Mr. ROY:: 1.	Has the government received representations from the Quebec government and the Montreal municipal authorities relative to the help the government could grant the city of Montreal to facilitate the solution of its financial difficulties?
2.	If so, by whom, and to whom were such representations made?
3.	What were such representations, and what was the government's reply?
Questions


Mr. RALSTON:: 1.	Yes.
2 and 3. On May 14 a telegram was addressed to the Minister of Finance by Mr. J. M. Savignac, chairman of the executive committee of the city of Montreal, reading as follows:
"May 15 city has to meet maturities of six million dollars. City needs help from superior governments to meet emergency pending publication and enforcing of recommendations of Rowell-Sirois reports. Expecting immediate action on your part with the banks or otherwise in order to prevent default."
On May 14, the Minister of Finance replied to this telegram as follows:
"Acknowledging your telegram May 14, as the matter referred to is one which is and always has been regarded as entirely outside sphere of dominion jurisdiction and administration I am referring your telegram to the honourable provincial treasurer of Quebec."



CHARTERED BANKS-UNCLAIMED DAILY OVERAGES

Mr. COLD WELL:: 1.	Do the chartered banks report the amounts of unclaimed daily overages to the department?
2.	If so, what amounts have been reported during the last fifteen years?
3.	How frequently are these overages disposed of and in what manner?


Mr. RALSTON:: 1.	If this question relates to tellers' overages, the answer is that there is no requirement in the Bank Act or otherwise that tellers' "overages" and "shortages" should be reported to the Minister of Finance.
2 and 3. Answered by No. 1.



BRITISH CHILDREN-ARRANGEMENTS FOR RECEPTION IN CANADA

Mr. BRUCE:: 1.	What were the limits agreed upon between the British and dominion governments regarding British child evacuees?
_ 2. In view of the minister's statement regarding the unreliability of the radio, will he state whether his announcement as given over the radio on Saturday last, that Canada would take all the children that England would send, is true or not?
_ 3. Has the government extended a definite invitation for (a) a limited number of British children, or (b) a general unlimited invitation to all children the British government cares to send; (c) if neither, what is the nature of the invitation?


Mr. CRERAR:: I have looked at these
questions, and also the statement I made on June 27. At the moment I believe there is nothing that can be usefully added to that statement.
[Mr. Roy.)
In regard to the second part of the question I may say that I made no announcement over the radio respecting this matter, on the date mentioned or on any other date. Under the circumstances I believe the question might be dropped.
Mr. HANSON (York-Sunbury); Could it stand for a day or two until I have an opportunity to consult with the hon. member?


Thomas Alexander Crerar: I have no objection.


Mr. HANSON (York-Sunbury):: Certain
parts of the minister's statement might bear further examination. I do not say he is wrong, but I should like to go into the matter further.
Question stands.



MUNITIONS AND SUPPLY-NEW BRUNSWICK CONTRACTS


Mr. PERLEY:: 1.	How much wheat of the 1939 crop, from the 1st August to date, was sold direct by the Canada wheat board to the representatives of the United Kingdom and France?
2.	How much of such wheat was sold through the board's agents or members of the grain exchange, to the representatives of the United Kingdom and France?


Mr. MacKINNON (Edmonton West):: 1.	Cash wheat 3,994,000 bushels, futures
29,620,000	bushels.
2.	These sales were made direct by the Canadian Wheat Board to the purchasing committee of the British Ministry of Food by direct cable negotiations.
(Mr. Howe.]


QUESTION PASSED AS ORDER FOR RETURN
Mr. MacKENZIE (Lambton-Kent):: 1.	How much money did the western farmer receive in the fiscal year 1939-40 under the Prairie Farm Assistance Act and the Prairie Farm Rehabilitation Act?
2.	What was the total cost, including administration, of each of the above acts?
3.	What was the total cost to the government as the result of the fixed price for wheat on the 1937-38 crop and the 1938-39 crop?
4.	What material aid and assistance was given to the western farmer in the dried-out areas in 1936-37, 1937-38, and 1938-39?
5.	Were any moneys paid under the Cooperative Marketing Act during the year ending March 31, 1940, and, if so, how much?
6.	What was the total amount of wheat produced in the three western provinces, Alberta, Saskatchewan, and Manitoba, in the years 1937-38 and 1938-39?



EUROPEAN WAR


[Stage Direction]
On the orders of the day:
Mr. G. K. FRASER (Peterborough West):: I should like to direct to the attention of the Minister of Finance (Mr. Ralston) a question which is b.eing asked by children's aid and welfare societies all across Canada. If a married couple take a refugee child and the man enlists or is conscripted after a month or so, would that refugee child be classed as a dependent and receive full dependent's allowance?


Thomas Alexander Crerar: This is a question which might be placed upon the order paper. It is addressed to the Minister of Finance (Mr. Ralston), and I shall direct his attention to it. I am sure he will make what disposition of it he desires to make.


Gordon Knapman Fraser: If a married couple take a refugee child into their home to look after it for the duration of the war, would they be allowed the full $400 exemption for that child when making out their income tax return?


Thomas Alexander Crerar: The same answer would apply.

National Defence Tax



SUBVERSIVE ACTIVITIES


[Stage Direction]
On the orders of the day:
Right Hon. ERNEST LAPOINTE (Minister of Justice):: I desire to lay on the table of the house an order in council declaring illegal the organization known as Jehovah's Witnesses.



NATIONAL DEFENCE TAX


[Stage Direction]
On the orders of the day:
Mr. J. L. O'BRIEN (Northumberland, N.B.): I should like to ask a question of the Minister of Finance (Mr. Ralston) in connection with the national defence tax which is payable by employers. On page 3, of the ways and means resolutions, section 18, clause 2 reads:
That every employer be required to deduct the tax imposed in respect of earnings of the employee earned or accruing due during and after July, 1940.
This matter is of the utmost importance to employers, and perhaps the minister could explain how it is proposed to administer and control the tax so imposed.
Hon. J. L. RALSTON (Minister of Finance) :: The hon. gentleman was good enough
to let me know that he intended to ask this question. This is really a matter for my colleague, the Minister of National Revenue (Mr. Ilsley), but I know the hon. member is anxious to have the information. It was only a moment or two before the house opened that he spoke to me about the matter, so I took the liberty of calling the commissioner of income tax with regard to it. What is being done by the commissioner of income tax is to have posters placed in banks, post offices and offices of inspectors of income tax all over Canada calling the attention of employers and employees to the provisions of this measure. At the same time forms are being sent out to be lodged in all banks, post offices and offices of inspectors of income tax, which forms are to be completed by the employee. That is, the employee will make a statutory declaration as to his status, whether he is married or single and the number of children he has, in order that the rate of deduction may be ascertained and fixed by the employer. On the back of the form appears a resume of the important provisions of the legislation in so far as they affect employers and employees. These forms will be readily available to employers all over the country and they are the forms to which reference is made.
The hon. gentleman will understand that in the short time between the bringing down of the budget and July 1, it has been impossible to communicate with all employers. However, I am assured by the office of the commissioner of income tax that if we could see the number of inquiries which are coming in from employers all over Canada with respect to the procedure to be followed, we would be certain there are very few who are not taking notice of the measure and doing their best to ascertain the best method whereby its provisions may be carried out.
In addition, a form is now being prepared which I understand is to be distributed this week. This form is being made as simple as possible and is to be used by employers in making remittances of deductions. Some time is being accorded to employers and employees to adjust themselves to the situation by reason of the fact that the first remittance is required to be made by employers on September 16. That is to say, the remittance to be made on that date will cover deductions made in July and August. I do not think there is anything more I can say at the moment in connection with the matter of procedure.


Mr. HARRIS (Danforth):: The deductions are to be made this week?


James Layton Ralston: Deductions are to be
made from wages earned on and after July 1.


Richard Burpee Hanson: This may be a very simple matter,
but it is giving a great deal of trouble. As I understand it, in the case of a seasonal employee the deduction must be made, and should the employee not become taxable, he must apply for a refund.


James Layton Ralston: That is quite right. PASSPORTS AND VISAS



INQUIRY RESPECTING APPLICATION OF REGULATIONS -ESTABLISHMENT OF BRANCH OFFICES

[Stage Direction]
On the orders of the day:
Mr. NORMAN J. M. LOCKHART (Lincoln): In the light of the impossible situation that appears to be obtaining in the passport offices at the present time, and the serious inconvenience to people who are being detained here because of inability to obtain passports, would the Prime Minister (Mr. Mackenzie King) or his government consider deferring the application of these regulations until July 15? This would enable urgent cases to get back to their homes. The government should also open up passport offices at those points where United States consuls are located. The situation is really serious. I know of many cases which are quite urgent, and I am not referring to people
Passports and Visas
[Stage Direction]
who simply want to make a visit. I think the Prime Minister might consider extending the latitude which is now granted to bus drivers and others.
Right Hon. W. L. MACKENZIE KING (Prime Minister):: If the matter rested in the hands of the Canadian government it would be a simple matter to arrange everything to meet the wishes of our own people, but these passport requirements are imposed by the United States government and a visa is required by some official of that government. Having regard to the tremendous pressure which has been placed upon the passport offices, the government is doing everything possible to have passports issued just as quickly as applications can be printed and personnel can be got together to distribute and issue the passports themselves. It must be remembered that a passport is an important legal document. It carries with it certain international obligations. It is not a document which should be issued without great care and caution on the part of the issuing government. Otherwise we would soon get into all kinds of difficulties. There is always the danger of fraud and not infrequently in the past it has been necessary to undertake prosecutions in connection with fraudulent passports. The government is opening temporary offices next week at Vancouver, Toronto, St. Stephen and Winnipeg. These offices will be opened on Monday next. I can assure the house that the passport office is doing everything it possibly can to hasten the issuing of passports that are required.
I may say that it is altogether probable that it will become increasingly difficult for persons who wish to travel simply for purposes of pleasure to receive passports for the purpose. That will help somewhat to relieve the pressure for passports at the present time. But in regard to the urgent class of cases of the kind, for example, which my hon. friend has mentioned, there is the strongest reason and the strongest desire to seek to meet the demand as rapidly as possible, and our officials are endeavouring to do that. If my hon. friend has in mind any particular cases he would like to bring to my attention I shall make it a point to mention them specially to the passport office, but I hope that too many members will not accept that invitation.



THE BUDGET


[Stage Direction]
The house resumed from Wednesday, July 3, consideration of the motion of Hon. J. L.
Ralston (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Coldwell, and the amendment to the amendment of Mr. Quelch.
Mr. A. M. NICHOLSON (Mackenzie) :: Mr. Speaker, during the few minutes remaining at my disposal I should like to discuss a matter of concern to my constituency and to a large part of western Canada, namely, the Hudson bay route. While the Hudson strait and Hudson bay have never provided that short sea route to Asia which was the dream of many early mariners, these waters do provide a shorter route to Europe from one of the best wheat producing areas in the world. Those of us who looked forward to this shorter route to provide some relief for western Canada have been disappointed that the facilities provided have not been used to a greater extent. I have before me the annual report of the Board of Grain Commissioners for Canada for the year 1939, and at page 27 I find that for the crop year 1938-39, only 916,913 bushels were cleared through Port Churchill for overseas destination. In the same year we cleared from all our Canadian ports 116,931,215 bushels. But what disturbs me particularly, Mr. Speaker, is that in the very same year we cleared through the port of New York over 7,000,000 bushels, and through the port of Albany over 2,000,000 bushels. We cleared through United States ports in the same year a total of 12,157,315 bushels, or over 10 per cent of the quantity cleared through all Canadian ports.
Those who are familiar with the history of modern transportation will readily understand why there has been opposition to new modes of transportation. When the locomotive was introduced, tavern keepers and owners of turnpike companies were most violent in their opposition to the new method of transport. Farmers were agitated at the prospect of losing markets for horses and markets for hay. Agnes C. Laut in her book "The Romance of the Rails" tells of an eminent divine in the United States who predicted that the use of the modern locomotive would result in many insane asylums being required because people would be driven mad with terror at the sight of locomotives with nothing to draw them rushing across the country.
Mr. Robert R. Livingstone, a transportation mogul of the last century, writing from Albany in 1812 discussed the railroad as a mode of transportation and ridiculed the idea of a train moving along rails at the rate of four miles an hour. But, Mr. Speaker, in spite of the considered opinions of men like Mr. Livingstone, railway transportation has devel-

The Budget-Mr. Graydon
oped by leaps and bounds, and we in western Canada feel that the Hudson bay route might be used more extensively.
I appreciate the reply which the Minister of Transport (Mr. Howe) made on June 14 to a question I had asked about a more extensive use of this route. I appreciate also the return he brought down for me showing the expenditures that have been made on various routes in Canada. One question I asked was:
1. How much was spent by the dominion government for dredging the St. Lawrence river and Montreal harbour, and for operating and administering the St. Lawrence ship channel during the years from 1935 to 1939?
The return showed that from 1935 to 1939 we spent $18,757,321.69 for dredging and $852,332.83 for operation and administration costs. In the same period we spent, under the Maritime Freight Rates Act, to compensate the railways for the difference between the tolls actually collected and the normal tolls, the amount of $13,279,872.09. During the same period we spent on capital construction $326,083.46, and for operating deficit, $1,472,388.40, or a total of $1,798,471.86 on the Hudson Bay Railway. Expenditures on harbours by the dominion government from 1935 to 1939 were as follows:
Churchill	 $ 926,942 57
Montreal	
7,040,559	36Vancouver	
2,234,297	35Halifax	
4,954,180	04
In conclusion, I hope the government will bear in mind that in western Canada we have large quantities of foodstuffs, pulpwood and minerals which will be of great assistance to the mother country, and I hope very careful consideration will be given to the movement of these commodities through the port of Churchill and, if necessary, to the sending of convoys to this port from time to time.


Mr. GORDON GRAYDON (Peel):: Mr. Speaker, I should like to preface my remarks on the budget by saying how privileged we are as members of the House of Commons to be presided over by one so well qualified as yourself, by every instinct and attainment, for the office of Speaker. I take some personal pride in being able to claim the Speaker of this house as a personal friend. I know something of his impartiality so far as private affairs are concerned, and the manner in which he has demonstrated that quality since his recent appointment has met, I am sure, with approval and favour in every part of this house.
I wish further to preface this address with a brief reference to the passing of the late Minister of National Defence. I knew the Hon. Mr. Rogers intimately. Although from
time to time we on this side of the chamber found it necessary to disagree with his views and policies, it was never possible to question his motives. That, after all, is one of the most effective tributes which can be paid by a member of the opposition to the memory of one who held ministerial office, particularly at a time like this.
May I also in passing make reference to the fact that, since the election on March 26 last, we of the Conservative party have lost by death one of our most valuable members, Doctor A. B. Hyndman, member for Carleton. He was the man with whom I shared my office in this building, and I knew him favourably and well. I want to pay tribute this afternoon to his high qualities of character and mind and to the ability and capacity which the doctor brought to bear not only in his private life but in his capacity as a public man. In the loss of men of this calibre one cannot but feel that the hand of death falls heavily upon those engaged in public life, and that the losses which are thus sustained from time to time are not easily repaired.
Dealing with the budget, it seems to me that, more than any other which has been brought down in my experience, the present budget has widened the incidence of taxation. In other words, the Canadian taxpayer is going to feel the pinch in many directions. The pressure of war-time taxation is reaching further and deeper every hour. Yet there has been little or no complaint on that account. There may be objections as to the distribution of the taxation on the score of inequality, but there are and will be no complaints from the rank and file of Canadian citizens as to the taxation itself, because they are ready and willing to submit to these heavier burdens in order to pay for the freedom and the liberties which we enjoy.
When we speak of the sacrifices which are being made by our citizens under the terms of the new financial arrangements set out by the Minister of Finance (Mr. Ralston), may I point out what a very heavy burden is being borne by the working man, by the man who has not reached one of the higher income brackets. Of course he is not complaining, but perhaps the sacrifices he is making are not always realized by his wealthier fellow citizens. To take $10 from the man who has a surplus of only $12 or $13 is a vastly different matter from taking a percentage of their incomes from those who will still have a substantial surplus. Those men and women throughout the dominion who are making the kind of sacrifice to which I have referred are making a contribution second only to that of the men in the armed forces who carry such a heavy responsibility in this war.
The Budget-Mr. Graydon

I am glad of the opportunity to welcome at this moment the hon. member for Mata-pedia-Matane (Mr. Lapointe), who has just entered the chamber in his military uniform. May I say to him that the warmth of the welcome which he has received this afternoon is not only an indication of the high regard in which he is held personally, but an evidence that in all sections of our country, including parliament itself, men are taking their part in the armed forces of the dominion to stop the ruthless aggressor nations which would smother us out of existence.
One of the things which must be adhered to closely in regard to the budget taxation proposals is the achievement of a real equality of sacrifice. This principle must be something more than mere words. It should have a real and concrete application. In my contacts with men and women who are in the lower income earning brackets, I find that, while they do not mind paying until it hurts, they want to know that it is hurting equally the other people. They have a right to expect some equality of taxation.
May I point out to the Minister of Finance that during the last few years there have been example after example of governmental extravagance which could not be justified by the most ardent partisan. From time to time we have had examples of the commission form of government. I am not going to deal with them in detail this afternoon, but I warn the government to take heed that this kind of extravagance is not transplanted into our war administration. There must be economy all along the line. When the private citizen is being asked to economize to the last cent, it is not too much to ask the government to act on the same principle in the administrative field.
I would point out to the Minister of Finance and to every other man who occupies a public position that when our boys come back from overseas to take up again their positions in private life, every one of them will be entitled to ask the public men who are in authority in this country during the war, "While we were over there, prepared to sacrifice our all, receiving only the prevailing rates of pay, what were you public men doing in Canada? Was there the same equality of sacrifice here which was required of us over there?" I mention that by way of caution and warning to the government, because to-morrow's Canada will not be either to-day's or yesterday's Canada. Let us realize this fully this afternoon. This war is going to call for the steady hand of every loyal Canadian if we are to see to it that Canada is kept in its proper place, a foremost place among the
TMr. Graydon.]
nations of the world, when this war has ended. I am one of those who believe that this can be done, but there rests upon every one of us a heavy responsibility. We must make sure that while the war is in progress, there shall be at least some approach to equality of sacrifice for all. During this war, pleasure and profit, whether on the part of governments or of individuals, must give place to sacrifice and service. All these activities may have their place in times of peace, but at this moment the war is the only thing that counts. Let us see to it that not one working man or woman, and not one member of his majesty's forces shall have reason to point the finger of scorn pr criticism at the expenditures which the government is making. That is the best wish I have for the government, and I do hope that it will be realized in every particular.
When the government is cutting down on extravagant expenditures, I suggest to the Minister of Finance that some day he might visit the Canadian Broadcasting Corporation and see whether all the money they are spending is being spent to the best advantage of the Canadian people in general. I ask for that investigation simply because I am convinced that so far as this branch of the administration is concerned there are some decreases that are long overdue.
We who represent rural ridings are naturally interested in problems of agriculture as well as those which confront us in other directions. We who represent farming communities realize to the full-indeed, we must realize it because the people themselves realize it so well-that, the export market for many of our products having been cut off, the domestic problem facing the farmer is very much emphasized and exaggerated at the present time. I will not go into this problem in detail but I wish to leave a thought with the government, and particularly with the Minister of Agriculture (Mr. Gardiner). Rightly or wrongly, there is throughout the dominion, among the farmers, particularly among mixed farmers, the feeling that there will have to be some change in the marketing of live stock in the interests of the average farmer. The farmers are dissatisfied, and charge the government with some responsibility in this regard. I leave this thought with the Minister of Agriculture so that he may take it into consideration when he is dealing with important matters of this kind in the routine of his department. The farmer believes that he should have more say in the price he gets for his products and in regard to the methods whereby they are marketed.
Perhaps there is no need for me to bring the matter up again this afternoon, at any

The Budget-Mr. Graydon
rate in any great detail, but I would remind the house that in years gone by we have heard a good deal about the trade agreements with the United States. Why, we used to hear a good deal from men on the government benches-eloquent men too, some of them. Some of them are sitting in front of me now. They were convincing men, because they almost convinced me that the farmer was coming into an era of unparalleled prosperity, that his salvation at last was at hand.
But what has actually happened? I am not making any unjust criticism of the agreements, but I suggest that although the picture looked rather rosy at the time it was being painted, it was not quite so encouraging when it was unveiled. Take the matter of milk and cream alone, for example. What has been the situation since the agreement went into effect? I see one of our Canadian Jersey breeders looking interested as I mention this matter. Well, I am sure he expected more from the agreements than we have accomplished, because, across the international boundary, from Halifax to Vancouver, we have shipped, in milk and cream, since the lower tariff came into effect, only one 8-gallon can of milk a day. I shall not suggest that the farmer who takes that over should have one of the new passports or should come under the new regulations, but certainly he occupies a unique position in Canadian agricultural economy.
I am not criticizing the trade agreements unduly except to show that, in spite of all these rosy pictures that are sometimes painted as an indication of what governments will do for the farmers, the promises held out to the farmers are not all carried out. More particularly, I would deal with another branch of agriculture which has suffered seriously during the last five years. Those hon. members who have listened from time to time to the debates in this house on fruits and vegetables, and who have inquired into the vexed problem that has arisen in regard to these products, will remember that in the agreements in 1935 there were substantial reductions in the protection given the growers of fruits and vegetables in Canada. Despite the fact that they bore more than their share of the burden of imports during the period from 1935 to the signing of the agreement in 1938, the 1938 agreement further reduced their protection by means which I shall not discuss in detail this afternoon; but the result has been that since 1934, the year before the agreements went into effect, we were importing into Canada $15,500,000 worth of fresh fruits and vegetables, while last year we imported 40 per cent more than in 1934, or $21,500,000 worth. In peace time this was paralyzing to our growers, and
there were outcries and complaints throughout the country; but in time of war such a situation becomes even more acute, because while we are bringing into the country $21,-
500,000	worth of fresh fruits and vegetables per annum, we are spending huge sums in an endeavour to get our own people to consume our own products. The whole thing fails to make sense to an ordinary layman like myself, let alone an economist who would know so much more about a matter of this kind. Surely, if we want to solve the problem of overproduction and an insufficiency of markets for our fruits and vegetables, the first step is to shut off imports that are coming in through the back-door. If we do that, then we can deal with marketing the products we have. In addition to the situation I have indicated, our export market in Britain was cut off for many of our fresh fruits at the time when the war broke out, and the whole situation is that much more aggravated to-day.
The worst feature of the whole matter is that Canadian fruit and vegetable growers can grow more stuff now than the people of Canada can consume. That has been shown time after time. I make this suggestion to the Minister of Finance, that the fruit and vegetable growers of Canada ought to be given their home market at a time like this. They should not have to stand for this competition from the United States. At the same time we are spending our own money trying to find markets for our surplus production. May I also suggest-and I am not so sure that the same suggestion has not been made many times before-that instead of simply letting the matter stand with a ten per cent tariff on imports into Canada, the Minister of Finance do something real by way of damming the flood of United States fruit and vegetables, not only of a class or kind which are produced in Canada but also the citrus fruits which to some extent at any rate can be regarded as luxuries, and which are supplanting our own fruits such as apples. I am wholeheartedly in favour of control of importations from the United States of fresh fruits and vegetables, coming into our already overcrowded markets.
With regard to the war, I am not satisfied and I do not think the people of Canada are entirely satisfied that we have by any me&ns reached our maximum war effort. I say that advisedly. I realize that perhaps the government do not agree with that, but throughout the dominion people are trying to do something for Canada and there seems to be no channel through which they can work. There are numbers of men wanting to join the army, the air force and other branches of the service or to do something else in regard to the war effort and they can find no opportunity. Take,
The Budget-Mr. Gray don

for example, veterans of the last war who from the beginning of this war have been trying in vain to find an opportunity to serve their country, offering the ability, experience and capacity which only they possess.
Another matter agitating the people of Canada is that they want to know just what the law for the mobilization of our national resources really means. As far as anybody can find out, it is just another law on the statute books; for there has not been any registration made; nothing has been done under the act; no questionnaire has been printed; there has not been, as far as I can gather, any real move made to register our people. Perhaps in earlier days governments could take a few months or a year to get the forms ready and everything in hand, but to-day Hitler walks into France and cleans up the whole nation in less than a month. The world is moving, systems are changing so fast that we cannot afford to let two weeks elapse from the time this bill was passed before the registration is commenced. Something should be done by way of waking up the government to the seriousness of the situation. I was not here, I was ill, when the bill was before the house, but I read what the Prime Minister said. He urged and pleaded that the bill be passed that night. I thought we were going to have an invasion before morning. But that was two weeks ago, and so far none of us has even had a registration form to complete.
While there may be criticism of the men of Canada, I want to pay tribute to the women of the dominion, about whom too little has been said in this house, in regard to their part in the war effort. I notice the hon. member for Neepawa (Mr. Mackenzie), who is a particular friend of the ladies, applauding that from the government benches. While men have been doing much talking about registration, about our war effort, and even about the government, the women have actually been doing their job in every county, town and hamlet in Canada. As early as September last, a voluntary registration of Canadian women was started under the leadership of Miss Margaret P. Hyndman, K.C., of Toronto, one of Canada's leading women barristers, assisted loyally by Senator Fallis and others, and during that time it is amazing what tremendous latent power and resources the women have shown through this registration. I shall always hold it against this government that they contributed nothing by way of money or otherwise to that national effort. Not one five-cent piece was ever given to the women for that registration; they did it voluntarily, and throughout the length and breadth of Canada; it is reason for pride that, although we were not pushing our war
fMr. Gray don.]
effort to the full, the women were doing the best they could under circumstances that were not always easy.
In closing, let me say that I do not like to hear from place to place in this dominion pessimistic talk about our chances of success in this war. Let us from this day on, never utter another pessimistic word in public or in private as far as Canada's and Britain's war effort is concerned. While perhaps the situation does not justify jubilant optimistic hopes at all times, we as Canadian citizens have no right to show the white feather when things are going badly, or seemingly so, for the empire. This is the time when every red-blooded Canadian should stand on his feet and say, "England will not fail, England cannot fail." I am disgusted with men who on the air and in the press are always raising technical questions concerning our war effort. We are in this war to a finish. You cannot have a moderately conducted war; it must be either a full-fashioned fight or no fight at all. And I am for a full-fashioned fight, right down to the last man and the last dollar if necessary in order that we may come out of this struggle victorious. We lacked preparedness for this war; the government has to take the responsibility for that, and so does every one of us, because during recent years public opinion had been so trained that we were peace-loving citizens, and the awkward position of peace-loving people everywhere in the world to-day is only too clear. Because we prepared for peace, we were not prepared for war. But those days are past. To-day public opinion has reversed itself on all those matters.
I would point out that at the end of this week the national youth congress meets at Montreal. In my time in Ontario I have had something to do with youth organizations.
I want to make this one suggestion-and it will be a friendly and kindly one-to the national youth congress in Montreal: They cannot do a better service to the Dominion of Canada, in the meetings of their congress, than to stand up from the beginning to the end of those meetings and pledge the full force and power of youth in Canada to the winning of the war. I point that out this afternoon because that youth congress will bring to the city of Montreal, many representative youth organizations. I say to you now, Mr. Speaker, that so far as youth in Canada is concerned, this one truth stands out: There is no more loyal body of persons in any part of the world. That congress would do well to come forward and to proclaim that loyalty. It would do well to offer every possible assistance to Canada and to

The Budget-Mr. Fleming
the empire in our hour of need. My plea is that those young people may forget for the time being some of our domestic problems of youth, and that they may put forth every effort to try to do their part to clean up this mess of war in which we are now engaged, so that in the years to come we may have the freedom and the liberty to deal with the admittedly pressing domestic problems as they arise.
So I say: Let us ban all this pessimism in Canada. Let us bring forward an era of optimistic hope for the future. I say that because we must realize that nothing less than our best, so far as our war effort is concerned, will be sufficient. Let us give that best, as we see it. I should like to see among our people in Canada an inextinguishable flame which would show a great national and united spirit in the land, a spirit similar to that of those who are facing the dangers in England to-day. You men on the government benches, and you men on the opposition benches, as well, can all contribute to that great forward movement in Canada which will show to the world that this dominion is whole-heartedly behind the aims and objectives of the great empire to which we are proud to belong and for which we are proud to fight.
I like the spirit of old England. I should like to see that spirit transplanted to Canada. I should like to see it fostered and nourished, so that it may grow. I should like to see more evidence of that spirit which compelled the song writer to compose these four lines, with which I shall close:
There'll always be an England,
And England shall be free,
If England means as much to you As England means to me.


Mr. H. R. FLEMING (Humboldt):: Mr. Speaker, I am sure the hon. member for Peel (Mr. Graydon) will pardon me if I do not follow him in a discussion of the divers questions he has raised. With many of his observations respecting our war effort I entirely agree.
The budget presented to the house a few days ago was presented with all the uncertainty of war. There was none of the old-time glamour which always preceded the budget speech. We had none of the last-minute appeals by powerful organizations asking that this, that or the other thing be changed. We heard nothing about last-minute appeals for changes in our tariff structure. Men and women in every walk of life throughout this broad Dominion of Canada for weeks and months had prepared for important changes in our taxation structure.
In these days when shock follows upon shock so rapidly, it is becoming easier for
us to accept the incredible. No longer are we easily surprised. We are becoming what might be described as shock proof. In other times I cannot imagine myself describing as good what was said by the Minister of Finance (Mr. Ralston) in his first and valedictory budget; but I think the country generally agrees that in doing so, he has dealt with an unpleasant but very necessary task in an extremely efficient manner. And we have every reason to hope and to believe that it will be an efficacious manner.
That great Canadian newspaper which often speaks so ably for western Canada-I refer to the Winnipeg Free Press-said editorially after the budget was presented:
Everything must be subordinated to supplying the funds for our war effort. The government's budget is built upon sound lines in that it takes money directly from individuals and corporations that have it in their possession because they have received it; but of course, the system will not function if there are undue demands for purposes not at the moment necessary upon the taxpayer's dollar. Every dollar possible of current issue must be made available for the purposes of the war, and into the same channel the public must pour its surplus capital wealth. And this must be done without repining or any looking backward to happier days.
"For what avails the plough or soil,
Or land, or life, if Freedom fail?"
The Western Producer, a Saskatchewan newspaper which often speaks for organized farmers, has this to say:
The Canadian government has taken rapid and drastic legislative action. We feel certain that the people are one hundred per cent behind this course. The farmers of Western Canada for whom this paper endeavours to speak love freedom and abominate all tyranny. As every reader of these words knows they did not and do not now think that conditions in this wealthy country were or are anything like what they should be. Yet ever since the fateful day when war was declared they have through every organization and mouthpiece, which they possess for making their opinions articulate, spoken with one voice. They have placed themselves and their resources at the disposal of the government, and expressed readiness and eagerness to do everything within their power which was demanded of them. They are ready now.
I give these quotations to show how the spirit of western Canada met the challenge of this budget, the spirit with which she will meet future challenges as they arise from time to time.
I find that, despite what the hon. member for North Battleford (Mrs. Nielsen) said on Tuesday last, I cannot agree with her, even though she may be the only woman in this chamber. I cannot agree with her when she says she is convinced that those who support the government will in the future be adjudged the real enemies of the Canadian people. I believe that this government has done all it
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possibly can do to carry on under a united people the prosecution of our war activities, and that it has done this to the best of its ability.
The provisions in the budget are hard and heavy; yet they are no more drastic than the circumstances warrant. I believe they fall as evenly as any human can make them. Perhaps they will make it more difficult for the average man to continue his former mode of living, but it must be realized that we shall have to readjust ourselves. We shall have to change certain of our economies and I believe that there will be a certain equality in those who have the ability to pay. There will be many changes in the economic life of most families, but it will not mean the giving up of many necessities or luxuries. Through the years people have grown to think of many luxuries as being necessities.
Taxes might have been imposed on many other commodities. A few days before the budget was brought down we heard that a prohibitive tariff might be placed on gasoline. Even if that had been done, I believe the Canadian people would have accepted it. There might have been some discontent, but the tax would have been paid. I use this as an example to show the spirit of the Canadian people to-day. They believe in doing everything within their power to aid the government, no matter what the sacrifice may be. They know the urgency of the need and the urgency of the hour.
No doubt it is difficult to find sources and avenues of taxation. Undoubtedly the easiest method might have been to tax certain income, but we do not know at the present time just what effect such taxation would have. That remains to be seen. A lowering of purchasing power means less business, and less business means lower salaries. There was one thing the Minister of Finance apparently had in mind when he was exploring these different avenues of taxation; I am sure he decided that the war activity would produce the money to sustain the effort. We must continue to find money. We must not think that this is the last sacrifice we shall be called upon to make. Our effort must be accelerated until victory is ours. There is no reason why we should think that we have dug down into our pockets as deeply as we shall have to dig. We have not made all the sacrifices we shall be called upon to make, but I confidently believe that the people of Canada are prepared to make any sacrifice.
Hitler and his hordes claim they are fighting to determine the next thousand years of German history. The British empire to-day stands alone in its fight to make sure that a thousand years of dark ages shall not descend 
upon the whole world. We are fighting against a pagan philosophy. We are fighting for those countries which are already prostrated beneath the feet of the Teuton conqueror who has overrun them in his desire for world domination. Perhaps not all the German people believe in the doctrines of Hitler and nazism, but wre must fight a German people flushed with victory before we shall be able to find that out. We certainly do know that there is some division of opinion among the German-Canadians in our own Dominion of Canada. The German Canadian newspaper Der Nord-westen, published in Winnipeg, contained in its issue of June 19 an editorial on the French negotiations for an armistice. It had this to say:
The peoples of all races who make up Canada's population stand firmly behind Canada. No one, either by word or deed, should work against this spirit of unity. That is of national importance. Every Canadian who wishes to retain his personal and political freedom should know that this is the time for help.
In the constituency wffiich I have the honour to represent in this House of Commons there is a large German population. In that constituency is one of the oldest German language newspapers in western Canada, a newspaper that fought against Hitler and his nazi doctrines long before many people heard of them or questions about them were raised in this house. This newspaper, the St. Peter's Bote, was banned from Germany some six years ago because of its fearlessness in condemning Hitlerism and pointing out that doctrine as a menace to the world. During its long existence in western Canada it has always upheld the principles of democracy. Its distinguished German-Canadian editor has striven day after day to point out to his readers the great freedom which each and every one of them enjoy as British subjects in this Dominion of Canada. That newspaper has endeavoured to imprint upon the minds of its readers the great blessings of British citizenship in the country of their adoption.
For almost a quarter of a century I have lived in that district. I grew from youth to manhood there. I know these people, and I know they are loyal Canadians and loyal subjects of His Majesty the King. There may be some nationalists, some troublemakers, among them, but those people are ostracized by the loyal German-Canadians just as they would be by any other Canadians. These German people came to this country to seek the freedom and opportunities which would be available to them as Canadian citizens. They came just as our forefathers came from the confines of the empire. During the last great war many of these German settlers sent

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their sons to fight in foreign fields in order that democracy might live. As soon as the present war was declared the sons of these hardy German pioneers in that district went forth to serve the country of their adoption.
In any community there is always a certain number of persons who are ready to criticize the government in connection with its policy on international affairs, but the German-Canadian by and large realizes the value of the liberty and freedom he enjoys under our flag of freedom, the union jack. I know Saskatchewan better than any other province. Who would question the loyalty of a man of the type of the minister of public health of the province, the Hon. J. M. Uhrich? Who would doubt the loyalty of Mr. J. J. Milden-berger, a member of the legislature who enlisted immediately after the war broke out? He was ready to fight for his king and country. I could give a long list of those, many of them bearing historic German names, who have offered their all.
Only a short time ago I received from that district the assurance that they had made a voluntary gift of 810,000 to the government to be used for war purposes. This money was raised in Humboldt and district from people of many racial origins, but all animated with one purpose, namely, that this war should be prosecuted to a successful conclusion in order that Christian civilization might be saved.
In the town of Humboldt, which is one of the principal towns in the constituency of Humboldt, there is situated a religious institution known as St. Elizabeth's hospital. It is the mother house of their various hospitals in Canada, and the offshoot of an old Austrian order which has been in existence for three or four hundred years. Some thirty years ago they came to Canada and pioneered, and they have built up a splendid, modern hospital. They know what the invasion of Austria by Hitler has meant to their time-honoured institution in that country, and they came to me and gave me the assurance and the undertaking that in the defence of the country' they have learned to love they will do their bit by looking after any refugee children who may be placed in the district of Humboldt. I would plead, therefore, that in our dealings with these people we use forbearance and the utmost kindness. The lives of many of them are difficult because of their names or because some of their relatives who may be living within the confines of the German nation are under suspicion. Let us not persecute them into opposing us. I have no brief for anyone who has any disloyal tendencies, everybody knows it, but these people are absolutely
loyal to Canada and the empire, and I am sure that a little consideration on our part will help them to give greater proof of their loyalty. So long as the Canadian government is under the leadership of Canada's greatest statesman, the present Prime Minister (Mr. Mackenzie King), I am sure that war hysteria will not lead us into paths of unjustifiable persecution. We do not want, Mr. Speaker, to develop a minority problem in this country.
The hon. member for Qu'Appelle (Mr. Perley) has injected into this debate a subject which is of great importance to those of us who come from western Canada. So important is it that we cannot call it a side issue. It deals with our basic industry, the marketing of our wheat.
There have been in the last number of years many attempts to formulate a wheat policy which would be of assistance to the western wheat growers. The question was discussed in the house last year from various phases and angles, and now that the country is in the throes of a terrible war, a war which none of us ever dreamed would have the ramifications it has had, necessarily this great question of wheat marketing has been affected by the many rapid changes that have taken place on so many different fronts in continental Europe. Markets that we once held have now been lost, and other markets must be found. During the years that Germany and Italy were trying to develop themselves into self-contained countries in the hope that they would be able to feed themselves in time of war, when they knew that the great wheat-growing areas of western Canada would be isolated from them by the British navy, the wheat producer of our Canadian west was a victim of these war preparations just as much as any other group of people who have suffered from the war.
In the last war western Canada as a wheat producer, was a vital war weapon. In this war we have an overproduction of wheat, and if our wheat fields do not lie idle our people feel at least that they could make a greater economic contribution than is presently demanded of them. I would suggest that the government establish factories for war supplies wherever possible in western Canada. If the people of those western plains are to be kept on the land, some effort must be made to find a market for their produce. Factory towns are needed in western Canada to provide a local market for the farmers. Such industrial centres might well be established at the present time because perhaps the day and hour will come when the great industrial towns near our coast will be in danger, and then it would be a veritable godsend to have
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established on the prairies munition factories which would be out of range of danger at least for the time being. It might be the decisive factor in supplying the needs of our armies which may then be in the field. The government at this time has an excellent opportunity of putting this to the test by sponsoring and encouraging the establishment of war industries in western Canada.
Another question which has come up from time to time in the last few years, is in connection with the grain exchange. For some reason or another the western farmers feel that the grain exchange is responsible for a great deal of their misfortunes. I am not in a position to say whether the grain exchange should be closed or not. That is a matter to be decided by the technical .officers of the department who are administering the act. But I would say that if the grain exchange is serving no useful purpose, if it is not needed, it should be closed, and that would silence that opinion which holds that the grain exchange has brought misery upon western agriculture. That view may or may not be true. Someone applauds, but I am not in a position to say whether that is so or not. But if the grain exchange is not serving a useful purpose, would it not be a good thing to close it and so prove for all time that it was not the grain exchange which was responsible for all the misery that has come to western Canada?
I entirely agree with the hon. member for Qu'Appelle in his statement that changes in government policy should be announced in the House of Commons when parliament is in session. An English Prime Minister used to say that the only information he had was what he read in the newspapers. He said it more or less as a joke, but it is past a joke when day after day the policies of the government are announced in Winnipeg or at some other point before they are made known to the House of Commons. The Minister of Transport (Mr. Howe) admitted the other day, in reply to a question by the hon. leader of the opposition (Mr. Hanson), that announcements sometimes went out before they even reached his office, and he stated that he would give an undertaking that as soon as he received such information he would make it known to the house. We have given the government all the authority that we could possibly give them, and surely they now possess sufficient authority to make the giving out of information to the press prior to the time it reaches this House of Commons an offence which will be dealt with in a stringent manner.
The other day the hon. member for New Westminster (Mr. Reid) stated that the civil

service commission was becoming a bureaucracy, and that this bureaucracy was growing up in Ottawa and perhaps in other cities where there were large numbers of civil servants. I have no quarrel with the civil service. I believe in the merit system, but sometimes we see that merit system misused, misused right before the eyes of members of parliament, right within the precincts of this House of Commons, and then one begins to wonder what would happen if he knew all the inner workings of it. I remember, when a committee of this house was inquiring into the service-you, Mr. Speaker, were a member of that committee-how difficult it was to get any information in connection with this closed corporation. But a bureaucracy, as the hon. member for New Westminster said, brought proud France almost to her knees and caused considerable difficulties in Great Britain. The bureaucracy which has grown up in this city of Ottawa is a prize packet of ineffectiveness, and it is all wrapped up in a neat little bundle and tied with red tape. The story is told of a civil servant who lost the key to his desk. He waited two or three days, and finally one of the employees of another department came along and asked him how he lost the key, where he lost it, and a number of other silly questions. Several more days elapsed, and another man came along to estimate how much it would cost to get a new key to open the desk. After about a couple of months a third employee came up to open the desk.
Perhaps that is just a story. But there is another one which is going the rounds here, concerning certain employees who were doing some work at the Hunter building. They had to punch a time-clock on George street, so it took them half an hour to walk to work; it was half past nine before they arrived at the Hunter building. It was also necessary for them to leave half an hour before noon in order that they would have time to punch the George street clock. When they returned after lunch they would go to George street to punch the clock, and arrive at half past two to begin work. Finally, they would leave the Hunter building half an hour before closing time in order to punch the clock at the closing hour. By this means they lost practically half a day going down to George street to punch the clock; but that was a regulation; someone was responsible to see that the regulation was carried out, so the clock must be punched or some employee would not have any job.
Anyone who thinks that these examples are exaggerated should make an investigation of the rules and regulations. I often wonder that any cabinet minister has a hair on his

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head, that all his hair has not been pulled out in a fit of exasperation with this bureaucracy of civil servants. Of course I realize that, when a member of parliament becomes a privy councillor, one of the first "pep" talks he gets is to the effect that he must depend at all costs on the civil service, because, as the hon. member for Temiscouata (Mr. Pouliot) has said, if you say anything about any of them they at once jump up in their places and defend the accused civil servant at all costs, whether they know he is right or wrong; if he is a member of this bureaucracy he must be right.
The government had a mandate from the people while this country was at war to carry on the war effort. This mandate was received not when the war first began, but when we were in the midst of it, and when the Prime Minister had told us he shuddered to think what would happen when the teriffic battles then pending were in progress. I believe that the Prime Minister and the members of the government are doing their best to work out the vast and perplexing problems which confront them. I am, and I think the Canadian people should be, deeply grateful to the Prime Minister for his leadership. I believe all Canadians realize his qualities of mind and heart and are grateful for his leadership. He has associated with him some of the best brains of the country to advise the government on the many technical questions which arise in connection with this war.
There has been some discussion at various points with regard to the new mobilization order, and certain newspapers suggested that some of us had gone back upon our election pledges in connection with what they term a conscription bill. Let me read what His Eminence Cardinal Villeneuve, Archbishop of Quebec, recently stated:
The righteousness of our cause should lead us to make sacrifices to ensure its triumph. AH Christians in the dominion and the millions scattered throughout the empire find in the teachings of Christ the truest and strongest grounds for their loyalty to their earthly sovereign.
The present mobilization of our material resources as represented in the budget may seem to some a considerable sacrifice compared with peace-time standards, but it is a small price indeed compared with the consequences of defeat.
Our freedom has been hard-won. Our ancestors paid for it in blood, tears and sweat, and we are called upon again to pay the price. Are we to be unworthy of that heritage? Are we, in this hour of the nation's history, to betray those who died in order that justice, liberty and honour might live? Are we to 95S26-84
betray those who believed and still believe in human dignity and human worth? Shall we allow the world to slip back into the dark night of oblivion because of our failure to see our problems and to see them whole, or our unwillingness to make the sacrifices which our leaders demand of us?
We are facing a new world-an almost unbelievable world. We cannot afford to be complacent or we shall soon be rudely jarred out of that feeling of self-satisfaction. France, after she 'had signed her "honourable" peace, has in the last few days learned what that has meant. She has been forced to turn over her radio sets. That is a small thing, Mr. Speaker, but it is just the beginning of what Hitler-domination will mean. Let us not carelessly cast away the liberty we possess as though it were something which had not been hard-won. The time has been reached when the almost unbelievable is approaching, when perhaps that little island of Britain, now becoming the greatest fortress in the world, will be invaded. But Drake put the great armada to rout, and I am confident that England will know how to deal with Hitler's new armada of the air. I can think of no more suitable words to quote at a time like this than those of the greatest of poets, Shakespeare, in his play "King John":
Come the three corners of the world in arms, And we shall shock them.
And again:
This England never did, nor never shall,
Lie at the proud foot of a conqueror.
May we gladly and proudly do our part that those words may remain true.


Hon. H. A. BRUCE (Parkdale):: Mr. Speaker, may I first congratulate the Minister of Finance (Mr. Ralston) upon his budget speech. He performed a most difficult task with rare ability and with commendable lucidity of statement. Ordinarily these taxation proposals would have been a bitter pill for the public. Their unanimous acceptance is the best possible proof of the resolve of the people of Canada to spare nothing to ensure victory.
A great deal has already been said on the budget. I propose to attempt to look the present situation and its utmost needs in the face, and then to ask whether this budget, the financial programme, the defence programme and the general policies of the government are sufficient for the job in hand, and if not, by what means a greater effort might be more quickly obtained.
We shall all agree with the Minister of Finance that the budget provisions should

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have as their first objective the raising of money to ensure the maximum war effort. I think we shall all agree that taxes designed to cut down the demand for luxuries in order to swing more men and more machines into the production of munitions would be a good war-time measure. Knowing the Canadian people perhaps as well as the Minister of Finance does, I share his confidence to the utmost that they will shrink from no contribution to ensure the soldiers, the sailors and the airmen of Britain and Canada all the machines and equipment which can be produced or procured. But it is vital to ask if these taxes, if the financial policy of the government, if the political preoccupations of some of its members are such as to permit the defence of Canada and the empire to develop as rapidly and as effectively as it should. That the Canadian people are willing to carry any burdens which tend to ensure the maximum war effort should make the government strive the harder to see that that willingness is not imposed on, that no burden is added until its need is apparent, and that the small wage-earner, the salaried man, be not asked to dissipate in tax demands all his savings as represented by bank deposits and insurance policies as well as savings invested in homes, automobiles, radios, refrigerators, pianos and so forth. He must pay more, as all must pay more; but the whole history of the development of the industrial and economic life of the two great nations inhabiting North America shows that their greatest achievements have been made by enlisting idle capital to back men and their labours and plans.
The Minister of Finance made a partial statement when he said: "Common sense will tell those who think the taxation too drastic what will become of their property or their incomes if Germany and Italy should conquer the British empire". Common sense and practical experience should tell this government that no ordinary man can expect, out of current earnings, to meet a major emergency in his private life and fortune, nor does he try, unless he is very rich, to finance the establishment of a plant or factory out of current income. For the emergency he uses his savings of months or years, borrows on his insurance, his house, his possessions, his securities or his credit, and then adjusts his income to the task of servicing the money which came to his aid from others, or replenishing his savings if he dipped into those. The establishment or expansion of a business in a major way would generally be financed in like manner.

The defence of Canada is both a major matter and a capital problem. A patient might as well try to finance the removal of his appendix while the operation was proceeding as for us to try to pay for this war, as we go, out of current earnings. Certain members suggest that the Bank of Canada finance this war by monetizing the dominion's credit. That would throw us into an orgy of inflation worse than this continent has ever dreamed of, I am afraid.


Mr. SPEAKER:: I am sorry to interrupt the hon. member, but the other evening I had to call the attention of another hon. member to the fact that he was reading his speech and to ask him to refrain from doing so. I must ask the hon. member to try to conform to the rules in this regard as closely as possible. I would ask him not to read his speech.


Herbert Alexander Bruce: I am following my notes closely, Mr. Speaker.


Georges Parent: But the hon. member whom I interrupted the other evening also suggested that, in reading his speech, he was following his notes closely. I would ask the hon. member to refrain as far as possible from reading his speech.


Herbert Alexander Bruce: I will refrain as far as possible, Mr. Speaker, but I am only following the example of many others in this house, including the Prime Minister himself.


Georges Parent: When I made the statement in the house on another occasion in regard to the reading of speeches, I pointed out that ministerial statements were read in order that they should be meticulously accurate, and the same practice and custom have been observed in the case of the leader of the official opposition. But there is a rule against the reading of speeches and all hon. members should try to conform thereto. They may refer to their notes, but they should try not to read their speeches.


Herbert Alexander Bruce: I am speaking on the budget, Mr. Speaker, and I am anxious to be as accurate as possible. Therefore I have to stick to my notes fairly closely. However, I shall do the best I can.
Fortunately the remedy which certain hon. gentlemen suggest, where the cure might be worse than the disease, is not necessary. The idle capital, including industrial plants and equipment and skilled workers, which can be enlisted endlessly and diverted into the manufacture of munitions, should be called upon to the limit. We should borrow all the

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funds which Canadians are not using in worthwhile enterprises, and turn this money to work in the war. That will take care of the emergency more quickly than current funds can do.
We lack the capital equipment for war. The minister himself says that we are paying the price of long years of wishful thinking. He also truly says that the Huns are hammering at the gate. The first war budget in September was a scholarly treatise, on the best financial practice as the government advisers saw it, on how to tax and borrow for war. This was to be a pay-as-you-go-war, as everybody expected, and the most incalculable of earthly occurrences would proceed along ordinary lines and Canada could gently increase this effort as increasing business provided more taxes and more savings to borrow. That is all changed, but I fear that the point of view which is shown in that budget still makes itself evident in this new one. We must create our defence equipment and get it into full working order as quickly as possible. That can be done only by mobilizing savings and the wealth in plants and materials and in the men of Canada.
The minister expects his new taxes will produce $280,000,000 in a full year, and he expects to get $600,000,000 more by borrowing. But if he can procure $280,000,000 additional in taxes, that would service eventually $5,600,000,000 of loans and eventually extinguish them, provided five per cent be set aside each year for interest and sinking fund.


James Layton Ralston: Extinguish them in how long a period?


Herbert Alexander Bruce: I have not worked out the number of years.


James Layton Ralston: Well, that is very important. My hon. friend is making the argument that this is not a pay-as-you-go budget. It is not intended as an entirely pay-as-you-go budget, but what we are doing is taxing $278,000,000 eventually, as my hon. friend says, for an expenditure which may be $900,000,000.


Herbert Alexander Bruce: The minister expects an expenditure of about $1,000,000,000 a year. This could be financed by $50,000,000 of taxes on the same basis, and would add in the first year less than one-fifth of the burden. Moreover, it would make as quick a contribution to the war effort, and possibly a quicker one. There would be more private money to expand the war effort and a more hopeful spirit about our ability to do all that is required. So why unnecessarily increase five or six times the burden of the small salaried man? Why penalize the laudable private eSorts of citizens to save, invest and insure, to own 95826-84}
homes and expand their businesses? Can a nation become richer by such taxation if its people become poorer? What about the postwar period? Borrow until Canadians are fully employed and we are making the maximum effort. That is capital expenditure for the planes, tanks, guns, shells and ships that the government should have started providing years ago. Current expenditure on such capital equipment after the war should be provided by taxes. Any excess now is in the nature of emergency, and calls upon our resources of stored funds. A maximum effort calls for Canadian plants and men to satisfy British needs and our own on the fastest possible ascending scale. It calls upon us to get an immediate understanding on measures for the common defence of this continent.
To the United States it would easily be worth a billion dollars to be sure that Canada can defend itself adequately. It would be worth twenty billion to that country to make sure that the British navy and air force would hold Britain and the seas while this continent turns its peace strength into war strength. Possibly the finance minister might find in such an understanding elements which would reduce his chief worries materially. The need of United States money to finance purchases in that country justifies his exchange differential and his ten per cent addition to the customs duties. It is an emergency duty, and an opportunity for the United States to provide adequate credits for purchases we make to keep Britain fighting the Huns strongly and for our own defence. Why not secure us this help in place of taxes which may lead to a general effort of wage-earners for increased remuneration, thus tending to the inflation which the minister seeks to avoid?
All arrangements made to stop consumer expenditures that keep valuable men from munition work are good, and we applaud them. No financial alchemy would prevent taxes, borrowing and credit expansion from exacting hardships from Canadians if they do their best in war. But the hardest road is being trod by the finance minister. We could all stand the ultimate dose better if it were increased gradually from current income and quickly from funds made available by borrowing.
It is nevertheless deplorable that there were in the minister's speech no indications of a serious curtailment of expenditures in every department unnecessary to the prosecution of the war. In answer to questions directed to the Minister of Transport (Mr. Howe), I am informed by a return tabled in the house that it is the intention of the government to permit the Canadian National Railways to expend
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$3,050,000 during this year on their ill-conceived and ill-fated terminal at Montreal. The history of this famous adventure in the waste of public funds is too well known for me to need to bring it to the attention of the house. The only defence offered for the decision to recommence the work something over a year ago was that since $16,000,000 had already been wasted it was vital to continue the waste. What could be more outrageous, in view of the severity of budget requirements, than the decision to expend $3,050,000 this year on that terminal?
The Minister of Finance recently inaugurated a campaign for war savings certificates, in sums as small as twenty-five cents, among school children and others. The children have been asked to abstain from candy in order to buy these certificates. Workmen's families have been asked to cut down household expenditures in order to buy them. How can the minister possibly justify this campaign for sacrifice even by children, if the proceeds are to be poured into a big ditch in Montreal? Furthermore, this terminal project involves waste of labour and material very urgently needed for the manufacture of munitions of war. A decision to suspend this work at once would save a large sum of money. I am aware that contracts have already been let for some of the work, but government contracts have been cancelled since the war began, and I urge the government to issue instructions at once for the immediate suspension of work on the Montreal terminal, and to advise the officers of the Canadian National Railways that they must use their existing facilities as best they can. It would be nothing less than criminal to allow this expenditure to continue when the country is faced with the great problems of the war.
Yesterday I received from the office of the director of public information a copy of a radio speech made on the night of July 1 by the Secretary of State (Mr. Casgrain) over the French network of the Canadian Broadcasting Corporation. I agree with the director that this is an important speech and is worthy of comment. The Secretary of State started out by saying:
What day could have been better chosen to speak of national unity than that of the dominion which we celebrate to-day?
Further on he said:
All this shows that the union of the diverse elements which compose our country is a guarantee of general well-being. All this shows also that in the hour of peril unity alone can save a country in danger.
And further on he says:
For a long time we have been able to delude ourselves with a fictitious isolation. I said just now that circumstances are dictating our
[Mr. Bruce.l
line of conduct. They are of such gravity that they also require us to consider them on a plane quite superior to that to which we have been accustomed. This means that to safeguard our liberties, our language, our economic and social life we must cease every quarrel and every campaign which has not for immediate object the pursuit of the war and our final victory. Only on this condition will we Canadians, a small people with great ideals, survive. I beg of you, my fellow countrymen, to be realists.
Those are noble words which every loyal Canadian will applaud. When reading this speech this morning I could not help wondering if it had been censored by the Prime Minister (Mr. Mackenzie King) before it was given, and if he still maintains the attitude which he expressed so forcibly in this house less than two weeks ago. I do not intend now to refer further to what happened on that occasion.
I want to reply to questions that were asked me a little over two weeks ago by the hon. member for Parry Sound (Mr. Slaght). I was then speaking about subversive elements. The hon. member wants to know, first, if I have personally located and investigated persons whom I believe to be guilty of subversive activity, and reported same to the Minister of Justice (Mr. Lapointe).
The hon. member may think this is a clever lawyer's question, but I have to tell him that I have not played the part of a detective. That is not my profession, nor is it part of my duty as a member of the House of Commons. Those who have investigated, being men responsible as police for the public peace and safety, have done this work and reported names and organizations to me. They have also reported names as long ago as May 16 to the Minister of Justice, and received a reply to the effect that the information would be laid before a committee of parliament.
Question No. 2 is fully answered by the answer to question No. 1.
Then, in question No. 3 the hon. member wants to know if I am aware that public criticism, unsupported by facts, of the Royal Canadian Mounted Police regarding their performance of duty, is an attempt to destroy the confidence of the Canadian people in such force. I think I am aware of as much along this line as is the hon. member for Parry Sound. I am further aware, although he does not seem to be, that I have not made criticism of the Royal Canadian Mounted Police force, as a force, at all. But I have made criticism of the administration of a great public trust by a department of government. And I intend to continue that criticism whenever justified.


Richard Burpee Hanson: Quite right.

The Budget-Mr. Jagues


Herbert Alexander Bruce: I may further inform the hon. member for Parry Sound that when I speak in the House of Commons I always speak on my responsibility as a member, just in the same way as did the Minister of Munitions and Supply (Mr. Howe) speak on his responsibility as a minister of the crown when he said that tanks could not be made in Canada.


Mr. ROWE:: Hear, hear.


Richard Burpee Hanson: And they are going to make tanks.


Herbert Alexander Bruce: No one can forecast with any degree of certainty the exact nature of the test Britain will shortly face. But whatever it is, we can be confident that she will meet it unflinchingly and without yielding. It may very likely result in shifting the centre of the war effort to the new world-not because Great Britain will yield, but because a beleaguered fortress cannot carry on normal production, and cannot plan for the next year's output to achieve victory. This means that Canada will become the very heart of the empire defence arrangements. In coordination with the United States, and aided by the other dominions we shall have to carry on the fight from here, and become the main British war industry and supply centre.
I wonder if we have yet grasped what this means. It implies an army of probably 500,000 men, or even more, for home defence, as well as for ultimate overseas duties when and where they can be used. It implies a production programme many times as great as anything we have yet envisaged. We must make planes, tanks, guns, shells and armoured cars on a prodigious scale. If there is the disturbance of British production, to which I have just alluded, they may wish to send us shiploads of machinery, and they may also send mechanics to reestablish their aircraft, munitions and equipment industries in Canada. Aerial interruption may soon reduce Great Britain's war effort by fifty per cent. Let us therefore offer Great Britain all our facilities for the reestablishment of those factories here.
I wish to commend the able, efficient and very much overworked Minister of Munitions and Supply for setting up the control board over industries which has just been announced, and the duty of which will be to mobilize Canadian industry as speedily as possible for war services.
I shall now for a few minutes turn to a problem which is agitating the minds of thousands of generous-hearted women and men throughout Canada. It is that of the disposition of countless British children whose lives
are in peril from nazi bombers. The response of Canadians, and especially of Canadian womanhood, to the necessities of the situation, is one of the noblest episodes in the history of this country.
The country had to wait until June 27 for a comparatively complete and explicit statement from the Minister of Mines and Resources (Mr. Crerar) on what was being done. That explanation was made exactly thirty-one days after my first inquiry as to what the government proposed to do. There is no reason why the problem respecting the internees the British government may desire to transfer to this country should have been mixed up with that of bringing the children to safety in Canadian homes anxious to receive them. Precious time has been lost, and the peril to the children has increased with each passing day. We are now assured that by the end of this month approximately 5,000 British children will have arrived in this country. In view of the fact that there are 7,000,000 children in the British isles who are exposed to imminent danger, surely more attention and energetic action are necessary if they are to be saved. I suggest to the government that an invitation of an unlimited nature be extended to Great Britain to send as many children to us as she wishes and we shall give them hospitality for the period of the war. Surely Canada can undertake the financial responsibility for this great philanthropy now and make the necessary adjustments later on. The halting manner in which the government has approached this question must inevitably lead to a comparison with our sister dominion Australia which has agreed to adopt, that is, to assume full financial responsibility for 15,000 British children. Is it not better to let these children sleep, if necessary, in the open fields of Canada rather than be bombed in their homes in England ?


Mr. NORMAN JAQUES (Wetaskiwin):: Mr. Speaker, we in this group regarded your predecessor with respect, and may I say with affection. I have no doubt that we shall come to regard you with the same happy feelings.
Before I commence my remarks on the budget, I should like to repeat the stand which we in this group take toward the war. This was stated last September, and the policy which we advocated then has, with one exception, been adopted by the present government. The conscription of finance has not been put into effect. We Social Crediters believe in individual freedom above all else. We hate dictatorships. I say that because I do not want any remark which I may make interpreted as being anti-British or pro-German or anything of that kind.
The Budget-Mr. Jagues

The reason is that, to our opponents, money is a religion or an object of idolatry, and to criticize it is blasphemy.
At the time when, in 1934, Major Douglas was a witness before the committee on banking and commerce I, of course, was not a member of that committee, but judging from the testimony, and after discussing it with those who were there, I have no doubt that Douglas was regarded as a criminal, or the equivalent.


James Layton Ralston: Major Douglas was
regarded as a what? I did not hear the hon. member.


Norman Jaques: I would say he was regarded as a criminal by some and as a fool by others; either as a knave or a fool. But when a banker was on the stand, it was "Yes, sir" and "No, sir" and "Please, sir" and "Thank you, sir."


James Layton Ralston: I wonder if my hon.
friend will find in the evidence of that banking committee a single instance in which it was said, in addressing a banker, "Yes, sir" or "No, sir."


Norman Jaques: That may not have been
expressed in those words-


James Layton Ralston: No. The hon. member
is drawing on his imagination; that is all.


Norman Jaques: 
Mr. GOLDING:: Tell us what he said for the $500 he got.


Norman Jaques: I could not hear the question.


William Henry Golding: Would the hon. member tell the house the rest of it, what he told the committee for the $500 which he received?


Norman Jaques: Oh, his advice. Well, it was advice which unfortunately was not taken. Had it been taken it would have been cheap at any price.


William Henry Golding: Read the evidence.


Norman Jaques: I have read that evidence many times, and it only confirms what I have since learned as a member of that committee. It seems to be the main concern of the committee to defend the banks and the financial institutions of the country. It is not mine; I was not sent here to do that. _
My objection to this budget is, as I said at the beginning of my remarks, that it is debt creating and deflationary, and for that reason I seconded the amendment which was proposed by my friend the hon. member for Acadia. For these reasons I must oppose the budget unless that amendment is adopted.


Mr. A. R. ADAMSON (York West):: Mr. Speaker, in rising to discuss the subject of mining taxation, let me say that I am not opposing fair taxation on operations which are in many instances carried out with great profit to those concerned; I speak not against the tax, but against the method of its application. I should like to commend the Minister of Finance (Mr. Ralston) for his realization of this point, particularly with regard to his understanding of the hazardous nature of mining, more especially in connection with the discovery of new mining properties. I should also like to congratulate him upon his realization of the importance of gold as a means of obtaining foreign exchange. He called it hard money. During wars, or other periods of grave unrest, primitive people such as the Turks, the Arabs, and even the Americans, are inclined to look with grave suspicion on extended international paper credits. Gold to-day is the only universally accepted currency; it is the only truly international money. The drastic measures which the government have had to take to restrict the importation of non-essential United States goods, in order
to preserve our exchange is a true indication of our dependence on gold. At this time in our history, nothing could do Canada more harm than any tax which would curtail the production of metals and more particularly, gold. This is of such vital importance that it cannot bear repetition too often.
The operation of a mine falls into roughly two categories-the physical or actual processing of the ore, and its sale. A ton of ore is of no value to the country until it is drilled, blasted, mucked into cars, hoisted, crushed, milled, filtered, and finally refined. The metallic content then obtained is sold and a profit results. In the case of gold, there is only one purchaser, namely, the government; in the case of base metals, the purchasers are also very much restricted, and are also chiefly governments. Mining differs in this essential point from manufacture, and it is my contention that a system of taxation which is suitable for industry generally must be considerably modified to make it adaptable to mining operations.
In mining, what is known as the winning of the ore is purely an engineering operation, and as I shall show later, the more efficient that operation can become, the greater the volume of metal produced. These essential operations of mining are in no way profit making operations. The only profit which accrues to the mine is after the metal has been sold and the costs of its extraction have been deducted. It is my contention that it is at this point that taxation should be imposed, and such taxation as the mines profits tax, the corporation tax, the dominion income tax, the municipal taxes, as well as certain sales taxes, do not truly fall under this category. They are to a large extent taxes levied on the actual production operations.
An example of this is the application of the sales tax to articles made in the mine shops to replace material worn out in the operation of the mine. I have here a list, and with the consent of the house I shall quote two examples. Twenty-four 5' 6" ore chute bars became worn out owing to the continual passage of rock over them. They had to be repaired, welded and replaced in the mine's own shops. The cost was $18 each, and there was imposed a tax of $30. These bars need constant renewal through wear and tear, just as drill steel needs to be constantly sharpened. Imposing a tax here is definitely an operation tax and raises the cost of extraction of the ore. Another example is seventy-five filter rods for the mill, these cost $18.75 each and were also made in the company's own shops, and on them a tax of $31.25 was levied. I should like to point out also that the major producing mines

The Budget-Mr. Adamson

nave estimated that it actually costs the government more to inspect these shops and obtain this revenue than the net proceeds from these taxes.
In order to simplify my argument I shall consider the gold mines in northern Ontario and Quebec. While I have some knowledge of British Columbia, more particularly the high grade mines in the Zeballos district of Vancouver island, I am not familiar enough with them to discuss them in detail. What I have to say now concerns Manitoba, Ontario and Quebec.
It has been found that the value of ore in place tends to vary with reasonably well defined uniformity. It has been worked out with some degree of accuracy that in the Porcupine camp the volume of ore will increase at twice the rate of its diminution in value. In other words, if you have one ton of $12 ore you will have two tons of $11 ore, four tons of $10 ore, and so on. With the consent of the house I should like to put this table on Hansard because it will show this condition somewhat more clearly than I can express it.
Porcupine, Northern Ontario and Quebec Precambrian Shield Not B.C.
Tons	Ore value		Dollar
	per ton		total
1	
$12	=	$ 122	
a	=	224	
10	=	408	
9	-	7216	
8	-	12832	
7	=	22464	
G	-	384128	r=	640256	
4	=	1,024511	$2,546
Average of whole stope, $5.02.
Tons
384 = 77% of $5 Grade or lower, volume.
Dollars
$1,664 = 65% of $5 Grade or lower, value.
In this stope the value runs from $12 to $4. With one ton of $12 ore there will be 128 tons of $5 ore and 256 tons of $4 ore. The average value of the ore in this stope is $5.02 a ton. The total tonnage will be 511 and the total dollar value $2,546. Thus it will be seen that 77 per cent of the volume of this stope will have a value of less than $5, and that 65 per cent of the dollar value will be won from ore having a value of $5 or lower. This situation can also be expressed logarithmically; as known to mathematicians, it is a function of little " e ", and also as a simple integral. I mention these alternative solutions merely to show the general trend of the function and
[Mr. AdamsonJ
to show how closely the mathematical equation follows the physical conditions of the ore in place. This is particularly true of any dilution of what might be called a pregnant solution into a barren one of greatly varying density. I am not going to weary the house further in this matter except to say that when the ore-bearing solutions were forced up into the base or country rock, they were in a molten or even a gaseous state, and therefore were of greatly different density from that of the rock through which they were forced.
I have taken the time of the house to put this rather technical information on the record in order to show that low grade ore, having a value of $3 to $7, is responsible for the great volume of rock which is developed and for the great majority of the dollars produced. Taxation on the operation which tends to increase the over-all cost of production even by a few cents, kills more ore and destroys more dollars than is generally understood.
Canadian mine financing, despite the many criticisms leveled at it, has one strong point in its favour, namely, its simplicity. In the huge majority of cases there is but one method of financing, namely, by no personal liability common stock which is sold directly or indirectly to the public at varying prices, depending upon the outlook for the mine at the time, as well as on other general conditions. In the great majority of cases there is no profit until a dividend is declared and paid on that stock. It is my contention that this is the proper time and place to apply taxation. Many mines in Canada have been ir production for years but have as yet been unable to declare a dividend, although they have been considerable contributors to the treasury.
There is one other unfair and inequitable condition of the excess profits tax, namely its application to mines of extremely low grade ore or where the net profit per ton is meagre. I mention in this connection the Omega mine. The profit at that property is to-day 31 cents a ton. The new taxation is $1.23 per ounce of gold. The average grade is under $7 a ton, it takes five tons of ore to yield one ounce of gold. This means that the over-all cost of operations will be increased by 24 cents a ton, leaving the mine a profit of but 7 cents a ton. As this operation is in debt to the extent of some $400,000, it will readily be seen that it will be unable to continue to pay its way, and will be forced to close. Thus a supply of gold will be lost to Canada in this hour of need. My suggestion to overcome this condition is to exempt from the excess profits tax mines whose profit per ton is 50 cents or less.
At six o'clock the house took recess.

The Budget-Mr. Adamson
After Recess
The house resumed at eight o'clock.


Agar Rodney Adamson: Mr. Speaker, continuing from where I left off, I realize, of course, that under section 89 of the Income War Tax Act as amended in 1939 new mines are exempted for a period of three years from the time they go into production. While this is a satisfactory method, it is not in my opinion flexible enough. Under this regulation extremely profitable operations such as East Malartic are exempted, while struggling properties such as Naybob and Bankfield are imposed upon. I feel that exemption should be granted not for a period of time but until a profit or a surplus of a definite percentage of the capital outlay has been built up.
Some mines develop extremely rapidly while others, alas, take many, many years. It is my contention that taxes on the operations I have mentioned should be done away with, and that instead a direct dividend tax should be levied. This would have two great advantages. First, it would be extremely simple and cheap to collect, and second, it would show directly to every taxpayer the amount he was paying in taxes.
I have taken as an example a dividend tax of 20 per cent and have compared the revenue which would be produced by this impost with the revenue produced by the present system of taxation. I am fully aware, Mr. Speaker, that by treaty with the United States of America we have agreed with them not to tax dividends at a rate greater than 5 per cent. This, however, is more of an exchange regulation. No one in the house would, I believe, contend that we did not have the right to tax Canadian corporations as we saw fit, nor would we have anything to say as to how people of the United States taxed their companies. In the case I am proposing the dividend tax would be in lieu of income, corporation and excess profits taxes, and would be applied identically to both foreign and Canadian shareholders. The exchange tax is applied only to foreign-owned securities.
In 1939 the producing mines of northern Ontario paid $15,000,000 in dominion income tax, provincial mines profits tax and corporation tax. During the same period they paid $66,000,000 in dividends. On last year's basis, if there had been a 20 per cent dividend tax on mining operations they would have paid $13,200,000. Had the $15,000,000 acquired by taxation been added to the dividends, they would have amounted to $82,000,000. Then. 20 per cent of this would have been $16,400,000,
or approximately the same as was raised by the indirect method of taxation on the operation itself.
A further advantage of such a tax on dividends would be to encourage the management of every mine to bring about that ideal in business, namely, the greater the production the greater the profit. The total dividends paid by mining operations in 1939 amounted to slightly over $100,000,000.
It is predicted that the production of gold will rise from $184,000,000 to $250,000,000 this year, or an increase of approximately 46 per cent. The corporation tax under the present taxation system remains at 18 per cent, and the excess profits tax is at the minimum rate of 12 per cent, or a direct taxation on the operation, whether or not excess profits are made, of 30 per cent. I am not sure what the minister expects to raise out of this taxation, but let us for the moment assume that owing to the increased price of gold, and owing to the increased production, the dollar value of the gold production will be up 35 per cent. Assuming, therefore, that excess profits and income taxes were removed, and the increased dollar value of the mine had been stepped up 35 per cent, and that these had been added to the dividends, the dividend expectancy, despite the probable over-all increased cost of mining, would be about $140,000,000. A direct 20 per cent tax on these dividends would amount to $28,000,000, or approximately one-half of what the minister expects to raise from the personal income tax, or approximately one-quarter of the total Canadian excess profits tax. Steps would have to be taken to see to it that companies would not build up huge surpluses and not pay them out in dividends; and some regulation would have to be made limiting the size of the surplus to some fraction of the capital expenditure made by the company. If a tax of 30 per cent were imposed, the return would be about $42,000,000, or 75 per cent of the total estimated to be raised on the personal income tax, or 42 per cent of the total estimated by the minister to be raised on the excess profits tax. This 30 per cent is the same rate as he intends to impose at this time. I point this out merely to show that great sums can be raised out of mining, but it has to be done scientifically, and without doing damage to the country or the industry itself.
One other suggestion I have to make to the minister is with regard to prospecting or finding new mines. As he has so well stated, mining requires the risking and often the losing of large sums of money in exploratory and development work, before production commences. In view of the present upset state
The Budget-Mr. Adamson

of the financial market it is almost impossible to get private capital interested in the development of new mines. For years the mining industry has been extremely worried over the lack of new properties being prospected and brought into development. The hazardous nature of prospecting will be better realized when it is estimated that only one out of every six hundred prospects ever develops into a producing mine.
To-day the only people in Canada with the money and knowledge of mine making are those in charge of producing mines. While these mines belong to the people who find and develop them, my contention is that it is their duty to help to develop the other mineral resources of the country. I would suggest, therefore, that a further tax, known as a development tax, be imposed, either to be paid to the government or to be used by the mines in prospecting for and developing of other properties. Mine making is no longer a job for the small prospector or syndicate. It requires immense sums of money and considerable experience and equipment. The only people in this business to-day are those in charge of the major producing mines, and I believe it is their duty to develop the country which gave them their all. These suggestions are made with some knowledge of the hazards of the mining industry, from both the producing and taxing points of view. The ideal would be to raise the greatest sum and do the least harm to the industry. It is the industry and the north country, not the individual, that counts.


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I rise to discuss one or two matters which have arisen in the debate and also to support the subamendment which amends the amendment already moved. These taken together now read:
This house regrets the failure of the government to impose a one hundred per cent tax on all profits in excess of a fixed return on capital invested.
Furthermore this house is of the opinion that there should have been no increased tax burden placed upon the consumer until Canada attain maximum production of desired commodities or full employment by issuing through the Bank of Canada, currency and credit in terms of actual public need.
I am of the opinion that the subamendment places before the house a clear and additional reason why the government should have explored the fields outlined therein. I have in mind the fact that at the close of the general election of 1935 the Prime Minister (Mr. Mackenzie King) stated that he would issue and use currency and credit in terms of the public need.

I want to deal with one or two matters which were raised by the hon. member for St. Antoine-Westmount (Mr. Abbott), who spent most of his time the other day in criticizing what I had said in connection with the excess profits tax. I could not be present at that time because I was otherwise engaged in the committee inquiring into the defence of Canada regulations. As I gathered from reading Hansard, his main criticism was directed against the figures which I had presented in support of the case I was endeavouring to make. I wish to return to that in a few moments. First, however, there are one or two less important criticisms to which I would refer immediately.
The hon. member said that I alleged that some industries would pay no excess profits tax. It must have been obvious from the context of my remarks that I was referring to the excess profits tax as it would be computed under the act of September of last year. Under the present tax, industry will pay a minimum of 12 per cent. Then it was stated by the hon. member that the excess profits tax plus the corporation tax would inflict a heavier tax in Canada than is imposed in Great Britain. In proof of that statement it was said that in Great Britain there is no corporation tax as such. It is not possible for me to compute the taxes paid in Great Britain, nor do I think it is possible for any other hon. member to do so.


Richard Burpee Hanson: Why not?


Major James William Coldwell: In Great Britain businesses and corporations are taxed under schedule "D" of the income tax act, and there are four other schedules. I wish to deal more particularly with the criticism of the figures I presented. I did not intend to mislead the house in any way, nor do I think my hon. friend intended to do that. I think in the interests of understanding it would be well if the analysis were carried one step further. It was said that I had computed the excess profits tax on a 10 per cent basis-that is true-when the tax is really 12 per cent-that is true. However, it will be noticed that I computed the corporation income tax at 20 per cent, when it is 18 per cent. In other words, for ease in figuring I computed the tax at 30 per cent-10 and 20 per cent-instead of 18 and 12 per cent.


Mr. ABBOTT:: Is it not true that in five cases the hon. member computed the tax at 18 and 12 per cent?


Major James William Coldwell: That is quite true. I used the two methods of computation because of the difficulty of breaking down the figures given in the Financial Post survey. I shall

The Budget-Mr. Coldwell
deal with them in a moment if I may. As I say, for arithmetical convenience, if I may put it in that way, I used the one basis principally, when perhaps I should have used the two methods as such. However, the collections would be the same: 18 and 12, 30; 20 and 10, 30.


Douglas Charles Abbott: Why did the hon. member compute the tax in five cases as 18 and 12 per cent, and in the other twenty-eight cases as 20 and 10 per cent?


Major James William Coldwell: In those cases where the computation was obvious from the reports presented I used the 30 per cent-12 and 18 per cent.
I come now to the major criticism made by the hon. gentleman, that I computed the taxes on the basis of the net earnings available for dividends, which meant the amount left after provision had been made for payment of taxes. That is quite true. This was done for two reasons, which I shall give in just a moment. May I say that the basis I used actually weakened my case rather than strengthened it. As I mentioned a moment ago, the figures were taken from the Financial Post survey of corporate securities for 1940 and covered earnings for 1939. As I indicated, the returns published in the survey were not made on the same basis by all the companies concerned. Some did not show any allowance for taxes, while others showed an allowance for income tax and others showed a reserve for all taxes generally. It was therefore thought that it was safer, although perhaps not as correct, to use the net profits available for dividends rather than a different figure which would necessarily comprise different elements for different companies.
The hon. member was quite correct in stating that this meant an underestimate of the amount of the taxes to be paid by the corporations, but it is equally true that it meant also an underestimate of the amount made by the corporations and of the amount payable in dividends and of the amount of profit made, expressed in percentages. I am very glad to take the figures suggested by my hon. friend and to analyse the situation from that point of view. I shall place on Hansard both the profits and the taxes on the basis of the profits made by the corporations in question, inclusive of any reserve for taxes shown by them in the returns in the Financial Post survey. The corporation income tax is in every case 18 per cent of this profit and the excess profits tax is 12 per cent, with the exception of Aluminium Limited which, according to its 1939 earnings, as I indicated previously, would pay excess profits tax in accordance with the 75 per cent provision.
What do these revised figures show? They show that the 33 companies to which I referred last Friday had in 1939 total earnings, on the basis suggested by my hon. friend, of $180,530,298, instead of 1146,191,262, as I stated on Friday last. That is to say, they had a return on their capital of close to 21 per cent, instead of the 17 per cent which was the result of the figures I used last Friday.
Similarly, the total taxes, both corporation income and excess profits, which will be paid by these 33 companies on the basis of the 1939 earnings would be, roughly, about $10,000,000 more than the amount which I previously gave. However, the result would still be that the corporations would have between them about two-thirds of their profits left, which would represent about a 14 per cent return on their capital, instead of the 11 per cent which resulted from my figures of last Friday.
Thus I think it is clear that the case which I tried to make last Friday is strengthened, and not weakened, by the adjustments which my hon. friend suggested to me. If I may emphasize it, the adjusted figures show that the 33 companies had a profit representing a return of 21 per cent on their combined capital and that after paying the corporation income tax and the new excess profits tax they would still have left profits amounting to a return of 14 per cent on their capital, or respectively 4 and 3 per cent higher than on the figures which I myself gave a week ago.
The same result emerges in the case of the 5 corporations which I gave as illustrations last Friday. The profits of Consolidated Mining and Smelting Company, according to the revised figure, would be $11,619,586; the corporation income tax on this figure at 18 per cent would be $2,091,525, and the excess profits tax at 12 per cent would be $1,394,350, making a total, for the two taxes, of $3,485,875. This would still leave the corporation with a profit balance of $8,133,711. This amounts to a return on their capital of 41-8 per cent, instead of the 33-6 per cent which I mentioned last Friday.
Now I come to Canadian Industries Limited. The revised profits would be $7,653,443; corporation income tax, $1,377,620; excess profits tax, $918,413, making a total of taxes amounting to $2,296,033. This would leave the corporation a balance of profit of $5,357,410, or a return on capital of 30 [DOT] 7 per cent, instead of the 25-2 per cent which I indicated a week ago.
Let me summarize the results of the other three companies, to put the matter on an exact basis with the figures which I gave a week ago. International Nickel on the same basis would have remaining a profit of 23-8
The Budget-Mr. Coldwell


Mr. C. E. JOHNSTON (Bow River):: Mr. Speaker, I wish to say a few words on the amendment to the amendment. We are faced to-day with one of the most critical conditions of all times, and everything should be done that can possibly be done to further our war effort. We hear a great deal of talk, not only in this house but through the press, that this is the time to tighten our belts, and that everyone should economize to the utmost. It seems to me that if members of parliament are to go about the country making such statements, hon. members themselves and men in high authority in the dominion should be the very first to practise what they preach. I well recall that a few years ago the Prime Minister of the day, the Right Hon. R. B. Bennett, made use of this expression, "tightening our belts." Down through the years since then it has often been repeated, and the other day I noticed that the governor of the Bank of Canada, Mr. Graham Towers, also announced that this is the time when everybody should tighten their belts. Incidentally, Mr. Towers receives a salary of $30,000. And he talks about tightening his belt.


An hon. MEMBER:: Some belt!


Charles Edward Johnston: Excuse me -tightening "our" belts, not "his" belt. Of course he got a reduction of salary from the previous year; it was cut down from $35,000 to $30,000; so he is going to have to economize a little; he will have to get along with a bare subsistence on $30,000. I noticed, however, in the paper which reported his advice to the people of Canada to tighten their belts, that he has spent $30,000 for a new house. Surely there are some limits to the gullibility of the Canadian people. As I said the other day in this house, one of the most desirable or rather essential things is that our people shall become united at this time. But it is hardly sensible to expect more cooperation from those who will suffer from increased taxation as a result of this budget, when they read that the governor of the Bank of Canada receives

The Budget-Mr. Johnston (Bow River)
$30,000 a year, that he expects them to tighten their belts, and that at the same time he is spending $30,000 for a new home.
I shall not criticize at length the increased taxation as it affects incomes in the higher brackets, but I wish to say something about its application to those receiving small incomes. We see that individuals whose income is as low as $600 a year are to pay increased taxes. That is an extremely small income to stand any further reduction. Nor can I imagine how a man with a family and a salary of only $1,200 can provide them with a home, fuel, clothing and all those articles whose prices will be increased, and contribute additional taxes as well.
Observing that this budget was brought down by a man who, if he is not to be called a financier, is well versed in finance and may be termed an expert, I could not help looking up a clipping which appeared in the Edmonton Journal on April 14, 1938, and in which it is stated that the government of the day had spent $1,123,967 on royal commissions. I shall not detain the house with any remarks on the extravagances of governments in the past; maybe we should not go back that far. But in this clipping there are two items which I wish to read to the house. The commission on the textile industry was headed by Mr. Justice Turgeon, who is a leading Canadian citizen and, I am sure, a very clever man; he must be, he is a judge.


An hon. MEMBER:: Hear, hear.


Charles Edward Johnston: The commission on the textile industry which was headed by Mr. Justice Turgeon cost $173,231. J. C. McRuer, K.C., of Toronto, got $31,456, and Elie Beauregard, K.C.-"hear, hear" again, I suppose-got $37,142 as joint counsel. But this is the point I want you, Mr. Speaker, to notice particularly. Judge Turgeon was paid $14,256 in living expenses. So it cost the learned judge $14,256 for living expenses while he was commissioner.


Mr. MacNICOL:: Is that for himself alone?


Charles Edward Johnston: I suppose so, because he had to economize. I do not know what it would have been if he had included an allowance for his family. I am sure he did not pad his allowance; one would not expect that from a judge. But compare that living allowance with the minimum of $600 for a single man and $1,200 for a married man under the taxation proposals of this budget. If that is considered a decent living allowance by the financial expert who drew up the budget, then it is an absolutely criminal offence to allow that judge to be given $14,256
for his living allowance. There is simply no common sense in it; there is no justice in it. Let me go further. May I say in passing that Judge Turgeon had $35 a day for living expenses. That was his living allowance compared with the single man's living allowance of $1.66; and one we shall tax while we have forgotten all about taxing the other.
The next one is the commission on wheat marketing, also headed by Judge Turgeon in the same period during which he conducted the other investigation. This inquiry cost $114,237. Colonel J. L. Ralston, Montreal-
I believe it is the same financial expert who drew up the budget-received $200 a day and $20 a day living expenses. He must be good. Mr. Turgeon received $12,100 in living allowances, making a total of about $26,300 in living allowances for that period.
The point is that Colonel Ralston was allowed $20 a day living expenses and Judge Turgeon $35 a day, and I am sure that they were honest when they put in their living expense accounts. Well, if they were honest when they put in their living expense accounts and it cost the one $20 a day and the other $35 a day, then it is a great injustice to expect another of their fellow citizens to live on $1.60 or $2 as the case may be-and he has dependents. Then, to add insult on top of that, we are going to tax it out of him.
I ask you, Mr. Speaker, can you expect the people of Canada to be united when they see such things going on? It is a regular racket; it cannot be termed anything else in view of the evidence I have put before the house. I think that in all fairness to the country this budget should be changed in this one instance at least and that the exemption should be raised from $600 up to $1,000 for single men and proportionately higher for the married men.
If we were telling the people to tighten their belts because we were doing the same thing, the situation would be different. It would be different if we said to them: You must tighten your belts because we are short of supplies. There would be sense in that. There would be sense in saying to them: We must economize because we have not enough wheat to give you; we must economize because we have not enough meat to give you; we must economize because our farmers and other primary producers cannot possibly raise the stuff you require. But what utter nonsense it is to talk as we do with conditions as they are. Why, the Minister of Agriculture (Mr. Gardiner) himself, when speaking on the wheat
1344	COMMONS
The Budget-Mr. Johnston (Bow River)
bill last year, advocated that the people reduce the wheat acreage and cut down the amount of production. Why? We are doing everything now to see to it that the primary producer shall cut down his production at the very time when we need greater production. On the contrary we should be assisting our primary producers. We should be giving them at least cost of production so that the people of Canada would not be required to lower their standard of living at this time. We should be putting forth every effort to produce as much as we can. Goodness knows we shall need it in the near future.
It is all very well to talk about increased taxation and tightening our belts if this is necessary. As the hon. member for Acadia (Mr. Quelch) said, if we are short of any goods in the country the proper thing to do is to ration them if we wish to save foreign exchange. But seeing that this government intends, according to the Minister of Finance, to finance this war exactly as the last war was financed, I was forced to look up some of the figures in connection with the last war, and I find, from a return tabled in the House of Commons a year ago, that before the war started in 1914-that is, according to the return giving the figures for the fiscal year 1913-14^- we had a national debt of $333,996,850, or just about one-third of a billion dollars. I am speaking of the net national debt because I shall refer to it in the course of my speech, and for the sake of convenience I shall say roughly about one-third of a billion. In that year we paid $12,893,505 in interest. In other words, out of every $100 of taxes we paid $7.90 in interest on that debt. That is not a tremendous debt-about a third of a billion. dollars.
But what happened after the war? In the fiscal year 1919-20 our debt had risen from about one-third of a billion dollars to $2,248,868,624, an increase of approximately two billion dollars; and in that year our interest had jumped from $12,000,000 in 1913-14 to $107,527,089-from $12,000,000 to $107,000,000 in interest alone. The amount of interest we paid in 1920 was almost equal to what our deficit will be this year; and in the same year we paid, out of every $100 of taxes, $30.80 in interest charges. That is a tremendous increase, from $7.90 to $30.80 interest for every $100 of taxes paid. Yet we are going to finance this war in exactly the same way. I have not much confidence in our ability to prepare effectively for war if we are to carry on under such a tremendous handicap.
Let us continue the analysis and find out what our debt is doing. In 1931 we had a 
net debt of 82,261,611,936, and there was an increase that year of $83,847,977. For the succeeding years the figures are as follows:
Year	Net debt	Increase1932	
$2,375,846,172	$114,234,2351933	
2,596,480,826	220,634,6531934	
2,729,978,140	133,497,3141935	
2,840,110.958	116,132,8171936	
3,006,100,517	159,989,5581937	
3,083,952,201	77,851,6851938	
3,101,667,570	17,715,3681939	
3,152,559,313	50,891,744
Every solitary year an increase of millions of dollars of debt, the total increase since 1931 being $974,795,355, or a yearly average increase of $108,310,595. And those were in a period of peace.
The debt charges alone for the fiscal year 1938-39 amounted to $113,147,062, or $309,992 a day. According to the statement of the Minister of Finance at page 1018 of Hansard we are going to have this year a deficit of $118,000,000, and the net debt as at March 31, 1940, was about $3,270,980,000. The gross liabilities at that date are estimated at $4,028,573,000.
How are we going to be able to carry on in this country in time of war and do our share of rearming and supplying the British empire with the commodities they require if we are going to keep on under a limited monetary system? It is safe to say that at the end of this war, if it lasts as long as the last war did, and our debt increase continues in proportion to the increase this year, our national debt will be over ten billion dollars, and the carrying charges alone will be half a million dollars a day. Is it any wonder that the people of Canada are asking, why have we not all our machine shops working? Why is it that we have thousands of men hanging round the country unemployed, anxious to work but unable to find any work to do? Even to-day the situation is exactly the same. In England even the women and children are at work, whereas here we have able-bodied men only too anxious to do their share for the empire but they are not permitted to do it because we have not the money. This lack of efficiency I fear is going to have disastrous results for Canada, unless we change our methods.
It seems, according to the Minister of Finance, that the only source of money is taxation or borrowing. To borrow is only a delayed form of taxation. There is a limit to the possibilities of taxation. As taxes increase, the standard of living of the people is continually lowered; the nation's preparedness for war is continually lowered, and you continually disunite the people of this country. The people of Canada should begin to look about them and see what happened in other

The Budget-Mr. Johnston (Bow River)
countries, and profit from that experience. We know what happened to Holland, to Belgium, to Norway; every one of those countries was defeated for just one reason- they were not prepared. What happened to France? That great power was smashed by the German machine because she was not prepared. At the beginning of this war we were told that France was ready, that Great Britain was ready, that Canada was ready. After the defeat of every one of those countries which I mentioned a moment ago, the excuse was made that they were not properly prepared. But are we prepared? Or are we heading for exactly the same thing?
Why did France not complete the Maginot line right round to the English channel? It was clearly explained in the press the other day that it was because the financial system broke down and she did not have the money. Why did she not have the money? Because the financiers would extract the very last drop of lifeblood from the people in order to get their pound of flesh. France had the material; she had the men to complete that line, but the financial interests sacrificed their country for their pound of flesh. We should begin to take stock of ourselves, and see if we are not in exactly the same position France was in. Surely there are other ways of getting money besides taxation and borrowing. I want to show hon. members, if I can, that some people in Canada are beginning to awaken. They are becoming alive to the issue that the state should create credit, so as more effectively to carry on our war effort.
I wish to read to the house a reprint from the Ottawa Citizen of June 26. This is reprinted from the Western Producer, a Saskatoon publication, and is entitled "Money's part in Defeat or Victory." It is as follows:
Canada remains chained to comparative inaction, or certainly far behind the limits of her full capacity by the bogey of money and costs. There she will remain so long as she holds fast to the position which the government has taken that we must pay as we go, that our war effort must be strictly limited to the amount of taxes which can be collected, supplemented by restricted borrowing. These shackles that tie ns down must be broken. The fact must be established that the only limit to our war effort is our resources and our manpower. The machinery of production must be freed from the blighting control of finance. The watchword must be full steam ahead in field, factory and workshop, with orders to the Department of Finance, in collaboration with the Bank of Canada, to supply all the money needed. Let there be no doubt about it, this must be done sooner or later, or Canada will be defeated and become a conquered country.
That was printed in a paper which has a wide circulation, and expresses the opinion of a great many people.
I shall read another extract which sets out the opinion of people from a country outside Canada. I refer to Dorothy Thompson's statement in the New York Herald-Tribune of June 24. This is the statement of a United States woman who visited Europe, and who has given her reasons why Germany has been so successful. She states:
Hitler is winning the war because he has been fighting it with an industrial and engineering economy, while the democracies have been fighting it with a money, or financial economy, and fighting it stingily. We are now following Britain and France in our defence programme.
The Germans did not vote themselves four billion money units for defence. They voted -had voted for them-thirty thousand airplanes, so and so many guns, so and so many thousand tons of reserves of oil and raw materials. The German economy is an economy of things and men; the allied economy is an economy of symbols:	money. The German
economy recognizes that all wealth is in goods, particularly in capital goods, and that these are not created by money, which is only a medium of exchange, but by the application of labour to materials.
The allies had money, but failed to produce goods. The Germans had no money, but did produce them.
That is further evidence of what can be done if one has the will to do it, and the only limit to war preparedness is material and men. Surely in Canada we have an unlimited amount of these. But some of us will sit back complacently and say to ourselves, "Oh, we do not need to fear; we are three thousand miles away from Germany." But let me read a warning by Major-General L. R. LaFleche. This article, which is headed "LaFleche warns Canada to be Prepared", is as follows:
Major-General L. R. LaFleche issued an earnest call to-day for the conversion of Canada into a strongly fortified bulwark against nazi domination of the world which he sees as one of Hitler's goals.
Just back from France where he served as Canadian military attache and saw at first hand Germany's lightning subjugation of that country, he said in an interview with the Canadian Press that the dominion should look to her arms and the defence of her great coast-line without delay.
"Inaction and indecision should not be tolerated," General LaFleche declared. "To-morrow may be too late."
Yes, Major-General LaFleche declared, "Tomorrow may be too late." And so I say to you, Mr. Speaker, that we should become more alive to this fact, and that we can never do our maximum until we have the issuance of currency and credit in terms of public need. As was said in the English House of Commons by Mr. P. C. Loftus, a member of the Conservative party:
If there has to be a certain expansion of credit money, created credit, I cannot see why the state itself should not create that credit free of interest.
1346	COMMONS
The Budget-Mr. Johnston (Bow River)
That is what hon. members in this comer of the house have been advocating for the last five or six years, and I am pleased to say that our efforts are having some effect on some of the people. I well recall the excellent speech delivered the other day by the hon. member for New Westminster (Mr. Reid). That speech is to be found at page 1225 of Hansard. I shall not take time to read it, but in effect he said that the time had come when some of this nonsensical foolishness of hon. members on the government side of the house should change to a little seriousness and some deeper consideration, because the time was at hand when our monetary system should be changed.
I have before me a letter from another Liberal-and if hon. members wish, they may read his statement. I am sure no hon. member would contradict these gentlemen, because they are Liberals. The letter to which I refer is from Cecil R. Bull, M.L.A. for Okanagan in the legislature of British Columbia. May I say in passing that this gentleman is a Liberal, the other hon. member of whom I spoke a moment ago is a Liberal, and the member in the British House of Commons is a Conservative; so it would appear that truth is beginning to have its effect on Liberals and Conservatives. In view of the fact that the two Liberals I mentioned, namely, the hon. member for New Westminster and the member in the legislature of British Columbia, are from that province, it would seem that the only Liberals in Canada who are-should I say?-a little progressive and who seem to be a little more learned than the rest of them, seem to come from British Columbia. But of course they have obtained that feeling from the west.


Mr. MacINNIS:: The Cooperative Commonwealth Federation is strong out there.


Charles Edward Johnston: Mr. Bull has this to say about finance:
Orthodox financiers and economists will tell you that there is no solution, that there always were unemployed and there always will be, or words to that effect. In point of fact they admit they are licked.
And then later on:
Before I outline the course that must be followed, I would like to cite some of the fallacies many people believe in:
1.	There are people who believe the present economic state of affairs can continue. I say they are blind.
2.	There are people who say if men look for work they can find it. I say this is not an answer and it is not true, and further it is a shallow, hypocritical remark.
3.	There are people who say lots of men do not want to work. I say that is an equally cruel and trifling remark as the previous one.

4.	There are people who do not know there is a problem; who live in a world apart ignoring this vital and tragic issue that will bring such a bitter reckoning to us and our children if it is not tackled.
And he has this to say about finance:
The government must amend the Bank of Canada regulations to permit the bank to loan money on long-term contracts to the dominion, provincial and municipal government:	These
loans to be paid over a specified period without interest.
As existing government bonds mature they must be paid off by the bank: That i^ to say, there must be no refunding with interestbearing bonds. This does not mean that the people would be relieved of any further responsibility regarding our government debts, but rather that it would be converted from an interest to a non-interesTbearing obligation.
That shows progressiveness. It shows that there are at least two Liberals in this country -the only two I know of-who are keeping up with the times. Their minds are open enough to convince them of truth. That is what we in Alberta have been asking for. That is why the Alberta government have been appealing to this house for a provincially owned bank. They realize that the principle of public ownership must be carried into the control of our finance.
We should have public ownership and control over the issuance of debt-free and interest-free money, especially in a time of war when we so greatly need more money. We need more than we can ever hope to get from taxation, more than we can ever hope to get by borrowing, more than we can ever hope to get, no matter how deeply we grind down the poor people in order to get more taxes. We cannot get enough in that way and it unnecessarily destroys the morale of the people.
I should like to refer to the proceedings of the banking and commerce committee of May 16, 1939. At that time the hon. member for Vancouver-Burrard (Mr. McGeer) was addressing the committee, and he made reference to a statement which had been made by the Minister of Justice (Mr. Lapointe). I quote from page 625 of the proceedings as follows:
The Minister of Justice further stated at page 4155 as follows:
I am free to admit that I would rather have held the opinion that this should be a privately-owned institution publicly controlled, before I read the bill as it is and heard the discussion and knew all the functions that are going to be those of this public institution. Under the circumstances, the central bank being what it is going to be, I think I should be derelict in my duty if I did not support the principle of public ownership.
There is a statement by the Minister of Justice showing that he is absolutely in favour of the principle of public ownership and the issuance of currency and credit in terms of

The Budget-Mr. Howe
public need. We certainly have a great public need to-day. Reference is made on page 626 of the same proceedings to a statement which had been made by the present Minister of Finance (Mr. Ralston). I quote:
Dealing with those functions, Mr. Ralston said:
1 submit, Mr. Chairman, that the Prime Minister and whoever drafted this legislation, and, with all due deference, some of the commissioners who made the suggestions which appear as a schedule, have for a moment forgotten that after all this is a state function, that the control of credit and currency is the biggest and most important public utility in the economic activities of the Dominion of Canada. I am not one who necessarily champions public ownership at all times and in all places, but I say there are certain things which should be under public ownership, or public control and certainly the very first and most important of those is the institution which controls, which guides and which directs the whole economic life of the dominion.
Those are brave words, but it may take a great deal of courage to put them into action. We have a so-called publicly owned bank and we have as Minister of Finance the hon. gentleman who made that statement.


Georges Parent: I must inform the hon.
gentleman that his time has expired.


Charles Edward Johnston: I shall
have finished in just a moment. We have a minister in charge-


Some hon. MEMBERS:: Order.


Georges Parent: I shall permit the hon.
gentleman to complete his sentence.


Charles Edward Johnston: We have
now sitting on the treasury benches as Minister of Finance the hon. gentleman who uttered those words which I have just quoted from the proceedings of the banking and commerce committee. I hope he will give consideration to the statement he made as reported in those proceedings. I hope he will take into consideration the tremendous peril this country is in and see that every effort is put forward. If money is needed, he should see that it is issued by the Bank of Canada as interest-free money. We shall then not have piling up on our shoulders a debt which our children will have to bear after us. Every effort should be made to see that a maximum war effort be put forth. I hope and trust that he will see fit to raise the exemption from $600 to $1,000, with a corresponding increase for married men. Now is the time to act; let us not wait until to-morrow when it may be too late.


Hon. C. D. HOWE (Minister of Transport):: Mr. Speaker, I rise to take part in this debate very briefly in order to discuss the Montreal terminal situation which was referred to by the hon. leader of the opposition (Mr. Hanson). His statement was, I think, that the government had stopped work on the supreme court building, on the Toronto postal building and on the postal building at Quebec, and therefore it was a disgraceful state of affairs that they should continue with the Montreal terminal project.


Richard Burpee Hanson: "Shocking" is the word I used.


Clarence Decatur Howe: I do not want to misquote the hon. gentleman-shocking situation. It seems to me that that remark shows a complete lack of conception of what is involved in the Montreal terminal problem. This is not a project to replace an existing building with a new and better building; far from it. To understand the problem I would recall that when the Canadian National was organized in 1919 it took over five existing railways. Those railways were separately operated enterprises, and the process of consolidating them into one coordinated system has been proceeding ever since. I am happy to say that to-day we have a well coordinated railway except on the island of Montreal.
In 1919 the island of Montreal was served by two railways which are now components of the Canadian National Railways: one, the Grand Trunk and the other, the Canadian Northern. Each of those railways had a main terminal in the city of Montreal, and each had a secondary terminal which was operated separately from the main terminal. No change has occurred in that situation from that date to this, although a start was made on correcting the situation in the years from 1927 to 1931. There are in Montreal four separate railway terminals operated by the Canadian National Railways. First, there is the Bona-venture terminal serving the lines coming into Montreal from the east and the main line to the west. Second, there is the Moreau street terminal which serves the lines to Quebec and the north shore of the lower St. Lawrence. Third, there is the tunnel terminal on Lagauchetiere street serving the Laurentian district and the district north of Montreal. Then there is the McGill street terminal which serves the territory from Montreal to Granby; the railway formerly using this terminal was known as the Montreal and Southern Counties railway. There is no connection whatever among these four terminals. Each terminal must have its own coach yard because it is impossible to operate
The Budget-Mr. Howe

a passenger terminal without one. Each terminal must have a freight yard. These freight yards have become tremendously congested under present day conditions and are quite inadequate to handle efficiently the volume of traffic being passed through them.
With the increased business which came in 1925, 1926, 1927 and 1928, culminating in the highest traffic year of 1929, the need of improved terminal facilities in Montreal became so great that the railway undertook a tremendous project to solve this problem. It undertook to unify the four separate railways serving the island of Montreal into one terminal and to provide proper passenger accommodation. At that time the project was a $53,000,000 one. However, it was necessary to stop work because of a falling off in traffic and the difficult monetary situation which existed in 1931, at which time some $16,800,000 had been spent on the project.
The following years were low traffic years, but within the last eighteen months there have been definite indications of an increasing rise in traffic and growing indications that the terminal situation in Montreal must again be reviewed. The consequence was that in planning the budget for the year 1939, after a thorough reconsideration of the whole terminal project by the board of directors of the Canadian National Railways, it was decided to carry on the terminal project in a decidedly modified form. Accordingly a project was worked out which would involve a further expenditure of some $12,500,000, and the board decided, and the government concurred, that an investment of that type would be money well spent and would provide an adequate return in improved operating facilities.
The work of completing the Montreal terminal project was undertaken in that year. There was considerable unemployment at the time and the government was making provision for projects to relieve unemployment. In 1939 the government joined with the directors of the railway in providing the cost of direct labour used on the project, and as between the railway appropriation and the government labour contribution some $4,500,000 was expended on the project in that year. Commitments, in addition to the amount I have mentioned, were made which carried over into this year; for a project of that kind is a continuing thing and commitments have to be made considerably in advance of the year in which the expenditures will take place.
At the outbreak of the war the situation was seriously reviewed. First, a study was made to see by how much the $12,500,000 contemplated expenditure, on top of the $16,800,000 expenditure which had been made in earlier

years, could be reduced and still bring about the desired result. I am not going to give the exact figures of that reduction because I have not reviewed the situation lately, but my recollection is that the figure was reduced by about $2,000,000, which it was felt could be cut out and still preserve the essential features of the terminal project. The matter was seriously considered by the directors of the railway. It was made known to them that the government would not be in a position to make further grants towards labour costs on account of unemployment, because unemployment was not expected to be a factor throughout the year 1940 and in subsequent war years. The directors reviewed again the economics of the problem and the increasing difficulty of railway operation in that area owing to the lack of adequate terminal facilities, and their decision as indicated to the government was that they had no doubt whatever that the terminal project should be carried out.


Richard Burpee Hanson: When was that?


Clarence Decatur Howe: When was the position reviewed? Last October or November, and provision was made for the project in the budget for 1940-41, which was submitted to the government in January of this year.
Suppose we had followed the judgment of the hon. leader of the opposition and had suspended work on the terminal. The position would then have been that to an inoperative and unproductive investment of $16,800,000 would have been added another $4,500,000 of money actually expended, plus possibly $1,500,000 to $2,000,000 of commitments which would have had to be liquidated. We would have had invested some $22,000,000 or $23,000,000 in a project estimated to cost in toto some $27,000,000, and yet for the lack of the last $4,000,000 we would have had no terminal facilities on the island of Montreal. I think that will hardly commend itself to hon. members as a wise decision to be made offhand, without a careful study of what is involved in this project and of the results of discontinuing the project at the stage it is in to-day.
It is the intention of the government to complete the project in accordance with the latest plans which have been projected by the railway directors, which call for a minimum of expenditure to achieve the operating results. It is expected that the trackage features of the development will be placed in operation in the spring of next year and all the work contemplated in the plan is expected to be completed by autumn of next year.
Traffic is growing by leaps and bounds. To-day gross earnings, which is a reasonable

The Budget-Mr. Maclnnis
measure of traffic, exceed those of a year ago by some 35 per cent, representing a tremendous increase in traffic. The railway to date has handled the increased traffic without any congestion whatever. I think that few of us realize how fortunate the country is that throughout the depression years all the railways of Canada were able to maintain their property in efficient operating condition so that they were prepared to handle the situation as we find it to-day and as we foresee it in the days to come as long as the war lasts. It has not been handled without testing the railways very considerably.
The line between Moncton and Truro was the bottle-neck of the Canadian National Railways in the last war. At that time some 400 cars a day were moved over that length of line. During last winter we maintained an average of over 700 cars a day moving over that line, and we expect during the coming winter to increase that movement considerably. We have accomplished that by enlarging sidings, and by improved operation due to heavier locomotives and better rolling stock. We do fear a serious bottle-neck in the island of Montreal, and every effort is being made to complete the terminal developments so that a bottle-neck on the island will not occur before the new improvements can be placed in operation.
It is true that, so far as passenger facilities are concerned, we shall have a new passenger station instead of the old Bonaventure station. It is essential that the old Bonaventure station and the area serving it be used for freight facilities. That is one of the objectives of the entire terminal plan. The new terminal will be a simple building, as simple as can be built without requiring to be rebuilt as future requirements are placed upon it. It will be an adequate station to serve the passenger business of Montreal, and it will be built in a vastly superior passenger location compared with the present terminal.
I have said this simply because in the newspapers and in this house there has seemed to be a complete misconception of why the Montreal terminal is being built. It is not on a par with the supreme court building. We have a supreme court building; it has been functioning for many years, and we are merely building a better one. It is not the same as a post office. A post office is a place for the handling of mail. If a new post office cannot be built, additional facilities can be rented and the service continued. But when we have a railway terminal situation such as we have on the island of Montreal, we must either correct the situation or allow ourselves to be bottle-necked if the
freight traffic increases beyond a point that those facilities can meet. That is the situation.


Mr. HOMUTH:: Has the minister anything to say about our war effort?


Clarence Decatur Howe: Not a thing at this time.


Angus MacInnis: Mr. Speaker, the Minister of Finance (Mr. Ralston) began his budget speech with the statement that the budget this year was being delivered at the most critical hour in history. He said:
For the first time in a thousand years the world has been made to realize that a new "Dark Ages" may not be the figment of a wild imagination. . . . All the things we hold dear -the democratic way of life, the Christian ideal, these age-old tenets of human relationships. fair dealing, justice and brotherhood- are threatened with destruction by those who would shut the gates of mercy on mankind.
These are stirring words and fine sentiments, but I think they should be examined carefully as to what exactly they mean when applied to the social relationships prevailing in this country to-day. I do not want to minimize the critical nature of the situation or the ruthlessness of the gangsters who rule Germany and Italy to-day. I have tried more than once in this house in days gone by to draw attention to the danger of "building up" those gangsters. I did not have much success.


An hon. MEMBER:: What about Stalin?


Angus MacInnis: Well, we shall deal with
Stalin at the proper time. Even to suggest that the system under which we in Canada live has much of those fine attributes referred to by the Minister of Finance is, in my opinion, sheer poppycock.
The hon. member for Mackenzie (Mr. Nicholson), when speaking yesterday, referred . to the number of fine residences in that part of Montreal represented by the hon. member for St. Antoine-Westmount (Mr. Abbott). I was looking towards my hon. friend from that riding while the hon. member for Mackenzie was speaking, and when he mentioned the affluence of St. Antoine-Westmount the hon. member for that constituency seemed pleased. But, as the hon. member for Mackenzie pointed out, there is another side to the picture. All the Montreal constituencies do not contain such fine houses. Montreal has its wealth and splendour; it has also its poverty and squalor; and, strange as it may seem, I have always observed, and I think anyone else who attentively observes will find, that in any city the greater the wealth, the greater the poverty. I ask you, Mr. Speaker, and all hon. members, how do those
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fine attributes to which the minister referred- fair dealing, justice, brotherhood and the Christian ideal-apply in the relationships which exist and which under the circumstances must exist between those who live on the slopes of Mount Royal and those who live in the hovels of the mean and narrow streets of other districts in Montreal? The contrast between the two conditions of life demonstrates quite definitely that there is very little fair dealing, very little justice, and no brotherhood whatever, but a great deal of injustice and class dominance. It is time that people in high places should stop associating the present social order with the Christian ideal which, if the term means anything, refers to the doctrines and teachings of Christ, the founder of Christianity. He did not stand for the conditions which we find to-day.
Mr. Vernon Bartlett, a member of the British parliament and a commentator of note on foreign affairs, in a recent article which appeared in the London News Chronicle and which was reproduced in some Canadian papers, said that the sudden collapse of the war in France could be accounted for by the fact that the older generals and politicians in that country are less afraid of Hitler than they are of social change. I believe there is plenty of evidence to prove that the same is true of some so-called statesmen and politicians closer to us than France. This budget in fact indicates that this government is very much afraid of social change and that it is totally oblivious to what is taking place to-day-not only changes of the borders and governments of countries, but alterations of the whole world order. One would hardly think that those who drafted the present budget understood what is happening in the world to-day and what must be done if we are not only to defeat Hitler but to prevent totalitarianism in this country after we have defeated Hitler.
Perhaps it is impossible to carry on, without borrowing, production on the scale which is necessary to meet the requirements of this war, but certainly it is not necessary to borrow on the scale indicated in this budget.
There are two matters in particular to which I wish to refer, although briefly: first, the excess profits tax; second, the national defence tax.
It is not necessary for me to say very much about the excess profits tax. The hon. member for Rosetown-Biggar (Mr. Cold well) has adequately dealt with that subject, and nothing that I could say could add very much to what has already been said in that regard. But I fear that hon. members do not quite . realize even the psychological implications of leaving this tax at anything less than 100 per

cent. The tax is now 75 per cent on excess profits in the taxable year over those of the four-year pre-war base period. This means that corporations will be allowed to keep 25 per cent of the profits made in excess of profits made in the peace-time period of the last four years. This is indeed a strange procedure at a time when the government insists that every one must make sacrifices. But no sacrifice is made by one who is allowed to keep any amount of excess profits that accrue from war conditions. All profits in excess of normal can be said to be made because of war conditions. It is indeed the very reverse of sacrifice; it is making profits out of the sacrifice of others. The least therefore that this government can do, even if only for psychological reasons, or political reasons if you like, is to take 100 per cent of the profits made in excess of those made in the four-year period mentioned in the budget. No one should be allowed to make profits out of the blood and tears of the Canadian people. In any event, this group repudiates the doctrine, both in war and in peace times, that any individual or group of individuals has the right to exploit the natural resources of the country and the people of the country for private gain. We are therefore, as a matter of principle, opposed to the exemption of excess profits, to any extent, and we are opposed to any exemptions particularly in this time of national distress.
I come now to the national defence tax, the tax on low incomes. It is not only a most obnoxious tax but it is also an uneconomical tax. Single persons earning $600 a year and married persons earning $1,200 a year do not live; they merely exist. Any deductions from their incomes will simply mean that some government authority will have to assume larger burdens in social services. In a recent interview or address, I am not quite sure which, reported in the press, the Hon. George M. Weir, provincial secretary and minister of education of British Columbia-I believe he is also minister of health-said that 50 per cent of the population of that province were unable to pay for essential medical services. In other words, to the extent that they received medical attention, they received it from the state. What is true in this regard in British Columbia is true, I am sure, in every part of Canada. Tiiese are the people who will be hardest hit by this tax, and it is not justice, it is not fair dealing to ask them to make further sacrifices. They have never done anything but sacrifice-sacrifice in order that a few might live in wealth and luxury.

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The national defence tax should certainly not apply to single persons with incomes of less than $750 a year and married persons with incomes of less than $1,500 a year. Let us break up this $600 and see what it means. Six hundred dollars a year amounts to $11.50 a week, or about $46 a month. I insist-I was going to say suggest, but I insist-that this is a measly income when compared with $20 and $35 a day living allowances paid certain people or salaries of $30,000 a year paid certain others. It cannot be repeated too often that the sacrifice one makes cannot be computed in the amount one gives but must be computed in what one has left to live on after the tax has been paid.
In considering this budget and particularly because it is a war-time budget, I think it would be instructive if members would read the speech made by the Minister of National Revenue (Mr. Ilsley) when presenting the budget at the special war session last September. I am going to quote briefly from that speech to show that, despite the warnings of the minister, despite what he said on that occasion, we are adopting precisely the same policy followed by the government in the last war-that is, the policy of enriching the few at the expense of the many and making future generations pay for the war. What happened in the last war? This is how the Minister of National Revenue put it; I am quoting from Hansard at page 139 of September 12, 1939:
Prior to 1914 the dominion government had relied for its revenues almost exclusively on customs duties and a few excise duties. It had no system of general taxation or established machinery for directly taxing the net incomes, profits and wealth of individuals. The sudden introduction of such taxation measures on the scale required would have been too drastic to be either economically or politically practicable. Her own financial programme and perhaps more importantly the influence on world prices of the inflationary financing of many other countries resulted in a drastic expansion of bank credit, a rapid rise in prices and a redistribution of the national income. Prices and the cost of living rose more rapidly than wages and interest on old debts. Industrial profits and property incomes increased while the real income of wage-earners and individuals receiving interest payments at fixed rates declined, or rose less rapidly.
It was this reduction in the real income of one section of the community and the creation of large surpluses in the hands of other sections willing to lend to the government that in considerable part at least made possible Canada's remarkable record in mobilizing public savings through the various war and victory loan programmes. The decline in the relative standard of living suffered by certain groups, the rapid increase in savings and the postponement of needed capital facilities made possible the enormous volume of war loans and represented the sacrifice necessary for the oonduct of the war.
In other words, what worked to the disadvantage of certain classes in the community worked to the advantage of certain other classes. A few got rich because of conditions created by the war; they loaned their money to the government for war purposes, and for the past twenty-five years the interest on these loans has been the first charge on the revenue of this country. Then he went on:
Indeed it is perhaps not too much to say that some of the roots of the present war are to be found in the world-wide unsound financing of the last war and the great economic dislocations and continuing burdens of which it was in part the cause. It is to be hoped that in the present war the world may be able to avoid a repetition of that experience.
If this budget is any criterion of what the Canadian people may hope for, I am afraid we are not going to avoid similar disasters to those arising from the last war. Indeed we are allowing huge profits to be made to-day. We are borrowing these profits at good rates of interest, and we will continue for the next twenty-five years as we have done in the past twenty-five years paying interest to the people who have increased their wealth because of the war.
Again in the same speech, at page 136 of Hansard, the Minister of National Revenue, after referring to the difference between conditions in Canada at that time, that is September last, as compared with those in 1914-18, said:
What has happened is, of course, a strong tribute to the vastly improved position which we enjoy to-day. True, we start with a much higher public debt, but in most other respects our economy is infinitely stronger. We are no longer dependent on vast imports of foreign capital on which the old pre-war boom was based. During and since the war Canadian savings have increased enormously and we have built up a vast and efficient mechanism for the mobilization of these savings. The strength of our banking system has always been recognized, but the changes which we have made in monetary and banking legislation during the last few years have greatly improved its efficiency and flexibility and its ability to promote the public welfare in war time as well as in peace time.
There is no doubt whatsoever of the enormous increase in savings during and since the first great war. And, strange as it may seem, savings have increased during the last ten years, despite the fact that Canada has been going through the greatest depression in its history. Each year the chartered banks of Canada file with the Minister of Finance a statement of the amount of money on deposit in current and savings accounts. I have the statement filed on October 31, 1939. The total amount is indeed enormous. But an analysis of the statement shows the same state of affairs as was shown by the
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analysis of income tax returns which has already been placed on Hansard by the leader of the opposition (Mr. Hanson) and the hon. member for Mackenzie (Mr. Nicholson). It shows in fact an enormous concentration of wealth in the hands of a few. If we take the savings accounts only, that is deposits payable after notice, on October 31 last, there were 4,161,897 depositors with total deposits amounting to $1,709,156,774. But 3,828,291 of these, that is all accounts of less than $1,000, represented an average of only $119 each, or not enough to pay for a respectable funeral. Deposits between $1,000 and $5,000 numbered some 290,000, with a total of over $588,000,000, or an average of $2,027 per depositor. Of accounts of $5,000 to $25,000 there were 40,000, representing a total of about $348,860,000, and these again show a big increase in the average per depositor, namely $8,721. There were 2.757 accounts with deposits from $25,000 to $100,000, with an aggregate of $123,329,760, or an average of $44,708 each. Of deposits in excess of $100,000 there were 626, with over $190,000,000 aggregate deposits, giving each depositor on an average $303,770. It seems to me that instead of taking a few cents out of the pittances of wage-earners who may have been on relief during the past four years or part of that time, this government could well go where the money is and take some of it. It would be better for the government and better for the country, and I am sure better for those who have so much that they do not know what to do with it.
What has happened in the realm of finance as shown by the income taxes and also by the return I have just read, has taken place in the whole economy of the country. As a matter of fact, big business has this country by the throat, and never was there a government in Canada more tender towards big business than the present one. Despite the sad story of the exploitation of primary producers, of labour and of consumers related by every royal commission set up in Canada in the last six or seven years; despite the proof of monopolistic control of industry which has been indicated by investigations under the Combines Investigation Act, this government insists not only upon doing nothing but upon increasing the power and the influence of big business in the affairs of the country.
The latest commission to refer to this monopolistic control is the Sirois commission. Surely the findings of that commission should be of sufficient importance to merit the attention of the government. The price spreads committee referred to this matter, and every other

committee which has investigated different industries has referred to it. At page 148 of book 1 of the report of the commission on dominion-provincial relations I find this:
Business organization has everywhere become increasingly monopolistic. In Canada industry, commerce and finance are highly centralized and in many branches a few enterprises dominate the field. Under such conditions the maintenance of prices is possible in the face of declining demands. The monopolistic producers may consider that they are better off by selling less at higher prices than by selling more at lower prices. Consequently the burden tends to fall upon the workers who lose their jobs through the reduction in output, and on the exporters whose costs are thus held rigid while their prices on world markets are sharply reduced.
I would ask the government to take notice of what is happening to-day. It should take notice that the commission points out that our monopolistic producers do not consider the general public when they are considering the raising or lowering of prices. The commission shows that our monopolies may conclude that they can best improve their own position by selling less at higher prices than by selling more at lower prices. But while the monopolists are better off, the whole mass of consumers are worse off. Before there can be any sense to this urge to win the war and to defeat Hitler, there must be some programme setting out what we are going to do in Canada after we have defeated Hitler. The urge to defeat Hitler in itself is not enough.
I wish now to say a few words respecting the subamendment moved by the group to my left. The amendment to the amendment is as follows:
Furthermore this house is of tlie opinion that there should have been no increased tax burden placed upon the consumer until Canada attain maximum production of desired commodities or full employment by issuing through the Bank of Canada, currency and credit in terms of actual public need.
I do not hold with my hon. friends to my left who say that all we have to do to increase production, to distribute goods or to make everyone perfectly happy and content, with the whole supply of wealth to draw on, is to issue money.


Mr. BLACKMORE:: Nor do we.


Angus MacInnis: As a matter of fact, I
think if the hon. member for Bow River (Mr. Johnston) who spoke to-night really took note of the quotations to which he referred, he would be sitting with the group to which I belong, because those quotations prove our position.
I was about to point out, however, that I am not going to quarrel with hon. members to my

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left. It was stated to-night by the hon. member for Rosetown-Biggar that we are going to support this subamendment, and I see no reason in the world why we should not support it. I see no reason in the world why we should complain of poverty and distress while we have abundant natural resources, while we have abundant machinery and while there is idle man-power in the country. I do not see any logic in that sort of thing. The way to produce wealth-and the only way in which wealth can be produced-is to apply labour to natural resources. But as was abundantly proved in the statement of the Minister of Transport (Mr. Howe) delivered in the house on May 22, what stands between labour and natural resources, and the production of wealth, is the private ownership of the means of production. Let me read what the minister said as it is recorded at page 128 of Hansard:
One of our chief difficulties has been to obtain the latest British designs for mechanical equipment used by our troops in common operations. British industry has not been too willing to part with these designs, many of which represent years of study and development by private manufacturing firms.
That is the cause of many of the difficulties in Europe to-day. Private interests would not release the things necessary to carry on the production of the country, in order to meet the menace of Hitler. That is what stood between the people of Europe and the means to defend themselves. It was not because they did not have the money to do it. They could not get it done because they could not get access to the machinery to effect production, because these private interests held certain rights with which they would not part until they got their meed of profit.


John Horne Blackmore: They would sell their goods to them.


Angus MacInnis: No; they would not sell their goods unless they were given something of value in exchange, and to the extent the government gives value, they create a debt. I do not care how you do it, every seller of goods accepts a promise to pay. It does not matter who issues the promise, it creates a debt somewhere. In order that the country may have the full use of productive forces, the country will have to take them over.
I noticed the hon. member for Acadia (Mr. Quelch) adroitly and, I believe, quite properly used the statement made by the Prime Minister (Mr. Mackenzie King) on August 2, 1935, in Saskatoon respecting the necessity of issuing currency and credit in terms of public need. I am sure hon. members across the way will be very glad to support this amendment, along with us!


Richard Burpee Hanson: But he did
not mean it.


Angus MacInnis: Oh, I would not say that in regard to the Prime Minister. I do not know that I would say it even of some other hon. members who might make a similar statement, because of course I must have regard to the rulings of His Honour the Speaker.
What this government lack most is a social vision. They do not look to the future. The world that they are looking at, the world that they think and live in, is the world that existed when they were young fellows about thirty years ago. As I look round this chamber at the faces of hon. members I see that most of them, not all of course, are about my age.


An hon. MEMBER:: Thank you for the eomplitaent.


Angus MacInnis: My hon. friend is young and handsome like I was thirty years ago. Most of us started out in life as young men about thirty years ago. We are not yet old, but we are living in a totally different world. As I look across the floor of this chamber I see many men who during the period mentioned had left the old country to come to this great Canada of ours. Along with thousands of other young men, I left eastern Canada as a youth to go to the last great west. But there is no great west to-day. You cannot leave the maritimes and hope to make your fortune in British Columbia, Manitoba, Saskatchewan or Alberta. Possibly you would not have made it thirty years ago, but at least there was hope, but you certainly cannot do it to-day.
We are living in an altogether different world. We must adapt ourselves to the needs of the present world. As I say, the greatest handicap of this government is that they have no social vision. They cannot look ahead. I am sorry to say that the proposals made the other day by the leader of the opposition (Mr. Hanson) were no more far-seeing than those contained in the budget. To advocate a cent sales tax on gasoline, the curtailment of ordinary expenditures, the placing of a sales tax on canned milk is not the kind of statesmanship we need for the present emergency.


Richard Burpee Hanson: There is a war on.


Angus MacInnis: But there are still 300,000 men who are unemployed in this country. Until you put those men to work producing wealth you should not talk of taxing the children's milk, of taxing gasoline or of taxing
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anything else. Put these men to work producing real wealth. That is what is necessary. There is also a war on in Great Britain, but despite that fact they have started to improve social services since the new cabinet was formed. I see in the press where soldiers' war pensions have been increased.


Mr. DEPUTY SPEAKER:: I am sorry to have to advise the hon. gentleman that his time is up.


Angus MacInnis: I should like to read this quotation from the New Statesman and Nation, London.


Some hon. MEMBERS:: Go ahead.


Angus MacInnis: I believe I have the unanimous consent of the house. The statement is quite short and it shows what the new government is doing.


Thomas Vien: Do I understand that the house is agreeable?


Some hon. MEMBERS:: Yes.


Angus MacInnis: The statement reads:
Single old-age pensioners living alone and without other resources will receive 19s. 6d. a week and in addition rent and winter fuel allowances which will be fixed in relation to local conditions by the assistance board advisory committees. A pensioner couple living alone will receive 32s. a week plus similar allowances. The new scales are based on proposals of the assistance board prepared before the change of government, but one or two minor instances of 'scaling-up" show that the labour ministers did something to improve a measure whose basic principle was so opposed to their philosophy. As a temporary alleviation of war-time hardship it is to be commended.


Mr. H. C. GREEN (Vancouver South):: Mr. Speaker, this parliament assembled just seven weeks ago to-day. After that short period we find ourselves in a new world, in a world which few of our Canadian people even dared contemplate. Holland, Belgium and France are gone. Italy has swooped down on helpless France. Great Britain, our motherland, is at bay, and how grand she is when facing such tragic conditions as she faces to-day! What an inspiration and what a challenge there is to every man, woman and child in the British commonwealth! The United States, our great neighbour, is alarmed and is rushing defence preparations. Canada is facing a very real threat of invasion.
We are in a new world, I repeat, a far more dangerous world than we ever knew before. Our empire is in jeopardy; our homes are in jeopardy, and it is essential that we in this parliament and the Canadian people have a clear vision of just what is at stake. I suggest that the issue is this: Are we to be free

men or are we to be slaves? The situation is as serious as that, and our best defences are a fighting spirit and a grim resolve to see it through to the bitter end.
That is the background against which the Canadian parliament and the Canadian people view this budget. Is it any wonder that they are ready to accept it, heavy as it is? I think this is so also because of the great confidence they have in the Minister of Finance (Mr. Ralston). That has helped the Canadian people considerably when faced with this budget.
In my opinion, however, there are two features of the budget which are quite wrong. I should like to point these out in a spirit of helpfulness to the government. In the first place, the money paid to our fighting forces and to the dependants of our fighting forces is not clearly exempted from the new taxation. It should be. I ask the Minister of National Revenue (Mr. Ilsley) to correct me if I am wrong in any of my statements. I should like to quote section 18, subsection 8, paragraph (c) of the proposed Income War Tax Act resolution. This section deals with the new national defence tax and reads:
(c) members of the Canadian naval, military and air forces shall be exempt from tax while such members are on active service beyond Canada-
That would cover a man overseas.
-or are on active service in Canada and-
Here is the qualification:
-whose duties are of such a character as are required normally to be performed afloat or in aircraft, but only to the extent of their service pay and allowances.
As I interpret that provision, it means that the men serving in our military forces in Canada, who after all constitute the great bulk of the men who have enlisted, will be subject to this national defence tax. I believe the same condition exists with regard to the ordinary income tax. These men must pay an income tax on their pay and on the allowances to their dependants. I repeat that they and their dependants should not be taxed in that way. They are making a much greater sacrifice for Canada in far more difficult ways.
The second point on which I criticize the budget is the excess profits tax provisions. I think these provisions underestimate the loyalty and the will to serve of our business leaders in Canada. I am convinced that all they ask is a reasonable profit, and provision for that should be made for them; then all excess-not 75 per cent merely-over a reasonable profit should go to the nation. Such a provision in the budget would have done more than anything else could possibly have

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Mr. Green
done to make our people realize that there would be some equality of sacrifice in facing this war. But, instead, the government have compromised. They take only 75 per cent of the excess profits. Presumably that is based on the theory that to get the full cooperation of Canadian business men even at this time when our very national life is endangered, one must dangle before their noses the carrot of 25 per cent of excess profits.
I repeat, Mr. Speaker, that all that the majority of these business men ask is a reasonable profit, and not excess profits. Reasonable profit could easily be determined. There are, for example, in the budget resolutions provisions under which it is possible to arrive at what is called a standard of profits, and the same principle could be used in deciding on a reasonable profit. I suggest to the Minister of Finance and to the Minister of National Revenue that they follow the example of the Minister of Munitions and Supply (Mr. Howe) whose department in many instances now set a reasonable figure for contracts. They decide what is a reasonable price to pay, and the contract is awarded at that price. I think we must remember that Canada faces an emergency, that our national safety is endangered. The government have stressed that time and again this session, and at no time more strongly than when they introduced the mobilization of resources bill, Bill No. 43. Why, the very first paragraph of the recital of that bill contains these words:
Whereas by reason of developments since the outbreak of the present war a special emergency has arisen and the national safety of Canada has become endangered-
That is the position; there is no disputing it, and I suggest that the government reconsider the excess profits tax provisions of the budget.
It should also be pointed out again to the Minister of Finance and to the government, and with the greatest emphasis possible, that this budget means great sacrifices for the Canadian people. It may mean suffering for many Canadian people. It certainly means greater sacrifices than any other budget in the history of Canada. But, despite that fact, the Canadian people will pay. Witness their response to the war loan in January last and how they rose to the occasion then. Witness their response to the sale of war savings certificates at the present time. They will make sacrifices, and do it gladly, if they believe they are getting value for their money and if they believe they are getting action for their sacrifices.
By value for their money I mean that there shall be no waste, and I mean further that
there shall be no favouritism, political or otherwise, in the spending of this money. I have never made a practice in this house of hurling charges of patronage and things of that kind. I think the ministers and the government are dead against it, certainly at this time. But there are underlings across the country in every riding who are seeing to it that supporters of the government get jobs first. I do not think the ministers will deny that. Perhaps they are helpless to eliminate this entirely, but I appeal to them again, for the sake of the unity of Canada in our war effort, to make another attack on these heelers and stop that sort of thing- stop political patronage in connection with our war effort.


An hon. MEMBER:: The shoe is on the other foot.


Howard Charles Green: That may be in some
instances. Our people are no more perfect than your people, but it is a thing which in war time should be stamped out completely. I am not in favour of it in peace time either.
Action for their sacrifices means bold and aggressive leadership by the government, and in connection with my appeal for bold and aggressive leadership by the government I have certain suggestions to make, first concerning cooperation with Great Britain. I make this group of suggestions first because I think they are of prime importance at this moment.
It must surely be clear to every Canadian to-day that apart from sentiment, which after all is very, very important

and I do not wish to minimize it at all-we can best achieve victory by helping Great Britain beat Hitler right now. That is the best way we can achieve victory. I suggest that the government should send to Great Britain without delay all available troops. Weeks ago, the very first week this parliament met, the Prime Minister announced a speeding-up of our war effort. He said that the second Canadian division would be sent overseas without delay. But we -have heard nothing yet of the arrival of the second Canadian division in Great Britain. At the moment he made that announcement the division had not been recruited up to strength. But this is one thing we must do-get all available troops to Britain without delay.
Second, may I urge, and urge most strongly, that we shelter in Canada for the duration of the war not only all the children Great Britain wishes to send here but any other of her people whom she wishes to send, women, the aged and the disabled. That is surely necessary not only to save the lives of these
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kinsfolk of ours, but to help in the defence of Great Britain, -which means to help in the defeat of Hitler. Great Britain to-day is an island fortress. Make no mistake about that. Great Britain is apt to become the battle ground at any minute. She is an island fortress in which food is of the greatest importance. There may be a scarcity of food there, and then it will come down to a question of how many people have to be fed. We should take into this country just as quickly as possible every man, woman and child Britain wishes to send here. Think of the way in which the fighting forces in France were impeded by the women and children, the disabled and the aged; think of all the confusion that resulted from their presence on the roads. We do not want that to happen in Great Britain. I urge upon the government to put nothing whatever in the way of the British government because time in this matter is of vital importance.
I suggest also that to help Great Britain we permit, nay, that we invite Great Britain to transfer to Canada any business which for war reasons she wishes to have transferred here. We should not put any barriers in her way in that regard, and finally, we should leave no stone unturned to become an arsenal and food reservoir not only for our own nation but for Great Britain as well.
Then I have certain suggestions to make concerning the fighting forces in Canada. One of the hon. members who preceded me this evening read from the press interview given by Major-General LaFleche in London on June 28. I will repeat only a few words. He said:
The dominion should look to her arms and the defence of her great coast-line without delay. Inaction and indecision should not be tolerated. To-morrow may be too late.
Every man in Canada of fighting age who can be spared from industry and from the production of primary products should be trained for the defence of this dominion, for everyone may be required. I think that fact should be made clear to the Canadian people. The government should at least inform the country of the approximate number that will be needed. This would enable many of the men who will be required to serve to arrange their affairs and make preparations beforehand. We may need one million men in our fighting forces in Canada; I repeat, one million men. In the last war we enlisted 628,462 from a population in 1918 of 8,148,000 souls. Last year we had a population of 11,315,000, and an equivalent number of men in the fighting forces in this war would be 872,686. But the danger to Canada to-day is far greater than it was in the last war.

I suggest also to the government that they make use of every reasonably fit ex-service man who volunteers for service. The government have provided for the recruiting of a few thousand only; they should use every fit man who volunteers. These men are men of proven courage, men of experience in warfare; best of all, they are men whose loyalty is beyond question, who can be relied on in any emergency. They are the finest reserves that we could have. They can be used to replace younger class A men, for example on coast defence. By this means many young men could be released for active service.
Mention of these large numbers-and I do so, not to frighten the house or the country, but because we in Canada must start facing facts; had we done so months ago, we would have been a great deal better off to-day than we are-brings up the question, who are the men to command all these troops? I cannot for the life of me understand why the government have not already chosen commanders and staffs for the third and fourth divisions, and sent these men over to England to find out the latest methods of warfare. Why do we delay so long? We had the same trouble with the second division; although parts of it were recruited last fall, no commanding officer or staffs were appointed until two or three months ago. It is an absurd way to make preparations to take our part in the war. It might even be wise for the government to recall certain men from our forces in Great Britain to lead our new troops.
In connection with our forces at home, I suggest that national defence headquarters here in Ottawa greatly needs strengthening. I regret to have to say it, yet I believe every hon. member is of the same opinion. It appears to me that there is unnecessary delay and red tape at headquarters. Perhaps that is only to be expected, In peace time these people went along smoothly; they were not required to face great problems, and they were not given much support either by parliament or by any government. Now national defence headquarters has to conduct and supervise one of the biggest enterprises in the country, an effort of such vital importance that perhaps the very survival of this nation will depend upon whether or not our defence is efficient. It calls for the ablest and most active men in the country. This is no time to be blindly following seniority. I suggest to the government that when the Minister of Finance (Mr. Ralston) takes over the department of detfence he review all the staffs, both here and at other centres, and if he finds reorganization is needed he carry it through without any qualms at all.

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I think he should consider bringing men back from England to fill key positions here, and he might also transfer men from the districts and from the non-permanent active militia. So much by way of suggestion to the government in connection with our war effort.
In addition, I have two suggestions to make concerning our civilian population. I make them because I believe that they will serve to raise the morale and the spirit of the Canadian people.
In the first place there are many Canadians on relief who are able and willing to work but cannot find employment. They are known as the employable unemployed. According to the Labour Gazette for June of this year, there were 166,000 men and women in this class in April. After Canada had been at war for eight months, after we had recruited nearly 100,000 men, after we had drawn into employment a greater number of men than ever before in our history-as is indicated in the issue of the Labour Gazette which I have cited-there were 166.000 employable Canadians and their dependants on relief. Nothing does more to lower the spirit of the people than this state of things. It must not be permitted to continue. Clearly in this crisis it is the duty of the government to see to it that the nation is so organized that every one willing to work can do so. We are in a new world; we are facing new conditions; our people are entitled to no less than the assurance of employment, and nothing will do more than employment to build up their morale.
The government should take over full responsibility for all employable unemployed. Let us face this question at last. Such a course has been recommended to us time after time. It was recommended by the Purvis commission. It was recommended again by the royal commission on dominion-provincial relations, known as the Rowell-Sirois commission. There is, at page 24 of their book of recommendations, a most clear-cut finding on this question. They say:
The experience of the past decade is conclusive evidence that unemployment relief should be a dominion function. By unemployment relief we mean relief or aid for unemployed employables as distinct from unemployables.
If the government will do that and do it now, such action will focus attention on the need of placing these men and women. It will mean that they are so much more likely to get jobs. The government can get detailed information with regard to these individuals. The government have a far greater measure
of control over industry and over the producers of primary products than they have ever had before, so that they are in a position to emphasize the fact that all Canadians must have a chance to work. Industry and primary production must be organized on that basis. Also the government can set up a national employment service. That has been recommended by both commissions I have mentioned, and it should be set up without further delay, stressing the placing of these people- not stressing registration but stressing the actual finding of jobs. And the government could very well appoint honorary advisory committees across Canada to help in the finding of jobs for these people. I do not think we make half enough use of honorary advisory committees in meeting the problems facing the country.
This brings me to my second suggestion with regard to our civilian population. The government should go much further, because after all theirs is the responsibility, in harnessing the enthusiasm of the people. We have hardly begun to do so. We have a great untapped reservoir of useful service in Canada to-day. That was very well illustrated in a telegram sent to the Minister of Pensions and National Health (Mr. Mackenzie) by the Vancouver board of trade, copies of which were received by other members from British Columbia or at any rate from Vancouver. Under date of May 23 of this year, it states:
Members of the Vancouver Board of Trade wish to point out to the government the fact that thousands of citizens of this community expect the government to encourage and organize those who wish to serve their country. We respectfully urge that the government give a lead to those people which will dispel-
And these are significant words.
-the growing feeling that their services cannot be used in any capacity and are not wanted.
Let the government bring in at once a bill providing for the proposed department of national war services so that suggestions may be given them in the house, and let them make the main job of that new department the putting of volunteers to work in Canada. For example, we have splendid work done by the women across the country. I dare say every member of this house fought his election to the tune of knitting needles. I did in my riding and I imagine the same is true of other parts of Canada.
Then we have the unfit young men, transients, who were rejected from the army. Surely there is no reason why they should not be organized into works battalions to do many of the things necessary to be done. Then there are our scientists and engineers. Long before the war the government got a
Fhe Budget-Mr. Green

list of all engineers in Canada, and yet every week I get a letter from one or another of the engineers at the coast saying, in effect, "We registered months ago and want to do something to help in the war effort, and yet we cannot get anywhere. No one seems to need us and we might as well be in China for all the use we are to Canada." Then there are our youths, who are too young to serve. Surely they could be given physical training courses throughout Canada, something that would help them greatly.
Finally, I have a few suggestions to make concerning parliament, and I offer them with a good deal of diffidence. Incidentally, I should like the support of every private member on these suggestions, regardless of the party to which he belongs. I suggest that the government should make far more use of parliament. There has been a tendency this session to hold back discussion of estimates having to do with the war-for example, national defence estimates, external affairs estimates, pensions estimates-none of them considered yet, but all of them estimates on which we could have made useful suggestions to the government. Then there has been a tendency to reduce the hours of sitting. Each Friday, without much ado, this house adjourns at six o'clock. Every other year we sat on Friday nights and a great deal of useful work was accomplished. Perhaps it was because a good many eastern members had gone home for the week-end. I do not think the present practice is right under war conditions. It is not setting a proper example to the Canadian people. And then there has been a tendency to reduce the number of questions referred to committees. This house has been sitting for seven weeks, but at present only two committees are sitting and the only committee that has done any real work is the committee on the defence of Canada regulations. I know because I am on that committee.
It is all hard to understand. There are so many ways in which private members could help. The people of Canada are looking to this parliament for leadership as never before, and members of parliament feel their responsibility deeply. Every private member came here determined to do a job for Canada and we are not getting much opportunity to do it. The government should go out of their way to provide opportunities for the discussion of questions concerning the war. They would get many valuable suggestions, and those suggestions should not be limited, as they are at the present time, to members of the

different opposition parties. It is a tragedy that the custom is such in this parliament that private members of the government party are supposed to keep still when estimates are under consideration. There are in this parliament many bright young men on the Liberal side who could be of great help at this time, and yet they are forced to sit as quiet as a lot of clams because a private member supporting the government is not supposed to take part in the discussion of estimates.
I suggest that the government should appoint committees designed to undertake the consideration of many questions. It is not too late. For example, a military committee might be appointed. In 1939 the government promised that a committee would be set up to go into military affairs, to survey the military situation across Canada. The Minister of Pensions and National Health is in his seat to-night. As Minister of National Defence he made that promise in the session of 1939. The Prime Minister did the same, and promised it again this session; yet nothing has been done. Private members are just as much in the dark as anyone in Canada on these questions simply because there is no committee work of that type. There should be committees, perhaps, to survey other services-the air force, the naval service, a committee to advise on the functions of the national war service department, a committee on external affairs, and so forth.
Parliamentary government in Canada is at stake, and now is the time that parliament should be showing leadership. The government must give private members an opportunity if parliament is to show leadership. We are in a new world and there should be a new spirit in parliament. There was such a spirit in the war session, last fall, but there has been very little since, either in the session in January or in this session. The old days of party sham-battles and playing the party game in and out of the house are gone forever. They are just as much out of date as the bow and arrow. I sometimes wonder whether that is realized by any party in the house, and I include my own party, the Conservative party, in the statement. The Canadian people need something better in their parliament at this war time.
I thank the house for the patient hearing given me. All these suggestions are meant to be helpful, and I trust they will be accepted by the government in that spirit. In conclusion, may I repeat that our best defence in this crisis is a fighting spirit and a grim resolve. Canada is a strong young nation, not yet fully realizing its own strength. Our

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job in this parliament is to see that the efforts of that young nation are directed into channels where they will be most effective in bringing about victory. Let us drop half measures; let us go all out to win, and let us remember and take comfort from the fact-that our people are a people of courage and of vision, and that our cause is just and is the cause of humanity.
On motion of Mr. Maybank the debate was adjourned.
On motion of Mr. Crerar the house adjourned at 10.55 p.m.
Friday, July 5, 1940

(Questions answered orally are indicated by an asterisk.)