EUROPEAN WAR


Right Hon. W. L. MACKENZIE KING (Prime Minister):: I should like to lay on the table of the house the following additional emergency orders in council:
No. 2588, relating to the appointment of Lieutenant Colonel Henri DesRosiers and Lieutenant Colonel K. S. Maclachlan as associate acting deputy ministers of national defence.
No. 2595, placing all officers and ratings of the Royal Canadian Naval Reserve and the Royal Canadian Naval Volunteer Reserve on active service.
No-. 2596, waiving the maximum age limits for entry into the Royal Canadian Navy, the Royal Canadian Naval Reserve, and the Royal Canadian Naval Volunteer Reserve.
No. 2620, setting up a war services offers bureau under the public information committee.
No. 2621, establishment of an agricultural supplies committee.
132	COMMONS
Department oj Munitions and Supply
No. 2622, naming members of the agricultural supplies committee.	'
No. 2625, amending the war time prices and trade board regulations and appointing further members of the board.
No. 2626, authorization of the proclamation that a state of war exists between Canada and the German Reich as from September 10.


Mr. MANION:: I would invite the attention of the Prime Minister to the suggestion that in the interim after the prorogation of the present session of parliament it might be advisable-and I hope the right hon. gentleman will agree that it is-that copies of emergency orders in council be sent to the leaders of the various parties.


William Lyon Mackenzie King: I believe the suggestion is a good one, and I shall be glad to have it complied with.



CREATION OF VOLUNTARY SERVICE REGISTRATION BUREAU

William Lyon Mackenzie King: It will be noticed that the list of emergency orders in council tabled today contains an order respecting the war services offers bureau, and I should like to make a brief statement in regard to that body. During my remarks on Friday last I took occasion to inform the house that the government had in mind and were taking steps to arrange for the establishment of a bureau to 'give proper consideration to the many offers of assistance which had been received and indeed continue to be received daily in large numbers by the government. The order in council for this purpose has been approved by his excellency and has just been tabled. It provides for the establishment of a bureau to be known as the voluntary service registration bureau with authority "to direct and have general control of the tabulation, organization and coordination of all voluntary offers of service for the defence of Canada," in cooperation with Britain and France.
The general object of the voluntary service registration bureau is to arrange that the best possible advantage be taken of the offers which are being made by men and women and by organizations from coast to coast. The qualifications of individuals and organizations will be considered in relation to the country's needs at this critical time, in order that the most effective use may be made of such services. The bureau has already entered upon its task, and I feel confident that it will in no small measure contribute to the effectiveness of our national effort.


Robert James Manion: Might I ask the hon. gentleman to

put the order in council itself on Hansard? I believe that would be of assistance to all hon. members, because we are all receiving letters and telegrams in this connection.


William Lyon Mackenzie King: I might have
it inserted in the votes and proceedings, if that would be satisfactory.


Robert James Manion: Very well.



MUNITIONS AND SUPPLY


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the house go into committee at the present sitting to consider the following proposed resolution:
That it is expedient to introduce a measure to establish a Department of Munitions and Supply with authority, to mobilize the resources of the nation for the production of munitions and essential supplies and to take such action as may be necessary therefor, to secure an adequate supply of commodities of all kinds necessary or desirable for the prosecution of the war, to ensure an adequate allotment of such supplies among such agencies as may require the same, and to control the making of contracts in connection with expenditures therefor; to provide for the employment of officers, clerks and servants necessary for the proper conduct of the business of the department; and to authorize the payment of certain expenditures and the making of certain grants in connection with the work of the department.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
William Lyon Mackenzie King: Mr. Chairman, I would ask the committee if it would permit the resolution to pass so that we may have the debate on .the bill. The purpose of introducing the resolution at this stage is that of permitting the house to have the bill before it at as early a moment as possible. Hon. members would then have an opportunity of acquainting themselves with its provisions. I would suggest that to avoid unnecessary repetition the resolution might be carried, and the bill introduced and immediately distributed, following which we could proceed, in a moment or two, wdth the budget resolutions.


Robert James Manion: Carried.


Mr. POULIOT:: Will the defence purchasing board continue to operate after the establishment of the Department of Munitions and Supply?

European War-Recruiting


William Lyon Mackenzie King: I shall have a full statement to make with respect to the matter at a later time.
Resolution reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce Bill No. 5, respecting the Department of Munitions and Supply.
Motion agreed to and bill read the first time.


Mr. SPEAKER:: When shall said bill be read a second time?


William Lyon Mackenzie King: This day.
PRIVILEGE-Mr. LACOMBE


STATEMENT BY CHIEF JUSTICE GREENSHIELDS
[Stage Direction]
On the orders of the day:
Mr. LIGUORI LACOMBE (Laval-Two
Mountains) (Translation); Mr. Speaker, before the orders of the day are called1, I wish to bring forward a question of privilege. There has just come to my attention a statement made by Hon. R. A. E. Greenshields, chief justice of the Superior Court for the district of Montreal, and reported in the Ottawa Journal of September 12, 1939. The statement reads as follows:
Quebec Chief Justice Assails Lawyers Refusing to Serve
Montreal, September 11.-Hon. R. A. E. Greenshields, seventy-eight-year-old Chief Justice of the Superior Court, condemned to-day what he described as "ill-judged sentiments" expressed by certain members of the provincial bar, who, he said, had "refused to serve their king in an hour of dire need."
The Chief Justice, opening the fall sessions of the superior court, did not identify the men he criticized, but it was believed he referred to lawyers who had urged from public platform that Canada take no part in the war.
"I would recall to these gentlemen that when they were admitted as members of the profession of law-"
Mr. LAPOINTE (Quebec East) (Text):: Whait is the question of privilege? The Chief Justice did not speak about members of parliament; he spoke about members of the bar.


Mr. LACOMBE (Translation):: The question of privilege is this, Mr. Speaker. As representative of the electoral district of Laval-Two Mountains, I am not only a member of parliament but also a member of the bar of the province of Quebec. It is as a member of parliament and a member of the Quebec bar that I raise this question of privilege.


Some hon. MEMBERS:: Order.


Walter Edward Foster: I am of the opinion that the question raised by the hon. member is not in order.


Liguori Lacombe: Mr. Speaker, am I to understand that your ruling precludes me from continuing the reading of the item published in the Ottawa Journal?


Walter Edward Foster: I have ruled that there was no1 question of privilege in the matter.


EUROPEAN WAR
[Stage Direction]
On the orders of the day:
Robert James Manion: Mr. Speaker, I have a telegram of protest which probably I should have sent across to the Minister of National Defence (Mr. Mackenzie). However, I think it is non-political, and besides that, it shows a spirit which I thought might well be displayed. Therefore I will read the telegram to the house. It comes from my own section of Canada, is addressed to me and is signed by a lawyer in Kirkland Lake, Ontario, Mr. O'Meara. The telegram is as follows:
Toronto militia units actively recruiting in this area to bring their units to strength, whereas the Algonquin rifles, of which there is a local company, have not been put on active basis, and this condition is causing keen local resentment. Suggest you vigorously protest to the responsible minister.
I am passing the telegram on to the minister.


Hon. IAN MACKENZIE (Minister of National Defence):: I may tell my hon. friend that there have been similar protests from other parts of Canada. I should like to say that these matters are being carried out as carefully as possible by the staff, with a view to the national interest, and local difficulties are being adjusted as fast as possible.


Robert James Manion: I am quite satisfied with the statement the minister has made, but I thought I should read the telegram so as to indicate the spirit displayed.


ORDER IN COUNCIL RESPECTING MEMBERS OF THE PUBLIC SERVICE WHO JOIN THE DEFENCE FORCES
[Stage Direction]
On the orders of the day:
Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I wish to direct a question to the government respecting order in council P.C. 2584, concerning leave of absence of members of the public service. May I point out that this order in council does not appear to cover temporary employees who have been in the service of parliaments over a number of years. Does the government consider that
European War-Wheat

the order in council covers that classification, the temporary employees of the house, for example?


William Lyon Mackenzie King: I have not the order in council before me at this time, but I shall look into it and give my hon. friend a reply (ater.


PRESS REPORT OF SPEECH OF MEMBER FOR TEMISCOUATA ON SEPTEMBER 11
[Stage Direction]
On the orders of the day:
Mr. JEAN-FRANCOIS POULIOT (Te-miscouata): The Canadian Press report of the speech made yesterday by the member for Temiseouata (Mr. Pouliot) contains the following sentence:
Canada should aid in every way possible, the best method of aiding was by the supply of weapons and materials.
That sentence in the resolution passed by the municipal council of St. Hubert is as follows:
Canada must first provide for the defence of her territory, and this in the most efficient manner possible.

[Stage Direction]
On the orders of the day:
Hon. W. D. EULER (Minister of Trade and Commerce):: Mr. Speaker, I wish to
make a statement in correction of one made on Saturday and again yesterday by the hon. member for Rosetown-Biggar (Mr. Coldwell). On September 9 he said the following, as reported at page 56 of Hansard:
The price of flour has risen without warrant, because the Canadian carry-over of wheat was all disposed of to the millers, exporters _ or speculators at least a month before this crisis developed, and at a very low price. The 100,000,000 bushels or so, speaking in round figures, of our carry-over of wheat was still mainly in Canada. Neither our government nor our farmers who produced it will reap any gain from that wheat. Only those who to-day stand between us and those who need it will make rich gains.
Then, yesterday he is reported at page 110 of Hansard to have said:
On Saturday I drew to the attention of the house the fact that a little more than a month ago it was reported that there was a carryover of nearly one hundred million bushels of wheat. Most of that wheat had been bought from the wheat board at a very low price. We saw a few days later in the newspaper that the board stated that it had disposed of its holdings of wheat and that this large quantity of grain had passed out of its hands. Since that time the price of wheat on the market has gone up by leaps and by bounds until to-day-I have not checked to-day's price -it is in the neighbourhood of thirty cents

a bushel higher than it was a few weeks ago. This means that during this period of tension, which for not a few of us has been something of an .agony, some persons in this dominion or elsewhere have made or can make out of that wheat about $30,000,000.
I called up the chairman of the wheat board with regard to this matter, and he has assured me that this is the fact: that the great proportion of the carry-over of 1938 is still under the control of the board and that the increase in price will inure to the benefit of the government so far as the 1938 crop is concerned, because much of the 1938 crop was sold below the present price; that any increase in price on the 1939 crop will inure to the benefit of the producers of that wheat, and that no speculators have had an opportunity of making a profit of some $30,000,000.
While I am speaking perhaps I might correct an impression that seems to be in the minds of western producers and say, that the profits that may be made or the receipts that may be had from sales of the 1939 crop at high prices will not be used to reduce the losses of the government on the 1938 crop, but will go to the benefit of the producers of the 1939 crop.


Major James William Coldwell: I am glad to get that correction.



BUSINESS OF THE HOUSE

[Stage Direction]
On the orders of the day:
William Lyon Mackenzie King: I think perhaps it might expedite matters a little if we considered order No. 3 before having the Minister of National Revenue (Mr. Ilsley) bring down the budget on behalf of the Minister of Finance, as the Minister of Labour (Mr. Rogers) has a statement to make in regard to the Combines Investigation Act which I think will be acceptable to all parts of the house.



COMBINES INVESTIGATION ACT


[Stage Direction]
The house resumed from Monday, September 11, consideration of the motion of Mr. Rogers for the second reading of Bill No. 3, to amend the Combines Investigation Act.
Hon. NORMAN McL. ROGERS (Minister of (Labour): Mr. Speaker, I promised the house last night that I would make a statement to-day on the further intentions of the government regarding this bill. As explained yesterday, we felt that certain amendments to the Combines Investigation Act were desirable, and that the need for these amendments was emphasized in a time of war. Accordingly

Combines Investigation Act
we thought we ought to proceed with these amendments by way of legislation, taking the house fully into our confidence. In view of the objections taken last night to this course of procedure I have referred to the Department of Justice the several points raised, particularly by the hon. member for St. Lawrence-St. George (Mr. Cahan). The law officers of the crown advise us that we can proceed with the necessary amendments to the Combines Investigation Act under the War Measures Act. That being so, and having regard to the desire of the government to avoid as far as possible introducing any controversial legislation at this session, we have decided to withdraw this bill and proceed with such amendments of the combines act as may be required as time goes on under the provisions of the War Measures Act.
Walter Edward Foster: Is it the pleasure of the house that the hon. Minister of Labour shall have leave to withdraw the bill?


Mr. A. A. HEAPS (Winnipeg North):: Mr. Speaker, the Minister of Labour (Mr. Rogers) has stated that because of certain representations made last evening he now proposes to withdraw this bill. Some members of the house are not in favour of that course being followed. Personally, I think that when the house is in session all the legislation which the government seeks to put into effect should be brought down and passed upon by the house. In years gone by, objections were raised, particularly by hon. members to my right, to the government proceeding by order in council at a time when the house was in session.
There is strong resentment throughout the country against the increase in prices of everyday commodities of life. It is possible that in this proposed legislation is to be found the means of curbing those who would attempt to profit by the existing war prices. We are given the impression that by withdrawing these amendments to the Combines Investigation Act the government are weakening in their effort or desire to put a stop to war profiteering. If the house were not in session I could well understand the desire of the government or the desire of the opposition to see that action was taken under the War Measures Act, but I contend that the democratic method of procedure is to proceed by way of legislation when the house is in session. There is no excuse for the government's withdrawing legislation of this kind simply because some hon. members happen to be opposed to it. It may be that this legislation can be described as contentious, but if there is to be a real effort on the part of the government to curb profiteering I cannot see why such a
measure as this can be called contentious. I doubt if there is a single member in this house who does not desire that profiteering be curbed with the least possible delay.


Walter Edward Foster: Order. I thought the hon. member intended to make only a few remarks. I had put the motion and I thought it was carried.


Abraham Albert Heaps: It was not carried. I have every desire to expedite the business of the house, but-


Walter Edward Foster: The motion is not debatable.


Abraham Albert Heaps: If the motion is not debat* able, then I must bow to your ruling.


Walter Edward Foster: I allowed the hon. member to speak because I thought he had only a few remarks to make. If he is going on to make a lengthy speech, then I must call him to order.


Abraham Albert Heaps: I should like to know whether it is debatable or not debatable.


Walter Edward Foster: It is not debatable.


Abraham Albert Heaps: If it is not debatable, then I am out of order. I do want to say that I protest against the withdrawal of this bill.


Mr. ROGERS:: With the consent of the house, I really believe the point raised by my hon. friend ought to be answered immediately. Let me assure him that the matter at issue is simply one of procedure and not one of intention. We are advised by the law officers of the crown that under the War Measures Act we have the power to proceed with the amendments which are necessary to make the Combines Investigation Act effective in time of war. Let me assure my hon. friend that this is our intention, to make the Combines Investigation Act effective in time of war and to take whatever steps may be necessary to curb profiteering at this time.
Bill withdrawn.



THE BUDGET


William Lyon Mackenzie King: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.


Hon. J. L. ILSLEY (Acting Minister of Finance):: Mr. Speaker, it is a matter of universal regret that since the presentation of the last budget the Hon. Mr. Dunning, the then Minister of Finance, has been obliged to resign by reason of ill health. Sufficient time
The Budget-Mr. Ilsley

has not elapsed since the appointment of his successor for his election to a seat in this house, and it is therefore necessary that the financial proposals of the government should be placed before the house by the holder of another portfolio.
The task before us to-day, like many a task in war, is a difficult and disagreeable one. Budgeting at the best of times is not a pleasant business, as it involves essentially the counting of the cost of what we do. In the situation to-day, when we are entering upon a war of whose nature and duration we can guess only a little, it is difficult even to foresee the order of magnitude of the cost we shall eventually have to incur, and to pay. Therefore, our financial plans can only be provisional and we must be prepared to adapt them to changing circumstances. But it is doubly important under these conditions that we act with care, and seek to avoid financial pitfalls as we would the stratagems of the enemy. We shall not make the mistake which was justifiably made when Canada entered the last war, expecting it to be a short and only moderately expensive one. We know that mechanized warfare on the modern scale is tremendously costly and we can be sure that if the war continues the cost will increase probably more than proportionately. Therefore we must make our plans now with the full realization that we may be in for years of strenuous national effort.
We enter this war at a time when Canadian business has been reviving from the recession which checked our recovery from the great depression. Without attempting to describe economic conditions in detail, I would draw your attention to the fact that conditions have improved substantially in the four months that have elapsed since the last budget. Our western farmers are harvesting a bountiful wheat crop, apparently much better than was expected a month ago when earlier, more roseate prospects were being threatened by weather conditions. Wheat prices have also risen considerably in expectation of increased war demand. Construction activity, not only residential but industrial and commercial as well, has shown a notable increase due in substantial part to the measures enacted by parliament to stimulate it. Our exports both to the United Kingdom and the United States have increased substantially. In spite of the acute political tension in Europe during the last few months, business sentiment in Canada had improved and there was mounting evidence of a new forward-looking attitude. Given peace, we might legitimately have anticipated a brisk recovery during the balance of the fiscal year. Now that war is upon us, its immediate effects may produce hesitation and quietness for a month or two in view of the shock to business fMr. Ilsley.]
confidence and the necessity of making readjustments to war conditions. This period should not last long, and once it has passed we may, I think, expect a more rapid expansion due to the insatiable demands of war.
It has been a matter of special gratification to note the comparatively moderate effect of the immediate shock of war upon our financial markets. It was only natural that certain reactions should take place in the opening days of a major war but there has been no closing of stock exchanges, no public hysteria, no wholesale liquidation, no strain upon our financial institutions. What a contrast with the cataclysmic events of the first two weeks of August, 1914! What has happened is, of course, a strong tribute to the vastly improved position which we enjoy to-day. True, we start with a much higher public debt, but in most other respects our economy is infinitely stronger. We are no longer dependent on vast imports of foreign capital on which the old pre-war boom was based. During and since the war, Canadian savings have increased enormously and we have built up a vast and efficient mechanism for the mobilization of these savings. The strength of our banking system has always been recognized, but the changes which we have made in monetary and banking legislation during the last few years have greatly improved its efficiency and flexibility and its ability to promote the public welfare in war-time as well as in peace-time. In recent years we have increased enormously the diversification of our industries, and in particular the remarkable expansion of our mining and metal industries will be of unique importance in a modern war. In every way we are far better able to undertake immediately the great economic tasks which war has thrust upon us.
Coming to my immediate task, I will endeavour first to review the outlook for our revenues and expenditures for the present fiscal year in the light of the new developments. You will not, I am sure, expect me to deal with these matters in the detail which is usual in an ordinary budget address, and I know that you will be ready to make allowances for the difficulties which inevitably present themselves to anyone who must attempt the role of forecasting the probable course of events during even th6 next few months. No one can predict with any measure of confidence precisely what lies ahead of us, and the estimates which I will give you should be regarded merely as rough approximations based on our view of the probable course of events.
You will recall that in April last the then Minister of Finance forecast total revenues

The Budget-Mr. Ilsley
of $490,000,000 for the present fiscal year. While during the first five months of the year the receipts from certain taxes, particularly income tax, were possibly lower than he had anticipated, I now expect that our present tax structure, without any revision, will probably produce a higher revenue for the year as a whole than he had estimated, because of the expansion of production and incomes which should result within a relatively short time from our own expenditures on war activity and the probable placing of substantial war orders in this country by one or more allied governments. For our present purposes it is now anticipated that, if there were no changes in our tax structure, our total revenues for the year would be of the order of $495,000,000.
On the side of expenditure it is far more difficult to forecast the final result of the year's operations. In the budget of last April the probable total expenditure for the year was estimated at $550,100,000, exclusive of any further losses in respect of wheat and exclusive of certain defence expenditures which are being capitalized under the special sinking fund plan. For many obvious reasons it is still not feasible or advisable to make any estimate of the probable financial results of the wheat marketing program, although it will be clear to everyone that the substantial change which has taken place in wheat prices will, to say the least, greatly ease the burden that might otherwise have had to be borne by the national treasury. Fortunately, also, the splendid wheat crop which is now being harvested in western Canada should reduce to rather modest proportions any expenditures that might otherwise have had to be made under the Prairie Farm Assistance Act. With the certainty of a good wheat crop and as a result of the gradual improvement in business which has already taken place, the appropriations already made by parliament for deficits of government-owned enterprises will, I believe, prove adequate. This leaves for consideration, in respect of the items budgeted for last session, mainly our ordinary and capital expenditures and special expenditures for unemployment relief and for projects designed primarily to alleviate the problem of unemployment.
In considering these expenditures there is one outstanding point which should be stressed, namely that the magnitude of the new burdens thrust upon us makes it imperative that we should do everything that is practicable to conserve our resources and to economize on any expenditures which are not urgently needed in the national interest. It would, of course, be "penny wise, pound foolish" to curtail expenditures so suddenly and so drastically as 87X34-10
to aggravate seriously the unemployment problem before the stimulating effects of war expenditures and foreign purchases in our markets have acquired that momentum which will almost certainly bring our economy ultimately to a position of maximum productivity and full employment. It is therefore necessary to distinguish between a policy that may be appropriate for the next two or three months and what should be done in the later months of this fiscal year or in the later years of war. Parliament can be assured that while our policy will be to conserve our resources to the maximum practicable extent and to secure the maximum possible economies in the appropriations already granted by parliament, that policy will not be carried out in such a way as to aggravate unemployment and retard the prompt expansion of production and national income.
Finally, we must take into account the sum of $100,000,000 which we have asked parliament to appropriate in order to meet the special expenditures necessitated by the existing state of war.
Including this amount, it is now estimated that our total expenditures for the year will aggregate approximately $651,000,000, not including the two items of capitalized defence expenditures and any further losses in the marketing of wheat. If we deduct from this sum the estimate I have given of $495,000,000 for our total revenues for the year, we arrive at an anticipated deficit of $156,000,000, exclusive of the two items just mentioned. In view of the magnitude of that sum and, if the war continues, of the additional sums which we may have to raise in subsequent years as well as the importance of the effects on our economy of the particular policies which may be followed, it is appropriate for me to make some comments on the general problem of war finance before I announce the specific proposals which I have to make.
First of all let me emphasize that however we finance the cost of the war, whether by taxation or by borrowing or by inflation, we cannot escape its real costs. By the real costs I mean the goods and services which have to be sacrificed out of our current production to meet the needs of war. We shall have to devote a vast quantity of materials and the work of many thousands of men to produce the foodstuffs, the equipment and the munitions which are used by those who are drawn out of peace-time occupations to serve the needs of defence. To destroy the menace of Hitlerism, we must be prepared to sacrifice what the use of these materials and the labour of these men would otherwise have

The Budget-Mr. Ilsley

provided for us in terms of better and more secure living. If we must devote a great deal of our labour to making guns and military supplies, we shall have to do without whatever would have been produced in their place in peace-time.
We can, however, lighten the burden imposed by this real sacrifice if we expand our total employment and production. To the extent that we can put our unemployed men and equipment to work producing what we need for war, we will have to divert less resources away from normal uses. In many cases we may need to use on war work specialized men and equipment which are already employed, but we can cut down the real costs involved in doing so if we can replace them in their normal work by somewhat less skilled labour or less specialized equipment which may now be unemployed. We can reduce the cost further by developing more skilled labour, by better organization and by more effective utilization of all our resources. Conditions of war will not only demand but probably also make possible the full utilization of our man-power and equipment. The urgent demands of ourselves and our allies for supplies of all kinds and the will of a united people to win the war, even at the cost of some regimentation which might not be acceptable to a democratic people in peace-time, will provide that impetus to expansion of production and capital investment which has been lacking in these recent years of uncertainty and fear.
In this connection we recall how rapidly Canadian business responded to the needs of our own and allied governments during the last war. Industrial capacity was rapidly expanded and at the peak one-third of our manufacturing industry was engaged on war orders for other countries. Similarly agriculture and the mining industry received powerful stimuli from the urgent demands of allied governments for foodstuffs, metals and minerals. Our exports increased enormously -from 432 million dollars in 1914 to 1,540 million dollars in 1918. Exports of shells and explosives alone rose from a few million dollars in the first year of war to 390 million dollars in 1917 and during the war period approximately one billion dollars worth of shells and explosives were shipped overseas. The new wealth of resources and capacities which the necessities of the conflict developed in Canada was an important offset to the enormous cost and wastage of the struggle.
Whatever such offsets may be, it is important to emphasize that, as I have already said, the real costs of war must come out of
(Ifx. Ilsley.]
current production, out of the goods and services produced during the war. It is true that some stocks of military supplies may be on hand at the beginning of a war, but their importance is slight for a war of any duration. Borrowing abroad may enable a belligerent country to supplement its current production with an excess of imports but such borrowing is usually difficult in war time and leaves the country with the need of making real payments abroad after the war is ended. Taking it by and large the fact is that the shells that are fired and the other goods and services that are used up in the course of a war must be produced during the period of the war. This being the case, it follows that, and I repeat it again, in real terms, namely, in terms of the loss to the nation of this production, a war is paid for substantially during its duration. Obviously this simple fact has very important implications for any program of war finance.
There may be some who feel that borrowing at home may enable us to shift part of the burden to the next generation. Ill-considered and excessive domestic borrowing, of course, may add .unnecessarily to the burdens of certain members of the present and post-war generations who will find it necessary to pay interest to those of their fellows who may be bondholders. But the war generation does not thereby shift its own real burden on to posterity because borrowing at home does not enable us to borrow from future production the physical goods and services that are used up during a war. Borrowing at home is merely one means of diverting our production into war requirements, a means which is less painful at the time but which ultimately requires a somewhat greater resort to taxation. When we borrow a hundred dollars from one of our citizens and spend it on war supplies, he is thereby prevented from spending that hundred dollars on his own consumption or investing it to enable someone else to spend it on some kind of capital production. In future years we will have to pay him not only the principal but interest as well. Obviously we could accomplish the same diversion by taxing the hundred dollars away from him. Diversion by this method alone, that is to say, by a 100 per cent taxation or pay-as-you-go policy would seem at first sight to represent the ideal policy of war finance; in principle it would appear to be the most logical, the most equitable, the least likely to create disturbances and dislocations. But, in the first place, this takes no account of, the desire, indeed the necessity, of individuals making some savings to provide for a rainy day, and an effort to take so much in taxation that individual savings would be practically wiped out, would

The Budget-Mr. Ilsley
become so disruptive in character as inevitably to produce disorganization and public discontent. In the second place, realism compels us to admit that a pay-as-you-go policy has to take account, of the psychological reactions to taxation. In other words, we must recognize that when diversion by means of taxation rather than borrowing is carried too far the average citizen begins to feel that there is no use in his working for any additional income and therefore he does not put his best effort into his work with the result that efficiency and production fall off. If we cannot maintain our production at maximum efficiency we may lose the war, and at least the real costs of the war will increase. It is by a reasonable balancing of these various considerations that we have to decide how much to tax and how much to borrow.
We can also divert our resources to war purposes by inflation. We can create additional supplies of money and use them to purchase what we need. In this case, just as in the others, what we take for war purposes someone else must do without. Instead of taking money from the individual citizen in the form of taxes or loans, we put our new money into competition with his old money and take the goods and services away from him by forcing prices up against him. Of course this new supply of money will then go into general circulation and will continue to compete with the former supply. Therefore to continue getting the supplies that we need we must necessarily continue issuing more and more money, thus driving prices up farther and farther. If it is replied that we should control prices rigidly, then, assuming that all prices under such conditions could be effectively controlled-a very optimistic assumption-we would have to prevent the public from spending its money by some other means such as a drastic system of rationing all commodities. In that case the citizen would get paid in money which he could not spend freely. In other words, he has in effect been compelled to make a forced loan to the government on which he receives no interest. It must be realized, therefore, that this inflationary method of financing a war is easily the most unfair and inequitable of all the methods of diverting labour and materials to war-time purposes. It represents merely a thinly disguised scheme of taxation of a most unjust type. It throws a grossly unfair proportion of the burden upon the person of small or medium income, the wage earner, the salaried man and those who have savings deposits, insurance policies or securities of any kind whose value is fixed in money. It represents a complete violation of the principle of taxation in accordance with ability
87134-10J
to pay. It leaves in its wake a host of troubles such as chronic dislocations between industries, incomes and prices which are most difficult to cure, very serious damage to business and public morale, and high interest rates. If long continued, it can end only in complete collapse. These and other results of drastic inflation can be illustrated from the experience of many countries during the last war.
Canada's record in that war was much better than that of most other countries. But like the other belligerents she met the major portion of the cost of the war out of borrowings and credit expansion. We had no previous experience in financing a major war and in any case the imposition of a weight of taxation sufficient to pay for the whole cost of the war would have been too revolutionary a step to take. Prior to 1914 the dominion government had. relied for its revenues almost exclusively on customs duties and a few excise duties. It had no system of general taxation or established machinery for directly taxing the net incomes, profits and wealth of individuals. The sudden introduc- ' tion of such taxation measures on the scale required would have been too drastic to be either economically or politically practicable. Her own financial program and perhaps more importantly the influence on world prices of the inflationary financing of many other countries resulted in a drastic expansion of bank credit, a rapid rise in prices and a redistribution of the national income. Prices and the cost of living rose more rapidly than wages and interest on old debts. Industrial profits and property incomes increased while the real income of wage-earners and individuals receiving interest payments at fixed rates declined, or rose less rapidly. It was this reduction in the real income of one section of the community and the creation of large surpluses in the hands of other sections willing to lend to the government that in considerable part at least made possible Canada's remarkable record in mobilizing public savings through the various war and victory loan programs. The decline in the relative standard of living suffered by certain groups, the rapid increase in savings and the postponement of needed capital facilities made possible the enormous volume of war loans and represented the sacrifices necessary for the conduct of the war.
No country had the courage to finance the great war solely by resort to taxation and borrowings out of savings. As already indicated, the record of some countries was much better than that of others but all suffered from a world-wide inflationary rise of prices of enormous magnitude. For the last twenty
The Budget-Mr. Ilsley

years the world has been paying the price-a colossal one. Indeed it is perhaps not too much to say that some of the roots of the present war are to be found in the world-wide unsound financing of the last war and the great economic dislocations and continuing burdens of which it was in part the cause. It is to be hoped that in the present war the world may be able to avoid a repetition of that experience.
All this is not to say that a small and carefully regulated amount of credit expansion may not be desirable in the early stages of the war in order to assist the increase of production and employment. It must be small and carefully controlled because its effects which may not appear immediately are cumulative and otherwise might get out of hand. If at the beginning of the war there are unemployed resources, some credit expansion may give an impetus to their prompt utilization. If it is carefully controlled, the expansion of production may prevent any abnormal rise in prices, confidence may be maintained and the initial impetus may be carried on and accelerated by the insistent demand that exists for supplies. However, as soon as the expansion of employment and production gets well under way and certainly before it approaches its limits, further expansion of the supply of money and credit must be stopped if the danger of progressive inflation is to be avoided. With an economy at full production and employment, the only result of expanding money and credit is to raise prices without increasing production. At such a point commences the cumulative spiral of inflation with all its deadly consequences to the economy.
It is with these fundamental considerations in mind that we have decided upon our policy of war finance. Because we believe it is the part of wisdom, we shall follow as far as may be practicable a pay-as-you-go policy. In imposing the new tax burdens which this policy will require we shall be guided by the belief that all our citizens will be ready to bear some share of the cost of the war, but we shall insist on the principle of equality of sacrifice on the basis of ability to pay. We shall not of course be able to meet all war costs by taxation, because, as already indicated, there is a limit to the taxes that can be imposed without producing inefficiency, a lack of enterprise, and serious discontent. As the first necessity is to win the war as quickly as possible and without undue cost, we cannot carry taxes beyond the point where they seriously interfere with production. But we are not prepared to be timid or lighthearted in judging where this point lies, if need arises. What we cannot meet by taxation we shall

finance by means of borrowing from the Canadian public at rates as low as possible. There may be some who expect or fear that interest rates will rise substantially, perhaps a few who are thinking in terms of conditions during the last war. Such a view completely overlooks the vast changes that have taken place. We do not expect that any material change in interest rates from peace-time levels will be necessary to attract a sufficient portion of the large increase in savings which should be produced by the expanding production and incomes under war-time conditions. And we refuse to believe that those of our people who will benefit from the new conditions would seek to take advantage of war necessities to demand any undue increase in the interest rates which we have paid in peace-time.
I have already indicated the basis for distinguishing two major periods in our program-the initial period of expansion and preparation and the main period of full war effort. We commence the initial period immediately, and the paramount need is to get things moving as rapidly as possible in the proper direction. Our own expenditure on defence and preparation will furnish an important stimulus to the expansion of economic activity. There will be two additional sources of stimulus, first, the orders which we expect some of our allies to place in Canada for essential foodstuffs, raw materials and munitions; and secondly, the private capital expenditures which will probably be necessary in order to place our industry on an adequate footing to meet war requirements. These expenditures will probably soon be large enough to bring a rapid expansion of employment and incomes. Out of these enlarged incomes the public will be able to contribute more tax revenues and more savings. During the next few months, while we are starting the process of getting all our available resources into useful employment, the expansion in tax revenues from either existing or new sources may not provide for any very important part of our increased expenditures. We shall have to do some borrowing but the initial operation will probably be of a very short-term character and be designed to promote the immediate expansion of productive activity. It would be unwise and probably impracticable to attempt at an early stage any large borrowing operation designed to draw heavily upon public savings. Only after the initial period of expansion is well under way should we find it necessary to offer a loan for general public subscription in order that savings may be put directly to use.
By the time we have achieved the second stage of full war effort our national income will

The Budget-Mr. Ilsley
have increased so substantially that our existing taxes will yield a much higher revenue than during the last year or two. Not only will there be a greater volume and value of sales but the rise in individual earnings will bring more incomes into the higher taxation brackets and there will be additional business profits subject to tax. Consequently, the increase in dominion revenues should be larger, proportionately, than the increase in the national income. Nevertheless, our special expenditures caused by war conditions will be substantially increased, and while certain expenditures that have caused heavy drains upon the treasury in recent years, such as those for unemployment relief and wheat marketing, may be largely or wholly eliminated, it can never be forgotten that we start the war with a dominion budget heavily unbalanced under peace-time conditions. It is obvious, therefore, that additional taxes should be imposed immediately. I am confident that the Canadian public as a whole will expect this parliament to have sufficient courage to impose upon them such new or additional levies as will demonstrate an immediate and resolute effort to pay our way.
In this spirit we have prepared the program of tax increases which I am now about to recommend to the house. They may be regarded in some quarters as drastic, but I am sure that the Canadian public will accept them as an inevitable incident of the vital struggle in which we are engaged and as essential to avoid greater evils and burdens at a later date. They are comprehensive in their incidence because we believe that no person will desire to escape some additional taxation. They have been carefully studied to make sure that they will be in conformity with our fundamental aim of providing for equality of sacrifice on the basis of ability to pay.
The main feature of this tax program is an excess profits tax of general application. If we are not to impair the incentive to maximum efficiency or retard the prompt utilization of our entire resources and the achievement of full productivity and employment we must be able to hold out to business men the opportunity of making a reasonable profit and also the chance of securing some compensation for exceptional efficiency and willingness to take the risks inherent in industrial enterprise in war-time. But under war-time conditions when important sacrifices are being asked from the humblest citizen and when human lives are at stake, no government can justify the making of profits that are excessive or unreasonable.
It is an extremely difficult matter to devise an excess profits tax which will be fair to all kinds of businesses. No one who has not attempted to draft such a measure can appreciate the range of thorny problems involved. In the first place the normal rate of profits is not the same for all industries. Risks are far greater in some businesses than in others and, accordingly, the rate of return must be higher if such risky industries are to obtain the capital they need and to survive. They would be severely discriminated against under a general measure which taxed all profit above a common level on the assumption that the annual rate of return should everywhere be the same. Furthermore, not all businesses require the same proportion of capital in relation to value of output. Thus under normal conditions with no excess profits being made, the ratio of profits to capital of a company in a business using relatively a small amount of capital will appear abnormally high even though there be no profiteering. Thus, while an excess profits tax based on rate of return on capital may be entirely fair and reasonable over a wide range of industry, there are instances where it would operate with undue hardship. This should be recognized at the outset and provided for.
The United Kingdom in its recently imposed tax on armaments profits adopted the method of imposing the tax on the increase in the amount of a firm's profits as compared with the average profit made by the firm in recent years. This method assumes that profits in the selected base years might fairly be regarded as normal, and therefore that any increase over this normal rate is the measure of excess profits due to war conditions. The United Kingdom taxes such abnormal profits at the rate of 60 per cent. The method may work with reasonable fairness in the United Kingdom for the limited number of companies to which it applies but in Canada it would not be satisfactory for a measure of general application because a number of our industries have not been making normal profits in recent years, and indeed in some cases have not been making any profits at all.
It is obvious, therefore, that each of the two general methods of taxing excess profits, which I have discussed, would operate unfairly in certain cases. After much study and careful consideration with a view to being fair to all types of business, it was decided to combine the two methods as alternatives in the measure which we are recommending to the house. Accordingly a business concern may elect to be taxed on either one of the two bases, that is to say, either on the basis of a graduated scale
The Budget

Mr. Haley

of rates of profit on capital employed, or on the increase in profits over the average of the past four years. Where one basis might give rise to injustice or hardship, the business concern may elect to be taxed under the alternative basis. It is believed that this arrangement will have the effect of reducing to a minimum any injustices or undue hardships which might be inherent in either of the two methods used alone.
With regard to rates of taxation, the following schedule will apply where the taxpayer elects to be taxed on the basis of percentage return on capital employed:-
On	that	portion	of	profits	in	excess	of
5 per cent and not in excess of 10 per cent, a rate of 10 per cent.
On	that	portion	of	profits	in	excess	of
10 per cent and not in excess of 15 per cent, a rate of 20 per cent.
On	that	portion	of	profits	in	excess	of
15 per cent and not in excess of 20 per cent, a rate of 30 per cent.
On	that	portion	of	profits	in	excess	of
20 per cent and not in excess of 25 per cent, a rate of 40 per cent.
On	that	portion	of	profits	in	excess	of
25 per cent, a rate of 60 per cent.
Where the taxpayer elects to be taxed on the alternative basis, he will be required to pay to the treasury 50 per cent of any profits in excess of his average annual profits in his previous four fiscal periods. In view of the increase in the tax on corporate profits, to which I shall later refer, this will mean a tax of approximately the same severity as that applied to armament profits in the United Kingdom.
It should be pointed out at once that this tax on excess profits is to be levied on all businesses whether incorporated or not and whether increased profits are the result of war contracts or not. The reason for its application to all business firms is, of course, that under war-time conditions it is impossible to distinguish between the firm which is making larger profits directly because of armament orders and other firms whose profits are expanding as a result merely of a higher volume of business or possibly a higher price level due to war-time conditions. Furthermore, the excess profits tax will be in addition to all other taxes currently in force. In this respect the present measure differs from the Business Profits War Tax which was levied during the last war. At that time business corporations paid either the corporate income tax or the business profits war tax, whichever was the higher. Under the new measure which we are recommending, the corporate income tax will be regarded as an expense

in calculating the amount of excess profits for tax purposes. That is to say, it is the amount of profits left in the hands of a business concern after paying income tax which will be subject to the excess profits tax. This new tax will be applicable to profits earned in the year 1940 and in the fiscal periods ending therein after March 31, 1940.
I should add that problems arising out of certain special circumstances will be provided for in the bill. We must also contemplate that if Canadian industry is to be able to meet the urgent demand for war supplies that will arise, it will probably be necessary to provide for the construction of new plant or important extensions to existing plant and equipment. Particularly if business men expect the war to be of short duration they will not be willing to assume the risks of making the new investment required with an excess profits tax as drastic as that which we are proposing, unless they can see an opportunity of being able to amortize their costs over a reasonable period. Special provision, therefore, will have to be made for this problem.
The corporation income tax rate is also to be raised from 15 per cent to 18 per cent, and in the case of consolidated returns, from 17 per cent to 20 per cent. Thus, regardless of whether a corporation makes sufficient profits to bring it under the excess profits tax, it will in future be required to pay an additional 3 per cent on its net income.
All individuals subject to income tax will be required in future to pay a war surtax equal to 20 per cent of their ordinary income tax. That is to say, after calculating income tax under the present schedule of rates, an additional 20 per cent of the tax bill will be payable as a war surtax. This increase will be payable next year in respect of incomes earned in the year 1939 and fiscal periods ending therein.
As is usual in war-time budgets, we are also recommending certain increased levies on articles that are commonly regarded as being in the category of luxuries. Excise duties on spirits have traditionally played an important part in our revenue system and have been lowered in the last few years. We are now recommending that the present rates of S4 and S5 per gallon respectively on domestic and imported liquors should be increased to $7 and $8 per gallon respectively, the rates which were in force prior to the reductions in 1935. In the case of Canadian brandy, the existing $3 rate will be moved up to S6 with an equal increase on the duty on imported brandy. Beer will bear an additional levy by means of an increase in

The Budget-Mr. Ilsley
the rate of tax on malt from 6 cents to 10 cents per pound. On beer brewed from substances other than malt the existing rate of 22 cents per gallon will be increased to 30 cents. The rate on malt syrup is also to be increased from 10 cents to 15 cents per pound. Appropriate changes will also be made in the rates applying to imports of the foregoing. Wines which now bear the rate of 7J cents per gallon will in future pay 15 cents, and in the case of champagne and sparkling wines the existing 75 cents per gallon will be raised to $1.50 with equivalent increases on the imported product. Cigarettes will in future bear a tax of $5 per thousand, an increase of $1 per thousand over the present rates, and the tax on manufactured tobacco will be increased from 20 cents to 25 cents per pound.
As we are not recommending any lowering of the existing level of personal exemptions under the tax on individual incomes, it is considered that all our citizens may properly be asked to make some contribution to the treasury for the prosecution of the war, through their purchases of tea and coffee. Both are wholly imported commodities, and an increase in customs duties would therefore be wholly for revenue purposes. Accordingly, we are recommending that in the case of coffee, of which the greater part of our imports now comes in free, an increase of 10 cents per pound shall be imposed under all tariffs. With regard to tea, the greater part of our present imports now pays 4 cents per pound. It is proposed to add to existing rates 5 cents per pound in respect of tea invoiced at less than 35 cents per pound, 7i cents in respect of tea invoiced-at 35 cents per pound or more but at less than 45 cents per pound, and 10 cents per pound in respect of tea invoiced at 45 cents per pound or more.
In view of the increased levies on alcoholic beverages .and on tea and coffee, it seems proper that some additional taxes should be imposed in respect of soft drinks. It is proposed, therefore, to place a tax of 2 cents per pound on carbonic acid gas and similar preparations used in the manufacture of nonalcoholic beverages. There will be no increase in the sales tax but the base of this tax will be broadened by removing from the schedule of exemptions electricity and gas used for domestic purposes, salted or smoked meats, and canned fish.
All changes under the Excise Act, the Special War Revenue Act, and the Customs Tariff are to be effective as of this date, except in the case of the increases in excise and customs duties on spirits including brandy
which are to be effective as of September 3, 1939. I may say that that was the date of the declaration of war by Great Britain.
From these special war levies it is estimated that we shall derive approximately $21,000,000 during the remainder of the present fiscal year. In this connection it must be remembered that the revenues due to the increases in the individual and corporate income taxes and the levy of an excess profits tax will not be coming into the treasury until our next fiscal year. In any case it is impossible to predict what the yield of the excess profits tax will be in its first year of operation, and I shall not even hazard a conjecture. However, excluding this new impost, it is estimated that on the basis of a full year's operations but without assuming any increase in production and incomes as compared with, say, 1938 or 1939, the other new changes -being made in our tax structure should produce a revenue of approximately $62,000,000. I have already indicated our view that after a short period of hesitation and quietness it is very likely that business will improve and that under the impact of war demand productive activity and, consequently, individual and business incomes, will rise substantially. If such a forecast should prove to be correct it is clear that the new taxes and the tax increases now being imposed will at a somewhat later stage produce a substantially higher return than, the estimate which I have just given of their yield in a year like 1938 or 1939. Not only that, but if and when- our economy begins to expand to the stage of full production and employment, the yield from our existing tax structure will rise more than proportionately.
If there are any hon. members whose first impression was that our tax proposals were drastic, the estimate I have given of the moderate increase in revenue which will accrue to the treasury this year to meet the expenditures provided for in the war appropriation bill should serve to correct that impression. On the other hand, the estimate for a full year's operation of the new taxes and the considerations which I have mentioned in regard to the effect of expanding production and incomes on our new tax system as a whole should make it clear that we are endeavouring to avoid oft-repeated mistakes in war finance and striving to carry the pay-as-you-go policy as far as is practicable. The government believes that it has made sound and courageous decisions. It believes that the house will approve these decisions. It is confident that all sections of the public will bear the sacrifices asked of them in the knowledge that they are necessary to the successful outcome of the struggle to which we are committed.
The Budget-Mr. llsley

We are engaged in a grim and serious business. Modern war is a conflict in which whole nations are pitted against one another. The issue may be decided not by the relative strength of armed forces but by the magnitude and efficient use of economic power and by the test of human nerves, the strength of the will of peoples to bear burdens and stand strains. No one can doubt the courage and the moral strength of the Canadian people. But this courage and strength must be shown at home as well as on the field of battle. Our war effort on the economic side must extend throughout the country from the city factory to the farthest frontier farm and mine. Our people will, we are confident, bear their burdens with fortitude, and pursue their respective tasks with a determination to let nothing interfere with maximum efficiency. In carrying the financial burden, every one of our people can and will contribute to the victory of the freedom and the justice for which we fight.



RESOLUTIONS

[Stage Direction]
Mr. Speaker, I beg to give notice that when we are in committee of ways and means I shall move the following resolutions:

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend Schedule A to the Customs Tariff and amendments thereto, and to provide:
1.	That there shall be levied, collected and paid on the following goods, whether dutiable or not dutiable, when imported from any country, the additional rates of duties of Customs hereinafter specified:
(a)	Whisky, brandy, rum, gin and all other goods specified in Customs Tariff Items 156, 156a and 156b-$3 per gallon of the strength of proof.
(b)	Ale, beer, porter and stout-9 cents per gallon.
(c)	AVines of all kinds, except sparkling wines, containing not more than forty per cent of proof spirit-74 cents per gallon.
(d)	Champagne and all other sparkling wines -75 cents per gallon.
(e)	Manufactured tobacco of all descriptions except cigars, cigarettes and snuff-5 cents per pound.
(f)	Cigarettes weighing not more than three pounds per thousand-$1 per thousand.
(g)	Tea, when the value for duty thereof under the provisions of the Customs Act:
(i)	is less than 35 cents per pound-5 cents per pound.
(ii)	is 35 cents or more but less than 45 cents per pound-74 cents per pound.
(iii)	is 45 cents or more per pound-10 cents per pound.
(h)	All goods specified in Customs Tariff item 25a-10 cents per pound.
(i)	All goods specified in Customs Tariff Item 26 except coffee, roasted or ground-10 cents per pound.
[Mr. Ilsley.l
(j)	Coffee, green, and coffee, roasted or ground-10 cents per pound.
2.	(1) That any enactment founded upon the foregoing resolution relating to item (a) shall be deemed to have come into force on the third day of September, one thousand nine hundred and thirty-nine, and to have applied to all goods imported or taken out of warehouse for consumption cn and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(2) That any enactment founded upon the foregoing resolution relating to items (b), (c), (d), (e), (f), (g), (h), (i) and (j) shall be deemed to have come into force on the twelfth day of September, one thousand nine hundred and thirty-nine, and to have applied to all goods imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.

[Stage Direction]
Resolved, that it is expedient to introduce^ a measure to amend the schedule to the Excise Act, 1934, as enacted by chapter thirty-seven of the statutes of 1936 and to provide:-
1.	That the duty of excise on spirits distilled in Canada be increased from $4 to .$7 per proof gallon.
2.	That the duty of excise on Canadian brandy be increased from $3 to $6 per proof gallon.
3.	That the duty of excise upon all beer or malt liquor brewed in whole or in part from any substance other than malt be increased from twenty-two cents to thirty cents per gallon.
4.	That the duty of excise on malt manufactured or produced in Canada or imported be increased from six cents to ten cents per pound.
5.	That the duty of excise on malt syrup suitable for the brewing of beer manufactured or produced in Canada be increased from ten cents to fifteen cents per pound and malt syrup imported into Canada and entered for consumption be increased from sixteen cents to twenty-one cents per pound.
6.	That the duty of excise on tobacco of all descriptions manufactured in Canada, except cigarettes, be increased from twenty cents to twenty-five cents per pound actual weight.
7.	That the duty of excise on cigarettes manufactured in Canada, weighing not more than three pounds per thousand, be increased from $4 per thousand to $5 per thousand!
8.	(1) That any enactment founded on resolutions 1 and 2 hereof shall be deemed to have come into force on the third day of September, one thousand nine hundred and thirty-nine.
(2) That any enactment founded on resolutions 3, 4, 5, 6 and 7 hereof shall be deemed to have come into force on the twelfth day of September one thousand nine hundred and thirty-nine.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act, chapter one hundred and seventy-nine of the Revised Statutes of Canada 1927 and amendments thereto and to provide:-
1.	That subsection 1 of Section 83 of the said Act be struck out and replaced by the following:

The Budget-Mr. Ilsley
"1. There shall be imposed, levied and collected the following excise taxes:
(a)	a tax of fifteen cents per gallon on wines of all kinds, except sparkling wines, containing not more than forty per cent of proof spirit;
(b)	a tax of one dollar and fifty cents per gallon on champagne and all other sparkling wines."
2.	That Schedule II to the said Act be amended by adding thereto as paragraph 4 thereof the following:
"4. Carbonic acid gas and similar preparations to be used for aerating non-alcoholic beverages.. .two cents per pound."
3.	That Schedule III to the said Act being the list of articles exempted from the consumption or sales tax be amended
(a)	by striking out under the heading of "Foodstuffs" in the sixth line the words: "Fish and products thereof;" and replacing them by the following words: "Fish and products thereof, not to include canned fish;"
(b)	by striking out under the heading of "Foodstuffs" in the tenth and eleventh lines the words: "Meats, salted or smoked (not to include the same when chopped, ground, parboiled or spiced);"
(c)	by striking out under the heading of "Miscellaneous" in the first line the word "Electricity" and replacing it by the following words: "Electricity, except when used in dwellings;"
(d)	by striking out under the heading of "Miscellaneous" in the fourth and fifth lines the words: "Gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes;" and replacing them by the following words: "Natural gas and gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes, except when used in dwellings;"
4.	That any enactment founded on this resolution shall be deemed to have come into force on the twelfth day of September, one thousand nine hundred and thirty-nine and to have applied to all goods imported or taken out of warehouse for consumption on and after that date and to have applied to goods previously imported for which no entry for consumption was made before that date.

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act to provide-
1.	That a war surtax of 20 per centum of the total income tax otherwise payable under the said Act be imposed upon all persons other than corporations.
2.	That the rate of tax applicable to corporations and joint stock companies, except those filing consolidated returns, be increased from 15 to 18 per centum.
3.	That the rate of tax applicable to corporations and joint stock companies which file consolidated returns under the said Act be increased from 17 to 20 per centum.
4.	That voluntary donations to approved patriotic organizations and institutions in Canada during the present war be allowed as a deduction from income, up to 50 per centum of the net taxable income of the taxpayer.
5.	(1) That the amendments proposed in resolutions 1 and 4 hereof be applicable to the income of 1939 and all fiscal periods ending therein and of subsequent periods.
(2) That the amendments proposed in resolutions 2 and 3 hereof be applicable to the income of 1940 and all fiscal periods ending therein after March 31, 1940, and of subsequent periods.

[Stage Direction]
Resolved, that it is expedient to enact an Excess Profits Taxation Act to provide
[Stage Direction]
1.	That an excess profits tax be levied on . the profits of all businesses, whether incorporated or not, the said tax to apply to profits in excess of 5 per centum of the amount of capital employed by the taxpayer in the business, and to be graduated at the following rates: on profits in excess of 5 per cent but not exceeding 10 per cent of the capital employed -10 per cent;
on profits exceeding 10 per cent but not exceeding 15 per cent of the capital employed-20 per cent;
on profits exceeding 15 per cent but not exceeding 20 per cent of the capital employed-30 per cent;
on profits exceeding 20 per cent but not exceeding 25 per cent of the capital employed-40 per cent;
on profits exceeding 25 per cent-60 per cent;
and that the said excess profits tax be in addition to the tax imposed upon the taxpayer under the Income War Tax Act, but that any tax payable by the taxpayer under the Income War Tax Act in respect of the profits of the same business for the corresponding period be deductible as an expense for the purposes of computing the profits to be assessed under the excess profits tax.
2.	That an alternative excess profits tax be imposed upon the profits of all businesses, whether incorporated or not, taxing at the rate of 50 per centum all profits or income in excess of the average income of the taxpayer for the four years 1936, 1937, 1938 and 1939, or the four fiscal periods of the taxpayer ending in such years;
And that the said alternative excess profits tax of 50 per centum be in addition to the tax imposed upon the taxpayer in respect of the same profits under the income War Tax Act, but that any tax payable by the taxpayer under the Income War Tax Act in respect of that portion of his profits which is in excess of the aforesaid average profits shall be deductible as an expense for the purpose of computing the net excess profits to be assessed at the aforesaid rate of 50 per centum.
3.	That the tax proposed in resolution 2 hereof be an alternative to the tax proposed in resolution 1 hereof, and the taxpayer shall have the right to elect to be taxed either upon the basis of the tax proposed in resolution 1 hereof or upon the basis of the tax proposed in resolution 2 hereof.
4.	That the governor in council may provide by regulation for the depreciation and amortization of new plant and equipment which may be deemed necessary to fulfil orders for war purposes.
5.	That this act shall be applicable to the year 1940 and fiscal periods ending therein after March 31, 1940, and all subsequent periods.
The Budget-Mr. Stevens
Hon. H. H. STEVENS (Kootenay East):: Mr. Speaker, my first words must be to join with the minister in his expressions of regret that the former Minister of Finance, (Mr. Dunning), was unable, because of impaired health, to be here to present the budget, and indeed has been compelled to resign the office of Minister of Finance. I am sure that all will agree with me when I say that we regret not only his absence but also the occasion of it.
Obviously one is at a distinct disadvantage in having to face a formidable document of this kind, the presentation of which has been so excellently made by the minister, without having had time to study and consider it. I am sure the house will bear with me if I run over rather rapidly, and I confess in a more or less casual way, the remarks which have been made by the minister.
I feel we have had in the statement which has been presented an excellent analysis of the economic factors involved in the problem with which we are faced at this time. The minister reviewed the situation as it is and as it has been during the past number of years, particularly within the last few months. I think his presentation was a fair one, laying an excellent foundation for the proposals which followed. The minister made one statement which I should like to emphasize. He pointed out, very properly, that any provision made at this session for increased revenue, and indeed any presentation regarding expenditures, must necessarily be of a provisional character. With that statement we agree, and it is largely because of this consideration, together with the conditions with which we are confronted, that we now withhold any criticism in regard to the government's proposals.
I was glad also to note that the minister emphasized the fact that under the present circumstances the government would necessarily have to proceed with care. I commend the minister for taking that attitude and simply add that we strongly urge the government to exercise the greatest care, not only in the administration of the new taxes but particularly in regard to expenditures. We say that with all kindness, and in that connection we find ourselves in harmony with the view expressed by the minister.
It was indicated also that in all probability the war will not be a short one. I understand that the British authorities are acting in the light of a war period of a minimum of three years; indeed, in many of their utterances they suggest that the period may be even longer. As much as we should like to see an end to this strife, I am sure it would not be

wise on our part to proceed on the basis of the war coming to a conclusion within a short time.
It is encouraging to note that in recent times, there has been some improvement in conditions, but the undertaking of my leader and of ourselves as a party prevents me from analysing these conditions. However, I should not like to agree entirely with the minister that preceding the outbreak of the war there was a condition, to use his own words, of brisk recovery. It is not my intention to dispute that statement beyond indicating a slight disagreement.
Reference was made to the last war period, and I am pleased to note that the government have studied what happened during that time. When Canada entered the great war of 1914 she had nothing whatever to guide her, but at this time the archives of the various departments of the government are filled with records of blunders, shall I say, and of achievements, which should be extremely helpful to the government in the present crisis. In the budget it is indicated that the government is taking advantage of this information, and this is something that should be approved.
I agree with the minister when he says it is impossible to indicate what the exact revenues may be from the proposals now before the house. It would be obviously impossible also to say what the total expenditures will be. However, the minister suggests that the expenditures for the current fiscal year, which I presume include war expenditures, will amount to approximately $651,000,000, plus the capital expenditures which were voted at the last session for militia and defence purposes. I should like to suggest to the government that the so-called capital expenditures for defence purposes can scarcely be considered as capital expenditures, because without doubt they will be absorbed in the general war expenditures of the period. Therefore the estimated deficit of $156,000,000 for the current year, which would be decreased by the anticipated increased revenue, should in my opinion be increased by the amount of the capital expenditures. I think the government ought to keep this in mind, because there is no doubt that that will be the case.
It is true that we cannot escape the costs of the war. We are in the war and we must face the issue as it is. In his closing remarks the minister properly - pointed out that the people of Canada will have to square up to the task. I think the house as a whole will agree with me when I say that there is every possible need, not only for sacrifice but for cooperation on the part of business interests

The Budget-Mr. Stevens
and of the public generally. This will have to be tendered to the government in the great task with which it is confronted.
I shall turn now briefly to the proposals which are being made. The analysis made by the minister of the three methods of financing was, I think, excellently done. He referred to the three methods of financing, borrowing, paying as you go, or inflation. The minister has discarded inflation and has partly discarded borrowing. He has adopted a method of "pay-as-you-go" as far as the revenues of the country will permit, the balance to be absorbed by borrowings.
I should like to say just a word or two in regard to the matter of inflation. In my opinion the term "inflation" has been grossly abused in recent years. It is generally accepted-I mean by other than experts in economics, like my hon. friend across the way-that the term "inflation" refers to the issue of paper currency without regard to its background, whether that be a gold reserve or some other form of security upon which it may be based. That form of inflation which was adopted by some of the European countries particularly following the last war is of course inimical to the interests of any country and should be avoided. But there is a danger, as we have experienced in recent years, of adopting the attitude of deflation, which is just as injurious to a country as one of reckless inflation.
I should like to draw to the attention of the minister and of the government a very simple fact. During the last twenty years, by and large, Canada has had in circulation currency to the extent of about one-half per capita the amount of currency in circulation in the United States and in Great Britain. If the minister would be good enough to give his attention to this point I would appreciate it. The per capita circulation in Canada has been approximately $20, sometimes $21, and for a short time it went up to $22; but over a period of ten or fifteen years it has been about $20 per capita, while in the United States it has averaged from $40 to $42 per capita, and in Great Britain about the same, something over $40 per capita. This indicates that there has not been in Canada an excess of circulation at any time in the last twenty years. Indeed, in my opinion there has been definitely something less than an adequate amount of currency in circulation in Canada.
The figures which I have just given are susceptible of verification by the records of the bureau of statistics, the Bank of Canada, or the banking and commerce committee of this house, and in my opinion they constitute ' a definite challenge to the financial authorities of Canada. Please understand me; I am not criticizing the financial system of Canada at all, because I believe, as I have stated on previous occasions, that we have one of the soundest and best managed financial systems in the world. But I do say that there is danger . in erring on the side of care and restriction and deflation just as much as there is danger in erring on the side of inflation or expansion of currency. The cold fact is this, and I repeat it because I should like the minister (Mr. Ilsley) and his colleague the Minister of Finance (Mr. Ralston), who is not able to be with us, to study the question. It is an economic fact which challenges attention in this country that, apart from the needs of the war, the amount of currency in circulation in Canada for the last eighteen or twenty years has been approximately one-half per capita of that in circulation in Great Britain and the United States. As I intimated the other day, our extensive gold production in Canada, providing as it does what is still the best medium of reserve in the world, together with our present per capita rate of currency circulation, afford to us the opportunity of financing by a method which cannot by any stretch of the imagination be termed reckless, unorthodox or inflationary.
I should be the last to suggest anything that would be likely to undermine confidence in Canada, but I cannot under any circumstances conceive how, by taking advantage of these rich resources of ours and this obvious degree of under-circulation of currency, we can possibly risk any interference with our economic structure. I hope the minister will give careful study to the matter, because I believe in this alone we have an opportunity for financing in these early days of the war, to which the minister very properly referred a moment ago, without at this stage increasing the debt of Canada.
The minister has rightly stated that during the next few months, before the new revenues come into the treasury in substantial quantities, and when there is a heavy demand for immediate expenditure, the revenues available to the government will not be sufficient to take care of expenditures. Obviously so; and the minister may rest assured that we shall make no critical approach to that situation because we recognize it as a perfectly natural one and we desire to assist the government in every way in meeting it. But any government is entitled to examine its revenues to see whether there are not some reserves upon which it can draw to help it over such a period. Without going into any detail I should like to lay down a principle which we have to face in these modern days.
The Budget-Mr. Stevens

There has been a tendency in some quarters to look upon a reserve as something sacrosanct, something that must not be touched or invaded at all. Insurance companies, for instance, and other financial institutions of the kind, have built up reserves which they seem to consider they must keep always at a given level; but these reserves are built up by a corporation or bank or financial institution to be made available when they are required. I am not suggesting that reserves, whether they be gold or other reserves which we may have at our disposal, should be invaded recklessly. I am not aware just what the gold reserve is at the moment, but I imagine it is around fifty. It is recognized and acknowledged by international conferences and international agreement that a twenty-five per cent gold reserve is acceptable as adequate. Again I am not sugegsting that we should immediately go to the extent of invading the gold reserve until we are down to the twenty-five per cent level, but I do submit that between the twenty-five per cent level and the fifty per cent level there are reserves which we may legitimately use. Again I say to the government that, apart from our reserves in the way of increased taxation, we have in our gold a reserve which can be drawn upon for use in time of stress without violating-and I emphasize this because I do not wish to be misquoted or misrepresented-without invading or violating any of tie orthodox and accepted principles of sound finance, so called.
The minister has stated that he proposes to proceed on the pay-as-you-go principle, plus borrowing to make up any deficit. To this principle I take no exception. I think it is a highly laudable objective for the government to have in mind. I well recall the difficulty of financing in the last war. I think the house should do justice-possibly the minister did something less than justice- to those who were saddled with the responsibility in those days, because they were entering an entirely new field. I well remember when the then minister of finance issued his first victory loan. It was done with fear and trembling. We had no idea what the resources of the country were in that regard. We feared it might be a failure. It went over, to use a slang expression, with a bang, but it was a surprise to every financial authority in the country, and it was not until after the first victory loan that we obtained some realization as to the reserve resources of this country. We were faced with difficult times in those days. Now we know our position; we have our people well educated to public loans and also, through the concentration in trust, loan and financial institutions, banks 
and insurance companies, of the control of liquid capital, we pretty well know what those resources are. To-day it is a much easier task. The effect of the minister's policy of pay-as-you-go can be pretty well calculated by proper analysis of the financial resources of the country.
I intend now to refer to this policy. As to the taxes proposed, I am not going to criticize them. I give my hon. friend a sort of blanket "God bless you; go ahead and do the best you can" and anything I shall say with regard to those taxes is in the way of suggestion rather than criticism.
First with regard to the excess profits tax. I well remember when it was first introduced in the last war. The minister referred to it as a thorny problem, and indeed it is. In this matter he has my sympathy and, I know, the sympathy of all who have had some experience in that task. It is a tax which it is extremely hard to apply equitably. In just glancing over the proposal in the moment or two I have been able to examine it, it appeals to me as reasonable under the circumstances; and I am quite certain that, with the very able staff he now has, with their very wide experience in these matters-some of them, I think, had experience of the old excess profits tax-he will be able to administer this tax in a way which will be satisfactory. I feel that I should add to what the minister said in his closing remarks and appeal to the business public of Canada cheerfully to cooperate with the government in the collection of this tax. Upon one thing the people of Canada are perfectly clear; they will not tolerate excess profits in this time of stress. But I should like to add this, that I believe the great body of the business public, particularly in the industrial realm, are equally desirous of avoiding anything in the nature of undue profits.
May I give the minister one illustration of the undesirability of hasty judgment and condemnation of firms? I recall that a particular firm in Canada was examined in 1919 by a committee of this house which was known as the high cost of living committee. I imagine that in a year or two we shall be having a similar committee again. I remember that this firm, brought before this committee, showed a profit of some seventy-two per cent, and it was looked upon as very high, because they had had some large and valuable government contracts. But when we examined into it this is what we found. The firm happened to be a woollen manufacturing concern. They had been operating their woollen plant and manufacturing different patterns of woollen goods. They would have their looms operating for maybe a day or two, or some limited period of time, on one kind of pattern;.

The Budget-Mr. Stevens
then the loom had to be changed over to another pattern, and when they took from the government a contract for khaki cloth they gave a figure based upon their actual cost of production according to their books, plus a small profit. But they found, when they ran the same looms twenty-four hours a day, day in and day out, month in and month out, that the cost of production was materially reduced, which of course is quite understandable. At the end of the year the plant, to the amazement of those who operated it, showed a profit of seventy-two per cent. They were not to be condemned for that, although I confess that at the time there were those who bitterly criticized them. I cite that as an illustration only; there are many others. Conditions will arise in the industrial realm where concerns will show at the end of a period a profit far beyond what they ever expected to make. I believe that in the set-up the minister has given us to-day there is reasonable protection for such firms and at the same time justice will be done to the treasury and to the sentiment of the country by the avoidance of undue profits. Therefore, I see little, indeed nothing, in the excess profits proposal of the minister which I would criticize, but I should like to emphasize that in its administration great care should be taken not to do injustice in cases where obviously no offence was contemplated or intended.
The alternative method is, I think, a good one. We shall have to wait and see how it works out. I have not had time to study it. We usually find that after proposals of this kind are introduced and the practical business men to whom they will apply have had an opportunity to study them, certain things develop and certain representations are made. I am quite certain that if after a study of the application of these new taxes the minister is shown that they bear with undue severity upon certain classes of industry, he will come to parliament at the next session and seek the necessary amendments to adjust them. But from the opportunity I have had of examining them I am not disposed to criticize them.
There is one point about these taxes, however, which strikes me as a little dangerous. We have had up to the present a very heavy corporation tax, of fifteen per cent, which is now increased to eighteen per cent. The excess business profits tax is to be applied above that figure, and it may work out all right; I have not had time to study it. But it struck me at the moment that possibly there is danger in carrying along the ordinary corporation tax and the excess profits tax on top of it. I suggest that that phase of it should be studied with great care in the next
few months, so that if it is clear that in some instances an injustice is being done, amendments or adjustments may be made.
There is one thing we do not wish to do. The minister himself referred to it in his excellent speech. We must not discourage people from carrying on active industrial operations in this country. I know there are some who look upon industrialists almost as evil-doers; but that is not so. There are men in industry and in business who are guilty of malpractice, but comparatively speaking they are few in number. The general industrial public as well as the mercantile and financial public is anxious to do the right thing. Generally speaking that is so, and I have had opportunities of studying the question, perhaps under very critical conditions. Therefore we must not jump to the conclusion that because a firm is making a little profit it is an evil thing; because capital will not be invested in industry if there is nothing in industry, and if you talk about the alternative, the nationalization of industry, you will have chaos and collapse in front of you. In my opinion there is no escape from this, that if we sought to nationalize industries during these times and under present conditions, and placed in control of industry men, whether they have had training or not, who are under government control, we would face the collapse of the industrial structure of the country. Or perhaps I might put it in this way. We have a magnificent economic structure in Canada. I admit at once that it is not working with complete equity not by any means. I repeat, however, that we have a splendid economic structure. We have factories and corporations organized for the carrying out of certain lines of business under a trained personnel who know their business. And we have financial institutions with certain duties to perform. There is one thing that parliament and the government must always do; they must always safeguard the public against exploitation. But it does not follow that these institutions are anything but of great value to the country. And so, whatever we do, as the minister indicated in his analysis of the situation, we must not discourage or destroy the instrument of production in Canada in its present form.	_
There is another point which the minister made and which I would emphasize. The demand for war material will present itself in various forms, and it is futile to discuss now the question whether a person should put his money into the production of armaments. We have to have armaments; we cannot escape that. Unfortunate as it is, dislike it as we will, we have to have armaments. But for an industry to expand ita
The Budget-Mr. Stevens

plant, to put in new machinery and enlarge its buildings at this time for the purpose of fulfilling the imperative needs of the country, it must make provision for the risk it is taking, and fairly generous allowances will have to be made. The minister cited the United Kingdom. The United Kingdom has a definite plan which is followed in that respect. I have not that plan before me and I am therefore unable to present it here. But I gather from the minister's remarks that either he or the department has carefully studied the British system. I know however that in Great Britain they do make generous allowances for plants that will be out of use when the war is over. All we have to do is walk down Wellington street and we shall see buildings there to-day some of which have been idle, in whole or in part, for years. Those buildings were put up to meet the demands of the last war. You cannot erect such buildings and equip them with the necessary machinery without loss when their usefulness ceases. There are two avenues of approach to this question. One is to make reasonable allowances for the disuse of such buildings, and if the government could have some of its experts keep in mind the possible use of these buildings after the war for the production of goods for peace-time, a useful purpose would be served. In the old land and in Europe considerable advantage was taken after the last war of many plants for peace-time production after their usefulness in the production of armaments had ceased. That question might be studied in Canada.
Another point must be considered. We should avoid giving contracts to persons who are inexperienced in the line of business represented by the contract. I do not know whether it is true, but it was told me by a responsible person the other day that someone who had a furniture factory got a contract for clothing or goods of that class. We want to avoid that sort of thing, and I am warning the government against giving contracts to persons who are not fitted or qualified to carry them out. And it can be done; it is not difficult. The principle should be laid down that these contracts with respect to iron and steel products, clothing, boots and shoes and so on should be given to firms engaged in those respective lines of business.
I am not going to criticize at this time the increase in the corporation income tax or the surtax on incomes. We had a surtax on incomes in previous years and we shall have to stand it again. I see no objection. There is a substantial increase on tobacco and liquor and I believe 1hat those who indulge in the use of these things, either 
tobacco or liquor, will cheerfully bear the tax. As regards tea and coffee, I apprehend that there may be some criticism of the tax; but again, these are commodities that have usually been taxed in different countries in times of stress. I do not recall the British tax on tea, but I know that it is quite highland to the Britisher tea is almost, if I might say so, the breath of life. The tea tax is high. In the last war there was a tax of 10 cents per pound in Canada; the minister proposes now to tax tea 5, 7i and 10 cents per pound on the higher priced commodity, and there is to be a tax of 10 cents on coffee. I take no exception to these. I see no escape from this form of taxation.
The tax on soft drinks is not a new one; we have had it before and it will work again. But it is one of the most annoying taxes that can be imposed, and there is some difficulty in connection with this class of goods. A five cent bottle is sold; when the tax is raised it is impossible to produce the drink and sell it at five cents a bottle, and the price usually jumps to ten cents. I remember the difficulty that was experienced in this regard before. If the tax does not produce a substantial revenue it is not worth the trouble which its imposition and working out will entail. I leave that suggestion with the minister.
It is expected from these increased taxes to get an increased revenue for the rest of the fiscal year of $21,000,000, and I understand that the total increase in revenue anticipated in any full year in the future, to be derived from all the taxes including the income tax will be $62,000,000.


James Lorimer Ilsley: That is correct, unless business increases.


Henry Herbert Stevens: Frankly, I do not think the increase is exorbitant. It should be at least that.
There is one thing I should like to say to the minister, and it is this. I am very glad that he has not increased the sales tax, and in case between now and the coming session he should be tempted to do so I will tell him why I make that statement. The sales tax works inequitably on different lines of business. Let me illustrate that briefly. Here is one class of industry that has a turnover we will say every two months, equal to its capital. Therefore at the end of the year it would have a forty-eight per cent tax as compared with its capital. Another class of industry has a turnover comparable with the amount of capital only once a year. Obviously one class of business carries a greater weight of taxation than the other, though the rate is the same.
I think the minister partly recognized that

The Budget

Mr. Coldwell
principle when he imposed the excess profits tax; I believe that principle was involved in the choice given there.


James Lorimer Ilsley: Yes.


Henry Herbert Stevens: Frankly I believe that the sales tax method should be reviewed and studied. I am not authorized by my leader or my colleagues to say what I am about to say; I am just throwing it out as a hint or suggestion of my own. For many years I have studied the sales tax with great care, and from time to time I have sought to find in my own mind and to my own satisfaction some substitute for it, because it is a very valuable tax.
I think at the present time it is producing about $120,000,000 or $130,000,000 a year.


James Lorimer Ilsley: Yes.


Henry Herbert Stevens: It is a valuable tax, which could not be discarded without substituting something for it. Admitting that it is inequitable, as I think will be admitted by anyone who has studied its application, I believe a turnover tax right across the board, say of two per cent in war-time and one per cent in peace-time, would be more equitable and less burdensome, would produce much more revenue and would injure no business. I realize what is said about the pyramiding, but you have pyramiding under the sales tax; the pyramiding is there. I have taken my pencil and worked it out many times; I have studied it very carefully. I think the pyramiding of the low tax of say one per cent would be so minute that it would be hardly worth bothering about, whereas the pyramiding of the eight per cent tax is quite substantial. The real point of it, however, is this: the industry which is the foundation of your productive activity suffers under the sales tax, whereas if you had a turnover tax that went clean across the board, with everyone paying a small tax, it would not bear down to the point of bankruptcy, as has sometimes happened under the sales tax. I know industries which in these last few years of distressed times have gone bankrupt under the sales tax. A tax of two per cent or one per cent could not vitally affect any industry or business. I know there are those who say that the cost of collection would be too great, but that is not so at all. You have your sales tax organization to-day, together with other media of collection that could be easily invoked. Furthermore, with, the class of individuals who might seek to escape it, the individuals carrying on small cash business, to the extent that it might be evaded, in the first place, the revenue would not be affected very much; and in the second place, with a
severe penalty attached and the ease with which you could discover such evasion-it is quite simply done by checking the invoices from their sources-an example could be made of a few of them and there would be very little evasion. In addition, the amount of the evasion would not be worth the risk.
I merely make that suggestion because these are parlous times and we need revenue.
I believe that in these days-and I am speaking solely for myself, and may be treading on the toes of some of my colleagues, since I have not discussed the matter with them

we might well try some of these things which perhaps in normal times we would not care to risk. I will admit that politically at first it might have some repercussions, and that might be a reason for not trying it. I do not refer only to this government but to any other government. Even so, I think it is well worth consideration.
I have spoken at greater length than I had intended, Mr. Speaker, and I shall not further prolong the discussion. I simply repeat that in the limited time I have had to consider them I am not inclined to offer any very severe criticism of the minister's suggestions. We know perfectly well that the government must bear down very heavily in taxation at this time, and I see no reason at the moment to criticize the government's policy of establishing, as far as possible, a pay-as-you-go basis, with limited borrowings. In that connection I was glad the minister confirmed what I said yesterday with regard to the possibility of borrowing money at reasonably low interest rates. I think he agrees with the opinion which I believe is held by many that there is no sanction for the rapid increase of interest rates on government security, and I was glad to hear him make that statement. In closing, however, I suggest that he carefully review the possibility of using the gold resources of Canada to a somewhat greater extent.


Major James William Coldwell: Probably those of us who listened to the introduction of the war-time budget by the minister were impressed by the fact that the government is making at least some attempt to inaugurate the policy which I believe was generally hoped for on all sides of the house, that as nearly as possible we should pay as we go. From that point of view I think both the minister and the government for which he speaks may be congratulated.
The minister, of course, took note of some of the factors which enter into the difficulties of war-time financing in this country, particularly the tremendous difference between now
The Budget

Mr. Coldwell

and 1914 in regard to the extent of the national debt. As we said on a previous occasion, we must not increase this debt to a greater extent than we can possibly avoid, because in spite of what the minister said in the carefully outlined philosophy contained in the first part of his address, in effect we are placing a burden upon a future generation. It is true, of course, that most of the goods produced in our generation are consumed in our generation. That is true in peace as it is in war. Nevertheless, if money is borrowed, somebody, at some time in the future, has to repay in goods and services the value of that money and the interest that will accrue. The unfortunate part is that it is no longer a question of rewarding a certain person or group of persons for foregoing pleasure at the moment. To-day we have large accumulators who are denying themselves nothing but who are yet able to impose upon future generations a toll of labour and resources.


Mr. ROSS (Middlesex):: Is it not fair enough that the future generation should pay?


Major James William Coldwell: The question is asked as to whether or not it is fair that the future generation should pay. I think not. As a matter of fact, in my opinion this generation has made a deplorable mess of both our economic and social affairs, and we should not expect succeeding generations to pay the penalty for the mess we have made.
I agree with the hon. member for Kootenay East (Mr. Stevens) in this regard, that the issue of currency at this particular time may not be considered an inflationary measure. As he has said, we have the backing which would enable us to make such an issue. Since we are expecting to trade very largely with Great Britain and her allies, may I add that there may be some immediate advantage in depreciating our dollar in terms of the United States dollar, and bringing it more nearly to a parity with the pound sterling. Of course our dollar in the past week or ten days has fallen. Nevertheless it is still appreciably higher in value than the pound sterling.
The budget before the house to some considerable degree represents an attempt to finance by taxation

that is, making the present generation pay to a degree for the war that is upon us. I would point out, however, that many of these taxes fall very heavily upon those who are least able to pay. It is true that some compensation is to be found in the fact that corporation and income taxes have been increased. On the other hand, the taxes upon tea and coffee and on the cheaper grades of tobacco which, on a poundage basis, will pay as high a tax as the (Mr. Coldwell.]
dearer types, and the taxes on gas, electricity and certain kinds of meats and fish fall heavily upon the people who as yet-I do not know what the war may bring about- are not able to bear increased taxation.
Then we come to the excess profits tax. I have done a little pencilling as I have sat listening to the budget speech, and I have made a comparison of what the tax will mean in the two forms. If the investment is, we will say S100, and the net return is 10 per cent, the new tax will impose a dollar of taxation. This means that the amount of the profit allowed may be 9 per cent. * If the profit is $15 on the $100, then the deduction by the tax, I take it, would be $3, and the profit allowable would be 12 per cent. On twenty dollars-


James Lorimer Ilsley: I do not think that is
correct.


Major James William Coldwell: I have just figured it
out hurriedly. If the minister disagrees, I hope he will correct me, because I think when we go away from this session, whether it be to-night or at some later time, we should know exactly what the tax is, in dollars and cents.


James Lorimer Ilsley: The computation of the hon. member is not correct.


Major James William Coldwell: Then I should be glad to have the minister correct my calculation, if it is wrong. I have taken the minister's figures.


James Lorimer Ilsley: I do not think the hon.
member is right, in the first place. He is leaving out the corporation income tax entirely. That must come first, before the business profits tax is chargeable. I suggest that is a very important omission. And, apart from that, I think the hon. member's figures are inaccurate.


Major James William Coldwell: I should be glad to have them corrected, because it is important that we know exactly what these taxes mean. Would the minister give the house a table which would give an accurate picture of exactly how , the taxes would apply, on a basis of $100 or $1,000, as the case may be?
3n my opinion the election of the corporation as between two methods of paying the excess profits tax may react in favour of businesses which have been able to show a very substantial profit in the past few years.
I think the businesses which in some instances have been able to show a fair profit have been those which to some extent have been connected with preparations for war. For example I would mention the metal mining industry. If any group of industries should be

The Budget-Mr. Jagues
expected to bear a very substantial portion of the tax, certainly it would be that group connected with preparation for war. I should have liked to see the minister or the government-and perhaps at some later date they may consider the point-consider the limiting of profits in various types of industry to a certain percentage, and then taxing the total amount above that percentage for the revenue of the country.
After all, when we speak of equality of sacrifice we must bear in mind that in war there is no equality of sacrifice. No matter how much taxation individuals may pay in dollars and cents, their contribution is not in any degree equivalent to the sacrifice of human life. Consequently there can be no equality of sacrifice in a war condition. I do not think anyone can have any objection to what may be described as luxury taxes, namely taxes on intoxicating liquors, beer, tobacco and cigarettes, except in so far as the poor man's tobacco is taxed at the same rate per pound as that of the man who can afford a more expensive brand.
As I said at the outset, I believe that taxes on tea, coffee, gas and electricity are those which will fall heavily upon the people least able to bear them.
As I said the other day, we still have a very valuable source of revenue which this budget does not tap, and which I would have wished to see tapped. I refer to what I described as a capital gains tax. I know there are some people who will say that in the past few years certain individuals have taken losses on the stock market, and that assertion is perfectly true. But to my mind it is no reason in the world why, under conditions of stress and strain, with stocks rapidly increasing in value, we should not expect a return to the state from a condition which has been brought about by action of the state. I say that because, after all, a declaration of war is indeed action taken by the government of this country. I say, therefore, that a capital gains tax is something that might well be instituted, and a source from which large revenues would be derived.


James Lorimer Ilsley: Would the hon. member
tax gains without allowing losses as deductions, in years when there were losses?


Major James William Coldwell: My answer would be that all our taxes are based upon gains, not losses.


Mr. GRAY:: Should be.


Major James William Coldwell: If we pay an income tax on this year's income and have no income next year, we are not permitted to average
the two years. Consequently I say that it is a legitimate tax. Moreover, in all probability you may not be taxing the same persons who sustained losses, because under our economy there is a constant shift in the ownership of stocks, of bonds and even of real property. In gains from such transactions we have a possible source of revenue.
The other afternoon I mentioned the situation in regard to wheat, and I was glad to hear the Minister of Trade and Commerce (Mr. Euler) correct me this afternoon. But I notice that the minister said that the board still controlled that wheat, and I do not know just what that actually means. As I said, I have a distinct recollection of seeing a statement early in the month of August to the effect that the board was waiting for new wheat to be delivered before it could resume its marketing operations in relation to that commodity. I do not know if that implies that the board has control of wheat through options, but I took it for granted that is not the case because of what I understand to be the attitude of the party supporting the government now in power.
These are the main criticisms I would offer at this time. Hon. members realize that no one has had an opportunity of studying these taxes and their implications. We are in the war, and all of us, no matter what our opinions may be regarding it, should be ready to do everything we can to support the government in financing the activities that we have undertaken as a nation. I am anxious to see that in the financing of our activities the burden shall be placed upon those who can most easily bear it, rather than upon those who cannot. Before I sit down I will again emphasize the fact that no matter what taxes we may inflict upon those who profit from the industrial activity of this nation during the war or upon those who by fortuitous circumstances have control over great masses of wealth, we are not in any way approaching an equality of sacrifice. We are asking large numbers of our young men to lay down their lives, and to sacrifice the most precious possession a young man has.


Mr. NORMAN JAQUES (Wetaskiwin):: Mr. Speaker, we have been accused of using this opportunity for advancing ideas which we hold, but I cannot help that and I intend to take no notice of such an accusation. During the present session I have heard nothing which would cause me to alter my opinion that this war can be financed without increasing the debt of the country. By using the services of the Bank of Canada and by adopting suitable methods of taxation we can fight and win this war without leaving an overwhelming
The Budget-Mr. Jaques

burden of debt upon the succeeding generation. I cannot remember his exact words, but this afternoon the minister said that the real cost of a war is paid during the war. That is right. A war is paid for by blood, by sweat and by tears. When that payment has been made, the bill is paid. That was true of the last war, but why are we still paying for it? If the real cost of the last war was paid during the war, then all that has been paid since is unreal. That is what we believe.


Mr. DUFFUS:: Does the hon. member mean to say that it was all paid for during the time of the war?


Norman Jaques: Yes. The cost of a war is the cost of human life, human suffering and material losses. Anything else is purely artificial. Why should people as yet unborn be asked to pay for the cost of this war into which we are entering? It has been said that we should borrow now while the borrowing is good because interest rates are likely to rise. Is that a promise or a threat?


James Lorimer Ilsley: I did not say that interest rates would likely rise.


Norman Jaques: I am not accusing the minister of saying that, but it has been said twice in this house, and I am asking if that is a promise or a threat. It is curious that such a statement is accepted as being quite patriotic, but a statement that we should enlist men as soon as possible because their rates of pay are likely to increase would receive a different reception. Quite a different interpretation would be put on that statement. The minister explained the methods of financing. He calls any creation of credit by the state, inflation. We are led to believe that this war can be financed mainly from the savings of the people, and we have been led to believe that this was the case during the last war. If the last war was financed from the people's savings, I should like, to know why bank deposits increased by something like a billion and a half dollars. Where did that come from? Did it come out of the people's savings? I do not think so.
I remember that as a child I was astonished at seeing a conjurer produce rabbits out of a hat. At the end of the last war, when I was fully grown, I was greatly surprised by having a bank offer me not only bonds but the money with which to buy them. So we can easily see through this little trick of financing by the people's savings. It is just a smoke-screen, because the greater part of a war is financed by the creation of credit. I am not going to take up much of the time of the house, but I should like to know why it is not considered 
inflation when money is created by private corporations and then issued as a loan to the country. But if the state itself creates the credit and uses it for the purpose of prosecuting the war, that is called inflation, and that is where we in this corner part company from the rest of the house.
There is one other point. If the production of munitions of all kinds is to be increased to the maximum, surely that will require the savings of the people for investment. If their money is put into bonds, where will the necessary money come from to expand the war industries? But if the state will supply the money which they need, combined of course with a proper system of taxation, since, as the minister has said, we shall be bound to cut down our standard of living because so many men will be taken out of the production of the things we ordinarily consume and be diverted into the production of munitions, and taxation is necessary for that reason, then by these two methods by using the Bank of Canada to issue credit for the state itself, and by a proper system of taxation to prevent inflation, it will be possible to finance and win this war without adding to the debt burden of the country.
I ask hon. members to consider the burden of debt of Canada at the present time. We are told that this war is a life and death struggle and that it will continue until Germany is beaten. Some experts say that the war will last ten years. I canot say anything about that, and I am simply giving the figures I have read as having been given by British experts. I think four years was mentioned here this afternoon, and the minister said this war was likely to be more costly than the last. If that be so, consider the state of debt which we shall have to face at the end of the war if it is financed as the last war was. I am quite aware that no action is likely to follow upon any remarks which we in this corner of the house may make. Nevertheless I am making them because I wish to make my stand clear now at the beginning of the war. The results I am content to leave to the verdict of time.


Robert James Manion: Mr. Speaker, I have just a few words to say because the hon. member for Kootenay East (Mr. Stevens) has, on very short notice, made a very able speech on behalf of our party. There are one or two points I should like to mention, and I know of no better time than the present because it is always understood that in a budget debate any subject at all may be discussed. I have no intention of delaying the house, because my hon. friend the member for Yukon (Mrs.

The Budget-Mr. Manion
Black) wishes to say a few words before six o'clock and I wish to leave her plenty of time. The government certainly cannot accuse us of not doing everything we can to help them and I have no intention of changing our record at this late hour. I believe it is the duty of the whole house to assist the government to get through their business in parliament as expeditiously as possible so that they may get down to the real business of *carrying on our part in this terrible conflict.
Perhaps a word or two about the budget will not be out of place now I am on my feet. While we have gone through a series of crises and now have this terrible catastrophe of war brought upon us by Hitler, it is some satisfaction at least to know that the ill wind that brought us the war brings us a couple of favours. First, there will be a better price for wheat, which will probably save Canada as much as she may spend on war between now and Christmas; and second, it will probably cure the unemployment problem, which we were apparently unable to cure in peace-time.
It strikes me that it is not unwise to utter at this moment a thought which all of us who are in public life should bear in mind, that all over the world to-day thoughtful people are asking why at a time like this we can raise the money for war but in peace-time we find it so difficult to get the money to cure national ills such as unemployment. I say that without any thought of criticizing anybody. I say it merely because I believe that during this war in which we are engaged it is the duty of all of us in all sections of the house to endeavour to work out a method of curing that local condition, or the very fact that we are unable to do so and yet are able to carry on the war will wreck the system under which we now live.
I wholly agree with the minister (Mr. Ilsley) when he said that we must have courage at home as well as abroad, and in imposing these new taxes he should expect very little complaint from those who are taxed, because if the man at home is taxed he is at least very much better off than the poor fellow who is at the front offering his life. We all realize that taxes are necessary at a time like this, and I was glad to hear the minister express the desire that Canada, so far as it can, should pay as it goes during this war. During the last war I think England led the world in doing that, and it did noble work; we did not do so badly, but perhaps we could have done much better. Having learned from the mistakes of the past, I hope now we shall do everything in our power to pay as we go.
I entirely agree with the minister that equality of sacrifice should be the principle of this whole taxation, based on the ability to pay.
I shall not discuss any of the items of the budget, but I should like to express my approval of one feature-I am not criticizing the others-and that is the necessity, as the minister said, of encouraging our industrial companies to expand, companies which will have to make heavy initial capital expenditures which might prove a total loss if the war proved to be of short duration. This encouragement must be given if we are to get industrial production in this country such as we got during the last war, when we had a magnificent record. We must, as the minister pointed out, to a certain extent, perhaps to a great extent, take care of the preliminary expenditures which must be made by the industrial companies which we expect to produce the needs of this war. I think that should be plainly understood. At the same time we should provide by some form of amortization that if the war goes on for a great length of time, the company will not get the full advantage of its production all at once and then be free of any taxation upon it over a long period of time. Suppose we were so fortunate as to go through a short war; our industrial companies would not be encouraged to greater production and greater efficiency if there was before them the fear of bankruptcy through making heavy initial expenditures in plant which would be useless if the war should last only a few months.
But the real reason I rose to my feet was to draw to the attention of the Prime Minister (Mr. Mackenzie King) with all due respect but with great solemnity one particular point I wish to make, and I know of no better time to do it than now. While we of the official opposition and our friends to the left are promising, and so far as we are concerned and I am sure so far as they are concerned, intending to carry out that promise, to give every cooperation to the government by avoiding the playing of polities, I hope the Prime Minister and his government will return the compliment. This method of cooperating, this principle of no politics, cannot be a one-way street; it must run in both directions. In saying that, I do not want to utter any jarring note in this session. I am not trying to offer any unfair criticisms; indeed I do not wish to offer any criticisms at all; for I fully realize that the war is only in its tenth day, that we declared war as recently as last Sunday, and having served in governments I realize the time it takes to get everything going in a proper manner. But, unfortunately, already there are
The Budget-Mr. Munion

various complaints-many of them. I overlook that at the moment, but I urge upon the Prime Minister-and I am sure he will accept the suggestion in the spirit in which it is offered-that he and his government see that politics are set aside by the government as well as by ourselves.
I say that for this reason. I shall give one illustration, and only one, although I could mention a number. I have in my hand a paper in which reference is made to a certain appointment. I shall not name the appointment or the man, but the appointee is one who is known to be outstandingly, openly and strongly a supporter of this government. I have not a word to say against that circumstance; for I have the utmost respect for a man who has strong political views, to whichever of the parties represented in this house he may happen to belong. But I pick up another paper and I find that another appointment is to be made, or so it is positively stated; it is an appointment in association with the first-and I understand they are the only two-and it is to come, according to the statement, which I hope will be corrected, from the organization office of the Liberal party. The Prime Minister shakes his head, and I hope he is right. Probably, and I say this with respect, he knows nothing about it; naturally he cannot know the details of all appointments to be made. But I draw to his attention and to the attention of the government that this would not be carrying out the spirit of the contract which we offered them. In attempting to cooperate in every way, my party and I are sincere. I want the government to give us every chance to cooperate, and I suggest this with no thought of reflecting on the government and no desire to offer any criticism. I repeat that I understand full well it takes time for the government to get down to handling affairs; and if a few errors are made, far be it from me to offer any criticism. I am not doing something which I did not do in my few remarks the other day. At that time I pointed out that patronage and favouritism must cease. I will read the sentence if I may, although in doing so I am breaking the rules of the house:
Another suggestion, and it is this: Let not the abuses of political patronage and favouritism interfere with our national efforts. Canada as a whole is fighting-not one party-and Canada demands that we do our duty fearlessly and fairly. Let service and quality and honesty rule in all our vast expenditures. We must not let any scandal destroy our efforts.
I have no reason for doubting that the Prime Minister is just as sincere as I am in desiring that anything of that sort be avoided.
I am putting it before him only because I

want to bring about national understanding and a united country at this very serious time, and [DOT]we cannot have national understanding and unity if any one of the three or four parties in this house starts out to play politics. We of the opposition have a duty to perform which is second only to the duty which the government itself has to perform. According to our constitutional system a good opposition is just about as necessary as a good government; and we intend honestly and fairly to cooperate; but we do not intend to abdicate our right to criticize if we think the government is not playing fairly with the people of this country, as it would not be doing if it permitted politics to get into the administration and the affairs of a war. I say this merely for the purpose of urging the government to give us every opportunity to cooperate with them to the fullest extent, because we intend to do our duty, and while we have avoided anything in the way of criticism during this session, and shall so continue until the end of this session, naturally we cannot promise that in the future if criticism is deserved.
One other matter, which perhaps is not so important, and perhaps I should have notified the Prime Minister of my intention to mention this. I ask him if he will make a statement on it this evening. That is the question of an election. I was going to mention it to the Prime Minister; but it occurred to me only a few moments ago, and I thought that since I was rising in my place it might be an appropriate moment to mention the subject. If it is assured-and I believe that it is the intention of the Prime Minister-not to have an election until after another session of parliament, if the opposition and the country can be assured that such is the intention of the government, the opposition will be in a better position to cooperate with the government than if hon. members on all sides are to go home with the thought in their heads that possibly an election will be sprung upon them. I have no reason to think the Prime Minister will do any such thing; in justice to my right hon. friend I should say that from conversations with him I have reason to think there is no thought of an election. But I believe that for the good of the country and the empire it would be an appropriate statement for the Prime Minister to make, if he deems it advisable, that there will be no election until at least after another session of parliament.
My whole object in these observations is not in any way even to imply criticism, but to ensure that we can continue to cooperate in every way as we have done this session and to maintain a united front throughout Canada in these very serious times.

The Budget-Mr. Mackenzie King


William Lyon Mackenzie King: Before I reply specifically to my hon. friend with regard to the two points which he has raised, may I at once extend to him and also to the leaders of the other parties in the house my own warmest thanks and the thanks of the government for the manner in which thus far they have cooperated with us. No one appreciates more than I do the spirit that has actuated hon. members on all sides of the house. It is my hope that that spirit will be maintained, as fully as may be possible, all circumstances considered, not only through the remainder of the present session but, I trust, in any future sessions parliament may have in the course of this terrible war.
Now, as to party politics in relation to government at this time, let me say quite honestly and frankly that there is nothing my soul would loathe so much as an effort on the part of any members of my own party or any members anywhere to seek to make party capital out of a condition such as the world and this country are faced with at the present time. So far as I am concerned I look upon myself to-day, with all due humility, much more as the leader of all parties in this country united in an effort to do what we can to preserve and defend the liberties of mankind. Personally I believe that we can be most successful in that effort as a government taking full responsibility but shouldering it fearlessly and courageously, and faced by an opposition which, as my hon. friend has just said, is as necessary to the full discharge of parliamentary obligations under .the British system as is any other feature of our constitution.
My hon. friend, as the leader of the opposition, holds a position involving a special duty imposed upon him by parliament. His position is recognized by statute and he is in many particulars in a capacity similar to that of any member of the government. It is his duty to watch over every act of the administration to see that it is performed as it should be, more especially is this true ait a time such as this. I do feel that what my hon. friend has pointed out as his conception of his duty is what, more than anything else, will help me in my position as leader of the government to discharge my own obligations in the way in which I should like to see them discharged; the way in which I shall use my utmost endeavours to have them discharged. I wish my hon. friend to be free to criticize, and indeed he will help me if from time to time, as matters come to his notice which
in his opinion show evidences of party bias, he will be good enough to bring such matters to my attention and accord me an opportunity to discuss them with him.
My hon. friend has mentioned that he has seen certain names suggested in connection with possible appointments. On the other side I have had the criticism that some or most of the appointments made thus far have been going, not to Liberals but to others. That is a part of human nature. There are certain appointments which properly are made by the administration in office, and which must continue to be so made in the customary manner, for example, vacancies, such as appointments to the senate, must be filled by the administration. I do not think my hon. friend would expect-


Robert James Manion: We do not want them; indeed, we would not take them.


William Lyon Mackenzie King: I am, however, entirely of one mind with my hon. friend as to the attitude the government should assume with respect to agencies specially associated with war effort, as respects all phases of war effort. I will do my utmost to cooperate with him and with the leaders of other parties in maintaining an attitude which is above party in this time of great struggle.
As to the question of a general election before another session, my hon. friend has been kind enough to say that I told him some time ago that I would not think of anything of the kind or countenance it. Nor have I had a suggestion from any member of parliament that a general election should be thought of between now and another session. The term of parliament is five years; and as time runs on there may be in the minds of some a temptation to follow the course which was adopted during the last war and have parliament perpetuate its term, provided the war is not over at that time. Personally, I never liked the extension which was made during the tame of the last war. In my opinion, the people of the country have the right to say whom they wish to have administering the affairs of Canada, and they should exercise that right periodically at the time provided for in the constitution. I do not think any parliament should take it upon itself to deprive the people of that right. That is my feeling, very strongly, at the moment. There may be conditions between now and the end of this parliament which may necessitate a reconsideration of this question, but I should hope that everyone would expect that the people of Canada should have a chance to express
The Budget-Mrs. Black

their minds freely with regard to the administration, the opposition, third parties and generally with their representation in parliament within the period of time which the constitution provides. It is my intention to have parliament called again in January. It may possibly be necessary to have parliament called before that, but I should expect that we would follow the usual procedure and bring hon. members together some time in the month of January. At that time, we will be in a position to consider what steps may be most necessary with regard to developments that may ensue meanwhile. I hope I have made perfectly clear the position of my colleagues and myself.	.


Robert James Manion: May I be allowed, Mr. Speaker, to break the rules and speak again merely to express my thanks to the Prime Minister for his straightforward answer to my question.


Mrs. MARTHA LOUISE BLACK (Yukon):: Mr. Speaker, it is nearly six o'clock, and I am sure you will allow me to take just two or three minutes to express a few thoughts that occur to me at this time. I only wish to say to the government of the day that, when I left the Yukon, the message given me by Liberals and Conservatives alike, was this: "Go down to Ottawa and tell the government that to the utmost of our ability we will support them, as we did during the last war, irrespective of any political feelings." There are men and women in that section of the country who are willing to give their all, I do not care whether it be their worldly goods or their lives if needs be, and they are at the disposal of the government to use as the government will.
The government must take the blame in all that it does as well as the credit. We must have faith that this government as well as every other government will honestly and conscientiously try to do the best it possibly can. The government will make mistakes, because it is only human, as we all are; but if the government makes mistakes we will strive with our lives, with our help, and with the little treasure we have, to see that those mistakes are rectified and that eventually we shall once again have a peaceful and happy country.	.
At the present time there are no boundary lines either in the air or on land or at sea, and we must stand together to protect this land of ours from the raid that may possibly come.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Mr. J. C. LANDERYOU (Calgary East):: Mr. Speaker, at the time of the civil war President Lincoln declared that he had two enemies, one the Confederate army and the other finance, and that of the two he feared finance more. He did not fear the Confederate army which faced him nearly as much as he feared finance in the rear, and I say we are in the same position to-day. I do not fear Hitler nearly as much as I fear finance. In Hitler we have political dictatorship, but in finance we have a worse dictatorship, more cruel and more destructive of our social and economic well-being than any political dictatorship can ever hope to be. So I must remind the government and the acting Minister of Finance (Mr. Ilsley) that every precaution must be taken to prevent finance from wrecking the social and economic structure of this country as it has done in the past.
We have very clearly stated our position on this matter. I was interested to note the headlines in the newspapers being put out across Canada to-day. Here is one:
New higher taxes to pay Canada's war debt.
Voluntary service registration in dominion.
Here is another:
Pay as you go policy.
Equality of sacrifice will be insisted upon.
After listening to the budget address, I believe the statements thus made to the people of Canada are absolutely false, because there is no equality of sacrifice in the financial policies advocated by the present administration. We are going to watch carefully the policies pursued by this government; so if they want our cooperation and support, it must be upon the basis we have set forth, the broad basis of national service. The pay-as-you-go policy! I find nothing whatever in the budget address that would indicate equality of sacrifice. I find no fundamental difference between the policies advocated by this government and those policies of borrowing and taxation pursued by the government that was in charge of the affairs of this country from 1914 to 1920. I find that taxation is not being applied in an equitable manner; at least I do not see anything of the kind indicated in the address that was presented this afternoon.
We have urged upon the government the conscription of finance, man power and industry, because we believe that justice, equality of sacrifice and efficiency demand universal conscription. By the conscription of finance we do not mean to conscript the savings of

The Budget-Mr. Landeryou
the people of Canada as represented by savings deposits. The minister states that he does not intend to borrow from the savings of the people. Surely he did not have to tell the house that. Hon. members understand the position of the savings of our people in our Canadian banks to-day. There is approximately $2,500,000,000 in savings deposits; there are over four million depositors; but 8 per cent of that number control 76 per cent of the total deposits, and only 24 per cent of these deposits are owned or controlled by 92 per cent of the depositors. In fact, this is the position with respect to savings in this country: There are 3,797,000 deposits of $1,000 or less, and according to the governor of the Bank of Canada the dollar value of the deposits coming within that category is about $452,000,000. These deposits average $117. We know the great bulk of the savings deposits in this country is in the hands of a few. We will never suggest that these savings, accumulated over the years by the great majority of the depositors, should be confiscated or seized under any pretext whatever. These people have not had enough in the past; why should ' we attempt to take away what little they have to-day? Furthermore, it could not be done because business would come to a standstill. So to suggest that there is in the hands of the people to-day sufficient money in the form of savings deposits to finance a major war is foolish.
The last- war was financed through the creation of money out of nothing by the banking corporations of this country, which money ultimately became the savings of the people. Bonds were given the private banking corporations and credit was issued by these private companies, who have usurped the power that should belong to parliament to control the issue of money and credit. We say that power must be taken away from private individuals; that the issue of money and credit must be taken over by the state, to be regulated in terms of private, public and industrial need; that finance must go hand in hand with the conscription of industry and man power, if [DOT] necessary. But we will never tolerate the position that was taken in the last war, that the lives of men should come before demands upon finance. We say that all must make this sacrifice.
So we wish to make our position clear, that the government can issue money upon the *credit of the nation just as well as it can borrow money upon the same credit. The minister can rise in his place until doomsday and say that is inflation; but the money must come from somewhere and we are determined that usury and debt, the twin destroyers of
civilizations in the past, shall not come out victorious in this war. We are determined that usury and debt shall receive their deathblow before the culmination of the crisis that now exists in the world.
I listened to the remarks of the leader of the opposition (Mr. Manion), who said that many people in Canada were now wondering why we should have had to go through ten years of a great depression during which individually, municipally, provincially and federally we faced bankruptcy. We were unable to secure the money necessary to keep the wheels of industry turning; the great production of our country had to be sold on the instalment plan, because of the deficiency of purchasing power in this country. Many of our municipalities went into bankruptcy, and to-day many others face it. Many municipalities found themselves unable to carry out civic improvements they knew to be necessary, and unable to maintain a decent standard of living for those on relief. We had a million Canadian citizens living on $6.43 a month for food, clothing and shelter, less than was spent by this government to keep a man in the penitentiary. The youth of this country were riding the freight trains, unable to find employment, driven from pillar to post, sleeping in box cars and knocking at back doors for food, and last session they were called yaps and street-corner bums by a member of the Liberal party. These so-called yaps and street-corner bums are now to be the heroes of the country. They are now asked to give their lives for their country. We demand equality of sacrifice. We say these young men are being hounded into the army through force of economic circumstances. We are saying that if they have to make the supreme sacrifice; if they have to lay down their lives for their country- as the youth of Canada are prepared to do-* the men who stand in the rear and operate the financial system should not be permitted to plunder the nation, while the fighting men are doing their best to protect national integrity.
We say that provincial governments, too, were in a very bad financial position, and were passing the buck in respect of relief costs. The federal government was unable to maintain the widows of men who served in the last war. As a matter of fact, I have had widows of that kind in my own constituency who have come to me with tears in their eyes, begging that I bring their plea before parliament, and asking that something be done for them. They have told me they have been unable to live in Canada or to enjoy the standard of living which they thought was proper, in view of the fact that their husbands had served Canada in the last war.

The Budget-Mr. Landeryou
But, always we hear the cry, "There is no money." Parliament is now assembled, and . the two hundred and forty-five men who some months ago were asking, "Where is all the money coming from?" now say to the youth of Canada, "We have battleships costing millions of dollars; we have aeroplanes with machine guns mounted on them, costing hundreds of thousands or probably millions of dollars. We have tanks for you; we have submarines for you. We will give you small guns; we will give you big guns. We will give you all the ammunition you want. We will give you shoes, food, clothing, shelter. We will give you all the equipment you want." To all those young men who were knocking on the back door for food we now say, "We will give you chits which will permit you to go to a restaurant for food-we will give you all these things if you are willing to go out to lose your life or to destroy the lives of others. But in times of peace we would not give you money. We would not	see	that	you	had a decent job.We would	not	make it	possible for you toget married and raise a family in this great country of ours." No, but we say to them now, "Here are these instruments of destruction; we give them to you for nothing, because we are making a profit on them." As in the	last	war,	we	will make a profiton the bodies	that	lie	in Flanders' fields.
It is estimated that in the last war $25,000 was the cost of destroying a soldier. Somebody has been making a profit out of those dead bodies ever since.
These conditions must cease in Canada, if we do not want to break down the whole social and economic structure of our nation. The youth of Canada are prepared to serve. We realize that we in the British empire are faced with a great task. We know, too, that this month of September is one of the gravest we have known. But we are watching very carefully, because we have had the bitter experience of ten years of depression. We know something about the financial policies pursued between 1914 and 1918, and we are determined that in this instance a change must come. So do not fool yourselves.
The youth of Canada are prepared to make their contributions on the basis of universal conscription. We do not want the newspapers of Canada to stress particularly the conscription of man power, because, so far as I personally am concerned, I am for universal conscription, but I would not vote to have one man join the army or leave the

shores of Canada unless at the same time there were conscription of finance and industry.
By conscription of industry we do not mean nationalization. We do not mean that we are going to go into a scheme of government ownership, as has been proposed by hon. members of the Cooperative Commonwealth Federation. We do not want any change of ownership, but we do want industry financed with a sufficient amount of credit, so that there will be no difficulty in establishing factories which in years to come may have to be established, in building storage plants which may be required to store our food, or in any way developing Canadian industry.
We are in favour of industry functioning at its maximum capacity to serve the needs of Canada and the empire. However, in reading the press, I have noticed emphasis on the suggestion that we advocate the conscription of man power. We do advocate that; we are prepared to conscript man power. But we must conscript industry and finance as well. We do not want the newspapers in Canada, or members of the old-line parties to go out on the hustings and say that we are advocating the conscription of man power without stating that we also demand the conscription of industry and finance. All three must go together.
We know that this war may become an issue closely related to supplies of men, food and implements of war, and we believe that industry should be mobilized so that all waste may be eliminated. We do not want to see the fruit growing in the orchards of Nova Scotia, Ontario or British Columbia falling to the ground and being wasted, as it has been in times past. On the contrary we want a strict conservation of our food supply, because we learned in the last war that the allied forces faced food shortages. We know that the results of this war may depend to a considerable extent upon food supplies-a factor which may be of greater importance than supplies of guns or men. If we do everything that can be done to build up our food supplies and to [DOT] indicate to the people of Canada that we are sincere in our desire to see that everyone makes the same sacrifice, we shall have no difficulty.
Once more I urge the acting Minister of Finance to consider the issue of debt-free money by the government, so that all necessary financing can be done, so that the farmers of Canada may get the machinery necessary for increased production. Let there be no delay in supplying the nation with equipment necessary to increase our supplies of

The Budget-Mr. Pelletier
food. I would urge that the government take steps to see that debt and usury are not permitted to be victorious in the next war, and that it earnestly endeavour to bring about a condition whereby all, through equality of sacrifice, may have that peace and sweet content which the Prime Minister has stated is the rightful heritage of all.
Mr. POUL.IOT: Would the hon. member tell us how his monetary system would be of any benefit to the returned man or to the common citizen, and what the benefit would be? I have not gathered that.


John Charles Landeryou: Does the hon. member want to know how money would help the returned man?


Jean-François Pouliot: I want to know how that money will find its way into the pockets of the private individual and how, being there, it will help him to get anything.


Walter Edward Foster: Order. I would remind hon. members the house is not in committee.


John Charles Landeryou: I had not intended to go into any detailed discussion in that connection, but I would point out briefly to the hon. member that at the present time you can borrow money on the credit of the nation.


Mr. R. A. PELLETIER (Peace River):: Mr. Speaker, I shall at the outset of my remarks offer congratulations to the Minister of National Revenue (Mr. Usley) upon the clear manner in which he presented his budget speech this afternoon. We might say also that we feel extremely sorry to hear of the illness which led to the resignation of the former Minister of Finance (Mr. Dunning). We in this corner of the house feel particularly sorry that the government should have to suffer the loss of his services at this time. We always felt that the hon. gentleman was a most able and sincere individual. So far as we were concerned, he always extended to us the greatest courtesy and we again offer our sympathy to the government for having lost his services.
I am sure all of us realize that it was not an easy task for any government or any individual to have to face this country at this time and present a budget. We feel sorry that such a situation has been brought about, but we do admire the minister for the courage he displayed and we sincerely hope to be able to offer our cooperation. During the last few days of this session we have been asked to give our cooperation to the government, which we have done gladly, in order that the business of the house might be rushed through because of the emergencies of the present situation. We gave our cooperation because
we felt it was in the best interests of the country to do so. But the question of a declaration of war has been decided; the necessary funds have been voted to carry on, and we feel it proper to call a halt at this time in order to review the important decisions we are about to make.
The hon. leader of the opposition (Mr. Manion) has so thoroughly offered his cooperation to the government that he appears to have abdicated his position as leader of the opposition in this house. As a matter of fact,, at the present time we have what might be-called a union or national government. Apparently there is no need to include-opposition members within the ranks of the-government when the government is receiving such whole-hearted cooperation from the leader of the opposition. We understand, of course, the motives which have led the leader of the opposition to offer his cooperation; he has done so in a spirit of assistance to the government at a critical time. Nevertheless we maintain that, once the government has been given power and authority to act, there is no need for undue haste in discussing matters that will affect, not only the present situation but the aftermath of the war.
We are grateful to the Prime Minister (Mr. Mackenzie King) for having been kind enough to clarify the situation with regard to a general election this year. He has made it quite clear that parliament will be assembled once again. I think that is the only fair thing that could be done and I thank the Prime Minister for that demonstration of a really democratic spirit. This will mean that, no matter what policies may be pursued in the future, we shall have an opportunity of discussing them and leading public thought by their being presented once again to parliament before the people are called upon to decide.
We have not had time to go into the budget in detail. We are more -or less in the same position as was the hon. member for Kootenay East (Mr. Stevens) this afternoon. Apart from touching generally on the broadest points of the budget, it is impossible for us at this time to visualize fully the different provisions and what they will mean to the people of Canada. We do know that we are facing a serious situation and that these measures have been brought down in order that we may meet that situation as adequately as possible. I believe it is proper for a private member to attempt to analyse the situation as it exists to-day and as it may exist in the near future. We know the present alignment between the conflicting armies, but the great question in Europe

The Budget-Mr. Pelletier

to-day is Russia. Everyone is wondering what Russia will do finally, and as yet no one has been able to answer that question. There are those who believe that in the event of Russia becoming involved in the war on the side of the foe of Canada, the agony of the present crisis would be greatly prolonged. For this reason we should take the proper steps to protect the people of this country in a financial way.
No one can know what will happen, but I think we should pay heed to the warnings which have been given from time to time by the Prime Minister as well as to the declarations by Mr. Eden of Great Britain as recently as yesterday. It has been stated that we are involved in a war which has for its purpose the complete destruction of Hitlerism from the face of the earth. That is quite a job, and I believe we are going to be a long time doing it unless we bring about universal conscription of all our resources. In my opinion that is the only way to strike a quick and decisive blow at the enemy.
In bringing down the budget this afternoon, the Minister of National Revenue stated that there were only three methods by which money could be raised, namely, by taxation, by borrowing and by inflation. He gave a good deal of time to the question of inflation and pointed out the dangers of an inflationary policy at this time. He should have gone further and stated that inflation is dangerous only when it is inflation, but that reflation is entirely different. As a matter of fact, the minister admitted that there would be a certain amount of inflation at the beginning. He felt that this would be absolutely necessary. I believe he used the wrong term. Instead of calling it inflation, he should have called it reflation. Reflation is getting back to the former level, and that is the term which he should have used.
There is also the question of borrowing. The minister did not go into this in detail, but I should like to submit to him that there is danger in borrowing. The minister stated that it would be necessary to borrow money to a certain extent to finance the war. The result of such a course will be that the bonds of this country will be placed upon the market and be made available for purchase by various institutions. There might be a tendency on the part of banking and lending institutions and others to call in their present loans and thus restrict the amount of credit and currency available to industry, the proceeds being invested in government bonds. This is what has happened to a great extent during the
I Mr. Pelletier.]
past few years because of the economic pressure and distress which have been prevalent in the country.
This afternoon the hon. member for Kootenay East referred to gold. He pointed out that without using any harebrained .financial scheme, without using any wild form of inflation, it would be quite possible and proper to use our own gold resources. The amount of the gold backing of our dollar could be increased, and thus our gold would be used to greater advantage than it has been in the past. This would not be taxation; this would not be borrowing; this would be using currency in terms of public need. There has never been a greater need for public credit than at this very moment.
There are in the budget many matters which need to be discussed, but I am particularly glad to note that every effort is to be made to control any undue rise in prices. I know the minister will agree with me that inflation can be brought about if there is no control over the rise of prices. I have a clipping here which I should like to place on the record, showing the amount of products in cold storage in Canada at the present time, and it might be interesting later on to see how they have increased in price without any new sources of production being drawn upon.
The quantity of creamery butter held in cold storage in Canada on September 1, 1939, was 54,975,936 pounds, as compared with 61,113,630 pounds on the same date last year. The stocks of other commodities held in cold storage are as follows:
Commodities Held in Cold Storage on September 1, 1939
Dressed poultry	pounds	2,894,628Cheese	pounds	52,507,421Dairy butter	pounds	291,177Cold storage eggs	dozen	7,861,333Fresh eggs	dozen	591,488Frozen eggs	dozen	6,009,041Pork	pounds	25,919,044Beef	pounds	9,932,231Veal	pounds	3,733,649Mutton and lamb	pounds	844,495Frozen fresh fish	pounds	34,661,250Frozen smoked fish	pounds	1,964,588Dried, pickled and salted fish., pounds	3,421,578
And so on. A complete list is given of the amount of stocks now held in cold storage in this country. Some people have already taken advantage of present prices to make a profit out of those commodities. I must say that we in this comer of the house are convinced that any increased profit has certainly not gone to the primary producer. Only yesterday I received a long distance telephone call

The Budget-Mr. Maclnnis
from a manufacturer in Montreal complaining that they were unable to carry on their manufacturing activities in that city because they were unable to get any sugar. When they went to the wholesaler, he told them he had no sugar and to go to the manufacturer; and when they went to the manufacturer, he sent them back to the wholesaler. The result was that they could get no sugar at all. Undoubtedly, when the sugar now withheld is put on the market, it will be sold at a higher price than ever before.
As the hon. member for Calgary East (Mr. Landeryou), who spoke before me, said, there can be no doubt in the country as to the stand taken by this group concerning universal conscription. We have felt that this is the only way by which we can get efficiency of action and equality of sacrifice. We feel that only by this means can we attain these results which are desired by every Canadian in this country. We believe that, no matter how great the financial contribution may be, it can never be as great as the contribution of human life. We feel that a repetition of the methods of financing the last war can only bring about a repetition of the results-debt, poverty and unemployment. Furthermore, the people would be given greater confidence in this parliament if it demanded in this hour of crisis an equality of sacrifice so far as that is possible. It is by these considerations we areT motivated, and we should like to see these policies brought into effect at this time. We feel that only in this way can parliament have the full confidence of the Canadian people. Therefore, Mr. Speaker, we have decided that the only fair thing to do is to bring in an amendment to the resolution that was moved by the Minister of National Revenue this afternoon, and I shall place it before the house in a moment.
Our amendment calls for the setting of a committee to study ways and means of conscripting finance. We feel that this would not necessarily mean a long time to get results. A committee of this kind could work just as quickly as any other board or committee which has been set up or proposed by the government at this time. If industry can be conscripted, we feel that it is just as easy, if not easier, to conscript finance, and that it can be done just as rapidly. We feel that in moving this amendment we are placing before parliament what the people of this country would like to see done. They have no hesitation in offering their lives, and I feel that no one should have any hesitation in contributing to the extent of his financial ability to the cost
87134-lli
of the war in which we are engaged at the present time. Therefore, Mr. Speaker, I move, seconded by the hon. member for Camrose (Mr. Marshall):
That the Speaker do not now leave the chair, but that this house set up a committee to study ways and means of conscripting finance, and thus bring about a greater equality of sacrifice.


Mr. ANGUS MacINNIS (Vancouver East):: Mr. Speaker, I had not intended to speak in this debate at all. The attitude of our group with regard to Canada's participation in this war has already been put before the house by one of our members. I agree with the statement he made, and so far as possible I hope within the ambit of that statement to facilitate the work of the session to the greatest possible extent.
But there is one word I wish to say to the government and to the Prime Minister (Mr. Mackenzie King) in particular. We are facing a time of stress. Many of our people remember the last war, and a great many more remember the promises that were made during the course of the last war. Everyone realizes that those promises have not been fulfilled. Nevertheless I am sure that a great many people have agreed, like myself and others of us in the Cooperative Commonwealth Federation group, to participation in this war because we believe vital issues are at stake, and because we believe that if the powers opposed to Germany in this war prevail, we shall have a better opportunity to maintain our democratic institutions and to build up on that foundation a better society than we now have.
I would urge upon the government that it is of the utmost importance that during the course of this struggle we retain as much as possible of our civil liberties. We must be careful with our censorship. Already it has been drawn to my attention that two radio broadcasts arranged by the organization to which I belong have been prohibited in the city of Vancouver.
When I was arguing for Canadian participation in war, the thing I had to combat most was this: the moment you agree to participate in a war, that moment your civil liberties are taken away and there is no assurance that they will ever be restored. I have a certain amount of faith in my fellow man. I believe that others are just as anxious as I am tb maintain civil liberties and democratic institutions, and I hope that if it is found necessary to take away certain liberties and privileges we now have, the amount taken will be the minimum and will be restored as soon as this war is over. I draw that point
The Budget-Miss Macphail

to the attention of the Prime Minister, and I think a statement on the subject should be made before parliament prorogues.
As to this amendment, I do not wish to say anything. I could vote on it more intelligently if I knew exactly what it meant. I have said time and time again in this chamber-of course without any effect-that if my friends to the left knew the distinction or the association between finance and property, they would not be talking continually in this way. Finance to-day represents property; you cannot conscript finance without conscripting property. They say they are opposed to the nationalization of industry and yet they are going to nationalize finance. You cannot nationalize finance without nationalizing industry; and even if the thing could be done, nationalizing finance without nationalizing the material things which are manipulated with finance would be quite useless. If someone of the Social Credit group could explain to this house what is meant by the conscription of finance, he would be conferring a favour on the house, and it would enable me, at least, to vote intelligently on this amendment. Until I have that information I must vote against it.
Miss AGNES C. MACPHAIL (Grey-Bruce): In the budget speech this afternoon I noticed particularly one sentence, and it was this:
We must be able to hold out to business men the opportunity of making a reasonable profit and also the chance of securing some compensation for exceptional efficiency and willingness to take the risks inherent in industrial enterprise in war-time.
I have no particular objection to that sentence, but I look in vain for some protective sentence in the interest of the greatest industry that Canada has, the industry of agriculture. I hear a disquieting rumour today-how true it is, time will tell-that the price of cheese at something like the present price is being fixed by Great Britain. I feel that I must say to the government-I had hoped others would have done so, and then I should not have needed to-that agriculture in this country must not be sacrificed on the altar of mistakes of foreign policy outside this country.
Since the last war Canadian agriculture has taken a fearful beating. In 1926 although the agriculturists formed one-third of the total population, they received only one-fifth of the national income, and from 1931 to '1937 they received something less than one-tenth of the the national income. The farmers of this country have been paying for the last war ever since it ended. All our production was speeded up to war-time necessity. Suddenly the markets which they had were taken away;

no attempt was made to fix prices, except of wheat, and that very recently, and the farmers have been working for nothing. One does not need to make an argument about it; the shabby countryside which one sees ever}-where-more so in some provinces other than our own, but everywhere-shows all too clearly that the farmer went on producing at a loss.
If the Canadian government is to give every economic assistance it can to Great Britain in the war which is now in progress, it must be on the basis of adequate prices for Canadian agriculture. The thing I fear-and it is almost certain to happen-is that there will be another great campaign to increase the production of foodstuffs to meet the needs of a peculiar situation, one which will not last; and then, when it is over, the farmer will fall into a depression even greater than the one which has existed constantly since the close of the last war.
I urge upon the government, and I regret to say it seems to be the only way it can be done, that they take it upon themselves to safeguard the interests of agriculture in this country. If agriculture was doing its duty by itself, it would have an organization so powerful, with an office in this city so strong, that there would be no doubt that the interests of agriculturists would be remembered. Since that is not so, and I regret very much to say it is not so, I feel that the government of Canada must feel themselves responsible for the safeguarding of agricultural interests in this country; and we must not allow the fixing of farm prices in England, if they are going to be our prices, at anything like their present level, because the present level is starvation wages for the farmer, wages which make it impossible for him to care for the needs of his family. He cannot pay doctor bills; he cannot provide for any dentistry; he cannot dress as he should; he cannot look after his buildings; he cannot paint them. We cannot allow our own government or any other to fix for agricultural products prices which would mean a continuation of the semi-starvation which the farmers of this dominion have endured.
None of us is happy about the present situation. I do not think I was ever more desperately unhappy than I was at the conclusion of the speech of the Minister of Justice (Mr. Lapointe) the other day, a brilliant and excellent speech, but one which made me feel that the hope for Canada in the future is very slight; that we are not a nation; that we have no control over the amending of our own constitution; that we only use words when we say we declare war. At least we can
16a

The Budget-Mr. Woodsworth
surely do this; we can say that no other government is going to say what our farmers shall get for their products, when the lives of these other governments depend upon the amount of farm stuffs which will be sent to them from this country. I entreat the government to listen to me on this occasion.


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. Speaker, before the main motion is put. there are a few remarks I should like to make. In this debate we have heard the phrase "equality of sacrifice" used very freely, indeed. While the budget might have been worse than it is, at the same time I should not like the impression to go abroad that there is the slightest ground for talking about its providing for equality of sacrifice.
Men are asked to go and give their all. Women are asked to stay behind and care for their children, and to face the prospect of lifelong widowhood with orphaned children. I say it is absurd in such a situation to talk about equality of sacrifice. Wealthy people are asked to make a sacrifice of giving up expensive wines-no, as a matter of fact, their sacrifice is that of paying more for expensive

The Budget-Mr. Woodsworth
wines. That kind of thing is all they are asked to do. It is the mere giving up of a few luxuries, if it amounts to even that much. Simply because we are doubling the taxation on articles used by certain classes of people, it does not follow that there will be equality of sacrifice, and it is absurd for us to try to spread abroad any such idea.
Again I would point out that even though we conscripted all wealth, there would not be anything like equality of sacrifice, unless the men of wealth themselves faced life-and death in the trenches, with all that this involves. I have to speak against war, but I have profound respect for the men who are willing to make the great sacrifice because of their high ideals. On the other hand, I have little respect for the man who stays behind and does even the slightest bit of profiteering -or, I would gc farther than that and say, "profit-making."
Hon. members to my left against whose amendment I voted talk about conscription, but it is not the kind of conscription I want. I believe they mentioned that it involved no change of ownership. The kind of conscription I would advocate is something that does involve change of ownership. I would talk about the conscription of bank accounts and the conscription of property of every kind- if we are going to go into conscription at all. Talk about that; let us have that kind of conscription.
A few days ago the leader of the Social Credit group (Mr. Blackmore) said that they stood for a wide program of conscription of man power, finance and industry. Well, I would be inclined to say that if the conscription of men were advocated, I would certainlv advocate, not the kind of conscription they lane about-a namby-pamby thing that does not mean anything and that has no sense in it- but that before a single man is conscripted, there ought to be complete conscription of wealth. And even then you would not begin to get equality of sacrifice.
These are things that should be clearly recognized. I have not the right to discuss the amendment which has just been voted upon, but I do insist that the kind of thing we have been talking about-and, in my judgment, this has been done in all sections of the house- is unreal. I cannot but think that if we are going into this war and are going to stand shoulder to shoulder in the defence of the country, to use the words of the Prime Minister (Mr. Mackenzie King), it must mean that if we are sincere, those who hold that belief ought to be prepared to go to the very limit of sacrificing every last dollar in the country.
[Mr. Woodsworth.)


Mr. STEWART:: They may have to.


James Shaver Woodsworth: That is not the popular doctrine, but I say that is what is involved in the fine phrases we have been using.
I voted against the amendment because I want to get away from a lot of the camouflage we hear so much about. Let us get down to business. If we adopt the idea of conscription, then let us be prepared to carry it through to the very limit. What is the use of our talking about setting up a committee to study this kind of thing? Of course we would all vote to set up a hundred committees, if they meant anything-but they do not, at the present time.
The government has said it is not going to adopt conscription. I say that before there is any effort made to conscript the people of this country, we should conscript all the wealth. And one other word: For the moment we may not be entering upon a procedure of legal conscription; but when I read that certain municipalities are turning men off relief unless they sign up, then I say that is moral conscription, that it is not justifiable, and that it is just as effective as legal conscription would be.
Let us face these facts-and I believe these are the last words I shall have to say with regard to the whole situation. One of the hon. members who has spoken has remarked on the fact that money can be easily obtained when we are at war. I cannot but think of the thousands of men I have met personally during the last few years-the boys who have been riding the rods and the men in the soup kitchens. I know we are all sympathetic with our less fortunate brothers, and more or less in a general way we all would support any move towards an improvement in their condition. But the government apparently could not find money to give relief to those poor boys-although, as soon as what is described as a national crisis arises, we find there is plenty of money for all kinds of undertakings. And those self-same poor boys who yesterday were hobos are now well dressed and provided with the necessities of life.
I point these facts out in making what may be my last plea. According to the orders in council which were read to-day, it may not be possible for us to speak. If these orders are strictly construed, it would not be possible for us to talk-even about the terms of the peace. I lived through the last war, and I found that I could not speak. I commend the Prime Minister from the bottom of my heart for those noble words of Liberalism he uttered just before the dinner recess.

Ways and Means
I do-and I think he has it in him really to struggle to maintain some of those principles of liberty. Personally I am not so much afraid of the power of Hitler in this country as I am of the possibility that by entering upon this war we shall be conquered by some of the things which to-day we condemn in Hitler.
I would hope that through all the restrictions and privations which necessarily must come in a war, the principles of liberty, the principles of free speech and the principles of a free parliament which, as I said the other night, had been upheld to this stage, may be upheld to the very end of the war-however long it may last.
Motion (Mr. Mackenzie King) agreed to. WAYS AND MEANS



CUSTOMS TARIFF AMENDMENT

[Stage Direction]
The house in committee of ways and means, Mr. Sanderson in the chair.
Resolved, that it is expedient to introduce a measure to amend schedule A to the customs tariff and amendments thereto, and to provide:
1.	That there shall be levied, collected and paid on the following goods, whether dutiable or not dutiable, when imported from any country, the additional rates of duties of customs hereinafter specified:
(a)	Whisky, brandy, rum, gin and all other goods specified in Customs Tariff items 156, 156a and 156b-$3 per gallon of the strength of proof.
(b)	Ale, beer, porter and stout-9 cents per gallon.
(c)	Wines of all kinds, except sparkling wines, containing not more than forty per cent of proof spirit-71 cents per gallon.
(d)	Champagne and all other sparkling wines 

75 cents per gallon.
(e)	Manufactured tobacco of all descriptions except cigars, cigarettes and snuff-5 cents per pound.
(f)	Cigarettes weighing not more than three pounds per thousand-$1 per thousand.
(g)	Tea, when the value for duty thereof under the provisions of the Customs Act:
(i)	is less than 35 cents per pound-5 cents per pound.
(ii)	is 35 cents or more but less than 45 cents per pound-7J cents per pound.
(iii)	is 45 cents or more per pound

10 cents per pound.
(h)	All goods specified in Customs Tariff item 25a-10 cents per pound.
(i)	All goods specified in Customs Tariff item 26 except coffee, roasted or ground-10 cents per pound.
(j)	Coffee, green, and coffee, roasted or ground-10 cents per pound.
Mr. MARSH:: We have not the bill before us and I do not think we should proceed without it.


James Lorimer Ilsley: We are dealing with the resolution and perhaps I can explain it. I have not the resolution before me, but I know exactly what it is and it can be explained quite easily. The resolution simply authorizes the addition of certain rates of duty.


Mr. CAHAN:: Has the resolution been
printed and distributed?


James Lorimer Ilsley: I am not sure about that. All these matters were mentioned this afternoon in the budget address, but I do not think there has been time to distribute the resolution. The resolution makes additions to the present rates of duties on the list of articles contained therein. These additions in duty will be covered by the bill which will be presented to parliament.
Paragraph 1 agreed to.
2.	(1) That any enactment founded upon the foregoing resolution relating to item (a) shall be deemed to have come into force on the third day of September, one thousand nine hundred and thirty-nine, and to have applied to all goods imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
(2) That any enactment founded upon the foregoing resolution relating to item (b), (c), (d), (e), (f), (g), (h), (i) and (j) shall be deemed to have come into force on the twelfth day of September, one thousand nine hundred and thirty-nine, and to have applied to all goods imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.


Mr. WALSH:: What becomes of stocks
which are held at the present time by retail merchants? This measure comes into effect on September 12, and I should like to know how stocks in merchants' hands will be affected.


James Lorimer Ilsley: Goods imported before September 12 would come in under the old rate of duty. Section 3 of the bill to be presented reads:
This act shall be deemed to have come into force on the twelfth day of September, one thousand nine hundred and thirty-nine, and to have applied to all goods mentioned in the preceding section, imported or taken out of warehouse for consumption on and after that date, and to have applied to goods previously imported for which no entry for consumption was made before that date.
There is one exception. The increased duty in the case of spirits is to apply on and after September 3.
16S
Ways and Means


William Allen Walsh: There is no way of preventing merchants from immediately increasing the price on their present stocks in order to cover the cost of replacement?


James Lorimer Ilsley: Not under this measure.
Paragraph 2 agreed to.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the schedule to the Excise Act, 1934, as enacted by chapter thirty-seven of the statutes of 1936 and to provide:
1.	That the duty of excise on spirits distilled in Canada be increased from $4 to $7 per proof gallon.
2.	That the duty of excise on Canadian brandy be increased from $3 to $6 per proof gallon.
3.	That the duty of excise upon all beer or malt liquor brewed in whole or in part from any substance other than malt be increased from twenty-two cents to thirty cents per gallon.
4.	That the duty of excise on malt manufactured or produced in Canada or imported be increased from six cents to ten cents per pound.
5.	That the duty of excise on malt syrup suitable for the brewing of beer manufactured or produced in Canada be increased from ten cents to fifteen cents per pound and malt syrup imported into Canada and entered for consumption be increased from sixteen cents to twenty-one cents per pound.
6.	That the duty of excise on tobacco of all descriptions manufactured in Canada, except cigarettes, be increased from twenty cents to twenty-five cents per pound actual weight.
7.	That the duty of excise on cigarettes manufactured in Canada, weighing not more than three pounds per thousand, be increased from $4 per thousand to $5 per thousand.
8.	(1) That any enactment founded on resolutions 1 and 2 hereof shall be deemed to have come into force on the third day of September, one thousand nine hundred and thirty-nine.
(2) That any enactment founded on resolutions 3, 4, 5, 6 and 7 hereof shall be deemed to have come into force on the twelfth day of September one thousand nine hundred and thirty-nine.
Resolution agreed to.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Special War Revenue Act. chapter one hundred and seventy-nine of the Revised Statutes of Canada 1927 and amendments thereto and to provide:-
1.	That subsection 1 of section 83 of the said act be struck out and replaced by the following:
"1. There shall be imposed, levied and collected the following excise taxes:
(a)	a tax of fifteen cents per gallon on wines of all kinds, except sparkling wines, containing not more than forty per cent of proof spirit;
(b)	a tax of one dollar and fifty cents per gallon on champagne and all other sparkling wines."
[Mr. Ilsk-y.J
2.	That schedule XI to the said act be amended by adding thereto as paragraph 4 thereof the following:
"4. Carbonic acid gas and similar preparations to be used for aerating non-alcoholic beverages... two cents per pound."
3.	That schedule III to the said act being the list of articles exempted from the consumption or sales tax be amended
(a) by striking out under the heading of "foodstuffs" in the sixth line the words: "fish and products thereof;" and replacing them by the following words: "fish and products thereof, not to include canned fish;"
; (b) by striking out under the heading of "foodstuffs" in the tenth and eleventh lines the words: "meats, salted or smoked (not to include the same when chopped, ground, parboiled or spiced);"
(c)	by striking out under the heading of "miscellaneous" in the first line the word "electricity" and replacing it by the following words: "electricity, except when used in dwellings:"
(d)	by striking out under the heading of "miscellaneous" in the fourth and fifth lines the words: "gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes;" and replacing them by the following words: "natural gas and gas manufactured from coal, calcium carbide or oil for illuminating or heating purposes, except when used in dwellings;"
4.	That any enactment founded on this resolution shall be deemed to have come into force on the twelfth day of September, one thousand nine hundred and thirty-nine and 'to have applied *to all goods imported or taken out of warehouse for consumption on and after that date and to have applied to goods previously imported for which no entry for consumption was made before that date.
Resolution agreed to.

[Stage Direction]
Resolved that it is expedient to enact an Excess Profits Taxation Act to provide
[Stage Direction]
1.	That an excess profits tax be levied on the profits of all businesses, whether incorporated or not. the said tax to apply to profits in excess of 5 per centum of the amount of capital employed by the taxpayer in the business, and to be graduated at the following rates:
On profits in excess of 5 per cent but not exceeding 10 per cent of the capital employed- 10 per cent;
On	profits	exceeding	10	per	cent	but	not
exceeding 15 per cent of the capital employed

20 per cent;
On	profits	exceeding	15	per	cent	but	not
exceeding 20 per cent of the capital employed- 30 per cent;
On	profits	exceeding	20	per	cent	but	not
exceeding 25 per cent of the capital employed

40 per cent;
On profits exceeding 25 per cent-60 per cent; and that the said excess profits tax be in addition to the tax imposed upon the taxpayer under the Income War Tax Act, but that any tax payable by the taxpayer under the Income War Tax Act in respect of the profits of the same	business	for	the	corresponding
period be deductible as an expense for the purposes of computing the profits to be assessed under the excess profits tax.

Ways and Means
Mr. LAWSON:: This will come in as an amendment to the Income War Tax Act?


James Lorimer Ilsley: No, it will be a separate measure.


James Earl Lawson: But it will be administered by the commissioner of income tax, I assume.


James Lorimer Ilsley: Yes.
Paragraph 1 agreed to.
_ 2. That an alternative excess profits tax be imposed upon the profits of all businesses, whether incorporated or not, taxing at the rate of 50 per centum all profits or income in excess of the average income of the taxpayer for the four years 1936, 1937, 1938 and 1939, or the four fiscal periods of the taxpayer ending in such years;
And that the said alternative excess profits tax of 50 per centum be in addition to the tax imposed upon the taxpayer in respect of the same profits under the Income War Tax Act, but that any tax payable by the taxpayer under the Income War Tax Act in respect of that portion of his profits which is in excess of the aforesaid average profits shall be deductible as an expense for the purpose of computing the net excess profits to be assessed at the aforesaid rate of 50 per centum.
3.	That 'the tax proposed in resolution 2 hereof be an alternative to the tax proposed in resolution 1 hereof, and the taxpayer shall have the right to elect to be taxed either upon the basis of the tax proposed in resolution 1 hereof or upon the basis of the tax proposed in resolution 2 hereof.
4.	That the governor in council may provide by regulation for the depreciation and amortization of new plant and equipment which may be deemed necessary to fulfil orders for war purposes.
5.	That this act shall be applicable to the year 1940 and fiscal periods ending therein after March 31, 1940, and all subsequent periods.
Paragraphs 2 to 5 inclusive agreed to.


[Stage Direction]
Resolution agreed to.

[Stage Direction]
Resolved that it is expedient to amend the Income War Tax Act to provide-
1.	That a war surtax of 20 per centum of the -total income tax otherwise payable under the said act be imposed upon all persons other than corporations.
2.	That the rate of tax applicable to corporations and joint stock companies, except those filing consolidated returns, be increased from 15 to 18 per centum.
3.	That the rate of tax applicable to corporations _ and joint stock companies which file consolidated returns under the said act be increased from 17 to 20 per centum.
4.	That voluntary donations to approved patriotic organizations and institutions in Canada during the present war be allowed as a deduction from income, up to 50 per centum of the net taxable income of the taxpayer.
5.	(1) That the amendments proposed in resolutions 1 and 4 hereof be applicable to the income of 1939 and all fiscal periods ending therein and of subsequent periods.
(2) That the amendments proposed in resolutions 2 and 3 hereof be applicable to the income of 1940 and all fiscal periods ending therein after March 31, 1940, and of subsequent periods.
Mr. NEILL:: Will the minister tell me why, if the increased taxation proposed to be imposed on individual taxpayers applies, as I read it, to the 1939 period, it does not also apply to the 1939 period with respect to corporations?


James Lorimer Ilsley: A great deal of thought was given to that matter. I do not know just how I can put it in the shortest language, but the taxation of corporations is tied up pretty well with the excess profits tax, which is dealt with in a separate bill. The taxation is worked out in such a way as to take into account the incidence of both forms of taxation, and it was not thought proper to impose the excess profits tax on corporations for periods that ended before March 31, 1940. If you did, you would be taxing them over a considerable prewar period, and therefore perhaps the first decision that was made was to impose the excess profits tax on periods ending on or after March 31, 1940. The hon. gentleman says, why do you not treat individuals just the same? Well-


Alan Webster Neill: Pardon me. The minister has answered me in connection with excess profits. This is income tax.


James Lorimer Ilsley: What I was trying to say is that the two were considered together. Perhaps there is some ground for that when the weight of the taxation is considered; it was considered that you would have to take into account the income tax itself and the excess profits tax too. The income tax is allowed as a deduction in arriving at the excess profits tax; it was thought that the two should be imposed for the same period, and that is the reason why it applies to this period. For individuals the same reason does not apply at all, or it applies to a very much lesser extent, and so we applied the individual income tax for the present calendar year. In other words, we shall collect the individual income tax next spring, in April or thereabouts.


Alan Webster Neill: Sounds like inequality of
sacrifice!


Major James William Coldwell: I happened to be called out when the minister was dealing with the excess profits tax. Could he give us an illustration of how that will work? I mentioned this afternoon some figures which the minister

Ways and Means

said were incorrect. I should like to know just how this will affect a profit on, say a thousand dollars, in two or three of these categories.


James Lorimer Ilsley: If the hon. member will put a case, I will give him in a few minutes the exact tax that will be pajmble. I think that is the best way to get at it.


Major James William Coldwell: Supposing we have a capital of, say a thousand dollars. We will take the first clause here; we will say there is a profit of ten per cent. What would be the
tax payable?


James Lorimer Ilsley: I shall have that worked out. It includes two taxes. I will give it to the hon. gentleman on the bill. We are not on the bill now.


James Earl Lawson: Would the minister glance for a moment at item 4 under income tax resolutions, voluntary donations to an approved patriotic organization or institution. Who is going to do the approving?


James Lorimer Ilsley: The Secretary of State for Canada. That is provided for in the bill.
Resolutions reported, read the second time and concurred in.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 6, to amend the Customs Tariff.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 7, to amend the Excise Act, 1934.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 8, to amend the Special War Revenue Act.
Motion agreed to and bill read the first and second times.
Mr. Ilsley thereupon moved for leave to introduce Bill No. 9, to amend the Income War Tax Act.
Motion agreed to and bill read the first and second times.


William Lyon Mackenzie King: Now that all of the budget resolutions have been reported and the bills have been introduced and gone through their first and second readings, I move that the house agree that Bills Nos. 6, 7, 8 and 9, namely, the four bills which are based on the four resolutions, be referred to committee on one motion. That is adopting

the same practice with respect to these bills as is adopted as a general rule with regard to private bills, the standing order being that:
All private bills reported to the house by any committee may, on one motion be referred together to a committee of the whole house and such committee may consider and report one or more such bills at the same sitting.
That will help to expedite the matter.


James Earl Lawson: Are they printed?


William Lyon Mackenzie King: Three are
printed and the fourth is on the way to the house.


[Stage Direction]
Motion agreed to.

[Stage Direction]
The house in committee on Bill No. 7, to amend the Excise Act, 1934-Mr. Ilsley-Mr. Sanderson in the chair.
Bill reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 6, to amend the Customs Tariff-Mr. Ilsley-Mr. Sanderson in the chair.
Bill reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 8, to amend the Special War Revenue Act- Mr. Ilsley-Mr. Sanderson in the chair.
Bill reported, read the third time and passed.

[Stage Direction]
The house in committee on Bill No. 9, to amend the Income War Tax Act-Mr. Ilsley- Mr. Sanderson in the chair.
Sections 1 and 2 agreed to.
On section 3-War surtax 20 per cent.
James Earl Lawson: I have not before me the Income War Tax Act. May I ask which of these schedules relate to rates payable by non-resident owned investment corporations?


James Lorimer Ilsley: My information is that they do not.	-


James Earl Lawson: These amendments do not affect non-resident owned investments?


James Lorimer Ilsley: No.


Charles Hazlitt Cahan: The wording of this amendment is clear on its face; but, not having the original act before us, one finds some diffi-

Department oj Munitions and Supply
culty in grasping the connection. In working out the percentage, is there an increase of one-fifth in percentages, or will the income tax be computed as in the previous year and one-fifth added?
Mr.	ILSLEY:	The	latter is the	case.	Thisis a surtax on	the	income tax.	It is an
increase of the income tax, made up as before, by 20 per cent. Is there any ambiguity?
Mr.	CAHAN:	In	computing	that,	the
amount of the tax will be reckoned as in the previous year and one-fifth of the tax of the previous year will be added as surtax?


James Lorimer Ilsley: Yes, that is correct.


[Stage Direction]
Section agreed to.
Sections 4 to 7 inclusive agreed to.
Bill	reported,	read the third	time	and
passed.


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved the second reading of Bill No. 5, respecting the Department of Munitions and Supply.
He said: I had the permission of the house to present the resolution at an earlier stage without debate and to have the bill introduced and read the first time. When that permission was granted, I indicated that I would make a statement on the second reading of the bill with respect to its purpose and provisions.
The bill before the house intituled "An act respecting a Department of Munitions and Supply," is intended to give the government the necessary authority to set up a department of munitions and supply. In the United Kingdom during the last war, as hon. members are aware, it proved necessary, in order to meet the unprecedented demands for munitions and other supplies, to set up a separate ministry of munitions.
Mr. Lloyd George, in his Memoirs, makes some very significant observations which bear directly on the proposal being made by the. government. In a speech at Manchester, while organizing the Ministry of Munitions, he had this to say of its purpose:
We want to mobilize in such a way as to produce in the shortest . space of time the greatest quantity of the best and most efficient war material. That means victory; it means a great saving of national strength and resources, for it shortens the war; it means an enormous saving of life.
87134-12J
That reference will be found in Mr. Lloyd George's Memoirs, volume 1, page 258. He also stated:
It requires some effort to envisage the wide range of our task. Few people would at the outset imagine how much is covered by the phrase " munitions of war " or dream of the colossal ramifications of the industries concerned in their production.
That will be found on pages 269 and 270 of the Memoirs. Mr. Lloyd George also stated:
Most of the special steps that were taken after the formation of the Ministry of Munitions to stimulate production could equally well have been taken in 1914. It was to those special steps that the greatly accelerated yield on account of outstanding war office orders in the latter part of 1915 as well as the immense augmentation of output in 1916 on direct orders of the ministry was mainly due.
That will be found at page 269 of the Memoirs.
The government is determined to avoid if at all possible similar consequences flowing from any delay in setting up effective machinery in Canada to meet the urgent demand, inseparable from modern war, for munitions and supplies. It is for these reasons that we are asking parliament to give us authority to set up a new and comprehensive department with far-reaching powers. Hon. members will recall that following upon the commission established in 1915 for war purchasing, the war trade board was established in 1918, both under the authority of the War Measures Act. We intend to take at once measures which were found necessary as the result of experience gained after the war of 1914-18 had been in progress for some time. We propose to establish at once under the provisions of the War Measures Act a war supply board responsible to the Minister of Finance with comprehensive powers similar in character to those being asked for in this bill.
At the same time, as the result of legislation being asked for in this bill, the government will have in reserve the authority to create at any moment a separate department of munitions and supply. The new department, if it becomes necessary, will have the advantage of the experience and organization which the activities of the war supply board will have made available. At the last session of parliament we established a defence purchasing board. That was in a time of peace. This is a time of war. Hon. members will recall that at the time the defence purchasing board was set up the Minister of National Defence (Mr. Mackenzie), in reply to a specific question, said:
The answer is this, that this is a measure for peace time, and I trust that it will long be used for that purpose. If an emergency arises, doubtless other measures will be enacted immediately to deal with the emergency.
172	COMMONS
Department oj Munitions and Supply
That quotation will be found at page 1972 of Hansard for this year.
The main concern at that time was to ensure that there should be no profiteering incidental to preparations for defence. The then Minister of Finance (Mr. Dunning) envisaged different methods for controlling profits in the event of war. In the same debate he said:
And of course if-God forbid-war should come and we have to consider the results of war inflation of one kind and another, outside of this measure altogether we shall have to evolve schemes for profit control which will apply not only on purchases by the Department of National Defence. I think there is no doubt we would come to that.
That is to be found in Hansard for March 29 of this year, at pages 2397-8.
I hope I have already made it abundantly clear that the attitude of the government to-day is just as firm in that respect, and if anything more were needed to show our firmness the tax proposals in the budget speech should leave no room for doubt on this score. What we do want to ensure is that the procedure for which there might have been time in days of peace does not hamper and slow up the meeting of urgent needs in the present situation, when the saving of time may mean the saving of lives. The war supply board will be so constituted as to function speedily and effectively in the matter of purchases. But this problem is no longer confined to the purchase of day to day requirements on a comparatively limited scale. The problem is now broadened to include planning not only for months but perhaps for years ahead. Further than that, it includes the whole question of the supply of materials of all kinds directly or indirectly necessary for the prosecution of the struggle. It involves the investigation of sources of supply of many commodities, not only those produced in Canada but those which must be obtained abroad; also the working out of measures to conserve essential supplies here which otherwise might be exported, and the ascertaining of capacities and capabilities of plants and businesses for producing or supplying essential needs.
Equally important is the endeavour which must be made to ascertain and forecast not only present but prospective needs, and to take steps to see that supplies will be conserved or obtained to fill these needs from time to time. The experience of the last war revealed clearly that staying power, the effective use of economic resources, was the decisive factor. It is but a commonplace to say that in modern war economic defence is as vital as military defence. Canada's geographical situation especially fits her to make

a tremendous material and technical contribution to the joint effort. This joint effort raises another problem, namely the distribution of available materials as between us and our allies. Now that purchases on a large scale by the British government, and probably by other governments associated with Great Britain in the struggle, are likely to be made in Canada it is advisable that there should be an authority with power to act not only for Canada but as agents for other governments if they should desire it, and in any case to coordinate the purchases of the Canadian government with those made for other governments.
Furthermore the experience of the last war has clearly shown that the problem of securing armaments and munitions cannot be separated from the general economic organization of the country. For example, if too much energy and material is thown into the manufacture of munitions, some other industry equally essential to the national effort may be crippled. In order to prevent such a situation arising, the governmental body must have power, not merely over the production of munitions themselves, but over production of related supplies, if a proper balance is to be maintained, and the most effective use made of our varied resources.
Not only will it be necessary to coordinate the industrial production of the country in a way which would not be desirable in peace time, but it may be necessary to determine priorities in the case of certain essential materials. A Canadian supply authority must be able to divert production from one field to another as the changing circumstances of war may demand. It is essential that an organization be created which will view the problem of supply as a whole and which will have the capacity to act in whatever direction action is most urgently needed.
While the legislation which the government has introduced provides for the creation of a department of munitions and supply, it is not the intention of the government to set up a full-fledged department immediately. We are anxious to avoid unnecessary duplication of departments, and to have the benefit which will be gained from actual experience in operation of a fully authorized and competent board working to achieve the best methods of handling the complex and far reaching problems involved in respect of war supplies. We feel that the reasons for having made the defence purchasing board responsible to the Minister of Finance apply even more strongly in the case of a war supply board during the period in which an organization is being built up. The problem of finance is a vital element in the general problem of supply, and the

Department of Munitions and Supply
Minister of Finance must necessarily be in close contact with whatever organization is entrusted with the responsibility of securing munitions and supplies.
No one can foretell what demands this war will make upon the country. We must be prepared to meet unexpected demands quickly. This legislation gives us the power to act quickly and effectively if the need should develop for another department with a full time minister in charge. In the earlier stages, however, it is considered that surveys, investigations, organization and administrative methods can be initiated and worked out by a board in close touch with business and practical conditions, these activities to be later continued under the board or merged in a ministry as the occasion and circumstances demand, and as the experience gained may warrant.
James Earl Lawson: It may not be strictly in order, but "perhaps the Prime Minister would permit me a question. Is it the thought that this war supply board to which the right hon. gentleman has referred is to supplant what has been previously set up as the defence purchasing board?


William Lyon Mackenzie King: Yes.


Charles Hazlitt Cahan: Mr. Speaker, when I read this bill and attempted to consider it in all its ramifications and complexities, I felt I need not discuss its provisions in detail, either on second reading or in committee. It is an elaborate effort to provide for a Department of Munitions and Supply under a minister who will have the most extensive powers ever given to a minister of the crown in Canada.
Section 6 of the bill provides that the minister shall examine into and organize the resources of Canada, the sources of supply and the agencies available for the supply of munitions of war, and supply for the execution and carrying out of defence projects, and the needs present and prospective of the government and of the community in respect thereto; and may make use of the services of any board, agency or association in carrying out the provisions of this section.
Then in the definitions section it is provided that "munitions of war" shall mean:
Arms, ammunition, implements of war, military, naval or air stores, or any articles deemed capable of being converted thereinto, or made useful in the production thereof.
And the term "supplies" is defined in this
way:
"Supplies" includes materials, goods, stores and articles or commodities of every kind including, but not restricting the generality of the foregoing: (i) articles which in the opinion of the minister, would be essential for the needs
of the government or of the community in the event of war; and (ii) anything which, in the opinion of the minister, is, or is likely to be, necessary for, or in connection with, the production, storage or supply of any such article as aforesaid.
Therefore the scope of the work of the department is very extensive indeed, and I might almost say unrestricted. It occurred to me, therefore, in reading the bill that it was to be brought into operation at an early date by order in council, and that it was to continue for a period of three years, with a possible extension of one year for certain of its provisions. I had thought therefore that it would be advisable to refrain from any criticism of these provisions for the present, in view of the fact that at a later date-perhaps at the ensuing session of parliament-the bill would have been in operation for several months, and that we would then know something of the success and efficiency of the measure.
I now find, however, that this bill will be held in abeyance for the time being, while the new war supplies board, which is to be created and which is to function under the War Measures Act, is to make the necessary investigations and examinations of the economic conditions and industrial life of the country, preliminary to setting up the Department of Munitions and Supply as provided in the bill.
Under those circumstances I think criticism is vain and premature. I trust, when the war supplies board is constituted, that the order in council, by which it will be constituted, will be made known to the public, so that during the recess we may thoroughly examine into its provisions and watch with great care the manner in which it functions.
I should have thought it might be advisable to start at once with the Department of Munitions and Supply because that department, if it is to be created, should be under the administration of a minister of the crown. The war supplies board will not be under the direct administration of a minister of the crown, whose time can be given exclusively to the efficient operation of the board. Perhaps any further comment from me is unnecessary.
I notice that under section 20 the governor in council may from time to time make such regulations as may be necessary to carry into effect the provisions of the bill. No provision is made for the publication of those regulations, or to provide that they shall have the force of law after they are once made.
Section 14 provides-and I believe very properly-that subject to the order of the minister any person carrying on business, which comes within the scope of this enact-
174	COMMONS
Department of Munitions and Supply
ment, shall not be bound, in respect of such matters as may be specified in the order made by the minister, by any obligation or limitation imposed on that person by or by virtue of any other act, order, rule, regulation or by-law. That is a provision whereby the minister administering this department may exempt all persons and all companies, with which he may deal, from the provisions of any act existing on the statute books of Canada, which would otherwise restrict their operations in furnishing munitions of war and supplies.
For instance, had this bill been drafted after the remarks I made the other night respecting the Combines Investigation Act, I would have suggested that the draftsman had carried out the suggestions I then made, namely, that if industry is to be mobilized for the efficient production of munitions of war and supplies for carrying on the war, it must not be subjected strictly to a number of statutes, such as the Combines Investigation Act, and one or two others which I might mention.
I regret to have taken any considerable time, but the Prime Minister's statement that the bill is to be held in abeyance and is not to be put into operation at an early date, came without notice. Otherwise I would discuss certain of its provisions more at length.


Mr. T. L. CHURCH (Broadview):: I understand the purpose of the bill now before the house is that of establishing a Department of Munitions and Supply. I would suppose that the bill of last session limiting to five per cent profits on munitions, and imposing certain other restrictions, would have to be read into this measure. We have wasted most of this year. As late as August business men came to Ottawa and could find no one who could deal with the matter or advise them. I moved a resolution in the house at the last session and also in 1938 asking for a survey of industry in this country similar to that carried out by the British munitions board. My motion called for a census or registry to be taken of the industrial and economic power, food supplies and so on of the country. On February 2 the minister replied that 1,300 industrial firms had been surveyed. Letters were sent out. That was all very well so far as it went, but it was not followed up. Many firms tell me that they were not inspected or surveyed at all. On April 26 the minister said in reply:
During the past two years this committee has made a thorough survey of industrial firms and plants, with a view to ascertaining, tabulating and indexing the available industrial resources of the country for the production of military requirements at a time of emergency.

In April, two months after his reply in February, he stated that 1,500 firms had been surveyed. The result of that survey has been practically nothing. During the past eleven months there have been three major crises in Europe, but we have not profited from any one of them or started to get ready. We misjudged the European situation. Immediately after Munich we should have started mobilizing the industry of this country and putting it on a war basis. The industry of Great Britain has been on a war basis for two years, but nothing was done here as a result of the survey, or any preparation made. At the opening of the last session or a month later, a petition was presented to parliament by the Ontario legislature along the same lines as my earlier motions.
All this is gone and perhaps there is no use in talking about it now. We should not forget that Germany has great striking power. She has 100 divisions ready to put into the field, and she has the largest and most up-to-date fleet of aeroplanes in Europe. She has 4,200 first-line machines and 2,500 modern bombers capable of bombing London or Paris, or perhaps even coming here to Canada. It is almost impossible to have quick action in the production of munitions. We should have had the equipment available with a reserve of materials; we should have set up reservoirs of food and provided protection against this dreadful submarine menace to transportation.
Another idea is that the most attention should be given to home defence. Home defence in Canada is not as vital as it is in Great Britain. Great Britain is one of the most vulnerable of the European nations. She must provide means of protecting her people because she is only twenty or thirty miles away from her enemies. She must provide protection for her people from air raids, and she must ensure a sufficient supply of munitions and food. Home protection is of vital importance to Great Britain, and this matter is not receiving the attention it should in Canada. The main program passed this session seems to be for the defence of Canada. I contend that our first line of defence is in France and Great Britain. If they fail, all is gone and the whole world will' enter into outer darkness. All the money we are spending on the home defence of Canada will be wasted; it will not contribute one iota to winning a victory. Our duty should be early to supply Great Britain with all our munitions to the exclusion of the home defence of Canada. The passive defence of Canada will not assist Great Britain in meeting her enemies on the German border. Our home defence is useless.

Department oj Munitions and Supply
I should like to say a word about the action of the United States in connection with its Neutrality Act. For the last three or four years our friends in the Cooperative Commonwealth Federation and others have been arguing that we did not need an army or air force, that we could rely on Pan-America. As a result of similar arguments Great Britain, to please the pacifists, scrapped the finest navy, the finest army and the finest air force the world ever had. You cannot get such forces back in a day or a generation, and this is one of the main reasons for the present trouble.
I think Canada should seek some revision of her last trade treaty with the United States -which she has now power to do-in view of the action of that country in connection with its Neutrality Act. They are not going to give us any munitions, aeroplanes and all that kind of thing. After Munich, New Zealand, by preparation, got ready, and she has now 1,300 trained pilots who are immediately available to go to England to take part in the fighting at the German front. We should have taken the same action. The board of education of Toronto came down here and stated they were ready to offer the equipment of their technical schools to train men, and asked federal aid. Many men from Canada were trained, and some have since gone overseas to receive further training in England. Some of those men took part in the recent attack on the Kiel canal. In view of the action of our friends to the south, I think we should seek some revision of our trade treaty. We should make every effort to conserve the economic and industrial life of Canada in view of this great disaster which has come to the world.
We have been supplying materials to Germany when we should have been building up our own country. I was surprised to learn that we have been supplying Germany with pig iron. The figures show that the following exports of pig iron were made during the six months, September, 1938, to February, 1939:
From

	Tons
Belgium and	Luxemburg	 131,754
France	 204,506
United Kingdom	 39,203
And a large tonnage from Canada. That is a deplorable condition. I regret to learn that for the past three years Canada has not been supervising her trade with Germany and has permitted the shipment of iron and other raw materials to that country for the manufacture of munitions.
This munitions board should not be faced with the same disaster which faced the British board in 1917 when there was a great scarcity of power for munitions plants. At one time
the hydro system supplied power to manufacture 52 per cent of all the shells being sent to the allies. A book published by Mr. Carnegie, one of the heads of the British munitions board, shows that there was a great scarcity of power during the war and the record the hydro made. The government would have been well advised after Munich to take some definite action. This board cannot come along now and get munitions in the twinkling of an eye. It is going to take a long time to get into production.
The United States are back to where they were in the days of George Washington and Andrew Jackson. They want complete isolation. The United States always speaks with two voices, one is the voice of the president, who has been most friendly to us, but the other is the voice of the house of representatives and the senate, who are for neutrality and isolation. We all know what action was taken by congress during last July and August in connection with the Neutrality Act. I ask hon. members to read some of the speeches delivered in the senate and the house of representatives. The United States are treating the dictatorships the same as they treat the democracies. They are treating people who are attacked the same as they treat the attackers.
Then we may not be able to get the plants which we hoped to get, even assuming that this board will take over certain private plants.
It is essential that munitions plants should have protection and that they should have a cheap power, light and water supply. These industrial plants will be working on two or three shifts a day, and any board appointed should seek the utmost cooperation between labour and industry and should prevent sabotage. It has been a puzzle to me why all these raw materials, scrap metal, pig iron, nickel, lead, copper and manganese, have been allowed to go out of the country and get over to Germany during the past year or two.
The return which has been brought down gives no indication at all of where these plants are. A few of them have been inspected, but I should like to know if any new factories have been approved, and in what state of preparation they are. What progress has been made in that respect? Will consideration be given to all these matters under this legislation? During the war of 1914 to 1918 it was found necessary, in order to give full support to these industries under the munitions board, to place section 98 in the criminal code for the protection of munitions plants. I am not prepared to say
176	COMMONS
Department of Munitions and Supply
what should be done here, but it is a fact that Attorney General Conant of Ontario has written to the Minister of Justice (Mr. Lapointe) and to the department asking for an amendment to the criminal code to protect not only munitions plants but public utilities in the event of war. I do not know wl ether that should be done, but certainly the government should look into it. I do not wish to delay the committee or to say much more, but I do think it is deplorable that with war staring us in the face Canada should have been asleep at the switch in making preparations to supply munitions.
I believe that Canada will give as good an account of itself in this war as in 1918, when we bad a munitions board. I believe that industry and labour will work well together and that there will be no strikes. I think everybody will make a great effort to supply Britain with the munitions she needs, and that should be our first consideration, and home defence second.


Robert James Manion: Mr. Speaker, looking over this bill
since it was distributed, I have been struck, as was the hon. member for St. Lawrence-St. George (Mr. Cahan), by the extraordinary powers that it gives to the minister if and when he is appointed. I listened to the Prime Minister (Mr. Mackenzie King) with interest, and I noticed that he mentioned the work of Mr. Lloyd George in England. I should like to ask him, if I might without interrupting the few remarks I wish to make, whether the powers conferred by this bill are more extensive than those that Mr. Lloyd George took for the same purpose in England. Are they more extensive than his?


William Lyon Mackenzie King: In replying to my hon. friend I can reply at the same time to the hon. member for St. Lawrence-St. George.


Robert James Manion: Then perhaps the right
hon. gentleman would defer answering until I have finished the few remarks I wish to make.
I do not of course know what the answer to that question is. I hope at all events that these powers are not more extensive than those that were taken by Mr. Lloyd George. At any rate they are most extraordinary powers to give to any minister. While, as I have said before, I do not want to be put in the position of criticizing at a time when we have no desire to criticize unnecessarily, I do ask myself, and I think the government should ask themselves, if it is advisable to give to any one man such powers as this bill seeks to confer. We have stated that we are fighting 
this war to do away with Hitlerism. I should not like to do away with Hitlerism in Europe and establish it in Canada. I do think it might be well to give a little thought to these extraordinary powers.
Glancing over the bill, and that is all we have had time to do, it would seem that the minister could take control of almost any business in Canada, force anybody to store what he chooses to have stored, and go almost to the length of completely nationalizing the business of the country. I say that without meaning to criticize at all, but if I understand the somewhat confused and devious language that lawyers use in drafting a bill of this kind, all these powers are to be conferred upon the minister if and when he is appointed to administer this measure. I rose largely to emphasize the very wide powers to be granted to the minister if and when he is appointed, and to suggest to the government, with all respect, that before this statute is proclaimed and a minister appointed to carry it out, they should give very serious consideration indeed to the powers sought by this bill and consider perhaps putting some limitation on those powers. But if, on the other hand, they have decided finally that it is in the interest of our participation in this war to proclaim this statute and appoint a minister, then certainly I hope that they will appoint a man of exceptionally high ability and of fine character to such an all-powerful position if he is to be given these extraordinary powers to carry out the terms of the statute.


Mr. T. C. DOUGLAS (Weyburn):: The
Prime Minister stated that pending the proclamation of this statute, a supply board would be set up. May I ask whether it wall take the place of the defence purchasing board? Provision was made in setting up that board, first, for calling for tenders, and, second, a limitation was put on profits where tenders were not called for. When the Prime Minister rises to reply, perhaps he would state whether there will be any restrictions of that kind with reference to the supply board that may be set up pending the proclamation of this statute.


William Allen Walsh: Before the Prime Minister replies, I should like to make one or two observations. This bill is to set up a board; and if the board does not prove itself effective, a ministry of munitions will be set up. Why not proceed at once directly to the issue and set up a ministry of munitions such as was set up in England, and as I feel will have to be set up in Canada within a very short time. I do not see the

Department of Munitions and Supply
necessity of a bill to set up a board which may prove a failure, and then to have to make provision for a ministry following that failure.


Mr. STIRLING:: This bill does not set up a board.


William Allen Walsh: I was referring to the setting up of a board under the War Measures Act. I would prefer to see a ministry of munitions set up to function immediately, and not wait until a board has first been set up under the War Measures Act. I feel there is a necessity to appoint a ministry of munitions.
Right Hon. W. L. MACKENZIE KING {Prime Minister): Mr. Speaker, I might say first of all that this bill, the second reading of which has just been moved, is based on the bill which was passed by the British House of Commons as recently as the eighth of June of the present year, a bill providing for a ministry of supply. That bill was based on the Lloyd George bill, if I may so call it, which was enacted in 1915 at the time of the great war. All of the experience that had been gained under the Lloyd George measure was before those who were drafting the measure which was passed in June of this year; and, having regard to conditions in time of war being much the same in one country as in another, our administration felt that we could not be on safer ground in instituting the ministry for a similar purpose than by following as closely as we could the British enactment. Hon. members will, I think, agree with me that there is.no parliament in the world which strives more earnestly to preserve freedom and prevent anything in the nature of the development of dictatorship than the British House of Commons; but, as has been pointed out time and again, measures which are suitable for a time of peace are not adequate for a time of war, and we are at present in a time of war, a very serious war indeed.
The British minister of munitions, Mr. Burgin, in speaking upon the very subject to which the leader of the opposition (Mr. Manion) and the hon. member for St. Law-rence-St. George (Mr. Cahan) have referred, namely the very extensive powers which are given in the bill to the ministry, made the following statement to the British House of Commons, and I will repeat to our House of Commons his words in reference to this measure. They will be found in the British Hansard, parliamentary debates, House of Commons, June 8, 1939:
The house, with its experience of past debates on the subject, will recognize at once that if you take the decision to appoint a minister of supply and set up a department, you must give to it powers adequate for the purposes that you intend to be served by that department.
Those powers must be wide and drastic. It is of the very essence of a supply department for a defence service that wide and drastic powers should be obtained. Of course, those powers are only to be used compulsorily if your voluntary system fails to deliver what is required. Hitherto, the voluntary system has been sufficient to meet the demand. We are now, however, in an emergency condition. We seem destined to live in an emergency condition. Therefore, something of the magnitude of the task must be appreciated in order to justify the wide powers that are granted by this bill.
I doubt if there is any hon. member who likes less than myself to entrust a ministry with too extensive powers. I have felt very strongly, as all hon. members know, on giving a ministry extreme powers to exercise at will, and I think that the very temperament which has caused me to feel as strongly as I have in that regal'd will enable me to watch with extra, zeal to see that these powers are not availed of in excess of what the situation may demand.
As regards the question asked by the hon. member for Weyburn (Mr. Douglas), perhaps he would wait until the bill is in committee; the question he has asked will come up naturally there.
With regard to the comment of the hon. member for Mount Royal (Mr. Walsh) as to the war supply board possibly being a failure and requiring a substitute later, I would say that I think the government, in taking the lesser step at the outset and taking it under the direction of one so experienced in military affairs and in financial affairs as the present Minister of Finance, is taking a very wise course.	If it becomes necessary to
establish the department in full before parliament reassembles or when parliament does reassemble, it will only be because it is desirable to have more extensive authority than it is contemplated to take under the board which will be appointed under the War Measures Act. But the War Measures Act board will, we hope, enable the government to introduce this new branch of administration in a way which will effect economies at the outset and add to efficiency in the long run.


Robert James Manion: I am sorry, but I hardly think that the Prime Minister (Mr. Mackenzie King) answered my question quite directly. He read from British Hansard and pointed out that dictatorial powers were taken under the Lloyd George act. What I asked him was if the terms of this bill are based on the Lloyd George act and if they go any further than that act.


William Lyon Mackenzie King: I have not myself read the Lloyd George act, but I am informed by my colleague, who has, that they
178	COMMONS
Department oj Munitions and Supply
go about the same length as the Lloyd George act did. But as I mentioned, the present act in Britain on which this measure is based is itself based on the Lloyd George act.
I should have said, in reply to the hon. member for St. Lawrenee-St. George, that I think he was right in suggesting that the order in council appointing this board under the War Measures Act should be given publicity at once, and I would think it should appear in the Canada Gazette.
With respect to regulations which can be made public, they will be made public. There may be some which it would not be in the public interest to publish, but any such might be communicated to the leader of the opposition (Mr. Manion).


Charles Hazlitt Cahan: And such should be given the force and effect of law, I think, by the express terms of the statute.


William Lyon Mackenzie King: I have no doubt that my hon. friend is correct in that. The legislation as drafted will, I believe, cover what my hon. friend has in mind.
Motion (Mr. Mackenzie King) agreed to and bill read the second time.



BUSINESS OF THE HOUSE


William Lyon Mackenzie King: If the Speaker will allow me, I will put the motion with
respect to adjournment. Under the standing order, the house would adjourn at eleven o'clock. I should like to ask that the present debate be suspended, and move that this house be not adjourned at eleven this evening.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the house go into committee on Bill No. 5, respecting the Department of Munitions and Supply.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Definitions.
Mr. MacNICOL:: I should like to ask a question with reference to paragraph (e). In the twenty-third line are the words "in the event of war." whereas in sections 5 and 7 are 
the words "during or respecting the present war." Should not the same words be used in each case?


Mr. POWER:: I rather imagine that was copied from the British act. The British act was passed in the month of June, before war was declared. If my hon. friend has any objections the words "in the event of war," I should be glad to strike them out, because war is here.
Mr: MacNICOL: Should it not read, "during or respecting the present war"?


Charles Gavan Power: I move, seconded by Mr. Rogers, that the words "in the event of war" in line 24 be struck out and the words "in the present war" be substituted therefor.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 3 agreed to.
On section 4-Deputy Minister.
John Ritchie MacNicol: Why are the appointments to be made by the minister instead of by the civil service commission?


Charles Gavan Power: The reason is that this is
a new department which is being set up. It is all very well, in cases where a department is already in existence and where there are a certain number of men who know the workings of that department, to bring in new men through the civil service commission. But when a department or a board of any kind is being set up, it is extremely difficult to get the calibre of people required through the civil service commission by means of the ordinary eligible lists.


Charles Hazlitt Cahan: This department will cease
to exist at the end of three years. It is not regarded as continuing after that time.


Charles Gavan Power: I thank my hon. friend for
giving me a better reason than the one I mentioned.


[Stage Direction]
Section agreed to.
Sections 5 to 11 inclusive agreed to.
On section 12-Power to require production of documents and keeping of records.
Thomas Clement (Tommy) Douglas: Would the
Prime Minister be good enough to answer now the question I asked a few minutes ago?


Mr. HOWE:: Perhaps I may be allowed to answer the question on behalf of the Prime Minister. The provisions of the defence purchasing board will not be carried into a board set up under the WTar Measures Act. As

Department oj Munitions and Supply
stated by the Prime Minister, the defence purchasing board was a board to function in times of peace, and one requirement was that all materials should be purchased by public tender. It is perfectly reasonable and satisfactory to do that in time of peace, but it may be impossible to do it in time of war on certain occasions, and to make it mandatory that tenders shall be called, as in the defence purchasing board act, would not be practicable. Let me give an illustration. A few days ago an order came to the defence purchasing board for the purchase of a net for submarines at one of our harbours. A net for submarines was needed immediately. It was not something that we could get by tender. That is obvious. It is not a commodity sold on the ordinary market. It was necessary to make arrangements to have it constructed at once. It is obvious, therefore, that if a new board functioning in time of war were restricted to tenders, the obtaining of that veiy necessary equipment would have been impossible at the time at which it was required.
There is another factor to be considered. In time of war many materials come from outside the country. Prices in other countries are beyond our control; they may fluctuate widely. At such times it is often not possible to protect the price for a period such as is required in calling for tenders. A price may be quoted for two or three days, but with rapidly fluctuating prices no firm is likely to quote a price good for two or three weeks, and such additional time as is necessary to review tenders and to award the contract after the tenders have been analysed. Under the former act, there was a provision that profits should be limited to 5 per cent of the capital utilized for the period in which the article was produced. I have had a good deal of experience, extending over a good many years, in buying materials, and I give it as my opinion that it is impossible to lay down a uniform standard for profits with respect to a wide variety of purchases. If you could tell me the range of products, I would give from my experience what I believe to be the minimum profit which is reasonable; but unless you could tell me the range, I would not attempt to say what would be a reasonable profit for a wide variety of commodities. It depends a great deal upon the size of the plant, the amount of machinery required, the length oT" time ltr takes to produce it; and these factors are not capable of measurement by any yardstick.
The provision of 5 per cent was put in the last act after a good deal of consideration as a minimum return for the service
rendered, but it was one which men of considerable experience believed to be unworkable. I can say to my hon. friend that from that day to this the defence purchasing board has done its very best to place contracts on that basis and has used every pressure that could be brought to bear in the form of patriotism and so on, but to date it has not succeeded in placing a single contract on that basis. To carry that provision into another bill would be out of the question at this time. That part of the act we can consider as having proven to be unworkable.
The best guarantee which this government can have that profits on war material will be kept to a minimum is to place, on the board responsible for purchases, men of skill in purchasing, men of experience, men who know values, and men of absolute integrity. When the board was set up under the last act, the chairman was chosen as a man who perhaps had the widest experience in purchasing in this dominion, a man who in the ordinary course of his business had for many years been purchasing materials to the extent of around $100,000,000 a year. A man of that type, if unrestricted by the sort of provisions placed in the last act, could have saved for this government every cent it was possible to save, and at the same time he could have obtained the material which he was required to secure. I believe that the greatest safeguard this country can have, particularly at the present time, is to have adequate machinery of control such as the set-up under the present bill, and to have the measure administered by men of experience and wisdom in the particular service, men of absolute integrity.


[Stage Direction]
Section agreed to.
Sections 13 and 14 agreed to.
On section 15-Power to require protection of essential undertakings in time of war.
John Ritchie MacNicol: In line 20 on page 9 of the bill I find these words:
. . . the appropriate proportion of the expenditure of a capital nature. . . .
Would wages be included as an expenditure of a capital nature?


Charles Gavan Power: I did not quite follow my hon. friend, but I think I have an idea of what he wants to know. Subsection 2 states:
Where the person carrying on an undertaking proves to the satisfaction of the minister that directions given under this section in respect of that undertaking have been complied with within the period specified therein, or such further period as the minister may allow, there shall be paid to that person by the minister a grant equal to the appropriate proportion of
ISO	COMMONS
Department of Munitions and Supply
the expenditure of a capital nature which appears to the minister to have been reasonably incurred in complying with the directions.
If the minister were to tell a person that he must build an extension to his plant, let us say, or put in some new machinery, then an appropriate proportion of that expenditure would have to be paid by the government.


John Ritchie MacNicol: But would that include wages?


Charles Gavan Power: The labour cost of installation might be included, but I doubt whether any other labour cost would come in.


James Earl Lawson: The other labour cost is included in the goods supplied.


Charles Gavan Power: Yes.


[Stage Direction]
Section agreed to.
Sections 16 to 18 inclusive agreed to.
On section 19-Offences and penalties.
Mr. MacNEIL:: May I ask if the rights of organized labour are fully protected under this bill?


Norman McLeod Rogers: The point raised by my hon. friend is one which would naturally be raised in connection with a bill of this kind by one interested in organized labour. This point was not overlooked in the drafting of this bill. On the other hand, it was not found possible to put in any appropriate words the rights and obligations of labour in relation to the activities which might be carried on under this ministry of supply. It seems to me that one cannot go beyond this statement, that in connection with this very large reserve of power in regard to the mobilization of industry in this country, it would be natural for the minister concerned to work on a basis of consultation both with industry and with organized labour.	I have every reason to
believe that if the cooperation of labour were sought on fair and reasonable terms, cooperation would be given in generous measure. I doubt very much if it would be possible or, indeed, advisable to put into this bill any special clause dealing with the position of organized labour. I think we can depend upon the relationship ' to be worked out satisfactorily on a basis of effective consultation.


Mr. SLAGHT:: With reference to this section, which is the punitive portion of the bill, perhaps I can allay some of the fears that were expressed by the leader of the opposition in regard to the drastic nature of the bill, by pointing out that under section 11 provision is made for remuneration after arbitration. If anjmne concerned feels that he has been ad-

versely dealt with, that section is open to him. Under this section provision is made for the only method I can see of enforcing the measure, namely proceeding by summary conviction against anyone who does not comply with what are said to be drastic provisions. So we find that we have what is a basic protection against anything that might be regarded as too arbitrary in this country. Anyone proceeded against for failure to comply with the directions of the minister would have all the protection of the court in the proceedings on summary conviction and also all the protection of the appellate court on an appeal from any such summary conviction, if he felt himself to be aggrieved. I think with those safeguards we may consider that this measure well protects the subject in war-time.


Charles Grant MacNeil: I can appreciate the difficulties outlined by the Minister of Transport, and I do not wish to detain the committee at any great length, but I think some further assurance should be given in regard to the limitation of profits. It is well remembered- and I have before me some of the evidence- that a similar committee was set up during the last war, and subsequently some unsavoury evidence was brought to light showing that some of the members of the original shell committee were personally interested in firms handling large contracts for the government. One member of the board was interested in a firm which secured contracts to the value of $15,000,000. Can we have some assurance that the members of this supply board will not have any direct personal interest in any of the firms likely to secure war contracts from the government?
Another point that arose during the last war was that middlemen were allowed to operate. Anyone who has read the Memoirs of Sir Robert Borden or even the booklet issued by the Liberal party in 1917, which in condensed form points a finger at all these difficulties, will see what might arise in this connection. Actually reputable firms such as Bauer and Black, another firm making Webb standard equipment, were refused the right to do business direct with the government. That is my second point. Can we be sure that middlemen will not be allowed to take a rake-off? There was one case in which three men actually agreed to share a rake-off of a million dollars on a contract for shell fuses.
The third point on which I think we should have some assurance is in regard to the elimination of a patronage list. Before the public accounts committee of 1915-16, and before the Davidson and the Duff-Meredith commis-

Salaries Act-Amendment
sions as well, I believe the director of contracts swore that he was compelled to do business with a specified list of firms, which eventually grew to something like eight thousand. Again, if you read the evidence produced at that time, you will find that one great source of the difficulties with regard to purchasing and the scandals which subsequently arose was the patronage in placing contracts.
I bring up these three points at this time for the consideration of the government, and while the minister may not be able to give any definite assurance at the moment, could we have some general assurance with regard tc these matters?


Charles Gavan Power: We can thank the hon. member for the warning he has given us not to fall into any of the errors which may have been committed by past or present governments, or which might be committed by a government which had not been so solemnly warned as we have been to-night. It is the intention to get the very best possible men to do the work. The only assurance that can be given to my hon. friend is that we hope, in giving anyone the wide powers contained in this bill, to be able to confer them on someone who will be above all suspicion. It is the intention to deal directly with manufacturers; almost every section of the bill indicates that. Furthermore, it is the intention to inquire into all sources of supply and to mobilize all industry. I should think that if all the intentions of the bill are fully carried out, there will be no chance whatever for any middlemen. The duty of the minister is to see to it that all the industries in Canada capable of producing munitions and supplies are mobilized in such a way that these will be produced most effectively and most expeditiously. I see no room whatever for either patronage lists or middlemen. The warning which the hon. member has given us will be duly conveyed to whomever is in charge of the department. I am quite sure there will be no reason to complain of any of the evils which he foresees.


[Stage Direction]
Section agreed to.
On section 20-Regulations.
Charles Hazlitt Cahan: I suggest some change should be made here.


Charles Gavan Power: I am prepared to have an amendment moved, and would ask my colleague to move it.


Mr. LAPOINTE (Quebec East):: I move:
That after the word "act" in section 20 the following words be added: "and such regulations shall have the same force and effect as if enacted herein."


Charles Hazlitt Cahan: I think that will enable
the government by regulation to eliminate the middleman and patronage. Such regulations, if made to that end, will have the force of law.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 21-Coming into force.
John Ritchie MacNicol: May I ask a question
respecting section 6 which, I realize, has been passed? I would direct attention to lines 42, 43, 44 and 45, wherein appear the words:
. . . and generally take steps to mobilize, conserve and coordinate the economic and industrial facilities available in respect of munitions. . . .
And so on. Would that include mobilizing and perhaps compensating inventive geniuses in plants? I have in mind an inventive genius in a plant who has developed a wonderful shell lathe and who, in addition to receiving good pay was given a trip to Scotland by the proprietor of the plant so that the man might recuperate in health for many hours lying awake at night pondering over problems. I am wondering how the government will obtain the services of these geniuses if they cannot be compensated.


Charles Gavan Power: It has been suggested that perhaps the words, "conserve and coordinate the economic and industrial facilities available," might be meant to cover the case of a reward or compensation made to someone who is particularly apt at inventing objects useful in the manufacture of munitions.


John Ritchie MacNicol: That is satisfactory. Section agreed to.
Bill reported, read the third time and passed. SALARIES ACT AMENDMENT



PROVISION FOR SALARY OF MINISTER OF MUNITIONS AND SUPPLY

[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to amend the Salaries Act to provide that the salary of the Minister of Munitions and Supply shall be $10,000.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to and the house went into committee, Mr. Sanderson in the chair.
War Charities Act
John Ritchie MacNicol: And will the minister also receive the $2,000 allowance for his car?


William Lyon Mackenzie King: I think he
would be terribly disappointed if he did not.
Resolution reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce Bill No. 10, to amend the Salaries Act.


[Stage Direction]
Motion agreed to, bill read the first and second times, considered in committee, reported, read the third time and passed.


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 11, relating to war charities.
Motion agreed to and bill read the first time.
Mr. LAPOINTE (Quebec East) moved the second reading of the bill.
Some hon. MEMBERS:: Explain.


Ernest Lapointe: Mr. Speaker, I have been requested to give some explanation of this bill. During the last war, in 1917 it was found necessary to pass a similar bill for the purpose of registering all war charities and preventing abuses which had grown up in connection with subscriptions thereto. In many places throughout Canada people were being asked to subscribe to various charities which were not coordinated in any way. It was thought that it might not be necessary to introduce such a bill at the outset of the present war, and we had decided to wait until the regular session. However, people interested in these welfare subscriptions came to us and pointed out that legislation was absolutely essential. These gentlemen, many of whom were from Toronto, were quite frank in voicing their apprehension that people would be greatly embarrassed by promoters of alleged charities. Under the provisions of this bill no such fund can be started without its being registered. The present bill is much the same as the one enacted in 1917, except for a few changes suggested by those interested.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee, reported, read the third time and passed.

[Stage Direction]
Hon. J. L. ILSLEY (Minister of National Revenue) moved for leave to introduce Bill No. 12, the Excess Profits Tax Act.

Motion agreed to, bill read the first and second times, and the house went into committee thereon, Mr. Sanderson in the chair.
Section 1 agreed to.
On section 2-Definitions.
Robert James Manion: Are the definitions in this bill the same as those in the previous bill, the definition of capital, for example?


James Lorimer Ilsley: There are some changes as
improvements have been made in the" light of the experience gained under the other act. I have one or two amendments to suggest to section 2. The first sub-paragraph in subsection 2 of section 2 is lettered "(i)." I am sugegsting that this be changed to a capital "A". Then in the last line but one on. page 1 there is a sub-paragraph lettered [DOT] This is to be changed to a capital B . Then after the word "period" in line 22 on the first page the following words are to be added, "or deemed to have been received by shareholders thereof under section 13 of the Income War Tax Act." Then on page 2, line 9, tie small "(i)" is to be changed to a capital "A". I will ask my colleague, the Minister of Transport to move these amendments.


Clarence Decatur Howe: I move accordingly.


James Lorimer Ilsley: The hon. member for Rose-town-Biggar (Mr. Coldwell) asked me for certain information which I said I would give him when we were considering the bill. As I understood Lis question, it was what the tax would be in connection with ia profit of ten per cent made by a. company having a capital of $1,000. He wanted to know how much would be left in the hands of the corporation as a return. The combined income war tax and business profits tax would be $21.20. This would leave $78.80 in the the hands of the corporation, or 7-S8 per cent on the capital. Of course individual shareholders would again be taxed if their total income were sufficient.
The Ion. member for York South (Mr. Lawson) asked if these changes in the rate of corporation income tax affected non-resident owned investment corporations, and I told him I thought not. I find that is not correct. I find that the non-resident rate is changed because the rate is one-half the corporation rate, and therefore moves up with the corporation rate. When the corporation rate is raised from 15 to 18 per cent, the nonresident rate moves from 7i to 9 per cent.

Excess Profits Tax Act
The reason why I was under the other impression was that the schedule was affected not directly but indirectly, in the manner I have just mentioned.


Robert James Manion: The minister said that
certain changes were made in the definitions. Will he explain what tl'ey are?


James Lorimer Ilsley: The chief change is in paragraph (c) (ii) from lines 25 to 32. That is a limitation which did not appear, I am informed, in the other act. It provides that capital shall not include capital stock to the extent that it represents the value of good will or other intangible assets, whether paid for in cash or not, or appreciation in value of assets used in the business unless the minister is satisfied that capital values should be recognized in whole or in part to the extent that cash was used in the purchase of good will or other intangible asset. That is the chief change in the definitions.


Mr. DONNELLY:: I understood the minister to say in reply to a question asked by the hon. member for Rosetown-Biggar that on a capital of $1,000 the government got ten per cent in excess profits taxation, and that the tax actually received by the government would be $21.20. I should like to know how he arrived at that figure.


James Lorimer Ilsley: The capital is $1,000; the profit, $100, and the corporation income tax is 18 per cent; that is $18. That is allowed as a deduction before we begin to apply the excess profits tax. Therefore we start with $82 which in a way is subject to the excess profits tax. But 5 per cent is exempt from excess profits tax; that is $50 which is exempt. That leaves $32 which is subject to excess profits tax. The rate of excess profits tax between 8 and 10 per cent is 10 per cent. So the excess profits tax is 10 per cent of $32, or $3.20. Now $18 income tax and $3.20 excess profits tax gives the figure of $21.20.
Amendment (Mr. Howe) agreed to.


John Ritchie MacNicol: I would ask a question with reference to goodwill. Paragraph (c) (ii) says:
(ii) capital stock to the extent that it represents the value of good will, other intangible assets, whether paid for in cash or not, or appreciation in value of assets used in the business unless the minister is satisfied that capital values should be recognized in whole or in part to the extent that cash was used in the purchase of good will or other intangible asset.
A company might have purchased a plant five years ago, and at that time the goodwill might have been of some value, but in the meantime the company might have gone out of manufacturing the line which represented
the goodwill for which they paid cash. So the goodwill would apply to a line they had ceased to manufacture. Would that be taken into consideration under this clause?


James Lorimer Ilsley: To the extent that cash was paid for goodwill, the minister has power to allow the stock representing the goodwill to be considered as part of the capital.


John Ritchie MacNicol: Irrespective of whether the company had ceased to manufacture the line representing the good will for which cash had been paid?


James Lorimer Ilsley: The minister has that power.


John Ritchie MacNicol: He would have the power not to include it?


James Lorimer Ilsley: He has the power to include or not to include the value of the goodwill as part of the capital of the company.
Section as amended agreed to.
Section 3 agreed to.
On section 4-Deductions.


James Lorimer Ilsley: Mr. Chairman, there is a
printer's error in this section, or a bad arrangement of the clauses, which I wish to correct by an amendment. Lines 34 and 35 reading, "Dividends received from any company incorporated in Canada" should be paragraph (e) and should come immediately after (d). Paragraph (e) in the bill, which reads, "The governor in council may provide by regulation for depreciation of plant and equipment built or acquired to fulfil orders for war purposes," should be subsection 2 of section 4. It does not belong in that list of clauses at all.


Ernest Lapointe: I move
accordingly, Mr. Chairman.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 5-Exemptions.
Alan Webster Neill: Would the minister indicate
the nature of the exempted businesses alluded to in this section?


James Lorimer Ilsley: They are municipal undertakings, charitable institutions, labour organizations, mutual corporations, clubs, certain farmers' associations, credit unions, 4-K companies, farmers' cooperatives. That indicates the nature of the exemptions. I have indicated them very briefly, not comprehensively, but my description can be amplified by reference to the other act.


[Stage Direction]
Section agreed to.
Sections 6 to 11 inclusive agreed to.
Bill reported, read the third time and passed.
[Stage Direction]
European War


Walter Edward Foster: I have the honour to inform the house that I have received the following message:
Ottawa, September 12, 1939.
Sir:
I have the honour to inform you that His Excellency the Governor General will proceed to the Senate chamber on the thirteenth day of September, at 12 o'clock noon, for the purpose of proroguing the present session of parliament.
I have the honour to be, sir,
Your obedient servant,
F. L. C. Pereira,
Assistant Secretary to the Governor General.



EUROPEAN WAR


Robert James Manion: Might I ask the Prime Minister
(Mr. Mackenzie King) or the Minister of National Defence (Mr. Mackenzie) a question? I am informed that the Vancouver Sun to-day announced that two Canadian divisions are now being organized and equipped for service overseas. Is this true or is it just a rumour?


Ian Alistair Mackenzie: That is not correct.


William Lyon Mackenzie King: That the house do now adjourn and stand adjourned until 11.45 a.m. to-morrow.
Motion agreed to and the house adjourned at 11.45 p.m.
Wednesday, September 13, 1939



BUSINESS OF THE HOUSE

William Lyon Mackenzie King: Mr. Speaker, hon. members will observe that there are no orders of the day, this house having completed last night the business before it. His Excellency the Governor General is expected to arrive very shortly to prorogue parliament. It will be necessary of course to await report on bills still before the senate. At the present time I understand there remain only one or two bills to be considered by the senate.



EUROPEAN WAR


William Lyon Mackenzie King: Yesterday the hon. member for Rosetown-Biggar (Mr. Coldwell) asked a question respecting orders in council with regard to leave of absence of members of the public service, as to whether the order covered temporary employees in the service of parliament. The answer is that the order in council applies to all employees, whether' they be permanent or temporary, including as specifically asked, temporary employees of the House of Commons.



APPRECIATION OF COOPERATION IN FACILITATING BUSINESS OF SPECIAL WAR SESSION

William Lyon Mackenzie King: I shall be obliged to
leave in a minute to meet His Excellency the Governor General, who is on his way to prorogue parliament. Before I leave the chamber I should like to say just one word. I should like again to thank all members of the House of Commons, and in particular the hon. the Leader of the Opposition (Mr. Manion), and the leaders of the Cooperative Commonwealth Federation and Social Credit groups, for the helpful manner in which they have cooperated with the government in the work of the session. Without this cooperation, given in the manner in which it was, it would not have been possible to have the business dispatched as rapidly as it has been, or to have this special war session concluded within six days- of its opening.
I should like to thank, in equal measure, the Leader of the Opposition in the Senate, and all hon. members of that house, for the helpful manner in which they, too, have cooperated with myself and with the leader of the government in the Senate in the work of the present session. To accomplish the results so speedily achieved the cooperation there has been between the Senate and the House of Commons has been no less, necessary than that which happily has existed between the members themselves in their respective chambers.
What has been attained by way of effective cooperation between hon. members of both houses of parliament, with parliament in session, it should, in the national interest, be possible to have continue with equal effectiveness between the members of all parties and groups throughout Canada in the interval or time which may elapse between the close of this special war session and the re-assembling

Prorogation
of parliament. I would hope a like spirit of cooperation on the part of all might be made to prevail in our country, throughout the duration of the war.
PRIVILEGE-Mr. CHURCH



ALLEGED LACK OF OPPORTUNITY TO DISCUSS TAXING MEASURE

Thomas Langton Church: Mr. Speaker, I rise to a question of privilege. Late last night the house had before it Bill No. 8, which involved a tax on the consumption of gas and electricity. I wished to make some observations with respect to it, having waived my right on the budget to await the text of the bill. When the bill was called I asked for a copy, but there appeared to be no copies available other than a typewritten copy. The bill was passed without any opportunity for consideration. What is the use of calling parliament if we are going to pass such important bills without representatives of the people having copies before them or having anything to say in the matter?


Ernest Lapointe: The hon. member is too late.


Thomas Langton Church: As a private member I
wish to protest against this way of doing business. If this is the way we are going to do it, we might as well not assemble at all.



BUSINESS OF THE HOUSE

Ernest Lapointe: I have just received information that it may take over half an hour for the senate to dispose of its business, and I would therefore move that the sitting be suspended, to be resumed at the call of the chair. I would ask that the bells be rung when the house is ready to resume.


[Stage Direction]
Motion agreed to.
At 12.05 p.m. the sitting was suspended during pleasure.
The house resumed at 1.15 p.m.

[Stage Direction]
A message was delivered by Major A. R. Thompson, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, His Excellency the Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
In the Senate chamber, His Excellency the Governor General was pleased to give, in His Majesty's name, the royal assent to the following bills:

[Stage Direction]
An Act to incorporate The Canadian Patriotic Fund.
An Act to amend the Customs Tariff.
An Act to amend the Excise Act, 1934.
An Act to amend the Special War Revenue Act.
An Act to amend the Income War Tax Act.
An Act respecting a Department of Munitions and Supply.
An Act to amend the Salaries Act.
An Act relating to War Charities.
The Excess Profits Tax Act.
An Act for granting to His Majesty aid for National Defence and Security.
To these bills the royal assent was pronounced by the Clerk of the Senate in the following words:
In Ilis Majesty's name His Excellency the Governor General doth assent to these bills.
Then the honourable the Speaker of the House of Commons addressed His Excellency the Governor General as follows:
May it please Your Excellency:
The Commons of Canada have voted supplies required to enable the government to defray certain expenses of the public service.
In the name of the Commons, I present to Your Excellency the following bill:
"An act for granting to His Majesty aid for national defence and security."
To which bill I humbly request Your Excellency's assent.
To this bill the Clerk of the Senate, by command of His Excellency the Governor General, did thereupon say:
In His Majesty's name, His Excellency the Governor General thanks his loyal subjects, accepts their benevolence, and assents to this bill.

[Stage Direction]
After which His Excellency the Governor General was pleased to close the fifth session of the eighteenth parliament of the Dominion of Canada with the following speech: Honourable Members of the Senate:
Members of the House of Commons:
I thank you in the name of His Majesty the King for the manner in which you have responded to the demands of this critical time. In enacting measures necessary for the defence
Governor General's Speech
[Stage Direction]
of Canada you have performed a primary national obligation. In providing voluntarily for effective cooperation by Canada at the side of Britain and France in a war to resist aggression, you have made a momentous decision. The promptness with which you have acted affords unmistakable evidence of the ability of a free people, through its representatives in a free parliament, to meet the grave emergencies of war.
Members of the House of Commons:
I thank you for the appropriation you have made to meet the needs arising from the state of war.
Honourable Members of the Senate:
Members of the House of Commons:
The people of Canada will, I know, face the future with calm and resolute courage. The days of stress and strain, which lie ahead, cannot fail to prove a supreme test of national determination and endurance.
In bringing this special war session to its close, I pray that an all-wise Providence may guard and guide this land, united in an effort to do what lies within its power to help defend and preserve the liberties of mankind.
This concluded the fifth session of the eighteenth parliament.
[Stage Direction]
FIFTH (Special War) SESSION-EIGHTEENTH PARLIAMENT
(September 7-September 13)
Abbreviations:	lr., 2r., 3r. = First, second, third reading. Amdt. = Amendment. Com. =
Committee. Div. = Division. M. = Motion. Neg. = Negatived. Res. = Resolution.
Abyssinia, invasion of by Italy in 1935, references to, 25. See also references in debate on European War
Active Service, definition of, 121-25. See also discussion on War Appropriation Bill
Address in Reply to Governor General's Speech, 6-50, 51-88	.
Adoption of shall be considered as approving of government's policy of immediate participation in the European war, 31, 51
Motion for consideration, 6, agreed to, 88 Moved by Mr. Hamilton, 6; seconded by Mr. Blanchette, 10
Amendment (Mr. Laeombe), 73, negatived, 88
Motion, Mr. Mackenzie King, for engrossing and transmission to Governor General agreed to, 88
Speakers, Messieurs: Blackmore, 47; Blanchette (seconder), 10; Church, 73; Coldwell, 54; Factor, 83; Hamilton (mover), 6; Harris, 84; Heon, 79; King. Mackenzie, 18; Laeombe, 70; amendment, 73; Lacroix (Quebec-Montmorency), 75; Landeryou, 69; Lapointe (Quebec East), 64; Lawson, 87; Manion, 12; Pelletier, 76; Poole, 86; Raymond, 58; Thorson, 51; Woodsworth, 41
Aggressor Nations in Europe, conquests leading up to European war, references to, 25. See also debate on European War; War Appropriation Bill
Aircraft Manufacture in Canada for needs of Allies, references to, 35, 92. See also discussion on Munitions and Supply Bill; War Appropriation Bill
Air Force and Equipment, provision for.
See discussion on War Appropriation Bill
Albania, seizure of by Italy in April. 1939, references to, 25. See also debate on European War
Angell, Sir Norman, collective security against violence the basis of all civilization and organized society, .on, 56
Appreciation expressed by Prime Minister of cooperation of parties in facilitating business of special war session, 157, 184
Appropriation of $100,000,000 for war services. See War Appropriation Bill
Army Pay and field allowances, for every rank in 1914 and 1939, table showing, 123-24
Assistance to dependents of officers and men on active service. See Canadian Patriotic Fund
Athenia, Cunard liner, sinking of by German submarine, references to. 67, 74. See also references in discussion on European War, Participation in
Austria, invasion of by Germany, references to. See European War
Australia, discussion in parliament of sending of expeditionary force overseas, 35-36
Bank of Canada, utilization of for raising of war appropriation. See references in discussion on War Appropriation Bill
Black, Mrs. Martha Louise (Yukon)
Budget, 158
Blackmore, Mr. J. II. (Lethbridge)
Address in reply, 47
Conscription of finance, industry and man power, 48-49
[Stage Direction]
Blackmore, Mr. J. H.-Con.
Consultation with leader of government on European war, reference to, 21 Deceased members, tribute to, 5-6 European war, debate on, 47-50 State direction of finance, industry and man power, 47-48
Blanchette, Mr. J. A. (Compton)
Address in reply, seconder, 10 European war, 10-12
Bohemia, seizure of in March 1939 by Germany, references to, 25. See also debate generally on European War
Borden, Sir Robert, attitude in 1914 on outbreak of European war, 14. See also references in debate on Address; European War, Participation
Borrowing for war expenditures, method of. See discussion on Budget; War Appropriation Bill
British Columbia Government, communication from Premier T. D. Pattullo, offering to support federal government's war efforts, 37
British War Mission, arrival of from United Kingdom to survey situation in Canada, 35
Brooks, Mr. A. J. (Royal)
War appropriation bill, 122
Budget. See also the several Revenue Bills Anticipated deficit of $156,000,000 for this year, 137
Financial proposals presented by Acting Minister of Finance (Mr. Ilsley), 135-45
Debate on, 135-67
Speakers: Black, Mrs., 158; Messieurs: Coldwell, 151; Ilsley, 135; Jaques, 153; King, Mackenzie, 157; Lander-you, 158; Maclnnis, 163; Macphail, Miss, 164; Manion, 154; Pelletier, 161; amendment, 146; Stevens, 146; Woodsworth, 165
Main motion, Mr. Mackenzie King, agreed to, 167
Amendment (Mr. Pelletier) negatived, 165 Resolutions, 144
Business of the House. See House of Commons
Cahan, Hon. C. H. (St. Lawrence-St. George) Canadian Patriotic Fund bill, 124 Combines Investigation Act Amdt., 126-31
Cahan, Hon. C. H.-Con.
Income War Tax Act Amendment bill, 171 Munitions and supply bill, 173-81 War appropriation bill, 119
Canadian Legion of Honour, suggested organization of, 17
Canadian Minister to the United States,
resignation of Sir Herbert Marler, 90
Canadian Patriotic Fund Bill
(Provision for assistance to dependents of officers and men on active service)
Bill No. 2. Mr. Power
lr., 50-51; 2r., 122-23; com., 123-26; 3r., 126
Capital Gains Tax, suggested means of raising revenue for war purposes, 57. See also references in debate on European War; Income War Tax Act Amendment; War Appropriation Bill
Chamberlain, Right Hon. Neville, references to. See discussion on Address; European War
Changes to Standing Orders. See Business of the House
Children, British, suggested shelter for in Canada during war, 17, 23
China, invasion of by Japan in 1937, references to, 25. See also discussion generally on European War
Church, Mr. T. L. (Broadview)
Address in reply, 73
Canadian Patriotic Fund bill, 51, 122-23 Combines Investigation Act Amdt. bill, 129-30
European war, participation in, 73 Munitions and supply bill, 174-76 National register of man power and skilled labour, suggested, 75
Privilege, alleged lack of opportunity to discuss taxing measure, 185 Recruiting methods adopted. 119-20 War appropriation bill, 112-21
Coldwell, Mr. M. J. (Rosetown-Biggar) Address in reply, 54 Budget, 151
Cooperative Commonwealth Federation, attitude on participation in European War, 55 European war Debate on, 54
Orders in council respecting members of public service who join defence forces, 133-34
Income War Tax Act Amendment, 169-70 War appropriation bill, 110-11 Wheat prices, increase in, 56-57, 134

[Stage Direction]
Combines Investigation Act Amendment Bill
(Strengthening of procedure for investigation and prosecutions)
Bill No. 3. Mr. Rogers lr., 90; M. for 2r., 126-31; bill withdrawn, 134-35
Commitments on the part of Canada for war efforts, references to, 69. See also discussion on European War, Participation in; War Appropriation Bill
Committees of the House, proposed setting up for study of problems caused by war, 57-58
Conscription
Attitude of government and members of parliament on. See debate on Address; European War
Finance, industry and man power, advocacy of by Social Credit and New Democracy group, 47-49, 69-70, 158-63. See also rejerences in debate on Address; Budget
Military service, for. See debate on European War; War Appropriation Bill
Undertaking given by Prime Minister to parliament on March 30, 1939, 36
Constitutional Status of Canada. See references in debate on European War, Participation in
Cooperative Commonwealth Federation
Participation in European war, policy respecting, 42-43, 55-56, 105. See also rejerences in debate on Address; European War, Participation in; War Appropriation Bill
Cooperation of all Parties, in the house, during war session, reference of Mr. Mackenzie King, 157, 184
Corridor Problems, solution of. See debate on European War
Crete, Mr. J. Alphida (St. Mauriee-Lafleche) War appropriation bill, 105-06
Customs Tariff Amendment Bill
(Measure to amend Schedule A of customs tariff and amendments thereto)
Bill No. 6. Mr. Usley
res., 144, 167; lr., 170; 2r., com., 3r., 170
Czechoslovakia, invasion of by Germany, references to. See debate on Address; European War
Daladier, Premier, of France. See references in debate on Address; European War
Danzig, taking over by Germany on August 31, 1939. See references in debate on European War
Defence of Canada, measures necessary for.
See references in speeches on Address; European War; National Defence; WTar Appropriation Bill
Defence Purchasing Board, references to. See Munitions and Supply Bill
Democracies, uniting of against totalitarian states in European war. See references in debate on Address; European War
Department of Munitions and Supply, estab-
.	lishment of. See Munitions and
Supply
Dependents of soldiers, allowances for. See Canadian Patriotic Fund Bill
Donnelly, Mr. T. F. (Wood Mountain) Excess Profits Tax Act, 183
Douglas, Mr. T. C. (Weyburn)
Munitions and supply bill, 176, 178
Dubois, Mr. Lucien (Nicolet-Yamaska)
War appropriation bill, 111
Dunning, Hon. Charles, resignation of as Minister of Finance, correspondence tabled, 3-4
Election, general, not to be held under after next session of parliament, 156-58
Emergency Orders in Council, tabling of. See European War
"Equality of Sacrifice," demand of the people of Canada for, during present war, 7-8, 48, 53. See also references generally in speeches on Address; European War; War Appropriation Bill and various Revenue Bills
Equality of Status of Canada with Great Britain, expression of in action of parliament on European War, 30-31. See also references in debate on Address; European War
Ethiopia, invasion of by Italy in 1935, references to, 25. See also references in debate on European War﻿190
[Stage Direction]
Euler, Hon. W. D. (Minister of National Revenue)
Wheat prices, increase and alleged profit to speculators, 134
European War
Active service, terms of enlistment and service in the field, 121-25 Announcement respecting further proposed legislation, 89
Austria, invasion of by Germany. See under this title references in debate on Participation of Canada Canada's participation in. debate on, 6-50, 51-88
Communications from provincial premiere offering to support federal government in war efforts, 36-38
Conscription of men for military purposes, attitude of government, 36, 42. See also debate under this title on Canada's participation Correspondence between Prime Minister and leaders of Germany, Italy and Poland, text of, 29-31 Creation of voluntary service registration bureau, 132
Debate on Canada's participation in, 6-50, 51-88
Amendment (Mr. Lacombe) against participation in, 73, negatived, 88 Declaration of policy of Canada with reference to, need for, 18. See also references in debate on Address; European war; War Appropriation Bill Dependents of enlisted men, provision for, 17, 121-25
Economic assistance, policy of Cooperative Commonwealth Federation, 42-43, 55-56, 105
Emergency orders in council, tabling of, 1-3, 88, 131-132
Enlistment of men unfit for military service, necessity for guarding against, 16-17. See also references in debate on War Appropriation Bill Enlistments and recruiting for home defence and service abroad, references to, 120-22. See also discussion on War Appropriation Bill Expeditionary force, question of dispatching overseas, 35-36. 57. See also debate generally under this title on European War
Financial proposals presented by acting Minister of Finance. See Budget Government policy of immediate participation
Adoption of address in reply to Governor General's speech to be considered as approving of, 30-31, 51
European War-Con.
Government policy-Con.
Announcement of by Mr. Mackenzie King, 30-31
Increase in price of wheat and alleged profit to speculators, 56-57, 134 Members of public service joining defence forces, older in council, 133-134, 184 Military pay and field allowances of every rank in army, in 1914 and 1939, table showing, 123-24
Munich agreement of September, 1938, references to, 25. See also debate generally on European War, under this title, Debate on
Nature of present situation and outline of events since taking office by present government in 1935, 24-41 Order in council respecting members of the public service who join the defence forces, 133-134, 184
Outline of developments since prorogation of parliament on June 3, 24-41 Participation of Canada in, debate on, 6-50, 51-88
Petition against participation of Canada in, presented by, Mr. Raymond, 6; out of order, 50
Procedure in issuance of proclamation declaring existence of state of war with German Reich, 88-89
Procedure as to giving effect to decision of parliament regarding Canadian participation, 51
Recruiting of militia units in Kirkland Lake, Ontario, 133
Reported organization of divisions for service overseas, 184
Statement of Prime Minister on attitude of Canada, and outline of action of government and correspondence with belligerents, 18-41
Tabling of documents relating to outbreak of war-emergency orders in council, tabled by Prime Minister, 1-3, 88,
European War of 1914
Members still in house who were present at war session, 65
References to. See discussion on Address in reply; European War
Excess Profits Taxation Act
Bill No. 12. Mr. Ilsley
res., 145, 168-69; lr., 2r., com., 182; 3r., 183
Excise Act Amendment
(Increase in duty on distilled spirits; beer and malt liquor; malt and malt syrup; tobacco and cigarettes)
Bill No. 7. Mr. Ilsley
res., 144, 168; lr., 170; 2r., com., 3r., 170

[Stage Direction]
Expeditionary Force, question of dispatching overseas, 35-36, 57. See also references in debate on European War; War Appropriation Bill
Extra-Territorial War, opposition to participation of Canada in. See under European War, Petitions
Factor, Mr. Samuel (Spadina)
Address in reply, 83-84 European war, participation in, 83
Favouritism, elimination of from national war efforts, references to, 16-17, 22-23, 42. See also debate on Address; War Appropriation Bill
Finance, Minister of
Ralston, Hon. J. L., appointment, and resignation of Hon. Mr. Dunning, 3-4
Food Prices, rise in since outbreak of European war, references to, 56-57. See also debate generally on Address; War Appropriation Bill
France, participation in European war and attitude of Canada towards. See debate on Address; European War
French-Canadians, opposition to conscription for military service. See references in debate on Address; European War, Participation in
Gains Tax, suggested imposition of for purposes of war financing, 57. See also references in debate on European War; Budget; Income War Tax Act Amendment
Gariepy, Mr. Wilfrid (Three Rivers)
War appropriation bill, 104
Gauthier, Mr. Pierre (Port.neuf)
War appropriation bill, 111-12
General Election, not to be held before next session of parliament, 156-58
German-Russian Trade Agreement, signing of, in August, 1939, references to, 27-28. See also references in discussion on European War
Germany. See also European War Austria, invasion of, references to. See debate on Address; European War Invasion of Poland. See references in debate on European War
Government
Appointments, properly made by the administration in office, 156-57 Attitude of on European war, statement of Prime Minister, 18-41 European situation, events following taking office of Liberal government in 1935, outline of, 24-41 Ministerial changes
Appointment of Minister of Justice as acting Secretary of State, announcement, 3
Minister of Finance, resignation of Mr. Dunning and appointment of Mr. Ralston, 3-4
Outline of developments since prorogation of parliament and action of in reference to European war crisis, 24-41 Parliamentary sanction and authority for actions of in support of Canada's part in European war, references to. See discussions on Address; European War Policy as to participation in European war, decision of, 28-29. See also European War, debate on; War Appropriation Bill
Proclamation declaring existence of state of war with, 88-89
Quebec ministers, opposition to conscription, 68-69
Services, expansion and requirements because of war efforts, 91-92. See also references generally in debate on Munitions and Supply Bill; War appropriation Bill
Governor General's Speech, 1
Address in reply. See that title
Great Britain. See also European War British War Mission, arrival in Canada to make survey of situation, 35 "Canada at war when Great Britain is at war," attitude of Sir Wilfrid Laurier in 1914, references to, 14. See also * references generally in debate on Address
Children from, suggested haven for in Canada during war, 17, 23 Conference of leaders of parties in house with government, references to, 20 High commissioners, appointment of in various dominions, 117 Participation in European war, and attitude of Canada towards. See debate on Address; European War
Great War of 1914, references to. See discussion on Address; European War
[Stage Direction]
Green, Mr. H. C. (Vancouver South) Expeditionary force, question of, 100-01 Food prices, rise in since outbreak of war, 101-02
War appropriation bill, 100
Greenshields, Chief Justice R. A. E., of Quebec Superior Court, statement as to lawyers urging that Canada take no part in the war, 133
Hamilton, Mr. H. S. (Algoma West)
Address in reply, 6 European war, 6-10
Harris, Mr. J. H. (Danforth)
Address in reply, 84
European war, participation in, 84
Heaps, Mr. A. A. (Winnipeg North) Combines Investigation bill, 135 War appropriation bill, 116
Heon, Mr. G. H. (Argenteuil)
Address in reply, 79
European war, participation in, 80
High Commissioners, appointment of in British dominions, from Canada, proposed, 117
Hitler, Adolf, Reichsfuehrer of Germany Conquests of. See references in debate on Address; European War Correspondence with, test of, 29-30 Speech delivered in Reichstag May 21, 1935, on responsibility for war, 38-40
Home Defence, enlistments for, 120-21. See
also references generally in debate on War Appropriation Bill
Homuth, Mr. Karl K. (Waterloo South) Canadian Patriotic Fund bill, 126 Combines Investigation Act Amdt. bill, 130 War appropriation bill, 118
House of Commons. See also Government Business of the house Announcement respecting further proposed legislation, 89
Appreciation of cooperation in facilitating business of special war session, 157, 184 Changes in standing orders, M. (Mr. Mackenzie King) agreed to, 5 Order of, 134
Suspension of eleven o'clock rule with respect to adjournment, M. (Mr. Mackenzie King) agreed to, 178 Divisions
Address in reply, amendment (Mr. La-combe) negatived, 88 Budget, amendment (Mr. Pelletier) negatived, 165
House of Commons-Con.
Members
Deceased, tributes to Rinfret, Hon. Fernand, 5 Young, A. MacG., 5
Present at war session in 1914, still in house, 65 Privilege
Church, Mr., alleged lack of opportunity to discuss taxing measures, 185
Lacombe, Mr., declaration of Chief Justice Greenshields, 133
Howe, Hon. C. D. (Minister of Transport) Munitions and supply bill, 178-79
Hudson Bay and James Bay, possibility of establishing of enemy airplane bases in, 15
Ilsley, Hon. J. L. (Acting Minister of Finance)
Budget speech, 135-45 Customs Tariff Amendment, 167 Excess Profits Tax Act, 182-83 Government departments, increased services, 92
Income War Tax Act Amendment, 169-70 National defence services, 91-92 War appropriation bill, 91-119
Imperial Conference of 1937
Defence policies of dominions and matter of cooperation, summary dealing with, 32-34
Income War Tax Act Amendment Bill
(Imposition of war surtax of 20 per cent; corporation and joint stock companies tax; deduction from patriotic organization contributions, etc.)
Bill No. 9. Mr. Ilsley
res., 145, 169; lr., 2r., 170; com., 3r., 170-71
Industry
Effect of crippling of in countries at war, 67 Organization and mobilization of for war purposes, 8, 16. See also references in debate on Address; European Situation; War Appropriation Bill
Internal Economy Commission, personnel, 4
Isolationist Policy, effect of. See debate on Address; European War
Italy. See also references in debate on European War
Invasion of Albania by in April 1939, references to, 25. See also debate on European War
Mussolini, Premier, correspondence of Canadian Prime Minister with, text, 30

[Stage Direction]
Japan, intervention in China in 1937, references to, 25. See also references in debate on European War
Jaques, Mr. Norman (Wetaskiwin)
Budget, 153
Keith, Sir Arthur Berriedale, on right of neutrality, 107
King, Right Hon. W. L. Mackenzie (Prime Minister)
Acting Secretary of State, appointment of Minister of Justice as, 3-4 Address in reply, 18-41 M. for consideration, 1 Appreciation of cooperation of parties in house in facilitating business of special war session, 157, 184 British children, suggested bringing of to Canada dm-ing war, 23 British War Mission, arrival in Canada, 35 Business of the house
Announcement respecting further proposed legislation, 89
Changes in standing orders, M., 5, agreed to, 5
Order of, 134
Suspension of 11 o'clock rule with respect to adjournment, 178 Canadian high commisisoners in various dominions, proposed appointment, 117 Combines Investigation Act, amendment bill, 90
Cooperation of parties in house, appreciation of, 156-57, 184 Deceased members, tributes to, 5 Defence policies of Canada Speech on March 30, 1939, 34 Speech on January 25, 1937, reference to, 71
Dunning, Mr., resignation as Minister of Finance, 3-4
Election, not to be held before next session, 156-58
European war
Announcement respecting further proposed legislation, 89
Communications from provincial governments in support of federal government's war efforts, 36-38 Conscription of men for overseas service not a necessary or effective step, 35-36 Conditions confronting present government since taking of office in 1935, outline of, 24-41
Correspondence with leaders of Germany, Italy and Poland, text of, 29-30 Creation of voluntary service registration bureau, 132
Emergency orders in council, tabling, 1-3, 88, 131-32, 184
King, Right Hon. W. L. Mackenzie-Con.
European war-Con.
Expeditionary force, question of despatching overseas, 35-36
Government policy with respect to participation of Canada in, 18-41 Adoption of address to be considered as approving of, 31, 51 Announcement of, 30-32
Orders in council respecting members of public service who join the defence forces, 134, 184
Outline of developments since prorogation of parliament on June 3, 24-41
Procedure ,to give effect to decision of
[DOT] parliament regarding Canadian participation, 51
Procedure in issuance of proclamation declaring existence of state of war with German Reich, 88-89
Statement as to attitude of government and steps taken on outbreak of war, outline of, 18-41
Tabling of documents relating to outbreak of war-emergency orders in council, 1-3
Undertaking given to parliament on March 30, 1939, 36
Favouritism and political patronage, elimination from war efforts, 23
Hitler, Herr
Correspondence with, text of, 29-30
Speech of May 21, 1935, to Reichstag, on German desire for peace, 39-40
Imperial conference of 1937, defence policies of dominions, summary on, 32-34
Lapointe, Hon. Mr., appointment as acting secretary of state, 3
Leaders of political parties, difficulties in present crisis, 23-24
Manion, Mr., reference to government action in not consulting leaders of other parties, 16, 20
Marler, Sir Herbert, resignation as Canadian Minister to the United States, 90
Minister of Finance, resignation of Mr. Dunning and appointment of Mr. Ralston, 3-4
Munitions and supply department bill,
132-33, 171-78
National and local organizations, offers of support for war efforts of government, from, 38
National defence, increase in defence expenditure from 1935 to 1938-39 under present government, 26
Oaths of office bill, 1
Parliament, decision as to peace or war in hands of, 28-29
[Stage Direction]
King, Right Hon. W. L. Mackenzie-Con. Pledge given to summon parliament before committing Canada to war, references to, 6, 62. See also generally references in debate on Address Present Crisis, the, quotation from, 40-41 Profiteering in war industries, position of government, 22-23
Ralston, Mr., appointment as Minister of
Finance, 3-4
Resignation of Mr. Dunning as Minister of Finance, correspondence, 3-4 Responsibility of one holding office of Prime Minister, reference to, 24 Revenue bills, consideration of together, 170 Rinfret, Hon. Fernand, tribute to, 5	[DOT]
Royal visit, message from His Majesty the King expressing appreciation and thanks, 3
Salaries Act Amendment bill, 181-82 Social Credit Group, identification of with New Democracy, 96-97 Speech on May 24, 1938, on Canada's attitude on foreign relations, 61 Supply, committee of, notice of motion, 88 Tributes to deceased members, 5 War appropriation bill, 96 War Measures Act of 1914, powers under, 28-29
Ways and means committee, notice of, 88 Woodsworth, Mr., political views in present crisis, reference to, 23-24 Young, the late A. MacG., tribute to, 5
King George YI
Message from expressing appreciation and thanks for royal visit, 3 Radio broadcast on Sunday, September 3, 65
Kirkland Lake, Ontario, recruiting of militia units in, 133
Laconibe, Mr. Liguori (Laval-Two Mountains)
Address in reply, 70 Amendment, 73
European war, participation in, 70 Greenshields, Judge, statement as to lawyers refusing to serve, 133 War appropriation bill, 95
Lacroix, Mr. Edouard (Beauce)
War appropriation bill, 103-4
Lacroix, Mr. Wilfrid (Quebec-Montmorency) Address in reply, 75-76 European war, participation in, 75-76
Lalonde, Mr. Maurice (Labelle)
War appropriation bill, 106-08
Landeryou, Mr. J. C. (Calgary East)
Address in reply, 69 Budget, 158
European war, participation in, 69 War appropriation bill, 112
Lapointe, Right Hon. Ernest (Minister of Justice)
Acting Secretary of State, appointment as, 3 Address in reply, 64 European war, participation in, 64 Excess Profits Tax Act, 183 Greenshields, Judge, reference to, 133 His Majesty's radio broadcast on September 3, 64-65
Members present during 1914 war session, 65 Munitions and supply bill, 181 Neutrality, doctrine of, 65-67 Participation in war, attitude in 1935, references to, 62
War Charities Act Arndt, bill, 182
Laurier, Sir Wilfrid
Attitude in 1914 on cooperation with government, 92-93
Canada at war when Great Britain at war, attitude in 1914, references to, 14. See also references in debate on Address Shortage of labour in 1917, on, due to war enlistments, 57
Lawson, Hon. J. Earl (York South)
Address in reply, 87 European war, participation in, 87 Income War Tax Act Amendment, 170 War appropriation bill, 97-99, 117-18
League of Nations
Abandonment of principles of, a cause of present European War, 45-46, 56. See also references in debate on European War
Legion of Honour for Canadian service, suggested organization of, 17
Mackenzie, Hon. Ian A. (Minister of National Defence)
Enlistment and terms of service in field, 121 European war, reported organization of divisions for service overseas, 184 Militia Act, calling out of troops under, 121-22
Recruiting of militia units, practice, 133 War appropriation bill, 121-22
MacNeil, Mr. C. G. (Vancouver North) Munitions and supply bill, 180-81 War appropriation bill, 102-03
MacNicol, Mr. J. R. (Davenport)
Canadian Patriotic Fund bill, 123-25 Excess Profits Tax Act, 183 Munitions and supply bill, 177-81
Maephail, Miss Agnes C. (Gray-Bruce) Budget, 164-65

[Stage Direction]
Man Power, mobilization of for war purposes, 8. See also references in debate on Address; European War; War Appropriation Bill
Manion, Hon. R. J. (Leader of the Opposition) Address in reply, 12-18
Adoption of, to be considered as approving government policy of participation in the war, 31
British children, suggested haven for in Canada during war, 17 Budget, 154
Canadian Patriotic Fund bill, 51, 125 Cooperation with government in war activities, reference to statement on, 7, 13-15 Deceased members, tributes to, 5 Election before next session, inquiry, 156-58 Enlistment, method of, 121 European war
Canada's participation, statement on address, 12-18
Creation of voluntary service registration bureau, 132
Emergency orders in council, availability of, 132
Recruiting of militia units in Kirkland Lake, Ont., 133
Reported organization of divisions for service overseas, 184
Tabling of documents relating to outbreak, and emergency oiders in council, 3
Excess Profits Tax Act, 182-83 Government action in not calling into consultation leaders of other parties, 16 James bay, possibility of enemy air bases in, 15
Laurier, Sir Wilfrid, attitude in 1914 on European war, 14
Legion of honour for service in Canada, suggested, 17
Marler, Sir Herbert, resignation as Canadian Minister to the United States, 90 Munitions and supply bill, 176 New Democracy, affiliation with Social Credit Group, 97
Political patronage, elimination of from national efforts, 15-17
Profiteering in war contracts, statement in press by, 16
Quebec Social Credit League, res. opposing conscription, 97
Rinfret, the late Hon. Fernand, 5 Vulnerability of Canada to hostile attack, 15-16
War appropriation bill, 118-22 War service, reference of Mr. Mackenzie King, 18
Young, the late A. MacG., tributes to, 5
Manitoba Government, communication from Premier John Bracken, offering to support federal government's war efforts, 36-37	*
Marler, Sir Herbert, resignation of as Canadian Minister to the United States, 90
Memel, seizure of by Germany in March, 1939, references to, 25. See also references generally in debate on European War '
Military Pay and field allowances of every rank in army, in 1914 and 1939, table showing, 123-24
Militia Act, enlistments under sections 63 and 64, references to, 121-22
Minister of Finance, announcement of resignation of Mr. Dunning and appointment of Mr. Ralston, 3-4
Ministry. See Government
Ministry of Munitions in Great Britain, references to. Sec debate on Munitions and Supply Bill
Mitchell, Mr. A. H. (Medicine Hat)
European war, participation in, 51
. Social Credit Group, identification of with New Democracy, 96-97 War appropriation bill, 96-97
Moravia, seizure of in March, 1939, by Germany, references to, 25. Sec also debate on European War
Munich Agreement, negotiation of in September, 1938, references to, 25. See debate generally on European War
Munitions and Supply Bill
(Establishment .of department to mobilize and control resources, munitions and essential supplies)
Bill No. 5. Mr. Mackenzie King res., 132; lr., 133; 2r., 171-78; com.. 17S; 3r., 182
National and Local Organizations, offers of support from for government's war efforts, 38
National Defence. See also debate on European War; Munitions and Supply Bill
Appropriation of $100,000,000 for granting to His Majesty aid for national defence and security. See War Appropriation Bill
[Stage Direction]
National Defence-Con.
Condition of defences of country inadequate in 1935 on coming into power of present government, 26. See also references in debate on European War; War Appropriation Bill Danger of attack on Canada from hostile force, and. possibility of, 15-16. See also references in debate on Address Increase in defence expenditures from 1935 to 1938-39 under present government, 26
Measures necessary for, provision for defence of Canada. See discussion on Address; European War; War Appropriation Bill
Outline of nalure of defence services, 91-92. See also generally debate on War Appropriation Bill
National Defence and Security, appropriation of $100,000,000 for granting to His Majesty. See War Appropriation Bill
National Register of skilled labour and manpower, suggestion of Mr. Church, 75
National Service, mobilization and organization of Canadians for, 8-9, 50. See also references in debate on Address; European War; War Appropriation Bill
Nationalization of capital and industry, references to. See debate on Address; War Appropriation Bill
Neill, Mr. A. W. (Comox-Alberni)
Income War Tax Act Amendment bill, 169
Neutrality, doctrine of. See references in debate on Address; European War, debate on
Definition of by Oppenheim, 67
New Brunswick Government, communication from Premier Dysart, offering support of federal government's war efforts, 37
New Democracy. See also Social Credit Conscription of men, finance and industry, advocacy of, 54
Social Credit Party, identification with, 47, 69-70, 95-97, 158-63
Nova Scotia Government, communication from Premier A. L. Macdonald, offering to support federal government war efforts, 37
Oaths of Office Bill. Mr. Mackenzie King lr., 1;
Ontario Government, communication from Premier M. F. Hepburn, offering to
support federal government war efforts, 37
Opening of the fifth session of the eighteenth parliament, by His Excellency the Governor General, 1
Oppenheim, definition of neutrality, 67
Orders in Council, emergency, relating to . outbreak of European war. tabling by Prime Minister, 1-3, 88, 131-32, 184
Outbreak of War. See European War
Parliament. See also House of Commons
Decision of regarding Canadian participation in European war, 88-89 Procedure to give effect to, 51
Intention of government to summon in January 1940, 158
Pledge of Prime Minister to summon before committing Canada to war, references
to, 6, 29. See also generally references in debate on Address
Prorogation of the fifth session of the eighteenth parliament, 184-86
Participation of Canada in European' War. See references in debate on Address; European War
Patriotic Fund. See Canadian Patriotic Fund
Pelletier, Mr. R. A. (Peace River)
Address in reply, 76
Budget, 161 Amendment, 163
Conscription of finance, man power and industry, advocacy of, 79
European war, participation in, 76-79
Petitions. See European War; House of Commons
Plebiscite in connection with declaration of war by Canada, suggested, 62, 69. See also references in debate on European War, Participation
Poland, invasion by Germany. See also European War
Correspondence between Prime Minister Mackenzie King and President of, text, 30
Invasion of by Germany. See European War, Debate on
Political Parties and Groups. See also House of Commons
Cooperation of in house during war session, 157, 184
Leaders of, difficulty of in present war situation, 23-24

[Stage Direction]
Political Patronage, favouritism and, elimination of from national efforts, references to, 16, 22-23, 41. See also references in debate on Address; Budget; European War; Munitions and Supply Bill; War Appropriation Bill
Poole, Mr. E. J. (Red Deer)
Address in reply, 86
European war, participation in, 86
Pouliot, Mr. Jean-Frangois (Temiscouaita) Monetary system, 161 Munitions and supply bill, 132 Press report of speech .on September 11, 134 War appropriation bill, 112-17
Power, Hon. C. G. (Minister of Pensions and National Health)
Canadian Patriotic Fund bill, 50-51, 123-26 Military pay and field allowances in 1914 and 1939, table showing, 123-24 Munitions and supply bill, 178-81
Power Politics, return to in present European War, references to, 45. See also references in debate on European War
Present Crisis, the, by James Russell Lowell, quotation from by Prime Minister, 40-41
Prices, rise in since outbreak of European war, 56-57. See also references generally in debate on Addreiss; War Appropriation Bill
Prime Minister. See also King, Mackenzie Responsibility of one holding office of, reference of Mr. Mackenzie King, 24
Prince Edward Island Government, communication from Premier Thane A. Campbell, offering support of federal government's war efforts, 37
Privilege. See House of Commons
Proclamation declaring existence of state of war with German Reich, announcement by Prime Minister, 88-89
Profiteering in War, control over, 8, 15-16, 42. See also references generally in debate on Address; European War; Munitions and Supply Bill; War Appropriation Bill
Propaganda, influence of on present crisis. See discussion on European War
Prorogation of the fifth session of the eighteenth parliament, by His Excellency the Governor General, 184-86 Message from Governor General's Secretary, 184
Provinces, communications from, offering to support federal government war efforts, 36-38
Public Service, members of who join defence forces, order in council respecting,
133-34, 184
Quebec (province)
Attitude on conscription, references to. See debate on Address; European War Reference of Mr. Lapointe (Quebec East), 68-69
Social Credit League in, opposition to conscription, 97
Quelch, Mr. Victor (Acadia)
War appropriation bill, 99
Ralston, Hon. J. L., appointment as Minister of Finance, announcement, 3-4
Raymond, Mr. Maxiine (Beauharnois-La-prairie)
Address in reply, 58 European war, participation in, 58 King, Mackenzie, pledge given against Canada's participation in war, 62 War appropriation bill, 100
Recruiting, methods adopted, 119-20, 133. See also references generally in debate on European War; War Appropriation Bill
Rhineland, militarization of in 1936, by Hitler,
references to, 25-26. See also references generally in debate on European War
Robichaud, Mr. L. P. A. (Kent, N.B.) Canadian Patriotic Fund bill, 126
Rogers, Hon. N. McL. (Minister of Labour) Combines Investigation Act Amendment bill, 90, 126-31 Bill withdrawn, 134-35 Munitions and supply bill. 180
Royal Visit, message from His Majesty the King expressing appreciation and thanks, 3
Russia
German trade agreement with, references to, 27-28. [DOT] See also discussion on European War
Participation in war. See discussion on European War
[Stage Direction]
Salaries Act Amendment Bill
(Provision for salary of Minister of Munitions and Supply)
Bill No. 10. Mr. Mackenzie King res., lr., 2r., com., 3r., 181-82
Saskatchewan Government, communication from Premier W. J. Patterson, offering to support war efforts of federal government, 36
Senn, Mr. M. C. (Haldimand)
Canadian Patriotic Fund bill, 125
Slaght, Mr. A. G. (Parry Sound)
Munitions and supply bill, 180
Smuts, General Jan, Prime Minister of South Africa, on extent of participation of South Africa in European War, 55
Social Credit Party
Conscription of man power, finance and industry, advocacy of, 48, 54, 69-70, 79, 96-97. See also references in debate on European War. Participation in; War Appropriation Bill New Democracy, identification with, 47-48, 96
Quebec province in, opposition to conscription, resolution on, 97
Soldiers' Dependents, provision for. See discussion on Canadian Patriotic Fund Bill
South Africa, participation in European War, attitude on, 55
Special War Revenue Act Amendment Bill
(Excise taxes on wines, carbonic acid gas for beverages; articles exempted from consumption or sales tax)
Bill No. 8. Mr. Ilsley res., 144-45, 170; lr., 170; 2r., 170; com., 3r., 170
Speech from the Throne
Address in reply. See that title Text of, 1
Standing Orders, changes in. See House of Commons
State Direction .of finance and industry and man power under present crisis, advocacy by Social Credit Group, 48
State of War with Germany, existence of. See discussion on European War, Participation in
Status of Canada in time of war, introduction of bill in 1939 respecting, reference of Mr. Thorson, 52
Statute of Westminster, status of Canada under. See discussion on European War, Participation in
Stevens, Hon. H. H. (Kootenay East)
Budget, 146
Combines Investigation Act Amdt. bill, 128-29
Laurier, Sir Wilfrid, attitude in 1914, 92-93 War appropriation bill, 92-95
Stirling, Hon. Grote (Yale)
Canadian Patriotic Fund bill, 125
Sudetenland, campaign for annexation of, references to, 25. See also references generally in debate on European War
Supply, Committee of Notice of motion, 88
Suspension of certain standing orders. See House of Commons, Business of the House
Taxation. See also Budget and various taxation bills
Capital gains tax, proposed institution of, 57. See also references in debate on European War
Corporation income tax, increase in, 142. See also Income War Tax Act Amendment Bill
Excess profits tax. imposition of. 141-42.
See also Excess Profits Tax Act. Provision for war expenditure. Sec discussion on Budget; Customs Tariff Amendment; Excise Act Amendment; Income War Tax Act Amendment; Special War Revenue Act Amendment Suggestions of Cooperative Commonwealth Federation for war financing, 57 War profits, suggested, 8, 16. See also debate on Address in reply; European War
Thorson, Mr. J. T. (Selkirk)
Address in reply, 51-54 European war, debate on, 51-54
Totalitarianism, opposition to by democracies, references to. See also debate on Address; European War
Tributes to Deceased Members. See under House of Commons, Members, Deceased
United States
Attitude of neutrality in European War, references to. See debate on Address Munitions and Supply Bill

[Stage Direction]
Unity of Canada, maintenance of by cooperation and coordination of war efforts, 7. See also references generally in debate on Address; European War; War Appropriation Bill Maintenance of by refusal to enact conscription measure, 67-69
Universal Service, complete direction and control by the state of finance, industry and man power, advocacy by Social Credit Party, 48
Versailles Treaty, results of seen in European War to-day, 45. See also discussion on Address in reply to Governor General's Speech
Voluntary Service Registration Bureau,
creation of by order in council, 132
Walsh, Mr. W. A. (Mount Royal)
Customs Tariff Amendment, 167-68 Munitions and supply bill, 176-77
War. See European War Extra-territorial, opposition to participation of Canada in. See under European War, Petitions
Profiteering, absolute control over and taxation suggested, 8, 15-16. See also references generally in debate on Address in reply; European War
War Appropriation Bill
(Provision for granting to His Majesty aid for national defence and security)
Bill No. 4. Mr. Ilsley res., 91-100; lr., 100; 2r., com., 100; 3r., 122 Amendment (Mr. Lacroix, Quebec-Mont-morency) ruled out of order, 100
War Charities Act Amendment Bill
(Measure to provide for the registration of charities)
Bill No. 11. Mr. Lapointe (Quebec East) lr., 2r., com., 3r., 182
War Measures Act of 1914 Combines, dealing with under. See references in debate on Combines Investigation Act Amendment Bill Measures passed by dominion government under powers of, statement of Mr. Mackenzie King on August 23, 1939, 28-29. See also references in debate on European War
War Munitions and Materials. See also War Appropriation Bill
British sales to Germany in August, 1939, extent of, 60, 175
Establishment of department to mobilize and control resources, munitions and essential supplies, 132. See Munitions and Supply Bill
Nickel and scrap-iron exports to Germany and Japan, references to, 45
Organization of industrial life for production of, 8. See also discussion generally on Address; European War
Supply of, industrial equipment and accessibility to main theatres of war, 34-36.
See also references European War	in debate	onWar	Supply Board. See	Munitions	andSupply Bill	War	Surtax. See Income	War Tax	Act
Amendment
Ways and Means, committee of Notice of motion, 88
Wealth, conscription of, 42, 48, 54, 69-70, 79, 96-97. See also Social Credit
Wheat Prices, increase in and alleged profit to speculators, 56-57, 134
Woodsworth, Mr. J. S. (Winnipeg North Centre)
Address in reply, 41-47
Attitude of in present crisis, reference of Mr. Mackenzie King, 23-24 Budget, 165-67
Consultation with leader of government on outbreak of European war, reference of Mr. Mackenzie King, 21 Deceased members, tributes to, 5 European war, debate on, 41-47 Rinfret, the late Hon. Fernand, 5 War appropriation bill, 95 War, attitude on, 42-43 Young, the late A. MacG., tributes to, 5
World War. See European War
Young, the late A. MacG., 7


[Stage Direction]
September 7-September 13, 1939
3 GEORGE VI, 1939

[Stage Direction]
(Sworn in, October 23, 1935.)
Prime Minister, President of the Privy Council,
Secretary of State for External Affairs.. ..Right Hon. William Lyon Mackenzie Kino
Member of the Administration and Minister
*without portfolio	Hon. Raoul Dandurand
Minister of Mines and Resources	Hon. Thomas Alexander Crerar
Minister of Justice and Attorney General of
Canada	Right Hon. Ernest Lapointe
Minister of Public Works	Hon. Pierre Joseph Arthur Cardin
Minister of Trade and Commerce	Hon. William Daum Euler
Minister of Finance	J-Hon. Charles Avery Dunning
2Hon. James Layton Ralston
Postmaster General	1 2 3 4 5Hon. Norman Alexander McLarty
4Hon. Charles Gavan Power
Secretary of State	6Hon. Fernand Rinfret
6Right Hon. Ernest Lapointe
Minister of National Defence	7 *Hon. Ian Alistair Mackenzie
8Hon. Norman McLeod Rogers
Minister of Pensions and National Health .. 9 10 11 12Hon. Charles Gavan Power
10Hon. Ian Alistair Mackenzie
Minister of National Revenue	Hon. James Lorimer Ilsley
Minister of Fisheries	Hon. Joseph Enoil Michaud
Minister of Labour	HHon. Norman McLeod Rogers
12Hon. Norman Alexander McLarty
Minister of Transport	Hon. Clarence Decatur Howe
Minister of Agriculture	Hon. James Garfield Gardiner
Minister without portfolio	Hon. James Angus MacKinnon
1	Resigned office, September 6, 1939.
2	Appointed, September 6, 1939.
3	Appointed, January 23, 1939.
4	Appointed, September 19, 1939.
5	Died, July 12, 1939.
6	Appointed Acting Secretary of State, September 6, 1939.
7	Appointed Minister of Pensions and National Health, September 19, 1939.
3 Appointed, September 19, 1939.
3 Appointed Postmaster General, September, 19, 1939.
10	Appointed, September 19, 1939.
11	Appointed Minister of National Defence', September 19, 1939.
12	Appointed Minister of Labour, September 19, 1939.
iii
87134-AA
[Stage Direction]
Speaker 		K.C.
Deputy Speaker		
Deputy Chairman of Committees of the Whole
House	J. Frederick Johnston.
Clerk of the House		LL.D., Litt-D., F.R.S.C.
Clerk Assistant		
Sergeant-at-Arms		and Bar, M.A.
Editor of Debates		
Associate Editor of Debates .. .,	
Editor of French Debates .. ..	
Official Reporters of Debates:-	
English: H. E. Oliver, T. S. Hubbard, E. L. Featherston, C. L. Empringham, G. H. Playle, W. W. Buskard, P. H. Shelton.
French: Hector Benoit.

[Stage Direction]
Messieurs: Cote, Esling, Finn, Gauthier, Hill, Lawson, MacKinnon (Edmonton), McIntosh, McNevin (Victoria, Ont.), Mitchell, Pinard.
Chairman: Mr. Jean-Frangois Pouliot
ir

[Stage Direction]
Members of the House of Commons
Fifth (Special War) Session, Eighteenth Parliament
Hon. Pierre-Francois Casgrain, Speaker
Ahearn, Thomas Franklin-Ottawa West. Anderson, Alexander James-High Park.
Baker, Richard Langton-Eglinton.
Barber, Harry James-Fraser Valley.
Barry, John Patrick-Northumberland (N.B.) Beaubien, Arthur Lucien-Provencher. Bercovitch, Peter-Cartier.
Bertrand, Elie Oscar-Prescott.
Bertrand, Ernest-Laurier.
Black, Donald Elmer-Chateauguay-Hunt-ingdon.
Black, Martha Louise-Yukon.
Blackmore, John Horne-Lethbridge.
Blair, John Knox-Wellington North.
Blais, Frank-Chapleau.
Blanchette, Joseph Adeodat-Compton. Bonnier, Joseph Arsbne-St. Henry. Bothwell, Charles Edward-Swift Current. Bouchard, Georges-Kamouraska.
Boulanger, Oscar L.-Bellechasse.
Bradette, Joseph Arthur-Cochrane.
Brasset, Maurice-Gaspe.
Brooks, Alfred Johnson-Royal.
Brown, Albert A.-Hamilton East.
Brunelle, Herve Edgar-[DOT]Champlain.
Cahan, Hon. Charles Hazlitt-St. Lawrence-St. George.
Cameron, Charles Alexander - Hastings South.
Cardin, Hon. P. J. Arthur-Richelieu-Ver-cheres.
Casgrain, Hon. Pierre-Francois-Charlevoix-_ Saguenay.
Casselman, Arza Clair-Grenville-Dundas. Chevrier, Lionel-Stormont.
Church, Thomas Langton-Broadview. Clark, Stuart Murray-Essex South.
Clark, William George-York-Sunbury.
Clarke, Harry Gladstone-Rosedale.
Cleaver, Hughes-Halton.
Cochrane, Kenneth Judson-Cumberland. Coldwell, Major James William-Rosetown-Biggar.
1Cote, Pierre Emile-Bonaventure.
Crerar, Hon. Thomas Alexander-Churchill. Crete, J. Alphida-St. Maurice-Lafleche.
Damude, Arthur B.-Welland.
Davidson, Robert Greig-Stanstead. Deachman, Robert John-Huron North. Denis, Azellus-St. Denis.
Deslauriers, Hermas-St. Mary.
Donnelly, Thomas F.-Wood Mountain. Douglas, James Lester-Queens.
Douglas, Thomas Clement-Weyburn. Dubois, Lucien-Nicolet-Yamaska.
Dubuc, Julien Edouard Alfred-Chicoutimi Duffus, Joseph James-Peterborough West. Dunning, Hon. Charles Avery-Queens. Dupuis, Vincent-Chambly-Rouville. Dussault, Joseph Etienne-Levis.
Elliott, Hon. John Campbell-Middlesex West.
2Elliott, Otto Buchanan-Kindersley. Emmerson, Henry Read-Westmorland. Esling, William Kemble-Kootenay West. Euler, Hon. WYlliam Daum-Waterloo North. Evans, Charles Robert-Maple Creek.
Factor, Samuel-Spadina.
Fafard, J. Fernand-Montmagny-L'Islet.
Fair, Robert-Battle River.
Farquhar, Thomas-Algoma East.
Ferguson, Rork Scott-Hastings-Peterborough. Ferland, Charles Edouard-Joliette-l'Assomp-tion-Montcalm.
1	Resigned to enter Quebec provincial election, October 10, 1939.
2	Resigned, October 25, 1939.

[Stage Direction]
Ferron, J. Emile-Berthier-Maskinonge.
Finn, Robert Emmett-Halifax.
Fiset, Sir Eugene, Kt.-Rimouski.
Fleming, Harry Raymond-Humboldt. Fontaine, Th. Adelard-St. Hyacinthe-Bagot. Fournier, Alphonse-Hull.
Fournier, Sarto-Maisonneuve-Rosemount. Francceur, Joseph Napoleon-Lotbiniere. Fraser, William Alexander-Northumberland (Ont.).
Furniss, Stephen Joseph-Muskoka-Ontario.
Gardiner, Hon. James Garfield-Assiniboia. Gariepy, Wilfrid-Three Rivers.
Gauthier, Pierre-Portneuf. iGiROUARD, Wilfrid-Drummond-Athabaska. Gladstone, Robert William-Wellington South.
Glen, James Allison-Marquette.
Golding, William Henry-Huron-Perth. Gosselin, Louis-Brome-Missisquoi.
Goulet, Alfred-Russell.
Grant, Thomas Vincent-Kings.
Gray, Ross Wilfred-Lamibton West. Graydon, Gordon-Peel.
Green, Howard Charles-Vancouver South.
Hamilton, Henry Sidney-Algoma West. Hansell, Ernest George-Macleod.
Hanson, Olof-Skeena.
Harris, Joseph Henry-Danforth.
Hartigan, David James-Cape Breton South. Hayhurst, William-Vegreville.
Heats, Abraham Albert-Winnipeg North. Heon, Georges Henri-Argemteuil.
Hill, Burton Maxwell-Charlotte.
Homuth, Karl K.-Waterloo South.
Howard, Charles Benjamin-Sherbrooke. Howden, John Power-St. Boniface.
Howe, Hon. Clarence Decatur-Port Arthur. Hurtubise, Joseph Raoul-Nipissing. Hushion, William James-St. Ann. Hyndman, Alonzo Bowen-Carleton.
Ilsley, Hon. James Lorimer-Digby-An-napolis-Kings.
Isnor, Gordon B.-Halifax.
Jaques, Norman-Wetaskiwin Jean, Joseph-Mercier Johnston, Charles Edward-Bow River Johnston, John Frederick-Lake Centre
Kennedy, Orvis A.

Edmonton East.
King, Right Hon. W. L. Mackenzie-Prince Albert
Kinley, John James-Queens-Lunenburg Kirk, James Ralph-Antigonish-Guyeborough Kuhl, Walter Frederick-Jasper-Edson
Lacombe, Liguori-Laval-Two Mountains Lacroix, Edouard-Beauce Lacroix, Wilfrid-Quebec-Montmorency Lalonde, Maurice-Labelle Landeryou, John Charles-Calgary East Lapointe, Arthur Joseph-Matapedia - Ma-tane
Lapointe, Right Hon. Ernest-Quebec East. Lawson, Hon. James Earl-York South Leader, Harry-Portage la Prairie Leclerc, Joseph Hermas-Shefford Leduc, Rodolphe-Wright.
Lennard, Frank Exton-Wentworth Little, Walter-Timiskaming Lockhart, Norman J. M.-Lincoln
Macdonald, William Ross-Brantford City MacInnis, Angus-Vancouver East Mackenzie, Frederick Donald-Neepawa Mackenzie, Hon. Ian Alistair-Vancouver Centre
MacKinnon, Hon. James A.-Edmonton West 2MacLean, Alfred Edgar-Prince MacLean, Matthew-Cape Breton North-Victoria.
MacLennan, Donald-Inverness-Richmond MacMillan, John Angus-Mackenzie MacNeil, Charles Grant-Vancouver North MacNicol, John Ritchie-Davenport Macphail, Agnes Campbell-Grey-Bruce MacRae, John Donald-Glengarry McAvity, Allen Getchell-St. John-Albert. McCallum, Angus Neil-Frontenac-Adding-ton.
McCann, James J.-Renfrew South McCuaig, Duncan Fletcher-Simcoe North McCulloch, Henry B.-Pictou
1	Resigned, to enter Quebec provincial election, October 6, 1939.
2	Died, October 28, 1939.

[Stage Direction]
McDonald, George William-Souris McDonald, Wallace Reginald-Pontiac McGeer, Gerald Grattan-Vancouver-Burrard McGregor, Robert Henry-York East McIntosh, Cameron Ross-North Battleford McIvor, Daniel-Font William McKenzie, Hugh Alexander-Lambton-Kent McKinnon, Hugh Bathgate-Kenora-Rainy River
McLarty, Hon. Norman Alexander-Essex West
McLean, George Alexander-Sirncoe East McLean, Malcolm-Melfort McNevin, Bruce-Victoria (On.t.)
McNiven, Donald Alexander-Regina City McPhee, George W.-York ton Manion, Hon. Robert James-London Marsh, John Allmond-Hamilton West. Marshall, James Alexander-Camrose Martin, Paul-Essex East Massey, Denton-Greenwood Matthews, James Ewen-Brandon.
Maybank, Ralph-Winnipeg South Centre Mayhew, Robert Wellington-Victoria (B.C.) Michaud, Hon. Joseph Enoil-Restigouche-Madawaska.
Mills, Wilson Henry-Elgin.
Mitchell, Archibald Hugh-Medicine Hat. Moore, William Henry-Ontario. Motherwell, Hon. William R.-Melville. Mullins, James Patrick-Richmond-Wolfe. Mulock, William Pate-York North.
Mutch, Leslie Alexander-Winnipeg South.
Needham, Joseph-The Battlefords.
Neill, Alan Webster-Comox-Albemi.
O'Neill, Thomas James-Kamloops.
Parent, Charles-Quebec West and South. Parent, Louis Etienne-Terrebonne. Patterson, J. E. Jack-Victoria-Carleton. Pelletier, Ren£ Antoine-Peace River. Perley, Ernest Edward-Qu'Appelle.
Pinard, Joseph Albert-East Ottawa. Plaxton, Hugh John-Trinity.
Poole, Eric Joseph-Red Deer.
Pottier, Vincent Joseph-Shelbume-Yar-mouth-Clare.
Pouliot, Jean-Franqois-Temiscouata.
Power, Hon. Charles Gavan-Quebec South. Purdy, Gordon Timlin-Colchester-Hants.
Quelch, Victor-Acadia.
Raymond, Maxime-Beauharnois-Laprairie. Reid, Thomas-New Westminster.
Rennie, Almon Secord-Oxford.
Rheaume, Martial-St. Johns-Iberville-Napierville.
Rickard, Wilbert Franklin-Durham. Roberge, Eusebe-Megantic-Frontenac. Robichaud, Louis P. A.-Kent (N.B.).
Rogers, Hon. Norman McLeod-Kingston City.
Ross, Douglas Gooderham-St. Paul's.
Ross, Duncan Graham-Middlesex East.
Ross, John Gordon-Moose Jaw.
Rowe, Percy John-Athabaska.
Rowe, Hon. William Earl-Dufferin-Simcoe.
St-Pere, Edouard Charles-Hochelaga. Sanderson, Frederick George-Perth.
Senn, Mark Cecil-Haldimand.
Slaght, Arthur Graeme-Parry Sound Spence, David-Parkdale.
Stevens, Hon. Henry Herbert-Kootenay East.
Stewart, Hon. Hugh Alexander-Leeds. Stirling, Hon. Grote-Yale.
Streight, John Everett Lyle-York West.
Sylvestee, Armand-Lake St. John-Roberval.
Taylor, James Samuel-Nanaimo.
Taylor, William Horace-Norfolk.
Telford, William Pattison-Grey North. Thauvette, Joseph-Vaudreuil-Soulanges. Thompson, Thomas Alfred-Lanark. Thorson, Joseph Thorarinn-Selkirk. Tomlinson, William Rae-Bruce.
Tremblay, Leonard David-Dorchester. Tucker, Walter Adam-Rosthern.
Turgeon, James Gray-Cariboo.
Turner, John Mouat-Springfield.
Tustin, George James-Prince Edward-Lennox.
Veniot, Clarence Joseph-Gloucester.
Vien, Thomas-Outremont.

[Stage Direction]
viii
Walsh, William Allen-Mount Royal. Ward, William John-Dauphin.
Warren, Ralph Melville-Renfrew North. Weir, William Gilbert-Macdonald. Wermenlinger, Edgard Jules-Verdun.
White, Robert Smeaton-St. Antoine-West-mount.
Winkler, Howard Waldemar-Lisgar.
Wood, George Ernest-Brant.
Woodsworth, James Shaver-Winnipeg North Centre.

[Stage Direction]
Fifth (Special War) Session, Eighteenth Parliament
Acadia-Quelch, Victor.
Algoma East-Farquhar, Thomas.
Algoma West-Hamilton, Henry Sidney. Antigonish-Guysborough-Kirk, J. Ralph. Argenteuil-Heon, Georges Henri.
Assiniboia-Gardiner, Hon. James Garfield. Athabaska-Rowe, Percy John.
Battle River-Fair, Robert.
Beauce-Lacroix, Edouard. Beauharnois-Laprairie-Raymond, Maxime. Bellechasse-Boulanger, Oscar L. Berthier-Maskinonge-Fenron, J. Emile. Bonaventure-'Cote, Pierre Emile.
Bow River-Johnston, Charles Edward. Brandon

Matthews, James Ewen.
Brant-Wood, George Ernest.
Brantford City-Macdonald, William Ross. Broadview-Church, Thomas Langton. Brome-Missisquoi-Gosselin, Louis.
Bruce-Tomlinson, William Rae.
Calgary East-Landeryou, John Charles. Calgary West-1 2 3Bennett, Right Hon. Richard Bedford.
3Cunnington, Douglas George Leopold.
Camrose-Marshall, James Alexander.
Cape Breton North-Victoria-
MacLean, Matthew. Cape Breton South-Hartigan, David James. Cariboo-Turgeon, James Gray.
Carleton-Hyndman, Alonzo Bowen.
Cartier-Bercovitch, Peter. Chambly-Rouville-Dupuis, Vincent. Champlain-Brunelle, Herve Edgar.
Chapleau-Blais, Frank.
Charlevoix-Saguenay-Casgrain, Hon. Pierre-Frangois.
Charlotte-Hill, Burton Maxwell.

[Stage Direction]
Black, Donald Elmer. Chicoutimi-Dubuc, Julien Edouard Alfred Churchill-Crerar, Hon. Thomas Alexander Cochrane-Bradette, Joseph Arthur. Colchester-Hants-Purdy, Gordon Timlin. Comox-Alberni-Neill, Alan Webster. Compton-Blanchette, Joseph Adeodat. Cumberland-Cochrane, Kenneth Judson.
Danforth-Harris, Joseph Henry.
Dauphin-Ward', William John.
Davenport-MacNicol, John Ritchie. Digby-Annapolis-Kings-Ilsley, Hon. James Lorimer.
Dorchester-Tremblay, Leonard David. Drummond-Arthabaska-4Girouard, Wilfrid. Dufferin-Simcoe-Rowe, Hon. William Earl. Durham-Rickard, Wilbert Franklin.
Edmonton East-Kennedy, Orvis A. Edmonton West-MacKinnon, Hon. James A. Eglinton-Baker, Richard Langton.
Elgin-Mills, Wilson Henry.
Essex East-Martin, Paul.
Essex South-Clark, Stuart Murray.
Essex West-McLarty, Hon. Norman Alexander.
Fort William-Mclvor, Daniel.
Fraser Valley-Barber, Harry James. Frontenac-Addington-McCall-um, Angus Neil.
Gasfe-Brasset, Maurice.
Glengarry-MacRae, John Donald.
1	Resigned to enter Quebec provincial election, October 10, 1939.
2	Resigned, January 28, 1939.
3	Elected in by-election, September 18, 1939.
4	Resigned to enter Quebec provincial election, October 6, 1939.
ix
87134-BB

[Stage Direction]
Gloucester-Veniot, Clarence Joseph. Greenwood-Massey, Denton. Grenville-Dundas-Casselman, Arza Clair. Grey-Bruce-Macphail, Agnes Campbell.
Grey North-Telford, William Pattison.
Haldimand-Senn, Mark Cecil.
Halifax-Finn, Robert Emmett.
Isnor, Gordon B.
Halton-Cleaver, Hughes.
Hamilton East-Brown, Albert A.
Hamilton West-Marsh, John Allmond. Hastings-Peterborough-Ferguson, Rork Scott.
Hastings South-Cameron, Charles Alexander.
High Park-Anderson, Alexander James. Hochelaca-St. Pere, Edouard Charles.
Hull-Fournier, Alphonse.
Humboldt-Fleming, Harry Raymond.
Huron North-Deachman, Robert John. Huron-Perth-Golding, William Henry.
Inverness-Richmond-MacLennan, Donald.
Jacques-Cartier-iMallette. Vital.
2Marier, Elphege.
Jasper-Edson-Kuhl, Walter Frederick. Joliette-L'Assomption-Montcalm - Ferland, Charles Edouard.
Kamloops-O'Neill, Thomas James. Kamouraska-Bouchard, Georges. Kenora-Rainy River-McKinnon, Hugh Bathgate.
Kent (N.B.)-Robichaud, Louis P.A.
Kent (Ont.)-:!Rutherford, James Warren.
4Thompson, Arthur Lisle Kinders! ey-2 3 4 SE*1 liott, Otto Buchanan.
Kings-Grant, Thomas Vincent Kingston City-Rogers, Hon. Norman McLeod
Kootenay East-Stevens, Hon. Henry Herbert Kootenay West-Esling, William Kemble
Labelle-Lalonde, Maurice Lake Centre-Johnston, John Frederick Lake St. John-Roberval-Sylvestre, Armand Lambton-Kent-McKenzie, Hugh Alexander Lambton West-Gray, Ross Wilfred Lanark-Thompson, Thomas Alfred
Laurier-Bertrand, Ernest Laval-Two Mountains-Lacombe, Liguori Leeds-Stewart, Hon. Hugh Alexander Lethbridge-Blackmore, John Horne Levis-Dussault, Joseph Etienne Lincoln-Lockhart, Norman J. M.
Lisgar-Winkler, Howard Waldemar London-Manion, Hon. Robert James. LotbiniLre-Erancoeur, Joseph Napoleon.
Macdonald-Weir, William Gilbert Mackenzie-MacMillan, John Angus Macleod-Hansell, Ernest George Maisonneuve-Rosemount-Fournier, Sarto Maple Creek-Evans, Charles Robert Marquette-Glen, James Allison Matapedia-Matane-Lapointe, Arthur Joseph Medicine Hat-Mitchell, Archibald Hugh Megantic-Frontenac-Roberge, Eusebe Melfort-McLean, Malcolm Melville-Motherwell, Hon. William R. Mercier-Jean, Joseph Middlesex East-Ross, Duncan Graham Middlesex West-Elliott, Hon. John Campbell
Montmagny-L'Islet-Fafard, J. Fernand Moose Jaw-Ross, John Gordon Mount Royal-Walsh, William Allen Muskoka-Ontario-Furniss, Stephen Joseph
Nanaimo-Taylor, James Samuel Neepawa-MacKenzie, Frederick Donald New Westminster-Reid, Thomas Nicolet-Yamaska-Dubois, Lucien Nipissinc-Hurtubise, Joseph Raoul Norfolk-Taylor, William Horace North Battleford-McIntosh, Cameron Ross Northumberland (NJ3.)-Barry, John Patrick Northumberland (Ont.)-Fraser, William A.
Ontario-Moore, William Henry Ottawa East-Pinard, Joseph Albert.
Ottawa West-Ahearn, Thomas Franklin Outremont-Vien, Thomas Oxford-Rennie, Almon Secord
Parkdale-Spence, David Parry Sound-Slaght, Arthur Graeme Peace River-Pelletier, Rene Antoine Peel-Graydon, Gordon
2 Died, April 17, 1939.
2	Elected in by-election, December 18, 1939.
3	Died, February 27, 1939.
4	Elected in by-election, December 18, 1939.
5	Resigned, October 25, 1939.

[Stage Direction]
Perth-Sanderson, Frederick George. Peterborough West-Duffus, Joseph James Pictou-McCulloch, Henry B.
Pontiac-McDonald, Wallace Reginald. Portage la Prairie-Leader, Harry.
Port Arthur-Howe, Hon. Clarence Decatur. Portneup-Gauthier, Pierre.
Prescott-Bertrand, Elie Oscar.
Prince-iMacLean, Alfred Edgar.
Prince Albert-King, Right Hon. W. L. Mackenzie.
Prince Edward-Lennox-Tustin, George James.
Piiovencher-Beaubien, Arthur Lucien.
Qu'Appelle-Perley, Ernest Edward.
Quebec East-Lapointe, Right Hon. Ernest. Quebec-Montmorency-Lacroix, Wilfrid. Quebec South-Power, Hon. Charles Gavan. Quebec West and South-Parent, Charles. Queens-Dunning, Hon. Charles Avery.
Douglas, James Lester. Queens-Lunenburg-Kinley, John James.
Red Deer-Poole, Eric Joseph.
Regina City-McNiven, Donald Alexander. Renfrew North-Warren, Ralph Melville. Renfrew South-McCann, James J. RESTiGoucHE-MADAWASKA^-Michaud, Hon. Joseph Enoil.
Richelieu-Vercheres-Cardin, Hon. P. J. Arthur.
Richmond-Wolfe-Mullins, James Patrick. Rimouski-Fiset, Sir Eugene, Kt.
Rosedale-Clarke, Harry Gladstone. Rosetown-Biggar-Coldwell, Major James William.
Rosthern-Tucker, Walter Adam.
Royal-Brooks, Alfred Johnson.
Russell-Goulet, Alfred.
St. Ann-Hushion, William James.
St. Antoine-Westmount-White, Robert Smeaton.
St. Boniface-Howden, John Power.
St. Denis-Denis, Azellus.
St. Henry-Bonnier, Joseph Arsene.
St. Hyacinthe-Bagot-Fontaine, Th. Adelard.
St. James-1 2 3Rinfret, Hon. Fernand.
3Duroeher, Eugene
St. John-Albert-McAvity, Allan Getchell. St. Johns-Iberville-Napierville-Rheaume, Martial.
St. Lawrence-St. George-Cahan, Hon. Charles Hazlitt.
St. Mary-Deslauriers, Hermas. St-Maurice-Lafleche-Crete, J. Alphida.
St. Paul's-Ross, Douglas Gooderham. Saskatoon-4 5Young, Alexander MacGillivray.
5Brown, William George Selkirk-Thorson, Joseph Thorarinn. Shefford-Leclerc, Joseph Hermas. Shelburne-Yarmouth-Clare-Pottier, Vincent Joseph.
Sherbrooke-Howard, Charles Benjamin.
Sim cos East-McLean, George Alexander. Simcoe North-McCuaig, Duncan Fletcher. Skeena-Hanson, Olof.
Souris-McDonald, George William.
Spadina-Factor, Samuel.
Springfield-Turner, John Mouat.
Stanstead-Davidson, Robert Greig.
Stormont-Chevrier, Lionel.
Swift Current-Bothwell, Charles Edward.
Temiscouata-Pouliot, Jean-Frangois. Terrebonne-Parent, Louis Etienne.
The Battlefohds-Needham, Joseph.
Three Rivers-Gariepy, Wilfrid.
Timiskaming-Little, Walter.
Trinity-Plaxton, Hugh John.
Vancouver-Burrard-McGeer, Gerald Grattan. Vancouver Centre-Mackenzie, Hon. Ian Alistair.
Vancouver East-Maclnnis, Angus.
Vancouver North-MacNeil, Charles Grant. Vancouver South-Green, Howard Charles. Vaudreuil-Soulanges-Thauvette, Joseph. Vegreville-Hayhurst, William.
Verdun-Wermenlinger, Edgard Jules.
Victoria (B.C.)-Mayhew, Robert Wellington. Victoria (Ont.)-McNevin, Bruce. Victoru-Carleton-Patterson, J. E. Jack.
1	Died, October 28, 1939.
2	Died, July 12, 1939.
3	Elected in by-election, December 18, 1939.
4	Died, July 9, 1939.
5	Elected in by-election, December 18, 1939.

[Stage Direction]
Waterloo North-Euler, Hon. William Daum. Waterloo South-Homuth, Karl K.
Welland-Damude, Arthur B.
Wellington North-Blair, John Knox. Wellington South-Gladstone, Robert William.
Wentworth-Lennard, Frank Exton. Westmorland-Emmerson, Henry Read. Wetaskiwin-Jaques, Norman.
Weyburn-Douglas, Thomas Clement. Winnipeg North-Heaps, Abraham Albert. Winnipeg North Centre-Woodsworth, James Shaver.
Winnipeg South-Mutch, Leslie Alexander. Winnipeg South Centre-Maybank, Ralph.
Wood Mountain-Donnelly, Thomas F. Wright-Leduc, Rodolphe.
Yale-Stirling, Hon. Grote.
York East-McGregor, Robert Henry.
York North-Mulock, William Pate.
York South-Lawson, Hon. James Earl. York-Sunbury-Clark, William George. Yobkton-McPhee, George W.	[DOT]
York West-Streight, John Everett Lyle. Yukon-Black, Martha Louise.
[Stage Direction]
House of Commons deflates
[Stage Direction]
Thursday, September 7, 1939

[Stage Direction]
Speaker: The Hon. Pierre-Francois Casgrain
The parliament which had been prorogued from time to time to the second day of October, 1939, met this day at Ottawa, for the dispatch of business.