Mr. SPEAKER:: I have the honour to
inform the house that I have received the following communication:
I have received with great pleasure the address you have voted in reply to my speech at the opening of parliament, and thank you for it sincerely.	p,. P. Duff,
Government House,	Administrator.
Ottawa.



WHEAT BOARD


[Stage Direction]
On the orders of the day:
Mr. E. E. PERLEY (Qu'Appelle):: I should like to direct a question to the Minister of Trade and Commerce (Mr. MacKinnon). Would he have the report of the Canadian Wheat Board for the crop year 1938-39 tabled at the next sitting of the house, or as soon thereafter as possible?
I should like to ask another question. Under the Canadian Wheat Board Act, 1935, provision is made for a weekly report from the board to the minister. Would the minister consider having these weekly reports tabled, covering the period since August 1, 1939?
Hon. JAMES A. MacKINNON (Minister of Trade and Commerce): The hon. member for Qu'Appelle (Mr. Perley) was good enough to intimate to me that he intended asking these questions this afternoon, and I took occasion to discuss the points raised with the advisers of the department and officials of the wheat board who are in the city at the present time.
The report of the wheat board to which the hon. member refers was tabled in this house on the 17th day of this month, immediately after the opening of parliament.
Regarding the weekly audit reports, this is a matter which has been up for discussion before with this department. I think all I can say is that this report exhibits the exact position of the board from week to week, and it is not considered in the best interests of the country that the figures contained therein should be made available to the public. I am sure the hon. member will fully appreciate that. The figures would be of special value to the people to whom we look to sell wheat, and the publication of them would put us in an unfair position. The regularly published statistics containing the figures of Canada's whole wheat position are available through the bureau of statistics, and the report of the board of grain commissioners, and with respect to a monthly report I think these same remarks would apply.



MUNITIONS AND SUPPLY


[Stage Direction]
On the orders of the day:
Mr. T. L. CHURCH (Broadview):: I should like to ask a question of the Minister of Munitions and Supply (Mr. Howe). Has the attention of the government and of the minister been drawn to the voluntary offering to the government of various kinds of mechanized equipment by municipalities, corporations and
Munitions and Supply

private individuals, as a contribution to Canada's war effort? Will the government lay down a policy and rules and regulations on this matter and let the Canadian people know that such contributions will be welcomed as they were in the last war?


Hon. J. L. RALSTON (Minister of Finance):: My colleague the Minister of Munitions and Supply intimated to me that the hon. member was going to ask this question, and it was thought that I might reply because of the fact that the offers to which the hon. member refers generally come in the form of offers of money to be used for a particular purpose. Members well understand that it is extremely difficult in practice to earmark a particular sum of money for a particular piece of equipment; it would mean the maintaining of a special fund for each particular purpose. Therefore we are indicating to the donors that it would be preferable if they would permit that money to be put into the consolidated revenue fund, and we have pointed out to them that the consolidated revenue fund will be devoted, among other things, to the purchase of equipment of the kind.
I should like to add, however, that if there are offers of special pieces of equipment for particular purposes the government will be very glad to give consideration to them, having regard to what fits best into our requirements. The government welcomes and appreciates, on behalf of the people of Canada, the offers which have been made of funds for particular purposes which afterwards have been permitted to be put into the consolidated revenue fund under the conditions I have mentioned, and the offers of equipment as well.


Thomas Langton Church: I thank the minister. During the great war Sir John Eaton at his own expense equipped a battery, and I should think help of that kind would be very acceptable.


MANUFACTURE AT HAMILTON OF TANKS OR BREN GUN CARRIERS
[Stage Direction]
On the orders of the day:
Mr. W. P. MULOCK (York North):: I should like to address a question to the Minister of Munitions and Supply (Mr. Howe). Has his attention been drawn to a report appearing in the Hamilton Spectator of Wednesday, May 29, wherein it is alleged that certain charges of the hon. member for Parkdale (Mr. Bruce) are borne out by the statement of an official of the Sawyer-Massey firm of that city, in these words:
His firm, said the Spectator informant, was prepared, in the event of being awarded a

contract, to start production on a form of tank known as the Bren gun carrier, without delay.
I should like to ask the minister whether tanks or Bren gun carriers were involved in the matter.


Hon. C. D. HOWE (Minister of Munitions and Supply):: It never occurred to me that a Bren gun carrier and a tank were near relations. I suppose if anyone suggests that the Bren gun earner is a form of tank the opinion is in the eye of the beholder; but they are of very different construction. Several hundred Bren gun carriers are in the process of construction in Canada. It occurs to me that this may explain statements which I thought were preposterous in connection with the manufacture of tanks. Perhaps those speaking had in mind Bren gun or universal carriers, which are capable of being produced entirely in Canada, but the tank is a much more difficult matter. Instead of carrying Bren guns or ammunition it carries men and the machinery of war, and in my mind there is no relation between the two except that they may look alike.


Hon. R. B. HANSON (Leader of the Opposition):: What about the whippet tanks?


Clarence Decatur Howe: Well, there is a vast difference between a whippet tank and a Bren gun carrier. They may look somewhat alike but they are very different.


INDUSTRIAL SURVEY
[Stage Direction]
On the orders of the day:
Hon. NORMAN McL. ROGERS (Minister of National Defence): Yesterday the hon. member for Danforth (Mr. Harris) asked whether the registration of the Canadian manufacturing industry made by the Department of National Defence had been completed and was up to date. In reply I may say that all the information obtained by the Department of National Defence prior to the outbreak of war in the registration of the Canadian manufacturing industry, along with the personnel employed in making the registration, were transferred to the war supply board by order in council dated October 21, 1939. I am informed by the Minister of Munitions and Supply (Mr. Howe) that this information has proved to be most valuable and is being kept up to date.

Government Loan Bill

[Stage Direction]
On the orders of the day:
Hon. NORMAN McL. ROGERS (Minister of National Defence): I should like to answer a question put by the hon. member for Broadview (Mr. Church) regarding arrangements with respect to recruiting. Instructions have been issued to district officers commanding to recruit up to establishment reinforcements of the second division Canadian active service force. Instructions also have been issued to take all necessary administrative steps to mobilize units of the third division and to commence recruiting as early as possible. Steps are being taken to extend our recruiting organization to include permanent recruiting stations, so that those desirous of enlisting may avoid long trips involving considerable expense, and the department may have available, for use when required, a registration of personnel.
Hon. GROTE STIRLING (Yale):: I wonder if I might ask the minister to go a little further on the question of recruiting. Is it his intention to open recruiting stations in parts of the country where units are not being definitely recruited? I will give as an instance the interior of British Columbia, in which province recruiting previously has taken place at the coast. It is a long journey from the interior to the coast.


Mr. ROGERS:: It is the intention to establish recruiting centres in the interior of British Columbia at certain selected points in relation to certain units that will be included among those now being mobilized. Obviously I cannot give the house a statement of the various permanent recruiting stations which will be established. Normally they would be located Where there were either headquarters or subunits of the non-permanent active militia units. But if a certain part of the country, even under those conditions, finds itself discriminated against, I shall be very glad to consider the advisability of opening recruiting stations there.


Richard Burpee Hanson: Will that be true also with respect to the northern and northeastern portions of New Brunswick, where there has been very little opportunity of recruiting?


Norman McLeod Rogers: I can also give my hon. friend an assurance in that regard.


SUBVERSIVE ACTIVITIES
[Stage Direction]
On the orders of the day:
Mr. N. J. M. LOCKHART (Lincoln):: I Should like to ask the Minister of National Defence (Mr. Rogers) for some information, which might be given to me privately as to what is being done with regard to certain matters which I brought to the attention of the house generally and to his personal notice more particularly, having to do with certain protection in the areas I described. Definite questions are being asked me and the press have reported things which I hesitate to believe with regard to the protection being afforded. Could I have, even privately, some information which might serve to allay the fears of those who have spoken to me?
Hon. NORMAN McL. ROGERS (Minister of National Defence): I should like to thank my hon. friend for the suggestion he has made, and I shall be very glad indeed to discuss the matter with him this afternoon at his convenience.


LOAN OF $750,000,000 TO MEET LOANS OR OBLIGATIONS, TO PURCHASE UN MATURED SECURITIES, AND FOR PUBLIC WORKS AND GENERAL PURPOSES
[Stage Direction]
Hon. J. L. RALSTON (Minister of Finance) moved the second reading of Bill No. 22, to authorize the raising, by way of loan, of certain sums of money for the public service.
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Vien in the chair.
On section 1-Short title.
Richard Burpee Hanson: I should like an assurance from the minister that there will be an accounting to parliament of the moneys expended under this act. I realize that this is a bill designed to bring money into the consolidated revenue fund and that with respect to the ordinary services of the country expenditures must be made under votes of this parliament, which are subject to the audit act and to the scrutiny of the auditor general. As to the portion of the moneys which will be devoted to loans, what provision is there in the law now with respect to an accounting to parliament? Is it covered by the audit act? I know that details will appear in the auditor general's report, but it is so late when the report reaches one that it it not of much use.

Government Loan Bill


James Layton Ralston: I am sorry I cannot tell my hon. friend immediately what does appear in the audit act with respect to this matter. He will understand that in the case of refunding the issues themselves are a charge on the consolidated revenue fund, and that the bonds on maturity really amount to a cheque against that fund. That is the way the payment out of the fund would be effected. The payment is indicated in the accounts when the loan disappears from the liabilities side of the balance sheet.


Mr. QUELCH:: I believe the minister mentioned the other day that the government had sold to the chartered banks and to the Bank of Canada $65,000,000 worth of bonds bearing interest at two per cent. Will he now give the percentage sold to each respectively?


James Layton Ralston: I am sorry I have not the amounts before me, but if my hon. friend wishes I can get that information for him.


Victor Quelch: Can the minister explain why a greater percentage of the bonds could not have been sold to the Bank of Canada, rather than to the chartered banks?


James Layton Ralston: As I remember it, the
bonds were held partly by the chartered banks and partly by the Bank of Canada, and the bonds held by the chartered banks were refunded by the issue of new bonds. The difference between $65,000,000 and $80,000,000 was paid off, and the balance was issued to the Bank of Canada.


[Stage Direction]
Section agreed to.
On section 2-Loan authorized.
Richard Burpee Hanson: I realize
that this section, which is the enabling section of the bill, is based largely on the principle used by corporations. Full power and authority is given the governor in council to regulate the sale, pledge the security, state the rate of interest and set all the terms and conditions, as provided in this section. What is the policy of the government with respect to loans made under the authority of this measure in respect of (a) the lifetime of the security, and (b) the rate or rates of interest? And (c), will the government under section 4 make regulations with respect to callability?-a very important feature which should not be and no doubt is not being forgotten by the financial advisers of the government. If there is one reflection which might be made on financing which has been done in the past it would be that provision was not made for the calling of long-term, high-interest-bearing debentures. I urge upon the government that, in respect of every issue, some provision be made for calling obligations which will mature after

the cessation of hostilities. I know that such a provision may interfere with the price received for the security, because as a rule financial institutions, if they are receiving a good rate of interest, purchase non-callable in preference to callable securities. One reason for this preference is that in the case of institutional investments, holdings of callable securities may interfere with the establishment of a satisfactory portfolio. But in the interests of the country we should be certain that this provision is made. If the minister has a policy in respect of these different matters I should like him to state it to the house and country.


James Layton Ralston: My hon. friend would
no doubt expect me to say that at the moment one cannot lay down or formulate a definite line of policy with regard to the terms of issues which may be made in the future. With regard to maturity, one of the major factors-[DOT] I cannot give them all

is obviously to endeavour to find a maturity which is at such a date that it will not involve too great a burden of refunding in any particular year. That is one factor.
Another factor which must be considered is the length of term of the bonds which are being refunded and where they are held. Rate of interest will of course depend on the length of term for which the money is asked, and on what the market may be for bonds of a comparable maturity which are outstanding at the time of the refunding operation.
Obviously a third factor in connection with rates of interest on issues being made at this time is the readiness of Canadians to help. While we want to be sure that the issue is taken, at the same time we want to be sure that the money shall be secured at the cheapest possible rate. We believe we can depend on the Canadian people to see to it that the issues made by the government at reasonable terms will be taken up.
With regard to the callable feature, we took advantage of a feature of that kind in connection with the 48-52's which were issued in January last. One always has to consider the price and coupon rate so that the call feature will not mean that you are paying a long-term rate of interest for a short-term bond. I agree fully with my hon. friend when he suggests that, in so far as it does not interfere with the salability of the bond or make the money too expensive, it is most desirable that there should be a call feature in a bond. That is perhaps somewhat more applicable in respect of bonds bearing a high rate of interest, such as those to which my hon. friend has referred. But generally speaking I think the government's being able to

Government Loan Bill
call bonds on such terms as they may see fit, after leaving a reasonable time for the bond to run, is a proper precaution to take.


Mr. ROSS (St. Paul's):: Is this the only authority for the renewing of the $230,000,000 of treasury bill's? Is there any other authority for their renewal?


James Layton Ralston: I have not looked into that matter thoroughly, but I anticipate that the supply bill, that is the general appropriation act which we will pass, based on the estimates, will contain the usual provision which allows the government to borrow up to $200,000,000. I think that is broad enough to cover the issue of treasury bills. This bill and that provision in the appropriation act would, I think, be the only ones-with the exception, of course, of the $700,000,000 authorization received yesterday or the day before, which would authorize the issue of treasury bills.


Thomas Langton Church: During the last great war, for war purposes, a much larger sum was charged to income and not so much was received by way of borrowing. I hope the minister will not be unmindful of the fact that during the last great war 550,000 men were in the army, many being young business men from the industrial provinces of Ontario and Quebec, from the maritimes and British Columbia. To-day many of these business men are paying income and sales tax on what they must buy for their families; the men who fought in the last war have had to pay a great part of the taxes made necessary by that war. I am sorry to see this clamour and demand for increased income taxes, especially when income is not available. The main recruiting provinces were the industrial provinces and the maritimes and British Columbia. Ontario and Quebec pay about eighty per cent of the cash taxes, according to a return made in 1924 to the then hon. member for Sherbrooke. Many of the men enlisting for this war have given up all their income, and if additional taxes are imposed their families will have to pay them.
There has been a great change in our financial structure. During the last war real estate did not have to bear the federal and provincial burdens it bears to-day. The federal and provincial authorities have taken over the right to levy many taxes which were previously the exclusive right of the municipalities. Prom confederation to 1917 the income tax was exclusively the right of the municipality, but at that time the federal authorities took it over. Then the provinces came along with a duplicate tax, and in British 95826-264
Columbia there are three. Our municipalities are carrying relief burdens which were never contemplated by the fathers of confederation.
We all realize the minister is carrying a tremendous burden and he deserves and will get the support of all the country. Many of the men enlisting to-day are professional men. I know of a doctor in Toronto, one of the best eye and ear specialists in Canada, whose income was $19,000 a year. He has gone to the war and has had to give up all his income. His wife is doing war work, but still these taxes have to be paid. It is a great mistake to attempt to charge too much to income. Other countries are not doing it. No doubt there will be some demand from the prairie provinces that this should be done, but we should not forget who pays the taxes. I appreciate the difficult problem the minister must solve to raise this money, but we must not forget that those who are going to pay the taxes will be those who have always paid the taxes. The minister has had more experience than I in many spheres of activity and I have no doubt he realizes the heavy burden being borne to-day by real estate.
A proper proportion of these taxes should be levied on bonds and securities. A previous minister said that he could borrow money for two-thirds of one per cent, but there was no war on at that time. There will be very little salvage after the war, and the bonds and securities of the country should pay a proper share of these taxes. Our men are going overseas to fight to protect these bonds and securities owned by the insurance companies and other financial institutions. They are risking their lives for this country, and that is not being done by those who stay home and do not pay taxes.


James Layton Ralston: My hon. friend will understand that the subject with which he has been dealing will be given the most careful attention and study in connection with the budget. After all, that is when such a matter would be considered.


Richard Burpee Hanson: The Bank of Canada, I believe, is the fiscal agent of the government and I suppose the governor and the directors of the bank are the financial advisers of the government. As I understand it, the Bank of Canada as the fiscal agent of the government puts out an issue which is allocated to the banks and the investment bankers-if that term is in order; I believe at one time a ban was placed upon the use of that term. These institutions are paid something for selling the bonds, which is quite proper; but I should like to know the cost, in percentage if it can be given that way, to the treasury of selling the bonds. I should
Government Loan Bill

like to know also what is paid by the treasury to the chartered banks for servicing the loan after it has been placed in the hands of the investors, that is, cashing coupons. Is that service paid for by the first cost, or not?


James Layton Ralston: I cannot give my hon. friend the over-all cost of loans. He will understand that in a number of cases the loans were simply refunding issues, and there was practically no commission cost. As I understand it, what my hon. friend is referring to particularly are loans similar to the one issued in January. That loan was sold to the public and the commission allowed was three-quarters of one per cent. However the individual who happened to procure the subscription of an insurance company or other institution making a large subscription would not receive this three-quarters of one per cent on that transaction. What was done was this. A large number of what we called national subscribers were put in one group and all amounts arising from commissions on their subscriptions were pooled and distributed among the banks and those who sold bonds to individuals in proportion to those sales. That was one factor in the distribution. The share in the pool was based on the amount sold by that individual house to what I would term private subscribers. That provided an inducement to sell as many as possible to those outside the national group. There was another factor in arriving at the distribution, namely the record in previous government issues. That system was found to work quite effectively, and I think I can add that it was satisfactory from the point of view of the country.


Richard Burpee Hanson: The cost to the country was three-quarters of one per cent.


James Layton Ralston: Plus expenses.


Richard Burpee Hanson: That would be the cost of preparing the bonds and advertising.


James Layton Ralston: I am sorry I cannot answer at the moment the other question with regard to the charge made by banks for cashing coupons.


Richard Burpee Hanson: As I recall it, in previous war loans the first commission to the bank covered the cost of cashing coupons during the lifetime of the issue. The arrangement was a good one, and I was wondering whether it was being perpetuated. I understand that the coupons are payable at par at any branch of a chartered bank in Canada, no charge being made to the investor.

As far as he is concerned, that is all to the good. The point is not of great importance. I was merely asking for information, but if the minister cannot give it, all right.


James Layton Ralston: I can give my hon. friend the information now. I knew there was some difference having regard to when the issue was made. The chartered banks receive one-eighth of one per cent of the face amount of the coupons cashed from all issues sold since 1923. In the case of the war loans 1916-1919 the charge for cashing coupons was included in the issue commission.


Richard Burpee Hanson: Now they are paid by the government.


[Stage Direction]
Section agreed to.
Section 3 agreed to.
On section 4-Orders and regulations.
Richard Burpee Hanson: I suppose this section is necessary. I regret that we cannot write the regulations into the legislation itself, but it is impossible to foresee every contingency and orders or regulations may be necessary to suit conditions as they arise.


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

[Stage Direction]
The house resumed from Thursday, May 30, consideration in committee of Bill No. 10, to ratify and confirm a certain agreement respecting the joint use by Canadian National Railways of certain tracks and premises of the Vancouver, Victoria and Eastern Railway and Navigation Company, at Vancouver, in the province of British Columbia-Mr. Howe- Mr. Fournier (Hull) in the chair.
On section 1-Agreement ratified and confirmed.
Mr. GREEN:: I understand that this bill merely ratifies an agreement between the Great Northern and the Canadian National Railways. Is the city of Vancouver interested at all? And if so, has the city approved the terms of the bill?


Clarence Decatur Howe: The entire arrangement is by agreement with the city of Vancouver. It has been approved by the transport board after hearing all parties. The principal purpose of the change in the westerly end of this section of the line was to eliminate a level crossing,

Beauharnois Power-Mr. Howe
which was done under orders of the city of Vancouver. I am sure there are no objectors to the bill.


Howard Charles Green: This is just to complete the arrangement made between the city and the two railways?


Clarence Decatur Howe: That is true. Practically it completes the agreement of 1915, which required certain work to be done, the abolition of grade crossings and the improvement of streets. All that has now been done and this permits the last part of the agreement to be carried out-the removal of Canadian National railway tracks from a certain street.


Grote Stirling: I understood the minister last night to say that the Great Northern was not included. The member for Vancouver South (Mr. Green)-perhaps it was a slip of the tongue-referred to the railway as the Great Northern. I asked the minister about that last night.


Clarence Decatur Howe: The Great Northern is not
a party to the agreement in any way unless it should be the owner of this particular railway.


Grote Stirling: That is what I was
getting at.


Clarence Decatur Howe: My hon. friends opposite may know whether the Vancouver, Victoria and Eastern Railway and Navigation Company is owned by the Great Northern. I do not know. I think it is probable, but I asked the question of my officers, and no one could tell me.


Howard Charles Green: The Vancouver, Victoria
and Eastern Railway is a subsidiary of the Great Northern, I understand.


Clarence Decatur Howe: I dare say that is true, but I cannot say positively whether it is or not.


Mr. MacINNIS:: I understand from the
explanatory notes that the original agreement of 1915 gave the right to run over the Vancouver, Victoria and Eastern Railway's tracks from New Westminster into Vancouver, right into the terminal; that this was made an agreement in perpetuity some time ago, and this bill covers that part of the railway from where the viaduct goes over the track to the terminal. That being so, I would ask if the terms of this agreement are identical with the terms of the original agreement.


Clarence Decatur Howe: I cannot answer that definitely, but it is my belief that they are. As the matter had been thoroughly examined by the board of transport commissioners and approved by them, and would have ended there had it not been that the agreement was for more than twenty years, I confess I did not examine into the terms of the agreement
itself. The whole purpose of coming to parliament is to extend the term of the agreement from twenty years to perpetuity.


[Stage Direction]
Section agreed to.
Section 2 agreed to.
Schedule agreed to.
Bill reported, read the third time and passed.

[Stage Direction]
Hon. C. D. HOWE (Minister of Transport) moved the second reading of Bill No. 9, respecting the Beauharnois, Light, Heat and Power Company.
Richard Burpee Hanson: Before the bill is given second reading and is considered in committee I think we should have a clear statement from the minister with respect to its purposes, so that the house and the country may be clearly seized of its objects and effect. I do not wish to make any remarks on the bill until the minister has made his statement, and I invite him to do that now; then I shall have something to say.


Clarence Decatur Howe: The Beauharnois Light, Heat and Power company now has a lease of certain power right* from the province of Quebec in the flow of the St. Lawrence river. It was granted, by act of parliament passed in 1931, the right to divert the water of the St. Lawrence river through its power canal to the extent of 53,000 cubic second feet. The act of 1931 declared that the Beauharnois Light, Heat and Power canal and works were works for the general advantage of Canada; and by that act control of the power canal, in fact, the ownership of the canal, was vested in the federal government. The same act provided that no more water could be diverted from the St. Lawrence for power purposes except by act of parliament. Some eighteen months ago the government received an application for a further diversion of power from the St. Lawrence through the Beauharnois canal. The company pointed out that it held what is called an emphyteutic lease from the province of Quebec for an additional
30,000	cubic second feet of water, and asked the federal government to implement that lease by authorizing the diversion of an additional 30,000 cubic second feet. The circumstances were looked into carefully. It was found that at that time no particular shortage of power existed, and there seemed then to be no great public interest which required the
39S
Beauharnois Power-Mr. Howe

federal government to authorize that diversion. Since then the situation has been changed tremendously by the war. Large blocks of power are being used by such industries as the alloy steel and electric steel industries.


Mr. MacNICOL:: Aluminum.


Clarence Decatur Howe: Well, aluminum does not apply largely in this particular case. It has been a very important factor in taking up power generally. Also flour mills, which are large users of power, have greatly expanded their production; with the result that in a very brief time, measured in months, the power problem has changed from an easy situation to a very limited situation so far as obtaining large blocks of power is concerned. The Beauharnois company is the largest and the principal supplier of power in the Montreal area. It also sends power across the provincial boundary into Ontario, where it is retailed by the Ontario hydro-electric power commission. The government has had representations from that commission that it is urgently in need of enlarged blocks of power. It has also had a report from the Quebec electrical board to the effect that the unsold power in the Montreal area is reaching a dangerously low point.
As Minister of Munitions and Supply, it has become my duty to ensure an adequate supply of power for the manufacture of munitions of war. Plans have been made for industries within the Montreal area which cannot be put into effect unless there can be an assurance that increased blocks of power will be available when these projects are completed. If I had doubts some eighteen months ago whether it was greatly in the public interest to grant this additional diversion, as Minister of Munitions and Supply I now have not only no doubt of the necessity, but I feel I should be negligent in my duty to that department did I not press as strongly as I could to have this additional power made available without delay.
So far as I know, this Beauharnois project represents the source of additional power which could be made available most quickly. With very little improvement the power canal can handle the additional water. The power house is of sufficient size to permit additional turbines to be installed. I am not sure whether the power house is now large enough to take the entire capacity, but I do know that a considerable increase in capacity can be made without enlarging the present power house. In other words, we have the power canal, the power development itself, and a power house adequate to receive the additional generators. So that we _have at Beauharnois a source of

power located in a great industrial area, the greatest industrial area we have in this country, and capable of immediate enlargement.
I believe I have given the house the pertinent facts of the matter. Of course the lease of water power is a provincial matter. The provinces own the power rights, and the province in which this industry is situate has already taken steps to lease the water power rights needed for this purpose. The government is interested primarily in navigation; and I have looked into that question and can assure the house that no navigational interest will be prejudiced by the diversion of this water. I understand that only one boat travels, or has travelled for many years, between lake St. Erancis and lake St. Louis. That is a tourist boat, the Rapids Queen, operated by Canada Steamship Lines; and I think no public interest will suffer greatly if the operation of that boat, which has become hazardous because of the lower water conditions over the years, is made to cease entirely. I believe that the public interest as affected by power for industrial purposes, and particularly for the production of munitions, will be greatly benefited by this additional diversion, and I am satisfied that no navigational interest will suffer by the diversion.


Richard Burpee Hanson: It is indeed reassuring to hear the minister say that no navigational interest will suffer by the diversion of this additional water. I quite agree that under present conditions it is not likely to interfere very much with the excursions of the Rapids Queen, but for quite a while now this country has been talking about a St. Lawrence waterway, and this area will be an integral part of it; the diversion of this water will have a bearing upon that scheme if it ever goes through. I do not intend to-day to rake up old scandals or anything of that sort, but the country's mind might well be refreshed after a period of nine or ten years with regard to this whole project.
I agree that the interest of the dominion is through its control of navigation, and navigation solely. I have lately been reading the argument made in this house by the Minister of Justice when, I think it was in 1931, certain Beauharnois bills were before parliament for enactment, in regard to' which he took a different point of view; however, it is a settled opinion that if the Dominion of Canada has any interest in this project at all it is by reason only of its jurisdiction over navigation. I think that is a very sound legal position, notwithstanding the view that may have been taken in former years by eminent counsel, including my right hon.

Beauharnois Power-Mr. Hanson (Sunbury)
friend, with respect to that question. I do not think there can be any doubt that the province of Quebec, in whose territory this power site lies, owns or controls the water, at least so far as hydro-electric power purposes are concerned. But because of its jurisdiction in respect of navigation the position has been affirmed from the very beginning, and I desire now to maintain it, that the dominion parliament has complete control over the diversion of water from the St. Lawrence river. The power company must first get from the Quebec government a grant of title to the waters for power purposes and the right to divert it must come from the dominion. So we are probably on common ground with regard to that.
The Beauharnois Light, Heat and Power company, which I believe is the operating company, was incorporated by the Quebec legislature as long ago as 1902. The statute was amended in 1928 when the present development was promoted by a group in Montreal about which a good deal has been heard in days gone by; I think I can just leave it at that. The act referred to, the Quebec statute of 1928, 18 George V, chapter 113, gives the company the right to build a new canal between lake St. Francis, the upper lake on the St. Lawrence river, and lake St. Louis, the lower lake, into which the water from this canal runs.
On April 27, 1928, an order in council was passed by the government of the province of Quebec authorizing the issue of an emphyteutic lease for a period of seventy-five years to the Beauharnois company of the rights of the province of Quebec to such part of the hydraulic power as could be developed from the diversion of 40,000 cubic feet per second. The lease that was issued under and by virtue of that order in council was conditional upon the company's authorization from the federal government to divert the flow of 40,000 cubic feet per second. On December 5, 1929,-in point of time, I believe, subsequent to the dominion authorization of such diversion- the company was granted by the Quebec government the right to an additional 13,072 cubic feet per second.
On application made by the company to the governor in council some time prior to March, 1929, and following a hearing before the then minister of public works and two other federal ministers, the celebrated order in council No. 422 was passed on March 8, 1929, authorizing the construction of a canal by Beauharnois and the diversion of 40,000 cubic feet per second. I have the order in council here. It is an historic document, containing a great many provisions no doubt
intended, and properly so, to safeguard the public interest. It will be noted that the authorization was by order in council, not by parliament, on the theory, as I understand it, that under the Navigable Waters Protection Act jurisdiction was in the governor in council and an order in council was all that was necessary. Probably that is a correct statement of the position.
In June, 1929, about ten weeks after order in council No. 422 was passed, an agreement was entered into between the Beauharnois company and His Majesty the King in the right of the dominion, incorporating the terms and conditions of order in council No. 422. This agreement was approved by order in council No. 1081 of that date. I refer to the numbers and dates so that if any hon. member wants to look into the contents of these orders in council he may do so. They are all set out, I believe, in the evidence and minutes of proceedings of the Beauharnois committee of 1931, where they may be found in a convenient form.
In that same year the governor in council passed three other orders in council, Nos. 2201, 2202 and 2203, which authorized the transfer of three water-power leases previously granted to Montreal Cotton company. These leases were assigned by the Montreal company to the Beauharnois company, and under and by virtue of that transfer and assignment the Beauharnois company acquired the right to use and divert into the canal the 13,072 cubic feet per second which together with the
40,000	cubic second feet authorized in March, 1929, make up the total of 53,072 cubic second feet which they are authorized to divert at the present time. The diversion of the 13,072 cubic feet had been authorized by previous arrangement and was I think vested in the Montreal Cotton company, and no question arises with respect to that.
The question of the diversion of this water arose in the house in 1930. Nothing took place. It was raised, if I recollect aright, by the then hon. member for Acadia, who is not now in parliament. Again it was raised in 1931 because of allegations made across the country with respect to what had taken place after the passing of order in council No. 422 in 1929. I recall very well the sittings of that committee, some of the results that flowed from them and some of the controversies that took place in this house in connection with the report of the committee and the legislation that resulted from it. I do not intend to go into that to-day. The committee made a report on July 28, 1931, and as a result two statutes were passed by this parliament, which
400	COMMONS
Beauharnois Power-Mr. Hanson (Sunbury)
are chapters 19 and 20, 21-22 George V, assented to August 3, 1931. The preamble of the first statute recites:
-grave doubts have arisen as to the validity of order in council P.C. 422, dated the eighth day of March, 1929, as amended by order in council P.C. 1081, dated the twenty-second day of June, 1929, which purported to be made under the provisions of the said Navigable Waters Protection Act, and also as to the validity of an agreement based upon the terms and conditions of said amended order in council, made between the Beauharnois Light, Heat and Power Company, Limited, and His Majesty the King, which was executed on the twenty-fifth day of June, 1929-
In the enacting sections the statute goes on to annul order in council P.C. 422, dated March 8, 1929, as amended by the second order in council to which I referred, as well as the agreement. Section 2 provides:
The Beauharnois Light, Heat and Power Company, Limited, its successors or assigns, in so far as it may be within the competence of parliament, is hereby granted the right to divert from lake St. Francis up to but not exceeding 53,072 cubic second feet of water of the flow of the river St. Lawrence, to be returned to lake St. Louis-
That is to say, having rescinded the authority previously given, in the manner in which it was given, parliament then gave this company the right to divert water up to that limit. Then section 3 contained an absolute prohibition against the governor in council consenting to any further or additional diversion of water by that company from the St. Lawrence river except with the express approval of parliament. The result of that legislation was to grant the diversion the company was then expected to operate under, to put it on a sound and safe basis so they would be sure they had what they wanted up to that point. But the primary object of the legislation was to prevent any further diversion being permitted by the governor in council and to retain control in parliament, I think in the interests of navigation. As is well known, of course, this company went through the throes of a reorganization-


Mr. LAPOINTE (Quebec East):: Is there not a section which reserves the rights of the province of Quebec in the use of the water?


Richard Burpee Hanson: Yes; I am coming to that. I may as well deal with the two statutes at once; I want to be as coherent as possible and not take up too much time.
A moment ago I stated that there were two statutes, and I have given the house the substance of the first, together with what appear to be the reasons for that statute. At the same time parliament passed a second

statute, which is chapter 20 of the statutes of that year, the preamble of which deals with the question of jurisdiction. This has to do with inland navigation, and I think it was upon that basis that the act was passed. At all events that was one of the reasons. The preamble states:
Whereas the improvement of inland navigation by the development of a deep waterway, which is now in progress, from lake Superior to the sea-
I might interject that we were then either finishing or had just finished the great Welland ship canal.
-through the great lakes and connecting waters and in part in, over or along the St. Lawrence river, requires that the canal now being constructed or to be constructed by the Beauharnois Light, Heat and Power Company, Limited, should hereafter be under the legislative jurisdiction of the parliament of Canada and be made available for navigation for vessels of such size and draught as may use the new Welland canal upon its completion-
This company having been given the right to divert 53,000 cubic feet per second, the effect on the flow of water for purposes of navigation will be appreciated at once. My information is that the canal was designed, constructed and in fact conceived to take the whole flow of the river, about 250,000 cubic feet per second; and it was because of the idea that eventually this company might gain the whole flow of the river that it was deemed desirable that the canal should be vested in His Majesty the King, while built at the expense of the company, so as to take the place of that portion of the St. Lawrence river bed which would be denuded of water by the entire diversion of the river.
I understand that the canal cost 816,000,000. Anyone who has seen the canal must be impressed with the magnitude of the whole undertaking. This statute, chapter 20, was designed to vest the canal in His Majesty the King, and to declare that the work was for the general advantage of Canada, so as to give jurisdiction over the canal to the government of Canada, having regard to the appropriate provisions of the British North America Act. Section 3 contains a provision empowering the governor in council to acquire such lands and works as may be deemed necessary or useful for the improvement of navigation by means of said canal between the two lakes, and finally section 4 contains a provision safeguarding the rights of the province of Quebec, whatever they may be. I recall very well the discussion backward and forward at that time between Mr. Cahan, who was in charge of the matter, and my right hon. friend

Beauhamois Power-Mr. Hanson (Sunbury)
the Minister of Justice (Mr. Lapointe). Certainly the rights of the province of Quebec are adequately safeguarded, and no question arises out of that.
One point further in this brief history of the undertaking. I understand that subject to the passage of legislation in 1931-and I have not the exact date before me-the Beauhamois company secured from the Quebec government of the day the right to use an additional thirty thousand cubic feet per second of water, and I understand the company were made to pay pretty well for that right, too. I do not know just what right and proper rentals should be, but I thought that if a company were receiving a public franchise from a province it was only right and proper that that company should pay proper compensation.


Mr. ROWE:: They still have it cheap.


Richard Burpee Hanson: It may
still be cheap hydro power; I think perhaps it is. So far I do not think it has been an especially cheap hydro-electric installation, based on horse-power cost. But if they get this additional diversion of thirty thousand cubic feet per second, and if they ultimately secure the diversion of the whole of the waters of the St. Lawrence river, it will be a gold mine for the Beauhamois company. The country should get something out of it, and so should the province of Quebec. That is the history of the situation, as I know it.
This application is one for the diversion of an additional thirty thousand cubic feet per second of water from the St. Lawrence river. Under the existing statute application must be made to parliament. But before parliament passes the bill there are some considerations to which the House of Commons, the government and the public ought to give attention. I am not raising these matters in any hostile attitude. I understand that to-day the company has two contracts, one with the Ontario hydro-electric for 250,000 horse-power and the other with the Montreal Light, Heat and Power Company for 150,000 horse-power. It should be noted by hon. members that at the present time, and I believe since 1931, the Beauhamois company has been a wholly-owned subsidiary of the Montreal Light, Heat and Power company.
I know there was a great deal of recrimination in connection with the acquisition by the Montreal Light, Heat and Power company of the Beauhamois company. The original company, namely that of 1928, which might properly be described as the promotion company-I am at a loss to know how to characterize it-was in financial difficulties; and if the government had not taken action
and guaranteed the banks over an interim period, this great enterprise might have gone into liquidation and been purchased for a song. There were some who thought control of the Beauhamois company ought not to go into the hands of the Montreal Light, Heat and Power company. But it was developed at the time and subsequently that no other group was capable of coming to the rescue of the Beauhamois company and of carrying its operations through to a successful conclusion. Whatever one may think about power monopoly, he must realize that there are practical considerations which have to be taken into account, particularly in a situation such as that which confronted the Beauhamois company.
I shall not go into that phase of the matter. Suffice it to say that the Beauhamois company is a wholly-owned subsidiary of the Montreal Light, Heat and Power company. I think I am correctly advised when I say-and if not I shall accept correction-that about
400,000	horse-power is being generated and sold, such horse-power being allocated as I indicated earlier in my observations. It is contended, and I have no doubt genuinely, that the Ontario hydro-electric authorities are approaching a time when more power will be needed from Beauhamois, notwithstanding what we have heard in recent years about selling Quebec power in Ontario. I shall not discuss that aspect of the matter at all, but I have no doubt power is needed in Ontario. I do not know what the situation is in the Montreal area.
I am wondering if the minister has any information as to what portion if any of the power is now being or in the future may be exported to the United States. My information is that the 150,000 horse-power to which I referred earlier goes into what is known as the Montreal power pool, and is used in various ways and through various channels. I have no information which would lead me to believe that any portion of that power is directly exported to the United States. I made some inquiries respecting the power exported to the Aluminum company located in the state of New York, and my information is that the power they import from Canada is developed at the Cedars. My understanding is that the development at that point is not a wholly-owned subsidiary of the Montreal Light, Heat and Power company, but is one in which they have a very substantial interest.
Will the minister indicate what portion if any of the present output of this power can be said to be exported to the United States, and what portion of any increased output will be so exported. It may be that none of it
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Beauhctrnois Power-Mr. Hanson (Sunbury)
will go to the United States; I have not been informed on the point. In any case the public ought to know something about it. If Canada is giving the right to the Beauhamois company to divert 30,000 cubic feet per second from the wholly enclosed Canadian portion of the St. Lawrence river, and if a portion of that increase is to be exported to the United States, we ought to know about it. No matter how friendly we may be to the great republic to the south, after such observations as I have been able to make I am led to the belief that once an agreement is made to export power to the United States we shall never get back the rights to that power.
I realize that there are two schools of thought on the subject. Frequently I have heard it urged that (power is one commodity Canada can sell, and that we have an excess supply. It is stated that the sale of power would bring in money. The other point of view is that we should not (permit any further export of power to the United States because after a time they might claim a vested interest and we should never get back the rights.
I remember clearly a debate which took place in this chamber in 1925 on a resolution moved by an hon. member then sitting on this side of the house, and seconded by myself. The government of the day was led by the right hon. gentleman who now leads the government; I believe the late Sir Lomer Gouin was minister of justice and my right hon. friend the present Minister of Justice (Mr. Lapointe) was minister of marine. On that occasion the principle of the resolution was accepted, namely that there should be no further export of power without the consent of the province involved.


Ernest Lapointe: Was that Mr. Stewart's motion?


Richard Burpee Hanson: I think it was the motion of Mr. LeSueur. That gentleman is now connected with the Imperial Oil company, but in the years I have mentioned he sat in the house. I believe that principle has prevailed ever since, and I agree that it is a sound one. The view that we ought to sell our power in order to obtain ready money is a short term view. We ought to take the long term view of this matter. However, that is one' point to which I should like the minister to give consideration. I am sure the information must be available to him and he should inform the house. I do not imagine for a minute that any of the
250,000	horse-power sold to the Ontario hydro is exported to the United States, but I should like to know definitely. Is any of the 150,000 horse-power sold to the Montreal company exported? Will any of the power to

be generated by this additional diversion of
30,000	cubic second feet be exported to the United States?
There are three other considerations of a national character to which I desire to direct the attention of the minister. First, I should like to know what effect if any this additional diversion will have upon the water levels of Montreal harbour. I know that many people will say right off that it will have no effect, because this water is simply to be diverted at one point in the river, passed through the canal, and then expelled in the lower lake to go down the St. Lawrence river. However, it must be remembered that in order to make the best use of a water diversion, the water must be controlled. I think this is something about which the government should consult an independent hydro engineer. I have the highest respect for Mr. Henry's ability, but I think we should have some other opinion. To put it frankly, he is rather interested in the project. This diversion may result in a periodic lowering or raising of the water level at Montreal. I hope I have made it quite clear that I am not objecting; I simply offer this for the consideration of the government.
The next matter to which I would direct attention is the possible effect of this diversion upon the Soulanges canal, which is on the north side of the river opposite the Beaubar-nois development. I should like to know at what stage of this diversion or of future diversions will there be an effect upon the government-owned canal.


Mr. REID:: Can the hon. member say whether or not the diversion which has taken place up to the present time has bad any effect upon navigation?


Richard Burpee Hanson: As I
understand it, for quite a number of years there has not been m-uoh navigation. The only steamboat plying these waters was the Rapids Queen. I made that trip several times. I understand that this boat does not go down the rapids at the present time, but I am not prepared to say that that is because of any diversion that has taken place. Any navigation on the river is taken care of by the canal on the north side. If the hon. gentleman has ever travelled up and down the river he will know that that canal provides the only feasible way of getting up the river. I should like to know what effect this diversion will have upon the Soulanges canal. I can visualize the time when, if this company succeeds and additional diversions are permitted by future governments, the whole flow of the river will go through the power company's canal, thus rendering the canal on the other side useless

Beauhamois Power-Mr. Hanson (Sunbury)
for navigation or any other purpose. This is a consideration which we ought to keep before us.
The next matter which I offer for the consideration of the minister and the government is this: If the present diversion or future diversions seriously interfere with navigation through the Soulanges canal, what arrangement is there in existence or what arrangement will be put into effect to permit navigation through the company canal? That is the canal which was built by the company and which has been vested in the federal government by legislation. At what stage of the diversion will the Beauhamois development be considered a navigation project as well as a power development? To-day it is only a power development, but if future diversions should change the course of the river it will become a navigation proposition. The government is in duty bound to see that provision is made to protect the rights of navigation. I hope there will always be navigation in the St. Lawrence river.
If my reading of the public press is correct, at this very moment the government is negotiating with the government at Washington for a new treaty to establish what is known as the St. Lawrence waterway development. My view is that in war time all such demands might very well wait. I am not going to say anything more about that at this time. This scheme has no friends in the maritime provinces, no matter what government promotes it, and I doubt if it has many friends in Quebec. I would not venture to speak for the hon. members from that province, who are well qualified to speak for themselves; but I do venture to speak for my own and neighbouring provinces. The Minister of Finance (Mr. Ralston) is a maritimer, and I am just throwing this out as a hint to him. This scheme has not many friends down there.


Mr. McCANN:: There are lots of them in Ontario.


Richard Burpee Hanson: That may be true. It just shows what a sectional country Canada is, which is a pity. I am not so sure that all of Ontario is in favour of it, neither am I so sure that all of the United States is in agreement. I have read many press reports and I have received many communications, but why labour that point now? I mention the matter merely in passing.
Let me ask this further question. What would be the feasibility and desirability of diverting the main flow of the St. Lawrence through Beauhamois, making it fully navigable and abandoning the Soulanges canal? What works would be required for that purpose, and is the government looking ahead to that
situation? I think that parliament in granting this very important and very valuable franchise ought to take as long a view as possible of its every effect on the economy of this country, and I have endeavoured to present these considerations as best I could and bring them to the attention of the government. Having done that, I feel I have done my full duty. I am trying to do that, and I think hon. members will give me credit for presenting the matter in as judicious a way as possible without opening up any old sores. I could talk of "valleys of humiliation" and $500,000 election gifts, but I am not going to do SO' because that is past and done with. Perhaps I am sorry that I did not get part of that money to help elect myself. But that is all over.
There is a further consideration to which I would direct the minister's attention. What is the potential gross power development at Beauhamois? What is it capable of doing? Is it not sufficient, if fully utilized, to render completely unnecessary any further plans for the St. Lawrence waterway considered as a power project?
I would also ask the minister about the Chicago diversion. It may seem a little far afield to speak of that here, but I followed this matter in days gone by when I was here, and I was astonished at the absolute disregard by the Chicago municipal authorities of the agreement made between the two nations. I ask the minister now: Is the Chicago drainage commission complying with the terms of the judgment of the supreme court of the United States?
There is one further consideration. With this additional diversion, with this increase in the flow of water and the increase in the company's power production, will there be any effect on the capital structure of the company? Hon. gentlemen may say that that is none of our business. Possibly not; it is a matter of property and civil rights, the company being incorporated under a Quebec act. But I would remind the house that large sums of money were subscribed by the public and put into this enterprise in days gone by and were absolutely lost to the enterprise- not by the present owners, because I do not think any money has been lost by any action of theirs. But in days gone by there is no doubt that huge profits were made by the promoters of this Beauhamois scheme. Some of it did not stick very long with some of the recipients but it all came out of the public, every dollar of it, and it is loaded into the capital structure and into the rates which this company may charge. Will this new diversion of 30,000 cubic feet per second have
404	COMMONS
Beauhamois Power-Mr. Hanson (Sunbury)
any effect on the capital structure? Will it have any effect on the rates? It should have, because this new diversion will make the cost of the installation very much lower per horsepower than it is to-day. I understand that the capital cost to-day is about $200 per horsepower. The figure may not be accurate; it is an estimate, and it is estimated that this additional diversion will reduce the capital cost per horse-power to $150, which as hon. gentlemen will observe is a very marked improvement in the capital cost of the installation.
I have already alluded to Mr. Henry. Mr. Henry's position with respect to this matter ten years ago occasioned a good deal of censure and recrimination. Mr. Henry was deputy minister of railways; Mr. Henry was head of the Beauhamois corporation. I cannot recall whether he occupied both positions at the same time. My colleague from Yale (Mr. Stirling) says he did not. But I know there was a great deal of criticism with respect to Mr. Henry's relationship to this project and the application that was granted in March of 1929. Mr. Henry is now the head of the Beauhamois corporation, and I understand that he is the minister's right hand man.


John Ritchie MacNicol: He is a liaison officer.


Richard Burpee Hanson: He is
liaison officer with the minister. I am not going to pursue that-


Clarence Decatur Howe: To get the record straight I may say that Mr. Henry is a member of the executive, first of the war supply board, now with the Department of Munitions and Supply, serving without salary.


Richard Burpee Hanson: Very good.


Clarence Decatur Howe: And I suggest that a man doing that should not have unnecessary disapprobation piled on his head.


Richard Burpee Hanson: I agree with the minister. You will not find me slinging any mud at Mr. Henry. I am simply calling attention to the present situation which is somewhat similar at least to the situation which existed in 1929.
I am not going to vote against this bill. I believe that the company is up to the limit of the power which can be developed from the present diversion. Is that correct?


Clarence Decatur Howe: Yes.


Richard Burpee Hanson: Just about up to that. I understand from the minister to-day, and this is a very important point to which we should give consideration, that in the area served by this development there is

need for more power. I am quite prepared to accept the minister's statement on that. I believe it is correct, and that is one fairly good reason-it may not be the best reason in the world-for putting this bill through. The only reason I have occupied the attention of the house for so long was to call its attention to the relationship of this development to the national interests. The government in the final analysis must take full responsibility for putting this bill through; by making it a government measure they have taken that responsibility.
In closing I commend to the minister's attention the different aspects of the matter to which I have referred. There are questions of a serious public character to which consideration should be given and in respect of which there should be a statement from the government before the bill is finally passed.


Ernest Lapointe: May I ask my hon. friend and the house if the bill could be allowed to go to committee, so that the minister might be able to give the information which has been asked for?


Richard Burpee Hanson: I think that would be the proper procedure.


John Ritchie MacNicol: The minister intends to put the bill into committee right away?


Ernest Lapointe: Immediately.


Clarence Decatur Howe: It is merely for the purpose of allowing questions to be answered.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Fournier (Hull) in the chair.
On section 1-Authority to divert.
John Ritchie MacNicol: I am not rising to oppose the bill, but I have some questions which I wish to ask, so if the minister is replying later on to any other hon. member, he can at that time also answer my questions. At the same time I wish to say something about the whole matter which is involved in the bill.
As I understand it, the authority of this parliament is strictly confined to navigation. That being the case, all we can do is either approve or disapprove the bill, because the production of power is wholly a matter for the province of Quebec. Since the government sponsored the bill, and in view of the fact that the diversion of 83,072 cubic feet of water per second will destroy the river, so far as navigation is concerned, from lake St Francis down the rapids section of the river to lake St. Louis, I should like the minister to inform the committee if the government

Beauhamois Power-Mr. MacNicol
has ascertained and satisfied itself that so far as navigation is concerned from lake St. Francis to lake St. Louis, the St. Lawrence is "through"; for, as I said a moment ago, the diversion of 83,072 cubic feet per second will destroy navigation; in fact at present, during the summer time, navigation is destroyed through the diversion of the present
53.072	cubic feet of water.


Clarence Decatur Howe: It is not very good in the winter time either.


John Ritchie MacNicol: Occasionally, when high water is available, the Canada Steamship boat, the Rapids Queen, can go down that section, but navigation is precarious excepting during high water.
I might, perhaps, give a little background regarding the flow of the water at the point where it is affected by the Beauhamois canal and where it flows down the river to lake St. Louis. This is one of the greatest sites of potential power wealth in the world. Behind lake St. Francis the area of the St. Lawrence watershed, outside of the Ottawa river watershed, is 250,000 square miles, more largely in Ontario than in the United States, but shared almost equally between them. The total flow of the river at the outlet on lake St. Francis in high water is about 230,000 cubic feet per second; it varies from that amount down to
180,000	cubic feet per second in low water. As I have said, in low water the diversion of 83,072 cubic feet from 180,000 cubic feet of water would destroy the value of the river for navigation purposes. I want to have it clear in my mind whether the government has decided that so far as navigation is concerned between lake St. Francis and lake St. Louis, the St. Lawrence river is "through."
The river from the gulf of St. Lawrence to the head waters-and I have followed it from one end to the other-is about 1,870 miles. It has immense potential power value. Right at the outlet of lake St. Francis at present what is the situation? Beauhamois diverts
53.072	cubic feet of water per second, from which it develops, or can develop, on an 85 per cent basis, 400,000 horse power. As any engineer in the house knows, the horse power is based on the height that the water drops, which is 83 feet. The level of lake St. Francis above the sea being 152 feet, and the level of lake St. Louis being 69 feet, this makes the difference of 83 feet. The flow of the river, which is taken normally at 230,000 feet per second, multiplied by the height of the fall, which is 83, and divided by 11, will enable anyone to figure out the normal power, which would be approximately 1,750,000 horse power on that basis. I believe that to-day the Beauhamois company are developing all
but one-half of the power of one generator. As my leader said, they are developing practically all they can. A little down the river from the outlet of lake St. Francis there are two other power sites in operation: The Cedars on the north side of the river developing about 225,000 horse power, and the St. Timothy on the south side of the river developing
30,000	horse power. In other words, at the moment there is being developed from the flow of the river east of lake St. Francis in the rapids section between lake St. Francis and lake St. Louis, approximately 655,000 horse power.
Now my leader referred to the possible diversion of the full flow of the river, and asked the minister what the horse power would be if the full flow of the river were diverted through the Beauhamois canal. The full flow is 230,000 cubic feet per second. I suppose it could be regulated back west through the reservoirs of the five great lakes, commencing with lake Superior, the largest, having an area of 31,800 square miles, and lake Ontario, the smallest, having an area of 7,760 square miles. Therefore I have no doubt that remedial works west of Kingston, Ontario, to the sources of the river could provide enough water that the flow of 230,000 cubic feet per second could be maintained. That being the case, the total power which could be developed by the full flow of the river at Beauhamois is 230,000 multiplied by 83 and divided by 11, or approximately 1,750,000 horse power. There we have an everlasting and perfect potential power development, which so far as I know is not surpassed anywhere in one unit.
There is one feature that I do not like- not about this development itself; I think the development is a splendid one-but I do not like one phrase that is in the bill because it recalls another very sad event that happened to Canada. In the preamble are these words:
. . . urgently required to meet the increased demand incident to manufacture of materials for war purposes.
I have in mind that in 1918 there took place in the St. Lawrence river another diversion in regard to which somewhat the same words appeared in the submission presented to the International Joint Commission when the Aluminum company at Massena applied to that commission in August I believe, at any rate during the summer of 1918, for permission to erect a weir in the south channel of the St. Lawrence river between Long Sault island and the New York shore. The same argument was put up for permission to divert waters, namely "for war purposes." The International Joint Commission granted the Aluminum company the right to erect a weir in the river, the first result being that the river was raised

Beauharnois Power-Mr. MacNicol
five feet, and the second result was that navigation was totally destroyed in the south branch of the St. Lawrence river. The commission gave the Aluminum company the right to erect that weir on condition that it should be removed at the end of the war, or in any event within five years. That has not been done; that weir is still across the river between Long Sault island and the south bank of the river. I have made a careful examination of it, photographed it, and what I am stating I know to be a fact. There is no navigation down the south branch of the St. Lawrence river, and for years-for generations, from the commencement of navigation in the St. Lawrence-the south branch was a navigation channel. That weir has not been removed in spite of the express order of the International Joint Commission.


Mr. CHEVRIER:: May I tell the hon.
member that there was no navigation in the south branch of the river before the weir of which he speaks was built.


John Ritchie MacNicol: My hon. friend evidently is not familiar with navigation in the south branch of the St. Lawrence river. I may tell my hon. friend that this matter has had long study by me, and from the commencement until 1896 the south branch of the St. Lawrence river could be navigated.


Lionel Chevrier: That is correct. May I interrupt the hon. gentleman? What I was telling the hon. member is that prior to the construction of the weir there was no navigation south.


John Ritchie MacNicol: And I am telling my hon. friend again that he is wrong. I repeat what I said; up until 1896, about the time the Massena canal was first commenced, the south branch of the St. Lawrence could be navigated. I was up and down it myself from the town of Prescott when I was a boy. I am not in the habit of making statements here that are not correct. In spite of the order of the International Joint Commission the weir is still in the river, and the Massena company is diverting 25,000 cubic feet per second with which they are generating 90,000 horse power at Massena.
However, I am not opposing these words in the bill; I am merely stating that they recall to my mind another diversion from the St. Lawrence river that has been wholly unsatisfactory so far as Canadians are concerned, for we receive no revenue from that diversion.
Something was said about the export of power. I also am generally opposed to the export of power. Years ago when the development of the St. Lawrence river for power purposes was proposed, the late Sir Adam Beck,

who was then chairman of the Hydro-Electric Power Commission of Ontario, stated, in a protest against the exportation of hydroelectric power, with special reference to a power development that at that time was proposed to be erected on the Ottawa river at Carillon, as reported at page nine of the report:
I am not alone.
That is in the opposition to the export of power.
Premier Ferguson of Ontario and Premier Tasehereau of Quebec on different occasions have expressed themselves most forcibly against the exportation of electricity upon any terms such as those outlined for the proposed Carillon lease.


Richard Burpee Hanson: What is the date of that?


John Ritchie MacNicol: The report of 1925,
page 9.
My leader asked: Is there any power being exported by the Beauharnois company? My information may not be correct, but as given to me it is that in consideration of the United States interests at Niagara releasing the Hydro-Electric Power Commission of Ontario from the agreed export at Niagara falls of some 40,000 horse power, that amount is now exported from Beauharnois to compensate for said release. Of course that is not an additional exportation; it is only taking the place of the said exportation that would have been carried on from Niagara falls according to agreement.
One reason why I am not against the diversion of the water, provided the government have decided that navigation is " through " east of lake St. Francis, is that the HydroElectric Power Commission of Ontario does require power. And it has a right to expect to be able to purchase power from the Beauharnois company because, in a pamphlet issued in 1928, entitled " St. Lawrence waterway project" are these words:
We believe the situation justifies consideration of the present problem from the broad national standpoint by both the provinces concerned-
That is, Ontario and Quebec.
-and that in the national interests such arrangements should be made as will enable Ontario to secure her power requirements for eastern territory from the purely Canadian section of the river pending the development of the international reaches. We are of opinion that, in the light of the good understanding presently obtaining between the two provinces, this would not be difficult of arrangement, and that power could be thus secured at rates which will compare most favourably with present cost of Ontario power.

Beauharnois Power-Mr. MacNicol
That merely goes to show that Ontario should expect to obtain power from Beau-hamois and have it delivered to the Ontario hydro commission. As I said a moment ago, the hydro commission does require more power. Prior to the depression I believe the demand for power increased at the rate of about ten per cent a year, but during the depression the demand decreased. In one of the last years of depression, 1937, the power generated by the Ontario Hydro-Electric Power Commission direct was 1,094,504 horse power. In 1938 it was about the same- 1,086,729 horse power. In 1939, however, I suppose owing to the demand made by industry in preparing to produce munitions, the government having gone into that work to some extent, the power produced rose to 1,228,552 horse power, an increase of thirteen per cent in one year. From other hydro interests and companies producing power for the hydro commission, the commission obtained 1,484,650 horse power in 1938 and 1,669,335 horse power in 1939, or an increase of twelve per cent in that period. So to-day there is a substantial demand, and I am told that at the present time the hydro electric power commission has a reserve of not more than 300,000 horse power.
There are other places where electricity can be developed. One such place is the Nipigon river. They are now developing a large block of power there, but just south of the point where the Nipigon river leaves lake Nipigon there is a most magnificent falls called Virgin falls, and just down the river there are two other rapids. From those three rapids I am told some 75,000 horse power could be developed. And if we can obtain an agreement with Quebec we can develop about 225,000 horse power at the Carillon, and by agreement between the two provinces another 600,000 horse power can be developed between Chats falls, where they are developing, and lake Temiskaming. None of that power, however, could be brought into operation quickly, so there is some merit in the request of the Beauharnois company to develop more power.
As someone said not long ago, the Beauharnois development is a wonderful project. In my surveys up and down a great number of rivers I have always been struck with the way God, in laying out the courses of the rivers, provided many wonderful places for the development of vast power resources. The river may take a turn one way round a bend and go down a series of rapids, but God has left, between where the river starts to bend and where power can be developed, a narrow flat table-land, so that all man has to do is dam
the river, dig a short canal and develop power. The Beauharnois canal is fourteen or fifteen miles long and something like 3,000 feet wide. It is a wonderful sight, running across a tableland, the edge of which is the shore of lake St. Louis, where there is a fall of 83 feet. In that distance of fourteen or fifteen miles the river drops down its natural bed over a series of rapids of which the Coteau, Cedars and Cascades are the principal three. So at Beauharnois there is an opportunity to develop power rapidly. I believe they would have to erect another power house, since I understand that now they are developing to capacity with the exception of half of one turbine. However, they could construct a new power house more rapidly than the Ottawa river could be dammed and a power house erected at that point.
I want to take this opportunity to warn the government in the strongest way possible that if they -make any attempt whatever to permit the diversion of water from the Albany river watershed, I will fight it as long as I can, I care not who introduces it or who supports it. I a-m wholly opposed to the diversion of water from one great watershed to another. I am told that the hydro power commission have stated that they will do this if they are permitted, and I believe there is some talk of writing such a provision into the St. Lawrence treaty, but I will fight any provision in that treaty in regard to the diversion of Albany river water into the great lakes. They have erected dams on a branch of the Albany river, namely the Kenogami river, as the minister knows, at a cost of one and a half or two million dollars, and they cannot use a drop of that water without the consent of this parliament and the congress of the United States. I do not think we should do anything like that; I believe we can get all the power we want in Canada without that, but of course that is another matter.
A few moments ago my leader said something about what took place in 1931. I am not going to enlarge on what he said. I was in this house at the time and I well remember the speech made by the Prime Minister. I felt very sorry for him at that time. I am convinced of this, that if there is one thing we can say about the Prime Minister it is that he is absolutely honest personally. I do not believe anyone could point a finger at the integrity of the right hon. gentleman, but at that time there was a rather sorry mess associated with the development of Beauharnois. I always regret that such a great, God-given treasure to Canada should have been mixed up with such a dirty -mess at that time.
Perhaps I might answer a question which was asked by the leader of the opposition

Beauhamois Power-Mr. MacNicol
with regard to the Chicago drainage canal. I keep in constant touch with the diversion at Chicago and know it perhaps as well as it is known by most people. At the moment the Chicago diversion is down to the amount set out in the judgment of the supreme court; that is, the diversion for dilution purposes, which is 1,500 cubic feet per second. On the other hand, Chicago has increased its takeage of water for domestic purposes until to-day it exceeds the per capita takeage for domestic purposes of any great city in the world. It is said it is now taking for the 4,000,000 or 5,000,000 citizens in the Chicago sanitary district, over 300 gallons per day per citizen. That means it is taking somewhere between 1,250,000,000 and 1,500,000,000 gallons of water per day, or the equivalent of about 2,000 cubic feet per second. That amount is much more than Chicago took for domestic purposes before the judgment was issued by the United States Supreme Court. So that when the government is considering the diversion at Chicago, in connection with the St. Lawrence river development, it should keep in mind the fact that Chicago is taking far too much water for domestic purposes, and is thereby in a position to dilute its water more than it would otherwise do. It is still a Chicago steal in that regard.
My leader said something about the Soulanges canal. I believe that canal starts about Coteau Landing, or just east of that point. The Beauhamois diversion is constructed in such a way that a long weir runs out into the lake. The lake being level, I should not imagine that a further diversion of
30,000	cubic feet per second would interfere with the present operation of the Soulanges canal. However, it might do so. Certainly it might well interfere with power production farther down the river, and would eliminate possibilities of navigation down the river.
When the minister speaks, I should like him to answer these questions:
(a)	Does the government propose to abandon navigation down the river between lake St. Francis and lake St. Louis? If it does, then I presume there will be no further objection to any further diversion.
(b)	What effect will the additional diversion of 30,000 cubic feet per second have on the production of power at the Cedars power plant and at the St. Timothy power plant? If the power development at either of these plants is affected by the increased diversion, who is going to compensate the present producers of the power?
(c)	Is the government going to permit the export of power generated by the further diversion of 30,000 cubic feet per second at Beauhamois?

(d)	As the diversion will destroy navigation, and as it will destroy navigation for small pleasure craft and ships operated by the Canada Steamship Lines, will the minister tell the committee if the Canada Steamship Lines have any vested rights in the river in connection with the passage of its ships, and if so, who would compensate that company for the loss of the privilege of sailing boats down the river? We must realize that the boat trip down the St. Lawrence is one of the greatest scenic trips in the world.
(e)	Provided the Beauhamois company is given the right to divert this water, and when or if the St. Lawrence canal or whatever navigation canal the government is going to construct through the Beauhamois canal is constructed, will Canada be in any way obligated to pay for navigation purposes part of the cost already expended by the Beauhamois company?
I ask that question because I am told that there will be a clause in the new St. Lawrence agreement to the effect that the cost of the development of the St. Lawrence waterways will be divided as follows: Purely power purposes, so far as Ontario is concerned, to be paid by the province of Ontario; purely navigation purposes to be paid by the Dominion of Canada; purposes common to both power and navigation to be paid equally by both. I have in mind that when the Beauhamois bill went through the house nine or ten years ago I was fully convinced, and I believe all hon. members were convinced, that if and when the Beauhamois canal became a navigation canal it would not cost the Dominion of Canada anything, apart from the building of the locks.
That is all I have to say on the matter. I am not going to vote against the bill, if the government gives satisfactory answers to what I have asked. I am sorry that the greatness of this power project was in its early stages somewhat marred by the dirty mess which surrounded its inception.


Mr. COLD WELL:: This is probably one of the most important bills we have had before us for a considerable length of time, and one which, in the opinion of hon. members of this group, should be referred to the committee on railways, canals and telegraph lines, in order that a thorough investigation may be made into what the proposed bill involves.
In discussing the bill this afternoon the minister said it was necessary to obtain this right to divert a further 30,000 cubic feet per second as a requirement of war production. May I point out to the committee that the bill provides for the diversion of this water after the war is over. On the grounds of a war necessity we are extending the concession

Beauhamois Power-Mr. Coldwell
of one of the most valuable resources of our country to a private corporation. As has been shown already by hon. members who have spoken, the amount of the diversion will be so great that in reality we are giving a virtual water-power monopoly to the Beauhamois company.
It is proposed to increase the amount already granted by 30,000 cubic feet per second, and thereby bringing the total amount up to about 83,000 cubic feet per second. As shown by the hon. member who has just taken his seat, that involves more than one-third of the possible flow of water in the river St. Lawrence. In view of the circumstances it is perfectly obvious that parliament has a duty to all the people of Canada, and that such a right should not be granted to the Beauhamois company until the whole matter has been thoroughly investigated by the proper committee and a report made to the house.
The present application carries the Beau-harnois company's control of the water of the St. Lawrence river one step farther towards complete control. That, it seems to me, involves something else; it involves the whole of the St. Lawrence waterway scheme. Before we vote upon this bill, the minister should tell us if the proposed additional diversion has been submitted for the approval of the International Joint Commission. If this has not been done, should the government not consider the obtaining of their approval in view of the boundary waters treaty? I have before me an opinion given on December 21, 1928, by the deputy minister of justice, Mr. Edwards. The boundary waters treaty between Canada and the United States was made on January 11, 1909. That treaty contained certain terms, and article IV states:
The high contracting parties agree that, except in eases provided for by special agreement between them, they will not permit the construction or maintenance on their respective sides of the boundary of any remedial or protective works or any dams or other obstructions in waters flowing from boundary waters or in waters at a lower level than the boundary in rivers flowing across the boundary the effect of which is to raise the natural level of waters on the other side of the boundary, unless the construction or maintenance thereof is approved by the aforesaid International Joint Commission.
Article VIII states:
In cases involving the elevation of the natural level of waters on either side of the line as the result of the construction and maintenance on the other side of remedial or protective works or dams or other obstructions in boundary waters or in waters flowing therefrom or in waters below the boundary in rivers flowing across the boundary, the commission shall require, as a condition of its approval, that
suitable and adequate provision, approved by it, be made for the protection and indemnity of all interests on the other side of the line which may be injured thereby.
Then Mr. Edwards goes on to say:
I am of opinion that the plain intent of these articles of the treaty, as regards the present case-
That was the former application.

is to require that the construction of the proposed works shall be approved by the International Joint Commission, if the said works, when constructed, would have effect to raise the natural level of waters on the United States side of the boundary; but if the construction of the proposed works would not be attended by that effect, then I am of opinion that the construction of the works may be authorized without reference to the International Joint Commission.
I am not in a position to say just what the effect of this would be; but in view of the fact that if such projects are proceeded with, the Beauhamois company will control the whole canal system in that part of the river, I am of opinion that, before this bill is passed, a thorough inquiry should be made into this application.
There is another question which I think the minister might answer. Is it the policy of the present government to allow this section of the St. Lawrence river to pass completely to private control? This is a navigable water. If this is not their policy, is this not a good time to stop any further progress in the direction of private exploitation? I know nothing about the technical problems involved, but along with many other people in this country I am alarmed at the growth of monopolies in various forms. These monopolies have increased largely because of the granting of the right to exploit the natural resources of Canada. Probably the greatest natural resource that we have left to-day is water power, and private corporations are endeavouring to obtain control of this public asset. In our opinion our water power ought to be developed for the public benefit rather than for the benefit of private corporations. In view of the scandal which surrounded the granting of the original application some years ago, I think it would be in the interests of the government itself to refer this bill to the proper committee. Then the application can be thoroughly investigated.


Mr. MARTIN:: What would be the proper committee?


Mr. COLDWELL:: The committee on railways, canals and telegraph lines. We could then have available the technical advice that we require in order to arrive at some opinion regarding the application. I am not an engineer and I do not know very much about engineering practice. There are probably many
Beauhamois Power Bill

other members like me in that respect, and before we are asked to vote upon this bill we should be better informed as to its implications. In any event, before the bill is passed, there should be a thorough investigation and the whole matter referred to the International Joint Commission for its approval. This is a good time for the government to prevent the extension of private monopoly in connection with our power resources.
This afternoon we were told by the leader of the opposition (Mr. Hanson) that the Beauhamois corporation is now a subsidiary of the Montreal Light, Heat and Power consolidated, which has subsidiaries all across Canada and is rapidly becoming a giant corporation controlling the very life of this nation as far as the power situation is concerned. That is not healthy. That is not good. In our opinion this bill should not be passed to enable this corporation to further fasten its grip upon the Canadian people. We should not give to this company the right to divert from our waterway system an additional amount of water which would permit them to control more than one-third of the flow of the whole river. We urge, therefore, that the government give these suggestions their consideration and that the matter be referred to the committee to be thoroughly investigated. If that suggestion is not adopted, then we urge that the matter be referred to the International Joint Commission before this concession is granted.


Mr. CASTLEDEN:: Mr. Chairman, recently there was in a Toronto paper an editorial entitled "Is Beauhamois too hot to handle?" I do not know if that is the reason why there are at this time so many empty seats on the government side. I notice that there are fewer than thirty members in their seats. I rise to protest against the principle of handing over the natural resources of Canada to private corporations which are rapidly becoming monopolistic in character. We maintain that our duty here is to protect the natural wealth of Canada, which we contend belongs to the common people of Canada., and it should not be handed over to these corporations.
I find from the Annual Financial Review of July, 1939, that Montreal Light, Heat and Power Consolidated has several subsidiary companies: The Cedar Rapids Manufacturing and Power company; the Provincial Light, Heat and Power company; the Quebec-New England Hydro-Electric corporation; the Beauhamois Power corporation, and under that the Beauhamois Light, Heat and Power company; the Montreal Island Power company. I believe we should be remiss in our

duty if we did not voice a protest against the giving away of these natural resources. I cannot understand why the wealth of Canada, which we maintain is the heritage of the people of this country, should be given away without remuneration. In that connection I should like to know what profits the Beauhamois company derives from these great natural resources. I should like to see the Canadian people a fifty per cent shareholder, let us say, in some of these large corporations which are deriving their wealth from our natural resources and from which the people receive mighty little in return.


Clarence Decatur Howe: There have been so many questions, Mr. Chairman, that perhaps it would save time if I attempted to answer them briefly before we proceed with the bill section by section.
First, as to the profits of Beauhamois, I would point out that the disposal of electric energy, or of the water in the river and the energy generated from it, is a matter entirely for the province. The province owns the flow of the water and can dispose of it as it likes except when it interferes with navigation, and there the federal government has sole and paramount jurisdiction. But so long as navigation is not interfered with, the use of the water in the river is the concern of the province.
The Beauhamois Light, Heat and Power company, as has been stated, is now wholly owned by Montreal Light, Heat and Power, and the rates that it can charge for the sale of power are controlled absolutely by the electricity board of the province of Quebec. The leasehold arrangements for the water dealt with in this bill are a matter entirely for that province.
As for the use of the power, the province of Quebec has taxing power on the corporation, and if the province has not sufficient taxing power I think my colleague the Minister of Finance (Mr. Ralston) can help them out with his war profits tax. It would hardly be good business for the company to attempt to pile up undue profits for itself out of any . lowering of capital cost per horse power resulting from this diversion.


Richard Burpee Hanson: The company has been giving back its profits in reduction of rates to its customers, and it ought to get credit for that.


Clarence Decatur Howe: Quite so, and good business would justify that practice in this particular case because otherwise they would simply be piling up profits to be taxed by the province and the dominion. The price at which power is sold in the province of Quebec is a matter

Beauhamois Power Bill
for the province, and not for the federal government.
As to the export of power to the United States, it has been the policy of this government since I have been a member of it, and I think consistently for a good many years prior to that, not to sanction the export of new power to the United States.


Richard Burpee Hanson: Without the consent of the province.


Clarence Decatur Howe: No new power has been exported since I have been a member of the government. My knowledge does not go beyond that, but I think for many years past no new power has been exported to the United States. Two or three years ago application was received from three separate interests to export power: the Montreal Light, Heat & Power company, the Aluminum Company of Canada, and the Ontario hydro-electric power commission, for the right to export a block of 40,000 horse power to the United States. Permission to export was refused by the government to all three interests.
In the 1938 session a bill was introduced by the government and passed by this chamber prohibiting the export of power from Canada except by act of parliament. That bill was rejected by the upper chamber. I read from the Journals of the Senate, June 29, 1938, page 361:
The standing committee on banking and commerce to whom was referred the bill (21 from the House of Commons), intituled: ''An act to amend the Electricity and Fluid Exportation Act," have in obedience to the order of reference of 5th April, 1938, examined the said bill and now beg leave to report thereon as follows:
The committee recommend that the bill be not further proceeded with at the present session, circumstances having changed since its introduction in this house.
All of which is respectfully submitted.
F. B. Black,
Chairman.
Then at the bottom there is this note:
With leave of the Senate, the said report was adopted.
In other words, this House of Commons passed a bill the purpose of which was to prohibit the export of new power except by consent of the parliament of Canada, but that bill was rejected by the upper chamber.


Richard Burpee Hanson: This house passed the bill?


Clarence Decatur Howe: Yes.


William Earl Rowe: And it was rejected by the upper chamber?


Clarence Decatur Howe: Yes.


Ernest Lapointe: It was a government bill, was it not?


Clarence Decatur Howe: Yes, and it was killed over
there.


Ernest Lapointe: It did not come back here.


William Earl Rowe: No.


Clarence Decatur Howe: The question was asked, what portion of the power to be generated is intended for export? The answer is that none of it can be exported without the consent of the government, and I think the government has demonstrated fully that it is not disposed to authorize the export of new power from Canada for any purpose whatsoever.


Richard Burpee Hanson: With the minister's permission, I think he is correct in saying that none of this power could be directly exported without the consent of the government, but as I understand it, this
150.000	horse power goes into the Montreal Light, Heat and Power pool, from which there is to-day express authority to export. So some of this power may be exportable.


Clarence Decatur Howe: Mr. Chairman, I am looking for someone who can distinguish power after it goes into the pool; I think it would be very difficult. The only change I know of in that situation is that we had an application for permission to change the point of export for the Ontario hydro grid. The Ontario hydro grid is supplied with power from a good many sources-the Gatineau, Beauhamois, Niagara, and other points. Its transmission lines were overloaded in the Niagara area, and it was desired to change the point of export, for a part of its commitments to the United States, to Cornwall. That was granted; it was only a small block and no new export of power was involved. It is quite possible that the Cedars have an old contract extending over a good many years to export power to the Aluminum Company of America at Massena, New York; if the power is pooled, it is quite possible that some of the Cedars power will go in the Montreal area and some of the Beauhamois power will go across the line, and I am sure no one can tell which power goes across, because, of course, two sources of power feeding into the same wire are hardly distinguishable from that point on.


John Ritchie MacNicol: Massena power would hardly be exported to Canada. They develop only 90,000 horse power, and in addition they buy large quantities of power.


Clarence Decatur Howe: The Cedars export power to Massena.


John Ritchie MacNicol: I know. Massena itself could not export any.


Clarence Decatur Howe: No.
Beauhamois Power Bill


George Hugh Castleden: We have a boundary waters treaty with the United States. I should like to know whether this proposed additional diversion has been submitted to the International Joint Commission for their approval.


Clarence Decatur Howe: These are not boundary waters. The waters are wholly within Canada. My hon. friend (Mr. Coldwell), the leader of the hon. member's group, read an opinion from the Department of Justice indicating that if there were put in boundary waters any obstruction which would raise or lower the level of those waters back in the other country, the matter must be submitted to the International Joint Commission. In this diversion it is simply water passed from one lake to another, rather than changing levels. Every precaution is taken to see that levels are maintained in both lakes. However, I might say that this project, the Beauharnois canal, is an essential part of the St. Lawrence waterways development, which is an international plan. It is constantly being studied by engineers chosen by their respective governments for that purpose; and the proposed diversion and all the works connected with it have received the full study and approval of the engineers responsible for the St. Lawrence waterways development.


Major James William Coldwell: On both sides of the line?


Clarence Decatur Howe: Yes.


Richard Burpee Hanson: Has the minister any reports which he could appropriately give to the committee?


Clarence Decatur Howe: I should be glad to table the publications in connection with the St. Lawrence waterway which go into this matter fully. I have quite a library on the subject.


Richard Burpee Hanson: Do they go into the question of diversion?


Clarence Decatur Howe: I am sure they have been tabled in the past, but I should be glad to table them again.


Richard Burpee Hanson: That is
not exactly what I had in mind. What I was thinking of was any study of the effect of this proposed diversion upon navigation, and the kindred subjects to which I referred.


Clarence Decatur Howe: I have a report from a member of my own staff, Mr. D. W. McLachlan.


Richard Burpee Hanson: I should be glad to have that. I have great faith in him.


Clarence Decatur Howe: Mr. McLachlan has been in charge of the St. Lawrence, for many years for the former department of railways and

canals, and now, for the Department of Transport. Mr. Guy Lindsay, our hydraulic engineer, is also an expert on the matter. Both are Canadian representatives on the international board which is studying the development of the St. Lawrence. I might point out that any diversion into the Beauharnois canal, which is the canal that will be used for navigation in the St. Lawrence development, is compensated for in the flow of the river.
This bill will be supplemented by regulations which will set down certain obligations on the Beauhamois company to build compensating works. A very careful study is made to determine the effect of the diversion on water levels in that section, and compensating works are built to maintain the levels of the river.
A question was asked as to what effect this would have on the Soulanges canal. It will have no effect.


Major James William Coldwell: Just before we leave the other point, I might have gone on and read the opinion of the deputy minister in which he says this whole matter should be referred to technical engineers and so on in order to establish whether any diversion would affect the agreement under the treaty, that is as to the water levels. The point I was making is, that report having been made, can we have it produced here in order to satisfy the members of the committee?


Clarence Decatur Howe: I believe that such a report can be produced. It is difficult to produce specific reports on this particular subject because it is involved in a larger plan of development. Studies of the St. Lawrence have been made and agreement reached as to what compensation, for example, is necessary at certain stages of development of the work, as regards the water in this canal. The statute for the Beauharnois provides a limit on the flow of water in the Beauharnois canal. I think the limit is 2J feet per second. So much has been decided in an international way about this particular diversion that I cannot say what reports we have on this particular phase of the matter, but I can say that every phase of the development is a matter of international agreement and has been agreed upon by engineers responsible to their respective governments for the development.
Then comes the question as to when the Beauharnois ship channel will be put in operation. Navigation from Montreal harbour to Prescott is maintained at a 14-foot level, and very large expenditures are required both in the international section, above the Beauhamois development, and in the Lachine section below the Beauharnois development,

Beauhamois Power Bill
before the 27-foot depth of navigation will be obtained. As I say, the development proposed in this bill does not in any way affect 14-foot navigation in the Soulanges section or any other section of the river. At such time as 27-foot navigation is a feasibility, we have a power canal some sixteen miles long, I think it is, developed at the cost of the Beauhamois company, which would otherwise have been required to be developed at the expense of the federal government, at least as far as the government's responsibility for navigation is concerned.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.


Clarence Decatur Howe: At the request of the hon.
leader of the opposition I table the report on the application of the Beauhamois Light, Heat and Power company under the Navigable Waters Protection Act for approval of plans to divert 40,000 cubic feet per second from lake St. Francis to lake St. Louis and from the St. Lawrence river via the south shore. This report was made by an interdepartmental committee of federal government engineers. It gives data on the effect of diversion of various amounts of water.
I also table a plan dated May 8, 1935, showing the development of the St. Lawrence at the present time.
I also table a plan dated January 8, 1940, showing the navigation features of the canal, with the future locks that will be built when needed for navigation and the development required for the 83,000 cubic feet per second diversion contemplated by this bill.


George Hugh Castleden: Would the diversion
of this water affect the locks already there, render them obsolete?


Clarence Decatur Howe: Nothing that is there will be changed in any way. Compensation works will be built in the river to take care of the proposed diversion through the canal so that the level of the water at the head of the Soulanges canal locks will be exactly the same after the diversion as it is at present. The water levels from there down are of course controlled by the locks themselves. There will be no change whatever in the navigation feature of the river by the 14-foot canal system now in operation.


Mr. NICHOLSON:: While I understand
we are concerned chiefly with the navigation aspect, could the minister state the amount of power developed as the scheme now stands and the amount that will be developed with the additional quantity of water?


Clarence Decatur Howe: The present amount developed is 450,000 horse-power, and the additional diversion will generate an additional 250,000 horse-power.


The CHAIRMAN:: Shall the section carry?


Richard Burpee Hanson: I do not
think the minister has completely covered the situation as set forth by myself. There are several considerations to which he has not adverted at all.


Clarence Decatur Howe: I shall be glad to continue.
My notes are a little disorganized.


Richard Burpee Hanson: This is a very short bill, just one clause and the preamble. If it goes through now, there will not be another opportunity to get the information for which I have asked. Besides, the minister has now tabled something which I think we should have had before; that is the report. I have not been able even to look at the outside of it yet. I would ask the minister if he would be content to have the committee rise, report progress and ask leave to sit again the first of next week. Meantime, perhaps I shall have an opportunity to look into this application.


Clarence Decatur Howe: Before doing so, perhaps I
could continue and cover the points that have been raised, and then I shall be glad to comply with the request of my hon. friend.


Richard Burpee Hanson: Just in a cursory way.


Clarence Decatur Howe: When the committee rose at six o'clock I think I was discussing the regulation of the water and the compensation works. In addition to the bill, certain regulations will be set up by the Department of Transport with regard to compensation works. Studies have already been made, and the department have determined the requirements in that regard.


Richard Burpee Hanson: That would
be under the statute?


Clarence Decatur Howe: Yes.


Richard Burpee Hanson: Could the minister tell us what they consist of?


Clarence Decatur Howe: They consist of dams set in the rapids to cut off the flow of water down the river, to compensate for the flow of water through the canal. In other words, the area of flow down the river will be reduced to compensate for the diversion.
The question was asked as to when the Beauhamois ship channel will be in operation. The Beauhamois ship channel is part of the 27-foot navigation in the St. Lawrence river and would obviously be of no value until the
Beauharnois Power Bill


John Ritchie MacNicol: Two thousand, to be correct.


Clarence Decatur Howe: Yes. So while the judgment of the court, as we interpreted it, contemplated a diversion of about 3,000 cubic feet per second, the actual diversion is about 3,500 cubic feet per second. I do not think Canada can complain particularly about the way in which the diversion at Chicago has been handled. We can hardly begrudge Chicago an ample amount of water for its sanitary and domestic purposes.
The question was asked whether the government proposes to abandon navigation in that section. The government takes the view that the only real navigation to-day, as for several years past, is navigation through the Soulanges canal, which was provided for the passage of lake carriers past that section of the river. As I have stated previously, navigation in the Soulanges canal will not be affected in any way. For years the only navigation in the river itself has been the down trip of the Rapids Queen, a tourist boat that was able to carry passengers downstream from Prescott to Montreal, returning upstream by way of the St. Lawrence canals. To the best of my knowledge and belief that boat has not been operating on regular schedule for some time past, and the government believes that no public interest will suffer greatly if the boat does not operate in future.
A question was asked as to what effect a further diversion of 30,000 cubic feet per second would have at the Cedars and St. Timothy. (Mr. Howe.]
The answer is that it will have no effect whatever, on account of the fact that any water taken from the channel itself will be compensated for through the construction of dams, so the present water levels will be maintained and the present flow to the power canals at both these developments will be fully protected.


Mr. DOUGLAS (Weyburn):: 
Clarence Decatur Howe: Not at all. As I have said, the government is under no obligation whatever as far as maintaining the status quo of navigation is concerned. We have 14-foot navigation through that section in the Soulanges canal, and we shall continue to have it after this diversion takes place. Compensating works to protect the levels will be built at the expense of the Beauharnois company, under our supervision.


Thomas Clement (Tommy) Douglas: Not by the government?


Clarence Decatur Howe: No; the government is under no financial obligation whatever. As far as 27-foot navigation is concerned, at the moment we have benefited to the extent of $12,000,000 by having the canal provided without cost to the government; and instead of being faced with an expenditure of some $38,000,000 for a navigation canal with locks, we are faced only with the cost of the locks themselves and other facilities, which I believe is estimated to be about $26,000,000. In other words, we are about twelve million dollars to the good, as far as 27-foot navigation is concerned, as a result of this development.


Richard Burpee Hanson: You are to the good to the extent of the cost of the canal, anyway.


Clarence Decatur Howe: I think the figure mentioned by my hon. friend is approximately correct. I believe the figure mentioned in the company's original application was $16,000,000. It was stated here that the canal was built for the full flow of the river. That is not entirely true. The banks themselves that were built above the land level were built wide enough so that it would be possible to excavate between them to take the full flow of the river ultimately, but of course that excavation has not been made. In connection with the present development additional excavation will be required, to widen the usable part of the canal to take the additional flow through the canal.

Beauharnois Power Bill


Grote Stirling: For the whole length of it?


Clarence Decatur Howe: Yes.


John Ritchie MacNicol: And the government will not have to pay anything in future if and when the full flow of the river is turned into the canal? The excavation at that time, to take care of the full flow, will have to be carried on by the Beauharnois company?


Clarence Decatur Howe: Yes. The government is under no obligation whatever to spend any public money in developing this project, either now or in the future.


Alexander Malcolm Nicholson: Do I understand that the entire cost of constructing the present canal was borne by the Beauharnois company?


Clarence Decatur Howe: That is correct.


Richard Burpee Hanson: I asked
the minister one question which evidently escaped his notes. In the course of my remarks I asked: What is the potential gross power development at Beauharnois? What is it susceptible and capable of being? Is it not sufficient, if fully utilized, to render completely unnecessary any further plans for the St. Lawrence waterway, considered as a power project?


Clarence Decatur Howe: The total flow of the river, when diverted through the canal, will amount to 240,000 cubic second feet, which would develop 1,920,000 horse-power at that location. How long that would meet the needs of that district of course none of us can estimate, since the consumption of power seems to rise very rapidly. At the end of this development some 700,000 horse-power will be developed, and after that it will be possible to develop a further 1,200,000 horse-power less the output of other plants.


Richard Burpee Hanson: Are those figures from the reports of the minister's engineers, or are they the company's figures? I had an idea that the full flow would develop something in excess of that horse-power.


Clarence Decatur Howe: I obtained this information from my own engineers this afternoon, and I might add that all the data and figures I have used have been supplied by the department's own engineers, who I think are more familiar with the river and have done more work on it than any other engineers.


Mr. JOHNSTON (Bow River):: How long would it take to complete all this work? How long would it be before they could start generating this additional power?


Clarence Decatur Howe: Fifty thousand horse-power is immediately available. The machines are there and could be used at once.


Charles Edward Johnston: Without any further time extension at all?


Clarence Decatur Howe: By putting through the additional water, as I understand it, those two machines can be brought into production. They are stand-by machines, capable of being used with the others, but of course that would leave the plant without a stand-by.


Charles Edward Johnston: That would not be sufficient to meet their total requirements?


Clarence Decatur Howe: No. Fifty thousand horsepower is not a great addition. For instance, we have a plant for the production of explosives that we wish to start as soon as we can be sure of power, and that plant alone would require 12,000 horse-power.


Charles Edward Johnston: Then how long would it take to build up this equipment to the point where you could get 200,000 horse-power?


Clarence Decatur Howe: Perhaps it will take two years before the full 250,000 horse power will be produced, depending on deliveries of equipment. It is my understanding, however, that the power will be progressively increased as the equipment is delivered and as improvements to the channel are proceeded with. It is my information, both from my own engineers and from the company, that the
250,000	horse power will be in full operation within two years of the passage of the bill.


Charles Edward Johnston: It would not be very useful for immediate war purposes, would it?


Clarence Decatur Howe: We are in the fortunate position of having 50,000 horse power that can be turned on immediately. That is a fair-sized block of power, in itself. And as additional units are installed and completed, they can be turned on immediately. In my opinion this is the most readily available source of additional power we have in Canada.


John Ritchie MacNicol: If that additional horse power is developed at once, it would mean that there will be no stand-by turbines to operate in the event of any of them being out of commission.


Clarence Decatur Howe: Correct.


Douglas Gooderham Ross: What will be the extra cost of the development of this 250,000 horse power? What extra amount of money would have to be put into it?


Clarence Decatur Howe: I am sure I do not know. The matter of cost is entirely that of the Beauharnois company, and we have not interested ourselves in that phase of the matter particularly. We pay no part of it.
Beauhamois Power Bill


Douglas Gooderham Ross: Through the
development of this 250,000 horse power would there be a reduction in power rates to users? Certainly this development could be done very cheaply, in comparison with the development which has already taken place? Is there any safeguard stipulating that the people of Canada will get poweT more cheaply?


Clarence Decatur Howe: As I said earlier, the production and sale of power are entirely under the control of the province of Quebec. That province has its own electricity board, and I feel certain that the company, as lessees of the province, will be controlled to the extent required to protect the interests of the power users.


Douglas Gooderham Ross: Is the power house now erected sufficiently large to take care of the installation of the new equipment necessary to develop the 250,000 horse power?


Clarence Decatur Howe: I stated before the hour of adjournment that I was not sure, but I have since ascertained that it is not. An expansion of the power house will be required. However, there are units installed as present standby units which are immediately capable of producing 50,000 horse power.


Richard Burpee Hanson: The minister takes the stand that the question of rates is outside his jurisdiction. It is a pity that this is so. I am inclined to agree with him, from the legal point of view. This company will get the whole flow of water of the St. Lawrence river; certainly it is going to be a bonanza to the Montreal Light, Heat and Power company.


Clarence Decatur Howe: As I said before, both governments have taxing power. If it is a bonanza this year, it will be a bonanza for my colleague the Minister of Finance as well, because practically all the additional profit will flow into his coffers under the present system of taxation.


Richard Burpee Hanson: I suggest to the minister that he is taking a very narrow point of view. What about the poor public? Surely they have some rights. I have had something to do with power in days gone by. In fact at the present time I am in the throes of a power controversy in my own office. I have often wondered if those of us in authority, either in parliament or in our provincial legislatures, adequately take care of the rights of the man who has to pay the bill. I do not think we always do. That is all I have to say in the matter.


Douglas Gooderham Ross: One or two further points run through my mind. In Ontario there are two or three points at which further

power could be developed. There could be a possible extension at Niagara falls. There are possibilities on the Ottawa river, and there is the further possibility of development in the international section of the St. Lawrence river development, if it ever takes place.
Coming from Ontario, I am particularly interested in any increase in the development of power at Beauhamois. There is the possibility there of a development of about 2,000,000 horse power. Although it is in the province of Quebec, it is quite likely that that province cannot take all the power in the meantime. We are in the midst of a war, and it will be some time before we can make heavy capital expenditures. I am particularly interested in seeing that in any future development which takes place at Beauhamois the people of the country may receive the benefits flowing therefrom. Through this measure we are giving away certain rights to the Beau-harnois company, and it seems to me that before we give up the use of this water to the Montreal, Light, Heat and Power company, the government should take steps to protect the people of Canada against any exploitation or any attempt to monopolize power. Although the development would be in the province of Quebec, yet it seems to me the province of Ontario must be vitally interested in any water diversion under the control of the dominion government.


Richard Burpee Hanson: You have Mitch to protect it.


Clarence Decatur Howe: Would my hon. friend permit me to ask him a question? I am wondering how the Ontario hydro-electric power commission would like the idea of our attaching conditions to the cost of power in connection with developments we lease to them. We do lease developments to the Ontario hydro. Does my hon. friend think it would be a wise thing to attach conditions?


Douglas Gooderham Ross: I do not think the minister's answer is sufficient at all. I am stating what I think should be done; I do not know whether the province of Ontario would like it. I would say, however, that if the dominion government has it within its power to give cheaper power to the people of Canada, then it should exercise its rights.


Clarence Decatur Howe: My hon. friend has hit on the exact point, namely that we have not the power to place restrictions on it. The power inside a province belongs to that province. The navigation belongs to the dominion, and is a paramount right over the power. But the jurisdiction of the dominion government ends in either granting or not granting the diversion of water for power purposes.

Beauharnois Power Bill


Mr. DOUGLAS (Weybum):: But you could attach a proviso when water is diverted.


Clarence Decatur Howe: I would not answer that without the advice of counsel. It may be that we could, but in my opinion we would be usurping a right that is not ours.


Richard Burpee Hanson: The true
position is that in respect of power the jurisdiction to control rates is not in this government at all, but rather in the government of the province of Quebec. That may be unfortunate, but it is so.
With respect to the question the minister directed to the hon. member for St. Paul's, may I suggest this, that if in one of its developments this government produces power which it owns and which it can dispose of, by reason of having the development as a public work of Canada, and if it sells that power to the Ontario hydro-electric or to any other power consumer, whether for immediate and direct use or for resale-as in the case of hydro-it would be a proper thing for this government in making a lease of that power to put in some provision or to retain some control over the rates to be charged the public, always having regard to competitive conditions obtaining, and all other factors which might enter into such a situation. I do not believe the dominion government has done that in the past, and I think it is something it might consider doing in the future.


Angus MacInnis: Mr. Chairman, I take the same position in regard to this bill as was taken this afternoon by the hon. member for Rose-town-Biggar (Mr. Coldwell). I am opposed to the principle of the bill. I am opposed to handing over the public domain to private individuals or corporations to be used for the purpose of exploiting the people of this country. That is what the power companies have done with the privileges we have given them. A moment ago the minister told us that the government had no power to do certain things. The explanatory notes to the bill say this:
By chapter 20 of the statutes of Canada, 1931, the canal then being constructed by Beauharnois Light, Heat and Power Company, and the works appurtenant thereto, were declared to he works for the general advantage of Canada, and the governor in council was authorized to make any orders, rules and regulations which might be deemed necessary or convenient with respect to any diversion of waters of the St. Lawrence river by said company.
As far as I have been able to find out, the only advantage Canada ever got out of this project was the privilege of guaranteeing the bonds that were used to complete the work begun in 1929.


Clarence Decatur Howe: I may say that the government guaranteed no bonds.


Angus MacInnis: I believe they guaranteed the bankers against losses in that regard. I am not quite sure, but I think that was the case.


Richard Burpee Hanson: The government guaranteed the interim financing as between one financing and the other.


Angus MacInnis: I think the government
did undertake certain financial obligations in that regard. Further down in the explanatory notes I find this:
The nature of this power development will enable additional power to be made available within a relatively short time, and it is considered desirable that steps be taken to ensure ail adequate supply of power to meet increased demands arising from the war.
Instead of giving private corporations further rights and privileges at this time, I think we should follow the policy adopted by the governments of Great Britain and New Zealand. The government should take over these works. We are supposed to be fighting for certain things worth fighting for. We are supposed to be fighting for our country, and yet we are continually handing over to private individuals everything of value in the country. If we want to show people that we are sincere in what we are saying, the first step we should take is to put an end to that sort of thing. I remember a statement made by a former Prime Minister during the debate on another bill. During the session of 1932 the Right Hon. R. B. Bennett made this statement:
I believe that there is no government in Canada that does not regret to-day that it has parted with some of these natural resources for considerations wholly inadequate and on terms that do not reflect the principle under which the crown holds the natural resources in trust for all the people.
It is time that the government should realize that they are administering the natural resources of the country for the people. In so far as what has occurred in the past is concerned, it would seem that the common people have no rights at all.
I should like to refer to another matter. A few evenings ago the hon. member for Wey-burn (Mr. Douglas) asked the Minister of Munitions and Supply (Mr. Howe) if government contracts had been given to corporations controlled by those leaders of industry who had offered their services to the government. The minister would not give an undertaking that such was not the case. The name of Mr. Henry was mentioned this afternoon.


Clarence Decatur Howe: I think we are all agreed that we do not want to sabotage Canada's war

Beauharnois Power Bill

effort. Mr. Henry is a most valuable man and I wish I had half a dozen more like him. If I had, my efforts on behalf of munitions and supply would have better results. Mr. Henry is one of the most highly respected engineers in the Dominion of Canada, a man with a unique experience. Is it good business to slander the reputation of a gentleman who is doing extremely valuable work for this government?


Thomas Clement (Tommy) Douglas: Nothing of a slanderous nature has been said.


Angus MacInnis: I take strong exception
to the statement of the minister that because we criticize certain things or because we mention certain names, we are sabotaging the government's war effort. That is unjust; that is unfair, and it is not necessary on this occasion. If the minister has a clear conscience in regard to the matter, he can stand whatever may be said.


Clarence Decatur Howe: I can stand whatever my
hon, friend says. Go right ahead.


Angus MacInnis: I would advise the minister to go slowly. I would save him and his government from another trip into the "valley of humiliation." We have been watching things in this corner. All we are asking is that there should be a complete investigation by a committee before which competent witnesses could appear so that we could get an understanding of all that is involved. I was just going to bell the committee that this is the Mr. Henry who was referred to in a report which was supported by hon. gentlemen on the other side. This was a unanimous report.


Mr. MACKENZIE (Vancouver Centre):: I rise to a point of order. It was not a unanimous report. I demurred.


Thomas Clement (Tommy) Douglas: That still
makes it unanimous.


Angus MacInnis: That report had this to say:
It is worthy of note that the three orders in council numbered respectively 2201, 2202 and 2203, approving of the transfer of the leases from the Montreal Cotton Company all dated the 6th November, 1929, each contain the following:-
"The minister, on the advice of the chief engineer of the department, concurred in by the deputy minister, recommend that authority be given"-
And so forth.
Mr. Henry was deputy minister at that time and continued in that position for some time afterwards. All this came out in the investigation. I suggest to the minister that before he proceeds further with this bill, he give hon. members an opportunity to have all relevant facts.


Grote Stirling: I understand that before recess the minister stated that no portion of the
150,000	horse power developed from the existing flow is exported, but I did not understand him to be specific with regard to the second part of the question asked, whether any portion of the 250,000 horse power which will be created by the diversion mentioned in this bill, is or is not to be exported. Could he clear that up?


Clarence Decatur Howe: I can say definitely that as long as this government is in office, no portion of that will be permitted to be exported. There was a slump in the use of power during the depression, as my hon. friend knows, in 1933, 1934, 1935 and subsequently, and there were applications for the export of power, but they were consistently refused even in those times. I think that no government in Canada to-day would permit the export of new blocks of power. I think public opinion is definitely against it. I know that this government is definitely against it, and I think that any government sitting on the treasury benches here would also be against it.


Thomas Clement (Tommy) Douglas: A few moments ago I asked if it would not be possible to have a proviso added when granting a permit to divert water, and the minister said he did not know if that would be possible. But in section 1 the Beauharnois Light, Heat and Power company are asking power to divert water, and in line 10 the section says:
... to be used for the development of hydroelectric power ... in such manner ... as may be prescribed by order of the governor in council.
So it would seem that under the government's authority there are terms and conditions that could be imposed upon any company that is being granted a permit to divert water in this way.


Clarence Decatur Howe: These provisoes depend upon the way in which the water is handled; that is to say, compensating works, the safety of the canal banks, all of which affect navigation, and the physical handling of the water. We can prescribe as much as we like, but we must remember that we do not own the water itself and that the power rights are the sole concern of the province. But I have seen no indication that the province of Quebec is not just as jealous of the rights of its citizens as we would be or as any other province would be. When we are giving over a valuable asset, divesting the public resources, to private gain, to use the words of hon. members opposite we have to take a realistic view of the situation. Without going into the history of why the development is there, it has been built up at a tremendous initial cost; and if the

Trans-Canada Air Lines
potential power of the river is now a valuable asset to the well-being of the people, there is only one practical way in which it can be used for the benefit of power consumers in that area, that is by sending the water down that canal. The government would hardly be justified in going to the expense of building another power canal, and the only alternative would be for the government to expropriate and pay for the present work. I am afraid that my colleague the Minister of Finance would hardly rejoice over that proposal in war time, even if we had the privilege of selling power in the province of Quebec, which we have not. Nor do I think the province of Quebec is to-day in a position to take that step either, but they can always do so in future if they deem it wise.


Thomas Clement (Tommy) Douglas: Under the
stress of war Great Britain is doing something very close to it at this moment.


Clarence Decatur Howe: Great Britain is in a very
different position. There is only one government there for all purposes.


Thomas Clement (Tommy) Douglas: Has any work been done by the company in anticipation of this permit being granted to divert water?


Clarence Decatur Howe: I am told that there is a
dredge at work, although I do not know whether it is in anticipation of this or not, but some dredging is done there every year.


Thomas Clement (Tommy) Douglas: Any construction ?


Clarence Decatur Howe: No.


George Hugh Castleden: Are these water power rights not both exclusive and perpetual?


Clarence Decatur Howe: I am not sure what the
Quebec lease says. We give the company power to divert water, and once it is diverted we have no power to recall it. I am not aware what the terms of the lease are for the use of the water.


Richard Burpee Hanson: To clarify the matter, perhaps I might say that when the canal was vested in his majesty in the right of the dominion, we gave to the Beauhamois company an exclusive easement for the use of the canal for power purposes. In Quebec they call it a servitude. In addition, the company acquired rights from the province of Quebec. The effect of it is that nobody else can use that water.


[Stage Direction]
Section agreed to.
Bill reported.
95826-27$

[Stage Direction]
EXTENSION FOB ONE TEAR OF INITIAL SUBSIDY PERIOD DESCRIBED IN ACT [DOT]
Hon. C. D. HOWE (Minister of Transport) moved that the house go into committee to consider the following resolution:
That it is expedient to amend the Trans-Canada Air Lines Act, 1937, to extend for one year the initial period described in the said act.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair,
Clarence Decatur Howe: Mr. Chairman, this is a
simple amendment to the Trans-Canada Air Lines Act. The act provides that the rates to be charged for the carriage of mail will be set automatically in January of each year, based upon the experience of the previous year. At the start, a rate of 60 cents a mile for the carriage of mail was adopted, with the proviso that until January, 1940, the government would bear any deficit arising out of the operation of the line. The belief in which the bill was framed was that by January, 1940, we would have had one full year of experience with the Trans-Canada Air Lines, and that we would have struck an operating rate in 1939 which could have been applied to 1940. It turned out that 1939 was not a typical operating year; for, instead of getting a full year of operation, we commenced to carry revenue mail only on March 1, and passengers on April 1. We also did not open in that year the full service that we had originally intended. The maritime extension was opened only this year, and we have yet to open the extension from Toronto to western Ontario. Therefore 1939 is not a typical year. If we followed the act strictly, the rate for carrying mail would automatically increase from 60 cents to slightly over 70 cents, whereas we know very well from operating results that a proper rate for this year would be less than 60 cents. We feel certain that the automatic application of the rate a year from now will bring the rate per mile down considerably below that figure. The amendment proposed will make it possible to continue the 60 cent rate for 1940, and defer the automatic application of a new rate until January, 1941. That is its only purpose.


Richard Burpee Hanson: I have not read the statute. Does the minister say that the only object of the bill is to extend for one full year, a typical year, the rate charged for mail on the system?


Clarence Decatur Howe: That is the only change in the bill.


Mr. CRERAR:: The resolution states that it is an extension for one year.
Yukon Act-Fur Export


Richard Burpee Hanson: At som< stage-this may or may not be the appropriate place; perhaps it is just as good as any other- would the minister tell the committee what feeder lines have been established on the Trans-Canada airways?


Clarence Decatur Howe: The position of Trans-Canada Air Lines to-day is that it operates a service from Vancouver on the west to Montreal. At the present time there are two services daily over that distance; and the service also connects into Toronto, so that we can say that Vancouver, Toronto and Montreal are connected with two services daily. The Trans-Canada also operates its own service from Lethbridge to Edmonton, and from Montreal to Moncton, New Brunswick. It has made arrangements with private operators for a service connecting Vancouver and Victoria, operating, I believe, three times daily. It has arrangements with Prairie Airways for the operation of a service from Regina to Saskatoon, to Prince Albert, to Battleford, and to Moose Jaw and Regina, a loop service operating daily. It also has arrangements with private firms to operate services from Moncton to Charlottetown and Summerside, from Moncton to Halifax, and from Moncton to Saint John. I think that is the present position.
Resolution reported, read the second time and concurred in. Mr. Howe thereupon moved for leave to introduce Bill No. 23, to amend the Trans-Canada Air Lines Act, 1937.
Motion agreed to and bill read the first time.


YUKON ACT AMENDMENT
[Stage Direction]
The house resumed from Tuesday, May 28, consideration in committee of Bill No. 11, to amend the Yukon Act-Mr. Crerar-Mr. Fournier (Hull) in the chair.
On section 2-Coming into force. Retroactive.
Thomas Alexander Crerar: When this bill was before the committee a few days ago, the question was raised by the hon. member for Yukon (Mr. Black) that some litigation was pending under the provisions of this act regarding the tax on the export of furs.


Richard Burpee Hanson: Under the Yukon ordinance.


Thomas Alexander Crerar: Under the Yukon ordinance. I stand corrected by the leader of the opposition, and I thank him. We have no record in the department of any litigation under the

act. It is possible that there is some litigation under a game ordinance of the Yukon territory. However, in order to make certain beyond any question of doubt, I wish to present an amendment which my colleague the Minister of Finance will propose.


James Layton Ralston: That section 2 be struck out and the following substituted therefor: -
"2. The provisions of section one of this act shall be deemed to have come into operation on the nineteenth day of May, 1919, but so as not to defeat, distui'b, invalidate, or affect any penalty, forfeiture or liability, civil or criminal, incurred before the time of its enactment or any proceedings for enforcing the same had, done, completed or pending at the time of such enactment."


Mr. BLACK (Yukon):: The amendment as suggested by the minister has exactly the same effect as the amendment I proposed, and I am quite content to see it go through.


Thomas Alexander Crerar: I might just say that, being Scottish and therefore rather cautious-


John Ritchie MacNicol: I am glad the minister didn't add, "and tight."


An hon. MEMBER:: Not on Friday night.


Thomas Alexander Crerar: -in order to be very certain I submitted the question to the law officers of the crown, and the amendment that I have just read is the one they suggest.


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

[Stage Direction]
Hon. N. A. McLARTY (Minister of Labour) moved that the house go into committee to consider the following resolution:
That it is expedient to bring in a measure to provide assistance in the alleviation of unemployment and agricultural distress out of moneys appropriated by parliament, and for such purpose to supplement the measures taken by the provinces towards providing assistance to those in need, establishing unemployed persons in employment and training and fitting suitable persons for productive occupations, and also to provide financial assistance to the provinces by way of loan, advance or guarantees out of unappropriated moneys in the consolidated revenue fund, and for the appointment of necessary officers, clerks and employees.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.

Unemployment Relief
Mr. McLARTY:: As this bill merely reenacts the Unemployment and Agricultural Assistance Act of 1939 which, on account of its duration for only one year, expiring at the end of each fiscal year, must be reenacted each year, I trust that to-night I shall not have to give any lengthy statement concerning it. I would suggest, with the permission of the committee, that perhaps any debate upon it might well take place on the second reading of the bill. I say that for two reasons. In the first place, while the bill is a reenactment, there are certain amendments which I shall endeavour to outline. In the second place I am advised that the report of the commissioner under the 1939 act will be tabled on Monday and will give a more complete explanation of what has been done than any explanation I could possibly give this evening.
There are three amendments to the act, all predicated and based upon the altered conditions arising by reason of this country being at war. There is a change in the preamble, the only effect of that change being to direct our effort under the act in the coming year to developing our economy and fitting it more for war.
There is an amendment by the elimination of what was section 3 of the act of 1939. Broadly, that section provided that the dominion itself would undertake works and projects in connection with the relief of unemployment and the promotion of employment. It was felt that owing to the wide activity that is taking place as a result of the unfortunate circumstances in which we find ourselves to-day, it would be unnecessary for this government to take measures under that particular section. But if works become of vital necessity and it is apparent that they are so, they can still be initiated by means of an estimate which would require presentation to this house. In other words, the control of this house in connection with unemployment projects which may be taken up by the dominion alone is broadened.
A third amendment is that to section 5 of the act of 1939. That section provides that the dominion may lend to the provinces that share which the provinces themselves are required to pay under any agreement entered into under section 4 of the former act. It is thought that under existing circumstances, bearing in mind the wide obligations that the dominion is carrying in other ways, it would be only fair and reasonable to make sure that any such advances are more or less restricted, to the extent that the undertaking must be clearly in the national interest.
Those are the only three amendments, subject of course to the necessary change of dates. I would suggest, if it meets with the
approval of this committee, that if debate is to ensue, it might be well if that debate could take place on second reading of the bill, when hon. members have the advantage of seeing the precise wording of the amendments and also seeing the report of the commissioner on unemployment and agricultural assistance which I shall be glad to lay on the table on Monday next.


Richard Burpee Hanson: I am not at all impressed with the reasons given by the minister why this resolution should be advanced to the stage he has indicated tonight. To me the very fact that the report of the commissioner has not been tabled and is not in the hands of hon. members is a substantial reason why this resolution should not be proceeded with until we have had an opportunity of seeing the report and reading and digesting it. This is an important matter, even in war time. I recall some debates I have heard in this house on the question of unemployment relief in days gone by, and the hammering that hon. gentlemen opposite gave to us between 1930 and 1935 over this vexed question. I recall too that notwithstanding all that was said by hon. gentlemen while in opposition, when they came into power they hardly altered in any degree at all the policy dealing with this difficult matter.
The government have had substantial cooperation from the official opposition with respect to their many bills. We have put through this week important resolutions and bills, including the war appropriation bill and the loan bill. This house has accomplished in one week's time more in the way of advancing important legislation I suppose than ever occurred in the history of parliament, save and except perhaps during other war sessions. And this is an important matter. I have not been able to give any study to it, and I think the minister ought not to proceed with this resolution to-night or until we have had an opportunity to study their record for the past year.
In addition, may I point out that in the report of the royal commission on dominion-provincial relations, there are specific references to this very question, which references ought to receive some consideration in this connection. I have not been able to read the recommendations of the commission with respect to unemployment relief, and I doubt whether many hon. members have read them. Therefore I think the minister ought not to press this resolution at this time. I suggest that the government have made substantial progress. This is an extremely important matter, and I believe more time should be given hon. members to study the question,
Unemployment Relief

in view of the fact that the report to which the minister has referred, and which we hope will be an illuminating one, will be laid on the table so that hon. gentlemen may have an opportunity of studying it.
I know the desire of the government to expedite their legislative programme. Now that we have got rid of some of the bile that has accumulated as a result of the election and the sporadic political warfare that has taken place recently, I say to the government, that we on this side of the house are prepared to cooperate in putting through the programme in an orderly and decent way. But we must not abrogate our function as an opposition. That function i9 neither to obstruct nor to throw ourselves into the arms of the government and say we will pass anything and everything they want to pass, but rather to study each question on its merits and contribute what we may, having regard ;o our ability to make a contribution.
That is what I believe we should do at this time. I could elaborate on that at much greater length, but I do not think I need do so. With respect to the war effort, let me repeat what I said a while ago, that so far as money is concerned, so far as the granting of supply for war effort is concerned, the official opposition will support the government in any and every measure it may lay before parliament and ask to have enacted into law. We believe the Canadian people are anxious to support the government's war effort if the government will but give the proper lead, and we are prepared to support any and every measure leading to the winning of the war, so far as money is concerned. Every other power the government may require for its war effort is already vested in it under the War Measures Act. There are, of course, certain other collateral matters arising out of the war effort, such as aid to certain basic industries in this country: wheat, apples, dairy products, and I should like to include our fishermen and our potato farmers. These must be considered, and perhaps the government may take some action by way of legislation and financial assistance. These we should like to examine in the light of the information given us.
I would ask the minister not to press this unemployment relief measure to-night. I do not think it would be quite fair to do so until we have the commissioner's report. So I am going to ask the minister to be good enough to report progress on this resolution at least until we have seen the report.


Norman Alexander McLarty: I do not wish to embarrass the leader of the opposition in the least. Naturally I am anxious to have this legislation move forward as quickly as possible, because
Illr. R. B. Hanson.]
of the fact that we have several commitments which must be met. I believe the resolution has been on the order paper since parliament opened.


Richard Burpee Hanson: Since
May 21.


Norman Alexander McLarty: At any rate it has been on the order paper for some time. I am not going to press the matter, in view of what the hon. gentleman has said, although probably there is no point that could be brought up on this resolution that could not be debated upon the second reading of the bill, and that *would include the reference of the dominion-provincial commission to the matter of unemployment and direct relief. However, if the leader of the opposition feels that he has been placed in an embarrassing position by our proceeding with this resolution to-night; if he feels that there is something he would like to say on the resolution that he cannot say on the second reading of the bill, in view of the cooperation he has shown I think it only fair that we show an equal measure of cooperation. So I would ask that the committee rise, report progress and ask leave to sit again.


Richard Burpee Hanson: Thank you.
Progress reported.



SEEDS ACT


[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved the second reading of Bill No. 19, to amend the Seeds Act, 1937.
Motion agreed, bill read the second time and the house went into committee thereon, Mr. Fournier (Hull) in the chair.
On section 1-Regulations.
Grote Stirling: I wonder if the minister would explain to what extent the revenue he anticipates will provide the services.


Mr. GARDINER:: I do not expect that the revenue will provide a very great part of the cost of the service. I am not in a position to estimate just to what extent it will cover that cost, but possibly this amendment will have the effect of considerably cutting down the expense to which the department is now put. At the present time the act provides that tests of seed will be made by the department, and up to the present these tests have been made free of charge. In the beginning the intention was that these tests should be made in order to give certificates to those growing registered seed, but the practice has developed of farmers sending in for test

Seeds Act
samples that could be easily tested by the farmers themselves. It is a very simple operation, consisting of placing seeds between blotters, keeping them properly moistened and then counting the results, but the farmers have begun to follow the practice of sending these seeds to the department to have the tests made. It is considered that a very heavy expense has been added in connection with this practice and that the imposition of a small fee will tend to decrease the number of applications and also help defray the cost to the department.


Grote Stirling: What sum of money is involved in the transaction at present, and does the minister expect it will be considerably increased?


James Garfield Gardiner: I doubt if I have that information before me at the moment.


Victor Quelch: Does this not also apply to inspection for purity as well as for germination?


James Garfield Gardiner: No; this inspection is largely for germination. It is covered by this particular section.


Victor Quelch: The minister says " largely," but not " altogether."


James Garfield Gardiner: No, not altogether, in so far as certificates are concerned.


Victor Quelch: In so far as that is concerned, the farmer cannot do the testing himself; he has to send a sample to the department to have it tested.


James Garfield Gardiner: In all those cases referred to, a sample will still come in, but in other cases it is not necessary to send one in. In cases of tests being made for germination, samples will not be sent in to the department in anything like the number of instances that there have been in the past.


James Lester Douglas: What do those services cost the government a year?


James Garfield Gardiner: I have not that information at present, but I can give it when the estimates are before the committee of supply.


Thomas Clement (Tommy) Douglas: It seems to me that the minister's own statement rather damns the bill, when he says it will rather considerably decrease the number of people using this service. The minister is one of the men, along with many others in Saskatchewan and other parts of western Canada who have tried to encourage farmers to have seed tested, so that they may get into better grades of seed. I should think the government would be anxious to expand this service, rather than to see it contracted. If the charging of a fee is going to have the latter effect, as the
minister just said, then surely that would not be for the good of agriculture. If the amount of money which will come in is not very great, and is not going to reduce the government's expense to any appreciable extent, surely the harm of charging this fee is going to offset any good it may do.


James Garfield Gardiner: I do not think there will be any great harm done. As a matter of fact, I do not think any harm will be done. Those who have been associated with this kind of work will realize it is a very simple thing to test seed for germination. The department will still give instructions to anyone who does not know how to test the seed. Not only will it save the work that has to be done in the department itself, or in other places under the department's direction, but it will also save the cost of sending seed and having it sent back again, where it is necessary to send it back, throughout the length and breadth of Canada.


Mr. ROSS (Souris):: Does this increase
the cost for inspection as to purity? I believe my question is along similar lines to that asked by another hon. member. For instance, where one has to obtain certain certificates to sell pure seed, will this measure add to the cost of obtaining those certificates?


James Garfield Gardiner: To the extent that the fee is put on, it will add to that cost, but in connection with the quantities of seed that are to be sold, under certificates, it will amount to a very small charge per unit. If a person were sending in a small package of seeds for testing, as a sample of the seed he is going to sow, of course the charge would range higher on the quantity for which the test is made.


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


[Stage Direction]
Hon. J. G. GARDINER (Minister of Agriculture) moved that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Agricultural Products Cooperative Marketing Act, 1939, to provide for agreements with cooperative associations and processors, and to provide also for the calculation and payment of liabilities of the minister under any agreement and for the payment of administrative expenses.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.
424	COMMONS
Agriculture Cooperative Marketing
Ernest Edward Perley: Will the minister please
explain?


James Garfield Gardiner: The proposed amendments provide for a clarification of the terminology of certain sections of the act as a result of one year's experience in its administration. Some of these amendments are necessary also in order to bring sections into line with current practices of cooperative associations. Amendments also provide that the creation or naming of a selling agency to represent a cooperative association or processor may not be required except where necessary, and agreements under the amended act may be made direct with the cooperative association or associations or with the processor or processors, as well as with the selling agency.
The proposed amendment also includes two new sections to the act similar to those which were explained in connection with the Wheat Cooperative Marketing Act. One is to provide for a report to parliament of proceedings under the act, and the other to provide authority to pay any liability which may arise under any agreement, as well as to pay administration expenses.


Ernest Edward Perley: How many cooperatives were formed last year, and what has the minister's experience been in respect of them?


James Garfield Gardiner: Products handled under the Agricultural Products Cooperative Marketing Act to the end of April, 1940, are these:
Saskatchewan honey	pounds	511,000Manitoba honey	pounds	1,130,000Saskatchewan alfalfa seed. ..pounds	1,158,750Ontario onions	cwts.	168,000Fox pelts	
30,000Mink pelts	
2,000
Those are the principal commodities. The organizations are: The Saskatchewan Honey Producers Cooperative Association, the Manitoba Cooperative Honey Producers Limited, the Saskatchewan Alfalfa Growers Cooperative Marketing Association, the Ontario Onion Growers Cooperative Limited, and the Fox and Mink producers across Canada. Then, there is also an organization in British Columbia which handles grass seed.


Grote Stirling: Does the minister mean
that six cooperatives were set up under this legislation, or that on six occasions assistance was given to existing ones?


James Garfield Gardiner: There are more than six concerns set up. There is the Saskatchewan Honey Producers Cooperative Association, with headquarters at Fort Qu'Appelle. I believe that is in the constituency of the hon. member for Qu'Appelle. Then, there is the Manitoba Cooperative Honey Producers Limited, with headquarters at Winnipeg; 
the Saskatchewan Alfalfa Growers Cooperative Marketing Association, consisting of eleven local cooperative marketing associations with headquarters at Prince Albert. There is the Erie-St.Clair Onion Growers Marketing Board at Leamington, Ontario, and the Saskatchewan Registered Seed Growers of Moose Jaw, Saskatchewan. In connection with silver fox pelts there is the Canadian National Silver Fox Breeders Association. Then there are the Dominion Silver Fox Furs Limited, Summer-side, Prince Edward Island; and the Charlottetown Fur Sales Limited, Charlottetown, Prince Edward Island. These two have one central agency. Then there is the Prince Edward Island Fur Pool Limited, Summerside, Prince Edward Island, and L'Association des Eleveurs de Renards de la Province de Quebec, St. Hyacinthe, Quebec. Then there is the Dominion Fur Auction Sales Limited, Winnipeg, Manitoba. In connection with silver fox and mink pelts there is the Maritime Fur Pool Limited, Moncton, New Brunswick.


Grote Stirling: What about British
Columbia?


Paul Joseph James Martin: The minister has forgotten the corn growers of Kent and Essex.


Grote Stirling: Did not the minister
mention one organization in British Columbia?


James Garfield Gardiner: There is one there, but I do not think it is listed. There is a seed growers' organization in British Columbia.


Paul Joseph James Martin: Has the minister listed the corn growers of Essex and Kent? If he has not, he has missed a most important one.


James Garfield Gardiner: I do not have that on my list.


Paul Joseph James Martin: There must be something wrong with the minister's statistician.


Ernest Edward Perley: How many pounds of honey were produced by the cooperative at Qu'Appelle? Can the minister give the committee the number of pounds of honey shipped through Churchill, also how many pounds that particular point in Saskatchewan contributed to that particular shipment? He will recall that a considerable shipment of honey went out through Hudson bay last fall.


James Garfield Gardiner: I have not the figures,
but the Saskatchewan honey handled under the Agricultural Products Cooperative Marketing Act totalled 511,000 pounds.


Thomas Clement (Tommy) Douglas: What is the
total value of the products handled under the act during the -last fiscal year?


James Garfield Gardiner: I have not all the
products here, but Saskatchewan honey, Manitoba honey, Saskatchewan alfalfa seed, Ontario

Agriculture Cooperative Marketing
onions and fox and mink pelts totalled $906,000. There are some others which I have mentioned and for which I have not the figures.


Victor Quelch: What percentage of the
whole would that be?


James Garfield Gardiner: I have not the figures
here. I put most of them on Hansard the other night. With regard to honey, it would be a considerable part so far as the west is concerned.


Alexander Malcolm Nicholson: Has the minister the
value of alfalfa in Saskatchewan?


James Garfield Gardiner: The total was 1,158,750 pounds, valued at $150,000.


Ernest Edward Perley: Could we have some information as to the terms of the agreements entered into last year between the department and these cooperatives? Also could we know if there is to be any change this year in the agreements?


James Garfield Gardiner: Each agreement made
with these different organizations is based upon the practices followed in the marketing of the particular product, but generally speaking the principle upon which agreements are made is that the government guarantees a percentage of the average price for the preceding three years. The bill itself provides that the government cannot guarantee more than 80 per cent of the average price obtained for a product during the previous three years. In actual practice, most agreements cover about 65 per cent of the average for the previous three years. Under the bill, the organization set up uses the guarantee for the purpose of financing their operations, making initial payments to the producers and providing for the cost of administration throughout the season. When the product has been sold, if more than the initial price and the cost of administration is obtained, then they make interim and final payments on the product.


Ernest Edward Perley: What will be the liability
of the department to these cooperatives under last year's operations?


James Garfield Gardiner: There has not been a
full year's operation under the act. As the hon. member knows, the act came into force about July 1 last year and has been operating only from that time. Many of these organizations were not set up until quite late in the year. Here are some of the products and dates:
Honey-August 31.
Alfalfa-August 31.
Onions-November 28.
Registered seed-December 20.
Silver foxes-December 8.
Silver fox and mink-December 19.
Silver fox and mink pelts, maritimes- January 4.
These organizations are comparatively new.


Ernest Edward Perley: I understand that the fox farmers of Saskatchewan did not organize.


James Garfield Gardiner: They have been negotiating, but I do not think their organization has finally been set up. I would not be absolutely certain of that.


Mr. WRIGHT:: Is it anticipated that there will be any loss in connection with any of these operations?


James Garfield Gardiner: The only case in which there would appear to be any possibility of a loss is in connection with onions, and that situation has improved recently.


Mr. SENN:: Do I understand that the list of firms read out by the minister include all firms? If so, has the minister any idea of the quantity of goods handled, how much land area would be covered by the operations and how many producers are involved?


James Garfield Gardiner: I placed certain information on Hansard a moment ago in connection with the volume of honey, alfalfa seed, onions, and fox and mink pelts. In connection with furs it will be noted from the names of the organizations that they are spread pretty well across the eastern part of Canada, covering the maritimes, Quebec and Manitoba.


Mark Cecil Senn: Would that be all one organization?


James Garfield Gardiner: No, there are six organizations in connection with furs.


Thomas Clement (Tommy) Douglas: Could the
minister give us any idea as to how many producers have availed themselves of the benefits of this act and what have been the costs of administration of the act?


James Garfield Gardiner: I just stated that most of these organizations came into being after August, while others were not set up until November, December and January. As yet no organization has completed a full year, so we have not the necessary returns to complete an estimate of the cost of administration.


Thomas Clement (Tommy) Douglas: How many producers have availed themselves of the benefits of this legislation? Would not the different cooperatives and selling agencies that have applied for benefits under this act furnish some record of the number of producers they represent?


James Garfield Gardiner: I have not those figures, but these organizations cover most of the fur producers from the maritime provinces to Manitoba. I think practically all of them are now covered by this legislation. As hon. members know, the alfalfa seed growers are all located in the Whitefox country in northern Saskatchewan, and I think practically

426	COMMONS
Agriculture Cooperative Marketing
all of them are now under this legislation. The same thing is true of certain alfalfa growers in Manitoba.
The honey producers are organized into one organization covering about the eastern half of Saskatchewan. The organization has its head offices at Yorkton. The honey producers of Manitoba are also organized under the act, and so are some of the grass seed growers in British Columbia.


Thomas Clement (Tommy) Douglas: Has the minister any figures of administration costs to the end of the fiscal year?


James Garfield Gardiner: It will be impossible to have them until we get the accounts of the companies themselves.


Paul Joseph James Martin: Is the hon. member criticizing the act?


Thomas Clement (Tommy) Douglas: The hon. member for Essex East (Mr. Martin) seems to have become the custodian of this end of the house. We are interested in trying to get information about the government's administration of its affairs. We were sent here for that purpose, although nobody has yet been able to determine what my hon. friend is here for. I think we have a right to get the information.


Paul Joseph James Martin: My question was intended as a very serious one.


Thomas Clement (Tommy) Douglas: I am sure.


Paul Joseph James Martin: I usually do not have an opportunity of putting a serious question to my hon. friend, but I was trying to do so to-night. This is an act which I think has great merit. The committee will possibly remember that I took almost one whole afternoon here discussing a problem concerning the corn growers of southwestern Ontario.


An hon. MEMBER:: It has forgotten
by now.


Paul Joseph James Martin: But I have not. This act has the great merit of encouraging among the com growers of that part of Ontario a movement somewhat along the lines of that initiated by St. Francis Xavier university. As a result of this act the corn growers got together and formed an association which since July has had, I think, 1,500 paid-up members. They conduct study clubs and run the whole thing by their own efforts. I think the essential credit for this endeavour is due to the inspiration that came from this act, and my reason for putting the question to my hon. friend was to bring out the fact that the act was not without merit. I am glad to find that the new leader of the Cooperative Commonwealth Federation and myself agree on that.
(Mr. Gardiner.]


Thomas Clement (Tommy) Douglas: We have no quarrel as to whether there is merit in the act, but we are trying to find out what percentage of the producers have availed themselves of its benefits, whether it is working to the best possible advantage, and whether changes might not be made in it before the bill itself comes down that might give the act a greater appeal among the producers of agricultural products. Surely the hon. member can find no quarrel with us for seeking that type of information.


Paul Joseph James Martin: I find no quarrel with my hon. friend. He is protesting too much; that is all.


Percy Ellis Wright: Have any guarantees given to producers under this act been equal to the maximum which might have been given?


James Garfield Gardiner: No, I do not think any guarantees have reached the 80 per cent which the act provides might be given. The guarantee has been less than the 80 per cent by agreement between the organizations themselves and the department.


Alexander Malcolm Nicholson: Has the minister information as to the set-up of the alfalfa industry in northern Saskatchewan, the average price over the past few years and the initial payment last year?


James Garfield Gardiner: I have not statistical information here on these questions. It has usually been the practice to bring down all such statistical information when the estimates are before the committee of supply. Then all these matters will be open for discussion.


Mark Cecil Senn: I have on several occasions advocated the cooperative marketing of farm products. The questions I have asked to-night, and the questions asked by different members of the committee, have been for the purpose of getting real information. As farmers we are interested in the operation of this act. It takes the place, to some extent, of what was known as the Natural Products Marketing Act, which was later declared ultra vires, and I am surprised that the hon. member for Essex East (Mr. Martin) casts a reflection upon us for trying to get information about the act. I very much want to see the act a success.


Paul Joseph James Martin: I am sure the hon. member does not want to misinterpret my remarks.


Grote Stirling: Order.


Mark Cecil Senn: I was rather of the opinion from what the -hon. member said and from the way in which his questions were framed that he implied we were criticizing for the

Agriculture Cooperative Marketing
sake of criticism. I want to assure him and the minister that nothing of that kind was in my mind at least, and I doubt if it was in the minds of other members of the committee who have been seeking information.
As I have said, I have always been interested in cooperative marketing, and I hope the day will come when more of our farm products will be marketed on that basis. We are interested in the operation of this act, and I am only sorry that it has not reached the stage where the minister can give us some real information as to its value and as to its success.
I was going to ask him if any time limit is set with respect to the full crop of a particular area. I have no doubt whatever that there will have to be different times set, because one product will come on the market at one time and another product at a different time of the year, which makes it impossible to have a uniform date when all these agreements shall end their fiscal year. But I believe that some date should be fixed so that a surplus not disposed of cannot be held over from one period to another. It must be apparent that sooner or later there must be an end and an accounting, not only to enable the department and the government to know whether they are to sustain a loss or not, but in order that the farmers may get their final payment. The act as I read it makes it compulsory that not more than 80 per cent of the total shall be paid to the farmer until the department gives the organization its consent to finish up and give the farmer his final payment.
I would ask the minister two questions. The first one is with regard to the final payment. In cases where 65 per cent is the total guaranteed, is the other 35 per cent held back until the end of the year, or is it only the 20 per cent that is over and above the 80 per cent which is allowed under the act?


James Garfield Gardiner: The 35 per cent, which is an estimate based on the average of the last three years.


Mark Cecil Senn: The full 35 per cent is held back. That is a serious handicap to a great many farmers who depend on that crop for their revenue for the year. It seems to me that to hold back 35 cents out of every dollar until the whole crop is disposed of is a hardship upon the farmers, and I would suggest to the minister that there might very well be interim payments at least, so that the farmer would not be out so much of his revenue.


James Garfield Gardiner: The main objective in this legislation is to assist the farmers to finance. Those who are growing alfalfa seed sell a considerable part of that seed in the United States and some in different parts of Canada. They found it very difficult to sell seed, particularly in the early stages of the seed growing industry there. In the earlier years they were engaged in the growing of alfalfa seed in that section largely because of the fact that many of these farmers had come from the south country, while others who had been living there for some time had found the country not suited to other things which they had been trying to grow. Finally they found that alfalfa was a seed which could be grown to good advantage in that section of the country. In other words, they were men who were trying to establish themselves on farms of a certain type, for the first time. As a result of that condition prevailing, among other reasons, they had to sell their crop almost as soon as they had harvested it and take what they could get for it. Under this act they are able to spread the sale of it over a considerable part of the year, or over that part of the year which passes between the growing of it and the seeding of it the next year, and get better results from the market as it goes along.
Of course the government in common with the farmer has this object in mind, that none of these organizations should lose money. If any considerable number should lose on that advance in any one year or over a period of years, I am afraid the house would want to repeal this legislation. So that whenever any of these organizations come before the officials of the department, the first thing we do is to try to reason with them to get an advance which everyone feels will be safe.
If the committee will permit me-and I do not think they would want to bear with me while I read all this material, which will give a considerable part of the information for which hon. members are asking-I should like to place on Hansard the record I have before me. It covers all of the cooperative organizations of which I spoke a moment ago and the names of which I read to the committee. To indicate the type of information it gives, I will take the first item, which is honey. The name of the association is the Saskatchewan Honey Producers Cooperative Association of Fort Qu'Appelle; name of selling agency, P. M. Pugh, Fort Qu'Appelle, Saskatchewan. Then it gives the initial payments to primary producers: grade No. 1, 3 cents a pound; grade No. 2, 2J cents a pound. Then there are the processing, carrying and selling charges-this is right in the agreement

Agriculture Cooperative Marketing
-in connection with a product of this kind. We limit the charge which can be imposed in connection with the handling of this product to 2 cents a pound on both grades. Then there is the percentage that initial payments and charges are of average wholesale price for past three years; this one is approximately 55 per cent in both cases. So the committee will see that the initial payment is about 55 per cent. There is added to that a possible cost of 2 cents a pound on this honey for all processing, carrying and selling charges. That whole amount is guaranteed. It is not only the 55 per cent of the average price of the
three years which is guaranteed; the carrying charges, the selling charges and the processing charges up to 2 cents are also guaranteed. That information is given on this statement which I have before me with regard to all of these organizations; and if it would meet the wishes of the committee and give the information required, I would be pleased to place this table on Hansard.


Mark Cecil Senn: I think that information should go on Hansard. It will be of value to those of us who want to make a study of it.


James Garfield Gardiner: The table is as follows:

Summary of Agreements Under The Agricultural Products Cooperative Marketing Act, 1939
Product	Date of Approval of Agreement	Names of Cooperative Association or Processor	Name of Selling Agency	Initial Payments to Primary Producers	Processing Carrying and Selling Charges	Percentage that Initial Payments and Charges are of Average Wholesale Price for Past Three YearsAug. 31.. ..	Saskatchewan Honey Producers Cooperative Association, Fort Qu'-Appelle.	R. M. Pugh, Fort Qu Appelle, Saskatchewan.	Grade No. 1, 3c. per lb. Grade No. 2, 2jc. per lb.	2c. per lb.	(approximately) 55%2c. per lb.	55%Honey	Aug. 31.. ..	Manitoba Cooperative Honey Producers Limited, Winnipeg.	E. B. Chown, Winnipeg, Manitoba.	Grade No. 1, 3c. per lb. Grade No. 2 and Grade 3, 2Jc. per lb.	2c. per lb. 2c. per lb.	55% 55%Alfalfa seed....	Aug. 31.. Nov. 28.. ..	Eleven Local Co-operative Marketing Associations. Erie-St. Clair Onion Growers Marketing Boards Leamington, Ontario.	Saskatchewan Alfalfa Growers' Co-operative Marketing Association, Prince Albert. The Ontario Onion Growers' Cooperative Ltd.. Leamington, Ontario.	Registered seed, 9c. per lb. Certified seed, 8e. per lb. Commercial seed, 7c. per lb. In 100* In 50# bags bags Grade No. 1:	21c. per lb. 2|e. per lb. 2|c. per lb. 18c. per 100} bag.	56% 56% 56% 60-65%2i" min. .. 95 50 Grade No. 1: If" min. .. 75 40	Grade No. 2: If" min. .. 55 30	Initial payments mentioned above on onions for immediate sale but on only 85% of quantity placed in storage.	Registered seed.	Dec. 20.. ..	Saskatchewan Registered Seed Growers Limited, Moose Jaw, Saskatchewan.	W. E. Dempsey, Moose Jaw, Saskatchewan.	See agreement attached for various initial payments.	lie. per lb. 5c. per bushel.	50-60%
>
Agriculture Cooperative Marketing

Summary of Agreements Under The Agricultural Products Cooperative Marketing Act, 1939-Concluded
Product	Date of Approval of Agreement	Names of Cooperative Association or Processor	Name of Selling Agency	Initial Payments to Primary Producers	Processing Carrying and Selling Charges	Percentage that Initial Payments and Charges are of Average Wholesale Price for Past Three YearsSilver Fox pelts	Dec. 8 .. ..	The Canadian National Silver Fox Breeders Association.	George A. Callbeck, Summerside, P.E.I.	50% of basic valuations of pelts. Basic valuations are approximately the same as 1939-40 market prices.	$1.05 per pelt plus interest, etc.	(approximately) 40-45%Silver Fox pelts	Dec. 8 .. ..	The Dominion Silver Fox Furs Limited, Summer-side, P.E.I. Charlottetown Fur Sales Limited, Charlottetown, P.E.I.	John McIntosh, Summerside, P.E.I.	50% of basic valuations of pelts. Basic valuations are approximately the same as 1939-40 market prices.	$1.05 per pelt plus interest, etc.	40-45%Silver Fox pelts	Dec. 8 .. ..	Prince Edward Island Fur Pool Limited, Summerside, P.E.I.	Peter G. Clark, Summerside. P.E.I.	50% of basic valuations of pelts. Basic valuations are approximately the same as 1939-40 market prices.	$1.05 per pelt plus interest, etc.	40-45%Silver Fox and Mink pelts...	Dec. 8 .. ..	L'Association des Ele-veurs de Renards de la Province de Quebec, St. Hyacinthe, Quebec.	Syndicat Co-operatif des Producteurs de Fourrures, Quebec City.	50% of basic valuations of pelts. Basic valuations are approximately the same as 1939-40 market prices.	25 cents per fox pelt and 10 cents per mink pelt plus interest, etc.	40-45%Silver Fox and Mink pelts... Silver Fox and	Dec. 19. . ..	Dominion Fur Auction Sales Limited, Winnipeg, Manitoba. Soudack Fur Auction Sales Limited, Winnipeg, Manitoba. Edmonton Fur Auction Sales Limited, Edmonton, Alberta. Little Bros. Fur Sales Agency Limited, Vancouver, B.C.	J. A. Couture, Winnipeg, Manitoba.	50% of basic valuations of pelts. Basie valuations are approximately the same as 1939-40 market prices.	25 cents per fox pelt and 10 cents per mink pelt plus interest, etc.	40-45%Mink pelts...	Jan. 4 .. ..	Maritime Fur Pool Limited, Moncton, N.B.	Harry Rich, Moncton, N.B.	50% of basic valuations of pelts. Basic valuations are approximately the same as 1939-40 market prices.	$1.05 per fox pelt and 30 cents per mink pelt plus interest, etc.	40-45%
(Interim payments of one cent per pound have been made to honey producers in Manitoba and Saskatchewan. Interim payments aggregating $25,686.65 were made to alfalfa seed producers in Saskatchewan. No registered seed was delivered under the agreement which was concluded with the Saskatchewan Registered Seed Growers of Moose Jaw.)
Agriculture Cooperative Marketing

Agriculture Cooperative Marketing


Mark Cecil Senn: What length of time will be allowed each of these organizations?


James Garfield Gardiner: I should have answered that. The surmise of the hon. member is correct, that different times will be inserted in different agreements, depending on the way in which the different products are handled, the times of the year at which they are harvested and the times they are used for certain purposes. For example, for seeds, harvested in the fall and planted in the spring, there will be a different time as contrasted with furs, which are marketed throughout the year.


Mark Cecil Senn: It is very important that one crop should be cleared up before the next one comes on the market. I should like to know if it will be possible for the department to insist on there not being any carryover at all?


James Garfield Gardiner: Details with regard to these matters are written right in the agreements in order to deal with each product as it is or always has been handled on the market by the different organizations.


Mark Cecil Senn: I believe it would be of value to the committee if a copy of some agreement, of a general character, were placed on Hansard or put at the disposal of the committee so that we could study it and have some idea of its terms.


James Garfield Gardiner: I am afraid that any particular one of them would not be of much value. I would suggest this, that I attempt to get a copy of each one of these agreements and have those copies placed on the table of the house so that hon. members can go through them before we take up the estimates in connection with the expenditures under this act. I believe we would then be in a position to discuss all details in connection with them.


Grote Stirling: Has there been under this act a considerable number of applications, of which the number the hon. member has referred to were successful?


James Garfield Gardiner: I am speaking only
from memory, I thought I had the details here. My recollection is that some twenty-seven or twenty-nine cooperatives all told have been set up under control selling agencies. I am not in a position this evening to say to what extent all of them have been doing business since they were set up, but I believe that nearly all of the organizations which have made application have finally entered into agreements with the department.


Victor Quelch: In British Columbia and Alberta cooperative marketing acts were passed, but have the boards of those provinces taken any steps to take advantage of this act?


James Garfield Gardiner: I think an organization in connection with grass seeds has been set up in British Columbia. Speaking from memory, I believe that is the only one that we have had under consideration in that province. I do not recall that any organization has been set up in Alberta. I will check closely on that and bring the information down.


Percy Ellis Wright: The alfalfa growers' cooperative organization of northern Saskatchewan was formed a year before this act came into force. It came in under the legislation afterwards, however, during the past year.


James Garfield Gardiner: Oh, yes. I think that
would be true of most of these organizations, that they were in existence as cooperative organizations before this act came into being. They have come under the act for the purpose of assistance in financing.


James Lester Douglas: What steps
have the department taken to get these cooperatives formed? I am surprised that a larger number of cooperatives have not availed themselves of the benefits of this act. I thought it would be much larger than the list the minister read.


James Garfield Gardiner: I think the list is
larger than the one I have read. Apparently only the ones for which we had statistical information were placed on the list I have. The department has not gone out to promote the organization of the cooperatives. Most of them are set up under provincial charters; sometimes they have been encouraged by provincial promoters of cooperative organization to come under this act. In most instances they have simply written to the department for information; we have sent out the information; and as a result of their obtaining it they have formed control selling agencies.
Resolution reported, read the second time and concurred in. Mr. Gardiner thereupon moved for leave to introduce Bill No. 24, to amend the Agricultural Products Cooperative Marketing Act, 1939.
Motion agreed to and bill read the first time.
Farmers' Creditors



FARMERS' CREDITORS


[Stage Direction]
Hon. J. L. RALSTON (Minister of Finance) moved that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Farmers' Creditors Arrangement Act, 193-1, to provide inter alia that proposals for a composition, extension of time or scheme of arrangement may be made under the said act by farmers in Manitoba.
Motion agreed to and the house went into committee, Mr. Fournier (Hull) in the chair.
James Layton Ralston: The object of the bill
which is to be founded on this resolution is to provide that the Farmers' Creditors Arrangement Act shall be in force in Manitoba as it is in Alberta and Saskatchewan. It will be remembered that this matter has been the subject of legislation at two previous sessions. In 1938 I think it was, by amendment of the senate if I remember correctly, provision was made whereby the act was terminated, as far as its effect in Manitoba was concerned, as of June 30, 1939. Then in 1939 legislation was introduced similar to that which I am proposing now, to provide for reopening the act in Manitoba. That legislation was not carried by parliament although it passed this house. Since that time further representations have been received. The situation up to June 30, 1939, was as follows: From the time the act came into force until June 30, 1939, when it expired, as to future applications, 11,369 farmers in Manitoba had interviewed official receivers regarding their debts, and 4,714 had submitted proposals, of which 867 were awaiting final settlement on June 30, 1939. Since that time the board in Manitoba has been sitting, dealing with those cases which were outstanding as of June 30, 1939.
Representations are made that of those who failed to submit proposals a large number were from districts where adverse crop conditions had prevailed for a period of years, and therefore farmers had become so hopelessly involved that a -proposal was not practicable at the time. Another suggested reason why proposals were not made before the expiration of the act is that farmers who had not availed themselves of the benefit of it, a number of them at least, were those whose creditors, realizing that there was not any hope of collection, did not exert pressure and therefore there was no incentive to ask for the benefit of the act's provisions. The point is -made now that one fairly good crop has changed this situation. It is said that the farmers are faced with legal proceedings by foreclosure, seizure and dispossession, and that

every effort ought to be made to retain the farmers on the land as efficient producers. Hon. members will recall that according to its preamble the act was enacted originally not as a bankruptcy act for farmers but rather as a measure for the purpose of inducing farmers to remain on the land.
In April of this year the legislature of Manitoba adopted a resolution which is in the following terms:
That the legislature of Manitoba unanimously requests the passage by the parliament of Canada of adequate enabling legislation to make the King's Bench Amendment Act, 1939, effective in the province of Manitoba; or if the dominion parliament be not prepared to pass such enabling legislation, that in order to remove the present condition of injustice from which the Manitoba citizens suffer as compared with those of Alber-ta and Saskatchewan in the matter of debt adjustment legislation. the dominion parliament should reenact the Farmers' Creditors Arrangement Act as applicable to the province of Manitoba at the earliest possible time; and that copies of this resolution should be sent to the right honourable the Prime Minister of Canada and the members of the House of Commons and of the Senate.
Resolutions have been received also from the Manitoba Federation of Agriculture, Winnipeg, and numerous local farm organizations requesting the reenactment of these provisions.
It is with these conditions and representations in mind that we propose, if this resolution passes, to present to -the house a bill founded on this resolution for the purpose of extending the provisions of the act to apply in Manitoba.
As I recall, there is another section with regard to the matter of official receivers. This section may be dropped; it is only a formal section anyway. Its effect is to provide that in provinces in which there are no further proposals to be made, the official receivers appointed under the act shall cease to hold office, because there is no necessity for having provision for receivers if there is n-o work for them to do.


Richard Burpee Hanson: I have no objection at all to this resolution. I rise only for the purpose of asking for information in respect of the situation in New Brunswick. Does the minister know whether the act has lapsed in New Brunswick, and if so, has there been a deadline?


James Layton Ralston: Yes, there is a dead-line, but I am not sure if the operations of the board were completely finished. The board was operating until a very short time ago, but operating on proposals which had been presented before the act had lapsed.

Farmers' Creditors


Richard Burpee Hanson: Then in effect the act has lapsed in New Brunswick as far as new applications are concerned, and they are just cleaning up?


James Layton Ralston: That is so.


Richard Burpee Hanson: I am glad to hear that, because really it has been a racket.


Mr. BROOKS:: I think, as far as New Brunswick is concerned, they are still hearing proposals of soldier settlers.


James Layton Ralston: That is so in all provinces.


Alfred Johnson Brooks: Does this prevent any
further new applications from farmers in Manitoba?


James Layton Ralston: On the contrary, this would permit new applications.


Alfred Johnson Brooks: How about soldier settlers throughout Canada?


James Layton Ralston: As I understand, the act still applies to them.


Mr. NEILL:: Is the minister sure of that?


James Layton Ralston: I have not looked at the act, but I noticed statements in previous debates.


Alan Webster Neill: I was under the impression that as far as Ontario is concerned, it is absolutely cut off, and I think in British Columbia also. The soldier settler was exempted for a period, but I thought the period had lapsed.


James Layton Ralston: In reading the debates of last year, I got that impression, but I have not looked at the act.


Richard Burpee Hanson: That information could be obtained.


James Layton Ralston: I will get that information for my hon. friend.


Mark Cecil Senn: Has the minister information as to whether the board of review is still operating in Ontario?


James Layton Ralston: That is really what we are talking about here. The board is not operating as far as any new cases are concerned.


Mark Cecil Senn: But to clean up cases.


James Layton Ralston: If there are any cases left, although I do not think there are any, I have not heard of any reports of operations. I find that I was quoting my colleague the Minister of Mines and Resources (Mr. Crerar) regarding soldier settlers; I knew I had some authority for the statement I made. In the
debates of last year this question was asked by Mr. Weir, as reported on page 2678 of Hansard:
Mr. Weir: ... I have just one question to ask of the minister. Is it a fact that all soldier settlement board eases where compromises are made are dealt with under this
legislation?
Mr. Crerar: So far as soldiers under the Soldier Settlement Act are concerned, throug-out Canada they all come under the Farmers' Creditors Arrangement Act.
It may be that the way in which it is stated there does not justify the statement I made, but certainly I gathered that impression from what my colleague said at the time. However, I shall certainly look at the act to see.


Alfred Johnson Brooks: I believe a time limit
should be set under this act as far as the soldier settlers are concerned. I know in New Brunswick they have waited months and months, but the judge who was supposed to look after the matter has not heard the cases yet.


James Layton Ralston: I believe the New Brunswick court is sitting and cleaning up the cases. Is my hon. friend asking that a time limit be fixed?


Alfred Johnson Brooks: It seemed to me there should be a time limit, because the thing seems to be going on indefinitely. I know soldier settlers there have waited a long time to have their cases adjudicated, and nothing has been done.


James Layton Ralston: The hon. member means a time limit on the board?


Alfred Johnson Brooks: Exactly.


James Arthur Ross: Has the minister any thought of bringing down enabling legislation so that a land court might be established by the provincial government of Manitoba? That has a distinct bearing on this matter.


James Layton Ralston: No.


James Arthur Ross: Quite frankly, there are some aspects of the administration of this act that I do not like, but I am quite satisfied that it is absolutely necessary that the farmers should have some recourse, owing to the condition of agriculture in western Canada to-day. During the last several years the cost of production has advanced tremendously. At page 58 of Hansard for this session the leader of the social credit group placed on record figures showing that the average cost of some twenty-one articles necessary on the farm has advanced 66.7 per cent since 1914. Then the other night the Minister of Agriculture placed figures on record indicating that there was
Farmers' Creditors

very little difference between the average prices of wheat and certain other agricultural products for the five year period prior to the commencement of the last great war and the average for the same period before the beginning of the present war, which is quite true. Notwithstanding that, as the minister went on to point out, the dollar has not nearly the purchasing power to-day that it had then.
We in the west are in an exceptionally bad situation at the present time because the average of $1.02 for the five years prior to 1939 was almost twice what we have received so far for the crop of 1939, on the basis of 70 cents at Fort William, which nets the farmer in my district about 55 cents a bushel for No. 1 northern. Therefore I do not think any argument is necessary to point out that it is utterly impossible for the farmer, no matter how well he may manage, to exist and raise his family and pay his way under these circumstances. So, while personally I do not like some aspects of this act, we must have some means of recourse, and I am glad that the minister has seen fit to bring in this act so that our people in Manitoba may have a chance to reestablish themselves. We need something that will enable the farmer in the west to go along on a sound business basis, as other industries in this country are permitted to do.
I do not want to get mixed up with any theories in what I am about to say, but I think in western Canada, and for that matter throughout Canada, we have one of the finest economies in the world. Let me give an example of what I mean. In South Africa the people are directly dependent for their livelihood upon their output of gold and the demand for that product. If something unexpected should happen, as it may, those people cannot eat that gold or clothe themselves with it. On the other hand, I do not have to point out that in Canada, and especially in western Canada, with wThieh I am much better acquainted, we have the finest cereals and live stock in the world. Farther north we have our immense mineral and timber wealth, so we have everything that is absolutely essential for the maintenance of life in this country. I do not know that we really appreciate what we have here; it is a matter of the administration of those vast resources. Probably before we are through this terrible crisis we may to a greater extent appreciate our great natural resources and what we can produce. At present, however, we are forced to resort to some legislation such as this, and therefore I commend the government, instead of criticizing them, for doing something for our people

in the west. Certainly the fanners of Manitoba require some legislation of this kind until the government sees fit to put the agricultural population on a sound basis which will enable them to make their own way without need of adjustments of this kind.


Thomas Clement (Tommy) Douglas: I am glad
that the benefits of this legislation are to be made available again in Manitoba. Personally I thought it was a tragedy when this act was made inoperative in that province. 1 should like to make an appeal to the Minister of Finance, however, before he brings down the bill, if I am not out of order in so doing. This act was passed originally in 1934 and was by way of an experiment, as the minister has said. It was not bankruptcy legislation; it was an attempt to retain farmers on the land as efficient producers. Boards of review were set up, but they tackled the job very gingerly. I need not take time to read the statistics now; I can place them before the committee when we are on the bill, but in the first two or three years the reductions were very small, in some instances as low as 16 or 17 per cent of the whole accumulated debt.
This government came into power in 1935, and in 1936 a new board of review was set up in Saskatchewan. In the meantime there had been two crop failures. The figures given by the Sirois commission show that in those two years the agricultural income of Saskatchewan dropped drastically; and the board of review, faced with those conditions, saw that it was necessary to tackle the question of cutting these debts much more courageously.
As a result, from 1936 to 1939-I have not the figures for this year-the percentage of reduction of the accumulated debt grew until in the last year debts were practically being cut in half. It is easy to see why that was necessary. In the meantime there had been four or five crop failures; prices of other commodities had increased; debts had piled up, and the boards of review were compelled to meet the situation. I think they met it very well, and I believe this legislation has been extremely beneficial.
What I want to point out is that the people who came under this legislation in the first two or three years now find that the proposals made to them are most inadequate in the light of subsequent events; and they find their debts now as high as when they went before the board of review, if not higher, with the exception of a few districts. In the greater part of Saskatchewan it is not possible for the farmers to meet the terms of the proposals that were made in those years, and the result is that many of those people now find it

Farmers' Creditors
absolutely impossible to keep up with proposals that looked fairly proper and safe in 1934, 1935 and 1936. Therefore I am asking the Minister of Finance, when he brings down his bill, to consider the possibility of allowing rehearings in Saskatchewan for people who came before the board of review in those first few years, when the board was more or less experimenting so far as the question of keeping farmers on the land as efficient producers was concerned.
I know what the minister has in mind-and it is quite valid-namely, that you cannot continue to have rehearings ad infinitum. Under those circumstances we would have a board of review sitting constantly for years. But I would point out to him that in the first two or three years of operation this act was in an experimental stage. Boards of review had no precedent from which to judge what reductions should be made, nor did they know what amount could be paid. After these years of experience the boards of review have done much better, and they are doing a very good job to-day. I do say, however, that the people who came in the early stages, in 1934, 1935 and 1936, have been penalized because of this lack of experience. If the people who came before the boards of review in those years could be allowed rehearings now, it would enable many, who otherwise are going to find it impossible, to remain on the land.
Resolution reported, read the second time and concurred in. Mr. Ralston thereupon moved for leave to introduce Bill No. 25, to amend the Farmers' Creditors Arrangement Act, 1934.
Motion agreed to and bill read the first time.
On motion of Mr. Crerarthe house adjourned at 10.25 p.m.
Monday, June 3, 1940