[Stage Direction]
Mr. J. P. HOWDEN (St. Boniface) presented the first report of the standing committee on railways and shipping owned, operated and controlled by the government, and moved that the report be concurred in.
Motion agreed to.


Right Hon. W. L. MACKENZIE KING (Prime Minister):: Mr. Speaker, there were on the order paper last Monday six private bills dealing with incorporations and amending charters. They deal with the proposed Alberta Bank, the Pool Insurance, the Stanstead and Sherbrooke Insurance Company, the Ottawa Electric Company and the Ottawa Gas Company, the Detroit and Windsor Subway Company, and the Cedars Rapids Manufacturing and Power Company. The promoters of these bills have gone to the expense of advertising and paying the fee required by the House of Commons. Some of them have also hired solicitors who are ready to act as parliamentary agents before our committees when these bills are under consideration. The notices required under our rules have been given in the newspapers and the Canada Gazette. All this will be lost if the bills are not proceeded with during the present session. They are debarred by the order passed in the house on the May 21, 1940, but it would be an easy matter to take them up now, which can be done by the adoption of the following resolution:
That the order of the 21st May, 1940, appointing the order of business of the house for the present session be suspended with regard to such private bills as have already been introduced in the house.


Hon. R. B. HANSON (Leader of the Opposition):: Does that apply to the divorce proceedings?


William Lyon Mackenzie King: Yes.


Richard Burpee Hanson: I have no objection at all. I regard the suggestion as a good one; it is one which had occurred to me when the Prime Minister (Mr. Mackenzie King) was taking away all the rights relating to private members-

British Children


William Lyon Mackenzie King: Not all.


Richard Burpee Hanson: -at a very early stage of the session. At that time, I believe, not one of these bills had been introduced. Of course the government must have or should have known that there was legislation on the way. I think this is a proper move. The expenditure which has been made should not be lost. Business would suffer- not to mention the bills for the relief of certain persons.


[Stage Direction]
Motion agreed to.


Hon. T. A. CRERAR (Minister of Mines and Resources):: Yesterday the hon. member for St. Paul's (Mr. Ross) addressed a question to me with regard to the movement of British children to Canada. I intimated to the house then that I would probably make a statement to-day and I wish to do so now.
In view of the widespread interest in this country in the matter of British and refugee children who may come to Canada, I wish to give to the house, and to the public generally, an outline of what has already been done and our plans for the future, so far as we have been able to formulate them.
At the outset I wish to distinguish between British children and refugee children, or refugees generally. The latter are those who came to Britain following the invasion by Germany of Holland, Belgium and, later, France. On the advice we have received, contrary to the general belief in Canada there are-or at any rate there were up until a week or ten days ago-only about 2,900 Belgians and 150 Dutch refugee children in Great Britain, and of these it was estimated 125 to 150 were unaccompanied by parents. This, of course, does not include those children and adults who had reached Britain prior to, and following, the attack on Poland, from Austria, Germany and Poland itself. It was reported to us last February by our immigration officials in London that at that time these totalled less than ten thousand, approximately ninety per cent born in Germany and Austria, about the same percentage being Jewish, most of whom had been absorbed into the normal life of Great Britain.
The movement which is by far of greatest interest to Canadians is the movement of British people, mainly children, to Canada. This movement is of two kinds.
The first is made up of all those coming on their own and paying their own way. These
include a few men, some women and many children who, if they can get a release of their funds in the United Kingdom, can come here and support themselves, and those coming to join relatives or friends in this country who have offered them homes. This movement also includes residential schools moving as a body to locate in Canada, at least for the duration of the war. Every encouragement is being given by the Canadian authorities to this movement, and delays are not allowed to occur through unnecessary investigations which might delay sailings.
We have been advised that, under the present British regulations, no person, male or female, between the ages of sixteen and sixty may leave Great Britain without a permit. In addition to this, some difficulties have arisen owing to the fact that the United Kingdom government restricts the free movement of sterling exchange. Within the last week or ten days we have had quite a number of requests from British-born people resident in Canada, and from others, asking if we cannot do something to help their relatives and friends in the United Kingdom secure permission to transfer sufficient of their own funds to enable them to come to Canada and maintain themselves in this country. While it is recognized that this is a matter wholly for the United Kingdom government to decide, we have urged on our high commissioner in London that he strongly support the effort to have sterling exchange released for the necessary monetary support of those who wish to come to Canada on their own resources.
The other, and larger, movement is the one which, as I have said, arouses the most interest in Canada, namely the movement of British children who can come only if transportation is provided and free homes are offered here. Several weeks ago, after the successful invasion of Belgium, Holland and France and when it appeared likely that Britain itself would shortly be subjected to severe attack, the government here, on its own initiative, offered to assist in bringing to Canada British and refugee children. That offer has been accepted by the British authorities. One of the features of this assisted movement provides for the nomination of children to designated homes in Canada. Under this arrangement parents in Britain who have relatives or friends in Canada may nominate their children to be brought out and placed in these homes.
There will be included in this movement children from five to fifteen years of age inclusive, with possibly a small number under five years, if available for adoption in Canada. In every case, we are advised, the consent of parents or guardians must first be obtained.
British Children

Ocean transportation arrangements will be made by the United Kingdom government, which will supply ships and pay ocean passage. Some days ago the Prime Minister (Mr. Mackenzie King) mentioned in the house that there would likely be a movement from Britain to Canada of internees and prisoners of war, and it is expected that the British government may decide that these must move before the children.
The dominion government will use its medical examiners and its immigration officers overseas for examination of the children before sailing. It will be necessary to keep careful records so that identity may be preserved and the children thus enabled to be reunited with their parents, either here or at home, after the war is over.
The dominion government will look after the reception of the children at Canadian ocean ports, will provide rail transportation with proper meals en route and will carry them to the provincial distribution centres. Nurses will be placed on each train carrying children and an immigration conductor or conductress will be on each car.
Under arrangements worked out between the dominion government and the provinces, the latter will have the oversight of reception, placement and after-supervision. In doing this they will utilize the services of child welfare and other organizations in the various provinces who have the experience necessary to handle this part of the task. The provinces, and the organizations cooperating with them, are now engaged in receiving offers of homes and examining the suitability of these homes for the reception of the children after their arrival. Following the recognized practice in all the provinces, care will be taken to place children in homes of their own faith, by which I mean non-Roman Catholic children will be placed in non-Roman Catholic homes, Roman Catholic children in Roman Catholic homes and Jewish children in Jewish homes.
Many splendid offers of cooperation have been received from churches, from national and local organizations and from individuals willing and anxious to help in this great work of saving thousands of children from the mother country. There is room for all in this voluntary effort. I should like to emphasize here as strongly as I can the necessity for their being one recognized central authority in each province for placement and supervision, and that such central authority be the provincial department dealing with welfare matters. It would greatly facilitate the work of administration if those desiring to help in any way would first of all get in touch with the appropriate provincial department. rMr. Crerar.]
Foreseeing the necessity for close provincial-federal cooperation if this work were to be successfully handled, we invited the provinces to send their welfare experts to a confei ence which was held in Ottawa on the 3rd and 4th of June. The plan of operation being followed is largely that devised and recommended by this conference. I wish to place on record here our appreciation of the splendid cooperation we are receiving from the provinces.
Immediately following this conference we offered to take ten thousand as an initial movement, whom we felt certain could be placed in private homes; but that did not by any means limit the movement to that number. The task we have undertaken is to place many thousands in good private homes in Canada for the duration of the war. This is a form of war work which is well worth while. It is measured not by money but by service; and for this reason I have no doubt that the response, of those who can offer homes will be widespread. But there are many in Canada who cannot offer a home, single persons and others who have not suitable accommodation. May I suggest to them the possibility of cooperating with some home which has taken a child, and sharing the expense of food and clothing. In this way the burden will be more equally shared and the circle of those who can help enlarged.
Up to the present the British government have not been able to give us any estimate of the number who are likely to come. My own impression is that it may well reach very large dimensions. With this possibility in view I have been conferring to-day with the provincial ministers in charge of welfare work in their provinces, to consider further plans for a greatly extended movement, should this become necessary.
I have not said anything about the expenses involved beyond what is paid by the United Kingdom government and the dominion government in transportation and services. There will necessarily arise expenses beyond this for such items as medical care, hospitalization, or other unforeseen contingencies. The matter of how these will be met has been under consideration, and a decision will likely be reached in a few days. If a private home could be found for every child, where lodging, food, clothing and education could continue to be provided free, the expense to the provinces and to the welfare societies would consist largely of increased staff to look after the welfare of the children. We must, however, expect and plan for difficulties which are bound to arise through the failure of some children to fit into the homes where they are placed, the need for hospitalization, and other costs that are inseparable from handling such a large number.

British Children
11S3
When the magnitude of the movement can be better determined it may be advisable to make an appeal throughout the dominion for funds to help take care of the expenses that are bound to come. I might add that we are planning to set up a dominion-wide organization in the nature of a supervisory board or committee, and probably a liaison officer or local committee in each province to work in cooperation with the provincial authorities.
The house will agree with me that these proposals constitute a unique adventure. I am sure the Canadian people will understand and sympathize with the difficulties and anxieties of parents in Britain who have to decide on the matter of parting with their children, to be moved thousands of miles away into the care of strangers. This thought I am sure is in the minds of thousands of Canadian mothers and fathers to-day. Nevertheless there will be some difficulties. The warmth of the welcome given in some homes may become cooler; in some cases the child, because of the complete change in environment, may become a problem. Notwithstanding these and other problems which may arise, I am sure we may depend upon the overwhelming and continued support of the Canadian people.
Just a few minutes before I came into the chamber a cable came in from our high commissioner. This was partly in reply to a cable dispatched to him several days ago, dealing with the question when we may expect children and in what numbers, because it is necessary for us to have as much information on that as possible, in order that we may plan a little ahead their distribution and care. The cable says:
Anticipate 3,000 will arrive approximately middle of July and a further 750 each five days from then up to July 25. Will send details as soon as available.
The details, I assume, would be as to number of boys and girls, religious faith, and similar information. This message would indicate, I take it, that up to July 25 we may receive from 5,000 to 5,500 children.



QUESTION RESPECTING &quot;CALLING CANADA&quot; ADVERTISEMENT IN NEWSPAPERS

Mr. PAUL MARTIN (Essex East):: Mr. Speaker, I have had brought to my attention an advertisement which has recently appeared in the Evening Telegram of Toronto and in a number of newspapers across Canada, and which I am advised has been refused by a still greater number of newspapers. This advertisement is purported to be given out by a group calling themselves "Calling Canada". This advertisement is headed "Calling Mr. King" and the text is as follows:
English mothers rush to evacuate children. Geoffrey Shakespeare, parliamentary secretary for the dominions, told a press conference that Great Britain has given up plans for immediate mass evacuation of children from the British Isles to the dominions.
The dangers of transportation and lack of adequate reception facilities were given as reasons.
Hitler's bombers will raid England to-night, to-morrow night and the next night.
The battle of Britain has begun.
The slaughter of children is beginning.
Then follows a picture of a poor child crying. Below the picture is the following: How's your conscience, Mr. King?
For over a year thousands of Canadian homes have been clamouring for a chance to take the children in, pleading for a plan to meet this hour.
You have been the obstacle.
Mr. Speaker, I ask the government and the house two questions: Is this not a matter far beyond the standards of fair comment or criticism? Does it not call for immediate consideration by the government?


Right Hon. ERNEST LAPOINTE (Minister of Justice):: Mr. Speaker, the advertisement to which the hon. member has referred is certainly a dastardly attack upon the Prime Minister (Mr. Mackenzie King), and the facts being false makes the comment still more malicious. I am not prepared to say that it comes under the defence of Canada regulations dealing with subversive literature, though I do not know anything better calculated to create disaffection and to hamper war work in Canada. I shall submit this matter to the law officers, and at the same time ask the Secretary of State (Mr. Casgrain) to obtain a report from those in charge of press censorship. I myself believe that "Calling Canada" should be called to some sense of propriety.


William Lyon Mackenzie King: Mr. Speaker, I do not
wish to say anything with respect to this particular advertisement as such, but I do feel that inasmuch as some days ago I advised the house that there would necessarily be a delay in connection with evacuated children coming to Canada, on account of the desire of the British government to use transportation facilities for the distribution of alien internees, I ought now, in view of what is set forth in the advertisement, to make it quite clear that in that statement I was quoting from official documents.
This advertisement has appeared since I made the statement in the House of Commons that it would not be possible to have the children come without priority being given to interned aliens. I have in my hand some
11S4
British Children

documents which I shall send later to the leader of the opposition (Mr. Hanson). First there is a communication from the High Commissioner for Canada in Great Britain to the Secretary of State for External Affairs. This communication dated June 5, 1940, states:
Dominion office state that question of evacuation of internees has now, for various reasons, become very urgent. In the circumstances they would be grateful to receive the Canadian government's decision on the point at earliest possible date and in advance of any decisions on refugees and children.
Then subsequently, on June 13 there is a further communication from the High Commissioner for Canada to Great Britain to the Secretary of State for External Affairs, as follows:
Ministry of shipping, after considerable discussion, have agreed to the use of troopships for any returning civilian personnel we desire to send thereon, though they state that service regulations here restrict such passages to personnel whose passage is paid for by the government. We can, therefore, use these ships for evacuee children, stranded Canadians, wives and dependants of officials being repatriated at the government's expense and wives and dependants of officers paying their own expenses. Arrangements regarding issue of tickets, assembly of passengers and transportation to ships has had to be made by this office. Understand that Ministry of Shipping may request us also to send internees on ships in question. This might complicate arrangements regarding evacuee children if these were ready for first convoy which will be end of this month or beginning of next. Feel, however, that evacuation schemes will not be completed by then.
These twro communications make it perfectly clear that it was the wish of the British government that as between interned aliens and evacuees priority should be given in the order indicated here.
I have another dispatch in my hand which I shall permit the leader of the opposition to read, because it indicates that when, in explaining the situation the other day, I made reference to this order of preference, I did to some extent embarrass the British government in relation to British internees in Germany, in making any reference to German internees coming to Canada before the German government had been advised, through neutral channels, of the fact by the British government. I mention that only to indicate how very much embarrassed one in my position is when, not having one's word accepted with respect to actual facts governing the case, he has to disclose information prematurely or submit to misrepresentations of his position.


Richard Burpee Hanson: I hope my right hon. friend will acquit me of having any desire to misrepresent 
him. The fact of the matter was that I had received information of a very reliable kind, from Montreal, that passenger ships were arriving on this side half empty. It did seem to me to be a pity that the opportunity should be lost of bringing some of these people over here. I was actuated solely by humanitarian considerations and had no thought of any other question being involved. I certainly had no desire to impugn the honour of the Prime Minister.



MINIMUM WHEAT PRICES


Mr. E. E. PERLEY (Qu'Appelle):: Mr. Speaker, under standing order 31 I desire to move the adjournment of the house for the purpose of discussing a definite matter of urgent public importance, namely, the action of the government taken to establish minimum prices for certain grades of cash wheat in store Fort William and Port Arthur, to December 31, 1940.


Mr. SPEAKER:: While the hon. member must take the responsibility for making the motion, yet according to our rules he must make a prima facie case that there is that question of urgency, to which objection might be taken by other hon. members. I would ask that the hon. gentleman give the reasons for the urgency of such a motion.


Ernest Edward Perley: The action will involve the disposal of one of the largest crops we have ever had in western Canada as well as of the 1940 crop up to the end of the present calendar year. I think that is a matter of urgent importance. It involves the present situation, and a change of policy without notice being given to the public or to this parliament is a matter that should be discussed here and now. The public wants to know the government's policy, especially in view of the announcement which, I am informed, was made yesterday on the Winnipeg grain exchange instead of in this house. Last night I was called by a press man in respect to an inquiry he had received from Wall street as to the action taken by the government on the grain exchange yesterday. It is that matter that I want to discuss.


Ernest Lapointe: Resort to the procedure which my hon. friend has adopted is restricted not only to matters of special urgency but to matters which cannot be discussed in any other way. I would refer your honour to paragraph 244 of Beauchesne, under standing order 31:
Motion for adjournment regarding matters for the discussion of which the committee of supply

Minimum Wheat Prices
or other appointed business would afford an early opportunity have been ruled to be out of order.
As late as yesterday a question was discussed on the motion to go into supply, by the hon. member for Rosetown-Biggar (Mr. Coldwell). This matter could well have been discussed on such a motion; it can be discussed at any time before going into supply, or in supply on certain estimates. 1 do not see that this is one of the matters that can be raised in the house under this very limited rule.


Ernest Edward Perley: The Minister of Justice (Mr. Lapointe) says that this must be a matter that cannot be discussed in any other way. May I remind him that on several occasions since May 16 we have endeavoured to obtain a statement from the Minister of Trade and Commerce (Mr. MacKinnon) as to when we would have an opportunity to discuss this all-important question. We have been put off by being told that it was under consideration. It has been under consideration for a month or more, yet I understand that yesterday a definite announcement was made which should have been made in this house. Therefore I say we have not had an opportunity of discussing this question.


Richard Burpee Hanson: With regard to the point of order raised by the Minister of Justice, and his reference to paragraph 244 of Beauehesne, I submit that next to the war itself the subject of the motion of the hon. member is one of the most urgent matters this house can discuss. The question of the disposition of our wheat carry-over and of this season's crop is of extreme importance, and no early opportunity is available to this house to discuss it, since the order for the day is the budget debate, which may go on for a week or ten days. Furthermore, the hon. member for Qu'Appelle (Mr. Perley) has indicated that an opportunity has been sought on several occasions, and we are all aware that this is a fact. The minister has been asked as to the policy of the government with respect to this matter, which we all agree is veryr serious and important; and the reply has been that it was still under discussion and consideration. Then what happened? Announcement was made in the Winnipeg grain exchange, outside of this house and while this house is in session. This is a very important point which I think should not be overlooked. On more than one occasion this session I have tried to impress upon the Prime Minister and the members of the government that this sort of thing is all wrong and should not happen. This is a matter of urgent public importance, and the Minister of Justice has not indicated that it may be discussed on an early occasion.


Ernest Lapointe: It could be discussed this afternoon in the budget debate.


Richard Burpee Hanson: Theoretically that may be correct; practically it is not possible, as no one knows better than the Minister of Justice. He knows that arrangements were made, to which I agreed, that the budget debate should go on this afternoon, but this matter arose after that arrangement was made. I suggest to the Prime Minister and the Minister of Justice that, small in numbers as we are over here, if they want to get cooperation in their war effort they had better show a little reciprocity in a matter of this kind.


Some hon. MEMBERS:: Oh, oh.


Richard Burpee Hanson: All right. That is not a threat; it is a promise. If I have to I will go so far as to make an appeal to the Prime Minister to let this question be debated this afternoon. I do submit that in the interests of the producers of western Canada, of the people of Canada and, may I say, of the treasury of Canada, the matter ought to be discussed in the house this afternoon. Let the debate go on; it will not take very long. This thing has been smouldering for a month or more and it ought to be debated now. I am told that instructions have gone out to the western country, through a group of grain companies, not to buy any more wheat, and that buying has ceased. I do not know whether that is true, but if it is true it is a mighty important thing to the western producer.


William Lyon Mackenzie King: I am sure my hon. friend the leader of the opposition (Mr. Hanson) will agree that it is not desirable, if it can be avoided, to create precedents which are likely to prove embarrassing on future occasions. If there were no opportunity for the hon. member for Qu'Appelle to speak to-day on the subject he has brought up as one of urgent public importance, I should go a long way to meet the request of the leader of the opposition, despite the embarrassment it might create later on. But I do point out to him that this afternoon, following the remarks of the hon. member for Danforth (Mr. Harris) who is to be the first to reply to the Minister of Finance in the budget debate, the hon. member for Qu'Appelle might have an opportunity to take up the subject to which he has referred. It would be quite in order for the hon. member to speak then, and it would be quite agreeable to this side of the house to have him follow immediately after, if that is agreeable to hon. gentlemen opposite.
Questions


Richard Burpee Hanson: That, of course, is a compromise; but unfortunately, as the Prime Minister knows, there are other groups in this house who would have to be consulted. If they will undertake to give way this afternoon I believe that would be quite agreeable, but I am not so sure that they will do so. I do not know that they have been consulted. Certainly this ought to be a matter of great importance to their constituencies, and I appeal to them to adopt the suggestion of the Prime Minister.


Mr. COLD WELL:: I was about to rise, when the Prime Minister took the floor, to support the suggestion of the hon. member for Qu'Appelle. In spite of the fact that we are interested in discussing the various aspects of the budget, and are prepared to go ahead with that discussion this afternoon, I am in agreement with the hon. member for Qu'Appelle that this is a matter of public importance that ought to be discussed immediately. As far as I am concerned I should be very glad indeed to adopt the suggestion which has been made that the hon. member be allowed to proceed immediately after the hon. member for Danforth (Mr. Harris) has spoken in the debate on the budget.


Mr. BLACKMORE:: All the members of our group come from wheat-growing regions. We are very much interested in this discussion, and we shall gladly fall in line in order to facilitate a discussion of the wheat problem.


Georges Parent: Then does the hon. member wish to withdraw his motion?


Ernest Edward Perley: Yes.
Motion withdrawn.



QUESTIONS

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

Mr. BROOKS:: 1.	Have central *warehouse depots been established for the purchase and sale of canned lobsters under the lobster marketing scheme at Halifax, Nova Scotia, Shediac, New Brunswick, and Charlottetown, Prince Edward Island?
2.	If so, what is the amount being paid in each centre for (a) warehouses; (b) salaries; (c) other expenses?
3.	What are the names of individuals or
companies concerned?


Mr. MICHAUD:: 1.	Yes.
2.	(a) Halifax, National Harbour Board, 858.13 per month; Shediac, Simpson Roberts Co., Ltd., $20.84 per month; Charlottetown, Charlottetown Forum, Ltd., $100 per month, (b) Halifax, W. S. Lee, assistant controller, $300 per month, Florence H. Clancey, stenog-

rapher, $60 per month; Shediac, J. A. Kelly, depot manager, $200 per month; Charlottetown, W. H. Tidmarsh, depot manager, $200 per month. Casual assistance and labour as required, (c) Other expenses are largely of unforeseen nature and not readily estimated.
3.	Answered by No. 2.


QUESTION PASSED AS ORDER FOR RETURN
Mr. DIEFENBAKER:: 1.	Has the Prairie Airways Limited been given a contract at the airports in Regina and Moose Jaw, Saskatchewan, or either of these, by the terms of which said company will train or provide training for pilots for service in the air force?
2.	If so, what .are the terms respecting remuneration or payment for such training?
3.	Have contracts of a similar kind or nature been entered into elsewhere?
4.	If so, with whom?


Mr. POWER:: Return tabled. I should
like to make this observation, with the consent of the house. In connection with this return I am tabling a copy of the standard form of contract entered into between commercial companies or flying clubs and the Department of National Defence for Air. In connection with this contract there are certain syllabi which are marked for official use only, and I would therefore ask hon. members to treat them with some discretion and not broadcast them.



BUSINESS OF THE HOUSE


William Lyon Mackenzie King: (Prime Minister) moved:
That when this house adjourns on Friday, the 28th June next, it stand adjourned until Tuesday, the 2nd July, 1940.


Richard Burpee Hanson: May I ask the Prime Minister if we shall sit on Friday evening?


William Lyon Mackenzie King: If we are to adjourn for Saturday, Sunday and Monday, probably hon. members will wish to leave early on Friday. We might therefore adjourn at six o'clock.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day.
Mr. J. S. ROY (Gaspe):: Mr. Speaker, I wish to direct two question to the Minister of Agriculture (Mr. Gardiner) regarding the free distribution made last year in his prov-

The Budget-Mr. Hanis (Danjorth)
ince, and a few others, of a surplus of apples of an estimated value of S87,000.
First, when the decision was arrived at and made known, were any -representations made to have a portion of this surplus distributed to the most deserving charitable institutions in the province of Quebec, and particularly to the destitute fishermen of the Magdalen Islands? If the answer is in the affirmative, why has not this distribution been made? Second, is it the department's intention-


Some hon. MEMBERS:: Order.


Joseph Sasseville Roy: -to give a share to the parties I have mentioned out of this year's surplus, of which, according to the minister's statement in the house-


Georges Parent: Order. I cannot hear what the hon. member is saying.


Joseph Sasseville Roy: -of which, according to the minister's statement in the house on June 6, a large part will be put at the disposal of the refugees in Europe?


Mr. GARDINER:: I think the hon. member's observations should be taken as notice of question.



THE BUDGET


[Stage Direction]
The house resumed from Monday, June 24, consideration of the motion of Hon. J. L. Ralston (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Mr. J. H. HARRIS (Danforth):: Mr. Speaker, ever since the tragedy which caused a vacancy in the treasury benches I have been anxious at the first formal opportunity to express my profound sorrow and to offer my sincerest condolences to the family of the late Hon. Norman McLeod Rogers. To the Prime Minister (Mr. Mackenzie King), his associates and all the members of this house I express my sympathy as well as that of the constituency which I have the honour to represent. The late minister's industry and application in the several departments with which he was connected offers a good example to future generations. The knowledge which he gained as professor of political science and history at Queen's university must have been of considerable assistance to the government in carrying out their onerous tasks. His last words to the Prime Minister were, "Very well; I will carry on." Those who heard those words reiterated must have been inspired. It should inspire all and act as a clarion call- "carry on, Canada."
The Minister of Finance (Mr. Ralston) will soon take over a most difficult task. I commend the government for its choice of a Minister of National Defence. The minister was a previous incumbent of this office. From his youth up he has been interested in military matters generally. The hon. and gallant member for Prince will, I know, give a good account of himself in the portfolio of defence. He has had legal training; he has been associated with the business life of this country; he has the confidence of Canada. I look forward to his accelerating Canada's war effort and inspiring our people to greater effort. Never in the history of Canada have we been asked to place at the disposal of the government a sum ranging from $600,000,000 to $700,000,000 in the short space of twelve months. We should be able to do it. Given leadership, I think we will be able to do it. I am rather in favour of the principle which was laid down, that we should pay as we go.
I shall endeavour this afternoon to follow the course adopted by the Minister of Finance in his budget speech. First, I shall discuss the economical and financial review or, as I like to put it, the financial operations of the dominion for the fiscal year. Second, I shall discuss the budget forecast or estimate of revenues and expenditures for the present year. Third, I shall take up the government accounts, or the balance sheet of the dominion for the year just closed, considering active and non-active assets together with liabilities, both direct and indirect. Fourth, I shall review our trade and commerce. In the budget speech I do not think sufficient emphasis was placed upon this feature of our work. Fifth, I shall deal with the ways and means mentioned in the budget speech for providing the necessary revenue to meet expenditures. Then perhaps I may be permitted to make a few constructive suggestions as to what should have been taken from, as the minister said in his preliminary remarks, or what should be added to the policy of the government as set out in the budget speech.
I feel that our thoughts and actions should have but one end in view, to gear everything to Canada's war effort. That will be the thought back of any observations or criticism which I shall utter in this house. By directing our efforts and actions to the war effort, we as a nation will simply be doing our duty. As I see it, our duty is to do everything possible to stop the ruthless aggressors who have been tearing down the institutions which we love so dearly. Not only are the institutions being destroyed, but the people of France and Britain are in peril as well. What matters our institutions? It is our people who are important. If I can leave but one message this afternoon it will be this: We are more than allies of Britain and France; we are part and parcel of them,
1188	COMMONS
The Budget-Mr. Harris (Danjorth)
bone of their bone, blood of their blood and flesh of their flesh. I shall approach the problem this afternoon from that point of
view.
In his preliminary remarks the Minister of Finance made a few references to what had taken place during the last two or three years. Should I refer to these, I want the house and the country to understand that I do so without any recrimination, without any idea of offering destructive criticism, but simply to put the facts upon the record. The minister had something to say about the wishful thinking of our people during the last three years, but he was fair enough to say that there had been a good deal of wishful thinking on the part of the government during the same period. He might have gone further and said that the government knew that we were approaching a world catastrophe. The government should have given leadership to our people and brought them out of that complacency in which they were satisfied to stay so long as their attention was not drawn to the impending tragedy.
It was, I think, Emerson who a hundred years ago said, "He that marches ahead of public opinion marches out into the night." I say that this administration marched behind, lagged behind public opinion, and deserves to be left out in the night. Hon. members who were in the last house will remember that on many occasions our party urged the government to prepare for what was coming. Not only did we urge them to get ready; we offered to cooperate in every possible way. On March 2, 1937, I had the privilege of saying in this chamber:
No one knows better than . . . the Minister of National Defence-
Who at that time was the hon. gentleman who is now Minister of Pensions and National Health (Mr. Mackenzie).
-that billions are being spent in the little British isles overseas on armaments. Over a five-year period Great Britain has budgeted for an expenditure of $7,500,000,000. The first white paper brought down provides for an expenditure of $2,000,000,000.
That was three years and four months ago.
What does all this mean? ... I hope the minister realizes the extraordinary changes which have taken place. . . . Throughout the whole world there is a great rush on the part of all countries to get into a position where they can take care of themselves. The minister must realize we are sitting on a volcano.
This amused the house very much, and I remember that there was considerable heckling. But this statement and similar warnings repeated many times throughout Canada did not move the government from a complacent attitude. To quote further from what I then said:

We are going to have an eruption one of these days and then there may be a world catastrophe.
That catastrophe is upon us; it has been upon us for some little time. Yet even after war was declared there seemed to be, as the Minister of Finance said, a period of quietness and hesitation. Those symptoms affected not only many of our people but obtained in our government, which should have stirred itself a good deal more than it did. When parliament met in special session last September, my party not only gave no opposition but offered the government the utmost degree of cooperation, and by so doing left no excuse for the continued quietness and hesitation of which the minister spoke. The consequences are with us now-busy days and sleepless nights. We may have saved the interest on some money which should have been spent a year ago, and by waiting this long, what equipment we have may now be a trifle more modern. But the result of these delays has been to leave us unprepared in regard to equipment and organization to carry out our war effort. We are much further behind in evaluating and effectuating what is required than if we had got out of that complacent condition two or three years ago, or, certainly, when parliament met at the time that war was declared.
So much for the past. Let us forget the past and face the future. Let us all strive now to do what we can to further Canada's war effort. In this connection I should like to make one or two observations.
Tell our people, tell business, tell industry that from this time forward Canada's policy will be one which will see to it that we are going to defend ourselves, and that we intend to honour all the contracts which we have let and that the contracts will be filled. Whether the war stops or not we shall need this material. We shall need it for our own defence. Tell Canada that we shall have a defence policy which will necessitate having an armed force ready and prepared to defend ourselves. We will modernize our equipment from year to year; we will keep our coast in a continuous state of defence. Let us see if we cannot inspire some confidence in business and private enterprise which is timid lest the war effort may collapse.
I come now to an economic and financial review of the year that is past. The results have been fair. We budgeted for such and so and we reached and in some respects passed our objective. With the pay-as-you-go policy I am entirely in accord. In my opinion it could have been usefully expanded in several directions, and it might yet be extended. I doubt whether we can borrow our way

The Budget-Mr. Harris (Danjorth)
through this war expenditure without freezing up much of our liquid position. I was not entirely in favour of the government's action last November as regards the $200,000,000 two per cent two-year expansion banking arrangement which was made. It was a new departure so far as financial circles were concerned. The government met no opposition in September from our party. We were not sure just how it was intended to raise this money in November. Had we known, we might have advised the minister, for several reasons, to put on a war loan as early as possible.
The first reason, to my mind, is that nothing grips so much the imagination of the people and makes them realize that there is a war on, as a war loan. It seems to stir them; they know they have a job of work to do. The second point which occurred to me was that the government knew, when that shortterm loan was put on, that $92,000,000 out of that $200,000,000 would be used for the repatriation of Canadian securities held in Great Britain. The government must have known also that it would be some years before Canadian securities would be flowing back again to be held in London. On more than one occasion the Prime Minister intimated in this chamber that this would be a long war. Time and again we had evidence that Britain's war effort would tend to exhaust her financially to a serious degree, and that our Canadian securities held in London would not flow back there within two years, and in that period of time would not amount to $200,000,000. The main point I had in mind in that connection, however, was that our people would have known that we were at war. As regards the amount of money raised, we were not courageous enough for we did not ask for enough. In proof of that I mention the fact that the January loan of $375,000,000, our first war loan, at 3i per cent for twelve years, was subscribed to by 178,000 persons in Canada. They poured $200,000,000 in cash into that loan. Those 178,000 subscribers realized in January that there was a war on and had they been given the opportunity in September or in November they would have come to the front in like manner. In the meantime we lost the enthusiasm and that driving force which these people would have engendered in creating public opinion to do everything possible to further our war effort. We lost three precious months.
I suggest that we shall have difficulty in borrowing our way through this war, and therefore I reiterate what I said before. We should do everything we possibly can to pay as we go. It will be impossible, under the United States Neutrality Act and the foreign exchange control regulations, for us to expect
much in the way of United States funds; therefore I urge that we conserve as much as we possibly can of our foreign exchange for the purchases which we have to make abroad. In passing I would offer the suggestion with regard to investments held by non-residents of Canada 

and I refer mostly to the United States at the present time. Our foreign exchange control board is buying large quantities of United States exchange to pay for such items as rent, mortgage interest, dividends on purely Canadian investments, and we are losing a good many Canadian dollars in securing United States exchange for the purpose of remitting these items. I suggest that the foreign exchange control board should give serious consideration to the question of retaining these balances in Canadian depositories. I have held some strong views for some time with regard to the pegged rate of exchange. Pegging it at ten per cent as we did in September was quite all right at that time, but there should have been an adjustment.
Before discussing this question I should like to read into the record certain figures with regard to the free market exchange as given by the federal reserve bank in New York, obtaining since the outbreak of war. In this connection I would say that the government, by putting on a ten per cent war exchange tax, have gone a long way to meet the situation to which I now refer. In respect of imports they have caught up to the free exchange market I should like to have seen obtain, and they have done so in one jump from ten to twenty per cent, by invoking the war exchange tax of ten per cent. But there are two sides to the picture, because while exchange comes to us on the goods we export, exchange must be given by us for our purchases from abroad. I should like to put on Hansard the exchange rates from month to month since the outbreak of war. At the first of September one hundred Canadian dollars were buying 95-6 United States dollars; October 2, 88-8; November 1, 89-6; December 1, 88-6; February 1, 87-4; March 1, 86 -1; April 1, 81'1; May 15, 81-6. These were the exchange rates in the so-called free market, or, as some call it, the black market as published by the federal reserve bank of New York.
In our trade agreement with the United States, provision was made for mutual agreement on wide fluctuations in exchange. In order that the record may be complete I wish to quote article XIII, which made this provision :
If a wide variation should occur in the rate of exchange between the currencies of Canada and the United States of America, and if the government of either country should consider the variation so substantial as to prejudice the industries or commerce of that country, it shall be free to propose negotiations for the modifi-
1190	COMMONS
The Budget-Mr. Harris (Danforth)
____________________________________________________________[DOT]
cation of this agreement; and if agreement with respect thereto is not reached within thirty days following receipt of such proposal, the government making such proposal shall be free to terminate this agreement in its entirety on thirty days' written notice.
I am convinced, Mr. Speaker, that we had to have the foreign control exchange board in order to curb the panic that might have occurred, involving a collapse of markets. But had free market prevailed Canada, in my opinion, would have been in this fortunate position. We are primary producers of goods which are shipped to the United States to the extent of seventy per cent of our exports. The farmer or live stock man takes a car of cattle to Buffalo from western Ontario. True, he gets a $1.10 in Canadian currency for the United States dollar that he receives, but after his day's work in the stockyards he walks down the streets of Buffalo with Canadian money in his pocket and goes into his hotel or into a restaurant and buys a one dollar dinner for which he must pay $1.22 or $1.25 in Canadian currency. The proceeds from the sale of his cattle he must deposit in his bank when he gets home. They in turn under our law send it to the foreign control exchange board and he gets $1.10 for every United States dollar he has. With seventy per cent of our primary exports going to the United States, consider the happy position our primary producers would be in if they were able to get one hundred and twenty Canadian dollars for every $100 worth of sales they make instead of one hundred and ten dollars as at present.


Mr. RALSTON:: I think the gentleman
would have used United States money to pay for his dinner, not Canadian money.


Joseph Henry Harris: Well, I do not think the man I referred to would go to the trouble of buying United States exchange before he went across the border when he was only going for the day.


James Layton Ralston: He got it for his cattle.


Joseph Henry Harris: True, but under the regulations of the foreign exchange control board exports must be paid for in United States funds, which in turn must be surrendered to the board. Any shipper knows that. If you retain any part of your remittance, you are breaking the regulations. That is one of the difficulties experienced by the foreign exchange control board in their attempts to curtail the bootlegging that is going on-and I regard what the Minister of Finance suggests as a bootlegging transaction in foreign exchange. I hope he is not going to encourage us to do that sort of thing, but it is common knowledge that it is going on to-day to the extent of at least $50,000 daily. The greatest problem

of the board is to stop that bootleg traffic, and the greater the spread the greater the traffic will be.
Free traders! There used to be some in the Canadian House of Commons when I came here some eighteen years ago. Perhaps I should have sent to the museum and brought one back so that I could address a few remarks to him in regard to the next item running through my mind, namely the war exchange tax. I am in favour of the war exchange tax. Not only will it provide revenue, but it will slow down the imports of luxuries and other unnecessary articles. It will tend to keep in Canada more Canadian dollars. It will tend to make more employment in Canada. The same objective could have been reached on a free market, except of course that the government would not collect the duty wherewith to run the affairs of the country. I purpose later in my remarks to say something more in that regard. Before I leave the matter of imports let me say that with free exchange this tax would have been of great benefit to Canada in making more employment for our people. It would be less tempting to Canadians to buy goods in the United States if they had to put up 120 Canadian dollars for the goods rather than $110 as at present.
I come now to another feature of the budget which I am anxious to commend not only in this house but to all the Canadian people; I refer to the issue of war savings certificates. The sale of these should be encouraged in every possible way. I think the minister is a little optimistic in expecting $50,000,000 from this source in the current year. More energy and enthusiasm will have to be displayed by the volunteer effort which is being put forth in this connection. I hope the press will pay tribute to the voluntary efforts of citizens who are promoting the sale of these certificates. If we apply ourselves with diligence we can raise the $50,000,000 from this source. And we should do it.
I should like to make one or two observations regarding the money receipts from the sale of the certificates. The money finds its way now into the consolidated revenue fund, and thus people are likely to think that it is revenue. But it is a liability, and some day Canada will have to honour its obligation in that regard. What sinking fund arrangements are being made? At the present time the consolidated revenue fund is cluttered up with items such as post office savings, departmental funds, civil service insurance funds, annuity funds, superannuation funds, returned soldiers' insurance funds, moneys received from the sale of school and Indian lands, and so on. Now here is another large item to swell the consolidated revenue fund. I often

The Budget-Mr. Harris (Danjorth)
think we do not realize that some day these liabilities all have to be met, and there is not a sufficient sinking fund on the asset side of the ledger to take care of our obligations on the liability side. The money collected from the sale of war savings certificates should be earmarked as a direct responsibility. We are too prone to get our capital assets into the revenue structure without making provision for the liquidation of the corresponding liabilities.
What applies in this regard applies also with regard to Canadian National Railways financing. They buy freight cars, build stations, lay rails and what not. It all goes into their capital assets, but no fund is set up from year to year to take care of the depreciation of the equipment. Therefore we are fooling ourselves in regard to the earnings of the road. Similarly we are fooling ourselves when we say that our consolidated revenue fund is swelled by so much from the sale of war savings certificates, and that we are that much further ahead. I want to gear all my ideas to the war effort ; so that following these constructive criticisms I would say: Let us get the money wherever we can; let us encourage our people in thrift; let us stop wasteful spending and do all we can, by every possible means, to expand our war effort.
I come now to the matter of the physical volume of trade. In August last the index figure stood at 125; in January, responding to the war spending, it reached 139. Since January we have had a recession in commodity prices-and may I interject this warning; look out that we do not have a further recession in commodity prices during the next few months. Our physical volume of business receded to 137. Did this rise indicate an expansion of business as we ordinarily know it in Canada? Not entirely. The major portion of that expansion of physical volume of business was due to the construction industry, which increased 76 per cent in the six months; and a second reason was the heavy sale of pleasure cars, arising out of the fear on the part of the people that these would be further taxed.
Coming back to the question of construction, the construction of buildings is a capital expense. I do not mind the expenditure of money to stimulate the physical volume of trade, but I should like to see those expenditures made for production purposes. We have hundreds of idle factories in Canada, and I would say to the Minister of Munitions and Supply (Mr. Howe) that in making these expenditures, instead of putting up buildings here, there and everywhere he should use the buildings already existing and get them into
production, thus using this money for production purposes.
May I interject just here that urgent government business has made it necessary for the Prime Minister and the Minister of Munitions and Supply to retire from the chamber, and I should like to express my appreciation of the kindness of the Prime Minister in sending me a note excusing himself and the other ministers who found it necessary to leave. It was a very gracious act on his part, and I thank him for it.
To return to my point, I think we should put our money into production instead of making capital expenditures, and I hope the minister will take note of this suggestion. Scores of factories and other buildings are available. Let us not put up new, expensive buildings; let us get into production with the space at present unoccupied.
I return to the question of automobiles. Even since war was declared our people have been seeking pleasure to a greater extent than they should have. They motor here and there, all over the country. Of course it helps to keep things normal and to prevent the people from becoming panicky, but at the same time it wastes a good deal of gasoline and money. During the last twenty years I am afraid our Canadian people have not been as provident as they might have been, particularly the younger people. Our people have not been provident; they have been reckless; there has been too much wasteful spending. This has had an effect on the physical volume of trade, but while we were building and driving motor cars certain totalitarian states were building tanks, aeroplanes and other war equipment. While our unemployed were idle their unemployed were building military roads. We see the result to-day in the present unpreparedness.
The other expansion in the physical volume of business was in connection with employment. In his budget speech the Minister of Finance said that 100,000 wage earners had been drawn into employment during the last twelve months. I am glad of that; I am sorry it was not three hundred thousand. Something should be done to bring more and more of these people into employment. The present situation, with 367,000 unemployed employables not earning wages and 171,000 of them drawing relief, is not what should be the case in this country at this time.
In the summary which accompanied the budget address the period of the last twenty-three months was covered. In all kindness I say to the Minister of Finance that if he had gone back to the first item set out on page 40 and made a deduction for the twenty-three month period, he would have found that only

The Budget-Mr. Harris (Danjorth)
46,000	wage earners were drawn into employment, together with another figure which I am sorry to put on the record. He would have found that while 169,000 unemployed employables were receiving aid twenty-three months ago, to-day 171,000 are receiving aid. In other words, in our war effort and our expansion of the physical volume of business in the last two years we have not taken any people from the category of unemployed employables and put them in the class of wage earners. That is a serious situation, which should engage the attention of the government. We have a mobilization bill now. Some do not like the word "conscription" but the unemployed would like to be conscripted off the relief rolls if we could find work for them.	Let our administration
give leadership in that regard and let us all do everything possible to see that relief costs are less, that wage earners are put into production and that our physical volume of business expands.	This might help us to
expand our national income to the $4,500,000,000 the minister mentioned, which, at our present speed, we are not going to achieve.
On June 21 I wrote the deputy minister of finance and asked for a review of government accounts, 1939-40, and a review of economic and financial conditions for the same period. This always forms part of the budget address. I should like to make a constructive suggestion with regard to the conduct of budget debates. Of course as ordinary members we could go down to the bureau of statistics and gather this information, which was all available for perhaps a month before it was given to the minister. But to my amazement the reply I received from the deputy minister of finance was that this material was not given to me but would be tabled by the minister at the time he delivered his budget speech and would be printed as an appendix to the House of Commons debates. We could have taken a staff and done this work for ourselves, but in my opinion in future budget debates we should have this information a week or two in advance of the budget speech. I make this statement to the Minister of Finance: Had I been asked a week ago to make the speech I am making to-day, and had I had this information I should have been prepared to follow on immediately after the minister, and to permit some of my colleagues to deal with specific items which must receive our attention at this time, and save two days' time


James Layton Ralston: As my hon. friend must realize, I have been in the position in which he finds himself to-day. I believe the custom has been to do as has been done in the present instance, namely to present the accounts along with the budget speech. The
[Mt. J. H. Harris.]
general reason they cannot be presented to the house earlier is that the budget is generally delivered much nearer March 31. However I thoroughly agree with my hon. friend's observations with regard to the present year. I really believe that what has happened is that the compilation did not take place until very recently. I can say to him truthfully that this copy was not put on my desk until the Thursday preceding last Monday.
As the hon. member must know, we have been working at very high pressure. I can say to him that I am sure the government would gladly accept his suggestion if sufficient time elapses between the end of the fiscal year and the presentation of the budget speech.


Joseph Henry Harris: The Budget-Mr. Harris (Danjorth)
I come now to the part of the budget speech which has to do with the trade of Canada. Hon. members who support the government know a good deal about trade. During the last two or three occasions on which they have appealed to the people, they have used that as their slogan. I sympathize with their point of view. War strangles trade. This administration, in common with all others, did everything possible to expand our trade in peace time. We were all in favour of that. Now twenty per cent of our economy depends upon our trade; and this can be compared to the five per cent which obtains in the case of the United States, a country which is fast becoming more or less selfsufficient. I do not believe in self-sufficiency in normal times, but conditions are different in times of war. I do not subscribe to the theory embodied in that pat phrase "economic nationalism," but perhaps we must strive more toward that end when we are faced with a war as a result of which our exports are cut off and we are unable to import many of the things we need.
Fortunately for Canada only five per cent of our imports come from Austria, Czechoslovakia. Germany, Norwav. Sweden, Denmark, France, the Netherlands, Belgium, and other countries in central Europe which are now at war. In 1938 we imported only $31,425,000 worth of goods from these countries. During the same year we exported $66,000,000 worth of goods, which gave us a favourable trade balance of about $35,000,000. But Great Britain had a much greater balance of trade with these countries. Her imports from and exports to these countries were quite extensive. Therefore, it behooves us to do everything possible to supply Great Britain with the things which she normally imports from Europe. But we should remember that Great Britain must have Canadian dollars with which to buy Canadian products. If during these trying times she is to be able to buy from us, we must do everything possible in the way of buying British goods.
The repatriation of $92,000,000 will curtail our trade, inasmuch as Great Britain will not have the interest from those investments in Canada with which to buy our materials. I shall refer to this a little later when I discuss another suggestion which I have in my mind. I close this portion of my remarks by saying: Give to Great Britain every possible Canadian dollar so that John Bull in turn may be able to buy the things which are so sorely needed. This war exchange act is a move in the right direction. Non-empire imports last year increased $170,000,000, mostly from the United States. The provisions of the war exchange tax act, which really constitute a duty, will tend to slow down these tremendous imports.

It is to be hoped that the main part of that slowing down process will be balanced in the form of increased imports from Great Britain. We import iron, steel, machinery, cottons, silk, coal and petroleum from the United States, most of which are necessary. I should like to see these commodities imported instead of many of the luxuries we now bring into the country.
There is one item of import which is of great interest to Canadians at this time, especially in view of the legislation before us. I refer to coal. More and more Canadian coal should be produced in Canada for Canadian consumption. We would thus conserve Canadian dollars rather than have them used to buy foreign exchange for the purchase of United States coal. As far as many of the other items are concerned, we must of necessity have them and the United States is the quickest market from which to secure them.
I come now to the matter of capital expenditures and revenue expenditures. The Minister of Finance told us that during the last four months there had been an increase of fifty per cent in the importations of capital goods from the United States. If those goods were to be consumed in production and not be tied up in capital, then they would tend to extend our physical volume of trade. I hope that soon we will be fitted out with machines of all types so that we will not have to make much more capital expenditures. Much of the machinery which is being bought promiscuously by the Department of Munitions and Supply in the United States could be produced here. The Canada Machinery Corporation and other machinery companies are accustomed to making tools and dies; the doors should be wide open and they should be given every opportunity to put their men to work in making the machinery which is required for the manufacture of munitions and supplies, so that we shall not have to expend more and more of our Canadian dollars on this type of capital equipment.
I know that haste is essential, but at the same time full consideration should be given to our industries which are capable of manufacturing dies, tools and machinery. So long as the United States will accept our gold and our exports we shall probably be able to keep a fair balance, but let me tell you, Mr. Speaker, and this house that the economic penetration of this country by the United States is going forward by leaps and bounds. I have no objection to that, in face of the war, but we should take heed that some day- I pray God it will be soon-we shall have peace. The economic penetration of this country by the United States will by then be considerable.

The Budget-Mr. Harris (Danjorth)
A year or two ago I criticized very strongly in this chamber the Canada-United States trade agreement. It was my privilege at that time to analyse our trade situation for a period of some twenty years; and for the benefit of new members I might mention that this schedule of seventy pages which I have in my hand represents what we gave the United States, and this smaller document indicates what we received. Item for item we gave $5 for every $2 we received. Beyond that, we gave away , a three per cent excise tax. True, that has been equalized through the new war exchange tax, and I compliment the government on their courage in this matter, although I wonder whether we have accomplished what we set out to do, in view of the pegging of exchange at $1.10 when the free market is $1.20. Nevertheless, what was given away two years ago under the provisions of article XII of the Canada-United States trade agreement is now recovered, but that is for the period of the war only; when the war is over that tax will disappear and we shall be back where we were.
A few weeks ago an item on the order paper in the name of the Prime Minister called for a committee of this house to study what shall be done in the matter of reconstruction after the war. In my opinion the greatest problem as far as trade is concerned will arise when the provisions of the present war exchange tax become inoperative at the close of the war. There will be a collapse of trade in Canada if we ever go back to last year's position.
I purpose to put on the record article XII of the Canada-United States trade agreement, so that we may be able to refer conveniently to the clause which makes it possible for us to continue the agreement and at the same time impose a war exchange tax of ten per cent:
XII.	1. Nothing in this agreement shall be construed to prevent the enforcement of such measures as the government of either country may see fit to adopt
(a)	relating to the importation or exportation of gold or silver;
(b)	relating to the control of the import or export or sale for export of arms, ammunition, or implements of war, and in exceptional circumstances, all other military supplies;
(e) relating to neutrality or to public security; or-
This is the clause under which, I understand, the war exchange tax becomes operative:
(d) should that country be engaged in hostilities or war. . . .
Article XIII reads:
XIII.	If a wide variation should occur in the rate of exchange between the currencies of Canada and the United States of America, and if the government of either country should consider the variation so substantial as to prejudice the industries or commerce of that
country, it shall be free to propose negotiations, for the modification of this agreement; and if agreement with respect thereto is not reached within thirty days following receipt of such proposal, the government making such proposal shall be free to terminate this agreement in its entirety on thirty' days' written notice.
We are at war, and perhaps all this does not matter so much now, but at the same time we must take cognizance of the position we are getting ourselves into. We must go further and see whether we cannot get action of some kind from those of the ministry who are charged with the responsibility. I suggest that a definite responsiblity lies with the Minister of Trade and Commerce (Mr. MacKinnon). Trade is vital to us, and I have felt for some time that the conduct of that department has been weak and ineffective. In recent months a number of trade commissioners have been evacuated from Europe. What is being done to utilize their services and abilities and put them to work on the problem of enlarging our export trade? Something should be done. The people should know that these trade commissioners are to be placed in the Americas or other non-belligerent countries to help make up for the loss of trade which has resulted from the present tragedy in Europe.
In this regard I suggest that we should have an imports board, with adequate authority, working in conjunction with the foreign exchange control board. Their duty should be to review the necessity of providing foreign exchange for certain classes of imports, and they should have power to restrict the departure of our Canadian dollars for the purchase of American exchange. In order that the point of my remarks may be made abundantly clear let me recite an actual experience of my own three or four weeks ago. I was in a planing mill in one of our large cities. I happen to know the proprietor very well; he is a conscientious and intelligent Canadian, and much worried about the war situation. I asked him, "Is your mill busy?" He said, "Yes." I asked, "What are you doing?" On a bench almost as large as the table now in front of me, all kinds of blue prints were laid out. I said, "You have got this job, have you?" His reply was, "Yes, I got this job, but am not very proud of the fact that my men are working on this particular job." What they were manufacturing, Mr. Speaker, was the panelling for two beer parlours, one for men and one for women, in a large beverage room which is being rebuilt during this time of war. That was not so bad. But, he said, look at this specification. The specification says that this beer parlour, 80 by 80, and this other, 40 by 80, must be panelled with southern pine imported from the United States and trimmed with hardwood
1106	COMMONS
The Budget-Mr. Harris (Danjorth)
imported from the United States. I have no doubt hon. members see the point I have in mind when I say that an import board should have discretionary powers to restrict the bringing in of pine and hardwood for that particular specification when we have an abundance of Canadian white pine, maple, birch and various hardwoods which would do a good job. I give that to illustrate my meaning when I say that we should have an import board functioning in Canada.
Necessary war supplies should also come first. In other words we should classify all the goods that come into the country and give necessary war supplies the right of way, taking other materials in the order of their importance, so that we shall not have too great an influx of luxuries to the displacement of necessary war materials. And if we had an import board we should also have an export board to help export our surpluses. We cannot possibly consume all the wheat which is grown in Canada, and our pulp and paper, our lumber and non-ferrous metals must find export markets. I say therefore that an export board would have real work to do in trying to find these export markets to absorb our surpluses. But they should be given the power to take all necessary action.
We all remember what happened in the wool industry when war was first declared. Wool was being exported by scores of carloads. The hon. member for Brantford (Mr. Macdonald) who is in his place, no doubt knows what took place. I have a vivid recollection of someone in a constituency adjoining his calling me up on the long distance telephone to try to get an export licence to ship seven cars of wool to the United States in order to take advantage of that market. He got them out. Many scores of other cars were got out of the country, notwithstanding the fact that we produce only twenty per cent of our requirements and have to buy elsewhere. An export board should have the necessary authority to stop the export of materials of that kind in a time of war. What obtains in that regard obtains in regard to scrap iron, copper, aluminum and other metals used in our war effort. We should always keep in mind the importance of doing everything possible to enable Britain to have sufficient dollars wherewith to buy the products which we must export.
We shall no doubt hear something about wheat to-day. Now I am always loath to start talking about wheat, but I do know that we cannot consume all that we grow. The countries that are overrun in Europe import, annually according to the statistics, anywhere from 100,000.000 to 200.000,000 bushels of wheat-not from Canada but from the

world's markets. If they will not buy that quantity this year and if they do not get it off the world's market, then 100,000,000 or
200,000,000 bushels of wheat will go-where? It will go into competition with the surplus wheat that we are producing. Then what are we going to do about our surplus wheat? An export board could be charged with the responsibility of meeting that difficult situation.
The Americas are cereal producing countries. Australia is a cereal producing country. It will be difficult to find markets in that half of the world, and everything possible must be done to conserve the other markets. I wish to put on the record a quotation from one of the first parliamentarians in Great Britain, made in the British House of Commons, wherein he is reported as follows with regard to exports from Britain-and by that I am thinking of imports into Canada from the mother country, because Britain will lean upon us:
In this war we are fighting with our backs to the wall. Only by exporting and by fighting, and by exporting to enable us to fight and to go on fighting, shall Britain be able to win her way to safety and victory over the powers that threaten not merely the ideals we cherish but our very existence.
That statement was confirmed by Mr. A. M. Wiseman, Britain's senior trade commissioner to Canada, in a recent address in Ottawa in which he said that Britain's fourth arm of defence in modern warfare is her export trade. He pointed out that Britain was spending a large part of her war outlay for foodstuffs and that she must in turn export her own products in order that she may have the dollars wherewith to buy imports from Canada, wheat being an outstanding example.
I come now to revenue and expenditures. We are going to extract more from the Canadian people than ever before. The Canadian people are geared up to the idea of paying more. They are anxious to do all they can and will cheerfully do all they can. I have always said in days gone by that taxation should bear down more heavily on nonproducers than on producers, and I am still of that opinion. But we must remember that those who are privileged to be nonproducers, living off private incomes, are among the most patriotic of our people. A week ago last Sunday in the afternoon an elderly lady of some sixty years-I happen to be the executor of her father's estate- and she has a nice income-was sitting in my home and she said to me: "I have been to Alaska, to Australia; I have been around the world. I have lived in Muskoka in the summer and I go to Florida for the winter. But there is a war on and I want to do something on behalf of the war effort. I

The Budget-Mr. Harris (Danjorth)
am going to stay in Canada. I can run a sewing machine. Why can I not run a machine or work in some factory, if only for a few hours a day, so that I can do my bit voluntarily during this war?"
People who have large incomes will help, by the payment of income tax, to increase the flow of money into the treasury of Canada. We as a parliament perhaps cannot provide the ways and means, but we can encourage them to use their own initiative to get into productive enterprises of one kind and another. Let us ask our people to declare a holiday on holidays, an armistice on wasteful spending, and submit themselves to extraordinary taxation; I am satisfied that they are anxious to do so.
This income tax levy certainly tells us we are at war. But I think the minister could have gone even further in many directions. I do not know why exemptions with regard to charitable donations and so forth were granted a few years ago. Each budget seems to bring down some new exemption from taxation of someone somewhere. There is a war on. Cancel all exemptions from income tax that were given in the last few years, provided this does not conflict with the present legislation, and I am sure people will be satisfied. In the income tax form which we fill out there are four or five classes of exemptions. I make this suggestion, that when the new forms are printed, provision be made for exemption for the children who are coming from Britain, the 3,000 who were spoken of, followed by 750 more every five days, for a week or two, about 5,000 altogether -not nearly enough. Let us have more of them here, and for those good people who take them into their homes let us give the full exemption that is given for our own children. Do not even put them in the category of " other dependants "; make them part and parcel of us now. And do not put those who are charged with looking after those children in the position of having to make a separate affidavit that they have refugee children in their homes. I received a letter this morning from a constituent. She says that she is taken two guest children into her home, and that her mother is going to look after them; that she earns thirty dollars a week, and will provide for these two children and will pay her full share of taxes of all kinds, but if the government in its wisdom could see its way clear to give her, a maiden lady, an exemption for the two guest, children it would be appreciated. Her name is Nellie Dunham.
The national defence tax is quite opportune, and, in the main, satisfactory. It will reach wageeamers in the lower brackets. Industry
and business will have to pay much of that tax. I make this plea to industry in Canada: for all those employees on your payroll who are receiving less than the cost of living as defined by the Department of Labour at Ottawa, you pay their tax. I make this further suggestion to the minister, that he allow those corporations who feel free to do that to charge that payment in their financial statements as expense against the operation of their business, or that he at least let them have an exemption for that amount.
In that regard I have another communication which points out one of the anomalies. On a return of income of $8,000, the schedule provides for a tax of $1,695, and in addition, if there are no dependants, there will have been deducted by the employer $160, making a total of $1,855. But the taxpayer receives only $7,840 in place of the $8,000 for which he is obliged to file his return. I submit it is hardly fair to be taxed on $100 when only $98 is received.
The excess profits tax received my support in the September session of parliament. Again I support it, but anything that can be done to get excess profits back into production and productive enterprise should be done; any encouragement that can be given those earning excess profits or profits of any kind to put their funds back into enterprises so that we can have expansion of national income would merit consideration by this government and by the people of Canada.
I have often thought that the orientation of taxation as it at present obtains in this country is in the wrong order. It always seemed to me that most of our money should come, as it did in days gone by, from duties imposed on the handicraft of people who are shipping goods to us, but in these strenuous times the situation is different. We now have the sales tax in first place. From the sales tax a revenue of $170,000,000 is expected this year. It is not an economic tax. It is true it taxes all our people, but it raises the cost of living in this dominion, whereas a tax taken from goods brought in from other countries comes to us without in the same degree raising the cost of living or cost of production in our own country and at the same time provides more work for our own people. The sales tax does not make for more work. It is true it catches all, from the baby in the cradle to the octogenarian in his casket, and in that way perhaps there is some equality. I quite agree with it this war year, although I do not agree with an eight per cent sales tax in peace time. I would go one step further in that regard: Why not cancel all the exemptions that were given? In 1938 a great list of exemptions from sales tax was

The Budget-Mr. Harris (Danforth)
inserted in the act, and the same thing occurred in 1936 and 1937. Since the sales tax levy was raised from two per cent to eight per cent, those who received exemptions were put in a preferred position against those trades and industries which did not receive exemptions. The farmers of Canada do not mind paying sales tax on their harness, but the sales tax was taken off harness. They *certainly would not object to gopher poison carrying sales tax. The building trades would not object to paying sales tax. In the old days it was said that it was taken off building materials, so that it would not cost so much to build the platforms on which parliamentarians could make their speeches, and there would be more platforms built in Canada because building materials were exempted from sales tax. Remove the sales tax exemptions; let us get another ten or twenty million dollars from that source, and I do not believe the people will object.
In his opening remarks the minister said there would be some who would say the government had not done what it ought to have done and had done what it ought not to have done; that there would be criticism of detail and that we would probably differ with the government as to the proper way of doing things. Well, I never remember a budget coming into this house that did not contain paragraph after paragraph about agriculture and the farmer. The farmer is the forgotten man in this budget. Read it through; look it over, and you will see that what I say is correct. The farmer does not appear anywhere. During fifty years fifty budgets have said that the farmer was the back-bone of the nation. This time he does not appear in the preliminary remarks at all. The hon. member for Queens-Lunenburg (Mr. Kinley) gives the answer. I do not say it, but the hon. member for Queens-Lunenburg says the answer is that this is a taxation budget. Therefore, if the farmer is not mentioned in the preliminary economic survey, we will not need to mention him when it comes to the question of raising the money to pay the cost of carrying on this country this year. But the farmer wants to know what the government is doing for agriculture. He will listen with a great deal of interest to the discussion that will go on after I take my seat. He wants to participate in this national defence tax. He would like an opportunity, I am sure, to contribute his bit in a direct way. Why separate him from the rest of the community?


James Garfield Gardiner: Do you think he will not get an opportunity?


Joseph Henry Harris: He will get it, the Minister of Agriculture (Mr. Gardiner) says, and this answers the question from

another point of view. I suppose that with the estimates, supplementary estimates and further supplementary estimates, in accordance with the speech of the Prime Minister (Mr. Mackenzie King) the other day, we shall witness this session one budget brought down by the Minister of Finance and a supplementary budget brought down by the Minister of Agriculture, so we shall have two chances to discuss the same problem. I hope, when the Minister of Agriculture does bring down his suggestions with regard to finding money with which to prosecute our war effort, they will not be middle-of-the-road suggestions.


James Garfield Gardiner: I will deal with that in due course.


Joseph Henry Harris: The Budget-Mr. Harris (Danjorth)
our Canadian farmers, whether they produced lard from the hog, tallow from the steer, or dairy butter at the farm, had been put on a parity with the United States farmer, in respect of this taxation, then the government would have been fair to that Canadian farmer. Had that condition obtained, we would have $10,000,000 coming into our treasury this year-and I defy anybody to refute those figures. Had that been done, the government would have inspired some confidence among our farmers. Instead of lard selling at 5^ cents a pound in tank cars, as it is selling to-day, it would have received the benefit of the tax against its competitor, namely vegetable oils and shortening, and the farmer would have obtained the advantage. Perhaps he would not have had the advantage of the whole three cents a pound, as suggested, but he would have had a good portion of it.
From every hog we would have about 30 pounds of fat at three cents per pound, bringing the extra value to almost $1. On
6,000,000 hogs there would have been $6,000,000 more to place to the credit of the Canadian farmer. The tariff board, an instrument of this administration, made the recommendation to which I have referred. It was tabled a year ago, but no action has been taken. We have missed an opportunity of bringing in $10,000,000.


James Garfield Gardiner: Action was taken on it.


Mr. HOMUTH:: Reverse action.


Joseph Henry Harris: One further
observation I should like to make is this: There are about four interests in Canada which control this industry-two packers and two soap makers. They are big and influential interests. The other evening I heard the hon. member for Temiseouata (Mr. Pouliot) talking about interests. He said that a certain gentleman exercised a sinister influence because he was one of the big interests. That is what he meant. I am not saying that these big interests exercise any sinister influence. Their heads are loyal citizens and they are doing a great work for Canada in these difficult times. The Prime Minister (Mr. Mackenzie King) knew what the true situation was with regard to what the non. member for Temiseouata said, and he should have risen in his place and stopped the hon. member for Temiseouata from vilifying Mr. Purvis, the former head of Canadian Industries Limited.
Perhaps in some of their workings this great industry has become monopolistic and it may exert influence which is not always beneficial. If influence has been brought to bear upon this administration or upon any of its servants -I refer now to the high commissioner's office

in London-in order that there may be accumulating profits from the use of foreign oils rather than our own products, in order that these profits may go on without let and hindrance during the war time, then someone is going to answer for it. As an example of the influence that is brought to bear, I should like to quote from a requisition issued by the Department of Munitions and Supply for beef, bacon, fresh pork, mutton and shortening. The shortening is requisitioned in one pound prints, the most expensive way in which to buy this product. A large percentage of the cost of putting out one pound prints is taken up in the container itself and the cost of advertising. It was specified that it must be manufactured from pure vegetable oil, that lard will not be accepted for shortening.


An hon. MEMBER:: Read it.


Joseph Henry Harris: I have read it so often that it is firmly fixed in my mind. The words "lard will not be acceptable" are underlined in the requisition. Since when were we not able to make pies with the use of lard as shortening? Since when were we not able to fry eggs in bacon fat? Since when were we not able ito cook French-fried potatoes with the use of dripping and lard and fats natural to this country? Since when were we not able to make doughnuts by frying them in fat produced in Canada? Whence came the influence to have it specified in that way in this requisition for requirements for our troops?
It is still being done. I can tell this house where some of the influence comes from. This is a high-powered organization. They make a large profit out of this product. It costs them four to five cents a pound and they refine it and sell it for two pounds for a quarter. Because of that large spread they are able to put experts into dietitian's establishments. They even exert some control over what our universities shall teach in the way of dietetics in order that more and more of this product may be used. If a man operates a bake shop and is using Canadian fats of any kind for shortening purposes, they will put an expert in free of charge to show him how to use vegetable oil. If a man is using two per cent lard in making bread, they will put in an expert to show him how to use this vegetable oil. They are efficient and in their efficiency they bring influence to bear. If the war were over, I should like to make some research into certain activities of the Department of Agriculture, in order to find out how influence is brought to bear by these interests which I have mentioned. I am not complaining because they are doing a great

The Budget-Mr. Harris (Danjorth)
service for Canada, but I bring this matter to the attention of the government at this time. I charge the government with the responsibility for not collecting that $10,000,000.
The Canadian people were rather expecting a tax on gasoline and petroleum products. On an average, one and one-half billion gallons of petroleum products are imported into this country each year. A tax of one cent a gallon would have given us another $15,000,000, and the Canadian people would not have objected. There is a federal tax in the United States, and the people in Great Britain pay a very heavy tax. Our people were ready to pay a tax on gasoline. It is true the war exchange tax act imposes a ten per cent tax, but, as I said before, that is simply the spread between pegged and free money.
I should like to summarize my suggestions. A tax of fifty cents a quart on liquor would have brought in another $5,000,000. The implementing of the recommendation of the tariff board in connection with vegetable oils would have brought in another $5,000,000. A tax of a cent a gallon on petroleum products would have meant another $15,000,000. This makes a total of $25,000,000, but I would go even further. I would put the tax on liquor at the highest point at which it could be placed without stopping the revenue. I would get every possible bit of taxation. I believe we could raise that to $10,000,000. Then, in connection with vegetable oil, if our farmers were placed in the same position as United States farmers, another $10,000,000 could be obtained. A tax of two cents a gallon on gasoline would give us $30,000,000. This makes a total of $50,000,000 which could have been extracted from the Canadian people in order to help this war effort. This could have been done without our people being greatly worried or concerned, without their being panic stricken and without making them tend to put their savings in the old sock.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


Joseph Henry Harris: Mr. Speaker, in reference to the summary which I gave showing how we could add during the current year some $50,000,000 to our revenue and avoid the necessity of taking from our people, by way of borrowing and freezing up, a large sum of money, but rather add the extra taxation which would come into the treasury from the cancellation of the sales tax exemptions of the last five years, and also the cancellation of the income tax exemptions, while it is 95826-76
rather difficult to estimate how much more revenue we could get, it would certainly be very considerable. I am satisfied that the grand total would approximate one-third of the deficit for which we have budgeted; it would emphasize the fact that we are at war; and it would be good medicine for the Canadian people.
The next best way to conserve funds in a treasury is to save what we have. Non-war expenditures, the minister says, are being reduced by $77,000,000, over three-fourths of which represents the absence of expenditures on public works. I am in accord with that action, and I believe that a similar course should be taken in the case of personnel. According to the estimates, the civil service numbers, in round figures, thirty thousand; it was the same last year and the year before. But this year, in connection with the war effort, we have added without let or hindrance hundreds of employees in the new service of munitions and supply. By all means put on a staff in that department, and do a job, but let us keep our heads. If we have made a great saving on public works, surely some effective use can be made of the employees, with their experience of many years in the putting up of buildings, and of the plans in their archives, and they are good plans, because most public buildings which have been erected in Canada in the last ten years are a credit to the department. Nevertheless, although they have the plans and specifications, we find that much delay has occurred in drawing new specifications for buildings which are required in connection with the government's war effort. The point I wish to make is that architects, engineers, designers, draftsmen and estimaters connected with the public works department are not engaged in the putting up of new buildings this year. There must be quite a large personnel, therefore, which could have been drafted into the service of the Department of Munitions and Supply, thus saving a considerable amount of money. A day or two ago I put on record certain statistics in regard to personnel. I was amazed to find that in the Department of Public Works, the department which the minister rose to defend last evening, the number of employees has risen from 1,754 last year to 1,771 this year.
I should like to make reference along the same line to other departments of government which seem to be drifting. The ministry has failed to place at the head of the departments I have in mind men with sufficient driving force and initiative. Take, for example, the Post Office Department. Under none of the governments which we have had in the past decade has there been a minister who



The Budget-Mr. Harris (Danforth)
has given continued adequate direction and driving force to the work of that department. It has drifted along, and one result is that the personnel has increased from 10,800 to 10,900. What I have said of that department applies also to the Department of Transport. It is not fair to ask the Minister of Munitions and Supply (Mr. Howe) to administer also the Department of Transport. The government has been lax in not placing at the head of the latter department a minister who can give it all his attention. Its importance in these difficult days need not be emphasized. As the hon. member for Davenport (Mr. MacNicol) said a few days ago, in that department or somewhere in the government service there should be a traffic manager to control the work of transport and give right of way to all activities having to do with the furtherance of our war effort.
There will be a vacancy shortly for a Minister of Finance. I hope that a man with some vision and initiative, one who realizes the difficult position we are in, will take charge of that department immediately the present minister vacates it. He has done a splendid job of work as far as he has gone, although, as I intimated in my earlier remarks, in my opinion he has not gone far enough.
I hope that the Prime Minister will carry out the pledge he gave to this house two or three nights ago when he said that his administration was a truly national government inasmuch as it represented 180 of the constituencies in Canada. He went further and declared that any constructive suggestion from any part of the house would be given serious consideration by the government, and that in this time of stress and strain this truly national government would give effect to worthwhile suggestions no matter where they might come from. Well, I suggest that the summary of other moneys that could be raised in Canada be given consideration by the government.
I make another suggestion. If it were possible to take a secret ballot of the members of this house, if it were possible for the members to divorce themselves entirely from any influence whatever, for example, from the liquor interests in relation to the liquor tax suggestions that I have made, from the packing industry in relation to the traffic in vegetable oil and the suggestions I have made in that regard, from the gasoline interests of Canada in relation to the suggestions I have made on that subject-if it were possible, I say, for all hon. members in this house to dissociate themselves entirely from these several interests and to take an independent view of, and give a secret ballot on, these questions and on the question of the sales

tax exemptions and the exemptions in connection with income tax, then, if my judgment in these summaries did not carry two-thirds of the considered opinion of this honourable assembly, I misjudge the feelings of hon. members during this difficult time.
When the Minister of Finance (Mr. Ralston) moves over to his new position as Minister of National Defence, he will face a difficult task. I presume the Minister of National Defence for Air (Mr. Power) will have a department entirely his own, and I do not know whether he will be answerable to the Minister of National Defence. Whether he is or not, however, each of these departments should go forward with energy and industry on behalf of Canada. I would ask these two ministers to consider the suggestion made some days ago by the hon. member for Weyburn (Mr. Douglas) with regard to a department of economic warfare, with someone charged with the responsibility of looking after economic warfare as far as Canada is concerned. Perhaps, also, as a subdivision of one of these ministries, as in Great Britain, there might be a branch to take care of home defence and of home security. There should be some one to assume full responsibility for that very important feature of our national safety.
In the last ten months we have failed dismally to give the people of Canada some idea of what will be done in that respect. Municipalities and provinces have been harassed and worried about the situation. The freedom with which firearms are sold by retail stores in the large centres of population is something that concerns those charged with municipal administration; and when we find aliens being interned, their premises being searched, as in two of the large cities within the last month, and rifles and rounds of ammunition being found on these premises and confiscated, I say to the Department of Justice that they should draft into legislation immediately some provision for licensing every single individual, whether he be a Canadian or an alien, if he is permitted to have rifles or firearms of any description. I suggest, further, that the department should quietly see to it, wffien the hunting season arrives and there are tourists in our midst, that it knows who are carrying firearms, and have such persons submit to the law, if such a law is enacted. We must have an active branch of the service to look after our home affairs. If we have such a branch, we shall go a long way towards allaying the feeling of unrest which exists among the people that all is not well.
The new ministry of national service should immediately take in hand the matter of voluntary service. In answer to a question I asked the other day, the statement was made

The Budget-Mr. Harris (Danjorth)
that 15,000 persons or thereabouts had expressed a desire to render voluntary services to Canada. What is being done with this great' potential factor which would be of real service to the country? It is indexed into 150 major classifications, into some 300 trades, but it seems to be pigeon-holed. There are 550 classes of people who have been indexed, comprising
15,000	of the finest people in Canada, technicians of all kinds, citizens who are well trained in certain lines, and only the odd score of them have been accepted at a dollar a year. This new department should immediately take hold of this nucleus and from it expand Canada's national effort so as to give our people a chance to be of real service. I am of the opinion that the organization of such voluntary service could be entirely selfsustaining.
We have letters coming from all sources asking us to take advantage of the services that are being offered. I read in the Ottawa Journal, under date of June 20, that 700 school teachers had volunteered their services to register men under Canada's proposed mobilization scheme. The chairman of the board of education in Hamilton addressed himself to the board of munitions announcing that they were ready to give their services in any capacity. They do not want to take holidays. I have a letter from a school-teacher who is anxious to work for her country free of charge during her summer holidays. In Britain something is being done in this regard. The entire population, it is suggested in a resolution submitted by thirty or forty British members of parliament to the Prime Minister, should be divided into armed forces and others, the latter being subdivided into producing groups to be kept at regular jobs, and non-producers subject to immediate call to serve in any capacity.
I had the privilege of presenting to this house-and even though I was out of order I managed to get it embalmed on the record of the house-a petition from eleven thousand people who were anxious to do something on behalf of Canada. Since then I have received a copy of a letter addressed to the Hon. Mr. Power, Minister of National Defence, under date of June 12, which reads as follows:
At a meeting of the above association (Toronto auxiliary defence unit No. 1) comprising twenty-eight organizations in the east end of Toronto, it was decided to write you offering our help in any way you might suggest.
The purpose of the association is to stimulate our war effort, and to cooperate with the proper authorities in home defence. Our city is located on lake Ontario and is vulnerable from any effort to cause trouble which might be directed from New York state. Recently at a mass meeting eleven thousand citizens signed a petition that was sent to Ottawa.
95826-76i
If the government are planning any national registration we would be glad to cooperate and to undertake the registration in ward eight.
Included in our association are the members of two posts of the Canadian Legion, and we would ask permission to organize and drill a home defence unit, also that we might be permitted to raise funds through theatre parties etcetera to equip this unit.
Assuring you of our support, and hoping for your cooperation, we are,
Yours truly,
Toronto Auxiliary Defence Unit No. 1.
On June 13, I received a letter from the Canadian Progress club in Toronto, with three sheets of individual signatures, some seventy-five in number. This came to me out of the blue; I knew nothing of it. It reads:
At a meeting of the Canadian Progress club, Toronto down-town, held to-day, the members unanimously decided to send a joint letter to the Minister of Defence and the members for Toronto and the Yorks, urging that in view of the present emergency everything possible be done forthwith to further Canada's war effort, so that it may be completely worthy of the country's capacity and of the spirit of its citizens.
And this is the important part:
We pledge ourselves individually and as members of the Canadian Progress club, Toronto down-town, to support to the limit of our abilities every call and demand that may be made upon us. We earnestly hope that some definite task may be given to our club, and to each and every one of the undersigned members. As a Canadian service club we stand ready to serve our country to the limit.
That is signed by the president, S. Hume Crawford.
These are substantial citizens, and I will see to it that their request and their signatures get into the hands of the responsible ministers.
Then from the west end of Toronto I got a letter from another Canadian Progress club, along much the same lines. They say:
We have taken the privilege of petitioning the hon. Minister of National Defence and for your information we enclose a copy of our communication to the minister.
They also say:
We pledge ourselves individually and as members of the Canadian Progress club, Toronto West, to support to the limit of our abilities every call and demand that may be made upon us.
I have another suggestion which emanated from a discussion that took place in Toronto over the week-end. We have 245 members of parliament. We draw an indemnity for twelve months' work. We work about twelve weeks, and sometimes think we are underpaid. Parliament will soon be prorogued. We have just come through a dominion election. We know our constituencies. Why can we not
1204	COMMONS
The Budget-Mr. Harris (Danjorth)
take charge of our individual constituencies and relieve the government and the treasury of the cost and burden of the national registration? We have our bureau of statistics, and the chief electoral officer. I hope the bureau of statistics has the necessary cards already printed for the information required. The chief electoral officer could assist in that regard; between him and the bureau of statistics the cards could be prepared, and surely we members of parliament would be glad to step in and take charge of our individual constituencies. It might cost us something. Let us conscript the war chests of the parties in this house and use them to pay the cost.


James Garfield Gardiner: The Cooperative Commonwealth Federation seems to have one.


Joseph Henry Harris: In like manner as income tax is not collected on an overdraft, of course those who have no chest will not be conscripted. But let those war chests be used as some of the funds to pay the cost. Some parties, I am sure, could subscribe a substantial overdraft, and the same parties that have the overdraft are the parties that will do a real job of work if the government asks us to assist in this regard.
I have a letter signed by James Labbett, treasurer of ward eight, central executive council, Toronto, stating:
I thought it would be a good time for the government to save some money by having each M.P. take over his riding and arranging to have the registration taken by his election organization, all work to be done gratis. The members should all have enough good men and women who would be willing to do this without pay. I know that I can get enough from our riding even if we have to man all subdivisions. By doing this the only cost would be the printing of cards, etcetera.
These are a few suggestions. In closing, I should like to summarize some of them. Tell the country that we in future are going to defend Canada. Let business make capital expenditures with confidence; we will continue to maintain, modernize and enlarge our defence system. Present contracts will be honoured, further contracts entered into, coastal defences maintained and modernized. In future all young men will receive military training. Equipment and clothing will be purchased continuously. Great Britain will be assisted to the utmost. The cabinet will be strengthened by the appointment of ministers to the Post Office Department, the Department of Transport and the Department of Finance immediately. An economic warfare division will be considered. Home defence and home security will be given immediate attention. A national war service ministry

will be set up, and voluntary service registration put to use on behalf of Canada. Let us have a holiday on holidays and the spare time of our citizens be put to work on behalf of Canada. Winning the war is all that matters, all that ever mattered. Organize an "all out" war effort; think and act now for ourselves; give the signal, "full speed ahead." Gear all action to our war effort. Do not depend on the Monroe doctrine; do not expect that we can shelter ourselves forever under the wing of the British navy. And remember that the eagle's nest is rather crowded and that we should not be a cuckoo bird and try to crawl into that nest.
Every true Canadian is anxious to do something. The word "sacrifice," as the Minister of Finance well said, has a much nobler meaning than is given to it in common use. It is the contribution that our soldiers, sailors and airmen are making for us. All Canadians, from whatever race they spring, will not shrink from their fair contribution. New Canadians who came here in the last few generations to find freedom and liberty, together with French-Canadians who were Canadians long before some of the rest of us were, know no other place that would give them the same freedom that Canada gives them, and they will fight for it. Those who have their origin a few generations back in the British isles, will all rise with the others as one man and see that Great Britain and Canada shall not fail, that freedom shall not perish, that democracy shall survive. With reverence and humility I say: Fear God; with loyalty, honour our king; with sincerity serve our country. Canada, carry on. Carry on, Canadians.


Ernest Edward Perley: Mr. Speaker, this afternoon when motions were called I endeavoured, under standing order 31, to move the adjournment of the house for the purpose of discussing a definite matter of urgent public importance, namely, the action taken by the government to establish minimum prices for certain grades of cash wheat in store at Fort William and Port Arthur to December 31 of this year. After a little discussion you ruled that there might be other occasions on which this matter could be discussed. Finally the Prime Minister (Mr. Mackenzie King) graciously suggested that I might follow the hon. member for Danforth (Mr. Harris), who has just taken his seat, and that I might say anything I desired to say with respect to this all important question during this budget debate. This puts me to some extent in an unfortunate position, because I had not intended to speak on the budget at this stage. I had expected to have the week-end to prepare something rather different

The Budget-Mr. Perley
from what I have to say to-night. However, I may have another opportunity to speak, if there should be an amendment moved, which I understand to be quite possible.
I shall now refer briefly to the subject I desired to draw to the attention of the government and of this house this afternoon. About nine o'clock last evening I was in my office in this building when the telephone rang. A member of the press called to ask me if I knew anything about what had taken place on the Winnipeg grain exchange yesterday. He said he had a telegram from a newspaper in Wall street, New York, asking for a 200 word message with regard to the meaning of the action taken yesterday. He came to my room with the telegram, but I knew nothing about the matter and could give him no information. I think he might better have gone to the Minister of Trade and Commerce (Mr. MacKinnon). However, in the air mail this morning, about an hour after the regular mail was distributed, I received a letter enclosing a copy of a notice that was posted on the bulletin board in the trading room of the Winnipeg grain exchange yesterday morning, as follows:
Winnipeg Grain Exchange
June 26, 1940.
Minimum prices for cash wheat
At the request of the federal government the council hereby establishes minimum prices for the certain grades of cash wheat "in store" Fort William and for Port Arthur, as follows, below which no transaction in the grades of cash wheat for delivery during the dates specified shall be made:
Then are se,t out the dates and the minimum prices for No. 1 northern Manitoba wheat, as
follows:
June 26-29	 71*
July 1-Aug. 3	 718
August 5-10	 71|
August 12-17	 711
August 19-24	 721
August 26-31	 72f
September	2-7	
728September	9-14	
728September	16-21	
731September	23-28	
738September 30-November 9	
73|November 11-16	
738November 18-23	
74JNovember 25-30	
74|December 2-31	
74|
This would indicate that in order to receive 3J cents over what is termed the fixed price of 70 cents, the farmer will have to hold his wheat for about four months after the new crop conies in. Then the notice goes on:
The minimum prices for other contract grades shall be at the deliverable discounts, which are as follows:
Cents under No. 1 northern
No. 2	northern	
3No. 3	northern	
8No. 4	wheat	
10No. 4	special	
22No. 1	C.W. garnet	
12No. 2	C.W. garnet	
15
Then it states:
The aforesaid minimum prices shall apply as from June 26, 1940, at 11.30 a.m., and shall remain in force until cancelled or changed by authority of the council.
Also enclosed in this air mail letter was a copy of a broadcast sent out from the exchange at noon yesterday. The letter indicated also that as soon as this notice was posted the members of the exchange telegraphed all their agents in western Canada. The broadcast was as follows:
To all elevator agents in west:
The wheat market is now at "pegged prices" established at request of the federal government, and we are unable to hedge country wheat purchases at present. Therefore, all elevator agents are instructed to cease purchasing wheat, effective immediately, and all open market wheat prices are hereby cancelled.
You can, however, continue to accept wheat for wheat board account up to the five thousand bushel limitation, also for wheat cooperative marketing account, or for storage.
If a customer wishes to make sale of wheat, you must wire the party's name, bushels, grade and position, and if and when sale is made, you will receive confirming wire.
All orders will be handled in rotation.
The broadcast was made on behalf of the Alberta pool elevators, the Manitoba pool elevators, the Saskatchewan pool elevators, the United Grain Growers Limited, and the NorthWest Line Elevators Association. I am also informed that when the notice was posted in the exchange yesterday morning there was no trading done; there was no buying of wheat, even by the domestic milling companies. I should think the government must be rather worried when they allow such action to be taken without due notice to the public or to this house.
At this point may I ask the question: What will happen to coarse grains? No one knows. But it was stated yesterday in the broadcast that the price of oats, where the freight rate was 21 cents a hundredweight, would be 16| cents for C.W.; 11 cents for feed oats; 17 cents for C.AV. barley; 12 cents for 3 feed barley; rye, 24 cents for C.W., and 17 cents for 4 C.W. Since May 16 many hon. members on this side of the house have on different occasions tried to get a statement from the Minister of Trade and Commerce or the Minister of Agriculture (Mr. Gardiner). We have asked what they proposed to do with respect to making amendments to certain
The Budget-Mr. Perley


Thomas Alexander Crerar: That is for the wheat the elevator companies purchase outright for cash.


Ernest Edward Perley: That is for the wheat which they take into their elevators and hold for the board. They receive this four cent service charge, which is an absolute misnomer.


Thomas Alexander Crerar: Are they not responsible for weights and grades?


Ernest Edward Perley: Yes, they are, but the If cent fee covers that. The wheat policy of this government is in a hopeless mess. There has been no real report made since 1936. No one knows just what is the position of the wheat board or just what finally happened with respect to the 1938 crop. The Minister of Finance in his budget speech gave us some indication of what the loss might be, but, no report has been made from which one can intelligently discover the exact position of the government and the board with respect to the 1938 and 1939 crops.
An advisory committee should be set up at once. If we had such a committee we would
The Budget-Mr. Perley

not be faced with the spectacle with which we were faced yesterday. The definite promise , was made during the campaign that provision would be made for the appointment of this committee as soon as the house met. I think the minister should tell us who is in control of the wheat board and who are the advisers of the board in Winnipeg. We should be told what members of the cabinet make up the advisory committee, how often it meets with the board and so on.
The farmers of western Canada have never been satisfied with the price of 70 cents a bushel which was set for wheat. I can recall the discussion on Bill No. 63 which took place last year, but I am not going to take the time to refer to it now. All I shall do is to recall to hon. members the protests which were received from all over the west against the setting of the price at 70 cents. We had a resolution submitted by a western committee headed by Mr. Bracken as well as a petition signed by some 600,000 people of western Canada. The farmers want a fixed parity price comparable with the price they must pay for the products of industry. The farmers are willing and anxious to do their part, but they want an equal sacrifice by all. I understand that last September the British government made a suggestion to this government, when they appointed Mr. Rank, that they would be willing to consider a fair price. Possibly the Minister of Mines and Resources (Mr. Crerar) will shake his head. He made a trip overseas on behalf of the government to discuss the matter. But before he did so, I understand a definite proposal was made, when Mr. Rank was appointed sole purchaser of wheat and other food cereals fbr the United Kingdom and France, that if the government would close the Winnipeg grain exchange the allies would consent to a fair price. I make that statement on good authority.


Mr. ROSS (Moose Jaw):: What is the
authority?


Ernest Edward Perley: My authority is that a note was sent to me in this chamber by the then Minister of Trade and Commerce, Mr. Euler, inviting me to go to his office; I was with him there an hour, and he told me the story, and informed me that his colleagues in the cabinet would not allow him to do what he was asked to do.


John Gordon Ross: When was that?


Ernest Edward Perley: Now, sir, we discussed the price.


John Gordon Ross: When was that?


Ernest Edward Perley: If the hon. member would just keep his seat for a little while-


John Gordon Ross: I am not rising. I just asked when this took place.


Ernest Edward Perley: This happened about the 9th or 10th of September last, just before we went home.


Mr. ROWE:: Page Euler!


Ernest Edward Perley: I asked him about the price. I suggested what it might be. He said he could not tell me that. I offered a guess. He, naturally, would not tell me. But he did tell me it was practically agreed that the grain exchange would remain open until the price of wheat reached about a dollar and a quarter.
Those are the circumstances. I say this, that had this government and the wheat board made a reasonable, businesslike suggestion to the British government last September, we would have had a much better price than seventy cents; we would have had nearer a dollar for the duration of the war, and we would not have had the mess we have to-day.
Without going into any long argument on this matter, because I should like to refer to a few other subjects of importance to the west, I contend that we are entitled to a statement from the minister. He should tell us whether there is to be any amendment of the wheat board act. We in the west were given to understand that there would be an amendment, as soon as the house met, making provision for an interim payment.
In this connection I desire to lodge a vigorous protest concerning the method which the government employed in announcing their policy to the end of December 31 of this year. We should have to-day an announcement by the minister as to how the government proposes to handle the 1940 crop. We should know what the price is likely to be. A full report should be tabled with respect to the 1938 crop and the final disposal of it, so that the matter can be discussed upon an appropriate item of the estimates. We should have a full report to date on the 1939 crop, showing exactly, from a financial point of view, where the government stands with respect to the wheat they are carrying, what advances have been made, and so forth. Not since 1936, may I point out, have we had a proper report. There is not an hon. member who knows to-day what the government's policy is. Certainly none of us knows where we stand financially with respect to this whole wheat business. I say that this parliament is entitled to know. It was due to hon. members to have this matter discussed long before now, and to know the reasons for the action which was taken. WT11 there be any amendment made to existing legislation? AVe should know that

The Budget-Mr. Perley
to-night. Will an advisory committee be appointed? Give us an explanation why the action was taken yesterday which was taken.
Under war conditions there should be full government control. If I had the time I could show, by quotations from the evidence presented to the Turgeon commission, that in an emergency or a crisis of this kind no useful purpose is served by the existing organization, or grain exchange. Evidently, to judge by a statement broadcast by the Winnipeg grain exchange yesterday to their agents, they themselves have decided to quit business. What is the government going to do about the matter? I think we should know.
Let me say a word generally with respect to the budget. This is a war-time measure, and I do not know that I have very much criticism to make. As far as the west is concerned, it does not affect the farmer very much. There is a substantial increase in income tax, but, as we know, that will not affect him. I believe it was the general expectation in the west that there would be some increase in taxation, particularly in the sales tax. We are pleased to see that there is not, but if there had been I believe the farmers are patriotic enough to have taken it graciously, because they are willing to do their part. However, we have no complaint to make with respect to the new taxes. Certain customs changes may affect us to some extent.
The all important matter, and one with which the budget does not deal definitely enough, is the situation of internal trade at the present time. The hon. member for Danforth made the statement that, with the exception of wheat, of which only thirty per cent is consumed at home, at least ninety per cent of our primary products are absorbed by the domestic market. He dealt with the important question of developing industry. I believe that this government should turn its attention to the encouragement of industrial development in the west. If action in a businesslike fashion were taken in that direction, much could be done to relieve unemployment.
Last year, speaking on the budget debate, I made one or two suggestions which at that time were regarded as rather drastic. I proposed that we should start a beneficial circle by increasing the price of primary products in Canada. I would not hesitate to double prices. That would start a beneficial circle in the domestic market. I believe, if you double the price of hides, wool, and other agricultural products, it would mean very little to th; cost of a pair of shoes or a suit of clothes, but it would increase the circula-S5826-77
tion of money in our home markets and relieve unemployment. I went so far as to suggest a domestic price for wheat of SI .20 a bushel. There was evidence-I do not have it under my hand, but I recall that I then produced it-given before a committee of this house by millers and bakers that a variation in the price of wheat from 70 cents to $1.60 a bushel did not make more than half a cent difference in the price of a loaf of bread. Why not have a reasonable domestic price for wheat if it will not affect bread consumers any more than that? That would be something worth while.
I suggested last year, and I am going to suggest again-I believe I had the support of the hon. member for Rosthern (Mr. Tucker) in this matter-that powers should be given by amendment to the Bank of Canada Act or by some other legislation to enable the government to issue currency against the wheat that they are carrying, because to my mind wheat is almost as good as gold. Wheat does not readily deteriorate, it will keep; and when you eat it, or when you sell it, you can call in your currency. That could be done and it should be done. It would save the interest that the government is paying on the amount it has invested in the wheat.
I suggested a long range marketing policy.
I will not go into that now, but I showed that there should be a parity of prices. We have been given definite promises with regard to certain measures that might be brought down this session which would materially affect western Canada. I did not see in the budget nor did I hear any reference to prices of agricultural implements. We know that this government in 1936 and 1937 carried on an investigation, and the Minister of Agriculture (Mr. Gardiner) boldly rose in his place in this house last year, in the early part of the regular session, and threatened the implement companies if prices did not go down, if they did not do so and so. Well, prices are up and we have not had any action. We should have some action in that regard, however, because the minister must have had something in mind when he made that statement.
I say, Mr. Speaker, that the farmers can no longer continue under present conditions. Their income has depreciated to a very considerable extent. We shall continue to have surpluses in primary products for a number of years. The government must not think they can regulate the prices to the farmer for his wheat or cattle or hogs or other primary products on the basis of surpluses that are in the show window, so to speak. That will only

1210	COMMONS
The Budget*-Mr. MacKinnon (Edmonton)
mean lower prices. They must, take constructive action. As I say, the farmers' income has depreciated considerably.


Georges Parent: The hon. member's time
has expired.


Ernest Edward Perley: I shall be only a moment
longer. I wish to quote certain figures I have been given by the bureau of statistics. I wrote to them the other day saying that I was going to prepare a statement on the budget with respect to farmers' income. I have received from the bureau a statement showing the income of farmers in the three prairie provinces from 1926 up to the present time, taking the year 1926 as one hundred. I will only give Saskatchewan in order to save time. The figures for the following years are: 1927, 90; 1928, 103; 1930, 37; 1933, 21; 1936, 30; 1937, 24; 1939, 30. In other words, the farmer's income in 1939 was only 30 per cent of w'hat it was in 1926. Does any hon. member think that the farmer can continue under such conditions? He cannot carry on when his income to-day is only 30 per cent of what it was in 1926. I do not think anyone will suggest for a moment that it is possible for him to do so.
I am disappointed that the budget was not more definite about certain matters; but now, since my time has expired, I will say this. I may have a chance to discuss this matter further if there is an amendment, as I think there will be, but I regret that this government has not been more definite and has not made a pronouncement with respect to this whole matter which is so important, having to do with the marketing of the western crop. Before now we should have had a statement from them, having regard to the announcement posted yesterday in the exchange.


Hon. J. A. MacKINNON (Minister of Trade and Commerce):: I do not intend to go fully into all the points raised by the hon. member for Qu'Appelle (Mr. Perley), but there are some statements with which I feel bound to deal at this time. The hon. member is altogether under a misapprehension as to the purpose of the announcement made by the wheat board from Winnipeg. It seemed to me he was confused in thinking that the new regulations dealt with the 1940 crop. The continued marketing of last year's crop was what was being dealt with by the board, and this regulation was considered necessary to make it possible for wheat farmers with wheat still on hand to sell it. The board came to this decision and, having done so, telephoned to me to acquaint me with the position as chairman of the wheat committee of the cabinet. It is a purely temporary matter having nothing to do with the marketing of the 1940

crop, and will be superseded, I expect, by decisions and regulations for dealing with the coming crop.


Ernest Edward Perley: Why does it mention
December 2 to December 31? That is the notice posted.


James Angus MacKinnon: I
am coming to that. The prices mentioned are put there to enable the buyer of wheat to hedge against his purchases of wheat at the present time. On May 18, the wheat board, after consultation with the wheat committee of the cabinet, requested the grain exchange to peg the wheat futures market at the closing prices of Friday May 17, which were: May, 70|; July, 71J; October, 73f. This action was taken owing to the fact that on Saturday morning. May 18, the market declined 10 cents a bushel to 60f for May wheat. The reason for this decline was as I stated in Hansard, May 20, at page 20.
While several factors have entered into the situation it seems clear that the changed war picture has been a predominant influence in the decline in commodity and securities markets. The fear of lost markets and the general financial unsettlement have created a feeling of uncertainty and resulted in general and drastic liquidation on the part of holders of wheat.
It was clear at the time that if the futures market fixed itself at the pegged price asked, with no buyers, it would be necessary to peg the cash wheat prices in proper relation to the futures, because otherwise the pegging of the futures market would be ineffective. The action of the market, then, from May 18 to June 22 was such that it was unnecessary to peg cash wheat prices. In other words, the futures market did absorb, at prices at or about the peg, any selling or hedges which developed. On June 25 it was clear that owing to the action of the market on June 24 and 25, the elevator companies were not able to hedge on account of the market being at the pegged price asked.
Further action was considered necessary. Consequently, after consultation with the government, the wheat board addressed a letter to the grain exchange under date of June 26 asking them to take the necessary action to peg prices of cash wheat in proper relationship to prices as fixed for the futures in the action taken on May 18. The meaning of such action is that neither futures nor cash wheat can be traded at prices below the fixed minimum prices, and this is. mandatory on all members of the grain exchange until further notice. It should be clearly understood that these are minimum prices, and there is no obligation on anyone to make purchases at these prices unless demand materializes. It has the effect, how-

The Budget-Mr. Douglas (Weyburn)
ever, of preventing the sale of wheat at prices below the minimum. Any farmer, however, who has less than 5,000 bushels may deliver his wheat to the board and receive 70 cents a bushel basis No. 1 northern Fort William; or any farmer who has over 5,000 bushels may deliver the surplus to the pools set up under the Cooperative Marketing Act, or place orders for the sale of his wheat with any elevator company. This will be sold when and if a demand arises at or about the minimum price.
It should be clearly understood that this is merely a temporary measure in order to stabilize the situation pending a decision as to what method shall be followed in handling the new crop. These minimum prices have been fixed up to December 31 for the reason that at the present time the December future is open for trading. Consequently cash prices must be fixed until the end of December, in order to make the minimum price system effective on forward sales. The fact that this has been done has no bearing on any action that may be taken regarding the new crop.
Further I would say that consideration is being given by the government and the wheat board to the method of handling the new crop. A decision cannot be made at this time, in the opinion of those advising us. on account of a number of factors which will enter into the situation between now and the beginning of the marketing of the new crop, such as the development of the present growing crop, the general war situation and its effect on the probable demand this coming year, plus the effect of growing crops in other parts of the world, particularly the United States. The situation is being carefully watched from day to day, and a decision on the method of marketing the new crop will be made as early as possible.


Ernest Edward Perley: Would the minister tell us who are the advisers of the government whom he just mentioned? Also why is it necessary for the elevator companies to hedge their grain if they are not buying it? It all goes to the government, or on the government account; there is no responsibility.


James Garfield Gardiner: What they take is the surplus over 5,000 bushels.


Ernest Edward Perley: They take the grain in at the 70-cent price on government account.
Mr. ROSS (Moose Jaw); No.


Ernest Edward Perley: What do they do?


John Gordon Ross: It depends on whether they are taking it for the board or the open market.
95826-77*


Ernest Edward Perley: They are taking it all for
the government.


James Garfield Gardiner: They cannot take anything over 5,000 bushels for the government; this has to do only with over 5,000 bushels.


James Angus MacKinnon: When I referred to the advisers of the government I referred to the wheat board.


Mr. T. C. DOUGLAS (Weyburn):: A discussion of agricultural marketing in general, and marketing of wheat in particular, has been long overdue in this house. We have waited now for some six weeks, hoping to have a statement from the minister and to have the policy of the government outlined, but so far without any great result. The hon. member for Qu'Appelle (Mr. Perley) has rendered a service, particularly to western Canada, by raising this matter this afternoon. I am only sorry that the minister did not give a fuller answer, and a fuller insight into what the government's policy is to be.
I need hardly remind hon. members that west of the great lakes wheat is still king, because our climate and topographical features are such that our economic welfare is irretrievably bound up with the growing and marketing of wheat. A favourable wheat marketing policy means reasonable prosperity for western Canada. Lack of such a policy means bankruptcy, not only for some three hundred thousand wheat producers but also for those other thousands of individuals and many organizations whose livelihood is bound up with the prosperity of the prairie farmer. With those facts in mind I want briefly to outline the wheat marketing policy that has been in vogue during the last few years.
In 1935 there was brought down in this house the Canada Wheat Board Act, which in its original draft provided for the sale of all wheat to the wheat board, the farmer to receive an initial guaranteed price and a participation certificate. It was the present Minister of Finance (Mr. Ralston) who led the opposition at that time to the compulsory features in that legislation. When that act finally passed this house, it provided that the farmer could deliver his wheat either to the wheat board or to the open market. If he sold his wheat to the wheat board he was to receive an initial payment, which was later set at 87i cents, and a participation certificate.
In 1936, this government having come to power, an order in council was passed on August 28 which prohibited the farmer from delivering his wheat to the wheat board if the price at Fort William was above 90 cents
1212	COMMONS
The Budget-Mr. Douglas (Weyburn)
a bushel. So in that year even if they wished to deliver their wheat to the wheat board, farmers were not permitted to do so while the price was above that figure.
In 1937 the same situation obtained. In 1938, on a falling market, the wheat board was again brought into operation. An initial payment of 80 cents, basis Fort William, was paid and participation certificates issued.
Last year, 1939, the government introduced what it called a new marketing policy, which gave to the wheat producer three alternative courses. He could (1) sell his wheat in the open market; (2) sell his wheat through a cooperative pool or association and receive an advance payment of 60 cents, baisis Fort William, with a government guarantee behind it, or (3) sell his wheat to the wheat board and receive an initial guaranteed payment of 60 cents, and a participation certificate. Under pressure from all parts of western Canada that initial payment was later raised to 70 cents a bushel, and to offset the concession a limit of 5,000 bushels was imposed; in this way the farmer was not allowed to deliver over 5,000 bushels to the wheat board.
Now we come to 1940. With the outbreak of the war members of this group and of other opposition groups asked the government to close the Winnipeg grain exchange, pointing out that Great Britain and France were purchasing their wheat through one agent, and that Australia had nationalized its wheat and flour industry. This government refused to take such a step, and have allowed the question of a wheat marketing policy to drift month after month, until at last, a few weeks ago, when the wheat market was in a state of imminent collapse, they were finally compelled to step in and peg the price at seventy and a fraction cents, basis Fort William. Again the members of opposition groups asked the government to close the speculative market and take delivery of wheat through the wheat board.
At that time the Minister of Trade and Commerce (Mr. MacKinnon) promised that a statement would be made, and said that the whole matter was under consideration. Then, a few weeks ago, without the house being taken into the confidence of the government, the public were informed through the press that the Winnipeg grain exchange was to continue until the end of the crop year, July 31. Ws have been waiting since May 16 for an announcement of policy. The minister has made another statement to-night. Still we have no intimation from the government as to what the wheat marketing policy of the government is to be for this crop year or for the years of the war. My object, therefore, in rising to support the contention of the hon.
FMr. T. C. Douglas.]
member for Qu'Appelle is to ask the government that during this budget debate the ministers responsible shall make a statement to this house and to the country outlining clearly what their policy is not only with reference to the marketing of wheat but with reference to the marketing of all agricultural products.
On behalf of this group I want to make four requests of the government. First, I want to ask when they propose to set up the advisory committee to the wheat board. The wheat .board act provides for that committee. It never should have been fired. In the first place it was abolished by this government because Mr. J. R. Murray, who was chairman of the wheat board, would not work with it. This government had to choose between Mr. Murray and producer representation on the wheat board, and they chose Mr. Murray. As a result the producers have had no representation since 1936; they have had no voice at all in the forming of a marketing policy for wheat. Now we ask the government to appoint that committee.	During the
election they promised to do so. The newspapers quoted both the Minister of Agriculture and the Minister of Trade and Commerce as saying that such a committee would be appointed.	That committee should be
appointed while this house is sitting, so that hon. members may know its personnel. The members of that committee should be appointed a sufficient time before the marketing of the 1940 crop to enable them to consult with each other and with the wheat board. How can they advise the wheat board unless they are appointed a sufficient time prior to the marketing of the 1940 crop to help formulate a policy?
We should know who will constitute that committee. It is understood that the committee will have producer representation. Does this mean that the organized wheat producers of western Canada are to have a voice in selecting that committee? Are the pools and the farm organizations to be consulted? Producer representation is a farce and a sham unless the organized producers of the west have some voice in selecting the men who are to speak for them on that advisory committee. The government owe it to themselves, to this house and to the farmers of western Canada to name that committee without further delay.
Second, I want to ask the government to tell us during this debate when they propose to bring down legislation to provide for an interim payment on the 1939 wheat crop. There has been some argument in this house with regard to statements made by the

The Budget-Mr. Douglas (Weyburn)
Minister of Agriculture. I am not going to continue that argument. There were newspaper reports to the effect that the minister had made a definite promise that an interim payment would be made.


James Garfield Gardiner: No, there were no such reports.


Thomas Clement (Tommy) Douglas: I said there were newspaper reports to that effect.


James Garfield Gardiner: The newspaper reports said I promised that I would recommend it.


Thomas Clement (Tommy) Douglas: Oh, no. I do not want to get into an argument, but the statement was in the press.


James Garfield Gardiner: Read it carefully and you will see.


Thomas Clement (Tommy) Douglas: This is from the Star-Phoenix of Thursday, March 21, reporting the minister's address at Wilkie:
Definite promise of amending legislation to provide for a 10 or 12 cent interim payment on the current year's wheat crop was made here Wednesday afternoon by Hon. J. G. Gardiner. The Minister of Agriculture declared that if the King administration was returned to power the present bill would be changed so that a payment might be made as soon as possible.


James Garfield Gardiner: What is that from?


Thomas Clement (Tommy) Douglas: That is from the Star-Phoenix. I will send it over to the minister. But I did not rise to quarrel over what the minister said or did not say. I want to refer to what the minister said the other night in this house. He said he did not make the remark quoted in the newspaper, and I accept his word. He stated that he said he would recommend to the government an amendment to the act which would permit the making of an interim payment if conditions warranted it.


James Garfield Gardiner: That is what I did say.


Thomas Clement (Tommy) Douglas: Very well. Has the minister made that recommendation?


James Garfield Gardiner: Yes.


Thomas Clement (Tommy) Douglas: If the minister has made that recommendation, when may we expect the amendment?


James Garfield Gardiner: I cannot answer that.


Thomas Clement (Tommy) Douglas: If we are not going to get the amendment, it must mean that the government has not accepted the minister's recommendation; and I say to him that as a responsible minister of the crown, in fairness to the people of Saskatchewan he ought to resign from this government in protest.


James Garfield Gardiner: The whole of the time has not elapsed as yet, you know.


Thomas Clement (Tommy) Douglas: As the act stands at present no interim payment can be made, since the act provides that all the wheat must be sold and all the money received before a further payment can be made. I hope the government will bring down legislation to permit the making of an interim payment because, as most western members know, many farmers, on account of financial stringency, were not able to put in as large a crop this spring as they have in other years. Every day I receive letters from farmers whose financial position is such that they cannot do their usual summer-fallowing. They have not supplies; they have not repairs to their machinery. If this payment could be made at this time it would help these people do the summer-fallowing they will be unable to do otherwise, and will permit them to keep their land in the shape in which they usually keep it. Therefore I ask the government to make some statement, to tell these people whether they are or are not going to get this payment, rather than keep them in a continual state of suspense.
Third, I want to ask this government what their policy is with reference to the marketing of the 1940 crop. We are only forty days away from cutting in western Canada. The farmers want to know what facilities there will be for the marketing of their crop and what price they will receive for it. Are we going to continue the old three-way method of marketing? Is the 70 cent initial guaranteed price to be what the farmer will receive if he delivers his wheat to the wheat board? Surely the government ought to tell the farmers now, and not continue to say, day after day, that the matter is still under consideration. We have had no hesitation at all in saying where we stand. We have asked that the Winnipeg grain exchange be closed, because we believe that in these times selling through the open market is not the best way to handle the marketing of agricultural products. The speculative market represents the world market, and at the present time the world market is not in a normal condition.
As someone has already said, Great Britain and until a short time ago France had one buying agency in this country. There is nothing to prevent the wheat board representing the government and the farmers of western Canada from dealing directly with that agency. We maintain that selling through these pools and associations set up under the cooperative wheat marketing legislation is no longer practicable or feasible. These pools and associations handled something less than one per cent of the crop last year, and it
1214	COMMONS
The Budget-Mr. Douglas (Weyburn)
means only that the farmers enter into competition with one another, to depress their own price.
We therefore ask that this year the Canadian wheat board should take delivery of all the wheat marketed this fall and that it should take delivery of that wheat at a price which shall be commensurate with the cost of production.
I have before me figures prepared by the Dominion Bureau of Statistics which help to show what the return has been to the farmer in western Canada for his wheat. These are the average prices received at point of production, per bushel:
Average price received per bushel
1908 to 1913, inclusive	71
1914 to 1918 (war years), inclusive	 1.37
1919 to 1929, inclusive	 1.06
1908 to 1930, inclusive	90f
1908 to 1938, inclusive (but eliminating war years)	  .84
1908 to 1938, inclusive (but eliminating depression years)	 1.06
1908 to 1939, inclusive (but eliminating both war years and
depression years)	98
1930 to 1938, inclusive (depression
years)	56
1938-39 cereal year	59
The figure for the last crop year, 1939^40, shows that the farmer got 49 cents a bushel at point of production. These figures indicate that the 30-year average wheat price is 901 cents a bushel. AVith costs on the upper trend, the western farmer is facing sure financial loss with the price of his crop at 49 cents a bushel at the farm, as it was last year.
I cannot impress upon the house too forcibly that this is the condition of the western farmer. Almost everything he has to buy has gone up or is going up in price, and the 10 per cent foreign exchange tax imposed by the budget is bound to affect certain kinds of farm implements. He is already paying more for his farm implements than he was paying a few years ago, and by virtue of the 10 per cent tax he is now going to have to pay more. With his costs steadily going up and his income steadily declining, it is absolutely impossible for the wheat producer to carry on unless the government is prepared to fix a price for his wheat which would bear some direct relation to the cost of production. AA'e ask the government at this session without further delay to bring down an amendment to the Canadian Wheat Board Act which will provide for the farmer a reasonable price for the 1940 wheat crop.
[M'*. T. C. Douglas.]
I now come to the fourth and last recommendation, and it is this, that during this session the government should announce its policy wjth respect to the marketing of products other than wheat. Agriculture cannot continue in war time, any more than in peace time, on an unplanned basis. Whether the government likes it or not, it is going to be forced into the marketing of farm products; in fact, it has been forced already. It has already been compelled to take steps with reference to the marketing of bacon. It has already been compelled to come to the assistance of the apple growers.


James Garfield Gardiner: Not compelled; we chose to do it.


Thomas Clement (Tommy) Douglas: Compelled by circumstances.


James Garfield Gardiner: But we chose to do it.


Thomas Clement (Tommy) Douglas: Compelled to do it, because it helped the people who were growing the apples. Are we going to wait until other industries are bankrupt, or is the government now prepared to outline a broad marketing policy to take care of the handling of agricultural products for the duration of the war.
With that in mind we ask two things: First, that the inoperative clause in the Canadian AA^heat Board Act be made operative, or that it shall be invoked so as to permit the wheat board to take delivery of coarse grains.
Second, we ask that with all possible dispatch the government set up boards for the marketing of other agricultural products, and that it pay to the producers parity prices for those products. When I say "parity" prices, I do not mean parity prices to the shipper or to the exporter or to the packing house; I mean parity prices to the man on the farm who produces the goods. That is the only place where a parity price can be of any use.
Someone says: "But that sort of thing will take money, and world markets are dwindling." That is true. It may be necessary, as the hon. member for Qu'Appelle has suggested, that we shall have to store wheat in this country, and that we may have to make it economically worth while for the farmer to store wheat on his own farm. We may have to build facilities to store wheat in Canada. I would remind hon. members that already outstanding economists are telling us that long before this war is over, parts of the world will be facing starvation. If, when the war is over, we have to choose between having piles of gold stored up, as they have been in the great republic to the south of us, and having great quantities of wheat stored up, I

The Budget-Mr. Fair
do not think there is any doubt of our decision as to which would be the more useful or the greater economic asset. The day may not be far distant when the gold held by that great republic to the south will be a drug on the market. But any country which faces as we do in the years to come a great period of economic dislocation, and which has huge quantities of a commodity as imperishable as wheat, has a great asset indeed. With its nationalized central bank, Canada can well afford to take delivery of that wheat, to issue currency and credit against it, and to give to our people a reasonable price for the product they are growing.
Before I take my seat I cannot do better than quote a short statement which has been put out by the Alberta wheat pool in a little booklet entitled "The Story of Wheat." At page 40 the whole situation is summed up in a manner much better than I could do it. These are the words:
There is an increasing conviction among farmers and farm leaders that Canadian farm policies are antiquated and that a new governmental outlook is necessary to solve the problem of agriculture. That problem lies in the fact that, while more than three million of the population live on farms, agriculture receives less than 10 per cent of the national income, and its share has rapidly declined during the past ten years. The major problems of the Canadian economy as they revealed themselves in the past decade must be approached through a restoration of agricultural income and a marked expansion in terms of the national income.
Besides the three million Canadians living on farms there are another two million living in rural areas, whose livelihood depends almost directly on agriculture. Thus, when agriculture's existence is imperiled by low prices, five million Canadians suffer jointly. When that number of people lack sufficient buying power to purchase manufactured goods produced in towns and cities, is it any wonder that unemployment has been rife in industrial areas, the normal interchange of goods between town and country becomes impossible and the farm price level breaks down?
Canada's first duty is to find a means of securing a "living wage" to those engaged in the natural industries, of which farming is the foremost, to cultivate and safeguard their buying power in order that they may become a great and growing market for the production of the secondary industries of the nation.
Farmers do not want the wages and living standards of the people in the cities to be cut down. They prefer to see urban populations with plenty of money to spend. But farmers do want their own living standards raised, and that can only be brought about by the maintenance of prices of farm products. A way must be found to raise farm prices to equitable levels balanced against the fixed charges of labour, of services and of industry.
The farmer has learned to produce abundantly. One hundred years ago it took the efforts of 90 per cent of the population, busily employed on farms, to feed and clothe the nation. To-day 25 per cent of that population can easily do
the job. The farming population will never be satisfied to have its productivity used as a club to beat down prices to penurious levels. Ways and means must be found to protect the price level of farm products if the nation is to escape persistent depression periods.


Mr. ROBERT FAIR (Battle River):: Mr. Speaker, I am glad to have an opportunity at last to say something about wheat. Like most of the farmers in the west I do not feel quite happy if I cannot say something about that crop. On several occasions since we came here on May 16 I have asked the Minister of Trade and Commerce (Mr. MacKinnon) what the government intended to do about an interim payment on the 1939 wheat crop. When I first made this inquiry I gave as my reason for doing so a statement which had been made by the Minister of Agriculture (Mr. Gardiner) when speaking at Wilkie on March 21. That was just five days prior to the dominion election. In order that there may be no mistake about this, I should like to quote the report which appeared in the Edmonton Bulletin of March 21, 1940. Under the heading, "Liberals will give interim crop advance," it states:
Wilkie, Sask., March 21-Hon. J. G. Gardiner, federal Minister of Agriculture, promised amending legislation to provide for a ten or twelve cent interim payment on the current year's wheat crop when he addressed a public meeting here yesterday.


James Garfield Gardiner: Read the next sentence.


Robert Fair: It reads:
If the Liberal administration was returned to power March 26, dominion election day, present wheat legislation would be changed so that a payment might be made as soon as possible, he said.
It is amusing and confusing that the Minister of Agriculture made no attempt to correct that statement until after March 26.


James Garfield Gardiner: That is absolutely incorrect. The Canadian Press rang me up the next morning to ask me if that statement was correct, and I said it was not.


Robert Fair: I was watching the papers
quite closely because I expected something along this line to happen. I certainly was not disappointed. It is also amusing and confusing to find that this statement was used by several Liberal candidates in Alberta. That story was not contradicted until the election was over.


James Garfield Gardiner: It was used by many
Social Credit candidates.


Robert Fair: Public opinion has demanded
that something be done by the government with regard to the wheat policy, so the government have finally caught up with
The Budget-Mr. Fair

public opinion, just as they did in connection with doing something about our war effort. I am glad to see that this has happened. In order that I may not be accused, as have other hon. members in the past, of asking for something for the wheat growers of western Canada and not including the farmers in other parts of Canada, I want to say that I include the farmers of eastern and central Canada in what I have to say to-night. The farmers in all parts of Canada have been mistreated for the past number of years. They are the easy prey of those who are well organized. Those who are well organized have certainly taken full advantage of their position.
In days gone by we have had some hon. members, particularly the hon. member for Wellington North (Mr. Blair), and the hon. member for Wood Mountain (Mr. Donnelly), try to tell us something about farming. I would say to those gentlemen that a little learning is a dangerous thing, drink deep, or taste not the Pierian spring. It reminds me of something I read not many days ago, that old maids know more about raising children than do the mothers of the children. In other words, professional politicians know best how to run other people's businesses. I commend these sayings to these hon. gentlemen. I hope they do not worry too much about farmers' business until they learn just a little more about it. I am now referring to gentlemen farmers, those fellows who raise nothing but their hats. If they want to do something about the matter, let them get out on a farm and obtain actual experience, which they certainly have not to-day. I could refer to other hon. gentlemen, but I do not think it is worth while doing so and I have not the time. All this is just a sample of what has happened in this house, and I think it is about time people awoke to the truth and got down to business.
Ever since coming here in 1936, the group to which I belong has steadily advocated cost of production for the products of the farm. Again I say that this should apply not only to the west but to all of Canada. We know that the farmers of eastern and central Canada should have a living just as the farmers of the west. If Canada is to prosper, our farmers must first be prosperous. Without that, the prosperity of Canada cannot be permanent. As long as the farmer's purchasing power is depleted, he cannot buy. You can go into stores in the west and you will see signs over the cash registers saying, "please do not ask for credit." The people who are producing the wealth of Canada should not have to ask for credit. They should receive enough from their labour to guarantee them a decent stand-

ard of living, something which they do not have to-day.
As I say, we have advocated cost of production and a reasonable profit. That is not asking too much. I quoted figures on more than one occasion which indicated that when farmers get an average crop and a fair price, industry generally in Canada is booming. The railroads have more to do than they have when crops and prices are poor. On more than one occasion I gave figures to show that when the farmer was receiving an average price of around SI.30 to $1.40 a bushel for wheat, he bought no less than $82,000,000 worth of farm implements in eastern Canada. In 1932 and 1933, when prices were ruinously low, those purchases were restricted to just over $8,000,000, or ten per cent of what they had been in good times. Because of the conditions under which we have been labouring for a number of years, farmers' implements are almost worn out; and when I heard an hon. member speaking the other day of the government gathering up the junk of western Canada, I thought there would be a very great addition to that junk pile if only the farmers had a decent price for their wheat so that they could buy modern, up-to-date machinery.
For the past crop we have received in my locality up to the present 51 cents a bushel for No. 1 wheat. Those of us who were fortunate enough to harvest No. 1 wheat are getting that, but thousands of farmers out there were not so fortunate, and hon. members can gain some idea, from the price spreads quoted this evening by the hon. member for Qu'Appelle (Mr. Perley), what those other fellows received.
I am not asking that any particular price be paid, but I do contend that the government should figure out the cost of growing wheat-[DOT] I think they are able to do that just as well as they can estimate the cost of an aeroplane or a battleship-and if they added as little as five per cent profit, although that profit limitation was removed in connection with industry last August by order in council, we farmers will have no complaint whatever. Indeed, I believe we would be well satisfied. We would not be found lacking in patriotism and going on a sit-down strike if we got that much, although the manufacturers of Canada did so.


Karl Kenneth Homuth: Now, let us be fair about that.


Robert Fair: I have been " fair " for over forty years. We shall not come within the class of which the Prime Minister (Mr. Mackenzie King) spoke on the 8th of Septem-

The Budget-Mr. Fair
ber, 1939, when we were in the special war session. He had this to say:
I come to profiteering. I believe I have already stated in this house that I know of nothing in the world more contemptible than that any man should seek to profit from the sacrifices which others are making.
Let me observe here that we in the farming industry are making sacrifices and have done so for a number of years. Let this statement apply to those who are profiteering at the expense of the farmer. The Prime Minister continued:
And if the laws and other measures which this government may introduce and seek to enforce are not sufficiently strong to destroy anything in the nature of profiteering, I hope hon. members of this house will bring to our attention, in a way that will also bring it to the attention of this country, what we ought to do to achieve that all-important end. There are some things that are very difficult of accomplishment. Unfortunately human nature has its weak and its bad sides as well as its strong and good sides. Sometimes it is very difficult to cope effectively with the underworld and its methods. But let me say this: I care not who the individual may be, how respectable in his own eyes or in the eyes of others he may appear, or what position he may hold; if in *this crisis he seeks to profiteer he belongs to the underworld and should be treated as one of those who menace all that is sacred in the human relations.
I am not deliberately singling out any particular company, but I am going to give just one example; this is taken from the Ottawa Citizen of May 16, 1940:
Net Profit of $9,820,114 for Int. Nickel.
The report of the International Nickel Company of Canada, Limited, and subsidiaries for the three months ended March 31, 1940, issued by Robert C. Stanley, chairman and president, shows a net profit of $9,820,114 after all charges, depreciation, taxes, etc., equivalent *after preferred dividend requirements, to 64 cents a share on the 14,584,025 no par shares of common stock outstanding.
This compares with a net profit of $10,262,660 or 67 cents a common share in the preceding quarter, $9,547,300 or 62 cents in the three months ended March 31, 1939, and $10,113,764 or 66 cents in the first quarter of 1938.
I repeat that I am not singling out that company; I happened to have that clipping, and since I had a very short time to prepare my speech this evening, I am citing that as an instance of what is going on in Canada to-day. On the other hand I have given, the house some indication of the difficulties which farmers are up against, and I would ask the Prime Minister to take into serious consideration those noble words which he spoke on September 8. Somebody says he forgot them. I hope this will bring them back to his attention.
In this house, for a number of days, in fact for a number of weeks, we have been following very closely the actions of the British government. While we copy their actions in some directions, may I suggest that in the interests of some of the underdogs in this country we should follow them in other lines. I read from the "Journal of the Parliaments of the Empire" for April, 1940, page 253, under the heading, "Doubling the country's production":
The Minister of Agriculture should have a clear objective and should attempt nothing less than doubling the food production of the country. Mr. Lloyd George enumerated six points that should be dealt with:
The farmer must know that if he doubled his production there was an assured market for his produce.
Prices paid must cover the cost of production, which they did not do now.
In connection with that, I might say that the last price I have seen which the British farmer gets for his wheat is $1.31 a bushel.
The state should subsidize all well-thought-out drainage schemes.
Active steps should be taken by the state to ensure an ample supply of lime and fertilizers.
Cheap capital should be available for all that was necessary to enable the cultivator to bring the soil to the highest pitch of fertility.
Adequate labour should be provided to carry out this programme.
I believe that this government should follow the steps of the British government along that line. They have followed it in other respects, particularly, I believe, in connection with Bill No. 43, section two of which reads as follows:
Subject to the provisions of section 3 hereof, the governor in council may do and authorize such acts and things, and make from time to time such orders and regulations, requiring persons to place themselves, their services and their property at the disposal of his majesty in the right of Canada, as may be deemed necessary or expedient for securing the public safety, the defence of Canada, the maintenance of public order, or the efficient prosecution of the war, or for maintaining supplies or services essential to the life of the community.
We supported that bill in part. We tried to have it changed so that the burden should be distributed more fairly, so that the principle of equality of sacrifice should be put into operation, but we were not able to accomplish that purpose. The bill has been passed, and we find that the farmer is the first upon whom these powers are being practised. As far as I can see, at the present time there is nothing to do but accept the price offered.
We are practically out of markets at the present time, and yet only a couple of days ago a budget was brought down imposing still further taxes on the farming population, if not directly at any rate indirectly. Speaking of the price of wheat, I said I was not referring
The Budget-Mr. Fair

to any particular price, but I did suggest that the government take the time and trouble to find out the actual cost of production. This can be done. On other occasions we have brought forward arguments, and have proved them, to show that it costs considerably more to grow wheat than is paid at the present time. I can remember the Minister of Agriculture in a discussion at the last regular session, stating that wheat could be grown on certain farms at 30 to 40 cents a bushel. Mr. H. G. L. Strange says:
I have averaged up the price of all the wheat produced for 62 years and I find it comes to $1.14 for No. 2 northern at Winnipeg.
That is the opinion of Mr. Strange, who is at the present time director of the research department of the Searle Grain company. Other figures go to prove the same thing. According to bulletin 159 of the central experimental farm at Ottawa the figure of 95 cents at the farm is given. We must also remember that the farmers of western Canada are paying by way of interest on debts between 25 and 35 cents a bushel for every bushel of wheat grown. Other industries are guaranteed profits, and I do not see any reason why, particularly at this time when wheat is going to be one of the things that will help to win the war, we should be asked to grow wheat at a loss. In the United States they are taking particular care of their farmers. I quote from the Western Producer of March 28, 1940:
At Washington last Friday the United States senate passed the big $923,000,000 farm appropriation bill-$203,000,000 above the budget-[DOT] estimates, in the face of a warning from Secretary of the Treasury Henry Morgenthau that it should not expect the increase to be paid from the treasury's cash balance.
We could enumerate several other subsidies paid by different countries, but I will not go into that. I will give the figures from the Searle index for June 19, 1940. This will give an indication of the purchasing power of the farmer to-day. The index price of the articles the farmer buys, 147 items, now stands at 134; 1913-14 equals 100, which means that these articles cost the farmers in the west at the present time 34 per cent more than they did in 1914 before the great war. The price of wheat, No. 1 northern, as of June 18, basis the open market price, is now 23 per cent lower than it was in 1913-14. This means, therefore, that a bushel of wheat in western Canada now has a purchasing power in relation to the articles farmers buy of 57 per cent in comparison with the purchasing power of 100 which it had before the war. And we are still compelled to pay our debts, to pay everyone his pound of flesh, and to feel happy about it. I wonder how it can be done.
[Mr. Fair.l
Some people have the idea that western Canada is getting the cream and other parts of Canada none of it. I may have another opportunity to go into this question to show that we are not getting more than other parts of Canada. An hon. member says that we are getting less, and I think we can prove that easily. We can also show that we are paying more. I heard the arguments put forward by the member for Qu'Appelle (Mr. Perley) and the member for Weyburn (Mr. Douglas), and being a little further west than they are, we are in just a little tougher position. We have more freight to pay on the wheat we ship, more freight on our machinery and on other commodities we purchase.
We have heard a good deal in this house from both sides about the desirability of preserving Canadian unity; we are told we must preserve Canadian unity at all costs. But before we can hope to preserve Canadian unity, we must not forget that we cannot do it if one section of the country is trampling another section under its feet. We must have unity on an equal footing.
I would urge the government to make full use of the wheat board act for the sale of wheat and other grains. I would ask them to guarantee farmers, as they have guaranteed industry, the cost of production with a reasonable profit. I would also ask that the representation of the producers be placed back upon the wheat board. It would look rather strange and amusing, and possibly expensive, to other industries, if we had a number of farmers set up as a board to sell the products of any industry in Canada or to sell the labour or other services of any other class in the community. But that is what is happening to us to-day. How many representatives of organized agriculture have we working on the wheat board or in conjunction with it to-day. I do not think we have one. Is that fair? There is an injustice there that should be remedied and remedied at an early date.
We find that the railways are collecting the same freight on our wheat to-day as when wheat was close to S3 a bushel, and the elevator companies are collecting the same charges. The Winnipeg grain exchange is collecting the same commissions. Speaking of commissions, when we had a wheat commission set up not long ago to investigate the marketing and production of wheat, we found we had one hon. gentleman on that body drawing just $200 a day, and in case he could not make a living at that, we found an additional $20 a day set out for living allowance. If deals of this kind were

The Budget-Mr. Ross (Souris)
straightened out and equalized and these amounts went where they properly belonged, you would have far better service in Canada.
On different occasions we have asked that the grain exchange at Winnipeg be closed, and again we might follow the example set in Britain. Right after the war started, the exchange was closed there. Why not here? Not many months ago I read in the press that the company headed by the present purchaser of wheat and cereals for the British and French governments had a profit of 19 per cent, and yet we are asked to sell our wheat at very little better than half the cost of production. I do not know whether I should go any further with that. But I have a little piece here which I think applies very aptly to our present Prime Minister. It says:
Man can circle the earth without touching the ground; men can kill other men twenty miles away; man can weigh the stars of heaven; man can drag oil from the bowels of the earth; man can compel an icy waterfall to cook his meals hundreds of miles from the stream; man can print a million newspapers in an hour; man can breed the seeds out of oranges; man can coax a hen to lay 365 eggs in a year; man can persuade dogs to smoke pipes and sea lions to play guitars. Man, in other words, is quite an ingenious and remarkable package of physical and mental machinery.
But, when this astonishing person is confronted with one problem, he retires defeated to his hut. Show him six men without money and six loaves of bread belonging to men who cannot use it but who want money for it, and ask him bow the six hungry men can be put in possession of the six surplus loaves and watch him then. It is then that he (the prime minister) attends conferences and appoints committees and holds elections and makes speeches and cries out that a crisis is upon him. He does a score of useless things and then retires to his hut, leaving in the shivering twilight the tableau of the six hungry men and the six unapproachable loaves.
Mr. Speaker, I ask that the government do something really in the interests of the farmer, give him for once a square deal and be fair with us.


Mr. J. A. ROSS (Souris):: Mr. Speaker, it has often been said that much of the leadership which we should normally be now receiving was sacrificed or destroyed during the great war. In my opinion we citizens of Canada are most fortunate in having to-day as Minister of Finance a man of character and practical training such as we have in the present incumbent of that office, the hon. member for Prince (Mr. Ralston). I was indeed pleased to hear him state in his budget address that he would not strain the word "sacrifice" by applying it other than to those who offer their lives in this great conflict. That was a very fine statement.
In rising to offer a few observations on this question I do so as a representative of an agricultural constituency in western Canada, and while fully realizing that our first and foremost concern at this time is the winning of this war, my remarks at this moment will pertain to matters of an agricultural nature. The people of my constituency have been through difficult times during the past ten years, due to both climatic and economic conditions. They are not quitters, but in every sense of the word are optimists. They are out there to-day as other western agriculturists, with their backs to the wall, but putting up a magnificent fight. They expect justice and fair play from the government. Accorded these, the western farmer can be depended upon to make his full contribution both to the winning of the war, and following that, to the upbuilding and development of this great dominion.
A great deal was said last fall about the agreement entered into between the governments of Canada and Great Britain with regard to the importation of Canadian pork products by Great Britain and the price to be paid Farmers of this country were encouraged to go into pork production in a big way, and thus use much of their grain as feed. Under date of May 23, 1940, the house was informed that as far as the Department of Agriculture is concerned, complete bacon agreement information between the British government and the government of Canada is not available for publication. The fact is that notwithstanding the great surplus of bacon in this country, during the first four months of 1940, there were 27,186,900 pounds of pork imported into Canada from the United States. During 1939 a total of 264,366,943 pounds of vegetable oil was imported into Canada from foreign countries, replacing dairy products, lard, tallow and animal fats, and this vegetable oil was imported duty free. According to an order for return delivered June 21, 1940, United States bacon has been used entirely for the military camps throughout Canada since January 1, and vegetable oil shortening has been furnished to the Canadian army one hundred per cent in place of lard and animal fats, under requisitions of the Department of National Defence. Surely there should be greater cooperation in such matters. This situation is most discouraging to the hog producers of Canada at a time such as this.
I should like now to discuss wheat. I would compliment the hon. member for Qu'Appelle (Mr. Perley) for bringing up this matter this afternoon as a matter of urgent importance. As was stated by the hon. member for Weyburn (Mr. Douglas) this evening, wheat is a most important product to

The Budget-Mr. Ross (Souris)
the residents of western Canada, even at this time when its value in dollars and cents is so low. To me it is astounding that we should receive the report from the Winnipeg grain exchange stating that it was under request of this government that the action referred.to was taken, and that it should be done in that manner rather than that we as members of the House of Commons should first be informed of this action by the Minister of Trade and Commerce (Mr. MacKinnon) or by the Prime Minister (Mr. Mackenzie King). It seems to me that as members of parliament we have a responsibility, and that information might at least have been given to us, if not discussed with us, instead of being broadcast across this country as was done yesterday.
In discussing wheat we must remember that by far the greatest part of mankind is still engaged in agriculture; further that the income from wheat farming is the greatest single contributor to world agricultural income, and finally that the price of wheat exerts a stronger influence on agricultural prices in general than any other individual agricultural price. We have at present a huge surplus of unsold wheat in Canada. On the 25th of this month it was 279 million bushels. At -this date a year ago it was only 106 million bushels. It is a vast carryover that we have in prospect at the end of the coming crop year. At this time I think we should certainly have a statement from the government as to the handling of the 1939 wheat crop and also the policy in regard to the bountiful harvest now in sight for 1940.
In my opinion agriculture is suffering more at this time from what might be termed a lopsided development in this country than anything else. The Sirois commission report stated that from 1896 to 1913 under a vigorous immigration policy by the government of the day, assisted by land companies and railway companies, a tremendous expansion took place on the territories of Canada. Settlement took place without discrimination. The territory settled grew from about ten million acres to some seventy million acres in that period. The production of wheat was increased from approximately 20 million bushels to some 210 million bushels during that period, and of course since that time it has been almost doubled again. Hon. members may recollect that at that time no encouragement was given to industrialists and tradesmen to come to this country and develop industry to any great extent. I need not point out that we probably have greater natural resources undeveloped in this dominion than any other nation in the world. We have great facilities for the development of industries. If in this country -there had been a balanced programme of

immigration and development, probably we would not now be facing this problem of how to dispose of our wheat. I should like to refer to an article which appeared in the Labour Gazette of December, 1937, which points out that the family of -the average industrial employee consumes agricultural products to the extent of $409.35 annually. These products are listed as follows:
Animal products	Per	yearBeef, different grades	$40	25Veal	
7	75Mutton	
12	02Pork, leg and salt	
33	02Bacon (breakfast)	
16	43Pure lard	
17	58
Poultry and dairy products
Eggs, fresh and storage	
41	65Butter, dairy and creamery	
49	55Cheese, old and new	
24	13Milk	
34	32
Prairie products
Bread	
57	04Flour (family)	
23	40Rolled oats	
15	34
"Truck" products
Beans	
6	14Apples, evaporated	
8	27Potatoes	
16	48Prunes	
5	98
I think in this country we should have good reason to expect a population of fifty or sixty million. If we had an additional ten million employees in industry, on the basis of this article their consumption of agricultural products at prevailing prices would amount to over four billion dollars annually, which would more than take care of the agricultural problem we are facing to-d-ay.
Farmers are suffering as a result of events over which they have had no control. Farming is a business of many hazards. During the past twenty years wheat prices on this continent have varied from $3.18 to 33 cents a bushel. Rainfall has varied from practically nothing in some districts to forty inches in other districts during one season. Insect pests have taken a toll amounting to millions of dollars. I often wonder whether Canada as a whole realizes the debt it owes to agriculture, especially during these last few years of depression. Farm production goes on year after year, with little regard to whether or not that production represents a profitable enterprise for the farmer.
Agriculture differs from industry. In 1932, when Canada was in the midst of the worst economic storm of its history, the farms of western Canada produced a wheat crop of 423 million bushels. The production of that large crop at that time and its subsequent handling by our railway systems, its financing from the time it left the farms until it was sold for export, and the economic activity which it generated, constituted a major

The Budget-Mr. Ross (Souris)
factor in Canadian business at a time when the country as a whole was in the most [DOT]critical situation of its history. I believe the contribution of agriculture during those years in maintaining and in many instances increasing its production, was an important factor in preserving our national solvency *during that period. It is true that the farmer received little or nothing for his efforts, but he kept this great basic industry functioning at a time when other industries in Canada were faltering.
In his budget speech the Minister of Einance stated that the loss arising from the dominion guarantee of a price of 80 cents a bushel, basis No. 1 northern at Fort William, for the 1938 crop, had amounted to $52,000,000. He also stated that the net cash deficit of the Canadian National Railways for 1938 amounted to $54,314,000, and in addition the railways received certain subventions from the government. I should like to suggest that there are some 290.000 farmers on the prairies dependent for their livelihood upon agriculture, while 133,500 employees are dependent upon the functioning of our railways for their livelihood. In addition, I should like to remind hon. members that in 1913 the average salary received by railway employees was $648, but in 1937 that average was $1,375, whereas to-day the farmer receives considerably less for his work than he received in 1913. To-night figures were quoted, taking 1926 as the base year, and to-day that index stands at only 30 per cent for the farmer income.
As reported at page 2623 of Hansard for 1939 the Minister of Agriculture (Mr. Gardiner) stated that wheat could be produced at a cost of from 30 to 40 cents a bushel. I do not know how in the world those figures could be arrived at by any practical farmer. Moreover, those figures were based on an average of 20 bushels to the acre, which was most unfair. The average wheat yield for all Canada during the last twelve years has been 12-9 bushels an acre. I should like to quote from a cross-section test on the prairies, conducted by Doctor Hopkins of the federal Department of Agriculture in 1932, with regard to the cost of producing wheat. This information was obtained from certain farmers who had kept records, together with the records of the experimental farms, based on an average yield of 18 bushels to the acre:
Quarter section	Per bushel
1 man and 5 horses, threshing hired $1-02 Half section
1 man and 7 horses	 0.795
1 man, 15 horse power tractor and
2 horses	 0.85
One section
2 men and 14 horses	 0.774
1	man, 15 horse power tractor and
2 horses	 0.712
2	men, 6 horses, 15 horse power
tractor and thresher	 0.778
1 man, 15 horse power tractor, combine and truck	 0.636
Two sections
4 men, 28 horses, combine	 0.642
1	man, 20 horse power tractor, combine and truck	 0.554
Three sections
2	men, 20 horse power tractor, combine and truck, land ploughed...	0.542
2 men, 20 horse power tractor, combine and truck, land one wayed.. 0.511
As I said, that survey was conducted in 1932, when the cost of production was considerably less than it is to-day; and, of course, it was based on 18 bushels to the acre. Various other tests have been conducted throughout the country. I should like to refer to the work of Professor Hope, who is in charge of the department of farm management of the university of Saskatchewan. He points out that the average cost, plus interest on debt, throughout the province of Saskatchewan in recent years has been 91 cents a bushel, on the basis of an average yield of 14 bushels to the acre, which is still considerably higher than the average yield throughout Canada. If one takes into account to-day the higher cost of living brought about by the budget, it will advance those figures to considerably more than a dollar a bushel.
Professor Hope stated, as did Doctor Hopkins, in his survey, that the most economic unit to operate on the prairie provinces was a two-section power farm with tractor combine and truck, and that that is the most efficient wheat-producing unit it is possible to set up at this time. But less than one per cent of the farms in the west are as efficiently operated as that unit. I cannot recollect the exact figures, but I know the average farm operated in the west is in the neighbourhood of a half section. As a matter of fact, I think it is a little less than a half section. That is the basis upon which we have to consider the cost of production, so far as the average farmer of western Canada is concerned.
I have before me an article by J. E. Lattimer, professor of agricultural economics at Macdonald college. It deals with crops and wars.' He has in this article a chart on which he gives some detail as to the acreage of improved farm land per farm worker in principal countries to date. These are the figures as of October, 1939:
The Budget-Mr. Ross (Souris)

Country	Acres
Canada	 76-9
United States	 50
Great Britain	 30-3
Ireland	 17
Denmark	 14-7
Norway	 14-7
Spain	 12
Sweden	 11'6
Switzerland	 11*2
France	,	 i...	10
Poland	 5-7
Italy	 5-2
Bulgaria	 4-2
Then he goes on to point out the values of land in 1914, and in various periods up to the present. Land in 1914 was $38 an acre, on the average, while in 1938 it was $24, which is quite a reduction. On the other hand, farm wages, including value for board, during 1914 stood at $323, while in 1938 it was $405, and at the present time it is increasing at quite a rate.
Then, I have before me an article respecting distribution costs. It is issued by the 20th Century Fund's committee on distribution, and points out that approximately 59 cents of the consumer's dollar goes for the services of distribution, and only 41 cents for the services of production. There is much more detail in this connection, but I shall not weary the house with it at this time.
Mention was made this evening of Major Strange, who has done a good deal of research work for the Searle Grain company of Winnipeg. He has gone back over many centuries in his research work, and is conversant with other matters pertaining to agriculture. During October of last year that grain company, as a result of his findings, suggested that the allied governments at that time should enter into agreement with Great Britain direct, whereby they would pay $1.15 for Canadian wheat, basis No. 1 northern, Fort William. He gave various reasons why that should be done, and stated that while neither France nor Great Britain could possibly decide at that time the amount of wheat they would purchase in Canada, they could easily decide now to pay farmers a reasonable price, which price would appear to be around $1.15 a bushel for No. 1 northern in store, Fort William. He goes on to say:
Because Great Britain will be drawing heavily upon the United States for many raw materials, and because there is a limit to the gold, foreign exchange and American dollars available to Great Britain, she will tend to reduce purchases of wheat from the United States and so will tend, no doubt, to purchase wheat from Canada.
The review says it can be assumed that the allies will be glad to treat wheat on the same basis as any other munition of war, which means they will be glad to pay a proper,

decent and reasonable price for it, so that it can be produced in proper volume for the duration of the war.
Then he mentions the cost of living, and states:
Continuing, the review says in part:	"In
1913-14. which was in peace-time, wheat was 874 cents a bushel for No. 1 northern in store Fort William, and was considered by many to be a fair price, and by all certainly not an excessive price. The Searle index reveals that since 1913-14 the cost of all the things that farmers have to buy had increased by 31 per cent by September 1 last. (It has risen sharply since then, and will continue to rise further no doubt as the war proceeds).
Adding 31 per cent to the pre-war price which farmers received at their local elevators, simple calculation shows that an equivalent price to-day would be $1.15 for No. 1 northern in store Fort William for western farmers to be as well off as they were in 1913-14.
That this is a reasonable price is confirmed by the fact that the British government to-day pays for British wheat-of lower quality than Canadian wheat-the equivalent at par of approximately $1.30 a bushel. One dollar and thirty cents a bushel in Great Britain means about <$1-13 at Fort William."
Then, I have here another small chart taken from the Commercial Intelligence Journal issued by the Department of Trade and Commerce. It is dated December, 1938, and points out the prices paid for wheat and for a loaf of bread in various countries. Probably we should not refer to Germany to-day, but it happens to be the first country on the list. The prices are as follows:
Price of
Price of bread wheat per pound per bushel cents
Germany	... $2.28	64Italy 	.... 2.11	7-8France	... 1.64	3-8Norway	... 1.62	4-8Belgium	.... 1.17	3-1United Kingdom .	... .65	4Canada 	... .60	7It will be noted	that the price	of bread in
Canada-and this was in the city of Winnipeg -was 7 cents a pound.
Based on the findings of Doctor Hopkins of the federal Department of Agriculture; of Professor Hope, of the department of farm management, Saskatoon university; of Major Strange, of the research department of the Searle Grain company; of Professor J. E. Lattimer, professor of agricultural economics at Macdonald college, and of several practical farmers who have kept detailed records on their own farms for the past twenty years, and also in view of the discussion on the budget at this time, I maintain that the wheat crop for the coming year should be handled through the wheat board on a parity price,

Loss oj H.M.C.S. Fraser
along with other products for the prosecution of this war, and at a price of $1.25 for the producer, basis No. 1 northern Fort William.
Some reference was made by hon. members *who spoke this evening, the hon. member for Qu'Appelle (Mr. Perley) and the hon. member for Weybum (Mr. Douglas), to the fact that we may yet reach the point where currency might be issued against wheat in storage. I believe that might well be done. It was also pointed out that in future years our storage wheat might be of greater value to us than would be the tremendous amount of gold stored in the vaults of the nation to the south of us. I think that is quite possible.
Turning again to the budget as it was presented, may I observe that I was rather disappointed to find that a liquor tax was not mentioned. It was stated this afternoon by the hon. member for Danforth (Mr. Harris) that ten million quarts of liquor are consumed annually in Canada, and I believe a reasonable tax on that consumption would bring in many millions of dollars to the treasury, and at a time when it is badly needed. To-day certainly liquor is nothing but a luxury. We should also have a small additional tax on gasoline, much of which is used for purposes of luxury. This would bring in considerably more revenue. I think all luxuries should be heavily taxed. Otherwise the budget seems to be quite fair. It probably will bear a little heavily on the small salaried people of this country.
Under the mobilization bill which was passed the other day the government take upon themselves greater dictatorial powers under order in council than have ever been granted to any party government in the world. Notwithstanding that fact, I think the members of this parliament should be taken into their confidence whenever possible. Personally I should like to see parliament assembled at least every ninety daj's during the conduct of this war. The people of Canada expect at least that from their representatives. It would have a steadying effect upon the people, which I think it is our duty to try to create in a time like this when they are apt to become jittery. With this great power which has been given to the government of the day, I hope they will try to take the elected members of all groups in this house into their confidence as far as possible. We should not go too long without being assembled to look after, not only the conduct and the winning of this war, but the welfare of the people generally.
On motion of Mr. Reid the debate was adj oumed.
On motion of Mr. Crerar the house adjourned at 10.55 pan.
Friday, June 28, 1940



RAILWAYS AND SHIPPING


[Stage Direction]
Mr. J. P. HOWDEN (St. Boniface) presented the first report of the standing committee on railways and shipping owned, operated and controlled by the government, and moved that the report be concurred in.
Motion agreed to.