[Stage Direction]
Mr. J. J. KINLEY (Queens-Lunenburg) moved for leave to introduce Bill No. 37, to amend the Fisheries Act, 1932.

He said:	Mr. Speaker, this bill contains
an amendment to one of the qualifying paragraphs of the Fisheries Act which relates to licences for certain types of fishing. The effect of the measure I believe would be to prevent beam trawling as at present carried on.
Motion agreed to and bill read the first time.

[Stage Direction]
SURVEY AND REGISTRATION OF EX-SERVICE MEN_

Mr. C. G. MacNEIL (Vancouver North):: Mr. Speaker, I desire leave to move the adjournment of the house to discuss a definite matter of urgent public importance, namely, the public announcement this date in the press and over the radio of a nation-wide survey and registration of ex-service men for the purpose of assisting the authorities in safeguarding the internal security of Canada under conditions of international tension, and the fact that there has been no pronouncement by the government as to whether official approval has been given the scheme, or whether present conditions warrant any partial registration for national service.


Hon. IAN MACKENZIE (Minister of National Defence):: Mr. Speaker, I rise to a point of order with respect to the proposed resolution. May I say immediately that this has been a voluntary effort of cooperation-


Mr. HEAPS:: That is not a point of order.


Ian Alistair Mackenzie: I am
discussing whether or not it is a matter of urgent public importance, and I say immediately it is not. It has to do with a voluntary effort on the part of all ex-service men who have been for some time in Canada. They did approach the government with reference to this matter, and they were told that the information which would be available as a result of registration would be welcomed by the authorities. I fail to see how this attempt to anticipate what was to be a press release this evening can be regarded in any way as a matter of urgent public importance.
I deprecate the attempt by anybody to play politics with the very noble efforts of the exservice men of the Dominion of Canada.


Charles Grant MacNeil: On the point of order,
and discussing the question whether this is a matter of urgent public importance-


Mr. WALSH:: 
Mr. SPEAKER:: I am ready to give my
decision, unless the hon. member wishes to speak.


Charles Grant MacNeil: On the point of order,
Mr. Speaker; I submit that the Minister of National Defence (Mr. Mackenzie) has no right to impute motives.


Mr. CHEVRIER:: The hon. member has
no right to take up the time of the house as he has.


Charles Grant MacNeil: This announcement has
had a profound effect throughout the country. The veterans have been criticized; and I think the government should explain the situation.


Walter Edward Foster: I have the motion before
me; I have taken time to consider it, and I am ready to give my decision.


Mr. MacINNIS:: Mr. Speaker, before you
give your decision,-


Some hon. MEMBERS:: Order.


Angus MacInnis: I think this section of
the house is entitled to the same hearing that the minister received when he spoke. The minister did not raise a point of order, he explained the matter which the hon. member for Vancouver North (Mr. MacNeil) had raised. In view of what the minister has said. I think the hon. member for Vancouver North has a perfect right to state why he is raising this point in the house to-day.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, may I say
a word as to the procedure which it seems to me should be adopted where it is the intention of an hon. member to move the adjournment of the house to discuss a matter of urgent public importance? In previous sessions we have considered such matters, and it was generally understood that where a member proposed to bring forward a matter as being one of urgent public importance he should before coming into the house, submit it to the Speaker in order that his honour might have an opportunity to decide whether or not it was a matter of urgent public importance and thereby be in a position to give his opinion to the house as soon as the subject might be brought up. The question of deciding whether or not a matter is of urgent public importance rests entirely with the Speaker. I do not know if His Honour the Speaker was given this particular statement in advance, but I suggest that on future occasions when a step of this kind is contemplated the procedure be as I have outlined it, because I believe it is the procedure which would best suit the convenience of all hon. members of the house.


Walter Edward Foster: Standing order 31 states:
(1)	Leave to make a motion for the adjournment of the house (when made for the purpose of discussing a definite matter of urgent public importance) must be asked after the ordinary daily routine of business (standing order 15) has been concluded and before notices of motion or orders of the day are entered upon.
(2)	The member desiring to make such a motion rises in his place, asks leave to move the adjournment of the house for the purpose of discussing a definite matter of urgent public importance, and states the matter.
(3)	He then hands a written statement of the matter proposed to be discussed to the Speaker, who, if he thinks it in order and of urgent public importance, reads it out and asks whether fV*p mpmhftr has the leave of the house.
I have just read the motion and in my opinion the matter to which it refers is not one of urgent public importance.


Charles Grant MacNeil: With all deference, I object, and I ask hon. members supporting me to rise. I have the privilege under the rules of the house to appeal.
And more than five members having risen:


Some hon. MEMBERS:: Sit down.


Mr. LAPOINTE (Quebec East):: I ask my hon. friend to read the rules and consider carefully whether there is an appeal from such a decision of the Speaker. This is not an ordinary ruling. It is a duty which devolves upon the Speaker to say whether in his opinion
__not in any other opinion-the matter sought
to be discussed is a matter of urgent public importance. I do not think there is any appeal to the house from the decision of the Speaker as to whether this is or is not a matter of urgent public importance.


Angus MacInnis: On a point of order, Mr. Speaker-


Walter Edward Foster: Government notices of
motions.


Angus MacInnis: Mr. Speaker- Mr. SPEAKER: Orders of the day.


Charles Grant MacNeil: The rule reads:
If objection is taken, the Speaker requests those members who support the motion to rise in their places and if more than twenty members rise accordingly, the Speaker calls upon the member who has asked for leave.
(4) If less than twenty, but not less than five, members rise in their places, the question whether the member has leave to move the adjournment of the house shall be put forthwith, without debate, and determined, if necessary, by a division.
I have stated my objection, and more than five members rose in their places.


Walter Edward Foster: That may be the procedure if objection is taken when I put the

National Defence-Ex-Service Men
motion. The Speaker is here to decide points of order, and the question referred to the house is not a point of order.


Angus MacInnis: I protest against this ruling. It is absolutely not in accord with the rules by which this house proceeds.


Walter Edward Foster: I have rendered my decision and it cannot be questioned.


Angus MacInnis: But it is questioned. We appeal against your decision.


Charles Grant MacNeil: With all deference I challenge your ruling.


Angus MacInnis: This has never been done in the house before.


Mr. MANION:: Mr. Speaker, I should like to speak to this matter for a moment. I am not rising to support the hon. member (Mr. MacNeil), but with all due respect I think the hon. members to my left here are right. If five members rise, the Speaker then puts the question to the house. I may be wrong, but it seems to me that the rule is clear. It states:
He-
That is the member-
-then hands a written statement of the matter proposed to be discussed to the Speaker, who, if he thinks it in order and of urgent public importance, reads it out and asks whether the member has the leave of the house. If objection is taken, the Speaker requests those members w'ho support the motion

Objection has been taken by the minister and by the Prime Minister (Mr. Mackenzie King).
-to rise in their places and if more than twenty members rise accordingly, the Speaker calls upon the member who has asked for leave.
I take it that twenty did not rise, but five did. The next paragraph says:
If less than twenty, but not less than five, members rise in their places, the question whether the member has leave to move the adjournment of the house shall be put forthwith, without debate, and determined, if necessary, by a division.
Under my reading of the rule, the hon. members are right in their request.


Ernest Lapointe: On this new point of order, Mr. Speaker, may I say this. What my hon. friend has read applies to what takes place after the Speaker has stated that he thinks the motion is in order. Paragraph 3 of standing order 31 covers the action taken after the Speaker has accepted the motion, after he has expressed the opinion that it is in order. The rule reads:
He then hands a written statement of the matter proposed to be discussed to the Speaker, rvho, if he thinks it in order and of urgent 
public importance, reads it out and asks whether the member has the leave of the house. If objection is taken-
And so on. All that my hon. friend has read happens after the Speaker has stated that he thinks the motion for adjournment is in order. When he thinks it is not in order, that aspect of the matter ends then and there. Now, as to an appeal from the ruling, standing order 12 reads:
Mr. Speaker shall preserve order and decorum, and shall decide questions of order, subject to an appeal to the house without debate.
This is not a question of order which has been raised, and there is no appeal from the decision of the Speaker. Under standing order 31 Mr. Speaker is simply asked to state whether he thinks the matter should be submitted to the house. There is no appeal. There is no point of order there.


Angus MacInnis: There is.


Ernest Lapointe: He gives an opinion; he states whether the matter should be submitted to the house.


Mr. DOUGLAS (Weyburn):: On the point of order, standing order 31, paragraph 3 reads:
He then hands a written statement of the matter proposed to be discussed to the Speaker, wno. if he thinks it in order and of urgent public importance, reads it out-
I would point out that your honour has read it out, and by doing that recognizes it as being a matter of urgent public importance.


Ernest Lapointe: The
Speaker did not read it.


William Lyon Mackenzie King: The Speaker read it to himself, he did not read it out.
On the orders of the day:


Charles Grant MacNeil: Before the orders of the day are proceeded with I would ask the Prime Minister if this scheme has met with the approval of the government.


William Lyon Mackenzie King: I must say to my hon. friend that I do not know what scheme he means. I have not seen any scheme. If my hon. friend will put his question on the order paper I shall try to answer it.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question of the Minister of National Defence (Mr. Mackenzie)? The Prime Minister did not have any knowledge of the matteT referred to by my colleague (Mr. MacNeil), but apparently, judging from his remarks of a few moments ago, the Minister of National Defence did. May I ask

Defence Purchasing Board
him whether the subject matter of that plan has been approved by him, by his department and the government.


Ian Alistair Mackenzie: I think I have answered that question already, but if the hon. member desires any fuller information and will place a question on the order paper, I shall be only too happy to accommodate him.



NATIONAL DEFENCE


[Stage Direction]
Hon. IAN MACKENZIE (Minister of National Defence) moved that the house go into committee to consider the following proposed resolution:
That it is expedient to introduce a measure to establish a defence purchasing board with exclusive power, subject to approval of the governor in council, to enter into all contracts for the purchase of munitions, equipment, materials and supplies required by the Department of National Defence in cases where the expenditure exceeds $5,000; to provide safeguards to assure that such munitions, equipment, materials and supplies shall be purchased at a reasonable cost to the government and without unreasonable profit to any manufacturer or supplier thereof; to provide that salaries, wages and other expenses of the board shall be payable out of moneys appropriated by parliament.
To authorize the governor in council to borrow such sums of money as may be required to pay expenditures of the Department of National Defence which are chargeable to capital account in the appropriations provided by parliament for the said department; and to provide a sinking fund sufficient to retire in ten years the said sums borrowed for capital expenditures of the said department, together with interest thereon at three per cent per annum.
He said: Mr. Speaker, I think this is one of the most important resolutions that have come before the attention of this house during this or any previous session. In the first place, Mr. Speaker, it might be of interest and of benefit to every hon. member of this house if I be permitted to traverse some of the historical background of the efforts that have been made in peace and in war to meet this urgent problem of the control of munitions supplies. I proceed immediately, sir, to some of the efforts that were made in Great Britain in the years between 1914 and 1918 to deal with this question.
I cite first The Munitions of War Act of 1915, introduced into the British House of Commons by the Right Hon. David Lloyd George, which gave the government control over labour relations in the armament industry and provided for the limitation of profits in establishments which were producing munitions.
The average net profits earned in the two years immediately prior to the war were taken in that act as the basis of computation, and profits exceeding by one-fifth the average for the preceding two years were taxed at the rate of one hundred per cent. In Great Britain at that time they also had an excess profits tax which applied to all industries with certain exemptions. The average profits earned in the years prior to the war were ascertained, and profits exceeding by more than $1,000 (£200) the pre-war average profit, were taxed at the rate of fifty per cent.
Then leaving the war years, and coming down to the year 1937, hon. members of this house will recall that the present Prime Minister of Great Britain, the Right Hon. Neville Chamberlain, then chancellor of the exchequer, introduced in Great Britain what is known as the national defence contribution. Although the provisions of that legislation were drastically modified after its introduction, there is still a special tax under the legislation on the profits of all trades or businesses over a five-year period, at the rate of five per cent in the case of corporations, and four per cent in all other cases. When the profit does not exceed $10,000 (£2,000) the tax does not apply. There are, of course, some modifications and exemptions.
I come now, sir, across the Atlantic to legislation adopted in the republic to the south of us, and I refer to the Vinson Act of the United States, passed in 1934, and applying only to the United States navy. Under this legislation no contract may be made by the Secretary of the Navy unless the contractor agrees to pay into the treasury, profits in excess of ten per- cent of the contract price. Should the contractor fail to pay the treasury department levies a tax of the amount which should have been paid under the agreement. This does not apply to contracts or subcontracts of less than $10,000.
In the United States they also have an excess profits tax. which is a general tax, and profits are calculated as a percentage of the existing and declared value of the capital stock, and the rates fixed are as follows: On profits in excess of 10 per cent and not in excess of 15 per cent, the rate o'! tax is 6 per cent; on profits in excess of 15 per cent, the rate of tax is 12 per cent.
Robert James Manion: May I ask if the figures the minister has just given apply to all profits, or just to profits on munitions contracts?


Ian Alistair Mackenzie: It refers to a general tax.
I come back now to the war years in the Dominion of Canada, and will briefly mention the various pieces of legislation that were
Defence Purchasing Board

passed by the parliament of Canada and the steps taken by the government of Canada at that time to meet the very perplexing problem of profits during the years of the war.
On May S, 1915, an order in council was passed establishing the war purchasing commission, consisting of three members. This commission was given the power generally to make all contracts for the purchase of materials of war and supplies of every kind, and for transportation, payable out of the War Appropriation Act of 1915. The largest part of the work of this commission concerned the purchase of supplies for the Canadian expeditionary force. The order in council sets forth certain provisions relating to the constitution of the board and the rules governing its procedure. For example, no contract could be made by the commission except under a requisition made upon it by the department concerned; and it might be noted, sir, in contrast to the legislation to be introduced consequent upon the resolution now under consideration and discussion, that the war purchasing commission did not require the approval of the governor in council for proposed contracts, although the council did authorize the release of funds and certain specific purchases. That is to say, sir, that so long as the War Appropriation Act gave authority for a certain expenditure and upon requisition of the department concerned, the commission had the power to proceed forthwith to enter into a contract. The commission was instructed that as far as practicable tenders should be obtained and contracts given at the lowest price offered.
Another order in council was passed on February 6, 1918. This extended the functions of the war purchasing commission to cover supervision of all purchases made by all the departments of government and not merely purchases under war appropriation acts. The board did not actually do the buying itself for all the departments, but exercised a supervisory authority over the letting of contracts and the making of purchases.
In September, 1918, the war purchasing commission recommended to the Prime Minister the establishment of a permanent purchasing commission centralizing in one office all buying for the public service. The bill was introduced into the house but was later withdrawn. The war purchasing commission ceased to function on July 1, 1920.
One word with reference to the Business Profits War Tax Act. It was introduced in 1916, and it established the following principle: that profits were to be calculated on the basis of the paid up capital stock. The measure levied a tax of twenty-five per cent on the

profits of corporations in excess of seven per cent and on the profits of individuals in excess of ten per cent. In 1917 an amendment stiffened the tax rates and at the same time introduced the principle of graduation. It provided for a tax of fiftj' per cent on profits between fifteen and twenty per cent and a tax of seventy-five per cent on profits in excess of twenty per cent. In 1920 the tax was moderated considerably. The following is a schedule of the rates introduced at that time:
Below	Rate of tax
Per cent	Per cent
10	 None
10 to	15	
2015 to	20	
3020 to	30	
5030 and over	
60
The Business Profits War Tax Act as then formulated expired on December 31, 1920.
I think for the information of hon. members I might cite two extracts from these two guiding orders in council, in order that we may have an appreciation of the idea which underlay at that time the formation of these purchasing commissions. I refer to P.C. 1033 of 1915. The order in council was recommended by the Prime Minister of the day, and paragraph 13 reads as follows:
The commission may make report to the Prime Minister from time to time in reference to any matter within the scope of its duties as herein outlined, with any recommendations the commission may see fit to make; and the governor in council and the Prime Minister may require from the commission a report in regard to any of such matters.
The Purchasing Commission of Canada was created by P.C. 1561 on July 12, 1920. This order in council was also recommended by the Prime Minister, and paragraph 10 reads as follows:
The commission may make report to the Minister of Finance from time to time in reference to any matter within the scope of its duties as herein outlined with any recommendations the commission may see fit to make, and the governor in council and the Minister of Finance may require from the commission a report in regard to any such matters.
May I say in passing that this followed the soundly established practice of Great Britain, where financial contracts are always subject to the review of the treasury.


Mr. STIRLING:: May I ask the minister a question?


Ian Alistair Mackenzie: Yes.


Grote Stirling: Was the commission that he has been describing answerable in the first place to any definite minister?


Ian Alistair Mackenzie: Yes; one was answerable to the Prime Minister, and the other to the Minister of Finance. They

Defence Purchasing Board
reported in the one case to the Prime Minister and in the other case to the Minister of Finance.


Robert James Manion: To complete the record: has the minister the names of the personnel of the commissions to which he refers?


Ian Alistair Mackenzie: Not at the moment. I will get that for my hon. friend.
I come now to the purpose of the resolution, and that is the establishment of a defence purchasing board. * As hon. gentlemen will observe, there are in the resolution three fundamental features and three cardinal principles. The first is the setting up of a defence purchasing board. The second is the establishing of a basis of profit limitation upon defence contracts. The third is arranging for the financing of certain expenditures over a period of ten years with the carrying charges against ordinary accounts.
In presenting this resolution to the house, I conceive it to be my duty to review, as I have already in part reviewed, the history of the efforts which have been made and the principles established in reference to defence department purchases, and to review as far as I can in all fairness the various viewpoints and see how far we can go to establish the approach to identity of aim and unity of purpose.
In 1937 my hon. friend the leader of the Cooperative Commonwealth Federation (Mr. Woodsworth) moved a resolution in this house. One part of the three point resolution read as follows:
That at no time should Canadian citizens be permitted to make profits out of supplying war munitions or materials.
That resolution was defeated by this House of Commons on February 4, 1937. I should like again to place on the record some of the observations made by my right hon. leader the Prime Minister in the course of that debate:
I share the hon. member's abhorrence of anything in the nature of profiteering. I cannot imagine a more contemptible means of seeking to make one's fortune than by doing so at the expense of the lives of others. . . .
If there are to be no profits, I cannot think of any way in which industry can be carried on other than by its complete nationalization. . . . The choice lies between state monopoly and private industry, or partly the one and partly the other. . . .
Guns and shot and powder are not the only materials required for war. They are not the only materials that present a temptation in the matter of profits when war occurs. . . .
Are all these things to be procured only under a government owned and controlled system which will not permit of profits being made? All that could result from a policy of
that sort, if it were possible, would be the creation of a non-profit socialist island inside a competitive economy. But I doubt very much if we could get that far in Canada in a great many years, and, even if we did, whether it would be a good thing for the country. . . .
I am afraid that for a long time to come we would not recover, what in the interval we had lost in the way of individual intitative and freedom. ...	_
Government manufacture may be desirable in regard to certain kinds of essential supplies which we require continuously.
I think private industry, where it is engaged in the manufacture of munitions and war materials, has to be watched closely to see that excessive profits are not made. . . .
We should seek most carefully to control private industry, but I cannot see how, in a system of competitive industry, you can totally eliminate the possibility of some profit being made. As hon. members of the house know, there is a great variety of special articles required as war supplies and equipment. It would be going much too far not to expect these to be obtained at least in part from private concerns which would expect to make some profit. Where, however, private industry is permitted to undertake the manufacture of munitions and war supplies, I believe there should be very strict government supervision. All contracts should contain provisions which will ensure that there will be no opportunity for other than a reasonable profit. I may tell my hon. friend that this whole matter has been given very careful consideration by the government. So far as any contracts with which we may have anything to do are concerned, every effort will be made to prevent anything in the nature of undue profits being secured by those who obtain the contracts.
May I say that those who affect the socialist philosophy of government know very well-and I do not say this critically

that profits are made out of raw materials as well as out of the completely manufactured weapon. They know that the requirements of armed forces are not confined to weapons and munitions. Those requirements include every commodity produced by the industry of the country.
Perhaps I might analyse the point of view of hon. members of the National Conservative party, and if my hon. friend the leader of the opposition (Mr. Manion) does not mind I should like to refer to an address which he delivered in Toronto on December 15, in which he made some observations that were reported by the Canadian press. If they are not correct I am sure the hon. gentleman will immediately correct them. If the report is correct, however, he appeared in that address to advocate in the first place, in the manufacture of arms and munitions for Canada. government control and elimination of profits, and in the second place, in the manufacture of arms and munitions in Canada for the United Kingdom, the control of profits, presumably by the Canadian government. This address, I must admit at once, was reported by indirect narration and it is re-
Defence Purchasing Board

grettable that the exact language was not quoted in full. However, I have not seen any correction of this press report and therefore I must take it that, if the hon. gentleman does not correct it, it is accurate.


Robert James Manion: I accept- the report largely, except that I did add that I had an open mind-I do not remember my precise words- in regard to the working out of this scheme; and I pointed out as well that, owing to the fact that a large capital investment would have to be made in connection with the manufacturing of munitions, the matter would probably require further consideration. I added something to that effect.


Ian Alistair Mackenzie: I was
not finding fault with what the hon. member had said; I was merely wondering whether the report was accurate. May I quote from the report? The introductory paragraph of the press report reads as follows:
All arms and munitions needed for the direct defence of Canada should either be manufactured by the government itself, or under the complete control of the government, with profits
eliminated, the Honourable R. J. Manion	
said to-night.
That was in indirect narration. The later (paragraph, apparently covering the same subject matter, was as follows:
Doctor Manion said he offered government control and elimination of profits as an alternative to complete nationalization of armament manufacture because-
And then they quote the hon. gentleman:
" I don't like to see the governments getting too much into business and because of the large capital expenditures complete government manufacture might involve."
The meaning to be attached to the phrase "elimination of profits" is somewhat obscured, in my judgment at least, by another sentence in which the hon. gentleman is reported in direct narration as follows:
"These proposals are fair because they leave plenty of opportunity for private enterprise."
And then he is quoted again as follows:
"There should be complete control of profits in the manufacture of arms and munitions of all kinds for the United Kingdom."
Again, not speaking critically, I suggest that my hon. friend appears to advocate the elimination of profits with respect to Canadian munitions orders, and the control of profits by the Canadian government with regard to United Kingdom orders placed in Canada. May I say at once that unless the government. of Canada, as a matter of policy, refused to permit any contracts between the British government and Canadian industry, I doubt very much how far their power of regu-

lation would go, except in so far as we have powers under section 290 of the Customs Act with reference to the export of arms.
The Canadian government, in my opinion, has no status unless it assumes its complete rights to supervise or regulate the terms of contracts between the British government and industries in Canada, and of course it is necessary to get permission under the Department of National Revenue. I am subject to correction, but it appears to me, from the reference in the Toronto speech by the leader of the opposition to war-time conditions, that his argument was not fully developed in the press reports. He may have contemplated, as the government has very definitely contemplated, that different conditions should prevail with regard to the control of industry in peace time and in war time.
In the first place, he has said that nationalization might be too costly; and secondly, he is for the elimination of profits. I should rather think that what he had in mind was the elimination of excessive or unfair profits and not the elimination of profits, as reported in that address.
May I now proceed to consider for a moment remarks made by my right hon. leader (Mr. Mackenzie King) as reported in Hansard of April 2, 1937, at page 2501:
For some months past an interdepartmental committee has been going very carefully into the whole question of the control of profits, with respect to munitions of war. . . . The line upon which we have been proceeding is to attempt to draw a distinction between war materials produced in times of peace, and what may be necessary in times of war. Unquestionably, special legislation would be required in times of war.
In the third place, although he has now left us, I should like to quote the opinions of the very distinguished leader of the opposition of last year, the then right hon. member for Calgary West. Speaking in the same debate, in reference to the remarks of the hon. member for Winnipeg North Centre (Mr. Woodsworth), Mr. Bennett said:
The hon. member for Winnipeg North Centre dealt -with the question of profits made out of war. I have made many inquiries on this subject, as no doubt he has. The business profits war tax in Great Britain, for instance, was a considered method of dealing with the problem of war profits	
After very careful consideration of the whole matter by committees and by business men, Mr. Lloyd George expressed himself as being strongly of the opinion that the best method was to let the manufacturers make all the money they could, and then take it away from them by taxation	
The contention of the hon. member for Winnipeg North Centre is that all money made from war should belong to the state. That was the general principle which was in the mind of

Defence Purchasing Board
the British government, and the principle which Sir Thomas White adopted here after it had been in operation in Great Britain	
The question of maintaining the industrial life of a country during war as distinguished from its purely war activities is one which, as the Prime Minister said, is not as simple as it looks; on the contrary, it is extremely complex, for certain types of industry through the expenditure of small sums of money can be made available for producing war materials, yet that work dislocates and in some instances destroys the normal business of the enterprise. It was that fact, I believe, which was the determining factor that caused the government to proceed in the way that it did, rather than by nationalization of the whole effort in the manner advocated by the hon. member for Winnipeg North Centre, who would be glad to see it accomplished because it means socialization of industry. It is a problem which is easier to talk about than to solve...
The reason which led to the enactment in Great Britain of a business profits war tax was that it first encouraged industry to develop to the nth power and then took away from it practically the entire amount of profits referable to the war.
We did not carry it to the same extent, but we did apply the principle.
I should like next to refer to the voluminous report of the British royal commission on the private manufacture of and trading in armaments. In part 7, chapter 12, the conclusions and recommendations of that commission are summarized as follows:
1.	The most effective available means of removing or minimizing the objections to the private manufacture of and trade in arms would be the limitation of arms by international agreement.
2.	The establishment of a universal system of state monopoly of the manufacture of arms is likely to be impracticable and in present conditions the promotion of general state monopoly should not be a part of the policy of this country.
3.	The abolition of the private industry in the United Kingdom and the substitution for it of a system of state monopoly may be practicable; but it is undesirable. No sufficient case has in our opinion been made out for taking so drastic a step. We believe that the reasons for maintaining the private industry outweigh those for its abolition. We are of opinion that the necessities of imperial defence cannot be effectively met, in existing conditions, except by the maintenance in peace time of a system of collaboration between the government and the private industry of the country in the supply arms and munitions.
4.	We are of opinion that this country should continue to promote and encourage the adoption of measures for the international regulation and control of the manufacture of and trade in arms. We believe that the proposals to this end recently submitted to the League of Nations by the government of the United States afford a basis on which agreement might be reached.
5.	We recommend that the government should assume complete responsibility for the arms industry in the United Kingdom and should organize and regulate the necessary collaboration between the government and private industry; that this responsibility should be exercised through a controlling body, presided
over by a minister responsible to parliament, having executive powers in peace time and in war time over all matters relating to the supply and manufacture of arms and munitions, costing and the authorization of orders from abroad.
6.	We recommend that measures be taken to restrict the protits of armament firms in peace time to a reasonable scale of remuneration, designed not only to prevent excessive profits, but to satisfy the public that they do so.
7.	We are of opinion that the problems involved in formulating plans for the conscription of industry in war time will have to be faced, and should be faced without delay.
8.	We are of opinion that the administration of the system of licensing exports of arms should be governed by an outlook different from and more positive in character than that which now prevails; that licences should be granted only to such firms as shall have been specifically authorized to accept orders for export by the controlling body already recommended; that the grant of licences should be restricted to orders by foreign governments, supported by import licences issued by those governments which shall state that the goods will not be re-exported.
We recommend that the practice of issuing open general licences for the export of certain classes of arms, etcetera, be discontinued, that specific licences be required in all cases, and in particular that rigid control be exercised over all exports of aircraft, whether classified as military or civil.
9.	We recommend the complete cessation of the private export trade in surplus and secondhand arms and munitions of war.
Then chapter 9 of part 5 is headed: "Taking the profit out of war":
135.	The complete removal of the profit motive from private industry is in our opinion neither necessary nor desirable . . . but it is our opinion that measures ought to be taken to restrict the profits of armament firms in peace time to a scale of reasonable remuneration . . . and we believe that if the firms' profits were so limited little would remain of the objections to the continuance of the private industry that are felt by a large section of the public.
Mr. MacNICOL; Is the minister now referring to private industry manufacturing war munitions, or to all industry?


Ian Alistair Mackenzie: I am
quoting from the official report of the royal commission in Great Britain.


Mr. MacNICOL:: But it refers to what, to private industry manufacturing war munitions, or to all industry?


Ian Alistair Mackenzie: To munitions entirely.
136.	We do not propose to undertake the task of formulating specific methods for the restriction of profits in peace time. No doubt it is fraught with technical difficulty.
137.	We do not think it 'would be sufficient for the purpose we have indicated to insure that the defence departments are themselves satisfied that the profits allowed to private manufacturers under particular contracts are
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fair and reasonable. Nor do we believe that a measure of taxation, such as the excess profits tax which was enforced during and after the last war will prove satisfactory to meet the essential object in view ... It should, in our opinion be an essential characteristic of whatever system of control be adopted that, while providing reasonable remuneration on a scale sufficient to insure the cooperation of private industry in the service of imperial defence, it shall be such as shall prevent excessive profit and at the same time satisfy the public that it does so.
138.	But the control of profits in peace time is not enough. '
139.	We believe that if it were known that in the^ event of this country being involved in a major war, industry generally would be conscripted, and that everyone in the country would be required at once to put himself at the service of the state, a considerable part of the objection to the private manufacture of arms would disappear. If the state could choose the staff they wished to keep in industry and those they required to join the forces, and if, in addition, everyone from the head of a business down were given similar positions and pay, according to the work they were doing, to those serving in the forces, it would make it still more unlikely for those engaged in supplying the requirements of the state in peace time to agitate for war.
Just one or two comments on these various paragraphs. With reference to paragraph 136, it is to be noted that even the British royal commission, after extensive study, did not undertake to recommend specific methods for the restriction of profits in peace time, neither did the United States senate committee. Both commissions went on record, as would the ordinary man on the street, to the effect that profits on the production of peace time requirements of departments of defence should be restricted. The British royal commission considered that the practice was fraught with technical difficulty. With regard to the specific problem that has confronted the Department of National Defence, neither of these two formidable inquiries produced concrete suggestions that were of assistance to the minister or the government or departmental officers. What has been accomplished has been done as a result of the foresight of the government itself and the earnest devotion of the public officials who had to deal with the problem.
With reference to paragraph 137, it is suggested that it is not enough for the defence departments themselves to be satisfied that profits allowed are fair. This was recognized in Canada when steps were taken to set up an interdepartmental finance committee to consult with and advise the department on this very problem. Since early in 1937, all contracts placed other than those where competitive bids were available, have been taken up with the interdepartmental committee; all possible advice and suggestions from that committee have been obtained for the guidance

of the department, and valuable suggestions emanating from the committee have found their way into the text of the contracts let.
With reference to paragraph 137, the last sentence refers to the necessity of assuring the public that excessive profits are prevented; and this was the desire and policy of this government. At the last session more than one offer was made to refer all these contracts for complete analysis by the standing committee on public accounts, and when public controversy developed in regard to one contract, only two or three days elapsed before a royal commission was established to ensure that all the facts were made available to the public of Canada.
In regard to paragraph 139, the royal commission here calls for a declaration that more drastic regulation will be enforced in time of actual war, holding that if this were done a considerable part of the objection to the private manufacture of arms would disappear. The Prime Minister emphasized the same point, speaking in this house on April 2, 1937, as reported at page 2501 of Hansard. He said:
The line upon which we have been proceeding is to attempt to draw a distinction between war materials produced in times of peace and what may be necessary in times of war. Unquestionably special legislation would be required in time of war.
Then, in regard to the general argument with reference to private manufacture of armaments-and I am not stating my own opinions here-may I point out that appendix No. 1 of the British royal commission's report summarizes the arguments of those who are in favour of retaining private manufacture. They say:
It has been claimed,-
(1)	That to prohibit private manufacture would deprive the country of an essential part of its war potential which could not be entirely made good in other directions even were the country prepared to face the considerable additional expense that would be involved;
(2)	That under the existing system reserve equipment is maintained by the private firms and a reserve of skilled labour is available that can be utilized immediately to augment existing supplies of war material on an outbreak of war;
(3)	That the export trade maintained by the private films in peace time provides a reserve for war purposes and meanwhile reduces the overhead cost of reserve maintenance;
(4)	That nationalization of armament production would involve the government in responsibility for the maintenance of this reserve, a reserve moreover which, under national ownership, would be largely maintained in idleness having regard to the objections that would be raised against the entry of the government into an export trade in armaments or the manufacture of alternative non-armament products in competition with private industry;

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(5)	That maintenance of reserve manufacturing capacity by the government would be costly even mating allowance for the fact that under the existing system the government already pay for it, to some extent in the prices paid to the armament firms and by reason of certain direct subsidies paid to ensure the maintenance of plant which could not otherwise be maintained by the private firms;
(6)	That maintenance of reserve capacity by the government would still not ensure the availability of the essential reserve of skilled labour which the private firms are able to retain by the utilization of their employees on export orders and non-armament work;
(7)	That in many branches of armament work, e.g., in the chemical and aircraft industries, experience gained on civilian work of a similar category is beneficial; and
(8)	That to deprive the aircraft firms of experience in the manufacture of military aircraft would prejudicially affect the development of civil aircraft.


Thomas Clement (Tommy) Douglas: Before the minister goes on, may I ask what statement he has read? Is it the statement of the British war office?
Mr. MACKENZIE (Vancouver); It is appendix I of the British royal commission's report.


Thomas Clement (Tommy) Douglas: And is the minister reading it because he supports it, or agrees with it?


Ian Alistair Mackenzie: No-and I distinctly said so. I am trying to give the two sides of the case as fairly as I possibly can.
I now come to the report of the United States senate committee. As I mentioned in a former debate in the house, the majority report was for the extension of the principle of nationalization. It recommended the nationalization of manufacture of certain large items. But there was a very strong minority report as well. I wish briefly to place it on record, as well as the general findings of the majority of the United States senate committee.
The committee minority (Senators George, Vanderberg and Barbour), supporting all other findings of the committee, questions the complete nationalization of certain defence commodities, because it doubts the advantage from the standpoint of
(1)	its effect upon disarmament,
(2)	its effect upon essential national defence, and
(3)	its effect upon government costs. The committee minority believes that if large government plants are erected to provide these commodities, there will be inevitable local, political pressure to maintain these plants at full capacity production regardless of actual defence needs, and the result will be to encourage armament rather than disarmament. The committee minority believes that if all production be thus concentrated in government plants, furthermore, there will be no adequate corrolary reliance, through private manufacture,
in the event of a war emergency unless the nationalized facilities are maintained at a needlessly extravagant and dangerous rate during peace time.
The committee minority believes, on the other hand, that unless these facilities are kept on a full-time production, basis during peace years, the unit cost of production will increase to a point which will create higher costs to the government than would be available through normal, private purchase. This could be another impulse to armament rather than disarmament through anxiety to maintain maximum arms production in order to maintain minimum costs. In other words, the committee minority believes that the public welfare, from the standpoint of peace, defence, and economy, can be better served by rigid and conclusive munitions control than by nationalization except in a few isolated instances.
That was the minority report of the United States senate committee.
I come now to the committee set up in Canada by the present government. It was known as the Skelton committee, and was under the direction of one of the ablest and most brilliant civil servants in any country of the world to-day. That committee had before it, in the first place, the report of the royal commission in Great Britain, secondly the report of the United States senate committee, to which I have just referred, and, thirdly, information with respect to the difficulties already experienced at that time by the Department of National Defence, and special measures already taken by that department in connection with the problem.
May I at this point refer briefly to the findings of the Skelton committee. In the first place, with reference to the placing of the manufacture of armaments in the hands of the state, it said:
1. The committee are unable to support such a proposal as bein'* practicable under present conditions in Canada. Whether, putting aside the idea of a complete state monopoly, there might be a case for some moderate extension of present government arsenals, in order to produce, e.g., a certain limited selection of articles for which the government would be the only purchaser and might need a continuous supply, and for which no private manufacturing equipment now exists in Canada-is a matter which the government' might wish to consider as a matter of policy.


Grote Stirling: What committee is this?


Ian Alistair Mackenzie: The committee set up by the Prime Minister in January of 1937, and presided over by Doctor Skelton.


Mr. STEVENS:: Was it known as the interdepartmental committee?


Ian Alistair Mackenzie: No. This was the committee which recommended the formation of the committee we now know as the interdepartmental committee. It was

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a committee set up primarily to discuss the theories and general principles of profits control.


Mr. GREEN:: Could that report be tabled?


Ian Alistair Mackenzie: Certainly; I see no objection to its being tabled. It was part of the evidence taken before the Davis inquiry. I see no reason why it should not be placed on the table of the house-in fact, I am informed it has already been tabled. It continues:
2. It is considered impossible to generalize a rule or rules of conduct in statutory form.
That is in reference to legislation.
The range of articles needed for the forces is so wide, that to attempt such legislation, would amount to an attempt to regulate the profits of a great part of the ordinary industry of the country. The problem appears to be essentially an administrative one.
The control of profits and prevention of excess can, it is believed, be most effectively sought by means of appropriate administrative practice on the part of the departments responsible for the placing of government contracts and orders involved in the defence program.
Where a really competitive market exists, the practice long pursued of calling for competitive tenders, appears to afford an effective safeguard against undue profits. For special articles, or work where the government will be the only or the main purchaser, other methods are required. In the one or two contracts of this type which have recently been placed, the Department of National Defence have taken special steps to guard against unreasonable profits arising.
This is early in 1937.
(3) Re special contracts: While the committee do not believe that any single hard and fast rule can be laid down* it is reasonable to assume that by careful study certain useful financial principles and safeguards might be evolved for each type of contract which may arise. It is suggested that there be instituted a standing interdepartmental financial committee to assist the officials charged with the placing of contracts under the defence program, the committee to be representative of the contracting departments and the Departments of Finance and National Revenue, and others, if considered desirable.
Such a committee might study and classify the requirements of the defence program from the financial point of view, and formulate and advise upon the financial principles or safeguards to be observed in placing contracts of various types, and as to rules of procedure. It might also be available for consultation upon the financial aspects of any unusual specific cases or conditions arising from time to time. It would be limited to this function of assisting in the prevention of undue profits.
Re Special considerations. The commissioner of income tax attached a separate report dealing with certain technical provisions, recommending that as a result of certain defects in the Business Profits War Tax Act of the last war, certain precautionary measures, with regard to capitalization and set-up of companies receiving armament contracts, be taken.

The committee recommended that there be referred to the interdepartmental committee,
(a)	Mr. Elliott's special recommendations.
(b)	The advisability of inserting in all contracts not awarded through competitive tendering, a stipulation granting to government inspectors or auditors, complete access to the contractors' books and records.
(e) The extent to which costing principles established in government arsenals or factories might be effective, in facilitating the control of the costs and profits of private manufacturers.
Re Publicity. The committee believe it important not only to ensure that contractors will be limited to reasonable profits, but also to satisfy the public that safeguards in this sense are being provided. It is, therefore, suggested that on some appropriate occasion, the House of Commons be informed in this regard.
Just a comment or two on these findings. As suggested in No. 1, the government is making the maximum use of its own arsenal plants. I say that deliberately. The advice given me by the officials of the Department of National Defence and by the highest ranking officers, those who are in favour of the principle of public ownership, in regard to the development of the Lindsay arsenal is that until we proceed with the filling group and the ammunition group at Valcartier, until we have made Quebec available, we should not proceed with the development of the Lindsay arsenal as planned for the manufacture of small arms ammunition. It must be kept in reserve. However, since this government came into office the production of our necessities at the arsenals at Quebec and Valcartier has been increased by four, six or seven times. We have made a modest beginning at the arsenal at Lindsay and it is my fervent desire that as soon as possible we should proceed with the further development of the facilities at Lindsay.


Mr. McNEVIN:: Did the minister subscribe fully to the suggestion of the committee that the further development of the Lindsay arsenal be not proceeded with until the filling group at Valcartier had been gone ahead with?


Ian Alistair Mackenzie: I do
not pretend to be an expert on military affairs. That information was given to me by the highest ranking officers, and naturally I accepted their opinion at the time. I say this to my hon. friend, that the production of small arms and ammunition has been increased so much in the other arsenals at our disposal that in my judgment the old objections with regard to Lindsay have disappeared completely.
The second conclusion of the Skelton committee, that the problem must be solved by administrative means, appears to coincide with

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the conclusion of the British royal commission, which admitted that the problem was fraught with difficulty. The problem is a new one, at least so far as Canada is concerned, and we can hope for progress only by experience. The department welcomes every constructive suggestion, but those emanating from outside the department have so far not been very constructive.
With regard to the third suggestion, the interdepartmental committee was set up and has cooperated with the department for the past two years. In that time this committee has passed upon contracts totalling in the neighbourhood of $10,000,000. In regard to the fourth suggestion, Mr. Fraser Elliott's recommendation that the capitalization of companies be closely watched, this is reflected in the provisions of one contract which restrain the company from selling shares without the consent of the minister. This is the first time in the history of Canada that any such provision has been incorporated in a government contract. With regard to No. 5, which dealt with publicity, both the Prime Minister and the Minister of National Defence explained the situation very fully to the house in 1937.


Robert James Manion: Could the minister tell us offhand the name of the company to which he refers that was limited with regard to the sale of stock?


Ian Alistair Mackenzie: I was referring to the John Inglis Company.
I do not think I shall take the time of the house to deal fully with the machinery which has been adopted to give every possible safeguard by the Department of National Defence. I shall refer only to one contract which was let before the interdepartmental committee was established. I shall outline the precautions which were taken by the department before the committee was set up and which I think were commented upon by the Skelton committee in the extracts which I have submitted to this house.
The special provisions introduced in this contract were numerous. It was stipulated that in the event of emergency the crown could diminish or increase the number of aircraft covered by the contract. It was stipulated that the crown could take over the plant and require that, in substitution for aircraft, other articles capable of being manufactured by the contractor be supplied. Under a supplementary agreement it was provided that if orders at a lower price were accepted from others for similar aircraft, the price to the crown would be reduced proportionately. It was provided that to the extent that the 71492-1X1
cost of any special machinery, tools, dies, et cetera, was included in the purchase price of aircraft covered by the first contract, the purchase price of similar aircraft in any succeeding contract would be reduced accordingly. It was provided that in the event of the company entering into any other contract, the crown should have the right to have its aircraft manufactured in priority.
These were safeguards of an entirely new type devised by the department itself to protect the public interest. To my mind, which may be prejudiced, they indicate that the department, in pioneering a new field and in seeeking to develop for the security of this country an entirely new industry, was using its utmost ingenuity to keep strict control over the industry. It should be stated that in negotiating the price of the aircraft, both the government and the company had the advantage of knowing the costs in the old country where the parent airplanes were being manufactured, and it was possible to arrive at an approximate estimate of the extent to which these costs would be varied by Canadian conditions.
Then, as to national ownership, I wish to say a word or two as to some of the difficulties which might confront the Department of National Defence should we accept the principle of national ownership. In the old days it was the practice of the Department of National Defence to procure most of its technical equipment by purchase from the war office, the admiralty or the air ministry. During the war of 1914-18, Canada, as we all know, produced large quantities of munitions, but it is sometimes not realized that although the quantity was large the varieties were within a very narrow range. Canada employed her industrial resources in the production of shells, and to some extent, explosives. Weapons were not manufactured in Canada, and, with the exception of the Ross rifle, never have been.
When the present government took office the dominion arsenal at Quebec was equipped for the manufacture of small arms ammunition and of some of the components of certain limited types of light artillery ammunition. The Lindsay arsenal had been closed down since the war. The department had on order from the old country a number of articles of technical equipment, but the present government was advised that the delivery date would be several years in the future. The practice of the department being to order its requirements from the old country, we speedily learned that this was not going to be possible or practicable with regard to any speedy

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measures of improving the defences of Canada. Great Britain, as we all know, had embarked on a heavy rearmament program and was utilizing the full resources of her own industrial capacity.
The department was faced with the necessity of developing sources of production within' Canada for articles of military equipment never before produced in this country. The question whether production should be by expansion of the government's own arsenal plants or by the utilization of private industry was very carefully and very seriously considered. As I suggested in my remarks before the royal commission, there were two schools of thought in the Department of National Defence. Certain senior officers were strongly in favour of the development of government arsenals. Others of equal senior rank pointed out that the capital cost of constructing and equipping the several plants advocated would fun between $30,000,000 and $35,000,000. These officers considered that having regard to the probable funds available the cost and delay involved in proceeding by state manufacture would be prohibitive.
The matter was then considered at great length by the government. I think I am safe in saying that on principle the government favoured state manufacture. However, at that time we were faced with a most serious financial problem. There had been a long series of heavy budgetary deficits in Canada between 1930 and 1935, and there was at that time the utmost necessity of restoring public finance at least to a state of approximate equilibrium. The funds made available for the Department of National Defence in each of the years 1937 and 1938 totalled approximately $35,000,000.
The decision made then was to proceed with the expansion of the dominion arsenal with respect to the production of commodities for which a fairly constant demand over the years might be anticipated. This ensured that full use would be made of any expenditures on capital account and that continuous employment would be afforded to skilled labour assembled for the purpose.
With regard to the very large scheme of erecting plants for the manufacture of small arms, artillery guns and other costly technical equipment for which the total requirements of the country were limited, this is best illustrated by the results of the decision reached. Had we, Mr. Speaker, adopted the suggestion made by some hon. members of the house at that time when the estimates were before it, of state production along the lines suggested by those who were advocating

this grand arsenal scheme in the dominion, that entire $30,000,000 during the past three years would have been required to construct and equip the necessary plants. What would we have lost? Instead of that we have acquired:
1.	Four new destroyers and four minesweepers for the navy, and
2.	Two hundred new aircraft.
3.	We have established a system of fortifications on the Pacific coast, to be completed next year.
4.	We have doubled the strength of our naval and air forces.
5.	We have purchased a great deal of miscellaneous equipment for the militia.
6.	We have increased the training of our militia forces in Canada.
7.	We have developed new air stations and have augmented the facilities at the stations already established.
8.	We have greatly increased the production of munitions, and we have augmented our supplies of all kinds of ammunition and other necessary military equipment.
Had we used our money on the construction of arsenals, we should have had none of this equipment with the funds at our disposal. I leave it as a cold business proposition to the fair and unbiased judgment of hon. members of this house.
9.	During the last three years we have increased the output of the Quebec arsenal from four to six or seven times what it was in several commodities when we took office.
10.	The government's own plants have been used for assembling anti-gas respirators, an operation never before undertaken in Canada.
11.	We have begun the utilization of the Lindsay arsenal after twenty years of idleness, and propose that that development shall be continued and extended.
I come now to another point. I have been criticized in this house and outside with reference to not calling for competitive bids. I wish for a moment or two to compare the records of the two governments. The first instructions I gave to my officials in 1935 when I assumed the office of Minister of National Defence were that tenders were to be invited by advertisement wherever possible in regard to contracts over $5,000. Contracts, Mr. Speaker, in the Department of National Defence, may be handled in five ways:
1.	By public advertisement.
2.	Through selected bidders.
3.	Through the war office, admiralty and air ministry.

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4.	Through sole manufacturers. This is usually for the replacement of parts.
5.	Through submission to the interdepartmental committee in certain circumstances where competition is considered unavailable.
Where the department has to deal with sole competitors or with a particular manufacturer, there is no choice. There was no interdepartmental committee to review contracts in the days of the previous administration, so that method can be left aside for comparative purposes. But where competition is possible it is desirable that the widest possible competition be obtained, and the present government decided, having regard to the record of the previous administration, that there should be a change of practice.
Taking only those cases, in contracts over $5,000, where competition is possible, the following is the record of the late administration during the four and a half years from April 1, 1931, to October, 1935.
Mr. MacNiICOL: The minister is starting something new. What is the use of rehashing what has been done prior to 19357


Ian Alistair Mackenzie: I thoroughly appreciate and welcome the sentiment my hon. friend has expressed; if that is the attitude he is going to take I appreciate it. But we have been criticized for not calling for competitive bids, and I thought it only fair to put the essential facts upon the record so that they would be available.
The late administration during the four and a half years from April 1, 1931, to October, 1935, let contracts as follows:
1.	By public advertisement, eleven contracts, totalling $736,874.
2.	By selected bidders, from selected lists, 284 contracts, totalling $5,013,502. In other words, Mr. Speaker, of the contracts available for competition where the amount involved was more than $5,000, the late government let by public advertisement:
1.	By number of contracts, less than 4 per cent (3-7 per cent).
2.	By dollar value, only 13 per cent.
They gave to selected bidders more than ninety-six per cent of their contracts, representing eightv-seven per cent in value of those available for public tender. Altogether, of contracts available for bidding, they let 295, to the value of $5,751,377. In five and a half years, under the previous administration, only eleven contracts, representing $736,874 out of $5,751,377, were offered to public bidding in the dominion.
Now we, sir, have let in three years in office, by competitive bidding, contracts to the value of $12,677,367. In three years and two months, down to December 31, 1938, the present government let 135 contracts by public advertisement as compared with eleven contracts in five and a half years under the previous administration.


Henry Herbert Stevens: Amounting to how much?


Ian Alistair Mackenzie: I am
coming to that. In five and a half years, the previous government let contracts of a value of only $736,000 by public advertisement-


Thomas Clement (Tommy) Douglas: Would the
minister give the amounts?


Mr. DUNNING:: Just be patient and
you will get it all.


Ian Alistair Mackenzie: While
in five and a half years the previous government let only $736,000 by public advertisement the present government let $7,785,000 in just over three years.
Of contracts available for tender the previous government held 87 per cent, by value, for selected bidders, and threw open only 3-7 per cent for public advertisement. The present government has let 60 per cent, by value, by public advertisement, and only 40 per cent to selected bidders.
The present government let 135 contracts by public advertisement in three years, while the previous government let eleven contracts by public advertisement in five and a half years. The previous government threw open to public competition $736,000, or 13 per cent, while the present government threw open to competition $7,785,000, or 60 per cent.
But apart from the contracts referred to the interdepartmental committee, what is of special interest is this, that of the eleven contracts for which the previous administration invited public tenders through advertisement, no fewer than nine were in their first year of office, when they were fresh from the electors. After that first year, in four and a half years, the previous government only twice submitted defence contracts to public tender, for a total amount of $448,884. No public bids were invited in 1932-33; no public bids were invited in 1933-34; and only once in 1934-35, and again in 1935-36, did the previous government ask for public bids on defence contracts.
But what is the progressive record of the present government? This government let by competitive bids:
1.	In the balance of 1935-36, 7 contracts.
2.	In 1936-37, 31 contracts.
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3.	In 1937-38, 38 contracts.
4.	In 1938-39 (nine months only), 59 contracts.
Perhaps, therefore, Mr. Speaker, I may be forgiven if I am fairly sensitive when this government is accused of favouring pets and favourites when calling for tenders.


Robert James Manion: I do not know anything
about this record, and I cannot discuss it, but would the minister give us a little more detail in regard to the selected lists on both sides? I assume my hon. friend has had selected lists.


Ian Alistair Mackenzie: Yes. I said forty per cent.


Robert James Manion: Would he explain to the house, as a matter of information, how the selected lists were chosen, both by the late government and by the present one?


Ian Alistair Mackenzie: Yes. I think the general procedure is this. You are building in Calgary, let us say. There are before the department a number of potential contractors, say seven or nine. You invite them to tender. The contract is not advertised in the press; it is a closed list, limited to those selected by the department.


Robert James Manion: I understood that, but what I meant was this: Has the minister the lists or the numbers of people called in with respect to these selected lists?


Ian Alistair Mackenzie: I believe I can get them. I have not them at the moment. I suppose they would be available in the department in all oases, as regards both the previous administration and the present one.


Robert James Manion: I was just asking for information.


Ian Alistair Mackenzie: I shall be very glad to get that information.
I come now to a brief discussion of the measure which would be consequent upon the adoption of this resolution by the house.
The bill itself has three definite features. The first is the creation of a defence purchasing board, with four members. The second principle is the provision for financing defence purchases of a capital nature on a ten year three per cent amortization basis. The third feature deals with the element of profit control.
I think it is fair for me to say that public opinion to-day is unanimous that excess profits on arms and munitions contracts must be curbed.


Mr. LANDERYOU:: May I ask the hon. gentleman a question? Who makes the greatest profit out of war, those who finance it or those who produce the materials?


Ian Alistair Mackenzie: According to the information that is mine as a result of the experiences of the last war, the greatest profits were made, not on these engines of destruction which we call munitions, but in respect of essential food and other supplies for those who were trying at that time to fight the battles of Canada overseas.


John Charles Landeryou: How would that compare with the profits of those-


Some hon. MEMBERS:: Order.


Walter Edward Foster: The house is not in committee.


Ian Alistair Mackenzie: When
my hon. friend interrupted me I was going on to observe that the commonest way of expressing this desire was to say we did not want anyone to profit out of war or preparation for war, but I must say that there has been a great paucity of practical suggestions as to how to attain this most desirable objective. My hon. friends of the Cooperative Commonwealth Federation have a very simple solution. They would nationalize all industry, and then there would be no profit at all in the manufacture within Canada of shells or bread or butter or any other commodity.


An hon. MEMBER:: Nonsense.


Thomas Clement (Tommy) Douglas: That is a subject on which the minister is not an authority.


Ian Alistair Mackenzie: But I
believe the majority of people in Canada, as in Great Britain and the United States, believe yet in a competitive society and are not prepared for the drastic step my hon. friends would recommend.


Angus MacInnis: They are fast moving
that way.


Mr. REID:: Not the farmers.


Ian Alistair Mackenzie: Short of the complete nationalization of all industry there is no way to eliminate all profits on our defence requirements, to use a phrase which was attributed by the press, improperly I believe, to my hon. friend with reference to his Toronto speech. If we manufacture shells and guns in state arsenals we shall still build the plants and buy the machinery and raw materials under the competitive system and the element of profit will still remain. Although it may be one degree removed, it will be just as real and just as objectionable.

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There are other objections to the state arsenal plan for all direct requirements. It would involve, as has already been explained very thoroughly, large capital outlays on plant and equipment which would be required for only a short time, and unless your continuous supply is guaranteed, then would lie idle, throwing men out of work. Any such program has been rejected as uneconomic by some of the ablest observers. I have already reviewed the steps taken by Right Hon. David Lloyd George in the last war, when he said to a delegation of labour, "Let the manufacturers make their profits, I will take it away from them by taxation. Leave that to me." May I draw your attention to the fact that that measure was adopted under actual War conditions?
A great deal of thought has been given since then to the question of profits control in every democratic country in the world, and certainly much thought has been given to it by the present government. Perhaps I may be pardoned if I refer now to what I said in this house in 1937, I think in response to a question asked me by the hon. member for Winnipeg North (Mr. Heaps):
Now I wish to deal with the question of profits.... This question divides itself into three categories.
The first is the supply of defence equipment in peace time;
The second is the export of munitions or supplies beyond the country, and,
The third is the supply of munitions and equipment in war time.
With reference to the first of these categories having to do with the supply of defence equipment in peace time, government policies were formulated some time ago... .
They are designed to safeguard the public interest as far as possible by competition, where competition is possible. Where this cannot be done; where competition is not possible, they are designed to establish rigid principles of reasonable remuneration to make unfair profits impossible and to provide for a thorough system of inspection and audit.
So, sir, we have been through the British royal commission report. We have had the majority and minority reports of the senate committee of the United States. We have had our own Skelton committee report. We have worked in cooperation with the interdepartmental committee of eminent civil servants, and we have even had debates in this house. In Great Britain this is what the royal commission said:
It is our opinion that measures ought to be taken to restrict the profits of armament firms in peace time to a scale of reasonable remuneration. . . .
We do not propose to undertake the task of formulating specific methods for the restriction of profits in peace time. No doubt that is fraught with technical difficulty.
There is no concrete suggestion there. They go on to say:	.
Nor do we believe that a measure of taxation such as the excess profits tax which was enforced during the last war will prove satisfactory to meet the essential object in view.
That does something to increase the "technical difficulty" referred to, but nothing to help us solve it.


Robert James Manion: From whom was the
minister quoting?


Ian Alistair Mackenzie: I was quoting again from the British royal commission.
The United States senate committee dealt mainly with the export of arms. With respect to national requirements it merely recommended expansion of the principle of state ownership. Requirements in a great country like the United States or Great Britain are such that a state arsenal is a much more economic operation than it would be in a country like Canada, whose requirements of some very costly and technical items are strictly limited. May I say I hope they will remain so.
In the United States they had a drastic reorganization recently in the army to improve purchasing methods. Very wide reforms were made, but I noticed, in an article on this subject in Liberty the other day, this significant sentence:
No way around the old cost plus plan has been found.
The Skelton committee reported that profit control was essentially an administrative problem and advised that they were unable to recommend legislation which would cover all contingencies. They did make one important and valuable step forward-they recommended a court of review to advise the department directly concerned on the form of its contracts.
I want to say here that the interdepartmental committee, whatever criticism may have been offered concerning them, rendered magnificent and devoted service to the government and the country in the work they have done in the last two years.


Abraham Albert Heaps: If the legislation foreshadowed in this resolution is passed, will the interdepartmental committee go out of business?


Ian Alistair Mackenzie: I think it might be reasonably assumed that that would be the case. But I should be very glad if my hon. friend would wait until the bill comes down. He will then have an answer to his question.
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Abraham Albert Heaps: I think it is important that the minister inform the house whether this proposed new body will supersede the interdepartmental committee.


Ian Alistair Mackenzie: If my
hon. friend waits a little longer, I believe he will find before I conclude my address that his inquiry will have been answered.
In the proposals now offered to the house under this resolution, and to be elaborated in detail in the bill consequent upon it, I believe that we have gone further than any other government, in the United States, in Great Britain or any other democratic nation which believes in upholding the institution of competitive industry. The bill that is to be submitted to this house consequent upon the adoption of the resolution I am now discussing provides that maximum profits upon defence contracts shall not exceed five per cent per annum on working capital actually utilized in the performance of the contract, and this is to be achieved by the simple, clear and definite process of taxing away the excess. May I therefore explain the procedure that is contemplated in its logical sequence. The purchasing board will consist of a permanent, salaried chairman who will give his full time to this work, and the other three members will be paid a per diem allowance for attending meetings, and their actual travelling and living expenses. The board will make all purchases and let all contracts for the Department of National Defence where the amount involved exceeds $5,000. The procedure will be for the Department of National Defence to requisition the purchasing board for each requirement. Full information must be imparted as to the reason for the requisition, stocks in hand, and also in regard to other matters. The board may vary the requisition but not without the consent of the Minister of National Defence. The board will then have a completely free hand in negotiating the contracts and in the supervision of their execution. Each contract must be recommended to council and approved by council before being let. This, in my judgment, gives even a closer degree of government control than under the war purchasing commission during the last war. The war purchasing commission had power to enter into contracts without any reference whatsoever to council. This act requires that every contract shall be approved by council and therefore the principle of ministerial responsibility is regarded. The government is thus given a threefold check upon these contracts: through the Minister of National Defence, who makes the recommendation; the Minister of Finance, who, subject to the consent of council, gives

authorization; the Minister of National Revenue, who, when profits are made in excess of five per cent, is responsible for the taxation of excess profits.
The bill lays down as a cardinal principle that where competitive bidding is practicable there shall be competitive bidding by advertisement in the public press. The bill also lays down that as far as possible the purchases shall be made in the Dominion of Canada. If it is considered necessary to purchase outside of Canada the board, must report to the government, giving its reason therefor. If, after competitive bidding, the board deems it not in the public interest to award the contract to the lowest bidder, the act requires that it shall report to council giving its reason therefor. Then there comes the type of contract where competitive bidding is not possible. These conditions arise with respect to arms and munitions contracts more often than in ordinary business, for two main reasons: first, there are sometimes secret specifications which it is not in the public interest to distribute among miscellaneous contractors for bidding purposes; and, second, there are especially in a small country like Canada, which has had no past experience in arms manufacture, sometimes undertakings of an involved and technical character with which industry in this country has had no past experience and on which there is no sound basis for estimating costs in advance. In such cases firms tendering have a tendency to allow very wide margins for unforeseen hazards.
Where competitive bids are not possible we have worked out, in my judgment, the most drastic system of profit control ever enacted, so far as we could ascertain. The key clause provides that the maximum profit shall be limited to an amount equal to five per cent per annum on the average amount of capital employed in the performance of the contract.


John Ritchie MacNicol: Will the minister be good enough to read that again?


Ian Alistair Mackenzie: Yes, with pleasure. The key clause provides that the maximum profit shall be limited to an amount equal to five per cent per annum of the average amount of capital employed in the performance of the contract. The bill then provides that a tax shall be levied on the contractor equivalent to the amount by which his net .profit exceeds the five per cent.. The actual amount of capital is defined as follows:
The actual cost less depreciation of the physical assets including plant, machinery, equipment and working capital which are employed in the performance of the contract.

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It is provided that where the assets were acquired for a consideration other than cash the board shall determine their fair cash value at the time of acquisition having regard to any sale or sales of such assets within five years of their acquisition or to any other circumstances which may indicate their fair cash value. It is also provided that in determining capital employed in the performance of a contract the board may take into account actual cash outlays incurred in the acquisition of patents, royalties, or licence to manufacture. The board is forbidden, however, to give any value to goodwill to the extent that such patents, royalties or licences are employed.
The bill declares that net profit shall be the aggregate amount received under the contract less such actual expenses, disbursements, allowances for depreciation and overhead charges as the board may find properly chargeable to the contract. It is stipulated, however, that interest on borrowed capital shall not be deducted. The board is given power to employ auditors, who shall be given access to all books and records of the contractor. The determination of the amount to be charged as a tax is to be made by the purchasing board, but there is provision in the act for appeal to the exchequer court. The collection of the tax will be made by the Minister of National Revenue under the machinery of the income tax division. The bill makes the logical provision that income which has already been taxed away under this act shall not be counted as income under the Income War Tax Act.
The scheme calls for a substantial staff. Provision is made for the transfer of officials from the Department of National Defence and any other departments. The rights of such employees under the Civil Service and Superannuation Acts are carefully preserved.
In my judgment this is the most drastic tax on arms and munitions profits ever imposed. It is stiffer than was the war measure of Lloyd George in England. It is a tax on the whole of the profits which exceed five per cent of working capital utilized, and hon. members will agree that five per cent is a relatively low return on any industrial undertaking. We are proposing to impose that tax now in our peace time expenditures in regard to our national preparedness.


Robert James Manion: Will it be imposed on the Bren gun contract? I ask for information.


Ian Alistair Mackenzie: That is a question of policy that I cannot answer at the moment.


John Ritchie MacNicol: May I ask a question? Mr. DUNNING: Wait until we get into committee.


John Ritchie MacNicol: I am interested in that. Has the department consulted those who would probably tender, as to whether they would accept five per cent? Five per cent might be set up by the interdepartmental committee but not accepted by those who might like to be called upon to tender.


Ian Alistair Mackenzie: I welcome the question of my genial friend. Immediately we hear the clamour; the first time this government has taken steps for the most drastic profit control, the suggestion comes from my hon. friend-


Robert James Manion: It is not a suggestion.


John Ritchie MacNicol: It is not a suggestion
but a question.


Ian Alistair Mackenzie: The
answer is, no.


John Ritchie MacNicol: Why did you not answer? You always try to drag politics into everything.


Walter Edward Foster: Order. The hon. member must take his seat.


John Ritchie MacNicol: The minister cannot
answer a question civilly.


Ian Alistair Mackenzie: I do
not desire to pursue any acrimonious argument at this stage.


John Ritchie MacNicol: Then don't start it. I
asked a civil question.


Ian Alistair Mackenzie: And I
gave a civil answer. That is exactly the kind of criticism which I anticipated would be levelled at this resolution and the measure consequent upon it, that we are not allowing industry sufficient profit.


John Ritchie MacNicol: Not at all. The minister is entirely wrong.


Mr. POULIOT:: Let him sit on the board.


John Ritchie MacNicol: The minister flies off
the bat every time I ask a question.


Walter Edward Foster: Order.


Robert James Manion: Well, Mr. Speaker, the
hon. member has some right to protest. He asked a civil question and the minister immediately says that this is an argument against the whole proposition. It is no such thing.
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Ian Alistair Mackenzie: Apart
from the fact that that is not a point of order at all, I did answer my hon. friend and I think I was entitled, as one who has been unfaiily attacked in recent months for giving too much profit to private industry, to assume that the question was asked to show that, before we established this very low rate of five per cent-


John Ritchie MacNicol: The minister has no right to draw inferences as to my reason for asking the question.


Thomas Reid: It was a leading question.
. Mr. MacNICOL: Let the minister be civil.


Ian Alistair Mackenzie: I intend to be civil to the hon. member for Davenport (Mr. MacNicol); I have the highest possible regard for him.
What would have been the result if we had consulted some of these firms in regard to this rate of five per cent? Does anyone think we would have received enthusiastic endorsation from some of these contractors? We are endeavouring to meet an actual situation of the present moment. We are endeavouring to submit for the consideration of the Canadian people a plan for the most drastic system of control of profits and munitions that has ever been attempted in any country. In regard to that plan I trust we shall receive the cooperation not only of the hon. member for Davenport but of every hon. member of this house.


John Ritchie MacNicol: The minister has no
reason to doubt my cooperation.


Ian Alistair Mackenzie: Not the slightest.
I come now to consideration of the financial provisions of this bill.


Robert James Manion: Before the minister proceeds to that would he tell us a little more about the personnel of the board? He says there would be five?


Ian Alistair Mackenzie: Four.


Robert James Manion: Would he give some idea as to their occupations, or how they would be chosen, or something of that sort?


Ian Alistair Mackenzie: The
question of occupations has not yet been even discussed. The idea is to have a chairman as the permanent head, who, I trust, will be one of the most eminent Canadian^, and whose selection will meet with the complete endorsation of everyone in this house; because the 
success or failure of this proposed board in my judgment will rest entirely upon the personnel.


Robert James Manion: I said that.


Ian Alistair Mackenzie: As far as I am concerned I assure my hon. friend now, and I am sure the Prime Minister will endorse this, that I have no desire in the world that there shall be any political complexion to that board. I shall be willing to seek the cooperation of the leader of the opposition and of any group in regard to getting the most eminent personnel in Canada, so that this board shall be above any acrimonious dispute. No one wishes that more than the Minister of National Defence. As long as I am in this department I want to go ahead with the real business of defence. This question of contractor relations has always been an embarrassment impeding the minister and raising an element of suspicion in regard to munitions contracts which does not exist in connection with the contracts of any other department. And-I said this a year ago, I think-the further we remove it the better will the minister be satisfied and I believe the public as well. Therefore in that spirit of seeking cooperation in regard to the personnel, let us get a plan that will work. Although a net five per cent is not very fair to industry, I think it will work.


Mr. SPENCE:: It is more than many people make.


Ian Alistair Mackenzie: I think that is right. That is a sensible answer from a very good business man.
Now, one or two conclusions. In the first place the provision for the defence of the country is the first and most fundamental duty of any government. That duty involves the organization of our defence forces, of our man power and the equipment of our forces; hence it necessarily involves procuring weapons and munitions. The government definitely agrees to the principle of the production by national manufacture in state owned arsenals to the greatest extent practicable where a continuous supply is assured and a sudden interruption of that supply is not going to dislocate conditions of employment in Canada, as already stated in this house. But the government cannot go so far as to say in regard to these extraordinary conditions that we can nationalize everything with reference to munitions or armaments or supplies over night. I believe that in the end it would not be a practicable solution.

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The government, if I may speak for them, believe in the principle of equality of sacrifice; that in war time men should not be required to offer their lives and limbs while those who provide the weapons of destruction have even the possibility of reaping undue profits.


Howard Charles Green: May we take it from that that it is the intention of the government to conscript at least certain industries in war time?


Ian Alistair Mackenzie: I am
not in a position to answer that question, but I say that the policy of whatever government should be in power in the event of national emergency would be determined by the actual situation prevailing at that time. We in the department have taken the precaution of making an industrial survey of practically all the manufacturing plants in Canada. But what the policy of any government would be I could not at this moment say with any authority.
The government considers that the problem of controlling arms and munitions profits in times of peace presents problems essentially different from those which would exist in time of war when mobilization of the nation's entire industry and man power might be required. The government is determined that in peace time, where private industry must be utilized, there shall be the strictest possible regulation of profits both in the interest of the taxpayer and in deference to public abhorrence of profits made from products which involve destruction of human lives and misery among nations.
I think I have given a fairly comprehensive survey of the discussions that have taken place in this and other countries in peace and in war in reference to this perplexing and absorbing question of the control of profits on munitions. I believe this to be a very drastic departure, and as I said to the Leader of the Opposition, speaking as Minister of National Defence I welcomed the removal of these contracts from the control of the department. I am much more concerned, as long as I have the privilege of serving that department, in the real task of preparing for national security and national insurance of our people. There is in this resolution or in the bill to follow no relaxation of the principle of ministerial responsibility. We are following the sound British practice of treasury control. The Minister of National Defence retains the power of recommendation; the Minister of Finance, with the
7H92-112
consent of council, the power of authorization; and the Minister of National Revenue in certain cases the power of taxation. Again I repeat that the success of this legislation will depend upon the personnel of the board. It must be such as to command the support of all parties, and the confidence of the country. There is no more important task to-day in Canada than the great task to be entrusted to the proposed board, and, so far as the government is concerned, I want to repeat most emphatically that there is no suggestion of any political appointments. In connection with this important national question we invite the cooperation of every hon. member, belonging to whatever political philosophy you like, in the house. And let me add my own fervent hope that out of the disputations and criticisms of recent days there will emerge a system of which all in the Dominion of Canada may be proud, one which will get results for the Department of National Defence, and which will command the trust, the support and the confidence of all Canadian people.


Mr. LAWSON:: Mr. Speaker, before a discussion of the resolution takes place I should like to ask the Minister of National Defence (Mr. Mackenzie) to elucidate one matter mentioned in his outline to-day. I understood him to say that the resolution contemplated three phases. One of those phases was that the bill, when brought down, would indicate that the expenditures on defence and war purchases would be on a three per cent amortization basis over a period of ten years. The estimates indicate the government proposes to spend $63,000,000 this year. Am I to take it that the government has, in addition to that expenditure for this year, a ten year plan covering war and defence expenditures, and that the proposed defence purchasing board is to work out a plan-or indeed one may be already in existence to be submitted to it for its administration?


Ian Alistair Mackenzie: Perhaps I should answer the question in committee. However I can say now that that is not so. The reason the $3,000,000 is placed in the estimates is to provide the sinking fund required to meet the capital expenditures. But there is no permanent plan of ten-year duration of any kind whatsoever. It is only a matter of taking care of current revenues, over an amortization of ten years.


Grote Stirling: Mr. Speaker, I have listened with the very greatest interest to the remarks of the Minister of National Defence (Mr. Mackenzie) in speaking to the resolution for which we have been

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waiting since it appeared on the order paper on January 24. I agree most emphatically with the phrase with which he began and with which he ended, namely that this is a most important matter in this or any country.
He has referred to the difficulties which attended this same question at the time of the great war. My thoughts immediately went back farther than that-to the great difficulties which attended this question in other countries throughout Europe, including Great Britain, at the time of the Napoleonic war, at the time of the Crimean war, and even as far back as the Marlborough campaign. Constant troubles and difficulties arose out of this question of the purchase of munitions.


Charles Avery Dunning: Our old friend Sam
Pepys.


Grote Stirling: Yes, right through that volume, and a great many other historical volumes too. You can go through Thackeray and find the same thing. It goes back far into history. Avaricious men in those as in later times, with respect to the quality of products produced, through being friendly to the government of the day, have endeavoured to take advantage of the miseries of a country at war.
It is to be feared that human nature has not greatly altered since then. To-day we are not so much faced with difficulties in connection with the quality of goods supplied. We have moved beyond that, through inspection. But we are still faced with the difficulties which attach to partisanship, and the desire to obtain greater profits than reasonably should be obtained.
The minister has also outlined in most interesting terms the ideal he has before him in connection with this board. It is an ideal, I hasten to state, with which I entirely agree. At this stage it is not possible to follow the minister in detail in his elaboration of the scheme which has been evolved. But il appears to me there are three questions in regard to the creation and setting up of the board, and the preparation for its functioning, which perhaps exceed in importance other matters connected with it.
Of course there stands first and foremost the question of personnel. With every word the minister used with regard to personnel I, and I am sure those associated with me, entirely agree. Whatever the final result of a further inquiry may be, there can be no question that the public has been somewhat shocked at the evidence produced before Mr. Justice Davis as to what has taken place in the past two years. Unquestionably there has been

evidence which tends to show that partisanship has come in. If the personnel of the board is chosen with any idea of partisanship, the public of Canada will not be satisfied with anything the board may do.
The next thing we must remember when we are examining those provisions of the measure which have to do with the functioning of the board is that we are dealing not only with guns and shells, but also with blankets, food and office requirements. For, as I understand the set-up of the board, it will largely take the place of the officer now in the department known as the director of contracts.
So far as requirements over $5,000 are concerned, the board will be supreme, but perhaps the director of contracts, or the branch under his direction, will continue to exist and function in connection with those smaller amounts. But when it comes to a matter of considering requirements of the naval, militia, air or civil departments, it will be necessary for the heads of those departments to receive the acquiescence of the minister, and, in turn, the minister will pass on their requirements to the board. Any amount over $5,000 will, in the future, be in the hands of the board.
The position the board will occupy in relation to the minister of the department, to whose care money has been voted by parliament, is a point to which I listened with particular interest, and it is a matter which I have no doubt will receive a great deal of consideration when the bill, in all its details, is before us. But if I understand it correctly, when a requisition has 'been accepted by the minister and turned over to the board, it then passes altogether out of the hands of the Minister of National Defence; and from the board it goes to council, of which that minister is just one member. I think that is correct.


William Lyon Mackenzie King: It goes to the Minister of Finance and from him to the council.


Grote Stirling: The board sends it to the Minister of Finance?


Ian Alistair Mackenzie: The
recommendation, yes.


Grote Stirling: The Minister of Finance presents it to the council. The Minister of Finance is merely a minister among his colleagues.


Ian Alistair Mackenzie: Absolutely.

Defence Purchasing Board


Grote Stirling: It appears to me that overcomes some of the difficulties which I foresaw in connection with the position this board might occupy in what we might call the mechanization of the government. I earnestly hope that the discussion which will occur on that phase of the matter will be illuminating and of assistance, and that the plan will work as the minister expects it will.
In his statement the minister made certain comparisons between contracts which have been let since 1935 and those which were let before that year. It is not possible for me to make any extended reference to those comparisons. As hon. members know, for a period of a little less than twelve months I occupied the position which the minister now occupies. I am sure he will agree with me that there is not, of necessity, anything wrong with the principle of selected lists. The common understanding of that term carries with it an idea of a list of political partisans, but the minister knows full well that is by no means true. There are certain requirements of the Department of National Defence, as of other departments, in connection with which very few people are competent to tender. I think the minister will agree with me when I say that since 1935 these selected lists have contained much the same names as were on the lists before that year. It is not possible for me to hazard any suggestion with regard to the comparative figures the minister has put forward; the records are available to him; he has a staff which is accustomed to dealing with these matters and it is easy for him to have prepared comparative statements which will bear out the view he wishes to express.
I should, however, draw attention to one fact. In the eleven months during which I occupied the office which the minister at present holds, we were operating in an atmosphere of disarmament. So far as my recollection goes, there were few contracts let for what could be primarily called munitions. The majority of the contracts let during that time, if my memory serves me correctly, were for the requirements of the relief camps. It will also be remembered that money expended during that period was looked upon as being somewhat in the form of relief. Therefore, if certain commodities were needed in eastern or western Canada, it was not an unreasonable view to take that the list of contractors capable of providing those commodities were those located in either eastern or western Canada. Details of that sort would enable one to make a much closer comparison between the two sets of figures. I do not propose at this stage to go further into that matter because I may elaborate it at a later date.
If, however, the minister can carry out the ideal which he has put before the house to-day, not only will he have the closest cooperation of those with whom I am associated, but I think he will receive from the people of Canada recognition that the ideal he is striving for is a worthy one.


Thomas Clement (Tommy) Douglas: Mr. Speaker, what I shall have to say on this resolution can be better left until the bill itself comes before the house. Therefore my remarks at the present stage of the legislation will be exceedingly brief. However, before I turn to the resolution I should like to say a word or two about the minister's speech. I think all parts of the house will agree with him in his expression of horror at any idea of large scale profits being made out of the production of war materials. It seemed to me that the major .part of his speech consisted of a defence of the Department of National Defence rather than a discussion of the resolution. After listening to the lengthy justification which he gave for all that has been done, I began to wonder why we should have this defence purchasing board at all. Every once in a while the minister would advance an argument against state ownership of armament factories and then look over at this comer and say something about the Cooperative Commonwealth Federation wanting to bring about socialization. The strange thing is that the minister himself is definitely on record as being in favour of the manufacture of war materials in state owned factories.
He cannot have it both ways. He cannot get the support of people who believe in state owned factories and at the same time label it socialism. He must be either for or against it. The fact that the minister throws back responsibility on the departmental officials by saying that there is a division of opinion among them cannot absolve the government from responsibility. What the opinions of the officials may have been; what the opinions of the officials may be to-day, has no bearing whatsoever. This government must accept responsibility for whatever policy they adopt in the manufacture of munitions and the preparation for possible war.
Let me turn now to the resolution itself. May I say that I have been interested in this matter ever since I came to this house and long before. On February 4, 1937, I had the privilege of moving the following resolution in the house:
That, in the opinion of this house, legislation should be immediately brought down by the government of the day providing that, in the event of another war involving Canada's active
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participation, every agency, financial, industrial, transportation or natural resources, shall automatically be conscripted for the duration of such a war, and that a penalty be imposed for the violation thereof.
It is interesting to note that although the Minister of National Defence (Mr. Mackenzie) was in his place at that time, he took no part in the discussion and we had no expression of opinion from him. I was interested in hearing the minister say to-day that this bill centres round the feature of profit control. I was, however, disappointed when he said that he did not believe we could remove the profit feature. I think the government and the minister have been sincerely concerned about the matter of profit control ever since they took office. The Prime Minister (Mr. Mackenzie King), the Minister of National Defence, the leader of the opposition (Mr. Manion) and other hon. members have indicated that no one wants to see profits made out of either preparations for war or the actual war itself.
I have no intention of debating this question at any length, but I should like briefly to review what the government has done in an effort to control profits on war materials. I want to remind the house that on January 8, 1937, the Prime Minister set up a committee presided over by Doctor Skelton. I shall not go into the details of the report which that committee submitted, because the Minister of National Defence has reviewed it adequately. But they did take cognizance of the fact that there was in Canada a widespread feeling against war profits. They drew attention to the resolution which I have just read and which was on the order paper at that time. They contended that to place the manufacture of arms entirely in the hands of the state was not feasible at that time, although they thought that there might be a case for some moderate extension of the government arsenals. They were doubtful whether new legislation to control private profits could be attempted at that juncture. They felt unable to suggest any specific legislative measures. They felt that the control of profits and the prevention of excesses could most profitably be brought about by close and guarded administration.
As a result of that committee's report, which was not very definite, an interdepartmental committee was set up, and I want to place before the house the terms of the order in council which brought that interdepartmental committee into existence:
Certified to be a true copy. The committee of the privy council have had before them a report, dated March 2, 1937, from the Minister 
of National Defence stating that an interdepartmental committee formed under the instructions of the right hon. the Prime Minister to consider certain questions pertaining to the control of profits on government armament contracts, has in its report suggested that there be instituted a standing interdepartmental financial committee to assist the officials charged with the placing of contracts under the defence program, and that such a committee " might study and classify the requirements of the defence program from the financial point of view, and formulate or advise upon the financial principles or safeguards to be observed in placing contracts of various types, and as to rules of procedure."
That it was also suggested that this committee " might be available for consultation upon the financial aspects of any unusual specific eases or conditions arising from time to time, and that it would be limited to this function of assisting in the prevention of undue profits, that is to say it would not be concerned with other aspects of the defence program."
The minister is of the opinion that a committee whose functions and duties would be generally as set out in the suggestion aforesaid would be in the public interest, and therefore, recommends:


Jean-François Pouliot: What page of Hansard is the hon. member quoting from?


Thomas Clement (Tommy) Douglas: From page
887. The order in council then goes on to
set out the recommendations:
1.	That there be formed a committee to be
known as the interdepartmental committee on the control of profits on government armament contracts...
Then it gives the personnel of the committee. Then follows recommendation No. 2:
2.	That the duties of this committee shall be generally to study and classify from the financial point of view the various requirements which the government's defence program involves, and when it is considered by the department concerned that effective competitive tendering cannot be secured in regard to any of its requirements, to formulate or advise upon such principles and safeguards, whether of a general or specific nature, which in this connection the committee considers should be observed, and to communicate to all departments concerned such information in this respect as the committee considers should be in their possession.
As a result of that order in council, which I have read in part to the house, an interdepartmental committee was set up, presided over by the deputy minister of national defence. I draw the attention of the house to the fact that the purpose for which that interdepartmental committee was set up was similar to the very purpose for which we are now proposing to set up a defence purchasing board.


Charles Avery Dunning: Not at all. '


Thomas Clement (Tommy) Douglas: Most certainly. The terms of the order in council deal with the preventing of undue profits and the safeguarding of the interests of the people of

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Canada, and the Minister of National Defence himself enumerated as the third feature of this bill, profit control.


Ian Alistair Mackenzie: May I interrupt the hon. member to say that the difference between the interdepartmental committee and the proposed board is this, that the committee was purely advisory, while this board will have power to act apart from the Department of National Defence altogether, except by way of requisition.


Thomas Clement (Tommy) Douglas: That is exactly the point to which I am coming. This interdepartmental committee was set up, and the impression was given in this house from time to time that it would be an adequate safeguard against the making of undue profits. The fact of the matter is that we know to-day that interdepartmental committee broke down.


Charles Avery Dunning: Oh, no.


Thomas Clement (Tommy) Douglas: I will make my own speech and the minister can make one after I have finished. The evidence placed before Mr. Justice Davis, while I have no wish to go into that at this time-


Charles Avery Dunning: The hon. member cannot.


Thomas Clement (Tommy) Douglas: The Minister of National Defence quoted from it.


Ian Alistair Mackenzie: No.


Thomas Clement (Tommy) Douglas: He quoted from the evidence.


Charles Avery Dunning: Not at all.


Robert James Manion: That just shows where we would have been had we not had some little discussion of the Bren gun. The whole matter would have been just buried in the public accounts committee.


Charles Avery Dunning: My hon. friends can
discuss it again when it comes back from the committee.


Thomas Clement (Tommy) Douglas: When this discussion between hon. gentlemen on the front benches is over, I shall be glad to go on with what I have to say.


Charles Avery Dunning: If it is in order.


Thomas Clement (Tommy) Douglas: It is in order. I want to point out to the house that here was a committee which in several specific instances found that the advice they gave and the point of view they took were deliberately either ignored or shelved. Here was a committee that broke down when it failed to report back to the body that created it. May I point out to the Minister of Finance (Mr. Dunning) who has been very good at interrupting, that
here was a committee on which his own deputy minister sat as the financial representative, disagreeing with the policy of the chairman of that committee. I wonder if the minister is acquainted with the fact that his representative on that committee disagreed with what was being done.
The fact of the matter is, Mr. Speaker, that the interdepartmental committee absolutely failed as a check on the making of undue profits. It absolutely failed to safeguard the interests of the Canadian people. We are now to have a defence purchasing board, and all I have to ask is, will the minister, before the bill is brought down, give us some guarantee that, when it is brought down, this purchasing board will do what the committee evidently failed to do? Will he assure us first of all that this purchasing board will have the power that the Minister of National Defence has just said the committee did not have? Will it have the authority to proceed along certain lines despite the fact that one official here, or another official there, is not in favour of a particular course of action?


Ian Alistair Mackenzie: If my hon. friend will wait for the bill, to tell him.


Thomas Clement (Tommy) Douglas: Otherwise, this is meaningless. I point out again that the value of this measure will be determined largely by the personnel of the board. Take the matter of a selected list. A selected list is meaningless unless those who compile it have the national interests at heart. Take this question of a five per cent profit. The minister said that no member of the house will object to a five per cent profit. Well, I object to a five per cent profit unless I know what it is on.


Charles Avery Dunning: That is what the minister told the hon. member.


Thomas Clement (Tommy) Douglas: No, he did not. It will depend, for instance, on the value of certain pieces of land, certain buildings and machinery. But who makes these valuations? Here again everything depends on the integrity of the personnel.


Charles Avery Dunning: Of course.


Thomas Clement (Tommy) Douglas: Exactly, and unless the minister can assure us that this board will have the necessary authority and that its personnel will be of sufficient integrity to warrant the confidence of the Canadian people, this board will get no further than the interdepartmental committee got. That is what I want to know. If we are merely to have another smoke screen, another group of men with no authority, another group to act
Defence Purchasing Board

as a buffer, then, of course, we are wasting time. But if the government is sincere and proposes to give to this board substantial authority, and to put on this board the kind of men who will command the confidence of the Canadian people, then we can do what the Minister of National Defence so eloquently professes to believe in, that is, take the profit element out of the manufacture of war materials.
I say seriously to the Minister of National Defence, and to the Prime Minister (Mr. Mackenzie King), who is at present in his seat, that this defence purchasing board can mean everything or it can mean nothing. I trust that it will mean everything. I can assure the minister, although I am sure I do not need to do so, that the Canadian public will not stand for another failure in this respect; that a defence purchasing board which will function no better than the interdepartmental committee functioned in safeguarding the interests of the Canadian people will be merely another smoke screen which will bring the wrath of the people upon those who have been responsible for the purchase of war materials for the Department of National Defence.


John Ritchie MacNicol: May I have the minister's attention, because it was in large measure his remarks which caused me to rise to speak? Ever since the last war my mind has been made up that if the time came again when Canada would have to embark upon any extended purchases of war materials or munitions, we should do something along exactly the same line as the set-up which has been explained this afternoon. Therefore, when the minister jumped on me, he was entirely out of place, and it ill became him to impute to me wrong motives in my question.


Ian Alistair Mackenzie: Oh, no.


John Ritchie MacNicol: The minister has a great many qualifications, but he has some serious defects-one perhaps more serious than any other, and that is a hot-headed temper. I am going to read to the minister a very ancient Brahmin proverb which I hope he will commit to memory and keep before him at all times when he is speaking. He must not impute motives to hon. members who have no such motives. The proverb I wish to read to him from an ancient book is: "Proceed not to speak or to act, before thou hast weighed thy words, and examined the tendency of every step thou shalt take: so shall disgrace fly far from thee, and in thy house 
shall shame be a stranger; repentance shall not visit thee, nor sorrow dwell upon thy cheek." I know the minister was sorry-


Mr. POWER:: Send a copy to the leader
of the opposition.


John Ritchie MacNicol: I addressed my remarks
to the minister. I know the minister is sorry-


Robert James Manion: Send a copy to the minister of health too.


John Ritchie MacNicol: -that he replied to me the way he did; therefore I forgive him for that. I wish to speak for only a few minutes and to refer to just two or three items of the resolution. I am convinced that all reasonable, thinking people in this country will support any action of any government which will eliminate from the production of munitions either in peace time or-particularly -in time of war exorbitant profits such as were made during the great war. Therefore I heartily endorse the principle of this resolution.
I remember well that during the great war, when private soldiers in the front line were receiving $1.10 a day, moulders received a great deal more. I do not know whether at that time the hon. member for Vancouver-Burrard (Mr. McGeer) was in that class; it is quite a while ago; but someone told me that he had been a moulder. As a class these men received extremely high wages. I know they were paid $18 a day because of the scarcity of that class of labour; had their wages been cut down, they would have gone on strike. As a matter of fact, in one plant I have in mind the moulders went on strike twice during the war until their wages were raised to about $18 a day, if I remember correctly. I assume that the bill to be founded on this resolution will prevent any such exorbitant profits all along the line, either to industry or to anybody else.
As I understood the minister, he said that it is not the intention of the government to embark upon a big scheme involving a huge arsenal wherein the government would manufacture in Canada all the munitions required. I am in accord with that declaration. I believe the government should not embark upon any such scheme-very largely for the reasons the minister outlined. On the other hand, I have been wondering whether a small plant, which perhaps should be called a pilot plant, could not be set up wherein various types of munitions could be worked out, blue-prints made, perhaps samples prepared, and all the details made available, so that

Dejence Purchasing Board
when the government found it necessary to embark upon a program of manufacture, all they would have to do would be to call in a number of industrialists and say, "We want that article manufactured. We will supply the blue-prints and all the details and particulars necessary to make it." If the government also had special machines required for the manufacture of these articles, they might say to the producers, "We can also supply you with that line of machinery," and let them tender one against the other for a reasonable price. I imagine it would be possible to proceed along those lines.
The reason I endorse the manufacture of war munitions by plants other than those of the government or in addition to any government plants is that in war time the main consideration is to win the war. In following the records of Britain all down through their history, I find that she set out at the very commencement to win the war. In order to win, one must have the equipment and the necessary munitions. I have always felt that those supplies could not be produced in a government plant in war time at the same rate of speed that they can be produced in private plants. On the other hand, I am convinced that if ever the time comes again when it is necessaiy for the government to embark upon an effort at all comparable with that of the last war -I hope that time never will come-or even a fraction of the requirements of the last war, some regulations should prevail in industry itself whereby the men engaged in industrial production will not be up against the difficulties they encountered in the last war.
While I am using arbitrary figures whose relations may be altogether wrong, I have a distinct recollection that when manufacturers entered upon the production of shells during the great war and men were taken on to turn out, say a 4-inch shell, they would commence by producing perhaps forty or fifty a day, but towards the end of the war those same men were able to turn out approximately five to ten times the number. The consequence was that their health suffered. I know many, many men who, for the sake of obtaining large returns, exerted themselves far beyond the natural endurance of the human body, with the result that when the war was over, many of them were physically nothing like the men they were prior to the time they set themselves so strenuously to the manufacture of shells.
One point further, and briefly, because I have no desire to hold up the resolution. The
government has, presumably as a result of its survey, a list of 720 plants or more throughout Canada.


Ian Alistair Mackenzie: I think it is about 1,200 now.


John Ritchie MacNicol: I make no comment, nor had I any intention of commenting upon the question of a profit of five per cent. I am not associated with business, now, and what I had in mind was whether, in arriving at that figure, these men had been asked whether it was sufficient or not. That was a civil question, and I hope that when I again ask the minister any question of the kind he will contain himself and not fly off the handle.
I can assure him that any question I ask is sincerely meant; it is intended to elicit information and has no other purpose. That is all I have to say on the resolution.


Robert James Manion: I shall say very few words at the moment because I think most of the discussion can take place better in committee than at this time. I simply observe that if the minister had made the same speech as this in his previous effort in this house, when there had been some criticism of him, he would in my opinion have done himself and his party a great deal more good, and would have justified, to some extent at any rate, some of the acts which he did not then try to justify.
Having listened carefully to the minister, and agreeing with most of what he said, I am of the opinion that the provisions of this legislation are the result of the Bren gun discussion in this house. I do not suggest that there was not going to be an act; the minister had placed a resolution on the order paper fairly early in the session. I do suggest, however, that the result of the Bren discussion brought about in the terms of the legislation an improvement which we would not have had in the absence of that debate. The minister may deny it, but certainly it is the conclusion to which I have come, although I cannot prove it. I suggest that if the minister, his department and the government, when dealing with the Hahn contract and with the Montreal construction company's contract, to which this side of the house objected, had recognized and acted upon the principles incorporated in the minister's speech this afternoon, or the principles to be embodied in the bill which he proposes to bring down, we could have avoided the whole discussion that caused so much dissension and agitation in the country and a good deal of bitterness in this house.
I believe that even yet-I say this on behalf of my party, but I say it also in the
Defence Purchasing Board

interests of the country-if the government could in some way make retroactive the proposals said to be incorporated in the bill which the minister has explained briefly this afternoon; if those provisions could be made to apply to those other contracts to which reference has been made, it would redound to the credit of the government and to the advantage of the country at large. I suggest that the government give some further consideration to that proposal.
I have a great deal of respect for all classes of citizens in Canada. I am never one to criticize or question the loyalty of other people. Whether they be the working class, the professional class, the business class, I believe that the vast majority of our people, when it comes to any question such as the manufacture of munitions involving the huge sum of money which is to be spent in Canada, desire to see that money properly, fairly and decently expended. I believe that the proposal of a five per cent profit, if it can be worked out, as I think it can, will probably satisfy all those who stand by the principles which I have upheld here not only in the debate on the Bren gun contract but in the speech which I made in the debate on the address in reply to the speech from the throne. A few moments ago I looked up that speech, and while I recognize that it is not strictly permissible to make quotations such as I should like to give to the house now, at the same time the speech I gave on that occasion, dealing as it did with this very question, would set out my opinions on the whole matter better perhaps than I can state them now. At page 23 of Hansard for the third day of this session I said:
The next paragraph with which I shall deal is that relating to the defence purchasing board. I am more or less in accord with the idea of a defence purchasing board, but before commending it completely I should like to know its personnel; I should like to know, for example, that it is not going to be a political purchasing board, that it will not be a case of picking one man and ignoring all others in regard to competition, picking a man and financing him while he runs around the world getting ideas about defence and then giving him the contract without permitting anyone else to tender.
I was obviously referring to the Hahn contract, but I also had in view the question of profits in general.
I should like to know that, before I unqualifiedly endorse the idea.
While in detail the suggestions I offered are somewhat different, though not very much so, from the proposals which the minister proposes to incorporate in his bill, and while

I have not had an opportunity to read the bill or to consider at all closely those proposals, I believe that the bill will largely meet the points which I raised in the speech which I made in the debate on the address and from which I have just been quoting. I went on to say:
But as a Canadian citizen who for a long time has been familiar with public opinion I am convinced that the making of large profits from the manufacture of munitions or armaments is repugnant to the ideals of the Canadian people, whether such profits be made directly through a percentage of the amount of the contract, or by selling stock, or in any other way. The making of huge profits on munitions is looked upon by many of our people as taking blood money, as profiteering in patriotism.
Further on, I give certain quotations which, so far as I can remember, are pretty much those which the minister quoted this afternoon. I admit that there are some differences in my references so far as details are concerned. Perhaps I was not as definite in one or two of my remarks as I might have been. But the whole principle behind those remarks was the elimination of unfair profits, and with that idea the minister's bill as foreshadowed this afternoon is in entire accord. Subject possibly to some criticism as regards details, it will probably meet the ideas I expressed in my speech on the address. I did suggest that profits on the manufacture of munitions in Canada should be entirely eliminated, and then I added, as quoted by the minister, that so far as munitions for other parts of the empire were concerned, the government should control profits. That, I suggested, would encourage the British to give contracts in this country, assuring them of a fair deal, and also leaving a fair profit to the manufacturers. I believe in the profit motive, so long as it is fairly and properly carried out.
It is suggested I proposed that there should be no profits at all in the manufacture of munitions in Canada; but a remark of mine quoted by the minister showed that I was open to conviction in the matter, because I pointed out the danger of the idea not working out, and I left a door open. I do not believe that we could eliminate profits one hundred per cent; but if the personnel of the munitions board is well chosen and endeavours to carry out the provisions of the legislation along the lines indicated by the minister, eliminating all but five per cent-which is eliminating ninety-five per cent of profit- that should satisfy the people of the country to a large extent. I say that without prejudice, to use what I believe is a legal term, and not affecting my right to offer some suggestions

Defence Purchasing Board
or criticisms with respect to the details of the bill when it comes before the house, as I suppose it will do this evening.
That is really all I wish to say at the present time, but I thought it might be well for me to say that on the resolution because it might not happen to fit in with regard to any of the provisions of the bill itself.


William Lyon Mackenzie King: I should not like to let the remarks of the leader of the opposition (Mr. Manion) go by without saying to him, on behalf of my colleagues and myself, how much we appreciate his chivalrous attitude towards the Minister of National Defence (Mr. Mackenzie) in what he has said this afternoon. My hon. friend has said that he thought that if the minister had made the same speech which he made to-day at an earlier stage, a good deal of the bitterness which has thus far characterized some of the discussions on defence matters would have been avoided. I agree with that, but I must say that the minister had a right to expect to have an opportunity to make the speech which he made this afternoon in connection with ,tbis measure apart altogether from the circumstances which surrounded the speech he made on a previous occasion. He was prevented from having that opportunity by the nature of the discussion on the Bren gun contract. The minister at that time was feeling very keenly the nature of the charges- I do not think that is too strong a word to use-which seemed to be leveled against him personally. I truly believe there is not an hon. member in this house who in his heart thinks for a moment that the minister did less than all he possibly could as a minister to avoid anything in the shape of profiteering or faulty procedure in the awarding of contracts in his department. But when a man is stung to the quick by bitter attacks before, as a minister, he has had an opportunity of presenting the affairs of his department to the house in a calm and deliberate way, it is not to be wondered at that he should have replied, to some of the references made, in a way that he himself would wish not to have been so obliged to speak.
What I want to make perfectly clear is that one of the reasons the minister spoke with the force and, to some extent, invective, which he used at the time, was that he has been subjected to pretty much of a personal persecution not only since this house assembled, but from a section of the press of this country from the time of the discussions which took
place before the commission appointed to investigate the question of the Bren gun contract. Hon. members must realize that the Minister of National Defence has been under a tremendous strain for months past, a strain which I imagine very few men could have endured if they had not had, as I know he has had, a sense of personal rectitude beyond all question.
The leader of the opposition said he felt that .the bill to be based on the resolution moved this afternoon was no doubt the result in large part of the discussions we have had in this house on the Bren gun contract. Let me assure my hon. friend that the measure which will come before the house to-day was to all intents and purposes completed in all essential particulars before this house ever met. I would draw my hon. friend's attention to the paragraph in the speech from the throne which says:
Legislation will be introduced to establish a defence purchasing board with power to purchase equipment for the defence services and to ensure that, where private manufacture is necessary, profits in connection with such are fair and reasonable, and that the public interest is protected.


Robert James Manion: It is the details of the bill which I was suggesting had changed.


William Lyon Mackenzie King: Let me say
to my hon. friend that before the commission under Mr. Justice Davis was appointed, the government had decided to bring in a bill along the lines of that being brought in to-day.
Let me say further that during the last two years my hon. friend the Minister of National Defence and I have had frequent talks together about this very difficult and complicated matter in relation to existing situations of how far it was wise to go in the opening up of arsenals, the letting of war contracts by tender, and with respect to other matters connected with his department; and repeatedly the Minister of National Defence himself has pointed out that he would welcome having some body independent of the Department of National Defence altogether review the contracts of that department so as to ensure that there would be no opportunity for any kind of profiteering or improper dealing with respect to any of them. It was at the instance of the minister and as a result of the talks he had with me as Prime Minister that in the first instance I appointed the Skelton committee, or recommended that there should be a committee to study this matter and advise the government as to the best method of proceeding to protect the public interest in connection with defence expenditures. The interdepartmental committee was a second step
Defence Purchasing Board

towards the same end, and the bill to be introduced is in part the result of the experience gained by that interdepartmental committee and the advice the officers of the government upon it have been able to give to the government. All of those steps were taken before there was any publication of any article in Maclean's magazine which occasioned the appointment of the commission. When that article appeared, it was just because the cabinet felt so strongly the necessity of seeing that there should be no suspicion, even, in the public mind either of wrongdoing or of wrong methods being employed in connection with defence contracts, that we immediately decided to have a justice of the supreme court make inquiry as a commissioner into the whole question of the contract there referred to as thoroughly and completely as possible. I assure my hon. friend and the house that the bill which is to be before us to-day was decided upon, its features settled and, if I am not mistaken, the greater part of its provisions drafted in final form before this house met, and even before parliament was called. It was the matter which to the largest extent occupied the attention of my colleagues and myself after we had completed the work on the Canada-United States trade agreement.
May I conclude by saying that at each stage the minister himself was the one who asked that the additional procedure mentioned should take place. When we come to read the bill it will be seen that one of the clauses gives to the Minister of Finance (Mr. Dunning) the authority of bringing the recommendations of the board to the attention of the cabinet. The Minister of Finance himself-I am not disclosing secrets that I should not-talked to me time and again about his not wishing to appear in his position to be in any way superseding the position of the Minister of National Defence. He thought that being naturally sensitive in this whole matter the Minister of National Defence might feel that others would think this provision was in the nature of a reflection upon him. It was because the Minister of National Defence insisted that in every respect he wished to have the financial aspect or rather the contractual relations aspect of the affairs of the Department of National Defence removed as largely as possible from the department and put, as it is in Great Britain, under the treasury or some authority in Canada corresponding thereto, that the bill is being brought down in the form in which it is today.
At six o clock the house took recess.
(Mr. Mackenzie King.]
After Recess
The house resumed at eight o'clock. INTERPRETATION ACT



AMENDMENT TO MAKE ANNIVERSAEY OP SIGNING OF STATUTE OP WESTMINSTER A STATUTORY HOLIDAY

[Stage Direction]
Mr. WILFRID GARIEPY (Three Rivers) moved the second reading of Bill No. 2, to amend the Interpretation Act.
He said:	Mr. Speaker, nations and families, like individuals, have their red-letter days. Events of special significance call for remembrance. Circumstances of particular importance deserve celebration. It is something of such a nature which prompts me to rise and present this bill.
Short as it is, the purpose of the bill is to recall yearly to our people our independence and emancipation, and to invite them to rejoice over the passage from a state of colony to a state of freedom and liberty. The object of this legislation is to add a holiday to the list of national holidays, and to make such holiday December 11, because the statute of Westminster was adopted in the old land on December 11, 1931.
In rising, I trust and hope to have the support of the house in the move I make. I know this is a request backed and endorsed by our people. I shall not delay proceedings by reading the numerous letters of approval which I have received from persons of different callings, nor shall I read the requests and petitions, the numerous resolutions passed in its favour by all kinds of bodies and societies, the writings of newspapers expressing opinions absolutely in sympathy with it and referring, all of them, to how essential it is for our national welfare that certain anniversaries be blessed and never be allowed to be forgotten by the masses and by the generations to come. This is one of them. Doctor Maurice Ollivier, of the law branch of this parliament has written:
(Translation) The life of all peoples is marked by certain dates which overshadow all others and are as beacons illuminating history and explaining it. In the history of France, it is 1789; in the history of England, 1215, and' in our own history, December 11th, 1931.
(Text) The year 1789 in France meant the end of royalty, the opening of a new era, and a
time when new devices and slogans were inscribed in French laws, and in the constitution of that country.
In England the year 1215 meant the alliance of King John with the nobles of his realm and the birth of that noble document,

Interpretation Act
Magna Charta, more pregnant in its terms and in its objects than anything ever seen before, even in republican Rome or in ancient Greece.
The statute of Westminster is the law par excellence for Canada; it is the crowning gesture in our history; it is the final say in our marvellous advance towards progress, civilization, freedom and world importance. It is achieving the summit, after centuries of struggles and physical and intellectual labours. It is the most important constitutional result secured since the foundation of our country, brought about gradually and progressively by mutual consent, and through the genius displayed by leaders of public opinion.
Representative institutions never existed in this country under the French regime. Absolute monarchy then prevailed, and it may be that such a system was not without some advantages in the pioneering period. Our clergy worked hand in hand with the seigneurs, and truth and gratitude demand that we acknowledge and recognize the services rendered to our different communities then, as well as presently, by our clergy.
The year 1760 changed the flag under which our forefathers lived. In that year was instituted military rule which was not devoid of glory and lustre, but which was unacceptable to a civil population endowed with ambition and self respect.
In 1774 the Quebec Act brought about a slight improvement, an improvement which was still more marked in 1791 under the Constitutional Act, and again under the Union Act of 1840. But it was not until 1848 that, on instructions from the home office to Lord Elgin, the then governor, responsible government came into existence. By their firmness and foresight Lafontaine and Baldwin, giants in statesmanship, obtained from the crown for the Canadian people rights and privileges which cannot be prized too highly. Macdonald and Cartier, with Tupper, Brown, Mowat and others, are the fathers of confederation, as we have it. It is a monument of grandeur, a tower of strength, an instrument of flexible government-imperfect, if you like, but, as events prove, capable of being made suitable to our needs and requirements.
And through it all, from 1760 to 1931 laws and constitutions have been altered in London. There was the supreme power, the final authority. The statute of Westminster, adopted at our request by this final authority, removes every vestige of bondage and makes us sovereign not only within our own walls and frontiers, but throughout the world. Rights of minorities are guaranteed. That which is sacred
remains sacred. But from now on we are a nation, in the full sense of the word; autonomy is firmly and definitely established and consecrated.
I am proud of Canada as she is now, with new rights and responsibilities, and I would say, Let us unite to be great and strong. Let us have not, a condition of province against province, race against race, creed against creed, but a condition where provinces, races and creeds may be standing together in brotherly love, under king and flag, to protect and defend our common heritage.
As a matter of record, may I state briefly the purpose of the statute of Westminster. It is described as "An act to give effect to certain resolutions passed by imperial conferences held in the years 1926 and 1930." It happens to be non-contentious, because we now face the fait accompli. Every political group and party, on behalf of the nation as a whole and without exception, will join in endorsing this great result which, obviously, has had the sanction of the government of the old land.
Doctor Ollivier, who has written extensively on the matter, states that the great war made possible what had looked like a dream before that time. Sixty thousand Canadians died in Flanders. Sir Robert Borden, the then Prime Minister, was emphatic in his views with respect to Canadian representation on post-war settlement commissions and at the meetings of the society of nations.
(Translation) By this statute, writes Mr. Leopold Richer:
. . . the various dominions, including Canada, have become independent countries of the British Empire George VI, is emperor of India.
L'abbe Lionel Groulx has stated:
, kingdoms whose sovereign, also king of England and
This statute is the acknowledgement of a new state of affairs by equals and associates; a political and diplomatic contract drafted and accepted by all, each one speaking and acquiescing in the name of his country with an authority and right absolutely equal to that of the others.
As a preparation to this statute, the imperial conference of 1926 distinctly stated:
Great Britain and the dominions are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the crown, and freely associated as members of the British Commonwealth of Nations.
(Text) May I recall that this statute secures for Canada what was desired by the American colonies prior to the Boston tea party. The revolution led by Washington might have been avoided had Lord North been animated by a
Interpretation Act
[Stage Direction]
different spirit. In short, the statute of Westminster declares in a few paragraphs that the British parliament has conferred sovereignty on Canada. Under its terms our country attains majority, is given complete and absolute power. It is liberated from the operation of the Colonial Laws Validity Act and can legislate with extra-territorial effect. It is no more under the power and control of the parliament of the United Kingdom. It is free as far as the merchant shipping act is concerned. The British North America Act is retained just as long as it is desired by ourselves. Amendments to the constitution of Canada are to be in the hands of Canada and Canada only. As it stands now, Canada is to choose its own representatives and make and sign its own'treaties with other nations, untrammeled and without any interference whatsoever. Such conditions have their consequences. Our responsibilities are increased. Being masters in our own home, we must keep a closer eye on everything, not only the constitution itself but on our policies, internal and external. No engagement can bind us unless we are a party to it, and particularly no engagement as to war. This may create the necessity for a truly Canadian flag, the abolition of appeals to the privy council and the immediate attention to sundry matters heretofore attended to outside of our own country.
These are far-reaching changes, of a nature to create pride and self-confidence. Their effect cannot be overestimated, either in time of peace or in time of war. Under the new order of things decisions are not to be binding unless they are arrived at on this side of the water by our own Canadian parliament elected by our people. The genius for government of the British race has never been shown more clearly and established more firmly than by this great move, by this momentous concession of an old and glorious nation to a young and promising people. Rome in its palmy days, like communist Russia, like Italy and like Germany of the present age, believed in force, in armies, in concentration and in domination by sheer power. Not so with the empire of which we are proud to be a part. It is a commonwealth of equal states. Under the statute of Westminster we are partners; we have the same king. But if we bow to the same God and to the same king, nothing can bind us except our own brains, our own conscience, our own choice and decision to select and conclude. In short, His Majesty the King has become the king of Canada, and Canada emerges into complete independence, taking her place under the sun among the free nations of the world.
[Mr. Gariepy.J
Between 1890 and 1900 there was a period of uneasiness in Canada. From Toronto came a demand for imperial federation, whereas in my own province the opposite extremes were advocated, some talking complete independence and others going back to the 1854 bogey and discussing annexation. A satisfactory solution has been found and discord has been replaced by agreement. Men who differed are now united and happy in a common course of thought and action. Deserving of praise and credit as they were in their time, the Quebec Act, the Constitutional Act of 1791, the Union Act and the Confederation Act. although each a step in the right direction, were only moves toward the final and definite evolution which has been reached by the statute of Westminster.
I pray that this house will pass this bill. It is worthy of favourable consideration and enthusiastic approval. I am a Liberal, and I cannot be silent over the fact that the leaders of my party have proved to be no small factors in the adoption of this statute. In a memorable speech Sir Wilfrid Laurier said in a prophetic tone, "Canada is a nation." He gave his life for this country like Thiers, like Gladstone and like Lincoln. Laurier was a martyr to an idea, to an ideal, to a project and to a goal. He wanted all elements and all classes to work in harmony and in agreement so far as Canada's welfare was concerned. The present Prime Minister (Mr. Mackenzie King) was a disciple of Laurier. He was at the imperial conference of 1926 and history records the stand he took and the lead he gave, ably assisted as he was by his popular Siamese twin, the right hon. the Minister of Justice (Mr. Lapointe). The right hon. Minister of Justice was the first Canadian to sign, in 1923, on behalf of Canada as a free country, a treaty with another nation. It was his glorious lot to impress the British government with the wisdom of this statute when its principles and features were being considered. Just a few days ago he said:
(Translation) In 1929 I had the honour of [DOT]leading a delegation charged with the discussion and preparation of the draft of the statute of Westminster, and I devoted two months to that work.
(Text) Lapointe, Laurier, Cartier, Lafontaine and Papineau-this chain of Quebec leaders in
the political field takes us back to previous centuries and recalls the part played in the progress of this country by the two great predominant races. Justice without favour, peace with honour, protection for one and all-it is under such sound policy that we shall fulfil our duties as Canadian citizens

Interpretation Act
in the enjoyment of a new statute. We shall be true to our king, the king of Canada, but we shall be true also to ourselves. We shall be free like the air we breathe, free as we never were before, thanks to a statute which I want the whole country to salute and be reminded of on December 11 of each year. This is why I present this bill for adoption by this house.
Mr. T. L. CHURCH (Broadview):: Mr. Speaker, the motion of the hon. member is for the second reading of bill No. 2, to amend the Interpretation Act. I am surprised that the Minister of Justice (Mr. Lapointe) has not risen in his place to declare this bill out of order inasmuch as it involves an expenditure of public money in its printing and in the time of the House of Commons it has taken up at so much per minute. The purpose of this bill is to make a holiday of December 11, which day is to be designated Statute of Westminster day. In my opinion there are too many holidays now, and it would be better if this parliament would devote itself to something practical for the benefit of the working people of this country and of the 300,000 or 400,000 youths who are out of work, rather than taking up time talking about academic questions like the statute of Westminster. This statute has been nothing but an empire wrecking act. It has come near to putting Canada out of the empire. Had it not been for Munich, this statute might have helped to 'bring about the end of the British empire.
We now have as holidays in December, December 9, the king's birthday; December 25, Christmas day, and December 26, which is more or less a holiday. There is also January 1, New Year's day, and it is now proposed to have another holiday, December 11, to be known as Statute of Westminster day. Well, good-bye and good night to work in this country. It is not holidays that the people are looking for; it is remunerative employment in Canada that Canadians want instead of having to go to the United States to look for positions.
Now, as to the proposal of the hon. member: who is asking for this statute?


David Spence: Nobody.


Thomas Langton Church: Who has petitioned this parliament for a holiday on this date? Let us look at the statute and see what it is. It was the result of what is known as the colonial or imperial conferences-they have changed the name of these meetings-in 1923, 1926 and 1930. The representatives of Canada had no mandate from the Canadian people to
bind us with such a statute as this, and those who went over there did not represent the wisdom and the judgment of the people of this country. Our people were never asked to express an opinion regarding this empirewrecking statute known as the statute of Westminster. Of course, Canada took a leading part in obtaining it. Canada seems always to do all the talking on such matters before these conferences; but when it comes to actual performance paying or doing something practical, she does nothing at all. Canada was responsible very largely for Munich, because she persuaded the mother country to disarm the finest navy, air force and army the world ever saw, with the result that the pacifist pact of Munich was necessarily brought about.
Let us look more closely at this statute, included as chapter 4 in the statutes of Canada, 1932. It is arranged into some twelve sections. It will be noticed, in section 10, that Australia, New Zealand and Newfoundland refused to be associated with this triumph of Canada, the south of Ireland and South Africa, the three dominions which are linked together in this statute. Section 10 states that sections 2, 3, 4, 5 and 6 of the act shall not apply to Australia, New Zealand or Newfoundland unless they are adopted by those dominions. What are those six sections? They are practically the whole of the binding sections of the statute.
Section 2, relating to the validity of laws made by the parliament of a dominion does not bind Australia, New Zealand or South Africa. It states that:
The Colonial Laws Validity Act, 1865, shall not apply to any law made after the commencement of this, act by the parliament of a dominion.
The next section relates to the power of parliament to legislate extra-territorially: Canada has adopted that, of course; although she still depends on the British fleet in time of trouble, she is over there leading in the obtaining of this empire-wrecking agreement. By section 4 the parliament of the United Kingdom is not to legislate for a dominion except by its consent. Section 5 deals with the powers of dominion parliaments in relation to merchant shipping. Section 6, as to the powers of dominion parliaments in relation to the courts of admiralty, we also put there.
It is evident that so far as Australia, New Zealand and Newfoundland are concerned, they want to be in the British empire. At this conference it was decided that every dominion must look after its own defence. Canada is coveted by all the dictators because of her magnificent natural resources. With
Interpretation Act

the raw materials that we have, this land would be the happy hunting ground of the dictators if trouble occurred; there is only one agency which separates us from that trouble and from the power of the dictators, and that is the British fleet. The fleet is the protection which the motherland gives this dominion to keep open our trade routes and protect our shores. For that reason I cannot understand such legislation as this. I believe that if this statute had been submitted to the people of Canada, it would have been defeated at the polls. In the elections of 1930 and 1935 I never heard anything about it. Yet it was put over by those interested. In whose interest? To please South Africa and the people of southern Ireland. Australia and New Zealand are excepted from it almost entirely.
Let us go further and see what since this statute came into existence, is the position of the dominions. We will start with the Dominion of Canada, and see how this measure has led to separatism. The story goes back to 1919. I do not assign all-the blame for this to the present government, because some of our own party were connected with this policy a few years ago. They opened a legation at Washington; and if I had been the only Conservative member to do so, I would have voted, had I been here, against the establishment of the Washington legation and other legations all over the seven seas, because in my opinion it was not only fatal in times of peace, but will be most disastrous in time of war. If it had not been for Munich, we would have found that out in twenty-four hours from the dictators. We were near to it during that awful week last September.
What part has Canada played? In 1919 we started this business of separatism by signing the peace treaty at Versailles as a separate nation. I collected these different statutes in an address on a motion of the hon. member for Winnipeg North (Mr. Heaps) in this chamber on Wednesday, January 27, 1937, and I am reading from my speech in Hansard of that date:
... a separate seat for Canada was demanded and _ secured at the assembly of the League of Nations. In March, 1923, the halibut treaty was signed at Washington by Canada as a separate nation.
I think the present Minister of Justice signed for Canada then.
The imperial conference of 1923 affirmed the right of Canada to sign separate treaties. In 1924 Canada acted separately on the Dawes
glan, and in that year Canada urged that the olonial Laws Validity Act be repealed. In 1926 there was another imperial conference and the right was affirmed of each dominion 
to make separate and independent treaties not binding on any other country. We were given sovereign powers, and we saw the results in the Kellogg note. Separatism has gone far enough in this country. Some would abolish appeals to the privy council; others would abolish the office of lieutenant governor. Many innovations have been made during the last few years, with the result that we have nothing but a policy of separatism in this country, and this resolution, Mr. Speaker, practically says that Canada is a separate country from the mother country, like Spain or Ireland. We are bound to the mother country by ties of loyalty and affection. _ The governor general is also now merely a viceroy and removed from getting any advice from Downing street.
If any advice is required we are now told that Canada is the only place where one can get it. That is the position of Canada. Canada was a party to this statute of Westminster; we signed, sealed and delivered the statute which I spoke of in that debate and which I have just set out.
Now we come to Ireland. The statute was passed to please two dominions, South Africa and the south of Ireland.


Mr. GRAY:: What is the hon. gentleman
reading from?


Thomas Langton Church: Not only has Ireland
abolished the office of governor general and can make its own treaties, but since the passage of this statute the king's head is off the coins and off the postage stamps; there is a separate flag, and the British army has been banished from Ireland. The authority and power for Ireland to act in this fashion were derived from the statute of Westminster. Yet it is supposed to be one of the dominions. From the same source come the powers of the president of Eire, as they call it, or the president of the republic as I call it; others can call it any name they like. Not only that, but Ireland has gone further. She abolished the protection of the motherland so far as the army goes. The Prime Minister of the Irish republic goes over to London and refuses to drink the royal toast at the banquet at the parliament buildings, and then he proceeds to try to annex the Six Counties. That is where they stand under this statute of Westminster.
We come to another of the dominions named in this statute, the Union of South Africa. Where does it stand? That dominion is part and parcel of this statute. On page 1, in the preamble, reference is made to the delegates from the Dominion of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, et cetera. The Prime Minister of South Africa refuses to take the privy councillor's oath. They have already hauled down the

Interpretation Act
flag, and they have a little flag of their own in which there is a little eyelet hole for the union jack. The flag which protected them has been removed. They want to follow the example of Ireland, whereby they will want to be outside the empire altogether except for the protection of the British navy, and they appoint their own governor general. They want to be what is called an outside state- outside 364 days in the year, but on the last day wanting the protection of the fleet of the flag that protect their shores. There is no doubt that is where they stand.
Here is a picture of how separatism works. There was a picture in all the Canadian papers away back on November 4, showing Hon. Mr. Pirow, the Minister of Defence of South Africa, reviewing Hitler's troops right in the city of Berlin a week after Munich. And he was there before. What was he doing over there? He was over there to try to get back for Germany by exchange some of her mandated colonies. That is the position to-day; and the right hon. Prime Minister Hertzog has never taken his oath as privy councillor and will not take it. What do we find Hon. Oswald Pirow, Minister of National Defence for the Union of South Africa, doing? He went to Berlin and reviewed Hitler's troops and took the salute. I have a picture in my hand of him reviewing the troops in Berlin. The Union of South Africa some years ago passed an agreement over the head of the mother country whereby certain territories will be given back to Germany in exchange for certain others. The Minister of National Defence for South Africa finally wound up in Great Britain, and what was he trying to do there? Trying to persuade the British government to give Germany back her colonies. In Canada the press, with three or four exceptions, for years have kept the people in the dark by their lip-service to the League of Nations. There are only about four or five newspapers in this country which have opposed this doctrine of separatism.
The Daily Express of Johannesburg has a picture, to which I referred in the debate in this house two weeks ago, of the hauling down of the union jack just before a parade at which General Hertzog took the salute. The caption under the photograph is as follows:
Just before General Hertzog arrived at Swartkop aerodrome to take the salute at to-day's union day parade, officers discovered that the union jack, instead of the union flag, was flying at the saluting base. Hastily they had the union jack hauled down.
That is the position in that dominion.
This doctrine of separatism is disastrous in peace but more futile in war. We saw the
result of it in 1914. Lord Roberts went up and down England telling the people that war was coming, just about a month before war broke out, and he appealed to them and to the dominions for preparedness. The leading statesmen of England, with the exception of Lord Milner, were opposed and would not listen to Lord Roberts, who was telling the people to be prepared. If they had been prepared Great Britain could have bad four hundred thousand troops ready to move at the outbreak of the war, and the war would have been over in a couple of months.
We may have the same state of affairs in Canada as a result of the doctrine of separatism and trying to look after our own defence. Where are we to-day? Suppose Munich had not been a success. Germany's air force has a supremacy in the air estimated at three to one, and they would have been over London within a very few hours. What did the Secretary of State for War in Great Britain, Leslie Hore-Belisha, say? He showed the futility of the defences of London in case of war and gave the people all the real facts, not silence. I quoted in this house a couple of weeks ago what Mr. Chamberlain said that there should be the fullest publicity not only with regard to the defence of England but with regard to Britain's foreign, home and defence policies.
So far as the statute of Westminster is concerned, all the papers of Canada, with five or six exceptions, have been giving lip-service to the League of Nations, hoping that that would save us, that it would provide an armed force to protect our shores. But we know the futility of that hope because the league is done and finished.
There is no demand from the people of Canada for this bill. The act leaves us to look after our own defences ourselves. The explanatory note to the bill states:
Paragraph (11) of section 37 at present reads as follows:
(11) "holiday" includes Sundays, New Year's Day, the Epiphany, Good Friday, the Ascension, All Saints' Day, Conception Day, Easter Monday, Ash Wednesday, Christmas Day, the birthday or the day fixed by proclamation for the celebration of the birthday of the reigning sovereign. Victoria Day, Dominion Day, the first Monday in September, designated Labour Day, Remembrance Day, and any day appointed by proclamation for a general fast or thanksgiving.
Then it goes on to say that the purpose of the amendment proposed by the hon. member for Three Rivers (Mr. Gariepy):
. . . is to make the eleventh day of December a holiday throughout Canada. The Statute of Westminster, which confirmed Canada's present
Interpretation Act

status, that of a sovereign country freely associated as a member of the British commonwealth of nations, was assented to on the eleventh day of December, 1931.
It is fit and proper that this most important anniversary should be kept and observed as a holiday.
The bill is entitled, "An act to amend the Interpretation Act," and reads:
His majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
1. Paragraph eleven of section thirty-seven of the Interpretation Act, chapter one of the Revised Statutes of Canada, 1927, as enacted by chapter six of the statutes of 1935, is repealed and the following substituted therefor:
"(11) holiday' includes Sundays, New Year's Day, the Epiphany, Good Friday, the Ascension, All Saints' Day, Conception Day, Easter Monday, Ash Wednesday, Christmas Day, the birthday or the day fixed by proclamation for the celebration of the birthday of the reigning sovereign, Victoria Day, Dominion Day, the elevfnth day of December, designated Statute of Westminister Day, the first Monday in September, designated Labour Day, Remembrance Day, and any day appointed by proclamation for a general fast or thanksgiving;"
I see no demand for this legislation, Mr. Speaker. But this government wants to change everything.
Under the statute of Westminster each of the dominions is to be responsible for its own home defence. Where is Canada's? What home defence have we if Canada is invaded by the dictators? We had a little discussion in this house last year about Japan-


Walter Edward Foster: I think the hon. member is going far afield from the subject matter of this 'bill when he talks about the defence of this country. This bill has to do with adding one more holiday to our list of national holidays, and the hon. member is not at liberty to speak of national defence on this bill.


Thomas Langton Church: Let me quote the words of the statute of Westminster respecting defence-[DOT]


Walter Edward Foster: The hon. member is repeating his argument, and there is a rule of this house which says that an hon. member repeating his argument all the time may be called to order by the Speaker. The hon. member is not adding anything new.


Thomas Langton Church: Then I will say it at some other time, Mr. Speaker. If all parliament has to do is to spend its time discussing academic questions like this, the sooner we go home the better. A private member has no rights here; yet a private member is the only connecting link between the government of the day and the electors, and when he ceases to function all parliamentary government is at an end. I have, as an authority

for the functions and rights of private members and their duty, that statement in Edmund Burke, who in his address to the electors of Bristol said:
Certainly, gentlemen, it ought to be the happiness and glory of a representative to live in the strictest union, the closest correspondence, and the most unreserved communication with his constituents-


Walter Edward Foster: The hon. member cannot impute motives. The hon. member for Three Rivers is quite within his rights in introducing this bill.


Thomas Langton Church: I accept your ruling Mr. Speaker. I doubt if a private member can say anything in this house. We have rules and regulations governing us that are three and four hundred years old. All we are here is a house of undertakers, janitors and caretakers. That is what we are coming to.


Some hon. MEMBERS:: Order.


Thomas Langton Church: We have no powers; we might as well go home.


Ernest Lapointe: I must congratulate the hon.
member for Three Rivers (Mr. Gariepy) on his very fine address and thank him personally for his kind words concerning myself. I hope he will not be too disappointed if I question the necessity or the opportuneness of carrying the bill into legislation. The hon. member for Three Rivers said such nice things about the modest work I had to do in connection with what led to the statute of Westminster that I needed the other words of my hon. friend the member for Broadview (Mr. Church) to bring me down to a status of humility.
As far as the proposal is concerned, to declare this particular date a holiday, to attain the purpose of the proposer of the bill would need more amendments than this one, because the Interpretation Act only defines what a holiday is when there is no other interpretation in the text of special legislation. On every occasion when we celebrate a holiday, that holiday is defined. For instance, in the Bank Act, in the Letters of Exchange Act, in the Civil Service Act, the holidays provided for are therein all described; and merely to add this date to the Interpretation Act would not have the effect of creating holidays for the various purposes of those legislative enactments. That could be remedied, of course, by adding amendments to the bill. I am doubtful, however, about the proposal itself, not because of the motives of my hon. friend but because I believe that

Interpretation Act
*
the first of July, Dominion day, is the national day of Canada and embraces the commemoration of all that Canada has done in her progress to nationhood.
Dominion day means confederation day. The confederation was formed in 1867 by the joining together of four colonies, and the new nation, or at least the country that was on the way to nationhood, gradually added to itself other provinces and made various improvements to reach the status which we now enjoy. This has been a gradual process. I will not describe the various stages; my hon. friend did. The year 1926, of course, crystallized the work that had been done, and the position of Canada in the British commonwealth was actually defined and accepted by all on a status of equality. In 1929 we had the conference in London where a draft of the statute of Westminster was prepared, discussed, debated and accepted and finally, in the following year, the statute was enacted defining Canada's nationhood.
All along there were many difficulties to be met and faced. Every step forward has been fought, most frequently by arguments such as those used by the hon. member for Broadview to-night. I may say that even those who accept the statute of Westminster to-day, and not only accept it but celebrate its anniversary on different occasions, were rather indifferent at the time, and some of them were apprehensive. It was represented as meaning separatism, separation from the British empire, as the hon. member for Broadview said to-night. Of course, it is the opposite. It is a symbol of union; it is unity and freedom; it is the bond that binds together the various parts of the commonwealth under the same crown. Freedom is the cement that binds all these nations together, and if the people of Canada and of the various countries of the commonwealth had ideas such as those expressed by the hon. member for Broadview, that, I believe, would lead to division, disunion and disruption.
Fortunately, my hon. friend's voice is one in the wilderness, because most of the people of Canada accept the situation as it is and are pleased at the change. But-and here I address myself to the hon. member for Three Rivers-the statute of Westminster applies to all Canada. It was the goal of all Canada and Dominion day, which is Canada's day, the national day of the whole country, embraces it all; so that undoubtedly the celebration of Dominion day, the Westminster act and the statute that was passed as a result of that act, all go together.
I do not believe that too many holidays would be advisable. I believe perhaps we ought to have fewer holidays, but we should celebrate them with greater keenness, more fervour and more patriotic enthusiasm. For instance, Dominion day, Canadian day, is not in my opinion celebrated as it should be throughout the country as the national day, as the national days of other nations are celebrated. It should be more assertive of the national spirit of Canada. I repeat, I do not think there should be too many holidays.
I have a list of the public holidays in England. For instance, bank holidays in England and Wales, Ireland and the Channel islands are, Easter Monday, Whit-Monday, the first Monday in August and the first day after Christmas or Boxing day. Banks are also closed on Good Friday and Christmas day; stock exchanges are closed on bank holidays; customs houses and docks are also closed on bank holidays and the king's birthday, June 3, or when decreed. It appears that the banks are open on the king's birthday, because it i3 specially stated that customs houses and docks are celebrating the same holidays as the banks, with the addition of the king's birthday. The law offices close on Good Friday, Easter Monday and Tuesday, Whit-Monday, Christmas day and the first day after Christ-' mas, that is Boxing day. There are really less holidays there than we have here at the present time.
I have another reason to offer. The statute of Westminster is a great step; but it is not as final for Canada as it has been for most of the other dominions, because of certain things which prevent complete nationhood, in spite of the fact that those obstacles are of our own will, are there because we want them to be there.


Mr. PELLETIER:: Would the minister say that there has been any sort of agreement between the various provinces to request the enactment of this statute?


Ernest Lapointe: I have
only five minutes left, and I may be presumptuous, but what I have to say is more important to me than giving the statement that my hon. friend would like me to make.
First, there is the right to amend our own constitution. This is the most important legislative work; it is our own charter; the conditions under which we act as legislatures here and in the provinces are still laid down at Westminster. This is by our own desire, because of our special conditions, but it is there. How can it be accepted in international law
Interpretation Act

*
that we are a fully sovereign nation when we have to resort to the parliament of another country to effect changes in our constitutional structure? This creates a situation which 1 hope to take the opportunity to deal with in connection with some important matters which will be debated this session concerning foreign affairs and various bills which are on the order paper.
In the second place, there are the privy council appeals. There, again, it is our own will; we can change it any time; we have the right to abolish appeals to the privy council, but we have not done so. Litigants from Canada must go to the mother country to get a final decision in Canadian cases. As the hon. member for St. Lawrence-St. George (Mr. Cahan) said last year, the sovereignty of Canada resides in the judicial committee.
There is another matter which has been discussed this session for a couple of hours, but which seems to be treated as futile, namely, the adoption of a distinctive Canadian flag. We cannot say that we have complete equality of status and full sovereignty until we have a Canadian flag. As far as I am concerned-I am speaking only for myself- I think the three matters I have mentioned will have to be dealt with and definitely solved before we can say that we are like the other dominions which have all done so. These dominions are as loyal as Canada, their people as loyal as any Canadians. But there are some people in Canada with the ideas of the hon. member for Broadview, who are afraid of asserting themselves, or to declare that they are full Canadian citizens.
This is not in any respect talking in favour of separation. I tell hon. members most sincerely and earnestly that I believe that the best way to keep the Dominion of Canada in the British commonwealth of nations-I hope to God it will always remain in the British commonwealth of nations-is to have a Canada free and equal in status in every respect. It is cooperation in freedom. And I repeat, none of those steps has led or will lead to separation.
I am pleased that my hon. friend has brought the matter up, in order that it might be discussed; it is an important subject. I do not suppose he expected that his bill would be accepted this session. His purpose must have been accomplished by having the matter discussed, and I suppose he will not insist on his bill being enacted this year.



NATIONAL DEFENCE


[Stage Direction]
The house resumed consideration of the motion of Mr. Mackenzie (Vancouver) that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to establish a defence purchasing board with exclusive power, subject to approval of the governor in council, to enter into all contracts for the purchase of munitions, equipment, materials and supplies required by the Department of National Defence in eases where the expenditure exceeds $5,000; to provide safeguards to assure that such munitions, equipment, materials and supplies shall be purchased at a reasonable cost to the government and without unreasonable profit to any manufacturer or supplier thereof; to provide that salaries, wages and other expenses of the board shall be
fiayable out of moneys appropriated by par-iament.
To authorize the governor in council to borrow such sums of money as may be required to pay expenditures of the Department of National Defence which are chargeable to capital account in the appropriations provided by parliament for the said department; and to provide a sinking fund sufficient to retire in ten years the said sums borrowed for capital expenditures of the said department, together with interest thereon at three per cent per annum.
Howard Charles Green: This resolution which was being considered by the house before recess, plainly contemplates extensive private manufacture of armaments in Canada. For the sake of making that clear, I will read the first part of the resolution, which is as follows:
That it is expedient to introduce a measure to establish a defence purchasing board with exclusive power, subject to approval of the governor in council, to enter into all contracts for the purchase of munitions, equipment, materials and supplies required by the Department of National Defence in cases where the expenditure exceeds $5,000.
To me the most significant feature of the discussion which took place this afternoon was the announcement by the Prime Minister (Mr. Mackenzie King) and by the Minister of National Defence (Mr. Mackenzie) that the government have adopted a policy of restricting manufactures in dominion arsenals; in other words, that our arsenals are to make only certain ammunition of a type of which a continuous supply is required. This means-and I suggest that the house and the Canadian people should understand it clearly-that Canada is going much further in the private manufacture of armaments than the United Kindom or any of the other dominions. It means that our gov-

Defence Purchasing Board
ernment have adopted a policy of relying almost exclusively on private firms for our armaments, contrary to the definite recommendation of our general staff as opposed to the recommendation of the deputy minister of national defence.


William Lyon Mackenzie King: I regret to interrupt my hon. friend, but he said that I had made some statement. I made no reference to any policy respecting arsenals this afternoon.


Howard Charles Green: I think the Prime Minister will recollect he stated that he had discussed with the Minister of National Defence on numerous occasions the question whether or not Canada should manufacture her armaments in dominion arsenals or should have them manufactured by private companies with profits restricted.


William Lyon Mackenzie King: I did discuss these matters with the minister; but I made no statement of policy this afternoon in regard to that.


Howard Charles Green: At any rate, the Minister of National Defence made a statement of policy.


Ian Alistair Mackenzie: I hate to interrupt my hon. friend, but I think I stated, at least I hope I conveyed the impression to my hon. friend that the policy I would like to see adopted is to extend the facilities of state manufacture as far as they are possibly practicable. I meant to convey that, all through my address.


Howard Charles Green: I am afraid the minister and his department wish one way and act another, because their actions certainly are in the other direction. As I have said, the government are doing this contrary to the recommendations of their own general staff. That was set out in the report in the Bren gun inquiry, where it is stated at page 10:
The minister said that there were two very definite schools of thought in the department and that he assumed all responsibility. One school, he said, was headed by the then chief of general staff, and the other by the deputy minister, for both of whom he said he had equally great admiration.
I would point out that, under our law, the deputy minister is not a military official. He is a civil official. Yet his recommendation was taken over that of the chief of general staff, who is a military official. Then the report goes on:
The minister said that General Ashton (the then chief of the general staff) was very insistent upon the development of government arsenals and that the former chief of general staff. General McNaughton, evolved a very comprehensive scheme for Valcartier which would include practically all the requirements of the Canadian forces.


Ross Wilfred Gray: The minister said that to-day.


Howard Charles Green: And I am repeating it tonight. The government may be right in adopting this policy, but personally I do not think they are. I believe they are not looking far enough ahead, and I believe they have drifted into their policy as the easiest course to follow in the recent emergency, instead of taking a long-range view, instead of realizing that we are really just beginning this business of defending ourselves and that / we shall require munitions and war equipment for many many years to come.
Australia has gone the other way. She has an arsenal policy, developed after the war- which is the time, incidentally, when Canada should have developed her defence policy.. And the House of Commons might very well remember that during all those years the present Prime Minister was at the head of the Canadian government.
After the war Australia set out on an effective arsenal policy. The result is that she produces not only her own munitions, but also her own machine guns and rifles, and I believe she either produces or is able to produce her light artillery and anti-aircraft guns, and her 4-5 howitzers. Incidentally, she produces her own Bren guns.
Then, the Australian arsenals serve as pilot plants for private industry. They develop the processes required for manufacture which, if necessary, can be made available to private industry. They produce the tools, jigs, gauges and so- on which are required by private industry for the production of armaments. They do research work and train key men for armament manufacture. Hon. members who are interested will find an excellent summary in the Canadian Defence Quarterly, volume 14, at page 288. It is an article entitled Australian Defence, written by the Hon. Sir Archdale Parkhill, Minister for Defence for Australia.


Ian Alistair Mackenzie: Not now.


Howard Charles Green: No, but he was at the time this was written. The question of munitions supply in Australia is discussed at page 296, and I should like to read the following paragraph which seems to sum up the situation:
In time of war the government factories would be quite inadequate, but in peace time they serve as places where a technical staff can be trained, and in the course of that training it is arranged that the ordinary peace time requirements of munitions by the fighting services are produced. The factories are also organized as the centres from which manufacturing details would be circulated to the commercial industries should necessity require their conversion from their normal pursuits.
Defence Purchasing Board

In Australia they have what I believe this house might very well consider establishing in Canada, namely what they call a munitions supply branch. I believe it is very much like the old munitions board of Canada. The summary sets out that the munitions supply branch, which to a great extent has been modeled after the old ministry of munitions in England, is administered by a board which has functions which I shall enumerate presently. I suggest the minister might get more efficient work from a munitions supply branch or a munitions board of this type than he will get from his proposed purchasing board. The functions of the Australian munitions supply branch, which is a part of the Department of Defence in Australia, are these:
(a)	To manufacture and arrange for local production of armament, arms, ammunition, supplies and stores of all kinds as may be demanded by the fighting services.
(b)	T-O provide facilities for scientific research and experiment, and the inspection and examination of munitions.
(c)	The designing of factories, machines and tools lor production in time ol war and the making and checking of gauges for trade manulacture.
(d)	The training of men in the manufacture ol munitions for distribution as instructors and inspectors to the civil factories in time of war.
The summary goes on to explain about the different factories and organizations which the Australian government have. For instance, they have a clothing factory which makes uniforms not only for the armed forces but also for the postal and tramway employees. It also makes mail bags. I should not like to be considered as suggesting that this government should go into the business of making standard articles such as blankets, clothing and so on. I think all that work might very well be left to private firms. But in Australia we find that they have a commonwealth clothing factory. Then, they have a munitions factory, an explosives factory and an ordnance factory which, as I have stated, is capable of making guns up to 4-5 calibre. At page 299 of the Canadian Defence Quarterly we find that lately the ordnance factory has commenced the manufacture of three-inch anti-aircraft guns, with mountings, and that good progress is being made. It is stated that in the projectile factory every class of shot and shell up to eight inches in diameter is made, and the larger types of bombs are also being manufactured. Then, they have a small arms factory, and they provide for investigation into chemical defence, inspection services, and so on. Apparently this is an adequate munitions supply branch.


Ross Wilfred Gray: Will the hon. member permit a question? Is he opposing the resolution of the minister?


Howard Charles Green: I think if the hon. member will keep his seat for a few moments, and will listen until I have finished my speech, he will find out what I am doing.
The manufacture of munitions has developed to such an extent in Australia that in 1937, at the imperial conference, the Right Hon. J. A. Lyons, Prime Minister, was able to report to the other dominions and to the United Kingdom the following, which appears at page 17 of the summary of proceedings of the conference:
The building up of the munitions supply organization had reached the stage that the government factories had developed the capacity for the production of the various types of the ordinary requirements of the army, navy and air force, and these resources were being further expanded. A survey of civil industry was also being carried out to determine the possibilities of capacity for production, and to prepare plans for mobilizing its resources in an emergency.
Just about a month ago a local Ottawa paper carried a news dispatch from Australia headed, "Australia near self-sufficiency in munitions manufacture." This is a dispatch from Melbourne, dated February 7, by Canadian Press and Reuters:
So great has been Australia's development of munitions supply that she is now nearing national self-sufficiency in munitions manufacture. The number of employees in munitions factories has been doubled in the last four years, though the actual number employed is not revealed.
And it goes on to set out the extent to which the Australian program has been developed.
So much for Australia. Now we turn to the United Kingdom where they have had such lengthy experience in the production of armaments. We find the position there to be much the same as it is in Australia. The minister will correct me if I am wrong in any of my information. I believe there are government arsenals at Woolwich and Enfield as well as many other government armament factories, some for example, in the depressed areas. All these factories are manufacturing armaments much in the same way as Australia, probably more or less in the capacity of pilot plants. This afternoon the minister quoted from the report of the royal commission on the private manufacture of and trading in arms which sat in Great Britain

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in 1935 and 1936. I think it should be noted that the sixth recommendation by that commission is as follows:
We recommend that the government should assume complete responsibility for the arms industry in the United Kingdom and should organize and regulate the necessary collaboration between the government and private industry; that this responsibility should be exercised through a controlling body, presided over by a minister responsible to parliament, having executive powers in peace time and in war time, over all matters relating to the supply and manufacture of arms and munitions, costing and the authorization of orders from abroad.
The commission went on to make this further recommendation, which I submit applies to Canada just as much as to the United Kingdom:
We further recommend that the government's own manufacturing establishments should be fully equipped for the production in some measure of naval, military, and air armaments of all types.
I understand that South Africa is making similar provisions for the manufacture of armaments. All these sister nations use government arsenals as the basis of their plans for the providing of armaments. In Canada apparently the arsenal at Quebec is doing first-class work. The arsenal at Lindsay is not doing very much, my information being that it is only making brass plates for shell cases, but it is an arsenal which could be used for the production of many more articles than are being produced at the present time. Yet, in spite of all this, we actually have the government turning over machinery for the making of munitions to a private firm, as was done in connection with the Bren gun contract, and buying machinery for another private firm in the case of the Montreal company which is to make shells. This is just the reverse of what is being done in Great Britain and Australia. To date Canada has not gone very far with this restricted arsenal policy. For example, we have not yet manufactured any rifles, any anti-aircraft guns or any artillery. The minister will correct me if that is wrong.


Ian Alistair Mackenzie: Correct.


Howard Charles Green: Sooner or later we shall have to face the question of how we are going to obtain these armaments. I suggest to the government that before they proceed any further with the present policy they should reconsider the whole question. They should arrange to use the dominion arsenals as Australia and the United Kingdom have done. I do not believe the Canadian people approve
reliance being placed exclusively upon private firms for our armaments, and I do not believe they will tolerate, let alone approve, armament rings and armament trusts, which are likely to spring up as a result of the government's policy. On the other hand, I have no doubt our people would be solidly behind a policy such as that adopted by Australia and the United Kingdom, even though this policy required in the beginning a heavier capital outlay than docs the present policy; the government have at hand the means of raising the money under their new plan for financing capital expenditures for armaments on a ten year basis. I suggest that in dealing with this very important problem the government show a little more of the foresight and initiative and courage of the individual Canadian.


Ross Wilfred Gray: I come back again to ask
the hon. member for Vancouver South (Mr. Green)-


Robert James Manion: Put it on the order paper.


Ross Wilfred Gray: I will ask him now. Is he opposed to the resolution of the minister?


Howard Charles Green: The hon. member can read my speech in the morning and he will see exactly what I am in favour of.
Mr. JEAN-FRANCOIS P.OULIOT (Temiscouata): I should like to know from the minister who is to compose this new board. There is a rumour in the house that the former Minister of Labour, the Hon. Wesley Gordon, will be one of the members. He was a minister in the Bennett government. It is also rumoured that Mr. Tom Moore, the well known parasite here in the city of Ottawa, will be another member.


Abraham Albert Heaps: That is not fair.


Jean-François Pouliot: I should like to know if there is any foundation in those rumours. There will be no partisanship in that, and I hope the minister will answer me later on. Mr. Wesley Gordon was dumb when he was Minister of Labour. Quite often when I asked him a question it did not seem that I was addressing the chair; it seemed as though I was addressing the desks because there was no answer.


Robert James Manion: I rise to a point of order. I do not like to interrupt my hon. friend because he is generally amusing even though he does not often enlighten the house. I do not think attacks on Wesley Gordon and Tom Moore have anything to do with the resolution before the house. I appeal to you, Mr. Speaker, to deal with the hon. member as you have with others, and make him keep to the subject before the house.
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Walter Edward Foster: I think the hon. member should be more careful.


Jean-François Pouliot: Would the minister be
kind enough to tell me if Wesley Gordon and Tom Moore are to be members of this board?


Ian Alistair Mackenzie: The minister is in no position to tell my hon. friend who are to be members on this board. I expressed a general principle this afternoon. I should be glad to see a board established which would command the confidence of all the Canadian people and in the appointment of which the hon. members Of every party in this house would concur.


Jean-François Pouliot: As I am a Canadian I warn the minister against falling on slippery ground by appointing those who are unworthy of the confidence of the government. That is my humble opinion. I am a Liberal to the core. I was born a Liberal, I am a Liberal, and I shall die a Liberal. But that does not prevent me from liking some Tories, although not all of them.


Thomas Clement (Tommy) Douglas: Has the hon. member no ambition?


Jean-François Pouliot: And also some members of the Cooperative Commonwealth Federation, whose conversion I expect to see some day, as well as some of my hon. friends of the Social Credit party.
I am a Liberal. I believe in Liberal policies, having been taught Liberal policies when I was a child. I have always fought for Liberalism. At times I was alone in voting against the social policy of the last government. I was proud of that; and my electors supported me, and the speech that I am making now I can make anywhere in my constituency, anywhere in the province of Quebec, anywhere in Canada. I am sick of suffering the continuance of Tory policies. I am fed up with them. I am a Liberal to the core. Here, provided that any minister has the approval of any Tory, he is sure that he is on safe ground.


Robert James Manion: Hear, hear.


Jean-François Pouliot: That is where he is mistaken. And now I am very doubtful if this legislation is a legitimate child. Who is the father? Is it Sir Thomas White, who was the patron saint of all profiteers during the war? Reference to him was made by the Minister of National Defence (Mr. Mackenzie) in his speech. Afterwards he quoted the former leader of the opposition; then he quoted the present leader of the opposition (Mr. Manion), and then the hon. member for Winnipeg North

Centre (Mr. Woodsworth). He forgot the hon. member for Weyburn (Mr. Douglas), who corrected his forgetfulness by quoting his own paper. Who is the father? Is it Sir Thomas White? Is it Mr. Bennett the bachelor? Is it the present leader of the opposition? Is the leader of the Cooperative Commonwealth Federation the father? It is a most important measure.


James Earl Lawson: Who is going to be charged as the putative father?


Jean-François Pouliot: It is very hard to say, but what can be said is that the child is surely illegitimate.


An hon. MEMBER:: Is it not more important to know about the mother?


Jean-François Pouliot: Afterwards we had some explanation from my chief to the effect that the Minister of National Defence had suggested to him that he did not want any contractual aspect of the Department of National Defence to be under himself, but that it should be under the Minister of Finance (Mr. Dunning). I am in full sympathy with the Minister of National Defence. He is my friend, and when everybody had a long face, at the time of the discussion of the Bren contract, I tried to crank the old Ford of the House of Commons to make it a little more snappy and to chase neurasthenia from the minds of my friends.


Mr. CASSELMAN:: Did the hon. member succeed?


Jean-François Pouliot: I tried to help the best I could. But now I think of the late famous Japanese general, General Oku, when he committed hara-kiri.


An hon. MEMBER:: What is that?


Jean-François Pouliot: Of course the minister of a department is the head of the department; but I fear that in this case, to quote Roman law, there is not a decapitation but there is a diminutio capitis, a reduction of head. This is not at all subtle. In fact, in the Department of National Defence there are two things. There is on the one hand the army, navy and air force; afterwards there are the supplies for the army, the tripartite army, consisting of army, navy and air force, and those supplies are of two kinds. There are, first, what we may call clothes, food and so on; and then there are the munitions. All contracts concerning the fabrication of armaments are transferred to the Department of Finance.
According to this resolution a new board will be created, and I strongly object to the

Dejence Purchasing Board
creation, of that board. I find it absurd. And I find it absurd because I am a good Liberal and because I have always fought the battles of the Liberal party. For me the Minister of National Defence is a good minister. I consider him so. I believe in him, and I want him to continue to act as Minister of National Defence. I say that as one of two hundred and forty-five members, expressing my own views. He is the victim of one of the worst intrigues of bureaucracy that I have ever witnessed.
Of course all the speeches that have been delivered by the hon. gentlemen who have spoken this afternoon and this evening were most interesting, but not one was to the point. You find that extraordinary, Mr. Speaker. But if hon. gentlemen will read Hansard of February 13, not for the speeches themselves but for the evidence, they will see that the cause of all this fuss is the fact that there was an incompetent individual in the Department of National Defence. Just because he belongs to the Rideau club, belongs to a highly respectable family of Ottawa, and has fine connections and relations, he will keep his job there; and instead of his being replaced by a competent man, a new organism is created at great cost just to do the work that that man should have done. I will not name him; it would give him too much importance. I do not think one should fire a 15-inch gun at a fly or a firefly; a puff is sufficient. But the evidence is there. It was put on Hansard; although it is always dull to read the reports of a committee, it was put there just to prove an evident fact, just to prove a thing that one sees very well, that it is dark at night, that it is bright in the daytime. It is there in the first pages of Hansard of February 13.
Then, to summarize the little speech that my distinguished leader made this afternoon, it was not, as the leader of the opposition (Mr. Manion) said, as a result of the Bren discussion in the house that we have' now to discuss this measure, but it was precisely on account of the report of Judge Davis, which was forwarded to council before we had it in the house. This is exactly the recommendation that has been made by Judge Davis. I am ready to support any policy which is enacted by the government that I have been standing with all the time and that I still stand with. But I will never vote for any so-called Liberal policy which is drafted by a Tory judge. That is all there is to it.


Ross Wilfred Gray: The minister has already recommended it.


Jean-François Pouliot: Now, Mr. Speaker, there was an interdepartmental committee for the purchase of munitions. It was headed by whom? It was headed by Doctor Oscar D. Skelton, under-secretary of state for external affairs, the champion of the League of Nations -buying armaments for the defence of our country. Can you imagine anything more ridiculous, -Mr. Speaker-Doctor Oscar D. Skelton, champion of the League of Nations, purchasing armaments for the defence of our country! He was the head man. He was surrounded by others, who are not bad men, but very few of them were lawyers. They had to pass on contracts, and so well was their work done that on the thirty-second day of the Bren gun investigation Judge Davis wondered who had drafted that particular contract. Because the committee had made no progress for months they had to work one night for the very first time, to settle the contract. I refer you, Mr. Speaker, to page 846 of Hansard for what the judge said.
Now there is Tom Moore who is out of a job. He is well known as a parasite, a man who has put in his pocket $13,813 paid to him by this country when he had not worked at all. He was on the unemployment insurance commission, and he had absolutely nothing to do at the time, for the legislation was being appealed before the privy council. Now he calls himself a dominion public servant. I do not want him on this board, sir, and I so notify the minister.
With regard to Mr. Wesley Gordon I will say nothing more than that there will be a revolt in the province of Quebec and throughout Canada if he is appointed because he was not competent as Minister of Labour. It may be a policy of appeasement of my Conservative friends in this house to say:	We
will appoint an important Conservative to the board. But I believe, Mr. Speaker, that there are good men among the Liberals, and it will be an insult to each one of them to select Tories when we have to award contracts. Is it impossible to find four just men in the Liberal party who are qualified to be appointed to that board? Is it necessary to cater to the official opposition and the other groups in this house? If the government have something to do, let them do it boldly and they will meet with the approval of the country.
I want the Minister of National Defence (Mr. Mackenzie) to stand up like a man and defend his own department, and not let it be carved up as our constituencies were carved up by the late administration. I want him to remain minister in full charge of his department. He has nothing to turn over to the
Defence Purchasing Board

Minister of Finance (Mr. Dunning). I do not blame the Minister of Finance for this, but there again I see the nigger in the wood-pile-these people who want to hold all the strings of government in the Department of Finance. In England the thing has been refused by the British House of Commons. Here the Department of Finance has complete control over the expenditures of every department, and now they are taking from the hands of the Minister of National Defence the absolute right which he has to award contracts for munitions which will be used by the soldiers, sailors and airmen under the minister's control. I strongly object to that. It is a master intrigue, Mr. Speaker, which has been catered to by Doctor Skelton, Tom Moore and others I could name, for instance, Mr. Clark of the Department of Finance, et cetera. I see some members who think of rising and saying that these men are not in this house; but they are our servants, and we are here to discuss their actions. I see bureaucracy there. In the United States they have a committee now studying the menace of bureaucracy which is the worst threat to democracy. They feel that in the United States, just as we feel it here. At the present time the civil servants, most of them, have no respect for their ministers, and why? Because they are paid, not under the authority of their own minister but under the authority of the Minister of Finance. That should stop. In the name of Liberalism there must be an end to it.
Of course there may be some Conservative members listening to me at the present time who may not agree with me, but they know that no one can pull a hair from my head here in this House of Commons. I have been battling for the Liberal party all the time; and even when I did not listen to the orders I received from my leaders to stop or shut up, it was for their own good, for their own defence. When I fought alone against the nefarious social legislation of the Bennett government, it was to keep the home fires burning in the province of Quebec. Fifteen days before the election I went to Toronto, the holy city of Toronto, where I told my audience that sixty Liberals would be elected out of sixty-five seats in the province of Quebec, and that message was carried to the homes of the whole population of Ontario by the Telegram as well as the Globe, by the Mail as well as by the Star.
The Liberal party is an entity. I believe in Liberalism, and if at times I use strong words in reply to my friends opposite to my right, it is not because I lack Christian [Mr. Pouliot-1
charity, but because I do not believe in their doctrines. They do not sit here as citizens but as members of parliament representing certain doctrines, certain ideas, with which I do not agree. If I can help them personally at any time I shall be glad to do so, but they shall always find me in their way fighting to the last ditch any of their doctrines that I consider pernicious and find to be all wrong.
My great grandfather was a humble merchant who was one of those who in 1834 voted for the ninety-two resolutions in the Quebec legislative assembly. He was one of those who believed in the same doctrines as William Lyon Mackenzie, the grandfather of my chief. I believe in responsible government, Mr. Speaker. The Minister of National Defence knows that I am his friend, and I want him to present the estimates of his department as the chief and head of his own department.
I want him to withdraw this legislation and to get rid of the thirty or forty employees of the Department of Finance who are a pest in his own department. I want him not to present this legislation to the house. Mark you, that does not mean that I am in favour of big profits on armaments, but I want the minister to have control himself and to be given a free hand, and he is at liberty to kick out of his department some of the incompetent men who cast an undeserved slur upon him.
Those, Mr. Speaker, are the views of a Liberal from below Quebec, and you also represent a constituency below Quebec. I do not want to be misunderstood. If Mr. Chamberlain found a policy of appeasement to be the right thing, I find it all wrong. Either our policies are good or they are bad. Even if they are very good we could expect the opposition to criticize them.


Robert James Manion: No, never.


Jean-François Pouliot: In theory they may deny it, but in practice, Mr. Speaker, you will see that that is done. If our policy is wrong, let us withdraw it; but if our policy is good, let us go ahead with it. That is my humble view. Then, if you do not satisfy the interests of our friends by giving them plums and large contracts, at least the members of the Liberal party will satisfy the minds and expectations of our friends, and the Canadian people will understand then that the Liberal party is true to its mission of defending the rights of the people against the rights of monopolies. I regard it as an insult and I protest in the name of the Minister of National Defence,

Defence Purchasing Board
who knows I am one of his best friends in this house, against the dismemberment of his department. He is a worthy minister. Let him keep his department as a whole and let him administer it with the good men he has in it, provided that he has, I will not say the courage-I know that he has-but the freedom to kick out those who are unworthy to be there and who, because they are incompetent, expose the lives of our children and others, in case of attack on this country.
I heard the hon. member for Weyburn (Mr. Douglas) speak of the integrity of the personnel of the interdepartmental committee.
I do not discuss their honesty; I give them the benefit of the doubt. But some are incompetent. There, sir, you have the whole story. Now I appeal to my hon. friend the minister. I ask him to reconsider what he said the other day when he urged us all to support this procedure. I for one cannot.
I ask him not to insist upon it but to speak again to the Prime Minister and to say to him, "I was weak the other day when I suggested to you, sir, to allow one important part of my department to go to the Department of Finance. I was wrong, and I have changed my mind after due reflection. Now, sir, it is in the interests of the country for me to keep the department as it is at present." The Prime Minister would understand, surely, and it would be for the good of the government and for the good of the department as well.
Here in the sendee, sir, it is my experience that when a man is incompetent he may get a promotion, but he is sure never to be troubled. And here in this house, if I say there is an incompetent man somewhere, I shall be told that he is my bete noire, that I am after him; or I shall be told that he is not here. It is most ridiculous. We are here to discuss the value of the men in the public service who are in charge of important positions. If they are competent, all right; but if they are incompetent, then I say "Get rid of them," and the sooner the better-the better government we shall have. Otherwise this country will be a democracy only in name; in fact, it will be a country in which there exists the dictatorship of bureaucracy. I hope these warnings that have been given for the good of the minister, for the good of the government, and to express the feelings of all in my province and in Canada at large, will be heard and heeded.


Thomas Langton Church: I hope that now the minister has decided upon a board, he will meet with the same success 71492-113
which has attended the activities of the British munitions board. I have here a summary of their report as given by the manager of the commission, Colonel Carnegie.
I fear a shortage of power if an emergency overtakes this country. As you are aware, Mr. Speaker, in 1917 there was a shortage of coal in Canada, and we also found ourselves faced with a shortage of hydro power owing to the fact that Ontario was supplying export power to other points and the huge demands for munitions. At one period of the war, in 1917, as this Carnegie book of the history of Canadian munitions shows, Ontario was manufacturing forty per cent of the total shells supplied to the British forces. She was able to do this largely on account of the huge power she had from the Hydro commission, but the demand for power was acute.
The debates that have been going on for a month or so now may, after all, prove to have served a most useful purpose. There were similar debates in Great Britain during the early days of the war and we had them here too. It brought about here a demand for reforms.
There are a few things which I should like to bring to the attention of the minister. The resolution declares that it is expedient to introduce a measure to establish a defence purchasing board with exclusive power, sub-, ject to approval of the governor in council, to enter into all contracts for the purchase of munitions and so forth in cases where the expenditure exceeds $5,000. In my opinion it would be better for the new board to assume complete control, with the necessary safeguards, over contracts amounting to more than $200, not only over those of more than $5,000. That was more or less the policy during the war, and competitive bids were called for those up to $200. Over that there would be a straight contract under the board.
I hope that the minister will see to it that everyone who wishes to have his plant surveyed will be given that opportunity. Prior to the war the Baldwin interests had a granite sets plant in Toronto at Ashbridge bay. In the early days of the war tariff changes were made which handicapped it, and it was at last turned into one of the largest munition factories in the empire. It was under the control of the British munitions board. The first shipment of shells, only a few, was made in December, 1914, and in 1915, on the institution of a new policy of the British munitions board, production went ahead by leaps and bounds. The late Mr. Fred Miller, a great

Defence Purchasing Board

patriot, was connected with the plant in an honorary way, as was also Mr. E. L. Cousins, manager of the harbour board. As I say, it was one of the largest munitions establishments in the British empire and it did very well.
I wish this new board every success, and I do not believe that the discussion which has taken place in this house, and which, after all, led to and was responsible for a board, will do any harm, because it will be aa intimation to the manufacturers of Canada that they must be up and doing. The Economist of London, England, has had some pertinent remarks to make with regard to the question of home defence. I quote:
It is not merely with reluctance, but with repugnance that most citizens acquiesce in rearmament. There is one aspect of the matter, however, to which these feelings need not so fully apply. The army the navy, and the air force are each of them necessarily concerned with the taking of life and the destruction of wealth. But there is a fourth arm, home defence, which, though it costs money which can ill be spared, is at least concerned exclusively with protection and preservation. Home defence, moreover, has a peculiar urgency for Great Britain, for in many ways we are one of the most vulnerable of European nations. It is more difficult for us than for others either to protect our population from air raids or to ensure that they are supplied with food.
I .trust that the new organization which is to be set up will follow the principles and great record that guided the British munitions board in Canada during the great war. When the war broke out Canada did not have a single plant to make shells, but by the cooperation of manufacturers, of labour and of a large number of key men who served voluntarily and without pay, a glorious record was made by Canada, and I wish the minister's new board equal success.
Iron and steel are the principal ingredients in modern armaments. Let me read two paragraphs from the report by the imperial munitions board of what Canada did; and I hope this new board will be able to parallel those achievements. In the report issued by the British war cabinet for the year 1917 it was stated:
Canada's contribution during the last year has been striking. Fifteen per cent of total expenditure of the ministry of munitions in the last six months of the year was incurred in that country. She has manufactured nearly every type of shell from 18 pounder to 9-2 inch. In the case of the 18 pounder no less than 55 per cent of the output of shrapnel shells in the last six months came from Canada, and most of these were complete rounds of ammunition. .	.	. Canada also contributed
42 per cent of the total 4-5 inch shells, 27 per cent of the 6 inch shells, 20 per cent of the 8 inch and 16 per cent of the 9'2 inch.

The following figures give some idea of what Canada accomplished in the production of munitions of war:
1914		$	28,164
1915		 57,213,688
1916		 296,505,257
1917		 388,213,553
1918		 260,711,751
The report continues:
The effect of the establishment of the munitions industry in Canada in increasing iron and steel production is also observable in the statistics of manufactures. In 1915 the iron and steel products industry of Canada produced commodities to the value of $120,422,420, while in 1917 its products were valued at $400,385,086, and in 1918 at $443,455,779. The chemical and allied products industry was also greatly stimulated by the war. Commodities to a gross value of $45,410,486 were produced by this industry in 1915 while in 1917 the gross value increased to $133,618,658 and in 1918 the gross products were valued at $173,649,073.
That is the glorious record of this dominion, considering it had at the beginning no factories and no industry to manufacture shells.
The manager of the British munitions board in Canada was David Carnegie, C.B.E., formerly member and ordnance adviser, shell committee, and imperial munitions board, Ottawa. He has given an account of the history of munition supplies in Canada, and I hope the new board will follow the great example in business administration which that board gave.
The former Prime Minister of Great Britain, Right Hon. David Lloyd George, shows what Canada has done. He says:
Though the material required could not then be produced in Canada, for, it must be remembered, no private manufacturer had ever made a shell in that country and the output of the only arsenal need not be considered, the Canadian manufacturers, under the initiative and leadership of the Minister of Militia, produced these munitions.
Then the account goes on to refer to the fact that the contract was for 220,000 shells a week but owing to the organization of the board they produced 400,000 18-inch shrapnel shells, twice the number called for in the contract.
Mr. Winston Churchill at the conclusion of the war wrote a letter of congratulation to the board for the great work it had done.
Then the United States came into the war, and it was fortunate for that country that Canada had the British munitions board. Let me read just two paragraphs concerning that:
In the autumn of 1917, after the government of the United States entered the war, negotiations were opened between the officials of the United States ordnance department and the Imperial Munitions Board, with a view to placing at the disposal of the United States the surplus forgings and machining capacity which had been developed in Canada.

Defence Purchasing Board
At the time in question Canada had a shellforging and machining capacity for 18 pounder shells of 400,000 per week, and had actually shipped overseas 32,000,000 of these shells. This remarkable development had taken three years' hard work and organization but now was not fully required by the British government, who had increased her manufacturing capacity in Great Britain. The actual requirements of the British government from Canada amounted to 150,000 to 200,000 per week, leaving an unused capacity of 200,000 to 250,000. It was this latter capacity the Imperial Munitions Board on behalf of the manufacturers of Canada, and in the interest of the Allies, placed at the disposal of the United States government. The proposal was opportune, as at the time the United States were making desperate efforts to organize for the production of the 75 mm. high explosive shells. This shell was about the same size as the British 18 pounder shells. It was therefore with the object of assisting the United States ordnance department in carrying out its munitions program that negotiations were begun.
So we see what was done in Canada by all the parties uniting in harmony. I hope that the new board will go to work and that not only shall we get orders from our own defence department for home defence but that Canada will have a large share of the munition orders of the mother country in her rearmament, because we are not getting it now. In addition, I hope that advancement will be made all along the line and that Canada will be making the record for itself which it made in the late war.
Motion (Mr. Mackenzie, Vancouver) agreed to and the house went into committee, Sir Eugene Fiset in the chair.
Mr.	MANION:	I	wish to ask	a few
questions. I asked about the personnel. I assume from his reply that the minister does not know who the personnel will be.


Ian Alistair Mackenzie: Not in
the least.
Mr.	MANION:	Is	there not a	defencecouncil in the minister's department? What connection will the defence purchasing board, when	appointed,	have with the	defence
council?
Mr.	MACKENZIE	(Vancouver):	There
is a defence council in the department consisting of the senior ranking officers in the three services: the chief of the general staff, the chief of the naval staff, the chief of the air staff, the adjutant general, the master general of the ordnance, the judge advocate general, the deputy minister and the minister.
As far as I can recollect from the terms of the legislation, there will be no connection whatsoever except that in the first place I would think the requisitions would come from the members of the defence council. My
hon. friend is probably aware that there are full meetings of the defence council; there are meetings of the military members of the council; in recent months there has been formed an air council in the department of air services, and they meet by themselves to consider problems relating essentially to that branch of the service. But in regard to the general requirements of the Department of National Defence, they would make the representations through the minister to the purchasing board, and the purchasing board will probably review the entire requirements of all services and make recommendations in turn to the Minister of Finance who will bring them before the council.


Robert James Manion: That is why I asked the
minister in regard to the personnel. I am concerned not so much regarding their names as regarding their occupations. I remember in the remarks I made to which he referred this afternoon and to which I also referred, I had suggested-it was merely a suggestion- that perhaps the board which would handle the purchases of munitions and armaments might be made up of, I think I put first the militia, naturally someone from the army, then a manufacturer, then a representative of labour, and some others. I mentioned those as an example. After all, if the defence purchasing board is merely a group of business men with possibly labour representation -and I think there should be labour representation-that board would naturally not know the needs of defence in Canada. They are not military men, any more than my hon. friend and I are military men. Therefore there will have to be some liaison between the defence purchasing board and the defence council.
A suggestion has been made to me by a military man for whom I have a great deal of respect, but who is not and never has been in any way associated with the Department of National Defence. This suggestion, which I believe is worthy of consideration, is that there should be a committee of the House of Commons and the Senate-an advisory committee, if you wish-made up of eight or ten persons who could hold discussion in camera, if necessary, with the defence council and with the defence purchasing board. They could discuss the needs of the Department of National Defence, the method of obtaining requirements and other matters relating to the defence of the country. I do not know whether or not this is the best place to discuss the matter; probably I should have waited until the defence estimates were before the committee of supply, but it seemed to me
Defence Purchasing Board

that the subject fitted in here just as well as anywhere. If I speak now, it will not be necessary to do so later on.


Ian Alistair Mackenzie: Perhaps it might be said more properly when the bill is before the house.


Robert James Manion: Perhaps so.


Ian Alistair Mackenzie: But I
have no objection to the statement being made now.


Robert James Manion: The suggestion was made that it might be expected that questions would be asked in regard to the spending of money for the defence of Canada by the Department of National Defence, and that replies would be made by the Minister of National Defence or by the Prime Minister to the effect that it is not considered in the public interest to give the information asked. I can understand how that would happen. It seems to me there should be some group, composed of members of the House of Commons and the Senate, who could discuss these matters in camera, and possibly_act as a sort of liaison between the two houses and the Department of Defence. This is a suggestion which I believe is worthy of consideration.
The question of defence is a big problem in Canada to-day, particularly in view of the world situation. The expenditure of $63,000,000 for armaments and munitions is very important to the Dominion of Canada, and I suggest it should be made to the best possible advantage.
I should like to ask the minister one or two further questions. Did the minister say there would be three on the defence purchasing board?


Ian Alistair Mackenzie: Four,
altogether; the chairman would be a permanent official, and the other three would be temporary.


Robert James Manion: One further question: Did he say the chairman would be paid a salary, and the others would receive merely expenses?


Ian Alistair Mackenzie: Yes, the chairman would be paid a salary, and the others would be allowed per diem expenses and allowances for the time they may be called in to advise on specific contracts. The hon. member will readily realize there might be a difficult legal contract to be drawn up. It might be that a commercial lawyer would be called in-or an accountant, as the case may be, depending on the qualifications of the temporary personnel.


John Charles Landeryou: Will the money be
borrowed from private money lenders, the same as was done in the last war? Is that the intention?


Ian Alistair Mackenzie: Does the hon. member refer to the financial provisions necessary to look after the operations of the board?


John Charles Landeryou: Yes. The resolution uses this expression, "To authorize the governor in council to borrow such sums of money" and so on. Who will they borrow from-from what source?


Ian Alistair Mackenzie: I would say, from the very best sources available.


John Charles Landeryou: The amount involved this year would possibly be somewhere in the neighbourhood of $60,000,000? Could the minister give the committee any figure as to the amount that might have to be borrowed this year?


Ian Alistair Mackenzie: I think the estimates for this year will speak for themselves. The total vote is for something more than $63,000,000, of which amount $3,000,000 is required for the financing of the capital expenditures. If my memory is correct, $29,000,000 of the $60,000,000 is taken from capital expenditure, and the balance from ordinary revenue. The differentiation is based on the durable value of the implements or supplies.


John Charles Landeryou: If war broke out, considerably more money would have to be borrowed?


Ian Alistair Mackenzie: Oh, yes.


John Charles Landeryou: It could not be taken out of revenue. That would simply mean that this sinking fund provision would have to be increased tremendously.


Ian Alistair Mackenzie: May I tell my hon. friend that if war broke out, entirely new and drastic financial provisions would have to be made overnight.


John Charles Landeryou: I would hope that would be the case, because the experience we had in the last war would indicate that such procedure would be necessary. The first paragraph of the resolution contains the expression "to provide safeguards to assure that such munitions, equipment, materials and supplies shall be purchased at a reasonable cost to the government and without unreasonable profit to any manufacturer or supplier thereof." With that thought I am absolutely

Defence Purchasing Board
in accord. It is not those who labour in the production of war materials who make the profits. It is not necessarily those who supply the raw materials who make the profits. It is not particularly those who control the industries who make such large profits. I believe our experience in the last war would indicate that it was those who financed the war who made the tremendous profits or, in other words, those who have been described as the men who stand behind the men behind the guns-that is, those who financed the whole thing. They are the ones who derived the profit.
We are informed that the last war cost between 250 billion and 400 billion dollars. The cost of the war to Canada has been estimated in the neighbourhood of one billion seven hundred million dollars. I know that the debt of Canada rose from about $360,000,000 in 1914 to about three billion dollars when the war was over. We have been paying interest on that sum ever since-interest amounting to as much as we originally borrowed. And still we owe the amount we originally borrowed to finance the war. So I say that if we go to those private moneylenders to get money to carry on Canada's national defence, we shall be creating a practically intolerable situation in Canada. We shall be raising the debt and taxes tremendously.
May I make a suggestion to the Minister of National Defence? I would suggest that he have erected a very large Neon sign which could be seen at night when illuminated, and also during the day, and that on that sign he would have the debt of Canada, private, municipal, provincial, and federal. I would suggest that he have, too, the number of Canadians unemployed and living on the verge of starvation. I would suggest that he put on the sign the number of homes lost through taxes and mortgage foreclosures. If that were done, I suggest any invasion of the country would be stopped immediately. If an enemy could see a big sign showing the terrible mess the country is in, the debts we owe-privately, municipally, provincially and federally-it would hesitate to take over a country in such condition. I believe such a sign would be more valuable than the guns the minister has placed on the west coast. He would simply be advertising the terrible financial mess the country is in, and enemies would hesitate to take it over and, as it were, pay the shot. Of course we know that, ten chances to one, if an enemy did take the country over, it would never attempt to pay the debt. And so we would be fighting, and
fighting hard, to keep somebody from getting in here who would free us from financial bondage. We fight for the privilege of paying this intolerable burden of debt and taxation.
I hope the minister will adopt my suggestion and have the sign erected as quickly as possible, and at the least possible expense.


Mr. BRADETTE:: What a dramatic jokel


Thomas Clement (Tommy) Douglas: It seemed to me this afternoon that the minister, in a lengthy speech, in an able manner weighed pro and con the policies of state manufacture and private manufacture. He went into the subject elaborately, and placed upon Hansard a great deal of valuable data, which I think most of us want to go over before we can be prepared to say much about it.
It seems to me as though the government has definitely set its feet toward private manufacture as opposed to state manufacture. I wonder if the minister could tell the committee-if he has not this information now perhaps he will have it when the bill comes down-how much has been spent in the last few years by the Department of National Defence in the way of capital expenditures to provide machinery to be installed in the plants of private manufacturers, the machinery to belong to the government if, later on, it is decided to go into state manufacture.


Ian Alistair Mackenzie: I could not give the information immediately, but I shall endeavour to have it when the bill is in committee. As far as I know, there are only two plants in which machinery has been installed, the two which were mentioned in the debate last week. My hon. friend does not refer to the expansion of the government arsenals; he refers only to private companies?


Thomas Clement (Tommy) Douglas: Yes.


Ian Alistair Mackenzie: I shall have the information when the bill is in committee.


Mr. MARSHALL:: The resolution refers to unreasonable profits. Will any limit be set on the profits that may be made in the manufacture of munitions? For instance, we were told that in connection with the Bren gun contract a ten per cent profit was allowed.


Ian Alistair Mackenzie: The profit allowed here is five per cent. As a matter of fact, according to the evidence given, the profit under the Bren gun contract is 7-76 per cent.


René-Antoine Pelletier: The press dispatches in to-day's newspapers state that there seems to be a decrease in the tension in Europe and
Defence Purchasing Board

that the clouds of war which were hovering over Europe a short time ago appear to be dispelled. I was just wondering if the work to be undertaken in connection with national defence would be such that it could not be discontinued in the event of more peaceful times coming to the world. In setting up a board of this kind I should like to know whether it is to be of a permanent nature. They are even talking of possible disarmament conferences and new limitations being placed upon armaments that might be required. There seems to be some hope that countries will not have to carry on with their armament programs. In setting up a board of this kind the government must have some definite information that the situation will be precarious for many years to come. I submit it would be illogical to set up this board for a year or some other short period of time. We are being asked to vote some $65,000,000 for purposes of defence, and I should like to know what would happen in the event of the situation in Europe becoming less tense, and there being no further danger to this country. Will the government then drop all these armament projects or will it be compelled to continue with the work it has undertaken? During the last number of years the government has spent millions of dollars to build up defences which we are told are obsolete to-day. I ask the government to give some indication of what is feared in the future and what its attitude will be concerning the continuation of a program of this kind in the event of the war clouds over Europe disappearing.


Ian Alistair Mackenzie: Obviously the questions asked by my hon. friend are such as are not capable of being answered specifically. Naturally the attitude of any government in Canada would be guided largely by the conditions which might prevail in the world. There is nothing in the constitution of this board to make it of an absolutely permanent nature. What we are trying to do is to provide an efficient system, in connection with even small purchases, with the requirements of the Department of National Defence.


Abraham Albert Heaps: When the minister was speaking this afternoon, I asked what would be the status of the interdepartmental committee when this board was appointed. Will that committee still function?


Ian Alistair Mackenzie: That will be fully disclosed by the text of the bill. I would say, however, that the interdepartmental

committee which has rendered such excellent service to the country in the last two years would be no longer required for this particular purpose. As a matter of fact, under the bill to be introduced, this board will have authority to deal not only with contracts, as I explained this afternoon, but to review all existing contracts which have been let under the old system and to report thereon to the government.


Abraham Albert Heaps: In a sense this new set-up will be a replacement of the interdepartmental committee which has been functioning up to the present time. As the minister said this afternoon, a great deal will depend upon the personnel of the new board. Am I asking too much when I inquire whether the powers of the new board will be of an absolute nature, or will its work be subject to review by this parliament?


Ian Alistair Mackenzie: The
work of any board is subject to review by this parliament. We could not take away from parliament the right to review the work of any board. I think it would be more convenient if my hon. friend would wait until he sees the actual sections of the bill, which are self-explanatory in regard to the questions he has just asked. I may say, however, that this is to be an independent board to supervise the purchases by the department.


David Spence: How can it be an independent board if, as has been suggested by some one, there is to be on it a representative of labour and representatives of other classes? We should have on this board men of the highest integrity, men with good business training and with sufficient ability to carry out the work successfully.


Ian Alistair Mackenzie: I can
promise my hon. friend that we shall do our utmost to carry out his suggestion in that regard. I think it is advisable, as far as possible, to have the various occupations represented in the make-up of the board. We might need an accountant; we might need a trained legal man; we might need a representative of labour, as was suggested by the commissioner. Of necessity, no decision has been made as yet in regard to these occupational qualifications.
Resolution reported, read the second time and concurred in. Mr. Mackenzie (Vancouver) thereupon moved for leave to introduce Bill No. 38, to establish a defence purchasing board.
Motion agreed to and bill read the first time.

Pension Act Amendment



PENSION ACT


[Stage Direction]
The house resumed from Thursday, March 9, consideration of the motion of Mr. Power for the second reading of Bill No. 6, to amend the Pension Act.
Charles Grant MacNeil: Before the bill passes its second reading, I have a few observations to make. I wish to associate myself very warmly with the remarks made last evening by the hon. member for Vancouver South (Mr. Green). I am not' in opposition to the bill. I think the minister is to be commended for proposing to abolish the pension appeal court and to set forward the date for receipt of applications for pensions.
I think, before the bill passes second reading, the minister should take an opportunity to explain to the house his attitude with regard to several important proposals which have been made to him by organized ex-service men in connection with pensions. An honest endeavour was made earlier in this parliament to recast as it were the Pension Act and to bring all pension matters to a stage of finality. Since that time we have experienced various problems; we have encountered several anomalies in the act; and I think that on this occasion, when he is introducing an amending bill, a further effort should be made to bring to a stage of finality these important problems with regard to which the minister has received recommendations.
I do not wish my remarks to be construed as opposition to the bill introduced by the minister, but this is the only opportunity we shall have to point out its inadequacies and to invite him to make a pronouncement with regard to several matters which should be dealt with at this time.
I am of the opinion that a bill of this kind should be referred to a special committee of the house. There are several important and valid reasons why it should be dealt with by a special committee. This matter of pensions should be considered with relation to the general problem. If it becomes possible to deal with small groups under the Pension Act without violating the principles of that act, that, I think, should be done with relation to existing problems among ex-service men. The question of pensions is a subject of a highly technical nature, and can be discussed more readily and with more facility in a special committee. A committee provides a useful forum for the receipt of recommendations and the discussion of them without
detaining or unduly occupying the time of the house. Furthermore, it is important with regard to the pensions question, with the experience we now have, that we should bring this matter, as I have said before, to the stage of finality.	.
I think it is important that the minister should make a pronouncement at this time with regard to the claim of non-pensioned widows. This matter has received considerable attention in recent months, and certain classifications of those widows have a strong claim upon the government and upon this country. I believe a strong case can be made for those widows of ex-service men who until the time of death were in receipt of pensions. Those women up to the time of their husbands' deaths were in receipt of the additional pension. They were in a sense assured up to the time of death of an income in respect of the disability incurred during service. Because it cannot be definitely established that the man's death was due to a pensionable disability, they are cut off with, perhaps, only a month's allowance. I think consideration should be given to those in that classification who are in destitute circumstances, who were in receipt of the additional pension until the time of death of their husbands and that some form of allowance on the basis of need should be extended to those widows to enable them to adjust themselves to a new mode of life. After all, if they are in destitute circumstances they must apply for relief, either for mothers' allowance or some other form of aid, to the provincial or civic authority, and usually the federal government contributes a large proportion of the assistance extended to them. I think they have a just and proper claim upon the federal government. There would be no great expenditure involved. As far as I can ascertain by an examination of the departmental figures, not a very large number are involved in that classification, and I believe that at this stage the government would be well advised in moving forward to a sympathetic consideration of this classification.
With regard to the other classifications, I think some of them at least might be placed on the same basis as the widows of those who were in receipt of war veterans' allowance at the time of death, and who at the present time receive the allowance for the continued period of twelve months. Much could be said in this regard. I am confident that already, because of representations made to him, the.minister must have given the matter careful attention.
Perhaps I should refer to these cases where there is doubt, the borderline cases
179S
Pension Act Amendment

where it may be contended strongly that the pensionable disability was a contributing factor to death. I have under my hand a copy of a decision made by the pension appeal court which I think illustrates the point I am discussing at *the moment, where a man had established entitlement to pension, where he was admitted to hospital because he required operative treatment-he was pensionable for a chest condition-and as a result of the administration of a general anaesthetic he developed bronchial pneumonia and death ensued within a few days. In this particular case the appeal court went to considerable trouble to question the former decision rendered by the pension commission with regard to entitlement. The deceased officer in question happened to have had service in the British forces. It was shown in the concluding paragraph of the judgment that there was doubt, even in the minds of the members of the pension appeal court who signed the judgment, and by the way, the case was appealed by the crown. The court felt that a further claim should be made and that it might be possible in their opinion to consider fresh evidence with regard to entitlement. I feel that cases of this kind should be again reviewed, under the new and amended legislation, by the pension commission. I think that in cases such as this a powerful contention may be made for some form of allowance to the widow who is not now pensionable and because a reasonable doubt exists that the pensionable disability was a contributing factor to death. In this case the widow had some assurance that because of her husband's disability she would receive some form of income from the state with respect to that disability. Certainly in many of these cases the widow during her husband's life gave the best years of her own life irr administering to his comfort and need when the man was handicapped by his war disability.
I wish again to stress the necessity of amending the legislation dealing with the needs of those suffering from mental and nervous disorders. That ground was traversed last evening by the hon. member for Vancouver South, and I support him in that regard. I suppose that almost every hon. member is having considerable trouble with claims advanced by men suffering from some form of neurological disorder. I have under my hand a case which, I believe, illustrates the point

a man who had three enlistments and who gave meritorious service in France. There is a record of hospitalization, while on [.Mr. MacNeil.] '
active service, for epilepsy, mania and neurasthenia. Nevertheless, upon examination by the neuro-psychiatrists of the treatment branch, it was diagnosed that he was suffering from psychopathic personality of constitutional origin, that there was superimposed on that psychopathic personality an anxiety neurosis, and to quote the report:
On the strength of the neurological report and diagnosis to psychopathic personality, the commission have ruled that the entire disability present in this case is the result of the constitutional condition and psychopathic personality with spasmodic affection of the eye, and the man's award of pension previously paid at 30 per cent for anxiety neurosis lias been discontinued.	.
I have no criticism in this regard of the pension commission, 'but the man's total disability was thirty per cent. He is receiving pension for aggravation at the rate of eighteen per cent because of the spasmodic affection of the eye. I suggest that if section 11 (b) be suitably amended by the house at this time along the line suggested by the hon. member for Vancouver South, the pension commission would be on stronger ground in dealing with these cases and be in a position to relieve the worry and anxiety which these men are occasioned, and which I contend accentuates rather than removes their disability. That is in my opinion an important matter. I believe it was the original intention of parliament to protect the man who served in a theatre of actual war with regard to pre-enlistment disability. It was never intended that there should be discrimination in respect of mental or nervous disorders. I fail to comprehend why there should be any distinction drawn between, say tuberculosis, and a mental disorder. If a man had any constitutional or hereditary tendency to pulmonary tuberculosis, no discrimination is made because of that, and upon discharge from the service he is given the full protection of this section of the act. But by reason of the recommendations of the neuropsychiatrists of the treatment branch, who dominate the situation with respect to diagnosis, this discrimination against mental or nervous disorders does exist to-day, and a certain number of men, whether the number be large or not I do not know, are suffering grievous hardship as a result. I urge upon the minister that he take the opportunity of amending the act in the way previously suggested, so that men in this category may be given their full rights.
I find that this bill makes no provision for the plight of those dealt with under section 77 of the Pension Act, and that also was referred to last evening-the payment of

Pension Act Amendment
additional pension in respect of children born after May 1, 1933. I would remind the house that this section was introduced as an economy measure when the depression was at its depth, and no longer is there any good reason for the maintenance of this section.
I also urge that the date with respect to marriage contracted subsequently to the appearance of disability, which is now January, 1930, should be moved forward to synchronize with the final date for payment of additional pensions, May 1, 1933, or delete section 77; in one way or the other remove the apparent anomaly that exists in the Pension Act.
I again urge upon the minister the necessity of dealing more generously with the nonpensionable widow. If he cannot see his way clear to assuming any additional responsibility in this respect at the present time, he should at least give consideration to lowering or extending the classification. At the present time provision is made for the dependents of those who died in receipt of pensions, classes 1 to 5. That might be lowered to include those in receipt of fifty or sixty per cent pension without incurring any great additional liability, and again meeting the need of those who are rendered dependent by death where the pensionable disability is a contributing factor to death.
I do not wish to detain the house at length.
I merely urge upon the minister at this stage that he make a declaration on behalf of the government with regard to the important recommendations which have been advanced and which should now receive consideration.
I repeat my suggestion that it would be proper at this time to have a brief inquiry by a special committee of the house where all these technical matters might be adequately and frankly discussed to the satisfaction of the organized ex-service men.
Hon. H. II. STEVENS (Kootenay East): Mr. Speaker, this bill, of course, is strictly limited. I gather that it deals merely with the change from the appeal court to appeal boards of the commission.
I am inclined to agree with the suggestion of the hon. member for Vancouver North (Mr. MacNeil), who has just taken his seat, that it might be advisable to set up again this session a special committee to deal with the numerous, and, I think, reasonable requests, many of them, that have been made by veterans' organizations. I recall that over the years since the war, the special committees that have been set up from time to time to deal with soldier problems have done extremely valuable work. I think all who know of the work of those 71492-114
special committees will agree with me in paying tribute to the splendid work done by the present minister (Mr. Power) when he was a private member of the house and a member of that committee, and, on some occasions, chairman of it.
While I was not a member of that committee, I do recall that few committees of this house have carried on their deliberations with a more genuine spirit of cooperation, or reported to the house with a greater degree of unanimity than the special committee which was set up from time to time to deal with pensions and returned soldier problems. I suggest that at this session a similar committee should again be set up, to which this bill might be referred, for the purpose, not of dealing with this particular subject but, rather, of reviewing the position of the veterans as it is to-day.
I am quite aware that there will naturally be in the minds of many people the thought that sooner or later wTe must call a halt on pension legislation. But I feel that this concept is not a very sound one in the light of the facts with which we are confronted at the present time.
May I now turn the thoughts of the members of the house for a short time in a slightly different direction. From time to time we are told, as, for instance, when we were dealing with the question of free hospitalization or free medical attendance of a civilian nature, that these, are matters of provincial jurisdiction where the province must be considered, and where, indeed, our jurisdiction is distinctly questioned. And so again with questions of relief. We are told that this is primarily a municipal matter, certainly a provincial matter, but that through grants in aid we can cooperate. But the welfare of veterans is definitely and distinctly a federal responsibility, and I think the time has arrived when we as a parliament ought clearly to declare, as we have in a half-hearted way declared at times in the past, that this is a federal matter and that we propose definitely to take that responsibility on our shoulders. I think if we should so declare, it would go a long way toward clearing the atmosphere.
I am not giving to the house anything new when I refer to a document issued by the Canadian Legion containing a copy of an address by the late Sir Robert Borden when he was Prime Minister. I have no doubt members of the house are familiar with it, and I shall not quote it at length but rather refer to it for the purpose of supporting what I have just said. In this address by Sir Robert

Pension Act Amendment

Borden to the members of the Canadian expeditionary force in 1917, I find the following language:
The government and the country will consider it their first duty to see that a proper appreciation of your effort and of your courage is brought to the notice of the people at home, and it will always be our endeavour to so guide the attitude of public opinion that the country will support the government to prove to the returned men its just and due appreciation of the inestimable value of the services rendered to the country and empire, and that no man, whether he, goes back or whether he remains in Flanders, will have just cause to reproach the government for having broken with the men who won and the men who died.
These were magnificent words spoken by the then Prime Minister of Canada, and in my opinion-and I have always held this view tenaciously-it was a declaration that we dare not break faith with those men, a declaration which we must respect. Taking that view, I hold that we should not hesitate to declare that it is our federal responsibility, the responsibility of this parliament, to care for the veterans of the great war. What does that involve? I know that we cannot respond to all the requests and suggestions, because many of these requests, though made by men in good faith, are made without an appreciation of the magnitude of the demands or of their seriousness-demands such as a large bonus to every individual, and so on. Some of these requests cannot be entertained, but the least that parliament can do is, as we have done in the past, from time to time to review the general conditions of the veterans of the last war, in such a manner as to ensure that we are doing the maximum in caring for them.
There is a second point I wish to emphasize. The other day we spent several hours discussing state medicine, and it has been discussed on several occasions in this house. Well, there should be no hesitancy on the part of parliament in assuming responsibility for the complete hospitalization of the veterans of the last war, irrespective of whether they are pensionable or not. I speak now as a layman and from observation and contact with these men, and while of course my opinion is not technically authoritative, it is nevertheless my view that most of these men are probably eight or ten years older than they are, if I might use that contradiction in terms. By virtue of that service they are aged before their time. I may be wrong, but that is my impression. I meet men I know who are no older than myself, but they are certainly much older in their physical condition than I am, and I think that is generally the case. For that reason we ought frankly to accept the responsibility of hospitalization for the

veterans, and I would make no discrimination regarding the causes of their illness, and so on. I would accept responsibility in the name of the people of Canada, and because I think parliament must keep faith with the declaration made by the Prime Minister of Canada of that time, with full knowledge and a sense of responsibility of his statement as Prime Minister, that we would take care of these men.
The hon. member for Vancouver North referred to the question of widows' pensions. I am not sufficiently acquainted with the technique of this subject, the particulars of the law, to discuss it, nor do I wish to discuss it at length. But there in that connection is a point which I think we could well take into consideration. The widow of a veteran, although for pension purposes, under the law as at present drafted she may not be entitled to continuation of the pension, because of lateness of marriage or for some other reason, is nevertheless in my opinion still entitled to special consideration by this parliament, and I again apply to that subject the same test I applied to the other, namely, that we are called upon in Canada, through the provinces and the municipalities, to care for the derelict, the unfortunate, the unemployed and the destitute citizens of the country, by tens of thousands. We do that with the question of jurisdiction constantly thrust forward, whereas we have here a group whom we might very well take under our care, and the responsibility for whom this dominion should assume.
There is another question which is perhaps more difficult. I do not admit that in these two other instances I have mentioned, the question of hospitalization of veterans and the question of widows, there is any complicated difficulty. But the next is perhaps a little more complicated, and that is as regards imperial veterans resident in Canada. With respect to this class, I recognize, of course, that there may be two broad divisions. On the one hand there is the imperial veteran who is perhaps an old country born man, who enlisted in the early weeks or months of 1914 in the imperial army. Many of them hastened away because of the delay at Valcartier and because they wanted to get back and join the imperial forces. At any rate, they left Canada and joined the imperial forces, and they are naturally subject to such benefits as the imperial parliament may have granted. There is a technical argument- that can be advanced regarding this class, and that is that they are imperial veterans and that therefore the imperial parliament must take care of them. On many occasions since the

Pension Act Amendment
war their rights or requests have been reviewed, and we did make certain concessions, so that the answer I have just indicated does not really hold good. I say, we have made certain concessions to them. Now I suggest that their requests should be again reviewed by a competent committee of the house to consider whether or not we could extend to them some additional privileges which they do not now enjoy. I suggest that we might very well include them in the privileges of free hospitalization. These are certain major questions to which I wanted to refer.
There is, of course, the question of taking care of or making what we call economic provision for the returned unemployed. I hold in my hand a letter which I received from the Cranbrook branch of the Canadian Legion, signed by its secretary, W. S. Johnston. from which I quote one paragraph:
The officers and members of the branch are in complete sympathy -with the proposal that the dominion government adopt the principle contained in the recommendation of the veterans' assistance commission and the dominion convention of the Canadian Legion at Fort William; "that unemployed ex-service men who saw service in the theatre of actual war be paid a provisional economic allowance by the dominion government while unemployed."
That is a suggestion made not only by this branch but by the veterans' association and the Canadian Legion generally. I am quite aware that it might be argued that the federal authorities should not be asked to pay an allowance to unemployed veterans. But we are caring for our unemployed-this is a point I should like to emphasize-and some at least suggest that many of the unemployed are now getting substantial relief, and more than is granted under the soldiers' aid provision. In other words, the civil unemployed get from the civic authorities plus the dominion grant more than do veterans directly from the department. I again submit that inasmuch as we are called upon to make very heavy grants to the provinces and the municipalities on general unemployment, this is a section of our citizens that we might well consider taking under our special and direct care.
Many of these men are, because of war service, burnt-out before their time. I am sure medical men in the house will support me when I say that because of war service many of these men who are unemployed or only partly employed, are not employable in the ordinary sense of the term. A great many of them are, as a result of their war service, quite unfit for ordinary manual labour. I know that in some instances men who suffered 71492-114i
some slight wound or sickness overseas, some of the very best of them, did not report or disclose their disability or sickness during service; when they came back from the war they felt fairly good and they said-some of them used pretty frank language-"To the devil with it; I am not going to bother about pension or make any application," so they just let it slide, and the record is gone. Now, as these men have grown older, it is difficult for medical men to determine whether their present disability is exactly due to war service.
It is true we have in the law a provision referring to the burnt-out group and borderline cases, but the law has been fairly strictly interpreted. The minister rather smiles; perhaps he thinks I am wrong in that, but I know cases where it has been strictly interpreted. I cannot of course speak for a very large number; but within my own knowledge there have been many cases that I have brought to the attention of the authorities, and in some instances they have been adjusted. Perhaps it was because I and others pressed the matter, not in any political sense; the minister and the department under the present administration will react just the same as any others, but in many instances there has been an adjustment, or shall I say justification of an adjustment has been recognized, after reviews which it was difficult to get and which had been denied in the ordinary interpretation of the law. That being so, I say we should take responsibility for these cases and recognize them definitely as a federal responsibility.
I wish also to refer to another communication which I received only a day or two ago from the Canadian veterans' bonus league at Regina, signed by its president, Mr. Cole, and its secretary, Mr. Gee. I shall not read the whole communication, but it impresses me as a rather reasonable analysis of the case. I quote a paragraph or two-


Charles Gavan Power: If my friend will permit
me, they do not seem to agree with him entirely in regard to imperial veterans.


Henry Herbert Stevens: That may be true. I have a number of communications and am dealing with several of them.


Charles Gavan Power: This particular branch does not seem to have the same view as my hon. friend.


Henry Herbert Stevens: There may be differences of opinion among ex-service men, but I never allow that to interfere with my approach to
Pension Act Amendment

this question. I think we should approach the question in a very broad spirit. This letter contains this paragraph:
We contend that the soldier of 1914-18 served the nation as a whole and no section in particular; that during such service he was a complete charge-
This is rather a good argument; I would like the minister to catch it.
-he was a complete charge of the federal government during the time of service, therefore as a veteran should still be such a charge, and that the federal government should assume the full responsibility for their welfare.
I think that is putting the matter succinctly and well. Then they make certain suggestions. They asked for action during the present session to cover these points-I will read the points as they have outlined them:
1.	Place the responsibility for the care of the veterans where it rightfully belongs, on the federal government.
With that I entirely agree.
2.	Deal with the problems of that class of veteran that is incapable of competition in the labour market due to age and disability.
3.	Create Work and employment for this class of veteran that will be of a permanent nature and not that type of employment which will be discontinued in a few *weeks or months and then place the veteran back where he is.
4.	In ordering certain types of employment for the exclusive employment of veterans over a period of years guarantee permanency and allowing the veteran to stabilize his economic position.
5.	Give the Canadian veterans certain preferences over imperial veterans.
Well, I have never argued that we should place the imperial veterans in exactly the same position as Canadian veterans. I think it is a question that is open to argument. I think we should be very generous towards the imperial veteran in any of these measures of assistance that we can render, particularly if he was long a resident of Canada before the war, as many of them were. Many of them were born here; others were men who had lived in the country a good many years. I know one little village, Wallashee on the Canadian Pacific main line near Ashcroft, B.C., where there were twenty-seven ablebodied men when the war broke out. Every man went and went immediately. They had been in that village for years building up little fruit ranches. As you go by you can see these ranches to-day, gone to waste, the fruit trees dead and the neat little houses now
[Mr. Stevens. 1
a wreck. Not one man lived. The whole village was wiped out. That is the class of men they were. Of those who did fortunately come back, many had spent years in building up the country and are entitled to such consideration as I have suggested.
There are a number of other points to which I might refer, but I see it is eleven o'clock. I suggest earnestly to the minister that a committee be set up this session to review the present requests and suggestions for dealing with the veterans, and that parliament should declare at this session that it accepts the responsibility of caring for the veterans of the great war as a definite and distinct responsibility.
On motion of Mr. Finn the debate was adjourned.


[Stage Direction]
At 11.04 o'clock the house adjourned, without question put, pursuant to standing order.
Monday, March 13, 1939