Mr. J. S. ROY (Gaspe):: Mr. Speaker, I
rise to a question of privilege. Following the announcement I made to the house last Friday that three ships had been sunk the Sunday before in the St. Lawrence by enemy submarines, certain newspapers intimated that I should be censured.


Mr. MACKENZIE (Vancouver Centre):: The hon. member cannot refer to press reports commenting on proceedings in this house.


Hon. R. B. HANSON (Leader of the Opposition):: Let him make his statement.


Joseph Sasseville Roy: As I do not want the impression to go abroad that I may be one who disregards our interests in connection with the war, I should like to make a statement on the circumstances surrounding my announcement. I could have made this announcement at three o'clock the day before, but as I feared that the convoy might not have reached its destination at that time, as a convoy travels slowly, I waited until the next day. At that time I was sure it would be of no use to the enemy, who in all cases knows more than we do. In an editorial to-day the Montreal Gazette writes this:
Any effort to withhold information from the enemy when it is in the possession of a whole countryside, and beyond, looks more like a thin hope than a genuine possibility.
VAction Catholique of Quebec also declared in its Saturday edition that half of the people of Quebec city knew all about it before

Shipping Losses
my announcement. A reporter from La Prcsse of Montreal told me the same. My reason for making that announcement was to urge again that the government should-


Mr. SPEAKER:: In rising to speak to a
question of privilege the hon. member should deal merely with the matter about which he complains. He should not enter into an argument or enlarge upon a statement that has been made already; he should simply make his position clear as to what he intended when he made his statement in the house. I think the hon. member has now made it clear what his intentions were. He has told of the date when he received notice of these sinkings, and how he delayed in giving that information on the floor of the house. I think the hon. member has now gone as far as he should on a question of privilege.


Joseph Sasseville Roy: I was just about to give the
real reason why I made the announcement. It will take only a moment.


Georges Parent: I understood from the
hon. member that he was complaining about editorials in certain newspapers which referred to the statement he made on Friday last. He is entitled to state the meaning and intent of that statement, and I think he has done so.


Hon. J. L. RALSTON (Minister of National Defence):: My colleague, the Minister of
National Defence for Naval Services (Mr. Macdonald) is not in the house at the moment, but perhaps I should not let this opportunity pass without pointing out to the hon. member who has just sat down what has been intimated to him already by the Prime Minister (Mr. Mackenzie King), namely, the great gravity of his or any one else communicating information of this kind prior to the time that the censors or the department or the intelligence branch of the department consider it advisable to do so. I am only pointing out to him that what he does in that respect is to oblige the submarine commander by reporting for that commander to his base that successful action has been taken. A submarine commander might not be in position to do that himself without being detected. My hon. friend, or anyone else who publishes a statement of this kind, does it-unwittingly of course-for the submarine commander. In that respect I submit he is doing something which is bound to assist the enemy, something which cannot be in the public interest. I do suggest that the course which was suggested to him on Friday, namely, that he communicate with the
Minister of National Defence for Naval Services and ascertain from him whether it was thought to be in the public interest to refer publicly to this matter, would have been a much wiser course.


Richard Burpee Hanson: Mr. Speaker, with much of what the Minister of National Defence (Mr. Ralston) has said, I am in thorough agreement, but I think it would have been better if it had been stated a long time ago, after the first incident, just what was the proper course to pursue. That was not done. I may say to the minister that I heard of this incident myself on Tuesday. Reports were widespread in the province of Quebec, and I have had many letters about it. I communicated with the minister on my arrival from Fredericton at noon on Tuesday; he told me what the position was as they understood it and indicated just the reason the minister has now given-that a substantial time should elapse before the incident should be made public. I am in thorough agreement with that. If that course had been proposed to the hon. member for Gaspe (Mr. Roy)
I have no doubt that as a good citizen he would have been guided by it. At Matane and Cap Chat the situation was such that everybody knew7 it. From a letter I received only this morning I could tell the minister just how widespread was the information about this incident. You cannot keep these things quiet. However, an announcement in the House of Commons is another matter.
There is one thing I should like the minister to bring to the attention of his colleague. What is the position with respect to convoys in the St. Lawrence? Are there any? Should we not know the position, at least in a general way? The minister shakes his head. Perhaps he is right; I am not going to judge. But so far we do not know just what is the position with respect to protection. I think it would have a reassuring effect if something were said on that point.


James Layton Ralston: If Mr. Speaker will permit me, may I say with regard to the reasons for not disclosing matters of this kind except after a lapse of time, I do think the hon. leader of the opposition has forgotten that my colleague the Minister of National Defence for Naval Services (Mr. Macdonald) made a very complete statement some time ago on that very matter, and gave the reasons.


Richard Burpee Hanson: And I did not think they were good enough.
Shipping Losses


James Layton Ralston: I am sorry, but I remember it myself, and the minister went to some pains to give reasons. It was in connection with a sinking which had taken place farther around in the gulf, and at that time he indicated that a reasonable time should elapse before an announcement was made. We must not, I submit, mix up the idea of people in the locality having knowledge of such an incident and the placing of it on record in Hansard or publishing it in a newspaper, whence it is immediately transmitted by friends of the German government to Germany and is announced over the German radio. No one suggests that you could possibly keep these matters secret from those in the locality, but it is a different matter to make them public so that they can be transmitted to Germany.


Mr. M. J. COLDWELL (Rosetown-Biggar):: Might I suggest to the government that before this house adjourns there should be a secret session of the house at which the matters we have just been discussing can be laid before the members, together with the situation regarding the war? Our sister dominions are kept fully informed in that way, and a secret session of the house at Westminster is being called in the near future to discuss shipping. In view of the war situation which faces us to-day I think this house should be much more fully informed regarding all phases of the war than we are at the present time, and I suggest that a secret session of the house be held before we adjourn.


Richard Burpee Hanson: Was the last one so successful?



CONSIDERATIONS AFFECTING ANNOUNCEMENTS AS TO SINKINGS

[Stage Direction]
On the orders of the day:
Hon. ANGUS L. MACDONALD (Minister of National Defence for Naval Services): I should like to make a statement with reference to certain remarks made in this house on Friday last by the hon. member for Gaspe (Mr. Roy). I might recall to the house that on May 12, I believe it was, I gave a statement to the press, and on the 13th I made a statement in this house, respecting sinkings on the eastern Canadian coast. In those statements I endeavoured' to lay down certain rules which should guide in further pronouncements of this nature. Subsequently to those dates, the chief censor for Canada, Colonel Biggar, in cooperation with the officers of the naval services, issued a circular which was directed to the newspapers of the country setting forth in greater detail the considerations which

should be kept in mind in making statements of this sort. I am very glad to say that the newspapers of this country have observed with the greatest care the suggestions made to them by Colonel Biggar.
I should like to point out that in Great Britain announcements of sinkings of merchant ships are not now made. For a time in the earlier days of the war it was the custom, in due course, to announce that certain vessels had been sunk and that the next of kin of the casualties, if there were any, had been notified. But in more recent months you will not find any such reports of sinkings in the British press. There are excellent reasons for that. In the first place any immediate announcement of sinkings will prevent the next of kin of casualties from being informed before the announcement is made. The result is that every person who has a friend or relative on these ships sailing the seas is in anxiety until he gets a letter from that friend. Consequently it is only proper, in common decency and Christianity, to wait for some time, and to inform the next of kin of casualties, and when the announcement of the sinking is made, to say that that has been done. Then everyone who has not been notified knows that his relative or friend is not involved in the sinking.
There is another reason, the main reason of course, which is that announcements of this sort are likely to give useful information to the enemy. That is the chief reason why some secrecy has to be maintained. The ways in which announcements of this sort may be of use to the enemy are many and varied. If he does not get the information from us, he has to work it out for himself. He has to separate rumour from fact; he has to judge of the reliability of his information, and in a hundred ways he may remain uncertain. But when we in this country, and particularly in this house, give him the information on a platter, then the thing is settled and he does not need to inquire any further as to the accuracy of the information.
As I say, the hon. member for Gaspe last Friday did not ask a question but made a statement. He said that three ships out of a convoy of fourteen had been sunk. The hon. member having made that statement, and having made it, I must assume, with every sense of his responsibility as a member of this house, and the matter having therefore become public and having been announced in the press of the country and on the radio of the country, I may now state, I think I am almost required to state to the house, that three ships belonging to the united nations were torpedoed and sunk in the gulf of St. Law-

Slapping Losses
rence about a week ago. I must add with regret that four members of the crews of those ships are known to have been killed, four are reported missing, and ninety-nine have been safely landed. I am glad to say one pleasant thing in what must be an unpleasant duty, and that is that the citizens of that region, the constituents of my hon. friend, and of other hon. members of this house too perhaps, have shown in this and in the other instance which occurred two months ago, the highest measure of charity and kindliness. They are not, I understand, wealthy people, they have little to give, but what they had to give they gave with a cheerful heart to those men who were perhaps worse off than themselves.
Information as to the sinking of these ships was in the possession of many people early last week. There is no doubt about that. Many people knew of it; it was known along the waterfronts of the country, it was known to the press by Monday or Tuesday of last week. The press refused to publish it; not one newspaper, so far as I know, endeavoured to make any use of this information until an official statement was made. It was in the possession of mjr hon, friend the leader of the opposition, because he had heard the story on the train and spoke to me about it. I felt it quite proper to inform my hon. friend as to the facts, asking him-what perhaps I did not have to ask him, because I knew I could rely on his good sense in the matter-to say nothing about it, and of course my hon. friend said nothing about it. So the information was widely known to people in this country. But I point out now-and it is a mistake that is commonly made-that people say to me, "Well, the public know about this anyway; why don't you make an announcement about it?" But there is a tremendous difference between Canadians knowing about something and Germans knowing about it. The entire people of this country might know of a sinking or some other event of that kind, but so long as that information did not get to Germany, so long as it was not made public in our papers or broadcast over our radio, the chances of its getting to Germany would be small. Of course once it is broadcast it becomes the property of the world. It is known in the United States, it becomes known in neutral countries; speedily it finds its way to Germany and is used there for propaganda purposes.
These rules laid down two months ago and repeated by the chief censor are not made for the purpose of keeping information from the people of Canada-not at all. They are made for the sole purpose of keeping
from the enemy information which may be of great value to him in directing the movement of his ships.
This brings up a much more serious question, one which concerns the rights and privileges of this house. There is very little use, there is very little purpose, in censoring the press and radio of the country if any hon. member of this house can stand in his place and, by asking a question, or by making a direct statement, as the hon. member for Gaspe did, undo the whole work of the censorship authorities and all the efforts of those who are endeavouring to ensure the safety of allied ships and allied seamen. We are constantly urging the average citizen to guard ihis	tongue. You see	noticesin almost	every	elevator. in public
buildings, in government buildings, urging people not to talk about the movements of ships or troops or the manufacture of munitions. "Guard your tongues", we are telling the people in French and English all the time. But how can we expect the average citizen of this country to guard his tongue if hon. members of this house do not guard theirs?
I will say this to the hon. member for Gaspe; had I been in the house on Friday I think I should have felt constrained to rise and ask this house to expunge from the record the statement which he made. Thereby it would not have become a public statement. But he having made it, and it having been allowed to stand on Hansard, it of course became public; and the members of the press gallery had a right to use it. But if this sort of thing is to go on; if any hon. member can stand up and, by innuendo, by question, by statement, jeopardize the whole security system of this country, then I am afraid it will be necessaiy for someone to say that statements of that kind will either not be allowed to be made or, if made, will not become part of the record of this house.
My hon. friend talks of the protection of his constituents. I would say to my hon. friend that statements such as he made are not adding a single jot or tittle to the safety of his constituents; on the contrary they endanger the lives of his constituents. I would say further that there are other people in this country, other citizens of Canada, who are in greater danger, or are much nearer the battle line, much nearer the danger zone, than his constituents; and not once have I heard from that easternmost part of Canada any break of this kind. Not once have I heard an hon. member from the easternmost provinces of Canada rise in his place and ask questions of this kind. Not once in the newspapers of that part of the country, where information as to the movements of ships is fuller and more complete than anywhere elsp.
Shipping Losses
[Stage Direction]
have I heard of anyone endeavouring to say anything or to do anything which might endanger the life of a single seaman or the safety of a single ship. When my hon. friend talks about protecting his constituents, I should like to know what he has ever done to ensure the greater protection of this country, or to add in any way to its defences.
Mr. COLD WELL:: If I may ask the minister a question, does he not think it would be perhaps wise to notify an hon. member of any untoward happening in his constituency, in order to prevent a recurrence of this sort of thing?


Some hon. MEMBERS:: No.


Major James William Coldwell: Placing the whole burden upon an hon. member of this house to ask about something that occurs in his constituency, and then castigating him, in my opinion is wrong. The minister must take ' some responsibility for this situation. As for the radio and the press, surely we have a voluntary censorship; and members of the house surely must ask questions somewhere about the welfare of their constituents or as to what happens in their constituencies.


Mr. MACDONALD (Kingston City):: I realize that we should not get into a debate, Mr. Speaker, but my hon. friend could have asked his question privately if he had wished, as my hon. friend the leader of the opposition (Mr. Hanson) did. Then he would have been given the information on his honour as a member of the house. But I do not understand how the asking of a question or the making of a statement in this house is going to add to the protection of my hon. friend's constituents. If he thinks for one moment that the whole Canadian navy is going to line up along his shores and defend those shores only, letting the convoy system we have and the protection we have for all the rest of Canada go to the dogs, he is making a tremendous mistake. I am not ready to change the disposition of one ship of the Canadian navy for him or all the questions he may ask from now until doomsday.


Joseph Sasseville Roy: I have listened to the minister very carefully, and I am taking his remarks in the best spirit, because I know the motives which inspire him are of the best. He has asked me what I have ever done to protect my constituents and my constituency. I would recall that I have offered the government many suggestions which have been disregarded; and if they had listened to what I suggested, this last torpedoing might not have happened.
I will not disclose anything now. My reason for making that announcement-which I will admit might not have been as good as I 
thought it was-was in support of my asking for a secret session for the benefit of the house. I have the strongest reasons for urging a secret session, in order to disclose to parliament matters I do not want to disclose publicly, because I am afraid they would help the enemy. That was the only reason for my announcement. If we are given a secret session to study these important matters I will prove to the house that I am just as good and loyal a Canadian, taking just as good care of my constituency and of the interests of the whole country, as anyone else.


Angus Lewis Macdonald: If I may add one word, if my hon. friend has in mind any means for adding to the protection of this country I should be very glad if he would come and tell me so. We do not need a secret session so far as naval defences are concerned. If the hon. member will come to me at any time with his suggestions I shall be glad to entertain them.



QUESTIONS

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

Mr. McGREGOR:: 1.	Is James Elliott Coyne, deputy chairman of the wartime prices and trade board, a permanent employee of the government, or of any government agency?
2.	If so, what salary and other allowances does he receive?
3.	Is he married, or single without dependents ?
4.	What is his age?
5.	Was he appointed under a certificate that his appointment was necessary in the public interest ?
6.	Was he employed as counsel, or otherwise, with the royal commission on dominion-provincial relations?
7.	What total salary or fees was he paid for this work, and on what basis were these calculated?
8.	By whom has he been employed during the past five years?
9.	For how many years has he been employed by the government or governmental agencies?


Mr. ILSLEY:: L An employee of the Bank of Canada.
2.	The Bank of Canada is not a government department and information in regard to salaries paid to their officers is not a matter of government record. Mr. Coyne receives no additional salary or allowances as deputy chairman of the wartime prices and trade board or from any other government department or agency.
3.	Single, without dependents.
4.	Thirty-one.

Questions
5.	No. Mr. Coyne has been on loan from the Bank of Canada to the wartime prices and trade board since long before the order m council relating to appointments to the public service was passed and has been an employee of the Bank of Canada since before the war. His qualifications for the services which he renders in the work of the wartime prices and trade board are considered to be of an exceptionally high character and the continuation of such services is deemed to be necessary in the public interest.
6.	As an employee of the Bank of Canada he did some research work for the royal commission on dominion-provincial relations.
7.	No additional salary or remuneration of any kind.
8.	1937

employed by Coyne and Coyne, barristers and solicitors, Winnipeg and serving as assistant counsel, royal grain inquiry commission. 1938 to date-employed by the Bank of Canada but on loan to the foreign exchange control board, September, 1939, to March 15, 1941, and on leave to the Department of Finance as financial attache, Canadian Legation, Washington, March 16, 1941, to November 15, 1941; since November 15, 1941, on loan to the wartime prices and trade board.
9.	See No. 8.
industrial councils in war industries


Mr. NOSEWORTHY:: In what government-owned war industry plants are organized trade unions recognized as the bargaining agency between workers and management?


Mr. MITCHELL:: None.


GASOLINE RATIONING-MARITIME PROVINCES
Mr. PURDY:: 1.	What representations have been made to the government or any department thereof with regard to the reduction in the value of gasoline coupons in the maritime provinces and the effect of that reduction on the methods of transportation in these provinces?
2.	(a) What representations have been made regarding the reduction in value of the gasoline coupon in the i -ove named provinces and its effect on the regular means of livelihood of a number of people; (b) what is the number affected?
3.	What percentage of those affected by No. 2 would be assisted in continuing in their regular occupations if the passenger services on the various railroads discontinued during the past thirty years were reinstated?


Mr. HOWE:: Representations with regard
to reduction in unit value of the gasoline rationing coupons have been received from provincial governments, various organizations, business corporations, and private individuals
in the maritime provinces. These representations covered all aspects of the question, including the effect of the reduction on the regular means of livelihood of a number of people. There is no way of estimating what number of people are so affected.


PRAIRIE FARM ASSISTANCE-1 PER CENT LEVY
Mr. FAIR:: What amount has been collected in each province under the Prairie Farm Assistance Act 1 per cent levy in the crop years 1939-40, 1940-41, and 1941-42, to date?


Mr. MacKINNON (Edmonton West):: Amounts Collected on Grain Purchased During the Undernoted Periods
Manitoba	 $ 333,453 13
Saskatchewan	 1,344,208 23
Alberta	 743,121 61
Total	 $2,420,782 97
Adjustments not allocated by provinces	 724 40
Grand total	 $2,421,507 37
Manitoba	 $ 354,813 76
Saskatchewan	 1,360,540 00
Alberta	 866,818 03
Total	 $2,582,171 79
Adjustments not allocated by provinces	 516 08
Grand total	 $2,582,687 87
1941-42 to March 31
Manitoba	 $ 276,909 13
Saskatchewan ...,	 521,504 44
Alberta	 306,932 78
Total	 $1,105,346 35
Adjustments not allocated by provinces	 231 04
Grand total	 $1,105,577 39


WARTIME PRICES AND TRADE BOARD-RETAIL TRADE ADMINISTRATION
Mr. DIEFENBAKER:: 1.	Who is the director of retail trade administration, wartime prices and trade board?
2.	What salary, and expenses, if any, does he receive?
3.	What positions did he hold between 1923 and the date of his appointment?
Questions


Mr. ILSLEY:: 1.	The director of retail trade is Mr. E. G. Burton.
2.	He receives no salary. He receives travelling and living expenses when away from his usual place of residence.
3.	From September, 1923, until July, 1925, with Carson Pirie Scott and Company Ltd., Chicago, since July, 1925, with Robert Simpson Company Ltd., where, in 1937, he was appointed general manager.


INTERNATIONAL WHEAT CONFERENCE-CANADIAN REPRESENTATION
Mr. PERLEY:: Who were Canada's representatives associated with George Mclvor at tile international wheat conference held recently in Washington, and did the wheat producers or pools of western Canada have any direct representation?


Mr. MacKINNON (Edmonton West):: 1.	R. V. Biddulph, European Commissioner of the Canadian wheat board; A. M. Shaw, Department of Agriculture; C. F. Wilson' Chief, Agricultural Branch, Dominion Bureau of Statistics.
2.	When the United States government extended invitations to other governments to send representatives to the Washington wheat meetings, they especially requested that the delegates be government officials concerned with wheat. This request was observed by all five governments participating, whose delegations in each case were composed of government officials. Throughout the course of the negotiations the delegations consulted in all matters of principle with their respective governments.


TRAINING OF MILITARY MOTOR TRANSPORT DRIVERS
Mr. TUSTIN:: 1.	Are military motor transport drivers trained at London, Ontario, by civilian personnel ?
. 2. If so, by whom, and what remuneration is paid for each soldier so trained?
3.	Why is this training not given under military control and operation?
4.	At which military training centres do enlisted men receive motor transport drivers' training?
5.	Is complete training given to military transport drivers at each training centre?
6.	Is the training of motor transport drivers at Barriefield in the C.O.C.T.C. conducted under civilian command?
7.	If not, was it at any time during the past two years, and if so, when, by v'hom, and upon what terms?


Mr. RALSTON:: 1.	No military transport drivers are trained at London either by civil or military personnel. The Mechanics Training Centre at London, Ontario, provides training for motor mechanics and fitters for the workshop units of the R.C.O.C. and special training in diesel and radial engines for the motor mechanics of the Canadian Armoured Corps.
2.	The instructors for the Mechanics Training Centre are trained under contract by the Anderson Organization of Los Angeles, California. At the present time, the Anderson Organization is being paid at the rate of $1 a day per man in training.
3- The training given at the Mechanics Training Centre is highly specialized and includes training in diesel and radial engines. When this school was organized in July, 1941, neither experienced instructional personnel nor equipment was available in Canada. By entering into contract with the Anderson Organization, equipment and instructors were produced in a very short time.
4.	Transport drivers are trained at some 30 advanced training centres throughout Canada.
5.	Complete training for drivers is given at practically all advanced training centres throughout Canada. The specialized training given by the Mechanics Training Centre, London, is not duplicated elsewhere.
6.	No.
7.	No.
members of PARLLAMENT in armed forces


Mr. CRUICKSHANK:: 1.	Which members of the House of Commons served in the armed forces during the last war?
2.	Which members are serving in the armed forces at present?
3.	Which members have sons serving in the present war ?


James Layton Ralston: I want to ask my hon. friend to drop question No. 3, which reads "Which members have sons serving in the present war?" The departments have no record of that. My hon. friend might just as well ask which members have brothers or fathers serving in the present war.


Mr. CRUICKSHANK:: I should like to know that too.


James Layton Ralston: It seems to me it is not relevant, and it is not a matter regarding which we should be asked to give information.


Georges Parent: Question No. 3 dropped. Questions 1 and 2 passed as an order for a return.

Questions


MILITARY SERVICE-MEN SEPARATED FROM OR NOT SUPPORTING THEIR WIVES
Mr. CRUICKSHANK:: 1.	Are men of military age, married prior to July 15, 1940, separated or not supporting their wives, subject to call on the draft?
2.	Are men of military age, married since July 15, 1940, separated or not supporting their wives, subject to call on the draft?


Mr. THORSON:: 1.	No.	'
2.	Yes.


SMALL ARMS AMMUNITION PLANTS
[Stage Direction]
Mr. LaCROIX (Quebec-Montmorency):
In what locations in Canada are the small arms ammunition plants?
Clarence Decatur Howe: It is not in the public interest to give the exact location of small arms ammunition plants. They are either within fifty miles of the city of Quebec or within fifty miles of the city of Montreal, all in the province of Quebec.


INTERNMENTS
Mr. CASTLEDEN:: 1.	How many persons are now held in custody in Canada because they are communist or are suspected of being communist?
2.	How many of these persons have been in custody for more than two months?
3.	How many such persons in custody on July 8, 1942, were awaiting tribunal hearing?
Mr. ST. LAURENT:
1.	Sixty-six.
2.	Sixty-two.
3.	Six have not yet had a complete hearing; of these three have not requested a hearing; one refused to have a hearing for present; two are having a hearing but it is not yet completed.



QUESTIONS PASSED AS ORDERS FOR RETURNS


Mr. GRAYDON:: 1.	How many rural mail routes were in operation in Canada on July 1, 1942?
2.	How many new routes were inaugurated during (a) the year 1941, (b) the year 1942?
3.	How many extensions, if any, were made to existing routes, (a) during 1941, (b) during 1942?
4.	Has any general increase been made in the contract price of rural mail contracts during 1941 and 1942 by way of cost of living bonus? If so, what was the amount of such increase?
5.	By provinces, how many rural mail routes were put up for tender in, (a) 1941, (b) 1942?
6.	How many of these were put up for tender prior to the expiry of the existing contract?
7.	How many contracts were awarded in (1) 1941, (2) 1942, (a) at prices lower than the previous contract; (b) at the same price as the previous contract; (c) at a higher price than the previous contract?


DEFENCE OF CANADA REGULATIONS-CHARGES AGAINST FEDERAL GOVERNMENT EMPLOYEES
Mr. GRAYDON:: 1.	Have any informations and complaints under the defence of Canada regulations been laid against persons employed by the dominion government since the present war was declared?
2.	If so, what are the names and addresses of such persons, and with what branch of the government service was each connected?
3.	How many of such persons were convicted?
4.	How many of such eases were dismissed?
5.	Have any of such proceedings been withdrawn by the crown?
6.	If so, who were the accused persons in each
such instance, and what was the nature of the charges preferred against them and the reasons for such -withdrawals ?	.
7.	Are any of the persons against whom such proceedings were withdrawn still in the employ of the government? If so, who are they, and in what branch of the government service is each of them presently employed?


ACCIDENT TO ROYAL AIR FORCE FERRY COMMAND BOMBER NEAR MONTREAL
Mr. CHURCH:: 1.	What inquiry has been held into the deaths
of Squadron Leader George Patterson Christie, D.F.C., and of Wing Commander Brian Carr-Harris, of Toronto, killed on July 5, in a crash of a Royal Air Force ferry command Hudson bomber, near suburban Pointe Claire, near Montreal?	.	.
2.	Is any civilian inquest being held into the cause of this accident?
3.	Has the government, and under what law, statute, usage or custom, cancelled the right of soldiers, who are also civilians, to a civilian inquest into such matters to show the cause of the accident, and whether due care was taken to safeguard life in military camps?
4.	Has the government conferred with provincial attorneys general of the provinces on this subject of civilian inquests, and what was the reply in each case?
5.	Have any civilian inquests been held into conditions in the various camps of His Majesty's forces in Canada, since the war started, or into housing or hospital conditions of those who died in the latter places?


Mr. POWER:: Mr. Speaker, I think I shall have to make the same reply which I have already made to my hon. friend when he asked similar questions with respect to inquiries into the deaths of trainees in training. In this particular case I would say that the ferry command is under the Royal Air Force, and not under the Royal Canadian Air Force, and I have no control over it. I am convinced, however, that the Royal Air Force would not be willing to produce reports of these inquiries. With this reservation, the question can pass as an order for return.
Questions as Orders for Returns


CANADIAN FORCES-PRICES IN CANTEENS
Mr. CHURCH:: 1.	What are the rates being charged in canteens and other similar services, in the various camps of His Majesty's forces in Canada, since the sales tax was raised?
2.	Will any aid by way of bonus, subvention or subsidy be given as an aid to soldiers?
3.	Have the rates that formerly existed been frozen to prevent excessive charges by the wartime prices and trade or other board?
4.	What were the rates charged for cigarettes, chocolate bars, sandwiches, pop, ice cream, tea, coffee, beer and other articles of food and refreshment in these camps, (a) before the sales tax increase, (b) since they were put into effect?
5.	What regulation of these prices has the government regarding public and private canteens to the camps, re rates charged?
6.	Does the wartime prices and trade board issue any regulations in the matter?


MEMBERS OF PARLIAMENT IN ARMED FORCES
Mr. CRUICKSHANK:: 1.	Which members of the House of Commons served in the armed forces during the last war?
2.	Which members are serving in the armed forces at present?


CANADIAN FORCES-AVAILABILITY OF CIGARETTES FOR PURCHASE OVERSEAS
Mr. GRAYDON:: 1.	Has the alleged shortage of Canadian cigarettes available for purchase in Britain by our overseas armed forces been brought to the attention of the government?
2.	Is there actually such a shortage?
t 3. If so, what steps does the government intend to take to meet the situation?



CANADIAN FORCES-HOUSING OF FAMILIES OF MEN AWAY FROM HOME

Mr. GREEN:: What, if any, responsibility has the Department of National Defence or any other department of the government assumed for ensuring that sufficient housing is available for the families of members of the forces serving away from their homes?



SYNTHETIC RUBBER-POLIMER CORPORATION

Mr. BLACK (Cumberland):: 1.	When was the Polimer Corporation or other companies created for the manufacture of synthetic rubber?
2.	Where are such companies located, who are the principal officers and what are their qualifications?
3.	How much money, if any, has the government expended on each project to date?
4.	What additional expenditures is it expected will be required?
5.	When is it expected that manufacturing operations will commence?
6.	How many tons is it expected will be produced in 1942 and in 1943, and what will be the cost per ton?
7.	Have there been any proposals for the reorganization of the enterprise, and if so, what is the nature of such proposals?



MOTIONS FOR PAPERS


Mr. BLACKMORE:: For a copy of all documents, letters, telegrams, etc., pertaining to the court martial which, on May 2, 1941, dealt with the charges preferred against Major H. C. Singer, of the 2nd Canadian Anti-Tank Regiment in England, including the following:-
1.	The application for Major Singer's court martial.
2.	The convening order for his court martial.
3.	The subpoena of each of the witnesses who gave evidence in, the court martial.
4.	The first summary of evidence taken under Major S. McQwirter, April 14 to 18, both dates inclusive.
5.	Major-General Victor Odium's letter, 2 D.C./5-4, April 15, 1941.
6.	The complete copy of the proceedings of the court martial.
7.	The shorthand notes taken by the court recorder at the trial.
8.	All details as they appeared in the application for the court martial, including character, correspondence, court of inquiry, etc., etc.
9.	The letter sent to the Secretary of State concerning the dismissal of Major H. C. Singer from the services.
10.	Part I orders 2nd Cdn. Div., February 20-28, 1941; Part I orders No. 1 Base Depot, February 20-28, 1941; Part I orders 2nd Cdn A/T Regt., R.C.A., Oct. 30-Nov. 8, 1940, Dec. 15-27, 1941, Dec. 28-Jan. 5, 1941; February 20-28, 1941.
11.	Declarations to suspend, (a) Rule 8, Officer present at investigation; (b) Rule 14, Officer sent to inform accused of charges, etc.; (c) Rule 17, Undue delay in convening court martial. Open arrest April 9. Trial May 2 1941.


James Layton Ralston: Would my hon. friend consider dropping this motion, as I have already suggested? Otherwise it means that I have to be here every day when my hon. friend makes his motion. If he would drop it, to be reviewed and another motion submitted, he could put one on the order paper at any time. I do submit, Mr. Speaker, that a motion like this which has been standing on the order paper for four weeks should be either proceeded with or dropped.


John Horne Blackmore: I will notify the minister if I decide to move the motion.


James Layton Ralston: No, I am not going to stand for a notice from my hon. friend for me to be here.
I am asking my hon. friend, and I think it is only fair to the house, to drop the motion, which, I am told, has been standing on this order paper for at least six weeks.


John Horne Blackmore: I am not familiar with any rule under which the minister can ask me to drop the motion.

Labour Conditions


James Layton Ralston: I am not citing any rule. It is just ordinary businesslike procedure.


Georges Parent: Stands.


An hon. MEMBER:: Vote!


John Horne Blackmore: Mr. Speaker, the rules permit me to leave the motion on the order paper, and I propose to do so.
Motion stands.



WARTIME PRICES AND TRADE BOARD-BAKING INDUSTRY

Major James William Coldwell: For a copy of a report or reports by J. D. Woods of the wartime prices and trade board regarding the b King industry.


James Lorimer Ilsley: I have been in communication with my hon. friend about this motion, and I think he is willing to have it dropped.


Major James William Coldwell: The minister has agreed to give me an explanation of the matter, and I am prepared to drop the motion.
Motion dropped.



MILITARY SERVICE-APPLICATION OF S. L. LAMSON FOR POSTPONEMENT

Mr. CASTLEDEN:: For a copy of all reports, letters, evidence, recommendations, and other documents in the possession of the government, relative to the refusal by the national war services board of district M to grant the request for postponement made by Mr. Scott L. Lamson, L.534136.


Mr. THORSON:: This order should be made subject to a number of reservations. The boards hear all proceedings in camera; therefore all material which comes to a board is privileged. In addition, there are certain interdepartmental communications which are also privileged. With these reservations of privilege I see no objection to the motion being passed.


George Hugh Castleden: I cannot see why any of this need be secret; it cannot give any aid or comfort to the enemy. It seems to me that it is no more than the right of the ordinary citizen to have the information presented upon which a board bases its decision. It is possible that some reports which are presented are erroneous, and there is no means by which anyone can find out whether these reports are correct. On some occasions, I may say, the Saskatchewan board has acted differently from other boards. If the powers and privileges of these boards are not subject to some restriction, they can develop into a sort of star chamber and do real damage to the rights of citizens. I cannot see anything with regard to a return such as this, even respecting interdepartmental material, which should be considered secret.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Ernest Edward Perley: Can the Minister of Agriculture make a statement to the house so that the people of western Canada, and particularly the farmers, may know what steps are being taken to meet the very serious situation regarding farm and harvest labour? I am moved to make this inquiry because of the number of letters I am receiving which indicate that the farmers are seriously worried about the matter. What cooperation is being given by the various war services? What is being done?


Hon. J. G. GARDINER (Minister of Agriculture) :: The question should really be
directed to the Minister of Labour, who handles all questions which have to do with labour, including even labour for farms. I may say that representations are made to me as Minister of Agriculture, as apparently they are made to various hon. members representing agricultural constituencies, and I make representations on behalf of those concerned to the Department of Labour. My understanding is-the Minister of Labour will correct me if I am wrong-that a vote of $100,000 has been set up by this house for the purpose of making it possible for the minister to assist the provincial governments, or whatever department of a provincial government deals with agricultural labour matters, in the organization and transportation of labour from one part of a province to another, or even, if necessary, from one .province to another. For two or three years an amount of money has been included in the estimates for that purpose, and agreements are reached between the Minister of Labour, together with his department, and whatever department is responsible in the province, under which assistance will be given for the organization and transportation of whatever surplus labour is available to be moved to areas where there is a shortage.
Speaking as Minister of Agriculture, though, I think I should say-what is probably known to all hon. members-that surplus labour for different purposes is becoming less and less. Practically all of the labour in Canada is now employed, either in the armed services, in manufacturing, in transportation, or on farms, and I believe it to be very difficult to muster any additional amount of labour for farming purposes. It might be possible to reorganize it and to shift some of the surplus labour which is not on farms from place to place in
Labour Conditions

order 'to have it better distributed, but I doubt if there is any considerable amount of additional labour which can be placed on the farms. The course I have mentioned has been urged on the Department of Labour and they are doing, I believe, everything possible to coordinate the efforts of the provinces and the federal authority in this direction. An attempt is being made to - organize all the surplus urban labour, in villages and towns in the different provinces, in order that they can go to the farms in the surrounding community for so many hours a day or so many days a week. Organization is proposed similar to the organization which was carried- on in the last two years of the last war.
So far as the defence services are concerned, I think the Minister of National Defence should speak on their behalf.


Hon. H. A. BRUCE (Parkdale):: In further reference to the question which the Minister of Agriculture has just been answering, may I direct a question in respect to farm labour to the Minister of Labour, who seems to be the proper authority? It is becoming increasingly difficult, as the Minister of Agriculture said, to get suitable farm labour; and we are faced with this situation, that although we are paying double the wages we paid a few years ago, certain people will try to outbid us and steal away our help. I have had a recent illustration of this on my own farm. I should like to ask the minister if the same regulations should not apply to farm labour as apply to labour in factories-that the permission of the employer must be obtained before a man leaves to take another job of a similar character.


Humphrey Mitchell: I would say, in a kindly way, that we have heard a great deal about an allout war effort, and it is rather good1, from the labour man's point of view, to hear that there is a shortage of labour in Ontario.
As long ago as last February the Minister of Agriculture and myself discussed this matter, anticipating a distinct shortage of labour on the farms of this country. We came to an arrangement with the government of Ontario, who last year, through the instrumentality of an agreement with the federal government, and in cooperation with the employment service of Canada, made possible the organization of 23,000 additional people for the farms of that province. We made a similar agreement this year, with an additional amount beyond that of last year of $40,000 apiece, making $200,000 for the two governments. We sent a copy of that agreement to

all the other provinces, as we thought they would like to avail themselves of similar provisions or similar facilities.
I think this may be fairly stated1, that in connection with agriculture generally the best kind of government organization is that which is closest to the people.. I do not say that in any way to get from under the responsibility of the federal government. There is no need to tell my hon. friend that in its very essence agriculture changes from province to province, so that the problem in Saskatchewan is different from the problem in Ontario. Both in industry and in agriculture, faced as we are with various problems, we think it will be necessary to take substitutes. It is hard for us to adjust ourselves to a condition that departs from the psychology of two or three years ago, when we could simply go to the shelf and take down what we wanted. We have reached the point where it will be necessary for farmers and industrialists in Canada to use, if I may say so, all their local powers, their energy and their imagination to meet the local situation.
With respect to the wages question raised by my hon. friend, I should like to go into that, but he knows as well as I do, that in all these matters agriculture is generally excepted. It is excepted from the provisions of the unemployment insurance act; it is excepted from the provisions of many other acts and regulations in force in Canada, and I should not like to give an answer offhand. The hon. member understands as well as I do the vast organization that would be necessary to enable us to exercise control over the wages of individual farm labourers throughout the country. With regard to industry, it is comparatively easy where there are big units, where the organization is complete and we know who the employers are. There are 150,000 employers in industry and commerce to-day each of whom employs more than fifteen people. I say that not to make a speech, but to point out to my hon. friend the difficulties with which the government would be confronted if it undertook to set in motion immediately a policy that would control agricultural wages.
I think we should stand by the good old British principle, that it is wise not to pass regulations and orders in council unless there is a reasonable chance of enforcing them, because lack of enforcement would bring the government into ill repute and also render difficult the application and stabilization of the wage structure ot commerce and industry in this country.

Labour Conditions


Richard Burpee Hanson: May I ask the Minister of
National Defence if this matter of farm leave has been given consideration by his department. If so, has it been refused? I am prompted to ask this both by questions raised here to-day and by an announcement which I saw some days ago to that effect, the truth of which announcement was promptly denied.
I do think that some provision might be made with regard to draftees, if it will not upset the balance of training. Even if there is some inconvenience in connection with training at the different centres, the taking care of the harvest is such a vital matter in certain provinces that every effort ought to be made to render assistance if the difficulties are not insurmountable. I can visualize difficulties, and I will not press the point home; but it seems to me that the Department of National Defence might give consideration to a few days' leave for trainees and others in connection with this matter of harvest.


James Layton Ralston: I wish I were justified in giving to my hon. friend, the house and the country, an assurance that consideration which would really result favourably could be given. Let me say that the matter has been very seriously and carefully considered, and I would repeat here what I have had. to say in a good many letters, namely, that this matter of asking the army to supply men for various services has occasioned us a good deal of concern. My hon. friend will remember that not long ago the request was made that the army supply men for the purpose of loading fertilizer. Another request had been made previously that the army should supply men for seeding in the west. That request came from the president of the Saskatchewan Cooperative Wheat Growers Association. They felt perhaps that we should have complied with the request. A request was received later from the sugar beet growers, and so on.
There has arisen in this country the idea that the army has a pool of man-power which can be detailed for this or that civilian service. I say that in the kindest way, but I must say, as kindly and as firmly, that it cannot be done, in view of the commitments and preoccupations which the army has. There is not only training to be considered, but mobilization in connection with the expanded programme which had to be undertaken as the result of war developments. It is not possible to give the house any [DOT] hope that harvest leave will be entertained, in large
numbers, of men who have been called up, or of those who have enlisted voluntarily. There may be cases where men are at depots -not at training centres-and perhaps in some particular unit, on some local duty which does not require the same assiduous attention as some others, where some leave can be granted. But all cases will have to be considered individually, and there will be no harvest leave in the broad sense of making a general order that such leave will be granted to men who are needed to work on farms. Some consideration may be given regarding personnel in some units of a special character such as I have indicated, but I am afraid I cannot give the house any further assurance than that. '


Ernest Edward Perley: I would have directed my question to one of the ministers of the armed services, but I thought that the Minister of Agriculture (Mr. Gardiner) would make a statement similar to that which the Minister of National Defence has just given, and which is very valuable. It will enable farmers who have sons recently called up under the training scheme to know exactly what the conditions are and what they may expect. This morning I took up with one of the service departments an important letter I had received-


Some hon. MEMBERS:: Order.


Ernest Edward Perley: I am saying this to help the government. I was treated with great courtesy. I was told that there were special cases where it could be shown that it would not interfere with the man's course at all or with his general duties, wherein some consideration might be given. I thank the minister for the statement he has made. I wanted to get it on the record.


Georges Parent: Unless hon. members are seeking to continue what has become a debate, I must ask that similar questions be put on the order paper.


Mr. HOMUTH:: May I ask the Minister of National War Services (Mr. Thorson), whether any consideration has been given to certain conscientious objectors who are now in camp doing work which in many cases is useless and who might be engaged on farms in connection with the harvest?


Georges Parent: That is a question which the hon. member should place on the order paper.

Hong Kong Commission



HONG KONG COMMISSION


[Stage Direction]
On the orders of the day:
Herbert Alexander Bruce: About a week ago I asked a question of the Minister of Justice (Mr. St. Laurent), and I am not quite satisfied with the reply I received; for I am afraid it may create a wrong impression. The reply had to do with Colonel Drew's charge for services, and the reply was, "No account submitted". I understand that at the opening of the Hong Kong inquiry before Commissioner Duff, Colonel Drew stated that it was not his intention to accept any fee or expenses, that he had undertaken the work as a public duty. '


Some hon. MEMBERS:: Order.


Georges Parent: I understand that the hon. member wishes some further explanation with regard to a question he has already asked. I think he is entitled to that.


Ian Alistair Mackenzie: Can the hon. member make a statement as to what happened at a secret session?


Herbert Alexander Bruce: I do not refer to a secret session at all.


Georges Parent: The hon. gentleman is entitled to ask for further information with regard to a question he has already asked, but he may not make a further statement.


Herbert Alexander Bruce: That is exactly what I was coming to, Mr. Speaker. I want to know from the Minister of Justice if it is not true, and if it was not known to his department, that at the opening session Coloned Drew stated that it was not his intention to charge a fee or expenses, that he was doing this as a public duty. In the second place I would like to ask the minister if one might not say that his reply was lacking in frankness.
Hon. L. S. ST. LAURENT (Minister of Justice): Mr. Speaker, I resent the imputation made by the hon. member, and I ask that it be withdrawn. The hon. member knows, as does every other hon. member who has looked at Hansard, that neither the Minister of Justice nor anyone connected with' the Department of Justice made any answer to that question. The answer that was given was submitted by the Minister of Finance. I did not know of the preparation of the answer. As to what took place before the royal commission inquiring into the dispatch of a Canadian expedition to Hong Kong, I was not there, but I was informed that at the opening of that inquiry the commissioner 	j
stated that the proceedings were to be held in camera. I know nothing of what happened there, beyond what is contained in the report that was submitted to this house.


Herbert Alexander Bruce: In view of the minister's statement I withdraw the remark I made a moment ago. I will now direct my question to the Minister of Finance, under whose department the matter appears to have been considered. I would like to add this further question. Is it not a fact that in addition to the statement at the opening of the inquiry, a letter was sent by Colonel Drew in response to a request from the secretary of the commission, to the effect that he had no intention of charging a fee or expenses?


James Lorimer Ilsley: I had no knowledge of any such statement by Colonel Drew; in fact I had no knowledge at all of what went on at that secret hearing. I would like to ask my hon. friend how he knows.


Richard Burpee Hanson: Well, after that statement I
am going to ask the Minister of Natioual Defence (Mr. Ralston), who probably was there: Is it not true that Colonel Drew announced that he was not taking any fees or expenses, at some stage at all events, whether it was the first or second day? I believe my hon. friend was there nearly all the time.


James Layton Ralston: I want to say in the
first place that I was present at the sessions of the Hong Kong inquiry on only three days during the five or six weeks the sittings were held; that if I had heard anything of this kind I would not make any statement as to it; that I considered everybody was bound by the statement made by the chief justice to the effect that the proceedings were being held in camera.


Herbert Alexander Bruce: Mr. Speaker-


James Layton Ralston: I just want to add that
I heard no statement of the kind to which my hon. friend refers.


Herbert Alexander Bruce: Then I wish to direct another question to the Minister of Justice. In view of the serious charge made against one of Canada's most loyal and patriotic citizens-[DOT]


Some hon. MEMBERS:: Order.


Herbert Alexander Bruce: -and its subsequent withdrawal, which in itself is an admission that the government had not a leg to stand on-


Some hon. MEMBERS:: Order.

Excise Act Amendment


Herbert Alexander Bruce: -but were obviously
attempting to intimidate a public man, will the government consider making adequate compensation-


Some hon. MEMBERS:: Order.


Herbert Alexander Bruce: -and a suitable apology to Colonel Drew for the injustice and indignity which he has suffered?


Some hon. MEMBERS:: Order.


Georges Parent: Order.


Mr. MACDONALD (Brantford City):: Mr. Speaker, is it not a rule of this house that when you rise, any member who is on his feet should sit down? Should not any words which are sought to be said by an hon. member after you have risen be stricken from Hansard?


Georges Parent: There is no doubt as to the rule that when the Speaker stands, all members must take their seats. As to striking matter from the record, that would have to be at the behest of the house before I could give any such instructions.


Richard Burpee Hanson: Let us get on with the business.


William Ross Macdonald: With all due respect to the leader of the opposition, I think we would get on with the business of this house much faster if hon. members would resume their seats when the Speaker rises.



MILITARY SERVICE


[Stage Direction]
On the orders of the day:
Mr. N. J. M. LOCKHART (Lincoln):: I should like to make an inquiry of the Minister of National War Services. When a man enlists either for service in Canada or overseas, are the regional directors in the several districts advised within a reasonable time? If so, about what time elapses before advice of the enlistment reaches them?


Joseph Thorarinn Thorson: The Department of National Defence seeks to advise the Department of National War Services of enlistments as rapidly as possible, but from time to time there are omissions in those statements by reason of the fact that a person may have enlisted in one part of Canada, whereas he may have registered in another part, where his registration card would be.


Norman James Macdonald Lockhart: I appreciate that this matter may not be considered as very important, but I should like to refer to one
44561-261J
incident. A man enlisted a year and a half ago, and he was in England for a year. He was killed four months ago, and a notice to' appear for military service has just been received at his home. I can give the minister particulars of other cases. I think some check ought to be made.



VOCATIONAL TRAINING


[Stage Direction]
Hon. HUMPHREY MITCHELL (Minister of Labour) moved the third reading of Bill No. 64, to assist in the carrying on and coordination of vocational training (title changed to "An Act respecting the Carrying on and Coordination of Vocational Training.")
Motion agreed to and bill read the third time and passed.

[Stage Direction]
The house in committee of ways and means, Mr. Fournier (Hull) in the chair.
Resolved, that it is expedient to introduce a measure to amend the schedule to the Excise Act, 1934, and to provide:-
1. That the duty of excise on spirits distilled in Canada be increased from seven dollars to nine dollars per proof gallon, provided that duty paid spirits owned by any distiller at the close of business on the twenty-third day of June, one thousand nine hundred and forty-two shall be subject to the following additional duty of excise on every gallon of the strength of proof two dollars and so in proportion for any greater or less strength than the strength of proof and for any less quantity than a gallon.
Richard Burpee Hanson: It will be recalled that in my speech on the budget on June 30 last I adverted to the question of increased excise and import duties on alcoholic beverages. I do not intend to-day to repeat the observations I made then. I am fearful of the tremendous increase in the drink bill of this country at a time when Canada is at war, and I think something ought to be done about it. On one or two occasions when this matter has been referred to in the house the minister has taken the ground-I suppose it is open to him to take it-that in Canada the retail sale of liquor is entirely in the hands of the provincial governments. It is true that we have a system of government control of liquor in every province, save one, Prince Edward Island, where they go through the form of having a prohibitory law on their statute book. In my view this is not government control at all; it is government monopoly. We have had the spectacle, at all events in my province, and I am bound to say before the war, of the authorities actually doing certain things to promote the sale of liquor. I have always deprecated this, because I felt it was wrong.
Excise Act Amendment

I am not approaching this subject matter from the point of view of ethics. I am not advocating prohibition, I do not think prohibition can succeed in this country without the overwhelming support of the public. That is not apparent now, and it was not apparent for many years while prohibition was on the statute books of certain of the provinces. I am approaching the matter purely and simply from the point of view of a nation at war, a nation straining every effort it can to raise money for the prosecution of the war. I hope the minister will reconsider his position with respect to this matter. It is obvious that this is purely a revenue measure. If the minister is candid, and I am sure he will be, he will affirm that position. In so far as it is a revenue measure I am sure it will be supported, because if there is one thing upon which taxes should be imposed, both in war time and in peace time, it is on intoxicating liquors. For the moment I am differentiating between spirits as such, and beer and other lighter commodities.
We have the spectacle of the gross sales of liquor in Canada, under government monopoly, mounting to almost phenomenal proportions, and the thoughtful people and .good citizens of this country are alarmed about that situation. In my own province, in the year 1935, the total profits from the sale *of liquor at government liquor stores was between $500,000 and $600,000. In the fiscal year ended October 31. 1941, the profits were four times as much, and to-day, with the great decrease in the sale of gasoline and a large number of cars not being licensed, I suppose the liquor monopoly now in the hands of the provinces is the largest single source of revenue they have, or many of them at all events. As time goes on they come to look upon that as a legitimate source of revenue. It is legal, it is very easy money, and so it is quite natural for them to do so. I have never myself felt it to be a high type of citizenship to desire to be relieved of my obligations as a citizen to pay revenue to the province at the expense, perhaps of my weaker brother. But to-day I am not taking that high exalted stand. I am trying to deal with the matter in the light of present developments. Should we not do something to cut down this huge bill and divert to better purposes some of this free money that is now devoted to liquor? I use the word "better"; theoretically perhaps the war is not a better purpose, but at least it is much more of an absolute necessity. It is true that we need this money, and the nine million dollars that we will get from it will mean something to our exchequer, but I think we would get far more effort if some of it were diverted by
[Mr. R. B. Hanson.1
other forms of taxation to the public treasury. I think that would be better than putting excise and import duties on alcoholic beverages.
I have no doubt the minister has it in mind that to restrict the sales and make it much harder for people to get liquor than it now is would revive the old and discreditable corn-ditions with respect to bootlegging. But I might remind him that some of the incentives to bootlegging have been removed by changed circumstances. A great deal of liquor came into my province a few years ago because of its proximity to the two islands of St. Pierre and Miquelon, which were a source of supply. But then the United States had prohibition, and rum-running was rampant. I do not know that anybody got very much out of it, but some people are reputed to have made money out of it. The chief outlet was, of course, in the United States. As to central Canada, I have heard various stories about what happened along the border. But now that the United States definitely has liquor, the incentive to smuggling liquor into the United States is no longer there.


William Ross Macdonald: This law would not affect that.


Richard Burpee Hanson: It does
not affect anj'thing except the raising of additional revenue. I am trying to deal with a wider principle than that. I am trying to disabuse the minister's mind of any mistaken idea he may have with respect to the return of bootlegging.


William Ross Macdonald: I
agree with the hon. member there.


Richard Burpee Hanson: I am trying to talk sense, and I should think my good friend the hon. member for Brantford City would agree with me when I talk sense, which is 100 per cent of the time, I hope. I do submit that we, as representative men of this nation, should give consideration to what after all everybody knows is an evil thing in our body politic-the expenditure in war time of some $250,000,000 for the purchase of alcoholic beverages. I realize that a very large portion of that sum goes into the public treasury. If hon. members were to ascertain the exact figure they would find that a very large portion of that sum goes in taxes to the federal and provincial governments, and that the consumer is paying a good deal for very little in actual commercial value.
We have not rationed liquor. We apply the principle of rationing on the theory of scarcity; that, I think, is the economic reason for rationing. I was very much amused when on the other side last year to be told that

Excise Act Amendment
in a great hotel in Edinburgh they were rationed to four bottles of whisky a day, while down in London you could buy all you could pay for. I could not understand it, because Edinburgh was, I was going to say, the centre of the industry.


William Ross Macdonald: That four bottles was for the hotel, not for the individual.


Richard Burpee Hanson: Yes, for the whole hotel to sell to its guests.
It does seem to me, Mr. Chairman, that some solution should be found whereby a part of this enormous drink bill would be diverted to a better purpose and used in the war effort. I wonder whether the minister has not given further consideration to that. I am sure that with his background the minister must be alarmed at the situation which has presented itself, say, in Nova Scotia. I have had multitudes of letters from people in Nova Scotia complaining of the huge amount of money which has been diverted from the armed forces, we will say, to the purchase and consumption of liquor. I do hope that some consideration will be given to mitigating, I am not going to say the evil, but the amount of the bill which this nation has to pay. And that can be done.
I have no suggestion to make other than that of pressure, or that some arrangement be made with the provincial governments to limit the sale of liquor; because I agree that a large part of the problem is on the doorstep of the provincial governments, and not particularly on the minister's. I noticed in the press the other day that the government in Newfoundland has had to deal with this problem. I did not think their efforts were very stringent, because I understand that a man there can still buy three bottles of whisky a week, and surely that ought to be enough for anybody. But I do submit that the minister should make some effort in conjunction with the provincial governments., as a war measure, to limit the sale of liquor in Canada in order that a large portion of this bill of $250,000,000 may be diverted into other and better channels. I suggest that the minister negotiate with the provincial governments. I think some of them have been seriously alarmed at the situation that has developed in certain of the provinces. I think in the province of Nova Scotia they have taken note of public opinion and they themselves have gone so far, perhaps not very far, in an effort to decrease the sale of liquor. I do not think very much has been done in my ou-n province.
This resolution is purely a revenue measure. I do not disagree with that from the point of
view of getting money for the war, but I believe that if we were to use other methods a much larger portion of this spirits bill could be diverted to war purposes without any detriment to the liberty of any subject, and with great benefit to the whole body politic.


Mr. PARENT:: I completely agree with the remarks of the leader of the opposition. At a time when the very necessities of life are being restricted, I cannot understand why this country should tolerate the expenditure of $250,000,000 a year on liquor. I would especially call the attention of the authorities to the facilities which are reported to be available to soldiers to enable them lo procure hard liquor. I do not see how you can train an army on liquor. I agree that the men should be allowed to get beer if they need it, but it is appalling the way money is spent, especially in my city, on strong liquor. It is of no use to those who consume it, or to their families, and it occasions scandal at a time when people are asked to make the sacrifices they are now called upon to make.
It is all very well to say that a large part of this expenditure is returned to the government in taxes. I recall seeing recently the financial statement of a company which shows that, while they are paying $11,000,000 to the federal treasury, they still have at their disposal $10,000,000 to pay to the shareholders.


Richard Burpee Hanson: I think
the government would take a good deal of that.


Charles Eugène Parent: That is irrespective of the tremendous amount of money which is expended on advertisements and propaganda of various kinds.
I suggest that careful consideration be given to the remarks of the leader of the opposition, with a view to having this tax increased to the highest possible percentage. As I recall it, in the last war federal and provincial taxes combined amounted to $17 a gallon. At that time opposition was expressed to the impost because it was said that it encouraged bootlegging. But since those days, nearly thirty years ago, the Royal Canadian Mounted Police have organized a most efficient system to discover bootlegging; there is no more of this menace in the country, and I think something could very well be done to put liquor on practically a prohibitory basis. It is not a necessity of life, although it may be needed in certain types of sickness or other extraordinary cases. In a general way hard liquor is one of the luxuries, and if a man wants to have a drink he should be required to pay for it. At a time when we are cutting
Excise Act Amendment

expenses and asking people to make sacrifices, to take less sugar and tea, to buy fewer suits or shirts, even to the point of depriving their families of things they need, in order to win the war, why should they be confronted with a figure such as $250,000,000, advertising these scandalous conditions in the midst of the war? I wholly agree with the remarks of the leader of the opposition.


William Ross Macdonald: I agree in large measure with what the leader of the opposition has said. No doubt far too much drinking of alcoholic liquors is going on at this time, and too great a part of our effort is diverted to the manufacture of them. How this can be avoided, however, it is difficult for me to understand. I do not believe any of us would want to go back to the days of prohibition. The hon. member for [DOT]Quebec West and South, who immediately preceded me, suggested that we should again have prohibition or should put liquor practically on a prohibitory basis. It is my conviction that the Ontario Temperance Act, which was in effect in Ontario about a decade ago, did more to bring about intemperance and excessive drinking than any measure which was ever placed on the statute book of that province. Hon. members from Ontario will remember that although there was supposed to be prohibition, in almost every centre were numerous places where people could obtain liquor illicitly; also numbers of persons persisted in carrying around liquor in their pockets. Prior to that time, when I was a young man, I would never think of going to a dance with liquor on me; none of the young men of my day would have done so. But when the Ontario Temperance Act came into effect, I noticed that practically all the young men, and, I am sorry to say, many young women, carried liquor with them. We do not want that condition to arise again in Ontario or any part of Canada.
I believe we are all in accord with the curtailment of the sale of intoxicating liquors if it is possible to do so, but I would remind the Minister of Finance that it is not going to be an easy matter. He may increase the tax, he may cut down the sales, but if at the *same time bootleggers flourish and the illicit sale of liquor continues or increases, his efforts will be of no avail. No doubt something should be done, but let us not act without giving the matter most careful consideration, to make sure that we do not have another era of illicit liquor-selling in this country.


Mr. McIVOR:: I have not said much on this question, but I have thought a good deal. There is no use in trying to bring in legisla-[.Mr. Parent.]
tion unless public support is behind it. I think it is well understood that the minister has the backing of the best men and women in Canada in support of his legislation.


Richard Burpee Hanson: What legislation?


Daniel (Dan) McIvor: My only criticism is that the tax on hard liquor is not high enough. You cannot make men sober by legislation. I have had a good deal of experience in trying to sober up men when they had gone the limit. You have a better chance of sobering men with strong coffee than you have with legislation against the liquor business. A change of heart is needed. I have no patience with those who think that the dominion and provincial governments can legislate the liquor business out of existence; they cannot do it. I should like to know whether this legislation is in any way related to the discovery of an illicit still in the province of Quebec. It is evident the police are on the job and are going to back up the minister's policy.


Mr. BENCE:: The reason which appeals
to me as the ground for the increase in the sale of liquor in the country is the fact that the income of the Canadian people has increased so tremendously. It does appear to me that the mere putting on of 50 or 60 cents for an imperial quart of some kind of liquor will not in itself have the effect of prohibiting the sale of that liquor. I presume the reason the minister has put this tax on is that he sees in it another fairly easy way of increasing the revenues of the country, and also of cutting down generally the purchasing power that is available for other consumer goods. When the statement is made that there is too great a diversion of man-power and materials towards the production of liquor and away from the war effort, the minister might put figures on Hansard, if they are available, as to the total amount spent in Canada on liquor of all kinds, and the total amount of taxes obtained by the dominion government last year-he has given an indication as to what the increase in revenues will be-so that we can arrive at the net amount that is being paid to the producers of these commodities, and thus interpret the amount of labour that is being used and possibly obtain some understanding of the quantity of materials used, and so on.


Mr. BLAIR:: I suggest that there should also be something in the way of a time limit.
I am well aware of the anxiety of the minister to do his best, but I am aware also
that the people of Ontario are heartily sick of this business. I do not agiee with those

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who have said that drinking was worse during prohibition. I spend a good deal of my time among the rougher element, and I have seen more drunks recently than I did in prohibition days. One hon. gentleman suggested that something should be done, but ended up by saying that nothing should be done. We have reached the stage now where action should be taken. We have come to the pass where there should be some curtailment in time, and the matter should be talked over with the provincial governments. Surely we do not think that the ladies' beer parlours are something that we should be proud of. How would any hon. member like to see his daughter or sister coming out of a ladies' beer parlour, swinging along? Spend some of your time there some time, as I do occasionally. I often drop in on my way home from this house, and I see entertaining times there. I read character in faces, and while there are some Scotch among them, they are not all Scotch. Beer has a more degrading element in it than real whisky. If you want to know that, consider the different races that swing to beer and those that swing to whisky.


Richard Burpee Hanson: "Swing"
is a technical term now, isn't it?


John Knox Blair: What the aviator drinks after ten o'clock is so many headaches; what he drinks before that may be a little entertainment and amusement. Let him drink his beer as he likes until ten o'clock, but when men reach the headache stage they should quit, so that they can get up next morning with a clear head. When you come to the headache stage, then I think there should be a time limit. The Prime Minister is noted as a splendid man for timing; even in elections he does well, and he would know the time. I do not know whether his experience in liquor is as good as yours and mine, but I suggest that there should be a time limit when men should stop drinking at night if they do not want a headache next morning.
I am a coroner, and I have had to deal with a good many accidents on the road. Often when a man is killed in the county of Wellington and I am called in as coroner, I have had to do some desperate lying-my hon. friend does not have to do that because he is a lawyer. I have sent home word to many a father that a boy had died from heart failure when I knew it was booze. It was the next thing to a sworn declaration, and I made a notorious liar of myself. I am not giving a temperance lecture, but I do suggest that there should be consultation with the provincial governments, because they are charged
with the responsibility of regulating the traffic. There should be some regulation, some curtailment in time, especially among the aviators, and I would be delighted to see the ladies' beer parlours closed. It would be a good thing to see them done away with.


Mr. NICHOLSON:: When the war appropriation bill was before the house I spoke at length on this important national question. The large number of letters I have received would indicate that this is a subject that is causing a good deal of anxiety in the homes of the Canadian people.


James Lorimer Ilsley: Will the hon. member give me the date of that speech?


Alexander Malcolm Nicholson: June 1. The comments made by hon. members this afternoon also show that this is a subject that should receive more consideration from the government than it has received so far. After speaking on June 1, I received some criticism from certain quarters for suggesting that we should not send beer to the troops in Libya and other battle fronts. I never made such a suggestion. I would not for a moment suggest that those on the battle fronts should be denied the right to have refreshments at their bases. But I do think it is unfortunate that the policy of sending liquid refreshments should be decided by a man who is engaged in the brewing business, and that large quantities are sent when space is needed for more essential material.


James Lorimer Ilsley: That is not correct. The hon. member is referring to Mr. E. P. Taylor.


Alexander Malcolm Nicholson: Yes.


James Lorimer Ilsley: Well, he had nothing to say about that, so far as I know. This beer for Africa was purchased by an agency of the British government and taken by the British government. The only thing the Canadian government could have done would have been to protest, and we did not think we were justified in doing that.


Richard Burpee Hanson: I want to give the government clearance on that. I investigated the matter carefully, and I am prepared to give this government a certificate of non-complicity, if that is a good word.


James Lorimer Ilsley: Thank you.


Alexander Malcolm Nicholson: The information I had was that Mr. Taylor is vice-chairman of this allied shipping council, and he decides how the space shall be used, whether for Bren guns or tanks or beer. The decision was that it should be used for beer, and I was informed that large quantities did move to Libya.
Excise Act Amendment


James Lorimer Ilsley: That may be so; I do not know. I was simply speaking on behalf of the Canadian government. I do not know what agents of the United Kingdom government acted in the matter. Certainly Mr. Taylor did not take any steps as agent of the Canadian government.


Alexander Malcolm Nicholson: Mr. Taylor in Washington, as vice-chairman of the council, has the responsibility of deciding how the space will be used. He is there as our representative.


Richard Burpee Hanson: No, he is there for the British government.


Alexander Malcolm Nicholson: But he is one of our dollar-a-year men, isn't he?


James Lorimer Ilsley: .He is an employee of the British government, I believe.


Alexander Malcolm Nicholson: His name was one of those tabled as dollar-a-year men, I remember.


James Lorimer Ilsley: My understanding is that after the late Arthur Purvis died, the British government had to make other arrangements. I do not know the exact position Mr. Taylor occupies, but Mr. Morris Wilson and Mr. Taylor, I believe, or one of them, took on the work that Mr. Purvis had been doing.


Richard Burpee Hanson: Mr. Wilson.


James Lorimer Ilsley: I have always regarded Mr. Taylor since that time as a representative, or employee of the United Kingdom government.


Alexander Malcolm Nicholson: The statement placed on record was that:
Mr. E. P. Taylor is one of our dollar-a-year men. . . . Here we have a picture of the British supply council; we see Sir Arthur Salter, Mr. Morris Wilson, Lord Beaverbrook, Mr. E. P. Taylor and Mr. Jean Monnet. The article states that in some respect the British supply council acts as a coordinating body for the allies as well as for the British empire. Listen to this:
"Whether it is an apple or a flying fortress, the British supply organization endeavours to get these goods to the places most in need of assistance."
I think the government of Canada must take responsibility for the decisions made by this council, with Mr. Taylor as one of the members.


James Lorimer Ilsley: We have nothing to do with it.


Alexander Malcolm Nicholson: Again I say it is unfortunate that the president of Canadian Breweries should be placed in the position where large quantities of beer manufactured by his company should be going to Libya at a time when it has been established that there was a considerable shortage of other materials of war that are much more effective than beer in

meeting Rommel and the Germans. I support the leader of the opposition in urging that the government give more consideration than has been given to this question.
I hope the minister will answer the question asked by the hon. member for Saskatoon and give some information as to the quantity of materials used in connection with the liquor traffic, and the number of men and women engaged in it. When I spoke on June 1, I mentioned that it was a serious reflection on the people of Saskatchewan that they spent more on liquor last year than the Minister of Finance asked them to raise for the victory loan. It is hardly fair to expect the government of Saskatchewan, hard pressed as it is for funds, to take the lead in seeking to discourage the manufacture and consumption of alcoholic liquors, unless it is part of a national plan. You cannot expect any one province to go out and cut off its revenues unless all parts of the dominion are doing it. I think all hon. members-at least a great many-feel very strongly about this. I would take exception to a statement made by the hon. member for Queens-Lunenburg some time ago when he suggested that members of this house-


William Ross Macdonald: That was in a previous debate.


Alexander Malcolm Nicholson: Yes, but he referred to hon. members of this house. He cast a reflection on this chamber, and the impression has gone out that there is a great deal of drinking by members of this chamber. Let me say that one of the pleasant surprises I have had was to find that a large number of members of this house are total abstainers, and that so little drinking is done by members of the house generally. The reports I heard before coming here were such that I expected there would be more drinking by hon. members, but whatever the shortcomings of this chamber may be, I think the amount of liquor consumed by hon. members is not one of them.
I hope the government will give consideration to the many representations made by temperance and church organizations across the country, and people who are not prohibitionists, to the effect that this be recognized as a national question.
Before this section passes would the minister give some statement regarding the rate of excise in New Zealand, Australia and Great Britain? We are increasing our duty from $7 to $9 a proof gallon; what are the rates in some of these other countries?


Mr. QUELCH:: I wish to add my voice in support of those who advocate that we curtail the sale of liquor at this time. It has

Excise Act Amendment
been suggested that this is largely a provincial matter, but we have full power to deal with it under the War Measures Act. We have not hesitated to curtail the sale of gasoline and tires and sugar, and there is no reason why we cannot do the same so far as liquor is concerned.
As regards loss of revenue, I do not think anyone would suggest that we should encourage the consumption of a commodity that is injurious to the public, just in order to get revenue from the sale. We might as well encourage the sale of narcotics in order to get revenue.
So far as the tax curtailing the .sale of liquor is concerned, the minister has himself said that the purpose of taxation is to curtail spending; nevertheless I think he realizes that the on!jr real way to stop the sale of any commodity is to ration it. We are finding that out in regard to tires and sugar. I do not believe this country can make a total war effort so long as we allow over-indulgence in the consumption of liquor to prevail as it does to-day.
The liquor industry is consuming a tremendous amount of gasoline and sugar, and is very heavy on tires. As to the stand taken by some hon. members that it is not desirable to go back to the days of prohibition, I am not satisfied at all that if the police really tried to enforce prohibition it could not be enforced. I am not a teetotaller, by any means, but I think we all know that in prohibition days speakeasies and bootlegging were winked at deliberately by the police in many parts of the country. I am satisfied that if any serious attempt were made to enforce prohibition, it could be enforced. But I am not advocating prohibition; I am merely advocating that we ration the sale of liquor. It is a deplorable state of affairs, in a country that is trying to make a total war effort, to see the number of men and women that one can see in a state of intoxication almost any night in any city of this country; and apparently the same thing is going on in England. This tax will not prevent that. It may provide additional revenue, and I am sure the minister would be the last to suggest that he would be willing to sacrifice the health and efficiency of the people in order to get the few dollars that this tax brings in. The only way to curtail the sale is by rationing, not by increasing the tax.


Karl Kenneth Homuth: Instead of the various
speakers dealing with this question from the point of view of a tax, we have had several temperance lectures this afternoon. If we want to debate the question of temperance, it is the privilege of any hon. member to bring 44561-262
in a resolution on that question. But the budget is not brought down with the idea of curtailing or rationing liquor, or legislating as to the morals of the people. This budget is for the purpose of raising the necessary money to carry on the war and1 the business of the country. It would perhaps give the people an entirely different picture of this $250,000,000 that is supposed to be spent on alcoholic beverages if the minister would give us not only the correct figures as to the sale, but the tax that is collected by the dominion and the various provinces, the amount of labour, what goes into labour in the form of wages, what goes back to the farmer for his wheat and barley and other grains, and other factors that enter into the manufacture and sale of alcoholic beverages. It might give us a completely different idea of just what this so-called tremendous liquor bill is.
There is one thing about which the minister must be very careful. If we are going to curb this industry, if we are going to bring in special legislation to stop the sale or manufacture, that is an entirely different thing. I am quite in favour of this or any other tax the minister wants to levy, provided that in levying that tax he does not raise the price so high that once more we will see alcohol come in in large quantities from the United States, as happened in former years, when millions of gallons were rushed across. As a matter of fact it is only about two years ago that some very severe sentences were handed out in this connection, so that even under the present tax alcohol has been brought into Canada. That is one thing the minister must watch-that the tax does not make the price too high; for if it does, bootlegging and rum-running will commence immediately, and instead of going from Canada to the United States it will come from the United States to Canada. The matter of prohibition or temperance in itself is a question entirely apart from this matter of raising revenue with which to carry on the business of the country.


Howard Charles Green: I must say that I do not entirely agree with the hon. member who has just spoken. The matter has gone much deeper with the Canadian people than the question of taxation. I think there is a widespread feeling that it is the responsibility of the dominion government to do something about liquor, and not to wash its hands and say this is entirely a problem for the provincial governments. It does seem to me that the minister might give the committee the figures as to expenditures for liquor, both hard and soft, the number of men employed in the

Excise Act Amendment

industry, and the materials used, so that we may have before us the facts on which to form an opinion. I was very much impressed by a full page advertisement which appeared in the Evening Citizen of June 30, published by the Canadian Temperance Federation. According to this advertisement the cost to ultimate consumers of liquor legally sold in Canada has been as follows:
1938		 $173,000,000
1939		 179.000,000
1940	 191.000,000
1941	 232,000,000
The estimate they give for 1942 is $290,000,000. In this advertisement three suggestions are offered, to which I think the minister should give his reaction. They are:
(1)	As the manufacture of liquor is exclusively under dominion control you can ration materials that may be used for this purpose. They have done so in Britain and Australia. . . .
(2)	You can restrict the amount of liquor released from bond for sale. That would eliminate large wasteful expenditures. . . .
(3)	You could to-morrow commandeer distilleries for the manufacture of industrial alcohol so useful in making smokeless powder and as a basis for synthetic rubber. And you could order that a major part of liquor stocks now in existence be turned into industrial alcohol. Mr. Roosevelt has moved in this direction. . . .
The minister should give an answer to these three suggestions which have been advanced by the Canadian Temperance Federation. Another complaint we are hearing is that the brewers and distillers are having no difficulty in getting priority for the material required to expand their plants. I do not know whether or not that is the case, but I have had complaints to that effect from Vancouver, and the people resent it very strongly. Many people have the feeling that the distilling and brewing interests are being protected by the government, and it is most unwise that anything should be done which would give grounds for that belief. I think the whole situation can be fairly summed up by this expression, that Canadians cannot drink their way to victory. When sugar and gasoline are being rationed; when people cannot get fuel oil for their furnaces, and all this sort of thing, it does seem unreasonable that- restrictions cannot be placed on the sale of liquor.


Robert Fair: For some weeks or months past I have been receiving letters in connection with this liquor question; therefore I do not feel that I should keep my chair warm this afternoon and let this opportunity go by without having at least a few words to say.
It may seem rather strange to some hon. members that I, who come from old Ireland, should say anything against liquor, but any-

thing I have to say this afternoon will be against it. I lived in Ireland for almost twenty years, and during that time I saw a great deal of suffering and misery caused by this liquor traffic. The situation here is exactly as it was in the old country. I think if we went around this or any other city of Canada to-day or any other day we could see some of the effects of this curse, and if this government is going to fulfil its duty to the men overseas, and their parents and relatives here in Canada, it should do something in the matter. We find that the government has interfered with provincial rights in other matters perhaps not quite so vital as this, and personally I believe that if the government does its duty now it will accede to at least some of the requests of the temperance association and various church organizations all over this country. Not many days ago I received a letter from a man in Edmonton which reads in part as follows:
Any person who reads the financial papers or even the stock market reports of the daily press knows that according to the report of Mr. E. P. Taylor-we presumed the one-dollar-a-year man (see Saturday Night, February 21, 1942), that Canadian Breweries cancelled the arrears of $6.75 per share and substituted a dividend rate of $3.40 per annum instead of $3 per share. The result of this may be seen in the increase in the stock from $40 to $46.76 per share. Hiram Walker-Gooderham and Vvorts, and Hiram Walker and Sons Distilleries Incorporated, according to a notice which appeared in the Olole and Mail of Toronto, May 13, 1941, redeemed $207,000 principal of' ten year four and one-quarter convertible debentures due December 1, 1945, on June 1, 1941, at 102J per cent of their principal amount with accrued interest on principal amount to said redemption date.
The letter goes on to say:
Many of our sons are entering His Majesty's-forces for $1.30 a day.
And a little further on he says:
Perhaps some of you members could pass on the information to Mr. Gibson and have him or his department ascertain if this $207,000 and $6.75 arrears per share was deducted from the excess profits tax of these companies who-are exempt from tne rationing system of some of the essentials, and if so see that the tax be refunded to the nation.
I believe in this country we have a number of habitual drinkers, and it is going to be pretty hard for them to break off that habit. Why should young men who are leaving home for the first time to enter his majesty's forces be encouraged by us to take up this habit? Why should we do these things for the advantage of certain companies who are said to occupy preferred positions with respect to rubber and other commodities? Why should our young men and women be faced1 with this traffic which in manv instances will ruin their

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lives? I have two boys at home, and I expect that before long they will be going out among the rest of them. I certainly do not want to see them and the sons of other fathers and mothers tempted with this drug and traffic which could easily be done away with if proper precautions were taken.


Mr. GIBSON:: I should like to say something about the remarks of the hon. member for Battle River (Mr. Fair) and the correspondence he has received in connection with the taxation of liquor interests. A great many loose statements have been made outside this house with regard to this taxation. A question was asked some time ago by the hon. member for Fraser Valley (Mr. Cruickshank) as to whether brewers and distillers have been permitted to pay arrears of dividends and redeem debentures out of their excess profits. This question was answered, but it did not seem to give satisfaction to some people outside the house. I have had one or two abusive letters in that connection and these were followed by an editorial in the United Church Observer, to which I replied but which has not received publicity. The matter has come up again and I think this is the reason for the letter received by the hon. member for Battle River. All brewers and distillers are required to pay their income and excess profits taxes before making any distribution out of earnings for any other purpose. Consequently any distribution that may be made is not made at the expense of any taxation that may be levied upon them.


Richard Burpee Hanson: That is the law.


Colin William George Gibson: Furthermore, reference is continually being made to Hiram Walker's. The company actually referred to is Hiram Walker and Sons Inc., which did redeem some 4f per cent debentures, I understand to an extent of 8207,000. This particular company is a subsidiary of Hiram Walker-Gooderham and Worts; it is a United States corporation, does business in the United States, and does not file an income tax return in Canada. This is the company quoted as an example of a corporation in Canada escaping taxation. It is most misleading, and the public are entitled to know the facts.


George Hugh Castleden: Do they pay an income tax in this country for the business they do here?


Colin William George Gibson: I understand that this company does not do business in this country. It is a United States company doing business in the United States.


George Hugh Castleden: Or any of its
subsidiaries?
44561-262i


Colin William George Gibson: It is a subsidiary of Hiram Walker-Gooderham and Worts, which is a Canadian company.


Mr. JACKMAN:: I had not intended speaking on this, resolution, but there are one or two facts I should like to point out to the committee and there is a suggestion I wish to make. The minister is always looking for suggestions in this connection, and I think this one will come within the province of his own department. The liquor bill for 1942 is estimated at $250,000,000. Investment income in 1937 amounted to $451,000,000, and in 1941, to $512,000,000. We shall be spending in this country for alcoholic beverages almost half the total investment income in 1941. I have never been a believer that prohibition would be effective in this countiy, but I have always deplored the moral and economic waste which goes along with the overconsumption of alcoholic beverages. The taste for alcohol is acquired, unfortunately quite easily by some, and the acquisition of that taste is stimulated on eveiy hand by the advertising of the liquor companies. To some extent advertising comes within the province of the Minister of Finance (Mr. Ilsley) and the Minister of National Revenue (Mr. Gibson).
In Ontario there is a law against the advertising of liquor. WTe believe that the advertising of liquor is just as effective as advertising in other fields. We feel that the delights, if you want to call them that, or the pleasures of drinking should not be put before the young people of our province at every turn. However, since the war, there has been an evasion of this regulation by the beverage companies in Ontario. Advertising is now done under the guise of its being a contribution to the war effort. We see "buy war savings certificates", or "$4 will make $5", and advertising of that kind by the beverage companies. As long as a certain small por.tion of the advertisement is devoted to patriotic purposes, these companies may advertise. It is called a patriotic advertisement rather than an advertisement of liquor.
I suppose that all these companies are in the excess profits tax bracket, so that this advertising is virtually being paid for by the people of Canada. I suggest to the Minister of Finance that the statute should provide that for the period of the war the liquor companies shall not be allowed to advertise their products in any province. In that way greater revenue will be provided for his department, and there will not be an incentive placed before the youth of this country to drink more and more and thus acquire a taste for alcohol.
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There is another point which was not mentioned by the hon. member for Waterloo South (Mr. Homuth). He said that we are dealing with fiscal returns and not with morals, that we should not concern ourselves with the consumption of liquor. But we must remember something which has been brought out by other hon. members, namely, that the liquor trade consumes many products and services which would otherwise be useful. I am strongly against any increase in this trade being brought about by means of advertising.


Colin William George Gibson: With respect to advertising, I may say that these companies are not allowed to increase their advertising costs. These costs are being rigidly controlled by the income tax department. This refers not only to liquor advertising but to all advertising. Strict limitations are being imposed on advertising expenses as compared with the pre-war average.


Richard Burpee Hanson: What about this so-called patriotic advertising by distillers and brewers? Are they allowed for that?


Colin William George Gibson: We did allow an increase up to 10 per cent additional; that is, 10 per cent over the pre-war average advertising rate. This was done for one war loan campaign, but it has since been discontinued. Any advertising must in general be within the pre-war advertising expenditure average.


Harry Rutherford Jackman: It might seem like discrimination against the liquor industry if we were to prohibit them from advertising and not allow them to deduct this expense as an operating cost. However, I do not believe that this discrimination is unfair since in this resolution we are imposing an extra tax on the beverage trade because it is a beverage trade and not just a general industry. I see no reason why the minister should not give serious consideration to asking the beverage companies to eliminate advertising for the remainder of the war.


Alfred Henry Bence: I still believe we should endeavour to get a true picture of the whole thing and not allow distortions to go out from this house to the country in connection with this set-up. It seems to me that the quantity of labour and materials used is the important thing and not the total liquor bill. Can the minister give me the information I asked for a short time ago in connection with that aspect of the matter?


James Lorimer Ilsley: 
Richard Burpee Hanson: That is on domestic production-the whole thing?


James Lorimer Ilsley: That is right. It does not
include the customs duty on the liquor imported. I have not the figures of the total sales within Canada, and I do not know just how they could be obtained. It would be simple enough to get the figures of the sales of the liquor commissions, but then there are the hotels, beverage rooms, wine shops, and so forth. The total figures are not available, and as far as I know they are not procurable.


Alfred Henry Bence: Would not the total amount obtained by producers from sales in Canada be available?


James Lorimer Ilsley: I do not know. Several of
these companies carry on a soft-drink business as well as an alcoholic beverage business, and an export business too.
There is one point which perhaps I should mention. One may be misled by the huge figures one sees connected with the names of certain distilleries, such as Seagram's, Distillers Corporation, and so forth. Some of these distilling companies do most of their business in the United States, and yet all their business appears in the financial statements published in the papers. Those figures could be separated easily enough.


Mr. STIRLING:: Before the minister leaves that point, would the figures of the eight liquor commissions not give the total sales to the public?


James Lorimer Ilsley: No, because they would
leave out the beverage rooms, hotels and wine shops, which do not purchase from the commission, and which would make a very large total.

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Richard Burpee Hanson: Even
without that, do not the sales of the provincial liquor commissions amount to a shockingly large sum? I wish the minister would deal with the larger question.


James Lorimer Ilsley: I think the sales are going
up pretty fast and that people are quite justified in being concerned, but the point is what to do about it. I have received a great many letters, so much so that I have felt that I am being manipulated into the position of being defender of the status quo in dealing with a lot of people who have written me from all over Canada. But it is not much use just to talk about the increase in the consumption of liquo-r without putting forward some constructive policy to deal with the situation. I have listened this afternoon for suggestions, and there have been some.


Richard Burpee Hanson: The most obvious one would be rationing.


James Lorimer Ilsley: Yes, but I was beginning
with the suggestion of the hon. member for Rosedale (Mr. Jackman), who suggested that we stop advertising. That might be of some small effect.


Harry Rutherford Jackman: They put a terrific value on it, judging by the amount of advertising they do.


James Lorimer Ilsley: But there are two values in advertising. First, it may increase the consumption of the product, or second, it may increase the consumption of one's own product at the expense of that of some competitor. Without knowing anything in particular about the matter, my judgment would tell me that the chief reason why the brewers and distillers advertise is to bring their own brand to the attention of the consumer so that he will drink theirs instead of the other fellow's.


Harry Rutherford Jackman: That is not why we
eliminated advertising in Ontario.


James Lorimer Ilsley: I do not know what the
experience was in Ontario, but it may be that that would be the chief result of the elmina-tion of advertising.
Take Nova Scotia, a great province, I need hardly say. I have been reading the report of the speech of the hon. member for Mackenzie, and according to the figures he gave the percentage increase in Nova Scotia was greater than that in any other province. It was 35 per cent, as compared with 27 per cent for New Brunswick, and so forth. There may have been a reason for that-the war activity, the naval activity, the merchant shipping activity, and so forth in Nova Scotia, but I would point out that in that province you
have a government headed by a prohibitionist. Perhaps I am taking liberties in saying that about Mr. MacMillan, but certainly if there is in public life an enemy of the liquor traffic I have always thought it was the premier of Nova Scotia. As a result, I think, of that fact the government of Nova Scotia has sharply curtailed hours of sale. I do not know what the situation now is, but I do not think they sell liquor after six o'clock in the evenings, or on Saturdays at all. They have no beverage rooms, nor will they permit the beverage system to be introduced. In fact a great deal of unfavourable publicity was given to the government of that province not long ago over a club which they closed there.
So there you have a government which is going, undoubtedly, just as far as public sentiment will permit it to go, under the impetus of a sincere desire to curtail the sale of liquor; and you have a 35 per cent increase there, higher than that in any other province.
The delegation whose representatives I heard presented four requests. The first was that liquor stores be closed at ten o'clock at night; or perhaps it was eight o'clock; the next, that no advertising of liquor be permitted; the third was that the beverage rooms be closed, and the fourth was that when the beverage rooms were closed there should be no wet canteen.
Two of those conditions already exist in Nova Scotia with, as far as anyone can see, no effect whatever in curtailing the consumption of liquor. I have never been able to understand why anyone had any ground for thinking that if the dominion entered the provincial fields and sought to superimpose dominion regulations on provincial regulations, the dominion would get any better results. No one advocates dominion prohibition; no one in any of the provinces where liquor is sold advocates provincial prohibition; and the view we have taken is that the regulation of the sale of liquor is a provincial responsibility. It is true, I think, that the crown in the right, of the dominion could, under the War Measures Act, step in and regulate the crown in the right of the province. It would be a most disagreeable and friction-creating departure, I think, for the crown in the right of the dominion to undertake it; nevertheless, I think it has the statutory power. But. is there any reason to think that the crown in the right of the province or the government of a province is not doing its duty as it sees it within the bounds which are set by public sentiment in the various provinces?


Howard Charles Green: What about the suggestions of the Canadian Temperance Federation, contained in that advertisement?
Excise Act Amendment


James Lorimer Ilsley: Well, I am not in a position to argue those. I would have to give some thought to them, and I should not be asked to argue about them here. If I do improvise arguments, it may be held that I am going to great lengths to repel suggestions by wellmeaning, patriotic citizens. But it occurred to me as the hon. member was reading them that the first suggestion, namely, that materials be rationed, will not affect the production of some spirits for two years, and of other spirits for four or more years. The spirits which are being consumed are being taken out of storage. There is a large amount of spirits already in storage, and the effect of rationing barley and other grains would be felt only in the fairly distant future.


Howard Charles Green: What about beer?


James Lorimer Ilsley: The situation will be different as regard's beer; the effects will be felt in two or three months. The policy which is being asked for is to create in the country a scarcity of beer and spirits, not to ration a product of which there is a scarcity on account of inescapable reasons, but to create a scarcity; and while it might work out all right, I would certainly think there would be the most awful time here with bootlegging that was ever had in any country.


Richard Burpee Hanson: Just why, now?


James Lorimer Ilsley: Because there is plenty of
raw material left out of which to distil and to brew.


Richard Burpee Hanson: You are
talking about home brew?


James Lorimer Ilsley: The excise department is
not out of the woods so far as the moonshine problem is concerned: it is seizing stills right along, and illicit distilling is going on just the same as it ever did. Hon. members today have talked about this not being a measure of curtailment, but a revenue measure. Well, it probably is primarily a revenue measure, although I want to remind the committee that last year hon. members were urging a higher tax on spirits and on malt, not as a revenue producer but as a method of curtailment.


Richard Burpee Hanson: I do not
recall that.


James Lorimer Ilsley: Oh, yes. The hon. member for Mackenzie and others were urging it on that ground.


William Ross Macdonald: The public, urged it.
I Mr. Green.]


James Lorimer Ilsley: Yes, the public urged it.
I have been attacked and the government has been attacked from a hundred quarters because of our alleged tenderness toward the liquor interests in regard to taxation.


Robert Fair: The government's love for the liquor interests.


James Lorimer Ilsley: 
Alexander Malcolm Nicholson: What is the rate in the United Kingdom?


James Lorimer Ilsley: The rate in the United Kingdom is terribly high.


Richard Burpee Hanson: That is for domestic consumption, but not for export. There is no rate at all on liquor for export.


James Lorimer Ilsley: 
Alexander Malcolm Nicholson: Has the minister the rates for New Zealand or Australia?


James Lorimer Ilsley: I have not the rates for New Zealand or Australia. It must be remembered that a province has what is essentially a rate of taxation. It is a profit, but it is money taken by the provinces considerably in excess of the cost of carrying on the business. In effect it is a tax. Undoubtedly the provinces will charge a profit on the increase in the cost of liquor which has come about as a result of these higher taxes.


Richard Burpee Hanson: It must be remembered that in England they have no taxes on the exported article, and that is a big part of their trade.


James Lorimer Ilsley: Yes.


Mr. HANSON (York-Sunbuiy):: As I
understand it, there is no revenue from liquor manufactured in the United Kingdom and exported all over the world. That is

Excise Act Amendment
what they have to sell. The situation in England to-day is that their whisky costs about a dollar a quart more than it does here.
I am rather disappointed that the minister does not feel that there is any responsibility on this government. We have a large increase in the national revenue. That is going out to all and sundry, much of it to the people who are spending it on beer and hard liquor. I have felt that a larger proportion of that national income which is now going to the liquor trade and the provincial governments ought to be switched to the war effort; and the only method adopted by the government here is to raise the excise and the import duty by $2 a gallon. I have no doubt that that will bring in the amount of the estimated increase of revenue which the minister suggests, but it will not deal with what is now a pressing problem.
The minister says we shall have to leave the matter to the provinces. Well, notwithstanding the certificate of character he has given Mr. MacMillan, I am afraid that gentleman is in the same position as most of the other provincial governments. They need the money and this is the easiest possible way in which to get it. If that is the position the minister takes, it is too bad. This government undoubtedly has a great deal of power to deal with this matter. You can ration the amount of Scotch and Irish whisky that *will be imported from the old country. There is no question about our power to do that. You can ration the amount that the provincial liquor commissions will be able to sell, and you can limit the amount the distillers shall "take out of bond. It is all held in bond until the excise duty is paid. This government has power to ration in a very large way, not to say that a man shall be able to buy only three bottles of liquor or one bottle of liquor a week, as they did in Newfoundland, which would be in effect putting a restriction on the liquor commissions and therefore on the provinces, because the commissions are simply agencies created by the provincial governments. This government, I repeat, has a great deal of power which it could use to cut down the consumption of liquor in Canada. The minister says that would immediately revive the bootlegger. I will tell him that in my province there is little illicit distilling going on. The day of the home brewer is pretty largely gone. They have been dealt with pretty severely in the past.


An hon. MEMBER:: Maybe you don't get around among them.


Richard Burpee Hanson: I confess I do not. I have not had anything much to do with anything of that sort for a long time. The only bootlegging I know of that ever went on in New Brunswick-and it did for a good many years-was the bootlegging on the part of people who bought commission liquor and sold it after hours. We do not have liquor stores open in the evening, no beer and wine stores, and I hope we never shall. But the bootlegging that goes on is winked at. I took occasion to call up the chief liquor commissioner himself and I told him about a particular case. What was the answer? He said, "You will have to produce the evidence to me." I replied, "I am going a long way when I call attention to this and I am certainly not going to be a detective for you. I give you the name of the party who is doing the bootlegging and you can go after him." I also called up the chief of the Royal Canadian Mounted Police, who was responsible for the enforcement of the liquor law in New Brunswick. The mounted police have taken over the whole service. Complaint had been made to me with respect to an individual in a certain village some distance from the city of Fredericton who was bootlegging commission liquor, not after hours, but at any time, because there is just one liquor store in the whole of the county of York. I saw to it, that as far as I was concerned no liquor stores would be opened in any other place in the community except Fredericton, and the present provincial government observed that.


Mr. MAYBANK:: How many bootleggers are there, besides the store?


Richard Burpee Hanson: Not many.


Ralph Maybank: How do you know?


Richard Burpee Hanson: I do not know personally. The hon. member puts the question to me and cross-examines me, but I cannot give definite information. I can say, however, that the illicit bootlegging has been very limited. When I put the matter to the commissioner of mounted police, he said, "What evidence have you?" I answered, "It is not my place to get evidence; it is your business to get it when I tell you it is available. All you have to do is to send a plainclothes man to a certain place and you will get the evidence." He did so and the fellow spent the next Christmas in gaol where he ought to have been. That is the kind of bootlegging there is in New Brunswick, the bootlegger who operates after hours, and it is very limited.
I believe the minister would get cooperation from New Brunswick. Public sentiment there
Excise Act Amendment

is such as would compel the commission to make it harder to get liquor. I am alarmed about the evidence I see of sales to young soldiers. That is what is on my soul to-day. I went into Fredericton a week ago on Saturday afternoon. I got home at noon, or before noon, and on Saturday afternoon there was a continuous procession of young men in uniform going to and coming from the liquor commission store. It was mostly beer, I should judge, but they were carrying it by the dozen. That is where I think the huge increase has been, because in our part of the country we have no war industry and no large increase from the national revenue. The principal part is in connection with young soldiers. It is, I admit, a problem. At the training centre Colonel Brooks does not allow a wet canteen, but across the way a block distant there is a wet canteen. And there is complaint. In one place you can get beer and in the other place you cannot, so that anyone who does not feel responsible throws up his hands and says, "Let it go; it is not my funeral; it is not my obligation." I try to deal with the matter from the larger point of view as a national problem. Here is vast consumption of liquor. I think something should be done, and this government can do something. First of all, I suggest negotiation with the provincial governments to see if something cannot be done to reduce the huge quantities that are sold. An hon. member says something about advertising. I have noticed a magazine called the New World, filled with gorgeous advertising of liquor put out by certain interests close to the brewing interests. If you want to be fair about Mr. Taylor, and the dollar-a-year men, he has not been a dollar-a-year man for some time. I ran that story down, and I was satisfied that the beer shipped to Libya was shipped as a result of a request from overseas. They could not ship it from Britain. The soldiers think they have to have their beer in Libya. The British Tommy says he must have it; he will not be deprived of it. Some people look on beer as food; here it is a beverage, not a food at all. Perhaps it is the soldier's luxury. I am not so much concerned about the consumption of beer as I am about the consumption of hard spirits. I think we could get along without that in this countiy. It could be drastically reduced with beneficial consequences. The minister himself has some responsibility. I am not going to make an issue of this matter, and probably I have said more than I intended to when I rose, but I do think something must be done. The situation must be grappled with, and this government has a responsibility. Certainly the

provincial governments have their responsibilities, and perhaps the public discussion here will focus attention on the matter. The publicity from this debate will probably show to the provincial governments that, so far as there has been an expression of opinion in this house, we are nearly all in agreement here. The problem should be grappled with; the duty is partly on this government and partly on the provincial governments.


Mr. MacINNIS:: I do not know if I
have much to add to this discussion. I was in at the earlier part of the discussion, and I think I agree pretty much with what the leader of the opposition and the hon. member for Mackenzie and others said. But while the discussion was good in itself there was not much in the way of constructive suggestions as to how the consumption of liquor might be reduced. I do not think it is strange that there should be a large increase in the consumption of liquor at this time, because where large aggregations of people meet and have little to do except try to amuse themselves, it is quite understandable that there would be a large increase in the consumption of liquor.
After thinking about this matter or being in a position where I could think about it for many years, and having been at one time a believer in prohibition, I am now almost convinced that people who want to curtail the consumption of liquor are attacking the problem from the wrong angle. They are attacking it from the moral point of view, but I do not think we shall ever get anywhere in that way. I believe that a great deal could be done to-day if the matter were attacked from the health point of view. The people of this country to-day are becoming generally healthconscious. I believe that the harmfulness of drinking liquor could be emphasized in that way, w-ith a regular campaign of education carried on to show the young men and young women the harmful effects of liquor. As I go home along Bank street every evening I pass a certain hotel about a quarter past eleven o'clock when the people are coming out, and it is a common occurrence to see young men and young women coming out drunk and falling against the wall. Anything that could be done to put a stop to that should be done. I am satisfied, however, that it cannot be done by prohibition or by dealing with the matter from the moral point of view.
A few years ago I had the good fortune to be able to make a visit to Europe, and I was astonished to see how common it was to have liquor in every eating-place, even in the northern cities, the Scandinavian cities.

Excise Act Amendment
It seemed to me that there was less drunkenness than one sees in this country. I believe our system of beer parlours is one of the worst possible ways of dispensing of liquors.
I think it would be a good thing if light wines were served in restaurants rather than that people should have to go to a beer parlour and sit down and swill beer without anything much else to attract their attention, except the rather second-rate conversation that goes on. I agree with the hon. member for Rose-dale that advertising should be reduced. But along with that there should be a health compaign teaching people the harmful effects of liquor. This would do much more to curtail the consumption than anything else.
I noticed in the papers to-day that the director of national selective service says that non-essential industries may have to close down because he says some 250,000 workers will be needed within the next five months. Among the non-essential industries that could be restricted are those of brewing and distilling.


Howard Charles Green: Has the minister given any mnsideration to making a direct appeal to \he Canadian people? There is no doubt that much of the money that is spent on liquor could be spent for bonds and war savings certificates. When there was a shortage of sugar an appeal was made to the people to restrict its use, and the same with gasoline. Of course both were eventually rationed. But it might be helpful if an appeal were made to cut down the consumption of liquor. I am sure thousands would listen to that appeal if it were put forward with the authority that a government appeal would carry.


James Lorimer Ilsley: The suggestion is worthy of consideration. I do not know how far my duties go in regard to such appeals, but perhaps the government-


Richard Burpee Hanson: The minister should ask the people to spend the money on war savings certificates.


James Lorimer Ilsley: Yes, but I am pretty careful not to select particular commodities, unless on economic grounds; by that I mean with a view to saving and making available specific materials, such as steel, for example. The saving here would be very little. As the hon. member for Vancouver East said, the impetus behind the drive here is a moral impetus for the most part, it is persons who believe in prohibition, who have done so for years past, now coming forward-


Howard Charles Green: That is very important.


James Lorimer Ilsley: Yes. They now come forward and say, "You should now have prohibition or curtailment, whatever may have been the case in time of peace." The suggestion of the hon. member can be considered; that is all I can say.


Joseph William Noseworthy: This matter is, I think, indirectly concerned with the budget.
I do not think any hon. member feels that it is specifically a matter for the Minister of Finance. It is a matter for the government.
I think we all realize that the use of liquor cannot be done away with. You cannot, by taxation, stop people from drinking liquor, although you may be able to curtail the amount used. I think we must recognize that the sale of liquor cannot be legislated out of existence or regulated out of existence.
There are, however, some facts of which I believe the government-not particularly the Minister of Finance-should take cognizance. We have been shown this afternoon the comparatively great increase in the amount of money spent on liquor. As has been said, that is probably to be expected. Whether it is or not, many of the best people in this country are worried about it. They are not necessarily teetotallers or churchgoers, but the people who constitute the backbone of society in this country are worried about the situation in regard to the use of liquor during war time.
The second factor is that no one for a moment believes that the federal government cannot control liquor if it so desires. In view of the controls that have been exercised by the government in relation to human necessities, it is simply useless to tell the general public that the federal government has not power to control this industry if it so desires.
The third factor I think the government should take into consideration is an idea which I find very widespread in the community from which I come; that is, the idea that in some way the government is protecting the liquor interests. I have no reason to believe that is true; I have no proof, any more than anyone else has, but there is the opinion abroad to-day among the thinking people of this country that the government is supporting and protecting the liquor interests, and that is bad for the morale of the people.
The hon. member for Rosetown-Biggar made a suggestion which I thought was extremely important. Within the past six months I have noticed that in the city of Toronto, in nearly every street car, in our buses and on our billboards, the most captivating signs supporting the war effort bear underneath them the name of some brewery. I believe in Ontario we have a law that prohibits liquor advertising.
Excise Act Amendment

but everywhere in the city of Toronto you will find the most captivating, interesting and artistic advertising put out in the interests of the war effort bearing the names and addresses of some breweries. I think that is uncalled for. It is annoying to a great mass of well-intentioned, patriotic citizens, and I believe that is something to which the government might well pay attention.
I do not know what can be done by way of control. I think if control or rationing is applied it will have to be done with reason, because I am convinced that this is a matter which must be studied. No one in this country, even the most ardent temperance advocates, would like a return to bootlegging on i large scale; and I think any control or rationing should be not so much from the moral point of view but rather, as has been suggested, as a war effort. The hon. member for Waterloo South spoke of the amount of money spent on liquor, of the amount that went for material, for labour, and so on. The point there, it seems to me, is that most of these materials, most of that labour, all the rubber and gasoline used in the distribution of these goods, are required to-day for more essential war purposes, and I think it is on this basis that we should appeal to our public. Certainly the suggestion is sound that any effort in this direction should be accompanied by an educational programme. I have yet to see any information emanating from the department of public information urging people to be patriotic and drink less beer, or anything along that line. I think it only reasonable to suppose that a great many of our people, if they could be shown that the consumption of beer during war time is unpatriotic, would bring about a voluntary reduction in that consumption without need for much government regulation. I believe a programme of that kind would contribute materially to our war effort, at least as much as a great deal of the information being sent out by that department.


George Hugh Castleden: Is it the attitude of
the government in connection with this tax on spirituous liquors and malt and beer that they are taxing a luxury, or do they look upon this as a source of revenue, or is the tax intended to curtail civilian expenditure on nonessential goods?


James Lorimer Ilsley: I think it would be a combination of all those factors.


George Hugh Castleden: Does the government
consider, then, that malt and liquors are a luxury, and that beer is a luxury in exactly the same way? I see that the increases are approximately the same. The increase on
fMr. Noseworthy.]
spirits distilled in Canada is from $7 to S9 per proof gallon, while the excise on beer and malt liquor brewed in whole or in part from any substance other than malt is increased from 35 cents to 45 cents per gallon.


James Lorimer Ilsley: The beer tax mentioned by the hon. member I feel sure must be very unimportant. The important tax is the duty on malt, which is increased from 12 cents to 16 cents per pound.


George Hugh Castleden: And how about the
attitude of the government with regard to spirituous liquors?


James Lorimer Ilsley: I find it hard to define an
attitude in precise language.


George Hugh Castleden: Well, would you call
spirituous liquors a luxury?


James Lorimer Ilsley: That would be a matter for the individual; he can decide what he wants to call it.


[Stage Direction]
Resolution agreed to.
At six o'clock the committee took recess.
After Recess
The committee resumed at eight o'clock.
2. That the duty of excise on Canadian brandy be increased from six dollars to seven dollars per proof gallon, provided that duty paid Canadian brandy owned by any distiller at the close of business on the twenty-third day of' June, one thousand nine hundred and forty-two shall be subject to the following additional duty of excise on every gallon of the strength of proof one dollar and so in proportion for any greater or less strength than the strength of proof and for any less quantity than a gallon.
Richard Burpee Hanson: I suppose this increase is in conformity with the increase in the excise duty on spirits? It seems to be a little more.


James Lorimer Ilsley: It is not as great.


Richard Burpee Hanson: Is it upon the value? What is the basis?


James Lorimer Ilsley: Canadian brandy has been given a lower rate in the past than ordinary spirits in order that the rate should be the same as that applying to imported empire brandy. A further SI preference as compared with ordinaiy spirits is being allowed this year in order to assist to some extent in taking care of a difficult grape supply situation in Ontario. Thus, under the proposed rates, where domestic spirits will have a $9 rate and imported commonwealth brandy an $8 rate, domestic brandy will pay only a $7 rate.


[Stage Direction]
Resolution agreed to.

Excise Act Amendment
3.	That the duty of excise on beer or malt liquor brewed in whole or in part from any substances other than malt be increased from thirty-five cents to forty-five cents per gallon.
Richard Burpee Hanson: Is this an important item?


James Lorimer Ilsley: No, very unimportant.


[Stage Direction]
Resolution agreed to.
4.	That the duty of excise on malt manufactured or produced in Canada or imported be increased from twelve cents to sixteen cents per pound.
Richard Burpee Hanson: This is a very important item, in both quantity and the amount of increase. I understand that the pre-war excise duty on this commodity was six cents a pound; in September, 1939, this was increased to ten cents; in April, 1941, it was increased to twelve cents, and now it is to be made sixteen cents. Has this increase all been passed on to the public, or will the brewers absorb part?


James Lorimer Ilsley: There has been no increase in the price on account of the increase from twelve to sixteen cents a pound.


Richard Burpee Hanson: What is anticipated?


James Lorimer Ilsley: The practice will probably vary as between the provinces; it will depend to some extent upon what the liquor commissions do. I expect that the brewers will pass on all, if they can.


Richard Burpee Hanson: Did the brewers not absorb some of the last increase from ten to twelve cents? I am thinking about the consumer. He is entitled to some * consideration, even if it is beer.


James Lorimer Ilsley: The brewers absorbed part of the increase from ten to twelve cents.


Olof Hanson: What was the increase per dozen bottles of beer as a result of the last increase?


James Lorimer Ilsley: If all of the increase from ten to twelve cents had been passed on, it would have resulted in an increase of about six cents a gallon.


Richard Burpee Hanson: Did the brewers not increase their price by about ten cents per dozen bottles?


James Lorimer Ilsley: No, I do not think so.


Richard Burpee Hanson: Does the minister not think that these increased taxes on liquor and malt will bring into effect the law of diminishing returns?


James Lorimer Ilsley: I do not think they will cut consumption down a great deal. I would not mind if it could be cut down to some extent.
However, there is so much money in the hands of the public that the law of diminishing returns does not operate very powerfully. There will be more results from the increased income tax.


Richard Burpee Hanson: That will have an effect, not the excise tax itself.


James Lorimer Ilsley: Plus the excise tax itself. If anyone who has paid $5 for a bottle of whiskey finds that he must pay $6 or $6.50 and then has in mind his income tax, he may not buy so many bottles.


Richard Burpee Hanson: My feeling is that the fellow who could pay $5 for a bottle will pay $6.25. There will be no curtailment of beer drinking as a result of this increase. A total of $9,000,000 comes into the treasury in a full year, and I do not suppose the minister anticipates any curtailment in the drinking of beer.


James Lorimer Ilsley: There may be some.


[Stage Direction]
Resolution agreed to.
5.	That the duty of excise on malt syrup manufactured or produced in Canada be increased from eighteen cents to twenty-four cents per pound and malt syrup imported into Canada and entered for consumption be increased from thirty cents to forty cents per pound.
James Lorimer Ilsley: This is merely consequential upon the others.


[Stage Direction]
Resolution agreed to.
C. That the duty of excise on Canadian raw leaf tobacco when sold for consumption be increased from ten cents to twenty cents per pound actual weight.
Mr. SENN:: I am a little bit exercised over this increase in the excise duty on raw leaf tobacco. A lot of flue-cured tobacco is grown in Ontario, particularly in the southern counties, and a considerable industry has grown up. For some time we have been growing what is known as Burley tobacco in considerable quantities. This industry brings in a good deal of money to the farmers in three or four counties along the shores of lake Erie, and I am just wondering whether this increase in duty will not have some effect on prices paid to producers. At the present time prices paid for tobacco are determined every fall at a conference between a certain producers' association and the processors, and I am afraid that this increase will perhaps give a handle to the processors to beat down the price to the producers. There is not only an increase in the excise on raw leaf tobacco; there is also an increase of one cent per five cigarettes, 25 per cent on cigars and a cent per pound or part of a cent per pound on manufactured tobacco.
Excise Act Amendment

I should like to have an assurance from the minister that this increase is not going to interfere with the price the producer will realize.


James Lorimer Ilsley: This item would not apply to the sales of which the hon. gentleman is speaking. Those sales are not to the consumer.


Richard Burpee Hanson: They are to the manufacturer, but the ultimate effect is that the cost of the raw materials to the manufacturer is increased, and he will try to take it out of the primary producer if he can. While I do not know whether the price ceiling applies to tobacco or not, there will be an attempt to try to keep the price-ceiling structure level all along the line, and I would be fearful that this increase would come out of the primary producer. That is what has happened in other lines of endeavour, and I am afraid that we shall see history repeating itself.
There is another matter which I wish to bring to the attention of the committee. There is an increase of 100 per cent in the tax on raw leaf tobacco. That appears to be a very steep increase in comparison with the excise tax on cigars, cigarettes and manufactured tobaccos which are dealt with under resolutions 9, 10 and 19 of the Special War Revenue Act. This raises an interesting point. Heretofore cigarettes and manufactured tobacco have been taxable only under the Excise Act, and an excise duty has been levied rather than an excise tax. Now it is proposed that in addition to the excise duty on cigarettes and manufactured tobacco, levied under the Excise Act, there shall be levied an excise tax under the Special War Revenue Act. I should think that there would be confusion as a result of that action, and I think the minister is called upon to justify the confusion which will unquestionably result from the introduction of this new principle in the taxation of tobacco and cigarettes. I would have thought that simplicity, ease of collection, efficiency of audit and such considerations would dictate that the increases should be increased in duty under the Excise Act rather than the imposition of new taxes under the Special War Revenue Act. I wonder whether the minister's action in this regard, imposing a new tax rather than an increased duty, has anything to do with the maintenance of the price ceiling. I would assume that that is correct, but I doubt very much whether any such considerations outweigh the disadvantages which will, in my opinion, accrue from levying an excise duty and an excise tax upon the same commodities. It is axiomatic that an

excise duty is a much simpler and easier means of taxing any commodity than an excise tax.
I believe that there are now two branches of the excise division of the Department of National Revenue, the excise duty branch and the excise tax branch. Will there not be duplication and overlapping in the administration of the new proposals? I would have thought it would be much more satisfactory if the means had been adopted of increasing the duty in preference to imposing the new tax. I think the minister ought to justify this change.


James Lorimer Ilsley: The administration is by the same division of the Department of National Revenue. It is administered by the commissioner of excise. I do not think there will be any duplication. It was considered desirable to keep the new tax separate in every way from the excise duty.. The excise duty is reckoned in the price of cigarettes for priceceiling purposes. The new tax is a separate tax, announced to be on a different basis, and not to be reckoned in the price of the article for price-ceiling purposes.


Richard Burpee Hanson: So as to preserve the sanctity of the price ceiling- just another dodge to preserve it.


James Lorimer Ilsley: I think the word "dodge"' is objectionable.


Richard Burpee Hanson: All right- another example of the trial and error method.


James Lorimer Ilsley: We thought it was desirable to put a tax on the cigarettes in the box. It is a stamp tax applicable to the cigarettes in the box. While the tax is collected from the manufacturer, it is easily identifiable as being a separate tax imposed by this budget. It has been announced that it has nothing to do with the price-ceiling policy.


Richard Burpee Hanson: It is imposed in this way so that the price of cigarettes will not be further raised beyond the actual amount of the tax. That is the real truth of the matter. But what care is the minister going to take to see that the primary producer gets as much after this tax of 10 cents is imposed as he got before?


James Lorimer Ilsley: The tax of 10 cents on raw leaf tobacco does not apply at all to raw leaf sold to manufacturers. It applies to raw leaf which is sold to consumers, and which comes into competition with manufactured tobacco. The logical thing to have done would have been to increase the dirty by the same number

Special War Revenue Act
of cents per pound as the duty on manufactured tobacco was raised, but that would perhaps be a little too hard on the primary producer. The increase in the rate on the manufactured tobacco is 16 cents. That will be found in the Special War Revenue Act resolutions. I think that at first we proposed to make it the same, that is, an increase from 10 to 26 cents, but we thought that was a little heavy, and so we made it 10 cents. It certainly would have to be increased 10 cents to preserve the competitive situation between sellers of raw leaf to consumers and sellers of manufactured tobacco to consumers.


Mark Cecil Senn: How much revenue does the minister expect to derive from resolution No. 6 of the Excise Act? How much raw leaf tobacco is sold for consumption?


James Lorimer Ilsley: Last year we collected
$345,000, and this year we shall collect twice that amount. The estimated increase is $350,000.


Richard Burpee Hanson: If it is coming out of the consumer I am satisfied, but if it is coming out of the producer I am against it. Will the minister give consideration to this request, that if he finds after one year's experience that any portion of this increase comes out of the primary producer lie will reconsider the tax another year? It would be a great pity if it came out of the primary producer.


James Lorimer Ilsley: I will.


Richard Burpee Hanson: The commissioner of excise is in front of the minister, and I hold them both to that bargain.


[Stage Direction]
Resolution agreed to.
Resolution 7 agreed to.

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Special War Revenue Act and to provide:
1.	That the tax on telegraph dispatches be increased from five cents to seven cents upon each dispatch transmitted.
Richard Burpee Hanson: How much is expected to be obtained from this tax, and what were the considerations that actuated the minister in dealing with these, what I would call, nuisance taxes? Is not a tax of 5 cents enough on a telegram? It seems to me that that is a reasonable tax and that it should have been left as it was.


James Lorimer Ilsley: It is all a matter of judgment.


Richard Burpee Hanson: That is the
test, I suppose.


James Lorimer Ilsley: The amount expected for the full year as the revenue from this increase is about 8250,000. The amount expected for the remainder of the year is 8190,000. The revenue under the present tax for 1941-42 was 8574,000.


Richard Burpee Hanson: Of course that is quite substantial, is it not? All right.


[Stage Direction]
Resolution agreed to.
2.	That the tax on long distance telephone calls be increased from 10 per cent of the charge made to 15 per cent; provided, however, that upon long distance telephone calls made from any public pay station there shall be paid in lieu of the tax hereinbefore provided for, the sum of 5 cents for each such call for which a charge of more than 15 cents and not more than 45 cents is made, and 5 cents for each additional charge of 35 cents or any fraction of 35 cents; and provided further that the tax imposed shall in no case be greater than 75 cents on any one call.
Richard Burpee Hanson: If this
were not war time I would oppose it. It is a 50 per cent increase, and it discourages the use of this public utility, which is being taxed tremendously in every way. I suppose it is a big money-maker for the government, and it is easy of collection. It does not cost a cent for the government to collect; the telephone companies have to keep the accounts and collect and remit. On a telephone call a tax of 15 per cent up to a maximum of 75 cents on any one call must run into a huge sum of money. During the depression years it would have reduced the use of the telephone by a very substantial amount. The telephone companies are under control of the public utility boards; they cannot raise their rates to meet conditions. They have to wait until they are given authority. I regret to see this increase. I suppose it is necessary to get the money. After all, the public using the utility pay it.


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Would the minister say how much he got out of the 10 per cent charge last year?


James Lorimer Ilsley: The estimated revenue from * the increased rate for a full year is 8900,000; the estimated revenue from the increased rate for the remainder of the year is 8670,000.


Richard Burpee Hanson: What is that based on? Last year's experience?


James Lorimer Ilsley: Yes. The revenue for last year was 81,571,000.


Richard Burpee Hanson: Does this provision apply to telephones operated by the provinces?


James Lorimer Ilsley: Yes.
Special War Revenue Act


Richard Burpee Hanson: Under
what authority does the minister do that? Is it by arrangement or under special provisions?


James Lorimer Ilsley: There is a special provision in the act.


[Stage Direction]
Resolution agreed to.
3.	That there shall be imposed, levied and collected an excise tax of twenty-five cents per month on each telephone extension in any dwelling house, apartment or other domestic establishment.
Richard Burpee Hanson: I think
this is absolutely the meanest tax of the lot, and I am going to ask the minister to take it off. The extension of a telephone in a house is usually for the purpose of saving the feet of the housewife or the maid. The telephone companies charge for this service, and they charge too much. The mechanical apparatus does not cost very much. They charge, I think, 50 cents a month. This makes the cost 75 cents a month. That is a substantial tax on each telephone user, for a telephone which is installed, perhaps, for the convenience of aged people. A telephone in the house has now become a necessity. I am opposed to this tax. I do not know what the minister is going to get out of it, but of all the mean taxes that ever were imposed by parliament, this is, I think, the meanest. It is not imposed on business. In my business office we have five or six extensions: one makes money out of these telephones; a man absorbs the cost as part of his business expense. But this is a tax on a telephone which is put in to save one's wife from running up and down stairs. I suggest to the minister that he withdraw it. It is the only one I will ask him to take off. How much shall we lose if we do not impose this tax?


James Lorimer Ilsley: The estimated revenue for
the full year is $125,000; for the remainder of the year, $90,000.


Richard Burpee Hanson: Well, the
minister will lose that much, probably three times as much, through the resentment of the housewives of this country. The women will say, "I am not going to buy any more war savings certificates if I have to take out my extension.


James Lorimer Ilsley: Surely not.


Richard Burpee Hanson: Oh, well,
they will take it out, human nature being what it is. The minister is making a mistake in imposing that tax.


Charles Eugène Parent: You are right.


Richard Burpee Hanson: I have never heard from the telephone companies that it was their desire to do away with these extensions. They are always asking people to put them in.


James Lorimer Ilsley: Oh, no, there is a shortage
of instruments.


Richard Burpee Hanson: That is
only a temporary condition.


James Lorimer Ilsley: No.


Richard Burpee Hanson: It is a mean tax, and I am against it.


Mr. ROSS (St. Paul's):: When the minister made the announcement of the tax in the house, he said, "I don't care whether they leave them in or whether they take them out."


James Lorimer Ilsley: No, I did not say that.


Douglas Gooderham Ross: It is a tax on a
tax: that is what it is. If you are going to have a tax on these extensions in business we shall have to take them out, and some revenue will be lost. After all, however, look at the matter from this point of view. Things are being made more difficult for people all the time; everybody has to cut dow-n on household expenditures and so on, and now a wife in a family who had two maids and now has only one, or who had one maid and now has none at all, needs the extension for use while she is upstairs doing her job. It is only a small tax as far as that is concerned1-twenty-five cents a month-but I think it is a disgraceful one. If there is a need of telephone instruments to be installed some place else, tell the public that you have to have them, and then you can obtain them from houses where there are twro or three, or other places where there are more telephones than are needed. I ask the minister to take out this tax, or he will lose more revenue than he will ever gain.


Daniel (Dan) McIvor: I agree wTith the leader of the opposition that this is a mean tax, but I would like to ask the minister what tax is not mean.


Richard Burpee Hanson: The tax
on whisky!


Daniel (Dan) McIvor: There is one class of people whom this is not going to touch, and that is the class that cannot afford a telephone at all. There are quite a number of people who cannot afford a telephone.


Douglas Gooderham Ross: Not many now.


Daniel (Dan) McIvor: The other thing that bothers me is this, if we cancel a number of these

Special War Revenue Act
items where will the minister get his revenue? If I suggest that a tax should be taken off I should try to suggest some compensatory tax.


Mr. FRASER (Peterborough West):: In
answer to the hon. gentleman who has just spoken, I have letters on my desk upstairs from three families who cannot afford telephones, but they have them in the house owing to the fact that there are in the house bedridden invalids who need telephones. They pay 55 cents a month for the extension, and with this extra tax of S3 a year it will mean that S9.60 has to be paid for extension service which is necessary as well as giving a little pleasure to the invalid. The downstairs telephone is, of course, required, and many a time during the past year it has been necessary to call the doctor. I suggest that the minister cancel this tax.


Mr. GELLIS:: The hon. member who has just resumed his seat has partly expressed what I rose to say in the first place. This is really a tax on a luxury, and to invoke the name of the housewife, with all the sympathy there is for her, is certainly not an argument, because 95 per cent of them have no telephone in the house at all. There is no necessity for a telephone in every room, and therefore the tax is a proper one, with this exception. There are homes in Canada-not so many of them, but there are some where I think there should be an exemption; that is, where there is an extension for the use of someone who is bedridden. But there is no blanket argument on the ground that it is a benefit to the housewife or that it is a necessity, because it certainly is not.


Gordon Knapman Fraser: I support what the hon. member says in favour of an exemption for invalids.


Mr. McCANN:: As I read this resolution, it applies only to dwelling houses, apartments and other domestic establishments and is not a tax on an extension in any business concern.


James Lorimer Ilsley: That is correct.


James Joseph McCann: How about a professional man, for instance a doctor, who has his office and residence in the same building and has an extension for the convenience of himself and his patients at night? Does it apply in such a situation? The extension is paid for and well paid for, and it is a convenience not only to the professional man himself but to his clientele.


James Lorimer Ilsley: I would not consider that taxable. It is part of the professional establishment and not a part of the domestic establishment as such.


George Hugh Castleden: Would the minister consider the question in regard to invalids, to whom a telephone is a necessity? Surely it is as much a necessity to a bedridden person as it is to a doctor. We would appreciate a statement from the minister as to whether he will consider that question. In 95 per cent of cases it is a luxury and should be taxed, but for the bedridden person the telephone is a source of comfort not only personally but to those on whom that person depends.


James Lorimer Ilsley: I would not care to make an exception for such a small proportion of such a small tax. It would hardly be worth doing so. Moreover, it would be administratively difficult to draw the line between invalids and semi-invalids and those who are not invalids at all.


Richard Burpee Hanson: And there are rich invalids and poor invalids.


James Lorimer Ilsley: We would get into all sorts of difficulty.


Harry Rutherford Jackman: I support my leader's contention with regard to the tax. It is not only a mean tax but also a nuisance tax. I do not think this house has sufficient sympathy with people who are now burdened with larger than six-roomed houses which they cannot get rid of because there is no market for them. Such people cannot adapt themselves very readily to the more restricted circumstances in keeping with their incomes after taxation, and they may have two telephones. With the present shortage of domestic help it means more work for the women in that class. The tax is a nuisance. True, the amount is only $3 a year, but that is added to the charge which the telephone company makes and which, in my opinion, is and always has been exorbitant. One year's rental is about equal to the cost of the instrument, but now the minister sees a loophole to enable him to impose another tax. It is unfair. Many business men have extra telephones in their living rooms in order that they may conduct business, receiving calls in the evening, and that involves a business charge which they cannot take into account in their business expenses. A great many people who formerly had a good middle-class income are now reduced to a very small income by reason of taxation, and it has been necessary for them to maintain a certain standard of living in order to earn that income. Now the minister comes along with this picayune tax which is nothing but a nuisance. I think he would be well advised to take it off. At a more appropriate time I may make a suggestion as to where he could impose a better tax.
Special War Revenue Act


Mr. BOUCHER:: Why should there be a tax on a private telephone and not on a business telephone? One of the fundamental principles of taxation is ability to pay. A business is more capable of paying the tax than is a householder who has a telephone for the convenience of those in his home, and if it is purely a ' business proposition there are many reasons why the tax should be not on private telephones but on business telephones. The greatest percentage of extensions are for business reasons, but there are many other reasons than business for putting in an extension in a house. The difficulty of securing domestic help is one reason why the householder should have a telephone extension, and another reason is that there may be privacy in another room for business conversation. If the tax were intended to bring in revenue it would be better to put it on business rather than private telephones.


Clarence Gillis: I wish to pursue further the question of exemption for invalids. I do not think the minister is right in regard to administrative difficulties in carrying out the exemption. The telephone company puts in the extension and knows the purpose for which it is required, and that is entered in the books of the company. The company makes the collection and will make the return, so that the whole matter is in its hands. If the minister could make a statement to the effect that consideration will be given to the question of exemption, on the basis of necessity, for those who are bedridden, I do not see why the exemption should not be granted.


Mr. GRAHAM:: I have an extension telephone for the convenience of an invalid, but I do not think the solution is such as my hon. friends suggest. That would make it necessary for the minister to determine whether the extension was for the invalid or for other use. The solution I would suggest is to have a single telephone put in the invalid's room. I certainly agree with the hon. member for Fort William (Mr. Mclvor) that, if a person can afford two telephones, in view of the fact that we have to raise these moneys for war purposes this is a proper tax.


Harry Rutherford Jackman: Has the minister considered the case of those who do not feel they can afford an extension but who have a plug-in, a hole in the wall where one can plug in an extension so that the telephone may be moved upstairs or downstairs. Is that taxable?


James Lorimer Ilsley: I have not considered that question. I do not understand that arrangement.


Richard Burpee Hanson: That is where you can move your telephone around. That would not be an extension; it is simply shifting the site of the telephone.


[Stage Direction]
Resolution agreed to.
4.	That the tax on railway, vessel, bus and aircraft tickets or right of transportation be increased from 10 per cent of the charge made to 15 per cent; provided, however, that the said tax shall not apply on the charge for a ticket or right of transportation, if the regular charge is seventy-five cents or less.
Mr. REID:: I protest to the minister that a great class of travellers is left out of this tax. A few minutes ago an hon. member said that all taxes are irritating. That is true, but there is no need to make them needlessly irritating. The fact that those having passes pay no tax makes this tax the more irritating to those who have to pay it. I know what I am saying may not be popular with members of parliament who travel on passes, but there are thousands in this country who travel on passes and that makes it the more irritating to the ordinary citizen who has to pay a tax on his railway ticket.


Mr. MacNICOL:: Are soldiers exempt from this tax?


James Lorimer Ilsley: Y'es, soldiers in uniform.


John Horne Blackmore: What is the minister's purpose in imposing this tax? As I have said before, there seems to be some confusion in his mind as to the primary purpose in regard to many of these imposts. Is the objective here to raise revenue or to withdraw purchasing power?


James Lorimer Ilsley: There is certainly too much travel on the railways; that is, the trains are overcrowded. Something may have to be done about that, apart altogether from taxation. While I could not isolate a particular objective and say that is the only objective in this tax, I would say that it seemed proper to increase the tax on transportation for various reasons. We need the revenue, and there is too much travel on the railways. A great many persons travelling on the railways apparently can afford to pay a tax on their transportation, and if they do pay that to us, they will have that much less to spend on something else. So altogether it seemed to be a proper tax to impose. I am aware that there are objections to the tax. I am aware that there are some persons who simply must travel on the railways, and they will have to pay this tax even though travelling is a necessity for them.


Victor Quelch: Do soldiers' dependents have to pay this tax?

Special War Revenue Act


James Lorimer Ilsley: Yes.


Victor Quelch: Is that fair, for instance, when a soldier's wife has to join her husband, who may be an airman and be transferred from one end of Canada to the other? It is true you are giving them a lower rate, but it is not their fault that their husbands are moved frequently, it may be every three months, say from Montreal to Winnipeg or Vancouver. Is she going to be taxed every time she moves? Surely soldiers' dependents should be exempt in the same way as a soldier is.


James Lorimer Ilsley: I do not agree with that.


Richard Burpee Hanson: I would direct the minister's attention to an apparent discrimination-or perhaps differentiation is the better word-in the tax levied on pullman or parlour-car seats as opposed to ordinary transportation. The tax on seats is increased from ten cents to fifteen cents, while the tax on transportation is increased from 10 per cent to 15 per cent. It occurs to me that there is a differentiation there that is hard to justify.


James Lorimer Ilsley: Well, the person using the pullman or parlour-car seat ordinarily has to pay his transportation tax also, which is increased from 10 to 15 per cent. This simply increases the tax on pullman seats by the same proportion.


Mr. HANSELL:: When was the 10 per cent tax imposed in the first place?


James Lorimer Ilsley: A year ago.


Ernest George Hansell: Was there not a tax on railway tickets during the last war? There was. I was selling tickets during the last war and that was the time when the tax was first imposed. It was common knowledge that it was a war tax. When people came to buy their tickets they asked the price and we charged them a little more. "What is the idea?" they asked. "Well, this is a war tax." That tax has been on ever since the last war.


James Lorimer Ilsley: No, that is not correct.


Ernest George Hansell: Then I will say that the war tax has since been increased to 15 per cent. Fifteen per cent on a railway ticket is a lot of money; it is not 15 cents as in the next resolution; it is 15 per cent on the fare, and that can amount to a good deal. I venture to say it will be a long time, perhaps a long time after this war is over, before this tax is removed.
Then the hon. member for Acadia (Mr. Quelch) mentioned soldiers' dependents. This section is headed "Special War Revenue Act." A wife gives her husband to the services and
then, if she wants to go somewhere to meet him, she has to pay a war revenue tax. I support the hon. member for Acadia in his claim that that is not just.


Mr. AVRIGHT:: AVhat I have to say may not be popular, but I think it is entirely unfair that this tax should not be charged on those travelling on passes. We are charging this tax to soldiers' wives and we want to reduce travel; yet there are thousands of people travelling on passes who pay no tax at all. This tax should be extended to include those travelling on passes.


Douglas Gooderham Ross: Is a similar tax charged to those travelling on the railways in Great Britain?


James Lorimer Ilsley: I do not know.


Douglas Gooderham Ross: I think it would be interesting to know that in connection with this and other of these items. We would get some idea how taxes in this country compare with those in Great Britain.


James Lorimer Ilsley: In the United States the
treasury proposals wTere to increase their transportation tax from 5 to 15 per cent. I believe the ways and means committee have recommended a 10 per cent rate instead. I am unable to say which rate will be finally accepted in the revenue bill.


Gordon Knapman Fraser: AVould it not be possible for the minister to place a limit on the amount paid under this tax? The single fare to Vancouver, for example, is about S90, which means a tax of about $13.50, and if you buy a return ticket it comes veiy high. Some people have to travel, and have not this much extra money. It is a lot for them to pay, especially when members of parliament have passes for themselves, their wives and their families on which they do not pay the tax. I brought up this matter when I spoke on the budget, and I was severely called down by a number of hon. members for having done so. But I think hon. members should pay the tax on their passes, because it is those who are travelling on passes that are filling up our trains. There is no doubt about that. I have travelled to Montreal by both the lake shore and the other route, and about 40 per cent of those on the trains were travelling on passes.


James Lorimer Ilsley: Whenever we seriously considered taxing railway passes-and we have discussed this matter a great deal-it has always been represented to me that free transportation was regarded by a great many people in this country as one of the conditions of their employment, part of their remuneration, and that if we were to step in and tax
415S
Special War Revenue Act

those passes there would be a tremendous storm of protest. I am willing to consider the matter if there is a widespread demand here in the house, but I am afraid that if I were to say now that we would turn round and tax free transportation, for one member who has asked for it ten would protest against it. I am also afraid that in regard to the taxation of passes of members of parliament, for one member from a distant point, such as the hon. member for New Westminster, who would be agreeable, there would be ten members from distant points who would say it was most unfair to tax them so much more than the members who live near Ottawa. These are some of the objections that would be offered to any tax on free transportation. Those who work for the railways have always considered . that free transportation was a condition attached to their employment. That is the point of view that has always come forward every time we have had this discussion, though I must say I have not had any representations from the men themselves. I am sure there would be a tremendous number of railway employees and members of parliament who would object to the taxation of free transportation.


Richard Burpee Hanson: I should like to point out one consideration with respect to the transportation of hon. members. A member of parliament does not travel on a pass which is issued as a favour by the railway. He travels free as a result of legislation of this parliament, which I think was placed upon the statute books to overcome the charge that he might be influenced by the railways in their handing out free transportation to him. Under this legislation he is under no obligation to them; in other words, he travels as a matter of right and not as a matter of favour. I think that is why the provision was placed in the Railway Act as long ago as 1917 or 1918. Those of us who have read the novel by Winston Churchill with regard to the abuses in the New Hampshire legislature in connection with free transportation will remember the revolution brought about by the publication of that novel. So much was that so that to-day there has been a great change in the handing out of free transportation in the United States. They are very much more restricted than we are; it is confined almost entirely to railway employees and their relatives.
With regard to railway employees I should say that from time immemorial the right of free transportation for the employees themselves, not only on their own line but, after a period of time, on other lines, rightly or wrongly is looked upon as part of the working
[Mr. Ilsley.)
conditions of the* railway men. Perhaps the railways are very generous in this respect, but I think you would have a little revolution on your hands if you were to tax these passes. These are among our most patriotic people, and if transportation facilities are being taxed to their capacity the railways have the remedy in their own hands. At the Christmas holiday, and other times when railway communications were being taxed to the utmost by the movement of men on furlough, the railways just informed certain classes of relatives of their employees that they would not honour passes between certain dates, and there was not a murmur about it. I think we can leave that matter in the hands of the railways. In justice to members of parliament, however, I wanted to point out the distinction, that we do not travel on the railways as a result of any favour from the railways. That section was placed in the Railway Act to abrogate what I might call the humiliation of accepting a favour from a railway company, or of being under any obligation to a railway company in the matter of transportation, leaving members of parliament free to travel as a matter of right.
I would have no objection to paying a fax on my railway transportation, but I tell the committee that it would be a very substantial sum during the course of a year. Members of the cabinet would not be in as bad a position, because the country would pay their travelling expenses, and properly so, since they are, as a rule, travelling on official business. Not many of them, at all events during these days, travel for pleasure; and the members travel on public business also. If a member goes home on Friday evening and comes back on Monday morning, to say that he should pay a 'tax is, I think, not fair. Let us be fair to ourselves. Surely we get enough knocks from the public as it is. I feel like defending members of parliament against the picayune charges that are sometimes levelled against them, not very often but from time to time. Somebody will say with a sneer, "Oh, he travels on a free pass." He does not travel on a free pass at all; he travels as a matter of right, so that he may be free from any suggestion that he is receiving a favour at the hands of a railway company. I know the hon. member for New Westminster is very sincere about this matter; he has advocated it a good many times, and there have been times when I have thought that the relatives of the railway employees took pretty generous advantage of the free transportation provision. But they have grown to understand that this is their right, and I think it would take a long process of education to disabuse

Special War Revenue Act
their minds in that regard. I am not going to urge that they be liable to payment of this tax; there are other ways of getting at them. They are a class of people who earn good money, and they will contribute to the war effort of this country.


Mr. DUPUIS:: I should like to add a word in this connection. With regard to railway employees, I am of the opinion that the provision of free transportation forms part of their salary or wages, and I share the view of the leader of the opposition that it would be very unfair to tax them. But I should like to say a word on behalf of those who must pay large sums for railway fares, those who travel long distances. I think the hon. member for Peterborough West made a good suggestion in that connection, to which we should pay attention. I think there should be a ceiling on this tax in regard to long trips.
The return fare from here to Vancouver is about $200, and the tax would amount to around S30. A man is punished for living so far away from Ottawa or from his business. I should like to say a word for the relatives of soldiers or for the soldiers themselves. A boy who has enlisted may have his home far away from the point of embarkation. A mother who happens to live in Vancouver may want to see her boy in Halifax before he leaves, and I think a case Like this should be exempted from the tax. I raise my humble voice to join with other hon. members and ask that something be done.


[Stage Direction]
Resolution agreed to.
5.	That the tax on pullman or parlour car seats be increased from ten 'cents to fifteen cents.
Daniel (Dan) McIvor: The only thing wrong
with this tax is that it is not high enough; it should be 25 per cent. The man who is able to afford a seat on a pullman and have other accommodation provided for him should have to pay extra.


Mr. SHAW:: Why is the tax in this case
so many cents, whereas in the other case it is a percentage? As I interpret this tax, if I were to go to Winnipeg and take a parlour-car I would pay exactly the same as the man going to Vancouver.


James Lorimer Ilsley: It has been ten cents for
a great many years, and we just worked on the old section. My hon. friend would not take a parlour-car seat for a trip to Winnipeg or Vancouver; he would take a berth. In that case the tax of 15 per cent provided in the next resolution would apply. The average cost of a chair is sixty or seventy or eighty cents, and in that case a tax of 10 per cent would) amount to only six, seven or
eight cents. The transportation itself is subject to a percentage tax, and1 the berths are also subject to a percentage tax.


[Stage Direction]
Resolution agreed to.
6.	That the tax on berths in sleeping cars or on other sleeping accommodation on railway trains be increased from 10 per cent of the charge made to 15 per cent) provided, however, that in no case shall the tax imposed be less than thirty-five cents.
Gordon Knapman Fraser: I
think the minister ought to place a limit upon these taxes on train travel or berths. For a man travelling from here to Vancouver it means a considerable amount.


James Lorimer Ilsley: If I met the request of the
hon. member for Peterborough West I would not suit the hon. member who spoke last, because we would then be making the charge to Winnipeg and Vancouver the same.


Gordon Knapman Fraser: This
is a percentage charge.


James Lorimer Ilsley: The hon. gentleman has
suggested a ceiling which would have the effect of equalizing the charges on long distances.


John Horne Blackmore: Is the object here
to raise money or to prevent people from using berths?


James Lorimer Ilsley: There are several objects here.


John Horne Blackmore: We should have it
perfectly clear what we are doing. From what half, a dozen members have said it would appear that they are not distinguishing between a tax, the object of which is to raise revenue, and a tax, the object of which is to withdraw purchasing power or prevent the use of materials. It is entirely imperative that we have this distinction clear when we are dealing with the items of the budget, unless we do not want to be reasonable and logical.


[Stage Direction]
Resolution agreed to.
7.	That the excise tax on cigarette paper be increased from five cents for each one hundred leaves or fraction thereof to six cents.
Richard Burpee Hanson: I suppose this increase is designed to maintain the same differential between manufactured cigarettes and cigarettes rolled personally?


James Lorimer Ilsley: This is designed to be a comparable increase, but whether it is I do not know. There is always a great deal of dispute between manufacturers of paper and tubes and those of cigarettes.


[Stage Direction]
Resolution agreed to.
Resolutions 8 and 9 agreed to.
Special War Revenue Act
[Stage Direction]
10.	That there shall be imposed, levied and collected an excise tax of one cent per ounce actual weight or fraction thereof on manufactured tobacco of all descriptions, except cigars or cigarettes, manufactured or imported into Canada.
Richard Burpee Hanson: I should like to know what we old smokers shall have to pay because of this tax?


James Lorimer Ilsley: The present rate is 35 cents a pound; the increase is 16 cents a pound, which makes it 51 cents a pound.


Mark Cecil Senn: How much will that bring in?


James Lorimer Ilsley: The estimated revenue from the increase in rate is $4,000,000 for a full year; for the remainder of the fiscal year it is $3,000,000. The revenue in 1941-42 was $9,861,000.


Mr. WHITMAN:: Why are cigars exempt? Is there a special tax on cigars?


James Lorimer Ilsley: Yes, somewhere else.


[Stage Direction]
Resolution agreed to.
Resolutions 11 and 12 agreed to.
13.	That paragraph (a) of subsection four of section eight-six of said act is repealed and the following substituted therefor: -
"4. (a) There shall be imposed, levied and collected an excise tax of 25 per cent upon the current market value of all dressed and/or dyed furs,-
(i)	imported into Canada, payable by the importer or transferee who takes the goods out of bond for consumption at the time when the goods are imported or taken out of warehouse for consumption; or
(ii)	dressed and/or dyed in Canada, payable by the dresser or dyer at the time of delivery by him."
George Hugh Castleden: What is the change here?


James Lorimer Ilsley: 
[Stage Direction]
Resolution agreed to.
14.	That there shall be imposed, levied and collected an excise tax of 20 per cent payable by excise stamps on any charge for admission, cover charge, charge for meals, refreshment service or merchandise, or otherwise, which is payable by a person attending any dance hall, night club, cabaret or similar place of entertainment which provides a combination of any two of the following features: -
Dancing by patrons,
Sale of alcoholic beverages.
Entertainment by paid performers.
Gordon Knapman Fraser: Will churches and patriotic societies be exempt from this tax? There are many churches and patriotic societies across Canada which put on dances to raise funds for the church or for patriotic purposes, and I think they should be exempt from this tax.


James Lorimer Ilsley: There will be an exemption in the bill covering charitable organizations.


Richard Burpee Hanson: They would hardly qualify as dance halls or cabarets or similar places of entertainment.


James Lorimer Ilsley: No.


Richard Burpee Hanson: It seems to me that this resolution will require some little clarification in the bill. Does entertainment by paid performers include an orchestra? At the Chateau I see some of the younger members in the grill room, where there is an orchestra and a dance floor. There is a cover charge for dinner dances in the grill.
I never dance myself, but if I should go there and have dinner, whether I get up and dance or not, would I be subject to this tax?


James Lorimer Ilsley: If there is dancing and
alcoholic beverages are sold there.


Richard Burpee Hanson: Alcoholic beverages are not sold there. There has to be a combination of any two of these three features?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: So if they sold beer and wine in the grill room where they have a dance floor and a paid orchestra and serve meals, that would come under this?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Then the only thing is not to go there.


George Russell Boucher: Would not any place
where there was dancing by patrons and a paid orchestra be subject to this tax even if no

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alcoholic beverages were sold? You would not need to have entertainment by paid performers if you had the other two features.


James Lorimer Ilsley: It is not intended to include orchestras under "entertainment by paid performers."


Richard Burpee Hanson: The
orchestra would not be considered paid performers. That is the point about which I was asking.


[Stage Direction]
Resolution agreed to.
15.	That in addition to any other duty or tax which may be payable under the said act, or any other statute, there shall be imposed, levied and collected from the consumer or user a retail purchase tax payable by excise stamps in respect of the goods mentioned in the schedule hereunuer, purchased or imported by the consumer or user, at the rate set opposite each item in the said schedule, computed on the retail selling price, if the goods are purchased in Canada, and on a value which includes all other duties and taxes if the goods are imported by a consumer or user, provided that the said tax shall not apply to goods of which the total retail selling price or the total cost to the consumer or user is not in excess of one dollar, in the case of any item mentioned in subparagraphs 1, 2, 4, 7 and 8 of the said schedule, or not in excess of fifty cents in the case of any item mentioned in subparagraphs 3, 5 and 6 of the said schedule: -
1.	Trunks; suitcases; bags and luggage of all
kinds; purses; hanubags; jewel cases; brief and catalogue cases; dressing and toilet eases; shopping bags, except paper bags;, golf and other sports bags; all the foregoing whether fitted or not	 25 per cent;
2.	Clocks and watches adapted to household
or personal use	 20 per cent
3.	Articles commonly or commercially known as jewellery, whether real or imitation, including diamonds and other precious or semiprecious stones for personal use or for adornment of the person; goldsmiths' and silversmiths' products including all gold, silver, chromium or other plated ware and pewter ware. .25 percent;
4.	Articles of all kinds made in whole or in part of ivory, jet, amber, coral, mother of pearl, natural shells; tortoise shell, jade, onyx, lapis lazuli, or other semi-precious stones
25 per cent;
5.	Articles of cut glassware, crystal glassware,
cut or not, etched glassware, metal decorated glassware or marble	 25 per cent;
6.	Articles of china, porcelain, earthenware,
stoneware or other pottery ware, except articles for use in the preparation or serving of food or drink	 25 per cent;
7.	Ash trays; tobacco pipes; cigar and cigarette holders; cigarette rolling devices and other smokers' accessories, not to include lighters, matches or tobacco	 25 per cent;
8.	Fountain pens; propelling pencils; desk sets and all other desk accessories. . 25 per cent.
Richard Burpee Hanson: The minister is here entering into the field of a retail purchase tax. Heretofore we have
been clear of that type of tax. It resembles in its limited sphere a turn-over tax. I wonder how such a thing as this is going to be checked up. It will require a whole army of auditors to check up on this tax. Would it not be better to confine it, as we have to-day, to the manufacturer? I do not see how, in any event, the minister is going to check and collect this tax on stocks that are at present in hand. Under the other system he could collect on new goods that came in, but he is going to have a tremendous amount of difficulty in collecting this tax, and there is going to be a tremendous amount of leakage and losses. To do the thing properly you would require an audit of every retail establishment in Canada. Just to say that, indicates the difficulty of levying this tax on every item covered by this schedule. I think the minister ought to try to justify this tax on the basis of equity, and by that I mean the differentiation between small things. Why should cheap jewellery be exempted from the tax and candy be taxed? I say to the minister, if this is a proper tax, tax everything. I think I understand what his answer will be, that on small articles the cost of collection would be greater than the revenue that came in. Is not that the answer?
Mr. ILSLEY; Yes.	.


Richard Burpee Hanson: It would cost a good deal more than you would get out of it. That is the answer. This tax is in favour of Mr. Woolworth or Mr. Zeller, who deal in cheap kinds of merchandise. They will not be subject to this tax, but a reputable jewellery firm will have its business killed-people who are substantial business men in the community. I go along my own main street in Fredericton and see two old-established jewellers. One of them runs the finest store in town. I go up to the next block, and I see the cheap, tawdry jewellery that is found in the 5-and-10-cent store. The one who is taxed under this resolution is going to be put out of business, while the other fellow rakes in the shekels by the thousands and thousands on a multitude of small sales. I do not like this tax; I do not think it is fair. I do not see how in the world you are going to administer this tax on a proper basis. You cannot check it; you cannot control it. The only place to levy it is at the manufacturer's level, by adding the tax to the invoice. That is the way to do this thing: add it to the manufacturer's price. Then you will require returns only from a limited number of business people who will make correct returns. You will be saved the huge cost of auditing
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and of collection, and you will get an honest return from the manufacturer. He is not going to take any chance; the tax is added to his bill, and he collects it as part of his invoice. The consumer always pays. You can take it as axiomatic that the consumer has to pay these taxes. There is the odd case where the "squeeze", if I may use that term, is applied as between wholesaler and retailer; sometimes they are made to absorb part of the tax, but in nine cases out of ten the consumer pays these bills.
You are trying to do something which I think will be very difficult of accomplishment, especially under to-day's conditions. Where the goods are already in the hands of the retailer there will be endless trouble. If you collect from one you must collect from all, and if you do this properly the cost of collection is going to be colossal; you will need a whole army of tax auditors, and we have enough now. I suggest to the minister that the proper principle is the one he is applying to candy.


James Lorimer Ilsley: This tax since it was announced has given me more trouble than any of the others.


Richard Burpee Hanson: I thought it would be a headache.


James Lorimer Ilsley: For various reasons. I think that would be a fair description of it-a headache; and I am going to propose a change in the resolution. But I want to tell the committee in my own language the reason why I did not think we should impose the tax at the manufacturer's level. Once it was decided to impose a tax of this weight, which is heavy-25 per cent-at the retailer's level, it became apparent that to impose a tax of this weight at the manufacturer's level would mean that the tax on jewellery would probably be 66 per cent or something like that, because of the great mark-up there is on jewellery; and even if a tax of 50 per cent at the manufacturer's level were imposed, many of the consequences would be extremely serious.


Richard Burpee Hanson: To whom?


James Lorimer Ilsley: To various persons interested. I will give the committee some of the consequences of doing that. In the first place, if there were any difference in the degree to which retailers had stocked up there would be a tremendous amount of injustice. For instance, let us say the leader of the opposition is a retailer and has a small stock, and I am a retailer-perhaps running a department store- in a big way, and have very carefully stocked up and have a heavy inventory, and a tax goes on at 50 per cent of the manufacturer's

level. The leader of the opposition finds himself in an awkward position, finding himself carrying on business in competition with me, because he has to buy in at this high tax these goods which are very highly taxed, whereas my store is full of goods which are not taxed at all. The most serious discriminations would arise as between retailers, assuming there is a difference in the degree to which they have stocked inventories-and we are told that is the situation in the country at the present time. They are not evenly stocked in respect of inventories.


Richard Burpee Hanson: Well, they never are, are they?


James Lorimer Ilsley: With a high manufacturer's tax that would create serious discrimination and injustice as between retailers.


Mr. TUSTIN:: Would not that discrimination apply to almost everything that is taxed?


James Lorimer Ilsley: Oh, but in a very much
smaller degree. If it were 10 or 15 or 25 per cent it would not make so much difference, but this 25 per cent at the retailer's level on this particular kind of merchandise is a very high tax on the manufacturer's level. In jewellery, I think it would be something like 66 per cent. That is one objection. Another objection to imposing the tax at the manufacturer's level' is that all the inventories would escape the tax. We do not know how great the inventories in Canada in the hands of retailers are at the present time. The hon. member for Lethbridge took me severely to task the other day for not knowing. He said we certainly should know what the inventories were and where they were. I wish I did, but I do not. All we are told is that there are tremendous inventories, and a lot of these-goods turn over very, very slowly. If we imposed a tax at the manufacturer's level I am sure that a lot of these inventories would be sold over the next year or two years without any tax being paid at all.


Richard Burpee Hanson: It depends on what they are.


James Lorimer Ilsley: Yes. Some of them are
slow moving and some of them are faster moving. That is the reason why we have separated this tax into two classes.


Major James William Coldwell: Could the minister
explain the difference between increased inventories and consumer hoarding,?


James Lorimer Ilsley: That is another subject,,
and I think the answer to that query is not as obvious as it is in the mind of the-hon. gentleman.

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Major James William Coldwell: The minister is talking about increased inventories, and I think what he says is true. I have heard of a certain big retail organization across the country with tremendous stocks in warehouses and so on. And we are asked to cut down on our buying!


James Lorimer Ilsley: I do not want to get drawn off on that, but the answer is not as obvious as it appears in the hon. gentleman's mind. It is one thing for the consumer to hoard, and quite another thing for distributing agencies to see to it that consumers have goods available in fair proportions. I think that is the answer, though I have not given the question more than a few minutes thought. I have heard it asked as my hon. friend asked it and wondered if the answer was so obvious as people take it to be.
Another objection to putting on a very high tax on the manufacturer's level is that consumer purchasing is to a certain extent promoted.
After having said all that, I admit that the difficulties of imposing a tax at the retailer's level are so great that we should assume some difficulties, particularly in fairly quick-moving lines or the faster-moving lines, rather than plunge ourselves into the terrible administrative difficulties of trying to collect taxes at the retailer's level. For that reason I am going to propose that some be moved back to the manufacturer's level and some left at the retailer's level.


Richard Burpee Hanson: Which
are those?
Mr. ILSLEYr: It has been decided that in the case of items contained in resolutions 1, 7 and 8, the tax should be moved up to the manufacturer's level, and could be, without sacrificing too much revenue. At the same time the exemption in respect of items selling for a dollar or less will be dropped. This will reduce to some extent the administrative problems encountered in administering taxes at the retail level. The rate of tax which will apply on these three categories at the manufacturer's level will be 35 per cent instead of 25 per cent, which I may say will work out at something less than the equivalent of a 25 per cent tax at the retail level.


Richard Burpee Hanson: But a
little less revenue per item?


James Lorimer Ilsley: Yes. I am willing that the effective rate of tax on the consumer should be lower than the equivalent of the 25 per cent tax at the retail level, because it has been represented that there is a large volume of buying by the armed forces in the goods
and items included under resolution 1-trunks; suitcases; luggage, toilet cases, and so forth. In many instances these items have been purchased as presents for those going into the armed forces. On items which include jewellery, cut-glass articles, china, porcelain, and so on the tax is to remain at 25 per cent, payable by the retailer. I am proposing to simplify, as far as possible, the use of stamps in future. It is proposed that the stamp shall be placed on the daily recapitulation of sales of the taxed items, and this stamped recapitulation of sales shall be retained by the retailer at his premises for purposes of inspection by the revenue officials.


John Ritchie MacNicol: A whole army to
inspect it.


James Lorimer Ilsley: It will be simpler than what we intended at first. In making these changes I have done my best to meet representations which have been made since these taxes were first announced-and there have been many of them-to the extent that I felt I could safely do, bearing in mind the purpose for which the taxes were imposed. It is difficult to estimate at all accurately the effect of the proposed changes, but the revenue from the eight categories of items should not be much different from that originally estimated, which was $7,750,000 for the full year and $5,800,000 for the remainder of the present fiscal year. I have here a motion that resolution 15 be rescinded and another substituted therefor.


Ian Alistair Mackenzie: I move:
That resolution 15 be rescinded and the following substituted therefor:
(1) 15. That in addition to any other duty or tax which may be payable under the said act, or any other statute, there shall be imposed, levied and collected from the consumer or user a retail purchase tax payable by excise stamps in respect of the goods mentioned in the schedule hereunder, purchased or imported by the consumer or user, at the rate set opposite each item in the said schedule, computed on the retail selling price, if the goods are purchased in Canada, and on a value which includes all other duties and taxes if the goods are imported by a consumer or user, provided that the said tax shall not apply to goods of which the total retail selling price or the total cost to the consumer or user is not in excess of one dollar, in the case of any item mentioned in subparagraphs 1 and 3 of the said schedule, or in excess of fifty cents in the case of any item mentioned in subparagraphs 2, 4 and 5 of the said scheuule:
1.	Clocks and watches adapted to household
or personal use	 25 per cent;
2.	Articles commonly or commercially known as jewellery, whether real or imitation, including diamonds and other precious or semi-
Special War Revenue Act

precious stones for personal use or for adornment of the person; golusmiths' and silversmiths' products including all gold, silver, chromium or other plated ware and pewter ware. .25 per cent;
3.	Articles of all kinds made in whole or in part of ivory, jet, amber, coral, mother of pearl, natural shells, tortoise shell, jade, onyx, lapis lazuli, or other semi-precious stones
25 per cent;
4.	Articles of cut glassware, crystal glassware,
cut or not, etched glassware, metal decorated glassware or marble	 25 per cent
5.	Articles of china, porcelain, earthenware,
stoneware or other pottery ware, except articles for use in the preparation or serving of food or drink	 25 per cent;
(2) That in addition to any other duty or tax which may be payable under the said act, or any other statute, there shall be imposed, levied and collected an excise tax of 35 per cent on the sale price or the duty-paid value of the following items manufactured or imported into Canada;
1.	Trunks; suitcases, bags and luggage of all kinds; purses; wallets; billfolds; key and card cases; handbags' jewel cases; dressing and toilet cases; shopping bags, except paper bags; golf and other sports bags; all the foregoing whether fitted or not;
2.	Ash trays: tobacco pipes, cigar and cigarette holders; cigarette rolling devices and other smokers' accessories, not to include lighters, matches or tobacco;
3.	Fountain pens; propelling pencils, desk sets and all other desk accessories.
Provided that in the case of items mentioned under subparagraph (1) the said tax shall not apply when they are manufactured expressly for a customer for his use in the operation of his business or profession.


Richard Burpee Hanson: I think
this is an improvement; I believe the minister got out of a good deal of difficulty with respect to operation and administration. I wish to ask him a question with respect to item 5-"articles of china, porcelain, earthenware. stoneware or other pottery ware, except articles for use in the preparation or serving of food or drink." Would that cover table china?


James Lorimer Ilsley: It is exempted.


Richard Burpee Hanson: What is contemplated other than that?
Mr. ILSLEY; Porcelain ornaments, vase3,
ct cetera.


Richard Burpee Hanson: Ornamental
articles?
Mr. ILSLEY; Yes.


Richard Burpee Hanson: Not articles of general utility.


James Lorimer Ilsley: That is right.


John Ritchie MacNicol: A few days ago a merchant advertised a sale of handbags at $1.79 each. A buyer went in and bought one of

these and handed the merchant a five dollar bill, and when the change was given it was discovered that the merchant had charged more than SI.79. Asked why, he said the government had imposed a tax of 50 cents. In other words, he charged $1.79 plus 50 cents, but the purchaser received no slip with stamps on it. The purchaser did receive a slip with the total amount, but it bore no stamps. In what way will the government keep track of such sales? In most of the states to the south there is a turn-over tax, the equivalent of 3 per cent, from which they receive a large revenue. The state of Illinois receives about $50,000,000 a year. I am not advocating that, because I do not know enough about what a turn-over tax would mean here. Has the minister considered anything of that kind different from what I have quoted about the purchaser of this handbag, for which 50 cents extra was charged, and on the sales slip for which there where no stamps from which the government could receive anything?


James Lorimer Ilsley: The tax should have been 45 cents, not 50 cents.


John Ritchie MacNicol: I figured it at 44 cents, but the purchaser paid 50 cents.


James Lorimer Ilsley: Ever since the budget came down there has been some confusion in the minds of retailers as to just what they should do. The instructions were that they should place a stamp on the bill, cancel that stamp, and present to the purchaser the bill with the stamp so cancelled.


John Ritchie MacNicol: That was not done in this instance.


James Lorimer Ilsley: In some instances it has not been done, and there has been some lack of uniformity in practice. Once this resolution passes, it will make clear what the practice is, and it is hoped that there will be uniformity in the future.


Ernest Edward Perley: Has the department made any investigation as to stocks carried prior to the introduction of this resolution, by such companies as, for instance, Eatons and Simpsons, as compared with the stocks they carried at the time of the last budget a year ago?


James Lorimer Ilsley: No.


Ernest Edward Perley: I am informed by some merchants that they cannot meet the prices owing to the fact that, as they believed, certain stocks were materially increased just prior to the coming into force of the budget.


James Lorimer Ilsley: So far as the tax at the retail level is concerned, it attaches to stocks sold to the public. That is the best reason

Special War Revenue Act
in the world for fixing a retail tax. I would have stuck to it had it not been for the great administration difficulties and other reasons all along the line, but it is going to be more easily administered on jewellery than on some other lines which we have moved back to the manufacturer's level.


Gordon Knapman Fraser: With regard to the item as it appears in the resolution before us, "clock and watches"-I suppose that should be "clocks"-will alarm clocks be exempt? I ask that because they are a necessity to certain workers. The same applies to military watches presented to soldiers. Sometimes these watches have the names engraved on them. Are such watches exempt?


James Lorimer Ilsley: No.


Gordon Knapman Fraser: Alarm clocks are certainly a necessity to munitions workers. Clock manufacturers are to-day regulated almost out of business because priorities have practically put a stop to their producing clocks and watches. They are almost out of business because they cannot get the necessary materials, and I think they should have some leeway.


James Lorimer Ilsley: If that is the situation, that is the best reason that can be given, so that people will not buy them who do not need them. That is one purpose of the tax. Not all clocks and watches are by any means necessities.


Gordon Knapman Fraser: That is why I mentioned alarm clocks.


James Lorimer Ilsley: At present the great majority of them are bought by persons who could get along without them. That is not so in every instance, but I do not think we can go round picking out those cases that should be exempt. I do not believe we can draw definitions or make rules that will be as accurate as that.


Gordon Knapman Fraser: What kind of help are you going to give the manufacturer if he is put out of business by this tax?


James Lorimer Ilsley: This will not put the manufacturer out of business. He will use what materials are available, make what he can with them and sell them all. The jewellers will sell everything they have; there is no doubt about that. This tax will slow up the sales to some extent I hope, put a little brake on the free purchasing of goods like this.


Richard Burpee Hanson: Of course that is the intention of the tax, to prevent the consumer from buying.


James Lorimer Ilsley: Yes, that is one intention.


Richard Burpee Hanson: I wish the minister would apply that all along the line. There are other things we can get along without better than some of these things; whisky is one, but I am not going to revert to that.
I notice in the amendment there is a proviso at the end:
Provided that in the case of items mentioned under subparagraph 1 . . .
That refers to trunks, I think?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: Trunks; suitcases; baggage and luggage of all kinds . . . the said tax shall not apply when they are manufactured expressly for a customer for his use in the operation of his business or profession.
That was not in the previous resolution, was it?


James Lorimer Ilsley: No.


Richard Burpee Hanson: What is the reason for that?


James Lorimer Ilsley: Repair bags for telephone men is an example. Some firms make lines which constitute quite a large percentage of their total output, which are required-


Richard Burpee Hanson: Commercial travellers' luggage, for instance?


James Lorimer Ilsley: Well, if it is used for business purposes it is a business expense; it is not the idea to tax that kind of thing.


Richard Burpee Hanson: And doctor's bags and lawyers' brief-cases, they will be exempt?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: What about the luggage of a member of parliament when he has to travel all the time? I wish the minister could see some of mine.


James Lorimer Ilsley: Well, I do not know; I cannot give too many rulings.


Roy Theodore Graham: I wish to call attention to a principle in this resolution which I think is very unfair. I admit it is not new; it is found in many other statutes. I think it is important, particularly since this item is under the general heading "Special War Revenue Act." I think it is a fair principle to appeal to this committee on, that is to say, that war taxes should rest as equally as possible on every Canadian citizen. This tax is on the retailer's price. If it is an imported article, the 25 per cent ad valorem tax is added to the price including the duty and other taxes. It will be seen that persons who reside in the more remote sections of Canada are

Special War Revenue Act

at a disadvantage as compared with those who live in the two central provinces where practically all these items are manufactured. In my province of Saskatchewan I do not believe there is a single item mentioned in the schedule of this resolution that does not have to be brought in from Ontario or Quebec or possibly British Columbia. The result is that the purchaser or consumer in Saskatchewan-I say Saskatchewan merely to give point to my submission-has to pay the 25 per cent on the price f.o.b. factory, plus freight, plus the mark-up, and that mark-up of course is made on the laid-down price in the merchant's store in Saskatchewan, with the result that the consumer pays considerably more because of the application of the percentage tax than do consumers in other parts of Canada more favourably situated. Or, if the article is imported, the same result follows; the consumer in Saskatchewan must pay the tax on the price including duty and taxes.
There are dozens of statutes in which that particular unfairness falls upon persons living in provinces other than Ontario and Quebec. It is often argued in this committee, I think without any attempt at contradiction, that the people of my province are peculiarly unable to bear that added tax. Yet this section imposes an added burden on those people simply because they live in a remote part of Canada where manufacturing industries are not located.
I would like the minister to consider estimating what the 25 per cent would amount to in cents or dollars and make the tax applicable in that manner rather than as a percentage.
I would hope also that the minister would keep in mind the principle that the people who reside in the more remote parts of Canada are continually irritated by the application of the pyramiding system and having the tax imposed on the pyramided price. I think the minister should carefully consider this matter, in order that the people may feel that war taxes are being imposed on every citizen as equitably as possible.


Major James William Coldwell: I should like to support the argument of the hon. member for Swift Current. There are many of these taxes that bear heavily on people resident in provinces like Saskatchewan. A year or two ago a tax was imposed on electric power. Our small local communities with their little power plants pay a terrific tax, while in this city, for example, where power is very cheap, the tax amounts to scarcely anything. Wherever the price is high, there you have the high tax.
I think the hon. member's representation is valid. There was a time when we used to see goods advertised at so much more west of the 
great lakes, on account, we were told, of freight. It is true that the freight is a little higher, and other things are higher. As the hon. member says, our people are not feeling any benefit from war activity; we have no war industries in the province, and this form of taxation does bear very heavily upon regions such as he mentioned.
I can see the difficulty of adopting some other method, but I believe it could be worked out so as to be much more equitable. Our people on the prairies are feeling, and have felt for the past two or three years, that while there has been a certain measure of, shall I say, war prosperity in some parts of the dominion, the taxation increase to a very large degree bears more heavily upon them and they find it hard to bear.,


Charles Eugène Parent: In support of the remarks of the hon. member for Swift Current and the hon. member for Rosetown-Biggar I should like to call to the attention of the Minister of Finance that we in the province of Quebec already have a 4 per cent sales tax which increases considerably the cost of these various articles. Besides that, we have the heavy taxation of our public utilities. I hold no brief for the power companies in the province of Quebec, but I believe something like $10,000,000 to $12,000,000 in taxes on these corporations is paid to the federal government, and that is shouldered by the consumer. So if the minister could see his way clear to heed the remarks of those hon. members, he might also have consideration for the situation of those in Quebec province.


Angus MacInnis: I wish to support what was said by the hon. member for Peterborough West with regard to clocks. As a matter of fact, when the hon. member spoke I was about to rise to deal with the same subject. Most of the people in my constituency are interested in alarm clocks, and I want to draw the attention of the minister to the fact that an alarm clock is not a thing of beauty; no one would ever purchase one for its appearance. It sounds even worse than it looks, particularly about half past four o'clock in the morning.


John Ritchie MacNicol: Or even five o'clock.


Angus MacInnis: Yes, or even five o'clock.
I have no doubt the hon. member for Davenport has heard it on occasion, and it is not a nice sound, especially on a nasty morning. As I have said, no one would buy an alarm clock if he did not have to, and instead of having to pay a tax on it I think he should be given an alarm clock as a bonus, whenever he has need of one. For these reasons I think, as a special concession to those who

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have to do the sweating-I mean the physical sweating-in producing the sinews of war, if the minister cannot see his way clear to have alarm clocks given as bonuses, at least he should have them exempted from this tax.


Frederick Davis Shaw: I am curious as to why a 25 per cent tax was arrived at in connection with each group of articles. As I examine groups 1, 2, 3 and so on, I find very little relationship between them. For instance, there is not much connection between the commodities contained in group 2 and those contained in group 3, while the articles listed in group 2 are probably more essential than those listed in group 6. I rather feel that unless there is some strong justification for setting what I regard as a flat 25 per cent rate, there should be some variation, taking into consideration the part played in the lives of the people of this country by the various commodities.


Roy Theodore Graham: I should like the minister to express an opinion, if he would be kind enough, as to why the tax could not be expressed in cents or dollars, striking a reasonable average as between retail prices throughout Canada.


James Lorimer Ilsley: If this were converted from an ad valorem to a specific tax, it would be impossible to say what number of cents or dollars a given article should pay. For instance, articles of jewellery range in price from a few cents to many thousands of dollars. One could not put a specific tax on jewellery of, say $1 per article.


Roy Theodore Graham: No, but you could make it a specific tax, so many cents on jewellery up to a certain value; so many dollars on jewellery up to a certain higher value, and so on, grading the tax. I know that is a cumbersome method, but I suggest that it would be better to have this taxation principle correct and equitable, in order to remove the dissatisfaction that exists as between the different provinces, even though it meant going to a little more trouble in interpreting the tax. I think it will be agreed that our taxation system has spread out so enormously that the department must be prepared to face a certain amount of trouble and difficulty in the interpretation and application of these taxes.


Frederick Davis Shaw: I wonder if the minister would care to satisfy me, if that is possible, with respect to the setting of the 25 per cent tax in each case.


James Lorimer Ilsley: Well, we had a list of articles most of which people could do without, if they wanted to. We cut out a great many
44561-263J
categories, after consideration, and these were left. The great bulk of these are articles the purchase of which, generally speaking, can be deferred. That is true of a great many of them, if not all. There is no scientific method of ascertaining the correct rate. Twentynfive per cent for each is just as likely to be correct as 25 per cent for some, 20 per cent for others and 15 per cent for others. It is just as appropriate as the 8 per cent sales tax over the whole range of goods, for example, and perhaps more so.


John Ritchie MacNicol: If I understood the minister correctly a moment ago, he said that brief-cases of lawyers would be exempt from this tax.


Angus MacInnis: The clients will pay the-tax.	*


John Ritchie MacNicol: What did the minister
say when the leader of the opposition asked whether brief-cases of lawyers were exempted?


James Lorimer Ilsley: There is an amendment
which exempts articles included in the first item when used in business, or something of the kind; I do not know the exact words. It is a question of interpretation as to what that covers.


John Ritchie MacNicol: That was what I had in mind. In that connection I wanted to ask if brief-cases or sample cases of commercial travellers, architects, engineers and a long list of people who have to use these articles in earning their living also will be exempt.


James Lorimer Ilsley: I am told that brief-cases
and catalogue cases were crossed out entirely.


John Ritchie MacNicol: They are exempt?


James Lorimer Ilsley: Yes, brief-cases and catalogue cases are crossed out.


John Ritchie MacNicol: And engineers' cases?


James Lorimer Ilsley: I do not know, I am sure.
Do not involve me in too difficult questions of interpretation.


John Ritchie MacNicol: Brief-cases of architects,, and so on?


James Lorimer Ilsley: I would need to have the
item before me.


Mr. TRIPP:: I support the principle that the tax should be collected at the point of sale, for many reasons which I do not think it necessary to point out. In group 6, however, I should like to point out that articles of china are included. There is very little china manufactured in Canada. The great percentage of the china sold in our stores is manufactured in Great Britain, and a very large part of it is reexported to the United
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States. We who live along the border between the United States and Canada do quite a business in selling china to citizens of the United States who come here for that express purpose, that is tourists who come to Canada quite often for that one purpose. They make a special trip for it, and we sell them china which is manufactured in Great Britain. That serves two>
purposes, and I think we should allow that china to go out of this country without paying this extra charge. In selling it we help the British people, who make it, and we obtain United States dollars. My suggestion to the minister is that for export purposes the tax on china should be dispensed with.


James Lorimer Ilsley: I think it would be pretty
hard to determine whether or not a buyer was really a tourist. That is the trouble with making tourist exemptions. We gave some consideration to that, but we felt that it would be administratively difficult. It will be noted that china for use in the preparation or serving of food or drink is not covered by the item; it is only articles of china which are ornamental in character that are dealt with. I know tourists buy some of those, but I am afraid they will have to pay the tax like anybody else.


George James Tustin: The minister has announced that the tax on some of these articles is to be collected at the source, and in his remarks he said that there were large stocks of these articles in the hands of some of the large retailers. How is the tax going to be collected on the articles now in the retail stores? Will they be exempt?


James Lorimer Ilsley: Yes.


George James Tustin: There has been a number
of these articles sold and the 25 per cent tax has been collected. What is to happen about that?


James Lorimer Ilsley: We shall have to validate
that tax so that there will not be refunds.


Mr. ISNOR:: Can the minister tell whether the delegation which recently waited upon him represented the larger or the smaller retail stores?


James Lorimer Ilsley: A number of delegations
have waited upon me, and I think all interests and all points of view have been represented. I think the smaller retailers have been adequately represented by the retail merchants' association of Canada. Mr. Hougham, whom I have known for some years, represents that association. Representations have been made by the small retailers, the large retailers, the wholesalers, the manufacturers and everybody but the consumers. (Mr. Tripp.]


Gordon Benjamin Isnor: As a retailer I cannot follow
the argument of the minister in regard to stocks on hand, nor can I see how it will be fair to the smaller retailer. The minister has said that there is no check up with regard to stocks on hand. If I am not greatly mistaken, he will find this information in the bureau of statistics. A merchant must fill out a form giving information to June 30, not only what he has at the end of June but his purchases separately for the months of January, February, March, April, May and June, and then his total sales as well. It should be possible to make a very close estimate of the stocks on hand as of June 30. I do not think the minister has looked into this matter as fully as he generally does.


James Lorimer Ilsley: My advisers tell me that
they could not obtain accurate information, but I am interested in what my hon. friend says.


Richard Burpee Hanson: I think
they must have slipped.


James Lorimer Ilsley: I do not know. It may be
that moving some of these articles back to the manufacturer's level will not work very well for certain retailers, but it must be borne in mind that articles of a greater value are remaining at the retailer's level.


Gordon Benjamin Isnor: I do not know that I have
a great deal of objection to your moving them back, but now that you have started it I think it would have been better to have left the seven or eight items as they were originally.


Richard Burpee Hanson: The objection to that would be the cost of administration, and there -would be all kinds of chiseling. There would be a great loss of revenue, great expense in administration and the taxes would be wiped out. My reaction to this resolution was that the simplest method would be to work on the manufacturer's cost. No doubt the minister and his advisers, subject to the one omission that the hon. member for Halifax (Mr. Isnor) has indicated, have studied this question more than anyone else has found it possible to do. Perhaps the minister is justified in what he has said. However, having regard to the information I have and the growing scarcity of consumer goods, I think that if large purchases have been made by the larger retailers it must be known to the bureau of statistics. I make the prediction that within twelve months the shelves of the small retailers in this country will be bare; many of them are bare now. If you were in England you would be astonished at the lack of commodities in the

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small shops, but if you went to Harrod's or Selfridge's or any of the other large stores you would find that they were just full' of merchandise. I predict that within twelve months Eatons, Simpsons and the other large stores will have huge stocks of consumer goods on hand, while the shelves of the small retailer will be bare.


Thomas Reid: They say they are increasing their warehouses now.


Richard Burpee Hanson: That may be just gossip. I am going to ask the minister .to get in touch with his colleague, the Minister of Trade and Commerce (Mr. MacKinnon), and ask him to reveal between now and three o'clock to-morrow afternoon the information available in his department with respect to the stocks of these commodities on hand. The senior hon. member for Halifax has indicated that this information should be available. The large stores are well stocked up, and there is going to be a tremendous discriminatory effect upon the small retailers of this country. They are going to be a war casualty; in fact, many of them are now. In addition, they have to pay higher income taxes.


Thomas Reid: The big man has the inside track.


Richard Burpee Hanson: If I said that, the minister would say that I was speaking politically, but perhaps the hon. member for New Westminster (Mr. Reid) can say that to the minister. I do not like to throw out that kind of insinuation unless I have proof. If I had the proof I would say it; do not make any mistake about that. The large stores have an advantage because of their great buying power, and in addition to that they have better business acumen. They are able to look into the future with better results, and that is why they have grown.


John Ritchie MacNicol: Has the minister any recent information as to whether the number of retail stores is increasing or decreasing? I have noticed lately when walking along the streets of Toronto that there are more stores vacant, which would indicate that many small merchants are going out of business. The smaller merchants upon whom I have called recently all tell me that they are going to be put out of business by the taxes being imposed upon them, and the number of vacant stores would indicate that something serious is happening. I do not know whether this budget will increase or decrease the amount of revenue when so many merchants are being forced out of business. It would depend on
whether the number of retailers is increasing or decreasing. Has the minister any information on that point?


James Lorimer Ilsley: No, I have not, but I know that in 1941 the volume of goods sold by retail stores was 25 per cent greater than before the war, and the dollar value was about 50 per cent greater. There was a tremendous increase in business.


Richard Burpee Hanson: Because thei;e was a great deal more buying power.


John Ritchie MacNicol: My question was whether the number of retail stores was increasing or decreasing.


James Lorimer Ilsley: I have no information on that.


Thomas Reid: I had no intention of criticizing the minister in my remarks about the big man having the inside track. What I meant to convey to the leader of the opposition and to the house was that men in the wartime prices and trade board who are connected with large concerns are in a position to know the exact situation about shortages and to advise their firms accordingly. I do not say that they are doing it, but they are in a position to do it, many of them being connected with large firms. But I had no intention of criticizing the minister for that.


Richard Burpee Hanson: Then I misinterpreted the hon. gentleman. There is something in what he says. I have observed over a period of years the trend against the small retailer in our communities throughout Canada because of the chain store. It is a grave problem. The small retailer gives credit; the chain stores do not. The small retailer is a part of the community and takes part in the community life. But who ever heard of a chain store taking part in community life? I can remember that when I went to Fredericton forty years ago, we had five or six first-class grocery stores, big concerns which carried everything and did a huge business. The proprietors of these stores were among our leading citizens. They took part in every phase of our community life, and I have no doubt that the minister knows of a similar situation in his home town. To-day there is not one such big grocery store in Fredericton. They have all been driven out by the chain store. That is a factor in the life of our communities of which we must take note. I am just a bit fearful of this trend. I do not know just how you are going to curb it. I do know that by means of taxation and that sort of thing, attempts have been made on many occasions to curb this trend; but after all, before the war at all
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events, we were living in a land of free enterprise. The people do not have to support these chain stores, but they do, and I am just a little afraid that this taxation will accentuate the situation.


Roy Theodore Graham: I wish to return to the point I raised a few moments ago because I believe there is a very important principle of taxation involved. May I ask the minister if he recognizes the inequality that results from this type of tax imposition because of the pyramiding process in the application of a tax on a percentage basis?


James Lorimer Ilsley: On some goods on which the cost of transportation is added to the manufacturer's price the consumer at a distance will undoubtedly pay more per article than a consumer in other parts of Canada who buys nearer to the point of production. But there are articles on which the price is equalized all over the country.


Roy Theodore Graham: Not so many.


James Lorimer Ilsley: Perhaps not many, but there are some, and to those that objection would not apply. I would' point out that while that objection may apply to most of the articles in this list, our sales tax, which is by far the largest tax on the sale of goods, escapes very largely that objection because it is imposed at the manufacturer's level and does not include transportation. With respect to the electricity tax, which is small, and this tax, which is small-the total amount to be derived from this tax in a full year is only $7,750,000-it may be that a case, not a very large case, I think, can be made out, but I do not think it is a very large grievance. On grounds, of strict fairness, however, as between consumers in different parts of Canada it may be said that a consumer at a place remote from the point of production will pay a little more per article. But that cannot be avoided if we are going to impose the tax at the retailer's level. On the bulk of these articles it must go on at the retailer's level. Otherwise the heavy inventories will escape and discriminations between persons with large inventories and persons with small inventories will arise. There would be an undesirable stimulation to consumer spending if we imposed a very high tax at the manufacturer's level, leaving the inventories in the retail stores untaxed.


Roy Theodore Graham: I raised the point, not
Because of the items covered by this resolution but because of the principles which, as the minister points out, are applicable to all measures of taxation. The application of my objection goes further even than the addition

of the freight rate to the price at the point of manufacture, because there are certain trade practices such as mark-up. On jewellery, for instance, I assume that the trade mark-up by the retailer is likely 100 per cent. There is also a veiy high mark-up on furniture and many other articles which represents a very considerable percentage of the laid-down price in the store. This tax and other taxes of a like nature on the retail price are applied not only on the base price at point of manufacture but on that price plus freight and mark-up, and the application of the tax on that pyramided price is very unfair. I trust that the minister is quite aware of that inequity and that if he has a reasonable opportunity of removing it he will do so.


Robert Fair: What position will the western provinces be in as compared with the central provinces under this tax. It is well known that the central provinces are the manufacturers of almost all the things we buy in western Canada, and western Canada, the orphan of Canada at the present time, will be compelled to pay a higher price than the central provinces for the articles we are now discussing.


Jesse Pickard Tripp: Am I right in understanding the minister to say that present stocks were exempt from this tax?


James Lorimer Ilsley: No. The present stocks of most of these articles are taxable, and with respect to some I am proposing an amendment to move the tax back to the manufacturer's level, so that hereafter, after to-night, stocks of these articles in retail stores will be free from tax.


Gordon Benjamin Isnor: I think the hon. member for Assiniboia was anxious to have a clear understanding in regard to the large stocks of these articles now held by the larger retail stores. My understanding was the same as that of the hon. member, that what they now have on hand would not be taxed.


James Lorimer Ilsley: That is right.


Gordon Benjamin Isnor: I think the leader of the opposition has raised a very important point. I do not wish to take any strong stand against large stores, but it would appear to me that the smaller stores are labouring under a handicap in this respect.


John Ritchie MacNicol: They certainly are.


Gordon Benjamin Isnor: It is a well-known and recognized fact that during the past two years, and particularly last year, the large stores have had buyers in the field buying wherever it was possible.

Special War Revenue Act


Richard Burpee Hanson: Trying to get whole outfits.


Gordon Benjamin Isnor: It will be shown, I believe, in the report which has been asked for that their stocks have increased to a marked extent. I might add, for the benefit of the minister, that if I remember rightly, the date on which this return is to be made is July 18. I do not see how it is possible to have the return compiled and sent in by that date. I wish to add my voice to that of the leader of the opposition in urging the minister to give this matter serious thought.
While the chairman may rule that what I am about to say has no direct bearing upon the resolution under discussion, I am going to point out something else. Smaller retailers throughout Canada, and particularly on the eastern coast, feel that discrimination is being shown in favour of the larger stores in the manner in which the parking and non-parlcing regulations are being put into effect. The large stores have the advantage of extensive parking spaces, while the smaller stores do not enjoy that benefit. It has been said-I do not say it-that this is due to the dollar-a-year men being in a position to affect directly traffic and other matters which work to the real benefit of the large stores. While this may have no direct bearing on the resolution under discussion, it may be one more little indication pointing to favouritism in so far as the large stores are concerned.


Richard Burpee Hanson: So far as I am concerned I want to facilitate the passage of the minister's resolution. But I would ask him, in view of the discussion which was raised here this evening, not to press this item but to go on to another one and, between now and to-morrow, when we meet again, have his officials get all the information available with respect to stocks in the big department stores-


John Ritchie MacNicol: And the warehouses.


Richard Burpee Hanson: -and in warehouses, at a certain stated period. I think this will be interesting and useful information.
I am not going to throw out any insinuations, but it is true that Mr. Burton's son is in charge of retail sales in the wartime prices and trade board. I think it would be better if he were not there. No doubt he is one of the best retail men in Canada, but do you not see where it gives an opportunity to question a man's integrity when he puts himself in that position. He is there as a dollar-a-year man; he knows what is going on; he is paid by his firm-one of the biggest retailers in the country. I am not making any attack on him at
all, but there is the opportunity for a misunderstanding, and it seems to me that men ought not to allow themselves to be put in that position. No wonder there is criticism when an appointment like that is made, having regard to the ramifications of his own employment and the knowledge which he gets as a result of his dollar-a-year position. I just throw that out as a suggestion to the minister. I am not making any charge. No doubt he is one of the most conscientious men in the world. But these men leave themselves liable to charges by people who perhaps are not fair about it.
I ask the minister to get the information the committee asks for with respect to the stocks of the big retailers. If what the senior hon. member for Halifax says is correct, the minister can get it from the bureau of statistics.
While I am on my feet might I make this suggestion to the minister. Last year the sets of resolutions were not reported one by one as they were passed, but he reserved the time of the report until several sets were passed, and then introduced the bills. If he would have each set of resolutions reported to the Chair as they are passed and a bill introduced, we would have more time to study the bill. I think it would be fair to hon. members to do that. For instance, this afternoon we passed one set of resolutions dealing with the Excise Act. I would ask if, before we rise to-night, the minister would have these resolutions reported and then introduce the bill, so that we may get the bill and study it.


James Lorimer Ilsley: We will get the bills in as fast as I can arrange it, but the legal work of preparation of these bills and the work of checking is tremendous, and I do not know that the bill on the Excise Act will be ready to-night.


Richard Burpee Hanson: What I am thinking about is the introduction of the bill so that we may see it and study it. We are near the end of this session, and things will be done in a hurry. All the time you can give us to study the bill is important to us. The minister and his officials know what they are doing, but we do not know it until we see the printed bill.


James Lorimer Ilsley: I will bear that in mind and get the bills in just as fast after the resolutions are passed as is possible.
It is all right for this item to stand, but I must make it clear that the arrangements under the resolution will have to be as stated in the amendment. That is a peculiarity of our system; there must not be any
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vacuum; there must not be any interim period. The taxes on certain of these items go off to-night as of to-morrow morning; either they do or they do not, and there cannot be any doubt about it, because otherwise there will be speculation on what eventually will be done. So it must be taken, I think, that the amendment I proposed is settled as far as trading to-morrow is concerned.


Richard Burpee Hanson: Well, that is notice to the public, anyway.


James Lorimer Ilsley: That is notice to the public. I want to make that clear. May I say that no one has a keener appreciation than I myself of the difficulties in this matter as indicated in the observations of the hon. senior member for Halifax. I never know in these things whether somebody has been benefited a little at the expense of somebody else, or not, but I heard all the representations, and when the retail association of Canada, with Mr. George Hougham representing them, a man who is always associated in my mind with the representation of the smaller rather than the larger retailers, although I think he represents all, was in favour of moving all these articles back to the manufacturer's level, while I decided not to do that on the bulk of them for the very reasons that the hon. senior member for Halifax advanced to-night, I did think I should do it on items yielding about two million dollars of revenue here, because of the difficulties of administration that have developed since I introduced the budget, the tales of woe that we have had-


Richard Burpee Hanson: The end is not yet.


James Lorimer Ilsley: -about employing new
staffs. I do not want to say anything about my friend the commissioner of excise, but he has a responsibility about these matters, and he does not like to assume the responsibility of enforcing a tax unless it is enforced.


Richard Burpee Hanson: Of course, his duties are administrative. They are not legislative.


James Lorimer Ilsley: No, but as an administrator he has every right to make representations to the Minister of Finance and say, "Now, if you give me that thing to enforce, I am afraid that I can't enforce it."


Richard Burpee Hanson: Does the
minister ever heed that advice?


James Lorimer Ilsley: Time after time. Sometimes I do not, but usually I do. I do if I can, because I know what his difficulties are.

I was minister of that department for five years, and I have repeatedly said in this chamber that this house should take great care to see, when it enacts laws, that it enacts the kind of laws which the people will respect and which can be enforced reasonably well. In some respects, I am afraid, this is a little . off the line, but we have kept it on to the extent that we felt we could, and the recommendations I have made to-night embody the result of my judgment and that of my officials, after a very considerable amount of discussion and a great many difficulties. I am content to let that rest until to-morrow. With regard to what was said about the administrators, I do not object at all to any remarks like that.
I realize that when we go out and select executives of department stores and put them in the position of administrators of the retail trade or anything else, it will be said that they are using their positions, to help themselves and the interests with which they have been connected.


Richard Burpee Hanson: I did not
say that, I said that they were open to the charge that they might, I did not suggest that they did. I was very guarded in what I said. But they are open to that charge by virtue of their taking those positions and still retaining their connections with their parent firms. By so doing they lay themselves open to the chaige.


James Lorimer Ilsley: What are we to do about it? Consider the position the government is in.
If we do not take men who know the business, we must take someone who does not know the business and who will have no authority in administering it. That is the difficulty. We try to get round that by taking particularly able civil servants where we find them, and when we do that we are bitterly criticized for taking theorists-


John Ritchie MacNicol: Impractical men.


James Lorimer Ilsley: -and brain trusters.


Richard Burpee Hanson: Men without practical experience.


James Lorimer Ilsley: Yes. Sometimes we get bankers. We have asked the banks to release some of their best men, and they do. We have put these men in responsible positions. Often they are very good; they are excellent. They have practical business experience and financial experience as well; their heads are level, and so on. But how often have I heard it said that they are favouring their old clients. How often have I heard that statement made? I have heard it in this house. Members in this house say that there should be occupational representation on the war-

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time prices and trade board. That statement has been made repeatedly, and I have risen and said1, "no occupational representation on the board. A dozen civil servants; that is all we will have". Then it is objected that we are relying on men without practical experience. But if we once started putting on, that board representatives of particular callings or occupations, making it a kind of parliament where each had' a constituency to represent instead of representing the interests of the dominion as a whole, as civil servants are very likely to do-and in practically every case they do-I am sure we would be in a great deal more trouble than we are in at the present time. Whatever course we take is open to certain objections. Generally speaking, the course that has been followed with the wartime prices and trade board has been to look for ability which has been developed as a result of experience, together with character, and then to disregard the charges that these men are advancing their own interests. If anyone knows wherein they have done so, let him tell me or let him say it in the house.


Richard Burpee Hanson: We have heard it.
Mr. 1LSLEY: Certainly no one wants anything of that kind to go on.


Norman James Macdonald Lockhart: How many more employees will be required across the country, from coast to coast, to carry out the provisions of all these extra taxes? Several people have asked that question.


James Lorimer Ilsley: Just under this resolution?


Richard Burpee Hanson: Under all
of them.


James Lorimer Ilsley: I cannot say. The hon. gentleman is not referring to the income tax?


Norman James Macdonald Lockhart: No; the number of employees that will be involved as a result of the new budget.


James Lorimer Ilsley: It would be impossible to say. It will be a great many, but I have no means of estimating the number.
Resolution stands.
16.	That immediately after the word "cameras" in section five of schedule I to the said act, be added the following words:.
"photographic films and plates; projectors for slides, films or pictures; except those designed exclusively for industrial or professional photographers'use	25 per cent."


Richard Burpee Hanson: What effect will this have on the motion-picture industry. Will they have to pay?


James Lorimer Ilsley: No. Is the hon. member referring to such concerns as the Associated Screen News, for example? Those would be films, projectors, and so on for industrial or professional photographers' use.


Richard Burpee Hanson: They
come under the exception?


James Lorimer Ilsley: Yes.


Richard Burpee Hanson: This is ordinaiy photographic material?


James Lorimer Ilsley: Yes.


Mr. BLACK (Yukon):: As one of thousands of amateur photographers in Canada I know I am correct when I say that the present retail prices of photographic films, plates and projectors are so high now that very few people can afford to buy them or to use them; but if you jump the price 25 per cent, why except those designed exclusively for industrial or professional photographers' use? Take the film designed for the amateur's use; it is, in most instances, identical with that designed for professional use. Therefore, if you are going to increase the price of films 25 per cent to the amateur, you should do so in the case of the industrial or professional user. By not including the industrial or professional user you overlook a great source of income, because much more film and many more projectors are used by them, and they make a profit on the purchase, resale and use of the film and projector, whereas the amateur makes nothing. Why not tax the profit?


James Lorimer Ilsley: It was not designed in order to impose an additional business tax. This is a consumer's tax. To put it on business would increase the cost of carrying on business at a time when price ceilings prevent increases in charges and when heavy income taxes and business and excess profits taxes take excess earnings. In short, this was not designed as a business tax or as an additional cost in doing business.


George Black: In this legislation the minister is getting around the price ceiling. He is putting the price up 25 per cent when it is high enough now, and, as I say, the professional photographer uses films designed exactly as those used by the amateur. How will you tell them apart? What makes a man a professional? Suppose I make a film to-day and sell it; I go into the professional class. Shall I get my films the next day at 25 per cent less than I get them to-day when I am an amateur? It is not fair.


Gordon Knapman Fraser: There are many schools throughout the country that have motion-picture projectors. The inspectors

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take pictures and show them throughout their districts. Would the films that they buy be taxable?


James Lorimer Ilsley: Yes.


Gordon Knapman Fraser: That is going to hamper education to a great extent. These motion-picture cameras use kodachrome, and with the extra tax a film is going to cost practically $7 for fifty feet. Four hundred feet of film will show in about fifteen minutes; $7 for one-eighth of a roll will make the whole roll cost about $56 with the tax.


Mr. CLEAVER:: There is a determining
factor in this resolution, the person for whom the camera or film was designed. Reading the resolution strictly, who is going to determine what films are designed exclusively for industrial or professional photographers?


James Lorimer Ilsley: They are of a distinguishable type, I am told. This applies not only to films but plates, projectors, et cetera. Any of those articles that are designed exclusively for the use of industrial or professional photographers are free of the tax; those that are not are taxable.


Richard Burpee Hanson: I suppose it is well understood in the trade.


James Lorimer Ilsley: I think so.
17.	That section eight of said schedule I to the said act be repealed and the following substituted therefor:
"9. Beverages consisting of unfermented fruit juices (not including grape and other native fruit juices where at least ninety-five per cent of the products sold consist of pure juice of the fruit) and imitations thereof, carbonated beverages or aerated waters and all other compounded or mixed soft _ drinks, put up in bottles for sale	 25 per cent and one cent per bottle."


Douglas Gooderham Ross: Is the one cent a bottle for a pint or a quart bottle?


James Lorimer Ilsley: Any bottle.


Douglas Gooderham Ross: Many speeches
were made this afternoon about endeavouring to cut down the sale of alcoholic beverages. It is rather a pity that this extra tax should go on soft drinks. I think if it were kept to a reasonable level they would probably take the place of alcoholic beverages to some extent.


Some hon. MEMBERS:: Oh, oh.


Douglas Gooderham Ross: I mean what I say; I think it is a pity. I think cutting down the cost of soft drinks would have some effect in reducing the consumption of alcoholic beverages.


Richard Burpee Hanson: I have
heard of people buying chocolates instead of alcohol, but I never heard of them buying coca-cola.


George Hugh Castleden: What was the clause
before it was changed?


James Lorimer Ilsley: The part in italics is new
and the one cent per bottle is new.


An hon. MEMBER:: What were the proceeds from the tax last year?


James Lorimer Ilsley: The amount last year was
$6,247,000. The estimated revenue from the increase in rate for a full year is $5,000,000. The estimated revenue for the increase in rate for the remainder of the fiscal year is $3,750,000.


[Stage Direction]
Item agreed to.
18.	That the said schedule I to the said act is further amended by adding at the end thereof as section ten and eleven the following:
"10. Chocolate, candy and confectionery which may be classed as candy or a substitute for
candy	 30 per cent."
"11. Chewing gum	 30 per cent."
James Lorimer Ilsley: I have an amendment to
propose. This resolution imposes a new tax of 30 per cent on manufacturers of chocolate, candies, et cetera. The amendment I have to propose is in the form of a proviso, the effect of which is to substitute for the 30 per cent tax in the case of items packaged by the manufacturers to sell normally in the retail trade for five cents, ten cents and fifteen cents, a tax of one cent, two cents and three cents respectively. This proposal is made with a view to equalizing the tax as between manufacturers of these classes of fixed price items. I believe it will find favour with the trade generally.


Ian Alistair Mackenzie: I move:
That resolution No. 18 be amended by adding the following proviso to section 10 of schedule 1 to the said act, as therein proposed: "Provided, however, that in respect of the goods mentioned herein the tax shall be:
One cent on each article or unit selling regularly at a retai 1 price of 5 cents;
Two cents on each article or unit selling regularly at a retail price of 10 cents;
Three cents on each article or unit selling regularly at a retail price of 15 cents; and the Minister of National Revenue shall be the sole judge of the classification 'of the goods, the value, and the unit of the sale for purposes of this tax."


Richard Burpee Hanson: 
Richard Burpee Hanson: And especially the small retailers.


William Ross Macdonald: I was just coming to that; especially the retailer in the small corner store. As has been pointed out to the committee already to-night by many hon. members, the small retailer is having a hard time to exist even now, and with taxes such as these it will become even more difficult. Then there is the child himself. As hon. members know, many children
Special War Revenue Act

get only a cent, and they go to the store and buy a cent's worth of candy. You may say, why not give them 2 cents? Well, being Scotch and thrifty, while a cent is a small amount of money, nevertheless it is well to bring up our children on small amounts of money, and then they will appreciate the value of money more -when they get older. Also it may be suggested that certain candies which sell three or four for a cent could be sold at two for a cent instead. Well, if the retailer does that, the wartime prices and trade board will come along and say he is increasing the price of his candy, and he will not be permitted to do so. So the small merchant is met with difficulty at every turn, making it harder than ever for him to carry on. I would have hoped that some consideration might be given with regard to candies selling for less than 5 cents.


Mr. ROEBUCK:: I have had a number of protests in my constituency, most of which I have sent on to the minister. They have come from the retailer, the storekeeper, who has given me figures somewhat similar to those mentioned by the hon. member for Brantford City. The storekeepers who have written me have assured me that if this tax remains, one-cent candy will go off the market. It is pretty well agreed and pretty well established, I think, by both the manufacturers and the retailers that if this tax stands, that class of candy goes out of existence. During the evening someone criticized a tax as a mean tax; in fact, I think two taxes were referred to in that way. But I do not know a meaner tax than that which takes candy from the babies.


Richard Burpee Hanson: I was not going to say that.


Arthur Wentworth Roebuck: Someone ought to have said it. There are those who will say that the baby is better off without the candy, but I do not think that is a good argument. We are not the judges of that. I do think something should be done in this connection. We shall not hear from the children who are interfered with by this tax. The amount that will be raised is very small compared with the number of people who will be inconvenienced and who will feel aggrieved as a result of this legislation. I do think the minister should do something about what the leader of the opposition has described as the penny candy.
Progress reported.
Resolutions (Excise Act) reported, read the second time and concurred in.


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

Tuesday, July 14, 1942