperous industry.
I am not one who advocates undue protection or unduly high protection for industry. But I do say this, that if we are to preserve industrial life in this country and provide employment for those in our great centres who are unemployed, we have to recognize external and internal conditions, and provide such reasonable protection as would enable an industry to live. And in addition to that we have to review our outmoded and obsolete tax system, and lift off the shoulders of industry some portion of the burden- not in the way the minister has suggested, which is a sop, shall I say, or a mere gesture m the right direction. I will read what the Monetary Times has to say about it, when it refers to that particular part of the budget:
Most important and far-reaching of the budget proposals is the offer to all industrial concerns whereby ten per cent of the cash value of all expenditures on plant extension or replacement, purchases of new equipment or betterment of old which are made between the dates of May 1, 1939, and April 30, 1940 may be deducted from income tax payable over the next three years. That means that an expenditure of $1,000,000 on new plant and equipment will give the company the right to deduct $100,000 from its corporation income tax payable over the ensuing three-year period, or $33,333 per year.
Then the Monetary Times goes on to give the illustration of a company contemplating a $15,000,000 extension, which will give them $1,500,000 credit, or a right to deduct from their income tax $500,000 a year. This may, I say, have some value in stimulating the investment of money in capital goods. But it will not touch the hundreds of thousands of industries which could give employment
The Budget-Mr. Stevens

and extend their operations if there were some release from the burden of corporation income tax-and probably it would not cost the government any more. Because here is one concern alone which will benefit to the extent of $1,500,000. There will be two or three other concerns-


Charles Avery Dunning: I wish it were true, but it is not true-so I am advised. There is no such thing.


Henry Herbert Stevens: I hestitate to accept the minister's statement-not that I dispute his veracity in the least. But I think it is true, and I have reason to say I think it is true. I have nothing against the concern that is going to spend it.


Charles Avery Dunning: But they advise me that they cannot, that is all.


Robert James Manion: The president of one
company the other day said they were going to spend $10,000,000. I saw it myself.


Charles Avery Dunning: I am glad to hear it, if it is true.


Robert James Manion: But they were going to spend it anyway, without the assistance.


Henry Herbert Stevens: And so am I glad to
hear it. But what I am trying to remind the house is that two or three large concerns will benefit. While I like to see extensions, yet I say it would be infinitely better to have this relief spread about so that all industrial activity might benefit.


Charles Avery Dunning: The smallest industry
can benefit equally, you know.


Henry Herbert Stevens: Yes, but what does it
amount to?


Walter Edward Foster: Order; the hon. member has spoken forty minutes.


Mr. SLAGHT:: Would the hon. member
permit a question?


Henry Herbert Stevens: Yes.


Arthur Graeme Slaght: I understand the hon.
member to say he is in favour of a reduction of the income tax on corporations; am I right?


Henry Herbert Stevens: Well, I do not like to put it in those words. I said that I was in favour of a lowering of the corporation income tax- that is, that applies to the income earned by industry or corporations. If I may say so to my hon. friend, of course it does not affect the income on dividends earned from a corporation by shareholders. I am not talking about that.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major A. R. Thompson, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Honour, the deputy of His Excellency the Governor General, desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly the house went up to the Senate,
And having returned,
Mr. SPEAKER informed the house that the deputy of His Excellency the Governor General had been pleased to give in His Majesty's name the royal assent to the following bills:
An act to amend the Department of Transport Stores Act.
An act to amend the Foreign Insurance Companies Act, 1932.
An act to amend the Canadian and British Insurance Companies Act, 1932.
An act to give effect to a convention for the unification of certain rules relating to international carriage by air, to make provision for applying the rules contained in the said convention, subject to exceptions, adaptations and modifications, to carriage by air which is not international carriage within the meaning of the convention, and for purposes connected therewith.
An act respecting the Canadian National Railway Company, the Ontario and Quebec Railway Company, the Canadian Pacific Railway Company and the Toronto Terminals Railway Company.
An act to create a national film board.
An act to amend the Dominion Trade and Industry Commission Act, 1935.
An act to amend the Meat and Canned Foods Act.
An	act	to	amend the	Agricultural Pests'
Control Act and change the title thereof.
An	act	for	the relief	of Jean Winifred
Hunter Urquhart.
An	act	for	the relief	of Sarah Theresa
Norman.
An	act	for	the relief	of Helen Kathleen
Yuill.
An act for the relief of Constance Lillian Talbot Mais Pocock.
An act for the relief of Edith Cecilia Shaw Mayne.
An	act	to	change the	name of Ancient
Foresters' Mutual Life Insurance Company to Toronto Mutual Life Insurance Company.
An act to incorporate the Canada Board of American Missions of the United Lutheran Church in America.
An act respecting the Sterling Insurance Company of Canada.
An act to make provision for the Sealing of Royal Instruments.
An act to amend the Dairy Industry Act.
An act respecting the Chief Justice of Canada.
An Act to assist in the alleviation of Unemployment and Agricultural Distress.
An act respecting the Toronto Harbour Commissioners.
An act to Incorporate the Associated Canadian Travellers.

The Budget-Mr. Bothwell
An act to encourage the Improvement of Cheese and Cheese Factories.
An act respecting Small Loans.
An act respecting the New Brunswick Railway Company.
An act to ratify and confirm the agreement respecting the joint use by Canadian Pacific Railway Company and the Midland Railway Company of Manitoba of certain tracks and premises of Canadian Pacific Railway Company at Winnipeg, Manitoba.


[Stage Direction]
The house resumed consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
Mr. C. E. BOTHWELL (Swift Current):: Mr. Speaker, when one listens to addresses from hon. members opposite one is inclined to tear up the notes he has made and simply answer some of the arguments advanced. To-day, however, I intend to deal with just one paragraph of the address of the Minister of Finance (Mr. Dunning). But before doing so, may I congratulate him upon his restoration to what looks like reasonable health, and also upon the manner in which he delivered the budget address. I particularly appreciated the audacity, if I may use that term, with which he addressed industry in Canada. I believe there is much in those paragraphs that industry could take to heart, and thereby cooperate with the government to solve some of the difficulties confronting us.
The paragraph to which I make special reference and which I shall quote is found at page 3151 of Hansard, as follows:
Reports from the tariff board I have laid on the table to-day, respecting furniture, cigars, cocoa matting, starches and dextrines, worsted weaving yarns, coke, radios and tubes, and automobiles. The report on the radio industry, apart from recommending free entry of certain parts, refers to the bearing of the Patent Act upon the investigation. In this connection the board states that "radio tube manufacturers in Canada have taken full advantage of the protection afforded to them by the terms of the Patent Act." The board expresses the opinion that selling prices of radio tubes in Canada to all classes of purchasers should not be in excess of the recognized list prices in the United States, plus all charges on importation. To that end the board suggests that the proposed reduced duties on parts, unless "immediately reflected" in the published selling prices of Canadian radio tubes, be rescinded. In giving fuller study to other phases of this report than
those relating strictly to tariff rates, the government will have to consider the relation thereto of the provisions of the Patent Act respecting the abuse of exclusive rights under patents.
For some years I have been wondering whether tariff reductions were as important as some other things we might do in connection with the industrial life of this country, and also for just how long the manufacturers and industrialists of this country have been taking advantage of our patent laws to exploit the Canadian public. I was intrigued by the remarks made by the former Secretary of State (Mr. Cahan) before the senate committee of 1935 which was considering amendments to the Patent Act. He said:
The fact is that the administration of the patent office of Canada has in recent years become a matter of very grave criticism not only in this country but in other countries, and some measures of reconstruction and reorganization of the office are necessary.
What is brought to my attention from day to day and week to week is the danger arising from these monopolies (patents) which are established here, unless there is some reasonable, equitable and impartial control.
At the economic conference which was held in Canada in 1932 we had a large number of English engineering firms represented and it was my duty to deal with some of those representatives. They were complaining that our purchases of engineering machinery from England were very limited. And when you inquired into it you found that the patents under which that engineering machinery was manufactured in England had been resold or assigned to American manufacturers . . . with exclusive rights as to Canada, and Canadians were invited to buy in Ohio, or in Pittsburg, or from some high building on Broadway, because the article could be purchased for use in Canada from the United States.
As I look over the situation, with my experience of the last five years, I see the industrial life of Canada held in the grip of the holders of some 200,000 patent monopolies, all of whom obtained similar patents in the United States, or in Germany or England, and none of whom have any strong incentive to produce in Canada, if they can make use of the manufacturing facilities of the neighbouring republic or of the other foreign states.
I do not want to pass any reflections, but I do not think the Canadian patent office has been efficiently administered. I think that in the past thirty years many patents have been granted which never should have been granted. There has grown up in Canada an idea that the patent office is a revenue producing branch of a department of government. It should not be administered solely as a revenue producing branch. It should be thoroughly equipped and reorganized, but the difficulty is to produce officials who are thoroughly competent at the salaries which the parliament of Canada is willing to pay for such services.
But I think you should revise this bill on the clear understanding in view, that the patent office is to be reconstructed, reorganized and reformed. Having that understanding in view,
The Budget-Mr. Bothwell

I think you should proceed to consider what should be enacted to ensure that legitimate industry in this country may be protected and that all foreign combinations which seek to control the domestic market of Canada may be duly restricted and restrained.
Following that investigation the Patent Act was amended, but the amendments, so far as I understand their application, were, with one exception, of no special benefit. That one compelled an applicant to make application for patent in Canada before a patent was granted to him in some foreign country. Prior to that, and under the act as it existed before 1935, an applicant could make his application here at any time within two years after the patent had been granted in the foreign country. That amendment did something to improve the situation.
The United States has been up against somewhat similar conditions. On December 1 last a committee was set up in the United States to study its patent law. It found that not only was the patent law subject to abuses of various kinds by patentees themselves, but that the act lent itself to the formation of monopolies in trade which were so restrictive that they had a very bad effect upon United States industry. The committee which was set up is known as the temporary national economic committee. It held its first sittings in December, 1938. I shall refer to some clippings in connection with its investigation, first quoting a statement of the United States department of justice:
Whether the patent system as it has developed around the present laws has served its purpose of promoting the progress of science and the useful arts, or whether the "legal monopolies" created by the law have been used to restrict freedom of opportunity, foster rigid price levels, increase or decrease the demand for manufactured products, withhold adequate compensation from inventors, and finally, whether they have been used to "circumvent the fundamental objective of another government policy-that policy which finds expression in the anti-trust laws," are among the questions :oncerning the economic committee.
The United States department of justice, in its report quoted by the correspondent of the New York Times, said:
The complexity of the patent system had recently increased with the complexity and scale of business "and the ingenuity of counsel." all of which have combined to create a host of legal devices which have altered radically the simple body of patent laws existing in the early days of American government.
A study has been made of some abuses which have existed in this country under our Patent Act. For the information of the house I want to quote some remarks made before the patent institute in an address delivered by TMr. Bothwell.]
George H. Riches, a patent attorney of the city of Toronto. Dealing with abuses under the Patent Act, he said:
Canadian patents were found in each case tp contain claims which had been rejected as unpatentable by the examiners of the United States patent office.
And he expresses the opinion that:
Greater care should be exercised that such patents are not issued wherewith patentees may threaten legitimate Canadian industry.
And again:
Many manufacturers take advantage of this weakness in the Canadian patent system to obtain patents which are invalid but which they know will have a high value in preventing other manufacturers entering into competition with them.
In his address before the patent institute he gave several examples of the use that manufacturers have made of the Patent Act in Canada and the advantage they took of the public. For instance, he gave an illustration of a fellow with a valve which he found it convenient to manufacture in connection with his other business. This particular valve had been in use for quite a number of years. A patent attorney was requested to make a search to find out whether there was anything to prevent him from manufacturing this valve. In the course of the search it was learned that several applications for patents were pending for various devices in the same class as the article he proposed to manufacture; and, the patent attorney says, under our patent law and under the system in vogue in our patent office, there is no way of ascertaining whether this device would be an infringement of the patents which would eventually issue on these applications. As I understand the situation, patent applications at least three years old are still lying in the patent office, and manufacturers who want to take advantage of devices which they know have been manufactured for years and upon which they believe the patents have expired, are not able to find out from our patent office whether or not it is possible for them to proceed to manufacture.
A further illustration is given to show the way in which some manufacturers will take advantage of our patent law:
For over fifty years an American company had manufactured a smoothing harrow consisting of four gangs of plates with a scrub or levelling board located with two gangs in front and two gangs behind it.
This implement is used by market gardeners to pulverize and level the soil and up until a few years ago was made at least by two companies in the United States, one of whom at one time shipped some into Toronto.
One of our distributors in the United States-

The Budget-Mr. Bothwell
This is written from the office of the manufacturer.
-asked us to make a similar outfit, substituting steel in place of wood for the frame and a steel plate in place of a wooden board for the levelling or scrub board.
We designed and developed such a machine and bad it ready for sale when we were notified that a blacksmith at Weston had applied for patent on such an implement.
I believe that Weston is a small suburb of Toronto. That implement had been manufactured for fifty years.
In the application for patent, claims made by the original manufacturers were included and in his advertising matter the Weston blacksmith had simplv copied the advertising of the Meeker of Higganum, Conn., even to the extent of copying word for word testimonials received by the original manufacturer.
Notwithstanding our objections which were so strongly supported, a patent was issued and in due time we were threatened with suit for infringement.
I was approached twice-[DOT]
This manufacturer saj's:
-by legal representatives and once by the wife of the patentee, with a suggestion that the matter be settled amicably either by direct payment or by an agreement to pay royalty.


Major James William Coldwell: How long ago was that?


Charles Edward Bothwell: That was in 1937. I quote that in order to illustrate what manufacturers may do in connection with our Patent Act, and the use that they may make of it.
Mr. Justice Maclean of the exchequer court of Canada, discussing patents and our patent law, in 1932 Exchequer Court Reports, page 106, dealing with the case of Lightning Fastener Company v. Colonial Fastener Company, used these words:
It must be remembered that the object of the claim is to give a perfectly clear statement of the invention claimed. Of late years a superstition has arisen that a patent is more valid and has a greater hold over infringement if every possible permutation and combination of the elements entering into the invention is separately claimed; and it has become a practice to file claims which are copies of those used in American specifications. American claims may be very useful in dealing with American law, but in English law prolixity does not help a court which, whether in considering subject matter, novelty or infringement, invariably seeks to obtain an answer to the particular question, what has this man invented.
Again in the same report, by the same judge:
Prolixity and repetition in patent claims have also been frequently condemned in the United States courts. If the provisions of the Patent Act are not in terms sufficiently clear to enable the patent office to prevent a useless and confusing multiplicity of claims, and repetition in the separate claims, I would respectfully suggest to the commissioner of patents that he urge that the Patent Act be so amended as to
bestow ample power on the patent office, to curtail the abuse to which I refer and which is calculated to bring the whole law of patents into disrepute. I need hardly observe that my remarks are not applicable to all applications . . . perhaps only to a relatively small number, but in my own experience I have frequently noticed that claims are allowed which appear to me to be objectionable because of repetition in the separate claims, and the practice in my opinion should not be permitted to gather weight.
Again, by way of illustration, I would call attention to what has happened in connection with radio. It was referred to yesterday by the hon. member for Kootenay West (Mr. Esling) in his speech. One is astounded to know just how far people will go in order to exploit the consuming public of Canada. Dealing with this question of radio the statement has been made, and it has not been contradicted-I believe it is borne out by the evidence taken before the tariff board-that when the patent situation with regard to electrical apparatus was examined, it was found that this field was largely controlled by six companies who have pooled an innumerable number of good and bad patents. The companies are: Canadian General Electric Company, Canadian Westinghouse Company, Canadian Marconi Company, Northern Electric Company, Rogers Majestic Corporation Limited, Radio Corporation of Canada.
These six companies were involved in an investigation a few years ago under the Combines Investigation Act, and after the findings were made no action was taken against them. They have extended their operations to some other companies, and it would be astonishing to read the agreement that these companies entered into whereby they arranged that one company should have the manufacturing of one particular article and the others would not interfere, another company would have the manufacturing of some other article and the others would not interfere, and so on all through. The parent concerns are American, and they hold patents in Canada in connection with everything electrical connected with radio. Only ten per cent of the patents are held in Canada, ninety per cent being held in the United States; the parent company dictates what shall be done here, what price shall be charged; and if you buy a radio manufactured in the United States not only are you subject to a duty on bringing it in, but you are also liable to prosecution for infringement of patent rights by having it in Canada contrary to our own patent law.
' I will not take up any more time in this connection except to suggest that the defects which have been found in our Patent
The Budget*-Mr. Bothwell

Act might be outlined as follows-and I hope the minister in charge of patents and the government will see that the matter is looked into just as it was in the United States, where it was found that the manufacturer who is unconscionable enough to take advantage of the laws there is able to exploit the people unmercifully. And in Canada they can do it to a greater extent even than in the United States. I am going to suggest for consideration by the minister in charge of the Patent Act that there is lack of efficient examination of patent applications. The high cost of taking advantage of the remedies set forth in the Patent Act to curb abuses under it are prohibitive. Another defect is the cumbersome method by which such relief may be obtained and the uncertainty of the outcome. Other defects are: lack of responsible officers to investigate abuses; lack of power to punish patentees who have been found guilty of abusing patent rights; the large number of patents issued for the same articles; no positive, inexpensive way of ascertaining what patents cover a certain article; lack of positive control over the patentee; the wide powers given the patentee by means of which he may destroy the business of a competitor. These are matters for consideration. When one looks into the findings in the United States and considers some of the expressions that have been used there in the investigation, he will find that the chairman, after a hearing of several days, makes this statement:
The greatest handicap under the present system arises from the fact that there is no single court of patent appeals and no effective limitation upon the number of baseless attacks which may be made in the patent office by an applicant who desires to exploit or hamper an inventor.
Among manufacturers as well as among inventors there seems to be an agreement that patent procedure should be so changed that action on a patent application may not be unduly delayed in the patent office and that the entire life of a patent from the date of the application to the date of expiration shall not be more than twenty years.
One instance was brought to the attention of the committee of the extension by means of delays of the period of exclusive use from the seventeen years contemplated by law to forty-four years.
I might give an illustration of a company in the United States called Owens Illinois which is possibly a subsidiary of Hartford-Empire. No doubt Hartford-Empire control a large number of patents in the United States. They do not manufacture. For the period from 1925 to the end of 1937 they had an income of $49,479,062 from licence fees and royalties without manufacturing anything. It was "found that that company and Owens Illinois controlled 67 [DOT] 4 per cent and 29-2 per cent respectively of all glass 
containers produced in the country, leaving about 3 per cent for all independent competitors. Two companies control the whole situation there in connection with glass containers. An investigation. in Canada might reveal a somewhat similar situation. My studied conclusion on the whole matter is that by the patent laws we have in Canada we are enabling foreign manufacturers to exploit the Canadian public to an extent that could not be done even under the tariff of the late administration.


Mr. ANGUS MacINNIS (Vancouver East):: The hon. member for Swift Current (Mr. Bothwell) has referred to one phase of the evils which we in this group have been drawing to the attention of this house for a number of years; that is, the evil of private ownership in the means of life of the people of this country. That was not a bad thing while the number of owners was large, in other words, while property was distributed over a large number of owners; for then the amount that could go to any one owner was limited. But as the hon. member has just said, we find now that in industry after industry there is almost complete monopoly, and those industries are used not to supply the everyday needs of the people but to take from the people every possible cent that can be sweated out of them.
In rising to say a few words in this debate I do so because I wish to take issue with the point of view on which the minister based his argument for the exemption from income tax of new capital investment. I shall read the resolution of which he gave notice to amend the Income War Tax Act in the way I have stated. It is to be found on page 3153 of Hansard of April 25 last, as follows:
That it is expedient to amend the Income War Tax Act and to provide:
1. That a taxpayer (other than a company deriving income from a metalliferous mine to which section 89 of the act applies) shall be entitled to deduct from the tax that would otherwise be payable under the act amounts not exceeding in the aggregate ten per cent of capital costs actually incurred and paid in the period beginning May 1, 1939, and ending April 30, 1940, in respect of the construction, installation, betterment, replacement or extension of plant, machinery or fixed equipment during the same period, by deducting, in each of the first three fiscal years of the taxpayer after April 30, 1940, in which the taxpayer has taxable income, an amount not exceeding one-third of the aggregate amount of the deductions authorized.
The Minister of Finance (Mr. Dunning), in proposing this resolution, stated that he was doing so in order to encourage industry, increase employment and increase the national income. I say as emphatically as I can, and this opinion is shared by the group to which

Railway Act-Language Requirement
I belong, that this proposal of the Minister of Finance is not a solution of the problem facing the Canadian people. The problem facing us is not to create new capital, it is to distribute consumers' goods. And consumers' goods will not be distributed in greater relative proportion by the increase of capital at the present time. I freely admit that if new expenditures for capital goods are made, the first result will be beneficial, but it will be beneficial only as a shot in the arm is beneficial to a drug addict; it stimulates him for a while, but there is always the reaction, and the last state of that individual is worse than the first. And to the extent that we encourage capital investment in Canada without at the same time and to a greater extent finding ways to distribute consumer purchasing power, our last state will be worse than our first.
The root cause of the world depression which engulfed us in the fall of 1929 is still with us. That cause is too large an accumulation of capital goods in too few hands. The result in effect is that too large a share of the national income goes to a few capitalists, compared with the share which goes to the workers and farmers who produce that income.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



PRIVATE BILLS


[Stage Direction]
Bill No. 110, for the relief of Dorothy Gertrude Mary Huggins Yaun.-Mr. Hill.
Bill No. Ill, for the relief of Lola Margaret Miller Atkinson.-Mr. Walsh.
Bill No. 112, for the relief of Zeno Brack.- Mr. Plaxton.
Bill No. 113, for the relief of Esther Steinberg Soloway.-Mr. McNiven (Regina City).
Bill No. 114, for the relief of Sarah Sherry Miller.-Mr. Tomlinson.


[Stage Direction]
Mr. WILFRID LACROIX (Quebec-Mont-morency) moved that the house go into committee on Bill No. 3, to amend the Railway Act.
Mr. YOUNG:: Mr. Speaker, I rise to a point of order. When it was the decision of the committee not to report the bill, how does it now come before the house?


Walter Edward Foster: It is for the house to decide whether or not it will go into committee on the bill. The matter can be discussed, and if on a vote the motion is adopted, the bill will have to go to committee of the whole.


Alexander MacGillivray Young: All I wish to say is that the bill came before the committee on railways and canals and was thoroughly discussed. It was decided by a vote of twenty-two to nine that the bill be not further proceeded with. It was the opinion of the committee that the bill, having been rejected by the committee, was not then to be reported to the house.


Mr. THOMAS VIEN (Outremont):: Mr. Speaker, when this bill was considered by the standing committee on railways, canals and telegraph lines we gave notice to all interested parties who had requested to be heard, namely the Canadian Pacific Railway, the Canadian National Railways, the Bell Telephone Company and several brotherhoods of railway employees.
The question was somewhat difficult. It was the unanimous consensus of opinion, in committee, that the most serious consideration should be given to the request that, in the province of Quebec, where railways and other public utilities are operating, employees should be able to speak the language of the population they were called to serve.
The Canadian Pacific Railway's representations were first heard, through its solicitor Mr. Evans. He pointed out that if the bill became law it would be extremely cumbersome; that for years the Canadian Pacific Railway had observed, in practice, the general idea of the bill. Unfortunately I have not before me the statistics which were given to the committee; the proceedings were neither printed nor published. It was pointed out that for years the Canadian Pacific Railway had, whenever possible, employed men who could speak both languages.
The Canadian National Railways, represented by Mr. Valere Darveau, K.C., Quebec city, also gave the committee comprehensive statistics, to the same effect.
The Bell Telephone Company was represented by Mr. Monnach, K.C. I believe their statistics were still more impressive, indicating that their employees who came in contact with the public almost all can speak both languages. In some districts 100 per cent, in others 90 per cent or more.
Representatives of the various brotherhoods of railway employees were heard. They stated that serious difficulties would arise in connection with promotions if the order of merit were tampered with
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and in their opinion that would be the effect if this bill became law. Not only would it be detrimental to railway and public utilities employees in Quebec, because they might be deprived of their promotion if they were not bilingual, but it might be detrimental to French-Canadian employees in other provinces. Instances were given of employees of French origin in Ontario and the western provinces who might be detrimentally affected if, as a reaction against such a law, other provinces enacted legislation under which only English-speaking employees could be engaged.
Two sittings of the committee were held at which hon. members gave full consideration to the principle involved. All hon. members were sympathetically impressed by the idea that in Quebec employees of public utilities should speak both languages. They thought, however, that at present it would be inexpedient to pass such legislation before further studying this subject matter. As chairman of the committee I took no part in the discussion. I was certainly much struck by the impressive statistics filed, and in all fairness for these companies, it must be admitted that they have gone a long way to meet the situation.
A question arises as regards the constitutionality of this bill. The matter of hiring employees is a question of civil rights. Has this parliament jurisdiction to pass legislation affecting employees in one province, and to determine a question of language? Are not these matters questions of civil rights within provincial jurisdiction?
The question of expediency was fully considered. When the committee was ready for the question hon. members voted in the negative, twenty-two against and nine in favour of the principle of the bill. The clauses of the bill were not discussed. I was instructed to report to this house that in the opinion of the committee this bill should not be further proceeded with.
It is my duty to give this information to hon. members who were not on the committee or to hon. members who could not attend.


Mr. ARMAND SYLVESTRE (Lake St. John-Roberval):: Mr. Speaker, I was a member of the committee on railways and canals, and at the outset of my remarks to-night I want to say that I am strongly in favour of this bill. Representatives of the different companies concerned appeared before the committee, a Mr. Evans representing the Canadian Pacific Railway, and I must say we learned things that we did not know before. For instance, Mr. Evans explained the efforts being made by the Canadian Pacific Railway

to spread bilingualism among its employees in the province of Quebec. Once in. a while I travel on the Canadian Pacific Railway between Quebec and Montreal and I have noticed that every employee on the train i3 bilingual. The same thing may be said with reference to the Bell Telephone Company. I feel it is my duty to congratulate these two companies upon the efforts they are making to spread the use of the French language in the province of Quebec. Unfortunately the same thing cannot be said about the other companies that were represented before the committee.


Mr. LIGUORI LACOMBE (Laval-Two Mountains):: Mr. Speaker, it is a well known fact that the employees of the Canadian Pacific Railway and the Canadian National Railways are not all bilingual, and that is why I give my strongest support to the motion of the hon. member for Quebec-Montmorency (Mr. Lacroix).


Mr. H. B. McKINNON (Kenora-Rainy River):: Mr. Speaker, I am also a member of the railway committee. I stated in the committee that I was in symapthy with the idea expressed by this bill, but there are so many ramifications involved in it that it would be most difficult to forecast just how far it might go. There are many railway terminals like Ottawa, Brockville and other places from which employees run into the province of Quebec. Many positions on these lines are filled by sons who have followed their fathers in railroading. I feel that this bill would discriminate against these people whose homes are outside the province of Quebec. The provisions of this bill could easily go to the point where every person entering the province of Quebec, no matter whether his home was 15, 20, 25 or 150 miles away, would have to be bilingual. Further, I feel that this bill puts upon the board of railway commissioners a duty which they should not be expected to handle. This bill is putting the management of the railways into the hands of the board. While that board have duties to perform as far as the railways are concerned, I do not feel that the management of the railways should be one of those duties. It is for these reasons that I am unable to support the bill. As I said at the beginning of my remarks, while I am sympathetic with its provisions, nevertheless I feel that there would be too many difficulties in its application.


Mr. WILFRID GARIEPY (Three Rivers):: Mr. Speaker, last year a similar bill was presented in connection with the civil service commission, and at that time some of the hon. members of this house raised the same

Railway Act-Language Requirement
objections as those we are now hearing. Every time a suggestion is made that there should be a legal obligation to speak both English and French in the province of Quebec some hon. members become alarmed. I am not surprised at the language that is being used at the present time, even that of the hon. member for Outremont (Mr. Vien). But this alarm is absolutely uncalled for.


Thomas Vien: I should like to correct the hon. gentleman. I did not express any alarm, I simply stated to the house what had taken place in committee. I said that being chairman, I had not expressed any opinion. To-night I have simply given the house details of our proceedings. I felt it was my duty to inform hon. members to that extent, so as to enable them to form their own opinion without my expressing my personal views.


Wilfrid Gariépy: In view of the statement just made by the chairman of the railway committee, it seems to me it would be only fair that this bill should go to the committee of the whole house in order that there may be a full and fair consideration of its provisions. The railway committee is composed of sixty odd members and just twenty-two members opposed this bill, while nine were in favour. This bill is worthy of favourable consideration, and that consideration cannot be given unless the principles of the bill are fully understood. I am not speaking at this time because I have a grievance in so far as my own riding is concerned. The Canadian Pacific is the only railway entering my riding and for years past it has employed only bilingual employees in Three Rivers and the surrounding country. I have travelled throughout Quebec and have been in out-of-the-way places in the province where I found civil servants who did not know the language used by the main body of the population in the district. The chairman of the committee will bear me out that the hon. member for Matapedia-Matane (Mr. Lapointe) gave the committee statistics showing an almost outrageous proportion of employees not speaking the language commonly used by the people with whom they came in contact.
This bill goes no further than to give power to the transport commissioners to adopt regulations. There is nothing final about it; it is not arbitrary at all; it is not unfair to anybody. I confess that I have not unlimited confidence in commissions. I think we have far too many, and if I had my way I would give more power to the responsible ministers and cut out the commissions. But I take the law as it stands; under our law the railways are under the administration and control
of the board of transport commissioners, and this bill merely gives the board power to adopt regulations respecting the language used by the employees of the railways. There is no injustice being done. Every employee can still be asked to pass an examination in English. But this measure is on behalf of the pioneers. We find these men in out-of-the-way places, men of little education, untravelled ; that is not their fault. These men are an asset to the country; they are doing something worth while for Canada. But when they come to a small station to use the railway they find they cannot be understood, and they need an interpreter. That is not fair; it is not right, and the situation should be remedied.
I repeat that last year some members sitting not far from me did not like the principle of the bill respecting the language requirement in the civil service, but the bill was adopted, and everything has run smoothly. There has been no complaint. The applicants get fair play and justice, and everybody is satisfied. I say that the principle of this bill which concerns employees of the national railways and utilities is the same, and no injustice can be done by passing it. I think the passage of this bill will give satisfaction to the ordinary citizen of this country. It is not only the man of means in our big cities, the man occupying a responsible position, who has a right to ask for protection under our laws; every citizen throughout the length and breadth of Canada is entitled to the same consideration; in this case we are pleading for the pioneer, for the man living in the small village and using the small station, and I say that such people are deserving of consideration.
All that is now being asked is that the bill be referred to the committee of the whole house, where evidence can be given. If the bill is imperfect it can be amended in committee. I say Mr. Speaker, that the principle of the bill should be adopted, and I recommend its adoption.
Mr. GRAY. I happen to know that evidence was given before the committee to which the bill was referred, but how can evidence be given before the committee of the whole house?


Wilfrid Gariépy: The members of the committee who heard the evidence can bring it to the attention of the house in committee of the whole.


Mr. GRAY:: That is different. Is that what the hon. member implied?
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Wilfrid Gariépy: I meant that members of the committee heard the evidence and have first-hand knowledge of the matter which they can bring before the house.


Ross Wilfred Gray: Surely the members of the committee who heard the evidence gave their judgment upon it in the committee.


Mr. DAVID SPENCE (Parkdale):: Mr. Speaker, I happened to be one of the committee, and the chairman has given an absolutely correct account of what happened there. Representatives of the Canadian Pacific Railway, the Canadian National Railways, the Bell Telephone Company and everybody else interested were heard. I was not able to be present at the second meeting of the committee because my time was divided between the agriculture committee and the railway committee, but I do know that if a vote had been taken at the first meeting the majority against the bill would have been greater than twenty-two. Those in favour of the bill attended in full force on the second day, and if all those against had been in attendance the majority against the bill would have been greater. I do not see why this bill should have been brought into the house at all. We have already lost half an hour this week talking on the same subject, and the only way to deal with these bills, after the committee has recommended against them, is to drop them. To do anything else is simply to cause strife and trouble.


Hon. FERNAND RINFRET (Secretary of State):: Mr. Speaker, I desire to make it very plain that we French members from Quebec who do not agree with the mover of this bill (Mr. Lacroix) are just as anxious as he is to have the French language spoken in our province, but we wish to avoid placing on the statute book legislation so phrased that in certain instances it may bring more havoc than advantage to those whom the hon. member desires to serve.
Allusion has been made to the civil service bill, and I think I know more of that than does the mover himself. The principle of the bill was very good. The principle was that in parts of the country where the majority is French, civil servants appointed by the commission should speak the French language. The government and myself in particular, as minister in charge of the civil service, supported the bill on that principle, but we had great difficulty in putting into statutoiy language what the hon. member wanted, and what we wanted to achieve, without at the same time stipulating something that might work against us in other parts of the country.

I may be allowed to allude to that bill because a reference to it will illustrate the difficulty about these matters. When the bill was discussed in the house the then leader of the opposition, Mr. Bennett, with much diffidence because, as everybody will understand, he had to be very careful in his statements, pointed out at the time, and quite properly, the disadvantages of the bill as it stood. We changed the language of the bill and referred it to a committee. The committee rejected several clauses in their effort to reach language which would say exactly what we had in mind and what the mover of the bill had in mind, and which would at the same time avoid saying something else that might be detrimental to the workers whose cause the hon. member was espousing.
The bill came back to the house; again we had to change it; it went to the senate where it was changed two or three times; and finally it was adopted on the general principle that it was better to have a bill even if we were not sure that the language was quite appropriate. I can tell the house that since that measure has been on the statute book its operation by the civil service commission has been a matter of difficulty in many parts of the country. I wish to pay a tribute to the commission. They have tried to live up to the principle of the bill. They have made many appointments in accordance with it in certain parts of the country. They have also had to adopt regulations which they have submitted to me. Those regulations did not seem to fit properly; they were changed; and finally-and this I say without the least intention of withholding from my hon. friend the credit he will no doubt seek for a measure of this kind-they are not following the bill, but they are trying to adapt themselves, notwithstanding the bill, to conditions in the country; because, if my hon. friend's legislation with reference to the civil service were properly adhered to, it would simply mean that in any part of the country where there are French-Canadians, but they are in a minority, they could not secure an appointment. In the long run that would be the effect.
If I take the stand to-night which I do take, it is because I have become perturbed over the efforts of some, though not very many, hon. members who try to boost themselves as saviours of the race. They seem to be trying to disturb the whole situation created by both parties throughout the years; their attitude is, " We are going to save the French race although ministers stand idly by and will not help us to do so." I have been following very closely the course of this bill

Railway Act-Language Requirement
in the committee. In some degree I share the regret of the chairman that we have not the evidence before us. But I think it has been clearly pointed out that this bill would create much trouble in different parts of the country, in the services of the railways and the telephones, and that, at least in its present form, it would not be of very great advantage to those for whom it is intended.
I will, however, say this, and say it plainly:
I am sorry that such legislation should be necessary. I do not think any government commission or any large company operating in this dominion should have to be forced by legislation to give to the French-Canadian population that to which they are entitled. At the same time I am perfectly conversant with the fact that certain things cannot be legislated upon in such a clear way as to achieve exactly what we have in mind. I recognize, as a good and docile parliamentarian, that this bill has been referred to a committee; that the committee has not seen fit by a clear majority to recommend it; that it instructs this house that it should not proceed with this bill. The committee has received evidence. It has my confidence. I shall not impute motives to the mover of the bill; by parliamentary procedure I am not permitted to, and perhaps that is the reason why I do not.
The action taken by the committee does not mean that the railway companies should not have French employees. It does not mean that the telephone companies should not resort to the services of French people. It means that this bill cannot achieve its purpose except at the expense of other considerations. As far as I am concerned I will not vote to send it to the committee of the whole house. It has been inquired into and has been found wanting; and I know from experience with regard to the previous bill that if the civil service commission-and I say this with a great deal of pride in that commission, in that respect-had not exercised a proper judgment about that former bill, similar to this one, it would have been more detrimental to us in many parts of the country than it would have served any good purpose. Therefore, Mr. Speaker, I do not think we should proceed with the bill. But I repeat- and I hope I am not misquoted if anybody pays any attention to my speech or writes any comments about it-that in my opinion such bills should not be necessary, and that neither a government commission nor a great corporation should delay to deal fairly in this matter until we try by intricate words, and by distorting sentences to mean one thing
and nothing else, to legislate them into doing so. I express the hope that this discussion and the discussion before the committee will have had the good effect of bringing this matter to the attention of such corporations, and that on their own behalf they will improve the situation as it should be improved.


Mr. W. A. WALSH (Mount Royal):: Mr. Speaker, I was one of the nine members who gave this bill a measure of support in committee. Having lived in the province of Quebec for many years, naturally I was in sympathy with an effort to remedy certain conditions which frequently prevail. Fortunately, however, they do not prevail with all public utility companies. The Canadian Pacific Railway and the Bell Telephone Company have been uniformly fair in this respect. Mention has been made of the Canadian National Railways, and some reflections were cast upon their management for not doing as other companies have done, but probably the utter condemnation which was directed against them is not wholly warranted. I believe that that company is now endeavouring to meet the public demand in the manner in which it should be met, and that in a very short time there will be no necessity, even in the province of Quebec, of a measure of this kind. I do not care much for legislation which is directed towards public utility companies dealing differently in one part of the country from the way in which they do in other parts, but I sympathize with the conditions which sometimes prevail in my own province.
I believe that a purpose has been served by the discussion of this resolution. I am not altogether in agreement with the remarks of the Secretary of State (Mr. Rinfret); I cannot completely adopt his point of view, and I feel that the hon. member for Quebec-Montmorency (Mr. Lacroix) has done a service to his province by bringing the matter to the attention of the house, by giving an opportunity for the airing of views, and that thereby he has served the purpose which no doubt he had in mind. For this reason I feel that, this purpose having been achieved, there is no further reason for referring the bill to committee of the whole, and that it would be much better if he would gracefully withdraw it for this session of parliament, in the hope of noting, in due course, an amelioration of the conditions in the particular sphere in which he is especially interested. I am sure that such an improvement will be forthcoming; that in a year or two he will find that a bill of this nature is quite unnecessary, and that his purpose has been amply served by the discussion in the committee and in this house.
3458	COMMONS
Railway Act-Language Requirement


Mr. H. R. EMMERSON (Westmorland):: In connection with this Bill No. 3, I listened with interest to the evidence which was given by various officials of the Canadian National Railways, the Canadian Pacific Railway and other organizations. The point which came to my mind was that the evidence to which we listened was largely that of the running trades. If this bill were passed it would mean that all new employees of the railways would have to be bilingual. It would mean that all employees, including extra gangs and men engaged in maintenance of way and other works, would have to be bilingual. It would affect seriously many men in the province who have not the advantage of knowing both languages. In my constituency there are men of both nationalities and I have found that a great many of them are not bilingual. A great many of them are employed as labourers and they can speak only one language. The effect would be injurious there. While the majority of the people in my constituency are English-speaking, in some of the crews the men are as high as eighty per cent Frenchspeaking. For that reason, while I am in sympathy with the bill I feel it is not right that we should give to the transport board the authority which is sought in the bill.
Mr. T. J. O'NEILL (Kamloops):	I have
the highest regard for the mover of this bill and I do not believe that anyone in the house will question either his sincerity or his motives. I am of the opinion that to discuss a question of this sort is in the interests of the people. It makes no difference whether we agree with the bill or not, this motion gives every hon. member an opportunity to state his opinion and it brings out facts that we had not known before. May I quote the underlined words in the bill:
.	.	. providing for the employment in the
province of Quebec of employees duly qualified in the knowledge and use of the language of the majority of the citizens of such province requisite to the performance of their duties.
That gives a great deal of latitude to the transport board. The first business of any great transportation company is to provide transportation and service that will be satisfactory to the people, and if they cannot do that in Quebec because the employees are not versed in the language of the province, then they are not giving such service to the people.
The railways themselves are opposed, not to the principle of the bill but to its provisions which will set up restrictions to be imposed upon the railways. For that reason they are opposed to it. The labour organizations, at least those in the running trades,

engineers, firemen, trainmen and conductors, are opposed to it also, on the ground that it will interfere with long-standing seniority rights. There are a great many people who are of opinion that the labour organizations are so strong that they hold a club over the heads of the railway companies, and that the companies are objecting to the bill because of pressure put upon them by these organizations. That is absolutely wrong; it is not in accordance with the facts. Seniority holds good only so long as a man can discharge the duties required of him, and when he cannot do so the labour organizations do not insist upon his retaining his position on account of seniority.
I make these statements in order to remove any misundei-standing there may be with respect to seniority and the power the labour organizations have under the rule. There is another point with regard to the briefs submitted by the railway labour organizations. The labour organizations say that arbitrarily to place in the railway service in the province of Quebec only employees who are conversant with the French language would impose a hardship on the other employees. Some people have taken exception to this because they say that is not what the bill calls for. But that is exactly what the bill calls for-bilingualism. Because the labour organizations object to employing "in the province of Quebec, only employees who are conversant with the French language,'' it is assumed that they are referring to employees who are conversant with the French language only. But there is a difference between the phrases "only employees who are conversant with the French language" and "employees who are conversant with the French language only." The latter is the construction which some people have put upon the brief submitted by the railway organizations, but that construction is wrong.
In view of the fact that the labour organizations and the railway companies are opposed to the bill-not to the principle of the bill but to the privileges that will be extended to the transport board-I suggest that the house would be ill advised to proceed with it.


Clarence Decatur Howe: This bill amends a very important act, perhaps one of the most important on the statute books of Canada, the Railway Act. In amending an important act of this kind it behooves the department responsible for the administration of that act to make very sure that the proposed amendment is sound legislation. No one, in considering this legislation in relation to the act that it amends, can say that it is good legislation.

Railway Act*-Language Requirement
The Railway Act applies to every province of Canada. This amendment singles out one province for special treatment. It does not say that the employees in all the provinces shall speak the language of the majority of the people with whom they come in contact; it provides that only in the province of Quebec must that rule hold true. That, I submit, is not the proper type of amendment to apply to an act drawn to govern all parts of Canada.
It might be thought that the bill as applying to the province of Quebec would affect only railway employees in that province. If the terms of the bill were to be carried out literally by the transport board, its effect would extend far beyond the boundaries of Quebec. The city of Montreal is the great railway centre of Canada. From Montreal trains go to western Canada over the southern route and also over the northern route; trains go to the maritime provinces, to the New England states and in the direction of New York city. All these trains would necessarily be affected outside the province of Quebec, because running crews are not changed at the provincial boundaries, they must operate from Montreal considerably beyond' the boundaries of the province. Therefore the effect of this bill would be far wider than a simple reading of it might suggest. Of course I think no one will challenge the statement that it is highly desirable that employees on trains should speak the language of all the people with whom they come in contact. Without doubt bilingualism is very desirable in Quebec province. But what would be the effect of this bill on the railway employee with many years of seniority who is not bilingual? That man could never look for promotion, I think if the provisions of the bill were applied literally he could hardly be certain of his employment.
The seniority rules of the railways are of tremendous value both to the employees and to the management; they have grown up over a period of years; they are administered to-day almost automatically and without disturbance either to the employees, organizations or to the management. Certainly those rules of seniority would become a dead letter if this bill were enacted and applied. That, I believe, would be a serious calamity both for the employees and for the railways.
When this bill was referred to the committee it was for the purpose of enabling all interested parties to appear and give evidence. It is worthy of remark that all those who came before the committee testified that the bill was bad legislation and would not improve the situation so far as the lailways or their employees or the employees of the other
utilities which it is the intention of the provisions of the bill to reach are concerned. The chairman of the committee has told us that each of the railways was represented before the committee and gave evidence to the effect that this legislation is undesirable. Evidence was given that both railways have endeavoured to promote bilingualism among their employees, in Quebec province, and that considerable advance has been made in that direction.
Some comment has been made in this debate that the Canadian Pacific has made greater advances in this direction than the Canadian National. If that is true, as it quite well may be, I would recall to hon. members that the Canadian National did not grow up as the Canadian National system, but that it is a consolidation of a number of lines, some of which operated only to a small extent in the province of Quebec. For instance, the Grand Trunk Railway had its terminal in Montreal but had only a small mileage in Quebec province. Similarly the Canadian Northern operated into Montreal but had only a small mileage in Quebec. Trains from the Intercolonial railway passed into the terminal at Montreal, but of course the Intercolonial did not previously have any considerable mileage in Quebec. Therefore the Canadian National Railways have had a much shorter time to promote bilingualism among their employees than the Canadian Pacific. I feel quite certain that the management of the Canadian National are just as zealous in their efforts to promote bilingualism as is the Canadian Pacific. I know that when vacancies occur in the province of Quebec every effort is made to bring forward bilingual operators to fill those positions. I know that on the Canadian National the demand for bilingual employees is much in excess of the supply. For the senior positions on the railway experience is needed and seniority is needed. Unfortunately 'the supply of senior men who are bilingual is not as great as could be desired. The only way to correct this would be to disregard the seniority list, simply drop back the older employees who are not bilingual and bring on young men over their heads.
As I said, there is no question as to general agreement with the purpose of this bill; whether we reside in Quebec or not, we all agree it is highly desirable that operators in that province be bilingual. But to call on the board of transport commissioners to take steps to see that this is brought about within any short length of time would, I think, be imposing on the board a task that they could

The Budget-Mr. Maclnnis
not achieve by any practicable means, or, at least, by any means that would not create a great deal of hardship.
I see, Mr. Speaker, that it is nine o'clock.



THE BUDGET


[Stage Direction]
The house resumed consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
Angus MacInnis: When the house rose at six o'clock I was drawing attention to the fact that the difficulty which faces the people of this country did not arise because of any lack of capital goods, but was largely a matter of maldistribution or uneven distribution of the national income. On the need for the investment of new capital the minister had this to say in his budget speech, as reported on pege 3143 of Hansard:
If we can no longer count on great possibilities of expansion extensively by pushing back farther the borders of settlement or by means of a rapid growth in population, then we must expand intensively by improving our capital equipment, by making ours a better rather than a bigger country. On the frontiers of science, invention and technology the possibilities of expansion are greater than they ever were on the geographical frontier.
If that means anything at all, it means that if we are going to keep on investing capital we shall have to do it by improving the capital structure that we already have, making it more perfect and more efficient. There is nothing said about increasing consumption. There is nothing said about devising ways and means by which the Canadian people may benefit from an increase in producers' goods. Then the minister continued at page 3143:
However, in order .to expand production, employment and incomes, we must have substantially more capital creation, a more rapid rate of private investment. Someone must convert a larger proportion of the savings of the people into capital expenditures or else our national income will decline again. Look back on 'tihe history of this or other countries in their modern phase and you will find prosperity only with expansion, only when the people were busy creating new capital works. In our prosperous first _ decade of this century we were busy extending our capital equipment, building cities, railways, harbours, elevators and factories.
[Mr. Howe.l
That is all true, Mr. Speaker, but the trouble is that we have built too many railways, too many harbours, too many elevators and warehouses which are now empty and some of which have scarcely ever been used. The Minister of Finance (Mr. Dunning) wants us to go on and produce more of those things, in order that we may have still more monuments standing to our inefficiency and muddling. Then he continues:
In our post-war period of prosperity, from 1925 to 1930, we were busy building houses, factories, power plants, roads and automobiles. Since that time, 'investment in durable goods has languished. It revived somewhat in 1936 and 1937, particularly in the mining industry, and persisted well into 1938, with some recession thereafter. But it is still very far below the levels needed .to utilize fully our increased labour and other resources. Its full recovery is our greatest need to-day.
If the need is for capital goods, will someone tell me why our warehouses are full of things our people need and cannot buy? And if we double our production of durable goods, is there any assurance that we will double our production of consumer goods; and if we do not, are we any better off than we were before? I ask the Minister of Finance and other hon. members in all seriousness if ever again they expect to see an expansion in Canada equal to that which took place between 1900 and 1929. If the answer is yes, then I would ask them on what they base their expectation. What is the material basis for their hope? I do not think any intelligent person who has given thought to the matter can have any such expectation.
I can understand the viewpoint of the Minister of Finance. It is the orthodox economist's viewpoint. He holds to the theory that the prime purpose of capital goods is to produce capital. That is the theory of capitalism-that its purpose is the production of more and more capital, not the production of human goods and human requirements; these are only incidental. The production of capital goods is not an end in itself. The man who made the first hoe did not make it in order that he might continue making hoes. He made it in order to enable him to till the soil better, in order to get a greater return from it so that he might live better. Therefore the investment in capital goods is merely a means to an end; that is, it is a means to enable us to provide ourselves with our everyday needs in consumers' goods and services. That being the case, surely the time must arrive when we shall have all the durable goods we require or, if not, when our production of durable goods will be much less than when we began building our capital structure.

The Budget-Mr. Maclnnis
I submit that time is here now, and what we need to encourage is not the production of more durable goods but the production and distribution of consumers' goods. Does the minister think we can go on forever expanding our frontiers-and I think he will agree that is now completed-or go on building and improving our capital structure without in some way and by some means increasing the share of that production which goes to the producers in industry?
On Sunday last the President of the United States opened the New York world's fair. In the report of his speech which appeared in the Montreal Gazette of May 1, I find the following:	.
In declaring the fair "open to all mankind" the president paid tribute to the foresight of the nation's early leaders. He said they successfully planned a constitution to fit it to a constantly expanding nation.
The fact that the original framework was capable of expansion from its application to thirteen states with less than 4,000,000 people to forty-eight states with more than 130,000,000 he said stood "unique in the whole history of the world, for no other form of government has remained unchanged so long and seen, at the same time, any comparable expansion of population or of area."
The point to which I wish to draw attention is that somewhere about 1776, when the constitution of the United States was drawn up, the population of the United States was only a few million-of course more than the
4.000.	000 mentioned by the president, but not very much more. Yet during that period of about one hundred and sixty years they have conquered a whole continent, turned a whole continent of virgin forest and primeval prairie into a country teeming with cities, towns and cultivated farms, with a population of
130.000.	000 people. That time has passed. The capital and labour that were expended on the building and expansion of the nation must now be used for the betterment and welfare of mankind, so that the people will be able to take advantage of the great progress made by the science, invention and technology to which the minister referred.
But supposing the action proposed in the budget does result in increased expenditures on durable goods; what will be the result? For a short period during the year in which buildings and extensions to buildings and plants are under construction, employment will increase, and demands for consumers' goods will also increase. For a time conditions will be better. But as the new factories come into production with the best and most up-to-the-minute labour-saving machinery, workers will be dismissed, because the machines will be doing the workers' work.
Unemployment will increase and consumers' demands will again decrease. The national income will be increased, but the share of that national income going to the workers will be relatively less, while the share going to the owners of capital will be relatively greater because of the efficiency of the new equipment. This has been the history of capitalistic development since it first began. It is a fact that our capacity to produce continually outstrips our capacity to consume, and this keeps our productive system in a chronic state of depression.
In the golden age referred to by the Minister of Finance, from 1925 to 1930, nearly half the manufacturing effort of Canada was devoted to the output of producer goods. This was at the height of the so-called Canadian prosperity, and yet only a little more than one-half of our manufacturing effort was devoted to the production of consumer goods. Evidently there was a lack of balance between the two forms of production. In any event, the boom, which was based largely on the production of capital goods, collapsed. The result was that Canada found itself with a huge amount of capital equipment facilities for producing, transporting and storing consumer goods which it could not consume. I remember hearing the former Prime Minister, the Right Hon. R. B. Bennett, make the statement in this house, I think it was in 1934 or 1935, that at that time Canada had sufficient equipment to provide for a population of
25,000,000, and we had a population of only some 10,500,000. Yet the Minister of Finance tells us that what we need is more capital goods to produce other goods that we cannot consume.
It is evident that the production of capital goods at that time defeated its own end; that is, if its end was the production of consumer welfare. The value of investment in capital goods shrank, and in many instances vanished entirely. The equipment duplication of capital is a serious fault of the present system. It spells waste and inefficiency on every hand. Because of the hope that new capital equipment may prove the means of increased exploitation, the urge to produce is powerful, almost irresistible. This is nearly always the case, unless in a given industry control has reached the monopolistic stage. In that event the capital is kept down to the requirements of the existing market. The over-production of capital equipment in this period between 1925 and 1930 meant the diversion of manufacturing effort which might better have been applied to the production of consumer goods. If it were only possible

The Budget-Mr. Maclnnis
to do that under a profit economy, the production of consumer goods might well have been doubled with a corresponding increase in the standard of living. But that is something which cannot take place as long as we are living under a profit economy. I have before me an index of industrial activity which appeared in the April, 1939, monthly letter of the Canadian Bank of Commerce. This is what they say:
The general level of industrial activity in Canada, as measured by this bank's index, has remained virtually unchanged from mid-January to mid-March, factories and other industrial plants continuing to operate at 69 per cent of capacity and at 84 per cent of 1937 activity.
Many industries did not reach that high level of 69 per cent capacity. The production of food, drink and tobacco in March was only 57 per cent of capacity; clothing, textiles and shoes was 87 per cent; pulp and paper, 66 per cent; wood products, 77 per cent; automotive trades, 75 per cent; iron and steel, 52 per cent. This item is divided into heavy, medium and light and 52 per cent is the average. The point I wish to make is that with our present capital plant we are not operating at anything approaching capacity. In a book published a few years ago by Howard Henry Pratt Fairchild, professor of sociology, I think in the university of New York, he quotes H. L. Gantt who, he says, is one of the foremost efficiency engineers in the United States. This gentleman states that, on the whole, only about 50 per cent of industrial machines are actually operating during the time they are expected to operate, and, on the whole, during the time they are being operated, they are producing only about 50 per cent of what they are expected to produce. This brings our productive result down to about one-fourth of what it might be if our machines were run all the time at their highest capacity.
It is true that we were relatively prosperous during our periods of expansion; at least some were prosperous and most of the others hoped to be. But as I pointed out in this house a few days ago, that period is over. As I also pointed out, I do not see why that should be any reason for our living in poverty and in the deep gloom which evidently enshrouded the Minister of Finance when he was preparing his budget speech. If we cannot produce producer goods, we can produce consumer goods. That, indeed, should be the real purpose for any expenditure on capital goods. In an orderly society where the common good was the purpose of productive effort there would be rejoicing, and not despair, 
when it was ascertained at last that the building of the capital structure was finished. We could then go on with the production of consumer goods of all kinds and reap the reward that we have waited for so long. But not so under the present system where the ability to provide ourselves with an abundance of goods and services fills us with gloom and dismay. So, Mr. Speaker, I do not see that any value will come to the people of Canada through the proposal made by the Minister of Finance that income used for capital purposes should be exempted from income tax.
I wish now to say a word on another matter. I want to congratulate the hon. member for Humboldt (Mr. Fleming) upon his political progress. It is no mean distance that he has travelled when he can bring himself to the point where he is willing to vote for a Cooperative Commonwealth Federation amendment, and against his own party. I do hope that he will persevere with his study and investigation of the principles upon which our platform is based. I am sure, if he does that, he will come to the conclusion that there is only one way in which one can live a truly Christian life, and that is by forswearing forever a system that continues to exist by exploitation of the widow and the fatherless.
I should like also to advise him that there are more reliable sources of information as to our program and policies than even Cardinal Villeneuve, whom the hon. member for Humboldt quoted last evening. Perhaps the hon. member does not know that we published a reply to Cardinal Villeneuve's statement. Part of the cardinal's statement which the hon. member read into the record last night reads as follows:
The C.C.F. program contains several fundamental errors. Let me very briefly describe the first error in the C.C.F. program which advocates the suppression or at least the quasisuppression of private property. Now the right to own property is not derived from human laws but from nature, and every man has by nature the right to possess property as his own.
The abolition of private ownership leads to state ownership and therefore the C.C.F. program proposes the nationalization of practically all forms of industry and other means of production and state ownership of all financial companies, etc.
In this evening's paper I read that three hundred young men in this city last night did not have so much private property as to afford them a place to sleep. They had neither private nor public property. The Cooperative Commonwealth Federation has not yet been in office in this country, so it cannot be held responsible for that state of affairs. Nevertheless that is the state of affairs of an increas-

The Budget-Mr. Maclnnis
ing number of people in this country, who are being deprived of every vestige of private property. The hon. member for Carleton (Mr. Hyndman), addressing the house yesterday, referred to the fact that eighty per cent of the farmers of this country had not bought a new suit of clothes during the last eight years. He stated that fifty per cent of our farmers were bankrupt and seventy-five per cent of Canadian farms were mortgaged. I should like to know who it was that despoiled these people. Who deprived them of their property? It could not have been the Cooperative Commonwealth Federation because we have not had that opportunity. Cardinal Villeneuve had better look elsewhere for those who are depriving the people of private property.


Mr. KIRK:: Read the rest of the statement which the hon. member for Humboldt quoted.


Angus MacInnis: I have no objection to reading it all. I have read the last part of it; the first paragraph reads as follows:
Now I will deal with my attitude towards the C.C.F. One of the principal leaders of the C.C.F. declared that their program was based on frankly socialist principles. That is true; the C.C.F. and communism, economic programs are practically the same. The only difference is that the communists admit that they are prepared to attain their object by violent means, while the C.C.F. think they will accomplish their purpose peacefully.
The late pope issued an encyclical

the Encyclical Quadragesimo Anno-in which, speaking of our present capitalist system, he had this to say, which is not very much different from what I have been saying in this house for many years:
You assuredly know . . . and you lament the ultimate consequence of this individualistic spirit in economic affairs. Free competition is dead.
The hon. member for Kootenay East (Mr. Stevens) made a similar statement this afternoon. The encyclical continues:
Economic dictatorship has taken its place.
Unbridled ambition for domination has succeeded the desire for gain; the whole economic life has become hard, cruel and relentless in a ghastly measure.
I quote another paragraph from the encyclical:
For it is rightly contended that certain forms of property must be reserved to the state, since they carry with them an opportunity of domination too great to be left to private .individuals without injury to the community at large.
May I say that it has not yet been decided to what extent, in the interests of the public, in the interests of the common man and the 71492-218
comman woman, it will be necessary to socialize the means of production. Much is being done cooperatively already'.
I should like now to draw the attention of the hon. member for Humboldt, and of others who may care to hear it, to the fact that the principles and program of the Cooperative Commonwealth Federation are in complete harmony with the programs of the labour and socialist movements in such countries as Great Britain, Sweden and New Zealand. In New Zealand the prime minister and four members of his labour government are Roman Catholics. Of the British labour party the late Cardinal Bourne said:
It Should be recognized that the British Labour party, although calling itself socialist, does not fall within that category of socialist schools of thought condemned by His Holiness. I do not hesitate to say that Catholics are free to support and become members of the British socialist movement.
I should like to show hon. members how private monopoly is despoiling the people of this country and making inevitable the conditions that we have to-day. A few years ago there sat in these very buildings what was known as the price spreads and mass buying committee, which was later continued in the form of a royal commission. It investigated a number of industries in Canada and in almost every one, if not all, of the industries investigated, the committee found two things: (1) ruthless exploitation of the workers in industry', and (2) ruthless exploitation of the consumer as well. As my time is passing I shall take just a moment to refer to one industry which was investigated, the tobacco industry.
In 1933 there were over one hundred tobacco firms doing business in Canada-127 to be exact. One firm controlled 70 per cent of the production, and another firm handled most of the remaining 30 per cent. According to the report of the mass buying commission the net profits of the larger of these tobacco companies for the five years, 1929 to 1933, amounted to S36.000.000, dividends rose from the usual rate of 7 per cent to 10^ per cent. Bear in mind that this increase in the dividend rate occurred during the three years when the depression was at its worst. But that was not all by any means. During those same hard years, when the great majority of the people of Canada were undergoing unprecedented hardships, the president of this company was drawing a salary of $25,000 a year, with annual bonuses which in some years ran as high as $60,000, and the vice-president was drawing a salary of $40,000 a year, with annual bonuses which in some

The Budget-Mr. Maclnnis

years ran as high as $102,000. These men can buy many suits of clothes on those salaries. They are not at all in the position of the farmers mentioned by the hon. member for Carle ton yesterday.
I could go on and on. During those years the company not only increased its dividend but cut in about half the price of raw tobacco to the growers; it also reduced the wages of its employees in both factories and stores. The average wage in the tobacco factories in 1934 was $11.25 a week, or $585 a year. Compare that with the $85,000 and the $142,000 yearly received by tobacco company officials. But there is something even worse than that. The president of the other large tobacco company was at this time drawing an annual salary of $260,000. If you compare that with the average annual salary of $585 drawn by workers in the tobacco factories, you will find that the average worker would have to live and work for 446 years to get as much as the president got in one year. And yet it is said that the Cooperative Commonwealth Federation is going to take away the property of the people! Almost all the property of the people is already taken away, and unless such a policy as ours is adopted it will all be taken away. Only by adopting a program such as we suggest can the people have private property and live happy, decent, Christian lives.


Mr. HARRY LEADER (Portage la Prairie):: The annual budget debate affords an opportunity for each member of parliament to offer a few remarks, and I am going to avail myself of that opportunity. My first words are congratulations to the minister who delivered the budget speech upon the fact that his health has apparently been restored. I am sure that in offering congratulations to him I am speaking not only for myself but for my constituents.
My next word is a tribute of gratitude and praise to the present government. There is no doubt that it has enacted some beneficial legislation. That fact should be recognized by all good Canadians. Chief among these enactments, in my opinion, are the two trade treaties with the United States, one in 1935, the other in 1938. If I were to pick out one item which I believe will be more beneficial than any other, I would say that the outstanding feature of the agreement is the concession granted to our cattle raisers, although there is no doubt that people generally throughout the country will receive benefits.
I deem it a great privilege to stand here, a farmer member, speaking in the interests of the people of my constituency. I do not want

to appear sectional. This country belongs to Canadians, and while sometimes we from the west may seem to stress our own difficulties and problems compared with those of other parts of Canada, it is because of the fact that we are in circumstances of extreme difficulty.
It was not always thus. There was a time when western Canadians could hold up their heads, put their hands in their pockets and pay their bills along with any man or woman in Canada, but that time seems to have faded. We now have the spectacle, among two and a half million western Canadians in the prairie provinces and British Columbia, of 300,000 farmers who are almost at their wits' end to know how they will meet their next payment. It is well for this house to remember that, in years gone by, hundreds of millions of dollars of new wealth was created in the west. It was dug from the top six inches of the soil and it is capable of being reproduced from year to year. This prairie land was pioneered by the inhabitants of the older provinces and it is now occupied by their descendants.
I believe it is a fact that the growing of wheat is Canada's greatest industry, and I think it will continue to be so for a long time to come. We have heard the expression that the plains of western Canada are the granary of the empire. I do not think that statement can be gainsaid, although we know that other portions of the British empire can produce a great deal of grain. The prairie provinces have contributed a great deal to the dominion. They have afforded an opportunity to establish homes to large numbers of men and women who were bom and raised in other parts of the country. They have provided opportunities for the investment of capital. They have expanded our transportation facilities, with all that this means to the labour and industry of Canada. They have been the cause of the establishment of huge factories in eastern Canada to take care of our needs. All of this, Mr. Speaker, I maintain, was a splendid contribution, and I know it is recognized in other parts of the dominion.
I intended to refer to the wheat marketing problem, but as that subject is almost taboo at the present time I shall make no more than an observation. We understand that legislation is pending and that we shall have an opportunity to speak more fully on the subject when that legislation comes down. The people of western Canada were grateful to the present government when they guaranteed them an initial price of 80 cents a bushel for last year's wheat crop. I believe that our people are justified in their demand

The Budget-Mr. Leader
that this 80-cent initial price shall continue for this year's crop. All I want to say regarding this matter is that I support whole-heartedly the western delegation which made that proposal here over a month ago; I have not wavered in the slightest from that position.
We have heard a great deal about the tariff and how it bears upon the people of Canada. Some people say they are tired of the subject. Some doubt whether it has had a detrimental effect in various parts of the country. But it seems to me that we in the west have a perfect right to discuss this question because we are the ones who, through lack of factories and the difficulties of marketing our products, have to bear the greatest part of the tariff burden. This opinion is generally held. A foremost advocate in the west of a reduction in the tariff to relieve the situation is that great Liberal paper, the Winnipeg Free Press. I will not quote from it at this time, but I should like to read from the latter part of an article published by the Searle' Grain Company, dealing with our western problems and what the tariff means to us. I quote:
There is one thing more to add. This assistance to the west is but temporary. The real problem is to secure markets for all the wheat the west is producing. These markets were once enjoyed by the west, and have been lost mainly because of high Canadian and other tariffs. The solution here is simply to lower Canadian tariffs; then will surpluses disappear, crops be sold, and prices rise. When these things occur western wheat growers will not need any further assistance either from the dominion or from the east.


An hon. MEMBER:: What is the date of
that?


Harry Leader: It is a recent statistical
issue.


Major James William Coldwell: The April number.


Harry Leader: In spite of the trade
arrangements with the United States our tariff is still of considerable proportions. Looking over the agreement with the United States, I picked out a few items in which the ordinary home-builder would be interested. I find that clothing still carries a duty of 30 to 35 per cent, and boots and shoes 30 per cent, and that the home-builder faces a duty of 27+ to 32+ per cent on furniture. Kitchen utensils carry a duty of 25 to 30 per cent and bathroom fixtures face a duty of 27+ to 30 per cent.
There is some justification for maintaining a tariff against foreign countries, but we are not justified in maintaining a high tariff against the mother country. Yesterday I got some recent figures from the Department of National Revenue. I am going to quote some of them, 71492-2184
but I will be as brief as possible. We enjoy a sheltered market in the old country and that is where we must sell our farm products. We have a free market there, and what is more, a tariff is imposed upon non-empire goods which affords a preference to empire commodities. It seems to me, therefore, that we have not played the game fairly with the mother country. Let me give some of these items.
Tariff item 532.
Clothing, wearing apparel and all textile cotton manufactures-
1930-25 per cent and 3 cents per pound.
1936-	25 per cent.
Tariff item 555.
Clothing, wearing apparel, all textile woollen manufactures-
1930-30 per cent and 25 cents per pound.
1937-	30 per cent.
Tariff item 567a.
Clothing, wearing apparel, all textiles, artificial silk-
1930-30 per cent.
1936-	25 per cent.
Tariff item 568.
Knitted goods, underwear, etc.-
1930-25 per cent.
1937-	20 per cent.	'
Tariff item 553.
Household blankets

1930-22+ per cent and 20 cents per pound. 1937-20 per cent and 5 cents per pound.
Tariff item 572.
Floor carpets and rugs-
1930-30 per cent and 10 cents per sq. yd. 1937-30 per cent.
Tariff item 611a.
Boots and shoes-
1930-25 per cent.
1937-22+ per cent.
Thus it will be seen that the tariff is still very high on goods coming from the old country into Canada.
I wish now to discuss briefly a subject in which the tariff does not seem to cut any figure. I am going to refer to farm machinery. I do not intend to discuss this question in detail because I have done so on a former occasion and others have gone into the subject. We had our parliamentary investigation two years ago. There was a United States probe at the same time and we have had a probe this year by the Saskatchewan legislature. All these investigations indicate that a combine exists in the manufacture of farm implements on this continent. The fact that when this government lowered the duty on farm implements from 25 per cent to 7+ per cent there was no reduction in the price but the reverse, was a defiance to parliament and an exploitation of the farmers of Canada, and this government should have taken action in the matter. Here was a chance for real reciprocity. Canadian manufacturers of farm implements enjoyed free
The Budget-Mr. Leader

access to United States markets, and this government should have insisted that United States machinery be allowed to enter Canada free. That action would have been justified for the reason that manufacturers of farm implements, in direct defiance of the government, increased their prices instead of lowering them when the tariff was lowered.


John Alexander (1874-1948) Macdonald: Were not prices just as high in the United States?


Harry Leader: Well, farmers in the United States were getting more for their produce. If we were getting ten or fifteen cents a bushel more for our grain, $3 a hundred pounds more for our cattle, a better price for our butter and so on, we could pay more for our machinery. The people of western Canada are deeply concerned about the price of farm implements. They are desperate. I know neighbours in my district, and there are people in the same position throughout western Canada, who are organizing in an effort to borrow machinery from one another because they have not the price to pay for new eqpipment.
With your permission, Mr. Speaker, I should like to put on Hansard an article giving the views of the United Farmers of Manitoba. No doubt many of the ministers, and I presume every member from our province, have received copies of this memorandum. It gives the comments of four speakers who discussed this matter in the house some time ago, and in this case it seems that the first should be last, because they start out with myself. I quote:
Mr. Leader expressed the viewpoint of the farmers exactly when he said, "There are occasions-and they exist to-day. I believe, when it becomes the duty of a government to intervene if a great business organization takes advantage of its power to oppress its workers or to exploit the consumer."
Mr. Gardiner said, "I found that a binder that cost $295 a year ago would cost me $322 to-day. This is an increase of $27 between the time this committee first presented this report to the house and the present time."-"The industry has paid no attention to the complaints of farmers and the warnings of the committee. If they persist in this course action should be taken which they would fully understand and appreciate. Agriculture, which is the greatest primary industry in Canada, refuses to be bled any longer by half a dozen manufacturing plants which give as their only real reason the fact that they are employing 4,159 men."
Mr. Weir said, "The companies themselves, when being cross-examined by counsel for the committee, admitted that they could not justify their price increases by increase in the cost of production as regards raw materials, or any of the other items which enter into it, prior to 1930."
JMr. Leader.]
Then it quotes one of the oldest members of the house, a gentleman who enjoys the respect of all more than any other member, the hon. member for Melville (Mr. Motherwell).
Mr. Motherwell said, "The Minister of Agriculture issued a clarion call-for a lower price of farm implements, or at any rate a price not accentuated by reason of tariffs. If we are not to get it by reduction of tariffs then we must get it somehow. That was the philosophy of the minister's statement."


John Alexander (1874-1948) Macdonald: What is the hon. member reading from?


Harry Leader: From a memorandum sent out by the United Farmers of Manitoba. It closes with this comment:
Such emphatic statements as these naturally supported the growing assurance in the minds of the western farmers that practical measures would follow-. However, the session of 1938 closed and nothing was done.
And still another session is passing into the great beyond and no action has been taken. Let me assure the house that the Manitoba members did everything in their power to have the government take action in the matter. We went so far as to prepare a petition which in due course was sent to the Prime Minister (Mr. Mackenzie King) by the chief of our group, the hon. member for Marquette (Mr. Glen). I had better read the petition:
Resolved that after an exhaustive study of the evidence submitted to the special committee of the house which inquired into the high price of agricultural implements, and in consequence of the full debate which took place relative to the concurrence of the special committee's report, we tihe following members of parlia ment and supporters of the Liberal party do hereby request that all customs duties be removed from farm implements and parts. Also that cream separators be placed on t'he free list as previous to 1932. We do request that the implement companies should have a drawback on all imported materials included in such implements.
That was signed by thirteen Liberal members from Manitoba, being, I think, all the Liberal members except the Minister of Mines and Resources (Mr. Crerar).
Now I have the letter that the Prime Minister sent to the hon. member for Marquette in acknowledging this petition. I quote:
Dear Mr. Glen,
I wish to acknowledge your letter of June the 2nd, just received, with which you have forwarded a resolution, signed by yourself and other Manitoba members, regarding the duty on farm implements and parts. I have noted the representations contained in t'he resolution, and shall not fail to see that they receive the careful consideration of the government as a whole.

The Budget-Mr. Leader
I have no doubt that this did receive the serious consideration of the Prime Minister and his cabinet, but I am very sorry to say the consideration was not favourable.


Mr. GOLDING:: Oh, yes, there was quite a reduction in the tariff.


John Alexander (1874-1948) Macdonald: Has there not been a big reduction by the removal of the excise tax?


Harry Leader: Well, I do not know that there has been any reduction in the price, but there should at least be a 3 per cent reduction.


John Alexander (1874-1948) Macdonald: That is about one-third of the duty.


Harry Leader: 
Major James William Coldwell: And the government did nothing to force it down.


Harry Leader: The government has not taken adequate action; that is what I am complaining of, and that is what our people in western Canada are complaining of. I come from those people; I know what they are thinking, what they are telling me, and I tell them just what I am telling the house to-night.
Let me now give the personnel of the directorate of the Massey-Harris Company. I went to the trouble of digging this up, I believe it was two years ago, and in looking over my files found that I still had it. I find that none of the men who invented this machinery and brought it to its present standard is included in the directorate. No doubt they received considerable money when they left the company, and I do not think there is any one in Canada who begrudges these men any money they made out of that business; they worked hard for it. But at the present time who controls the Massey-Harris Company? Financiers who never did anything to build the machinery or bring it to its present state of development. Here are the names: T. A. Russell, president; J. S. Duncan, Toronto, vice-president; G. W. McLaughlin, Oshawa; E. R. Wood, Toronto; J. H. Gundy, Toronto; Frank P. Jones, Montreal; J. F. Lash, K.C., Toronto; Frederick K. Morrow, Toronto; J. A. Kilpatrick, Toronto; W. H. Moore, Toronto; G. W. Allan, K.C., Winnipeg.
Looking over the records of these gentlemen, I find some of them are directors in at least twenty-three companies; they are
men of big business. They control the tobacco industry, gold mines, oil fields, banks, grain companies, milling companies, cement companies, lumber mill, insurance, airports and mortgage companies, power companies-Beau-harnois, that name sounds rather familiar- chain stores, hockey rinks, steel companies and paper mills. What chance has the farmer of Canada with a directorate such as that? Mil-linaires who will close their factories when they cannot sell the goods, and who, instead of bringing down prices and selling reasonably, discharge their workmen and force them on relief for the people of Canada to support.
I have now come to a very important part of my remarks. I have to tell the house that it will be my duty to vote against the budget.


An hon. MEMBER:: Go over to the other side.


Harry Leader: Before I conclude, I hope to convince whoever made that remark that it does not make much difference which side I sit on, I can be just as good and faithful a representative as any of the hide-bound party men who interrupted me.
I always try to keep in as close touch as possible with the people who are paying me to do this job, my constituents. When I went home after the last session I called together my executive, or as many of them as I could get; I told them I had committed the unpardonable sin of voting against the budget, and I wanted to know how they regarded my action, the following resolution was passed. It was moved by Mr. Laird-


John Alexander (1874-1948) Macdonald: Who is he?


Harry Leader: He is a fine old Liberal in the city of Portage la Prairie, and there are many more of them. I quote:
Moved by Mr. Laird-seconded by Mr. Hugh McKenzie, that Mr. Leader's action on the budget vote has our full sympathy and endorsa-tion and that a copy of this resolution be sent to the Prime Minister and the Minister of Finance.
Carried unanimously.
That is what my people thought of my attitude at that time.


John Alexander (1874-1948) Macdonald: When was that passed?


Harry Leader: Last summer, when I went home after the session.


Miss MACPHAIL:: The hon. member for Brantford City is getting wrathy.
The Budget-Mr. Leader


Harry Leader: The remark of the hon. gentleman prompts me to state the political position that I occupy in my very humble capacity in this house. I have told the house before that I was raised a Conservative-


William Henry Golding: That was a big mistake.


Harry Leader: -and when I reached years of maturity I decided that was not the party for me. Then I became a Progressive member of parliament, a member of a third party. That party was abandoned by its leaders, sabotaged from the inside. Disintegration followed and to-day it is only a memory.


Major James William Coldwell: No, not quite.


Harry Leader: Then I was looking for a home, speaking politically.


Agnes Campbell Macphail: You picked a poor one.


Harry Leader: In 1932, I believe it was, the Progressives of Manitoba met in convention in Brandon and passed a resolution to amalgamate with the Liberal party in our province. That is why I am standing here to-night a supporter of the government, elected as a Liberal-Progressive. I want to make my position clear to this house; with my people back home it is as clear as daylight. I am going to read three short paragraphs from the letter which I addressed to my constituents prior to the last election. The letter carries a picture of the candidate- which no doubt created a deep impression; at any rate the results were quite satisfactory. But, after all, it does not matter what the candidate looks like, it is what he says that counts.


Major James William Coldwell: And what he does.


Harry Leader: Yes. What he does after he gets elected. In my letter I say:
While I believe in a strong government with sufficient power to enact legislation, I also believe that a member of parliament should study with care all proposed legislation, and vote for the interests of the people whom he represents rather than the interests of the political party with which he is affiliated. With this thought in mind I challenge all who are interested to study my four years record at Ottawa. They will find that I remained free at all times to exercise my own best judgment in recording my vote, and I intend, if elected, to pursue a similar course during my term of office.
The Liberal party has among its members many men and women of advanced and progressive thought. They are demanding decisive and immediate action in redressing the wrongs and inequalities from which we now suffer.


Agnes Campbell Macphail: That was before the
election.
fMiss Macphail.l


Harry Leader: Yes. I would ask hon. members who have been interrupting to listen to this:
With these people I will pool my resources, hoping that by united action we can effect relief measures that will restore our purchasing power, reduce our unemployment, and strengthen our faith in God.
In addressing this letter to the electorate it is not my intention to detail a general policy, but there is one particular industry that requires a new deal. The great agricultural industry must be rehabilitated, and placed upon a more permanent foundation.
Mr. Speaker, that is why I am here, and that is why I plead for agriculture-the only business I know anything about. As I said before, it shall be my duty to vote against the budget.
In conclusion, I want to say that in my remarks to-night I trust I have made my position clear. The opinions expressed are my own. But I realize that I am responsible to my constituents, and they will attend to me in due time. I really have cooperated with the government, but there is a limit beyond which I cannot go. When I return home, and if I offer myself as a candidate in the next election, my position will be exactly as it was four years ago. If I should have the good fortune to be elected I will come back to this parliament, irrespective of what the next government may be, prepared to give of my best, in cooperation, for the general welfare of this great Dominion of Canada.


Ernest Edward Perley: Mr. Speaker, I desire to join with the hon. member for Portage la Prairie (Mr. Leader) in expressing pleasure at the fact that the Minister of Finance (Mr. Dunning) has recovered his health and was able to deliver a most depressing budget without any apparent ill effects on him physically.
From the debate yesterday one would judge hon. members would have to conform to some new rules with respect to the budget debate, and would not be given the usual latitude customary when discussing the budget. When referring to certain bills on the order paper two hon. members were ruled out of order. After what happened this afternoon when the house met, it would seem that those two bills are to be revamped and rewritten to such an extent that when they appear again we may not be able to recognize them, and for that reason I do not propose to refer to them to-night. No doubt in respect of one the ante will be raised, as was indicated by the Minister of Agriculture (Mr. Gardiner) when referring to the bill of the Minister of Trade and Commerce (Mr. Euler). I just wonder why the Minister of Agriculture has to do

The Budget-Mr. Perley
most of the announcing for the Department of Trade and Commerce. However, we shall see the bills when they come down.
May I congratulate the hon. member for Portage la Prairie and the hon. member for Humboldt (Mr. Fleming) upon the manner in which they have expressed themselves. They have had the courage of their convictions, and I wish there were more like them in the house. I have seldom known of a speech made in the house that has brought about such quick results as did the speech delivered last night by the hon. member for Humboldt. We saw the results this afternoon when the ante was raised. I would say to the hon. member for Portage la Prairie that if he had directed the resolution he read to us respecting agricultural implements in the west to the right place, rather than addressing it to the Prime Minister (Mr. Mackenzie King)-if he had directed it to the Minister of Agriculture-he might have obtained some results. I say that because the Minister of Agriculture yielded to the committee that came down from the west and, as I say, he might have had some little influence in the cabinet and have brought about results.
Last night I was interested in the description by the hon. member for Humboldt of the different types or stripes of Tories. I wish he had described his own particular type to the house. However, he need not come over to this side of the house to describe Tories; there are so many peculiar types of Liberals on his own side it would take most of a forty minute speech to describe them. Had I the time at my disposal to-night I would take great pleasure in doing so, and I would begin with the Minister of Mines and Resources (Mr. Crerar).


An hon. MEMBER:: What about your own leader?


Ernest Edward Perley: He was described last night, and he can speak for himself.


Mr. CRERAR:: The hon. member might start with himself.


Ernest Edward Perley: I have a clear record of straight Conservatism, and I am not ashamed of the Conservative party. I have supported it throughout. I am not a wobbler like the Minister of Mines and Resources. Naturally, as a westerner I looked in the budget for something for the west, something to encourage western producers, but I failed to find anything. As the hon. member for Rosetown-Biggar (Mr. Coldwell) has said, the budget was a blank. It is a " do-nothing " budget by a " do-nothing " government. I recall the optimistic budgets delivered by the Minister
of Finance in 1937 and 1938. I recall the broadcast on the night of the election by the Prime Minister when he promised he would abolish poverty, adversity, and so on, and painted a wonderful picture. Now, after four years, nothing is done.


Mr. MARTIN:: That is not true.


Ernest Edward Perley: We have only to wait and hope, so far as the budget is concerned. Nothing permanent for the producer is outlined, nor is there anything for the consumer. There is no reduction in taxation, and no indication that the government intends to take any action towards bringing about lower prices of implements of production, to which reference was made by the hon. member for Portage la Prairie. There was no indication that the government would bring the prices of those implements of production to a level comparable with the prices received by the producer for the product of his effort.
And how about the iniquitous sales tax? How about the sugar tax? A ten per cent reduction in the former would mean a saving of about 815,000,000 in what the consumer has to pay.


Paul Joseph James Martin: Who put on the sugar tax?


Ernest Edward Perley: I will tell the hon. member about that. Oh, how in 1934 did we hear the wails from this side of the house! I can remember the hon. member for North Battle-ford (Mr. McIntosh) and the hon. membei for Wood Mountain (Mr. Donnelly) wailing about the sugar tax. When we had to increase the sales tax in a case of emergency to save this dominion, how they wailed about it! What hapened in the campaign of 1935? One would think from their speeches we would have a reduction. But now, when they come back they are prepared to swallow the sales tax when it is raised to 8 per cent, and the sugar tax remains.


Mr. EVANS:: Did you do anything?


Ernest Edward Perley: We took off one cent. You people were going to reduce it altogether, but you did not. The Minister of Finance was hopeful for next year, but with conditions as we know them to be and this government sitting idly by, especially during the last year, doing nothing, what may we expect? Surely we know. Is it any wonder that we have leadership leagues being formed when this government has not given the leadership the Canadian people desire and demand?
The budget stressed the importance of external trade and exports, but the figures of the Minister of Finance were shattered when the hon. member for York South (Mr. The Budget-Mr. Perley

Lawson) gave figures showing exports decreasing and imports not decreasing in comparison with the decrease in exports. We are heading toward an adverse trade balance. Why not investigate our internal trade? How many people know the value of our internal or domestic trade? How many people know what it amounts to or what it means to Canada? Ninety-five per cent of our natural agricultural products and 30 per cent of our wheat are consumed in Canada. The Liberal party stresses the importance of external trade. That trade is valuable along certain lines; but if it tends to increase unemployment in our country, if it becomes a question of trading Canada's raw products for the manufactured goods of other nations, then it is no good. On the other hand, domestic trade would tend to relieve the unemployment situation and increase employment. I would double the price of our agricultural products. It would then be found that unemployment would start to disappear. What would it amount to if the price of a cowhide, for instance, were doubled? How much would it increase the price of a pair of boots?


Charles Robert Evans: Why did you not do it when you were in office for five years?


Walter Edward Foster: I ask the hon. member
not to interrupt the hon. member who is speaking.


Ernest Edward Perley: Leaving the local conditions of drought and crop damage aside for the moment, generally a nation-wide depression is accompanied by a great decrease in the price of farm products, while prices of secondary products remain almost stationary and certainly do not go any lower. I was referring to the possibility of increasing the price of cowhides or wool. If those prices were doubled, what would it mean to the cost of a pair of boots or a suit of underwear? If the price paid for a bushel of wheat were doubled, what would it mean to the price of a loaf of bread?
A commission investigated the baking industry a few years ago, and it was shown conclusively that there was no great difference in the price of a loaf of bread when wheat was selling at 70 cents a bushel or $1.60 a bushel. We are going round in a vicious circle. We have more relief, and this means higher taxes. Higher taxes mean higher costs of production. Higher costs of production mean a loss of trade, both external and internal. Loss of trade means more unemployment. More unemployment means more taxes. Thus we go round and round the vicious circle. I suggest to the government that they should employ such measures as would make that circle

a beneficial one. Double the prices for our agricultural and natural products and the result would be a beneficial circle.


William Daum Euler: The hon. member suggests
that the government should take action to double the prices of commodities produced on the farm. Would he tell the house just how he would do that?


Ernest Edward Perley: I am just coming to that.


William Daum Euler: I think it will be most
interesting to know that.


Ernest Edward Perley: If the minister will just
sit quietly in patience for a little while I will try to explain. Better prices for our farm products would mean vastly increased purchasing power for half our population. An increased purchasing power would mean that more goods would be purchased. When more goods are purchased it means there would be increased employment at better wages. There would also be increased revenues for the government. I want to say here that the Bennett government directed its efforts toward increasing the prices of farm products. The measures introduced by the Minister of Agriculture will not increase by very much the prices of our agricultural production. The initial guaranteed price which he has suggested of 60 cents a bushel at Fort William is the lowest in practically fifty years and it will not tend to bring about the conditions which I have suggested. I do not think it will go very far in reversing the circle about which I have spoken. Courageous action on the part of the government in developing our natural resources and industry would go a long way toward relieving unemployment. If the price of wheat were set at a reasonable figure, say 87 cents a bushel or over, for a period of years you would be able to employ 200,000 more men on our Canadian farms annually.


William Daum Euler: Where would you sell the
wheat?


Ernest Edward Perley: We had a surplus in 1935
which disappeared in the world's markets. The Minister of Finance charged big business with timidity, but I do not see that this government has displayed any great courage or leadership. There are not many changes in the tariff under the budget because most of these occurred in connection with the trade agreement. Time alone will tell what the results will be, so I shall not deal with this phase of the matter just now. I should like to ask, where were the western Liberals, other than the two

The Budget-Mr. Perley
I have mentioned, when the budget was being prepared? What influence were they exerting upon tne government to carry out the policies which were promised to the people of western Canada? Only the hon. member for Humboldt and the hon. member for Portage la Prairie have taken the proper stand.
The minister mentioned the relief that has been given to the western provinces over a period of years. This amounts to $100,000,000 odd and I want to say that we appreciate it. However, when relief is necessary it should be given, but as relief. This relief would have meant much more to those needing it if it had been distributed in the proper manner. The administration of relief in Saskatchewan is a disgrace to this dominion. The administration of relief in that province has been so bad that its defects are quite apparent. The whole matter should be investigated, and if there is a change in government, which it is quite apparent there is going to be, the administration of relief in Saskatchewan will be sifted to the bottom.
Many matters of importance were referred to casually by the minister when he was delivering his budget speech, but time will not permit me to discuss them at this moment. They have been discussed more or less pro and con during this session, but with very little result.
The problem is the government's, and it is their responsibility. The Canadian people will	give their judgment at the first
opportunity. In computing the budget deficit for the fiscal year ending March 31 last at $55,000,000, the minister put the loss in connection with the operation last year of the wheat board at $25,000,000, but he did not say what it would be this year. No one knows that. For the next fiscal year the minister predicted a $60,000,000 deficit, again leaving out any losses in connection with wheat. Even this deficit figure is predicated upon an improvement in business conditions, which is not apparent. No provision is made in the budget for financing the pre-election agricultural measure recently introduced by the Minister of Agriculture in particular, and no one knows what it will involve. I shall not hazard a guess. But we know that this and other measures will be presented, and we know from what happened to-day that they will be rushed through the house in the dying days of the session, without any opportunity for proper consideration because there will be no time. Bill No. 62, not a very contentious measure, has been before the agriculture committee for I do not know how many sittings, and we are not through with 71492-219
it yet. If all the agricultural bills go to the agriculture committee it is doubtful if we could be through before August.
Coming back to the figure of $48,000,000, which has been referred to from time to time by the Minister of Agriculture as the loss on wheat, I charge that this government's policy was responsible for the greater part of that loss-the policy which they commenced in August of last year, the policy which they pursued of throwing huge quantities of wheat on the market, the selling policy, which they announced to the world. These policies, I charge, are responsible for more than half of that loss. Another part of the loss is accounted for in the carrying and storage charges allowed by private agreement to the grain companies. I wish I had time to deal with that feature to-night, but I may do so when the legislation is before the house. It represents a straight gift of five million dollars to the elevator companies in carrying or storage charges. They are making a service charge of one cent a bushel for performing no service whatsoever, and when the proper time comes, I have figures to substantiate my statement.
We shall not have time in the dying days of the session to give proper consideration to these very important bills. I know what happened, for example, the other day, when the second reading of Bill No. 104 was called, which the minister moved to refer to a committee, when not a single member had seen the bill at the time its second reading was moved. It had not even been printed. It was distributed in the house only five minutes after the minister made his motion. What a farce the whole thing is I Members are asked to consent to referring a 'bill to a committee when they have not even seen it.
Much has been said about the assistance that has been given to agriculture and the wheat producer. I want to say that the total assistance given to agriculture and the wheat producers in the seven years from 1930 to August 1, 1938, amounts to less than $22,000,000. I refer hon. members to the reports of the wheat board for 1937 and 1938, which are available to us all. The costs to date for assistance to agriculture and the wheat producers would be, first, the five cent bonus given by the Bennett government, amounting to $12,000,000; next, the adjustment with respect to the pools in 1935, of $6,500,000; and the net loss on the wheat board's 1935 and stabilization operations of $2,954,000, or a total of $21,454,000. That is apart from the 1938 crop, and it remains to be seen what it will be. Other exporting and importing countries have assisted their producers over

The Budget-Mr. Perley

the same period to the amount of four billion dollars, so Canada is not doing anything special in assisting the wheat producer as she has done. I take the position that there was no reason for a loss to be taken this year, and I may have an opportunity to discuss that when the bill is before us.
I desire to place on Hansard a weekly statement of the Canadian wheat board at the close of business August 13, 1938, and a
report of the wheat board covering the period from December 2, 1935, to May 29, 1937.


Walter Edward Foster: The hon. member can place them on Hansard only by unanimous consent. Do I understand that he has the consent of the house?


Some hon. MEMBERS:: Agreed.


Ernest Edward Perley: Thank you, Mr. Speaker. They are as follows:
August 20, 1938.
Weekly statement to the close of business, August 13, 1938 The Canadian Wheat Board,
Winnipeg, Manitoba.
Gentlemen,
In terms of section 8e of the act constituting the Canadian Wheat Board, we report that as at the close of business on Saturday, August 13, 1938, the cash position of the board was as follows:
No. 1 account No. 2	Seed and
No. 3 account account feed account Total
Funds on deposit with banks.. .. Funds transferred to the dominion
government	
Due to the Saskatchewan government-Options account	
-Seed and feed	
Due to 1938 crop account	
Inter-office adjustments
Seed and feed account	
No. 1 account deficit	 11,858,104 18
No. 3 account deficit	 49,574 88

50,570 00 215,563 03	215,563 03
22,832 50
391,813 52
$11,907,679 06 $24,612,139 97	$176,250 49 $12,880,711 40
The above figures are in accordance with the records of the board which we have examined.
Yours faithfully,
Millar, MacDonald Co.,
Chartered Accountants.
The Canadian Wheat Board
Weekly report as required by section 8e of The Canadian Wheat Board Aot Period from December 2, 1935, to May 29, 1937
No. 2 account-Holdings acquired from Canadian Co-operative Wheat Producers Ltd.
Holdings assumed from Canadian Co-operative Wheat Producers Ltd., as at Dec. 2, 1935.. .. Transactions from Dec. 2, 1935 to May 22, 1937. Cash wheat deliveries through clearing house.. Options acquired against cash wheat sales and
sales contracts	
Options sold	
Options exchanged against cash wheat deliveries. Cash wheat sold-completed	
Open market position May 22, 1937	
Transactions from May 25, 1937, to May 29, 1937. Cash wheat deliveries through clearing house.. Options acquired against cash wheat sales and
sales contracts	
Options sold	
Options exchanged against cash wheat deliveries. Cash wheat sold-completed	
Open market position May 29, 1937	
Cash wheat bushels	Open futures contracts bushels	Total bushels53,727,979-50	151,459,000-00	205,186,979-5020,541,000-00	20,541,000-0074,268,979-50	70.969.000-	00 187,629,000-00 20.541.000-	00	70.969.000-	00 187,629,000-00 20.541.000-	00 74,268,979-5014,258,000-00	14,258,000-00655,000-00	655,000-00655,000-00	655.000-	00 974.000-	00 655.000-	00	655.000-	00 974.000-	00 655.000-	00 655.000-	0013,284,000-00	13,284,000-00

The Budget-Mr. Perley
The Canadian Wheat Board-Concluded
Cash position
Funds on deposit with banks	$ 2,886,709 50
Funds transferred to dominion government	 8.000.000 00
Funds on deposit with dominion government	 2,000,000 00

Due from No. 1 account	 11,858,104 18
Due from No. 3 account	 49.574 88

Less due on Saskatchewan government accounts	 50,885 34
Cash surplus on No. 2 account	$24,734,503 22
Grave alarm was felt in government and other quarters over the report last week from London that the United States is seeking to negotiate a barter deal with Great Britain in wheat and cotton and to dispose of one hundred million bushels of her wheat in the British market. After the signing of the Canada-United States treaty in Washington, the United States sold some thirty million bushels of wheat to Great Britain, and the sale of an additional one hundred million bushels of United States wheat would virtually shut Canada out of the British market. British imports of wheat last year from all countries totalled 190,000,000 bushels. After the Prime Minister of this country signed the new trade agreement at Washington, the government here issued a statement to the effect that the giving up by Canada of the 6 cent preference on wheat in the British market meant no sacrifice because the preference was of no benefit to this country. But the Washington government, on the other hand, issued a statement claiming that the removal of the 6 cent preference for Canadian wheat would restore United States wheat to its old position in the British market at the expense of the Canadian wheat grower. The recently reported barter deal negotiations are designed to make that claim good.
In the next five years we shall see a vast change in production and marketing methods. A committee of the international conference that was held in London is now working on a plan for a five-year quota on production and marketing. Undoubtedly great changes will be made in the next few years.
I should have liked to devote a little time to the speech of the hon. member for Lake Centre (Mr. Johnston), but the hon. member for Humboldt and the hon. member for Portage la Prairie have handled that member so well that I shall waste little time to-night on his speech. He made some important statements with respect to the tariff. The only question I would be inclined to ask him would be, where were he and some other low-tariff members opposite when certain things were 71492-219i
happening? He also made a statement with respect to farm implements. I recall the statement he made in 1936 when he was moving for a committee to investigate the farm implement industry. I recall also the statement which the Minister of Agriculture made just before the Saskatchewan elections in 1934, warning the implement companies as to what might happen if they did not do thus and so. Why was not action taken along the lines suggested by the minister?
It is interesting to note the trend of business in Canada during the last two years. Wholesale prices in Canada have continued to sag, and probably will go lower. The drop in the price of raw materials has been substantially more severe than the decline in the price of manufactured goods. The slump in prices of Canadian farm products was about 25 per cent in the last two years, while the drop in prices of manufactured articles was only 8-8 per cent. There are only two ways in which this situation can be corrected. The price of manufactured goods must fall, or the price of primary products and raw materials must rise. Our exports of raw or unmanufactured goods are larger than our exports of manufactured goods. Our imports are chiefly manufactured goods. A comparison of prices of Canadian imports with export prices of our raw or unmanufactured products reveals one of the basic troubles which are holding back recovery.
There have been a number of rumours round the corridors of this building that protest meetings have been held by certain members respecting certain legislation, hole-in-the-comer meetings, I would suggest; and I protest against any minister of the crown making important statements with respect to changes of policy in impending legislation at hole-in-the-corner meetings with a few members and considering what will be the political effect of such changes.
The Minister of Agriculture made a visit to the west. He also made an evening broadcast, so he had many listeners, but he evi-
The Budget-Mr. Perley

dently gave them a headache, because the next morning they immediately started to get out a petition, which was signed by many thousands of farmers, protesting against the legislation which he had forecast in his address. It brought about delegations from the west to Ottawa to protest further. I understand that there was considerable bargaining and bartering when the Minister of Agriculture tried to make a deal with the premier of Manitoba whereby, if that premier would assist in discouraging pressure to be brought to bear on the government for measures to be referred to the committee on agriculture rather than have them go through the house, certain things would happen; for instance, Bill No. 63 would be withdrawn or left on the order paper. I object to that sort of thing. Once that kind of thing takes place, the whole marketing problem becomes a political football.
Many hon. members from the west have received petitions. I received one, which has 6,000 names on it, from my own constituency. A letter attached to one section of the petition was to the effect that it was not a political move; the writer had heard it charged that it was a political effort; he was sixty-four years of age and had ridden round on horseback getting people to sign the petition.
The hon. member for Weyburn (Mr. Douglas) made mention of certain resolutions passed at a Liberal meeting in the constituency of Qu'Appelle. I have a record of those resolutions, and I say that no greater condemnation of this government could be offered than the resolutions passed at that meeting; one, calling upon the government to take immediate action to reduce the cost of agricultural implements; another, asking the government to set a price of 80 cents on wheat; and another strongly worded resolution asking the federal authorities immediately to evolve some plan to create employment with a view of relieving the depression and the relief situation in Canada. Surely that is evidence of dissatisfaction and of condemnation of the government.


Mr. TUCKER:: Are you not yourself in favour of those resolutions?


Ernest Edward Perley: Yes, and I intend to go a great deal further than even those people went. I am going to put you on the spot and see if you are in favour of those resolutions.


Walter Edward Foster: Order. I would draw to the attention of the hon. member that he should not directly address another hon. member but should mention him as the member for such and such a constituency.
Mr. Perley.]


Ernest Edward Perley: I wish to recall something else that happened in our province. During the campaign of 1934 a copy of a little pamphlet was put in practically every cream-can at the railway stations when it was being returned to the farmer. It was something like this: "Dollar wheat will pay your taxes, and pay for the licence for your automobile, and your gasoline. Dollar wheat will pay your grocery bills, and buy boots and shoes and clothing for your wife and kiddies. Vote Liberal." That is all it said. The people did vote Liberal. Have they got dollar wheat? The babies are still going barefoot, and we have the promise of 60-cent wheat.
Here is another one. During the campaign of 1935 another pamphlet was issued by the ton. Some hon. members received thousands of copies, and every Liberal member in this house saw them during the campaign. They were used against me. This pamphlet stated:
Secretary of State Cahan announced at a meeting last night in Montreal that the cabinet had fixed the price of 874 cents for the 1935-36 year. (This shows the cabinet, not Mr. Bennett, fixed the price.) You should receive 10 cents more a bushel for your wheat. Liberal association, Saskatchewan.
And then followed the name of the publisher. The Minister of Agriculture admitted that he was responsible for the issuing of that pamphlet, which was widely circulated. Now what have we? Well, we have nothing like the 974 cent wheat which was suggested there. They offer 60 cent wheat.
Now. Mr. Speaker, this is the place for constructive suggestions. I have a resolution which was put on the order paper on January 12, but which will die, like many others; it will never be reached. However, I have a constructive suggestion to offer now, and it is to this effect. I have made a study of this wheat marketing problem to as great an extent, perhaps, as any hon. member. I have been associated with the subject for a number of years. I believe that we should take a courageous position, that we can give the farmer some sense of security and some relief if a fixed minimum price is set for a number of years. I would suggest, sir, that from the western committee set up by what is usually called the Bracken conference there should be selected a smaller committee, representative of all interests in Canada, and that they should start to work along lines similar to those on which they have been working, and devise a scheme for a fixed minimum price for a number of years.


David James Hartigan: How much?


Ernest Edward Perley: Just you contain yourself a moment.

The Budget-Mr. Perley


Walter Edward Foster: Order.


Ernest Edward Perley: I believe we are all agreed that the economic security of the producer is the first concern of any government. A sound, stable agricultural policy is essential to a sound, stable market for the products of industry. I shall not refer at this time to what Judge Turgeon recommended, but it is evident he believes that the wheat board is the only thing w'hich can function in abnormal times or in cases of emergency. I therefore would suggest-it is a suggestion of my own; I am not tying anybody to it, although I think it is worth while and should be considered by the government and by all of us- that the Wheat Board Act become operative to the full extent; that the board be enlarged by, possibly, two members; and that the advisory committee which we formerly had should be reinstated.


William Daum Euler: It is still included in the act.


Ernest Edward Perley: We can reinstate it quite easily, then. It would be better than an advisory committee of the cabinet. The board's powers should be enlarged to the limit of exporting. I would say that they should set a fixed minimum price of 87 cents a bushel for a period of ten years. The price during the stabilization years of the McFarland regime was 86 cents. The price was later fixed at 87 V cents, and the author of the Liberal pamphlet said it should be ten cents more. On all the operations during that time we finally made a profit of $25,000,000, other than the loss which was taken following the coming into operation of Mr. Murray's board. I would set the price at 87 cents for the month of August, plus one cent a month for each additional month until the following July 31, which would make an average price of 92J cents a bushel.


Thomas Alexander Crerar: May I ask my hon. friend
a question? Is he speaking for himself?


Ernest Edward Perley: I am speaking for myself; I said so. I am offering a suggestion to this parliament and to the government, and I will say this for what I am suggesting. If I could not go a thousand times further, in getting this suggestion put over with the government which I supported and the government which I hope to support if I am reelected at the next election, than the sixteen Liberal members from Saskatchewan have gone with their government, then I would be prepared to quit.


Thomas Alexander Crerar: If my hon. friend will permit me, may I say that if he had undertaken that his leader and his followers would underwrite his suggestion, we might be ready to pay some attention to it.


Ernest Edward Perley: Well, my leader will speak for himself.


Robert James Manion: Nobody knows what the
present government are going to guarantee. They do not know themselves.


Ernest Edward Perley: That is not as far as the
Minister of-


An hon. MEMBER:: -odds and ends.


Ernest Edward Perley: -Mines and Resources went in 1935, as would be seen if we had one of these pamphlets.


Thomas Alexander Crerar: I never saw the pamphlets.


Ernest Edward Perley: I make that suggestion
for this reason. The one cent added each month is practically the amount of the interest and the carrying charges on wheat, namely one cent a month, or one-thirtieth of a cent a day. It would encourage the farmer to hold his wheat on the farm, where it should be stored, and the cent a month would pay him exactly what the board is paying to elevator companies to carry the wheat once it is delivered to the board. Thereby the man would be assisted to carry his wheat and keep it out of the show window and out of the visible supply. That does not affect the man who cannot hold his wheat back, or all of it, because it does not affect the initial price; it is giving to the man who holds back his wheat only what the government is now giving to the elevator companies to hold the wheat. It would not cost the government any more. Further, I would issue participation certificates, and if the wheat was sold for more than the average I would set up a reserve fund. That is only business.
Further-and this is important-I would then set the domestic price of all wheat in Canada, the price of all wheat milled in the country for domestic purposes, at $1.20 a bushel, and I would regulate the price of flour, with the result that bread could be regulated, and it would not cost the consumer another cent a loaf. It would take sixty millions or more out of our export wheat, out of the visible supply, and that would be nothing more than what should be done. This is done in Australia and in other countries to a far greater extent than I suggest. The setting of a domestic price for all wheat used in Canada is a business proposition to which we shall come, and $1.20 a bushel is my suggestion. I wish I had time to elaborate this idea. I
The Budget-Mr. Perley

made this suggestion on the strength of the Turgeon commission's report, at page 23 of which is given the average price for the last forty-eight years. For the eighteen years prior to the war the average price was 91f cents; and for the eighteen years following the war the average price was S1.15J, and for the thirty-six years outside the war period the average was $1.03i, which is about five cents more than the Liberals suggested that the fixed price should be in 1935.
I am an optimist in this respect. I believe that history will repeat itself. In 1932 we had the greatest surplus in the world's market, and twice as much of a carry-over as we shall have this year. Under marketing conditions similar to those that prevail to-day, the Bennett government in 1935 set the price at S7J cents. And they were not wrong in doing so. All the wheat handled from 1930 to August, 1938, has not cost the country anything at all. The west has made a real contribution to confederation and has played its part. This is a national economic problem and must be met with courage by the government; and if this government does not grapple with the problem another government will come in that will. I simply put forward a business proposition for the consideration of the house. If the members from western Canada had the courage of their conviction; if they came here fully alive to their responsibility, to present to parliament what they know that their electors conceive to be the right thing for them to do, they would endorse the plan I propose. lVe want more men of the type of the hon. member for Portage la Prairie.


Walter Edward Foster: The hon. member has exhausted his time.


Ernest Edward Perley: I shall have another
opportunity.


Mr. J. A. MacMILLAN (Mackenzie):: This is the fourth session of the present parliament. I have sat through every session, and this is the first time I have attempted to trespass on the patience of the house. I believe I can advance fairly good reasons why I have remained so reticent. One is that I am penurious in bestowing compliments unless there is justification for it, and I am not prone to criticize unless I can take into consideration the various elements that enter into a discussion. Another valid reason may be, and it is a good, sane one, which I believe will have the approval of every member of the house, that I am weary listening to the superb mediocrity of ninety-five per cent of the speeches delivered here. I am
jMr. Perley.]
fully aware that any remarks of mine, regardless of the occasion, will gravitate toward that classification.
Needless to say I am not at all satisfied with the progress that the present government have made. I believe they could have done a great deal better, and being under that impression I sometimes wonder whether the Conservative party, had they been in office during the last four years, would have done as well as the present government, or, if one of the two expiring parties, the Cooperative Commonwealth Federation and the Social Credit party, had been in office, what progress they would have made in the last three or four years. After giving the matter due and careful consideration, I have arrived at the irresistible conclusion that, regardless of the shortcomings of this government, it is, after all, the most progressive, most alert, and most democratic party we have in this house.
Let us take these parties in the order in which I have referred to them. We will take first the Conservative party-and right here let me extend my sincere felicitations to the present leader of the opposition (Mr. Manion) upon his appointment to the leadership of his party. It is my candid opinion, however, that as long as he has the honour of a seat in this house he will be sitting to the left of the Speaker. In that respect, I am sure that he will find consolation in the fact that this is a sad and cruel world-we never strew flowers on a man's grave until after he is dead. Shortly after his appointment as leader of his party he made a tour of the country. He visited western Canada and made speeches in Saskatchewan, the province in which I live. I listened to him when he spoke in Moose Jaw. I was 200 miles away, sitting in my home, and I listened to him over the radio. I had not been listening very long when I came to the conclusion that it was a good thing his party was not in office at the present time. He discussed the tariff, and he discussed it in such a manner that, if I did not know to what religious denomination he belonged, I would have said he was a spiritualist. Everything that he said about the tariff was veiled in such opaque nebulosity that I could not tell where he stood on the tariff. It was hard to say whether he was coming or going. If that was his attitude on the tariff-


Robert James Manion: It was not. I took in Moose Jaw the same attitude on the tariff as I have taken in the rest of the country and in this house. My hon. friend is drawing on his imagination, just as he was a few minutes ago in suggesting that he was going to lambaste the government when he rose in his place.

The Budget-Mr. MacMillan


John Angus MacMillan: They tell me that on the Killarney lakes in Ireland the echo is wonderful and astounding. If you call out,
" How are you this morning?" the echo will come back, " I am pretty well, thank you." You would call that a phenomenon, and very likely, when I was listening to the leader of the opposition at a distance of 200 miles, the ether waves transmitting what he said into my radio may have changed what he was actually saying. But, upon my word, Mr. Speaker, what I am telling you to-night is exactly what the loud-speaker in my radio transmitted to my ears, and I concluded that if that was the attitude of the leader of the opposition on the tariff it would be his attitude on every other public question. I felt satisfied, therefore, that it was a good thing the Liberal party was in office. I have the profoundest respect for the leader of the opposition, and I am sorry if I have given him cause to interrupt me, seeing that I do not speak so very often in this house.
The Cooperative Commonwealth Federation party came into existence with a flourish of trumpets. They originated in Regina some time in July, 1932. They came into existence at a most opportune time.


Mr. HOWARD:: A late-hatched egg.


John Angus MacMillan: Well, I did not know the reason for the degeneration, but now I understand. They came into existence at the most opportune time when we had a period of intensified depression the world over. They deliberated for days in forming a platform. They expended brain work in perfecting that platform and presenting it to the people. After it was presented, I was one of those who said I believed they had a good platform and a good1 leader. Of course I was taking into consideration the political career of the hon. member for Winnipeg North Centre (Mr. Woodsworth) who was appointed their leader and who is still their leader. I felt that he would stand by his principles or perish for them, that his principles were eternal. I believe that once upon a time he suffered the degradation of being an involuntary guest of his country for sticking to his principles. But harmony did not prevail indefinitely. Two or three elections took place and the party did not meet with very good results, so in 1935 they had a convention in Winnipeg. I believe they have conventions yearly, and I think that is good business. In 1935, as I say, they met in Winnipeg. They had met with reverses; they were conscious of this and had to do something to improve their condition. What did they do? A gentleman by the name of Marcus Hyman-I believe he has now passed
to his eternal reward; I did not know him personally, but I believe he was a very capable man-pointed out at this convention that it was necessary for them to change certain planks in their platform before that platform would be acceptable to the people. There were in that platform planks which either of the two old parties could adopt, but there was one plank which constituted the fundamental difference between them and the old parties, that is the socialization of all natural resources, including the farm lands of the country.


Major James William Coldwell: I beg to contradict that statement.


Mr. McLEAN (Melfort):: We have had it read in this house a hundred times, the socialization of all natural resources.


John Angus MacMillan: It is a matter of record; it cannot be contradicted. I put this very thing on record in this house on April 14, 1935; it can be found in Hansard. The hon. member for Rosetown-Biggar (Mr. Cold-well) was not in the house at the time to contradict me, but I was not contradicted by thos who were present at the Winnipeg convention of 1935 and members of this house at the time.


Major James William Coldwell: I was there.


John Angus MacMillan: Mr. Hyman said it
was necessaiy for them to change that plank in their platform before they would meet with any success in the country.


Major James William Coldwell: Because of your misinterpretation.


Malcolm McLean: Now the hon. member admits it was there.


John Angus MacMillan: A guilty conscience needs no accuser. That is why the hon. member for Rosetown-Biggar is interrupting just now. Well, a change was made.


Major James William Coldwell: It was not.


John Angus MacMillan: They changed that
particular plank in their platform. In other words, they substituted expediency for principle, and as a result they began to die. It took Rome three hundred years to die, but it took the Cooperative Commonwealth Federation only three years when disintegration set in.
Mr. DOUGLAS (Weyburn) It did pretty well yesterday in Vancouver.


John Angus MacMillan: One swallow does not make a summer.


Major James William Coldwell: In Mackenzie next time.
The Budget-Mr. MacMillan

Mr. MaoMILLAN: All right. That is what happened. I am very sorry that has happened to the leader of the Cooperative Commonwealth Federation, because he is a man for whom I have a high regard. Moses sinned. He failed. Standing on the mount he could see the verdant fields of the promised land, but he was to have no direct contact in the consummation of the world's salvation. And the leader of the Cooperative Commonwealth Federation in a moment of weakness fell from his high estate, and now oblivion is extended to him for the rest of his days. The baneful effect of the step that he took is weighing him down as sin goads the transgressor. As far as I am concerned I am not going to say anything which will intensify his grief or hasten his disappearance from public life:
Revile him not, the tempter hath A snare for all;
And pitying tears, not scorn and wrath,
Befit his fall!
Oh, dumb be passions' stormy rage,
When he who might
Have lifted up and led his age,
Falls back in night.
I am very sorry I have to apply those lines to the leader of the Cooperative Commonwealth Federation party. But the supporters of that party are setting themselves forth as paragons of modem chivalry. Telling the truth and playing the game as it should be played, in an age of light and a land of constitutional liberty are. not among their knightly accomplishments. But let me say here-and it may be that the hon. member for Rosetown-Biggar will attempt to contradict me, but not successfully-that the Cooperative Commonwealth Federation is far more responsible than any other agency in this country for the discontent in the three prairie provinces to-day. They are going about among the people preaching discontent, preaching doctrines and policies which they know are impossible of execution, telling the people that if they are ever called upon to form a government, "This will be our policy; that is what we are going to do for the people."



BUSINESS OF THE HOUSE


William Daum Euler: Allow me to interrupt for a moment. I move:
That this sitting of the house shall not be adjourned at eleven p.m.


Major James William Coldwell: Is there to be some limit to the time which we sit?


William Daum Euler: I do not think there is any definite limit.


The ACTING SPEAKER (Sir Eugene Fiset):: One o'clock, by mutual arrangement, I understood.


Thomas Alexander Crerar: I understand there was some arrangement among the whips, after consultation with the members, that we might continue until one o'clock.


Robert James Manion: That is my understanding.


Mr. HEAPS:: There ought to be some limit, because many hon. members have committee meetings to attend at eleven o'clock in the morning and two o'clock in the afternoon, and have to be in their offices here at nine o'clock in the morning. It makes a very long day when we sit beyond twelve o'clock.


An hon. MEMBER:: Four o'clock in the morning.


Abraham Albert Heaps: We have no objection to the motion with that understanding.


Robert James Manion: Just so there will be no misunderstanding later to-night or to-morrow afternoon, I understand from our whip that the whips of all the parties have arranged that the house sit until one o'clock on the understanding that the vote will be taken to-morrow, not to-night.


[Stage Direction]
Motion agreed to.


[Stage Direction]
The house resumed consideration of the motion of Hon. Charles A. Dunning (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Lawson, and the amendment to the amendment of Mr. Coldwell.
John Angus MacMillan: I say the Cooperative Commonwealth Federation are holding themselves out as being the only party which will save the country; they make promises which they know to be impossible of performance. Let me give one or two illustrations. The hon. member for Weybum (Mr. Douglas), at Preece-ville in the riding which I have the honour to represent, at a Cooperative Commonwealth Federation convention held on October 11 of last year, which nominated a candidate who is still in the field, made a speech from which this is an extract, as reported in the Regina Leader-Post of October 12, 1938:
Mr. Douglas-
Obviously the reference is to the hon member for Weybum; there is no other Mr. Douglas so far as I know who would say this.

The Budget[DOT]-Mr. MacMillan
-speaking of old age pensions, said that out of 11,700 in Saskatchewan, receiving the old age pension, only 4,400 received $20 a month, the remainder receiving $15.
That is all right, but this is the part that is galling, because it is most unfair. Listen to this:
He said his party asks for pensions for the people at the age of sixty years, and that the pension be raised to $35 a month and later to $50.
He did not say how much time would expire before they raised it from thirty-five dollars to fifty dollars. But Mr. Speaker, the unfairness of the statement is this that there are about 870,000 people in Canada more than sixty years of age, and if we were to pay them a pension of $50 a month it would take practically all the revenue of the federal government. I wish to put this to the hon. member for Weyburn:	If he were in office, would it
be possible for him to do that? Would he use the entire revenue of Canada to pay one item of pensions?


Thomas Clement (Tommy) Douglas: The hon. member has asked a question; does he wish me to answer?


John Angus MacMillan: Yes, if it can be
answered.


Thomas Clement (Tommy) Douglas: The hon. member knows perfectly well that all persons in Canada over sixty years would not be accepting a pension. It would include only those persons over sixty who were willing to accept a pension. They are the only ones who would be given pensions. The hon. member does not suggest for one moment that all persons would want it.


John Angus MacMillan: But there was no
qualifying statement by the hon. member. He meant every person in the Dominion of Canada over the age of sixty years. It was his suggestion that every man who had reached the age of sixty years should be receiving a pension-that is what members of his party have been preaching all over Canada. That is one illustration of the unfairness of the Cooperative Commonwealth Federation group. That is just one of the reasons why we have so much discontent in western Canada. It is aggravated by the speeches of these people.
I shall now give another illustration. In 1938 there was an election in Saskatchewan. In that province there is a provincial constituency called Canora. The Liberal candidate, Doctor Dragan was of Ukrainian extraction. In the adjoining seat of Yorkton- that may not be correct, but it does not matter-the Conservative candidate was of
Ukrainian extraction. An S.O.S. call came from the Liberals in the adjoining seat to ask Doctor Dragan a night or two before the election to speak at a meeting in the constituency. Doctor Dragan went there to speak against one of his own countrymen. And why? Because he was on the opposite side of politics. What was the result? Next morning those people who hold themselves out as the paragons of modern chivalry got out this pamphlet:
Flash. Doctor Dragan flies by aeroplane to Touchwood constituency on June 6, 1938, to speak against John Hnatyshyn, Ukrainian candidate.
I consider that was most unfair. It was an attempt to play upon the sentiments of the people in that constituency because the two candidates were of Ukrainian extraction, one representing one party and one the other. He went in there to speak against a particular candidate. That was the manner in which they carried on that campaign. And so far as the second illustration is concerned I may say I could give many other illustrations of a similar kind in Saskatchewan. However, I shall not now say more about the Cooperative Commonwealth Federation.
We will now come to the other group in the house, namely the social crediters-poor fellows! I do not wish to say much about them. They are hopeless and defenceless in the house. I do not know if I should say that they are ordinaiy human beings; I should say they are super-human, because they are like the Bourbons of old who could never learn anything and never forget what they knew. My experience has been this, that a man as a rule will improve with experience. His intellect becomes keener. His view on affairs will broaden out, and he will learn a good deal. The Social Credit group were far more entertaining and far more constructive and helpful in the first two years they were in the house than they are to-day. They are failing rapidly. They will never attain office in parliament, at any rate, so I am not going to say anything more about them-except that they are muddling things in all directions. One cannot tell from one day to the next where they will be. They are a medley of contrarieties and contradictions.
I said at the outset of my observations that I was not at all satisfied with the progress this government has made. A man within the ranks of the Liberal party always has the right to speak his mind. To-night the hon. member for Qu'Appelle (Mr. Perley) made what might be called a fighting speech. I believe that now he feels he could have done more when he was sitting on the government side of the house.
The Budget-Mr. MacMillan

I am sorry he did not take into consideration the fact that he sat on this side of the house between 1930 and 1935, and although we had a depression in the western provinces far worse than we have to-day, yet there was not a single move made by the hon. member towards advocating a wheat board for the farmers of western Canada, until the party of which he is a member were five years in office and were facing an election.


Ernest Edward Perley: You were part of that parliament, and you evidently did not know what was going on.


Walter Edward Foster: I would ask the hon.
member not to interrupt.


John Angus MacMillan: The hon. member was sitting on this side of the house in those days. I must point out to the hon. member that if he was advocating a wheat board in those years he was not very effective, because we did not get it until we were going to the country. And the price of wheat was lower in 1932 and) 1933 than it has been at any time since-yes, lower than it has been in three hundred years. Yet nothing was done. Even if the leaders of the Liberal party did make certain promises in the last election campaign, I am sure our leader never went so far as to say that if he did not accomplish it he would perish in the attempt.


Mr. McGREGOR:: He never went anywhere.


Ernest Edward Perley: He went to the valley of humiliation.


John Angus MacMillan: If he did go to the valley of humiliation he did not stay there very long. By the will of the people he is now the Prime Minister of Canada, and has the largest following any prime minister has had in the history of this country.


Jean-François Pouliot: The valley of humiliation is not as bad as the " Perley " gates.


John Angus MacMillan: I am sorry the Minister of Public Works (Mr. Cardin) is not in his seat. If he were he would see the necessity of building an institution where some hon. members of this house could take a course in etiquette.


Major James William Coldwell: That is obvious.


Ernest Edward Perley: He would build it for that side, alone.


John Angus MacMillan: I want to congratulate the government upon negotiating the trade treaty they have negotiated. I do not like trade treaties, because to me they are merely optical delusions. Canada did not prosper or advance under trade treaties. Canada pros-
[Mr. MacMillan.)
pered and advanced under the great Sir Wilfrid Laurier when the government was cutting down tariffs, regardless of the attitude taken by any other country.
But conditions are changed to-day, and I believe that trade treaties are a necessity. England up to a few years ago-possibly fifteen or twenty years-was an absolute free trade country. To-day she has adopted protection, because conditions throughout the world are changed. Human ingenuity and modern inventions have annihilated distance, so that practically every country of the world to-day is the centre, and the circumference is not very far away. The result is that the method of doing business must change, and if every other country in the world is adopting trade treaties we shall have to do the same thing.
One reason why I do not like trade treaties is that they are negotiated by the representatives of two nations. One set of representatives is going to attempt to get advantage of the other; that is only human nature. In my opinion this procedure does not work out as well as that of simply taking the bull by the horns and making changes in the tariff. Anyway, we had men looking after the interests of Canada, and I believe they worked out a bargain for the Dominion of Canada as well as any group of people could have worked it out.
Now let me take up the wheat question. I am so indignant over this that I am tortured into brevity. I am supposed to have a good nature, and I must be careful not to say something for which I will be sorry. I believe the Minister of Trade and Commerce (Mr. Euler) and the Minister of Agriculture (Mr. Gardiner) have been very much misrepresented. I would expect that from others, but I am afraid this has been the case in connection with some of our own supporters. I cannot find where the Minister of Trade and Commerce or the Minister of Agriculture have said that they are not in favour of a wheat board. Were it not for the fight that the Liberal opposition put up in the committee in 1935 we would not have a wheat board. In the election of 1935 the Liberal party stated that it was in favour of a wheat board. We guaranteed a satisfactory minimum price to the farmer during the crisis, and we said we would sell our wheat in the world market at the world price. Hon. members may jeer when I read this, but I am here to say what I think. We promised lower tariffs on the implements of production and on household goods.
The hon. member for Portage la Prairie dwelt upon the implement question, and I

The Budget-Mr. MacMillan
shall not say very much about it, because I do not want my remarks to overlap what the hon. member may have said. However, this implement question and the wheat question are so important that I think I should give my personal views. I feel that whatever scheme is adopted by the government through the Minister of Trade and Commerce and the Minister of Agriculture, it is going to meet with the approval of the people of western Canada. I am in favour of 80-cent wheat. I feel like using as a slogan, "80 cents or fight." I did not hear what occurred in the house this afternoon when the Minister of Trade and Commerce and the Minister of Agriculture referred to these contentious bills, but I know they will be before the house in a few days. I hope that whatever policy is adopted will meet with the general approval of the people concerned.
The Liberal party possibly did not do what they should have done in 1936. They did not do what they should have done in the interests of the people of the west. I am not going to defend them, but when I feel that they have done the right thing, then I am going to defend them to the utmost. We received good prices for our wheat during 1936 and 1937. It is quite obvious from the conduct of the government that they are working in the interests of the people of western Canada, especially the farmers. During the summer of 1938 they saw that the price of wheat was going down to a low level, and they immediately got the wheat board operating and set a price which was satisfactory to the people. I hope that when these bills are ultimately passed by this chamber they will provide for a price that will be satisfactory to the people concerned.
I feel keenly about the question of agricultural implements. I may say that in the election of 1935 I was not, practically speaking, elected on a Liberal platform. I was elected on a platform that I framed myself. This contained just one plank of four words, "Bury the Bennett government." I was sincere and conscientious about that. The people took me at my word. Although I did not get the majority of the votes cast, under our form of government and system of elections I was the successful candidate. During that election campaign I pointed out to the people that if the Liberal party were elected to office, a reduction would be made in the tariff on agricultural implements, and that if the tariff were reduced, prices of implements would correspondingly decrease. That has been the past history in this country, and I felt quite justified in saying that. I have no apologies to make for those promises I made to the people of Saskatchewan. It must be remembered that I qualified my statement by saying that if the tariff were reduced, prices would correspondingly decrease.
What happened? Prior to parliament meeting in November, 1935, our leader, along with one or two of his ministers, went to Washington and negotiated a treaty with the United States of America by which the tariff on agricultural implements was reduced to 12J per cent. When the first budget was introduced by the Minister of Finance, the tariff on agricultural implements was reduced to 71 per cent. He was lauded all over the country by Conservatives, by members of the Cooperative Commonwealth Federation in western Canada, and I do not know if there were any social crediters living at that time. What was the result? The result was not what we expected. Instead of prices of agricultural implements decreasing in proportion to the reduction in the tariff, prices increased. What was the next best thing to do?


Mr. ROWE (Dufferin-Simcoe):: They have always done that.


John Angus MacMillan: Who is the hon. member who is interrupting me?


William Earl Rowe: I say they have always increased in the last ten years when the tariff was reduced.


John Angus MacMillan: I am sorry I cannot hear the hon. member. My hearing may be defective, or possibly there is something wrong with his voice. We were in office in 1936 and 1937. I am not at all surprised that the people of western Canada were disappointed with regard to the prices of farm implements. I was myself. I do not believe in fighting my party in the House of Commons; I believe in fighting my party in the caucus. I believe in fighting the minister in his office, and I have fought him. You are a married man, Mr. Speaker, and if you have a fight with your wife and family you are not going out on the street to settle it.


Walter Edward Foster: Order.


John Angus MacMillan: You settle it in the sanctuary of your own home. That is what I tried to do. If I have a disagreement with any minister, I am not going to air it in this house. I do not believe it is good politics to air it in the house, and it certainly is not showing loyalty and fidelity to your party or to your leader. I go to the minister concerned and I have my fight with him in his office. I am sorry the Minister of Agriculture is not in his seat to-night, because I am sure he would agree with me when I say that I have given him more worn' and trouble during
The Budget-Mr. MacMillan

the last two months by going to his office and fighting him there than any other hon. member. I believe that is the proper way to do it. I have discussed this matter of reducing the tariff on agricultural implements with the Minister of Finance and with the Minister of Agriculture. About a year or so ago the Minister of Agriculture made a speech in this house which I made good use of last summer. 1 thought that we might have an election, and I am afraid the effect of that is going to die out unless something is done. I am urging the government to do something. Although I believe that a deathbed repentance is binding and valid, I do not like it. We should act now. Perhaps we are too late to act, but the sooner we do, the better for the people. I was going to say the party, but I will leave that out.


William Earl Rowe: It is too late.


John Angus MacMillan: The hon. member who has just interrupted me should know that from experience. Let me give the house a few figures with regard to prices of farm implements. I am going to deal with the ordinary farm implement familiar to anyone who knows anything about farming. In 193637 an 8-foot binder was worth $294. To-day it has reached the desperate figure of $316.50. That is not very entertaining to the farmers in western Canada, especially when they take into consideration the toll and levy and tribute that they pay to eastern Canada from year to year by way of high tariffs. I hope the hon. member for Brantford City (Mr. Macdonald) is not going to interrupt me.
Take a 5-foot mower. In 1936-37 it cost me SI 16; to-day the price is $124, an increase of $8. The increase is not so great in itself, but when one takes into consideration the price of wheat and of coarse grains, live stock and everything the farmer produces, that increase is terrible.
A 10-foot rake in 1936-37 cost $59; to-day it costs $65, an increase of $6. I could go along and show that the price of every important and necessary article which the farmer has to use has increased since 1936-in other words, since this government came into office; I want to say something to help our opponents opposite. These increases, I say, have taken place since this government came into office.
The Minister of Agriculture a year or so ago made what amounted to a threat; that is the best way to put it. He said that if the implement manufacturers did not cooperate with the farmers of this country in the price of farm implements something would be done. I am urging upon this government to do something even in the dying days of this

session, to assist the farmers of the dominion- I do not say the farmers of western Canada, but the farmers of the whole dominion-by reducing the price of farm implements.
When you are in the ranks of the Liberal party it is your privilege to say what you think. I may be using strong language tonight, but I hope it will have its effect. I do not expect anybody on the other side of the house will invite me to cross over and sit on that side. I know that the hon. member for Vancouver East (Mr. Maclnnis), because one good Liberal on this side spoke his mind in the good old Irish fashion, invited him to cross the floor and sit on that side of the house. But that was a great mistake. When the prodigal son was in a far country, eating with swine, you do not find that the old man started off to the far country to bring him back home. No. He said: "Let my prodigal son come back home, and if he does I will receive him." And that is what the hon. member for Vancouver East should have done to-night. Instead of extending an invitation to the hon. member for Humboldt, he should have waited for him to cross the floor of his own accord. But he will never do that.
There are many interesting things we could talk about on this side of the house because this government has, after all, done well. When one takes into consideration the barriers they had to encounter, it is wonderful what they have accomplished.


Some hon. MEMBERS:: Oh, oh.


John Angus MacMillan: Again you agree with me.


David Spence: You are working pretty hard.


John Angus MacMillan: That is the only way you can accomplish anything.


David Spence: It is giving you a great deal of trouble.


John Angus MacMillan: If the Conservative party had worked harder when they were in office, they might have accomplished a great deal more. I think it was Carlyle who said- "Genius is an immense capacity for taking pains."


Walter Edward Foster: Order. I am sorry to have to interrupt the hon. member but his time is exhausted.


John Angus MacMillan: I should just like to conclude, Mr. Speaker, by giving a summary of what this government has done.


Walter Edward Foster: The only way the hon. member can proceed is by unanimous consent. Do I understand that he has unanimous consent?

The Budget-Mr. MacMillan


David Spence: He does not speak often.


Some hon. MEMBERS:: Agreed.


John Angus MacMillan: Carried. Thank you. Here is a summary of some of the things the government has done in less than four years. I am sorry I cannot give it all because my time has lapsed. But among its accomplishments are:
Removal of the special excise tax of 3 per cent on all imports into Canada under any tariff more favourable than the general tariff.
Nationalization of the Bank of Canada.
The hon. member for Parkdale (Mr. Spence) said that I was working hard. If his party had worked as hard when they were in office from 1930 to 1935 they might have accomplished more. The nationalization of the Bank of Canada took place last year. The government might have brought down that measure in its first year of office. I must give my own party a crack in that regard. Sometimes I think that in giving us a nationalized bank last year the government, were, like Leonidas in his last attempt in the pass of Thermopylae, moved by desperation rather than true courage.
Among other things the government has accomplished these:
Direct assistance; assuming the entire cost of material aid for those without means of subsistence in 1937-38. Expenditure of
820,000,000 in various measures of material aid, feed and fodder for stock in western Canada, and so forth.
Rehabilitation of Western Canada. Over twelve thousand acres of land has been irrigated by individual water development, assisting thereby over fifteen thousand farmers.
About thirty thousand acres have been sown for grass under the direction of the experimental farms. Grass seed has been furnished sufficient for over ninety thousand acres.
Radio administration equivalent to the best in the world.
Pensions for ex-service men have been increased and many important changes made in the table of disabilities. The War Veterans' Allowance Act has been widened and greater power given to the board.
Reduction of expenditures: For example, this government reduced the cabinet from twenty-one to sixteen, and I should like to see them reduce it by ten more.
Reduction of taxation on 192 items in the 1936 budget and on 354 items in the 1937 budget. All these reductions were on the necessities of life.
Duty on wheat reduced from 30 cents to 12 cents.
Duty on wheat flour reduced from $1.35 to
50 cents.
More than $600,000,000 of the public debt has been refunded during the last three years. More than $150,000,000 of debt is being carried in treasury bills at a cost of approximately two-thirds of one per cent.
The annual saving to the taxpayer in the charges on the public debt by the government's policy of refunding is in excess of $10,200,000.
On Canadian National Railway issues there has been saved another $3,000,000 annually, or a total saving to the taxpayers on the last two items of $13,000,000.
The average rate of interest on the public debt in 1931 was 4-98 compared with 3-53 to-day, a reduction of 29-1 per cent.
The government has negotiated several trade agreements on a reciprocal basis with the result that Canada's total trade to-day is greater by 50 per cent than in 1935 and double the low point in 1933. Canada's total trade with all countries was as follows:
Imports	 $562,719,063
Domestic exports	 849,030,417
Increase in total trade, $457,549,047 or 32 per cent.
1937-38 $ 799,069,918 1,070,228,609
Increase

I shall not say anything about the youth training movement because that would take considerable time. It is miraculous what the government has done in that regard.
Then our tourist trade has been greatly increased. That is a very important item.
The full sessional indemnity of members of parliament has been restored and cheerfully accepted by every member in all quarters of the house.
We are living. Mr. Speaker, in the most democratic country under the sun. The principles of democracy are exercised to a greater extent in the Dominion of Canada than in any other country. We have a wonderful country, and if the present Prime Minister is successful in the next election I am confident that prosperity will be restored. That is my sincere and candid wish, and I believe it is going to happen.
The Budget-Mr. Marsh


Mr. J. A. MARSH (Hamilton West):: Mr. Speaker, I am not going to invite the hon. member for Mackenzie (Mr. MacMillan) over to this side of the house, because he might not be very much at home, and neither might we. But may I invite him to speak again very soon in this house, because his kindly native Scotch humour, augmented by the atmosphere of Nova Scotia-a province from which many good men come-where he was born, and the sunny smiling Saskatchewan skies, have made him a pleasant speaker to listen to.
There are two ways to balance the budget. The first is to raise revenue by direct or indirect taxation or by customs duties in order to have enough money with which to run the government. There is another way, and that is to decrease expenditure to the point that we do not spend more than is ours to spend. In other words, to balance the budget we must of necessity cut our coat according to our cloth; but in order to do this we must first of all have the will to do it; and I have questioned, as I look over the financial statements brought in during the last ten years, whether governments present and past have not lost the desire, the will to do, the urge to bring in balanced budgets. I submit that this is one of the old-fashioned but primarily necessary points of business; it is a precept of business to pay as we go, to spend only what is ours to spend, to keep out of debt. Have these things vanished from us, the sons and the daughters of thrifty English, Irish and Scottish pioneers? Can we look with untroubled eyes on mounting deficits? If we can, if that is our philosophy of financial government, there is, I think, little hope for Canada. How can any one of us say to our boy or to our girl, "Here is a dollar bill. If you must spend it, spend only ninety cents, put ten cents in the bank. If you feel you must spend it all do not spend more than the dollar bill, do not go out and borrow, because when the time comes to pay it back you may not have the money to pay it with." The boy will come back to me and say, "Our government has done that for ten years. You fellows down there who are running the government are supposed to be the brains of the country. So what?" What is my answer to be if I am to be truthful? I might try to put him off by saying that the natural resources of Canada are behind the borrowings of the government. But if he pursues the question, who is going to pay back loans made through deficits? I must say to him, "The Lord only knows. Probably you will have to do so, or your son after you."

I believe that in Canada to-day we are in danger of accepting with something akin to complacency the philosophy of defeat. I think the people are tax-conscious-certainly the people in my city are-and they are looking to this government for leadership but they are not getting it. Is it competent for us to boast that we are the fourth trading nation of the world? Is it competent for the Prime Minister (Mr. Mackenzie King), the Minister of Labour (Mr. Rogers), the Minister of Trade and Commerce (Mr. Euler), the Minister of Finance (Mr. Dunning) to say that in 1938 we collected in revenue more money than has been collected by any government since confederation? Is it competent for them to say that this year we have collected more, with the exception of 1938, than any government has ever collected for the purpose of paying government debt and government services, so long as we have to admit a deficit of $17,000,000 last year and a deficit this year of at least $55,000,000 but which may run quite easily up to seventy or eighty million dollars? What sort of psychology. what kind of business precepts are we selling to the people of Canada? It is my conviction that the method of paying as we go in government is very necessary. It is essential to the life and the security of the people. There are two kinds of security. There is social security, which is something that the state does to the individual in the way of money and services. There is another kind of security, personal security, which is something the individual does for himself. The two overlap a bit but they are separate and distinct. Both of them are inseparable from finance, whether it is personal finance or finance by government. For this reason I emphasize the dangerous trend which is established when we as a government are complacent about mounting deficits and thereby give the lead to provinces, to municipalities, to industries and to personal financing of homes. It is a bad psychology; it is fundamentally unsound.
In 1900 the gross debt of Canada was $346,000,000. The interest on that was $2.03 a head, including every man, woman and child in Canada. I am speaking of the dominion debt alone. In 1913 the gross debt was $544,000,000 and the interest, because of several factors, including refunding and increased immigration, was slightly less, namely $1.90 a head. Twenty-four years later, in 1937, we find that the gross debt has gone out of the million dollar class and is $3,432,000,000, and the interest per capita is no less than

The Budget-Mr. Marsh
SI 1.50. In 1938, as near as I am able to figure it, the gross debt is 83,540,237,615, and the interest per capita is $11.79.
In talking of deficits I am not unmindful of the fact that from 1930 to 1935 we in this country, as in others, suffered the greatest depression in the history of the world. I am not unmindful of the fact that we are still paying in dollars and cents for the great war. We are paying indeed in many other ways, humanitarian ways, but I am talking now in terms of money. I submit that governments did not take the necessary steps which industriri concerns take to survive depressions, to overcome outside trends. Of that I am convinced. It is not my wish to boast of either my experience or my wisdom; I have very little of either. But I do say this:
I have punched a time clock, I have carried a dinner-pail, I have bought and sold as an industrial executive, and when in the depression 'firms were faced with the almost certainty of going out of business, they did what I mentioned a little while ago; they cut their coat according to their cloth; they cut salaries and wages; they bought from hand to mouth, they reduced overhead; they took the steps which were necessary and imperative to enable them to ride the storm of the depression, and were successful in doing it, while the firms which did not do these things went by the board, they were sunk in the ruin of business. The firms which survived took drastic measures. Governments in this country seem not to do that, and it is my conviction that the depressions we have experienced in Canada have lasted longer because governments have not taken the initiative and put themselves on a business budget.
During last year's debate the hon. member for Mount Royal (Mr. Walsh) pointed out that in 1937 our dominion debt was $4,163.000,000; our provincial debt. $1,415,000,000. and our municipal debt, $1,386,000,000, a total of approximately $7,000,000,000. This, divided among eleven million people, amounts to $636 per man, woman and child. Last night I took the Parliamentary Guide and found much pleasure in checking up the married men of the House of Commons, and I found that they averaged four and a quarter children per family. Using these figures I was startled to find that the family of the hon. member for Hamilton West have on their shoulders a debt of $4,452.16. In going through some files this morning I realized that I had made an understatement. I find here that my family owes $5,201, their share of the national debt. I am glad the Minister of Finance is not in his seat, because I do not want him to collect from me for this year. I find further
that our debt is twice our income. It has been growing at the rate of $272,000,000 a year. It amounts to $743.49 per capita as against $385 in the United States. Over three-quarters of this debt is held in Canada. For the dominion government's borrowings of two and a half billions in the last sixteen years we have practically no corresponding assets. The national debt has increased in the last eighteen years by $4,900,000,000. or 149 per cent, approximately two and a half times what it was in 1919. I am giving these facts from a pamphlet issued by the Tax-Payers Association of Canada, entitled "Government Debts," a careful, informative pamphlet, No. 1.
Pursuing that argument, the hon. member for Mount Royal (Mr. Walsh) took his case further and showed that 46 per cent of the dominion revenue for 1937 went to pay interest. Of the provincial revenue 37 per cent went in interest and 24 per cent of the municipal revenue wrent to pay interest on debt. It would seem from the speech of the Minister of Finance that contingencies of world trade and outside conditions were responsible for this $55,000,000 deficit. As I listened to his speech and later digested the figures, I failed to recognize the usual courage, the usual desire to meet the problems of the country which we have found displayed by the minister in bringing in other budget speeches in other years. All through the speech there is full recognition of various contingencies that, might affect Canada and that are upsetting governments. At page 3140 of Hansard I read:
.	.	. "the best laid plans" of government
and business may be suddenly upset by dramatic events elsewhere, or incalculable shifts in world trends.
Certainly, that is true. It is also true that from the Garden of Eden up to the present time there have been contingencies. There has been fluctuation in world trade, and there have been outside conditions affecting individual countries. Contingencies occur often in any man's lifetime, often enough for us to say that it is the normal state of man in a normal world. And the same is true of governments. He says:
Our fiscal year opened last April with a recession in business under way in most of the larger countries.
Neither is this new. We have had peaks and valleys in business indices ever since the Babylonian-Assyrian civilization, up to the present day, and we shall have them tomorrow and the next day and next year and the year after that. Then referring to war clouds he says:
Inevitably this reversion to political and economic barbarism has cast a dark shadow over
The Budget-Mr. Marsh

economic life which has impeded recovery not only in Europe but on 'this continent as well. Recovery has on several occasions raised its head only to be buried again in a new wave of fear and uncertainty.
Yes, and there have been wars and rumours of wars ever since the time when Joshua walked round the city of Jericho and blew his trumpet. But in the meantime the people of Canada must eat, they must be clothed, and our workers must be employed. At page 3140 of Hansard the minister says:
We entered the past fiscal year still burdened with the effects of our disastrous crop failure of 1937 and depressed both by the drastic recession in the United States and the uncertainty following the annexation of Austria.
Yes, and I am afraid that drought and grasshoppers and sand-storms and crop failures will always intersperse periods of plenty. We have had them throughout history and we shall have them again. There are contingencies; there are problems, and we shall always have them, problems which we shall have to solve nationally and personally. We must arrange and plan and budget for them, because they will certainly arise. Then there was the repeated reference to world trade. At page 3141 the minister says:
The changing trends in the prosperity of our various industries mainly reflect not internal conditions but lowered demand and falling prices in external markets due to the world recession. This is a price we must inevitably pay for our dependence on world trade.
Let me point out to the government that here we have the altar on which they have worshipped for the last four years-world trade. This fetish of world trade has resulted in the loss of home markets and in lack of protection for those markets. It has resulted in flooding Canada with foreign goods that should have been made by Canadian workmen who would have carried dinner-pails to factories and pay envelopes home from these factories. Speaking of secondary industries the minister says:
Have we fully explored the possibilities of processing our raw materials before exporting them? Have we sought out all the opportunities for the profitable investment of capital in new industries, particularly small industries.
How can the Minister of Finance, following the recent signing of the United States-Canada trade agreement, talk to us about secondary industries? I say to the government: You have removed the 3 per cent excise tax from foreign goods; you have reduced the duty on foreign goods coming into Canada; you have forced many Canadian industries in many Canadian cities to be jobbers for articles where formerly they were industrialists making those articles. On January 19 at page 165 of
FMr. Marsh.]
Hansard I pointed out to the Minister of Labour (Mr. Rogers) in this chamber what I thought of this situation. I will read what I said:
The minister knows as well as I do that the primary industries in this country employ only 100,000 people, while the secondary industries employ 900,000 people, or almost one million. It is the secondary industries that are going to suffer from this trade agreement. Take iron and steel, for instance. The national employment commission reported that manufacturers of iron and steel products, who should normally employ 100.000 people, had dropped 35,000 from their payrolls since 1929. The trade agreement hits at the secondary iron and steel industries. The imports in this group from the United States amounted in 1937 to $22,000,000, subject to the old rate of duty wihich was thirty per cent.
In view of the damage done to many of our secondary industries by lowered tariff I .submit that the plea of the Minister of Finance to secondary industry will fall upon deaf ears. I know of six paper-box companies that are threatened with being put out of business because of the removal of the 3 per cent excise tax. It is my information that our pulpwood industry is threatened by Scandinavian pulp, on account of the recent changes. I know that washing machine manufacturers are having great difficulty in surviving, that manufacturers of screws and bolts and nuts and stampings of steel and iron are in real danger of losing that manufacture; they have bridged the gap by taking out agencies for United States fij-ms as jobbers for United States products. I understand that the metal industries in Hamilton lost a big steel order recently to a United States supplier, as a result of the removal of the 3 per cent excise tax and the recent changes in the trade treaty.
I do not think it is right that any private member should rise in this house and engage in destructive criticism without also offering constructive ideas. I know that our pensions must be paid; I know that the Canadian people must have services from the dominion government. I know that the government must have money and must raise money by taxation. But is it necessary that this year we spend from SSO.OOO.OOO to $100,000,000 on public works that may or may not be needed? Or if there is a question as to whether they are needed or not, certainly they can be done without in times of stress. And we must be in a time of stress, otherwise with our revenues touching the peak we would not have a deficit of $55,000,000. Is it necessary to spend millions and millions on public buildings of one kind and another, a $50,000 post office in a ten dollar town

and I am not casting any reflection on ten dollar towns; I was brought

The Budget-Mr. Marsh
up in a five dollar village; they are the salt of the earth, and the most consistent, even-tempered, thrifty people, hard to stampede in times of depression, that we have in Canada to-day. But many post offices and public buildings are being built in villages that need no such expensive buildings. The trouble is that our sons and grandsons and our daughters and granddaughters will have to pay back in the future with interest the dollar which we borrow now because we have not the courage to face up to the present. All honour should be given to at least three ridings represented in this house which were offered a post office or other public building and said, "Maybe we need it and maybe we do not, but being thrifty people we think we can get on without it; the government must need money for other things, our turn will come in the future." That is the voice of a new Canada speaking-or I wonder, perhaps if it is the voice of old Canada, of our pioneer forefathers, whose lives were built on thrift, who built the country that you and I enjoy now with our electric lights and automobiles and social services of one kind and another.
Let me now say a wTord about government by commission. Must we have government by commission, with high salaries, lawyers at S200 a day and expenses at $35 or $40 a day? Why sixteen different commissions to do work that members of parliament are sent here to do? I have protested against this on various occasions, but evidently I, like some others, am simply a voice crying in the wilderness. Have we too many members of parliament? Have we a top-heavy civil service? I say we should be proud of our civil service in Canada. I would not fire one of them, but I would consider seriously doing what our industrial houses, our mercantile establishments, our business houses, do when a man is pensioned off, do not fill his place, and the business goes on just the same. As a rule it works, and in a time of depression it works very well. I can think of no better way if we are over-governed, and I am sure we are. What better way could be taken to relieve the home owner who is trying to keep his home, the young fellow aged twenty or twenty-five or thirty who loves a young woman and wants to marry her and put her in a home and raise up good Canadian children-and heaven knows we need them in this country, because we are barely half British now? I wonder if we have tried seriously to relieve the taxpayer of the burden of over-government. Every hon. member who has come up through municipal government, who knows something about the structure of provincial government and has
sat in this House of Commons, knows that we are a very much over-governed state. Why shut our eyes to facts? Why hide our heads in the sand? This government could cut its coat according to its cloth in a financial way and bring in a balanced budget if it wished to do so.
Now just a word regarding the industrialists. "Page the industrialist"; the Minister of Finance paged him the other day, the Minister of Labour paged him a month ago and several times since; the industrialist is told that he must bestir himself and take on his shoulders this burden of unemployment. They said: " Private industry must have confidence." I say to the government, if you had established a consistent and settled tariff policy the industrialists would have the courage to go ahead and plan. But what happened last year? January, February, March, April, May; in June the budget came down. But through those first five months of the year I got telegrams, letters, telephone messages, asking, "When is the budget coming down? We hear there is a trade treaty about to be negotiated1; we do not know how it will affect our business, how can we budget our sales; how can we buy?" The result was that there was very little smoke coming out of the factory chimneys in my city, very few wage envelopes that were full; firms that should have been employing their workmen five days a week had their employees working two days a week and subsidized by the municipality on the relief roll. This year it has been a little better so far as the advent of the budget is concerned. We had the budget six weeks earlier. But we have had this uncertainty about the tariff, this juggling of tariffs, always down. It has brought grey hairs to the employer and grief and "relief" to the workers, instead of work and wages.
Finally, I cannot accept the theory that in this young country we should have half a million employable people unemployed. I cannot accept the theory that we should have a million on relief. I will not accept the theory that we can borrow our way into prosperity; it will not work. I cannot accept the theory that two plus two make five or six or nine or eleven or twenty-seven. Neither can I believe that a country so amply blessed with material resources as we are in Canada need have the problems that we have to-day. Defeatism is foreign to our Anglo-Saxon blood; it should have no place in our national life; it should have no place in our national thinking.
I close with the minister's own brave words, as reported at page 3153 of Hansard:
... Is it not time for us Canadians "to see ourselves as others see us," to adopt a constructive rather than a negative attitude, and
The Budget-Mr. Marsh



COMMON'

[Stage Direction]
to concentrate with courage and vigour on a united effort to solve our own problems and continue the work of building a greater and better country?
But may I add that faith without works is dead, and wishful thinking will not take the place of workful doing. This government has not given to Canada the leadership that Canadians expect. This government has not done a good job in its financial operations. This government has not functioned to keep men and women employed in my city. Neither has it created a market for the farmer.
Before sitting down I should just like to say to the members from western Canada that I have never heard eastern members or city members grumbling because they had to vote money to the west. We must get out of our minds the provincial and municipal selfishness that is so rampant in this country. The fisherman in Nova Scotia, he is Canada; the western grain farmer in Saskatchewan, he is Canada; the man that carries the dinner pail in my city street to his work to-morrow morning is Canada; the gold miner in the Yukon is Canada and the dairy farmer in Quebec is Canada. All are Canada. We must forget our local selfishness. Let them realize in the west that we cannot sell our products unless the west is prosperous, and may we in the east realize that prosperity with us is impossible without prosperity in the west. But may I appeal to the west and tell them this, that when they accept a bonus on wheat and a bonus on cattle, and a bonus on this and a bonus on that, they are asking for the same thing-and we are giving it to them- that we ask from them when we say we in the east want a protective and stable tariff for our industries.
Mr. LIGUORI LACOMBB (Laval-Two
Mountains) (Translation): Mr. Speaker, I shall express myself in my mother tongue, although I could, as so many others have done, use the language of the majority. However, I have noticed that the French language has been ostracized in this house since Wednesday last. In fact, I asked the chief whip to put me down for that day, but it is only to-night that a French voice can make itself heard, bringing up the tail of the debate. Can this be wondered at, after the remarks which we have just heard, especially from a minister of the crown and on a subject such as the Lacroix bill? The British North America Act has sanctioned the official use of both languages in the Canadian parliament. This use we shall never forego.
The budget, which is usually the chief event of the session, generally gives rise to a highly important debate. Its presentation affords hon. members an opportunity of laying before
[Mr. Marsh.1
parliament the claims of their respective counties and also permits them to expound general ideas which, as has been frequently noted, may prove most valuable to the administration of the country.
As to the needs of my constituency, I have frequently expounded them during the nearly fifteen years that I have been sitting in the house. I have asked on behalf of the market-gardeners for the seasonal tariff now provided in the commercial agreement which Canada has concluded with the United States of America. I fervently hope that this tariff will produce the good results which the market-gardeners are entitled to expect from it.
I have noted with satisfaction that the Minister of Agriculture (Mr. Gardiner) has introduced measures intended to provide as much assistance as possible to the dairy industry. His department will pay to the cheese producers a much-needed bonus. By thus encouraging the production of cheese, the government will free the markets from a considerable quantity of butter. Butter producers will themselves Obtain a better price for this nationally important product.
The value of the constant assistance which the government is rendering to agriculture cannot be over-emphasized. Should farming and dairying ever cease, even partly, we would be faced with famine. Let us generously assist the farmer in his noble work. Is there a more useful and more admirable mission than his? Through his hard toil he provides the products indispensable to the life and progress of the nation. He is the most powerful factor in the country's prosperity. Let us not fear to give the farmer all the help required for the development of his property. Let us subscribe generously to the draining of farm lands. It has been demonstrated in many parts of the country that a good deal of drainage work can be carried on without the aid of mechanical excavators. In the constituency of Laval-Two Mountains the Minister of Public Works (Mr. Cardin) has authorized the draining of a few brooks with shovels. This undertaking has given work to many heads of families who were in dire need and at the same time has improved the yield of many farms. I have reason to believe that the minister will give favourable consideration to the other requests for drainage works which I have submitted to him. To relieve unemployment by improving lands under cultivation is doubly to achieve the ends of sound administration.
These considerations naturally lead me to say a word about public works. The federal government, in such distressful times, should carry out a vast program of public works.

The Budget-Mr. Lacombe
People are asking for work. Public authorities, which are in a position to find the necessary funds at extremely low rates of interest, should take advantage of exceptionally favourable circumstances.
During previous sessions of this parliament, I have often called the attention of the Post Office Department to the representations of rural mail carriers. Once again, I claim for them a just and reasonable remuneration. I suggest to the Postmaster General (Mr. McLarty) the advisability of amending the regulations in connection with the calling of public tenders, in order to do away with the awarding of contracts at ridiculously low rates.
There is another matter of national concern which I cannot pass under silence. I have in mind the enormous appropriations which the Minister of National Defence (Mr. Mackenzie) has submitted to the approval of the house.
The appalling increase in the military votes compels me to sound the alarm once more and to oppose armaments. I will do it without delusion, without passion and without hatred. I will do it solely through love of my country, in the interests of its survival and of national unity already so seriously endangered by an imperialistic doctrine which has done us and is still doing us so much harm. In the discussion of this vital and momentous question, we must have regard to the reason and the heart of the nation. Our truly national duty resides exclusively in the safeguard of the nation and the salvation of the country. And, until the Militia Act is changed, military appropriations may be used for our participation in external wars. Sufficient proof for that statement may be found in the following sections of that act. We find in chapter 132, vol. Ill of the Revised Statutes of Canada, section 64, page 2789:
The governor in council may place the militia, or any part thereof, on active service anywhere in Canada, and also beyond Canada, for the defence thereof, at any time when it appears advisable so to do by reason of emergency. R.S., c. 41. s. 69.
Then, in section 69 of the same act, page 2790:
The Army Act for the time being in force in Great Britain, the King's Regulations, and all other laws applicable to his majesty's troops in Canada and not inconsistent with this act or the regulations made hereunder, shall have force and effect as if they had been enacted by the parliament of Canada for the government of the militia, etc.
I fail to see anything in the amendments to the Militia Act which have been introduced since 1927, that repeals the sections to which I have been referring. There is, to be sure,
Chapter 21 of the Statutes of Canada, 193233, 23-24 Geo. V, page 97, assented to on the 12th April, 1933. But that act only applies to His Majesty's forces from other parts of the British commonwealth or from a colony when visiting the Dominion of Canada. On the other hand, section 6 of that act grants a very wide discretionary power to the governor in council, especially subsection 2, page 102, which reads as follows:
The governor in council
(i)	may attach temporarily to a home force any member of another force to which this section applies who is placed at his disposal for the purpose by the service authorities of that part of the commonwealth to which the other force belongs;
(ii)	subject to anything to the contrary in the conditions applicable to his service, may place any member of a home force at the disposal of the service authorities of another part of the commonwealth for the purpose of being attached temporarily by those authorities to a force to which this section applies belonging .to that part of the commonwealth.
Again, section 8, page 103, provides as follows:
So far as regards any naval force and the members of any such force, the provisions of this act shall be deemed to be in addition to and not in derogation of such of the provisions of any aot of the parliament of the United Kingdom or of the parliament of any other part of the commonwealth as are for the time being applicable to that force and the members thereof.
Mr. Speaker, considering the very spirit of the Canadian Militia Act, can we reasonably conclude that Canada cannot be called upon to participate in wars waged by the British commonwealth or in external wars? On the basis of that act, and especially of section 8 of the Revised Statutes of 1927, page 2778 in which liability to military service is set forth in the following terms:
All the male inhabitants of Canada, of the age of eighteen years and upwards, and under sixty, not exempt or disqualified by law and being British subjects, shall be liable to service in the militia:	provided that the governor
general may require all the male inhabitants of Canada, capable of bearing arms, to serve in the case of a levee en masse.
I do not hesitate to assert that in the event of a war in which the Empire would be involved, and this, even outside the territory of the British commonwealth, whether we like it or not, we will inevitably be drawn into some other reckless venture which will spell the downfall and ruin of Canada.
Section 8 of the Militia and Defence Act to which I have just referred, does not mention in any way that such compulsory military service is restricted to the defence of Canada and of Canada alone.
The Budget-Mr. Lacombe
[Stage Direction]
Mr. Speaker, notwithstanding any previous assertion to the contrary, the conscription act is far from being a dead letter as is fully evidenced by section 8 of the Militia Act. This Act, which was the cause of so many misunderstandings and disappointments as well as of an orgy of spending from which Canada will never entirely recover, still appears in our statute books, and not only in view of Canada's defence alone.
That is why I say to the skeptical: Read over carefully the provisions of the Militia and Defence Act which, for some reason I cannot fathom, it appears impossible to amend, and you will realize that I am not dealing in vain and empty words. You will understand that our uncompromising refusal to approve the increase in the defence estimates is not based on illusion, but rather on the doctrine of peace, autonomy, liberty and sovereignty which must prevail in Canada. Furthermore, does it rest on the prerogatives recently granted to us by the statute of Westminster. It is founded, lastly, on true canadianism, the unalterable principle of which has no other source save" an exclusively Canadian patriotism. And who could take us to task for this deep attachment to our only true national duty? In the face of the existing Militia and Defence Act, who would dare condemn the attitude we adopt? Therefore, shall I take good care not to overlook this act, seemingly inserted in our statutes for the sole purpose of nullifying the code of our liberties as set forth in the statute of Westminster, nor to censure the justifiable anxiety of our youth and of the entire right-minded population of this country.
To protect the territorial integrity of Canada against any foreign aggression; to shield our population against the powers of anarchy and the secret influences which endeavour, by every means, to spur the people on to carnage and war; lastly, to safeguard our national existence and our political independence; this I shall always be willing to do. But to sacrifice our sons on a foreign soil; to spend staggering sums in order to participate in foreign wars; to incur expenditures that will bring about the moral and financial ruin of my country, merely to take part in conflicts which do not involve our interests in the least: this, I claim, is a criminal aberration. Rather than to mobilize troops in view of participation in external conflicts, it is Canada's duty to mobilize conscience, logic and the hearts of her sons for the salvation of the motherland. That is our true national duty, and therein alone is embodied the safeguard of this nation.
When one stops to think that the spirit of domination, anarchy and the selfish inter-

ests of all nations have succeeded in establishing the most formidable doctrine of carnage ever expounded; when one realizes that Russia has 18.000,000 men under arms or in reserve, that France has 6,250,000, Italy 6,300,000, Germany, 2,200,000, without taking into account the British forces; when one considers the no less startling figure of 8,000,000 men mobilized by the second rate powers, is it possible to view the future without the gravest apprehensions? Is it human to contemplate the possibility of a dreadful war without thinking at the same time of the immense slaughter it would engender?
How can the world be made to believe that the only object of this infamous armament race is peace? Since when has veritable peace been synonymous with intimidation, violence and brute force? Since when has peace, true peace, been confused with odious dismemberment, unjust invasion and the enslavement and destruction of weaker nations? Since when is it that peace must needs exclude men of good will and the principles of charity and justice? The only peace which must prevail and save the world is that which belongs to the honest and just, the kind and the charitable. There is no other peace which can put an end to the armament race, to territorial violations and to the criminal greed of war profiteers. Should the nations not heed the moving appeal made by the highest spiritual authority in the world, His Holiness Pope Pius XII; should they continue to scoff at the solemn warnings and at the peace proposals, based on the strictest logic, of the great apostles of civilization and peace, they shall perish, annihilated by the diabolic instruments to which their own cruelty gave birth. In the following remark which our Lord made to Peter, his disciple, is set forth an eternal and unalterable principle: "Whomsoever lives by the sword, shall perish by the sword."
Should war break out, whose who are well informed will not be slow in ascertaining where it originated. It is moreover a well known fact that the selfish interests of some nations have always impeded the freedom of economic intercourse among nations. There are small-minded nations who sacrifice the fundamental principles of international justice to the spirit of domination and to military and financial imperialism. Such nations refuse to others free access to those material things which are essential not only to their development but to their very existence. Let no one be mistaken about that. In the criminal injustice of such nations lies the worst threat to international peace and order. With a view to avoiding the most frightful and horrible of all wars, will such nations refuse

The Budget-Mr. Lacombe
to make those sacrifices which the maintenance of peace calls for? Should such be their attitude, I do not hesitate to say that they are not worthy of existing. May God preserve us from such a dreadful catastrophe 1 But if it must unescapably occur, I do say that the responsibility for such a great calamity will lie not only upon those people who ask but also upon those who refuse. Love of peace goes beyond contractual and juridical obligations. True love of peace goes very much farther. It is synonymous with charity and justice. The salvation of humanity, in these troubled times, lies unmistakably in those two virtues, the only ones which can dispel the anxiety which is now distracting the world.
Sir, Canada should absolutely refrain from any participation in external wars. Not only should it reject conscription, but also oppose all form and means of participation, be it even voluntary. Canada should condemn any military action which is not intended solely for the defence of Canadian territory. Our country should change its Militia and Defence Act and its Naval Service Act in accordance with the intention of the Statute of Westminster. It should without delay declare its absolute neutrality. Otherwise, we are doomed to down-fall, ruin and destruction. Do we realize how odious and unjust on the part of our country would be another participation, even voluntary, in foreign wars? Do we realize that our national debt is more than eight billions, or nearly $750 per capita? Have we forgotten that it is gradually increasing, at the annual rate of approximately 275 millions? How could we ignore the heavy burden of taxation which has to be borne by the Canadian taxpayer because our country took part in the last war? History can not properly condemn that participation. And the Canadian people should unanimously condemn any participation in foreign wars, if they wish to live.
In conclusion, I wish again to protest with all my strength against any increase in the military estimates, when such appropriations are not exclusively intended for the defence of Canada. I want our country to proclaim its absolute and permanent neutrality. To those who claim that we do not possess that power, I would say: Stop boasting on public platforms of the liberties and the sovereignty which are guaranteed to us by the Statute of Westminster. You would do better to proclaim its unquestionable advantages on the floor of this house. Render to Canada what belongs to Canada by virtue of that statute: its liberty, its autonomy, its sovereignty, its neutrality. Do not try to conceal our sovereign rights under the cloak of
militaristic and financial imperialism. Past experiences and sacrifices having opened their eyes, our people demand the truth. No one has the right to deny it to them, even under pretence of constitutional reasoning or legal discussions.
Before resuming my seat, may I again ask the government to declare our neutrality. Canada possesses the right to do so, in spite of what may be thought or said by men for whose ability and experience I have every respect. To maintain the contrary would be to move backwards, to revert to colonial status. To delay further would be deliberately to await the crisis and perhaps the physical and moral impossibility of acting in the best interest of the country. The clauses of the statute of Westminster should be fully adhered to. Our national pride, our survival, our most precious liberties command us to tolerate no violation of our autonomy or our sovereignty. I therefore adjure Parliament to replace our obsolete Militia and Naval Service Acts by a formal enactment absolutely prohibiting the dispatch of Canadian troops beyond the boundaries of Canada. I therefore beseech this house firmly to repel any encroachment on our autonomy or our sovereignty, from whatever quarter. Participation in an external war would plunge this country into ruin and permanent bankruptcy. I therefore say that no government, however powerful, or no parliament has the right to decree the suicide of the nation. Let us order a plebiscite. Let us grant the right to vote to all those who would be called to the colours in the event of war. Indeed, why should the right to vote be restricted to those who know themselves to be safe from the call to arms? It is the privilege of our youth more than that of any other class of citizens to determine our armament policy. Our young men could thus decide their fate without the eager cooperation of dastardly war profiteers, ever willing to vote the death of others. A conscript of 1917, I shall never forget the hours of agony that my generation went through. The painful recollection of that unhappy period naturally makes me think of our youth of to-day. No one understands better than I their anxiety, their apprehension in these troubled times. No one wishes more than I to continue to protect them against the hypocrisy and greed of military and financial imperialism. No one is more anxious than I to protect the lives of our young people against the disgraceful and despicable trade carried on by cannon merchants who left nothing undone in order to prolong the bloody conflict of 1914. No one is more than I in favour of absolute neutrality for our distressed, bruised, and exhausted country, still
The Budget-Mr. Lacombe
[Stage Direction]
suffering after a lapse of twenty years, from the consequences of her participation in the war.
Let there be a referendum not only upon conscription but also upon any participation, even voluntary, in external wars. At a time when England is resorting to compulsory military service, our duty is to ascertain at once the views of the electors. We are in duty bound to respect the popular will, which is the very basis of democracy. It is up to the Canadian people alone to decide upon such momentous events. Parliament has no mandate to choose 'between the survival of our country and the risk of annihilation. Increased defense estimates, Canada's participation in external wars and conscription were not referred to the electors in the last general election. To deny them the right to express their views would be to disregard democracy, whose merits are so much extolled and whose survival is so persistently advocated. In the event of such a plebiscite, the most elementary justice bids the authorities in this country to grant the right of suffrage to young men who, although they are not yet 21, are nevertheless liable to be called to the colours. Those who are apt to pay with their lives the supreme folly of another intervention in foreign wars, should be the first entitled to exercise this right. Confronted with this tragic dilemma, will the voters decide that Canada must fall or rise to greater heights, that she must survive or die? The future shall supply us with an answer as to whether our people have in mind the sole defence of their immediate interests and territorial integrity, or whether they will be satisfied to forego their very existence as a sovereign nation.
Mr. H. A. McKENZIE (Lambton-Kent):: 
Mr. T. L. CHURCH (Broadview):: I had
not intended to speak in this debate at all: I am going on to fill in only; in ffict, I am in favour of closing parliament so that for the first time, and maybe the last time, a ruling sovereign may be here in person to close parliament. Would it not make history? We have been here since January 12, and should close. I do not speak for the opposition; I speak for myself. To be a member of parliament now a man needs to be a millionaire, when he has to stay round here for several months of the year. That is one of the reasons why a great many people do not run for this parliament and we should change our system of doing business for the purpose of efficiency.
As far as the budget is concerned, I sympathize with the very able and popular Minister of Finance (Mr. Dunning) in the task that is before him, and he should be given a veto power over all expenditures. He is estimating a deficit of $55,000,000 in his own figures for the coming year. And that is only part of it, because you have to add to that the repeal of the 3 per cent excise tax, another loss of 18 million dollars, which is a very small protection to a great many small industries; in fact, all they have left. I am at a loss to discover in the ways and means resolutions what the policy of the government is.
Various members of the government party rise in their places and take different stands and oppose the budget, but say they will vote for it.
The central provinces of Canada, Ontario and Quebec, are the goat of confederation for taxation purposes. I have said that on several occasions. The central provinces pay 80 per cent of the cash taxes of Canada. Just yesterday I watched thousands of people going to the office of the Department of National Revenue in Toronto, lined up at the wicket, paying their income tax; poor people many of them, yet paying, and finding it hard to do so, millions in income tax. And Toronto is paying the largest income tax by millions of any city in Canada.
Where is the money to come from for all these expenditures mounting up higher every year? We have only the sales tax, and the income tax left. I thought the minister would bp able to announce some drastic reductions in the expenditures of the country. When Sir Wilfrid Laurier became Prime Minister of Canada in 1896, the annual expenditure was $36,000,000; now it is between $500,000,000 and $600,000,000 and there seems to be no end. For example, in Ottawa $8,000,000 is being spent this year in new buildings, including $3,360,000 for the supreme court. What do they want with a building of that size and cost? This building cost $18,000,000. There is room enough in this building for a supreme court, for the senate which sometimes sits only forty days in the year. There is also the Victoria museum building. A supreme court building costing $250,000 would be enough. In Toronto they built an addition to the law society building for about $200,000. In Vancouver they have a very fine court of appeal building which is adequate for the business and is comfortable, and it cost only a very small sum. We have no money for slum clearance or housing yet. When their majesties come here and lay the cornerstone of the new supreme court building they can just look across the river and see some of the slums of Canada, and the need of housing. Right here in the capital and in all our cities they can see where money could be better spent to house the people. The same situation exists near the capitol in Washington. It seems to me some of these expenditures are unjustified in view of the very heavy deficit of $55,000,000 which the country is facing, with the over-government and taxation we have at present.
In addition, $1,300,000 is being spent on a war memorial, necessary of course, but at less cost. Would it not be better to do something as well for Christie street hospital where

The Budget-Mr. Church

some unfortunate soldiers have been sentenced to life imprisonment away up on the roof? War memorials are no doubt necessary, but the wealth of this country does not altogether consist in material things; a more valuable treasure is the character of our people, and that is being destroyed by unemployment. One of the main causes of unemployment is over-government and over-taxation in this country. In addition, we spent $5,000,000 of the taxpayers' money on the League of Nations, and what value this country got out of it I do not know. And although the league is dead and buried they propose to send another deputation, to cost thousands, over there this summer.
Coming to the visit of their majesties, no one will object to the proper expenditure for that. True it is that we have to pay for a visit of a committee of one hundred, I call them the "P.C." A gentleman asked me on the street what "P.C." means. He thought it meant police constable, that one hundred police constables were going to Quebec to meet the train. I told him it was the privy council of Canada that was going.
Anyone looking over the expenditures of this country must conclude that our system is all wrong. I propose that we sit round a table and adopt the practice of the municipalities. The time has come that the Minister of Finance should have a power of veto over all these expenditures; that is what he should have absolutely. If we adopted the municipal system we could sit round a table, notwithstanding the constitution; the constitution is not going to be hurt by having the business of the country administered in a businesslike way from the commercial aspect. You could easily then, under the municipal system, strike $250,000,000 off the maintenance charges of this country and cut in half capital expenditures. In addition, the minister said in his budget speech the other day that he would like hon. members to keep sharpening their pencils and add up the deficit. I say the system is all wrong and should be changed, and doing so would not interfere with the constitution, which would not be hurt by an agreement between all parties in this house to reduce all the expenditures of this country, to do which is so urgently needed to aid business and employment which heavy taxes retard.
We have heard a great deal about the railway situation. Some people who were paying their income tax the other day asked me

why the government does not do something about this railway situation. All the income tax paid from 1917 to 1938 amounts to less than the sum of the railway deficit. Some concerted plan should be adopted, not only coordination, although there is no coordination. We had several railway commissions appointed which recommended that the railway commission, now the board of transport commissioners, should be given power to supervise and regulate the railway expenditures and extensions, such as the Montreal terminal, but they are not allowed to do so. The government railway is going on with the station in Montreal in face of the Duff report and the Drayton report and against the opinion of the railway commission and cooperation and coordination of services. I believe the day is not far distant when we shall have to face this railway problem; the Minister of Finance cannot continue forever bringing down deficits. Does he propose to continue deficits and place further barriers and burdens and restraints of trade on the taxpayers of this country? Those who pay the income tax have some rights and they look to parliament to protect them. I asked this government to appoint a committee of both houses to go into this question. It should be gone into. I do not favour a merger, but no one would lose his job, if they had a system of unemployment insurance which would take care of all the employees; a few would be eliminated by coordination but I believe they could be taken care of by a national insurance scheme without their losing a dollar. This country expects this parliament in the coming recess to do something along those lines. How does it come when this government has $8,000,000 to spend on new buildings in Ottawa that the unemployed transients are out on the streets? In Toronto 286 of them were turned out of the Coliseum; in Ottawa 200 have been turned out of the Union mission and there is no place for them to go. Surely a government with the money to spend that this government have should be able to take care of these poor transients all over Canada, and no one should be out of work in this country. The time has come when we should have no further favoured nation treaty with Germany.


Major James William Coldwell: Mr. Speaker, I rise-


Thomas Langton Church: It is now one o'clock. I
move the adjournment of the debate.
Motion agreed to and debate adjourned.
On motion of Mr. Crerar the house adjourned at one a.m.

Questions
Wednesday, May 3, 1939