Mr. SPEAKER:: I have the honour to inform the house that I have received from the registrar of the Supreme Court of Canada certified copy of judgment of the said court setting aside the decision of the trial judges of the Superior Court of Quebec and declaring the petition in the matter of the election for the electoral district of Stanstead should be maintained and the election of the respondent for the House of Commons should be annulled.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. T. J. O'NEILL (Kamloops): Yesterday when I was speaking in this house in the debate on the mobilization act amendment bill, the hqn. member for Vancouver East (Mr. Maclnnis) said that some things I said were
not true. In order to keep the record straight I wish to refer to page 3770 of Hansard, where the hon. member for Vancouver East is reported to have said:
I want to correct the hon. member's statement. His assertions are wrong. There was no Cooperative Commonwealth Federation in this house in 1934.
The record is somewhat different. On February 1, 1933, at page 1687 of Hansard, the late Mr. J. S. Woodsworth, then the member for Winnipeg North Centre, speaking to a resolution of the Cooperative Commonwealth Federation, had this to say:
When I introduced this motion a year ago there was no large body of organized opinion behind it. To-day that situation is altered, for last August there was organized the Cooperative Commonwealth Federation-
Then he goes on to say:
We endorse the general viewpoint and programme involved in socialization of our economic life as these have already been outlined and accepted by the labour, farmer and socialist groups affiliating.
Mr. COLDWELL:: Mr. Speaker, I rise to a point of order. Is this a question of privilege? I cannot hear what the hon. member is saying.


Georges Parent: The hon. gentleman is speaking to a question of privilege in regard to a statement which he made yesterday and which the hon. member for Vancouver East characterized as incorrect.


Major James William Coldwell: We were not able to
hear what the hon. gentleman was saying. I heard indistinctly the name of Mr. Woodsworth mentioned, but could not hear anything else.


Mr. MacINNIS:: On a question of
privilege-
Some hon. MEMBES:	Order.


Angus MacInnis: If the hon. member for
Kamloops makes a statement we surely have the right to reply. His statement should have been made last night.


Georges Parent: The hon. gentleman is
referring to a statement he made in debate, which, he says, the hon. member for Vancouver East characterized as untrue. He is now rising to a question of privilege in order to substantiate the statement he made.
Mr. O'NEILL:	The hon. member for
Vancouver East did not merely characterize it as untrue; he said positively that it was not true. That was in connection with my statement that the hon. member for Vancouver East had voted with -the Conservative government for private ownership of the Bank of Canada, when the bill relating to the Bank of Canada was introduced for third reading.
Privilege-Mr. Church


Mr. HANSON (York-Sunbury):: This is
an argument.
Mr. O'NEILL: I have not taken up much of the time of this house, Mr. Speaker, and I think I have the right to proceed. On June 28, 1934, the hon. member for Vancouver East and the late Mr. Woodsworth voted with the government on the third reading of the bill for the establishment of a privately-owned central bank, on a division in which the Liberals all voted against privately-owned banks.
MR. CHURCH-REFERENCE TO STATEMENT OF MR. SI/AGHT IN DEBATE ON JUNE 25
On the orders of the day:


Mr. T. L. CHURCH (Broadview):: I rise to a question of privilege. I wish to refer to a speech made in the house last Thursday by the hon. member for Parry Sound (Mr. Slaght), at page 3695 of Hansard, in which he mentioned myself and the Union government and the Military Service Act. He based his remarks on a text book, Doctor Skelton's "Life of Sir Wilfrid Laurier." He said:
I am sorry the hon. member for Broadview (Mr. Church) is not here, for the Toronto Globe referred to the widespread feeling of disappointment, while it is said that Mayor Church of Toronto stated:
"The Military Service Act will cost the country millions and is getting very little results. If the government had spent one-quarter of the money in voluntary recruiting, they would have got more men."
Let me say that this book does not quote the page or the issue of the Toronto Globe, nor does it say what I said, because the remarks were never made in that connection. I was complaining about one thing, and that was a lack of equitable enforcement of that act throughout Canada. I complained because before the act became effective Toronto and Ontario had been dried up of voluntary recruits, and hardly any could be further obtained.
I never saw Doctor Skelton's text book until this afternoon. And may I .say that the hon. member for Parry Sound has described the author of the book as an historian. Well, if he is an historian he should state facts. The book does not state facts, because the real fact is that from the start I strongly supported the Union government and the Military Service Act. My only complaint was in connection with the non-enforcement of the act elsewhere in the province, and particularly its enforcement in Toronto. I called attention to the fact that that enforcement was not equitable. In reply to the hon. member for Parry Sound I say that what I said was that the enforcement of the act was unfair to Toronto and to Ontario generally.

Two or three years before this war, from 1937 to 1939, I urged on many occasions here a compulsory selective service register for Canada. I have been a supporter of that policy, and before and during the 1940 election I supported conscription and the policy of equality of sacrifice. Then the hon. member for Parry Sound makes things worse by casting reflections upon me, and by attempting to show a worse side of the picture. Referring to me he said "that I had been misled by my absentee leader". I was not a member of the House of Commons between 1917 and 1921. And may I point out in passing that the absentee leader to whom he refers has two sons in England, and that the party he refers to polled nearly one-half of the total vote in the elections of 1940. I might have something to say about these matters in another debate, because the hon. member has not stated the facts exactly and the connection to which they relate. His facts are not correct, nor are those of the writer of the book. I may challenge this or discuss it at another time.



EXCESS PROFITS TAX


[Stage Direction]
On the orders of the day:
Mr. BROOKE CLAXTON (St. Lawrence-St. George):: In view of concern which has been expressed to the effect that the 20 per cent of excess profits tax to be refunded after the war is to be taxable as income when refunded, would the Minister of Finance make a statement in the matter?


Hon. J. L. ILSLEY (Minister of Finance):: It will not be subject to income tax when refunded. It will be regarded as a part of income which is already taxed.



REDUCTION OF PRICE PAID BY PACKERS TO FARMERS

[Stage Direction]
On the orders of the day:
Mr. G. J. TUSTIN (Prince Edward-Lennox):: I should like to ask a question of the Minister of Finance or the Minister of Agriculture. A few days ago the price control board issued a statement setting a ceiling price on beef, and stating that there would be three reductions between July and September, the first of which, to the extent of one cent a pound, is to take effect on July 13. On what authority did packers in Toronto and Winnipeg yesterday reduce the prices for beef paid to farmers to the extent of one cent a pound at Toronto and one and a half cents at Winnipeg?

The Budget-Mr. Hanson (YorJc-Sunbury)


James Lorimer Ilsley: Probably I am the minister responsible. All I can say is that I shall make inquiries and let him have the information either privately or in the house, as he wishes.


George James Tustin: It is reported in this morning's press.


James Lorimer Ilsley: I understand.



THE BUDGET


[Stage Direction]
The house resumed from Tuesday, June 23, consideration of the motion of Hon. J. L. Usley (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
Richard Burpee Hanson: Tomorrow will be the seventy-fifth anniversary of the founding of this dominion-a long time in the life of an individual, but relatively short in the life of a nation. Only one other nation-the United States-has made such rapid strides in intellectual progress, political development, and material wealth in such a short period of time. So rapid has been our growth along all these lines, so certain has been our advancement, that we have been largely unconscious of our own development or of our strength. Yet on this seventy-fifth birthday of this nation we are literally standing on the edge of an abyss, and the whole future of civilization hangs in the balance. What a paradox!
What the end will be, no one can foresee. Dark days ahead-yes. But victory in the end is certain if we of the united nations will but gird our loins, put on the full armour of our strength, and pull our weight in the great task which lies before us.
In one respect at least this budget is the answer of the Canadian people to the challenge of the hour. Financial sacrifice-yes. But, after all, that is the least we can do. If you do not believe that, remember the casualty lists of 1917 and 1918, and try to visualize those of this year, next year, and every year until this war is won.
There was neither glamour nor high-sounding rhetoric nor political adornment in the budget speech of the Minister of Finance (Mr. Usley) to which we listened on Tuesday last. But there were statements and assertions of an arresting nature at the close of the minister's address which I sincerely hope caught the ear of all the people of Canada, including, if I may say so, those in this house who, in the early days of the war, advocated a moderate contribution-a middle-of-the-road course-for Canada.
I have observed during a somewhat long and full life that if you want to get the immediate attention of an individual you have only to say or do something which affects him personally, something which will affect his pocket-book. We have this something here in this budget.
The tax proposals are not only substantial; they are crushingly severe, and will bring home to all of us, as perhaps nothing else could, "the critical gravity of recent events and the necessity of making a supreme effort", to use the words of the minister, not only during this present year but in each succeeding year in which this nation, along with those of the united nations, will be engaged in a struggle for survival.
The position which the minister portrayed in the concluding paragraphs of his address is exactly the position which I have tried, perhaps inadequately, to portray to the Canadian people from the very first session of this parliament. There have been times when I have been appalled, and have had a feeling of despair at the apathy of a large portion of our people. In the early stages of 1940 there was a feeling of complacency which, in my view, was engendered and fostered by the attitude of the administration itself. Fortunately that has been reversed, both in the minds of the administration and in the minds of our people.
Their complacency, their desires for "gain and ease and advantage"-again quoting the minister-from now on must be submerged in the nation's will to win. I only regret that in one particular feature the Prime Minister (Mr. Mackenzie King) has not shown that will to win which is so urgently needed. But I say this, that sooner or later-I hope not too late -he, going along with the more forthright members of his cabinet, will change his views and practise what he has so long preached- total war with total effort. We are now approaching full conscription of wealth, and soon, I trust, we will be practising, in fact as well as in theory, the total mobilization and use of all the resources of the nation.
To those of us who recall the budgets of Mr. Fielding, in the pre-war days, the budgets of Sir Thomas White, in the days of world war No. 1, or even the budgets after that war, this year's budget is a stern reminder that two world wars have changed our whole economy, as indeed they have changed t4ie lives of every one of us.
The consideration of ways and means should be one of the chief preoccupations of this House of Commons, and I regret exceedingly that the delivery of this budget has been delayed to this late date in the session. Here we were, late in the fifth month of the session,
3788	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
on the ninety-second sitting day, listening to the largest budget-in terms of dollars and in terms of material sacrifice

in our history. The delay in its presentation is directly attributable to the anxiety of the Prime Minister to maintain his political position in the country and has been brought about largely by his determination to cariy through the farce of the plebiscite and his policy of appeasement. We have had almost a hundred speeches by hon. members opposite on the debate on the address, and at least seventy-five on this mobilization bill. On this question of delay, six of the twelve months of the calendar year have passed. Now, after six months, business executives, and more especially taxpayers in the lower income brackets, are being called upon to make tremendous adjustments in order to meet the strain occasioned by this budget. Six months of the calendar year have gone by, and to bring down these changes so late in the year does not give the taxpayer any opportunity to make a twelve months' adjustment, but compels him to carry out a twelve months' adjustment in the last six months of the year. That position is unfair, especially for the small salaried man who has to budget at the beginning of every year and who makes his commitments in the first part of the year. It reveals an attitude of indifference to the plight of the people who are called upon to pay this budget, and it is wholly reprehensible.
In the more than five months in which parliament has been in session, we have really dealt with only three of four important pieces of legislation-the billion dollar appropriation for Britain, the two billion dollar war appropriation bill, the wheat legislation, and the dominion-provincial agreements. All the rest of the time was wasted on the debate on the address, the perfectly useless and wasteful debate on the plebiscite bill, and still later, the debate on bill 80, amending the mobilization act-all three of which measures should have been disposed of in as many weeks.
No wonder the people of Canada look askance at this House of Commons and, in some quarters, express amazement at our performance 1


An hon. MEMBER:: Ah!


Richard Burpee Hanson: I hear some hon. member interject "Ah". I venture to say that that comes from a quarter which has not contributed anything to this debate. No wonder there is a feeling of frustration on the part of the Canadian people at all this sham and shadow-boxing, and that at a time when the fortunes of the united nations are at a lower ebb than at any time since Dunkirk. I confess to you, sir, that when I heard, a week ago

Sunday, the black news of the surrender of Tobruk, the news of the imminent fall of Sevastopol, the reports of the shelling of our own shores on the west coast, and this week the depressing news of the retreats in Libya, I was oppressed by the dreary and heartbreaking thought that, little by little, with a retreat here, another there, a disaster here, another there, the united nations were steadily losing this war, while we in Canada, and especially in this House of Commons, were debating among ourselves the question whether we would or we wouldn't, not whether we could or we couldn't, achieve in deed and in truth that which, for two long years, the administration has professed with lip service but which it has not by any means reached-the practice of total war. Surely the time has arrived when we should cease talking about the things which divide us, and here and now highly resolve that if we are to survive we must resort to and put into practice complete and unlimited action, along the line of principles to which most of us, if we will be but true to ourselves, will admit that we adhere.
Down in Washington last week the two greatest statesmen in the world, the two men upon whom the eyes of the whole allied world are to-day straining their vision-


Some hon. MEMBERS:: Three.


Richard Burpee Hanson: -were
meeting to perfect ways and means-


Some hon. MEMBERS:: Three.


Georges Parent: Order.


Richard Burpee Hanson: -of stemming the tide of retreat. I said two. and I stick to it.


Some hon. MEMBERS:: Three.


Richard Burpee Hanson: Mr. Speaker, I should like to have a little order.


Georges Parent: Order. I must insist that the leader of the opposition have the right to proceed without further interruption.


Richard Burpee Hanson: They were meeting to perfect ways and means of stemming the tide of retreat, adopting plans to turn retreat into offence-offence which is the only road to victory. May God guide and direct them. For I say to you, my friends, unless the united nations adopt a new attitude and strike out in an offensive, we shall continue to see and witness more retreats and more disasters.
For months now I have been looking for some sign of an offensive action in Europe. I am firmly convinced this war can and will only be won where it started-in Europe. I
JUNE 30, 1942	[DOT]>'
The Budget-Mr. Hanson (York-Sunbury)
pray that there shall not be a day's delay in There is one very grave omission in this reaching a decision. When that time comes, budget. Every individual is being asked to then our gallant Canadian army in Britain, practise the most rigorous economy. Bu together with the forces of Britain and the what proof is there in this budget, or indeed hosts from the United States now being massed elsewhere in government policy, that ordinary there, will strike the vital blows that are so operating costs of government are being cut necessary for the liberation of the world, to the bare bone, that waste is being elimm-Then and then only, will the forces of the ated, that thrift and frugality are being prac-united nations be in a position to overthrow tised? In every quarter there is evidence of the forces of evil.	wasteful expenditure, and particularly is this
I try to visualize the difficulties, with Britain true in defence expenditures. Evidence and already fighting on so many fronts; but if examples of that reach me almost daily, and Russia fails, then ultimate victory recedes. I know it must be within the knowledge of Who is there among us but does not shudder almost every member of this house, this at the very thought of Russian failure?	terrible extravagance that as going on m con-
I have no special knowledge of the feasi- nection with defence projects. I say to the bility of the project, but we are supposed to ministry that the new tax proposals would have the best trained and best equipped army meet with a more generous reception and there of its size in Britain. United States troops would be greater willingness to shoulder the are being massed there in large numbers, new tax burdens if the government would Surely they are not there merely for the itself set the example of economy. Instead, defence of Britain. The time and the manner it has budgeted for a 10 per cent increase and the place must be left to those in authority, in ordinary non-war costs of government-
I turn now to a consideration of our finan- instead of what it should be 10 per cent cut cial requirements for our war effort this year, off, and then 10 per cent more cut off.
So far as I have been able to estimate, they, We have a rising national income, attribut-together with the normal peace-time outlay able largely to war expenditure not true of government, will approximate four billions national income, as I understand that term, of dollars. The minister says it will not be but yet national income as interpreted by the less than S3,900 million. Just imagine a total economists. How large is that national budget expenditure of almost four billions of	income? Estimates vary. It	depends on whodollars for this little nation of less than	is making the estimate; but	let us estimatetwelve million soult^-more than 1333 for every	it at seven billions of dollars.	I think that is aman, woman and child in Canada 1 What a	little high; but it will approach that figure,task to raise, by various means, this vast sum	If so, then we must divert	by taxation atof money!	least one-third to war purposes. The balanceCan it be done? I believe it can and will required must be raised by loans and other be done, but it will mean sacrifice, great sacri- devices, if we are to follow the orthodox fice. Let there be no mistake about that, methods of the administration and its advisers. I believe the Canadian people will make the This will strain the resources of the Canadian sacrifice willingly, if they are convinced that people to the utmost. We must not disguise they will have the leadership so necessary- that fact in any way. There must be more of leadership that we have never had right down the tightening of the belt, as has been stressed to this moment.	from time to time.	...	,Direct taxation and incidental revenues on We have raised $2,600 million m our four the basis of 1941-42 are producing many times	war loans, in war savings, and in free loans, inas much as was produced in the last pre-war	forty months of war. Four billions more inyear. What we have already accomplished	taxes and loans or other devices will test us,will not be good enough for this and succeed-	but I believe the loyal people of Canada willing years of the war. This country will have	meet the test with fortitude and endurance,to produce by taxation two billions of dollars,	We must-or else! All they ask is that theor half our total outlay, if we are even to	burden of taxation be equitably distributed,approach within striking distance of the objec-	and that there be equality of sacrifice. Surelytive of the pay-as-you-go-as far as practi-	they are entitled to that..cable-policy of the administration, and to Really, Mr. Speaker, when you come to which neither we nor the Canadian people	examine the position, what hardships have we,in general have objected. I have always said	as a people, been called upon to endure up tothe Canadian people will give and lend to the	this time? Relatively high taxation? Yes.limit, to this or any other government, the	But what else? A little less coffee, a little lessmoney necessary to win this war, but they	tea, a little less sugar, a little less clothing, awant the money spent properly, not wasted,	little less gasoline, and now we are to beand they will hold the government strictly to	asked to pay a little more for whisky andaccount.	tobacco. There are also some slight restric-
3790	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
tions on consumer goods and in other directions. But let us be candid with each other. We have not sacrificed much-nothing like what the people of Britain have sacrificed; nothing like what I fear we shall have to sacrifice before this war is won. Let us face the future manfully and realistically. Let us tap the national income all along the line without fear or favour. Let everyone from the highest all the way down do his share. Only then shall we be able to face our conscience and each of us say to himself: I am doing and shall do my part if it takes the last dollar. The stake is worth it, my friends. That is the text and that is the spirit I offer to the Canadian people to-day.
When Canada entered this war in September,
1939,	our basic sources of revenue were customs duties, excise duties and taxes, including a sales tax of 8 per cent, and income tax on corporations and individuals. From these sources, in the fiscal year immediately preceding the war, we derived a total of 435 millions of dollars.
In the fiscal year ended March 31, 1941, we collected from those same basic sources a total of 1,359 millions of dollars, or more than three times as much. I think it is fair to add that we have had some new taxes not differing in principle or radically different in any degree, except in quantum, from the old taxes.
The ability of a country with a population of less than twelve millions to pay in taxation a total of nearly 1J billions of dollars- averaging, as it does, about $120 per capita- without undue hardship, is a tribute not only to our people but to the material resources of this country.
In making this vast contribution in cash to the national revenues, there have been some inequities and some inequalities. In particular, in the field of personal income taxation, there has not been equality of sacrifice. I emphasized this on a previous occasion. When in
1940,	and again in 1941, the rates on personal incomes were raised by the budgets of those years, I indicated the view I held that the taxes then imposed on such personal income were inequitable and lacked the element of equality of sacrifice.
I now wish to deal in some detail, if the house will bear with me, with the proposals of the Minister of Finance with respect to personal income tax.
In his personal income tax proposals the minister has had three major objectives in view. First is the curtailment of present excess purchasing power and the diversion of as large a proportion as possible of the national income to direct war purposes. The curtailment of existing purchasing power is neces-

sary to-day in order to curb the causes of inflation and in order to divert labour from the manufacture of unnecessary consumer goods to the manufacture of war materials or to the use of those materials in the armed forces.
So far as curbing the causes of inflation is concerned, it will be recognized that the existence of a price ceiling may prevent inflation, but I suggest that it does not strike at the causes of inflation and certainly does not prevent inequitable distribution of available essential consumer goods. Consequently a further curtailment of purchasing power and a further diversion of labour to war purposes has become an essential part of our war financing programme.
It will be recollected that last year I criticized the minister's budget on the ground that it had not faced, with sufficient realism, the problem of consumer spending. The enormous increase in retail sales during the last year has demonstrated that I was justified in that criticism, and I am glad to note now that, not only in his income tax proposals but in his new taxation of luxury commodities, the minister has met, in a measure at least- perhaps to a large degree-the criticism which I offered last year.
I now turn to the minister's second objective, which was, of course, the raising of additional revenue. He estimates that the increased yield from the personal income tax will be 45 millions of dollars for the remainder of the present fiscal year, and 115 millions of dollars for a full year. That is a large increase, and I do not believe that people will visualize just how large it is unless a comparison is made with what they have been paying heretofore under the same heading.
The magnitude of this increase is perhaps best illustrated by the fact that in the fiscal year 1938-39 the total personal income tax collections amounted to only 46 millions of dollars. In the fiscal year 1939-40. during seven months of which we were at war, the total income tax collections amounted to only 45 millions of dollars. In other words, the total increased yield from the tax increases for the remainder of the present fiscal year is as much as our total collections from personal income tax in the fiscal year 1939-40, during seven months of which we were at war. Our total income tax collections, including national defence tax, for the first full fiscal year during which we were at war, namely 1940-41, amounted to only 106 millions of dollars. Consequently the anticipated yield from the increased rates for a full year is almost 10 millions of dollars more than our total

The Budget-Mr. Hanson (York-Sunbury)
collections by way of income tax for the first full fiscal year of the war. That, I think, illustrates the size of the increases.
The third objective which the minister had in mind would appear to be the provision of post-war purchasing power to aid in post-war recovery. I was rather amused at a question- I suppose a framed question-asked by the hon. member for St. Lawrence-St. George (Mr. Claxton) of the Minister of Finance (Mr. Usley) at the opening of this sitting, whether the refundable portion of the tax collected would be subject to further income tax. Well, it is a ridiculous question. To do so would be a violation of good faith, and I wonder at the mentality of the hon. member who asked the question.


James Lorimer Ilsley: Mr. Speaker-


Richard Burpee Hanson: Well, that is just a little lecture, and does not call for a reply from the minister.


James Lorimer Ilsley: The question was being asked publicly by certain newspapers.


Richard Burpee Hanson: Then the newspapers had better examine their own heads, because to tax that twice would be a breach of faith. It is income tax now, it is credit; it is to be given back to us, and no government, unless it was a socialist government, would dare to tax it twice.


Mr. ROWE:: That is why the question was asked in the house.


Richard Burpee Hanson: Perhaps that is the reason. If that is so I will forgive the hon. member the question.
In this provision, the minister has adopted in large measure the principles and theories of the great English economist, John Maynard Keynes, whose principles and theories, as expounded by him in his book, "How to Pay for the War", have also been largely adopted in England. As I propose to discuss them in greater detail a little later in my address, I shall not dilate upon them further at this juncture, except to point out that two forwardthinking members of the opposition have frequently advocated the adoption of such a plan. I mention in particular the hon. member for Saskatoon (Mr. Bence) and the hon. member for Dufferin-Simeoe (Mr. Rowe) both of whom have advocated the plan with considerable force and vigour.
These three, then, were the objectives which the minister had in view in presenting his proposals, and the success of his proposals must be judged largely by the manner in which they attain the objectives.
In addition to stating his proposals, the minister laid down three standards or criteria on the basis of which to judge his proposals- 44561-240 J
namely the need for equity, for incentive, and for savings. That these are proper criteria I would not disagree; I think perhaps we all agree, although we may not be completely in accord on the question whether the minister's proposals are fully in line with all these criteria.
The minister mentioned the danger that high progressive rates of income tax may interfere with the incentive for harder and better work for efficient production; and well he may. There is such a thing as killing the goose that lays the golden egg. In mentioning this the minister recognized, of course, the important role which profit plays in the life of every individual, every last one of us. I would hope that the proposals have not too seriously interfered with that instinctive craving of individual human beings, and that the people of this country will respond to the urgent necessity of making service to the state-let me emphasize that-in this time of national crisis their major incentive to greater and more efficient production. Service to the state, not private profit or private gain, should be the standard for every one of us.
I propose to turn now to a discussion of some of the highlights of the proposals themselves. I think it is only on the anvil of discussion we can get to understand these proposals. That is one of my excuses, not an apology, for occupying the time of this house on this very hot afternoon, and if I add something to the sum total of the knowledge of hon. members I am sure they will forgive me.
The first important change is what the minister speaks of as the combination of the national defence tax and the graduated income tax into a single assessment. In committee we shall be able to analyse these imposts and determine whether the minister has gone far enough in the combination of the two taxes. What is now spoken of as the "normal" rate of tax appears in reality to be substantially the old national defence tax. It differs in principle from the graduated income tax in that is is assessable against the total income of any person whose income exceeds certain specified amounts. In view of the attempt which will be made to deduct both types of income tax at the source, I hope the minister will explain to the committee why he has not made a full and complete combination of the two taxes into a single graduated tax-in other words, added the percentages required to be paid under the normal tax to the percentages required to be paid under the graduated income tax, properly adjusted to produce the same revenue. This would have meant greater simplicity, I submit, both for
3792	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
the individual taxpayer and for the tax officials of the Department of National Revenue. There may be good reasons why this was not done, but I should like the minister to explain fully in. the committee stage just why it was not done. T have a shrewd suspicion as to what the reason was. By this method of putting the normal taxon the full amount of taxable income the minister desires to draw a larger sum from the lower wage and lower salaried people than he would by a complete combination. 1 think that is incontrovertible.
I am bound to say that I think the increase in rates of the normal tax as opposed to the old national defence tax was expected. I do not think there will be great objection. I believe it will make for equality of sacrifice, a principle for which I have always contended. The increase, however, in the graduated taxes is tremendously heavy, although, as the minister pointed out, there are certain alleviating features which are introduced into our financial system for the first time, and which I shall discuss a little later. These increases will bear heavily upon all classes of our citizenship and will involve a very substantial change in the mode of living of practically every class of our Canadian people. Subject to certain inequalities which I shall point out later, and which I hope the minister will undertake to rectify, I believe the Canadian people will assume this burden in the same spirit of patriotism and willingness to sacrifice as [DOT] they have assumed every other burden which they have been called1 upon to bear since the outbreak of the war. These increases are part of the price which we must pay for victory. I do not believe there is any class of our Canadian citizenry who are not prepared to place their last dollar at the government's disposal if it will mean the triumph of our institutions over the forces of evil and terror.
The next important feature in the income tax resolutions is the proposal to collect payments by regular deduction at the source, or, where that is impracticable, by compulsory instalment payment. There will be objections to this procedure in some quarters. There are many deductions from pay envelopes now. There is grumbling, and demands will be made for higher and higher salaries and wages to meet these deductions. In the early stages of the war these demands were met by many employers. This new deduction will cause a good deal of irritation; but, having considered the matter from every angle, I do not intend to oppose the procedure. I realize that this is the easiest method by which the government can get the money,

and this is the surest method by which payments will be made. It must be obvious, I think, to all of us that the tax rates have reached such a level that their payment must be a matter of grave anxiety to the taxpayer and a matter of monthly budgeting by every one of us.
I was rather disappointed to hear the minister say in the course of his speech that only a minority had availed themselves of the heretofore existing voluntary instalment plan. I believe that plan was both good and useful, I used it myself. I was compelled to use it, and I found it satisfactory. The new plan of deduction at the source, or the compulsory instalment payment, will bring not only increased revenue but earlier revenue to the treasury, and it will above everything else help to curb consumer-spending by preventing prodigal and spendthrift individuals from going on a buying spree, thus utilizing unnecessary consumer goods and then finding themselves unable to meet their obligations to the state.
The minister has changed the whole principle of exemptions m respect of dependency. Instead of allowing specific sums as exemptions in respect of marriage and dependents, the minister proposes in effect to freeze the value of exemptions at the amount which they have been worth under existing tax rates, to a taxpayer with an income of between $2,500 and $3,000. This feature of the minister's proposal is open to serious objection, and in my view works unwarranted hardship upon the family man as opposed to the single person. I am sure the minister will agree that the family man should be in no less favourable position than the single man or woman, but that is exactly what is occurring and that is where he is being put. He is being put in a less favourable position.
No matter what the economic status of a husband may be, he will now be allowed only $150 deduction in respect of his wife and $S0 in respect of each child. Surely no one will suggest that there is any equity in this. Surely no one will assert that the obligations of a married man with two children are only S310 per annum greater than those of a single person. Surely no one will suggest that the obligations of a married man who must buy or rent quarters and provide clothing and food for his family, must- provide for the education of his children and the security of his dependents in the event of anything happening to him, are so little greater than those of a single person. Is it right that a man with the responsibilities of a home should be given only $150 per anum consideration for having undertaken those responsibilities, and

The Budget-Mr. Hanson (York-Sunbury)
an additional S80 for each child whom he maintains? I ask the minister to reconsider that whole position. It is not fair; it is not just.
The minister stated that other changes would have the effect of widening the differences between single and married persons and those with children. While some of the changes do perhaps have this result in an indirect way, I do not believe that any of them are of such a nature that they will place persons of these different marital circumstances upon a substantial equilibrium. I give the minister and the house an example of what I consider to be a glaring case of discrimination and inequity. A single man earning 13,000 a year will contribute total taxes and compulsory savings amounting to $1,064 per annum; a married man with two children, with all the responsibilities of a home, education and all that goes with the maintenance of a family of four, earning $3,000 a year, will contribute total taxes and compulsory savings amounting to S668 per annum. The single man will thus be left with $1,936 net income per annum, while the married man with two children will be left with $2,332 per annum, or less than $400 more than the single man. Is it right that the man with the responsibilities of a home should be allowed less than $400 per annum consideration for having undertaken those responsibilities? I believe the old system was much more equitable and just. It recognized the undoubted fact that as a man's income status becomes higher his necessary family obligations increase, and so his tax exemptions operated to decrease proportionately his tax.


James Lorimer Ilsley: But were not those nearer together in the past?


Richard Burpee Hanson: These are my deductions. The minister can analyse them any way he likes. I think I am right.
The old system recognized that an attempt should be made to achieve a comparative equity between married and single persons. Now all that is gone by the board and the family life of this nation will inevitably suffer.
I draw this particularly to the attention of the house and particularly of the Prime Minister. I hope he will give some consideration to this question. It is the only appeal I shall make to him in regard to the matter of taxation. Heretofore my observation has been that he has never paid much attention to these questions of taxation. I fail to recall in recent years any occasion on which he has intervened in the budget debate or expressed any opinion on fiscal policy.
I want to point out, and I draw this particularly to the minister's attention, that the object of his fiscal policy, an object with
which I agree, is to reduce inflationary spending on useless commodities and services. It is notorious that our young single citizens are the chief contributors to the wave of useless and wasteful purchasing of non-essential goods and services which is a fundamental cause of inflationary danger.
Do not let it be said that I am arguing the case of the rich man. Nothing is further from my intention. I am arguing the case of the small and medium earning class who have undertaken responsibilities to the nation and who should not be penalized but should be given encouragement to fulfil them. Those who say that to retain the old system would help the rich man do not appreciate the fact that the maximum exemption which could possibly be allowed under the old system would be, in the case of a man with an income of $500,000, only 98 per cent of $750-not a very substantial sum for a man with an income of $500,000. If it is thought that to retain the old system, would assist the wealthy man too much, then I suggest that the old system be adopted up to a specified ceiling and that the exemption should not then operate at any higher rate. The man I am tiying to help is the man of small and moderate income, and I believe that this change works upon the married man of that class a most unfair discrimination.
I consider this proposal a retrograde step, and I urge the minister to revert to the old system, which was much more just and equitable than his new proposal. The youth of any nation is its greatest asset. Anything which tends to discourage the raising of a family is a vital and oppressive blow to the future of any nation, and this proposal does just that. People cannot afford to have children. If Canada is to be a great nation in the future she must have greater population, and the most satisfactory way to achieve an increase in population is to encourage the raising of children steeped in Canadian tradition rather than through immigration of persons steeped in the traditions of other lands. I therefore urge most strongly upon the minister the reconsideration of this proposal, and I sincerely hope he will change it.
As a measure of alleviation of the steep increase in income tax, the minister has proposed the adoption of three new principles:
1.	Exemption of medical and hospital expenses in excess of 5 per cent of income;
2.	Establishing a proportion of the tax as a minimum savings requirement, which will be held to the credit of the taxpayer as a refundable credit, with accrued interest at 2 per cent;
3.	Deduction from the minimum savings requirements of amounts paid in respect of superannuation, life insurance, and principal payments on mortgages on homes.
3794	COMMONS
The Budget

Mr. Hanson (York-Sunbury)
So far as the first principle is concerned, I am sure that every member of his house, especially those who belong to the medical profession, will be in agreement. Indeed so far as I am concerned I would hope that this might be a permanent feature of the income tax structure. When the tragedy of serious illness befalls a family, the drain on the family income is frequently such that for the state to tax the amounts spent constitutes a most serious hardship. It occurs to me that perhaps the principle will require to be broadened somewhat. As it now stands it does not appear to cover those not unusual cases where the actual expenditure for a physician or for hospitalization is not large, but where the expenses of the individual for medicines prescribed by the physician reach very large sums. I have in mind as an example those who are required to use insulin. I hope the minister in committee will see fit to broaden the resolution to include such cases, although I appreciate that there might be great difficulty in doing so, and perhaps some danger.
Earlier I mentioned, in passing, the new principle of minimum savings requirement, which has been largely adopted from the deferred pay theory of Lord Keynes. I mentioned also that this is a principle which has been advocated from time to time by members on this side of the house. I am glad to see that the minister has adopted the principle. This minimum savings requirement, as part of the general increase in the tax rate, strikes at the problem of unnecessary consumption of consumer goods. The provision for the return of the specified sums in the post-war period means that the individual now forgoes or postpones consumption in order that he may enjoy it at a later period when that consumption will be more advantageous to the economic good of the nation. This plan of deferring or postponing consumption will be, I hope, an important feature in post-war recovery. The release to individual taxpayers after the war of the sums which they will now establish to their credit will lead to a demand for consumer goods after the war and will thereby help to start the wheels of the ordinary economic system in renewed and vigorous operation. Therefore I believe the principle to be a sound one, not only for the present but for the future. There are a number of matters in connection with the practical application of the theory which will require to be clarified when the house is in committee, but I commend the principle itself.
I should like at this stage to reiterate what the minister emphasized in his budget speech, namely, that the refundable portion of the tax is merely a minimum savings requirement.

It does not absolve the taxpayer from the patriotic obligation of contributing to his utmost to voluntary savings methods. It is obvious from the minister's speech that new taxation alone will not begin to meet the financial requirements of this country, and that hitherto unheard-of sums will have to be raised by direct borrowing from the people. I have sufficient confidence in the Canadian people, as the minister himself has expressed, to believe that they will respond to their patriotic duty and will endeavour to save, over and above the amounts which they will be called upon to contribute as minimum savings requirements, as much as it is possible for them to do, and will invest it in war savings certificates and victory loans. To do so will require rigorous and plain and simple living on the part of every one of us. I am prepared to make that sacrifice. So are we all, I believe.
An important feature of the minimum savings requirement is the third principle to which I alluded, namely, the deduction from the minimum savings requirement of amounts paid in respect of superannuation, insurance, and principal on mortgages. In other words, credit is being given to the frugal individual who has taken his own means to provide for his own future. The minister has recognized that such a person should not be required to contribute twice and, in addition, that such payments are not of an inflationary character.
Another type of payment for which I believe provision should be made is that under agreements for sale. Such payments are identical in principle with principal payments on a mortgage, and I hope the minister will see fit to include them.
The minister's proposal, as it now stands, will rectify what has always seemed to me to be an inequality. In the past a person contributing to an organized pension or superannuation deduction scheme was entitled to claim exemptions in respect of his payments, whereas the individual who had not the benefit of such a scheme, but who must provide the equivalent by the purchase of government annuities or life insurance as a means of securing himself for the future, was not permitted any deduction. I am glad to see that this inequality has been done away with.
There is just one other feature of this vast increase in personal income tax to which I desire to allude. I call the minister's attention to it particularly. It must be recognized that personal income is of two classes, namely, that earned by the personal effort of the taxpayer, and that received from investments either accumulated or acquired by inheritance. The taxpayer in the fortunate position of owning investments can obviously meet a

The Budget-Mr. Hanson (York-Sunbury)
difficult situation by selling some of his investments. On the other hand, the taxpayer whose income is derived in the main from personal earnings-say a lawyer, a doctor, or one receiving a salary-has no such happy recourse.
Events of recent years have left many people with debts that they are honestly and valiantly struggling to pay off. The new taxes take such a toll of their earnings that in many cases there will be little or nothing left to apply on old debts. It is surely in the public interest that debtors be given reasonable encouragement to pay their debts. Under conditions now envisaged, this will become practically impossible. It would be only fair and equitable if the government would permit an exemption, with respect to earned income, to the extent of, say, 10 per cent to enable the taxpayer to pay debts contracted before the war. In the aggregate the amount could not be important in relation to the total income tax. But it would in very many cases encourage and assist honest people to pay their old debts, and thereby help to maintain their morale and their feeling that there is something left to work for. People of this type should not be driven to the bankruptcy courts.
I do suggest to the minister that some provision must be made for people in the circumstances to which I have alluded, and I believe an exemption of the type which I have mentioned would serve the purpose best.
I wish to refer now to the excess profits tax. These are important business taxes. Important principles are involved.
In the first war session of September, 1939, we witnessed the introduction and, a few months later, the abandonment of a hastily drawn and ill-conceived excess profits tax. It never was put in operation. It had many inherent defects. I shall not enter into a discussion of these, but it laid down the principle that excess profits over normal or basic profits would be subject to special taxation and so make available to the state a substantial portion of the excess profits made. Its enactment in eighteen hours was hailed as a demonstration that democracy could act with speed on occasion. The present act is based on the statute of 1940.
We on the opposition side of this house have never opposed or criticized the principle of taxation of excess profits. We have all, I think, subscribed to the principle that no one shall become rich out of the war. Whatever criticism has been offered has arisen from the incidence of the tax and its application. That is a fair and legitimate subject of examination and criticism. In my opinion, due regard was
not had, up to this budget, to the plight of many industrial corporations which, during the ten-year period of the depression, 19291939, had a hectic time to keep alive, not to speak of their obligations to their employees and to the communities which they served and in which they functioned. An attempt was made-which I believe in a measure has been successful, although only partly so-to classify those who were in the so-called "depressed industry" category. I have always thought this effort was praiseworthy and I believe the system established was fairly satisfactory. A board of referees was set up, composed of men of high calibre and good character, men who went about their work conscientiously. But I do not believe and never have believed that the base was broad enough.
There is a feature of our excess profits taxation on corporations and individual proprietors to which I desire to direct attention. Last year I asked the house and the country this question: If you continue to exact high corporation income and excess profits taxes, and still higher personal income taxes-and I agree that we must do so if we are to continue to pay as much as possible of our war costs out of current revenue

if you continue to exact huge so-called excess profits from these same sources, how will these individual proprietors and companies be in a position to meet the exacting post-war period of transition and change from a war-time economy to peacetime activity?
In particular, I then asked what thought have those master minds, who behind the scenes are formulating our war-time financial policies, given to the problem of enabling these same companies to provide the employment for our returned soldiers and our civilian population which it is so necessary to provide if we are to escape that dread period of unemployment which will inevitably descend upon us within a measurable period of time after the close of hostilities? These men have responsibilities; they have great power; but they are not answerable to anybody. I put this question to them-and they will probably all disappear and get out from under by the time the post-war period arrives.


James Lorimer Ilsley: Put it to me.


Richard Burpee Hanson: I put it to the minister, who can put it to them.


James Lorimer Ilsley: No; I shall answer it myself.


Richard Burpee Hanson: I dare say the minister will, but I suggest that it is to these gentlemen I wish to speak, these men who are formulating the fiscal policy of Canada, men with great power and no responsibility.
3796	COMMONS
The Budget-Mr. Hanson (Y'ork-Sunbury)
I then asserted that that situation must be faced. I have asserted with assurance on more than one occasion, both here and elsewhere, that no matter how wise government planning may be, no matter how much, you may continue with economic controls, no matter what plans may be laid, nothing can ever effectively be1 substituted for the principle of private employment, which is based on the broader principle of private enterprise.
I believe that unless you keep these private enterprises strong and healthy-supervised and controlled, if you will, wisely and effectively- you will have no cushion upon which these industrial undertakings can rest during that trying period which, plan as we will, is bound to come. Unless they have adequate reserves to fall back upon, then the old problem of unemployment will be upon our backs, as it was in the days following the last war and in the long dreary days which preceded this war The answer to my appeal, the reasonableness of which no one will deny, is found in that portion of the budget proposals which deals with this subject. The minister takes the ground that the act of 1940, by which certain basic and excess profits taxes were imposed, was appropriate to the period of expansion during the early stages of the war. Undoubtedly it has produced a substantial amount of revenue, but I doubt that it has always been reasonably equitable. However, I have no time to debate that point now. The minister now states that the time has come when we can and should make the tax more severe, and he proposes now to take the full 100 per cent . instead of 75 per cent, but with a compensating feature. Personally I would prefer another method, but I shall not argue the point now. i He proposes to increase the rate of tax on * excess profits but not the flat rate of tax which applies to profits generally. I agree with the latter point of view, for obvious reasons. But I wonder if he is correct in his hypothesis that, in taking 100 per cent excess profits, he will not be removing the incentive for economy and efficiency in production. I hope he is , right, but human nature being what it is, I may be at least pardoned if I am sceptical.
By taking the full 100 per cent, even though he leaves the flat rate of tax alone, he is in a degree depriving business of the right and duty to build up reserves-adequate reserves-for the post-war period. As a counter-balance, however, the minister proposes that, after having raised the rate from 75 per cent to 100 per cent, provision will be made-subject, as I understand it, to certain limitations-for refunding after the war, presumably after the ; official cessation of hostilities, to the taxpayer who has paid the 100 per cent rate on excess 
profits, 20 per cent of the amount of profits in excess of the amount at which the 100 per cent tax on the excess after the deduction of corporation income tax and the 12 per cent flat rate equals the 10 per cent tax on the total profit. This is a very obscure provision. Clearly it requires further clarification and elucidation. It is complicated, and I admit that I do not fully comprehend it. For this I may be pardoned. I wonder how many hon. members of this house comprehend it? I WQnder how many members of the government who gave assent to this budget know what this means? I do not think any one of them outside the minister knows what it means. I suggest that the 20 per cent refund applies only when the 100 per cent rate effectively applies on any additional profits. This is a great limitation. It does not mean exactly a refund of 20 per cent of excess profits where the effective rate is paid, but only after certain other factors are computed. I invite the minister to clarify the position in the committee stage. The sum to be returned is without interest, but is unconditional except as to liability to the crown for any unpaid tax accrued.


Mr. JACKMAN:: That is a nice touch.


Richard Burpee Hanson: The outstanding principle is clear. These companies will have allocated to them on the books of the nation credits varying in amounts for the express purpose of enabling them to function in giving employment in the trying post-war period. This idea is not original with this government. I have hardly found any original idea in any budget. They have all been copied from something and made to apply to conditions in Canada. Some such a scheme has been established in Britain, although there are differences in the details and different limitations. When there in September last I had a long and most interesting interview with the chancellor of the exchequer, Sir Kingsley Wood, and I discussed this very matter with him.
They have no corporation income tax in Britain, but they have an excess profits tax of 100 per cent over and above standard profits. I have often thought that system would have been the proper one for Canada and preferable to our present system. It avoids the reproach of double or even treble taxation. This reproach has been levelled across the floor of the house on many occasions. I remember well that when the then hon. member for Waterloo North was the Minister of National Revenue I levelled criticism at the proposals made in the 1920's, and he admitted that the charge was well founded. It is probable that

The Budget-Mr. Hanson (York-Sunbury)
it is too late now to change our system, but it was quite possible to have done so in 1939 and 1940, when the corporation income tax could have been vacated, the income taxed in the hands of the shareholders, and an excess profits tax of 100 per cent established from the very beginning. Business men, I believe, would have accepted it; in fact, those with whom I discussed the problem favoured it.
This was not done. It showed, in my view, a lack of vision, a lack of the realities of the situation which will confront us in the days to come. But because we have the present system fastened upon us, it is still, in my opinion, necessary and quite feasible to prepare for the post-war period by setting up, on the nation s books, credits for those who are paying so much in taxation so that they may-under government control, if you will-be able to function normally in the post-war period and provide that measure of employment and contentment which only private enterprise can provide. I approve the principle, even if I do not clearly understand the details. It is enough if I enunciate the principle which I think should guide us.. It has been studied with great care by the treasury officials in Britain. They have no doubt of its soundness and of its necessity. I had intended to offer it as a constructive suggestion to the minister and to the gentlemen, from the head of the Bank of Canada down, who are advising him.
The minister indicated that other and minor amendments to the act will be brought down. I shall only allude to one-that relating to small business. I refer principally to owner-managed businesses. These men are in many cases facing ruin as a result of present taxation and cbntrols. At present the law gives complete exemption to small businesses with profits of $5,000 or less. The minister states that this exemption in respect of the new 12 per cent flat rate will be withdrawn. If this means that taxation is to be made greater and heavier for them, I regret it; for under present conditions of price ceilings and similar restrictions, their plight is a difficult one.
On the whole, I congratulate the Minister of Finance on his action in providing that these taxpayers may recover, even in somewhat limited circumstances, 20 per cent of the 100 per cent excess profits tax at the close of the war, for the purpose of permitting the modernization, reconstruction, or readaptation of their factories, and, much more important, for providing working capital and employment which will then be so necessary.
I just want to say a word to the socialist party in this house in regard to this proposal. They will probably criticize the minister for
making what they will allege to be a concession to the profit motive and to capitalism. My own feeling is that fundamentally it is a concession to the very important purpose of permitting employers to find jobs for their workers. I should like to take this opportunity to say to our socialist friends that they are never going to become the true representatives of the Canadian worker until they realize that the one point on which the Canadian worker does approve capitalism is as an employer furnishing jobs-not talking about employment, but furnishing jobs. The Canadian working man knows his common interest with his employer on this point, however much he may differ with him on the details of how the jobs are to be furnished.


Mr. REID:: You are not arguing that the Cooperative Commonwealth Federation are the only ones speaking on behalf of labour?


Richard Burpee Hanson: Certainly not. In other words, the Canadian worker has a pride in his employer's success, provided that the employer passes on to him the employment, under proper working conditions, that is so necessary for his own well-being and happiness. If you want an instance of that, look at the two great railway systems in this country and how loyal the workmen are to their employers. I doubt whether any socialist speaks for the railway workers of this country.
I have one last word to say to the socialist party on this point. When the socialist party tries to criticize the minister's action in this respect, I should like to remind them that a great English labour leader, Sir Walter Citrine, told the Canadian club in Montreal not a year ago that English labour was tired of being misrepresented to the public by politicians and college professors.
I want to say a word with respect to the succession duty. I am glad to note that the minister has yielded to the theory that charitable gifts shall be entirely free of duty. If I recollect aright, I urged this course a ' year ago. The experience of a few months must have indicated to him that it was a mistake to impose even one-half the ordinary rate on such gifts. The reason is obvious. No matter how well intentioned a person having property to dispose of, by will or otherwise, may be, he instinctively feels that if the state steps in and confiscates twice, perhaps thrice, a portion of his capital assets, the state thereby releases him from obligations which, under different circumstances, he himself would assume. If the state takes that which under ordinary circumstances would go to charities,
3798	COMMONS
The Budget-Mr. Hanson (York-Sunbury)
then the state itself must assume those responsibilities. As a result of two, sometimes three, capital levies on the same dollar, plus high taxation for war, and levies for war purposes, charitable gifts have been rapidly receding. I congratulate the minister upon having seen the light, and changed his tune.
Now a word on indirect taxes. The minister has made another of his selective approaches to indirect taxation. He recommends substantial increases in taxes which fall on luxury expenditures. With the general principle involved I am in agreement. Any reasonable measure which will prevent or discourage such expenditures merits support. The money is required for other purposes.
With regard to the excise duties on alcoholic beverages, his approach is definitely not that of restricting consumption, but rather of securing additional revenue. It is of no use to tell this house that $2 a gallon added to the excise duty on spirits will reduce sales and expenditures. The only effect will be to raise the retail prices on domestic whisky from present levels by a small amount. Already I believe the Ontario liquor commission has announced new prices-25 cents more here, 35 cents there, with a maximum of 75 cents on a large quart. Does anyone mean to tell me that any person in Canada who wants a bottle of whisky will stop at the additional impost? The idea is ridiculous. Let any member of this house who uses liquor as a beverage pause and ask himself if he will refrain from buying a bottle of whisky because the government has raised the excise duty by $2 a gallon. The answer is obvious.
I do not know what the effect of the increase on malt will be on the price of beer. I should think not much-15 cents per dozen bottles, perhaps. I have heard that former increases did not perceptibly increase prices. I understood that the brewers, generally speaking, absorbed the increases. Certainly those two increases had no effect on the quantity purchased by the public. On the contrary, sales have steadily increased, I venture to predict that this increase from 12 to 16 cents on malt will not divert any dollars from consumer expenditure. This whole situation, Mr. Speaker, has given cause for grave anxiety in Canada. I fear that the drinking habit is increasing in this country. The drink bill in Canada has increased from $153 million in 1938 to $232 million in 1940, an increase of almost $80 million in two years, and I am told that this year's drink bill will probably reach as high a figure as $290 million. Recently representations have been made to the Prime Minister with regard to this matter. The liquor trade is a thriving trade, and it is the

only trade known to me over which control has not been exercised, except by way of taxation.
Recently the hon. member for Mackenzie (Mr. Nicholson) quoted1 in this house an extract from the "Brewers' Magazine", from which I shall quote two sentences:
One of the finest things that could have happened the brewing industry was the insistence of high ranking officers-
'Meaning high ranking officers in the army, I assume:
-to make beer available at army camps.
Then mark this. It goes on:
Here is a chance for brewers to cultivate a taste for beer in millions of young men who will eventually constitute the largest beerconsuming section of our population.
I confess, Mr. Speaker, that when I heard that I was appalled at the implications. The whole general effect will be more revenue from all these sources, and the alleged objective will not be attained. There is only one way to deal with this problem-for problem it is-and that is to make it impossible to expend such vast sums of money on alcoholic and malt beverages; and that apparently is the last thing in the world this government- or the provincial governments either, for that matter-wish to do. They know that the tremendous drink bill of this country is a serious drain on the people of Canada of money which should be diverted to other and better purposes, but neither authority will deal with it.
I shall not refer to the new taxes on cigarettes, smoking tobacco, cigars, and the like. I doubt if the new imposts will cut down consumption. They may. Meanwhile we are to receive in excess of fifteen millions of dollars of new revenue from the one source, and twenty-three millions of dollars from the other-and I suspect that is really what the minister is after.
I wish to refer to the tax on candy. This undoubtedly is imposed on the theory that candy is a luxury. I dispute that premise absolutely. Candy is an important food. It is probably the best energizing food, particularly for young people, because of its sugar and cocoa content. Our soldiers on active service use it for emergency rations. Our Atlantic pilots carry it on their trips, and I believe the commando troops take it with them as emergency rations. Recently Mr. Morgenthau recommended a 15 per cent tax on candy in his message to congress, and the committee threw it out, because candy is such an important food and uses many farm products-butter, milk, cream, et cetera.

The Budget-Mr. Hanson (York-Sunbury)
Candy is the only food which is taxed in this budget. Cheap jewellery is exempt from $1 down, but a tax is put on the candy sold to children. This is not just figurative, because it will actually be done. All penny goods will have to be eliminated; a child with six cents can buy a chocolate bar, but a child with one or two cents cannot buy anything.
There is another aspect of this matter which should be considered. With the restriction on sugar, children will get less sugar and now they will also get less candy. It will be bound to have a detrimental effect on the health of the rising generation. I say to the minister that this tax is unnecessary, and he ought not to pursue it.
Time will not permit me to make reference to the large number of other taxes, generally described as "nuisance taxes". We had them in the last war. I suppose we shall have to submit to them, as we did then. The only excuse for most of them is that the country needs the money. On that theory they will be accepted, but on the distinct understanding that we shall be rid of them at the earliest possible moment. I fear that, is a vain hope. Never again shall we be able to face life freed from the major part of these small, petty, nuisance imposts.
There is one redeeming feature, and it is this. The people of this country, who have become soft and prodigal in their personal spending in normal times, will once again have to scrimp and adopt the old-fashioned virtue of thrift-one of the real virtues, one which our parents practised, one which they endeavoured to instil into us as children, but which, alas! most of us in the easy days of the 1920's soon forgot and failed to practise. It will come back to us. It is being forced upon us, and it will be a good thing for us and for our children. It will teach us and them the principles of self-denial. That, at least, will be worth while.
I have either read or listened to all the budgets which have been delivered in this house for the past forty years. Even in peace time none of them are all good or all bad; but in peace time it is easy to criticize, easy to suggest that some other fiscal policy, some other tax, some other proposal, should be adopted. Per contra, it is usually easy to support some of the proposals in any peace time budget.
One of the difficulties which confronts me, and which always confronts one in my position at any time, is that one is obliged, on a motion to go into committee of ways and means, either to accept the budget outright or wholly to reject it. But the difficulties are
greatly accentuated when one is dealing with a war budget, a budget of such dimensions as almost to stagger one with its enormous figures and implications.
It has not been difficult to criticize the budget in its details, to find fault with this feature and that, to say that, from one point of view, it is soaking the rich; and from another angle there is concealed in this budget power to exact an undue portion of the national revenue from the wage-earners of this country-and there is substantial truth in the latter statement.
But having heard this budget delivered at the darkest hour in the history of this war, when the situation is more critical than at any time since Dunkirk; having since read1 it with care, and endeavoured to master the huge mass of figures and the underlying principles, realizing as I do that we are passing through a world revolution, a very convulsion of civilization itself, I have come to the conclusion that the proper and patriotic course for me is to support the general budget proposals. My reason, my convictions, tell me that we must raise this huge sum of money, by some means or other, and to argue at this time that some . other ways or means are preferable has no great appeal to me.
And let us not hear anything more of failure to conscript wealth. We are conscripting wealth. We had it in the 1941 budget, notwithstanding what some people may say or think. We have had it since 1940. We have it here, in stark reality. Also, those who are not possessed of accumulated wealth, those whose wealth consists of their week-to-week and mouth-to-mouth wages, those who are in receipt of the major part of the increased national income-their wealth is being conscripted by this budget too. They are paying-paying much more than appears from the skilfully disguised language employed by the minister. They will be called upon to pay the major part of the new millions which the minister hopes to get under the new personal income and other tax rates. The method or manner of approach to them is skilfully concealed and not so brutal as to those in the higher brackets. It is hidden in a mass of verbiage, but the power to withhold from the pay cheques of the wage earners and the lower salaried classes the greater part of these new levies is embodied in these resolutions, and they will pay by far the heaviest portion of these new imposts.
I point out as a matter of information, and information only, the following facts:
1. Up to this budget, the group earning over $2,000 per annum were 58 per cent of the
3800	COMMONS
The Budget

Mr. Hanson (York-Sunbury)
income taxpayers, and they paid 97 per cent of the amount paid in personal income taxes. They have been called upon to make great sacrifices, but there has been no great complaint from them.
2.	The group under 82,000 constituted 42 per cent of the taxpayers, and they paid 3 per cent -of the tax collected.
3.	Under the present proposals, based on the status of a married man with two children, the tax on an income of 81,250 has now been increased 45-1 per cent; on one with an income of $2,000, 258 per cent; and on 83,000, 211 per cent.
4.	Then the curve of increased taxation is reversed. On $5,000, the increase is 126 per cent; on $10,000, 68 per cent; and on 850,000, 30 per cent.
The undoubted fact is that those in the lower group of $3,000 and under are being subjected to a very sudden and steep levy.
But let us not flinch from -our obligations. Let us face the situation with courage and fortitude. Let us make every sacrifice. We are all together in this great adventure. There are no favoured few. Together we shall either survive or go under. Let us resolve that survive we shall.


Mr. J. H. BLACKMORE (Lethbridge):: Mr. Speaker, I think the leader of the opposition (Mr. Hanson) has completely excelled himself this afternoon-. I cannot recall having heard him deliver a speech more thoughtfully prepared, or more meaty, or more genuinely valuable. It was devoid of all forms of bitterness and party animus, and altogether it was a fine effort. I wish to congratulate him on it. . But I do not wish to leave the Minister of Finance (Mr. Usley) entirely without commendation. As I have said on more than one occasion, he is the man who has the greatest burden in Canada to-day, and his task is made more difficult by the fact that he is endeavouring to carry on in a power age with an ox-cart financial system. That is almost tantamount to a man's undertaking to equip an army with bows and arrows in order to meet tanks. The mere fact that the minister is endeavouring to cariy on under that handicap is cause for congratulating him even more sincerely than one would under ordinary circumstances.
With respect to the budget, I do not desire to be in any wray unkindly or harshly critical.
I should have been pleased if upon this occasion I could have had my speech carefully written out weeks beforehand so that I could read it, but the rules of the house

deny me any such privilege. I must therefore do my best to clothe my thoughts in language as I stand here facing a critical situation.
The attitude to budgets is changing rather rapidly, I fancy, in the world. There was a time when a budget was looked upon simply as a means of raising money, but to-day the budget is regarded as much more than that. It must be a means of regulating the whole economy of a country. To illustrate the truthfulness of what I have said, and to indicate that in this statement I am in reasonably good company, may I read from "Fiscal Policy and Business Cycles", a book copyrighted by Alvin H. Hanson, of Harvard university in 1941. I quote from page 187:
For the public economy expenditures ought to be weighed not in terms of the profit and loss of the state itself but rather in terms of the effect of such expenditures ou the full and efficient functioning of the economy as a whole. Fiscal policy is an important instrument for maximizing the real income of a community and for regulating the distribution of income and wealth.
As I deal with this budget I shall have in mind more particularly the assertion which is made in -the second sentence. I read that statement from page 187 in the chapter "budgetary theory -and practice". In the first place, I wish to make two or three comments on the budget itself and on the inconsistencies which arise from the difficulty of the minister's position rather than from any inadequacy or inefficiency on his part.
The budget lacks unity because it aims at two things. It has two objectives. The first is to raise money, and the second is to withdraw from the' people purchasing power, thereby relieving buying pressure upon prices and tending to offset the tendency to inflation. Since the minister is aiming at two objects all the time he cannot -be blamed for forgetting one of them once in a while and being really at a loss to know which object he is pursuing at any given moment. As I listened to him, I thought he hardly knew, in the case of any given impost, whether he had in mind chiefly the raising of money or the withdrawal of purchasing power. As a matter of fact, theoretically, the principle of withdrawing purchasing power should be his principal object, and not the raising of money. He would very much dislike to acknowledge that,
I fancy, and I know many good gentlemen, prominent in Canadian financial affairs, who would dread to acknowledge it. But it is unfortunately true, and that is one of the momentous facts predicable of our time, that the object of a budget is no longer to raise money but to withdraw .purchasing power.

The Budget-Mr. Blachmore
If we could once grant that the whole object of this budget had been the withdrawal of purchasing power, the incidence of these taxes would have been placed in an altogether different position as regards many imposts.
Is this budget as it stands designed primarily to raise money or to guard against inflation? If it is designed to guard against inflation, to prevent people from buying the things they desire to buy, did the minister have in mind the object of preventing the people from buying life insurance? If he had not in mind preventing people from buying life insurance, why would he withdraw purchasing power until they were unable to buy life insurance? Yet this compromising position has been thrust upon the minister and his department. Did he wish to prevent people from repaying debts? The repayment of a debt would hardly cause inflation, for in most cases the money would go immediately to the bank and the money used in payment of the debt would be dead for that cycle. Did he wish to prevent them from having dental care, or from having medical treatment, or from sending letters by paying postal rates, or from buying flowers and shrubs to decorate and beautify their homes, or from buying breeding stock such as cattle, horses, sheep, swine, poultry, bees and the like, to increase their productive capacity? Did he wish to prevent them from buying fences or building fences, or from getting timber to make fence posts with which to build fences? By these imposts he has successfully contrived to prevent them from buying a good many such things, the purchase of hardly any one of which would tend to cause inflation. I think I have said enough about the inconsistency of the budget, an inconsistency which results from the difficulty of the minister's position and not from his inefficiency or inadequacy in any respect.
Again, the budget is inequitable. I am not saying that the minister did not do what he considered his very best in an endeavour to make it equitable. He said specifically in his speech that in framing the budget his object was to recognize the need of equity, incentive and saving. That indicated a fine power of discernment in the minister, a fine appreciation of values. But in my opinion he has fallen far short of providing equity and incentive in many cases. As the leader of the opposition pointed out very well, I thought, sufficient to render it unnecessary for me to repeat except by reference, this budget bears destructively upon the less well-to-do among Canadians.
The sales tax-I hardly recall whether or not the leader of the opposition mentioned it -is designed to raise $218,000,000 in 1942. A
disproportionate amount of that will be taken from the less prosperous. The people who are straining every nerve and lying awake nights trying to make ends meet are being bled of their substance in a dozen and one different ways of which they are not really aware, by an 8 per cent sales tax stealing in upon them and completely unavoidable. While that impost was not levied in this budget, yet it was continued in this budget. I believe that the time has come for the removal of a large part of the sales tax, if not all of it.
The minister has borne with harsh insistence upon those with incomes of $3,000 a year and under. The leader of the opposition in his closing remarks referred to an article in the June 27 number of the Financial Post, a portion of which I shall read:
The tax on an income of $1,250 lias now been increased 45'5 per cent. On $2,000 income the increase is 258 per cent. On $3,000 it is 211 per cent. There comes the dividing line. For incomes above that figure the percentage increase declines. At .$5,000 the increase is 126 per cent; at $10,000 it is 08 per cent, and at $50,000 it is a 30 per cent increase.
I rarely mention personal matters in this house, but when I was elected to parliament I had nine children. My income would have come in that $1,250 bracket and would have been subject to that increase.


James Lorimer Ilsley: Surely not. You get $80
exemption for a child.


John Horne Blackmore: Yes, provided there
are the children, but the income would come in that bracket. It indicates how seriously we affect people when we increase taxation in the lower income brackets. Generally speaking, incomes below $3,000 a year are those of the men and women of Canada who are carrying the burden, who are raising the men and women who will be the fighters or producers-or who are not raising them, and who very probably will not raise them, as the leader of the opposition pointed out. Under the circumstances I find it difficult to see why the minister bore down with such particular care on the people with lower incomes. He would answer, I believe, as I think he indicated in his speech, that since money had to be raised it was necessary to go down to the incomes of the people who constitute the majority of the population.


James Lorimer Ilsley: It is an even and fair
gradation from $660 right up to $500,000.


John Horne Blackmore: But the evenness
ceases to exist when you get into the realities. It is easy to say that academically, but it certainly is not true when you get down
The Budget-Mr. Blackmore

into the lives of men and women. The people with those incomes are having all the trouble to get along that they need.
The minister, still indicating that he was desirous of being equitable, said, as I recall it, that he desired to see people have a decent standard of living. Now, what is a decent standard of living? "Decent" is one of those general expressions, like "a fair wage," "a fair price." It means pretty nearly anything, depending upon who uses the expression and who hears it used. If we could only come to some sort of agreement as to what constitutes a fair income and a decent standard of living! As an example, we felt it necessary, if I recall aright-I am speaking entirely from memory -to give a cost of living bonus to civil servants getting less than $2,000 a year. That indicated the belief that a decent standard of living would be rendered possible for the civil servant only by an income of not less than $2,000 a year. I rather think that is about right. But how in the world are the people who are getting $400 to $450 to have a decent standard of living? Yet we are taxing those $450 incomes through the sales tax right along. I think in a recent issue of the Ottawa Citizen there was a statement covering a considerable number of civil servants recently appointed all across Canada. A substantial percentage of them are girls receiving very small incomes and having a hard time to live in Ottawa and elsewhere. But the average income of all of them was $168 a month if I remember correctly. A man could live reasonably well on $168 a month, but if that is the average, when you take into consideration the large number receiving only a bare subsistence, there must be some receiving very substantial incomes. Probably they have no difficulty in attaining a decent standard of living, but I am not so sure about a good many others throughout this land, in agriculture and among the labouring people. What is a decent standard of living? I will not take time to go into it now; I simply raise the question. But I think it can hardly be assumed with justice that this budget is equitable.
This budget makes one more long stride toward the destruction of democracy through national debt. It increases our debt $2,228,000,000, according to the statement of the minister, as compared with $414,000,000 estimated increase for the past fiscal year. Our debt on March 31, 1942, was $4,062,372,000. It is impossible to forecast what our debt will be within a few years. Mr. J. H. Fisher, staff writer for the Toronto Telegram in an article on June 29, 1942, estimates that we shall be in debt to the extent of twelve billion dollars if the war lasts for three years, and I think we can pretty

safely assume it will last that long. That is twelve billion dollars as compared with three and a half billion exclusive of the guaranteed Canadian National Railways debt at the outbreak of war. Mr. Fisher estimates that this will constitute a mortgage of a thousand dollars a head on every man, woman and child in Canada.
I ask this question: Where does any man in this house or outside it suppose we are going to get the money for social services after the war, with a debt like that?


Harry Rutherford Jackman: Who owns the debt?


John Horne Blackmore: We will come to that in a moment; the question only aggravates the position. Whence will come the reward for the fighting men who are now risking their lives and being maimed? Where will preparations for a later war come from?
At this point I wish to pause to say something I have wanted to say a dozen times. I am going to say it now. I do not believe since the beginning of time there ever was a generation so callously betrayed by its leaders as was the generation which to-day is fighting for its life. Why? Because they had so big a debt they had to save; and the life and very existence of 650 million people are now in jeopardy because we owed so many dollars we had to tighten our belts.
What is going to happen after this war, with a twelve billion dollar debt hanging round our necks, if we insist upon using the system of financing of which the minister now apparently seems to be irretrievably enamoured? Whence will come the relief from the depression about which so many economists running round the country take delight in terrifying the people? "We have to have a depression" they say; "surely we are going to have a depression". Even the leader of the opposition (Mr. Hanson) fell into that foolishness. There is no reason why there should be a depression in this country. There was no reason for the last depression. It was deliberately and foolhardily manipulated by blind men.


Mr. HANSELL:: And nearly destroyed us.


John Horne Blackmore: It did destroy us, unless we, by good fortune, come through t.he war successfully. And the very men who engineered that depression are the men who are responsible for the defeats this race has suffered and is suffering to-day.


An hon. MEMBER:: They should be shot.


John Horne Blackmore: Shooting is too pleasant an experience for them. They betrayed us shamefully, culpably, reprehensibly, and they

The Budget-Mr. Blachmore
are all getting ready to do it all over again as soon as this war is over, simply because we shall be owing twelve billion dollars of debt.
Here is the astonishing fact: we in the House of Commons, responsible members of parliament, calmly and complacently contemplate such a situation as that. Only the odd person here and there rises to contest the claim of those who insist that we must carry on according to this financial system.
The minister made the remark that the size of the debt did not much concern us. So that we may have exactly what he said I shall read his words, as reported at page 3578 of Hansard:
It is not the size of the debt that is a matter of chief concern for after all it is an obligation of the people of Canada through their government to the people of Canada.


James Lorimer Ilsley: The hon. member had better finish it.


John Horne Blackmore: To be perfectly fair, I shall read everything the minister wishes to have read. He continues:
Rather, we are concerned about the distribution of it.


James Lorimer Ilsley: Right.


John Horne Blackmore: Is that sufficient? I want to be perfectly fair. He says that we are concerned about the distribution of the debt. The distribution, I say, is going to be very largely the same kind of distribution we had after the last war. Men who buy war savings certificates and victory bonds, yielding to the urgency of high-pressure sales methods, and activated by an impulse of patriotism, will dispose of their holdings. Of course they will-to pay the corner grocer, or to pay the doctor for the last child, or perhaps to prevent foreclosure on a home.
Who owns this debt? I say solemnly and after consideration, that to say that Canada's public debt is an asset to Canada is to tell a pernicious half-truth, more mischievous than an obvious falsehood. I know who made that remark, and I mean every word of what I have said, and apply it to him. In the position he occupies he should have had a stronger sense of his public responsibility than to make a remark like that, one which would deceive the people of Canada.


Mr. JOHNSTON (Bow River):: The governor of the Bank of Canada.


James Lorimer Ilsley: He said it was an asset as well as a liability, which is undoubtedly true.


John Horne Blackmore: It is a half-truth.


James Lorimer Ilsley: If the hon. member would finish what was said by the governor of the Bank of Canada, he would find that there is no half-truth about it.


John Horne Blackmore: I say it is a halftruth, no matter what he said or how he said it.


James Lorimer Ilsley: It is just like reading only part of what I said.


John Horne Blackmore: Would the minister put on record what Mr. Towers did say in that regard?


James Lorimer Ilsley: All I am saying is that my recollection is that Mr. Towers said that- debt was an asset as well as a liability, which is the truth.


John Horne Blackmore: But the implication was that it was an asset to the Canadian people.


James Lorimer Ilsley: Because it was being urged that it was purely a liability. There is no half-truth about that; he just finished out the picture. The hon. member is attacking the governor of the Bank of Canada in unrestrained language because he had pointed out an obvious fact, namely that a debt is an asset as well as a liability. It is an asset in the hands of the creditor and a liability to the debtor-both of whom are Canadians.


John Horne Blackmore: My next words will answer the minister completely. The minister implied the same thing in the remarks I have just read into Hansard.


James Lorimer Ilsley: Correct.


John Horne Blackmore: All the people will owe that debt, and pay taxes to a point of misery and slavery to repay a few.


James Lorimer Ilsley: But taxes in accordance with their ability to pay. The rich will no doubt be taxed much more heavily than the poor.


Angus MacInnis: Relatively no.


John Horne Blackmore: I challenge the minister's statement that they are taxed in accordance with their ability to pay. The tax structure erected in this budget is there to stay, just as the three-cent postage tax, imposed at the time of the last war, has stayed to this day. Whether or not the people go down into the depths of degrading poverty, as they did during the depression, they will still pay that tax, just as we had to pay the three-cent postage in the depths of the depression in 1932 and 1933. There is no way of getting out of it.
This tax structure is being prepared to bleed the Canadian people of every last drop of spending power possible of extraction from their emaciated bodies for the next generation. And what for? To pay 3 per cent interest on a twelve billion dollar debt to a few favoured ones.


James Lorimer Ilsley: On what?
3S04
The Budget-Mr. Blackmore


John Horne Blackmore: On a twelve billion dollar debt, on the assumption- that the war will continue for three years.
The difficulty lies right here. With the exception of, I believe, only three, there is not a newspaper or a public official or a bank manager anywhere in the dominion that is indicating even the slightest scintilla of vision as to what can be done so as to change the system to a point which would render such intolerable conditions more endurable. All they do is to sneer at anyone who has any idea as to what might be done. They will not even go so far as to consider a suggestion and permit intelligent and honest discussion.


James Lorimer Ilsley: If the debt should be $12,000,000,000, which I do not admit for one moment, the interest would be $360,000,000. Why does my hon. friend say that we shall have to maintain these taxes because of the interest charges, when this year we are budgeting for expenditures of ten times what the interest charges would be?


John Horne Blackmore: That is a very fine answer and a perfectly honest one. If the depression which is promised so abundantly and with such sincerity and gusto occurs, the productive capacity and the national wealth of this country will fall off in huge swaths, as it did in 1929, 1930, 1931 and 1932. The only way by which we shall be able to raise enough money to service that debt will be by the imposition and maintenance of such a tax structure as this, a tax structure which the people are now viewing with apprehension.


James Lorimer Ilsley: I do not admit the inevitability of a serious depression, although my hon. friend may,	*


John Horne Blackmore: I tell the minister that unless he changes the system he is using, a depression will come just as surely as the sun shines in the heavens.


James Lorimer Ilsley: That, system will not cause it.


John Horne Blackmore: It will cause it, because the same thing caused the last one.


James Lorimer Ilsley: Another system caused the ' last one.


John Horne Blackmore: I should be glad to have the minister explain that. I realize that he would not be prepared to explain it now. Public debt like private debt limits freedom of choice-which means a limitation of democracy in the case of the state,-a limitation of freedom and a limitation of choice of action. Public debt will threaten and completely destroy our security and will almost inevitably impair our productive power. The
[Mr. Ilsley.l
federal government could and should adopt such a fiscal policy as will enable and encourage all individuals and all groups of individuals to get out of debt and to stay out of debt. The present fiscal policy of Canada motivates and to a considerable degree necessitates falling into debt.. Ours is a debt creating system, and terrible have been the results.
I should like to refer to what has happened in Saskatchewan, and I quote from the United Farmers of Canada information bulletin of March, 1942:
In the meantime the farm debt in this province has increased by nearly $50,000,000 since the war commenced, thereby increasing the Saskatchewan farm debt to approximately $630,000,000 or $21 debt average on the
30.000.	000 acres cultivated in this province, which requires about $44,000,000 to satisfy interest. It is estimated that the average debt on the higher quality wheat land is $30 per cultivated acre. It should be remembered that much of this land operates the practice of summer-fallowing one-half of their land each year, consequently each crop acre in such circumstances carries a debt responsibility of $60 per acre, requiring $4.20 to satisfy interest obligation. And, granting that this type of land yields more bushels than the average land of the province, it would require about 45 per cent of a wheat crop at present prices to satisfy interest upon the debt.
That is individual debt.
Land of inferior quality is not in any better position because, while two-thirds of the cultivated acres is usually cropped and as the average yield is only about 12 or 13 bushels per acre, even with a less than average per acre debt, it is estimated that almost the same percentage of the wheat income is required to cover the interest amount.
As mortgage companies call for one full third share of the crop to apply as mortgage payment it should be clear that even this full one-third is insufficient to meet the interest obligation. Inis deficiency, plus an amount less than the one-third which also cannot be paid except in exceptional years is pyramiding upon unpaid principal. 1940 produced the second higher provincial farm income since 1930. i.e., $142,000,000 and in that year $42,000,000 was required to service the farm debt of this province, leaving about $100,000,000 as the fundamental maintenance for our provincial economy, or slightly over $100 per person.
It may be contended that this hardly has a bearing on the budget, but I shall soon show that it has. In Alberta, in 1935 the provincial debt amounted to $161,000,000; municipal debt,
570.000.	000; mortgage debt, $200,000,000; private debt, $171,000,000, making a total of
5602.000.	000. Those men who with complete ease and real satisfaction talk about our servicing this $12,000,000,000 debt forget entirely the other debts in Canada which must be serviced as well. In consideration of the debt situation which this budget is imposing

The Budget-Mr. Blnckmore
upon the people of Canada, and for other reasons, I beg to move, seconded by the hon. member for Macleod (Mr. Hansell):
That all the words after "that" in the said motion be struck out and the following substituted therefor:
"This house views with alarm the obviously decisive drift into national or state socialism everywhere in evidence in this budget as indicated by the shackling taxation structure it erects; the sweeping trend towards centralization. bureaucracy and oligarchic regimentation which it involves and the general deterioration of morale and incentive to productive effort which it aggravates;
Further, this house regrets the government's apparent inability to see the vast improvement in Canada's efficiency that could be effected by a wisely scientific use of her credit and currency potentialities, and deplores the government's persistent failure to employ Canada's credit and currency to supplement her pay-as-you-go policy, thereby to restrict the appalling growth of debt, and to provide a means of gradually paying off Canada's indebtedness.
Therefore this house respectfully urges the government to formulate and to introduce at the earliest possible moment such a modernized credit and currency policy as will, to the greatest degree rendered possible by our available facilities, curb inflation, control debt, mobilize Canada's resources for total war, ensure democracy and security to Canadians, in war and then in peace."
I wish to turn now to another aspect of this budget. Indirectly this budget is an inflationary budget. There are many situations in life where a man trying to avoid a certain thing runs directly into it. The effort here is to avoid inflation, but this budget is inflationary in effect. In the first place, it actually forces up prices. Take fountain pens, watches, clocks, passenger fares, long distance telephone cafls, telegrams and so on as an example. It is commonly assumed without reference to the facts of the situation that each and every one of these items is necessarily a luxury. Are we to assume that people, no matter how poor they are, are now to be able to avoid travelling on railways? Are they not likely to need to use the long distance telephone? For example, take the man operating a small grocery store. Will people no longer require to send telegrams in case of death or great mishaps? Are the teachers in our schools to go henceforth without watches? Must the little nurses in training, no matter how poor they are, get along without watches? Are the children in our schools to be made to go without fountain pens on the assumption that they are a luxury? The price added to the cost of these commodities will increase the family cost of living.
The result is there will be a tendency toward inflation. That is not the most serious aspect of the situation. This budget will discourage
production, or it will, in many instances, render production impossible. Just as soon as production begins to be restricted, as it undoubtedly has been now in many respects, there will be an increased buying pressure on the price ceilings. A scarcity of goods always results in an increased buying pressure on the price.
No producer can continue to produce at a loss. The minister said that we would have to find another incentive than the profit motive to encourage men to produce. There are simply tens of thousands of men in this country who must have a little profit or they can no longer produce. How is it that so many men overlook that important fact? As soon as the producers of this country find themselves unable any longer to make a living they will sell their stock, if they are stock raising, desert their farms and join the army or go into industry or go on the streets and hawk. They will do anything rather than stay on the farm where they are losing money, for they must do so.
But once cattle are gone it takes a long time to recover them. We have one fine example of that within the memory of this house. A few years ago the Minister of Agriculture (Mr. Gardiner) deemed it expedient to allow a large percentage of the cattle in Saskatchewan to be destroyed. Would it not help wonderfully if we had those cattle back now? But they just are not there, and we cannot get them there; they are gone. Every herd of cattle that is slaughtered as those were slaughtered that we heard about the other night from the hon. member for Fraser Valley (Mr. Cruickshank) means another herd of cattle gone; and it does not matter whether the children of Canada were crying for milk or the children of Great Britain were starving for cheese, when the cattle are gone, production from them would be impossible, no matter how high the price of milk or cheese may be. Why is it that men cannot see these things in this most trying time? I find myself afflicted almost with dismay when I read some of the shortsighted statements which have been made by certain permanent officials, whom I am not now going to name, with regard, for instance, to the desire of the Ontario farmers for an increase in milk prices to enable them to produce or of the Ontario berry producers for a similar increase in price to enable them to produce.
The government of this country should be watching every breeding animal. Three years ago I pointed out to this house that no more female lambs should be allowed to be killed until we were certain we had enough. Would
The Budget-Mr. Blackmore

it not be a fine thing if we had those lambs to-day? It would help our wool situation greatly. But there were all-wise who thought I was just foolish in making that suggestion. They will now continue to bump their heads against the cold stones of reality until they realize that once in a while some good thing can come out of Nazareth.
The government should be watching every heifer, every cow in this country, and1 seeing that none are destroyed until we are positive that we have all we need. That does not mean passing a law fdrbidding their slaughter; it does mean that the government would make sure of buying them if it was necessary for their owners to sell them. That is just common sense. There will be great pressure to sell and to slaughter unless an incentive is given to keep this stock, far more incentive than is indicated in this budget.
May I spend just a moment on inflation. I have spoken on inflation so many times in this house that I know everybody is weary of the subject. Nevertheless the fundamental facts regarding inflation which I have laid down since 1936 are the essentials upon which must be based a new economy, and every year of development will show the truth of what I say.
I am told that in one city of Ontario where there is plenty of ice in the winter, a number of companies, because of impositions and levies and restrictions of one kind and another, have been forced to close their ice business, after having been engaged in it, some of them, for sixty years. And this is all because of utterly impossible regulations. They were forced out of business, not because they did not want any longer to produce ice, not because there was not plenty of ice, not because people were not needing ice, but just because the officials in charge lacked the understanding and discernment, and the humility to be told. They had to go on blundering and bumping their silly heads until knowledge was knocked into them. There are some people that one cannot tell anything to-they know everything-until, by their immeasurable folly, they drag the people of Canada into misery. The result of forcing those people out of the ice business is now a scarcity of ice in that city. A scarcity of ice means that there will be a buying pressure upon ice and a tendency for the price of ice to go up; and if people are unable to buy ice, they will have in their pockets the money they would have spent on ice and will buy something else with it, which will bring pressure to bear on other commodities and cause an inflationary tendency.

Once we understand what inflation is and realize that it is not a great big ugly bogeyman, with cloven hoofs, a long tail, and great horns; once men realize that it is just a common-sense thing, the result of scientific facts, they will stop talking much of the indescribable nonsense which is being talked over the radio and in the press to-day, and they will come to realize that if we want to prevent inflation we must do the common-sense thing we would do if we wanted to prevent a headache-just refrain from the cause. The cause of inflation is a lack of goods, and anything that causes a lack of goods will have a tendency toward inflation. The people who made the regulations which caused these firms to go out of the production of ice were unwittingly doing that thing which was tending toward inflation. The people who unwittingly neglected to provide adequate sugar supplies in Canada were doing that which tended to cause inflation. The men who neglected to save the ewe lambs so that we would have plenty of wool in Canada were doing that which tended to cause inflation, and the people who caused the destruction of beef cattle all over western Canada were causing inflation and a rise in price without knowing it.
We need to look upon every dollar that goes into circulation as an agent tending toward inflation. As soon as it is out of circulation, it ceases to have that tendency. It is like a billiard ball that goes bouncing about a billiard table knocking anything that gets in its path and giving impetus to it. If you want to stop that billiard ball from doing more damage you must pocket it, and so with that one dollar bill. Get it into the bank, and then you will stop its inflationary tendencies. Every time it buys goods it tends to go into the bank. Suppose it is used to buy milk. The farmer who sells the milk will take the dollar and pay his debt that he incurred when he borrowed the money to produce the milk, thereby killing the dollar for that cycle so far as its inflationary tendency is concerned. If you want to avoid inflation, get as many goods and in as wide a variety as possible; get great productive capacity, and then the dollars which are out in circulation will find the goods and buy them and thus lose their inflationary impetus. Once people all recognize this simple, fundamental, common-sense fact, they will stop talking much of the foolish nonsense and indulging in much of the unjustifiable fears that we hear of to-day regarding inflation, and men will have a great deal more sense about money than many people seem to show in Canada. The government must take all possible care to see that there is plenty of goods in wide variety.

The Budget-Mr. Blachmore


Mr. DEPUTY SPEAKER:: Unless the
hon. member has unanimous consent to continue, I am sorry to say that his time has expired.


Richard Burpee Hanson: He is
moving an amendment.


Major James William Coldwell: It is a non-confidence
motion, I believe.


John Horne Blackmore: Yes; that is what it
is-a non-confidence motion.


Richard Burpee Hanson: Yes. The hon. member has all the time he wants.


John Horne Blackmore: Thank you, Mr. Speaker, for warning me.
If we are to be saved from inflation, in large measure we must look to our farming population in Canada. The minister has, in my opinion, been unfair to the agricultural portion of our population. He may consider that that is a severe thing for me to say, but I say it in all calmness, certain that I am right. He has been unfair to the agricultural population; he has slighted the farming population, perhaps without knowing it.


James Lorimer Ilsley: Not in the budget.


John Horne Blackmore: Oh, surely in the
budget there should have been some provision made for more generous treatment of the farmer, if the minister was aware the farmer was needing it.
It is a strange thing that the minister should neglect this important matter in his budget, because in speeches which he has delivered in the past he has made statements indicating that he was aware of the importance of agriculture in our economy and the bearing of agricultural production on the whole question of monetary policy, of our strength to win the war. May I read passages from a speech which he delivered before the Ontario Federation of Agriculture on March 17, 1942. I read particularly these words:
The important position of agriculture, indeed its central position, in relation to this whole policy of price stabilization, -was recognized from the very beginning.
Well, we certainly have no evidence that it was, from the prices that were given. I continue to quote:
As I emphasized in explaining the programme to the House of Commons, the policy could not be introduced until farm prices had been allowed to come fairly well up in line with other prices. We had waited until this had happened. By the time the price ceiling was put into effect the general level of retail food prices and of farm prices, with the exception of w-heat, had reached a fairly reasonable relationship with other prices.
Did the minister really believe that? If so, he was altogether misinformed by the men who advised him. I think the minister has some particularly doctrinaire and academic advisers. I think he should get some people from the fighting line of production, where they know something of the realities, to mix with these doctrinaire gentlemen who have taken university degrees and thus are supposed to be qualified to be the minister s advisers in these trying times. Again the minister says:
Let me assure you, however, that the arrangements by which the prices of various agricultural products are controlled have been worked out, and will continue to be worked out, by men who understand farm marketing problems.
These men may understand farm marketing, but they appear not to understand farm production.
On the prices board itself we have two senior representatives of the Department of Agriculture, and as foods administrator we have been fortunate to be able to secure Mr. Taggart, Minister of Agriculture of Saskatchewan, an outstanding authority on farming. Under lnm are many other experts on the marketing oi farm products to work out methods and details in consultation with producers and distributors.
I wonder how many on that board are practical farmers, who have got right out and known what it takes to produce a pig, what it costs to produce a bushel of wheat, who know the effort and expense it takes to produce a dozen eggs and keep on producing eggs.


Mr. GARDINER:: Mr. Taggart himself
does.


John Horne Blackmore: Then he must be the only one. There is no evidence that these men-and I do not know one of them except Mr. Taggart, whom I met once-are aware of the real needs of agriculture in this country. There are too many factors which they are disregarding altogether. I shall refer to one or two of them before I finish. Again I read: For most of us who are civilians that means one thing above all else now; to produce; to produce more rapidly, to produce more efficiently.
True. The minister never used truer words. It is to our superior productive power that we look for an overwhelming victory. We must make that power effective in the factory, in the mine and forest, and in the field. We must produce the goods and deliver the goods.
Utterly true. The one means of producing the goods is to make it pay to produce them. You do not need to go out and plead with farmers over the radio to be patriotic. If you make it pay them to produce goods, they will produce them, if you make it pay them so that they can live.

The Budget-Mr. Blackmore
Having quoted the minister's speech in March of this year, may I quote from his speech on the budget, as reported in Hansard at page 3592:
The war will not be won by disputing as to whether labour or agriculture or employer or employee should get a larger share of a swollen national income.


James Lorimer Ilsley: Hear hear.


John Horne Blackmore: Perfectly true, but the war may be lost by disregarding the economic exigencies of the whole process of production. It. may be lost, I say, by ignoring these things. Men will plead only so long. All that the minister and the men who are associated with him need to do is to read the remarks which were made by the leaders of the delegations who have come in the last three weeks to this government pleading for consideration. Read those statements and see how much hope there is in them. See how nearly ready these men appear to advise that men should stop milking cows and go and join the army. If, Mr. Speaker, we are not going to dispute about matters such as these vital ones to which the minister has referred, why all the prattle about equity? If we are going to pay handsome salaries to civil servants to take lucrative and dignified positions from one coast of Canada to the other, while we tell the farmer that he is supposed to produce for solely patriotic motives, I think the gross inequity will appear so grotesque as to arouse the disgust of ordinary men.
All one has to do is refer to the beef situation. I come from one of, I believe, the best beef-producing constituencies in Canada. What an amount of significance there was in the question asked this afternoon by the hon. member for Prince Edward-Lennox (Mr. Tustin) why the packers were permitted to lower the price of beef.


Mr. ROSS (Souris):: And a new quota going on to-morrow.


John Horne Blackmore: Never for a moment should that have been permitted. Who is governing this country? Is it the dominion government or the Canada Packers?


Richard Burpee Hanson: Ask Mr. Gordon.


John Horne Blackmore: If Canada Packers are able to dictate prices and decide whether this country is to have production or is not to have it, how long can we maintain that we are governing this country intelligently? How long can we maintain that we are guided primarily by the principle of an all-out war effort? I speak as one with experience. My father and my family have been producers of 
beef since I was old enough to know what a cow was. The beef prices in this country have been such as to ruin the beef producers; and now, at the very time when they have a chance to recover themselves, to improve their breeding stock, to get pasturage, to repair their fences, we have Canada Packers obtruding its unwholesome self into the picture, and the government sitting supinely by and permitting it, and then talking about governing the country.
We have to have discussions of farm income, and the discussion should have been on the floor of this house. I have avoided carefully saying anything in this plebiscite discussion which might embarrass the government, or might indicate that I did not sufficiently understand the situation. I will grant that there are things no man can understand, coming from the wholesome west here to Ottawa where we have to hear about the most pernicious political sculduggery going on. I have deliberately avoided saying much about this plebiscite, but it has been one of the astonishing things of my life that this government has devoted months and months to a discussion of the plebiscite and has never had any time to discuss the price of beef which meant food for Britain.


Richard Burpee Hanson: That is
playing politics pure and simple.


John Horne Blackmore: Playing politics, as
the leader of the opposition says, and then having the effrontery and hypocrisy to maintain their concern about an all-out W'ar effort, That is the thing that amazes me. I would say that the minister showed callous disregard of the interests of the farmer. He may not have felt it. but it was there and there was the insinuation that farmers should not busy themselves about incomes, about their share of the national income. But you can appoint deputy ministers at $9,000 a year!


An hon. MEMBER:: And take it away
from them in income tax. .


John Horne Blackmore: Yes, but you will be taking it away from the farmers in income tax if they get it. At any rate it would be a little comfort to them to be able to get it. The minister in his speech manifested little appreciation of the difficulties of the farmers. There seems to be a surplus of highly paid individuals going to and fro in Canada nowadays calling upon farmers to produce from patriotic motives. Why not help them to make their efforts yield returns? Here is an evidence of the attitude of such men who pose as financial and economic advisers to the people of Canada in this grave crisis. I quote

The Budget-Mr. Blackmore
from the letter of the Bank of Nova Scotia of March, 1942, from which I gathered a great deal of understanding that helped me to see through some of the government ways. I quote:
The price of wheat is a matter of national policy. Such policy must take into account the fact that, from a war-time standpoint as well as from a social standpoint, all sections of the population should receive enough income to maintain their health, their efficiency as producers, and their morale. But such policy must also take account of the fact that war is a time of shortage and that financial assistance to any group increases the demand of that group upon the diminishing supplies of manpower and materials available for civilian purposes.
The income of a deputy minister apparently does not have any effect upon the demand for materials, nor do the incomes of those officials appointed to lucrative positions across Canada apparently affect the demand for materials. But the moment farmers get an extra dollar, that affects the demand for raw materials for civilian supplies. Is it hypocrisy, or is it just unbelievable inconsistency and lack of intelligence?
To continue:
These two considerations balanced against one another, rather than the more obvious financial aspects, set the real limits on aid to prairie wheat farmers-
This indicates that the prairie wheat farmer must be content with only 90 cents a bushel for wheat, not because the government cannot pay more, but because the government is afraid to let the farmer have the money to spend. He is likely to hurt himself and Canada if he takes the money and spends it or pays off some of the tremendous debts that exist in Saskatchewan, or those great debts in Alberta, or pays his store bill or his doctor's bill which has been standing for ten years as a result of the depression. If the farmer takes the money for any of these purposes, he will cause inflation. Can you beat that in this time of war, in 1942? I continue the quotation: -or for that matter, to any other depressed group of the population.
That is an acknowledgment that the farmers are a depressed group, and we have the callous affirmation of the proposal to keep them a depressed group purely because they must not have the money for the reason that it would cause inflation. That statement comes from the Bank of Nova Scotia in its March, 1942. letter. That man should be made chancellor of one of the prominent universities in order to be quite consistent with what has gone on in the past in Canada.


Richard Burpee Hanson: He ought to be in the Bank of Canada.


John Horne Blackmore: Let us see what the farmers think about this matter. I will read what George W. Robertson, Secretary of the Saskatchewan Wheat Pool, has to say. He is a man who knows what the realities are:
In my judgment the establishment of parity prices for agricultural commodities represents the equitable method of price control for the agricultural industry, and that no price ceilings on farm commodities should be established below parity level. I would define parity prices for farm eomodities as the price which these commodities would need to realize in order to purchase as large a quantity of other commodities now available as it actually did during a specified base period, preferably 1926 to 1929. Ceiling prices should be established at levels approximately 15 per cent above parity prices to offset increased living costs recognized in government's labour policy by provision for cost of living bonus.
It will be answered that price parity has been established, but I will prove unchallenge-ably that it has not been established.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


John Horne Blackmore: Before the dinner
recess, Mr. Speaker, I was dealing with the budget and arguing that the farmers were not receiving a fair deal. I said' that the minister has slighted them, that he had disregarded their interests, that in his budget speech he had indicated a rather callous attitude toward them. Whether or not I was fair to the minister I am not able to say; we shall be better able to judge that by what he does in future, rather than by anything he may say now or anything he has done in the past. I was pointing out that the farmers generally were under a very heavy burden of debt, and now I wish to go forward with the argument as to whether or not the prices the farmers are now receiving are equitable. -
The minister indicated that the farmers were receiving reasonably good prices and a reasonably good income. But the minister, in saying that, disregarded the increased cost of the things the farmers buy. In order to show the truth of my statement I should like to read from the Searle letter of June 3, 1942. This letter is published by the Searle Grain company, which I believe is one of the best authorities on farming problems to be found in western Canada. I find the following remarks on page 1:
However, as was shown in an article in this letter on May 20, the price of wheat at the new 90 cent price will still be 31 per cent
The Budget-Mr. Blachmore

below "parity"; the price of hogs is now 15 per cent below "parity", of steers, 19 per cent above and of lambs, 11 per cent above "parity". ("Parity" meaning the present purchasing power of these products as compared with their same purchasing power over the same things farmers had to buy in 1913-14, all as shown by the Searle index.)
This indicates that on the whole the fanners are a good deal worse off to-day with respect to prices than they were in 1913-14. But may I pause here for a moment to deal with this whole question of parity prices. There seems to be abroad both in Canada and in the United States the idea that if we could' get the farmers back to the point where they would be getting the same income as they were getting in another given period of time, say between 1909 and 1914 or between 1926 and 1929, or some other period, all would be well with us and we would have no further need to worry about the farmers. I do not believe there has ever been a time in this country when the farming population has had a fair deal. There has always been the grossest disparity between the prices farmers were able to obtain for their products and the prices of things they had to buy. So to say that prices have returned to parity is not enough. We must place the farmers in a position in which they will be able to get as much for their effort, as much of the goods which other people produce and which the farmers have to buy, as other people are able bo obtain of the goods which the farmers produce and sell. Then, and not until then shall we have something like a balanced economy with respect to the farming population of this country.
May I now read another statement from the same Searle letter of June 3, 1942;
The Searle index of the cost of things farmers buy (147 items), now stands at 152-3 (1913-14 equalling 100). This means that these things cost farmers of the west at the present time 52-3 per cent more than did similar items of the same qualitv in 1913-14. (These costs have risen 16-3 per cent since August, 1939.) The price of wheat is now 10-5 per cent lower than it was in 1913-14. The purchasing power of a bushel of wheat is now, therefore, only 59 per cent of what it was in 1913-14.
When it is remembered that such a large percentage of the farmers of Canada, and particularly of the farmers of the west, are mainly occupied in the production of wheat and are scarcely in a position to go into any other kind of production, I believe such figures must give any thoughtful man cause for serious concern. But there are other matters which go still further in support of the statement I made. I have in my hand the booklet issued by the Searle Grain company, setting forth in great detail the costs of the 147 items which are used

by the company in compiling their index, indicating the manner in which the prices have increased by years from 1913-14 up to the present time. From this booklet let me cite a number of facts which I think should impress the members of this house. With regard to twenty-eight items of household equipment, taking the 1913-14 level as 100, it is true that whereas those items of household equipment were priced at 100 in 1913-14, prices had risen in 1926 to 165 and had risen still further in 1941 to 175. Of fifty-three items of farm equipment which were priced at 100 in 1913-14, in 1926 they were priced at 149, and in 1941 at 156. Of twelve items of farm machinery, taking the price at 100 in 1914, we find that price had risen by 1926 to 164, and bv 1941 to 187.
Nothing further should be necessary to indicate that even if it were shown that the prices the farmers are receiving had returned to the 1926 level, that in itself would not indicate that the farmers were receiving an adequate return having regard to the price of things which they have to buy as compared with the price of things they are producing and selling.
There were other matters which the minister disregarded, and which are likely to be disregarded by such good men as Donald Gordon and others, men of good-will but who simply have not had time, in the great urge of their responsibilities, to look into all the facts, and who have been advised by men who also are not familiar with the facts. The matters which might be disregarded include such things as these. Many of the farmers, as I indicated in my remarks before the dinner recess, have been forced out of live stock, so that now they do not possess the breeding stock which would enable them to go back into the production of beef or other commodities which might be more profitable to them. They have been through a depression and a long series of very bad years. As a result they have not the capital with which to go back into live-stock production, even should they wish to do so. Then in a great many cases they lack equipment, and in many more cases they are hopelessly in debt. They are simply hampered at every turn. Furthermore I believe the minister has overlooked the increased debt of the farmers, to which I referred at an earlier stage of my remarks.
Before I go on to the last aspect of the budget with which I choose to deal to-night, I wish to read to the house a line or two that will indicate something the minister might do in view of the precedent he has set in this budget.
The minister has forced loans from a number of people, and is undertaking to pay them

The Budget-Mr. Blackmore
only 2 per cent on the money he is forcing them to place with the government. He makes the promise that he will return that money at the end of the war. There are gentlemen who lent money in the past throughout the west, and perhaps throughout the whole of Canada, at interest rates running up as high as per cent. It was largely as a result of those high interest rates that Alberta was reduced' to the state of financial impotence in which the Social Credit government found her in 1935. And it is largely because of that state of financial embarrassment that so many things have occurred under that administration which have aroused the indignation of so many people in high places in Canada.
I should like to read a passage from an editorial appearing in the Edmonton Bulletin of Monday, June 29, an editorial which I believe will need no explanation or amplification:
The high interest rates on public and private debt in Alberta is nothing short of a scandal. Alberta was faced in 1935 with bankruptcy, due largely to paying ruinous interest rates. The drastic action by the Alberta government in cutting in half, to two and a half per cent, the interest rate on the provincial debt was the only action possible at the time, unless social services were entirely abandoned, or by pyramiding a huge increase in debt by funding the unpayable interest charges.
Edmonton is paying about $500,000 yearly in excess interest charges. And still we hear the suggestion to raise street-car fares and curtail much needed civic improvements.
The place to direct our demand for action is where action is possible-the hon. Mr. Ilsley, Minister of Finance, has absolute power to remedy this deplorable situation, which is a positive menace to the public interest.
When Mr. Ilsley in his new budget compels Canadians to lend part of their weekly wages at 2 per cent interest, why can he not compel our financial corporations to charge only reasonable interest rates.
Edmonton is paying 150 per cent more on a debt of $26,000,000 than what Mr. Ilsley declares to be a fair rate of interest.
Canada is fighting for its very existence against Hitler's new order of world slavery, and cannot continue to support the "high interest racket" if she hopes to make an all-out war effort.
One might suppose that that was from a Social Credit paper; but it is just a good, hardheaded Liberal paper from Edmonton,


James Lorimer Ilsley: But does nothing depend
upon the term during which you have the money? Two per cent is a fair rate for a short term.


John Horne Blackmore: If this war lasts for
ten years the minister will not return the money until after ten years, and the 2 per cent will not be increased, I say to the
minister that 2 per cent is enough. And 2 per cent is also enough for these other gentlemen to have. If they need any more than the 2 per cent, then I suggest to the government that it direct the Bank of Canada to refund the money. Let it give those men back their money, and then let the people of Edmonton have the money at the 2 per cent rate. It does not make sense in 1942, for a people to be charged 5 per cent or 6 per cent on money, while other people are in the throes of war, and having to suffer in order to pay that interest.
I should like now to turn to another aspect of the matter discussed in the budget speech. I would point out that things should be ever so much better than they are indicated in the budget. Again I am not casting any reflection upon the minister. In view of the circumstances in which he found himself he probably did the best he could. So long as he holds to the ordinary debt finance system he is going to be forced to bring down more and more onerous budgets, year after year, until the people of Canada are completely crushed under the enormous structure. It is not so serious now perhaps when the government is spending huge sums of money for goods which are to be taken overseas and destroyed. But just as soon as the country has returned to an economy wherein it consumes what it produces, then there will be a collapse. The object of this group is to adjust our affairs before the time comes for that collapse.
I suggest that the budget could be a victory budget, instead of a budget of defeat, as it is to-day. Notwithstanding all that is going to be done with the money that is raised; notwithstanding the splendid effort Canada has made in the war-and I have no thought of disparaging its vast effort-Canada is not by any means doing what she is capable of doing, judged from the point of view of materials, men, and organization.
If business methods were applied directly to Canada's financial and public affairs we could have a great improvement. May I read to the minister something from his budget speech which possibly he hardly realized was so significant, but which I am going to point out to him as being very significant. This is what he said, as reported in Hansard at page 3578:
We can probably again draw on inventories of civilian goods but by how much I do not know, for information as to inventories is very deficient.
No expression could have been used on the floor of the house which would condemn the government more completely, beyond question, than that statement. The very first
*3812
The Budget-Mr. Blackmore

thing a businesslike administration should do is to discover what inventories are from one end of the country to the other. When we had that make-believe registration, that child's-play window-dressing in 1940, there should have been a registration of every aspect of Canadian public life, a complete registration "of Canada's economic set-up. People will ask: How could it have been done? It could have been done. How is it that the bureau of statistics accomplishes so much by way of gathering statistics? Is it to be supposed that the bureau of statistics could not have been enlarged and specialized so that a complete inventory of everything in the country would have been prepared. Had that been done, the government would have been able to tell at a moment's notice- the minister himself, or anyone in charge of* his department-just how many shoes there are in stock from one end of Canada to the other, just how many pounds of butter there are, how many suits of clothes there are. Of course it could have been done. That would be a first essential in a businesslike administration in any country whatsoever, and especially in a country like Canada.
Without delay, the government should at once obtain an accurate and detailed inventory of all goods on hand, from coast to coast. Let it inquire into the amount of food, clothing, shelter, available fuel, educational facilities, available medical and dental services. Let the people be informed as to the available supply of those goods and services. The government would then be in a position to tell how much money it could put into circulation, without causing inflation. Then it would be able to tell how much in the way of goods is available for consumption, how many pairs of shoes a family may have, how many pairs of shoes the province of Alberta may have from Canada's supply, all matters which are vital to any government, where the money situation is going to be managed properly.
Then the government should know the number of non-Canadian goods, goods we receive from Great Britain, the United States, South America, Mexico and other countries.
We should know the number of goods in sight. For example, sugar is produced in my constituency. The government should know exactly the amount of sugar which it is estimated will reach the market this year. Probably it does know that-very likely, in fact, because there is a sugar controller. Then it should have the same information with regard to every commodity in Canada.

It should know the productive capacity of the country. The government probably does know the productive capacity with respect to sugar and a few other commodities, but it should know' the productive capacity with respect to every other commodity in. Canada. For that productive capacity has a direct bearing on the question of inflation, the question as to whether money must be taxed out of circulation, so that people may be kept from buying goods, and the question as to whether the minister should have forced loans, or should spend money.
The government, I say, should know the productive capacity of the country. It should know the mechanical productive capacity: the number of machines for manufacturing cloth, for example, and the number of machines for the manufacture of other commodities. It should have the extent of our transportation facilities. The government should know the extent of our storage facilities. This information should be right at the government's finger-tips. All that should be necessary in order to obtain the information is to touch a button. It could be done. The government should know, too, in great detail, the human material available in the country.
The government- should know the potential additional productive capacity. They should know, for instance, how much sugar could be produced, and how long it would take to get into that sugar production. They should know how' many factories it would be necessary to have, whether they could get the factories and all that sort of thing. They should know our honey producing capacity. They should know our wool producing capacity. They should know our dairy producing capacity, our fruit producing capacity and the same with all other foods. We should have full information as to the resources of Canada, both material and human.


Thomas Vien: The hon. member's time has elapsed.


John Horne Blackmore: I have moved a vote of want of confidence in the government, and my time is unlimited.


Thomas Vien: I have taken that into account. The hon. member started to speak at twelve minutes to five, and his amendment was presented at- twenty minutes to six. He has now been speaking for one hour and thirty-seven minutes. The hon. member spoke for forty minutes on the motion and fifty-seven minutes on the amendment.


John Horne Blackmore: There is no time limit on a member -who has moved a vote of want of confidence in the government. If the leader

The Budget-Mr. Blackmore
of the opposition (Mr. Hanson) had moved this amendment, he would have had unlimited time. He did not move it; so I moved it and I have unlimited time.


Mr. NEILL:: It is a well known fact that there is no time limit on an hon. member moving a vote of want of confidence in the government. I think the leader of the government will confirm that.


Thomas Vien: Has the hon. member the unanimous consent of the house?


John Horne Blackmore: I do not need it.


Mr. STIRLING:: I draw attention to the fact that the hon. member does not need unanimous consent. Surely he has unlimited time when he moves a vote of want of confidence.


Thomas Vien: Very well, I am satisfied.


John Horne Blackmore: There should be a complete inventory of the needs of Britain and the needs of Russia. Three or four times I have asked on the floor of this house to be given information as to how much of a given commodity the government wants. I do not believe the government has any definite conception of what it wants in the case of most of the major commodities which are required overseas by Britain and Russia. The government is so much in the habit of following the principle of laissez-faire that it cannot get out of the habit even to fight a war. It just has to let things drift. I think that situation should be remedied, and remedied at once. The government should determine what will be left for Canada after Russia, Britain and the other allies that require assistance have been supplied. Then after that it should determine what Canada's consumption could be.
There is something else that has been neglected by the government in connection with all these matters-the cooperation of the provinces. It is conducive to bureaucratic and centralized control in Ottawa when the wartime prices and trade board undertake to govern everything from Ottawa. They will find that in each of the provinces of the Dominion of Canada there is a government which is as much concerned about keeping prices down as ever the- government at Ottawa is. Those governments could be of great assistance to the wartime prices and trade board and to the ministers of the departments in making up inventories of goods and in doing many other things which must be done in this time of great peril. It would add greatly to our financial and economic stability.
Then the provinces could be divided into regions, and the regions could take care of these matters. The municipalities could take care of many things. I find that the cities are greatly concerned about prices within their own borders. They are just as vitally concerned as Donald Gordon or any other person in Ottawa in the prices of commodities. Surely we can count on the cities to assist most heartily and effectively in the administration of the policies of the wartime prices and trade board. I suggest that the government needs to decentralize its responsibility at once and bring in a great number of people to assist. It will have no trouble in doing that. The Minister of Labour (Mr. Mitchell) is in his place to-night. He has mentioned that he has found the assistance given by the provincial governments and other bodies most excellent because they are all vitally interested in this war. They are not foreign countries; they are Canada, they are British. Why try to monopolize all the control and management in Ottawa? It just does not make sense. It is contrary to the spirit of the British North America Act. It is contrary to democratic procedure in any British country, and especially in a country like Canada.
After having obtained, with- the cooperation of the provinces, an absolutely accurate inventory of the goods on hand and the goods which could be put on hand at a given time, the next thing the government should do is to determine how much money could be absorbed by those goods and by services such as schools, dental establishments, medical establishments, tranportation facilities and all that sort of thing. The government should determine how much might be paid into debt and insurance before it fixes a tax structure such as the minister has fixed by this budget.
The government should next find out the prices which are necessary to stimulate the desired maximum production. I have said time and again that if you give a man a fairly remunerative price for his eggs, or any other commodity, I care not what it is, you do not have to go on the air and plead with him to produce that commodity. You do not have to plead with any particular producer to produce something that will prove profitable to him. As I say, the government should determine the price which will stimulate maximum production. If it is prepared to maintain that price, it will get the maximum production which it desires.
There is one more thing that ought 'to be done, something to which I referred1 this afternoon. Let us say the government is trying to determine the price that ought to be paid for

The Budget-Mr. Blackmore

apples. There is no one in Canada who knows more about that price than the apple grower. Why not bring him into consultation instead of having a lot of doctrinaires who have probably never seen an apple orchard.
The next thing to do is to determine the wage rate which is necessary to stimulate maximum production and to make the labourer feel happy. When you are determining what your wage structure will be you should consult the workers; they know.


Mr. MITCHELL:: That is what we are doing.


John Horne Blackmore: I realize the minister is doing it. I am not sure but that he is the most progressive minister in the whole cabinet, and I hope the others prove themselves able to learn.


James Garfield Gardiner: While we are correcting the hon. member, may I say the apple growers are handling the apples.


John Horne Blackmore: The minister can
hardly conceive how much reassurance he has given me by this evidence that he has finally got on to what is the right thing to do. That is the policy that should be followed. The people who are producing know what is necessary.
There is one more thing that should be done. An adjustment should be made in order to bring agricultural purchasing power, labour purchasing power and the purchasing power of each and every one of the other groups into harmony so that there may be balance in the economy of Canada. In his telegram to the Minister of Finance of October 14, 1941, Mr. H. H. Hannam suggested this and indicated quite strongly that there had to be balance in the Canadian [DOT] economy. Agriculture is only one of the groups. The other primary producers are . also groups; the wage-earners and merchants are also groups which must be brought into such a state of prosperity or spending power that there is a balance throughout the country.
The next thing, after having determined on the price, is to advance credit to producers who would produce and also to students who would be prepared to learn. I commend the government for having helped, through the Department of Labour, to train boys and girls for specialized work. This policy should be followed throughout the country. Wherever there is a young man who is qualified to become a highly skilled technician or workman he should be discovered and the government should advance credit so that he might be able

to go on and perfect himself, because that young man or workman can be made into a great asset.	.
Then there should be price subsidies and wage subsidies, and price discounts, pensions and other allowances. There should be subsidies for freight rates where necessary, and discounts of the prices of secondary products to enable farmers to buy.
People will ask: "Where are you going to get the money to do all this?" The members of the house know full well my stand on that question.


Mr. MacNICOL:: We do not. It is not clear to us yet.


John Horne Blackmore: Then I am going to say just a little bit more about it. The whole amendment which I have moved this day is centred around credit and currency management. In a country such as Canada it is possible to have a certain amount of credit and currency out in circulation; the amount of credit and currency that can be out in circulation depends upon the goods and services available, upon the consuming and producing power of the country. The task of the government is to determine by scientific means how much credit can be put into circulation without inflation, and then to see to it that that amount of credit and currency is put into circulation. The credit and currency should belong to the government, be under the direction and control of the government, and the direction and control should be exercised scientifically.
If the government wants a farmer away out in one of the Battlefords, for instance, to produce sheep, and the farmer has not the money to produce the sheep, the sensible thing for the government to do is to see that the farmer gets the money with which to produce the sheep, and to show him where he can buy the sheep. Then, when he produces the wool it becomes an asset to the country. If a similar principle were applied over the whole economy of Canada, the improvement in the national economy, in the wealth and strength of this country, would be almost inconceivable; I am sure of that. This whole matter of the possibilities of currency and credit management has been neglected by the minister up to the present; it is time he changed his ways in that respect.
I am going to give just one little illustration to show how this thing could be worked out practically. In Britain during the last war they created a credit instrument called the Bradbury and 354 million pounds of Bradburys went into circulation in Britain during the last war. Hon. members who are interested in a

The Budget-Mr. Blackmore
study of the whole matter will find it excellently dealt with in "Currency, Credit and the Exchanges," by William A. Shaw, one of the best authorities on matters financial in the whole of Britain. As I said, 354 million pounds of Bradburys were distributed among the people. They were paper, treasury bills, nothing but paper currency, but they were accepted and they became legal tender. They helped to finance the war, and through them Britain won the war and would have won the peace had not evil counsels prevailed causing the discontinuance of the Bradburys some time after 1920.
We can think of saving certificates becoming legal tender just as easily as a five dollar bill. The savings certificates could be made not legal tender until a year from now, or two or three or four years from now. They could be kept out of circulation, "frozen" as it were, until the government saw fit to bring them into circulation by the simple device of declaring them to be legal tender or to be negotiable. The Bradbury experiment could be duplicated in Canada with great advantage. If we had a Canadian Bradbury and we paid the farmers the extra price necessary on his wheat with Canadian Bradburys or savings certificates; if we paid in Bradburys an extra price on any commodity that we chose; if we paid a subsidy on wages or on freight rates to bring down the cost of transportation of western wheat from the prairies to Ontario or Quebec or Nova Scotia or New Brunswick, the Bradbury or the savings certificate would then be being used as a credit instrument.
People will say immediately: "What good will all these things be to the companies concerned?" Well, what good are the savings certificates? What good is a bond, apart from the fact that it yields interest? A credit instrument such as the Bradbury or the savings certificate used in this way would be a use of the nation's social credit.
The number of Bradburys which could have been in circulation in Britain during the world war depended upon the number of goods and services available for purchase, together with the amount that could be produced. With price controls, the number of Bradburys could have been increased.
In Canada a considerable number of savings certificates could be put into circulation. What good would that do? Suppose the farmer received, at the end of the year, a 1500 subsidy in savings certificates, or in Canadian Bradburys if we decided to issue such a credit instrument. He could then use that credit instrument to pay off, say, a portion of a mortgage. The government could rule that 44561-241 i
the mortgage companies, but no other companies, could accept the Bradburys this year. That would enable the farmer to use that $500 immediately to pay off some of his debt. If a similar principle were applied throughout the whole economy of Canada, I think we would be astonished at the amount of debt that would be repaid and the tremendous amount of interest that would stop accruing, and surprised also at the general improvement in well-being and strength of the Canadian economy.
If the government chose to issue a kind of Canadian Bradbury or savings certificate it could say: "These certificates will not be transferable until the goverriment so proclaims by order in council". Then, if the government decided that it was unsafe to have that money put into circulation until three or four or five years after the war, it would be in a position to rule accordingly. The government would decide when they should be put into circulation. It need not be worried at all about inflation. If such an accumulation of purchasing power were put into the hands of the people as would result from the application of such a policy as I have indicated, we would have a fine guarantee against a post-war slump. When the war is over and we cease to spend money like water all over the country buying munitions, and the factories immediately tiy to transform themselves into peace-time production, purchasing power in many ways will at once cease to be distributed, and there will be a shortage of purchasing power, which will cause a shortage of buying, which will tend to cause unemployment and to bring on a depression. But if the government, knowing that there is a great deal of passive purchasing power in the hands of the people at this time, determined to use it by declaring that Bradburys or savings certificates, or whatever the credit instrument might be called, should be negotiable or legal tender at a given time, it would then have a reserve of purchasing power upon which it could draw to remedy the situation resulting from a falling-off of purchasing power following the making of the peace.
I wish to point out just one or two more things to hon. members. I am deadly in earnest in this matter; I am positive that there is a solution here, and that no solution can be found without some principle such as this. I crave the indulgence of the house to read into Hansard some bits of literature which I read into Hansard on May 25, because it is possible that some hon. members who are now here were not present when I read these passages before. I quote from a book called "Economic Tribulation", by Vincent C. Vickers, of the Vickers munitions corporation.
The Budget-Mr. Blachmore

To give an idea who Mr. Vincent C. Vickers is, I will read the following paragraph from the introductory note:
Vincent Cartwright Vickers was bom on 16th January, 1879, and educated at Eton and Magdalen College, Oxford. He was a deputy lieutenant of the City of London, a director of Vickers, Limited, for twenty-two years, and a director of the London Assurance from which he resigned in January, 1939. In 1910 he was made a governor of the Bank of England, and resigned this appointment in 1919. Eater, he became president of the Economic Reform Club and Institute.
I submit that any hon. member must be rather impressed by the record that this man has. It is 'not likely that a man of his calibre and his standing would recklessly espouse any untenable theory. In this book, which was finished on his dying bed, and published in 1941, and in which undoubtedly he put the very best things he had to say, he makes this reference to democracy, which I was discussing for a few minutes this afternoon. I then maintained that this budget is a step toward the destruction of democracy. As some hon. members might consider that I was extreme in saying that, may I support what I had to say on that occasion by the following quotation, which appears on page 66:
Our democratic system and our existing financial system can no longer live together; one of them must give way to the other.
And, Mr. Speaker, the one which is giving way in this country is democracy, and it is giving way very, very fast. I will read from the closing chapter of the book, in which the author offers suggestions which in his judgment are necessary for the preservation of democracy and the restoration of prosperity, peace and hope in the world, and particularly in his own beloved country. I read on page 74:
1.	State control and state issue of currency and credit through a central organization managed and controlled by the state.
In this dominion we could use the Bank of Canada. The minister told us not long ago in debate that he was using the Bank of Canada, but it was astonishing, I believe, to every hon. member-it certainly was to me -what meagre use he had made of its facilities. He had touched that privilege as though he was afraid of it. If he can use the Bank of Canada as a means of getting money without cost, as a debt to ourselves as a government, why not use it on a far more generous scale than that on which he has so far used it? If he feels that the financial stability of the Bank of Canada is not great enough to enable him to use it to help finance this war; if he feels that the responsibilities of that institution are so great, because of the foreign exchange control board and other

burdens upon it, I suggest that he establish in Canada a currency commission. Such a commission would not be seriously different from what existed in the last war. I pointed out to the house on a previous occasion that $26 million were printed in the last war by the treasury board for the cabinet and the Minister of Finance. That money was printed and used. Hon members will remember that up to the time of the organization of the Bank of Canada all the money of Canada was called Dominion of Canada bills, was printed and issued by the dominion treasury, and was,good money-as good as ever it has been since the Bank of Canada printed and issued it. To say that such a board cannot be set up in Canada to-day is to talk arrant nonsense. If the government feels that the Bank of Canada is not in a sufficiently stable position to issue this money, I suggest the appointment of a credit and currency commission whose business it will be to discover the capacity of Canada to absorb currency and credit without inflation and then issue that currency and credit and apply it scientifically in accordance with the needs of the people.
The next suggestion made by Mr. Vickers in his book is this:
2.	Stabilization of the wholesale price level of commodities.
He does not say how it is to be done. It can be done by a monetary technique, by price subsidies and discounts, as I have explained several times on the floor of this house.
That is to say, a fixed and constant internal purchasing power of money; so that a pound will buy to-morrow what it bought yesterday; an honest pound, not a fluctuating pound. And this can be done by so issuing and regulating the volume of available credit and currency that it shall at all times be adequate to permit of the purchasing power of the consumer being equated with the volume of production; not by limiting the purchasing power, but by firstly increasing purchasing power more in proportion to the productive capacity of industry.
Again:
3.	Fixation of foreign exchanges by foreign exchange equalization funds, and agreement with empire countries and all other countries willing to fall into line; and, once this was accomplished, the removal or diminution of trade barriers which to-day protect the countries from the results of a bad monetary system.
I pause there just a minute to point out, what I believe will be interesting to hon. members, that this writer says we have trade barriers because we have a faulty monetary system-which indicates that if we get a sound monetary system we can demolish trade barriers, greatly to the benefit of the people. I am not advocating any such set-up as will endanger our industries. We must have our

The Budget-Mr. Coldu'dl
industries in Canada; but we do not need to protect them by trade barriers; we can protect them with such subsidies as are necessary to enable them to compete successfully, and we can subsidize them by the creation of credit and currency which we are able to base on our goods-and-services-producing-power, which again is dependent upon our resources in materials and in men.
4.	Aliy additional supply of money should be issued as a clear asset to the state; so that money will be spent into existence, not lent into existence.
5.	The fluctuating quantity of gold lying in the vaults of the banking system should never be permitted to govern the volume of credit and currency needed by the country.
6.	The elimination of slumps and booms; and more direct procedure for eliminating unnecessary poverty.
7.	The abolition of the debt system where all credit is created by the banks and hired out at interest to the country.
May I in closing, Mr. Speaker, point out that there is no need for despair or for a defeatist attitude. This country is going to be richer after this war than ever it was before, except for the loss of precious men and women killed and maimed; for the riches of a country are to be computed in terms of the
goods-and-services-produeing-power of the
country. Every nation at present at war will be richer, excepting in those countries where productive power is being destroyed. The world is on the verge of a greater era of material prosperity than mankind has ever conceived of in its wildest dreams, and the only thing which can keep us from crossing the threshold and entering the realm of that prosperity is our own stupidity, our inability to adjust ourselves to the conditions of an age of plenty, our continuing to think we must carry on the affairs of this country in a power age with a dogcart or an oxcart financial and economic system.
What the government of this dominion needs above all things to-day; what the countries of the British empire and the united nations need above all things, is financially speaking, to turn and face the sunrise and cease to worship the sunset. Having done so; having modernized their economic and financial system, they may go forward with complete confidence; for our productive capacity far exceeds that of our enemies in combination. With the help of Providence, and our own good hard work, the work of the men and women whom we shall be able to employ as a result of a revised financial system, we shall struggle through, and under God we shall win, not only during the war but during the ensuing peace.
Mr. M. J. COLD WELL (Rosetown-Biggar);
I do not propose to speak at any great length to-night, because I believe that we should endeavour as far as possible to shorten this debate and to discuss in committee the various matters which we shall consider in connection with the minister's proposals. I am therefore going to confine my remarks within the shortest possible compass.
With what the hon. member for Lethbridge (Mr. Blackmore) has said regarding the condition of agriculture both now and in past days I am in thorough accord. I do not propose to follow him and to discuss the other proposals that he has made; but, as I understand it, we are discussing a budget designed to restrict purchasing power among the people, and I think any policy which would defeat that objective would probably bring disastrous results upon the country at the present time. I, too, believe that we ought to plan our productive effort and our purchasing power in relation to one another; but to think that the mere issufe of more money will cure the ills of society, or that the mere manipulation of currency, credit and money will bring us into some sort of utopia, is to follow something of an illusion, a money illusion, if I may put it in that way; for, after all, goods and services, not monetary tokens, are the real wealth of a nation, and if mankind can once grasp that fact, I, like the hon. member for Lethbridge, believe that when this war ends we can be, if we will be, better off, happier than we have ever been in all our history.
I congratulate the Minister of Finance (Mr. Usley) upon his able presentation of the financial position of the country. It was, I think, admirably done and he deserves every credit for doing such a splendid job. As a tax measure his proposals move in the right direction. I think they lag toward the top and fail to reach the objective that I should like to have seen reached. I think they fail, too, in another significant respect, and that is in the realm of social security. Again we have a war budget, a budget that contains no additional measures of social security, nor any additional help for the social security measures we now have in effect Old age pensions are left where they are; dependents' allowances are in the same position; veterans' pensions are too low with the rising costs of living which we have experienced, and I think that even in war time the budget should have recognized these needs. Indeed, I believe that if we are going to maintain the morale of our people, not only have we to consider the necessities of the aged, of the
The Budget-Mr. Coldwell

dependents of men overseas and of a health programme for the nation, but we ought to provide something of a minimum standard of life for the people of the country. I should like to have seen a national minimum adopted and a ceiling placed on incomes, not as a political gesture but as a very real aid in our war effort, because I believe that while some sort of ceiling is being established now by means of heavy income tax in the higher brackets, the gulf between low incomes and those that remain high is far too wide.
The budget outlines stupendous expenditures-some $3,500,000,000 for the war alone; but in my opinion the Canadian people will not object to these expenditures because this war must be won, and in order to win it we have to produce the instruments of war. We have to arm the men who are going to the battle zones, and that means that we have to provide for the financing of the instruments of war and the men who>
will use them. The total budget, I say, is stupendous. With our peace-time expenditures it reaches almost the fabulous sum of $4,000,000,000. In spite of the very heavy increased taxation, just over 50 per cent raised by taxes, we have to Taise a very considerable portion by way of loans. Few will object to the higher income tax, because after all the income tax is probably the fairest way of assessing taxation in a modem country. Few will objbet to the increased income tax, provided they are convinced that these increases are made on an equitable and just basis.
In examining the minister's proposals in that regard, I was struck with the fact that the people in the low and middle brackets will feel the pinch most; for let us keep this in mind: it is not what you pay out in taxes that really counts; it is the amount you have left after your taxes have been paid that counts. On a $2,000 income the increase in tax and compulsory saving is over 250 per cent. That is a tremendous increase for a family man, we will say, in the $2,000 bracket to take all at once. In the $3,000 bracket the increase is slightly over 300 per cent. In the $5,000 bracket it drops; the increase is 120 per cent; and in the $10,000 bracket the increase is 65 per cent, while in the $50,000 bracket it is 30 per cent. The increase above $3,000 diminishes on a percentage basis as the income increases. I think I know the reason why the increase is so great in the middle brackets, but the impact of the present budget in the income tax field will be greatest in these moderate income groups. Presumably, of course, this is to restrict purchases of nonessential goods by the largest group of wage-earners and salary earners who can be reached

through the income tax. I know the minister can make a good case for the taxes, because he will say that the reduction in purchasing power in these fields is to prevent buyer competition, to prevent price inflation, and ultimately to release material and labour for war purposes. Those are good objectives, but let us not forget that the impact upon this group of middle-income earners is going to be very great indeed.
The introduction of compulsory saving is also a step in the right direction, following as it does to some extent the British plan, though I believe it is rather more severe than anything the British have adopted as yet.


Humphrey Mitchell: You pay back more.


Major James William Coldwell: Quite right. A few moments ago the hon. member for Lethbridge remarked that the interest on these compulsory savings, which of course are in the nature of compulsory loans, is to be 2 per cent until paid, and it is anticipated that the loans will be repaid at the end of the war. Here, I think, is the defect in the minister's budget. Where is a compulsory loan made in connection with large accumulations of wealth, held either by individuals or by corporations? The owners of these accumulations will be induced to lend their money to the government at a rate, if the term is longer, in excess of the 2 per cent which will be paid those who are handing over their compulsory savings to the government.


James Lorimer Ilsley: But we take 20 per cent of the excess profits at no rate of interest.


Major James William Coldwell: I will deal with that in a moment. I would point out that you are not touching the same people with your excess profits tax as I am talking about at the present time. I am talking about corporations, trust companies, insurance companies and individuals who may have large accumulations of wealth. They are not touched by the excess profits tax; we have no compulsory loan on those accumulations of wealth, and I think that is a defect in the budget.


James Lorimer Ilsley: If the hon. gentleman will permit me, on their incomes we are much more severe than on the smaller incomes, in that we pay them back so much less.


Major James William Coldwell: Quite so, but I am not talking about individual incomes. I am talking about persons who have large accumulations of wealth, not income; and I am talking about corporations which may have accumulations on hand. I believe justice demands that where there are such accumulations, we should levy on them compulsory loans on a

The Budget-Mr. Coldwell
graduated scale, according to their ability to contribute. The compulsory savings plan is, in my opinion, a good feature; but, like the leader of the opposition (Mr. Hanson) this afternoon, I would say that I think it is bound to interfere with the sale of victory bonds in the future, and with the sale of war savings certificates and stamps. It will be impossible for the average man to pay the very high income tax, plus the compulsory saving, and also buy victory bonds and war savings stamps or certificates. Therefore I think the government and the country are going to face a very difficult situation in financing the amount which the minister indicated during his budget speech would have to be financed by way of loan, though I certainly wish him the very best of good fortune in endeavouring to raise money in that way. The amounts in the savings accounts of small depositors will be reduced, of course, and, as I say, that will make it difficult for such people to put their savings, as they have been doing for the past year or so, into various forms of war loans.
The minister mentioned the excess profits tax. It is raised to 100 per cent superficially, but in reality it is increased only 5 per cent, because 20 per cent will be refunded after the war. I think this is insufficient, particularly since the minister admitted in his budget speech that companies have been retaining substantial amounts for reinvestment in working capital, expansion and so on. I think, if I may say so, that this admission on the part of the minister in his budget speech is a vindication of all we have said in past months with regard to the necessity of a 100 per cent excess profits tax; and an answer, if I may say so, to the hon. member for St. Antoine-West-mount (Mr. Abbott), who a couple of weeks ago took me to task for picking out, as he said, a group of profitable companies. I may say I did not pick out a group of profitable companies; I took them more or less as they appeared in the newspapers, and somewhat at random, because they were war production companies. I say the determination of the government to impose this tax now indicates that the demand was justified when we made it some time ago.
With regard to the 20 per cent to be refunded, I noticed that this afternoon the leader of the opposition spoke at some length on this feature of the excess profits tax. He said that it would be a good thing; that it would enable industry to return to its normal way of doing things; that it would provide employment after the war, and so on. But I should like to point out to the house that the 20 per cent is to be refunded unconditionally.
There is no obligation upon the company which receives the 20 per cent refund in connection with the excess profits tax to do anything in particular with that money. It could, if it liked, cut a very substantial dividend melon after the war is over. This refund could, therefore, simply be deferred profits returnable to the shareholders when the war is over. If we are going to justify the return of this 20 per cent to industry when the war is over, that return should not be unconditional. It should be conditioned on industry using that amount in the transition from war-time to peace-time operations. Then this 20 per cent refund might be justified. Unless that is done, however, I would point out that we are simply setting up a fund out of which, at some future date, some nice, juicy dividends may be paid, and this would defeat the very object of the 100 per cent excess profits tax.
The leader of the opposition spoke of our little group and said he thought the worker was most interested in returning to his job when the war ended. He spoke at some length of the necessity of producing jobs for our men. Yet, as he was speaking-and I do not say this unkindly

I remembered that to-day is an anniversary. On June 30, 1935, in my home city of Regina, there were some 1,700 or 1,800 young men who were endeavouring to come to Ottawa to place their sad case before a government of which the leader of the opposition was then a member. I recollect meeting those boys in Regina and moving among them. In the number were university graduates and high school students. There were boys very much like my own boy at the time. What happened to them on that 30th day of June? In a peaceful meeting on the market square they were showered with tear gas bombs. A riot occurred, and one of our city detectives was killed.
Let us not allow that kind of thing to happen when this war is over. I have looked around the city in the past forty-eight hours and have seen the flags flying. The city is decorated in honour of those men who are now overseas-and I am glad the country is honouring those boys. Yet let me say that the greatest honour we can do them is to consider immediately how we may best give them an opportunity of living decent, comfortable lives when the war is over. To my mind, the flags are out of place until we have done something of that kind.
I said a few moments ago that the war will need every dollar we can find, and in my opinion we should go further in connection with the excess profits tax. We should take 100 per cent of all profits above a stipulated amount. In another debate in the house
The Budget-Mr. Cold well

recently I suggested that perhaps that amount might be limited to four per cent, and that above that we should take all else for the war effort. Indeed, I believe that would be fairer than the present system, because I think there is not a member in the house who does not know that in some respects the base upon which the excess profits tax is computed is both uneven and inequitable.
So I would point out that while we commend many features in the budget, it falls far short of anything which might be called the conscription of wealth in war time. It does nothing to conscript industry, and leaves financial institutions free to lend or to refuse to lend money to the government. In those respects, in my opinion it falls short of what a budget during war time ought to be. Let me emphasize again that it does not in any sense nationalize the financial system, without which, in my judgment, not even the shadow of the thing suggested by the hon. member for Lethbridge could be in any way instituted. Without a complete national control of the financial system it is impossible, to use the words of the Prime Minister (Mr. Mackenzie King) to issue currency and credit in terms of the nation's need.
The Minister of Finance has also decided that the new income tax and the excess profits tax shall be collected at their source. I think that is a good plan, and will prevent evasion. But how does the minister propose to prevent evasion in respect of unearned incomes, incomes from all kinds of bonds and investments, unless he compels a complete registration of both the securities and the owners of those securities?
One of the good features of the budget is the allowance for medical care, nursing and that kind of thing. In view of the tremendous tax now imposed upon the Canadian people it seems to me that that is an essential accompaniment of the budget. May I say to the minister that I hope, when the regulations are drawn, they will be sufficiently broad to meet various types of cases. It is proposed to make provision for medical care, hospitalization and nursing services. Among many of the lower income groups there may be a sick mother in the home, or a sick member of the family, but those people are unable to engage the services of a trained nurse or to remove the sick member of the family to a hospital. Yet the amount they spend on the sick person may be very considerable indeed1. So, while they may not have the services of a trained nurse and while there may not be hospital expenses, there may be other expenses in connection with that sick person which ought to receive some

specific consideration by the minister. Regulations governing this matter are being drawn, and I draw this to his attention in the hope that he will give it favourable consideration.
Then, as in former years I want to put in a word of criticism with respect to the kindness which has been shown for a number of years to the mining interests in this country. I think they have been treated very generously in their relief from taxation. Yet we send out surveyors. I do not know how much the Department of Mines and Resources is spending this year in sending out geologists and scientists into all parts of Canada, looking for favourable indications of minerals or oil. There is no doubt, however, that a very considerable sum is being spent for these purposes. When we have located favourable areas the private companies come in, on most occasions do some further prospecting, and then exploit the properties for their own private gain. Then we give the claims to private corporations and individuals for their own profit.
I think the time has come when we ought to consider doing this ourselves, and obtaining from our vast mineral and other deposits all the revenue that is in them. I notice we are still going in for some prospecting in gold. Well, I agree with those people who think it something of a paradox that we should take gold out of one hole in northern Ontario, ship it to the United States and put it into another hole. It seems to me a great waste of human labour when we are at war, and labour is needed.
The increase in the tax on alcoholic liquors is, as the leader of the opposition said this afternoon, fully justified. I could only wish that some steps might be taken to bring about a more moderate use of intoxicating liquor at this time of war. I believe in temperance, rather than in total abstinence; but I look round this country, and it alarms me to see the amount of alcoholic liquors being consumed at the present time.
Taxes on such luxuries as cigars, cigarettes, tobacco and so on were to be expected, but I want to join with the leader of the opposition in criticizing the imposition of a fairly substantial tax on candies. I think some differentiation might be made. Where candies are worth more than a certain amount per pound or where they are put up in boxes, they might come under the tax, but I think exemption should be given to the ordinary fudges and hard candies which children love. I agree with the leader of the opposition when he says that children crave some sweetmeat. This is a natural craving, and candy in moderate quantities should be within their reach.

The Budget-Mr. Ferland
The people of this country must be given assurances of a greater measure of social security when this war ends. When peace is proclaimed, are we going back again to the old pre-war unemployment, insecurity and poverty? A mother of a western Canadian boy who is now overseas sent me an extract from a letter which he had written to her during the plebiscite campaign, and which I received about the end of May. The people are English born, and the boy enlisted early in the war and is now in Great Britain. He said he was surprised that I had advocated a '"yes" vote in the plebiscite. He stated that he and some other boys from the same city, all of English stock, had voted "no" in the plebiscite overseas. He said they voted "no" because they did not feel justified in compelling boys to go over there and, when the war is over, to return to the conditions that they left when they enlisted. That comes from a boy who enlisted voluntarily and is now serving overseas. That was his thought, and I am sure the same thought is in the minds of many thousands of Canadian boys who are now in uniform.
What are we doing in the way of real preparation for the post-war situation, for the boys who will come back from overseas and for the workers who will be dismissed from industry? We have unemployment now. The hon. member for Cape Breton South (Mr. Gillis) will tell us that in the area which he represents miners are working only one day a week, and to-day they are enduring depressed conditions almost as bad, if not


Mr. GILLIS:: Worse.


Mr. COLD  WELL@: The hon. member says worse than they had to endure during the years of the great depression.


Humphrey Mitchell: My hon. friend knows there is an answer for that.


Mr. COLD  WELL@: I know the answer, but I would point out that nothing is being done to assist these men to maintain their families in decency when they are on such part-time employment. What we need is at least some beginning of a comprehensive social and economic plan. Hon. members have said to me that they have not heard me speak lately of economic planning, but I want to say that it is always in my mind. I believe that there can be no intelligent social and economic, life in the future unless through our democratic institutions we build and plan effectively to meet the needs of the people. It is no good ciying "socialism! " That is like crying "wolf! " It can be cried too often. I remember not so many years ago when some people in Regina where I lived said, "This man, if given his way, 44561-242
will hoist the red flag on the city hall or on the grounds of the legislative buildings." Our former leader, Mr. J. S. Woodsworth, was accused in this house of wanting to put the red flag on parliament hill. Last Friday when I came up here in the evening I looked over toward the governor general's office and, hanging right outside his excellency's window, I saw the red flag with the hammer and sickle in the corner. I did not put it there. I want that to be known. Times are changing, and it is useless to cry "socialism".
I do not believe in stateism, whether it is state socialism, state capitalism or any form of stateism. In New Zealand the Labour government succeeded in having the foundations of democratic socialism incorporated into the constitution before war broke out. They hope to do this also in Australia under the leadership of Mr. Curtin, and they plan to do it in Great Britain when the war is over under such men as Bevin, Citrine, Morrison, Cripps and so on. Our social democracy must mean the preservation of the widest measure of private ownership in home, in farm and in those things which do not oppress the people, but taking into the nation's hands the great trusts and the great monopolies so that we may plan and use them to attain security, plenty and peace.
Mr. CHARLES E. FERLAND (Joliette-L'Assomption-Montcalm) (Translation):	Mr. Speaker, it gives me great pleasure to join the hon. leader of the opposition (Mr. Hanson), the leader of the C.C.F. (Mr. Coldwell)- and the leader of the New Democracy group (Mr. Blackmore) in congratulating the Minister of Finance (Mr. Usley) on his brilliant delivery of a budget address remarkable both as to form and substance.
That part of the budget which introduces compulsory savings offers an interesting parallel with the "Enforced Benevolences" of King Henry VII who ruled England from 1485 to 1509 and who, impoverished at the end of the War of the Two Roses, filled the empty coffers in his treasury through compulsory loans levied from the nobility. But Henry VII never saw fit to repay his subjects the moneys he had forcibly extracted from their purse. Whatever the criticisms directed at this budget, Mr. Speaker, let us at least confess that our Minister of Finance is kinder than King Henry VII.
The two most important measures submitted to parliament during the present session are undoubtedly Bill No. 80, purporting to strike out section 3 of the National Resources Mobilization Act, thus introducing the principle of conscription of

The Budget-Mr. Ferland

men for overseas service, and the present budget in which the principle of conscription of wealth is incorporated' to a large extent. Canada's war expenditures last year amounted in round figures to a billion and a half. Now the Minister of Finance requires for the present fiscal period appropriations totalling yearly four billion dollars. He estimates the total revenues for 1942-43, the current fiscal year, at $2,050,000,000 and the total expenditures at the figure of $3,900,000,000. This would leave a deficit of $1,850,000,000.
The minister is relying chiefly on direct taxation of incomes and profits and on indirect taxation of goods and services to increase the revenues of the dominion by about $377,850,000.
Here is a summary of the budget:
First, a sharp increase in the income and national defence taxes is contemplated. These taxes will be combined and, whenever possible, deducted at the source. They will be increased by a salary deduction, considered as a form of compulsory savings, repayable after the war at 2 per cent interest.
Secondly, the excess profits tax is raised from 75 per cent to 100 per cent; 20 per cent of the tax would be refunded after the war also bearing interest at the rate of 2 per cent.
Thirdly, there are increased taxes on spirits, tobacco of every description, soft drinks, transportation, telephone communications, night clubs, luxuries such as furs, jewelry, candy, chewing gum, and so forth.
The Minister of Finance wishes the people to understand that Canada, together with the united nations, is in a critical situation and that victory will only be achieved after a long war. He said:
The war will be won, not alone by the valour of fighting forces and the skill of generals but by the willingness of the people at home to make necessary sacrifices-willingness to make those sacrifices first and not after all other groups have made them.
In this budget, the Minister of Finance calls upon the nation as a whole to accept the heaviest sacrifices in these tragic days, in this the most critical period of our history.
The budget has two main features: taxation is increased to such a degree that it appears crushing and savings become compulsory.
How will this war budget affect the 'economic life of Canada? I believe it is impossible at the present time, even for the exponents of new doctrines, the builders of theories, the pedlars of new systems and the experts who

contributed to the preparation of this budget, to foresee the consequences which, I fear, will spell disaster for many people.
Does this budget not preface a fundamental economic revolution? Is it not, to a certain extent, tainted by state socialism? Let us hope that it will not cause our economic structure to collapse.
This budget places our country on the same footing as every large nation devoted to an all-out war effort. I unhesitatingly state that Canada is now reaching the limit of her war effort, in spite of the statements made by inveterate conscriptionists who, during the last few months and even before, have waged a campaign of hate, prejudice, insult and slander against Quebec, ceaselessly proffering both in their newspapers and in public speeches, the same nonsensical charges with unheard-of violence and in a spirit of revolt against our province heretofore unknown in Canadian history.
Mr. Speaker, a nation with a population of 12,000,000 which raises an army of 500,000 men through the voluntary system, which can employ in its munition plants almost a million workers-the Minister of Munitions and Supply (Mr. Howe) said that the figure was 900,000 at this time-which is able to maintain on farms at least one million men, which supplies to the common cause all the planes, the merchant vessels and the warships it can build in its yards operating to full capacity, which supplies all the guns, munitions, supplies and commodities needed by the allies, a nation of 12,000,000 which does all that has no reason to be ashamed of its conduct, and I do not hesitate to say that Canada now ranks with the great nations which are putting forth a total war effort commensurate with their resources. We are doing even more than our neighbours.
I have before me, Mr. Speaker, a table published in a Montreal newspaper showing the taxes proposed in this budget as, well as those that are paid in England and in the United States. I find, in the first place, that England pays the heaviest taxes and I wish to correct a wrong impression which I have frequently noticed among the working classes who think that Canada is doing more than England herself. Taxes are much heavier in England than they are in Canada. One can understand that because Britain is in the war zone.
There are a few comparisons: We find that while a single person with a $2,000 income is taxed $441 in Canada, that same person is taxed $624.50 in Britain and only $106 in the

The Budget-Mr. Ferland
United States. Single persons earning $10,000 in Canada must pay a tax of $4,312-not including compulsory savings-while in Britain the tax is $4,624.50 and only $2,190 in the United States. I will give no further illustration but the proportion is the same all along the line.
At first sight it does seem that this budget is bound to have among others the following results: it will so reduce the purchasing power of the people that the taxpayer, the consumer and the government's competitors will be unable to buy the raw materials required for war.
The general taxes and the 100 per cent excess profits tax will necessarily bring about a formidable, indeed an excessive reduction of wealth among the very rich. The middle classes will also be seriously affected and they will be forced to adopt a standard of living far below that of pre-war days.
I believe the farmers will not be affected by this budget, those of my province anyway. Such is also the opinion of a financial publication from Toronto. It complained in its issue of Saturday last of what it termed "a grave and serious omission." Still one would need to have very little knowledge of the conditions which obtain among the poverty stricken farmers in Quebec to state that they should be in a position to pay income tax.
Further examples make it evident that certain civil servants, bank employees, employees in industrial, commercial and other establishments, earning a $2,000 income, will find it very difficult to balance their budget particularly after having paid $450 in taxes. But the wealthy-and I emphasize this point as an answer to all demagogues who hold a grudge against the wealthy class-the rich man whose income formerly was $100,000 will only retain $21,000, that is 21 per cent, and turn over $79,000 to the state. And what about the millionaire with a $500,000 income? According to the budget provisions, Mr. Speaker, he will only be able to keep $37,000. On the whole, however, the class most affected is composed of people with an income between $1,500 and $3,000 a year. It seems probable that a large number of these people whose standard of living required every dollar of their income and who must continue paying the same rent until next May, will be unable to balance their budget.
I hope that the hon. Minister of Finance will, within the shortest possible delay, find the means to correct any errors that may have been overlooked in a war budget of that size.
I sincerely think that the present budget will inevitably lead us to the enacting of moratoriums which will necessarily be
44561-242i
requested of the government, especially by small property owners and a certain number of small industrialists doing business on a small scale, who seem to be seriously affected by the budget.
In order to reach its ambitious goal, the government also relies on a voluntary savings tax. Certain newspapers claimed1 that this was merely penalizing the thrifty, since the government taxes insurance premiums. Such a tax, although paid by the insurance companies, will necessarily affect the policyholders, for the companies will certainly deduct the amount of the tax from the dividends payable, at least in the life insurance field. Thus the people generally will be asked to make a further sacrifice.
I hold no brief for the wealthy, but I have heard so much said against them, especially by certain demagogues, that I would be remiss in my duty were I not,to point out to the house the sacrifices demanded of those who enjoy large wealth. Is it not true that the wealthy invest their money in insurance companies and are sorely hit by this new tax?
Many people who were in dire need before the war are now earning reasonable wages. A gradual levelling of the social classes is in process of accomplishment and1 it is to be hoped that after the war there will no longer be families in need of assistance, no unemployment in a country such as ours, as large as a continent and enjoying tremendous resources.
For this levelling of the social classes, the Liberal party deserves some credit. If we consider the results of the Unemployment Insurance Act through which the government collects from 50 to 60 million dollars annually, we must realize that these moneys are held by the state for the benefit of the working class and not for the rich.	[DOT]
Mr. Speaker, as I said before, the government is requesting our people to make tremendous sacrifices. In the opinion of the administration, the present budget is necessary to attain an all-out war effort. Although I find the budget provisions severe, I find war even less to my liking and our people would be even more harshly treated in the event of an invasion of our shores, in the east by Germany or in the west by the Japanese.
The Canadian people realize that in view of the immediate threat to our country and to all the united nations, every individual must do his part and accept personal sacrifices, and no one in our dominion can remain indifferent to the war effort directed by our government.
The Budget-Mr. Ferland

Mr. Speaker, as the representative of the three combined counties of Joliette-L'Assomp-tion-Montcalm, with a population of 65,000 who have raised no objection to the government's war programme, who have accepted every measure with the sole exception of conscription for service overseas, I believe, Mr. Speaker, that I am expressing the opinion of virtually all my electors when I say that I shall support this budget on the whole, in spite of certain mistakes it reveals, mistakes which, I repeat, are unavoidable in a war budget of that size. I feel that the province of Quebec will accept this budget. I hope it will accept it without complaining. That is my personal opinion, for I have consulted none of my fellow members from the province of Quebec. We have taken that stand, but I feel that I am serving the best interests of my country and. my province in supporting this huge war budget, the largest in our political history. I feel that I would ill serve the interests of the French Canadians by a futile and barren opposition to this war budget which commands the general approval, as far as I can see, of the members of this house and which also seems to enjoy the approval of the press in this country. Of course I have no desire to force my opinion on hon. members. Every member of the Liberal party enjoys complete freedom. Those who do not agree with me are at liberty to take whatever stand they deem appropriate. I do not blame them in the least but I sincerely believe that ~we from Quebec would be mistaken in opposing such a measure; we would even interfere with the spirited battle undertaken by the members from Quebec under the efficient leadership of the former Minister of Transport and Public Works (Mr. Cardin) who has tendered his resignation, and who did1 a creditable thing when he showed the country at large that the province of Quebec is unalterably opposed to conscription. I feel it would be a mistake to persist in our quarrels and our dissensions on matters of lesser importance and that conscription must take precedence over financial questions. After all, as the saying goes, what money mars money will mend. And I assert with all my heart and with the utmost sincerity that there will never be any equality of sacrifice as between the soldier who sheds his blood, who gives his life, and the Canadian citizen who gives his money. I feel in duty bound to support the government on this measure. I am in agreement with the government's entire policy since the beginning of the war, and I will continue to support it with the sole exception of conscription for overseas service. I shall take the opportunity of stating why my electors are 
opposed to conscription at some other time, but for the time being I merely want to say that I shall vote against Bill No. 80.
Mr. Speaker, I do not wish to delay the business of the house much longer. This is army week, dedicated to the Canadian soldier. The government has directed that during the week extending from the 29th of June to the 4th of July, we should honour our valiant Canadian soldiers and, personally, I see no better way of paying tribute to the courage of our soldiers than by telling my fellow-citizens in the province of Quebec that they have a duty to fulfil and that if they are opposed to conscription, they must at least make personal sacrifices and assume the obligations imposed by this budget which is deemed necessary in the opinion of the government.
As an homage to the soldiers of Quebec as well as to the clergy and the bishops of our province who have supported every activity of the government with clear-sighted and broad-minded patriotism, may I be permitted to quote an excerpt from the collective letter made public by our bishop:
Let it be recognized that this spirit of devotion and self-sacrifice is nobly expressed by those who so courageously enlist in the army, navy and air force. We owe a debt of gratitude to our fellow-citizens who, by their courage and their bravery, will have so magnificently served their country and humanity. Their triumph over personal interest is a pledge of final victory: their loyalty honours our nation; their faithfulness to duty is the bulwark of our freedom. Every day we have new reasons to be prouder still of their steadfastness and their courage under fire, through thick and thin. They show themselves worthy of our young and valorous country. In their willingness to conquer or perish, their hearts are filled with heroic strength. And the sacred ties that bind them to all they hold dear are as many reasons for fulfilling their worthy part as defenders of our freedom.
So speak the bishops of the province of Quebec of the self-imposed sacrifices of our soldiers who are risking their lives and who stand ready to shed their blood for the common cause. Do our sacrifices count for so very much, I ask you. Would we not be ashamed to refuse to give a few dollars in support of so sacred and so dear a cause in this struggle between civilization and barbarism, in this battle of freedom against slavery?
In conclusion, Mr. Speaker, I would like to quote these words addressed to our soldiers on the occasion of this national celebration, which I have taken from the newspaper Le Droit:
The Canadians are there!
. . . and when the Canadians are there, that means the enemy shall not pass! . . . What heroic deeds are theirs! . . . What perilous

The Budget-Mr. Church
tasks they have accomplished! . . . More than once have they covered themselves with glory by standing fast when it seemed impossible and in taking positions held impregnable! . . .
Stout hearts and valiant arms, the Canadians have their legend. Those of to-day are the worthy sons of those of yesterday, and blood will tell.
They shall hold fast and they shall conquer!


Thomas Langton Church: Tomorrow is Dominion day, the seventy-fifth anniversary of confederation. I thought we would have been home long ago; and I think the time has come, after we have been here since November last, when the house as quickly as possible should conclude its business. I am only filling in, as it were, to-night as one member of the opposition in order that the debate may go on to-morrow.
In Sir John A. Macdonald we have one of the main pillars of confederation; he was one of the great statesmen who were responsible for bringing about that great event. He was Attorney-General of Canada, and we did not hear in those days the strange talk that we heard in this house the other day from one other Attorney-General of Canada, because, after all is said and done, Sir John Macdonald laid down the policy of this party and of this country's long British policy. As I understand it, we are all together in this war. We do not know who will own the country before the next Dominion day arrives, because the whole empire and the dominions are being attacked now and are in very grave danger from the axis powers. As I say, we are in the war together, but sometimes some of the parties in the house seem to me to forget that particular fact. The object of some-it is not my object, but it is the object of some here-seems to be to use the great national danger in which we find ourselves to-day in order to advance what I might call the aims of their own political parties and their own political faiths. That is a great mistake, because nothing else matters until the war is won. It is our only business.
Speaking to the electors of the city of Kingston in December, 1844, Sir John Macdonald used these words with reference to the fiscal policy of the country as it was then:
I, therefore, need scarcely state my firm belief that the prosperity of Canada depends upon its permanent connection with the mother country, and that I shall resist to the utmost any attempt, from whatever quarter it may come, which may tend to weaken that union.
Forty-seven years afterwards, speaking in the same city in February, 1891, in his last campaign-he was again elected-Sir John reaffirmed the same doctrine of our close relationship with the mother country. He said:
For a century and a half this country has grown and flourished under the protecting aegis
of the British crown. Under the broad folds of the union jack, we enjoy the most ample liberty, we govern ourselves as we please, and at the same time we participate in the advantages which flow with association of the mightiest empire the world has ever seen. As for myself, my course is clear. A British subject I was born and a British subject I will die.
In the course of half a century, Sir John never failed to make the stand of Canada known, in its relation to the rest of the empire. In those troublesome days, before the fathers of confederation had drawn up the British North America Act, they all had to give and take, with the result that confederation was facilitated and thus brought about. Shortly before the last war Canada was the chief drifter from the mother country, of all the dominions, owing to status dream, isolation and separatism. The visit in May, 1939, three months before the war, showed the great popularity of the king and queen in their visit here, but the decline and decay of our parliamentary institutions had already set in, because of the fact that we had surrendered our rights and privileges and functions to bureaucratic boards of all kinds and to the executive, especially under the present Minister of Finance (Mr. Ilsley). That is a serious mistake. To-morrow will be Dominion day and this week is called "army week." We had troops in front of these buildings to-night. I do not wish to speak with disrespect of the Minister of Finance, because I have a great deal of respect for every minister of the crown to-day in the laborious, thankless tasks they have, and whatever I shall have to say on the budget is said without any intention of giving offence to anyone and in a spirit of good-will. Indeed, I wish nothing but the utmost goodwill towards every member of the cabinet and this house. It seems to me, however, that the present Minister of Finance has forgotten the duty of this country to its soldiers at the present time. I have urged for three years that there should be some readjustment and reallotment of pay to the army, the navy and the air force. The question of pay was put through the house on September 10, in half an hour one night, Mr. Speaker-you were in the house-with practically no discussion at all. The present rates of pay were then established without discussion, and they have been found to be unjust, inequitable, unfair and full of inequalities; have done untold harm to recruiting and brought real hardship and suffering on soldiers' dependents. I find this every day in a soldier city from which I come.
A month ago I referred to what had been done in Washington, whereby every soldier in the United States army is given a minimum of $50 a month, with some receiving $60, and
The Budget-Mr. Church

extra pay all along the line. I was glad to receive some support in what I said then from my good friend the hon. member for Parry Sound (Mr. Slaght), and the soldier member for the Yukon (Mr. Black). I suggested that when these three payrolls were being discussed last session and this, they should be sent to some committee. In June, 1941, the present minister would not allow me to place on Hansard our schedules of pay, which are unjust and unfair, and nothing was done. I revived the matter this year. I venture to say that you could not get a Japanese office boy or cook to work for $50 a month, but what are we paying our men in uniform? It is all very well to sit and talk in this house; it is all very well to refer to what is being done on the farms and in the munitions plants, but that is as nothing compared with what is being done by our boys in the camps. Go to Camp Borden and the other camps throughout the country; see how our men sweat and toil all day. Yet all across the country this government has been spending money like water in the erection of camps, vast distances apart and at out-of-the way places, on expensive plants and military buildings. The youth of the city of Toronto have been taken from their homes and scattered all across the country, while the railways have been making millions of dollars out of the taxpayers, and this carnival of spending goes on. Down to the end of 1940, according to a return tabled in the house for me, the railways had made as much money as they made during the whole of the great war; yet they charge a soldier's wife or family $2 or $2.50 to go to Camp Borden to-morrow. The railways should be compelled to give the soldiers free transportation, particularly on holidays such as to-morrow, and on special occasions. We are becoming a laughingstock, the way we set one class of the community against another, and pay control boards and stay-at-home civilians and office soldiers in uniform, and refuse to pay those overseas and in training.
The plebiscite caused more dissension in Canada than has occurred at any other time in the history of our country. I believe the forgotten agency of the services of the government of the day is the army and one of the most necessary. It is the forgotten arm of the services. The cost of living bonus should be given to the dependents of those in the army, but it will never be given as long as the present state of affairs continues. I can tell you this, Mr. Speaker, that yes-men and nodders caused this war. The yes-men and nodders in Germany, Italy and Japan *brought about the tyranny and oppression

which exist in those countries, and caused the surrender and usurpation of the powers of the people to dictators, just as the House of Commons has surrendered its powers to controllers and bureaucratic boards. This House of Commons is to blame if the cost of living bonus is not given to soldiers' dependents and for Canada's bureaucracy of civil servants. Last fall a few small changes were made in the government's policy, but this added pin-money for a soldier bonus I think went to only about 204 people in military district No. 2, which at one time before the war had as many soldiers as all the rest of Canada combined. Many of these dependent people cannot pay their rent; some of them are without clothing and fuel, and this winter there will be a terrible condition. I think our schedules of pay should be brought up-to-date before we close. A committee should revise them, or I believe it can be done by the cabinet under the War Measures Act.
Then I suggest that the National Resources Mobilization Act should be enforced in regard to all classes of the community. I know of three young men in the city of Toronto, engaged in sports, who were given notice of their call last April. But they went away to a prairie town; then, against all regulations, they were allowed to join the air force, and now they are not to report to it until the end of August. In all other cases there is a thirty-day limit. How much longer are we [DOT] to continue a policy of this kind, while other young soldiers who are not earning extra money in sports, but for $1.30 a day are being killed every day over Germany? If that is the policy with regard to recruiting, there is no use in having an army week. The government's stand on sports in relation to the war should be made known. When we come to this building we find armed guards outside during this army week. But one-half of this building has been vacant since last June. If the government has no real war work to give the other branch of the legislature where there are so many able men of great experience ready to help, why not rent out that part of the building for an hotel, or use it to house some of our soldiers, or let it be used by some of these bureaucratic boards. The senate has been sent home, and the "House of Gordon" is reigning in its stead. I believe the time has come when we should stop talking about soldiers and do something practical about soldiers, who are going to defend this country from our enemies and fight the axis powers wherever found.
In my opinion, the budget simply deals with spending all along the line; there is

The Budget-Mr. Church
nothing in it about retrenchment or economy. It deals with the raising of $2,000,000,000 for the war. That matter has been debated here for months; but other than that there is very little new in the budget except provision for the cost of civil government, half a billion, and all that sort of thing, and marking up revenues from direct and indirect taxation. I believe the Minister of Finance should be compelled by statute law to bring down his budget on a fixed date each year. You, Mr. Deputy Speaker, have had a great deal of business experience through your legal connections in the city of Montreal, and you know that no large business concern of any kind could carry on as we carry on here. Six months of the year have passed and we have not yet had one dollar of our annual estimates passed in committee of supply. A haphazard budget is brought down, after several interim supply bills have been put through. From now on I am going to vote against every one of these interim supply bills as causing deficits and overdrafts. They are to blame for all the deficits we have in this country, war deficits, budget deficits and deficits on civilian estimates. The estimates do not contain the details. Any banking institution or insurance company which conducted its business as the Minister of Finance conducts his business on the present plan would close its doors in short order. I believe a date should be fixed by statute for the bringing down of the budget, and I also believe that we should establish a ways and means committee like the one at Washington. There are a great many inequalities in this new income tax schedule. These matters should come before a ways and means committee, as they do in the United States, because some of the professors and others advising the minister are not trained in business. On one occasion, referring to one of the unnamed government "spokesmen" talking over the radio, I described these people who are unnamed spokesmen, as the ghosts behind the scenes, because they tell us what we must do, but we do not know who they are. At Washington they have what they call a ways and means committee; they do not leave things to a bureaucratic board of officials. They take advantage, on such a committee, of the experience and knowledge of those who are in politics, who know something about questions of public policy and are trained in some form of competitive business. I do not believe any such income tax scheme would be imposed in that country. The minister has compared our income tax with the income tax in the United States, but he forgets that in the United States they have no sales tax,
and in England this year the income tax has not been raised. Also he charges too much to income and not enough to capital.
In this budget we have the highest income tax in the history of this country. I believe it is going to disrupt business to a great extent. I do not know how anyone is going to be able to pay his fixed charges for insurance, mortgage and other taxes. If a young man wants to get married, I do not know how he is even going to pay for any insurance or mortgage or keep his home. No small business man can pay all these fixed charges and the rest of the taxes out of the pin-money he will have left over after we pass this budget which has been drawn up by these bureaucratic powers over our heads. I believe the minister is taking too much from the taxpayers. There is no such thing as retrenchment in this budget. Look over the estimates, as I have looked over them four or five times from beginning to end, and can find no attempt at economy whatever. Do you see anything there about economy? Is there one word in the budget about economy? The civilian estimates have been brought before the house, but not one dollar has been passed yet-and let me point out that we have now reached the ninety-seventh day of the session. Not one dollar of estimates has been passed yet by this house.	'
That is the system we have in the house. If municipalities ran their affairs in that way they could not get along, and municipal governments would be beaten in their annual elections on the first of January. I say the system is all wrong, and it should be changed. This year the British budget was brought down on April 14 by Sir Kingsley Wood, and in that budget there is no increase in the income tax. The small man has his exemptions for dependants and those he has to keep. In Canada the only thing to do is to turn your business over to the state. And the state-this federal state *-is taking income and corporation taxes away from the municipalities and provinces and destroying the basis of confederation.
This all arises from that celebrated document known as the Sirois report. Ontario has become the goat of confederation, and under this particular budget she is most certainly the goat of confederation. When a comparison is made between this budget and the budget introduced in Washington, it will be found that the leading principles set out in the first part of our budget and review of the year are copied from Washington largely as to details and subject matter. That is all it is; it is a copy from Washington. I shall refer to it in more detail in a few moments.
The Budget-Mr. Church

No more interim supply should be passed until conditions are remedied. Hon. members are not doing their duty. Prior to the discussion on Bill No. 80, this House of Commons might as well have met in secret. When the public realizes that the important debates of their representatives in parliament are being held in secret they will have something to say about the whole matter.
The press have done well and at a great cost have given the people the facts. I am one who all along has advocated the removal of censorship barriers which have been placed in the way of the press. The present censorship should be abolished, because it is not a censorship at all. We would have no news only for the press, and not the radio. In England press censorship has been eliminated. They have eliminated so-called information bureaux. Before the censorship was removed in England the minister in charge of the information bureau there was in hot water almost every day, just like our own minister who heads our bureau of information. The fact that we call it an information bureau affords the only bit of humour in the whole session.
I say that press censorship as we have it at the present time should be abolished. The press should be free to publish the news. This information bureau with a pamphlet of its own, which hands out information, is only a farce because it gets its news from the newspapers. I sympathize with the newspapers when they do not publish proceedings of the house. One great newspaperman told me, before he died, that the proceedings are not worth publishing. Well, I am not prepared to go that far, because I believe this is the only place where the average man on the street or woman in a bus may have his or her grievances remedied. When we fail to function, parliamentary government is at an end. After all is said and done, the private member is the connecting link between the government of the day and the electors; and when he fails to function all parliamentary government is at an end. Are we going to wait until there is a rebellion of hon. members against this bureaucratic system of budgeting and surrender of our functions to all these czars and autocratic controls and boards costing the country millions?
I do not see any of the other Toronto members here to-night, and I do not care whether many members are here or not at present. But I want to say this, that the city of Toronto is the chief tax-paying city in the whole of the dominion. At one time they were paying between 25 per cent and 30 per cent of cash taxation of the dominion. This is the first time since confederation that that

great city has been without a single representative in the cabinet of the country, since 1935. We have one or two cabinet members from Ontario, but it seems to me they are not active enough to stand up for their province and prevent us from being burdened in this way. The city of Toronto has sent more recruits than any other centre, notwithstanding comparisons by tables, indexes, pamphlets and that kind of thing, and we have no direct cabinet representation as a city proper.
I am glad the Minister of Justice (Mr. St. Laurent) is in his seat, and I would suggest to him that he turn to the fifteenth chapter of St. John and refer to the thirteenth verse where it says:
Greater love hath no man than this, that a man lay down his life for his friends.
As thousands did in this and in the last war for our empire. I have a very high regard for the minister; he is a great lawyer, and a fine gentleman; but in his references to the British empire I believe he made a grave mistake, and it was a most unfortunate speech at this time. I can tell him that if the Minister of National Defence for Air (Mr. Power) loses his seat in the city of Quebec, I believe he could get one in Ontario, or in the Toronto district, because he commanded a Toronto unit in the great war, and his name is much respected by soldiers in Ontario. I am glad to say that about him in his absence; he is not in his seat to-night. I say to the Minister of Justice and Attorney General of Canada that his speech of the other evening when he referred to the mother country was a most unfortunate one. Let him remember, on this eve before Dominion day, that 4,275 boys from Toronto lie buried in France. They went over there without compulsion; they enlisted as volunteers, and they will lie in France, where they died fighting the battles of this country, until the resurrection morning. There is no bigotry in Toronto or ill-feeling toward others in this confederation.
I believe the Minister of Justice was not in his seat when I referred earlier to Sir John A. Macdonald. Let him remember that I am a great admirer of what the French people did, along with Britain, for civilization. I respect what was done by the glorious land of France in the last war; I respect what they then did for the world and for civilization. They took part in the great war for their state, their religion, freedom and civilization generally, and Britain and France deserved a better fate than this war. I should hope that before another Dominion day comes along, that fine land of France may be rid forever of those savage barbarians who have invaded the

The Budget-Mr. Church
country, and it can be done only by Canada taking part in another peninsular war, by a total war effort.
I suggest that the Minister of Justice might go to the city of Quebec and read the inscription on the monument to the memory of Wolfe and Montcalm, an inscription which will last for all time, and which was there in the days of Sir John A. Macdonald. I have always believed in a policy for all the provinces of a confederation, and in the old Cornish battle cry: "Each for all and all for each."
This is what I said in the house on March 19 of last year:
We in Canada should be a united country from coast to coast. Wolfe and Montcalm lie buried together at Quebec, and the inscription on their monument attests the unity of the races in this country, as described in the motto on their memorials on the Plains of Abraham. Britain and Prance in the last war fought for a better world and for a better fate than has befallen them. I have always believed in the principles of confederation since I have been in this house-of the old Cornish battle cry of "Each for all and all for each". There is no use in our thinking that this is going to be an easy victory. We have no divine right to victory. This is going to be a most difficult, hard and heavy task and we should face that fact before it is too late. Facts are facts, and we should take our lessons from the past. So far we have lost the war and almost every battle; we have had no successes-
And we have lost the war so far right down to our Dominion day to-morrow. I say the same to-day.
A few days ago my good friend the hon. member for Parry Sound (Mr. Slaght) referred "to my absentee leader". Let me say to him that our party polled nearly half the votes in the last election. The Right Hon. Arthur Meighen is a private citizen now. About him I would say that he is a great Canadian and Britisher, and I think he got a very dirty deal in the campaign which was conducted against him in a riding, near one which I used to represent a few years ago. In addition to that, as head of a city which had joint relations with the Township of York, it was under my regime that the municipal services were installed-roads, sewers, water, street cars and all that kind of thing there. Some of the people of Toronto and of York South did not approve the most unfair treatment given my former right hon. leader by certain people inside and outside the house. He has two sons now in England and ready to go to the continent. I regret that I do not see as much of him as I should like, and I do not believe I have had twenty words with him since he was defeated in February. But I was one of his followers here for many years, and I want
to say that he is a man who speaks his mind and says what he believes to be true. He represents, I believe, a large body of public opinion in this country, even though he did not win that election. Sir Wilfrid Laurier was beaten; Sir John Macdonald was beaten, and so were many others.
Many of those who are now talking here and elsewhere about reconstruction are the very people who were responsible for our being unprepared to fight this war. They said that we could depend upon the Monroe doctrine, the League of Nations, the Kellogg note, Locarno, pacifism, Geneva, the status quo, isolation and collective security. There is collective security only when there is an armed Britain. We were told that we could depend upon notes and pacifism and Geneva. The Minister of Finance is presenting his budget, but let me tell him that last week I received a return which shows that, all told, $6,000,000 of the taxpayers money was spent, without any protest from the minister, on this sham folly of the League of Nations. He was one of those who went to Geneva a year or two before the war. He became imbued with all these kinds of pacifist ideas even after Hitler had taken the ascendency in Germany. The hon. member for Kamloops (Mr. O'Neill) also went to Geneva. I was glad to see them all go, because one of them told me after he came back that it was a wonderful trip, that it was a good cure for any ill health from which one might be suffering. Many of them made no report at all, but they said that the boats, hotels, meals, side-shows and cigars were good; that the banquets were wonderful and the wine perfect; that it was a delightful pastime attending the league and imbibing the doctrines that got us into this war.
This is the agency that caused the war, the league, Locarno, the Kellogg pact, pacifism, the Monroe doctrine, the status quo and pan-Americanism. Is it any wonder the taxpayer is groaning when he sits down and sees $6,000,000 spent on the league folly, $186,000 more this year, and that a million and a half of his money has been spent on the plebiscite mistake? If Hitler or Japan invade Canada, I said in my constituency, they would take the plebiscite and all connected with it and hang them on the sour apple tree alongside John Brown's body. The people of Canada, I find, are beginning to get quite bellicose against the present government and the House of Commons because of the plebiscite and because of the way they were led to believe that a vote for the plebiscite would be a vote for conscription and for a total war effort.
I can tell the Minister of Justice (Mr. St. Laurent), that if it were not for the mother
The Budget-Mr. Church

country, after Dunkirk we would have had the enemy in the St. Lawrence, and they would have blown down the citadel and this building long before he was sworn in. Then Quebec would have had the police gestapo, the concentration camp, the whip, the loud speaker, the tramping of feet, the taking over to Germany of thousands to work there, the burying of men, women and children alive as has happened in Russia and Czechoslovakia. They would have had the slavery which is worse than death. It behooves the people, not only of Quebec but of all Canada to pay tribute to the mother country for protecting our shores ever since we have been a nation. If it were not for the work of the British fleet and the air force after Dunkirk, long ago Washington and Ottawa would have had to sue for peace with the axis powers, and we would have had slavery worse than death.
I believe the League of Nations was largely responsible for the fact that we were unprepared when this war came. Munich was necessary because it gave us a year's respite, and a respite was necessary because Britain and France, either singly or collectively, were no match for Hitler. They purchased a truce; they had to buy a truce for one year, which later became an ultimatum. But what did we do? We did nothing all that year but spend money in the old way to send deputations to the league and all that kind1 of thing, and refused to see the handwriting on the wall. The Prime Minister was in Berlin in 1937, and if he had kept his eyes open he would have seen those huge tanks on the streets of Munich, Berlin and other places. He should have come back and told the people what Germany was doing. The taxpayer will not forget all these things when he pays his tax bill to the Minister of National Revenue (Mr. Gibson) and the Minister of Finance under the present budget. This confiscatory budget is going to destroy all competitive business, large and small, in this country. In England1 they have passed a law known as the pre-war trade practices act which will restore the wholesaler and the retailer his pre-war trade practices. We are relying on different agencies here, and the bureaucrats will, in the end, drive this country into bankruptcy. If I had time I would read the remarks of the chairman of the wartime prices and merry-go-round board in Montreal that all competitive business was at an end.
There has been a great hip-hurrah over this budget from the press of this country, also from the paid officers and press agents that the government have hired and from other loud-speakers of civil servants and of their control boards all over the country. You can-
not pick up a newspaper without reading of these new controls ordered over our heads. The minister of the crown responsible for them all is the present Minister of Finance. The minister told me that he could not give me the cost of the ceilings. That was before Easter, but during the Easter recess the chairman of the wartime prices and trade board said in Winnipeg that it would be $2,000,000. Inside of two weeks the same civil servant, Donald Gordon, was announcing the information, over the heads of this parliament while it was in session, that the cost of the ceilings would be $2,000,000. What kind of recognition will we get from the electors? The minister has brought down an item of $50,000,000 for ceilings for these bureaucrats over our heads, but by next year it will be a quarter of a billion without any control by parliament.
There are a lot of Utopians in and out of this house who advocate various policies. As I see it, they have one thing in common. They have always in the past been mistaken; before the war they were mistaken about notes and collective security, about the Monroe doctrine, the status quo and pan-Americanism. If I had taken a stand like that, when I came to the House of Commons I would have taken the penitent's bench, because I would have felt that I was guilty and had been responsible for a budget like this, and for this war which may engulf civilization. But no, they go round the country now posing as super-patriots, and they tell us about the new utopia that there is going to be after the war. Remember the utopia we were promised after the last war- a land fit for heroes to live in-a war to end war? We all know what happened. Our heroes were forgotten. They said it was a war to end all wars, and they advocated then, as they are doing now, all kinds of nostrums and cures. They should wait to see whether we are going to win the war, because that must be done first. Nothing else matters. Although we have many domestic problems, we do not yet know to whom Canada will belong.
I wish to protest about the way the income tax is being carried out. It is going to abolish all competitive business, large and small. The small man is not treated fairly, and in other ways the budget is full of inequalities, injustices, hardships and pitfalls.
The government has appointed a horde of officials in connection with the wartime prices and trade board. I have a clipping here which says:
Ottawa, May 13.-Fred W. Jones, of London, Ontario, has been appointed director of the

The Budget-Mr. Church
management service section of the wartime prices and trade board's division of simplified practice.
The management service section plans to propose programmes that will aid the small business man to bring about economies in his operations, and re-model his methods to meet present-day problems caused by the price ceiling and merchandise shortages. Operations will be carried out by field consultants in various trade categories. Offices are located in Toronto and Montreal, advising the small man how to run his business.
We have a whole regiment of officials appointed, not many of whom ever had any connection with any retail or wholesale competitive business, or any business. I have'a list of some of them here, with their names and former occupations. If the war policy of the government, as I said last year, is to control and administer every walk of life and almost every article or commodity of trade and commerce, it is going to bring this country to disaster and national bankruptcy and will not help win the war. These bureaucrats and boards have certainly got business into a huge mess in this country. The ceilings are bound to collapse, because many of them are founded only on sand. Some of the ceilings on the necessaries of life were no doubt absolutely necessary perhaps last season, if they had been properly administered. If all these bureaucrats were necessary for the winning of the war, no one would object, but we should beware of this hidden evil, the bureaucracy within our gates, with headquarters at Ottawa. From birth to death we are registered and controlled, supervised, directed and even dragooned. You can be arrested and kept in gaol without trial, on the word of a minister advised by his civil servants. We can be taken from home and our work, and sent hither and thither up and down the country, without any appeal.
The Minister of Finance has put himself in control of these men behind the scenes- professors, economists and all that kind of thing. They tried to do that in England, but there was such a rebellion in the House of Commons there that they stopped it and corrected the errors and got some parliamentary control. The idea seems to be, "a board a day will keep Hitler away". A newfangled controller a day is transforming all Canada into a serfdom and destroying all chance of the small, independent business man to exist. We have overnight become a nation run by bureaucrats, many of whom have never had any practical business experience with competitive business, and under the pretext of war they coin out their utopian economic new-deal methods and patent medicines and quack remedies for the poor, dear, suffering public and give him a knockout blow.
The budget has not one word to say about the housing situation. The housing conditions in the industrial city from which I come are simply disgraceful, and housing conditions in this city of Ottawa are also very bad. But nothing has been done about that. No doubt this question of housing and the beef control farce will be pulled out of the refrigerator by Christmas and be administered when one of the large number of bureaucratic boards we have in this country allow it. There are few walks of life which are not now supervised or directed by some department of state at Ottawa.
People want the money that is to be raised for war purposes to go for war purposes, but half of this budget is not for war purposes at all. They want the war vigorously carried out, its costs distributed as fairly as possible and the general welfare put ahead of special interests. They want a suspension of disputes and no special favours toward anyone-farmers, capital, labour, social workers or anyone else. Let me quote what Mr. Winston Churchill said in the House of Commons on April 13, 1939, with respect to bureaucracy:
I know very well the patriotism and sincere desire to act in a manner of perfect rectitude which animates ministers of the crown, but I wonder whether there is not some hand which intervenes and filters down or withholds intelligence from ministers.
This budget is largely copied from the United States. The Minister of Finance, addressing the House of Commons a month ago, said:
In my judgment parliament is more and more on trial at the bar of public opinion. There is something wrong with the House of Commons. I am not reflecting on the house, and I do not know what is the cause, but there is something wrong with it. I have asked myself is this the fault of the government in any way?
Following that the Financial Post sent me a wire for an opinion and I replied:
What is wrong with Mr. Ilsley? Why doe? he not veto and apply the brakes to the orgy and wasteful expenditures and to the way a mint of money is being spent like water over parliament's head.
A civil war was fought in England for nearly one hundred years to gain control over expenditures and of the executive now surrendered to irresponsible boards and bureaucrats who mostly never had any training in any competitive business. The press will not report the proceedings of parliament, who might just as well meet secretly, yet pages of paper glorify sports. I propose that the annual budget be brought down on a fixed statutory day.
Over our heads, while parliament was sitting, a subsidy was announced by Mr. Donald Gordon, chairman of the wartime prices and trade board, for fruit and vegetables. He announced to a delegation representing 25,000 Ontario fruit and vegetable growers that the
The Budget-Mr. Dechene

price ceiling would not be punctured to allow increased prices on produce grown for canning and jam processing industries. But he promised that the board would consider paying a subsidy on such products if processors and growers could prove to the board that the price of any one product should be increased. All that was done while parliament was in session 1 A huge amount has already been spent by the board in subsidies, and Mr. Gordon has surrounded himself with a lot of people who never were in business.


Thomas Vien: I am sorry, but the hon. gentleman's time is up.


Thomas Langton Church: I am sorry, Mr. Speaker, that I had to speak without any preparation, on such short notice.


Mr. J. M. DECHENE (Athabaska):: Mr. Speaker, in asking you for the privilege of the floor, may I say that I would not inflict myself upon this august assembly were it not that I am convinced that the matter I wish to discuss should be discussed in this budget debate because it relates to a part of our activities that is very much in the limelight at the moment.
First, however, I wish to congratulate the Minister of Finance (Mr. Usley) upon the presentation of his budget some days ago. It strikes me that it was the most courageous budget ever presented, and the presentation itself was an outstanding performance because, while it presented requirements in such staggering amounts the minister made everybody like it. But as usual in all democracies those who have been yelling the loudest for total war are reluctant to congratulate the minister upon presenting a budget which undoubtedly means total war for all the people of Canada. At the other end of the line, strange as it may appear, those who have been agitating for the conscription of wealth, whatever that may mean in the present circumstances, those who have been asking that the rich be taxed, now appear to be dissatisfied because the rich are being taxed out of practically everything they make.
I believe, however, that the Canadian people as a whole, of all classes, will agree with the tribute I have feebly tried to express to the Minister of Finance for his masterly budget in these critical times.
I notice by the tariff schedules in the Votes and Proceedings of June 23 that the government proposes to remove entirely the duty on machinery used to separate oil from bituminous tar sands. I am speaking from memory, but I believe the old tariff was 27^ per cent. This is being taken off entirely, showing the gov-

ernment's intention to help in the development of these great resources of our north country.
I have a piece of information which I should like to give to this assembly. It came to me from the far north, a part of the country which liars have not reached yet; one generally gets the truth from the people there. A large amount of material is being moved by some important company to Fort Norman, some 900 miles north of Fort McMurray, with the purpose of constructing a pipeline from Fort Norman to White Horse to supply gasoline, oil and other petroleum products for use on the new highway being constructed by the United States government through the Yukon to Alaska. But on behalf of the people of Fort McMurray, which is right in the centre of the greatest field of bituminous tar sands in the world, bar none, as has been proved by outstanding engineers of this government, and others, I wish to protest to this house against the apparent neglect of these great resources which, after all, are so much closer to the transportation system of Alberta and of Canada generally. An engineer of the Department of Munitions and Supply, in making a report to that department some weeks ago, stated it was not advisable to expend any money in developing the tar sands of the Fort McMurray and Fort McKay areas because of their inaccessibility. He expressed that opinion in spite of the fact that the railway runs through fifty miles of these sands, right to the town of Waterways, and within a few miles of Fort McMurray, and in view of the further fact that the greatest armies of the world to-day are engaged in a most murderous and costly struggle for the control of certain oil resources. Hitler is willing to go a thousand miles and wade through an ocean of blood, leaving thousands of corpses on his way, in order to reach either the Caucasus or the Iran fields, while we in Canada declare that a field like the Fort McMurray area, only 350 miles from Edmonton, is too far away for us to consider.
Through the courtesy of the hon. member for Peace River (Mr. Sissons) who is always awake to anything in the interests of the far north, my attention has been drawn to the issue of the Canadian Geographical Journal of June, 1942. In that magazine I find an extremely well-written article, containing information in the possession of the Department of Mines and Resources, written by S. C. Ells, an engineer of such repute that his fame has gone far beyond the confines of the Dominion of Canada. Mr. Ells was one of the first, away back in 1913, to go down the Athabaska river from Athabaska Landing, at what is now the

The Budget-Mr. Dechene
town of Athabaska in the constituency which I have the honour to represent, to investigate these tar sands. He went down in a scow to investigate what he had heard from the voyageurs of the Hudson's Bay company and the missionaries about these great tar sand deposits along the Athabaska and Clearwater rivers. It may not be of any great interest to the house, but some hon. members have given a certain amount of attention to this subject, and I was surprised that so little is known about it. In 1904, nearly forty years ago, I myself went down the Athabaska river in a scow as far as Fort McMurray. Even in those days, at Pelican portage, near the House river, the Department of the Interior of those days had sent some engineers to investigate the possibilities of gas and oil in that part of the country. They dug a well at House river near Pelican rapids which struck such a tremendous flow of natural gas that for a great many years it could not be capped. In those days the machinery which can now be used to stop flows of that kind had not been invented. Fire was set to that flow of gas, and one could hear the noise of it about eight or ten miles away, while at night one could see the flames burning 150 feet in the air. It continued to burn for some years, until the force was spent, allowing the engineers to cap the well.
In those days I went to Fort McMurray and saw these tar sands. In some places they were over two hundred feet high; it was an impressive thing to see them shining in the sun. Since that time Mr. Max W. Ball and his associates at For McMurray spent over half a million dollars in the construction of a plant to mine and refine these sands successfully. It was not a share-selling proposition; they put up their own money.
The reason why I present these facts to the house to-night is to try to interest the government and the people of this country in order to see whether something cannot be done, at a time when we cannot get gas elsewhere, and in view of the fact that eminent engineers have expressed themselves as so favourable to development work. Mr. C., S. Bowey, of the United States bureau of mines, a man of outstanding repute, after investigating that field declares that it is the largest field of bituminous sands in the world and contains the largest oil reserves in the world. I am not speaking merely of America. In 1937 he estimated that the known field, which extends two hundred miles along the Athabaska and fifty miles along the Clearwater river, contains deposits, which he himself saw, from which could be extracted with the machinery available in those days-and which
has been improved since

two hundred and fifty billion barrels of oil, while the known resources of the rest of the world, barring what may have been discovered elsewhere since that time, are only some thirty-nine billion barrels. Yet everywhere in Canada we are cutting down the consumption of gas in order to carry on our war effort, while 350 miles by railroad and 245 miles by air from the city of Edmonton, there is an unlimited amount of gas and oil for the Canadian people to develop.
There is another aspect of this subject which I wish to mention to the Minister of Finance.
I have not had time to reckon the amount; but I venture to say that during the last few years, until we recently cut down consumption, the large amount of gasoline, crude oil, and oils of all sorts imported from the United States has had a great deal to do with the adverse balance of trade which affects our exchange with that country. Besides that, we are importing millions of barrels of crude oil from south America, or at least we were doing so until the Germans stopped us. We were importing that crude oil to be refined on the east and west coasts and in Montreal. Millions of dollars were involved, while our own resources in our own country, sufficient to supply the needs not only of Canada but of America, are lying practically idle.
To-night the leader of the Cooperative Commonwealth Federation (Mr. Coldwell) referred to the treatment of mineral companies. I do not agree with the ideas he expressed in that regard. I say that when this war is over, contrary to what he seems to have in mind, whether it be a year or two or three years from now, we shall be facing a world which has wasted billions of tons of minerals of all kinds, blown up into the air, or sunk into the depths of the sea all over the world, to such a staggering extent that no man would dare to estimate the value of it. Besides the world scarcity of agricultural products, to be supplied by the great Canadian wheat lands, there will be a world scarcity of cattle and hogs, also to be supplied by the great western provinces and by the eastern provinces as well; and the demand for those products of this dominion, to replace the stocks of starving Europe and other parts of the world, will be tremendous, because there will be nothing left in the most populated parts of the globe. The war monster of Hitler will have eaten it all up. But just consider the wastage that is taking place in steel, iron, copper, aluminum, oil and everything else. All these commodities are being wasted, billions of tons and billions of dollars' worth of them. Canada with its
The Budget-Mr. Dechene

vast resources, in practically all these mineral fields, and with great coal resources, some of them untouched so far, will be able to supply the needs of the world. Take the coal resources in the Peace River country and the Rocky mountains, estimated at billions of tons-the best steam coal, available in Canada, but so far from communication that they are not being developed at present. This is in addition to the fields already in operation. Take the resources of Alberta alone. The coal resources of that province are estimated to be 15 per cent of all the coal of the British empire.


Mr. COLD  WELL@: Of the world.


Joseph Miville Dechene: Yes, of the world. Then take our oil and other minerals. I suggest that if we begin now to consider the tremendous expenditures we have to make, and which I approve, in order to win the war; if we start now to organize for post-war production to replace the wastage that is at present taking place; if we develop these resources at Fort McMurray alone, for example, we shall be taking a step in the right direction. At Fort McMurray the possibilities are simply immense. According to the figures of the engineer of the Department of Mines and Resources-and he puts it lower than does the bureau of mines of the United States-the estimate is a hundred and fifty billion barrels. If we proceed to develop these vast resources, then within a few years after the close of the war the worries of the Minister of Finance will have ended. Just consider the tremendous wealth that will be produced. That is why I dare to rise in my place to-night and speak as I am doing.
Aristide Briand, the great foreign minister of the French republic after the last war, and one of the greatest men produced in that period-as hon. members will remember, he had dreams of the United States of Europe-made a remarkable statement with regard to the strategic advantage to the nation possessing the oil fields and oil resources of the world. He said that possession of these oil resources was the reason for the breaking up of peace conference after peace conference, economic conference after economic conference. He said that without these resources no nation could be great in times of peace. How much truer his words are to-day. No nation can become great, he said; no nation can go ahead and be powerful unless it possesses these vital resources so necessary to the machinery of transportation and to all the other operations of our modern age. This was one of the reasons for some serious misunderstanding between the British and French governments.
[Mr. Dechene.l
Though the French government obtained a mandate in Syria, all they saw of the oil resources was a pipeline going through the country. But do we need to have impressed upon us the fact that the possession of these oil resources is as important as Briand stated? Surely it is palpable, it is a truism, that no nation can go ahead without this possession. As he said, it has caused the breakdown of many peace conferences.
I say therefore that, no matter what other burdens we may have to carry, we should proceed with the development of these vast resources. There is no wild-catting about it. This year in the dominion, I venture to say, $1,000,000 or more will be spent in attempting to prove oil fields. Sometimes six thousand or seven thousand feet will be drilled at tremendous cost, and many times there will be a dry hole. That may be true of the Turner valley or other places, but at Fort McMurray there is no dry hole. There is the sand staring you in the face, and the statement has been made by Mr. Max W. Ball, who is operating in the field and has spent his own money, that in cutting walls through the sand, with a steam shovel, or with whatever tools they use, they strike ponds of clear bitumen. Everything that we have been importing from Trinidad and far-off places in the world we have in the far north. As a matter of fact, Mr. Speaker, it is no longer the far north, because there is a railway right through the property.
On motion of Mr. Dechene the debate was adjourned.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
Wednesday, July 1, 1942