THE MINISTRY


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, the house is expecting from me to-day a statement with 
respect to matters pertaining to the cabinet. I have thought that the occasion would be opportune to review the war organization of the government as a whole, inasmuch as it is impossible, in considering matters of advice to the ministry, to separate from its relation to the cabinet itself, which has to do with the for-i mulation of policy and seeing to its due execution, that part of the administration which has to do with executive and advisory work. I hope, therefore, that the house will bear with me if the statement which I have to make is somewhat lengthy. It is lengthy for the reason that I have sought to include in it the names of outstanding persons who have been appointed to the public service in connection with Canada's war effort. I thought it desirable that hon. members should see not only how comprehensive is the list but also how representative in character it is of all shades of political and other opinion and of the business interests in the country.
On different occasions, the leader of the opposition (Mr. Hanson) has drawn attention to ways and means of increasing the effectiveness of Canada's war effort.
This is an aim which is shared by all hon. members of parliament. By none will constructive suggestions calculated to contribute to its fulfilment be welcomed more cordially than by my colleagues and myself.
The particular ways and means to this end which, at one time or another, were suggested by the leader of the opposition have been the enlisting of the services of "the best men":-
(a)	In executive and administrative posts,
particularly in those branches of government which have to do with the prosecution of Canada's war effort;	.
(b)	In an advisory capacity, where not possible to have their services enlisted either in whole or in part in executive or administrative posts;
(c)	In the government itself;
By "the best men" is meant, I think I may assume, persons whose services or advice are available, and who, all circumstances considered, appear best suited for the positions it is necessary or desirable to fill.
It has also been urged by the leader of the opposition that the work of the cabinet should be so arranged as to free as largely as possible from other duties Ministers of the crown who preside over those departments of government which are primarily concerned with war activities, in order that the time and attention of these ministers may be given as exclusively as possible to a consideration of war policies and their effective prosecution.

War Organization-Mr. Mackenzie King
A review of what, in fact, has actually been accomplished will make clear that it is precisely along these lines that from the very outset the government has been proceeding. We have not sought to do everything at once, thereby involving unwarrantable expenditure, and having, as the war has progressed, to undo much that should never have been done; or, what is worst of all, by premature action, creating problems and situations more difficult of solution than those we have been called upon to meet. Rather have we sought to anticipate, as far in advance as was possible, the problems which were certain or likely to arise in the progress of the war, and to prepare in advance, as far as possible, for the meeting of each new situation as it might arise, taking, when the right moment came, the additional measures required to deal effectively with it. These additional measures to meet new situations as they have arisen, have involved bringing continuously into the service of the state and to the aid of the ministry, in an executive, administrative or advisory capacity, available persons of outstanding ability and experience. It is along these lines that we shall continue to seek to meet each new situation as it is born of the exigencies and demands of the war.
In speaking on these matters, the leader of the opposition called attention to the following statement which I made in the course of the general elections held at the beginning of this year:
With the war and its problems growing in intensity and magnitude, I shall seek, if we are returned to power, to bring to the aid of the ministry, in an advisory capacity, a still larger number of men of outstanding ability and experience whose services in one way or another might be made available to the state, and add strength to the administration of our policies. How best their services might be consolidated and used whether (a) in an immediate association with the war cabinet, or (b) with a member of the cabinet, intimately associated with its war activities, is something that I would like to consider with my colleagues before the next parliament reassembles.
It will be noticed that this undertaking had relation to a course of procedure which had already been adopted, and with which the public were wholly familiar. It was, for example, everywhere known that in organizing the war supply board, the government had been fortunate in securing as the chairman of that organization, Mr. Wallace Campbell, president of the Ford Motor Company of Canada, who not only was called on occasion into conference with the war committee of the cabinet, but who, in addition to performing the duties of chief executive officer of the war supply board, served throughout in an advisory capacity to the minister responsible for its administration. Mr. Campbell, at the time of his appointment as chairman of the board, was selected as "the best man" available at that particular time for that particular post. The selection was made regardless altogether of party political affiliations.
How extensively, since its return to office, the government has carried out the pledge given by myself in the course of the elections, will be apparent from the appointments, since made, of men of outstanding ability and experience to executive and administrative posts immediately connected with Canada's war effort. Of every person so appointed, it may be said that directly or indirectly he has acted not less in an advisory capacity to the minister of the department concerned, than as an executive or person in a key position performing some important function in the prosecution of Canada's war effort. By advisory opinion thus obtained from exceptionally well informed and highly specialized sources, the ministry itself has been continuously guided in the shaping, development and execution of its war policies.
How effectively the administration has been strengthened by enlisting the services of the particular persons appointed will be apparent from their names, from their previous associations, and from their known qualifications for the executive and key positions now held by them in the departments concerned with war activities.
Appointments have been made by the assignment to tasks, for which they possess special qualifications, of officials from the permanent civil service, and by recruitment from financial, industrial, professional, technical and other fields of activity, of outstanding persons who, because of their training, associations and experience, were regarded as likely to be most familiar with the nature of the new administrative problems which had to be met.
Let me now briefly review the appointments made since the commencement of the war. The list does not purport to include all appointments made, but it is, I believe, sufficiently representative to make clear the government's determination to bring into the service of the state in an executive, administrative or advisory capacity regardless altogether of party political affiliations, the best available men to assist the ministry in the effective prosecution of the war effort of our country.
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War Organization-Mr. Mackenzie King
Department of National Defence
I shall speak first of appointments to the Department of National Defence. They have been so arranged as to indicate opposite the name of the appointee, the position presently held by him in the department, and as well
his business or professional affiliation at the time of appointment. The list speaks for itself. It discloses at a glance the importance and variety of the several positions. In most cases, the appropriateness of the appointment will be wholly apparent.
Name
Lt.-Col. Henri DesRosiers Lt.-Col. K. S. Maclachlan
Present position in department
Acting Deputy Minister (Militia Service).
Acting Deputy Minister (Naval Service).
Lt.-Col. Goodwin Gibson	Real estate advisor.
Major Basil Campbell	Assistant to real estate
advisor.
Arthur MacNamara	Chairman,	dependents' allowance board.Col. A. A. Magee	Executive	assistant	to Minister of	National	Defence.Capt. H. A. Dyde	Special assistant to Minister
of National Defence.
Lt.-Col. Geo. Currie	Executive	assistant	to Minister of	National	Defence.
Business or professional affiliation at time of appointment.
Vice-president, Imperial Tobacco Co. of Canada,
Ltd., Montreal.
President and general manager Fraser Companies, Ltd., Montreal, Edmundston, N.B.; President and general manager, Restigouche Co., Ltd., Campbellton, N.B.
Senior partner in firm of Gibson Bros. Real Estate Brokers, Toronto.
President, Campbell & Shepherd, Limited, Construction Engineers, Toronto.
Deputy Minister of Public Works and Labour, Manitoba government.
President. Barclay's Bank (Canada) and director of several financial institutions.
Dyde & Becker, Barristers, Edmonton.
Partner in Macdonald, Currie and Company, Chartered Accountants, Montreal.
Auxiliary Services
Early in October, 1939, a directorate of auxiliary services was set up in the Department of National Defence to coordinate and facilitate the work of the various agencies promoting the welfare of the men in the service.
Brigadier W. W. Foster, president of the Canadian Legion, was called upon to serve as director. The work of the auxiliary services has increased with the growth of our armed forces and more and more representatives of the voluntary organizations have come to work in active cooperation with service officials in the conduct of this work.
Besides the organization at headquarters in Canada and in each of the military districts an overseas organization has been established at Canadian military headquarters which includes representatives of the four principal voluntary organizations:	The Canadian
Legion, Y.M.C.A., Salvation Army and Knights of Columbus. Each of these bodies also has representatives working with the first division. The government has undertaken to provide the pay and expenses of a portion of these overseas workers.

Department of National Defence for Air
It will be recalled that very shortly after the general elections a third acting deputy minister was appointed to the Department of National Defence. This appointment had relation particularly to the air forces and the development of the British commonwealth air training plan. The government was fortunate in securing for this most important post the services of Mr. James S. Duncan, vice-president and general manager of Massey Harris Limited, Toronto, one of the best known and ablest industrial executives in Canada. Mr. Duncan's appointment was made on April the 11th.
On May the 22nd, parliament authorized the establishment of a separate Ministry of National Defence for Air and, on the day following, the Hon. C. G. Power was sworn in as minister of the new department.
Since that date, the administrative staff of the Department of National Defence for Air has been further strengthened by the following appointments:

War Organization-Mr. Mackenzie King
Name
Terence Sheard ..
J. L. Apedaile....
S. D. Armour.... J. W. G. Clark...
I. N. Smith	
W. J. Macdonald
G.	M. Black	
H.	G. Norman....
H. G. Colebrook.,
Present position in Department
Executive assistant to the deputy minister.
Inspector of accounts, civil flying schools.
Contracts officer, civil flying schools.
Director of public relations.
Assistant director of public relations.
Head of statistical and records branch.
Assistant to head of statistical and records branch.
Special assistant to deputy minister.
Executive assistant in charge of engineering and supply.
Business, professional or other affiliation at time of -appointment.
Assistant General Manager of the National Trust Company, Toronto.
Partner of Cole, Apedaile & Company, Chartered Accountants, Montreal.
Banker, Georgeville, Que.
Director of Cockfield, Brown Company, Advertising Agency, Toronto.
Assistant General Manager and Secretary-Treasurer, Ottawa Journal.
Senior Partner Millar, MacDonald & Co., Chartered Accountants, Winnipeg.
*Comptroller. Western Breweries Co., Winnipeg.
Partner of Price, Waterhouse & Co., Chartered Accountants, Montreal.
Director and general merchandising manager of Robert Simpson Co., Toronto.
I shall refer a little later on to the genesis and evolution of the Department of Munitions and Supply from a purchasing board, associated before the war, with the Department of Finance and later, at the commencement of the war, as a war supply board under-the supervision of the Minister of Transport,-to the present full-fledged Department of-Munitions and Supply. For the moment, it is sufficient for me to recall that the department itself was duly established on April the 9th, at which date the existing organization of the war supply board was absorbed into the new Department of Munitions and Supply. In no branch of the public service has need for rapid expansion and the enlistment of services of able executives and persons possessed of special knowledge been greater than in that concerned with the production of munitions and other war supplies. The services of a large proportion of those at present in these positions have been enlisted since the new department took over the work of the war supply-board.	i
The administrative staff of the Department of Munitions and Supply is, like other departments, presided over by a deputy minister. There is, as well, an executive committee of seven members. This committee might be compared to a small cabinet concerned exclusively with war supply. It meets from day to day; considers and decides upon matters of policy with respect to production of munitions and other war supplies as well as upon the best methods of carrying out policies already determined.
The department is divided into a purchasing branch, a construction branch and a number of production branches for aircraft, shipbuilding, munitions and gauges and chemicals and explosives.
For the mobilization of supplies of raw. materials controllers of metals, timber, oil and steel have been appointed. These controllers act not only individually but collectively constitute a war industries control board within the department.
On the administrative side the deputy minister is assisted by the comptroller and secretary and the officials of his branch.
A branch of the department is also being-organized for economic research and planning-required in order to maintain a constant and uninterrupted development of ever-increasing quantities of the materials of war.
The department has a labour liaison officer and liaison officers in New York and London,
Beyond the department itself, several nonprofit making private organizations, fully owned by the government, have been set up to carry on special phases of the work. Speaking in the house on June the 14th, the Minister of Munitions and Supply explained the purpose of these companies as follows:
It has been found utterly impossible to assemble in Ottawa a sufficient staff to handle all the multiplicity of undertakings that the department has in hand at the present time. The act provides that certain government owned and controlled companies shall be established
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War Organization-Mr. Mackenzie King
and headed by business men chosen by the government who will be able to carry on certain operations as companies rather than as part of a departmental staff.
Each of these companies is being or will be administered by a board of directors, chosen from outstanding business men and industrialists.
At the present time within the Department of Munitions and Supply there are, besides those who are connected with these government owned companies, some 65 persons serving in key positions or as departmental heads, of which number ten are outstanding permanent civil servants.
A list of departmental heads and key men in the Department of Munitions and Supply was placed on Hansard by the minister, on June the 20th. The names of the persons whose services have been classified in relation to their present position and prewar occupation are as follows:
Department of Munitions and Supply
Present position in	Business or professional affilia-
Name	department	tions at time of appointmentG. K. Sheils	Deputy Minister.	Asst. General Manager, General
Steel Wares Ltd., Toronto.
W. C. Woodward	Chairman, Executive	Comm.	President, Woodward Stores
Ltd., Vancouver, B.C.
R.	P. Bell	Member, Exec. C.	Director, Pickfords Black, Limited, Halifax and other Companies.Henry Borden, K.C	Member, Exec. C.	Barrister, Toronto.W. A. Harrison	Member, Exec. C.	Managing Director, Estabrooks
Ltd., Saint John, N.B.
R. A. C. Henry	Member, Exec. C.	General Manager, Beauharnois
Power Corp., Montreal.
G.	W. Scott	Member, Exec. C.	Chartered Accountant, Montreal.E.	P. Taylor	Member, Exec. C.	President, Canadian Breweries
Ltd., Honey Dew, Ltd.: Orange Crush Ltd., Toronto.
A.	J. Martin	Acting Secretary.	President, General Skycraft
Ltd., Montreal.
L. R. Thomson	Secretary and Comptroller.	Consulting Engineer, Montreal.A. S. Tindale	Ass't Sec'y. and Comptroller.	Chartered Accountant, Toronto.J. P. Pettigrew	Exec. Assistant to Deputy	General Manager, WindsorMinister.	Fisher Ltd., Montreal.W. D. Low	Exec. Assistant to Deputy	Purchasing Agent, C.N.R.,Minister.	Montreal.J. deN. Kennedy	Legal Department.	Barrister, Solicitor, Toronto.J. B. Carswell	New York Liaison Officer.	President, Burlington Steel Co.,
Hamilton.
C.	A. Banks	London Liaison Officer.	Managing Director, Bulolo Gold
Dredging Ltd.
H.	B. Chase	Labour Liaison.	Canadian Vice-President Brotherhood of Locomotive Engineers.W. F. Drysdale	Director of Production,	Vice-President, Montreal Loco-Munitions and Gauges.	motive Works.W. S. Lecky	Assistant-Munitions.	Manager, Holman's Machines,
Montreal.
Dr. C. A. Robb	Assistant-Gauges.	Professor Mechanical Engineering, University of Alberta.J. R. Donald	Director of Production,	J. R. Donald Co., Montreal.
Chemicals and Explosives.
A. F. McCall	Assistant.	Director, Drummond McCall &
Co. Ltd., Montreal.
Dr. J. H. Ross	Assistant.	Director, Forest Products
Laboratory, Montreal.
W. J. Sanderson	Director of Production, Air- President, Fleet Aircraft Ltd.,
craft.	Fort Erie, Ont.
W. S. Goodeve	Asst.-Executive.	Motor and Coach Co. Ltd.J. T. Asquith	Asst.-England.	Export Sales Manager, British
Machine Tool Co.
J. C. Ruse	Asst.-Raw Materials.	Contractor, Diamond Drilling
and Exploration.

War Organization-Mr. Mackenzie King
Department of Munitions and Supply-Concluded
Present position in	Business or professional affilia-
Name	department	tions at time of appointmentA. K. Tylee, O.B.E	Asst.-Building.	Ex-Air Commodore, R.C.A.F.D.	Stairs	Director of	Construction,	Chief Engineer, Montreal Con-Defence projects.	struction Co. Ltd.E.	P. Murphy	Assistant.	Construction Engineer, Department of Transport.L. C. Jacobs	Assistant.	Engineer, Montreal Power Corporation of Canada.D. B. Carswell	Director of Shipbuilding.	Marine Superintendent, Department of Transport.G. Ogilvie	Director of	Plant	Survey and Department of National Defence.
Production.
A. T. J. Watts	Assistant.	Department of National Defence.J. P. D. Malkin	Director of Purchases.	Director of W. H. Malkin &
Co., B.C. Packers and other companies, Vancouver, B.C.
J. Eaton	General Purchasing Agent.	Asst, to General Purchasing
Agent, C.P.R.
L. L. Price	Asst. General Purchasing	Purchasing Agent, C.N.R.,
Agent.	Montreal.
D.	P. Buckley	Aircraft Section.	Department of National Defence.T. A. McCormick	Barrack Stores Section.	Purchasing Agent, Canada
Creosoting Co.
W. J. Atkinson	Fuel, Paints Section.	Purchasing Agent, C.N.R.,
Toronto.
C. P. Morrison	Machinery, Tools.	Radio Department, C.N.R.E.	S. Hoare	Naval Stores.	Department of National Defence.G.	A. Briggs	Clothing.	Department of National Defence.W. E. Wilford	Food.	Commissary Purchasing Agent,
C.N.R., Toronto.
C. B. Doheney	Mechanical Transport.	Purchasing Agent, C.N.R.,
Toronto.
C.	E. W. Morehead	Building Supplies.	Purchasing Agent, C.N.R.A.	P. Labelle	Medical.	Wholesale Drug Supplies.F.	E. Wood	Cost Investigation.	National Steel Car Corp., Cost
Accountant.
W. C. McEachern	Personnel.	Post Office Department.B.	S. Liberty	Transport Controller.	C.N.R.W. Lauchlan	Treasury Liaison Officer.	Chief Treasury Office, Department of Finance.R.	Thomson	Publicity.	Public Relations Counsel,
Montreal.
H.	G. Caldwell	Statistics.	Professor Queen's University.D.	G. Mackenzie	Assistant R.A.C. Henry.	Consultant Economist.W. J. Neville	Files, Mail and Messenger Canadian Pacific Railway,Service.	Montreal.J. A. Marsh	Contract Investigator.	M.P. and General Purchasing
Agent, Canadian Porcelain Co., Hamilton.
A. R. Gilchrist	Overseas Accounting.	North End Motors Ltd.,
.	Office Manager.
A. Davis	Technical Consultant, leather. President, Davis Leather Co.,
Newmarket.
F.	C. Mechin	Petroleum.	General Manager, Imperial Oil
Refineries Ltd., Montreal.
C.	W. Sherman	Steel.	President, Dominion Foundries
Ltd., Hamilton.
H. D. Scully	Controller-Steel.	Commissioner of Customs.G.	C. Bateman	Controller-Metals.	President, Canadian Institute
of Mining and Metallurgical Engineering Institute, Toronto.
H.	R. McMillan	Controller-Timber.	President, H. R. McMillan
Export Co., Vancouver.
Geo. R. Cottrelle	Controller-Oil.	Director, Canadian Bank of
Commerce.
S.	W. Fairweather	Economic Adviser.	Director Bureau of Economics.
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War Organization-Mr. Mackenzie King
The government owned and controlled non-profit making private organizations set up to carry on special phases of the work of production of munitions and other war supplies are the following:
Operating Companies of the Department of Munitions and Supply The Citadel Merchandising Company Limited:
This company is concerned with ensuring the supply of machine tools and other equipment essential to war industry.
The officers are:
President	Thomas Arnold	Chairman,	Manitoba Steel
Foundries Ltd.
Vice-President	L. J. Belnap	President,	Consolidated Paper
Corp. Ltd.
Director	J. D. Johnson	President,	Canada Cement Co.
Ltd.
Director	C. E. Gravel	Director, Bell Telephone Co. of
Canada.
Director	F. K. Morrow	Director, Ogilvie Flour Mills
Co. Ltd.
The Federal Aircraft Limited:
This company has been organized to coordinate the output of all parts and to expedite the production of the Anson Training Aircraft.
The officers are:
President	R. P. Bell	Director, Pickfords Black, Ltd.,
Halifax and other companies.
Gen, Manager	R. J. Moffett	Chief Aeronautical Engineer of
Canadian Vickers.
Treasurer	F. L. Jeckel	Montreal Manager of Hardy
and Badden, Chartered Accountants.
Director	Sidney Dawes	President of the Atlas Construction Co., Montreal.Director	Blair Gordon	President, Dominion Textile
Co.
Director	Russell Smith	Canadian Industries Ltd.Director	Allan Aitken	Price Bros. & Co. Director	of
National Life Assurance Co. and other companies.
Another company has been organized of which, as yet, no public announcement has been made, which will be known as The Allied Supplies Limited. This company will be concerned with administration of the munitions and explosives programme undertaken on behalf of the British government and of any joint British-Canadian developments which may be assigned to do it.
The officers will be:
Chairman	Hon. C. A. Dunning	An ex-Minister of Finance	in
the federal government.
President	Harold Crabtree	Howard Smith Paper Co., Montreal (President Canadian Manufacturers' Association).Directors:	W. D. Black	President, Otis Fensom Elevator Co., Hamilton (an expresident of Canadian Manufacturers' Association).Beaudry Leman	President and Managing Director of Banque Canadienne Nationale (Past President of Canadian Bankers' Association) .J. Y. Murdock	President of Noranda Mines,
Ltd., and other companies.
D.	R. Turnbull	Managing Director of Acadia
Sugar Refinery Co. Ltd., Halifax.
R. H. McMaster	President of Steel Co. of Canada, Montreal.
E.	A. Wilson	President and General Manager
of Ingersoll Machine and Tool Co. Ltd., and Vice-President and Gen. Manager Morrow Screw & Nail Co., Ingersoll.

War Organization-Mr. Mackenzie King
It will be observed that the lists of persons I have quoted contain the names of many whose names, from one source or another, have been mentioned as those of individuals whose presence in the cabinet might be expected to add to the effectiveness of Canada's war effort. I submit that in the positions in which the services of the persons cited have been enlisted their opportunity to be of service to the state and effectively to aid the ministry (all circumstances considered) is relatively greater than it might be expected to be were they members of the ministry itself.
Department of Finance The appointments I have mentioned thus far have been in the departments immediately concerned with military defence. In the administration of the departments and agen-t cies concerned with matters of economic defence and internal security, the government has likewise enlisted the services of equally representative groups of outstanding and specially qualified persons.
For instance:	In the Department of Finance, the executive staff has been strengthened by the appointment of Professor W. A. Mackintosh, head of the Department of Political and Economic Science of Queen's university, as special assistant to the minister. But much more than in the work of the department itself, the services and counsel of business and professional men have been sought in connection with the organization and direction of campaigns for nationally offered war loans and the sale of war savings certificates, and in the vital and highly specialized work of the foreign exchange control board.
War Loan and War Savings Campaigns To direct the campaign for the first publicly offered war loan, a national war loan commitn tee was set up under the chairmanship of the Minister of Finance. Serving on it were five former ministers of finance:
Sir Thomas White,
Sir Henry Drayton,
Honourable C. A. Dunning,
Right Honourable R. B. Bennett, and Honourable E. N. Rhodes.
In addition were the provincial treasurers of all nine provinces. In order to give the committee as broadly representative a character as possible some 225 prominent people in all the provinces of Canada were added to the membership.
To direct the more purely technical aspect of the campaign, a national subscription committee of men connected with the securities business was set up under the chairmanship of Honourable C. A. Dunning.
In the campaign for the sale of war savings certificates the government has similarly availed itself of the services of prominent business and professional men.
A national war savings committee was set up of which Mr. W. H. Somerville, general manager of the Mutual Life Assurance Company of Canada, and Mr. de Gaspe Beaubien, a consulting engineer of Montreal, and a director of several industrial companies, were appointed as joint chairmen. Provincial chairmen were selected as follows:
British Columbia-Christopher Spencer, Vancouver.
Alberta-John Burns, Calgary.
Saskatchewan-W. G. Yule, Regina.
Manitoba-E. J. Tarr, K.C., Winnipeg.
Ontario-R. V. LeSueur, Toronto.
Quebec-Napoleon Charest. Montreal. _
New Brunswick-George E. Barbour, Saint John.
Nova Scotia-W. K. McKean, Halifax.
Prince Edward Island-Edmund T. Higgs, Charlottetown.
Foreign Exchange Control Board
Early in September, a foreign exchange control board was set up consisting of senior members of the public service and officers of the Bank of Canada. The purpose of the board has been that of setting up a complete system of exchange control, thus to conserve our financial resources and supplies of foreign exchange, and to prevent the dissipation of our capital into speculative or other unessential uses abroad. Working in close association with the Bank of Canada, the board has achieved its purposes with complete efficiency. Its task has been growing ever greater and more complex. To assist the nucleus of officials from the Bank of Canada, the board has secured the services of an ever increasing number of highly trained men from the fields of business and finance. I may make brief mention of some of these.
In addition to 20 employees of the Bank of Canada whose services have been lent to the board on a full time basis, the chartered banks have provided the services of 20 officials including Mr. F. R. MacLean of the Dominion bank, Mr. G. Catherwood of the Royal bank, and Mr. E.. C. Winrow of the bank of Montreal. Some 30 chartered accountants have been lent to the board by their employers on a full time basis, and an additional 15 to do investigational part time work in the commercial section in the summer months.
Five experienced securities dealers assist in the work of the securities section. Apart from the head of the general section, eight other lawyers are engaged in its work.
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War Organization-Mr. Mackenzie King
The following is a representative list of the executives who have come to assist in the direction of the work of the board:
Name	Present position on board	Former positionC.	K.	Highmoor	Chief	of foreign exchange	Assistant superintendent, Forseetion.	eign dept, of Canadian Bank
of Commerce.
A. McD. McBain	Public relations officer.	Manager of Foreign Relations
Dept., Bank of Nova Scotia.
M. W.	Mackenzie	Chief	of commercial section.	Partner in McDonald, Currie,
etc., Chartered	Accountants,
Montreal.
D.	R.	A. Walker	Chief	of securities section.	Associated with Wood, Gundy
and Co. Ltd.,	Investment
Dealers, Toronto.
W. D.	Matthews	Chief	of general section.	Barrister, with Wills, Bickle
and Gayley, Toronto.
A. M.	Campbell	Advisor on matters affecting	Associate Actuary, Sun Life
insurance.	Assurance Co.
Douglas Dewar	Head of Vancouver office.	A Canadian who was formerly
senior partner in Peat, Marwick and Mitcbel, Chartered Accountants, New York.
Andre Gerv-ais	Chief of commercial section, Chartered Accountant, with
Montreal branch.	Roland Levesque et Cie.,
Montreal.
War-time Prices and Trade Board
Upon the outbreak of war, immediate concern was shown by the government to prevent the disastrous rise in prices which so seriously dislocated the Canadian economy in the last war. On September 3rd, the government established the war-time prices and trade board, and invested it with extensive powers
to prevent hoarding, profiteering and undue rise in prices of necessities. The board itself is composed entirely of outstanding permanent officials under the chairmanship of Mr. Hector McKinnon, who is also chairman of the tariff board.
The complete list of the officials and administrators appointed from outside the public service is as follows:
K. W. Taylor	.. Secretary.	Professor of economics, Mc-Master University.Hubert Kemp	.. Economic adviser.	Professor of economics, University of Toronto.J. M. MacDonald	.. Economic adviser.	Head of Department of Commerce, University of Manitoba.H. D. Anger	.. Solicitor of board.	Barrister, of firm Elliott, Hume, McKague, and Anger, Toronto.David C. Dick	.. Wool administrator.	Manufacturer: President, Cobourg Dying Co. Ltd., Cobourg, Ontario.Harry Brown	[DOT]. Technical adviser to Administrator.	Wool	Retired textile expert, formerly Superintendent of the Rosamond Woollen Mills, Almonte, Out.W. P. Walker	.. Economic adviser to Administrator.	Wool	Comptroller of York Knitting Co., Toronto.S. R. Nohle	.. Sugar Administrator.	Assistant General Manager, Royal Bank of Canada, Montreal, Que.H. J. Hobbins	.. Technical adviser to Administrator.	Sugar	Sugar broker.Maurice Samson	.. Hides and Leather . istrator.	Admin-	Chartered accountant, of the firm of Samson, Knight & Company, 70 St. Peter St., Quebec, P.Q.J. McGregor Stewart, K.C... 	.. Coal Administrator.	Barrister, of the firm of Stewart, Smith, McICeen & Rogers, Halifax, N.S.

War Organization-Mr. Mackenzie King
Department of Agriculture An agricultural supplies board has been set up within the Department of Agriculture to help meet the extraordinary problems for our agricultural economy created by the war.
Other wartime bodies within the department are the bacon board, which was set up to implement and direct Canadian fulfilment of the important bacon agreement with the United Kingdom, and a dairy products board which was created to supervise the whole question of the production and marketing of dairy products. There is also an advisory committee to the bacon board but this, unlike the two just mentioned, possesses no executive powers.	_
To assist these boards in the conduct of their duties, the government has enlisted the services
of specially qualified persons from outside the permanent service. The Department of Agri-i culture has obtained the full-time services of Professor S. R. N. Hodgins of Macdonald College, Montreal, as secretary of the agricultural supplies board, of Mr. D. J. Perry, transportation officer of Canada Packers, Montreal, as transportation specialist for the bacon board, of Mr. C. J. Servais, packing house accountant of Toronto as accountant of the bacon board and of Mr. W. E. Bosnell, the plant superintendent of Canada Packers, Toronto, as technical adviser.
The part-time services of the following persons have also been enlisted by the department :
Name
Hon. J. G. Taggart S. W. Todd	
L. C. McOuat	
Adrien Morin ....
John Freeman_____
J. F. Desmarais...
Present position in department
Chairman, bacon board... Member, bacon board....
Member, bacon board Member, bacon board
Member, dairy board
Member, dairy board
Former position
Minister of Agriculture, Saskatchewan.
Industrial and Development Council, Canadian Meat Packers.
General agriculture agent, C.P.R.
Chief, Live Stock Branch, Department of Agriculture, Quebec.
President of Lovell & Christmas (Canada) Ltd., exporters of dairy products, Montreal.
President of Co-operatives fe-derees, Quebec, Montreal.
Department of the Secretary of State
Several of the war-time boards and agencies under the department of the Secretary of State are administered by a well known person from outside the government service. Dr. H. M. Tory, retired former president of the National Research Council has been serving as director of the technical section of the voluntary service registration bureau. The services of Brigadier General E. deB. Panet, chief of the department of investigation of the Canadian Pacific Railway have been secured as director of internment operations.
To organize the public information office the government first secured the services of Mr. Walter S. Thompson, director of public relations for the Canadian National Railways. Upon Mr. Thompson's retirement, because of the impairment of his health, he was succeeded by Mr. G. H. Lash as director, and Mr. Claude Melancon, as associate director, both of whom had been associated with Mr. Thompson in the Canadian National Railways.
Mr. W. Gordon Gunn, barrister, Winnipeg, is serving as the administrator of the War Charities Act. Mr. T. W. Laidlaw, the dean of Manitoba Law School, and Mr. Y. C. MacDonald, dean of the Dalhousie Law School, are both giving their services during their summer absence from their schools in connection with special work under the custodian of enemy property.
Departments of Trade and Commerce and Transport
In the Department of Trade and Commerce Mr. A. W. L. MacCallum has been appointed director of shipping, serving as executive officer of the Canadian shipping board. Mr. MacCallum formerly was manager of the Shipping Federation of Canada, Inc., of Montreal.
A similar outstanding appointment has been made in the Department of Transport of Mr,
T.	C. Lockwood as transport controller. The transport controller has supervision over the whole question of priority of movement with

1394	COMMONS
War Organization-Mr. Mackenzie King
regard to war needs. Mr. Lockwood was formerly general freight traffic manager of the Cunard White Star Line, Montreal.
I have referred thus far to enlisting in the government service, in executive and adminis-j trative positions, the best available persons from the business and professional world. I come now to the suggested means of increas-i ing the effectiveness! of Canada's war effort by enlisting the services of the best available persons in an advisory capacity where not possible to have their services enlisted either in whole or in part in executive or administra-* five posts.
In considering specific problems the government has not hesitated to seek the advice and cooperation of existing organizations and bodies known to be conversant with phases of the work concerned. In addition, a number of advisory boards and committees have been specially organized to aid ministers and war agencies by advice based upon practical experience. In each of these advisory bodies am effort has been made to secure as represent tative a group as possible of duly qualified persons. I may mention, briefly, a few of these-some specially created to meet the war situation, others organized bodies already established.
As an example of the advice and cooperation of existing Canadian bodies sought in connection with the solution of specific problems arising out of war-time administration, I might mention the conferences between officials of the dominion government, representatives of the various provincial governments, and the officers of qualified voluntary organizations, with respect to the questions of the immigration of refugees and the movement of evacuated children to Canada from the United Kingdom and elsewhere. Special mention should be made in this connection of
the helpful cooperation of the officers of the Canadian Welfare Committee and of the Canadian National Committee on Refugees.
In the work done so far by officials of the Department of Pensions and National Health upon air raid precautions, the collaboration of the provincial authorities in the coastal provinces has been obtained and, as well, the full cooperation and advice of the St. John Ambulance Brigade and Association. The department, in its health activities related to the war effort, has also secured the cooperation of all public health forces of the dominion, acting through the Dominion Council on Health. This council is made up of the chief health officers of all the provinces.
Department of Labour
The government has recognized from the outset the importance of meriting and obtaining the whole-hearted cooperation of labour in the development of Canada's war effort. It has recently given concrete expression to this recognition by the declaration of certain principles for the regulation of labour conditions now embodied in an order in council.
Recently there has been created a national labour supply council. The purpose of this council is to bring to the minister of the department advice from qualified representatives of labour and of industry upon all matters touching the supply of labour for war industries.
The chairman of the National Labour Supply Council is Mr. A. J. Hills, chief of personnel of the Canadian National Railways. The secretary is Mr. Humphrey Mitchell, a former member of this House of Commons and for some time past a permanent official of the Department of Labour. The council itself is composed of five representatives of labour and five of industrial employers, with an alternate for each.
The membership is as follows:
Representatives of labour:
Representative
E.	J. Tallon, Ottawa, secretary-treasurer of the Trades and Labour Congress of Canada.
J. W. Bruce, General organizer for Canada for the United Association of Journeymen, Plumbers, Gas Fitters and Steamfitters Helpers.
James Somerville, Canadian general vicepresident International Association of Machinists.
A. R. Mosher, Ottawa, president of the AllCanadian Congress of Labour.
Alfred Charpentier, Montreal, president of the Confederation of Catholic Workers of Canada.
Alternate
A. D'Aoust, Canadian vice-president of the International Brotherhood of Paper Makers.
Fred Molineaux, Canadian general organizer, International Brotherhood of Painters, Decorators and Paper Hangers of America.
Tom Moore, Ottawa, president of the Trades and Labour Congress of Canada.
C. R. Millard, director of the Steel Workers Organizing Committee.
Maurice Doran, Montreal, vice-president of the Confederation.
IMr, Mackenzie King.]

War Organization-Mr. Mackenzie King
Representatives of employers:
Mining industry
Representative	Alternate
J. H. Stovel, incoming president Ontario N. A. Bryce, past president, Ontario Mining Mining Association and general manager, Association, president, Macassa Mines, Kirk-Dome Mines Ltd., South Porcupine.	land Lake, Ontario.
Canadian Chamber of Commerce
Allan M. Mitchell, Robert Mitchell Co. Ltd., D. P. Cruickshank, president, Steel Equipment Montreal, Quebec.	Company, Ottawa, Ontario.
Canadian Manufacturers' Association
W. C. Coulter, past president, C.M.A.; presi- W. H. McIntyre, vice-president, Ottawa Car dent Coulter Copper & Brass Co., Toronto, & Aircraft Co., Ottawa, Ont.
Ontario.
C. N. Moisan, president, Standard Paper Box Louis Armstrong, Consolidated Paper Corpora-Co., Montreal, Quebec.	tion, Montreal, Quebec.
Canadian Construction Association
J. M. Pigott, Pigott Construction Co., Hamil- Albert Descliamps, general contractor, Mont-ton, Ontario.	real, Quebec.
Associated with the work of the Department of Transport are two advisory boards set up to recommend as to compensation for owners of vessels which have been requisitioned; one board for the Pacific coast and one for the Great Lakes, St. Lawrence River and Atlantic coast.
Chairman for the Pacific coast region is Honourable Justice Dennis Murphy of the Supreme Court of British Columbia.
Chairman for the Great Lakes, St. Lawrence River and Atlantic coast region is Honourable Justice M. B. Archibald of the Supreme Court of Nova Scotia.
Department of Agriculture
In the Department of Agriculture an advisory committee to the bacon board has been set up to bring to the operations of the board the benefit of the advice of a group of men representative of producers and of the packing industry. This advisory committee is without a chairman of its own and holds its meetings in conjunction with those of the bacon board itself.
Its members are:
W. J. Reid-Formerly associated with the P.E.I. Department of Agriculture.
H. Wilson-Well-known hog producer in western Ontario.
John Harrold-Hog producer of Alberta.
Joseph Bisson-Connected with the cooperative marketing of livestock in the province of Quebec.
K. N. M. Morrison-General manager of First Co-operative Packers of Ontario, Limited.
F.	H. Downing-Manager of Canadian Livestock Co-operative (Western) Limited.
John Burns-President of Burns Packing Company of Calgary.
J. H. Tapley-General manager of Swift & Company, Toronto.
Department of Fisheries
Two committees have been formed to be associated with the Department of Fisheries in an advisory capacity.
A war-time fisheries advisory board has been appointed to consider the whole question of the marketing of Canadian fish. Its personnel has been chosen to give representation to men with practical experience in both our Atlantic and Pacific fisheries.
Chairman: J. J. Cowie-Official of the department.	,
A. H. Brittain-Past president of Canadian Fisheries Association, Montreal.
Louis T. Blais-President, Louis T. Blais, Ltd., and president, St. Lawrence Sea Products Company, Quebec.	_
H. G. Connor-President, Maritime National Fish Limited. Halifax, N.S.
W. H. Smith-President, Lunenburg Sea Products, Lunenburg, N.S.
T. R. Clouston-General Sea Foods Ltd., Halifax.
A. Neil McLean-President, Connors Bros. Limited, Black's Harbor, N.B.
Col. J. W. Nicholls-Canadian Fish and Cold Storage Company, Prince Rupert, B.C.
A. L. Hager-President, Canadian Fishing Company, Limited, Vancouver.
Major Hugh A. Green-Coastal Fisheries, Ltd., Montreal, and director of fish supplies for Canadian army during the first Great War.
W. George Akins-Publicity agent, Toronto.
F. W. Wallace-Editor of Canadian Fisherman, and supervisor of fish division of the Canada Food Board during the first Great War.
Advisory Committee to the Lobster Controller
The dissolution of markets has necessitated the appointment of a controller who will have supervision over the entire field of production and marketing of canned lobster. In the initial stages, Dr. D. B. Finn, deputy minister of the Department of Fisheries, is serving as
1396	COMMONS
War Organization-Mr. Mackenzie King
controller; but to assist him an advisory committee of men immediately concerned with this problem has been appointed. The committee, chosen to give representation both to the fishermen and to the lobster canning industry, consists of Messrs.:
G.	S. Lee of Halifax.
Bert Mclnerney of Halifax.
W. H. Tidmarch of Charlottetown.
Emile Paturel of Shediac.
War-time Cooperation with the Provinces
I should not like to conclude this portion of the review of the services given in an advisory and practical manner by existing organizations, associations and individuals without making special mention of what might be spoken of as war-time cooperation extended on the part of the provinces of Canada.
I have already indicated wherein the federal government received the closest cooperation from the provincial governments in the first national war loan campaign. As mentioned, the provincial treasurers of all the provinces served on the national war loan committee.
Also, as just mentioned, the closest cooperation has been received from the welfare departments of the provincial governments in working out arrangements for the reception in Canada of refugees and evacuated children, and as mentioned, the Department of Pensions and National Health is cooperating with the provinces in the provision of air raid precautions.
The Department of Munitions and Supply is receiving valuable assistance and cooperation from provincial departments of natural resources, mines, lands and forests, etc., in the task of mobilizing our resources of raw materials to meet war-time needs.
As in peace time, close cooperation is maintained between the federal departments and the provincial authorities in the departments of agriculture and fisheries.
In the field of health and welfare, war-time conditions have made more essential than ever the closest cooperation between federal and provincial authorities.
In peace time, the primary responsibility for public order and the administration of justice rests with the provinces. It has been recognized, however, that in time of war, a share of this responsibility must necessarily be assumed by the federal government. This has not relieved the provinces of their constitutional function but it has served to emphasize the need for the closest cooperation between the provincial police and law enforcement agencies, on the one hand, and the Royal Canadian Mounted Police and the Department of Justice on the other.

In these and other ways, the federal administration has been materially aided by the governments of the several provinces in the successful prosecution of Canada's war effort.
I come now to means of increasing the efficiency of the cabinet, other than those of enlisting the services of the best available persons in executive and administrative positions or in an advisory relationship to individual ministers. In other words, I come to the cabinet itself, and here I wish to speak first of the plan of war organization within the cabinet and later of cabinet responsibility and personnel.
Canada's war effort has been, from the first, and will continue to be organized and directed by the cabinet. From the outset, the work of the cabinet has been so organized as to permit of immediate and effective direction of the various activities, and at the same time to ensure their complete coordination. For the most effective conduct of that effort, the cabinet itself has been organized into appropriate committees, each charged with responsibilities in specific spheres of activity.



WAR ORGANIZATION

[Stage Direction]
Cabinet Committees and Related Agencies
Prior to the war, there had been established a committee of the cabinet especially appointed to consider matters of defence.
When the war broke out, and it became necessary to view the problems of war in relation one to the other, and as a whole, in order the better to coordinate the work of the government, to prevent duplication of effort, and to promote efficiency, special committees of the cabinet were formed in relation to the several problems of major concern.
As a supervisory body in a position to view the war effort as a whole, an emergency council was appointed with an immediate relationship to the work of the several governmental committees. At the outset, this emergency council was composed of senior members of the cabinet. Amongst other duties, it took over those of the defence committee established prior to the war. As occasion has since required, its personnel has been altered or increased to include the ministers whose departments are especially concerned with the war effort. In an early reorganization, its name was changed. It has since been designated and is now known as the war committee of the cabinet. The ministers at present composing the war committee are the following:
The Prime Minister, the Leader of the Government in the Senate, the Minister of


[Stage Direction]
Cabinet Committees
Related Agencies*

War Organization-Mr. Mackenzie King
Mines and Resources, the Minister of Justice, the Minister of Finance, the Minister of National Defence, the Minister of National Defence for Air, the Minister of Munitions and Supply.
The war committee of the cabinet gives continuous consideration to, and recommends decisions by the cabinet upon, major questions of war policy and defence.
Related to the war committee are special committees especially charged with the consideration and supervision of specific problems. They are composed of the ministers primarily concerned with related phases of war effort. The committee also assist in the coordination of activities in which more than one department is involved. Of these special committees, six are concerned with problems related to Economic Defence: War Finance and Supply, Food Production and Marketing, Wheat, Fuel and Power, Shipping and Transportation, Price Control and Labour.
In addition there are special committees which deal also with matters of:
Internal security ;
Legislation;
Public information;
Demobilization and reestablishment.
Related directly to the work of the cabinet committees are the activities of the boards and agencies to which I have already referred. Certain statutory bodies already existing prior to the war, and as a result of the war charged with special responsibility, have also been related directly to the functions of the special cabinet committees which I have just described.
In order to further the effective coordination of the economic and financial policy in war time, to facilitate the work of the cabinet committees in the consideration of specific problems, and to assist in avoiding duplication of effort by departments and agencies, an advisory committee on economic policy, composed of members of the public service, has been established. This committee acts in an advisory capacity to the cabinet itself.
I have in my hand a diagram which discloses at a glance the relationship to the cabinet of the war time and statutory bodies and boards to which I have referred. It also designates, by the departments over which they preside, the ministerial personnel of the several committees. With the permission of the house. I will ask that the diagram be inserted in Hansard.
May I at the same time suggest that it may possibly suit the convenience of hon. members who may wish to glance at this review if Hansard were permitted to print the headings of the various subdivisions of the review itself, f
There is, thus, at the present time, an extensive and complete organization as between the different departments of the government whereby the duties and burdens of ministers are widely distributed and shared. Also, through the war committee of the cabinet, the most immediate and special attention is given to the general problems of the war. '
I have shown how, under the war organization of the cabinet, the burdens and duties of individual ministers have been lightened by the sharing of duties between ministers themselves and by the consideration and coordination of war activities by inter-related committees representative of different phases of war effort. It has been urged, as already mentioned, that the efficiency of the government might further be enhanced by the work of the cabinet being so arranged, and responsibilities of ministers so divided, as to free as largely as possible from other duties and responsibilities, the ministers of the crown who are concerned with those departments of government which have primarily to do with war activities, in order that their time and attention may be given as exclusively as possible to the consideration and effective execution of war policies.
As a corollary, it has also been urged that matters pertaining to war policy and the direction of the war effort should, as largely as possible, be entrusted to a war committee of the cabinet, the members of which would be free to give most, if not the whole of their time, to matters pertaining to the war, leaving to other members of the government, the administration of the departments concerned with matters of state which, in time of peace, are of great importance, but which, in time of war, are relatively less important.
From what I have already said with respect to the war committee of the cabinet, it will be seen that it has been precisely along these lines that the government has been proceeding. The need for the expansion of administrative personnel was more urgent at the outbreak of war than the need for the expansion of the cabinet. The need, however, of creating new ministries to meet wartime demands and of assigning to their administration, ministers whose time could be exclusively devoted to the supervision and encouragement of their affairs has become only too obvious. Existing ministries have accordingly been enlarged. New ministries have been established, and yet further ministries concerned exclusively with wartime activities are about to be created. To offset this expansion of wartime services, the activities of peacetime services have been materially curtailed. Their administration has been placed as completely as possible under
f See diagram following page 1397.
1398	COMMONS
War Organization-Mr. Mackenzie King
members of the government other than those primarily concerned with war activities. Where circumstances warrant it, a single minister has been given the responsibility of administering the affairs of more than one department.
Department of National Defence
The natural place of beginning the expansion of war services was with the Department of National Defence.
The Department of National Defence was the nucleus of the war administration. Until July, 1939, the department was entrusted not only with the organization of the defence forces but also with the problem of supply. The progressive increases in our defence expenditures from 1936 made it necessary to develop additional machinery for coping with the problem of supply. As a result the defence purchasing board was set up on July 14, 1939. When war came, we had already provided the beginnings of an organization to meet the supply problem.
The actual outbreak made necessary immediate administrative expansion in four directions. The fighting forces had to be increased in numbers, they had to be provided with vast quantities of war supplies and the necessary funds had to be obtained to finance this expansion. Finally provision had to be made for internal security and economic stability on the home front.
The mobilization and recruitment of the fighting forces threw added burdens on the administrative staff of the Department of National Defence. Two acting deputy ministers, both veterans, and both prominent industrialists with wide administrative experience were immediately added to the staff. One was entrusted with the militia services, the other with the naval and air services.
Department of Munitions and Supply
At the outbreak of war, the work of the defence purchasing board was transferred to a war supply board. At the special session of parliament, the government took steps to provide for a Department of Munitions and Supply under a separate minister of the crown. That department has since come into being and grown to vast proportions. It has been under a minister who, until to-day, had also been administering the affairs of the Department of Transport. The maintenance for a time of the association between the two departments made possible a needed rearrangement of some of their activities and the effecting of economies which would not otherwise have been possible.
The former Minister of Transport who also for some time past has been the Minister
{Mr. Mackenzie King.]
of Munitions and Supply will hereafter give his entire time to the work of the latter department. There has been transferred to the Department of Munitions and Supply, as being closely related to war activities, the branches of the Department of Transport concerned with the Trans-Canada Airways, civil aviation, and national radio broadcasting. The new Department of Munitions and Supply is the first new ministry which has been created since the outbreak of war.
Department of National Defence for Air.
The second new ministry is well known. It is the Department of National Defence for Air. Before the separate department was created, the Department of National Defence had been strengthened by the addition of an Acting Deputy Minister for Air to relieve the burden of the two Acting Deputy Ministers already mentioned.
The magnitude and importance of the con>-monwealth air training plan is well known. The development of this plan, in addition to the developments which were immediately related to our own air forces, made necessary the creation of a separate portfolio for Air. The wisdom of the course followed in creating the new Ministry of National Defence for Air has, I think, been fully demonstrated.
Department of National Defence for Naval Services
With the changed conditions in Europe, the increased importance of the navy, not only in the defence of our own coasts and harbours, but in cooperation with the naval forces of the United Kingdom and other parts of the British empire has become generally appreciated. As is now pretty generally known, the port of Halifax has, since the beginning of war, become a naval base second only in importance to the most important bases in the British Isles. In these circumstances, the government has deemed it advisable to add to the existing defence departments that of a separate Department of National Defence for Naval Services. A bill to establish the new ministry will be introduced immediately. What therefore, was originally a single Department of National Defence will hereafter be three departments, each presided over by a separate minister of the crown, all however, cooperating in closest relationship with each other.
Department of National War Services.
I informed the house some days ago that the government had decided to establish a Department of National War Services. I indicated at that time that the purposes of the new department would include the coordination

War Organization-Mr. Mackenzie King
of the activities of voluntary war organizations and services, but what was even more important, that it would be entrusted with the duty of mobilizing and guiding the activities of thousands of our citizens who are seeking practical and useful outlets for their enthusiasm and patriotism, and who are already banded together in patriotic organizations, veterans organizations, women's organizations, and a host of other groups who are eager to serve.
The minister charged with the responsibility for the new department will be expected immediately to establish a nationwide organization for voluntary service to be assisted by local committees in all parts of the country.
With developments in Europe, problems such as those of refugees, evacuated children, interned aliens and interned enemy prisoners have assumed proportions which require for their solution more and more in the way of cooperative effort on the part of Canada. Problems of internal security have arisen which have demanded increased governmental action and voluntary cooperation. The government has required additional powers for the mobilization of human and material resources. These powers in turn necessitate a nationwide registration which will permit of the most effective use being made of individual personal services and material resources.
The functions of the new department are not limited to the coordination and development of voluntary services. The direction and supervision of the national registration will be among the duties of the new ministry. In this connection, I should like to repeat that the government intends to make the fullest use, through the new department, of the register of women already prepared by the national committee for the voluntary registration of Canadian women. I might add that a good- part of the preliminary work of organization in connection with the national registration has already been completed by a special inter-departmental committee, under the chairmanship of the Dominion Statistician, which committee was established immediately after the announcement of the government's intention to undertake the registration of manpower.
The powers of the new department will also include the co-ordination of existing governmental information and publicity services connected with the war, in order to insure that Canadians generally may be more completely informed of all aspects of our war effort, with a view to enlisting the maximum understanding and support of the great cause in which we are engaged. Speaking generally, the new department will have the function, as I have

already said, of helping Canadians to help Canada in the effective prosecution of the national effort.
The all but complete cessation of new public works, other than those necessitated by the war, has led to a marked decrease of the work of the Department of Public Works.
With the transfer to the Department of Munitions and Supply of those branches of the Department of Transport concerned with airways, civil aviation, and radio broadcasting, the services of the Department of Transport will be also considerably reduced. It is proposed, therefore, to entrust to one minister instead of two, the administration of the Department of Public Works and the administration of the Department of Transport.
It will be observed that the undertaking to bring to the aid of the ministry a still larger number of men of outstanding ability and experience was not an undertaking specifically with reference to the cabinet, though it did not exclude changes or enlargement of the ministry itself.
It is perhaps not sufficiently realized that the functions of cabinet ministers, though very responsible, are necessarily limited. They must determine policy, make final decisions and accept responsibility, each individually for his own department, and all collectively for the administration generally.
The actual work of administration i§, however. carried on by the officials in the public service. I have already shown that in making the extensive additions to the administrative service which have been required by wartime needs, the government has adopted the single criterion of ability. No political, partisan or personal considerations have diverted us from getting the most suitable man available for the particular job required to be done.
The filling of cabinet posts is a more complicated task that the filling of administrative posts. Ability to direct the work of the government departments concerned is, of ' course, an important requisite. It is, however, far from being the only one. A cabinet minister must also be prepared to assume his full share of responsibility for all acts of government, and for explaining the policies of the government to parliament and to the country. He must, of course, be a member of parliament. If he is not in parliament when he is called to the cabinet he must find a constituency and be elected in it. Above all he -must have a capacity to work in immediate association with other ministers in the cabinet in the formulation of policy. Nothing would
1400	COMMONS
War Organization-Mr. Mackenzie King
paralyze government more quickly than divided counsels or dissension within the ministry.
That does not mean that narrow party considerations or, as some impatient critics are too eager to suggest, the dictates of "party politics" or of personal whim, govern the choice of ministers, particularly in war time. But it does mean that different qualities are required for effective work as a cabinet minister from those required in an administrative or executive post. It is a common experience to find that a business man is willing to make very great personal sacrifice in order to serve his country in an administrative capacity, but is exceedingly reluctant to enter the cabinet because a ministerial post involves election to parliament, public speaking and other activities for which he feels he has neither aptitude nor training.
Furthermore, the acceptance of a cabinet post involves a more complete severance of business and professional ties than is necessary in undertaking temporary administrative or advisory appointments. There is no business of any magnitude or importance in this country to which the war has not brought particular problems of its own. Highly placed executives may be spared by such concerns either in an executive or advisory capacity, for whole or part-time, without the risks attendant upon a complete severance of business relations such as would be involved in their entering the ministry.
If I ever had any doubt on this score, it has been removed by some of the steps I have recently taken in seeking to increase confidence in the disinterested motives of the ministry by bringing into the cabinet one or more persons whose inclusion would, I felt, have demonstrated the readiness of the government to meet, if that were possible, the wishes of members of political parties to have the basis of representation in the cabinet widened by the inclusion in the cabinet of persons known to command their confidence. It is an open secret that I have directly and indirectly offered to take into the ministry outstanding persons, none of whom are at present in public life, but whose presence in the ministry would, I believe, have made wholly apparent the readiness of my colleagues and myself to associate with ourselves in the work of the ministry persons whose appointment could in no sense be regarded as made from any party political motive, but only on the ground of the outstanding qualities the persons appointed were known to possess. Were I at liberty to give their names, I am sure that honourable members in all parts of the house would consider them among persons 
highly qualified to inspire confidence in the non-partisan character of the government's war effort.
I have found that those I approached felt that such special services as they could render could be given more effectively, either in administrative posts or in an advisory capacity or by their continuing to occupy an eminent and independent position in the community. The prevalence of this attitude was not the least of the reasons which led me to abandon the attempt to add to the cabinet from outside the ranks of those without previous experience of public life.
It is sometimes forgotten that the intimacy and prominence of the associations enjoyed with large enterprises are not infrequently a barrier rather than a passport to membership in a cabinet. The same consideration does not so generally apply where the services to be rendered are not concerned with the determining of policy but with its execution.
I have come to the conclusion that, for the present at least, the most effective use can be made of the services of men without previous experience of public life by bringing them into association with the ministry in an administrative or advisory capacity rather than by their inclusion in the ministry itself.
Advisory Committee to the Cabinet Considered
From like motives, I have also given consideration to the appointment of an advisory committee to the war committee of the cabinet which would include a limited number of persons chosen because of their prominence in representative fields of activity. To this proposal there are a number of objections, which, everything considered, appear to me to rob such a step of the advantages it might at first sight appear to possess.
In the first place, no matter what the political affiliations of members of such an advisory committee might be, the mere fact that they had been appointed by the government and had not sought or obtained any mark of public confidence from any section of the electorate, would tend to lessen their representative capacity in the eyes of the public.
They themselves might naturally feel that their power was not equal to the responsibility which they might be held to be assuming. Indeed, the objection on this score has been raised on the part of more than one with whom I have discussed the proposal.
The need for such a committee is itself more apparent than real, once it is realized that it is always possible for the government to obtain the benefit of the advice of those

War Organization-Mr. Mackenzie King
best qualified to counsel in particular matters, apart altogether from any membership in an advisory body.
Business men and professional men of wide experience and high standing can always be consulted and are in fact continually being consulted by the government whether they are members of an administrative branch of government or not.
Associate Members of War Committee
Realizing the importance of increasing public confidence through bringing to the aid of the ministry all points of view and opinions, I have considered yet another means by which this end might possibly be attained. I have thought of inviting leading members of the opposition to become associate members of the war committee of the cabinet, to share its deliberations and to assist in the formation of its proposals to the cabinet. Regardless of what course may be adopted, the government itself must, in the last analysis, take the responsibility for whatever is done or left undone. That responsibility cannot be escaped or evaded. It is difficult even to share it. It would not be my idea, in case members of the opposition became associate members of the war committee of the cabinet, for the government by that means to seek in any way to evade full and final responsibility for Canada's war effort.
But the presence in an advisory and associate capacity of members of the opposition would have a number of advantages. While their addition to the war cabinet would leave unimpaired the requirements of responsible government, it would mean that the government's policies were being shaped and made effective not only under the open gaze of members of the opposition, but with the assistance of their counsel, experience and advice. It would mean that in all major matters of defence, internal security, international cooperation, the leading members of the opposition, chosen to act in association with members of the war cabinet, would be fully informed.
At the present time, one of the great-difficulties of government lies in the fact that many matters of which the government has knowledge, many steps which the government takes, many actions which the government plans, are, in the very nature of things, highly confidential, and must remain so for varying periods of time. This obstacle would, in part at least, be overcome by the proposed associate membership of opposition leaders in the war committee of the cabinet, where, to its members, their experience, advice and point of view would certainly be of value. I believe that such a step would be of real assistance to the government in the discharge of its
great responsibilities. I am therefore prepared to invite the leader of the opposition (Mr. Hanson), and the hon. member for Yale (Mr. Stirling), who shares his desk, and was a former Minister of National Defence, to become associate members of the war committee of the cabinet. Were the invitation accepted, it would be my wish that they should be present at all meetings of the war committee and take part in all its proceedings. I am prepared, also, if this invitation is accepted by my hon. friends opposite, and if it is agreeable to other political groups in the house, to consider the extension of the invitation also to their leaders.
If the house and the gentlemen whom I have invited look upon the proposal with favour, it would mean that the country would have the benefit of their wisdom, advice and experience, the government would retain the responsibility for the direction of Canada's war effort, with which it has been charged. It would also be understood that members of the various opposition groups in this house would continue to be free to criticize the administration as they think fit, and to vote and act with complete independence.
Conferences with the Opposition
If the hon. gentlemen opposite should feel that they were unable to accept the invitation I have just extended, believing that thereby they would be accepting a share of responsibility without being accorded an equivalent share of power, I am prepared to make yet another proposal, the acceptance of which, I should hope, would not occasion the slightest embarrassment and which I feel would be essentially helpful at this time.
As I have already said, much of the action of the government and even more of the information on which its actions are based must, for military reasons, remain secret.
This consideration hampers the government in the discussion of its policies and action in parliament and before the people.
We recognize that it is an even more serious embarrassment to those in opposition in war time. Their lack of knowledge makes effective criticism difficult; it has also a tendency to breed misgivings which need not exist if the facts could be made available.
I believe that this situation could be remedied at least in part while parliament is in session by regular weekly conferences between the war committee and the members of the opposition and by similar conferences held at intervals when parliament is not in session.
At such conferences the government will be prepared to disclose, in confidence, full and detailed information both as to its actions
[Stage Direction]
1402	COMMONS
War Organization

Mr. Mackenzie King
and the considerations on which those actions are based. The effectiveness of the opposition, far from being impaired, will be greatly increased by the knowledge gained by their leaders by such conferences. Members of the opposition, as regards their rights of criticism, will have, as they have now, only the limits imposed by their personal sense of responsibility as citizens and members of parliament. From the standpoint of the public interest conferences of this kind would certainly have the merit of increasing confidence in Canada's war effort and thereby help to prevent the development of uneasiness which provides such a fertile ground for subtle enemy propaganda aimed at destroying the unity of that effort.
Let me now conclude with a word in reference to cabinet reconstruction. The acceptance, on Friday last, by Colonel J. L. Ralston of the portfolio of national defence was followed by Colonel Ralston's resignation as Minister of Finance. I am pleased to announce that the Hon. J. L. Ilsley, who, until to-day, was filling the office of Minister of National Revenue, has been appointed as Colonel Ralston's successor as Minister of Finance.
As hon. members are well aware, Mr. Ilsley, during recent years, whenever occasion required, has been the acting Minister of Finance. During the period of the illness of the former Minister of Finance, the Hon. Charles Dunning, and during Mr. Dunning's absence abroad, Mr. Ilsley ably presided over the affairs of the finance department. He is wholly familiar with its several activities; his ability as administrator in the years that he has been a member of the present cabinet has gained for him an enviable reputation in all parts of Canada. It is not a surprise, therefore, that public opinion generally, as reflected through the medium of the press, seemed to take it for granted, when it became known that Colonel Ralston had agreed to leave the Department of Finance for that of national defence, that Mr. Ilsley would be the logical successor.
Mr. Ilsley was sworn to his new office at noon to-day. In order that he may give his undivided attention, at this time of war, to the work of the Department of Finance, Mr. Ilsley has resigned as Minister of National Revenue.
Hon. members are aware that, in addition to his duties as Minister of Transport, the Hon. C. D. Howe has, since April 9, been at the head of the new Department of Munitions and Supply. Mr. Howe has to-day given up the portfolio of the Minister of Transport in order that, from now on, he may devote his entire time to the work of the Department of Munitions and Supply.
[Mr. Mackenzie King.)
I have referred to the contraction in the work of the Department of Public Works occasioned by the government's policy to restrict as largely as possible, during the period of the war, the construction of public works. I have also referred to the transfer of certain services from the Department of Transport to the Department of Munitions and Supply. .As the services of each of these departments has been somewhat curtailed, it has been felt that the administration of both departments could be entrusted to the one minister. Accordingly Hon. P. J. A. Cardin, who is Minister of Public Works, has to-day been appointed Minister of Transport.
I am pleased to be able to announce that my colleague the Hon. J. G. Gardiner, the present Minister of Agriculture, has agreed, once the act creating the new Department of National War Services has been passed, to undertake the organization of that new and important department of government. I need not say anything of Mr. Gardiner's special qualifications for such a task. His long experience in public life, his exceptional organizing ablities, his power as administrator so effectively disclosed in the years of his premiership of the province of Saskatchewan, and as a federal minister, are all guarantees that the purpose of the new department will be promoted with zeal, energy and skill, and the department made one of the most effective instruments in a nation-wide furtherance of the war effort of our country.
Mr. Gardiner will become, when he assumes the office of Minister of National War Services, a member of the war committee of the cabinet. That his undivided energies and time may be given to the work of the new department, he will shortly vacate his present position as Minister of Agriculture.
I am particularly pleased to be able to announce that I have obtained from the Premier of Nova Scotia, the Hon. Angus Macdonald, the promise of his willingness to resign the premiership of the province of Nova Scotia, a position which he has held with such honour and distinction alike to his native province and to himself, and to accept, immediately upon the establishment of the new department, the portfolio of Minister of National Defence for Naval Services. In thus responding to my request to assist my colleagues and myself in the prosecution of Canada's war effort, Mr. Macdonald is giving to our country another example of devotion to public duty, and of a willingness to serve, which in the public mind are already associated with his name. In addition to bringing to his new post his proven administrative ability, Mr. Macdonald has had an experience of military affairs gained as an officer in the last

War Organization-Mr. Mackenzie King
war. Such experience as will come with him to the council table will serve to strengthen not only his own, but all branches of the defence services.
It will be recalled that when Mr. Power accepted the portfolio of Minister of National Defence for Air, in order that he might give his entire time to the work of the Department of Defence, he resigned the position of Postmaster General, the affairs of which department have since been administered, as acting minister, by Mr. Usley. It is felt that the vacancy created in the office of Postmaster General by Mr. Power's resignation should now be filled.
I need not say to honourable members of the house and particularly to those who are numbered among my own supporters, that I have had few more difficult tasks than that of deciding to which of their number I should entrust the administration of the Post Office Department, and the administration of the Department of National Revenue.
The resignation, at the time of his appointment to the Senate, of the Hon. W. D. Euler as Minister of Trade and Commerce-a portfolio subsequently filled by the appointment to that position of the Hon. J. A. MacKinnon, as a Minister from Alberta-and the tragic death of the Hon. Norman Rogers, have deprived the province of Ontario of half of its representation in the government. It would, I am sure, be generally expected that, in the filling of existing vacancies, this representation of Ontario in the federal cabinet should be restored. At all events, my colleagues and I have so viewed the matter. That, however, has been the least of the difficulties. A much more perplexing problem has been that of making a choice from among the many honourable members from the province of Ontario who possess qualifications and claims for cabinet recognition. I have felt that, at this time of war, the citizens of Canada generally and in particular those of the province of Ontario would, other things being equal, welcome the appointment of members of this house who had seen active service in the last war, and who, on these as well as on other grounds, might be expected to bring valuable experience to the ministry in this most critical of all times.
Recommendations have accordingly been made to His Excellency the Governor General to-day, which his excellency has been pleased to approve, of the appointment of Colonel William Pate Muloek, of the city of Toronto, member for York North, as Postmaster General, and Colonel Colin Gibson, of the city of Hamilton, member for Hamilton West, as Minister of National Revenue.
I have given the house in considerable detail particulars of the manner in which the administrative functions of government have been extended and improved by attaching to the public service a large number of outstanding Canadians from all fields of industrial, financial and other endeavour. Each and every one has been chosen because it was considered that he was best able to advance the war effort of this country by specialized knowledge, and service based upon specialized education and experience.
I have offered to gentlemen opposite, in the only manner I have felt consistent with responsible government, an opportunity to share in our deliberations. By that invitation I have asked them also to give to the government the benefit of their wisdom and their experience. I have not asked them to share in our ultimate responsibilities because that would not be fair either to them or to the electors of this country.
I hope that my honourable friends will find themselves able to accept one or other of the proposals I have made. Whatever may be their decision I believe that I can at least make this claim on behalf of my colleagues and myself. We have not flinched from our primary and ultimate responsibility. We have not trimmed our sails to the breezes of popular favour or disfavour. While we have recognized our responsibility for policy, we have sought to obtain the best advice available in the country to assist us in its formation and pronouncement.
I leave this recital of facts with confidence to this house and the people of Canada. It tells its own story. It is the brief record of a government which, at a time of great peril in the affairs of the world, has done everything in its power to meet its responsibilities, to strengthen its administration, to mobilize the brain-power and resources of this country-in short, to do its plain duty, fully, honourably and fearlessly.
Hon. R. B. HANSON (Leader of the Opposition):: We have listened this afternoon with the very closest attention to the extraordinary efforts of the Prime Minister (Mr. Mackenzie Kingl to bolster up in the minds of the people of Canada the shattered fortunes of his government. There are one or two personal matters to which I should like to allude at the very beginning. Towards the end of his speech the Prime Minister advocated the inclusion of certain gentlemen, myself and my colleague the hon. member for Yale (Mr. Stirling), who sits to my left, and possibly the leaders of other parties in this house, in a consultative capacity, as I understood it, in a war committee of the cabinet.
95826-89i
1404	COMMONS
War Organization-Mr. Hanson (York-Sunbury)


William Lyon Mackenzie King: Associate members.


Richard Burpee Hanson: Associate members. I may say to the house and the countiy that a week ago on Friday the Prime Minister, in the course of a private conversation, made some such suggestion to me. At that time I was just about to leave for my home and the matter was not more than touched upon. I had time only, with his permission, to intimate the subject matter of the proposal to my colleague, and there the matter has rested ever since, because I have been waiting for the Prime Minister to clarify the position if he wished to proceed with it. But until this afternoon I had heard nothing from him. I am just a little bit surprised that without any notice to me or to my colleague, the Prime Minister has publicly referred to the matter, which I consider to be of very great importance. I can only say to him at this time that such an offer as he suggested a week ago Friday, and more specifically stated, if I gathered aright what he said, this afternoon, is not one that I at least would lightly refuse at this critical time in Canada's history. Neither is it one that I think I ought to accept without the gravest reflection, because ever since I came to Ottawa to attend this session of parliament I have been seized with the gravity of the situation in Canada as affecting our war effort, particularly our effort to aid our mother country and to aid in the defence of Canada. I have never refused on any occasion, so far as I can recall, to cooperate with the government in the furtherance of their war effort, and I do not intend to begin now.
The house and the country will of course not expect me to deal at any considerable length with all the topics that the Prime Minister has referred to this afternoon. As I intimated at the opening, his statement strikes me as a valiant attempt on his part to stem the tide of adverse public opinion in the country against his government. Let there be no mistake about it; the fortunes of this government are badly shattered. Public opinion at the moment is running strongly against this government, and I suggest to the Prime Minister that public opinion in Canada has been looking for something far more than he has offered this afternoon. The statement he made, comprising upwards of 40 pages, was filled up with a recital of the various boards and administrative committees that the government has set up since the war opened, or at least since active participation in the war began. Hundreds of names have been put upon the record. They are the names of devoted Canadian citizens, many of them known to me personally, many of them well

qualified to assist the government in this war effort. These men are acting and will act in an effort to aid this government to carry out Canada's duty in the premises as we know them. There is no doubt about their desire to assist, and with respect to many of them there is no doubt about their ability to do so. But that is not what the country has been looking for. I venture to assert that two-thirds of the Prime Minister's speech is just padding and nothing more. The only thing he omitted was to name the messengers and stenographers and office boys-and the new Minister of Agriculture.
However, let that be as it may. The Prime Minister did at the latter part of his speech refer to another important matter, and I am going to deal with it in a moment. But on the way let me tell the Prime Minister and the house what my reaction is to his statement. It is suggested by the English translation of a phrase from Horace's Ars Poetica: "The mountains are in labour, and a ridiculous mouse has been bom."
That is my first reaction to the general scheme of things that the Prime Minister has suggested. As he has said, it is no secret that for weeks, at least since the middle of Juno, the Prime Minister has been endeavouring to bring into his cabinet men of national calibre and of the Conservative faith. I have known of these efforts, and I say to him and to the country that never at any time, by word or deed or letter or anything else, have I tried to put any obstacle in the way of his bringing these men in. So far as I can recall I communicated directly with only one of them, and he was not a Conservative. I merely asked him if he was going in, and he intimated that he had been invited but that he was not going in, and he gave his reasons. Some of these men are men of national prominence; some are not so prominent. But they would not go in because the Prime Minister made it impossible for them to go in.


Mr. POULIOT:: Hear, hear.


Richard Burpee Hanson: The Prime Minister made it impossible. When? On the evening of Thursday, June 20 last, when I was referring to the question of national service, the strengthening of the cabinet and the establishing of a national government. The Prime Minister made a speech in reply which I think upon mature reflection he will regret the rest of his life. It is comparable in my opinion to the "five-cent" speech which he made just prior to the 1930 election, and which had such a damaging effect upon his fortunes when he went to the country that year. The statement which the Prime Minister made on the occasion to which I

War Organization-Mr. Hanson (York-Sunbury)
refer meant only one thing, namely that despite the fact that Canada is at war, despite the emergency now confronting this country, the Prime Minister is still thinking in terms of party power, his own personal position and the stability of his personal leadership.
On that occasion to my utter surprise the right hon. gentleman laid down two conditions which he said would govern future cabinet reorganization and leadership-and I may interject that to-day he has shown himself true to that statement. He said, referring to myself:
I hope he will not ask me as the leader of the administration to accept as a colleague any of those in the front benches before me who have said that they thought I was quite unqualified to be the leader of a government at the present time.
Of course that was said in a moment of personal pique. The second declaration of principle was this-and I want to direct particular attention to it, because it is a statement of a new principle in constitutional government in Canada. He said:
When I take into the administration additional gentlemen in order to strengthen it, one of the first qualifications which I shall require of them, as of anyone else, is loyalty to myself-


Some hon. MEMBERS:: Hear, hear.


Richard Burpee Hanson: All right; hon. gentlemen may applaud that statement of principle, but I suggest to them that that is not the true principle upon which the safety of the state should be based at this time.


William Lyon Mackenzie King: Does my hon. friend suggest that a prime minister should take into his cabinet someone who is known to be personally disloyal to him?


Richard Burpee Hanson: If the
Prime Minister will just possess himself in patience and hear my argument I am sure in his heart he will agree with it.
-and not a disposition to stab the leader of the party in his breast when he is trying to serve his country to the best of his ability at a time of war.
That is a statement which I think the Prime Minister will regret-


Some hon. MEMBERS:: No, never.


Richard Burpee Hanson: -and
which his biographer, when the time comes to write that monumental work, will have a great deal of difficulty in explaining. In my humble opinion in making that statement the Prime Minister immediately made any union government, any government including members of other parties or any national government, impossible under him.


Jean-François Pouliot: Hear, hear.


Richard Burpee Hanson: That may be satisfactory to hon. gentlemen opposite but it will not be satisfactory to the people of Canada. May I suggest to the house and to the country that under similar circumstances Mr. Neville Chamberlain never would have invited Mr. Winston Churchill into his government; and if that principle had prevailed when Mr. Chamberlain resigned and Mr. Churchill became Prime Minister of the United Kingdom, certainly he never would have invited Mr. Attlee and the leaders of the labour party in England to become members of his government.


William Lyon Mackenzie King: May I say to my hon. friend that they never would have gone in, if they had not believed they could be loyal to the leader of the government.


Richard Burpee Hanson: If the right hon. gentleman will just possess himself in patience and hear me out I think I may be able to lay down what I believe to be the correct principle that should guide him, but which evidently has not guided him. I suggest to the Prime Minister, to the house and to the people of Canada-because I hope I am speaking to the great mass of the public of Canada to-day-that the proper course for any prime minister to pursue in seeking to strengthen his cabinet is to invite into it the men who are best able to serve their country.


An hon. MEMBER:: That is what he has done.


Richard Burpee Hanson: That may be so, but you will allow me to have my views about it. I do not want to say anything harsh about anybody but I suggest as the first consideration that he should invite into the cabinet the men best able to serve the state. Once they have joined the ministry the usual rule of cabinet solidarity must prevail. Ministers thus brought in would have full opportunity at the council table to work out policies in conjunction with other members of the government; and, mark you, they must abide by the decision of the cabinet, of course after proper consideration and reflection. They are bound to the cabinet, not to the Prime Minister. That is the thesis I want to lay down to-day, that their duty and service is to the country, not to the Prime Minister.


William Lyon Mackenzie King: Is the Prime
Minister not a member of the cabinet?


Richard Burpee Hanson: 
Some hon. MEMBERS:: Shame!


Richard Burpee Hanson: That is my interpretation of the Prime Minister's position; you may have your own interpretation, but I have stated my view in parliamentary language as I have the right to do. The right hon. gentleman's statement further assumes that men would join his government in order to lead a palace revolution, without any intention of being loyal to the government of which they were to become members. No gentleman would undertake to do a thing like that. No one who was even suspect would be invited to join a government under those circumstances, so I suggest that is merely a figment of the Prime Minister's imagination. This declaration further means, if it means anything, that any person entering the cabinet under the Prime Minister not only must pledge himself to support the right hon. gentleman personally and to support the political party of which he is the leader, but he must do so regardless of the character of the war leadership given by the Prime Minister. That is what this country wants above everything else, and you cannot give it by a mere shuffling of the cards such as we got to-day. It is my opinion, and I think the mature opinion of all students of public affairs in Canada, that these two statements can have no other effect but to advance materially the date of the Prime Minister's retirement.
I have but little more to say, Mr. Speaker. I had not intended to discuss the names that have been brought forward, but perhaps I should make some reference to them. I have termed the Prime Minister's action a reshuffling of the deck, but I am glad to say

there is one notable exception. I believe the premier of Nova Scotia is a cultured gentleman, belonging to that class in the community which for a long time the Prime Minister has been wont to cultivate, the college professor. I have no quarrel at all with that class. If I were beginning de novo to form a government I am not at all sure that I would include one of these gentlemen in my cabinet, but Mr. Macdonald, whom I know very slightly indeed, has proved himself to be a gentleman, as I have said, and he will be a welcome addition to this chamber. He has had no experience in connection with naval affairs, but I have no doubt he will master that subject thoroughly. One thing I can tell the house and the country, as one maritimer speaking of another, is that he will make a splendid appeal to the patriotism of people of Canada. I am sure no one will ever question the solid Celtic character of the premier of Nova Scotia at any time. I do not know that I could pay him a finer compliment. We must wait and see what his performance will be.
With respect to the other changes in the government I think I should mention the transfer of the Minister of Agriculture to the portfolio of war services. If I am correctly informed, during the election campaign or at some time anterior to the summoning of this session of parliament, the hon. gentleman laid down the principle of a middle of the road contribution in connection with our war effort.


Mr. GARDINER:: Mr. Speaker, without
referring to me by name the leader of the opposition made a similar reference during the debate on the address in reply to the speech from the throne. That reference is not in accordance with the facts. Anyone who knows me knows that I am not a half-way man on anything.


Mr. HANSON (York-Sunbuiy):: Then may I put it in this way, that if the Minister of Agriculture made that declaration with regard to a half-way policy, as reported in the press, I hope the trend of events and the force of circumstances-


Mr. GOLDING:: Don't forget-


Richard Burpee Hanson: Will the hon. member from the brushwood country please keep quiet for a little while? I hope the Minister of Agriculture, in his new portfolio, will forget that he ever said that, if he did say it-and if he says he did not say it, of course I accept his word. I hope that as a minister of war services we shall have from him all the energy of which I believe he is capable in aiding and assisting Canada in her war effort. I shall be glad to help him whenever possible.

War Organization-Mr. Hanson (York-Sunbury)


Mr. BROOKS:: Directed in the proper channels.


William Henry Golding: Don't forget that he had four brothers put out of action in the last war.


Richard Burpee Hanson: I wish the hon. member from the brushwood country would keep quiet.
I have not very much more to say, because I could not begin to cover all the topics to which the Prime Minister has referred this afternoon. But in my opinion in failing to bring in any new blood of a real national character, aside from the one notable exception to which I have alluded, the Prime Minister has demonstrated the mistake which he made during the late election campaign. If I read his speeches rightly he then announced that the cabinet held all the available talent, and that any suggestion that better brains could be found elsewhere was ridiculous. That is the effect of the Prime Minister's campaign speeches. Of course it was a great exaggeration.


An hon. MEMBER:: It worked.


Richard Burpee Hanson: That is the justification offered by hon. members opposite. Nothing succeeds like success, whether it is based upon principle or not. Well, I disagree entirely with that point of view.
Unfortunately when faced with the greatest opportunity ever given a Canadian statesman the Prime Minister has permitted, in my judgment, too close a devotion to a narrow party spirit to lead him to neglect my well-intentioned suggestions for the creation of a truly national government, and in effect has announced to-day that he will continue to place loyalty to a party name in too prominent a place in his decision. That is the effect of to-day's announcement. Whether or not it has been brought about by force majeure I do not know. I believe he did make an attempt to bring gentlemen in from outside, and failed to do so. He failed for the reasons I have indicated. They felt that if they came into this government they would have to take the classification of Liberals, and they were not going to do that in a time of national peril for Canada. Why should they?
It is with the greatest regret that I have learned of the Prime Minister's unalterable determination to continue a partisan government. Neither my colleagues nor myself have any personal ambitions to share the responsibilities, or, shall I say, the temptations of power at this time. We might possibly have accepted a call to duty from the Prime Minister. At least we would have given it our most serious consideration-although in my own case I would have had to give it the most careful consideration-on account of personal,
not public reasons. But I want to make it clear to the house that my suggestion for a national government assumed a wider basis even than the inclusion of the Conservative party, which still commands the support of nearly half the people in Canada. Perhaps to-day, nearly four months after the election, it commands an even greater proportion of the support of the people of Canada.
The Prime Minister, however, has made his decision. We shall accept it with regret, and we shall continue a course of cooperation with the government, tempered by constructive criticism, and urging the Prime Minister to speed up the war activities of Canada. I am now offering a renewed pledge of willingness to cooperate for the national good.
Not only will the Prime Minister's decision to continue party politics not affect our readiness to cooperate in expediting war measures, but when, as will soon be the case, the Prime Minister finds himself forced by the pressure of public opinion, and probably by the advice of the saner members of his own party, to admit his failure at cabinet repairing, and undertakes a real cabinet rebuilding, then we shall be, as we are now, ready to assist him to undo his present mistake.
One further word, and I shall have finished. What this country needs, what it has needed since we declared war, and what it has needed increasingly since war was declared, is leadership-leadership of the highest character; leadership which has not been in evidence since September; leadership which cannot be given under the party system; leadership which for the safety of the state may and undoubtedly will shatter party organization and be disregardful of party shibboleths: leadership which will be national and in the highest degree constructive. Nothing short of that will do, in my humble opinion. It cannot be given by the Prime Minister under the party system, when even the safety of the state may be sacrificed to party expediency.
Well, supported as he is by a huge majority in the chamber-


An hon. MEMBER:: And in the country.


Richard Burpee Hanson: I deny that. If the hon. member does not believe me, just let him read his own party press, at times. That is the best answer I can give him. This leadership will come, I am sure. The trend of tragic events may force it sooner than we think. Only a government representative of all the people should lead this nation in war time.


Jean-François Pouliot: Speaking for us also I


Richard Burpee Hanson: If the Prime Minister will not do these things, then the voice of the nation will demand another

War Organization-Mr. Stirling
prime minister who will disregard party and his own personal prestige and save this country from disaster. I calmly await the verdict of time and events.


Hon. GROTE STIRLING (Yale):: Mr. Speaker-


Jean-François Pouliot: Mr. Speaker, I rise to a point of order.


Grote Stirling: A question of privilege.


Jean-François Pouliot: There is nothing before the house. This is not a free-for-all for members. Is there anything before the house? If there is nothing I will ask the hon. member for Yale (Mr. Stirling) to sit down. I have raised a point of order. Will you please tell him to sit down, and then decide if there is anything before the house?


Mr. SPEAKER:: As the hon. member has said, there is nothing before the house.


Richard Burpee Hanson: It is a
question of privilege on the part of the hon. member for Yale.


Georges Parent: A statement was made by the Prime Minister (Mr. Mackenzie King), and, as is the custom, the Leader of the Opposition (Mr. Hanson) was permitted the right to reply. The hon. member for Yale (Mr. Stirling) has been referred to by name, and I think he now has a right to speak. I will point out however that I do not propose that this should be a free subject of discussion from all parts of the house. I noticed the hon. member for Rosetown-Biggar (Mr. Coldwell) rose to speak, and I should think he would be entitled to do so; on the other hand I do not believe all hon. members would have that right.


Grote Stirling: It was for that very
reason, Mr. Speaker, that I rose to speak to a question of privilege. I had not had time to make the observation before the hon. member for Temiscouata (Mr. Pouliot) rose.
Under circumstances which appear to me most extraordinary the Prime Minister (Mr. Mackenzie King) has made allusions to me. He had made no reference to me before. It is true, as my leader remarked, that on the eve of his leaving Ottawa for a few days something of the sort was mentioned; but never did it occur to me for a minute that I should find myself in the position of receiving what is virtually an invitation from the government to become some sort of partial colleague of it under these circumstances. At the moment I have not before me the words which the Prime Minister used, and it would be extremely unwise for me to go any further into the matter to-day. I must

read what the Prime Minister said, and further I must look to the right hon. gentleman to give a full and ample explanation of just what it is he has in mind in laying an invitation of this kind before my leader and myself. If he will be good enough to elaborate his suggestion we shall then be able to give it the consideration it merits.


Mr. M. J. COLDWELL (Rosetown-Biggar):: Mr. Speaker, I listened with a great deal of interest to the statement of the Prime Minister (Mr. Mackenzie King) this afternoon. It was the very first intimation I had received of his suggestions-the alternatives of associate membership in the war committee of the cabinet, or regular weekly conferences to bring about a better understanding of Canada's war effort. The invitation to this group contained in the Prime Minister's statement was, as I understood it, conditional upon acceptance of the same invitation by the hon. leader of the opposition (Mr. Hanson) and the hon. member for Yale (Mr. Stirling). Therefore my answer must in some degree depend upon their decision, but also, and more important, upon the decision of the members who are associated with me here. We are essentially a democratic organization, and any course of action which might be taken by myself either as acting leader of the group or by our leader should he be able to return to the house, would depend upon the decision of the membership of our organization here. But there are one or two things I should like to say now.
We believe that to bring the war to a successful conclusion will involve more than we are doing at present. I should like to see the people of Canada enthusiastically behind a determined effort to defeat fascism in every form in our own country and throughout the world.


Mr. MARTIN:: They are; there is no question about that.


Major James William Coldwell: Yesterday I listened
to interesting and important speeches over the radio. One of them was from Great Britain. I listened to a rebroadcast of Mr. J. B. Priestley's address from England last night over our Canadian system. In his speech he confessed that one of the chief difficulties that face the British people at the present time in marshalling the great national effort that will be required to bring victory, is that the Chamberlain government had not sufficiently informed the people of Great Britain of their intentions when this war ends-not as to the making of peace, but in giving the people of Great Britain improved conditions for which they might fight enthusiastically.

War Organization-Mr. Coldwell
Mr. Watson Thompson, of the university of Alberta, speaking earlier in the day, expressed much the same thought with respect to our own Dominion of Canada. In my opinion, Mr. Speaker, any committee assisting the government in the conduct of the war in an advisory capacity ought to consider also ways and means of placing before our people the manner in which we may expect to see the grave defects in our economic structure remedied when this war ends. And that should begin at once.
I listened with attention to the long list of distinguished persons to whom the Prime Minister referred as members of various war boards and committees. As I listened I thought of the new act to mobilize industry and man-power for our war effort, and I thought there was danger that the question before us might be, not that of the government mobilizing industry, but that of industry controlling the government when the war ends. I did not hear the names of many men on the committees representing the workers' point of view, and I heard fewer representing the farmers' viewpoint. Even on the bacon board I noticed several names connected with Canada Packers and other packing organizations. I want to impress upon the Prime Minister, and I am not saying this in any spirit of carping criticism, that in my opinion the winning of the war will require the combined effort of all our people; the only way in which we can get that combined effort is to give our people confidence in the kind of leadership that we are getting behind all these boards and committees, and we must see to it that the consumer, the working man and the farmer, are adequately and properly represented. As I listened I thought that the war boards and committees savoured too much of big business to satisfy the masses of the Canadian people.
One other thing. I agree with the Prime Minister that steps should be taken to the end that in all parts of this house we may be better informed on our war effort, on our defences, and as to the grave situations that may confront us in the future. The Prime Minister, as we have said before, will find this group critical, as we have always been, of the leadership that was given up to the outbreak of the war and until recently. We were glad to see the change of government in Great Britain because we felt that the Conservative member who rose in the House of Commons and said to Mr. Chamberlain, "In God's name, go", was speaking for a large number of English-speaking people throughout the world.


An hon, MEMBER:: It was Lloyd George who said that.


Major James William Coldwell: No, it was Right Hon. L. S. Amery. I would say to the Prime Minister this afternoon that we must marshal our people in a great effort, and in order to do that our people must be properly informed. Little incidents sometimes weaken confidence. Yesterday afternoon I listened to the glorious music over the Columbia chain, and in the middle the concert was interrupted with the announcement "Flash! A bulletin from the navy department at Washington." Canadian radio connections were immediately cut and a few bars of unrelated music intervened. In a few moments the Canadian announcer said, "We will now resume the programme which was interrupted". The flash I knew was simply that the American destroyer which had been reported torpedoed earlier was safe. But that kind of thing makes our people feel that they are being kept in the dark, just as France was kept in the dark with the results that we have seen in the last few weeks.
I assure the Prime Minister that when we know the decision of the leader of the opposition and the member for Yale the group with which I am associated will consider his invitation very carefully and give the decision which we consider to be in the best interests of the country at this time.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, the offer which the Prime Minister (Mr. Mackenzie King) has made should be, and must be, one of great importance to the country. In the light of that fact it is somewhat surprising that we have not heard anything about it before. To me it comes like a bolt from the blue.
The proposal requires careful consideration. From the words of the Prime Minister I gather that there is no certainty as to the significance of the offer. It is impossible for me to form anything like an accurate picture of its implications or of what responsibility or opportunity for service is involved should we accept. We shall have to know something with regard to the details before I will be in a position to make any statement whatsoever. It has been a guiding motto of mine for a good many years that I neither seek nor shirk responsibility. I think I will repeat that now: I neither seek nor shirk responsibility. I am sure that that is true of our group. Our one guiding thought is our country's welfare; to that end we will gladly do anything to cooperate with the Prime Minister. But I prefer to leave the matter open so that we can learn more from the Prime Minister as to just what his proposal involves.
Mr, MACKENZIE KING: Mr. Speaker, I might say just a word or two in reply to hon. gentlemen who have spoken.

War Organization-Mr. Blackmore
First of all, with respect to the invitation which I have extended to the leader of the opposition (Mr. Hanson), to his colleague (Mr. Stirling), and, in a conditional manner, to the leaders of the other groups; let me say that I am obliged to each of them in turn for having made perfectly clear that there was no discussion of this important matter with any of them until the offer was openly made in the presence of all hon. members of this house this afternoon. I did mention to the leader of the opposition, as he has said, about a week ago, that I had in mind making the proposal which I made to-day. I thought that was a courtesy due to him, that he would wish to be turning the matter over in his mind; but more than that I did not think it was advisable for me to say to him until opportunity came to make the exact proposal in unmistakable language in the presence of all hon. members of this House of Commons. That was my reason for not having had a further conference with him.
Hon. members know that conferences conducted privately often give rise to different interpretations and meanings. Had I sought to confer in detail with my hon. friend as to just what was proposed, he might have received one impression, I might have had another. I was careful, therefore, to put in the statement which I have given to the house exactly what the proposal was, and what it would and would not involve in the way of either responsibility or lack of responsibility on the part of others and responsibility or lack of responsibility on the part of myself. That course was taken deliberately, and I think it was the right course. As I say, it was not from any discourtesy that I did not discuss the matter further with my hon. friend the leader of the opposition or say a word to my hon. friend the member for Yale about his name being included. As I have made quite clear, it is included because he is an immediate associate of my hon. friend the hon. leader of the opposition, is an ex-Minister of National Defence and, like his leader, a member of the privy council, and I felt that it would be generally recognized as appropriate to include his name in making the proposal I did.
Now may I say to my hon. friends of the other groups that, in extending the invitation in the way I did, I also deliberately made their inclusion conditional upon the leader of the opposition accepting the invitation.
I did so for this reason, that, unless the leader of the opposition were a member of the war committee of the cabinet, I doubt very much 
whether the purpose which it is primarily intended to serve by the association of opposition members with the war committee would be met. I believe my hon. friends will be the first to see that in taking that course I was saving them some embarrassment as well as saving embarrassment to the official opposition and to the government.
I should like to avail myself of this opportunity to say a word about the relations of a government and an opposition. I do think that, under our parliamentary system-and we are realizing it more than ever in these times when very heavy responsibilities rest upon the ministry-a government has to take responsibility, and assume that those who are not with us are against us. Broadly speaking, the only manner in which to carry on parliamentary discussion is on the assumption that there is a government and an opposition, not more than one government and not two or three or half a dozen oppositions. My conception of the British parliamentary system of government is that the official opposition is the body which is looked to for the expression of the opposing view held by hon. members who sit on the side opposite the administration. That does not preclude others from taking, if they so desire, an attitude of opposition, but also they are free to take if they so desire an attitude of support and equally of cooperation. It does, however, become almost essential that in matters of responsibility, negotiations where they relate to opposite sides of the house must first be between the Prime Minister and the leader of the opposition. May I add a further reason- parliament itself has recognized the leader of the opposition as an officer of the House of Commons. He is a salaried official of the house, he has been given by act of parliament a special status, and he is thereby entitled to recognition which others, no matter how large or how small their particular groups may be, are not accorded.
I did not except that even my hon. friend the leader of the opposition, despite the intimation I gave him some days ago, would attempt to make any final answer to-day to the invitation which I extended to him. I felt that he would wish to give the matter very careful consideration and to confer with members of his own party. I made the statement to-day so that it would be before him and all hon. members on the pages of Hansard to-morrow; and at such time as hon. gentlemen may find it convenient to do so I shall be glad to receive from them whatever reply they desire to make. Indeed I should be very glad-I imagine the house would rather expect it- if the reply were made on the floor of parlia-

War Organization-Mr. Blackmore
ment in the presence of all hon. members, just as the offer itself has been made. If there is any lack of understanding as to its implications, all can be made perfectly clear in the discussion in this chamber.
I can assure hon. members that in this, as in every other act which I have performed in the office I now hold, since this parliament met, I have had but one motive, and that is to do what in the circumstances seemed best with a view to effecting as far as possible cooperative effort by all parties to further to the utmost of our ability Canada's prosecution of the war.
As to the references, in what I said here the other evening, to the question of loyalty to myself, may I make it perfectly clear, as I think any person reading Hansard will see, that such references were not to myself personally, but to myself in the official position of Prime Minister of Canada; that I was then alluding to any one who might be holding the office of prime minister and what would be expected of and toward him in that capacity. I should like, now, at all events, to make that perfectly clear. Looking at the pages of Hansard I find that on the evening I made the reference which has been quoted there are other passages in which I refer to myself and to the very question of loyalty which I have always believed was an important relationship to observe in all public affairs. I find I made this statement:
As Prime Minister I propose to exercise to the full the authority given to me to select men in whom not only I have confidence but who I believe will serve to increase the confidence in the administration existing throughout the country; and I shall not be influenced in the making of that choice by other than my sense of profound duty in this grave situation.
I there prefaced the sentence with the observation that I was speaking as Prime Minister; and I was speaking not only for myself but for anyone else who might occupy my present office at any particular time. Anyone with the slightest experience of government will appreciate how impossible the situation would be if any Prime Minister, no matter who he might be, were to take into the cabinet men who had no confidence in his leadership and were not prepared to give him their full loyalty. My hon. friend has given his statement of the kind of relationship which he thinks should govern in these matters. I will give him mine. I do not think the two are far apart. No Prime Minister with a proper sense of his constitutional responsibilities would think of demanding of his colleagues an unconditional pledge of personal loyalty to himself in all circumstances. Every minister has a right, indeed a duty, to withdraw his
confidence from the Prime Minister if he believes his loyalty to the Prime Minister conflicts with his duty to his country; but he has no right to remain in the cabinet once he has lost confidence in the Prime Minister. It is his clear duty to resign immediately. The very foundation of responsible government is mutual confidence within the cabinet. Every minister must be loyal to his colleagues, and all must be loyal to the Prime Minister. The Prime Minister himself has the same obligation of loyalty to his colleagues. These,
I know, are accepted constitutional principles, and I stress them only because there has been a tendency to interpret words, which I used in my official capacity as Prime Minister, in a narrow personal sense which they were never intended to have. I am sure that anyone who had not confidence in a political leader would be guilty of personal disloyalty to himself if he entered a cabinet with that conviction. It could hardly be imagined that loyalty to others would be expected of one who was disloyal to one's own self. I cannot see how, in pointing out that loyalty lies at the essence of relationships of the character that belong to a cabinet, I have done other than express what, particularly in a time of war, is a most important principle to observe.
May I put this to my hon. friend so that there may be no misunderstanding. The antithesis of loyalty is disloyalty. Instead of saying I would expect personal loyalty to the Prime Minister, I might have expressed it the other way-I might have said I would not think that any member would be justified either in accepting office in a government or in remaining in a government, if he himself was disloyal to, or believed he could not be loyal to, the head of the administration. That is the extent of the meaning of the words I used the other night.
Now as to what was said with respect to changes in the administration, I am sorry that my hon. friend has not appreciated what has been accomplished more than he has, but I would point this out to him. It is now scarcely four months since the present administration received its verdict from the people of Canada. There was no concealment during the months of the general election of the personnel of the cabinet, or of its policies, or of the fact that we were in the midst of a great war and that it was certain, the moment the elections were over, or very shortly thereafter, that there would be an intensification of the war in the European scene. All that was carefully and fully presented to the people. Everything that could possibly be said against the administration by its opponents was said; all that could possibly have been urged on behalf of the men best fitted to carry on the
Treachery Act

government was put forward; the public heard every argument pro and con with respect to this administration. They returned the administration by an overwhelming majority, thereby placing upon the shoulders of its members a great responsibility and, particularly upon the shoulders of its leader, the Prime Minister, a great trust. That trust I am proud to have had bestowed and I propose to uphold it, and to uphold it in terms of representative and responsible government.



TREACHERY ACT


[Stage Direction]
Right Hon. ERNEST LAPOINTE (Minister of Justice) moved for leave to introduce Bill No. 73, respecting treachery.
He said:	This bill embodies the recommendations of the committee whose report has been submitted to the house. A draft of the bill is printed in the votes and proceedings of July 2. It relates to treason and other offences during the war.
Richard Burpee Hanson: It is
exactly the same bill?


Mr. LAPOINTE (Quebec East):: Yes.


Richard Burpee Hanson: Is it considered urgent, or shall we take it up after the budget resolutions?


Ernest Lapointe: I have not considered the question, but we might deal with it when it is printed and distributed, if my hon. friend agrees.


Richard Burpee Hanson: I have a one-track mind and I can do only one thing at a time. I was ready to go on with the budget resolutions and I should like to have a little more time to study the bill.
Motion agreed to and bill read the first time.



NATIONAL DEFENCE


William Lyon Mackenzie King: May I ask my hon. friend the leader of the opposition (Mr. Hanson) and other members of the house whether they would be agreeable to my having permission to introduce the resolution on which is based the bill to be introduced to amend the Department of National Defence Act so as to allow of the establishment of a department of naval services. The resolution could be put

through its stages to-day and the bill introduced so that it might be before hon. members for discussion to-morrow. It has no controversial features. The bill is necessary to make provision for the establishment of a new portfolio of defence for naval services.


Richard Burpee Hanson: I should
think that would be quite all right.


William Lyon Mackenzie King: I move that the house go into committee to consider the following resolution:
That it is expedient to introduce an act to
rovide for the appointment of additional
linisters of National Defence as, an Associate Minister of National Defence, a Minister of National Defence for Naval Services, and a Minister of National Defence for Air, each at the same salary as the Minister of National Defence, to deal with matters relating to national defence, to the naval service and to the air service, respectively, and also for the appointment of additional deputy ministers for the military, naval and air services, respectively.
He said:	His Excellency the Governor
General, having been made acquainted with the subject matter of this resolution, recommends it to the favourable consideration of the house.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.


Grote Stirling: May I ask the Prime Minister whether there will also be a bill setting up the ministry of services?


William Lyon Mackenzie King: Yes.


Grote Stirling: That is yet to come?


William Lyon Mackenzie King: Yes.


Jean-François Pouliot: May I point out that we have spent two and a half hours in what could have been done in five minutes. There was a lengthy announcement, a virulent answer, and then some serene speeches from the hon. member for Yale and other hon. gentlemen, leaders of groups. I find that the leader of the opposition is treated like a spoiled child. I remember the time when the present Prime Minister was leader of the opposition and he was bullied by Mr. Bennett every time he wanted to make an observation. Are we now to be ruled by the leader of the opposition? I understand the war has made some progress on the wrong side-


The ACTING CHAIRMAN (Mr. Fournier, Hull):: Order. I would point out to the hon. gentleman that what he is saying is not relevant to the resolution.


Jean-François Pouliot: I thank you, Mr. Chairman, for your observation, but I point out that I am discussing the importance of increasing the

Department of National Defence Act
cabinet, and therefore my observations are strictly in order. I have not the least objection to the selection of those who were named by the Prime Minister two hours ago; I congratulate them most sincerely. I believe they are very good men, and I had an opportunity to congratulate personally three new nominees, who are most capable. But what I say is that I disapprove entirely the tactics employed by the leader of the opposition to increase the cabinet. Continuing on that argument I am just as strong as Samson when he had in his hand-


Mr. DOUGLAS (Weyburn):: The jaw-bone of an ass.


Jean-François Pouliot: Yes. Therefore, sir, having the most formidable weapon that one could think of, I think I may continue my argument without being interrupted, and I hope, sir, that you will call to order anyone who dares to interrupt me when I am in order like that.
The leader of the opposition has suggested an increase in the cabinet, and now that we have it, he is not satisfied with it. He wants more people, he wants another motion, he is not satisfied with that motion-and I call your attention, sir, to the fact that this is strictly in order-he wants another one, and when we shall have another one, if we do not select Arthur Meighen or Herbert Bruce or some of those Tories over there he will always scream, he will never be satisfied. That is my point.
There is another thing that I regret-


Mr. ADAMSON:: Order.


Jean-François Pouliot: The hon. member has a great deal to learn before calling me to order. If he will confine himself to reading his newspaper, although he will not learn the rules, he will learn the news at least.


Agar Rodney Adamson: I think the hon. member was out of order in mentioning another hon. member by name.


Jean-François Pouliot: Then I shall call him Koko, the Lord High Executioner in the Mikado, and the hon. gentleman himself can be Pooh-bah, Lord High Everything-Else, according to Gilbert and Sullivan. Now, Mr. Chairman, you see how difficult it is to try to reason with people who are so jumpy as the hon. member for York West. We are here to discuss a most serious question, and leaving aside all the names of those who would be or who are ministers in petto, as it is said of those who have high ambitions, I must tell the government that I am not very fond of the idea of taking the leader of the opposition into confidence. There are 182
Liberal members in this house, and those Liberal members are the buffers or shock-absorbers of the government. When something is unsatisfactory to the people we are the ones who are told that. The conferences between this one and that one may be of importance, but the people of my constituency, and the people of my province at large do not;, I know, hear of that without the greatest fear. We do not want anything to be done behind the curtain, we want open talk. If the Prime Minister has to speak to the leader of the opposition he has only to use the language that I used to the Right Hon. R. B. Bennett when he was Prime Minister.
I did not speak to him in private, I spoke to him across the floor of the house. Why should the Prime Minister have more confidence in the leader of the opposition than in any one of his supporters?
I would also point out that there is such a thing as ministerial responsibility. The Prime Minister is the leader of the government. He expects his ministers to be loyal to him; that is the rule, if a minister is not loyal to the Prime Minister, then he has only one thing to do, namely, to resign. If the ministers cannot share common views or have an average common view, then it is "Good-bye sir"; he goes away. I have sworn allegiance to His Majesty the King, and I keep my oath, but that does not mean that I am to abdicate my mind, my principles, my views, for flattery in the name of loyalty. I pay compliments sometimes, but I cannot be a flatterer, I despise flattery. If some gentlemen are anxious to receive flattery from anybody, they will never get it from me. Moreover, sir, I do not see why one asks for loyalty. Loyalty is something that is so natural that it need not be mentioned. That a man is loyal means that he is an honest citizen, a loyal citizen. But to become the slave of any man or of any power one must abdicate his own personality and cease to be a free citizen. And if there is any place where freedom of speech should prevail to the utmost it is right here in the House of Commons of Canada. Moreover, a supporter of this government is a free man who has deliberately decided to support it, as those who oppose the government are equally free to entertain those views which they believe to be in the best interests of the country. I am not a school boy to be lectured by anyone. Furthermore I believe I am one of the last remaining Liberals of the old tradition in this House of Commons.
What is Liberalism? It is all that is highest in a man. It is his freedom-freedom of mind, freedom of speech and freedom of action.
1414	COMMONS
Department of National Defence Act
What is the next principle of Liberalism? It is decentralization. What is the third principle? It is that the government shall control big business and not be controlled by it. That is the point. We are here at immense sacrifice, Mr. Chairman, and if I did not spend the week-ends in the delightful province of Quebec and the county of Temiscouata, where I live, I never would have the courage to sit here week after week. But I get inspiration from the people I have the pleasure of meeting and from the beautiful scenery I see when I visit my constituency. That is why I have always been free here, and no man impresses me except by his merit. In this country it seems natural that the position should make the man, not that the man should make the position. We see that everywhere. In these departments there will be outsiders who will have to be brought here, proving once more that the civil service may be all right for routine but that when an emergency arises it becomes necessary to call in others. But, sir, I wonder if there will be a halo of sanctity round so many dirty heads as we see sometimes. It is not for me to castigate those who are ready to come here, but no one will convince me that all those who serve at a dollar a year have made a vow of poverty and are ready to wear the garb of a friar and to go begging round the villages in their bare feet. I do not believe it.
I want the government and the Prime Minister, whom I have supported for sixteen long years, to listen to and appreciate what I have done for the party as a free lance. I asked the Liberal members not to fight Mr. Houde of Montreal during the municipal election in 1930. The Prime Minister knows this; the Minister of Justice (Mr. Lapointe) does not know it, but there is another minister from the province of Quebec who is familiar with the situation. I took the responsibility of seeing Mr. Houde and telling him not to be against this government, after he had been elected by 42,000 votes. And although he was the leader of the Conservative party in Quebec he did not even preside at the meeting held in Montreal by Mr. Bennett during the campaign of 1930. Later, when Mr. Bennett was leader of the opposition, Mr. Manion rose to deliver a surprise attack between two votes on the budget; and who came to his support when he was told by his leader and by the whips to sit down? It was the member for Temiscouata, who tried to vindicate the honour of his party. The only member who told me he would have done the same thing was Malcolm McLean, formerly the member for Melfort, who is now rendering the country valuable service in another capacity. Whenever there was a difficulty I

tried to help, not for glory or for award but because I wanted my party to be respected; and also because I expected my party to do . something for my people. And the Prime Minister did something for them when he helped in the passing of legislation concerning minimum wage workers employed by the dominion government, and in other ways.
I have had very happy associations with my chief, the Prime Minister, and with the Minister of Justice, who is a dear friend of mine. I have had happy associations with all the other ministers of the crown, including those who will be sworn in to-day. But I want the government to realize that the members who support them make immense sacrifices and deserve consideration. We are not jealous of those who have been selected to-day; they are able men and we congratulate them warmly. But we believe that when a particularly important policy is to be considered, those who support the parties should be consulted and should have an opportunity to express the views of their electors. Otherwise how can we return home without having impossible explanations to make? Those who support us during the elections have a right to express their views to us, and we should have an opportunity of conveying those views to the government, because they are the views of good Liberals as well as of Conservatives who have good judgment.
Therefore, Mr. Speaker, in conclusion I shall ask the government to be cautious in the selection of those who will be their advisers. A Tory not in the government might hold a strategic position which would enable him to give most dangerous advice. The ministers should be warned about those people, and they should take great care not to be wrongfully influenced by the Tories who are so numerous now in the administrative services of the government. They are bold, exceedingly bold; they are arrogant, exceedingly arrogant; they are ignorant, exceedingly ignorant; they are most pernicious and dangerous. This is why we should not make saints out of them. We should consider each man according to his own merit. It will not do the government any harm to take at least half as much advice from their supporters as from the leader of the opposition, that good looking gentleman who looks so serious at the present time. I know he is kind-hearted; I know he is not a bad fellow, but unfortunately I cannot agree with what he has to say. Someone said Mr. Bennett was the successor to Sir Herbert Beerbohm Tree on the legitimate stage. I hope that my hon. friend the leader of the opposition will not try to copy the old stager in his performance, but that he will

Questions
be natural. If he is natural he will understand that it is not his duty to make absurd suggestions to the government; and he is too clever not to realize fully that his suggestions are absurd. He should simply observe the policy of the government and then do what as yet he has not done-offer constructive criticism. In doing that, he may not satisfy some of the drummers and the rank and file behind him-


Mr. MacNICOL:: You are only the rank and file yourself.


Jean-François Pouliot: I understand the hon.
member for Davenport (Mr. MacNicol) has noticed that I was speaking of him.


John Ritchie MacNicol: I am speaking of you.


Jean-François Pouliot: The leader of the opposition ought not to attach so much importance to the drummers he has in the back stage there, and should think only of the importance of his functions. He represents in the country those who do not believe in the government. Therefore he must be cautious in getting right information, even from leaks, and see that the information is good. He must control it, and then-well, make useful suggestions. I know he can do that. What I regret is that since the beginning of the session he has not done it. I am expecting him to do that, and I hope I shall not be disappointed. I would hope that in the future, and until the end of the session, my hon. friend who is now smiling, thank God, will see to it that he is worthy of the confidence the party has placed in him, and that he will make a good showing and as leader of the opposition give a good performance, always keeping within his duties, and always acting according to the best old British traditions.
Resolution reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce Bill No. 74, to amend the Department of National Defence Act.
Motion agreed to and bill read the first time.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.



QUESTIONS

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

Mr. CHURCH:: X. Will a more efficient press censorship be established at once in the public interest with regard to subversive publications by refusing them the right to the mails and distribution in Canada?
2.	Will all papers in relation to this matter be tabled for the information of the house?
3.	Has the attention of the government been called to the banning of 500 such publications by the government of Australia on account of the war and other considerations of empire importance?


Mr. CASGRAIN:: Mr. Speaker, I think the question in its present form is not regular. The first question seeks to obtain information as to the policy of the government. The policy of the government will be made known as the occasion may arise. I may say, however, that the matter is receiving the careful attention of the government.
As regards the second question, if the hon. member will make a motion for the production of certain documents, I will see that they are brought down. I would draw his attention to the votes and proceedings of Wednesday last, July 3, which shows that information was brought down in reply to a similar question.
The answer to the third question is: No; no information.


Thomas Langton Church: Australia has banned 500 such publications.


PAYMENTS ON GRAIN IN STORAGE
Mr. PERLEY:: What amount of money has been paid by the Canadian government on grain in storage of the 1938 and 1939 crops, respectively in (a) interior country elevators and mills; (b) interior terminal elevators; (c) in terminal elevators at Fort William and Port Arthur; and (d) all eastern terminal elevators?


Mr. MacKINNON (Edmonton West):: Storage-Western Division
(a)	Interior country elevators and mills (storage proportion of carrying charges)
(b)	Interior terminal elevators (1938 crop
estimated)	
(c)	Terminal elevators at Fort William and
Port Arthur	
(d)	Eastern terminal elevators	
1938	Crop

1939 Crop

Questions


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; (e) if neither, what is the nature of the invitation?


MEAT EXPORTS
Mr. LACOMBE:: What was the value of meat exported by Canada during the years 1938, 1939, and 1940,
(a)	to the United States; (b) to the United Kingdom?


James Angus MacKinnon: Canadian exports of meats to the United States and United Kingdom during the years ended March 31st, 1938 to 1940:
Fiscal year ended United March 31st. States
United
Kingdom
1938	..	..	$3,271,705	$36,159,4691939	..	..	905,954	33,010,3291940	..	..	926,427	42,691,934


Mr. CRERAR:: I have spoken to the leader of the opposition (Mr. Hanson), who asked the other day that this question stand, and he agrees now that it should be dropped.
Question dropped.


SASKATCHEWAN PENITENTIARY-COSTS PER INMATE CIVIL SERVICE SUPERANNUATION
Mr. HANSELL:: Is it the intention of the government to amend the Civil Service Superannuation Act so as to "provide that the time spent on active service by members of the civil service of Canada, who saw service in the great war of 1914-18, may be counted for the purpose of superannuation" ?


Mrs. NIELSEN:: How much does it cost for each person in penitentiary and/or in gaol, in Saskatchewan, per month, for the following, (a) food; (b) clothing; (c) housing, and (d) medical care?


Ernest Lapointe: Saskatchewan Penitentiary:
(a)	$6.77.
(b)	$1.26.
(c)	No accurate figure can be given. Maintenance costs of cell blocks not kept separate.
(d)	$1.11.
Note: Not in possession of information with respect to costs in provincial gaols.


CONCENTRATION CAMP-COSTS PER PERSON DETAINED
Dorise Winifred Nielsen: For each person detained in a concentration camp, how much does it cost, per month, to provide, (a) food; (b) clothing; (c) housing, and (d) medical care?


Pierre-François Casgrain: In accordance with the international convention relative to the treatment of prisoners of war, signed at Geneva on the 27th of July, 1929, the food ration of prisoners of war shall be equal, in quantity and quality, to that of the depot troops.
Owing to the varying number of prisoners passing through the camps, it is impossible to work out the cost per month for each prisoner.
TMr McKinnon.]


Mr. ILSLEY:: This question, Mr. Speaker, also relates to government policy, and it has never, so far as I know, been the practice of governments to answer questions of this kind. Government policy is made known as and when the occasion arises.
Question dropped.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Thomas Langton Church: What steps are being taken for the defence of the civilian population in our cities and towns in Canada from air raids and foreign attacks?


CANADIAN TRAVEL BUREAU-EXPENDITURES- VALUE OF TOURIST TRAFFIC
Mr. HATFIELD:: 1.	What was the total expenditure by the Canadian travel bureau in each of the years 1935 to 1939?
2.	What is the estimated annual value of tourist travel into Canada for the same period?
3.	What part of the annual expenditure, in
each of the said years, was allotted for the following purposes:	(a) salaries, wages and
ordinary office expenditures of the Canadian travel bureau; (b) travelling expenses and entertainment charged to the Canadian travel bureau;	(c)	purchase	and	distribution	ofliterature, protographs, broadcasts, films, etc., actually produced at the government printing bureau;	(d)	purchase	and	distribution	of
literature, photographs, broadcasts, films, etc.,

Motions for Papers
produced by private firms and companies;
(e)	advertising counsel and advice, art work and illustrations, provided or produced by private companies, firms and/or individuals, stating the names of such private companies, firms and/or individuals, with amounts paid to each; (f) advertising in newspapers and magazines printed or published in Canada, and the same in newspapers and magazines printed or published outside of Canada?
4.	What are the names and addresses of the firms or agencies through which advertising expenditures are made?


CAPE BRETON, N.S., WAR CONTRACTS
Mr. GILLIS:: 1.	What necessary war projects are being carried on in Cape Breton, Nova Scotia?
2.	What firms have the contracts?
3.	Who is responsible for the hiring of men on these projects?


MOTIONS FOR PAPERS
Mr. COLD WELL:: For a copy of all correspondence relating to the Ford Motor Company exchanged between any shareholder of the Ford Motor Company of Canada, Limited, and the Under-Secretary of State between January 1, 1936, and July 1, 1940.



MUNITIONS AND SUPPLY-APPOINTMENT AND POWERS OF CONTROLLERS

['Mr. Speaker, in the absence of the Minister of Transport (Mr. Cardin) I may say that the solicitor of the Department of Transport examined the bill and reported to\nAlberta Provincial Bank', "me that it was exactly what its sponsor has stated, and nothing more, namely, is a bill to write down the shares of the company to their true value. The Canadian National Railways are not interested in this bill in any way. Their system does not touch that company's system. I recommend that the suggestion of the sponsor should be followed and that the bill be referred to a committee of the house where it can receive the fullest possible study and where anyone who has a valid objection to it can present his case."]
Mr. DIEFENBAKER:: For a copy of all orders in council and other documents in the possession of the government relating to the appointment and powers of the controllers in the Department of Munitions and Supply and of the wartime industries control board.



Mr. NICHOLSON:: For a return showing:
1.	The names and addresses of all persons hired under the Canadian farm loan board in Saskatchewan;
2.	How much they received as commissions, salaries and expenses in each of the last three years;
3.	(a) How much money has been loaned by the said board, and (b) how much has been repaid to the board during each of the last three years;
4.	The total amount owing to the board at the end of the last fiscal year.


EMPLOYMENT AND SOCIAL INSURANCE COMMISSION
Mr. BLACK (Cumberland):: For (a) a copy of all correspondence addressed to the Prime Minister from the chairman _ of the employment and social insurance commission in the years 1935 and 1936 and replies thereto,
and (b) a copy of all correspondence addressed to the Prime Minister or the Minister of Labour by any member of the employment and social insurance commission in the years 1937, 1938, 1939 and 1940, and replies thereto.


WAINWRIGHT NATIONAL PARK-DESTRUCTION OF BUFFALO, MOOSE, ELK AND DEER
Mr. HAZEN:: For a copy of all correspondence, letters, telegrams, memoranda, statements and other documents in the possession of the department concerning the recent slaughter and destruction of buffalo, elk, moose and deer in Wainwright national park.


Thomas Alexander Crerar: This order was called the
other day and was allowed to stand. I ask, Mr. Speaker, that it be allowed to stand over at the request of the mover.


Georges Parent: Stands.


PRIVATE BILLS
[Stage Direction]
Bill No. 36, for the relief of Elizabeth Pauline Tingley Kidd-Mr. Hazen.
Bill No. 37, for the relief of Nancy Patricia Lytle Rowat.-Mr. Hill.
Bill No. 38, for the relief of Henry Carl Mayhew.-Mr. Mcllraith.
Bill No. 39, for the relief of Laura Lucrezia Green Stinson,-Mr. Mcllraith.
Bill No. 40, for the relief of Irene Nellie Kon Simpson.-Mr. Hill.
Bill No. 45, for the relief of Elma Jane Harris Aspell.-Mr. Hazen.
Bill No. 46, for the relief of Edith Leanora Holland Bonet.-Mr. Bercovitch.
Bill No. 47, for the relief of Dorothy Lavinia Worsley Baker.-Mr. Casselman (Grenville-Dundas).
Bill No. 48, for the relief of Eugene Belanger.-Mr. Mcllraith.
Bill No. 49, for the relief of Rebecca Cohen.-Mr. Mcllraith.
Bill No. 52, for the relief of Ethel Cahan Naihouse.-Mr. Bercovitch.
Bill No. 53, for the relief of John Roy Fumerton.-Mr. Bercovitch.
Bill No. 54, for the relief of Paul Edouard Tardif.-Mr. Mcllraith.
Bill No. 55, for the relief of Pearl Aizan-man Morris.-Mr. Bercovitch.
Bill No. 56, for the relief of Molly Gold-farb Goldberg.-Mr. Tomlinson.
Bill No. 57, for the relief of Muriel Agnes Martin Beech.-Mr. Hazen.
Bill No. 58, for the relief of Alfred Reinhold Roller.-Mr. Mcllraith.
Bill No. 59, for the relief of Sarah Kerzner Spilberg.-Mr. Factor.
Private Bills-Divorce
[Stage Direction]
Bill No. 60, for the relief of Christina Smith Dunlop Andrique.-Mr. Edwards.
Bill No. 61, for the relief of Anna Shepherd. -Mr. Abbott.
Bill No. 63, for the relief of Margaret Somerville Sickinger.-Mr. Hill.
Bill No. 64, for the relief of Romain Cleophas Moreau.-Mr. Macdonald (Brantford City).
Bill No. 65, for the relief of Dorothy Florence Donn Martin.-Mr. Graydon.
Bill No. 66, for the relief of Phoebe Doris Edge Pott.-Mr. Graydon.
Bill	No.	67,	for	the	relief	of	Filomena
Grego Sauro.-Mr. Bercovitch.
Bill No. 68, for the relief Kathleen Irene Mae Stephens Morrissey.-Mr. Macdonald (Brantford City).
Bill	No.	69,	for	the	relief	of	Dorothea
Frances Poyser MacDermid.-Mr. Macdonald (Brantford City).
Bill No. 70, for the relief of Sheila Alice Dolly Young Dodge.-Mr. Factor.
Bill	No.	71,	for	the	relief	of	Margaret
Louise MacDonald Russell.-Mr. Hill.
Bill No. 72, for the relief of Edward James Holt.-Mr. Factor.
On division.
Mr. JEAN-FRANCOIS POULIOT (Temis-couata): I	have counted the	number of
divorce bills on the order paper; there are thirty of them. Hon. members are told to be quiet, not to put any obstacle in the way of the progress of business; yet here we are with this putrid legislation, which comes to us in bulk and of which we should be ashamed. I have spoken along this line during several sessions, as those who were here at previous parliaments will remember. I do not understand why we should encourage this kind of legislation, just to give a chance to the lawyers on each side of the case to earn $500 apiece.
Mr. Speaker, if you glance at the evidence, the pestilential evidence which comes from the senate, you will observe that it is always the same thing-keyhole business, investigators, people who are paid so much by other people to look through a keyhole and find a man in the room with a woman, some clothes on a chair; a bottle of scotch, half full, on the table, and two glasses. Then the hon. gentlemen in the other place make a favourable report on the divorce petition. I suggest that, if we are to have conscription in this land, all the men who are parties to these divorce proceedings should be conscripted first along with the honorary lieutenant-colonels, and that all the women concerned should be put in canteens to make soup for the soldiers, and be generally useful in some way.
Mr. FRASER (Peterborough West):: What do you mean-boil them down?


Jean-François Pouliot: I do not know why we waste so much time on legislation which is a disgrace to our statute books. If we look at the volumes of Canadian statutes we can count any number of divorce petitions for the relief of Mr. So-and-So and for the relief of Mrs. So-and-So. Who knows that that man is a gentleman? Who knows that that woman deserves any consideration from the legislators of this country? It is shameful. I think we should all be ashamed of ourselves, taking part in such legislation, and I denounce it in the strongest language. We are making fools of ourselves in passing this legislation, because we are simply giving an opportunity to parasites to come to this house and make money at the expense of our honour. Moreover, the reports of the committee of the senate are stupid and in nine cases out of ten no judge would grant a divorce on the insignificant evidence that is given before the senate. What are the questions asked? Has there been any consent? Has there been any collusion between the parties? The interested party says, no. They can perjure themselves; it is evident that they perjure themselves, and it is taken for granted. Hon. gentlemen on the other side swallow it as they would a mouthful of water and their conscience is clear. It is shameful, sir. You are an honest citizen; we are all honest citizens, and we cannot do otherwise than disapprove such legislation. It is a curse, a waste of time. I am sorry my vocabulary is not richer because I would employ stronger language. We ask for a vote against these bills. They are all rotten legislation and we should vote against them. Get rid of this legislation.


Georges Parent: I understand there is no defence to any of these divorce bills, and I am suggesting that the house pass them en bloc on division, as requested. The numbers have already been read by the assistant clerk. It is moved by Mr. Mcllraith, seconded by Mr. Roebuck, that the bills be read a second time. Is it the pleasure of the house to adopt the motion?


Some hon. MEMBERS:: Carried.


Some hon. MEMBERS:: On division.


Georges Parent: Carried on division.
Bill No. 32, to incorporate Pool Insurance.- Mr. McNiven, (Regina City).
Bill No. 33, to incorporate the Stanstead and Sherbrooke Insurance Company.-Mr. Gingues.
Bill No. 34, respecting the Ottawa Electric Company and the Ottawa Gas Company.-Mr. Mcllraith.
Bill No. 44, respecting the Cedars Rapids Manufacturing and Power Company.-Mr. Abbott.

Detroit and Windsor Subway
Bill No. 50, respecting a certain wharf of Saguenay Terminals Limited.-Mr. Dubuc.
Bill No. 62, to incorporate Sisters Servants of Mary Immaculate.-Mr. Lapointe (Lot-biniere).


DETROIT AND WINDSOR SUBWAY COMPANY
[Stage Direction]
Mr. PAUL MARTIN (Essex East) moved the second reading of Bill No. 35, respecting the Detroit and Windsor Subway Company.
Richard Burpee Hanson: Before this bill is read a second time, will the sponsor give some explanation of its purpose. I have not read the bill.


Paul Joseph James Martin: Mr. Speaker, the purpose of this bill, which I think should be referred to the appropriate standing committee, where its promoters wish to have an opportunity of explaining its provisions, is to declare the true value of the shares of no-par value. When the company received its charter the value of the shares was declared, I believe, at around ten cents each. Latterly the directors valued the shares at something like $12.
There has recently been passed in the state of Michigan an act, No. 101 I think, the provisions of which render taxable the shares in accordance with the value declared by the directors. This, it seems, would be inequitable, because the true value of the shares does not begin to approach the value declared by the board of directors. I believe the matter should be referred to the committee on banking and commerce so that its sponsors can give reasons for the course which they propose to take.


Richard Burpee Hanson: Before the hon. member concludes his remarks, may I ask if the declaration of $3 a share as opposed to S12 will affect the taxation which this company will pay to the Canadian government?


Paul Joseph James Martin: I did not hear the question.


Richard Burpee Hanson: Will the reduction of the fictitious value of $12 a share to what the hon. member says is the true value, namely $3, affect in any way the taxation which this company shall pay to the treasury of Canada or to any municipality?


Paul Joseph James Martin: I am glad the hon. gentleman asked that question. It will in no way affect Canada. It simply affects the revenue of another country.


Thomas Langton Church: Before this bill is read the second time we ought to hear from the Minister of Transport (Mr. Cardin) what is the policy of the government regarding it. This bill was introduced and
passed by the senate on June 13. I may say that I had no notice that these bills were coming up to-night. I wished to speak on the principle of the Ottawa Electric company bill, but it has been referred to the appropriate committee.
We should not be parting with these franchises in the manner we are doing, without any proper reports from heads of departments. The Detroit and Windsor Subway company got its authority in 1926-27; the explanatory notes give particulars as to the capital stock and the issue of shares. I should like to know from the Minister of Transport what is the policy of the Canadian National Railways with regard to this charter, because a committee was appointed, without any notice being given to the house through the order paper, to deal with the national railways; the motion was put through, the committee is meeting, and these committees have a way of whitewashing certain matters.
This bill was introduced in the senate-a procedure which I have never known of before in regard to franchises of this description. We must be very careful. We are parting with the great public franchises of this country- light, power and transportation. The hydro electric system of Ontario, than which there is no better in the world, had a system of railways; and this Detroit and Windsor Subway company is in conjunction with the Detroit and Canada Tunnel corporation, a Michigan corporation, owning and operating a vehicular tunnel under the Detroit river between the cities of Windsor, Ontario, and Detroit, Michigan. The notes go on to say that all the shares of the subway company are owned by the tunnel corporation. Now they come to this parliament and ask for the amendment proposed. The committee will accept the bill subject to revision, and in my opinion, if this house adopts the principle of the bill it should be reported on and we should hear from the Minister of Transport what is the policy of the Canadian National Railways regarding this tunnel. Before we accept the principle of the bill we should have a further detailed explanation. This is an international charter; no doubt parliament has control, but some of the charters which have been passed cannot by the widest stretch of the imagination be said to be works for the general advantage of Canada. Has the management of the Canadian National Railways been consulted? What do they say about handing over a charter like this?


Hon. C. D. HOWE (Minister of Munitions and Supply):: Mr. Speaker, in the absence of the Minister of Transport (Mr. Cardin) I may say that the solicitor of the Department of Transport examined the bill and reported to
Alberta Provincial Bank

me that it was exactly what its sponsor has stated, and nothing more, namely, is a bill to write down the shares of the company to their true value. The Canadian National Railways are not interested in this bill in any way. Their system does not touch that company's system. I recommend that the suggestion of the sponsor should be followed and that the bill be referred to a committee of the house where it can receive the fullest possible study and where anyone who has a valid objection to it can present his case.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the committee on railways, canals and telegraph lines.

[Stage Direction]
The house resumed, from Tuesday, July 2, consideration of the motion of Mr. Blackmore for the second reading of Bill No. 26, to incorporate the Alberta Provincial Bank, and the amendment thereto of Mr. Ralston.
Mr. GEORGE H. ROSS (Calgary East): A few days ago the leader of the social credit group in this house rose in his place and condemned interest as being ungodly and unjust. I wish to point out that, according to the social credit philosophy, interest is ungodly and unjust only when it is payable by social crediters. When it is payable to social crediters it is most godly and most just. At least the social credit government always exact their pound of flesh when it comes to collecting interest.
I might illustrate that by a single instance. The city of Calgary had bought a number of province of Alberta bonds and were holding them in their sinking fund. On the other hand the province were holding some city of Calgary bonds. When it came to collecting the interest the province insisted that the city of Calgary pay in full the interest on their bonds. On the other hand the province of Alberta, as I explained when this bill was up before, repudiated half the interest on their bonds and paid only fifty cents on the dollar on the interest due. As far as the balance is concerned they are hiding behind the provision that a province cannot be sued without its consent; they would not consent. If interest is such a vile thing as social crediters make it out to be, I should like to know from the social crediters whether they propose that this bank shall collect interest from its customers when it goes into the banking business.
Mr. Aberhart and his associates now wish ' to start a bank. Why they who so vehemently denounce interest should want to start a bank is a question. I feel strongly that politicians who label banking as a racket, who say that credit should be extended indefinitely by the 
use of a fountain pen and book entries, and count the repudiation of honest debts a noble achievement, are not fit persons to be trusted to carry on banking business in Canada.
Certain sections of the Bank Act are designed to protect customers of banks by requiring that sufficient money be raised by those proposing to incorporate a bank to give some assurance of their being able to carry on business with a fair chance of success. According to this bill those sections are not to apply to this bank. So, if we grant this charter, we are creating a bank which can go into the banking business and receive deposits from its customers without having one dollar of assets of its own. The only asset of any kind that it will have will be the liability which the law imposes upon the directors in the event of the bank becoming insolvent. Should we grant a charter to people to carry on such an institution?
If the charter is granted, one of the first questions that will present itself will be, shall this bank be the banker of the province of Alberta? At once a conflict of interest arises. The members of the executive council of the province of Alberta will be the directors of this bank. As directors of this bank they should try to carry on a sound banking business and guard the interests of the bank. As members of the government of the province they should do all they can to guard the interests of the province. I suggest that there is not one member of this house, outside the social credit group, who will say that this bank should be the banker of the province. There is a direct conflict of interest. Men cannot serve two masters. Section 75, subsection 3, of the Bank Act prohibits directors from occupying conflicting dual positions.
Some eighteen years ago the United Farmers of Alberta government in Alberta appointed a royal commission under the able chairmanship of Professor D. A. McGibbon to investigate the question whether or not the province of Alberta should go into the banking business. After a thorough survey that commission came to the conclusion that the province should not go into any such venture.
What right has a province to go into the banking business? Under the British North America Act the exclusive legislative authority of the parliament of Canada extends to banking. No doubt this parliament can delegate its authority to someone else to carry on a banking business, but has the province of Alberta the right to accept the power to carry on banking business? It is very doubtful. And if this parliament authorizes the province to carry on something which it is beyond the power of the province to carry on, and

Administration oj Justice-Clemency
authorizes them to raise money for that purpose, we are assisting them to carry on an illegal enterprise. We must be careful in that respect.
If we grant this charter, the bank must inevitably fail. A few of the principal reasons are deserving of consideration. No prudent man, knowing the record of Mr. Aberhart and his associates, would entrust his savings to a bank directed by them. No person would be justified in doing his banking business with a bank managed by a political group wholly inexperienced in banking and as reckless in experimenting with public money as these people have shown themselves to be. Prudent men will deposit their savings in the chartered banks, which honour their obligations. Consequently this bank could not hope to receive large deposits.
Again, before the social credit government came into power in Alberta, Alberta was a borrowing province. It borrowed almost twice as much as the banks there received in deposits. It relied on the existing chartered banks for funds. The sums lent at any one time in Alberta were almost double the amounts received there on deposit. The banks drew on their deposit reserves from other provinces to meet the credit requirements of Alberta. Because of our branch banking system Alberta has been the beneficiary of outside credits from the earliest days. As pointed out by the leader of the social credit group, the Alberta bank must necessarily be only a local bank. It will have to rely on deposits in Alberta, and it cannot hope to get from such deposits sufficient money to meet its legitimate credit needs. Not having the deposits, it will not be able to lend; and not being able to lend, it cannot make sufficient money to pay operating expenses and interest on its funds.
There is a third reason why this bank must be an utter failure. To pay operating expenses and make a profit this bank will have to lend money. That will not be difficult to do; all the social credit supporters will be looking to the bank for loans. Credit is not likely to be distributed on a business basis by any government anxious for votes at the next election. If we may judge the social credit government by its record, this would operate as a purely political bank, lending money freely wherever the most votes could be secured. Loans so made would never be recovered, and the loss to the bank would be enormous. Insolvency and collapse inevitably must be the fate of a bank so managed.
What does the province of Alberta stand to lose by the collapse of this proposed bank? In the first place it will lose the $500,000 subscribed by the treasury of the province in
order to begin operations. In the second place it will stand to lose another $500,000, under the double liability provision contained in the Bank Act with regard to shareholders of banks. In addition, the depositors will stand to lose all the money deposited by them. Surely such a bank has no future and no hope but failure. This is the last of a series of attempts to mislead the public. It harmonizes with the covenant-signing crusade, the prosperity certificates, the treasury branches and the other ridiculous proposals of a bankrupt government. I call upon this house to take the necessary steps to avoid any further squandering of the money of the province of Alberta by defeating this ridiculous and hopeless measure.
Amendment (Mr. Ralston) agreed to on division, and bill referred to the standing committee on banking and commerce.


[Stage Direction]
On the orders of the day:
Mr. H. C. GREEN (Vancouver South):: On Wednesday last the hon. member for Vancouver North (Mr. Sinclair) asked a question of the Minister of Justice (Mr. Lapointe) concerning the release on ticket of leave from the New Westminster penitentiary of one Joe Celona of Vancouver. At that time I understood the minister to say that he would look into the case and give a reply later. I should like to ask when the house may expect that reply. There is considerable urgency about this matter, because grave concern is being shown by the people of Vancouver, this man Celona being a notorious white slaver.


Ernest Lapointe: This man applied a year ago, or some one applied on his behalf, for a ticket of leave, and the reply was that in offences of this kind it was customary for the prisoner to serve at least half his term before any consideration could be given the application. That is the usual length of time they have to serve.


Howard Charles Green: Even in a white slave case?


Ernest Lapointe: In serious cases, they must serve that length of time before consideration can be given. When the application was renewed the usual practice was followed. Reports were asked from various people, and of seven reports received six were rather favourable to the ticket of leave being issued. Apparently these people thought the
Wheat-Marketing of Crop

ends of justice would be served by the application being granted. This was done in the usual course, but since the question has been raised in this house 1 have received from British Columbia representations to which as yet I have not been able to give full consideration. However, I have communicated with some of those who were asked for reports in the ease, and I am awaiting their replies. In a day or two I may be able to give to this matter the possible reconsideration that may be needed.


Richard Burpee Hanson: Is the man out?


Ernest Lapointe: Yes, but he cannot escape.



EUROPEAN WAR


[Stage Direction]
On the orders of the day:
Thomas Langton Church: I should like to ask the government a question concerning a matter which has been standing ever since the war session last September. It is this: Will the government, before this session is over, come to a decision as to whether or not they will establish a system of insurance for our soldiers overseas? The United States had such a system during the last war, and it effected a great economy. Surely if we are going to insure those who stay at home, something along this line should be done for our soldiers who are risking their lives overseas. I do not ask for a decision to-night, but I think the government should give the matter consideration. The former Minister of Finance, Mr. Dunning, said money could be borrowed at two-thirds of one per cent and we have plenty of money in the bank, so I think the government should come to a decision on this matter. These men who are risking their lives deserve an insurance scheme just as much as those who stay at home, so I should like to know whether or not the government will give the matter consideration.


James Lorimer Ilsley: It will be given consideration.


Thomas Langton Church: It has been standing since last September.



ADVISORY COMMITTEE AND POLICY RESPECTING MARKETING OF 1940 CROP

[Stage Direction]
On the orders of the day:
Ernest Edward Perley: I should like to direct a question or two to the Minister of Trade and Commerce (Mr. MacKinnon) based upon a report appearing in the Winnipeg
rMr. E. Lapointe.]
Free Press of June 29, 1940, to the effect that the wheat committee of the cabinet-that is, Messrs. Crerar, Gardiner and MacKinnon- were in session on Friday, June 28, framing a policy for the wheat board in connection with the 1940 crop. The questions are further based upon a Canadian Press report appearing in the western newspapers under date of July 4, as follows:
The North-West Line Elevators Association to-day announced representations have been made to Ottawa by line elevator companies in western Canada to have the dominion government provide for the hedging of country wheat purchases and remove the 5,000 bushel limitation on deliveries to the Canadian wheat board.
A statement by the association said:
"The rapid and drastic change in the international situation due to the invasion of Norway, Belgium and Holland, followed by declaration of war by Italy and collapse of European France, coupled with the prospects of a large carryover of wheat in Canada, make it obvious that the government would have to take temporary measures to protect the price structure until they could formulate a policy to take care of the present situation-"
My question is: Has such representation been made by the North-West Line Elevators association and, if so, what is the government going to do about it? I should like to ask also, since this session is drawing to a close, if within the next week or so legislation will be brought down implementing some of the requests that have been made, especially with regard to the appointment of an advisory committee, and any other legislation necessary because of any changes that are to be made in the policy of the government in connection with the marketing of the 1940 crop.


James Angus MacKinnon: The hon. member for
Qu'Appelle (Mr. Perley) has asked a question regarding a meeting of the wheat committee of the cabinet which was supposed to have been held on June 28. I have no recollection of such a meeting being held. The Minister of Mines and Resources (Mr. Crerar), who is sitting near me, tells me that if any such meeting were held he was not present.


Ernest Edward Perley: Then the press report must be incorrect.


Thomas Alexander Crerar: The newspaper report.


James Angus MacKinnon: In connection with the statement that representations have been sent to the Minister of Trade and Commerce respecting the wheat situation, wheat storage or any matter connected with the subject, may I say that no word has been received by the Minister of Trade and Commerce or by the department from the NorthWest Line Elevator Association.
Regarding legislation in connection with the matter of an advisory committee, I would say

Wheat-Closing oj Grain Exchange
in answer that a great deal depends on the personnel of the advisory committee when we consider what action will be taken in connection with the setting up of machinery for the handling of this year's crop, in the event of such action being necessary. If certain decisions are made, one type of committee will be necessary; if another decision is made, in my opinion a different type of committee will be necessary. The matter is receiving the most earnest consideration of the wheat committee of the cabinet, and of the wheat board.


Ernest Edward Perley: Will no new legislation be
introduced in respect of marketing?


James Angus MacKinnon: I
cannot say definitely; it is a matter of government policy.



POLICY RESPECTING CLOSING OF GRAIN EXCHANGE AND SETTING OF PRICE FOR 1940 CROP

[Stage Direction]
On the orders of the day:
John George Diefenbaker: I should like to ask a question of the Minister of Trade and Commerce (Mr. MacKinnon) arising out of an item which appeared in the Ottawa Citizen of July 6, as follows:
The dominion government will defer for about ten days its decision as to whether the western grain exchange will remain open after the end of the crop year, a reliable source told the Canadian Press to-day.
On June 1 trade minister MacKinnon announced that following wheat fluctuations which had necessitated pegging of prices the exchange would remain open at least until the end of the crop year.
During the past few days I have received numbers of representations from farm organizations and from farmers throughout western Canada inquiring what the government's wheat policy will be, and urging that the policy should be announced, in view of the approaching harvest. My questions are these:
1.	Has the government not received representations from all the western pools and from numerous farm organizations demanding that the grain exchange shall be closed for the duration of the war?
2.	Does the government intend accordingly to direct the closing of the exchange from the end of the crop year, that is to say, July 31 next?
3.	Does the government intend to set the price of wheat for the 1940 crop, and, if so, will such price be on a parity with other prices so that the producers will be assured a fair return above costs of production?
Hon.' J. A. MacKINNON (Minister of Trade and Commerce): Mr. Speaker, replying to the question of the hon. member for Lake Centre (Mr. Diefenbaker) as to whether or not the wheat futures exchange would remain open, may I repeat what I said in a formal statement to the house, namely, that it would remain open until the end of the present crop year. My department, members of the wheat committee of the cabinet, and the cabinet itself are well aware of the urgency in connection with the whole wheat situation. I can say also that representations have been received by my department from some individuals and some organizations in favour of closing the futures market.


Richard Burpee Hanson: The hon. member referred to all the western pools.


James Angus MacKinnon: I am not in a position to say definitely that the pools have not made such representations, but I have no recollection whatsoever of those representations being received during my administration of the department.
As I have said, there have been representations in favour, and some against the closing of the futures market. The matter is receiving the earnest consideration of the-


Ernest Edward Perley: Representations have been made from the floor of this house. What are you going to do about that?


James Angus MacKinnon: That is also being taken into account in our consideration of the matter.


Mr. L. A. MUTCH (Winnipeg South):: Will the government consider a closed season on political sniping on the Winnipeg grain exchange?



PRAIRIE FARM ASSISTANCE


[Stage Direction]
On the orders of the day:
Ernest Edward Perley: I should like to ask the Minister of Agriculture (Mr. Gardiner) a question. In view of the fact that he is likely to leave that department I hope he will be in a position to give a satisfactory answer because crop conditions in parts of western Canada, notably the western part of Manitoba, and some parts of Saskatchewan and Alberta, are not good, and it will be necessary to carry on assistance under the Prairie Farm Assistance Act. Does he propose to recommend any changes in or amendments to the act so that it may be better and more satisfactorily administered than it was last year?
Royal Canadian Air Force


James Garfield Gardiner: Possible amendments to the Prairie Farm Assistance Act are receiving consideration. They have not yet been considered by the government. Whether or not they will be brought down is, of course, a matter of policy.



SIR HOWARD D'EGVTLLE


[Stage Direction]
Mr. JEAN-FRANCOIS POULIOT (Terniscouata): Mr. Speaker, may I ask the Minister of Mines and Resources (Mr. Crerar) who is in charge of the immigration branch if he is aware that an important gentleman named Sir Howard D'Egville has come to Canada? In the second place, is he here in a private capacity or on an official mission; in the latter case, what is the mission?
Thomas Alexander Crerar: Replying to the first part of the question, I believe Sir Howard D'Egville is here in Canada-at least, he was a few days ago, when he called at my office to see me. So far as the second part of the question is concerned, I have no information.


Jean-François Pouliot: I have none, either.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Agar Rodney Adamson: Mr. Speaker, I should like to ask a question of the Minister of Munitions and Supply (Mr. Howe). In view of a statement made by Mr. Noel Baker, a member of the House of Commons in England, that a certain United States commercial plane has had the seats taken out and bomber racks installed, that this ship when armed had proved most successful as a bomber, and that no casualties had been suffered by this type of aircraft, would the minister make inquiries with a view to seeing if any of this type of aircraft are available in Canada or the United States?


Clarence Decatur Howe: I read the dispatch to which my hon. friend has referred, and read in this evening's paper a further account of the same speech which has led me to believe that the plane to which reference was made was a Hudson bomber, which is an adaptation of the Lockheed passenger plane. It is, however, hardly suggested that the seats were taken out of the plane in England. I think the hon. member will find on further examination that the plane was adapted from the passenger
[Mr. Perley.l
plane at the point of manufacture. As a matter of fact, while the Hudson bomber has characteristics of a passenger plane, it is quite a different plane. As I stated before in the house, it would cost about as much to convert a passenger plane into a Hudson bomber as it would to buy the frame of the Hudson bomber new. The Canadian government has a number of Hudson bombers and we know it to be a most efficient plane. It is remarkable that none of them have so far been shot down over Britain.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Vien in the chair.

[Stage Direction]
Resolved, that it is expedient to amend the Income War Tax Act and to provide:-[DOT]
1. That the rates of tax applicable to persons other than corporations shall be increased to the rates of tax set forth in the following schedule:
A.-Rates of Tax Applicable to persons other than Corporations and Joint Stock Companies
On the first $250 of net income or any portion thereof in excess of exemptions 6 per centum or $15 upon net income of $250; and 8 per cent upon the amount for which the income exceeds $250 and does not exceed $1,000 or
$75 upon net income of $1,000; and 12 per centum upon the amount by which the income exceeds $1,000 and does not exceed $2,000 or $195 upon net income of $2,000; and 16 per centum upon the amount by which the income exceeds $2,000 and does not exceed $3,000 or $355 upon net income of $3,000: and 20 per centum upon the amount by which the income exceeds $3,000 and does not exceed $4,000 or $555 upon net income of $4,000; and 24 per centum upon the amount by which the income exceeds $4,000 and does not exceed $5,000 or $795 upon net income of $5,000; and 27 per centum upon the amount by which the income exceeds $5,000 and does not exceed $6,000 or $1,065 upon net income of $6,000; and 30 per centum upon the amount by which the income exceeds $6,000 and does not exceed $7,000 or $1,365 upon net income of $7,000; and 33 per centum upon the amount by which the income exceeds $7,000 and does not exceed $8,000 or $1,695 upon net income of $8,000; and 35 per centum upon the amount by which the income exceeds $8,000 and does not exceed $9,000 or $2,045 upon net income of $9,000; and 37 per centum upon the amount by which the income exceeds $9,000 and does not exceed $10,000 or $2,415 upon net income of $10,000; and 39 per centum upon the amount by which the income exceeds $10,000 and does not exceed $20,000 or $6,315 upon net income of $20,000; and 41 per centum upon the amount by which the income exceeds $20,000 and does not exceed $30,000 or $10,415 upon net income of $30,000; and 44 per centum upon the amount by which the income exceds $30,000 and does not exceed $40,000 or $14,815 upon net income of $40,000; and 47 per centum upon the amount by which the income exceeds $40,000 and does not exceed $50,000 or

Income War Tax Act
$19,515 upon net income of $50,000; and 50 per centum upon the amount by which the income exceeds $50,000 and does not exceed $75,000 or $32,015 upon net income of $75,000; and 53 per centum upon the amount by which the income exceeds $75,000 and does not exceed $100,000 or $45,265 upon net income of $100,000; and 56 per centum upon the amount by which the income exceeds $100,000 and does not exceed $150,000 or $73,265 upon net income of $150,000; and 59 per centum upon the amount by which the income exceeds $150,000 and does not exceed $200,000 or $102,765 upon net income of $200,000; and 63 per centum upon the amount by which the income exceeds $200,000 and does not exceed $300,000 or $165,765 upon net income of $300,000; and 67 per centum upon the amount by which the income exceeds $300,000 and does not exceed $400,000 or $232,765 upon net income of $400,000; and 72 per centum upon the amount by which the income exceeds $400,000 and does not exceed $500,000 or $304,765 upon net income of $500,000; and 78 per centum upon the amount by which the income exceeds $500,000.
Mr. ROSS (St. Paul's):: Mr. Chairman, I refrained from speaking in the budget debate because the Prime Minister was anxious to have the then Minister of Finance (Mr. Ralston) set free to take over his new position of Minister of National Defence, and I would ask you, Mr. Chairman, what latitude is to be allowed in committee? There are several things I should like to say but I do not want to overstep the rules of the house.
First I wish to congratulate the former Minister of Finance upon the way in which he brought down and delivered his budget. I wish also to congratulate sincerely the present Minister of Finance (Mr. Iisley), who is now in his place. The former Minister of Finance had a martial air about him that would lead us all to believe that he was headed for some other post than Minister of Finance, and now he has gone where we all thought he would go, to the Ministry of National Defence.
While speaking of martial airs, I think it is important that we should keep our chins up and have the public of this country know that they are to keep their chins up and have no thought but that we are going to win this war.


Some hon. MEMBERS:: Hear, hear.


Douglas Gooderham Ross: That is what we are going to do-win the war. I agree with what the hon. member for Peel (Mr. Graydon) said the other night, that the most important thing is that we should maintain just that attitude of mind of which I have spoken. I blame the government for not having had more martial music in this country. Bands playing martial airs have an inspiring effect on the spirits of the people, and if we had a few bands going round the country and giving us a little martial music it would do us a 95826-90
great deal of good. I suggest that the government appropriate a little money for the purpose and distribute it amongst the various militia units throughout the dominion so that we can have a little martial music to help keep the chins of the people up.
We who are of Scottish descent-and I see the Minister of Pensions and National Health (Mr. Mackenzie) in his place-think a great deal of the old Scottish march "Scots, wha hae wi' Wallace bled." What did that lead to? It led to victory. Then there are other grand airs: "Rule Britannia"; "Hearts of Oak"; "We'll Never Let the Old Flag Fall"; "Keep the Home Fires Burning"; "It's a Long Way to Tipperary"; and in more recent days, "Roll Out the Barrel." These songs did more than anything else in the last war to keep up the spirits of the people, and I think it is a great shame that the government have not appropriated more money to let our good fellows have a few bands. Let them have a dozen pipes instead of only two.


Mr. GRAYDON:: Page Tom Reid.


Douglas Gooderham Ross: Another very
popular song in the last war was "Pack Up Your Troubles in Your Old Kit Bag." That is what everybody in this country needs to do at the present time-to forget his troubles and think about the war and let us get along with it. I wonder what the government have done to keep the chins of the people up.
On June 26 I asked several questions of the government and, in particular, of the Minister of Mines and Resources (Mr. Crerar) who has charge of the immigration branch, and I said that my questions were based on an appeal by Mr. J. B. Priestley which I had heard over the radio. In that appeal Mr. Priestley said that he would like to see a million children sent out of England. It was a wonderful radio speech. The minister said that I should not pay any attention to people who probably might be speaking only for themselves. But it is extraordinary, Mr. Chairman, that Mr. J. B. Priestley seems to be often broadcasting from England. I wonder if he pays for all those broadcasts himself, or do you think the British government pays for them? When I heard Mr. Priestley make that appeal to get a million people out of their country I thought he was in earnest, and I believe that he was put up by the British government to do it.


James Lorimer Ilsley: If the hon. gentleman would permit me, Mr. Chairman, unless there was some agreement at some previous stage to permit discursive speeches on the budget resolutions, I would suggest that the speeches be relevant to the

Income War Tax Act

resolution before the house and that members be held to the observance of that rule. If there was any understanding to the contrary, of course it would have to be respected, but I am afraid that if hon. members generally are given the latitude that the hon. member is being given at the moment we shall enter upon a budget debate which will have no limitation of subject matter at all.


Richard Burpee Hanson: Mr. Chairman, I was afraid this question might arise. The hon. gentleman who has the floor spoke to me in regard to it and I told him to go on and speak until he was stopped in some way or another, and that then the question might be settled. I do not know whether the minister was in his place last Tuesday. I then made a definite offer that so far as this party was concerned the budget debate should cease then and there and that the then Minister of Finance (Mr. Ralston) should be allowed to go on his way to his new job. Through some misunderstanding-and I am not going to place the fault anywhere because I really believe there was a genuine misunderstanding-the thing did not get the clear-cut consideration it deserved, and I thought the arrangement was off, but we adhered to it for that day and no member of this party but myself spoke that day. The minister who is now Minister of National Defence agreed, I think, to it. So that the matter has been left in a state of uncertainty, and there are a few members of this party who would have spoken then if they had not thought they would have an opportunity on the budget resolutions to make the speeches that otherwise they would have made earlier. I would ask that as a matter of courtesy the minister allow these gentlemen to make their speeches-I do not think there are very many of them-and we shall get on with the resolutions. I promise cooperation if he will be good enough to do that.


James Lorimer Ilsley: From what the leader of the opposition (Mr. Hanson) has just said, it is clear that there was no understanding that the budget speeches could be made on the resolutions.


Richard Burpee Hanson: There was a misunderstanding.


James Lorimer Ilsley: It is probably true that certain members of his party desisted from making speeches which they had planned to make, but I am afraid that that does not give them a right nor does it give rise to any implied understanding that they can make speeches, in clear breach of the rules, on the resolutions. I am afraid that I cannot agree to waive the

rules at this stage to the extent that the hon. member who has just been speaking apparently expects them to be waived.


The CHAIRMAN:: Unless anybody else desires to speak to the point of order, I shall now make my ruling.


Mr. NEILL:: I should like to say a word. I have no desire to make a speech; I think the time is past for that; but I do remember that the Prime Minister gave an understanding that if the debate was expedited, hon. members who had, so to speak, repressed their speeches on the main motion would be allowed to make them in committee.


Richard Burpee Hanson: I think that was the arrangement.


Thomas Vien: Of course the chair cannot be a party to any understanding of that kind. The chair must naturally be governed by the rules of the house, which can be suspended only by the unanimous consent of the committee. Standing order 58, subsection 2, states:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
I was in the house when the Prime Minister and the leader of the opposition had a discussion on what had been agreed to, and it was obvious that no agreement had been reached, because they could not agree even on the ground on which an agreement was discussed. Therefore there is nothing before the chair at present to determine that there has been any proposal to be adhered to whilst these resolutions would be in committee; and the chair has only one alternative, which is to apply the rule I have just read, unless by unanimous consent the rule were suspended.
In addition to that, I would point out that it would be an endless procedure to repeat, on each of these resolutions, all the speeches which could have been made on the motion for Mr. Speaker to leave the chair for the house to resolve itself into committee of ways and means. Therefore I have no alternative but to suggest that hon. members stick to the subject matter of the resolution which is now before the committee.


Richard Burpee Hanson: May I call attention to what the then Minister of Finance said on Tuesday. July 2, as recorded at page 1257 of Hansard? After I had concluded my speech I asked the minister if he was prepared to make a statement before the hon. member -that is the hon. member for St. Antoine-Westmount (Mr. Abbott)-proceeded. The minister then said:
I want to say to my hon. friend the leader of the opposition and to the house that in regard to opportunity being given for discussion

Income War Tax Act
in committee of any matters which ordinarily would be discussed on the budget itself, the government is perfectly satisfied to give the undertaking that such opportunity will be given. It is a matter, of course, for the house to decide-


Thomas Vien: Will the hon. gentleman give the page and the date?


Richard Burpee Hanson: Page 1257, July 2:
It is a matter, of course, for the house to decide, but hon. members may be assured that if it is desired to make their statements on the budget in committee they will not be precluded by the budget itself being disposed of without prolonged debate.
There is an implied promise. I think the minister had better be guided by that if he wants to expedite his resolutions.


James Lorimer Ilsley: There is no doubt that sooner or later, at some stage on these resolutions, every hon. member will have an opportunity to say anything which is pertinent to the budget itself. But the hon. member was suggesting to the house that the government should provide more martial music for the people of this country. So far as I know, that has not any relation whatever to any resolutions which are now being brought down. I would take it from what the then Minister of Finance said that he meant just what he said, that is that no one would be denied the right of saying anything pertinent to the budget itself. Certainly hon. members will have that right sooner or later on one or another of these resolutions. But that, as I gather, was all that was agreed to. The reason why I am speaking about the matter in this way is that I cannot otherwise see any limit whatsoever to the latitude which would be given to hon. members. Anyone can speak on any subject on any resolution unless there is some limitation placed upon discussions.


Richard Burpee Hanson: But there was a promise made. The minister would be well-advised to let us have this if he wants to get his resolutions through promptly.


Thomas Vien: I do not think that would be quite proper on the point of order which has been raised. I should like to point out to hon. members that they will have an opportunity of speaking when the bill based on the resolution is read a second time. On the second reading of the bill there will be the same opportunity as on the budget resolutions. I have no alternative than to adhere to the rule which I have just read.


Richard Burpee Hanson: If that is your ruling, we shall abide by it.


Douglas Gooderham Ross: Mr. Chairman, I
must bow to your ruling. I prefaced my remarks with a statement of the understanding I had with respect to the situation. However, I have not much more to say in that connection, and I suppose that I might make it quite relevant by suggesting now that in the resolution which is before us the exemption for income tax purposes to the extent of $400 should be accorded to all those who take refugee children. I might also say that the reason I have for suggesting that is based on Mr. Priestley's plea that he wished Britain could get rid of a million children. I wonder how many hon. members, as well as the minister, realize the intensity of the desire of the British people to safeguard their race, and I wonder whether any hon. members realize what a marvellous thing it would be for Canada to have these children. I do not suppose that any real offer has been made by the government to the people over there. Let any hon. member put himself in the position of parents in the old country with children whom they want to send out here. Why do they not send children? Because there has been no guarantee on the part of the government of Canada for the upkeep of the children if anything should happen to these people, and therefore they say that they will keep their children there. It is a far broader matter than just a little argument on the question whether I am speaking at the present time on the resolution. However, I shall speak again on this subject.
I have something else to say with respect to the resolution itself. The income tax, the two per cent national defence tax and the tax in general are, I think splendid things. The graded income tax is perhaps more onerous than had been expected but it seems to be popular-more popular than unpopular. The general feeling was that we should have a policy of pay as you go. On the part of many people there was considerable worry lest the government should try to borrow a great deal more instead of taxing sufficiently, but that fear I think is out of their minds. The popularity of the taxes imposed upon the public is due, I believe, to the anxiety of the people to do something for their country. They feel that in paying these extra taxes they will be doing their bit. I hope that people in certain groups will still feel satisfied when they know the full extent of the graded tax.
I have a few observations to make with respect to the tax and its bearing on the life insurance business of Canada. I am not speaking for any private institutions; I am
Income War Tax Act

speaking because I have a general knowledge of the insurance business and I view with apprehension the effect of this tax on possible borrowings from the savings of the people. 1 have had prepared a schedule of certain elassi-
Old tax Millions
Under $2,000	 1.3
Between $2,000 and	$6,000	
5.3Between $0,000 and	$20,000	
12Between $20,000 and $50,000	
11.9Over $50,000	
17.3
The increase in the amount of the tax in the schedule is very great. The schedule of taxes collected in 1935 was obtained from a bulletin of the bureau of statistics, and the number of taxpayers which will be referred to later was taken from the bureau of statistics. The amount of the tax expected to be collected was prepared by the Department of Finance.
In the group of those whose incomes are under $2,000, hon. members will note that the increase is 1-3 millions to 28 millions; in other words, the amount to be collected in this group under $2,000 is 21-5 times that of the old tax collected, and the increase in the graded income tax is 6 millions. The tax collected from graded income tax will be over four times the old amount in the group whose incomes are from $2,000 to $6,000. The increase of the total tax is 5-3 millions to 28-3 millions, or over five times the amount will be collected from this tax than before. The graded income tax increase is 15-5 millions.
In the group whose incomes are from $6,000 to $20,000, the increase is from 12 millions to 39-9 millions, or well over three times what was collected before. The graded income tax increase was 24 millions.
The increase in the graded income tax in the group under $2,000, is 6 millions. From $2,000 to $6,000, it is 15-5 millions, and from $6,000 to $20,000, it is 24 millions. In these three groups, the increase in the graded income tax is 45-5 millions, or an increase in the amount to be collected from this group of nearly twice the amount of money which it was proposed to collect under the old tax. That is the increase. In other words, in these three groups, the increase in the total tax is from 28-6 millions to 97 millions, or an increase of 68-4 millions.
I am perfectly certain that the people are willing to pay these taxes. There is no doubt about that. But if the people are going to
IMr. Ross (St. Paul's).]
fications showing the old tax, the increase, the new, the national defence tax and the total. These are given in different categories and I will read them so as to get them in Hansard. The figures are given in millions:
Increase	New	National defence	TotalMillions	Millions	Millions	Millions6	7.3	21.5	28.815.5	20.8	7.5	28.324	36	3.9	39.99	20.9	1.1	223.5	20.8	1	21.8
have to take their savings, either life insurance or savings in any other form, to be able to pay these taxes, very much will not be gained. It is the angle of danger to these life insurance policies which I think should be brought to the attention of the government.
In the group of $2,000 or under, there are 119.346 individuals who paid tax in 1939. No doubt some more will pay. In the group from $2,000 to $6,000, there were 122,494 paying the tax. In the group from $6,000 to $20,000, there were 20,297 taxpayers contributing under the graded income tax. Where are these people going to get the money to pay this large increase? A great many of them will get money in the easiest way. Most of the people in this group are in the more or less fixed income tax category, with salaries or fixed incomes, and in the higher brackets they receive income from capital and will be able to take care of the tax in that way. But even so it will mean taking savings. With the majority, however, the prospect of expanding income is small and they will have to turn to their savings, which, in this group, are made up largely of their investments in life insurance policies.
Another angle of the situation is that in the group of $2,000 to $6,000 there are 122,000 odd, and I am sure there will be between 20,000 and 30.000 people in domestic employment who will have to be put out of work, or insurance policies will have to be borrowed on. In the group of $6,000 to $20,000, there are 20,000 taxpayers, and another 20,000 domestics will be put out of work, or else these taxpayers will have to borrow on their policies.
It is well known that in periods of stress the life insurance policies suffer. To show this I shall give a few figures with respect to borrowings on life insurance policies between 1928 and 1932. In 1928 policy holders in Canada had borrowed $99,857,363 against reserves of $578,574,607, or 17-1 per cent. In 1929 policy

Income War Tax Act
loans had increased to $118,000,000 on $640,000,000 reserves, or 18-5 per cent. In 1930 borrowings had increased to $141,000,000 on reserves of $700,000,000, or 20-2 per cent. In 1932 borrowings were $181,000,000 on reserves of 8770,000,000, or 23-5 per cent. Many of the policies borrowed on at that time have lapsed. Lapsed policies are no good to either the life insurance company, the policy holder or the country. I give these figures to illustrate how quick and easy it is in times of stress for people to resort to borrowing on their life insurance policies. Hon. members will observe from 1928 to 1932 policy loans increased by $85,000,000. With a return to normal times in 1938 and the increase of business which had been written, policy loans were reduced to $163,500,000 on reserves of $974,500,000, or 16-8 per cent, a drop from the high of 23-5 per cent. I repeat that between the years 1928 and 1932 they turned to their life insurance policies to the extent of $85,000,000. I feel sure that people will turn to their life insurance policies to the extent of forty or fifty millions to pay this large increase in the graded income tax; for again I point out that the large proportion of the people in the categories of which I have been speaking are those with very little capital apart from their life insurance.
Let me turn now to another angle, the possibilities the government have of borrowing from life insurance companies. The blue book for 1938 shows that the premium income and annuity considerations received by life insurance companies in Canada was $202,000,000. That does not include other income. Unfortunately I am not able to get the total income, but we must remember that income from outside Canada must be used for business outside Canada. The disbursements against that income were $97,000,000, leaving $105,000,000 for investment by insurance companies. That is an important source of loans to the government at the present time. That is the amount left for investment in government bonds by insurance companies in one year.
But life' insurance companies will now be saddled with an added burden, namely the great service which they are going to do for the dependants of the people who are killed or die as a result of the war. The government is of necessity going to have to borrow very large sums for war purposes. If the government takes from the people of Canada by way of taxes all of a sudden such large amounts that the people have to borrow so largely on their life insurance policies, then the government cannot borrow that money. It is all very well to say that we do not care how we get the money, that we shall get it either by taxes or by borrowing. That is not
the point. As I said before, if you are going to tax the people's savings you defeat your own purpose, when there are other ways of getting the money. There are over 6,500,000 life insurance policies in Canada to-day. No wonder one is apprehensive about that. Instead of taxing to such an extent the group of people to whom I have referred, namely, those who are least able to find the money, who now have a hard time to maintain their standard of living, there are other ways by which these taxes or at least part of them could be collected so as to soften the blow in the meantime and get them a little used to it. Remember that people take the easiest way. It is all very well for the government to say, We shall take your money away from you and then you will not be able to buy luxuries, but I am afraid people will sacrifice the necessities first and continue to buy the luxuries. People are only human; they require guidance and leadership. I point out that it was found impossible to give cash vouchers or cash to people on relief; what they could get had to be designated by voucher because they would sacrifice necessities to buy candy for the baby and luxuries for themselves, to go to the movies and so on. I shall come to the movies later. So we gave them designated vouchers instead of cash.
I agree that the increase in taxes generally was necessary. But a fifty per cent increase in the graded income tax in the group of which I have been speaking would have produced some $15,000,000, leaving in this group some $30,000,000 to be found. As I said before, the people require leadership. I feel that the government lacked judgment in this matter of where these taxes are to come from, as well as the extra savings required due to the war. Those two things go together. No doubt some will come from extra earnings on account of war activities, but the majority of the people are not going to have greater earnings unless we have inflation. People whose income remains the same will either pay this tax by refraining from non-essential spending or take it out of their savings, life insurance or other, and if taxes merely replace savings not much has been gained. Therefore to my mind it is most desirable that the taxes be applied as much as possible directly against the more non-essential articles, and also that a publicity campaign be undertaken by the government in an effort to curtail non-essential expenditures.
Other hon. members who have spoken have pointed out different ways by which taxes might be raised. For instance, there might be a sugar tax. I do not know what amount of money could be raised in that way. Then we might have an amusement tax. which
Income War Tax Act

brought in millions of dollars during the last war. It is no excuse for the government to say that they are going to get the money with the least possible expense and that it might be a little more trouble to collect an amusement tax. Neither is it an excuse to say that we are leaving this field of taxation to the provinces, because at this very time we are invading the provincial field of taxation in imposing the income tax.
There are many other taxes which might be imposed. The hon. member for Danforth (Mr. Harris) pointed out that some $10,000,000 might be obtained through a tax on vegetable oils and $15,000,000 from a tax on petroleum products. And if ever there was a non-essential it is liquor. It is all very well to say that the law of diminishing returns would work with regard to liquor; that may be perfectly true, but that is what we want in war time with regard to such commodities. Then the people will have more money with which to pay other taxes. We should impose an additional tax of at least fifty cents a quart on liquor, and that would give us at least another $5,000,000. Then there are the silk stockings worn by women; there are cosmetics and all sorts of things of that kind that might be taxed. I do not like to go too deeply into this part of the question of taxation, but we all know of a great many of these non-essentials that might be taxed at this time. The people need guidance. I do not believe the government would have very much difficulty in finding from other sources the revenue that is expected from the increased income taxes, which as I have said probably will be borrowed from the insurance companies. At the same time a useful purpose would be served by imposing a tax on nonessentials in that it would bring about the conservation of labour for essential industries.
In conclusion I should like to say just one further word with respect to life insurance. To-day it is more essential than ever that life insurance companies should be kept in a liquid postion, and that life insurance policies should be kept in force. We do not know how many people are going to die as a result of this war, and the companies must have premiums with which to pay these losses. Policies on which loans are made usually lapse before long, and if you have lapsed policies you do not have money with which to pay claims. As I said before, the life insurance companies in Canada have a tremendous obligation toward the government in the providing of millions of dollars for our war effort. When the government is borrowing money the life insurance companies will not be able to sell securities with which to meet
claims or buy government bonds. They must have an income by way of premiums, and they must not have lapsed policies or policies on which loans have been made, because they will be faced with death claims far greater than ever before.
I suggest that in the brackets with which I have dealt, certain reductions should be made, and I have another suggestion to offer which might help the minister. In Great Britain premiums on insurance policies up to a certain amount, and also up to a certain amount per thousand are exempt from income tax, so the matter of protection is looked after. I suggest that the government might easily make it attractive not to borrow on insurance policies, by granting exemptions to certain premiums.


James Lorimer Ilsley: There is one matter to which I should like to refer at once; that is, the exemption for guest children. It is proposed to move an amendment to this resolution, which amendment I shall read at the proper time. I wanted to give the committee this information now, however, because I am sure a great many members intended to urge it and it may shorten the discussion if I say that I intend to see that this is taken care of by an amendment to this resolution.


Richard Burpee Hanson: Four
hundred dollars each?


James Lorimer Ilsley: Yes.


Gordon Graydon: I want to thank the minister for telling the committee of the amendment which he proposes to move providing exemptions for guest children brought to Canada. This matter has been receiving a great deal of attention throughout the dominion, and I think the minister should be congratulated upon having attended to it at an early date.
I should like to bring to the minister's attention a matter in connection with the exemptions under the income tax for contributions to certain patriotic organizations in this country. This is a problem which confronts us in one of the communities which 1 represent. As I understand the situation, contributions .to certain patriotic organizations making a nation-wide appeal in the dominion and approved by the Secretary of State are exempt up to fifty per cent of the net income of the donors.


James Lorimer Ilsley: That is correct.


Gordon Graydon: According to the income tax returns for 1939, which were filed at the

Income War Tax Act
end of April of this year, it would appear that so far approval has been given to the following organizations:
Canadian Red Cross Society Fund; Canadian Legion War Services Fund; Canadian Y.M.C.A. War Services Fund; Salvation Army Red Shield War Services Fund; Knights of Columbus Canadian Army Huts Fund.
A number of towns and municipalities have felt that there is quite a duplication of appeals, leading perhaps to additional costs, and in addition a good many men and women who contribute to these funds and patriotic endeavours find it difficult to budget their contributions. The Red Cross makes an appea-l; no other appeal is mentioned at the time, but a little later the Salvation Army makes another appeal. Sometimes it is difficult for people to budget on that basis.
I want to point out particularly that in many of the towns committees have been set up to deal with these appeals. In the town of Brampton we have what is known as a win-the-war committee, which is endeavouring to take charge of all appeals by patriotic organizations in the town. This committee proposes to make one or perhaps two appeals a year and to disburse its funds to the Red Cross, the Salvation Army, the Canadian Legion and so on in a certain fixed proportion. But anyone who contributes directly to this win-the-war committee appeal, as I understand it may not be entitled to claim the fifty per cent exemption in regard to such contribution, and I believe this has been confusing the minds of a number of people. I think it should be made clear to the minister that the funds collected by such committees do not go only to these five specified objectives, but go to other worthy war work as well. I think the point raised might well be cleared up by the minister or by the officials of his department so that those of our patriotic citizens who are anxious .to contribute will not in any way be prejudiced, so far as their income tax exemptions are concerned. I should like the minister to clarify that point.
Mr. ILSLEY; The situation is this:	If
a person goes to one of the five organizations to which the hon. member has referred, he is allowed his gift as an exemption from his income, up to fifty per cent of his income. That sounds like quite a privilege, but practically it is not a great privilege, because as I am informed by the commissioner of income tax, from general observation it is clear that only a very, very small proportion of givers give more than ten per cent of their incomes to charities.
The hon. member seemed to say, if I followed him correctly, that there was no exemption, or that no deduction was allowed if a donor gave to an organization other than one of these five. But that is not correct. He is allowed a deduction up to ten per cent of his income if he gives to a community chest or to any charitable organization. That has always been the law-in fact it has been the law since the income war tax was inaugurated in 1917. That has not been changed.
It is true that by a measure passed here in September of last year the deduction in respect of certain charities approved by the Secretary of State was raised from ten per cent to fifty per cent, and we have received a great many protests from persons interested in civic charities, charities which do not come under that heading, and are not one of these five. This is a matter of some difficulty. It was gone into carefully, and we decided the best way to deal with it was to make sure that the number of national war charities was strictly limited. Therefore approval has been given to only five. That reduces the disadvantage under which the civic charities labour. That disadvantage is very small indeed, for the reason I have stated, namely that very few people give more than ten per cent of their incomes to charity.


Thomas Langton Church: I should like to speak for only three or four minutes respecting the income tax. So far as I am concerned, the amendments in the first section will cover the whole act. In my opinion the minister ought to tell the committee now just what the provinces are going to do in this matter. When parliament by what I called the law of the jungle took municipal revenue away from the municipalities, so far as income tax was concerned, I placed a substantive motion on the order paper.
The first measure respecting income tax was passed in 1917, and I contend that 84 per cent of the returns from that tax were collected from the two great industrial provinces of Ontario and Quebec. I raised this question when one of the predecessors in office of the present minister, the late Hon. J. A. Robb, held office as head of the Department of Finance. The matter was debated for a couple of days, and arguments were heard respecting whether or not arrangements had been made in 1917 to limit the extent to which revenues could be taken from the municipalities. Before 1917 those municipalities had this whole field of taxation to themselves. I say that to the year 1917 the whole field of taxation in this respect was in the domain of the municipalities.
There is a desire on the part of everyone to pay his taxes promptly, if he can. In passing, may I congratulate the minister's able deputy,
Income War Tax Act

Mr. Elliott, K.C., who has done such great work for many years to administer this act impartially and help industrial workers. But I would point out to the minister two or three matters which were suggested at the time when the federal authority took over this type of taxation. At that time it was pointed out that the action of the federal authorities was illegal under the British North America Act, and upon that occasion the minister said he would look into the matter.
Municipalities are being starved to death, and they are carrying burdens they were never intended to carry. In these days they are faced with expenditures for relief, hospitalization, and all that kind of thing. Now the federal government has gone to work and has taken away income tax revenues which, in the large cities, formed one of the main sources of revenue. As a result the municipalities are starved. Real estate has been confiscated.
To-day provincial legislatures are imposing additional provincial taxation, and taking away municipal revenues, and as a result the municipalities are being robbed of revenue. I do not know where it is going to end. Surely the federal and provincial authorities cannot be permitted to collect from the same sources in exactly the same way, one directly and the other indirectly. I asked for a stated case when the income tax legislation was first introduced. However we find at every session amendments made to the income tax act. My suggestion was that a stated case should be permitted under the Supreme Court Act, asking first of all whether the dominion government has the exclusive right to this type of taxation and, second, if it has the right not only to assess but also to collect and indirectly to levy as an agent on behalf of another provincial authority on the very same source? Has it the right to collect from A, B, C or D in different parts of the country, in triplicate the very same tax on the very same class of property? This type of overtaxation and overgovernment is driving the smaller wage-earner to the wall. That is what is doing it.
These small men know what their incomes are. Business men are receiving fixed salaries. I do not wish to delay the passage of the resolution, but I hope the minister will have some statement to make respecting action which may be taken by the provinces. Are they going to go to the same class of workers and collect in the same way and increase their levies also?
Some years ago there was a proposal in the house to give the provinces the right to levy sales taxes, which, if effective, would have meant duplicate sales taxes on sugar, tobacco,

coffee and things like that. The measure passed the house, but was defeated in another place.
My third point is one I raised on May 18, May 23, June 15 and June 18 that about two-thirds of war taxes should be charged to capital and one-third to income. The hon. member for Parkdale (Mr. Bruce) is not in his seat, but I am afraid he has been stealing my thunder along this line although he made a good speech. I say that because at the war session I pointed out that this generation was suffering in flesh and blood through its efforts in connection with the war, and that it should not be asked to pay these huge rates. The poor industrial workers in the industrial centres should not be asked to make payments along the lines indicated. I suggested that two-thirds of war taxes should be charged to capital and one-third to income.
During the first war session the minister said that he could borrow money for two-thirds of one per cent. An answer to a return received to-day shows that United States banks cannot get one-eighth of one per cent for it. My point is that the government is all wrong in respect of its collection of this revenue. It should charge two-thirds or three-quarters to capital, and only one-third to income. It is suggested that $286,000,000 is to be collected from this tax, 84 per cent of which will come from the industrial provinces of Ontario and Quebec.
One further point is this: I believe we should have a fairer way of collecting the money. In view of the heavy burden of taxation the minister should communicate with provincial authorities and ask if they are to impose increases in income tax also. The dominion should return one-third per cent of its income tax to the municipalities. We know that in 1917 the Ontario government assessed one mill on municipal assessment for war purposes, although it is clear under the British North America Act that militia and defence are matters which come under the federal authority. Not by the widest stretch of the imagination could it be said that that mill revenue received in that way in 1917, 1918 and 1919 was for war purposes. It was made to bolster up provincial revenues, although it must be admitted that they did give some grants for patriotic purposes. I admit that.
Surely the day is coming when there can be some relief for municipalities. Why should they be burdened, the way they are now? I believe these rates are too high for the lower classes of people, and these high taxes are going to bring about wholesale confiscation of real estate in Ontario and Quebec.
Last month I asked for a moratorium on mortgages, but the government would do

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nothing about it. In addition I would point out that I fear this budget is going to lead to serious labour troubles in this country between employer and employee because many employers have advanced money to employees, and many industries are closed up now, so how are these men going to be able to pay?
I also ask why the time of collection should be around the first of May, after the municipalities have all sent out their civic bills. Then along comes this government with its demand for the income tax. It is announced from Queens park that the province is going to cut the relief grants this year by nearly one-third, although the cities and towns have already budgeted for given amounts from the provincial and federal governments. I ask that more consideration be given to this matter. I doubt whether the federal authority has power to act as agent for the province and levy a duplicate tax on the same property indirectly and not only make the assessment but determine the method of collection. I fear the provincial authorities will add one or two mills to the municipal tax rate on account of the war indirectly and by their failure to aid relief.
We passed a Canadian patriotic fund bill last September, and many agencies are collecting money for various war objects. Surely there should be cooperation and coordination between the dominion and the provinces with regard to all these war levies. The minister ought to tell the committee whether the various provinces are going to mark up their taxes and whether we are going to have a system of taxation such as we had during the great war, which amounted to confiscation of property. Something will have to be done to relieve the burden on real estate and on the municipalities. I think the dominion should hand back to the cities and towns one-third of the income tax which they collect.


Paul Joseph James Martin: In rising to make but one observation I should like to take this opportunity of congratulating the Minister of Finance (Mr. Usley) most heartily. I suppose every private member has a pet cabinet minister, and I must confess, although it is an indiscreet thing to do, that the Minister of Finance is one of mine.


Richard Burpee Hanson: What are you looking for?


Paul Joseph James Martin: I am capable of being
magnanimous if the hon. gentleman is not. On May 24 I asked the following question:
Is it proposed to amend the Income War Tax Act so as to restore the provision whereby the pay and allowances of officers and soldiers of the armed forces of Canada was exempt from taxation?
That question quite properly was not answered because, as the Minister of Finance of the day said, it was a matter of government policy. But I do urge to-night, Mr. Chairman, that we should restore on the statute books of Canada this provision of the old Income War Tax Act. While I can appreciate that there are difficulties, particularly in the case of men in our armed forces with very large incomes, it is wrong in principle to ask a man to serve in the armed forces of the country and then to deduct from his pay, particularly from that portion which he receives for his services to the state in time of war, a certain amount by way of income tax. It strikes me as being wrong in principle, and in many instances it is unfair.
I have talked this matter over with the commissioner of income tax and with the minister himself and others, and I appreciate that there are difficulties, and serious difficulties, but I know of one unit in particular to which the restoration of this provision would be of tremendous assistance. We should give every encouragement we possibly can to those who are in our armed forces. Some may suggest that they are well paid in comparison with the troops of other countries. That may or may not be so, but I feel that the principle of taxing men who are thus engaged is unfair, and for that reason I rise to offer my word of protest.


John George Diefenbaker: I rise in support of what has just been urged by the hon. member, and to add something to what he has said. Prior to 1932-33 there was a section in the Income War Tax Act providing that certain incomes were exempt, and amongst those exempt were:
Any pension granted to any member of his majesty's military, naval or air forces, or to any member of the military, naval or air forces of his majesty's allies for any disability suffered by the pensioner while serving in any of bis majesty's forces or in the forces of his majesty's allies during the war that began in August, one thousand nine hundred and fourteen, and any pension granted to any dependent relative of any person who was killed or suffered any disability while serving in the said forces in the said war.
That provision remained in the act until the 1932-33 session, at which time it was repealed, no doubt for good and sufficient reasons at the time. But having regard to the fact that men are being asked to serve and are willingly doing so-and I am sure the minister will be as sympathetic to this suggestion as other hon. members-I think the repealing section should be removed and the old section which I have just read be reinstated as it was prior to 1932-33.

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So far as the national defence tax is concerned, section 18, subsection 8 (c), now provides :
(c) members of the Canadian naval, military and air forces shall be exempt from tax while such members are on active service beyond Canada or are on active service in Canada-
That is the material portion. If "active service within Canada" is to be interpreted as contemplated by the words "active service beyond Canada", then I suggest that this paragraph be amended to read: all those who are enlisted, whether on active service or not, within or without Canada, shall be exempt from payment of the national defence tax.
They are making their contribution already, one that goes beyond any money contribution, and therefore I suggest that it would be only fair and reasonable, as well as a kindly gesture
on the part of parliament, that they be exempted from payment of the national defence tax while on service.


Howard Charles Green: I pointed out that very fact,
Mr. Chairman, in speaking in the budget debate the other day. As section 18, subsection 8, paragraph (c) is now worded, a private serving in the active service forces in Canada and having a dependent mother to whom a dependent's allowance was paid would have to pay the national defence tax. Surely that is not fair. If a man is serving in Newfoundland he does not have to pay the tax, but if he serves anywhere in Canada he does. I suggest that all of these men who are enlisted in the active services forces at any rate should be exempted from payment of the national defence tax.


Mr. ROSS (Souris):: I should like to support what has just been urged upon the minister. I think it is unfair that those who are serving in the naval, or air forces should be exempt from payment of the national defence tax while those in the military forces have to pay the tax. The hon. member for Vancouver South has pointed out that a single man with his mother dependent upon him pays a tax of 89.96 to the national income after his deductions are taken off, and I wonder whether the minister could not see his way to reenact the legislation which, as was pointed out by the hon. member for Lake Centre, was formerly in force. It seems to me that at least the private soldier and the non-commissioned officer serving in the militia should be exempted from all taxation. I should like to see the same legislation in force as we had some years ago, but if that cannot be done, bearing in mind that the private soldier and the non-commissioned officer are making a 
contribution which the rest of us are not making, I think they are entitled to exemption. The small financial sacrifice involved in this contribution means a great deal at this time to these men and their dependants.


James Lorimer Ilsley: I made some inquiries about the national defence tax to which reference has been made. While strictly speaking that is not the resolution under discussion at this moment, it is related to the resolution under discussion, and perhaps I might say a few words about it.
To begin with, I think that perhaps the previous Minister of Finance was guided to some extent by the practice in Great Britain. I know that inquiry was made by cable as to whether Great Britain exempted members of her forces from income taxation, and the reply was that, if they are residents of the United Kingdom, they are not exempted from income taxation.


Richard Burpee Hanson: That is, on their pay and allowances? We are dealing with pay and allowances.


James Lorimer Ilsley: Yes; I am dealing with their pay and allowances. There is no exemption; they are taxed just as other citizens are.
It is true that when, at the very end of the last war, we introduced the Income War Tax Act, there was an exemption, which was subsequently repealed. I was not present at the discussions, but naturally the question arose-it must have arisen-whether an exemption was to be introduced into this war tax act. Exemptions of course are popular; they are easy to urge; and perhaps this exemption should be made. I am willing to take it into consideration. I have not yet had an opportunity of giving any consideration to it. But I do point out that, so far as the graduated tax under the Income War Tax Act is concerned, it will affect mainly officers, and that the provision would exempt a great many persons in the Canadian active service force who are in Canada and perhaps will remain in this country during the whole or most of the war. There is also, as I said, the experience of the United Kingdom. Great Britain is not exempting these classes. Those are the considerations that apply. They apply much to the same extent to the national defence tax.
About all I can say at the moment is that I have listened attentively to what has been urged by hon. members. The matter will receive every consideration, but I cannot give any assurance that we will introduce those exemptions.

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Richard Burpee Hanson: The minister has promised to give consideration to the suggestion, and I would recommend to our hon. friends who are urging it that they await his decision. I believe that the appeal will not fall to the ground. Even though the revenue will suffer a little, I think the minister should do this for the psychology of the thing, especially with reference to the national defence tax. I am not so much concerned about the officer class; they perhaps can stand the tax better.
I did not rise, however, to discuss this matter; I thought I would leave it to the soldier members of parliament. I should like to direct the minister's attention to another subject matter which comes directly under this paragraph of the resolution, that is, the personal income tax. It is this portion of the budget with which I have the most quarrel, because I consider that the minister has taken advantage of a group of people who have a certain ability to pay but who will be asked under this budget to pay an undue portion of this war revenue. At page 1251 of Hansard I put on record a statement of what was paid in the period 1938-39, and I called attention to what I thought was the case, that under this budget the greater portion of the sacrificial taxation to which the minister in his statement referred was being concentrated upon a handful of people in the lower middle brackets.
The minister in his statement at page 1024 of Hansard gave a general statement as to income of the same year-what was available, what was derived from a certain groupings of taxpayers, and what was expected. I wonder whether the minister or the officials of the income tax branch have any record for the taxation period 1938-39 of the number of people in these various groups in the lower middle brackets who paid income tax from income derived purely from fixed investments and trust funds. Could these officials give any information on that point? These people to whom I refer have maintained a certain standard of life. Those in the lower brackets above S5,000, in my community at least, are the people who bear the burden of all the public appeals which have been made for charity. They are living on incomes from invested capital; as the minister is aware, in the last few years rates of interest have fallen and fallen in an appalling degree, and when they come to reinvest they can do so only at very low rates of interest, with the result that their returns from fixed capital are diminishing in an alarming degree. I know that is so, from my clientele. They have the greatest difficulty in keeping up the standard of living to which they have been accustomed 95826-914
and in making their contributions to community efforts. These are the people who have the ability to pay, because they have fixed cash ineomes. They are making a great sacrifice. I wonder whether the minister or the officials can give us the number of people in these lower brackets who make returns- if they cannot supply the information to-night perhaps it can be had at a later stage of the proceedings-whose income is derived from invested capital or trust funds.
I have in mind the case of a widow who has money left her, put out at interest, who finds herself, owing to the reduction in the rate of interest, with her capital cut in two, and who, although yet in these brackets at a greatly reduced rate, is required to pay about three and a half times what she paid in 1938-39. These people will pay, of course, but one immediate result is that either they will lower their standard of living or they will let a servant go, thus adding to unemployment. 1 know of an immediate reaction of that kind. A man said to me, "Oh, well, I will have to let my chauffeur go. He has been with me ten years-and a very faithful man, too." What will happen to that chauffeur? Probably he is too old to enlist. He will join the ranks of the unemployed and the community will have to keep him. That is an illustration of one of the effects of this drastic taxation on people in that category.
I may not have been very clear in my presentation of the position, but perhaps I have been sufficiently clear for the minister to understand what I am driving at. How many of the 22,000 people referred to are people in the possession of fixed incomes from investment or trust funds, and what will be the effect on them of this additional taxation? They will pay; of course they will. But they will find it very difficult and I am afraid of the effect of this greatly increased taxation- not upon their standard of living, because I am sure that most of those who have any heart at all will not dismiss their servants, although that is the tendency. Can the minister give us any information along that line? I have had it figured out in two or three cases that this tax on people between $5,000 and $15,000 will represent about five times what it did before. That is not equality of sacrifice at all and that is the main quarrel I have with the budget.


James Lorimer Ilsley: With regard to the request
for information, I have asked the commissioner of income tax whether this information is now available and he tells me it is not. In order to get the proportion of the income of these taxpayers which is derived from investments, the extent to which such income is derived
1436	COMMONS
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from investment, the number of cases in which there is investment income, and the amount, it would be necessary to go through every file.


Richard Burpee Hanson: That has
not been done?


James Lorimer Ilsley: No.


Richard Burpee Hanson: Then I
will not press for it if it is not available, f would not ask the staff to do that. But the minister sees how important it is. It seems to me that the department-with all due deference to them, and all respect and all the other terms that I might apply to them-might have had that information for us. Perhaps it was never asked for. I impress upon the minister, however, that this income tax will bear very heavily upon such people.


James Lorimer Ilsley: That is no doubt true, but it is useless for us to expect everyone to keep up his standard of living through this war. Every member of the house can make an argument successfully to show that certain standards will have to fall, and I should hope that they would fall by persons refraining from spending money for many of the nonessentials for which they do make expenditures. But they will certainly have to do that sooner or later and probably sooner. That is what this war means-


Richard Burpee Hanson: That is what this budget means.


James Lorimer Ilsley: -and arguments based upon the undesirability of making some sacrifices in expenditures are arguments which, although they can be successfully made, do not in my opinion lead to any useful conclusion.


Douglas Gooderham Ross: In the remarks I made a little while ago, that was exactly the point I tried to make, that the people need some guidance as to what they are to do. As the leader of the opposition has said, many of the people in these categories-and I am not joking about the matter-will of necessity have to give up certain domestics whom they have been carrying before. What would the government suggest that these people should give up instead of letting these domestics go? With respect to the dollar a year men, what is the intention of the government regarding living allowances and so on? Will their remuneration be taken account of in their income? Will they be allowed to deduct expenses, or what is the policy of the government in that regard?


James Lorimer Ilsley: I want to give an accurate answer to that inquiry about the dollar a year men, and perhaps, since we cannot finish to-night, I had better get a little more clearly
[Mr. Ilsley.J
i
in my mind than it is at the moment the exact position in that regard. I would have said, but for the commissioner of income tax, that living allowances are income and taxable accordingly, but the commissioner tells me that there is a possibility of accounting for expenses which are not subject to income tax. The degree to which that is permitted is something in regard to which I wish to get more exact information.


Richard Burpee Hanson: While the minister is considering that question I should like him to give attention to another matter which I shall mention. It is under section 18 of the national defence tax. I am advised that the income tax branch, or the authorities, have ruled that the national defence tax cannot be collected by employers whose employees work on a commission basis but must be paid as an income tax return on April 30 like other income tax. The reason is that there is no means of determining the correct annual return to the employee, and whether it would exceed $600 or $1,200 as the case may be. He might not earn anything, or he might earn very little. I am further advised that the authorities have decided that when a commission employee makes his return on April 30, of the national defence tax due, it not having been deducted in advance, he will be assessed a penalty for failure to have it collected at its source by the employer. That is to say, there will be a penalty if it is not paid to the employer, who does not know what it is going to be or may not have ascertained it. This seems fantastic to me and I think some arrangement should be made to meet that situation. I shall send over to the minister the memorandum I have. It may help him to clarify the position and give me a considered answer at a later date. I am sure the commissioner of income tax understands about it. This penalty for failure to have the tax collected at the source, so far as income on a commission basis is concerned, seems to me to be a hardship and I should like the minister to consider it.


Thomas Miller Bell: I have listened with a good deal of interest to the discussion that has taken place regarding these schedules, and I may say that I am not particularly impressed with the argument that certain people are not going to be able to continue hiring chauffeurs or have as many domestic servants as formerly. I am not altogether impressed either with the arguments brought forward by the hon. member for St. Paul's (Mr. Ross) with regard to life insurance policies owned by the groups that are rather better off.
To my mind the income tax is probably the fairest way of collecting revenue because it is a tax most nearly approximating ability to

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pay. I am interested in the exemptions because I believe that the reduced exemptions in the lower brackets are going to work something of a hardship and may have something of the effect that the hon. member for St. Paul's suggested; that is, cause people who really need the protection, people in the lower salaried groups with young families, to have to curtail or even to drop their life insurance. That might have an effect upon our economy in future years, and cause difficulty. But when we compare our slightly higher brackets and the middle brackets with the same groups in Great Britain for example, we find that our increase is not as steep in the higher brackets as in the lower brackets. I have before me worked out a comparison of the remaining income of a married man with no dependants after the income tax has been paid, because, after all, it is not so much a question of what the taxpayer pays as the amount he has left that is important since that affects his standard of living. I find the amounts remaining to a taxpayer in Ontario, counting the Ontario tax as well, and in Great Britain, respectively, would be as follows: Amount remaining
Income	Ontario Great Britain
$ 4,000	
$ 3,615.50	$2,921.505,000	
4,396.38	3,546.5010.000	
7,663.65	6,449.9315.000	
10,356.65	9,006.1720.000	
12,969.10	11,284.93
The Ontario taxpayer of the same income group has a larger amount left than the British taxpayer, and as the income increases, the gap widens.
We have to raise the money. We can perhaps issue a certain amount of currency and credit which ultimately, unless rigidly controlled, brings about a degree of inflation, which is a tax upon the fixed income and wageearning groups particularly. So we have to raise most of the money by taxation. Therefore it seems to me we cannot devise a fairer way of raising it than by income tax on a graded scale. I noticed that the hon. member for St. Paul's said that if the government takes the money from the people in taxes, the government cannot borrow. I believe that this government and this parliament decided in September last that we should endeavour as far as possible to put into effect a pay-as-you-go policy; that we have no right to hand on to the generations to follow us obligations that it is possible to avoid.
He went on to say that there are other ways of raising money than by taxation. Immediately there arises the question, what other ways? He gave several other ways, which I jotted down. One was a sugar tax. Already sugar is taxed; already the price has
gone up. Sugar is a necessity of life. It seems to me that the people who are buying sugar and using it are already bearing a considerable burden. At a later stage in this debate I want to say something about sugar prices, because I have wondered why the price of sugar has increased in recent days. We should not tax the necessities of life if we can avoid it. A tax on vegetable oils was also suggested. It is true that at the moment lard is cheap, but vegetable oils may become during the war a substitute for more expensive shortening, and it seems to me we have no right to consider relieving the people who are going to have to dismiss their chauffeurs or footmen or domestic servants and place the taxes on necessities of life like sugar and vegetable oils. As to liquor, of course I agree that it should be taxed, and if by doing so you stop the use of it, that is perfectly all right with me, but in that case you would not get the revenue and would come to income tax in the end anyhow.
I just rose to speak because I thought the debate was going off in the direction of leaving the impression that we on this side of the house thought the income tax in the higher brackets would work a hardship on all the people, and I should not like the minister to think that. I believe the majority of hon. members believe that we have to get the money for the war effort where the money is available, and in spite of the fact that under the government's proposals everyone will have to reduce his standard of living, the people who can do most easily and with the least suffering are those who enjoy the larger incomes.
As to life insurance, since that subject was introduced, may I say that I hope to see the day when life insurance, which under our present system is a necessity, is handled through the state. This business of paying commissions of 30, 40, 50, 60, 70 or 80 per cent-


Douglas Gooderham Ross: I rise to a point of order. I was called to order for not sticking strictly to the resolution. I think the remarks of the hon. member at the present time are not strictly within the compass of the resolution.


Thomas Miller Bell: Before you give your ruling, Mr. Chairman, may I speak to the point of order? I have introduced into the debate nothing new; I am simply replying to some arguments raised by the hon. member for St. Paul's.


Thomas Vien: I point out that when the hon. member for St. Paul's was called to order he was discussing the advisability of

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the government spending money on brass bands and music that might be used to stir up patriotic sentiments of the Canadian people, and I could not see any link between the item before the committee and that kind of discussion. The hon. member for Rose-town-Biggar was discussing the income tax and possible alternatives, and the alternative which he was discussing had been suggested before during the debate. So, although it may be somewhat remote from the particular schedule before the committee, I believe that it is sufficiently connected with it to be in order.


Major James William Coldwell: Thank you, Mr. Chairman. I was saying that in my opinion we have a vast field in which we may work and that while to-day life insurance is perhaps a necessity, as the hon. member for St. Paul's claimed, and is useful, yet, on account of high commissions paid, it is a wasteful way of protecting ourselves against future difficulties. I noticed, for example, that the hon. member for St. Paul's spoke of the accumulated power of the insurance companies. He mentioned that last year, I think it was, they collected $202,000,000 and paid out $97,000,000. He said he had not the amount of their income derived from other sources, that is from bond investments and so on, but this left a balance of $105,000,000 which might be invested by the companies if it were not taken by taxation. I have a great deal of sympathy for the point of view that the taxes will reduce certain commitments which have been made in the past by perhaps everyone having an income, but we have to bear in mind that this war ought to be paid for largely out of the current income of the nation, unless we are going embark on a tremendous wave of inflation; and that in order for us to pay for it out of our income, it will be necessary for those who enjoy a high standard of living to accept a somewhat lower standard.
My criticism is from exactly the opposite point of view, that we are beginning too low; that the income of $612 on which the national defence tax is applied is altogether too low. The same thing may be said of the income of $1,200 for the married man and the exemptions for income tax of $750 for a single man and $1,500 for a married man. Both exemptions are too low. I have no sympathy, however, with the idea that people who are earning from S3,000 to $50,000, or whatever the limit may be, are being treated harshly under this budget. I believe they are the people who have the money; and where we can find the money, there we must take it. That is what I rose to say.


John Horne Blackmore: I think I should have something to say about two matters which have come up in the last few minutes. The Minister of Finance said he did not see how we could possibly avoid lowering the standard of living. I have learned to appreciate highly the minister's good judgment-


James Lorimer Ilsley: Not everybody's standard
of living, but there will have to be some lowering in some instances.


John Horne Blackmore: That is what I was going to say; I am glad the minister said it. But, Mr. Chairman, I think we ought to recognize the fact that in a land of abundance such as Canada it is not necessary to decrease the standard of living of the great majority of the people. There is plenty of every kind of food in this country and great resources with which we can produce more food than we are now producing. Why, then, should anyone in this dominion go short of food? Plenty of clothing is being produced in Canada; there are plenty of factories to produce more clothing and plenty of sheep, and there is plenty of room for more sheep to produce more material from which to make more clothes. Why, then, should anyone go short of clothing in this country? Let us be realistic and face facts as they are. If we required so much food to conduct this war that there was not enough left for the people of Canada, then there would be an excuse for lowering the food standard of the people. But if we can produce more than enough to feed all our people and still supply all the food necessary to help our allies in their struggle, then there is no reason why we should have a lower food standard in this country. That is simply plain common sense,
These things need to be borne in mind very clearly. Let me say this, that I am going to rise and protest every time people begin to look down in this dominion. When we begin to talk about having to go on a lower standard of living we are talking defeat; we are saying what is unnecessary; we are looking down and tending to discourage the people. If this were not a land of abundance there would be some excuse for it. If this were not an age of abundance there would be some excuse for it. But this is a land of abundance and we are in an age of abundance. Let us bear that in mind. If there is danger of our having to go on a lower standard of living, the only reason must be that we are not producing enough. But if we are not producing enough, the measures we take should be those which will increase production. One great objection I have to this whole set up as outlined in this budget is that practically every

Income War Tax Act
measure contained therein will decrease production. Taxes are put on the consumer so he cannot buy. If the consumer cannot buy, the producer cannot sell and therefore cannot produce. That fact must be borne in mind and must be faced realistically.
There is no reason why the standard of living in Canada should not rise right through this war, unless we should bring millions and millions of people here from England, as we may before the war is over. In that event we might not be able to produce enough food, clothing and shelter to maintain our standard of living. Then there might be some excuse for a lower standard. But unless some such thing happens; unless we have some national calamity as a result of which we lose our crops or in some other way have our production impaired, there is no reason why we should not have a rising of standard of living all during the war.


John Ritchie MacNicol: May I ask a question?


John Horne Blackmore: Let me say the other thing that is on my mind before I forget it. I should like to say a word or two now with respect to the remarks of the hon. member for Rosetown-Biggar, so that he and I may get together.


John Ritchie MacNicol: You two cannot get
together because he argued that the standard of living should go down.


John Horne Blackmore: We want to be sure
we understand each other. We are so likely to use different phraseology and think we differ in our opinions. Let us make sure what we mean by our phraseology. I gathered that the hon. member for Rosetown-Biggar said that state money, unless rigidly controlled, would cause inflation. I want to lay down the fundamental principle that that is not true.


Some hon. MEMBERS:: Oh, oh.


John Horne Blackmore: Let us be realistic.
If state money is loaned to men to produce sheep, that money has brought about an increase in the goods in the country and therefore has the very opposite effect to inflation. Let us adopt the realistic attitude towards inflation that has been adopted by the best thinkers such as Reginald McKenna and J. M. Keynes.


Thomas Vien: I should like to point
out to the hon. gentleman that while some latitude has been granted he has exceeded the reasonable bounds of that latitude, having in mind the schedules now before the committee.


John Horne Blackmore: I wish to bow to your ruling, Mr. Chairman, but the hon. member for Rosetown-Biggar said it would cause inflation. Surely that statement ought to be answered, because it is untrue.


Thomas Vien: I allowed the hon.
member for Rosetown-Biggar to discuss alternatives, but now we are entering into a discussion of inflation and monetary policy, which I think is too remote from the schedules now before the committee to be in order.


John Horne Blackmore: Then let us just
forget that; we shall come at it from another angle. The reason why I stress this fact so much is that the fundamental concept upon which we must base a sound economy in this country if we are to avoid this lowering of the standard of living is the very thing we are talking about at this moment. It has been said, for example, that this war must be financed out of current production. I grant that. But if such is going to be the case, the all important problem for the house is to determine how to increase current production. The measures outlined in this budget are going to decrease current production; it cannot be otherwise. Once we get that clearly in mind I will stop talking about state money, and refer to bank loans. If the banks all over the country should suddenly decide that they would lend freely for the production of all manner of meats, all manner of vegetables and food products, immediately there would be automatically increased production throughout the country. If you are going to finance the war out of current production you certainly would have a sounder basis upon which to finance, if that were to occur.
The big problem then should be for this government as part of its policy to see to it that production all over Canada is increased to the greatest possible degree. Then there is something with which to finance the war. I do not wish to be out of order in what I say, but I should like to refer to what was said by the hon. member. If the money which he mentioned is used for creating production, there will not be any ill results.
There are two points on which I rise to comment, and the first one is that we necessarily have a lower standard of living. I challenge that statement, and will challenge it every time it is made in the house, because it is fundamentally untrue. It may be all right for a person so well off that he has to dismiss his footman, or for another person who may have to get rid of an attendant for his pet
Income War Tax Act

dog. But I say that to begin to deprive people of a fair standard of food, clothing and shelter, a standard necessary to maintain a fit condition of health in the country, and a sound state of morale throughout the country, is going in a direction diametrically opposed to the best interests of the country, and is defeatism in one of its worst forms.


Paul Joseph James Martin: The minister did not say that.


John Horne Blackmore: I did not say whether he did or not; I am just making clear what I have to say. I have challenged the statement, and am making the position quite clear.
I shall deal later on with the matter of inflation, a discussion of which at this time it is ruled is not in order.


James Arthur Ross: I believe one question in respect of soldiers' allowances has been missed. If the soldiers are not exempt, will the subsistence allowance be charged against them in the computation for taxation?


James Lorimer Ilsley: Yes; that is part of their income.


James Arthur Ross: At what figure?


James Lorimer Ilsley: It will be valued. It has not been valued, but it will be.


James Arthur Ross: I have some figures before me. I believe 85 cents a day is the subsistence allowance allowed a soldier when he is away from barracks on leave. I have before me some figures in which I place the allowance at 50 cents. For a single man the taxable income table might be set up as follows:
Single man, at $1.30 per day.... $475.50
Board and lodging at 50 cents...	182.50
Widowed mother $20 per month. 240.00

The national defence tax at 2 per cent amounts to S17.96, and the tax credit of 2 per cent on $400 for one dependent amounts to S8, leaving S9.96. It is probably debatable whether an allowance is made for a dependent there.


James Lorimer Ilsley: I think it would be.


James Arthur Ross: I think so, too. Then, in respect of a married man with two children the figures are as follows:
Married man	and	two	children..)	$475.50.	[	182.50Wife, $35 per month	
420.00Children, $24	per	month.. 288.00Total	$1,366.00

The amount here at 2 per cent is $27.32, and the credit of 2 per cent on $800 is $16 which, deducted from the $27.32, leaves $11.32. Therefore I think this might be taken into consideration: If this legislation cannot be brought about to exempt all the soldiers in the military forces, then at least soldiers and non-commissioned officers might be. It seems to me rather stiff that they should be charged subsistence allowance, along with these other things.


James Lorimer Ilsley: As the hon. member knows, that does not apply when they leave Canada. It applies only in Canada.


James Arthur Ross: I believe the air force and the navy are exempt even in Canada; is that right?


James Lorimer Ilsley: Certain members of the air force. The determining factor is risk, I am informed. The wording of the resolution is self-explanatory, although I forget exactly what it is. The idea is that those members of the air force who ordinarily subject themselves to considerable risk are to be put in the same category as soldiers overseas, and therefore not subject to tax.


Howard Charles Green: Would the minister clear up the point respecting the widowed mother of a soldier? It would seem that the last few lines of paragraph 18 (1) (b) provide for exemption in the case of a parent or grandparent over twenty-one years of age only if dependent on account of mental or physical infirmity. As I understand it, that would not cover a widowed mother who is not disabled physically. I believe that point should be made clear, because according to my understanding a private with a widowed mother would have to pay this national defence tax, if he is in the active service force in Canada. That would seem absurd.


James Lorimer Ilsley: It is almost eleven o'clock, and I was wondering if the committee would permit the passage of the resolution. Hon. member's are now raising questions in respect of a resolution we have not yet reached, namely, one relating to the defence tax. I would point out that we are now discussing the graduated income tax. We have had a pretty full discussion of it.


James Lorimer Ilsley: I think the hon. member is right in what he says. However I shall look into the matter.
Resolution stands.
Progress reported.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.

National Registration
Tuesday, July 9, 1940