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

Mr. NICHOLSON:: 1.	How much wheat has been delivered at country elevators in the three prairie provinces in each of the following crop years: 1939-40, 1938-39, 1937-38?
2.	What amount of wheat was traded in the Winnipeg grain pit, and what amount cleared through the Winnipeg Grain Exchange Clearing Association during each of the above periods?
3.	Where is grain for Churchill inspected before being shipped to the port?
4.	How much grain was rejected in 1939 and 1938?
5.	What disposition was made of the rejected grain?
Mr. MacIvINNON (Edmonton West):
1.	August-May, 1939-40, 385,110,879 bushels; August-July, 1938-39,	281,255,243 bushels;
August-July, 1937-38, 118,326,431 bushels.
2.	Information not available.
3.	All grain consigned to Churchill is inspected at The Pas, Manitoba, with the exception of cars loaded too full to sample which are inspected at unload.
4.	Crop years.
(to June 30)	1938-39	1937-38bushels	bushels	bushelsWheat.. ..	. .. 1,257,501	5,358.839	736,725Oats	. .. 17,128	16 $56	25,516Barley.. ..	.. 3,464	9,774	6,456Flax	1,147	....Rye	. .. 4,761	4,290	4,104
5. Disposition not known, but presumed sold as rejected.


QUESTION PASSED AS ORDER FOR RETURN
Mr. MacINNIS:: 1.	Is there provision made for the maintenance of the dependants of interned Canadian citizens?
2.	If so, what is the amount per month (a) for a wife, and (b) for each child?
3.	To whom should the dependants of such interned person in British Columbia make application?


MOTIONS FOR PAPERS
Mr. DIEFENBAKER:: For a copy of all correspondence, petitions and other documents since January, 1940, relating to the filling of the vacancy for postmaster at Rosthern, Saskatchewan.


RECENT RELEASE OF JOE CELONA FROM WESTMINSTER PENITENTIARY
[Stage Direction]
On the notice of motion:
For a copy of all correspondence, letters, telegrams, petitions and other documents sent by any individual or individuals to any official of the Department of Justice or to the Minister of Justice in connection with the recent release of Joe Celona from the New Westminster federal penitentiary.
Mr. SINCLAIR:: I would ask that this motion be dropped.


Mr. HANSON (York-Sunbury):: I presume it was the mover in whose name the notice stands who made the request to have it dropped. I am not in accord with that request. I think the matter is important and the order should be tabled. If I am voted down, that will end the matter for the moment, but I am opposed to having the notice dropped.

National Dejence


Mr. LAPOINTE (Quebec East):: The mover of the motion is responsible for it and is the master of his own actions in the matter. May I say that even if the matter were not closed, this motion could not be accepted, because, as my hon. friend well knows, it relates to confidential matters.
May I say furthermore that the man who is mentioned in this motion was rearrested yesterday. The ticket of leave has been cancelled on representations which have been made to the department.


Richard Burpee Hanson: That is a full justification of the position I have taken. I understood that that was the case, and I am glad that the minister made the statement he did. But that does not tell the whole story. Why was he let out, in the first instance?


Ernest Lapointe: I am quite willing to say.


Richard Burpee Hanson: Second, why is he taken back now?


Ernest Lapointe: I am quite willing to say why, and why the ticket of leave was cancelled. My hon. friend would not get that by this motion. The motion could not be accepted by the house.


Mr. SPEAKER:: The hon. member cannot withdraw without the consent of the house.


Richard Burpee Hanson: Well, I shall not press the matter. I have got what I want.


NATIONAL DEFENCE
[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I
desire to ask the government a question of which I have given the minister notice. Will the Minister of National Defence (Mr. Ralston) give consideration to the formation as home guards of civilian rifle associations throughout Canada, as was done in England and France, and give them recognition? During the Finland campaign the value of the rifle in modem warfare was demonstrated. I suggest that the government concentrate first, as was done in England, on miniature rifle ranges for men to practise on in our cities and towns under citizen clubs and home guards. Lord Roberts urged this national work before the great war. Will the minister look into the matter? It will cost little for Canada to become a nation with a reserve of men who will know how to use a rifle, an arm the efficiency of which has been amply demonstrated in the present war.


Hon. J. L. RALSTON (Minister of National Defence):: I took note of the hon. gentleman's question the other day. I may say to him that my opinion-and it is also the opinion of the officers of the department-is that, having regard to the policy which is being pursued of authorizing recruiting up to war strength of the non-permanent active militia units, the formation as home guards of civilian rifle associations would not be justified for the purpose of teaching Canadians how to handle rifles. I may remind my hon. friend that a week or two ago my colleague the Minister of National Defence for Air (Mr. Power), who was then acting Minister of National Defence, announced to the house that the recruiting up to war strength of non-permanent active militia units, of which there are about ninety, had been authorized. Our opinion is that it would be far better-in fact I expect to make an appeal to the Canadian public to this effect-to proceed with matters of military training of this kind through the organization of the non-permanent active militia, rather than by forming these other bodies.


INQUIRY FOR RETURN
[Stage Direction]
On the orders of the day:
Mr. E. G. HANSELL (Macleod):: May I direct a question to the Minister of Agriculture (Mr. Gardiner). On June 17 there was passed an order for return respecting copies of affidavits sent in under the Prairie Farm Assistance Act for townships 10 and 11, range 27, west of the 4th meridian. I wonder whether the minister would care to say when we may expect this material.


Hon. J. G. GARDINER (Minister of Agriculture) :: So far as it is possible to bring down the information required in the order, it will be brought down as soon as possible. Listening to what has been said, however, I would suggest that there is some question whether we are at liberty to bring down all declarations made by individuals, because they might be considered confidential.


SOCKEYE SALMON FISHERY
[Stage Direction]
On the orders of the day:
Mr. H. C. GREEN (Vancouver South):: May I direct a question to the Minister of Fisheries (Mr. Michaud)? As the minister knows, there has been quite a serious dispute on the Pacific coast concerning the price to be paid to fishermen for salmon during the present season.

Trans-Canada Highway
Various parties asked the government to intercede, and it was my understanding that the minister said the other day that the government would make some move to try to help in ironing out the trouble. Time has run on, the season is passing, and apparently some of the fishermen have not yet gone out to fish, while others who have gone out are threatening to return unless there is some settlement of the dispute. What action have the government taken and what do they propose to do?


Hon. J. E. MICHAUD (Minister of Fisheries) :: The hon. member was kind enough to intimate to me that he intended to make this inquiry. The matter of the sockeye salmon fishermen on the Pacific coast has been referred to us and has been submitted to the war-time economic committee for study and report, and I expect that the report of the committee will be ready for release this evening or to-morrow morning.
With regard to the general situation, our information is that on Monday morning all the fishermen who had taken out licences to fish proceeded to the fishing grounds; but there are a few seine boats which have been tied up in Vancouver since the beginning of the season, and I am informed that this method of fishing is not a large factor in sockeye fishing.


TRANS-CANADA HIGHWAY REQUEST FOR FEDERAL ASSISTANCE IN RECONSTRUCTION OF CUSHING BRIDGE AT CALGARY
[Stage Direction]
On the orders of the day:
Mr. C. E. JOHNSTON (Bow River):: I have received a letter from the East Calgary Taxpayers' Association in regard to the construction of a new bridge on the site of the present Cushing bridge in Calgary East, on the trans-Canada highway. These people are desirous of having a new bridge built there because the present structure is dangerous having regard to the amount of traffic going over it on account of its location on the trans-Canada highway, and they are asking that something be done about the matter. I think it is the intention of the provincial government to assist in the construction of this bridge, but apparently the city of Calgary has refused to have anything to do with it because it is on the trans-Canada highway. I have sent notice of this question to the minister, and I wonder if he would make some statement now.


Hon. T. A. CRERAR (Minister of Mines and Resources):: I have not received the
notice the hon. member says he sent me.


Charles Edward Johnston: I sent it to the minister's office about one o'clock.


Thomas Alexander Crerar: That does not alter the fact that I have not received it. I did not fully catch my hon. friend's question, but I gather that the matter to which he refers is one that should be directed to the provincial government at Edmonton, rather than to the federal government at Ottawa. It is not the business of the federal government to build bridges on provincial, municipal or any other sort of roads.


Charles Edward Johnston: But this is on the trans-Canada highway.


Thomas Alexander Crerar: That makes no difference.


Charles Edward Johnston: May I just state-


Some hon. MEMBERS:: Order.


Thomas Alexander Crerar: During the last few years we have given some federal assistance to various provinces, in fact I think to all the provinces, towards the construction of tourist highways, but nothing beyond that.


Charles Edward Johnston: In this memorandum the taxpayers' association refer to a letter which the minister wrote on October 23, 1939. I can read, if necessary, the part of that letter quoted.


Thomas Alexander Crerar: If my hon. friend will let the matter stand until to-morrow I shall look into it, and I may be in a position then to give him further information.


Richard Burpee Hanson: Is there any federal responsibility? It would not so appear to me. The minister might direct his attention to that point.


Thomas Alexander Crerar: That is correct.


APPLE SURPLUS
[Stage Direction]
On the orders of the day:
Mr. J. S. ROY (Gaspe):: I should like to repeat the question I directed to the Minister of Agriculture (Mr. Gardiner) on June 27, concerning the free distribution of the 1939-40 apple surplus. May I expect an answer before prorogation?


James Garfield Gardiner: As I remember the incident, that question was asked in very much the way in which the question is now asked, and I think I suggested that the hon. member put his question on the order paper so that I might answer it in the ordinary way. So far as I know that suggestion has not been carried out, but I shall obtain an answer for the hon. member.
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Department of National War Services



NATIONAL WAR SERVICES


[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved that the 'house go into committee to consider the following resolution:
That it is expedient to introduce a measure to establish a Department of National War Services, with power to the minister thereof to conduct a national registration and survey, to promote, organize and co-ordinate offers of voluntary assistance and public information services; to assist in carrying out the purposes of the National Resources Mobilization Act, 1940; to establish councils, committees or boards or use existing agencies to assist the minister; to empower the governor in council to prescribe penalties for violations of the act; and to provide further for the employment of officers, clerks and employees necessary for the proper conduct of the business of the department and to authorize the payment of expenditures incurred under the act.
He said: I imagine everything hon. members would wish to discuss on the resolution may be discussed on the bill itself. My purpose in calling this order first is to enable me to introduce the bill and have it distributed immeditely, so that hon. members will have it before them in case we are able to reach the bill itself later in the afternoon. As soon as this resolution is disposed of it is my intention to call the order dealing with the amendment to the Department of National Defence Act. When we have concluded with that measure I may ask the house to give consideration then to the act respecting the Department of National War Services.
Motion agreed to and the house went into committee, Mr. Vien in the chair.
Mr. STIRLING:: I think it was a very reasonable request that we should proceed with this measure as far as the first reading of the bill, but I believe we should like any further discussion to stand in order that we may have an opportunity of considering the bill itself.


Mr. MACKENZIE KING:: Certainly.
Resolution reported, read the second time and concurred in. Mr. Mackenzie King thereupon moved for leave to introduce Bill No. 75, respecting a Department of National War Services.
Motion agreed to and bill read the first time. NATIONAL DEFENCE



APPOINTMENT OF ADDITIONAL MINISTERS AND DEPUTY MINISTERS FOR MILITARY, NAVAL AND AIR SERVICES

[Stage Direction]
Right Hon. W. L. MACKENZIE KING (Prime Minister) moved the second reading
[Mr. Gardiner.}
of Bill No. 74, to amend the Department of National Defence Act.
He said: As I intimated to the house a day or two ago, the purpose of the present measure is to make provision for an additional portfolio in relation to the Department of National Defence. At the present time the administration of all branches of the department is under the Minister of National Defence and the Minister of National Defence for Air. It is proposed to make provision for a third minister, the Minister of National Defence for Naval Services, whose duties with respect to naval matters will be similar to the duties of the Minister of National Defence for Air in regard to matters pertaining to the air forces.
The present bill repeals the act passed this session with respect to the appointment of a minister of national defence for air, but reenacts its provisions in their entirety in a broad manner which permits of the inclusion in the Defence Act, which is the act that is being amended, of the duties and functions of the Minister of National Defence for Naval Services as well as those of the Minister of National Defence for Air. It will be noticed that the bill also makes provision for the appointment of a minister to be associated with the Minister of National Defence. I might explain that when my hon. colleague who until recently was Minister of Finance (Mr. Ralston) consented to take over the duties of the Department of National Defence he felt he would wish to have associated with him a colleague who could be immediately at hand to assist him in seeing that matters of urgency in the department were expedited as rapidly as possible, and that no delays would occur, for example, through the absence of the minister himself. As an example, assuming the minister were called upon to leave the city and visit a training camp, or if he desired to perform that particular duty, one which would come naturally within the duties of the minister of national defence, there would not be, unless special provision were made for it, a minister here at headquarters with authority to take immediate action concerning some of those matters which might require prompt attention and action.
As the Minister of National Defence for Air has had a wide experience in the Department of National Defence, having acted as minister of that department for a considerable period of time, my colleague feels that he would be better qualified than anyone else to take on the responsible duties of associate Minister of National Defence.
The purpose of the bill as to its immediate application is to give to the Minister of

National Defence-Additional Ministers
National Defence for Air the authority of the Minister of National Defence with respect to any matters which may come up in the manner I have described. At first glance the proposal appears involved, but hon. members will on reflection see that it is quite simple and also very necessary. It may be made readily apparent by considering just one concrete example of the working of the proposed arrangement. An acting minister might perform certain duties, but he would not have the same authority as a minister who has been given his powers by statute. It is to enable whoever acts as associate minister to assume full authority, not only in his own eyes but in the eyes of officials and other members of staffs of the Department of National Defence, and also in the eyes of the public, to act for and in full authority as Minister of National Defence, whenever the minister may be absent, or whenever in relation to some particular matter the minister himself may so request, that this additional provision is being made.
Grote Stirling: Do I understand from the explanation given by the Prime Minister that there will be three individuals, namely the Minister of National Defence, the Minister of National Defence for Naval Services and the Minister of National Defence for Air, who, at least for the present, will also be associate ministers?	[DOT]


William Lyon Mackenzie King: No; there will be three ministers of defence. There will be the Minister of National Defence, the Minister of National Defence for Air and the Minister of National Defence for Naval Services, each of whom will have full authority with respect to his own immediate department. But with respect to the Department of National Defence there will when this bill becomes law be associated with the minister of that department the minister of the Department of National Defence for Air, who will have the same authority with respect to matters of national defence as the Minister of National Defence himself would have. There is no provision made for an associate minister, beyond the Department of National Defence.


Grote Stirling: Just three individuals?


William Lyon Mackenzie King: That is correct. The purpose is to expedite matters, and also to assist the minister himself in connection with the many matters which will come before his immediate department. In other words, the minister while dealing with one important matter might wish to have someone with the authority of a minister of national defence deal with some other matter also relating to defence. This provision would give authority
without questions arising in the minds of anyone as to whether or not authority existed.
I believe I have covered all that could be said on second reading. If there are any questions in committee, they may be answered at that time.


Richard Burpee Hanson: The statement of the Prime Minister (Mr. Mackenzie King) has to some extent clarified the situation. At first blush it might appear from the bill that we were to have four different ministries of national defence, and I just wondered where we were going. I now understand the Prime Minister to say that there are to be three individuals: the Minister of National Defence proper, in the person of the hon. member for Prince (Mr. Ralston); the Minister of National Defence for Air, whom we all know, and the new Minister of National Defence for Naval Services. I had the idea in mind that the Associate Minister of National Defence might be a fourth or alternating individual, if I may put it in that way.
I suggest to the Prime Minister that the bill is unhappily drafted. I understand now what the idea is, but I am not at all certain that the bill itself carries it out.
It will be understood of course that we are not opposing this measure. We want it to go through, because it has been the announced policy of the government that as a war measure there should be an additional minister. We do not desire to delay or oppose the measure. But whoever drafted section 3, in which provision is made to add an additional section to be known as section 4A, has not made the intention clear. Certainly we do not find any definition of the functions of the associate minister in question, although a reading of the sections found on page 2 of the bill may make the situation a good deal clearer. On reflection it may appear that the exercisable powers are sufficiently set out in subsection 2 of section 3, but certainly from a reading of the new section 4A one does not get a clear impression of the intent. It is definitely stated now, however, that the purpose of the bill is to make provision for an associate minister, who will be the Minister of National Defence for Air so long as he occupies that position, and who will be associated with the minister proper, to act either in conjunction with him or in his absence. The bill further makes provision for a minister of national defence for naval services.
May I ask the Prime Minister if the government has given any consideration to the suggestion I made some time ago, and to which I have had no response, respecting the appoint-
1194	COMMONS
National Defence-Additional Ministers
ment of an overseas minister of national defence? It may be that in view of the changed circumstances that such an appointment is not necessary, but I should like to know what the reaction of the Prime Minister has been to the suggestion. May I have a specific declaration from the minister also as to whether a policy has been reached with respect to sending additional men overseas other than those required as reinforcements for the first division? There are conflicting reports as to the necessity of further overseas aid, first, with respect to man-power and, second, with respect to war equipment of various kinds. I could enumerate the different types of equipment which might be required, but I think we are all well aware of what they are. I have never been able to get out of my mind the appeal made by Mr. Eden when he spoke on that Sunday and asked for more guns, more tanks and more planes. What is the government doing with respect to this particular sphere of activity? It is about time we had a report on it.
Then there is the matter of other supplies. I have in mind particularly foodstuffs, such as wheat. Are we doing anything to supply the mother country with what she needs in the way of foodstuffs? Are we making any effort to supply out of our abundance countries in Europe which are still open to us? Are we just waiting until the British government gives an order for wheat or for other commodities that may be required?
While I am on my feet I should like to make a suggestion to the government, one which I make not with hesitation but with the utmost good-will. We have an opportunity to make a magnificent gesture to the British government. We are carrying a huge surplus of wheat from the 1939 crop and there is the prospect of an abundant harvest later on this year, which will increase our supplies of this most important of foodstuffs, now being quoted on the market at a very low price. Some hon. members will contend that the price is below the cost of production. Why should not this government give the British government 100,000,000 bushels of the wheat carry-over? Serious consideration should be given to this suggestion. We should not wait until the British government comes along and, shall I say, bargains with us for the price to be paid. It is one thing that Canada can do. We have a superabundance of this commodity which Great Britain either needs now or will need later on. To give Britain 100,000,000 bushels of our wheat would serve a useful purpose; it would release that much storage space for the new crop. From what I hear, I do not know where it is going to be stored.


Mr. McCANN:: Not in England.


Richard Burpee Hanson: I do not
know where they will put it in England.


James Joseph McCann: They have no large storage facilities now.


Richard Burpee Hanson: Of course
my hon. friend does not know any more about it than I do. I do not know where they will put it, but I think they will take care of it if we offer it to them. My hon. friend's remark is just a red herring which he is drawing across the trail. I urge upon this government that they say to the British government that we have a superabundance of this vital foodstuff and offer the quantity I suggest. It would be a great gesture to the people of England, one which ought to have been made long ago.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Vien in the chair.
On section 1.
William Lyon Mackenzie King: My hon. friend asked one or two questions on the second reading. I did not wish to make a reply at that time, but I will give an answer now that we are in committee. First of all, with respect to the matter of an associate minister. The situation, as it will be in fact and in practice once this measure is enacted, will be precisely as my hon. friend the leader of the opposition has described it. I agree with him when he says that the section as drafted is wide enough to permit the appointment of a fourth associate minister to the Minister of National Defence. While it is not the intention to make any such appointment the government has felt there were strong reasons why it might be advisable to leave the section exactly as it is. One does not know what may happen in the course of days and months. A situation might arise where the minister might feel that he would wish to have someone appointed as associate who could give his entire time to matters arising in his office. If a situation of that kind arose it would likely arise very suddenly and possibly before there would be an opportunity to get a measure through to help to meet the situation which he would wish to meet.
I say quite frankly that while it is not intended to make any such appointment, while it is intended that the associate minister shall be the present Minister of National Defence for Air, it has been thought advisable to leave the section as it is with the understanding that if the occasion should arise where, for example, the Minister of National Defence for Air would not in addition to his own duties

National Defence-Additional Ministers
as minister of defence for air be able to meet the demands of that particular office, the minister himself might then feel that he had the authority to proceed with the appointing of someone else. Of course, if another appointment were made there would have to be further provision from parliament to meet the salary of such appointee, but there is no intention to ask for such salary at the present time.


Richard Burpee Hanson: Perhaps
unwittingly the draughtsman has caused the government to do just what I suggested might be done with this bill. Apparently the Prime Minister has, I shall not say seized the idea from me.


William Lyon Mackenzie King: That is what was intended.


Richard Burpee Hanson: That intention was not stated at the beginning. I think it is a good suggestion; it would afford an opportunity to have someone associated with the minister in addition to the Minister of National Defence for Air. There is something else that might be considered. Unfortunately there could be a repetition of what has happened. We cannot keep out of our minds the fact that accidents do happen and have happened. I am quite content that the Prime Minister and the government should accept the interpretation which I placed on this section, and keep open the possibility of appointing a fourth associate.
This bill has no short title. Of course a short title is not essential, but it might have occurred to the draughtsman.


William Lyon Mackenzie King: It is part of the national defence act.


Richard Burpee Hanson: It will
become part of that act?


William Lyon Mackenzie King: Yes.


Richard Burpee Hanson: Has the Prime Minister given consideration to the matter of the appointment of an overseas minister?


William Lyon Mackenzie King: Yes. May I say that ever since the war commenced the government has had before it the question of whether it was advisable and necessary to appoint an overseas minister. Our minds have been quite open on that matter from the beginning, but we have not felt that up to the present a situation has arisen which demanded it. During the last war there were obvious and special reasons why it was desirable to have an overseas minister. I need not go into those reasons at the moment as they are pretty generally known. As I have said, thus far we have not felt that there was any
necessity for the appointment of an overseas minister. Matters have been working quite smoothly in London as between different branches of the administration there and the office of the high commissioner. We are fortunate in having in the person of the Hon. Mr. Massey, our present high commissioner, one who is himself a member of the privy council, has been a member of the cabinet, and one who is very efficient in the discharge of his very responsible duties. He has an immediate contact with members of the British government and with others holding high administrative posts in London. Thus far we have not been in any way embarrassed by not having an additional minister in London. I am afraid that the appointment of an additional minister might serve only to create embarrassment. Such an appointee would be a fifth wheel to the coach over there, at the present time at all events. As my hon. friend has himself remarked, the situation has changed materially. If the war had run along on lines similar to those of the previous war there might have been necessity for an overseas minister, and it is of course possible that before the present war is over the need for such an appointment may arise, but up to the present time we have not seen any necessity for such an appointment.
I might point out an additional reason why the necessity is not likely to arise. In addition to having the High Commissioner for Canada in London, we have to-day in Ottawa in the person of the High Commissioner for the United Kingdom a further means of immediate and speedy communication between the governments of both countries. That situation did not exist before. We also have had visits to the old country by members of the government itself. My hon. friend will recall that the Minister of Mines and Resources (Mr. Crerar) visited London shortly after the war commenced and spent a month or more in contact with the British government and with our own forces, and more recently the late Minister of National Defence, Mr. Rogers, also visited London. I presume other ministers will be crossing to London as the occasion and the need for their presence there arises. In these circumstances generally we have not, as I have said, found it necessary to make an appointment of a minister overseas.


Richard Burpee Hanson: I can quite understand what the Prime Minister says, that the need for the appointment of an overseas minister has not yet arisen, whatever the future may hold in store for us. While I am on my feet I wish to make clear that in raising this question I had not the slightest intention of making any reflection upon the
1496	COMMONS
National Defence-Additional Ministers
high commissioner or upon his ability to act on behalf of the Canadian government in London. Such a thought never entered my head, and I want to make that quite clear.
I alluded to another very important matter. I should like to have a declaration of the government's policy with respect to sending more men to the old country. This seems to be the appropriate place for me to ask for it, and if the government is not ready to make a statement to-day, perhaps it will give the matter consideration and answer later. Are we to send more men to the old country? If we are not, we ought to know it. Beyond sending over the necessary reinforcements- and I assume it is the accepted policy that the forces over there will be kept up to full strength-I think the country ought to know just what the intention of the ministry is, one way or the other. It was intimated at one time, I forget by whom, that the second division would not now be sent over but would be kept on garrison duty in Canada. That announcement was a source of great disappointment to a lot of officers of the second division who had hoped to go overseas and who would not have sought commissions in the second division if they had thought they would be obliged to stay in Canada and do garrison duty. I can think of nothing more deadly in the life of a soldier than to have to hang around a garrison town and perform routine duties when there might be an opportunity for him to get nearer to the thick of the battle. I personally know one or two valuable citizens who would be glad to go overseas with the second division but would loathe the idea of becoming officers if they were simply to hang around a garrison town in Canada-and as my associate (Mr. Stirling) remarks, with the second division almost entirely unequipped.
On this question of equipment I think it is time that we had a further report from the ministry as to what equipment is going forward, what will go forward, and so forth. The country is awaiting some declaration from the ministry in that regard. While dealing with this subject, I hold in my hand a copy of a magazine called Time. Let me say at once that I never before read this magazine, and judging by the number of inaccuracies it contains-that is all I am going to call them at the moment-inaccuracies which to me at least are apparent, I do not think I shall want to read it very often. In its issue of the 8th of July, under the caption "Canada- There will always be an England," appears an article which if true is a terrible reflection on this country. I just cannot believe that 
all the statements in this article are true; I do not believe it. I know nothing about the man who wrote this article.
Unfortunately he may not have got in touch with the true situation with respect to the subject matter to which he alludes. But this is a magazine which I understand is circulated by the hundreds of thousands, if not millions, in the neighbouring republic, and articles of this kind are likely to do great damage to our prestige in that great country. I do not know whether the Prime Minister or the Minister of National Defence have seen this article, but there is a whole staff of press agents and propagandists attached to the ministry and I do not know any better purpose to which they could be put than to refute some of the statements contained in this article, because it is a direct reflection not only on the ministry but on the people of Canada as well. It is almost in the category with some of the stuff that has been published by the Saturday Evening Post. If I wanted to go after this government and embarrass it I could do nothing better than to read this article, but I am not going to read it. I do not believe all the things that are contained in it, but something ought to be done to counteract this kind of propaganda, because, as I have said, it is a direct reflection on the people of Canada as well as on the government.
At the very opening of the article there is a slighting reference to the Prime Minister, a reference to his, shall I say, physical structure, which somewhat resembles my own. To me it does not appeal at all, and I am calling attention to the article to ask the government to take steps to have this sort of thing kept out of Canada. More than that, some attempt ought to be made to refute or counteract it in the United States, whose good opinion we seek and value most highly at this time. Never was there a time in the relations between the two countries when there was a warmer feeling than there is now mutually between our cousins across the line and ourselves. The two countries have come closer together, more out of sentiment, I think, than anything else, and articles of the kind to which I refer have a tendency to bring this country into disrepute. I have felt that the policies of the government in days gone by- this is an old story and perhaps I should not bring it up at all-have had a tendency to bring too much of this kind of trash into the country. I remember listening once to the Prime Minister when he said that there should not be any tax on brains. In theory that is a fine principle, but there should be a prohibitive tax on trash coming into Canada.

National Defence-Additional Ministers


James Layton Ralston: My hon. friend has put me in a difficult position particularly with regard to his inquiries respecting troops going overseas. I have in mind, without fixing any date whatever, that a very large body will be proceeding overseas very shortly. These are not directly troops of the second division. I have in mind also that on account of communications which have been received from the government of the United Kingdom a substantial part of the second division is now on special duty outside Canada. I have in mind also that communications have been passing in the last few days with regard to the remainder of the second division, and yesterday I spent all morning with the staff officers and with the officer designate in command of the second division discussing the question as to the wisest policy having regard to the communications to which I have referred.
My hon. friend will understand that the situation is naturally a difficult one. We have to take account of the situation in Canada, the requirements here, and the possibilities which may arise with respect to the defence of Canada and the necessity for having trained troops here ready to move should the emergency demand it. We have to take into consideration what might be regarded as our more distant lines of defence, and we have to consider the communications exchanged with the United Kingdom from time to time with regard to the best disposition having regard to the greatest advantage to the common cause. These communications have been considered. To-day I am dealing with a message which, in consequence of a discussion held by the war committee of the cabinet last night, is being sent to the United Kingdom regarding the best disposition of the remainder of the second division, less a proportion which I consider and which, I may say, my officers consider it desirable to have remain in Canada at the present time. No one realizes better than I do what my hon. friend says- that, so far as the officers and the men are concerned, there may be a certain amount of ennui and boredom in service in Canada. As a matter of fact, if hon. members will permit a personal reference, I enlisted, I can remember, in the fall of 1915 and we sailed in October, 1916. I know therefore how tiring it becomes to soldier in Canada when the excitement is elsewhere. But we were not at that time in the situation we are in to-dav. The troops with whom I was associated did not expect to be, and really did not see any possibility of being called upon at any time to do duty here for the defence of Canada itself.
If I might digress for a moment, the Canadian troops at present enlisted-and 95826-95
there is something like 70,000 of them in Canada, or close to that number-are required to perform a variety of duties demanding varied training. They are required for coastal defence. That is one type of duty. They are required as guards of internment and prison camps. They are required as guards of vulnerable points. They are required for the purpose of the tactical defence of Canada, should the necessity arise. Detachments are required also to go to the outposts of this continent or the outposts of empire, to perform special duties on their own initiative, and I should perhaps point out that in some instances these special duties make a special call on equipment and accommodation, reducing what is available for the forces training here which might be avoided if troops went to the United Kingdom. And in addition to the various possible activities I have mentioned our soldiers may be sent to England.
In the short space of time since I have assumed office-I assumed office last Saturday morning-I have felt that the necessity in Canada was to give fundamental training in drill, in discipline, in musketry, in the different things that go to make up the basis of a soldier's work, and then give specialized training having regard to the different jobs which they may be called upon to do. That is what we are endeavouring to do at the present time. Every soldier who can be sent will be sent wherever it is considered he can be used most effectively. I have a responsibility to the people of Canada and to the empire as well, and I shall try, if I may put it in the first person, to discharge that responsibility to the best of my ability in the endeavour to dispose of the troops as may seem necessary under the circumstances.
As regards the sending of the remainder of the second division, we are now in communication with the United Kingdom and a message is being dispatched to-day as a result of the decision which was arrived at last night at the meeting of the war committee of the cabinet with respect to what further may be done in that regard. Without disclosing anything which, in the public interest, I should not make known, I may say this further. At that conference yesterday morning my one endeavour was to see whether it was possible to have troops in Canada sufficiently trained, mobile, adaptable and flexible to be able to substitute them for troops whom we might send on certain special duty if that should prove desirable. As a result of that discussion, we did arrive at a disposition which could release another substantial number of trained troops for that purpose. I

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cannot make any further statement in that regard this afternoon. I can assure the committee that I am fully alive to the needs of the situation and the diverse requirements which we in Canada are called upon to face. I may say further that I intend to speak to-night to the people of Canada to inform them that, as a result of the authorizations which have been given, there will be room for nearly 40,000 more men in the Canadian active service force; and in addition to that, if men do not want to enlist in the Canadian active service force and to spend their full time soldiering at the moment, they will have an opportunity of enlisting in the nonpermanent active militia and putting in two weeks' training at headquarters and two in camp, or all in headquarters or in camp, as facilities may allow. Thirdly, if they do not desire to enlist in either of the units, in six weeks' time the first quotas will be called out for training in connection with the general mobilization. I shall try to indicate the opportunity and the need for the enlisting and organization of man-power in these large numbers that I have indicated, so that we may be able to train them to meet whatever exigencies may arise.
With regard to equipment, my hon. friend has touched upon a point of interest to us all, a point of vital interest to me. He knows that there are items of personal equipment and items of unit equipment in connection with which there is a shortage. The situation was that up to two months ago, in exchange for our wheat and other things that we were selling to the old land, Great Britain desired us to permit her to supply as far as possible the heavy unit equipment necessary for these units. That time has gone by. In the United States there were also sources of supply, but the situation has changed there as well. The result is that Canada is very much on her own in regard to the supplying of equipment. When I say that we are doing everything possible, I want hon. members to take that assurance one hundred per cent. Ten days before I assumed this post I had a conference with the Acting Minister of National Defence (Mr. Power), the Minister of Munitions and Supply (Mr. Howe), his officers, and our staff officers, and we went ever every item of equipment we could think of. Plans as definite as possible were made for the production or procurement-it cannot be all done at once, and I am sorry it is not going to be faster than it is-just as quickly as we can in this country, and from other sources of supply, of equipment for our own needs regardless entirely of United Kingdom sources of supplies. We are dealing with this situation. As the hon.

member for Yale (Mr. Stirling) remarked, if we send a second division we expect to procure overseas a good deal of the heavy unit equipment. The motor transport for the second division is over there now. We expect to have Bren gun carriers and a little later to be able to send them over in replacement of those to be supplied by the United Kingdom in the first instance. Other items of equipment were to be obtained over there.


Richard Burpee Hanson: Before the minister continues will he tell us very frankly the position with regard to the Bren guns?


James Layton Ralston: Will my hon. friend
permit me to do this? The leader of the opposition in the senate asked the same question the other day. I have somewhere among my papers, although not here, an exact statement of the number of Bren guns which have been delivered, the number which will be delivered on August 1, and so on. I have not the figures in my mind, although I think 1 could give them with considerable accuracy. 1 should be glad to furnish them to the leader of the opposition, to the leader of the Cooperative Commonwealth Federation group, and to the leader of the Social Credit group.


Richard Burpee Hanson: The minister prefers not to make that information public?


James Layton Ralston: That is so. But I can assure these hon. gentlemen and all members of the committee that I was gratified by the statement, having regard to the terms of the contract. I am sure that what has been said about deliveries ahead of the contract will be very substantially implemented.


Mr. BROOKS:: Does that apply to the tripods which are needed for the Bren gun?


James Layton Ralston: I cannot tell my hon. friend that. I do not think there was any mention in the statement of tripods. I had it in mind that that would apply to the complete gun.


Grote Stirling: It cannot be used without the tripod.


James Layton Ralston: Let me say just one word further, with regard to uniforms. I am told that serges are coming in at the rate of fourteen thousand a week, summer dress at the rate of twenty-one thousand a week; and that those amounts will be substantially accelerated within the next two or three weeks.


Thomas Langton Church: I can assure you, Mr. Chairman, that it is the desire of every good citizen in Canada to cooperate with the present Minister of National Defence (Mr. Ralston) in

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his work. But it is right to point out to him that Canada was one of the countries which took a leading part in urging Britain to scrap the finest army, navy and air force the world ever saw. For many years past Canada has supported the babble of the pacifists. It is unfortunate that the minister has not before him at the present time a proper national registration and survey. Although he is a very able minister, a good soldier and patriot, and a great Christian gentleman, he is unprovided, as he starts work with any survey of the man-power of this country. No mere division or subdivision of departments can cure that defect now; it is too late.
The people of Canada have been criminally negligent in matters of defence. They have simply not taken it seriously. Canadians from coast to coast, led by pacifists in and out of the house and by some of the pacifist press of the country, thought that Canada had all eternity to prepare for this war and to organize her man-power, her naval power and her air service.
What are the facts regarding this department? In my opinion the present Minister of National Defence should be supreme in this department. I sympathize with the Prime Minister (Mr. Mackenzie King) and the cabinet in their work. I believe it is the duty of us all to unite and cooperate with them with a view to the maximum of unity and the minimum of criticism, and in any remarks I make during the next three or four minutes my single aim is to be constructive.
I do not know what is going to become of the new army to be raised by the former minister of agriculture (Mr. Gardiner). He is one of those who for many years supported pacifist doctrines. When I raised in the house this question of a register, what did a number of professors say? I mention this because it concerns the main question with which the minister has to do-the question of manpower. We might have had an army from coast to coast of six hundred thousand men, operating under a voluntary system, if the government had supported at that time the proposed system of registration. It would not have been difficult to get recruits when there were three or four hundred thousand young men out of work, many of them riding the rods.
One of the main hindrances the minister has to combat is the pacifists in Canada. I hope the time is coming when no more pacifist professors and judges will be brought down from the prairie; we have had enough of them in the past. Addressing a meeting of students in the university of Saskatchewan, two years ago, about the time that I moved for a national compulsory register of man-power, one of the professors said:
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The British empire is not worth fighting for.
The dean of arts of Alberta university at the same time declared that Canada should consult Washington rather than London in matters of defence policy. He favoured frank conferences at Washington rather than fiddling with someone in London.
It showed how the pacifists depended on pan-Americanism and such shams as the league and collective security. One of the main things the minister needs to do is to put a stop to all this pacifism. The other .day the Witnesses of Jehovah were banned as an illegal organization. What is to become of these pacifist professors and the pulpit preachers, some seventy-four of them, who signed a "Witness against War"? There was some correspondence with the Ontario government as to action against them but nothing was done. Man-power is the main consideration in this country at the present time, and you are not going to get people to enlist so long as these pacifist organizations are free to persuade the youth of this country, including those at the universities, to fight the law and not to do one's duty to one's country and defend it at a time like this.
Coming to the question of land services, I believe that this bill repeals one of the statutes already passed and assented to this session in another place. It is now intended to substitute this bill, of which sections 2, 3 and 4 are the binding clauses. Definitions are given; and the government may, under the War Measures Act-"may" is the word used-create additional ministers who are called associates. I believe that these associates for the navy and the air are somewhat like under-ministers are in the old country. I believe there will be some conflict of authority, although I desirh to support all these ministers, including a minister of information as well.
When the war broke out all the members, for the Toronto district received a letter from the late minister of national defence, who met such a tragic death, and from his predecessor, who did a great deal of good work at the start in organizing mechanized units, to the effect that they desired our cooperation in Toronto. I wish to state that since the war started we, the members of that district, have never had any invitation from the officers or heads of that military district to take part in assisting the department's effort. In my opinion there should be an immediate shake-up in that district, the greatest recruiting district in Canada, to get the maximum of effort.
In conclusion I would say just a word regarding the air scheme. As we are too late on land, now we are too late in the air and in the naval service. When the scheme was brought.
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forward in 1937 I supported it. At that time there were two or three visitors from the old country. It is a funny thing: anybody could come here from the United States preaching pan-Americanism and he was received with eclat. But when anyone came here from the old country and offered suggestions, as Lord Jellicoe did in connection with providing more destroyers for the greater protection of this country on the Pacific, they were criticized in the press from coast to coast because it was thought they were criticizing the government of Canada and were from Britain; yet they were right in urging that we be prepared and cooperate with Britain.
Three years ago, during the discussion of the estimates of the Department of Labour, I suggested that we should have a national scheme under which unemployed young people, of whom there were three or four hundred thousand at that time, might learn a trade, receive military training and be given pocket-money, clothing, food, lodging and deferred pay. At the end of their period of national service apprenticeship they would be in a position to become air mechanics or pilots, or to enter into the different branches of the aircraft industry, or into six or seven key industries. I also proposed then, and later, that we should have a survey made of all manufacturing plants, large and small, including those connected with the automobile and agricultural industries, with a view to preparing for war, but nothing was done.
I should like to pay tribute to the type of recruit that is representing Canada on land and sea and in the air. These men are writing a glorious new chapter of courage and chivalry at the present time. They are magnificent young men of nineteen, twenty and twenty-one, many of whom entered the service at considerable personal expense, and they have been carrying on in a manner worthy of the best traditions of the last war. At the outbreak of this war it might have been said that Canada had to depend on the mother country for defence by sea. Lord Jellicoe recommended that certain things be done at Halifax and Vancouver, and the Singapore base for Pacific protection, but the government of the day did not accept his recommendation, and as a result we are still completely dependent on the mother country for protection as we were years ago on land and sea, and in the air. In 1931 we undertook to look after the protection of our ports and coastal waters for three miles out, but in my opinion we are not able to do so under the statute of Westminster. We have splendid men in our Canadian navy, men prepared to live up to the best traditions of the Royal Navy,

but they have been handicapped by lack of proper ships and equipment. We are a nautical people; we lead in all aquatic sports; we should be training fifteen or twenty thousand men yearly for the Royal Navy and merchant marine because, as I have said before, when Great Britain entered this war she had 2,000 fewer ships to carry troops than she had at the outbreak of the last war.
I do not like this system of dividing the department into groups. Mere divisions will not amount to anything; everything will depend on the men administering the departments. I am sorry for those who are in charge at present, because it will take two years to train men and nearly two years to equip them properly. However, I do wish the government every success in the work they are undertaking, and I know that if they have the courage to go forward and give us a real war government, they will have the united support of the people of this country from coast to coast.


James Layton Ralston: I might say just one word in reply to my hon. friend's remarks concerning conflicting authority. He is perfectly right in raising that question, because under the broad powers of the act there might be difficulties as between the minister and the associate minister. I am sure, however, that no such difficulties will arise between the proposed associate minister and myself. It is of the utmost importance to the department to promote continuity of administration and to have the benefit of the experience of my colleague, who has agreed to undertake this work in addition to his other duties. With regard to conflict of authority, however, I think I can make this statement, which has been agreed upon by my hon. friend and myself and that is that as far as the public and the staff are concerned, whatever is done by my colleague is to be taken as done with the same authority as though it were done by the minister himself, and the government of course must take the responsibility. Any division of duties, or any delegation of duties, will be a matter between my colleague and myself; that is to say, we will make that arrangement and will simply stand by each other, with the ministry being responsible in the end. I am satisfied that there will be no conflict; and it was because T know my hon. friend as I do that I asked him to take on this important assignment.
I should like to add just one word to what the Prime Minister has already said. Perhaps the words "bottle neck" and "red tape" are the most often used by anyone criticizing any governmental administration. I am not so

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sure that either term is warranted. But anyway the appointment of another minister will
provide two bottle necks instead of one. That is to say, it is quite possible that we may be working along parallel lines. My colleague might be dealing with the matter of supplies while I might be dealing with training, or vice versa, and these matters would not have to be referred from one to the other. We shall have our consultations between ourselves, and I can assure my hon. friends that when they are given a decision by either my colleague or myself they can depend upon it that the other will stand by that decision.
You will note also, Mr. Chairman, in subsection (2) of section 3, that the associate minister is given the powers of the Minister of National Defence unless the governor in council otherwise directs. So far as I am concerned-and I think I can say this for the government-it is not proposed to impose any limitation under that section as far as the appointment of my colleague the Minister of National Defence for Air is concerned; but that provision is inserted so that if a time should come when a new minister had to be appointed, and it might be desired to impose some limitation on his authority, then that can be done in the order in council.


Howard Charles Green: As I understand it, the main purpose of this bill is to provide for a Minister of National Defence for Naval Services, and in that connection I think it would be only fair both to the house and to the country if the government would give us some idea of their plans for the Canadian navy. Within the last week or two we have lost one of our destroyers, with quite a large loss of life, and- the Canadian people at this moment are much more interested in the navy than they have been for many years. Coming from one of the coast provinces, the question of the Canadian navy is of great importance to me as it is also to the other members from those provinces. The present position is that we have only six destroyers left and apparently some smaller boats. The two coasts of Canada are in far greater danger now than ever before. The announced policy of this government during the last two or three years-the Prime Minister will correct me if I am wrong-has been that Canada alone should be responsible for the protection of her ports, for protection against raids and minor attacks, and for the protection of our shipping for at least a reasonable distance from our shores.


William Lyon Mackenzie King: Not alone but as a first duty.


Howard Charles Green: It is quite obvious to everyone that our fleet, as it stands at present, is not sufficient for these purposes. Apparently there is some intention of expanding it; otherwise it would not be necessary to provide for a separate minister. Although I do not ask the government to give any information which should not be disclosed, I would ask them to tell us within such bounds what they plan for the navy. For example, have they in mind the taking over of any of the units of the French navy, as has been suggested in different parts of Canada? Then, a further question: Have they in mind the construction of any warships in Canada? At the moment we cannot build any warships, not even destroyers, and I think it is time we made plans to put ourselves in a position where we could build at least these smaller war vessels. Then, are we taking steps thoroughly to modernize in every way our two great ports of Halifax and Esquimalt, so that they could service any type of warship?
I should like to have information from the government respecting these questions, and would remind them again of the report which Admiral Jellicoe made in 1919, at a time when he headed a naval mission for the Canadian government. His recommendations will be found in these words at page 10 of chapter 1 of his report, beginning at paragraph 4:
The question of the naval forces required by Canada may be viewed in two ways: first in the light of Canada's own requirements, and Canada's own safety; and secondly, in the broader light of the security and safety of the empire as a whole. The naval force suggested as adequate purely for the protection of Canada's trade and Canada's ports under the conditions assumed, comprises

And I would point out to the committee that this is what he recommended as a minimum for a Canadian defence navy.
-three light cruisers, one flotilla leader, twelve torpedo craft, eight submarines, with one parent ship, and certain auxiliary small craft for training purposes, et cetera.
Would some member of the government tell the committee what the plans are?


Thomas Langton Church: And he recommended the Singapore base for Pacific protection.


William Lyon Mackenzie King: I think, Mr. Chairman, that as we are about to appoint a minister of National Defence for Naval Services, it would probably be appropriate and preferable that the new minister to be appointed should be the first one to make a statement respecting that particular matter to the house.


Howard Charles Green: He will not be in the
house.
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William Lyon Mackenzie King: That is true,
but he would be in a position to prepare a statement to be given to the house. I might say I would hesitate very much, knowing the present situation, to attempt at this time to say very much about naval affairs on either the Atlantic or Pacific coasts. I think it would be the most indiscreet thing that could possibly be done. I do not mention that as a means of evading the question my hon. friend has asked or of evading the giving of the information he has requested. To answer his question I believe we would require a very carefully prepared statement by the Department of National Defence itself. Whether that statement should be given openly, or whether it should be disclosed to hon. members in another way, would have to be carefully considered.
My own opinion is that particularly in respect of naval affairs at this time, such information as we have to disclose ought to be given in confidence to members of the house, rather than given to the public generally.


Howard Charles Green: Does that mean a secret
session?


William Lyon Mackenzie King: Not necessarily; but it could be, if that were desirable. All hon. members would, I think, be prepared to admit they would like to see larger defence forces on our Atlantic and Pacific coasts than we now have. If I wanted to explain the reasons why the forces are not more adequate I would have to go back into the history of past political controversy.


Howard Charles Green: What about the last two
years?


William Lyon Mackenzie King: Frankly, I
think the greatest mistake ever made in respect of Canadian defence is that the policy of a fleet unit on the Atlantic and on the Pacific coasts, which was the policy of Sir Wilfrid Laurier when he went to the country in 1911, was defeated. If the naval policy of Sir Wilfrid Laurier had been carried out we would have had, and before the last great war, a fleet unit on the Atlantic and on the Pacific composed of a battleship on each coast, cruisers, destroyers and submarines, complete, as was done, for example, in Australia.


Howard Charles Green: Why could that not have
been done between 1921 and 1930?


William Lyon Mackenzie King: If my hon.
friend wishes me to answer that I would say it could not have been done for much the same reason as that which brought about the defeat of the Laurier administration, when its naval policy was made a political issue of

that day. However we are not likely to get very far to-day by discussing these old questions.
I repeat that what I would have liked to have seen would have been a complete fleet unit on the Atlantic and on the Pacific. I think it is a sound policy. It is a policy which certainly I did all I could to advocate at the time, and have advocated ever 6ince. But in considering defence matters in these recent years the governments of the day, regardless of which party has been in power, have had to consider what they could do in the light of the opinion of the people of Canada generally through those years. And my hon. friend knows as well as I do that while there were many things many of us would have liked to do, we could not have obtained support in parliament or in the country to do some of those things in the years to which he has just referred. We are beginning to see now that it would have been more fortunate for all of us had some lines of action been taken earlier than they were. It is easier to be wise after an event, than to be wise before it occurs.


Howard Charles Green: I did my best to urge it on.


William Lyon Mackenzie King: Returning to my hon. friend's question respecting the position of our defences from the point of view of sea defence: As he knows the Canadian government has been asked by the British government to send part of our defence fleet across the ocean. Four of our destroyers, until one was lost, were in British or European waters, and for some time past have been in British waters. We took this action of sending these destroyers overseas at the instance of the British government to carry out what was represented as the most helpful form of cooperation in meeting the critical situation with which the United Kingdom was faced at the time.
Steps have been taken to meet the weakening of our own defence force, as a consequence of the destroyers going overseas, but I would not wish to disclose at the present time what those particular steps are. AH I can say is that the matter had better be left to be answered by a carefully prepared statement from the defence forces themselves, to be given to hon. members in a manner which at the time may seem most expedient.


Howard Charles Green: The observations of the Prime Minister lead me to another matter. I am quite confident that the government would be particularly assisted in their war effort if they made provision for small committees of the house to deal with military matters and

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questions respecting naval and air activities. Many hon. members have considerable knowledge of the problems confronting the different departments of government dealing with our war activities. The work of .those committees could be carried on secretly; there would be no need to have any publicity in connection with what was done. They could sit between sessions and, if necessary, could go from one coast of Canada to the other, or even to Great Britain. In that way private members of parliament would have some idea of what is going on. I must say that at the present time members both on the government side and on the opposition benches have very little knowledge of what is happening, and I believe, if they were given an opportunity, they could make useful suggestions and give great help in conducting Canada's war effort.
At the beginning of the session the Prime Minister suggested the setting up of a committee on military affairs, but the idea was dropped. I would ask him to reconsider the plan, because I am convinced that committees of that type could render a real service to Canada under present conditions.


William Lyon Mackenzie King: As the hon. member has just said, when parliament met I did have on the order paper a motion which was intended to do the very thing he has suggested, namely to establish committees which would have power to bring before them officials of the department of National Defence who could give information which it might be thought might not properly be given on the floor of the house. It was indicated however at the time that that was not the best way to proceed. This was so expressed, I believe, from the opposite side of the house. I withdrew the motion and, as a matter of fact, was, if I recollect aright, applauded for so doing. I still believe however that my hon. friend is right when he says that committees of the kind would be helpful. My mind is quite open on the matter, and I shall be glad to discuss the subject anew with my colleagues.


Thomas Langton Church: I should like to ask some questions based upon the last remarks of the Prime Minister. Has the present Canadian government any commitments or understanding with Washington regarding the naval protection of the Pacific and Atlantic coasts of this country? Two years ago I called the attention of the Prime Minister and the Minister of National Defence to this matter. At that time we were discussing a defence vote to cover the naval protection of the Pacific coast from Puget sound to Queen Charlotte islands, 600 miles up the coast. It was stated that this outlay for the defence of the Pacific was to protect Canada's neutrality should the United States be attacked by a foreign power. That foreign power was not named, but the country referred to is well known.
I should like to know also what stand Canada took at the last imperial conference in connection with the Singapore base and the empire shipping scheme which constitute a protection for Canada in the Pacific and for the empire.
The hon. member for Vancouver South (Mr. Green) asked for certain information. This information is given quite openly in the British House of Commons by the First Lord of the Admiralty without any secret sessions or committees. Answering a question the other day by Sir William Davison, the First Lord of the Admiralty stated that the statute of Westminster provided that each dominion should protect its coastal waters for three miles out. Outside the three mile limit, the Admiralty would assist in any defence measures to the best of their ability against the German peril.


William Lyon Mackenzie King: A minute ago I said something about indiscreet replies; I think I ought to say something to my hon. friend about indiscreet questions. I cannot imagine myself giving a "yes" or a "no" to the question asked by my hon. friend. Regardless of what reply I made, it would be entirely misunderstood and misinterpreted, not only in this country but much more so in the country to the south. I therefore ask my hon. friend not to press his question any further.
As to	what took	place at the	imperialconference with respect to the Singapore base, I have a recollection of discussions on the subject at imperial conferences I have attended in London. I recall the matter came up in 1923 and I think again in 1926, and I am sure it has been discussed at other conferences since that time. I do not at the moment recollect	whether	it	came up at	the lastconference in 1937. If my hon. friend will place his	question	on	the order paper, I shallbe glad	to give	an	answer to it	if it is
possible for me to do so. Before disclosing the information requested I would wish to communicate with the British government and obtain their consent to any disclosure.
My hon. friend's next question had to do with the obligation of Canada in connection with our coastal defence. I am sure this whole matter is set forth in the report of the last conference. The imperial conference of 1930 decided that each dominion should undertake the defence of its own coasts as a first obligation, and that there would be cooperation between all parts of the empire in defence matters, as a second obligation.
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Mr. NEILL:: The hon. member for Vancouver South (Mr. Green) has been asking about the policy of the government in connection with naval units on the Pacific, and also what the policy of Canada had been in the past in this connection. We have been told that in 1911 the policy of Sir Wilfrid Laurier was to have quite an extensive naval unit in the Pacific. Reference was made to a battleship, destroyers and the necessary smaller boats that would accompany such a unit. If the hon. member for Vancouver South wants to inform himself as to what has been agitated in the past in connection with Pacific coast defence, he will find that in 1924 or 1925 I introduced a resolution urging the government to take definite and active steps toward providing more naval protection on the Pacific coast. I did not suggest anything as extensive as that indicated by the Prime Minister as being the policy in 1911; all I asked for at that time was a destroyer or two. The matter was debated for the usual length of time, about a day, but it got no support whatever from the government side, the Liberal party. The only support from the party to which the hon. member for Vancouver South belongs was from Mr. Tolmie, later premier of British Columbia.


Howard Charles Green: That was long before I got here.


Alan Webster Neill: He only damned it with faint praise. If the hon. member looks up the record at that time he will find how unwilling, not only one section of the house, but the whole house was that anything of that kind should be put into effect, the need for which I foresaw and advocated at that time.


Mr. MacINNIS:: I should like to say a few words on this bill, but they will not be by way of criticism, either of the bill or of the government. What I am going to say is just my own thoughts, but I believe the same point of view is held by the members of the group to which I belong. In the first place, I think we should get away from talking about what took place in the past. That sort of thing is not going to help us at all because to-day we are facing a situation which is altogether new and which no one could foresee. I remember when I held the opinion, although perhaps not as strongly as some of my colleagues, that there was no necessity for Canada arming to any extent because of our proximity to the United States. It was said that the United States would not permit Canada to be invaded or attacked. To-day we find that the United States is disturbed because the means of protection to which they looked in the past, the British navy, is now occupied in another quarter. They are disturbed because the 
British navy is being kept close to Europe. The United States finds it necessary to keep its naval force in the Pacific, and the Atlantic coast is not protected.
These are conditions which no one could foresee two or three years ago. I imagine what the government has in mind to meet the present situation is that we must build up the military and economic defences of Canada to the greatest possible extent, and cooperate with the other parts of the British empire. At the present time we are about the only democratic country, outside the United States, left in the world. I believe that to-day we have the cooperation of the United States to a greater extent than we realize, and I feel that this cooperation will be greater and more complete as time goes on. If we can hold off the aggressors for some time we shall be able to increase our own strength, and that holding off will bring us other friends and in that way our task will be made easier. But for a considerable time the defence of democracy will require all the resources and strength which Canada and the other parts of the British empire can muster. New situations will arise from day to day and we shall have to face them as they come. Our policy cannot be a rigid one; it must be elastic to meet conditions as they develop. But one thing at least has been driven home to us: isolation as we thought of it in the past is no longer possible. Just what form of international security we shall have after this war is over, I do not know, but we shall have to prepare for some form of international cooperation to the end that we may have national and international security. Something of that nature will be necessary if we are to avoid a war every quarter century or so.


[Stage Direction]
Section agreed to.
On section 2-Definitions.
Howard Charles Green: May I ask the Minister of National Defence whether recruiting for the active service force has been proceeding as satisfactorily within the last few weeks as was expected?


James Layton Ralston: I do not know what was anticipated, but the reports that I have had are that for the week or two about which I know, enlistments have been in the vicinity of 1,000 a day. I would say that is very satisfactory.


Howard Charles Green: Is the minister in a position to give us the total number now under arms?


James Layton Ralston: I always hesitate about giving the number of troops under arms, but I have indicated that there are about 76,000 in Canada and near to Canada.

National Defence-Additional Ministers


Alfred Johnson Brooks: Does that 76,000 include the men who are under training in the militia, or is it active service only?


James Layton Ralston: Recruited for Canadian active service force. My hon. friend will know that a slight deduction has to be made from that number when we are talking about the Canadian active service force for service overseas, because there are certain detachments of the non-permanent militia units which were called up for coastal defence and which, although they are receiving Canadian active service force pay, were not recruited for service overseas, but the number would not at a gueas amount to more than 2,000 or 3,000. The great bulk are recruited for service at home or service overseas.


Howard Charles Green: The minister has announced this afternoon that there was to be a call for another 40,000 men, and this large number of men will require commanders and staffs. In the main, commanders for the second division were not appointed until several months after the majority of the men had been recruited. Is it not possible to select the senior officers now and have them sent to England where they can find out something about the kind of warfare being waged at the present time, rather than wait for some months until the men are all recruited and then be faced with the necessity of building up a staff?


James Layton Ralston: I can assure my hon. friend that I am very much alive to the arguments made in favour of that suggestion, and I would be inclined to feel without having had the opportunity for much consideration that that would be the proper course to pursue. The objection as to how many should be sent overseas for instructional courses is another matter, but as my hon. friend knows, in connection with the second division, very large numbers of officers, and not necessarily senior officers, but officers particularly of specialist units and detachments, were sent overseas, and we have at the present time in England quite a number of the second division personnel taking instructional courses.


Richard Burpee Hanson: I hesitate to speak at all with reference to military organization because I realize that, being ignorant, it is probably wiser for me to keep quiet; but one occupying my position finds himself continually plied with suggestions, indeed, almost instructions as to what he should do in a case of this kind. Heretofore I have not done very much about it beyond communicating to the minister now and then a letter from somebody; but what is being urged on me-and I think I should speak of it-is that the chief officers of the third and
fourth divisions should be appointed now in advance of the recruiting. This may be all wrong; I do not know. But that is what is urged on me by those in whom I have confidence and who know. They say the reason is this, that all the trained non-commissioned officers have been absorbed into the other divisions and been taken overseas, and that there are no sergeant-majors and similar officers left to train the new recruits. It is urged upon me that the officers of the third and fourth divisions should be appointed now in order that they may assemble a skeleton instructional staff to train the new recruits when they are sworn in. It seems to me there is some sense in that view. I may be wrong, but that is the view that is being urged upon me. It may be the reverse; the cart may be before the horse, but to a logical mind the argument seems to have force. No doubt it has been urged upon the minister as it has been urged upon me. He and his officers know a thousand times more about these things than I do, but I pass the suggestion on to him for such consideration as he may see fit. I would ask the minister, is it foolishness or is it common sense?


James Layton Ralston: I can tell my hon. friend that some at least of those in whom I have confidence tell me that it is far from foolishness.


Richard Burpee Hanson: I am glad to hear that.


James Layton Ralston: I am giving serious
thought to that question. As a matter of fact, I have already on my desk a slate awaiting approval.


Richard Burpee Hanson: I am glad I mentioned the matter.


Alfred Johnson Brooks: The Prime Minister stated that he wanted an associate minister for the Minister of National Defence to give him an opportunity to visit different parts of Canada. I think it is an excellent idea that the minister should have an opportunity of gaining firsthand knowledge in different parts of the country of enlistments and what the requirements are. I believe it would give more confidence to the people throughout Canada.
With regard to the 40,000 men who will be raised in the near future, are they to be placed in militia units already constituted, or will new units be created to take care of the new recruits?


James Layton Ralston: I cannot give my hon. friend a detailed or perhaps an intelligent answer. They consist in large part of what we have called the fourth division; that is to say, divisional units of the fourth division
1506	COMMONS
National Defence-Additional Ministers
other than infantry battalions. That is one part. Another part will be the reinforcements which are necessary, and they probably will not be from any particular unit. Another part will be more infantry battalions. I am not going to identify them as being infantry battalions of the fifth division, not that I have any fears with regard to a fifth division, if such a formation is found best suited t-o our needs, but having regard to the variety of duties which they may be called upon to perform, I think it may be better not to identify them with a particular divisional unit at this stage. It is quite possible that duties in Canada may not make it possible to use them as a division, but I can assure my hon. friend that the foundation of these units will be the present militia units or new ones now being worked out by the officers.


Alfred Johnson Brooks: Are sufficient militia units organized now to take Charge of these enlistments, or will new units have to be organized?


James Layton Ralston: I do not know whether there are enough specialist units, which is perhaps the most important thing.


Mr. DOUGLAS (Weybum):: I think it is desirable to keep the different detachments of the Canadian active service force closely related to the area in which they were recruited. That would do a great deal to promote recruiting. As the minister knows, I have discussed some aspects of this matter with the officials of his department. Take the South Saskatchewan regiment, which was allocated to the second division last fall. The barracks were set up in Weybum. A committee was organized, comprised of private citizens who voluntarily gave their time and spent a good deal of money raised by public subscription in that district, to go through southern Saskatchewan for the purpose of recruiting. They did an excellent job. They travelled thousands of miles, put up posters, organized recruiting committees in small villages and hamlets and interviewed y-oung men who might be possible recruits. Since there was no train fare for them, the committees drove these young men and brought them into the recruiting centre or in some instances paid their farces out of funds raised by public subscription. As I say, they did an excellent job to help to bring the regiment almost up to strength. The government spent S7.000 in fixing up the building for a barracks and spent $5,000 in rent. The regiment has gone to camp at Shilo, Manitoba, and now the recruiting committee is informed that the barracks will not be used as a military depot.


James Layton Ralston: Does the hon. member say it is not going to be used?


James Lester Douglas: It is not going to be used as a military depot for the South Saskatchewan regiment. This is the problem. First, the regiment is not quite up to strength and it wants recruits. Second, young men in the southern part of Saskatchewan, particularly the southeastern part, who are desirous of joining the South Saskatchewan regiment, have to go to Regina in order to join up, and they may be sent to some other unit. Naturally they want to go to the unit in which their friends or brothers or other relatives are already enlisted.
Mr. RALSTON- They go to a general training centre


James Lester Douglas: Yes, and they would like if possible to continue going to a unit set up for the South Saskatchewan regiment, knowing that they were being sent as replacement troops for that regiment, instead of going to some general training centre and being liable to be sent to some other unit. The minister will agree that there is a psychological value in men knowing that when they enlist they will be sent to the unit in which a large part of the personnel is drawn from the same locality as themselves, so that there will be some continued association with home.
Not only has what has happened had a bad effect on recruiting; it has had an unfortunate effect on the district. Here were committees set up working for the purpose of furthering recruiting. Here was a regiment in which the men had some pride, in which sons and friends had become members. Now its connection with the locality has been cut off and no military reason has been given. There is a feeling that the reason is not military but something else. The minister has just taken over his post and I do not want to bother him with small matters, but I do urge that at the earliest opportunity he should give serious consideration to this matter and see whether it is not possible to allow men in that district, who wish to join the South Saskatchewan regiment, to have their military depot at Weyburn or at some other point in southern Saskatchewan where they can enlist and be forwarded as replacements to join the regiment in which their friends and relatives are enlisted.


James Layton Ralston: I shall be glad to take a note of what my hon. friend has said. The barracks were at Weyburn?


Mr. DOUGLAS (Weyburn):: Yes. The international harvester building was altered at a cost of $7,800 and fitted up as barracks, and it is one of the finest barracks in Saskatchewan.

National Defence-Additional Ministers


James Layton Ralston: The hon. member wants us to see that men who wash to join the South Saskatchewan regiment, in so far as there are vacancies, may join up with that unit rather than be taken to a training centre to be sent to some other unit.


James Lester Douglas: Yes. They can go down to Weybum, join up and be forwarded to the unit in which their friends and relatives are enlisted.


James Layton Ralston: It sounds so simple that I am sure there is a catch in it.


James Lester Douglas: It is precisely because it is so simple that there is a general feeling that there is some reason other than a military one why it is not done.


Mr. HOMUTH:: The other day the minister brought down a substantial budget-


James Layton Ralston: I am trying to help
spend it.


Karl Kenneth Homuth: Well, we spent the last two days trying to digest the new taxes. Under this bill and under similar measures we are building up a tremendous force of new civil servants. I realize that they are only for the war period, but a great many of even our dollar a year men are subject to the remark I am about to make. Every one appreciates their action in offering their services, but these men have come from the most ornate offices where, in most instances, they have sat behind highly polished mahogany desks, with nice rugs on the floor and so on. I know something of the furniture that has been ordered by the Department of Munitions and Supply. For example, some of the most highly priced leather upholstered chairs and other pieces of furniture of that sort are ordered. We ought to be very careful in our expenditures in furnishing these temporary offices. I say that seriously because we are asking the people to contribute money as they have never done before for war purposes. Let us therefore make sure that most of the money goes into the war and not into the furnishing of ornate offices for temporary employees. There is a tendency on the part of the men who are ordering these articles to get such furniture, and the practice they have followed for a long period of years under different governments has been to order the very best. In ordering furniture for these temporary offices for the duration of the war we should be careful and frugal in our purchases. I say that because I know something of some of the articles that are being purchased.


William Lyon Mackenzie King: My colleagues and I are in entire agreement with my hon.
friend, and we are doing what we can to see that the suggestion he has made is carried out in practice.


The CHAIRMAN:: I would point out that much of the discussion has hardly been relevant to the sections of the bill. However, I have given as much latitude as possible. We are now on section 3.


Howard Charles Green: Will the minister tell us the number of ex-service men who can be taken on under the present plans? I believe there are only the home guard and what is known as the veterans' reserve. Could he give us the establishment of these two forces?
I suggest most seriously that every returned man who volunteers should be taken on in some unit or another in order to build up a reserve of veterans of the last war.


James Layton Ralston: My hon. friend will remember that my late colleague announced that there were 12 companies of 250 each originally authorized for the home guard, which gave veterans the opportunity for full time soldiering. That has been increased to fifteen, and I am prepared to go further as occasion requires. Yesterday I was talking with the district officer commanding in Toronto, and he said he had applied for some more. There have not been, however, as many enlistments in the home guard as one would have expected. As the need is indicated and more qualified men wish to go into the home guard, I shall endeavour to see that the authorization is given. I think my hon. friend will agree with me when I say that we should like our comrades, if they are physically fit, to enlist in the Canadian active service force direct, because it helps the Canadian active service force very much to have what I might call the stiffening of men who have had previous experience overseas. So I am hoping that all veterans will not go to the veterans' home guard, but that many of them will join the Canadian active service force. I need hardly express that hope, because they have joined already in very large numbers.
With regard to the veterans' reserve, as I remember it, my late colleague did not mention any figure with regard to the establishment, and as far as I know there is not any limit.


Howard Charles Green: I believe he said, nineteen companies. I am not sure.


James Layton Ralston: As a matter of fact, that is really a provision for training veterans similar to the non-permanent active militia. There again I hope that as far as possible the veterans, notwithstanding the desire to get together, will go into the militia in order to
1508	COMMONS
National Defence-Additional Ministers
assist in the training and encouragement of the new soldiers who are coming along. As far as I am concerned, there is at the present time no limit to the number who, if they qualify for that purpose, can be recruited to the reserve.


Howard Charles Green: Is there any restriction against a man obtaining a commission? I understand that, for example, unless a man from the ranks has matriculated he cannot be given a commission. Is that a fact, because to me it seems unreasonable.


James Layton Ralston: I may appear terribly ignorant, but I must confess that I do not know. I have not been long at this job and the point has not come to my attention. I shall be glad to make inquiries.


Howard Charles Green: Another complaint is that a married man cannot enlist in the air force for flying service. Does the minister know whether that is correct?


James Layton Ralston: I shall find out.


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

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

Thomas Vien: Resolution 18 carried. Number 19.


Karl Kenneth Homuth: The minister said he was going to give consideration to the request made yesterday with regard to guest children, so far as the Income War Tax Act is concerned. Is he now prepared to make a statement?


Mr. ILSLEY:: That matter was to be dealt with when the bill came before the house. I am not just clear where we are, Mr. Chairman. We are dealing with resolution 18, and we were dealing with it yesterday paragraph by paragraph. I believe that hon. members would prefer to continue to deal with it in that manner. I propose to offer an amendment to paragraph 8 of resolution 18.


Thomas Vien: Shall paragraph 1 of resolution 18 carry?


[Stage Direction]
Paragraph agreed to.
(2)	That every employer be required to deduct the tax imposed in respect of earnings of the employee earned or accruing due during and after July, 1940.
Thomas Vien: I must remind hon. members that the discussion last evening of

resolution 18 covered a great deal of territory which is included in the various paragraphs. For instance paragraph 2, with respect to the employer being required to deduct the tax imposed, has been fully discussed. Therefore we are now at paragraph 3.


[Stage Direction]
Paragraph agreed to.
(3)	That every employer remit the tax collected at the source on the sixteenth day of September, 1940, and on the fifteenth day of each month thereafter.
Mr. LOCKHART:: I was discussing briefly a matter which might come under that category, regarding remitting the tax, and I asked the minister to rule on it.


James Lorimer Ilsley: The hon. member did ask me to rule on a certain case and I was not prepared to do so. I suggest that he take up questions like that with the commissioner. There will be a number of these difficult questions upon which the commissioner will be better qualified to give a ruling than I, especially on the floor of the house.


Norman James Macdonald Lockhart: I shall be glad to do that.


[Stage Direction]
Paragraph agreed to.
(4)	That incorporated companies paying interest on bonds or other like obligations registered as to interest, or paying dividends, irrespective of the amount to persons on record in their office or that of their agents, be required to deduct and collect the taxes imposed from each payment made to residents of Canada, paid in the case of interest, and declared and paid in the case of dividends, after the twenty-fourth day of June, 1940.
Richard Burpee Hanson: Would the minister just state what the implications of that section are. It relates to this national defence tax?


James Lorimer Ilsley: This has to do with the national defence tax. That tax is on all income, and there are only two or three ways in which it can be collected at the source. One is from employers; another is from the head office of companies.


Richard Burpee Hanson: This has to do with registered bonds?


James Lorimer Ilsley: Yes, and dividends. There will be many cases where it will not be possible to collect the national defence tax from anybody but the taxpayer himself, but there are two or three cases where it is practicable to go to the source. This is one of the cases.


Richard Burpee Hanson: I did not
quite appreciate, when I read it, all that it meant. That is to say, if I am the registered owner, of shares, let us say in a telephone

Income War Tax Act
company-which I happen at the moment to be-the telephone company will deduct from my dividends two per cent.


James Lorimer Ilsley: Yes, that is correct.


Richard Burpee Hanson: And of course I shall get some credit for that when I am making my returns.


James Lorimer Ilsley: Yes, it will be adjusted.


Richard Burpee Hanson: I can 6ee where there is going to be a great deal of trouble in connection with your bookkeeping and everything like that. It had not occurred to me that this would relate to matters of that kind, but I have no objection. As far as I am concerned, I am going to pay this tax, and everybody else should pay it. I just had not thought the minister was going that far; I thought the deductions were largely confined to wage and salary earners and that sort of thing, but I see he is going as far as he can. Has every case been thought of?


James Lorimer Ilsley: I do not think so, but to tell the truth I have not given any particular thought to this matter. I am under the impression, however, that in England they go much further than this.


Richard Burpee Hanson: Very well; I have no objection. The national defence tax on dividends, registered bonds and like securities now is to be deducted by the paying company or individual, as the case may be?


James Lorimer Ilsley: Yes.


[Stage Direction]
Paragraph agreed to.
(5)	That each incorporated company remit the tax collected at the source in respect of interest and dividends on or before the fifteenth day of the month immediately following the date of payment, the first remittance however to be made on the sixteenth day of September, 1940;
Richard Burpee Hanson: Suppose a dividend was declared before June 24, payable on July 1, which is a date on which a good many dividends are paid, or perhaps July 15. Will this deduction be made in that case, or only in connection witih subsequent dividends?


James Lorimer Ilsley: No.


Richard Burpee Hanson: Then it really means "declared and paid"?


James Lorimer Ilsley: That is right.


Richard Burpee Hanson: It has to be "declared and paid." If it is declared before and paid after, the deduction will not be made?


James Lorimer Ilsley: That is true.


[Stage Direction]
Paragraph agreed to.
(Mr. R. B. Hanson.]
(6)	That every person liable to taxation in respect of whom the deductions of the national defence tax on the full income has not been made be required, on or before the thirtieth day of April in each year, to deliver to the minister a return of his total income during the preceding year and pay the tax as in the Income War Tax Act provided;
Richard Burpee Hanson: This provides for a return under this act the same as under the Income War Tax Act? Is that the theory of it?


James Lorimer Ilsley: No return is necessary if the full amount has been deducted and paid.


Karl Kenneth Homuth: Then does it not really mean that everyone who must pay the national defence tax will have to send in a return? That would be my interpretation.


James Lorimer Ilsley: No. If the whole tax has been deducted at the source and paid, that is the end of it; no return is necessary. Perhaps a refund may be claimed, but there will not be any return.


Richard Burpee Hanson: That would be true with respect to a person who has no other source of income.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: But with respect to any person who has another source of income, a return will be necessary? Where is the provision for that?


James Lorimer Ilsley: That is the ordinary law in connection with the graded income tax.


Richard Burpee Hanson: Will that be the only return he will be required to make?


James Lorimer Ilsley: No; he will have to make a return in respect of this tax. It may be on the same form; I should think probably there would be a form sufficient for both purposes.


Richard Burpee Hanson: He will have to make that return in some form?


James Lorimer Ilsley: Yes.


Karl Kenneth Homuth: I am still not clear about it. Take the employees in our plant; week after week this tax will be deducted from their wages or salaries. If at the end of the year they are not liable for income tax but only for the national defence tax, they will not have to make a return. Is that correct?


James Lorimer Ilsley: That is correct.


Karl Kenneth Homuth: My impression was that everybody who came under the national defence tax had to make a return.


James Lorimer Ilsley: That is not correct.


[Stage Direction]
Paragraph agreed to.
Income ITar Tax Act
[Stage Direction]
(7)	That the national defence tax be applicable to the income of 1940 and all subsequent years except that in respect of the income of the year 1940 the tax shall be imposed only on one-half of the income if the income for the whole year exceeds the relevant amount specified in resolution No. 18 (1);
Karl Kenneth Homuth: I wonder if the minister will clarify that paragraph.


James Lorimer Ilsley: It simply means that the tax applies only for the last half of the present calendar year.


Karl Kenneth Homuth: That is, those who instead of paying the national defence tax each week turn in at the end of the year their income tax return on which the national defence tax will be imposed, will have that defence tax imposed only for the last half of the year?


James Lorimer Ilsley: It applies to everyone. The national defence tax applies only to the income received in the last half of the year 1940.


Grote Stirling: But will the exemption
of $300 apply then? Take the case of the workers in the agricultural and fruit-growing districts of British Columbia. They work for a certain time picking a particular variety of fruit; then they move on to some other district, where they are employed by some other person. During the course of the season they may make three or four of those moves. Each employer takes note of the fact that he has deducted so much money from the wages of these men. Eventually, somehow or other, those operatives are going to appeal for a return on that tax. Will they do so through local officers, through the Vancouver office or through the Ottawa office; and how is it supposed that they will be able to give an address to which a cheque can be sent?


James Lorimer Ilsley: The procedure will have
to be worked out. When they apply for a refund they can give an address and the money will be sent on if they are entitled to the refund. By the way, I think when I said the tax would only apply to income for the last half of 1940 I should have said that it would apply to half of the income for the whole year 1940.


Grote Stirling: To which an exemption
of $300 will apply?


James Lorimer Ilsley: There is no exemption of
$300. It is put on a yearly basis and half the tax payable for the year must be collected. That is to say, if a person does not earn $600 in the year 1940 he is not liable to the tax. If he does earn $600 in the year 1940 he is liable for half the tax that would be payable if he paid for the whole year. You apply the rules applicable to the whole year, which

are very carefully defined here, to the income for the year 1940 and then divide it by two, because it is intended only to take half the tax for this year.


Mr. JACKMAN:: If a man were to receive, say $2,000 a year as a salary, and if it were the custom of that particular business to give a bonus at the end of the year of, let us say $500, does he pay on half the amount for the current year 1940-that is, $250-or is the tax on the $1,000, which represents the salary from July 1 to December 31, plus the year-end bonus?


James Lorimer Ilsley: It depends upon the year in which the $500 was earned. If it were earned within the year 1940 the man's income for that year would be $2,500. The tax is calculated accordingly, and he pays half.


Harry Rutherford Jackman: It is earned as part of the year's effort,, but it is only payable at the end of the year.


James Lorimer Ilsley: Yes.


Harry Rutherford Jackman: But it is properly spread over the whole year, and divided into two, in the application of this tax.


James Lorimer Ilsley: I should think that would be part of the 1940 income. The 6ame rules apply to this as apply to ordinary income, and ordinary income tax. There are well established rules for choosing the year to which income is allocated. In that year the $500 bonus would be the income of the year 1940.


Harry Rutherford Jackman: As I read the resolution, and as I interpret it, the department would take a half year's income for the year in question, and subject that to the national defence tax.


James Lorimer Ilsley: Yes.


Harry Rutherford Jackman: The $500 bonus comes in at the very end of the year. Properly speaking, the man earned $1,250 during both halves of the year.


James Lorimer Ilsley: It does not matter whether it is regarded as being earned evenly over the year, or whether it is regarded as being earned in the last part of the year. It only goes to swell the yearly income, half of which is subject to tax. That was the point which I tried to make a minute ago, and on which I corrected myself. I stated rather loosely that it was only the income of the last half of the year which was taxed. I should have said it was half the income of the whole year which was taxed.


[Stage Direction]
Paragraph agreed to.

Excess Profits Tax Act
(8)	That the income of the following persons shall not, except as in this resolution provided, be liable to the national defence tax
(a)	incorporated companies;
(b)	persons and institutions mentioned in paragraphs (a) to (i) inclusive and in paragraphs (p) and (q) of section four of the Income War Tax Act;
(c)	members of the Canadian naval, military and air forces shall be exempt from tax while such members are on active service beyond Canada or are on active service in Canada and whose duties are of such a character as are required normally to be performed afloat or in aircraft, but only to the extent of their service pay and allowances.
James Lorimer Ilsley: I shall ask my colleague the Minister of Justice (Mr. Lapointe) to move an amendment which is in line with the amendment moved yesterday in connection with the Income War Tax Act.


Ernest Lapointe: I move:
That resolution No. 18 be amended in subparagraph 8 by striking out sub-paragraph (c) and substituting the following therefor:
(c)	Commissioned officers of the Canadian naval, military, and air forces, while such officers are on active service beyond Canada, or are on active service in Canada, and whose duties are of such a character as are required normally to be performed afloat or in aircraft, but only to the extent of their service pay and allowances.
(d)	Warrant officers, non-commissioned officers and men of the Canadian naval, military and air forces, but only to the extent of their service pay and allowances.


Grote Stirling: Does this mean that the officers of the ground forces of the Royal Canadian Air Force are not included?
Mr. ILSLEY- That is correct.


Grote Stirling: But the officers of the Royal Canadian Air Force who are actually flying are exempt?


James Lorimer Ilsley: Yes, they are exempt.


[Stage Direction]
Amendment agreed to.
Paragraph as amended agreed to.
Resolution as amended agreed to.
19. That the resolutions numbered 1, 2, 3, 4, 5, 6, 7, 8, 9. 11, 12, 14, 15, 16, 17 and 18 hereof shall be applicable to the income of the 1940 taxation period and fiscal periods ending therein and of all subsequent periods.
Thomas Vien: I have before me an amendment to resolution No. 19, to which reference was made the other day. It is as follows:
That resolution No. 19 be amended by adding after "5" in the first line thereof the figures and letters -'5A" and "5B".
This amendment arises as a result of amendments made previously in the committee.


[Stage Direction]
Amendment agreed to.
Resolution as amended agreed to.
20. That the resolution numbered 10 hereof be applicable to payments made after the 24th June, 1940.
Resolution agreed to.

[Stage Direction]
Resolved, that it is expedient to re-enact the Excess Profits Tax Act and to provide:
1.	That the option of using rates "A" be deleted, and that the excess profits be the difference between the profits of the year of taxation and the profits of the standard or base period.
James Lester Douglas: Has the minister any information available as to what number of companies elected to come under rate "A", what came under "B", what amounts were collected under plan "A", anu so on?


James Lorimer Ilsley: There has not been time, really. There have been no elections or returns, so far as I know. The old act applied to companies whose fiscal years end after March 31, 1940, and those companies had four months in which to submit their returns. They have not done so.


[Stage Direction]
Resolution agreed to.
2.	That the standard profits be determined with reference to the average profits of the standard or base period being the years, 1936, 1937, 1938 and 1939, except as provided in resolution 5 hereof.
Thomas Clement (Tommy) Douglas: I would suppose that the selection of these four years would work a hardship on some firms and would prove an advantage to others, in view of the fact that certain industries in those four years enjoyed an upswing in business while others were almost stationary or on the down grade.


James Lorimer Ilsley: It cannot be helped.


Thomas Clement (Tommy) Douglas: Could there not be a fairer average? Could it not be taken over a longer period?


James Lorimer Ilsley: No, I do not think it would be advisable to lengthen the period, or to take more than four years. If we were to make the period longer we would greatly increase our difficulty, because companies change their capital, go out of business, are reorganized, and so on. All those difficulties would be greatly increased if the period were lengthened. Then, if we were to go back to the year 1936, we would be getting back into the depression years, and I should think that would not be fair as a base period on which to erect an excess profits tax.
Excess Profits Tax Act


James Lester Douglas: But the four years the minister is setting are actually depression years for some industries.


James Lorimer Ilsley: Well, that may be so.


James Lester Douglas: And perhaps most properous years for others.


James Lorimer Ilsley: I may say there is a provision mentioned in these resolutions for depressed industries, industries which were depressed during that period, or for particular businesses within an industry depressed during that period.


Karl Kenneth Homuth: That is found in resolution No. 5?


James Lorimer Ilsley: Yes.


Grote Stirling: As I understand it, one part of the work of the board of referees will be to endeavour to average out those years so as to disclose a proper average profit. There are a number of industries which were not so prosperous in 1936 and 1938, but which were more prosperous in 1937 and 1939. Am I right in supposing that part of the work of the board of referees will be to endeavour to bring these earnings on to some sort of an even keel?


James Lorimer Ilsley: In the case put by the hon. gentleman, in all probability the average of the four years would be taken.


Grote Stirling: There would be no adjustment?


James Lorimer Ilsley: The case stated by the hon. gentleman would be regarded as a normal one. The good and the poor years would be taken in order to strike a fair average. What I have said is subject to this: If the situation is abnormal, provision is made for taking an amount different from the average. This is provided for in one of the later resolutions. I do not consider as abnormal the situation described by the hon. gentleman.


Karl Kenneth Homuth: Are we to understand from the minister that industry is not to be given much of an opportunity to appear before the board provided for by section 5? Many industries lost money in 1936, made a little in 1937, lost money in 1938 and made a little in 1939. There were abnormal conditions generally in the industry. I think industry ought to be given every opportunity to come down here to state their case. I hope they will be given a fair deal by the department. I take the minister's words to mean that conditions must be very abnormal before a plea will be considered. Nineteen thirty-six was a good year for a number of industries, but from then on many of them suffered a serious depression which continued up until September and
fMr. Il9ley.]
October of last year. When you consider the excess profits tax and the tax upon salaries and everything else, a considerable tax burden is being placed upon industry. I do not think industry is complaining except that they feel that they should have an opportunity of coming down to the department and having their case considered. The minister's words make one feel that the situation must be abnormal before it will be considered.


James Lorimer Ilsley: I am not the minister who will have the administration of the act; it will be the Minister of National Revenue (Mr. Gibson). Much will depend, I think, upon his view of the matter and the view taken by the board of referees to be selected. I do not think I could put the case better than I have if I were to administer the act. I did not use the term "very abnormal". The sections which follow have been carefully drawn and they represent the rejection of other attempts at drafting.


Mr. CASTLEDEN:: What method is used by the department to check the profits of a company? Do you take the annual statement?


James Lorimer Ilsley: The annual statement as adjusted by the auditors of the department, if adjustment is considered necessary.


Ernest George Hansell: Is any check made of the method of arriving at production costs in connection with government contracts? This would have a bearing on the profits made. Many things may be written into the cost of production, including certain hidden profits and interest on loans. The government must borrow money in order to pay for the article being produced. Interest must be paid on that money. The particular concern producing the article must borrow money to carry on its operations. The financial institutions get the interest on both borrowings; they get i* both ways. It is quite proper to tax profits, but when the borrowings of an industry are written into the costs, the interest paid on those borrowings should not be free from taxation.


Karl Kenneth Homuth: The interest costs should be considered.


James Lorimer Ilsley: The hon. member's question apparently relates only to cost plus contracts?


Ernest George Hansell: Yes.


James Lorimer Ilsley: The department would have the power to check costs in order to see that the profit was not larger than it should be.


James Lester Douglas: Would it not be fairer if the government set standard profit figures for the different industries, and then taxed everything above that? Due consideration could be given to the turnover, the risk

Excess Profits Tax Act
involved, the particular function of the industry and all that sort of thing. If a company has had an average profit of two per cent over a period of years, it will now pay a tax on everything over two per cent. If it has had an average profit of sixteen per cent, it will be allowed to continue to make that profit before paying any tax. I am keeping in mind that there is a minimum which they must pay. This will work a hardship on firms which have had low profits for the last four years, and will work to the advantage of certain industries which have had fairly good years.
I have in mind mining companies and other concerns engaged in producing war materials. For the last four years they have done a fairly good business. They lost their foreign market, and the result has been that the war orders they are now receiving hardly more than make up for the loss of their foreign markets. The chances are that their profits will not greatly exceed their average profits for the last four years. Other industries, like the textile industry, had quite poor years in 1936 and 1937; their average profit will be quite low. Would it not be possible to consider the setting of a fixed profit figure for the different industries and then tax everything above that?


James Lorimer Ilsley: That has been considered,
as well as a great many other plans; in fact, I never was connected with a measure which received one-tenth the consideration which this one has, and my own conviction is that it is exceedingly fair. The difficulty with adopting the suggestion of the hon. gentleman is this. There are between 32,000 and 33,000 corporations doing business in Canada. A number-unknown to the Department of National Revenue-of persons are engaged in business either as individuals or in partnerships, and it would be perfectly impossible, administratively, to make a determination of a fair return that would meet with any acceptance whatsover. There would be endless argument about it, and you would never be done with it, no matter how huge a staff of civil servants or others you might put on it. Therefore, in order to meet the situation practically, we are assuming that in the normal case, in the great majority of cases, in the run-of-mine case, if I might put it in that way, what the business has been making over a period of four years should be taken as the fair return. That is the basis of the act. There will be exceptions where it will be necessary to consider the representations of the industry, and provision is made for these exceptions in the subsections that follow.
It is all very well to say that we can fix a fair return, but I do not know of any human being or group of human beings who could fix a fair return or a range within which most people would agree that fairness lies. It would be impossible administratively and it would not be fair. Put it to any jury and you would have twelve verdicts, instead of one, as to what a fair return was.


[Stage Direction]
Resolution agreed to.
2.	That the standard profits be determined with reference to the average profits of the standard or base period being the years, 1936, 1937, 1938 and 1939, except as provided in resolution 5 hereof.
Resolution agreed to.
3.	That the rate of tax on the excess profits be increased from fifty per centum to seventy-five per centum.
Resolution agreed to.
4.	That on all profits a minimum tax be paid by every taxpayer under the Excess Profits Tax Act, such minimum to be a tax of twelve per centum on the total profits of the business before deducting income tax, and to be payable in all cases unless the tax provided in resolution 3 hereof is greater than the said minimum tax, in which case only the greater shall be paid.
Resolution agreed to.
5.	That a board of referees (hereinafter called the board) be established with discretionary power, subject to the approval of the Minister of National Revenue (hereinafter called the minister), to ascertain a standard of profits for new businesses or businesses depressed during the standard period, subject to the following:
(a)	in the case of a business depressed during the standard period the minister may direct that the board ascertain a standard of profits at an amount which they think just, being a return of not less than five nor more than ten per centum of the capital employed;
(b)	in the case of a new business other than that of the operation of a gold mine or an oil well, if it has been commenced since January 1, 1938, the minister may direct that the board ascertain a standard of profits at an amount which they think just, provided that the said amount represents a rate of return on the capital employed by the taxpayer equal to the average rate of return of taxpayers in similar circumstances engaged in the same or analogous classes of business;
(c)	In the case of a taxpayer engaged in the operation of a gold mine or an oil well which has come into production since January 1, 1938, the minister may direct that the board ascertain a standard of profits at such an amount which they think just on the basis of a presumed volume of production during the standard period equal to the volume of production in the taxation year and a presumed selling price for the product during the standard period equal to the average selling price of the said product during the standard period.
Excess Profits Tax Act
Howard Charles Green: Will the minister explain how this tax is to be applied to gold mines, old and new?


James Lorimer Ilsley: The explanation would take longer than the time available between now and six o'clock, but I can start it if the committee would like me to do so. Does the hon. gentleman want a detailed explanation? Would it not be better to wait until the sections of the bill, which are in more detail, are before us? It is an intricate and complicated question, and I could give my explanation then.


Howard Charles Green: A great many people are interested in this provision, and I think the explanation should be given on the resolution.


James Lorimer Ilsley: Perhaps we had better call it six o'clock, Mr. Chairman.
Resolution stands.
Progress reported.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
Thursday, July 11, 1940